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Welcome to the latest edition of the Tokengraph Newsletter! Today, we're delving into the lawsuit that Gemini (founded by the Winklevoss twins) has filed against DCG, a surprising twist in the world of crypto. We'll also analyze the implications of Bitcoin's hash rate soaring to a record high. Plus, don't miss our trivia, lightning round updates, and the web3 resource of the day!
On today’s agenda:
Gemini Trust Takes DCG to Court
Bitcoin's Hash Rate Smashes Record
CZ Welcomes Institutions to Crypto
Andy Murray's Career Becomes an NFT
Kennedy Does Hold BTC After All
And more…
Gemini Trust Company has launched a lawsuit against Digital Currency Group (DCG) and its CEO, Barry Silbert, accusing them of fraudulent behavior. The lawsuit centers around Gemini Earn, a program developed by the cryptocurrency exchange, Gemini, co-founded by the Winklevoss twins. This program offered users an interest rate between 0.45% and 8% for depositing their crypto assets, with Genesis, a subsidiary of DCG, serving as the primary partner.
🚨BREAKING: GEMINI FILES LAWSUIT AGAINST DIGITAL CURRENCY GROUP AND FOUNDER BARRY SILBERT
— Blockchain Daily (@blckchaindaily)
Jul 7, 2023
Gemini alleges that DCG and Genesis misled them about the risk management strategy in lending out customer funds deposited through Gemini Earn. The lawsuit asserts that contrary to the assurances of safety and return on deposits, Genesis had been "recklessly lending huge amounts to a counterparty that Defendants knew was using these huge amounts to fuel a risky arbitrage trading strategy."
2/ The complaint tells the whole story, but let's start here: when Gemini notified Genesis it would be terminating the Earn program in October 2022, Barry reached out to set up a meeting to induce Gemini to continue Earn. He did this knowing Genesis was massively insolvent.
— Cameron Winklevoss (@cameron)
Jul 7, 2023
DCG, the parent company of both Genesis and the crypto asset manager Grayscale, is a prominent entity in the crypto sector. During the global crypto market peak in late 2021, DCG managed an estimated $50 billion in assets. However, the company's fortunes took a turn when Genesis halted withdrawals in November 2022. By year-end, DCG reported only $5 billion on its balance sheet.
Since Genesis' withdrawal halt, the Winklevoss twins have demanded a repayment plan for the $900 million loan that their company granted to now-bankrupt Genesis Global. Despite reaching a seemingly agreeable repayment plan in February 2023, Genesis defaulted on a $630 million loan payment by May.
This Gemini lawsuit against Genesis and DCG is akin to Fairfield Greenwich Group (the largest Bernie Madoff feeder fund) suing Madoff for ripping off Fairfield Greenwich clients.
Gemini is cash-rich from, among other endeavors, profits gained from the exorbitant commissions… twitter.com/i/web/status/1…
— John Reed Stark (@JohnReedStark)
Jul 7, 2023
Gemini's lawsuit came after they made a final restructuring offer for Genesis's debt to avert legal action. This proposal included a $1.465 billion plan for forbearance payments and new loans in USD, Bitcoin, and Ethereum. However, in response to the lawsuit, DCG dismissed the allegations as a "publicity stunt," stating that any accusations of wrongdoing are "baseless, defamatory, and completely false." We’ll keep you posted on how things play out and whether Silbert and DCG are held responsible in the end or not.
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Bitcoin's hash rate, a vital measure of the cryptocurrency's network health and security, has achieved a new all-time high, further bolstering the resilience of the world's leading blockchain network. According to Bitinfocharts data, the hash rate spiked from 406 EH/s to 465 EH/s on Saturday, before a slight decrease to 428 EH/s on Sunday. Regardless of this minor drop, Bitcoin's hash rate remains at record levels.
The #Bitcoin Hash Rate (7DMA) continue its aggressive expansion, reaching an ATH value of 395 EH/s.
This is equivalent to 395 quintillion guesses every second in an attempt to solve the Block puzzle.
— glassnode (@glassnode)
Jul 10, 2023
A higher hash rate denotes a healthier and more secure network, which establishes a robust barrier against potential threats. It quantifies the computational power deployed to support Bitcoin's ecosystem, encompassing critical activities such as mining, block validation, and key generation. A greater hash rate means an exponentially more challenging environment for potential malicious actors to execute a hostile takeover, such as a 51% attack.
