Summary of this article
DCG sues Genesis over billion-dollar note linked to 3AC
SEC’s Paul Atkins suggests private equity access for retail investors
Bitcoin, Ether ETFs record $40B trading volume amid price surge
Digital Currency Group (DCG) has sued its subsidiaries Genesis Global Capital and Genesis Asia Pacific over a USD 1.1 billion promissory note. The controversy started in 2022 when hedge fund Three Arrows Capital collapsed and defaulted on heavy borrowings from Genesis.
In line with the lawsuit, DCG alleges that Genesis actually gained substantial amounts from collateral related to Three Arrows Capital, such as assets like shares of Grayscale Bitcoin Trust. The complaints continue to show these gains, more than compensating for the anticipated shortfall. DCG thus alleges that Genesis should repay money received under the note, given that the initial purpose of support became invalid once the collateral increased in value.
The suit also asks for the repayment of over $105 million, together with interest. DCG says that although these are the monetary advantages, Genesis has refused to pay back the money. This lawsuit is the newest turn in the troubled relationship between the firms, both of which have experienced difficulties since the collapse of the wider crypto market in 2022.
Genesis has also previously filed individual cases against DCG on charges of fraud and mismanagement. The new lawsuit joins the existing tensions within the group. According to Cointelegraph, the lawsuit sheds light on the ripple effects of the crypto crisis that continue to cause tensions among large players in the industry.
SEC's Paul Atkins Proposes Opening Private Equity To Retail Investors
Paul Atkins, the chairman of the US Securities and Exchange Commission (SEC), has speculated that private equity investments can be made available to retail investors. Presently, the opportunities are mainly off-limits to accredited investors, such as pension funds, endowments, and high-net-worth individuals. Atkins said that the SEC and the Department of Labor can collaborate in developing new avenues for more access.
He said, and Cointelegraph quoted, that it would be good to make exposure to private equity available to retail investors but with appropriate safeguards in place to avoid taking unnecessary risks. Private equity generally requires long-term holding and lower liquidity than public markets and hence might not be a good proposition for people without financial acumen. Atkins pointed out that the regulation for accredited investors was updated as recently as 2020, when financial education was added as a factor in addition to wealth. Despite this, most retail investors are still barred from these markets.
For Atkins, broadening access would enable people to be a part of high-growth prospects, such as segments like initial-stage crypto ventures and private token sales. Such investments are typically reserved for institutions, providing an unlevel playing field for smaller investors. The initiative is also tied to greater regulatory ambitions, as the SEC aims to make the US a leader in digital assets and associated markets.
Cointelegraph reported that, although the concept has seen interest, investor protection, potential mis-selling, and whether average investors are adequately ready for exposure to the risks of private equity remain concerns.
Bitcoin And Ether ETFs Log Record Weekly Trading Volumes
Spot Bitcoin and Ether exchange traded funds had their largest trading activity week. Total volumes exceeded approximately USD 40 billion, with Ether funds bringing approximately USD 17 billion and pushing overall participation in the market. According to Cointelegraph, an analyst called it the largest week on record for such products.
The milestone week coincided with aggressive moves in the underlying assets. Bitcoin reached a high close to USD 124,000 before declining to about USD 117,659. Ether reached USD 4,784, which represented approximately 1.94 per cent less than its all-time high of USD 4,878. These levels added to the spotlight on the funds and inspired additional investors to employ the ETF wrapper in order to access exposure.
Flows into Ether funds also accelerated. Spot Ether ETFs saw their largest one-day net inflow on Monday of USD 1.01 billion. For the first two weeks of August, these funds have recorded more than USD 3 billion in net inflows, their second-highest monthly result since launch. Rising volumes and consistent flows reflect rising interest from institutions as well as individual investors.
