Spot BTC ETF Inflows Surge, Biden Vetoes Reversed SEC Ruling, and MicroStrategy Settles Historic Fraud Case

Takeaways

• BTC price approaches $72K: The price of bitcoin surged to nearly $72K on Wednesday after US spot bitcoin ETFs recorded their second highest single day of net inflows.

• Biden vetoed a bipartisan resolution aiming to reverse an SEC rule on crypto custody services: The White House said the resolution would “jeopardize the well-being of consumers."

• Robinhood buys exchange: Robinhood announced Thursday it has agreed to acquire Bitstamp, a European crypto exchange, for around $200 million.

• MicroStrategy and its chairman Michael Saylor have settled tax fraud allegations for $40M: The company’s stock subsequently jumped more than 3% on Wednesday; the company maintains nearly $15B in BTC holdings.

• Changpeng "CZ" Zhao, founder of Binance, started a four-month prison term in Santa Barbara, California: CZ admitted to violating the Bank Secrecy Act (BSA) in November.

• Shares in GameStop surged 21%: Keith Gill, "Roaring Kitty," revealed a $116M stake in the company, driving renewed investor interest and trading activity.

US Spot Bitcoin ETFs Garner $887 Million in Day, BTC approaches $72K

US spot bitcoin ETFs have recorded their second-highest net inflow day, amassing $887M. The Fidelity Wise Origin Bitcoin Fund (FBTC) led the pack with $378.7M, closely followed by BlackRock’s iShares Bitcoin Trust (IBIT) at $275M. Bitcoin prices surged to nearly $72K on Wednesday, increasing more than 5% over the past five days.

ARK 21Shares Bitcoin ETF (ARKB) also saw significant activity, with net inflows exceeding $138M. This wave of investment marks the highest inflows since March 12, when these funds collectively drew in a record $1.04B, propelling Bitcoin to a new peak the following day. Grayscale Bitcoin Trust (GBTC) also had a rare influx, receiving $28.2M, marking only the seventh net positive day of inflows since its conversion to a spot ETF in January.

With spot ETH ETFs also in the headlines this week, some experts believe that the investment vehicles could see close to $5B worth of inflows in just the first 5 months after they begin trading. It has been noted however that these ETFs will not be able to accrue staking yield rewards upon launch.

Biden Vetoes Bill to Reverse SEC Crypto Custody Rule

Last week, President Joe Biden vetoed a bipartisan resolution intended to reverse a Securities and Exchange Commission (SEC) rule, which critics argued discouraged banks from providing crypto custody services.

The contentious Staff Accounting Bulletin (SAB) 121 has been a point of debate for over a year. Biden had previously signaled his intent to veto the bill following its passage in the House with a 228-182 vote. The Senate followed, with 12 Democrats and most Republicans voting to repeal the policy 60-38.

In his veto statement, Biden criticized the resolution for improperly constraining the SEC’s regulatory capabilities. He emphasized the need for the SEC to maintain a robust financial regulatory framework to prevent market instability.

There is another bill related to crypto regulation called FIT 21, which aims to establish a federal regulatory framework between the SEC and CFTC for digital assets that is generally viewed as positive for the crypto industry. Although Biden expressed openness to collaborate with Congress on a balanced regulatory framework for digital assets, he remains opposed to FIT21, but he has not yet threatened to veto it. FIT21 recently passed the House with two-thirds support across the aisle, and moves onto the Senate in its next phase.

Robinhood buys Bitstamp for $200M

Trading app company Robinhood announced Thursday it has agreed to acquire crypto exchange Bitstamp for approximately $200 million. The deal is expected to close in the first half of 2025.

Robinhood, which offers consumers a commission-free trading platform, has recently doubled down on crypto as its crypto trading business. But last month, the company received a Wells notice from the SEC that indicated an upcoming enforcement action from the regulator over some of the tokens issued on Robinhood’s trading platform.

Based in Luxembourg City, Bitstamp has roughly 4 million customers and claims to be the world’s longest running cryptocurrency exchange. The market reacted positively to the acquisition, with Robinhood’s stock jumping roughly 6.5% to $22.97 per share.

MicroStrategy and Michael Saylor Settle Tax Fraud Case for $40M

MicroStrategy and its chairman Michael Saylor have settled with the DC attorney general, agreeing to pay $40M to resolve allegations of tax fraud. The lawsuit, initiated in August 2022, accused Saylor of avoiding over $25M in income taxes by falsely claiming residency in lower-tax areas. This claim was later extended to MicroStrategy, alleging the company's involvement in the tax evasion scheme.

This settlement has positively influenced MicroStrategy's stock, with shares jumping more than 3% on Wednesday. MicroStrategy's shares are popular among Bitcoin investors due to the company's significant investment in Bitcoin, with holdings valued at nearly $15 billion.

Binance Founder “CZ” Begins Four-Month Prison Term

Changpeng "CZ" Zhao, the founder of Binance, has started a four-month prison sentence in California for failing to establish a proper know-your-customer (KYC) program at Binance. Zhao admitted to violating the Bank Secrecy Act (BSA) in November.

Despite prosecutors recommending a three-year sentence, the crypto world was somewhat surprised to learn that CZ would only be receiving four months prison time. In addition to his prison term, Zhao was fined $50 million.

The company also settled related charges of money laundering and sanctions violations earlier this year, agreeing to pay $4.3 billion in fines and appoint an independent compliance monitor. Zhao will serve his sentence at Lompoc II, a low-security facility in Santa Barbara County, California.

GameStop Soars as "Roaring Kitty" Returns to Reddit

GameStop shares soared by 21% on Monday after Keith Gill, known as "Roaring Kitty," returned to Reddit with a post revealing a $116M investment in the company. The stock closed at $28, having surged up to 75% during the trading session, with $4.7 billion in shares changing hands, making it the most actively traded stock on the NYSE for the day.

Gill’s first post in three years on Reddit displayed a holding of 5 million GameStop shares and 120,000 call options, bringing the total value of his position to $260 million.

This significant investment reignited interest in GameStop, reminiscent of the 2021 retail trading frenzy he previously influenced. The screenshot also revealed $65.7 million in call options expiring on June 21 at a strike price of $20. This activity comes after a month of volatility for GameStop, closing at $23.14, up 33% since Gill began posting again in May.

-Team Gemini