Exchanges face new legal issues, Goldman Sachs’ clients eye crypto, and more


Crypto exchanges are facing a new wave of regulatory hurdles worldwide, with the United States Department of Justice (DOJ) indicting KuCoin and its founders on March 26 for allegedly operating an unlicensed money-transmitting business and violating the Bank Secrecy Act (BSA). 

The charges coincide with a civil enforcement case by the U.S. Commodity Futures Trading Commission (CFTC), alleging multiple violations by the exchange. The DOJ claims KuCoin handled over $5 billion in suspicious and criminal funds.

Staying in the United States, another setback hit Coinbase on March 27. District Judge Katherine Failla denied the exchange’s motion to dismiss a lawsuit from the U.S. Securities and Exchange Commission (SEC), arguing that similar transactions have previously been considered securities transactions. Coinbase sought an order to drop the case, challenging the SEC’s authority over crypto exchanges.

In the Philippines, the financial regulator decided to block local users’ access to Binance on March 25, citing concerns over the firm’s unlicensed operations in the country. According to the agency, the exchange offered leveraged trading services and crypto savings accounts to local users without licenses.

Meanwhile, in Russia, Binance’s successor, CommEx, has officially announced that it is shutting down operations and has halted deposits. The company acquired Binance’s Russian business for an undisclosed amount in September 2023.

Along with the exchanges’ challenges, this week’s Crypto Biz explores BlackRock’s Bitcoin exchange-traded fund (ETF) inflows, Goldman Sachs’ clients returning to crypto, SWIFT’s central bank digital currency (CBDC) trials, and Mastercard’s forecasts for remittances in Latin America.

BlackRock’s ETF could flip GBTC in Bitcoin holdings within three weeks

BlackRock’s spot Bitcoin ETF is on track to surpass the Grayscale Bitcoin Trust (GBTC) holdings in about three weeks, given the current rate of inflows and outflows. As of March 22, BlackRock’s iShares Bitcoin Trust ETF held 238,500 Bitcoin (BTC) on its books, worth nearly $15.5 billion at current prices, with daily inflows averaging 4,120 BTC. In contrast, Grayscale’s Bitcoin Trust has 350,252 BTC worth $23 billion but is experiencing average daily outflows of $277 million or 4,140 BTC. In another ETF headline, asset manager Hashdex has officially joined the spot Bitcoin ETF market after completing the conversion of its futures ETF to hold spot Bitcoin. Hashdex renamed and converted its Hashdex Bitcoin Futures ETF to the Hashdex Bitcoin ETF with the ticker “DEFI.”

Galaxy Digital reports $296 million net income in 2023 after $1 billion loss in 2022

Digital asset management firm Galaxy Digital has reported a net income of $296 million for 2023, marking a reversal after ending 2022 with a $1 billion net loss. The performance shift is due to the rising prices of major cryptocurrencies, such as Bitcoin. The firm’s assets under management grew from $1.7 billion to $5.1 billion in 2023 and nearly doubled in the first two months of 2024, reaching $10.1 billion by the end of February. The firm also reported $18.7 million in mining revenue for the fourth quarter of 2023, a 31% increase over the previous quarter. “Our average marginal cost to mine in the fourth quarter increased relative to prior quarters due to fewer opportunities to economically curtail our mining operations and a higher network hash rate,” the company said in its statement.

Goldman Sachs hedge fund clients are piling back into crypto

Goldman Sachs’ clients have started to jump back into crypto, with renewed appetite stemming from the approval of spot Bitcoin ETFs. Max Minton, head of digital assets for Goldman Asia Pacific, told Bloomberg that many of his firm’s largest clients had recently become active or were “exploring getting active” in the crypto sector. Goldman’s options and futures offerings are the primary source of fresh demand, with hedge funds being the most involved among its clients, according to Minton. Goldman’s clients use their derivatives primarily to gain exposure to crypto volatility and to make long-term predictions about prices, said the executive, adding that Bitcoin-related products stood as the most popular investment vehicles among active clients.

SWIFT declares second sandbox connector tests a success for CBDC and more

The SWIFT messaging network has released the results of the second phase of sandbox testing for its CBDC interlinking solution, which it calls a connector. The project looked at four use cases, not all of which involved CBDC, according to the report it released on the test results. It experimented with digital trading with atomic (instantaneous) settlement using smart contracts. It connected tokenization platforms to facilitate atomic delivery versus payment and worked with financial infrastructure firm CLS Group to show the connector’s capability of connecting existing foreign exchange infrastructures using CBDC. SWIFT now plans to further develop the beta version of its connector.

Before you go: Mastercard has released a white paper on remittances in Latin America, noting that remittance rates are growing faster than the global average in the region. Digital remittances are expected to be worth $20 billion by 2026.

Crypto Biz is your weekly pulse on the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

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