The Crypto Roundup: 31 August 2023 | CryptoCompare.com

Federal authorities are challenging the assertions made by Sam Bankman-Fried, the former CEO of FTX, that the technology provided to him in prison is inadequate for preparing his defense. This development emerged from a legal document filed on Tuesday in response to a recent request by Bankman-Fried’s legal team.

Two ETF analysts at Bloomberg Intelligence, Eric Balchunas and James Seyffart, have revised their predictions for the approval of a spot Bitcoin exchange-traded fund (ETF), attributing the increased odds to a recent unanimous legal victory by Grayscale against the Securities and Exchange Commission (SEC). On August 30, Balchunas announced that the likelihood of approval has been raised to 75%, up from an earlier 65%.

A U.S. District Judge has cleared Uniswap, dismissing a class-action lawsuit that accused the platform, its developers, and investors of violating securities laws. The lawsuit, initiated by trader Nessa Risley, alleged that Uniswap acted as an unregistered broker and dealer, facilitating the trading of scam tokens such as Matrix Samurai, Rocket Bunny, and Alphawolf Finance.

August was a turbulent month for the digital asset market, as total assets under management (AUM) experienced a significant downturn, falling to $29.7 billion—a 12.7% decrease compared to July. Market volatility and a steep drop in Bitcoin’s value to $25,375 (according to CCCAGG)  on August 17th exacerbated this decline. 

Top stories in the Crypto Roundup today:

• DOJ Counters Former FTX CEO’s Claims Over Inadequate Prison Tech Access
• 75% Chance of SEC Approving a Spot Bitcoin ETF by Year End, Bloomberg Analysts
• Uniswap Dodges Legal Bullet as Judge Dismisses Lawsuit Over Scam Tokens
• August Sees Decline in Digital Asset AUM and Trading Volumes: CCData

DOJ Counters Former FTX CEO’s Claims Over Inadequate Prison Tech Access

Federal authorities are challenging the assertions made by Sam Bankman-Fried, the former CEO of FTX, that the technology provided to him in prison is inadequate for preparing his defense. This development emerged from a legal document filed on Tuesday. The filing was a response to a recent request by Bankman-Fried’s legal team, asking the U.S. District Court in Manhattan to grant him access to an internet-enabled laptop and a workspace at the federal courthouse for five days a week ahead of his trial in October.

The prosecution contends that the tech limitations placed on Bankman-Fried are not obstacles but mere inconveniences. They argue these restrictions are essential due to his alleged involvement in witness tampering. According to the prosecutors, any limitations on Bankman-Fried’s access to resources are a direct result of his own alleged unlawful actions while out on bail.

Moreover, the authorities pointed out that the tech resources already available to Bankman-Fried exceed what is generally provided to pretrial detainees. Specifically, he has the option to use a non-internet-connected laptop at the Metropolitan Detention Center in Brooklyn. Additionally, he is permitted to use an internet-enabled laptop equipped with Microsoft Office and other software at a designated area in the federal courthouse in Manhattan twice a week.

Despite these provisions, Bankman-Fried has declined to utilize the courthouse facility, seeking instead more lenient pretrial conditions. This refusal comes on the heels of a recent ruling by Judge Lewis Kaplan, who denied Bankman-Fried’s request to visit his legal team’s Manhattan offices five days a week in the run-up to his October trial.

75% Chance of SEC Approving a Spot Bitcoin ETF by Year End, Say Two Bloomberg ETF Analysts

Two ETF analysts at Bloomberg Intelligence, Eric Balchunas and James Seyffart, have revised their predictions for the approval of a spot Bitcoin exchange-traded fund (ETF), attributing the increased odds to a recent unanimous legal victory by Grayscale against the Securities and Exchange Commission (SEC). On August 30, Balchunas announced that the likelihood of approval has been raised to 75%, up from an earlier 65%. 

This adjustment is directly linked to the U.S. Court of Appeals for the D.C. Circuit’s unanimous and decisive ruling against the SEC’s arguments. In a research note, Seyffart and Elliott Stein, a Senior Litigation Analyst at Bloomberg Intelligence, wrote: “The chances of the SEC approving spot Bitcoin ETFs this year have risen to 75% from 65% following Grayscale’s court win, we believe, while odds by the end of 2024 reach 95%. The judges unanimously repudiated the SEC’s arguments, and the agency will struggle to justify further denials as it faces deadlines, negative PR and Hashdex’s novel approach.”

Within the next five days, seven spot Bitcoin ETF applications are due for an initial decision by the SEC. These applications are from major financial firms including Bitwise, BlackRock, VanEck, Fidelity, Invesco, Wisdomtree, and Valkyrie.

Uniswap Dodges Legal Bullet as Judge Dismisses Lawsuit Over Scam Tokens

A U.S. District Judge has cleared Uniswap, dismissing a class-action lawsuit that accused the platform, its developers, and investors of violating securities laws. The lawsuit, initiated by trader Nessa Risley, alleged that Uniswap acted as an unregistered broker and dealer, facilitating the trading of scam tokens such as Matrix Samurai, Rocket Bunny, and Alphawolf Finance.

Judge Katherine Polk Failla, who presided over the case, emphasized that the real issue was with the anonymous nature of the token issuers. She suggested that the plaintiffs should direct their concerns to Congress, given the lack of existing case law on how securities laws apply to decentralized finance (DeFi) protocols.

Uniswap, a cornerstone in the DeFi sector, has seen $7 billion in trading volume over the past month. Its decentralized structure allows anyone to create and list tokens, which has led to both significant gains and losses for traders.

Judge Failla found no grounds to hold Uniswap liable for the scam tokens. She clarified that the platform’s core smart contracts should be distinguished from those created by individual token issuers. Failla also drew an analogy to payment apps like Venmo and Zelle, stating that holding them responsible for illegal activities facilitated through their platforms would be unjust.

The judge hinted that regulatory clarity around DeFi may emerge in the future. She dismissed the lawsuit’s state-specific claims without prejudice, leaving the door open for future legal challenges in North Carolina, Idaho, and New York.

August Sees Decline in Digital Asset AUM and Trading Volumes: CCData

August was a turbulent month for the digital asset market, as total assets under management (AUM) experienced a significant downturn, falling to $29.7 billion—a 12.7% decrease compared to July. Market volatility and a steep drop in Bitcoin’s value to $25,375 (according to CCCAGG)  on August 17th increased this decline. Adding to the instability, the SEC delayed approvals for several digital asset ETFs, further shaking investor confidence.

In a positive turn, Grayscale triumphed over the SEC in a legal battle, with its Bitcoin Trust (GBTC) seeing a $1.17 billion boost in AUM on August 29th and 30th, according to CCData’s latest Digital Asset Management Review. This increased Grayscale’s total AUM to $17.4 billion, a 7.2% rise.

Average daily trading volumes for digital asset investment products also declined by 17.9% to $208 million. This drop marks the second consecutive month of falling volumes, sinking to their lowest levels since January 2023. The downturn in Bitcoin’s price fueled investor caution, reversing the optimistic trend seen earlier in the summer.

For more insight into the digital asset investment product landscape, read CCData’s full Digital Asset Management Review.

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