Young wizard @WClementeIII explains why hash-rate is at an all-time high, US markets are putting a premium on bitcoin, and a few surprising metrics that occurred over the last 90 days.
— Pomp 🌪 (@APompliano)
Jul 8, 2023
However, an elevated hash rate leads to increased competition for miners, requiring more potent mining hardware and cooling systems, potentially resulting in augmented energy consumption. To offset these growing costs, miners may sell their produced coins. With Bitcoin's price hovering around $30,164, miners may need to sell more Bitcoin to achieve the same face value.
But interestingly, in the wake of Bitcoin’s hash rate record being broken, Standard Chartered predicted that BTC could hit $50,000 this year and $120,000 next year, which would empower miners to keep more of their BTC while maintaining a steady income.
JUST IN: $800 Billion Standard Chartered bank says #Bitcoin to hit $50,000 by end of this year and could break $120,000 next year.
— Bitcoin Archive (@BTC_Archive)
Jul 10, 2023
The recent surge in Bitcoin's hash rate could be attributed to Texas-based miners returning to full or near-full capacity, according to a Hash Rate Index report. Despite recent heat waves, Texas's electricity grid remained stable, allowing miners to continue normal operations. This trend is also likely to drive growth in Bitcoin mining difficulty, an anticipated adjustment predicted to rise above 7.5% later this week. Mining difficulty represents the computational power needed to mine a single Bitcoin and adjusts approximately every two weeks based on network participation.
The report concludes, "There are thousands of other miners around the world who are expanding capacity when/if they can, so the growth isn't only coming from Texas. Wherever it's coming from, the end result is the same: the next difficulty adjustment is going to be a major one."
The Genesis Block or Block 0 of the Bitcoin blockchain contains a hidden message. What does this message refer to?
A. The name of the creator of Bitcoin
B. The reason for the creation of Bitcoin
C. A headline from The Times newspaper
D. A mathematical problem
Scroll down to the bottom to see if you're right!
⚡ Lightning Round: Weekly Updates
Binance CEO Changpeng Zhao (CZ) welcomed the entry of larger institutions like BlackRock into the Bitcoin ETF sector this week, calling it “hugely beneficial.” He foresees such moves as diversifying for the crypto landscape, attracting a currently underserved clientele, and stimulating innovation through competition—without posing a significant threat to existing platforms like Binance.
Wimbledon and tennis star Andy Murray partnered with digital artist Refik Anadol to introduce an Ethereum-based NFT, "The Exposition," encapsulating 18 years of Murray's Wimbledon data. This included his two Grand Slam victories. This art piece, signifying the blend of digital art, sport, and data science, went on sale during Wimbledon 2023. Future collaborations between Murray, Wimbledon, and Anadol are in the pipeline.
Presidential candidate Robert F. Kennedy Jr confirmed that he owns Bitcoin after previously denying it, marking quite an about-face for his campaign. Despite initially claiming his wife owned the Bitcoin, his campaign revealed that the Bitcoin actually belonged to him. A financial disclosure showed Bitcoin holdings between $100,001 and $250,000. Kennedy's campaign asserted that there is no conflict of interest.
❓ Trivia Answer
Answer: C.
The Bitcoin genesis block contains the following message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” It was a New York Times headline about the financial crisis of 2008, and it’s been interpreted to mean that Bitcoin founder Satoshi Nakamoto created his blockchain in direct response to the large banking failures of 2008-2009.
Web3 Resource of the Day
“gm: Arthur Hayes Says Crypto Failures Are A Sign of The System Cleansing Itself” | Interview from Decrypt
Founder of crypto exchange Bitmex Arthur Hayes spoke with Decrypt in this interview on his thoughts about how TradFi is a failed system—and how crypto could save investors. Take it from the man himself: "I don't care if you're capitalist or you're a communist. Everybody put on a lot of debt. We've passed the point where that debt is becoming useful. And therefore everyone is going to take an L unless they get some crypto or some gold—some hard asset that's outside of the traditional banking system."
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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice to buy or sell any assets or to make any financial decisions. Do your own research.