Here are some of the major developments from the world of crypto over the past few days
A jury in the US District Court for the Southern District of New York has found Terraform Labs and its founder Do Kwon guilty in the securities class action lawsuit filed by the US Securities and Exchange Commission (SEC). SEC Chief Compliance Officer Gurbir Grewal said in an announcement on April 5, 2024 that Do Kwon was convicted of defrauding investors in the case filed by the SEC.
The SEC case began in absentia on March 25, 2024 against Kwon, who remained in Montenegro, while the courts decided whether to grant him extradition to the US or South Korea.
Terraform Labs collapsed in May 2022 following the collapse of its algorithmic Stablecoin UST and other lawsuits related to its use cases. The failure of the platform likely contributed to the decline of the crypto market, leading to the bankruptcy of companies such as FTX, BlockFi, and Celsius. The SEC filed a lawsuit against Terraform and Kwon in February 2023.
The legal case could have major ramifications for crypto companies operating in the US. In December 2023, Judge Jed Rakoff issued summary judgment in Terraform’s favour on the unreserved offer and the sale of security-based products. Grewal said Terraform’s lack of compliance has “significant consequences” for investors and called for compliance.
Galaxy Trading, Pantera Capital, and Neptune Digital Assets have acquired approximately two-thirds of FTX’s shares in SOL.
Galaxy Trading, a division of Mike Novogratz's Galaxy Digital, reportedly raised $620 million to purchase SOL tokens from FTX holdings. A 1 per cent management fee was also charged for investments made in the fund. Elsewhere, Pantera Capital raised $250 million to purchase SOL tokens from FTX Assets, while Neptune Digital Assets, a Canada-based company, purchased 26,964 SOL tokens for $64 each on March 27, according to Bloomberg.
The sale attracted quite a bit of interest from asset managers and venture capitalists. The bankrupt exchange sold 25-30 million SOL tokens and closed at $64 per token, leaving FTX creditors with a net proceeds of approximately $1.9 billion. The sale of FTX's assets at a high price also sparked criticism from creditors. FTX’s former CEO, Sam Bankman-Fried, was sentenced on March 28, 2024 to 25 years in prison on fraud charges stemming from the stock market’s November 2022 crash. During the sentencing, creditors accused the exchange’s liquidators of copyright infringement debtors' assets.
Incidentally, FTX was one of Solana’s early investors. The 41 million SOL tokens are subject to a four-year vesting schedule, which means that they cannot be traded on the market until the deadline.
Crypto lending company Genesis is said to have sold up to 36 million Grayscale Bitcoin Trust (GBTC) shares to purchase an additional $68,088 worth of Bitcoin in order to pay off debts to creditors. Genesis sold approximately 36 million GBTC shares valued at $58.50 per share on April 2, according to a recent Bloomberg report.
The shares have risen nearly 50 per cent since Genesis first asked the US bankruptcy court for permission to sell 36 million GBTC shares on February 2, 2024. At that time, the shares were valued at $38.50 apiece. The total sale of $2.1 billion enabled the purchase of 32,041 Bitcoins on April 2, 2024 at a price of $65,685. Genesis will use Bitcoins to continue its efforts to pay off its debt.
Incidentally, the buying comes after coin exchange, Coinbase, announced that most of the proceeds from GBTC sales will remain in the crypto ecosystem. Coinbase had assured the public that the sale is not expected to have a major impact on the crypto market. It said that the rules of the bankruptcy process will allow Genesis to convert GBTC shares into Bitcoin assets under the name of creditors or sell the shares outright and distribute the proceeds.