As Barry Silbert departs, Grayscale re-files Bitcoin ETF application; Kyber Network Implements Workforce Reduction Following $49M Exploit; Bitcoin Investments Gain Traction Among NFL Athletes
Grayscale has submitted an amended S-3 filing with the U.S. Securities and Exchange Commission (SEC) on the same day that Barry Silbert, CEO of its parent company Digital Currency Group (DCG), announced his resignation from Grayscale’s board of directors.
There is speculation in the crypto market that Silbert’s departure could significantly improve the chances of Grayscale successfully converting its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, which is currently awaiting a decision from the SEC.
Ramah Luwalia, CEO of Lumida Wealth, suggests that Silbert likely resigned voluntarily to enhance the ETF approval odds, especially given the SEC’s ongoing investigation into Silbert and DCG. Adam Cochran, a partner at Cinneamhain Ventures, speculates that Silbert’s departure was part of an agreement between Grayscale and the SEC ahead of the conversion request approval.
The amended S-3 filing revealed a notable change: Grayscale has adopted a cash creation model. Eric Balchunas, senior Bloomberg ETF analyst, sees this move as Grayscale “finally surrendering” to a cash creation model, a point of contention between asset managers seeking a spot Bitcoin ETF and the SEC.
In traditional ETFs, an in-kind model is common, allowing market participants to handle the fund’s asset directly. However, a cash-creation model implies that new shares in a spot Bitcoin ETF could only be created or redeemed through cash transactions. The SEC’s move to prevent broker-dealers from directly dealing with Bitcoin is seen as an effort to better track Bitcoin movement from exchanges, addressing potential risks related to anti-money laundering or Know Your Customer compliance.
Scott Johnsson, general partner at VB Capital, notes that despite the SEC’s stance on investor protection, the cash creation model could pose greater risks for investors seeking Bitcoin exposure through a spot ETF. He emphasizes the novelty of the cash creation approach compared to the more common in-kind models used by other spot commodity ETFs.
Kyber Network Implements Workforce Reduction Following $49M Exploit
Kyber Network, the decentralized finance (DeFi) protocol behind KyberSwap, has unfortunately reduced its workforce by 50% in response to the aftermath of a $48.8 million exploit in November. Despite this setback, Kyber Network emphasizes its commitment to sustaining essential operations, including KyberSwap’s Aggregator and Limit Order functions.
In light of the downsizing, Kyber Network plans to establish a “voluntary database” to support departing team members in finding new opportunities within the Web3 space. The company is temporarily pausing its liquidity protocol initiatives and KyberAI project as part of a strategic effort to manage capital expenditures more effectively.
Kyber Network’s CEO, Tran, reassured stakeholders that the core business remains robust, emphasizing the continued functionality of KyberSwap’s critical features. The company is actively working to reimburse users affected by the November exploit.
To facilitate this reimbursement process, Kyber Network initiated its Treasury Grants Program on Dec. 20. The distribution of funds, denominated in United States dollar stablecoins, is scheduled for Feb. 1, 2024. Users impacted by the exploit are required to register for reimbursement between Jan. 11 and Jan. 23, 2024.
Although the reference value for impacted users is nearly $49 million, Kyber Network notes that affected users will receive 60% of this value. Additionally, an extra $6.6 million was siphoned by front-run bots subsequent to the initial exploit.
Kyber Network’s attempt to negotiate a bounty deal with the hacker was unsuccessful. The hacker demanded full control over the company, including its assets and governance mechanism, KyberDAO. Despite the hacker’s proposal to purchase the company at a fair valuation, Kyber Network reportedly rejected the offer.
According to DeFi expert Doug Colkitt, the attacker leveraged an “infinite money glitch” to execute the Nov. 22 hack. Colkitt described the exploit as a sophisticated smart contract manipulation across various networks implementing KyberSwap pools, affecting Avalanche, Polygon, Ethereum, and layer-2 networks Arbitrum, Optimism, and Base.
KyberSwap, operating on Kyber Network, serves as a blockchain-based liquidity hub that facilitates the exchange of tokens across different blockchains, eliminating the need for intermediaries in the process.
Bitcoin Investments Gain Traction Among NFL Athletes
American athletes, particularly those in the National Football League (NFL), are increasingly turning to Bitcoin as an investment option to secure their earnings, according to Dante Cook, the head of business at Swan Bitcoin. In a recent episode of “Decentralize with Cointelegraph,” Cook shared insights into why young American athletes, including NFL players, find Bitcoin’s “hard money” properties attractive for safeguarding their financial futures.
Cook, a former Division One linebacker, highlighted that Bitcoin is gaining popularity among young college athletes in the United States. Some NFL players have even opted to receive part of their compensation in Bitcoin in recent years. Athletes are seeking better investment options as traditional financial institutions and advisers may not deliver satisfactory returns, especially given the physical toll and short career span of professional athletes.
The average NFL career lasts approximately 3.7 years, making financial security a crucial consideration for players. Cook emphasized the need for athletes to evaluate whether their contracts, coupled with the physical risks they undertake, are sufficient to sustain them after retirement. To address these concerns, Cook is actively engaged in educating athletes at various levels about Bitcoin’s value proposition.
He highlighted an example from the University of Michigan, where the football team incorporated a financial literacy class on Bitcoin for its players. Cook played a role in educating more than 50 athletes at the university, and they received Bitcoin for participating in the program.
The discussion also touched upon the changing perception of Bitcoin among older generations. Cook noted that more seasoned investors, often referred to as “boomers,” are realizing the unique value proposition of Bitcoin. As traditional investment options face challenges, Bitcoin stands out with its fixed supply characteristics akin to hard money and the high potential for upside gains.
Cook, as the head of business at Swan Bitcoin, provides advice to institutional and private investors on Bitcoin acquisition, storage, and management.
For further details, you can listen to the full interview with Dante Cook on Spotify, Apple Podcasts, Google Podcasts, or your preferred podcast platform.
