FTX Debtors Propose Deal amid Spot Bitcoin ETF Concerns; Ex-BitMEX CEO Warns of Potential Risks
Summary:
The debtors of the bankrupt crypto exchange, FTX, have offered a separate agreement in the insolvency proceedings involving the exchange's securities-settlement platform, Embed. The U.S. SEC has given a deadline to crypto issuers for submitting their revised spot Bitcoin ETF updates. Alternatively, they risk exclusion from possible initial approvals in early January. Former CEO of BitMEX, Arthur Hayes, voices fears about the success of spot Bitcoin ETFs. He cautions that if spot Bitcoin ETFs accumulate most or all of the Bitcoins, it could result in the shutdown of the Bitcoin network.
Debtors associated with the bankrupt cryptocurrency exchange, FTX, have presented an independent arrangement pertaining to the collapsed exchange's securities-settlement platform, Embed. Simultaneously, the U.S. Securities and Exchange Commission (SEC) has called on cryptocurrency issuers to present their revised spot Bitcoin ETF updates by December 29. Otherwise, they risk being left out of the possible initial wave of spot Bitcoin ETF approvals scheduled for early January. In another development, the former CEO of BitMEX, Arthur Hayes, has expressed significant worry about spot Bitcoin ETFs.
A substitute arrangement has been recommended by FTX's outstanding creditors with Sam Bankman-Fried related to their $220 million procurement of Embed. This proposition was enumerated in a December 22nd filing to the United States Bankruptcy Court for the District of Delaware. The creditors proposed a settlement with Bankman-Fried focusing solely on the claims brought against him in the Embed case. As reported by Cointelegraph, Embed had been acquired by FTX US in June 2022 to enhance its securities trading platform.
According to the filing, two agreements for future equity (SAFE) had been issued by FTX US to Bankman-Fried, mandating him to pay $160 million for share rights in the crypto hedge fund. The proposed settlement mandates that all of Bankman-Fried's qualified stakes in FTX US should be returned to the creditors. On December 19, it was announced by FTX's debtors that they intended to merge assets with the former crypto exchange's Bahamian division to facilitate customer funds distribution.
The SEC has marked December 29 as the deadline for submission of final amendments to all S-1s by spot Bitcoin (BTC) ETF applicants. Completing and submitting applications by this date would ensure consideration during the first wave. Inability to comply with the deadline means that they will miss out on the first wave of consideration.
A Reuters report indicates that several firms, including BlackRock, Grayscale Investments, ARK Investments, and 21 Shares, seeking to launch their spot Bitcoin ETFs by early 2024, met the SEC officials on December 21.
Arthur Hayes, the former CEO of BitMEX, has in a warning indicated that spot Bitcoin (BTC) ETFs could potentially annihilate Bitcoin if they become too prosperous. In his blog post on December 23, Hayes explained that Bitcoin's value emanates from its fluidity. Spot Bitcoin ETFs are designed to accumulate assets and store them metaphorically, he added.
In an extreme situation, if most or all Bitcoins are held by spot Bitcoin ETFs, there would not be enough transactions to validate on the Bitcoin network, which could shut down the miners. Hayes cautioned that this dire scenario could lead to the cessation of the Bitcoin network and result in Bitcoin's disappearance.
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Published At
12/25/2023 8:08:09 PM
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