First Mover Americas: Investors Pull Coins From Bitcoin Funds

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Bitcoin funds are bleeding coins even as U.S. bank failures fuel expectations of an early Federal Reserve pivot in favor of liquidity easing. Usually, if the Fed doesn’t raise rates aggressively like it has been doing, risky assets like bitcoin benefit, but the opposite is occurring with the bitcoin funds. Data tracked by ByteTree Asset Management shows the number of coins held by close-ended funds, spot and futures-focused exchange-traded funds in Europe, the U.S. and Canada has declined by 16,560 BTC ($409 million) this month, reaching a 17-month low of 826,113 BTC. ETFs and other investment vehicles that allow taking exposure to bitcoin without having to own the cryptocurrency are widely considered a proxy for institutional activity.

Bankrupt cryptocurrency exchange FTX transferred $2.2 billion to founder Sam Bankman-Fried through various entities, the firm’s new management said. A total of $3.2 billion was paid to Bankman-Fried and other key employees, according to a financial report filed Wednesday. The next largest beneficiary after Bankman-Fried was Nishad Singh, FTX’s former director of engineering, who received about $587 million. In February, Singh pleaded guilty to charges including fraud and conspiracy for his role in FTX’s collapse. The payments were made predominantly from the Bankman-Fried-owned trading firm Alameda Research, whose precarious finances set the wheels in motion on FTX’s collapse in November.

U.S. Securities and Exchange Commission Chairman Gary Gensler is doubling down on his opinion that proof-of-stake tokens could meet the definition of securities under the Howey Test, thus bringing them under his agency’s regulatory authority. Speaking to reporters after a commission vote on Wednesday, Gensler said securities laws could be triggered because investors anticipate a return when they purchase tokens underpinned by a proof-of-stake consensus mechanism. The Block first reported the news.