With spot Bitcoin exchange-traded funds (ETFs) having launched less than a month ago, asset managers have started exploring strategies to increase their profitability.

Bankrupt cryptocurrency lender Genesis has reached a settlement to conclude a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC) a year ago over its lending program.

Data recently shared by on-chain analysis firm Chainalysis suggests that 54% of the tokens launched on the Ethereum network last year exhibited patterns indicative of pump and dump schemes.

Top stories in the Crypto Roundup today:

• Collapsed Crypto Exchange FTX Creditors May Get Fully Refunded
• Genesis Settles SEC Lawsuit for $21 Million in Bankruptcy Deal
• Over Half of Ethereum Tokens Launched in 2023 Show Pump and Dump Traits: Chainalysis
• Grayscale's Outflows Begin to Decelerate

Spot Bitcoin ETF Issuer Start Seeking Ways to Boost Profitability

With spot Bitcoin exchange-traded funds (ETFs) having launched less than a month ago, asset managers have started exploring strategies to increase their profitability.

Valkyrie Investments has said it’s retaining BitGo as a second custodian to safeguard customers assets, diversifying beyond Coinbase, which currently plays a pivotal role for the majority of Bitcoin ETF issuers, including Valkyrie's own Bitcoin ETF, which trades under the BRRR ticker, and has around $113 million in assets.

The approach not only helps reduce counterparty risk, but also positions the ETF issuer to negotiate better fee structures with custodians in the future in a bid to improve their profitability.

It comes after spot Bitcoin ETFs entered a fee war just before being launched on January 11, with seven of the funds waiving the fees during an introductory period.

Bakkt, a firm offering cryptocurrency custody and trading services, has reportedly been in talks with several ETF managers, with its CEO Gavin Michael saying there’s “a heavy price war going on.”

The head of prime brokerage at BitGo Adam Sporn revealed the firm is in talks with other spot Bitcoin ETF issuers, while officials at other custodians, including Gemini, Anchorage Digital, and Kraken, said they’re in discussions with ETF providers on becoming secondary custodians.

Genesis Settles SEC Lawsuit for $21 Million in Bankruptcy Deal

Bankrupt cryptocurrency lender Genesis has reached a settlement to conclude a lawsuit initiated by the U.S. Securities and Exchange Commission (SEC) a year ago over its lending program.

As part of the agreement, Genesis, a branch of the Digital Currency Group, will pay the regulator $21 million to end the lawsuit, according to a filing in the U.S. Bankruptcy Court in the Southern District of New York.

The filings note that the settlement is “the product of extensive negotiations between the SEC and GGC [Genesis Global Holdco]. It adds that it will “ resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC."

The agreed $21 million payment to the SEC is scheduled to occur after the clearance of all other prioritized, secured, and unsecured claims, according to court documents.

Over Half of Ethereum Tokens Launched in 2023 Show Pump and Dump Traits: Chainalysis

Data recently shared by on-chain analysis firm Chainalysis suggests that 54% of the tokens launched on the Ethereum network last year exhibited patterns indicative of pump and dump schemes.

These activities represented just 1.3% of Ethereum’s total decentralized exchange trading volumes in 2023, but the situation underscores the double-edged sword of Ethereum's permissionless ecosystem.

Chainalysis highlighted a case where a single wallet launched 81 tokens and amassed profits exceeding $800,000, employing tactics such as wash trading to deceptively remove liquidity and leave other traders stranded in what is commonly referred to as a "rug pull."

Chainalysis' Director of Research, Kim Grauer pointed out that it’s challenging to definitively label such activities as malicious or illegal without further details, and highlighted the importance of educating users that they can search on-chain data to detect potentially malicious behavior.

Grayscale's Outflows Begin to Decelerate

Grayscale has seen a slowdown in its outflows. Following its transformation into a spot Bitcoin ETF, Grayscale’s Bitcoin Trust GBTC experienced $5.23 billion in withdrawals, but this trend began to taper off dropping from $641 million on January 22 to $221 million by January 30.

Despite these figures, the broader spot ETF market continues to show a positive trend, especially when excluding Grayscale from the analysis. The trend suggests there’s rising confidence in the digital asset sector, likely spurred by the authorization of spot ETFs and a growing recognition of digital assets as a valid investment option by institutional investors.

Dig deeper into the world of cryptocurrency trading with CCData’s latest Digital Asset Management Review.

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