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$1.6B GBTC Earn Collateral Dispute

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In a legal showdown that unfolded within the courtrooms of the Southern District of New York Bankruptcy Court on October 27, cryptocurrency exchange Gemini launched an adversary proceeding against the bankrupt crypto lender, Genesis Global Holdco. The battle revolves around the destiny of a substantial 62,086,586 shares of Grayscale Bitcoin Trust (GBTC), which were initially deployed as collateral to secure loans granted to Genesis through the Gemini Earn Program, supported by a staggering 232,000 Gemini users. As of the present day, the assessed worth of this collateral stands close to a staggering $1.6 billion.

The lawsuit contends that Gemini successfully acquired $284.3 million by executing a foreclosure on this collateral, with the intention of distributing these funds for the benefit of the Earn users. However, Genesis has vehemently opposed these actions, effectively impeding Gemini from dispersing the accumulated proceeds.

Genesis, in its defense, has proposed an alternative approach. They advocate using the initial collateral value, which exceeded a substantial $800 million, as the basis for determining the deficiency claim for the Earn Users, rather than relying on the foreclosure value. This strategy would potentially liberate hundreds of millions of dollars for equitable distribution among other creditors. In their argument, Genesis emphasized that it was Gemini who bore the market risk associated with the Initial Collateral, following the foreclosure. Consequently, they argue that Earn Users should be the sole beneficiaries of any gains arising from Gemini’s assumption of this risk.

Furthermore, the lawsuit alleges that Genesis’ parent company, Digital Currency Group (DCG), executed the transfer of supplementary collateral to Genesis, exclusively for the immediate onward distribution to Gemini for the benefit of Earn Users. However, Genesis now seeks to repurpose these assets for other purposes. In rebuttal, Gemini asserts that a proper interpretation of the Security Agreement would confirm their rightful foreclosure on the Initial Collateral, recognizing Earn Users’ rights to the Additional Collateral. Such a determination would expedite the return of over $1 billion in digital assets, which Genesis has held in defiance of Earn Users for almost a year.

An interesting aspect to note is that Gemini Earn users constitute a substantial 99% of Genesis’ creditors, and their claims constitute an impressive 28% of the total claims by value, as per the lawsuit’s contentions.

Genesis initially filed for bankruptcy in January, a move that sent shockwaves throughout the cryptocurrency industry. Notably, the suspension of withdrawals, which occurred in November 2022, had significant implications for the Gemini Earn program. In a prior legal battle, Gemini had also taken DCG and its CEO, Barry Silbert, to court in July, alleging fraud associated with the Earn program.

Both Genesis and Gemini are currently defendants in a lawsuit initiated by the United States Securities and Exchange Commission, which asserts that the Gemini Earn program involved the offering of unregistered securities. New York Attorney General Letitia James added another layer of complexity to the legal proceedings by suing Gemini, Genesis, and DCG, citing fraudulent practices within the Earn program, which had a substantial New Yorker user base, totaling 29,000 individuals. James further emphasized that Gemini was fully aware of Genesis’ precarious financial state when executing the program.

Notably, Genesis Global Holdco has refrained from responding to inquiries from Cointelegraph as of the publication time. It’s worth mentioning that Grayscale is another entity under the umbrella of DCG ownership.

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Cryptocurrency Market Update: Bitcoin Slips Below $70,000 Amidst High Liquidation

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In a swift turn of events, Bitcoin (BTC), the pioneering cryptocurrency, dropped below the $70,000 threshold early on Wednesday following a wave of investor sell-offs. Just a day prior, Bitcoin had crossed the $71,000 mark, but market sentiment swiftly shifted, dragging other major altcoins—including Ethereum (ETH), Dogecoin (DOGE), Ripple (XRP), Solana (SOL), and Litecoin (LTC)—into the red zone.

According to CoinMarketCap data, the overall Market Fear & Greed Index stood at 75 (Greed) out of 100, indicating a mix of optimism and apprehension among traders. Notably, the Bittensor (TAO) token emerged as the top gainer with a remarkable 24-hour surge of over 7 percent, while dogwifhat (WIF) experienced the largest loss, plummeting nearly 16 percent.

Bitcoin (BTC) Price Update Bitcoin’s price tumbled to $69,089.01, marking a 24-hour dip of 3.05 percent, as reported by CoinMarketCap. On the Indian exchange WazirX, BTC was priced at Rs 60.93 lakh.

Other Major Cryptocurrencies Ethereum (ETH) saw a 24-hour loss of 4.81 percent, trading at $3,508.86, while Dogecoin (DOGE) registered a dip of 5.59 percent, currently priced at $0.1879. Litecoin (LTC) and Ripple (XRP) also experienced losses, with Solana (SOL) marking a 24-hour loss of 3.44 percent.

Top Gainers and Losers Bittensor (TAO) led the pack of gainers with a 7.30 percent surge, while dogwifhat (WIF) suffered the most significant loss, dropping by 15.58 percent.

