Weekly Update: 14th of August
What happened between the 7th and 14th of August?
- Ripple received a $125 million fine as it violated security laws while selling its XRP token to institutional investors. Read more
- US asset manager Franklin Templeton's on-chain money market fund launches on layer 2 network Arbitrum. Read more
- A New York judge approved a $12.7B settlement between FTX and the Commodity Futures Trading Commission, ending a 19-month legal battle. Read more
- As macroeconomic conditions remain tense, sentiment in the market reached a multi-year low. Read more
Ripple ends legal dispute with the SEC by paying a $125 million fine
On August 7th, Ripple was fined $125 million for 1,279 institutional sales transactions that violated securities laws. In 2023, a judge ruled that the selling of Ripple tokens to retail investors could not be classified as investment contracts, sales to institutions were. The Securities and Exchange Commission initially sought a fine of $2 billion, but the judge deemed this excessively disproportionate. Despite the hefty fine, Ripple's token (XRP) rallied by over 25%, marking the end of a four-year legal battle with the U.S. regulator. Additionally, the judge's ruling that retail sales were not considered investment contracts provided further support to the market.
Franklin Templeton expands its tokenized fund to Arbitrum
In 2021, U.S. asset manager Franklin Templeton became the first financial institution to launch a tokenized investment on a public blockchain, specifically the Stellar network. The Franklin OnChain U.S. Government Money Fund enabled investors to invest in U.S. Treasuries while leveraging the transparency and cost-efficiency of the blockchain, currently holding $412 million in assets. As of August 8th, Franklin Templeton extended this fund to Arbitrum, an Ethereum Layer 2 solution. This move is likely motivated by a desire to attract more capital, as it lost its title of largest tokenized investment fund to BlackRock’s BUIDL Fund, which holds over $500 million in assets. Additionally, this is a significant stamp of approval for Arbitrum, as regulators consider its public ledger to be a legitimate instrument for financial recordkeeping.
The FTX debacle is reaching its conclusion
After a 19-month legal battle, it appears that the FTX debacle is nearing its conclusion as a judge approves a $12.7 billion settlement between the collapsed exchange and the Commodity Futures Trading Commission (CFTC). On July 12th, news broke that FTX and the CFTC had reached a settlement and that the regulator was not seeking civil penalties, with the $12.7 billion intended to reimburse creditors. However, the settlement was still pending final court approval, which was granted on August 7th. Some FTX creditors, however, would like to be compensated in digital assets instead of dollars, so creditors are currently voting on their preferred method of payment. They have until August 16th to vote, and U.S. Bankruptcy Court Judge John Dorsey will make a final decision on October 7th.
Sentiment in the market is reaching a multi-year low
Due to shaky macroeconomic conditions, such as a possible escalation between Israel and Iran and a potential U.S. recession, sentiment in the digital assets market has reached a multi-year low. This is evident in the latest figures from the Crypto Fear & Greed Index, which hit 17 out of 100, indicating extreme fear. This figure marks its lowest level since July 2022, even surpassing the fear triggered by the FTX collapse. As a result, Bitcoin’s price action has been highly volatile throughout August. This fear will persist until macroeconomic conditions improve, so most investor attention will be focused on the latest U.S. economic figures in the upcoming period.
In other digital assets news
- Digital asset manager Grayscale launches two new trust products, the new products will solely focus on Artificial Intelligence network Bittensor and blockchain protocol Sui.
- On the 12th of August, after multiple days of decreasing outflows, Grayscale’s largest Ethereum ETF experienced its first day of no net outflows, potentially indicating net inflows in the coming weeks.
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