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Genesis Global Capital

Bitcoin ETFs Soar : $836M Vanish, Genesis Sell-off Worsens

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Bitcoin’s price gyrations often dominate headlines, but beneath the surface lies a complex interplay of factors driving the cryptocurrency market. Recently, the spotlight has been on spot bitcoin (BTC) exchange-traded fund (ETF) flows, captivating investors and analysts alike. However, as Coinbase’s latest research report highlights, this fixation on ETF movements may overshadow crucial fundamentals.

In a surprising turn, the week witnessed a notable shift as approved ETF products experienced their first net outflows in two months. According to Coinbase’s findings, net outflows amounted to a staggering $836 million between March 18 and March 21, coinciding with Bitcoin’s dip below the $63,000 mark. Despite this turbulence, the cryptocurrency found stability, hovering around $66,800 in subsequent trading.

Bitcoin ETFs See Record Outflow Surge

Of particular intrigue is the surge in outflows from the Grayscale Bitcoin Trust (GBTC), totaling $1.83 billion over four days. Analysts remain puzzled by the abrupt reversal, especially considering the previous weeks’ trend of positive inflows into other spot ETFs offsetting GBTC’s outflows. This suggests a potential capital rotation phenomenon, with investors possibly seeking lower-fee alternatives to GBTC.

Adding to the complexity is the anticipated selling pressure stemming from Genesis Global’s bankruptcy estate. The impending sale of 35.9 million GBTC shares could significantly impact market dynamics. Moreover, the report sheds light on Genesis’ collateral pledge of 30.9 million shares to borrow $1.2 billion from Gemini Earn users in 2022’s third quarter. With Gemini poised to return these assets following a court approval, the market braces for potential repercussions.

However, despite these developments, Coinbase acknowledges the ambiguity surrounding the correlation between recent GBTC outflows and Genesis’ financial obligations. The report underscores the challenge of dissecting market movements amidst such intricacies, emphasizing the need for cautious interpretation.

As the cryptocurrency market continues to evolve, the interplay between ETF flows, institutional maneuvers, and regulatory developments will shape its trajectory. While bitcoin’s price fluctuations may capture attention, understanding the underlying forces at play remains paramount for investors navigating this dynamic landscape. In an ecosystem marked by innovation and uncertainty, staying informed is key to navigating the highs and lows of the cryptocurrency market.

Gemini Users Filed Class Action Lawsuit Against Genesis and Digital Currency Group

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In response to Genesis Global Capital and Digital Currency Group freezing withdrawals and Gemini suspending its Earn redemption program, three Gemini Earn users have requested class action arbitration against them.

A class-action lawsuit is frequently viewed as an alternative to class-action arbitration, a process for resolving disputes between parties by a neutral third-party arbitrator. The arbitration process is typically informal and voluntary.

However, the arbitrator’s decision is final and cannot be challenged, so it may go more quickly and cheaply than a class-action lawsuit.

Gemini users claim that Genesis failed to return digital assets

According to the claimants, Genesis failed to return their digital assets as well as those of all other Gemini Earn users as required by the Master Agreements between the company and users.

They argue that Genesis first broke the Master Agreement when it failed to inform its customers of the company’s bankruptcy in the summer of 2022.

Then, according to their allegations, Genesis engaged in a fraudulent transaction with its parent company, DCG, to conceal its insolvency. Specifically, they say Genesis exchanged its right to recoup $2.3 billion owed to it by the now-insolvent hedge fund Three Arrows Capital for a promissory note with a 2033 due date for a note with a $1.1 billion principal.

The group also argues that Genesis’ Master Agreement effectively results in unregistered securities sales, and they are requesting the cancellation of the sale contracts as well as compensation for their losses.

Investors Brendan Picha and Max J. Hastings also filed a class action lawsuit against Gemini in late December, alleging that the exchange sold unregistered securities through its Earn program.

The plans to resume Genesis withdrawals caused a Twitter argument between DCG CEO Barry Silbert and Gemini co-founder Cameron Winklevoss late on Monday. Winklevoss accused Silbert of using “bad faith stall tactics.”

Winklevoss asserts that Genesis and DCG owe Gemini and its clients $900 million, and he gave Silbert until January 8 to publicly commit to resolving this matter.