Binance founder and former CEO Changpeng “CZ” Zhao was sentenced to four months in prison; Bitcoin (BTC) witnessed a rollercoaster ride, tumbling to a two-month low below $56,000 before recovering above $62,000; and spot Bitcoin ETFs hit record outflows.
Sustained regulatory efforts
- Last week witnessed a series of regulatory efforts and enforcement actions, with circulating reports suggesting that the U.S. Securities and Exchange Commission (SEC) has considered Ethereum to be (ETH) a security for over a year.
- Amid the SEC’s investigations into certain Ethereum sales, reports confirmed that U.S. prosecutors have also launched a probe into transactions on Block’s Square and Cash App divisions that could have violated compliance provisions.
- In addition, the FBI also leveled charges against Idin Dalpour, a New York resident, claiming that the individual ran a Ponzi scheme that defrauded investors of an excess of $43 million.
- Meanwhile, in Nigeria, a court has postponed the trial of the two Binance executives the authorities detained earlier this year on charges of money laundering and tax evasion. The trial was expected to commence on May 2, but the court chose to push it back to May 17.
Binance founder’s jail sentence, FTX exec forfeits mansion
- Reports surrounding Binance and FTX emerged this week. Binance founder and former CEO Changpeng Zhao received a 4-month jail sentence for his role in Binance’s AML law violations. The court rejected the DoJ’s push for a 36-month sentence.
- In the FTX case, Ryan Salame, a former FTX executive, agreed to a demand from the authorities to contribute $5.6 million to creditor compensation amid his plea deal. Salame would forfeit his $5.9 million mansion in the Bahamas to settle this demand.
Spot Bitcoin ETFs hit record outflows
- This week was another bearish one for the market, with spot Bitcoin ETFs also taking the fall. Cumulatively, the 11 spot Bitcoin ETF products witnessed $51.53 million in outflows on April 29, with BlackRock seeing no inflows that day for the fourth consecutive day.
- Two days later, on May 1, the ETF products saw outflows totaling $563 million, marking the highest figure since they started trading. In addition, BlackRock’s iShares Bitcoin Trust (IBIT) witnessed $37 million in outflows, its first outflow since launch.
- The Grayscale Bitcoin Trust (GBTC) saw a net inflow of new capital from investors, per Farside Investors (see below). This was the first daily increase since the Bitcoin ETF product debuted in January. A net $63 million was added on Friday, May 3.
- Asset managers in Hong Kong have set a target to surpass the $125 million trading volume recorded by the U.S.-based spot Bitcoin ETFs on their first day of trading. However, the Hong Kong-based ETFs saw just $8.6 million volume on April 30, which dropped to $5.5 million by May 3. Their ETFs are set to launch on April 30.
Bitcoin’s rollercoaster ride
- One of the major factors behind this underperformance was the inopportune time of their launch. Notably, the bearish pressure spilled into this week, causing Bitcoin to slump below $57,000 on May 1 for the first time since late February.
- Following the collapse below $57,000, the bulls immediately mounted a recovery push, resulting in BTC closing above $58,000 that day. Despite the recovery that followed, the drop below $57,000 led to a corresponding dip in the Fear and Greed Index, which entered Fear on May 2 for the first time since October 2023.
- As the bulls sustained the recovery campaign, BitMEX founder Arthur Hayes called the bottom, noting that a gradual price uptick to recoup the previous losses could be imminent. CryptoQuant CEO also confirmed that there were no signs of miner capitulation despite the downtrend and the Bitcoin halving.
- As Bitcoin closed April with a discouraging 14.94% loss, its most bearish month since November 2022, Michael Saylor’s MicroStrategy took advantage of the drop to buy the dip, adding 122 Bitcoin worth $7.8 million to their stash, as their holdings rose to 214,400 BTC.
- Interestingly, the U.S. labor market report, which triggered a shift in expectations of rate cuts from the Federal Reserve, coincided with Bitcoin’s recovery push on May 3. BTC leveraged the report to bolster its campaign, spiking by 6.46% on May 3 to recover the $62,000 psychological threshold.
- Bitcoin’s rally reverberated throughout the entire crypto market, causing the global crypto market cap to spike 7.7% as of May 4. Amid the uptrend, meme coins Dogwifhat (WIF), Floki (FLOKI), and Dogecoin (DOGE) saw upticks, witnessing two-digit gains in 24 hours.
Hacks and scams see a decrease
- Reports of crypto-related hacks and scams also made the headlines this week. Notably, a user lost $69.3 million to a scammer through an address poisoning scheme that saw the victim send 1,155 wrapped Bitcoin (WBTC) tokens to a mistaken address.
- Nonetheless, despite the prevalence of scam and hack schemes throughout April and this week, Peck Shield, a blockchain security firm, confirmed that losses from crypto hacks and scams amounted to only $60 million in April, a significant 67% drop from the figure in March.
- CertiK also revealed that funds lost to cybersecurity threats in the cryptocurrency industry recently dropped to their lowest levels since 2021.
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