SEC Sues Gemini and Genesis, Hodlnaut's Creditors Rejected Restructuring Plan

Jan 13, 2023
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Data and News for Digital Assets

Crypto Daily Report

January 13, 2023
THIS MESSAGE IS SENT SOLELY TO MEMBERS OF FS INSIGHT
Tickers on this report: APT, BTC, DXY, ETH, LDO, NDAQ, OP, SPX
Market Update
SEC Sues Gemini and Genesis, Hodlnaut's Creditors Rejected Restructuring Plan

Walter Teng

Vice President of Digital Asset Strategy

  • Traditional markets opened higher than the pre-markets before pulling back slightly at the time of writing. SPX and NDAQ are trading at ~0.3% lower than yesterday's close, while DXY is consolidating at the 102 area of support. Digital asset markets have decoupled on the lower time frames, with BTC and ETH trading at $19.1k (+5.6%) and $1.41k (+1.9%) levels, respectively. Despite the excitement around the upcoming Shanghai upgrade and liquid staking derivatives (LSDs), ETHBTC has fallen for a second straight day to 0.074, signaling a short-term pullback. Aptos (APT), Optimism (OP), and Lido DAO (LDO) have been the top gainers in the past week, appreciating by 90%, 53%, and 47%, respectively. Pancakeswap has amassed $30m in TVL on Aptos, Optimism has seen increased activity across addresses and transactions, while Lido continues repricing amidst excitement around LSDs. 

  • The SEC has charged crypto firms Genesis and Gemini for allegedly selling unregistered securities in connection with a high-yield product offered to depositors. In February 2021, Gemini, a crypto exchange, and Genesis, a crypto lender, partnered on a Gemini product called Earn, which touted yields of up to 8% for customers. Genesis loaned $900m in crypto from 340k Gemini users to now-defunct 3AC and others before sending a portion of profits back to Gemini, who deducted up to 4% in agent fees and returned the net profit to its users. Genesis should have registered that product as a securities offering. The agency is seeking permanent injunctive relief, disgorgement, and civil penalties against both Genesis and Gemini. Critics [1] [2] have pointed out the potentially counterproductive behavior of the SEC, fining entities after bankruptcy instead of protecting users from frauds like FTX. 
  • Singapore-based crypto lender Hodlnaut is facing possible liquidation after creditors rejected a proposed restructuring plan and instead sought liquidation of the platform's assets. Algorand Foundation, one of Hodlnaut's key creditors, called for immediate liquidation and distribution of remaining assets among creditors to maximize the remaining value. Hodlnaut's difficulties became apparent in August 2022 when the company halted withdrawals, citing market volatility and insufficient funds. It was subsequently discovered that the lender had understated its involvement in the Terra ecosystem, resulting in a loss of almost $190 million. The company's leaders also removed records related to their investments to conceal their involvement. 
Daily Technical Strategy
SEC Sues Gemini and Genesis, Hodlnaut's Creditors Rejected Restructuring Plan

Mark L. Newton, CMT

Head of Technical Strategy

Given Bitcoin's surge above initial resistance, many are wondering whether this progress suggests a larger rally is getting underway. Technically speaking, this breakout back above the downtrend from last August coupled with the movement to recoup the former lows that were broken from June/September lows is certainly encouraging in this regard. However, following an 11 out of 13-day rally to kick off 2023, momentum (as per RSI) has reached the highest daily overbought territory since early 2021. Thus, while trends are more certainly bullish in the very near-term, the risk/reward for new longs is not as ideal above $19k as it was a week ago. Bottom line, strong resistance lies at $20.3k, or the 50% retracement area of BTC's August-November 2022 decline. It's likely that this area provides some initial resistance to this rally. Furthermore, consolidation into late January should provide better opportunities for buying dips than at current levels. Support should materialize near $17.9k and then $17.3k which could be areas to consider more attractive to consider BTC than at current levels. However, trends and momentum should be largely positive into March, and an eventual retest of last August highs just over $25k should be likely after alleviating recent overbought conditions.

Daily Important Metrics

Crypto Size

Bullish signal is tied to the crypto market growing

Market Cap $908B +$27B (+3.10%)

BTC Dominance   40.29% (+1.79%)

Stable Coins

Increase in circulating stablecoins is a Bullish signal

In Circulation $66B (-0.00%)

In Exchanges $18B (-0.39%)

BTC Metrics

A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage

# BTC in Exchanges 2.3M (0.05%)

Funding Rates

Positive funding rates indicate traders are Bullish

Aggregate 0.0008% (0.0011)

Binance 0.0100% (0.0000)

Bitfinex 0.0295% (0.0133)

Bitmex 0.0100% (0.0000)

ByBit -0.0250% (-0.0061)

Deribit 0.0015% (-0.0089)

Huobi 0.0072% (-0.0006)

Kraken 0.0006% (0.0090)

Mean 0.0008% (0.0011)

OKex 0.0066% (0.0063)

SENTIMENT

SEC Sues Gemini and Genesis, Hodlnaut's Creditors Rejected Restructuring Plan

BMI: 59 (0.00%)

Futures All Exchanges

A positive spread between Futures Prices and Spot Prices is Bullish

CME BTC Price $19,045 (4.36%)

Spot Basis   $41.22 (0.22%)