Market Analysis and Expert Insights Experts weighed in on the market scenario, attributing Bitcoin’s downturn to heightened liquidations and cautious sentiment ahead of the upcoming US CPI data release. While Bitcoin’s immediate support rests at $67,700, resistance is expected at $70,400. Ethereum proponents face challenges amid hopes for an ETF approval, with the SEC providing limited updates on the matter.

Final Thoughts The cryptocurrency market remains highly dynamic, with prices fluctuating rapidly and investor sentiment playing a pivotal role. As the market navigates through volatility, it’s essential for investors to stay informed, exercise caution, and seek expert advice before making any investment decisions.

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Cryptocurrency: A Scapegoat for Foreign Policy Failures?

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Cryptocurrency has once again found itself at the center of a heated debate, this time regarding its alleged role in facilitating illicit activities and circumventing sanctions imposed by the United States. The Biden administration, in particular, has come under scrutiny for its handling of the issue, with some accusing it of using digital assets as a convenient scapegoat for broader foreign policy shortcomings.

In a recent hearing before the Senate Banking Committee, Deputy Treasury Secretary Wally Adeyemo raised concerns about the misuse of cryptocurrencies by foreign adversaries such as Iran, Russia, North Korea, and militant groups like Hamas. Adeyemo’s remarks underscored a growing unease within the U.S. government regarding the potential national security implications of unregulated digital currencies.

However, voices from within the cryptocurrency industry and Congress have pushed back against the administration’s narrative. Faryar Shirzad, Chief Policy Officer at Coinbase, one of the leading cryptocurrency exchanges, pointed out that the prevalence of illicit activity in the crypto space is relatively low compared to traditional finance. Instead of demonizing cryptocurrencies, Shirzad argued, the focus should be on targeting bad actors operating offshore.

Senator Tim Scott, the ranking Republican on the Senate Banking Committee, echoed these sentiments, accusing the Biden administration of using digital assets as a distraction from its failure to effectively combat financial flows to sanctioned entities. Scott’s criticism reflects broader skepticism among some lawmakers about the government’s approach to regulating cryptocurrencies.

One area of potential agreement between the Biden administration and the cryptocurrency industry is the need for clearer regulations governing stablecoins, a type of digital asset pegged to a fiat currency like the U.S. dollar. Both sides recognize the importance of addressing the potential risks associated with stablecoin issuance and usage, particularly in the context of national security and financial stability.

The debate over stablecoins has intensified following reports of their alleged role in facilitating illicit transactions, including those linked to Russia’s war effort in Ukraine. The Treasury Department has called for increased oversight of stablecoin issuers and transactions, while also advocating for legislation that would subject them to stricter regulatory standards.

Despite the contentious nature of the discussion, there are signs of bipartisan cooperation on certain aspects of cryptocurrency regulation. A bipartisan bill addressing stablecoin regulation passed the House Financial Services Committee last year, signaling a potential path forward for legislative action in this area.

As the debate over cryptocurrency regulation continues to unfold, it is clear that finding the right balance between innovation and security will be paramount. While concerns about illicit activity and national security must be addressed, policymakers must also recognize the potential benefits of cryptocurrencies in fostering financial inclusion and technological advancement.

Ultimately, the resolution of these issues will require thoughtful collaboration between government officials, industry stakeholders, and lawmakers to develop a regulatory framework that promotes innovation while safeguarding against misuse. Only through constructive dialogue and cooperation can we ensure that cryptocurrencies fulfill their potential as a force for positive change in the global economy.

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Bitcoin Resurgence: Why Wall Street Is Embracing the Crypto Revolution

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Andrew Pratt of Wiser Wealth Management in Marietta, Ga., finds little resistance as he proposes Bitcoin investments to his firm’s committee. With Bitcoin surging 140% in the past year and backed by giants like BlackRock, skepticism has waned. Pratt sees the potential to allocate a modest 1% of client portfolios to Bitcoin, acknowledging the limited downside risk compared to potential gains.

The debate over Bitcoin’s intrinsic value seems to have lost its relevance amidst its soaring market performance. Once dismissed, Bitcoin now boasts a market value of $1.3 trillion, driving the total crypto market to $2.5 trillion. Wall Street, once wary, now views cryptocurrency as an opportunity for profit rather than a speculative venture.

Despite lingering doubts about Bitcoin’s utility beyond speculation, Wall Street executives are increasingly supportive. BlackRock’s CEO, Larry Fink, notably reversed his stance, endorsing Bitcoin’s long-term prospects and championing the iShares Bitcoin Trust, now one of the largest Bitcoin ETFs with nearly $18 billion in assets.

While skepticism persists about Bitcoin’s status as a real asset or currency, its growing acceptance on Wall Street underscores the evolving landscape of finance. As institutions embrace cryptocurrencies, Bitcoin’s journey from pariah to portfolio asset highlights the transformative power of digital assets in reshaping traditional investment strategies.

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