Crypto Headlines of the Week: GBTC Bleeds, Terraform Bankruptcy

There are a fair amount of legal shenanigans this week, from religious-based scams to allegations of a country tarnishing Nexo’s reputation — along with more fall-out from the FTX and Terra implosions.

First up, stormy days in the Bitcoin and spot Bitcoin ETF world.

As of Thursday, January 25, Grayscale Bitcoin Trust (GBTC) has lost 106,092 BTC over a span of nine trading days, equivalent to approximately $4.4 billion in value.

The GBTC’ bleeding’ has contributed to the sluggish Bitcoin price performance as well as net spot ETF outflows. 

In fact, courtesy of the GBTC bleeding, Bitcoin spot ETFs experienced a significant net outflow of $159 million on Thursday, marking the largest single-day total net outflow since their launch.

Find out FTX’s role in the bleed, along with other major crypto stories of the week.

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Key Takeaways

  • FTX ‘sold about $1B of GBTC’.
  • Terraform files for bankruptcy.
  • Nexo seeks $3 billion in damages from Bulgaria.
  • Sim swap led to hack of SEC’s X account.
  • Pastor blames God for scam token.

Bitcoin Spot ETFs See Largest Single-Day Outflows

On Thursday, Bitcoin spot ETFs experienced a significant net outflow of $159 million, marking the largest single-day total net outflow since their launch. 

Out of all the spot Bitcoin ETFs, Grayscale ETF (GBTC) has seen the most substantial net outflows, with $429 million leaving the fund over the past day alone. All other ETFs, excluding Grayscale, experienced net inflows of $270 million.

Bitcoin Spot ETFs Witness Highest Single-Day Outflows as GBTC Continues to Bleed (Cryptonews.com)

FTX ‘Sold About $1B of GBTC’

FTX’s bankruptcy estate has dumped 22 million shares of the Grayscale Bitcoin Trust (GBTC) since it was converted into an exchange-traded fund earlier this month. The 22 million shares it sold – which took FTX’s GBTC ownership down to zero – were worth nearly $1 billion.

FTX Sold $1B Of GBTC, Explaining Part Of Grayscale Outflows (Nasdaq)

Futures Bitcoin ETFs Take a Hit as Spot ETFs Enter Market

Activity in ProShares Bitcoin Strategy ETF (BITO), the world’s leading Bitcoin futures-based ETF, has cooled significantly since the launch of ETFs directly investing in the cryptocurrency on January 11. 

On Thursday, BITO shares worth just over $500 million changed hands on the NYSE, a 75% slide from the record $2 billion registered on January 11, according to data tracked by crypto exchange Coinbase. BITO has witnessed a net outflow of over $270 million over the same period.

Investors Pull $200M From BITO After Spot ETF Approval (ETF.com)

Terraform Files for Bankruptcy

The cryptocurrency company behind the crashed TerraUSD and Luna tokens has filed for bankruptcy in the US. Terraform Labs’ tokens collapsed in May 2022, losing $40bn of their value and contributing to the so-called “cryptocrash”. 

The company’s co-founder, Do Kwon, is currently in jail in Montenegro after having been found guilty of forging documents. He has been charged with defrauding investors by US regulators and is awaiting extradition.

Terraform Labs, Behind UST and LUNA, Finally Declares Bankruptcy (Techopedia)

Nexo Seeks $3 Billion in Damages From Bulgaria

Cryptocurrency lender Nexo is seeking $3 billion in damages from Bulgaria over an aborted criminal investigation. Nexo AG, a Swiss unit of Cayman Islands-based Nexo Capital, alleges the investigation tarnished its reputation and destroyed shareholder value. 

In January 2023, Bulgarian prosecutors launched an investigation into Nexo AG, raiding offices in Sofia and charging its founders with offenses that included participating in an organized crime group to launder money and commit tax and computer fraud.

Crypto lender Nexo seeks $3 billion in damages from Bulgaria over aborted investigation (Reuters)

Indonesia Sees Significant Drop in Crypto Tax Revenue

Indonesia has said that the total tax revenue from crypto in 2023 was $31.7 million. Last year, the country’s tax revenue fell 62% compared to the partial collection period in 2022, when the tax regime was introduced in May 2022.

Crypto transactions in Indonesia are subject to dual taxation: a 0.1% income tax and a 0.11% value-added tax (VAT). Additionally, local crypto exchanges must contribute around 0.04% tax to the national crypto bourse.

Indonesia’s Crypto Tax Revenue Falls 63% in 2023 Despite Bitcoin’s Surge (CoinDesk)

Sim Swap Led to Hack of SEC’s X Account

The SEC has told Fortune that the agency was the victim of a “SIM swap” attack, a technique in which cyber criminals convince mobile carriers to transfer phone numbers to a new account when its X (formerly Twitter) account got hacked earlier this month. 

SEC blames ‘SIM swap’ attack for disastrous X hack ahead of Bitcoin ETF approval (Fortune)

Pastor Blames God for His Scam Token

Colorado-based pastor Eligio “Eli” Regalado and his wife, Kaitlyn, are facing legal action after allegedly defrauding investors of millions of dollars through the sale of an unregistered crypto token called INDXcoin. The token was marketed to devout Christians as a “God-backed” digital asset.

Colo. Judge Freezes Alleged Crypto Fraud Church’s Funds (Law360)

Crypto Crimes Fell in 2023, But New Threats Are Emerging

Crimes involving cryptocurrency dropped sharply overall last year after hitting a record high in 2022, but experts are sounding the alarm that criminals are getting better at covering their tracks.

Although crypto crimes were down collectively, some forms of criminal activity actually rose last year: ransomware and darknet markets. Furthermore, many crypto scammers have adopted tactics that make their crimes more difficult to uncover.

Crypto crime fell overall in 2023, but experts warn of rising threats (Fox Business)

The Bottom Line

From legal maneuvers to crimes and scams, there wasn’t a huge amount of positive news in crypto this week.

But the weeks pass, and in this volatile world, there are always surprises around the corner. Join us again next week to see where the industry and market take us next!

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Ruholamin Haqshanas

Ruholamin Haqshanas is a cryptocurrency and financial journalist with over three years of experience in the field. He holds a Bachelor's degree in Mechatronics and has a strong interest in FinTech. He started as a freelance technology writer, but moved into cryptocurrency as he delved deeper into the industry in 2019. Ruholamin has been featured in several financial and crypto news outlets, including Cryptonews, Investing.com, 24/7 Wall St, The Tokenist, Business2Community, ZyCrypto, EthereumPrice.org, Milk Road to name a few. Ruholamin has also worked on major crypto and DeFi projects as a content producer, including Midas Investments, BullPerks/GamesPad and Equalizer Finance.