Volume 2.1M (184%)

Open Interest  379,005 (-1.37%)

Options All Exchanges

Higher open interest change in a bull market is bullish for the sector

Volume 49,928 (166%)

Open Interest 217,171 (6.85%)

Volume Put/Call Ratio 0.6230 (68%)

Open Interest Put/Call Ratio 0.4887 (1.81%)

All metrics as of January 13, 2023 11:54 AM
Crypto Prices
SymbolMarket CapLast PriceDaily ChangeYear to DateRelative to BTC YTD
BTC$366B$19,0045.60%15%
ETH$173B$1,4122.44%18%3.12%
ADA$11B$0.32802.03%33%18%
DOGE$11B$0.07973.43%14%-1.11%
MATIC$7.9B$0.90393.79%19%3.89%
SOL$6.2B$16.725.94%69%54%
DOT$6.0B$5.223.61%20%5.39%
LINK$3.2B$6.312.19%14%-1.06%
NEAR$1.5B$1.811.58%42%27%

All prices as of January 13, 2023 9:57 AM

Exchange Traded Products (ETPs)
SymbolPremium to NavLast PriceDaily ChangeYear to DateRelative to BTC YTD
GBTC-39%$9.80-0.81%18%3.50%
BITW-54%$7.997.97%49%34%
ETHE-47%$7.3614%55%40%
BTCC-0.11%$3.528.31%16%1.46%

All prices as of January 13, 2023 2:57 PM

Stocks
SymbolMarket CapLast PriceDaily ChangeYear to dateRelative to BTC YTD
PYPL$216B$79.781.58%12%-2.70%
SQ$76B$71.800.18%14%-0.46%
COIN$65B$47.558.59%34%20%
SBNY$18B$117-0.58%1.58%-13%
HOOD$15B$9.043.20%11%-3.66%
MSTR$6.1B$2107.91%48%34%
SI$4.2B$13.7513%-21%-36%
MARA$3.5B$7.0331%106%91%
RIOT$2.7B$6.1515%81%67%
MOGO$223M$0.820021%55%40%

All prices as of January 12, 2023 4:00 PM

News
MARKET DATA
Hodlnaut Creditors Seek Liquidation, Reject Restructuring Plan: Bloomberg
CoinDesk
The restructuring plan would have allowed Hodlnaut directors who were at the helm during its collapse to continue managing the company.
DCG Mulls Venture Portfolio Sale to Shore up $3B Genesis Shortfall: Report
Decrypt.co
Digital Currency Group is reportedly looking to sell off some of its venture portfolio to make up Genesis’ $3 billion debt.
Nexo sees withdrawals of $158 million in day after Bulgaria raid
The Block
Crypto lender Nexo has seen withdrawals worth more than $158 million in the last 24 hours after Bulgarian authorities raided its offices. The post Nexo sees withdrawals of $158 million in day after Bulgaria raid appeared f...
REGULATION
SEC charges Gemini and Genesis with unregistered securities offering
The Block
The program has been the subject of a public fight between the two erstwhile corporate partners.  The post SEC charges Gemini and Genesis with unregistered securities offering appeared first on The Block.
FTX gets judge’s approval to start selling LedgerX and other units
The Block
FTX was cleared to begin sales of LedgerX, Embed and its European and Japanese units by the judge overseeing the bankruptcy process. More than 100 parties have already expressed interest. The post FTX gets judge’s approval...
FUNDRAISING AND M&A
Crypto market maker CyberX raises $15 million led by Foresight Ventures
The Block
Crypto investment firm Foresight Ventures led a $15 million Series A round into digital asset market maker CyberX. The post Crypto market maker CyberX raises $15 million led by Foresight Ventures appeared first on The Bloc...
HIRING
Head of $100 million venture studio Spartan Labs departs
The Block
The head of Singapore-based Spartan Group’s $100 million venture studio has left after less than a year in the role. The post Head of $100 million venture studio Spartan Labs departs appeared first on The Block.
Crypto.com Joins Coinbase, Slashes Workforce by 20%
Decrypt.co
The Crypto.com CEO cited ongoing economic headwinds and the unforeseen FTX collapse for the firm’s latest downsizing.
PRODUCT UPDATES AND PARTNERSHIPS
Ethereum developers release devnet 2 ahead of mainnet shadow fork for Shanghai
The Block
Ethereum has released a new developer network for client teams to test before the Shanghai upgrade. The post Ethereum developers release devnet 2 ahead of mainnet shadow fork for Shanghai appeared first on The Block.
INVESTMENT PRODUCTS
Samsung investment arm considering spot-Bitcoin ETF in Hong Kong
Coin Telegraph
With the Hong Kong Stock Exchange being the only regulated exchange in Asia offering Bitcoin futures ETFs, some believe spot crypto ETF products will soon be allowed.
HACKS, EXPLOITS, AND SCAMS
800 victims of 'massive’ Bitconnect fraud to receive $17M restitution
Coin Telegraph
The millions will be distributed among the select number of victims, but thousands more were impacted by the $2.4 billion fraudulent scheme.
Sam Bankman-Fried Denies Stealing FTX Funds in New Online Post
CoinDesk
The former FTX CEO ascribed the exchange's collapse to a targeted attack by Binance, Alameda’s poor hedging and the crypto market meltdown.

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