The topics covered in this week’s Crypto Biz include Worldcoin’s operator payment scheme upgrades, BlackRock’s spot Bitcoin ETF developments, and BlockFi’s comeback from bankruptcy.
It was only a few days after FTX declared that it had successfully recouped about $7 billion in assets when cryptocurrency lender BlockFi declared its bankruptcy this week. Customers have allegedly been defrauded of $8.7 billion, according to FTX debtors, which include both FTX and affiliates. As one of the exchange’s biggest creditors, BlockFi has lent FTX more than $650 million, so the success of its customers’ repayments is dependent on FTX’s capacity to reclaim its assets.
The new management of FTX is also carefully weighing its options for the future, which include selling the exchange as a whole (together with its large customer base of over nine million) or joining forces with another organisation to bring the exchange back to life. There is also a chance for an independent resurgence. In contrast, BlockFi’s court filings indicate that it is forced to cease operations.
This week’s Crypto Biz examines the rise of BlockFi from bankruptcy, the developments of BlackRock’s spot Bitcoin exchange-traded fund (ETF), and modifications to Worldcoin’s payment system.
For the creditors of some of the bankrupt companies from the 2022 crypto bear market, there is finally hope. About a year following their bankruptcy filing, businesses like FTX and BlockFi have started 5o return their customers’ funds
The BlackRock-sponsored iShares spot Bitcoin ETF is now listed on the Depository Trust & Clearing Corporation (DTCC), indicating that the US Securities and Exchange Commission may approve it. Eric Balchunas, a Bloomberg ETF analyst, stated in an Oct. 23 X (previously Twitter) thread that the DTCC listing was “all part of the process” of launching a cryptocurrency ETF. “There are no other ETFs listed on DTCC as of yet; this is the first spot ETF,” Balchunas stated. Balchunas conjectured that BlackRock might have already gotten the go-ahead from the SEC to list the ETF or was “getting everything ready assuming so.” The SEC has until January 10, 2024, based on the date of BlackRock’s application, to make a final determination regarding approval or denial of the ETF .
According to a recent bog post, cryptocurrency lending platform BlockFi has declared bankruptcy and is prepared to reimburse some of its creditors. According to the post, withdrawals “are currently available to nearly all Wallet customers.” Users of BlockFi Interest Accounts and Loans will also be able to take out some of their assets in early 2024. With its bankruptcy filing, BlockFi is now able to pursue asset recovery from companies it believes owe it money. This includes defunct cryptocurrency exchanges like FTX and Three Arrows Capital. Among other things, the total amount of money disbursed will depend on how well BlockFi performs in the FTX bankruptcy proceedings.
Ledger, a hardware wallet company, is releasing its cloud-based private key recovery solution in spite of harsh criticism from the cryptocurrency community. Users can back up their secret recovery phrase with a paid subscription service offered by blockchain protection platform Coincover. The launch occurs several months after Ledger, in response to criticism from the community, put a halt to the recovery service in May 2023. Following this, Ledger CEO Pascal Gauthier declared that the company would not release the product until its open-source code was made available. GitHub now has the Ledger Recover’s code available.
As early as next month, Worldcoin plans to phase out USD Coin (USDC) and start paying its Orb Operators (those who get paid for scanning people’s eyes) with its native Worldcoin (WLD) token. Most jurisdictions will be impacted by the change. Following the project’s official launch on July 24, Worldcoin said that the decision to pay orb operators only in WLD was a part of a “transitional phase.” According to data from Worldcoin’s official Dune Analytics dashboard, there are currently about 134 million WLD tokens in circulation, up from about 100 million at launch.