New York Attorney General targets Gemini, Genesis, and DCG over alleged investor fraud. Meanwhile, Morgan Stanley sees an end to the crypto bear market.
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Gemini, Genesis, DCG sued by New York Attorney General

Gemini, Genesis, DCG sued by New York Attorney General

New York Attorney General targets Gemini, Genesis, and DCG over alleged investor fraud. Meanwhile, Morgan Stanley sees an end to the crypto bear market.

Date:
Oct 20, 2023
| Issue
#
130

Welcome to another edition of Datawallet Daily. Here are the key stories that are shaping the crypto landscape over the last 24 hours:

Before diving all of the key regulatory stories of the day, let's take a quick look at market price action.

Gemini, Genesis, DCG sued by New York Attorney General

New York Attorney General Letitia James has sued Gemini Trust, Genesis Global Capital, and Digital Currency Group (DCG) over allegations of defrauding investors out of over $1 billion. The suit accuses these firms of serious financial misconduct, including providing undersecured loans and concealing information, thereby misleading over 230,000 investors, 29,000 of whom are New Yorkers. Amidst these developments, AG James seeks to ban the trio from New York's financial sector, casting a shadow over their future operations and potentially setting a precedent for regulatory actions in the crypto industry.

According to the lawsuit, Gemini provided loans to Genesis, a company owned by DCG, as part of its Earn program. These funds were subsequently lent to other parties, including trading firms like Three Arrows Capital and Alameda Research, both of which eventually filed for bankruptcy. As a result, Genesis found itself facing a staggering $1.1 billion deficit. It is worth noting that DCG also holds ownership of CoinDesk.

Morgan Stanley calls end of crypto bear market

Morgan Stanley Wealth Management suggested on its website that the era of the crypto winter might have come to an end. They examined whether the recent downturn in digital assets has run its course and concluded that there are indications of a potential crypto spring on the horizon. 

According to the investment manager, historical data shows that the lowest point of Bitcoin during previous crypto winters usually happens around 12 to 14 months after reaching its peak. In November 2021, Bitcoin soared to an all-time high of approximately $68,000, and it hit its bottom a year later.

Grayscale is looking to advance its bid to launch a spot BTC ETF

Grayscale Investments is seeking to advance its efforts in launching an application for a spot Bitcoin ETF following the Securities and Exchange Commission's decision not to challenge the company's court victory in August. The asset manager, which focuses on cryptocurrencies, has taken another step towards converting its Grayscale Bitcoin Trust (GBTC) into an ETF by filing a new document on Thursday. According to a source familiar with the matter, this action serves as a procedural milestone for the company, allowing it to initiate discussions with another division of the SEC as the lawsuit comes to a close.

BTC to hit $56K if BlackRock ETF is approved

According to Matrixport, a digital assets financial services platform, the approval of BlackRock's spot Bitcoin ETF by the Securities and Exchange Commission could lead to a significant increase in the price of Bitcoin. 

Matrixport's analysis of 15,000 U.S. registered investment advisors suggests that if this ETF is approved, it could attract inflows worth $12 billion to $24 billion. Based on these projections, Matrixport estimates that if Tether's market cap increases by $24 billion, which can be seen as a proxy for potential ETF inflows, the price of Bitcoin could rise to $42,000. Furthermore, if there is a larger influx of $50 billion, Bitcoin has the potential to rally to $56,000.

Other breaking news

Wrapping up

Wrapping up, today's issue revolved around Gemini Trust, Genesis Global Capital, and Digital Currency Group (DCG) being sued by the Attorney General of the state of New York. Morgan Stanely pronounced the crypto bear market over, while Matrixport claims that BTC will see new highs if BlackRock’s BTC ETF is approved. Finally, Grayscale is filing a new BTC ETF with hopes that it will get approved. Stay tuned as we continue to provide you with crucial updates and in-depth analyses of these evolving stories.