Crypto Spotlight - SEC files lawsuit against mining firm Green United, Dogecoin drops 10%, Alameda Research sues Greyscale

Since the story broke last Friday, the mass exodus of cryptocurrency firms from SIlvergate Bank has dominated the crypto news cycle. The result? A spike of fear among investors translating to a 5% drop in the value of leading cryptocurrencies.

Bitcoin 7-day price movement (Source: Coingecko)

However, every cloud has a silver lining, and this story is no different. The irony here is that the close of Silvergate benefits another area of the market that has taken a hit recently, stablecoins. Stablecoins have been the target of SEC regulatory scrutiny over the past month, with the US financial regulatory body arguing that many stablecoins exist as unregistered securities.

Silvergate's decision to close its instant settlement service SEN will likely increase the role of stablecoins and their issuers in crypto trading, according to a report by market research firm Kaiko. With the death of SEN, traders will likely transfer money into stablecoins instead of depositing dollars to crypto exchanges using banking rails.

Stablecoins such as Tether's USDT and Circle's USDC has replaced government-issued fiat currencies such as the U.S. dollar to buy and sell cryptocurrencies. The number of fiat trading pairs has declined globally as stablecoins have grown. Silvergate's closure cuts yet another bridge between fiat and crypto and should only increase demand for stablecoins. Here are all the biggest stories in crypto today.

1 - Recently bankrupt crypto lender Voyager Digital has denied the US SEC's claims that its VGX token is a security, as it seeks court approval for a $1.02 billion buyout by Binance.US. Delays to the deal are costing the company $10m per month, according to a filing on behalf of Voyager. Voyager has urged a speedy resolution to its bankruptcy case and expressed surprise at the delays and evolutions in the SEC's position.

The federal judge overseeing the buyout case expressed skepticism over the SEC's objections to the deal. SEC staff had raised concerns that Binance US may be operating an unregistered securities exchange, but the judge indicated that he could not delay the bankruptcy proceedings indefinitely while waiting for the regulator to explain its arguments. The judge emphasized the urgency of taking action in the bankruptcy case to address the needs of creditors who have invested their life savings in Voyager.

2 - Yuga Labs, the company behind Bored Ape Yacht Club, generated $16.5 million from its auction of 288 NFTs. The NFTs were part of their TwelveFold collection based on the Ordinals protocol, a platform that mints NFTs on the Bitcoin blockchain.

Michael Figge, the co-founder of NFT studio WENEW, was the artist behind the 3D project. The highest bid for one token was an astonishing 7.1159 BTC or about $159,600 at the time of writing. 

3 - Dogecoin has experienced a drop of almost 10% in the last seven days, reaching a two-month low of $0.073, as Tesla CEO Elon Musk turned his attention from cryptocurrency to artificial intelligence. Musk's previous tweets about Dogecoin had influenced its price, but his recent comment about shifting his focus to AI caused the price to drop further.

Additionally, Mark Yusko, the chief investment officer of Morgan Creek Capital Management, criticized meme coins like Dogecoin, calling them "speculative nonsense" without any value. Despite the recent slump, Dogecoin overtook Polygon as the ninth-largest cryptocurrency by market capitalization.

Dogecoin 7-day price movement (Source: Coingecko)

4 - The SEC has filed a lawsuit against Utah-based Green United, alleging that the company sold $18 million worth of fake crypto-mining equipment. Green United allegedly sold specialized crypto mining machines called "Green Boxes," which were supposed to mine GREEN tokens on the Green Blockchain. Investors were promised a 40% to 50% monthly return.

However, the SEC claims that Green United's machines never mined GREEN, and instead, the company duped investors into buying bitcoin mining equipment. The SEC is seeking permanent injunctions against Green United, its founder Wright Thurston, and its main promoter Kristoffer Krohn, as well as disgorgement and civil penalties.

5 - FTX's bankruptcy proceeding has incurred $38 million in bills plus expenses for January. The firm has teams of lawyers, investment bankers, consultants, and financial advisers working on the case. Sullivan & Cromwell billed the most at $16.8 million, with over 180 lawyers and 50 non-lawyer staff assigned to the case. The U.S. Department of Justice had initially objected to Sullivan & Cromwell's hiring, but the firm was later approved to represent FTX.


6 - FTX's trading affiliate, Alameda, has sued Grayscale and its owner, Digital Currency Group, over the structure of their Bitcoin and Ethereum trusts. Alameda accused Grayscale and DCG's management of self-interest and enriching themselves at the expense of trust shareholders by refusing to allow redemptions and charging high fees. Grayscale's trusts allow investors to buy shares through their brokerage accounts rather than holding direct exposure to the coins. Alameda owns over 22 million shares in Grayscale's flagship bitcoin trust and a further 6 million shares of the company's Ethereum trust. Grayscale has argued that the trusts should be converted into exchange-traded funds.