SEC Crackdown Continues With Robinhood Joining Their Ire

On Monday, Robinhood’s digital assets arm, Robinhood Crypto, announced that it received a Wells Notice from the SEC.

Surprise, surprise… the notice indicates that Robinhood Crypto will be sued for failing to register as a securities exchange and as a clearing agency.

What they’re saying: While Robinhood’s CEO Vlad Tenev took to X to dispute the SECs claims with a vow to fight, crypto CEOs like Coinbase’s Brian Armstrong were quick to welcome Robinhood to the club.

All eyes on today’s earnings call: While we are sure Robinhood was most likely feeling good going into their Q1’24 earnings call scheduled for market close today, the SEC pulled a Dikembe Mutombo and said “no, no, no.”

Kinda getting ridiculous: If it seems that regulators are going after a new crypto-related company each and every week by now… it’s cause they actually are. Let’s just quickly review…

These are all the companies currently being investigated or with lawsuits still in progress.

Best part? Yesterday, Sir Gensler went on CNBC and basically threw the media under the bus. Yup, it’s all our fault that the SEC is so focused on attacking crypto. Our reaction? Hey, some of these are public companies… you approved, y’know.
Genlser blames media for focusing on crypto, but crypto companies keep asking “what are the rules?” It’s like playing a game where no one knows what the objective is, but you’re red carded for looking confused.

FTX Creditors to Receive Over 100%… Of Their Original Investment

FTX creditors are likely to get all their money back… and then some, according to the latest reorganization plan released just yesterday.

Why it matters: This marks a big improvement from previous estimates in October, which predicted only a 90% payout. With projections estimating total cash recoveries between $14.5-16.3 billion, the full repayment of the ~$11 billion owed, plus interest, is now totally possible.

All this goes to say, if you were a retail investor with funds stuck in FTX, there's a good chance you'll be getting your money back, with a bit of extra interest. Equity holders, on the other hand, won't receive anything as of yet.

Yes, but… not everyone is stoked. Recovered assets are still valued at November 2022 prices (~$20k BTC), so this can’t be viewed as a full recovery. While creditors’ assets have been locked up this entire time, the crypto market has recovered significantly (>$60k BTC)

What's next? The proposal is still pending final approval by the U.S. Bankruptcy Court.

Our take: We are seeing a lot of people claiming that the process is unfair and that they aren’t being paid in full. And while we agree that, yes, the wording is odd to say the least, we have to wonder what actually is the best solution here?

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ETF Update in Images

Major Slowdown

Both inflows and outflows for the ETFs have begun to slow, showing a general disinterest from investor’s today. So much so that Blackrock’s IBIT ETF actually saw it’s first day of outflows last week.

Blackrock Can’t Yet Close the Gap

Right when it was looking like Blackrock’s IBIT ETF was set to overtake GBTC for the largest holdings of BTC, Grayscale began to show up.

That’s right, last Friday and this Monday, the overpriced bitcoin ETF, GBTC, saw for the first time ever inflows. Why? Well, we aren’t totally sure. While the party seems to be over, with GBTC experiencing outflows again yesterday, it all goes to show just how volatile the overall market – in both crypto and traditional environments – is right now.

Spot ether ETF Sentiment is Dropping

On May 3, Grayscale officially withdrew their application for an Ethereum Futures Trust with the U.S. Securities and Exchange Commission (SEC).

While the SEC has already delayed their decision three times, with the final decision due on May 30, it is somewhat confusing why Grayscale would prematurely remove the application.

All of this has led to sentiment around the chances that we would see an ether ETF by May 31st to reach an all time low of 7% on Polymarket.

What Else Is There?

As we wrote several issues ago, Bitcoin is beginning to run into a narrative problem with ETF inflows settling down.

We like to think that ETF inflows/outflows have too much weight in daily price action. And that investors are failing to realize the long-term implications of big funds gobbling up the limited supply. But what do we know?

The halving is done… any ETF news is meh now… meanwhile, the SEC crackdown continues.

What other bullish catalysts and narratives can the crypto crowd conjure up now to unleash more momentum?

Something tells us it won’t be memecoins…

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