Author: Michelle Lazo

Crypto trading platform Abra has announced the acquisition of several private cryptocurrency trusts from Valkyrie Investments. This move comes shortly before Abra settled with 25 U.S. state financial regulators for operating without the necessary licenses, marking a significant development in the crypto industry’s regulatory landscape.

Details of the Acquisition

Abra Capital Management LP, the asset management arm of Abra, took over several active trusts from Valkyrie in May. According to Marissa Kim, head of asset management at Abra, the deal includes Valkyrie’s Tron and Zilliqa trusts, as well as several trusts that have not yet been launched. The Zilliqa Trust had sold a total of $21.3 million in assets as of October last year, while the Tron Trust had sold $50 million in assets as of September 2022, according to filings with the U.S. Securities and Exchange Commission. However, the specific terms of the deal were not disclosed.

“This acquisition will provide ACM with a way to expand its current offering of spot and DeFi products to a new audience of investors,” Kim said. Abra may consider filing to make some of the trusts publicly traded in the future, depending on market demand, she added. Valkyrie did not immediately respond to requests for comment on the sale.

Regulatory Challenges and Settlements

Abra’s acquisition comes at a time when the company is navigating significant regulatory challenges. In June, Abra settled with a working group of regulators over claims that it had operated its business without the required state licenses to handle crypto asset activities. As part of the settlement, Abra is set to return $82.1 million in crypto assets to U.S. customers. This agreement follows Abra’s decision to halt offering services in the country last year. Abra Capital Management is an SEC-registered investment advisor, the firm stated.

Abra faced additional regulatory scrutiny when it was accused of securities fraud by the Texas State Securities Board in June 2023. The regulator alleged that Abra misled investors through the sale of two crypto interest account products and claimed that Abra had been insolvent or nearly insolvent. Texas was among the states involved in the recent settlements.

Valkyrie’s Strategic Moves

Valkyrie Investments has been offloading portions of its business throughout 2024. Earlier this year, Valkyrie sold its primary exchange-traded funds business to CoinShares International Ltd. The company’s private trusts business included funds tied to various cryptocurrencies, such as Algorand, Avalanche, BitTorrent, Dash, Polkadot, and Bitcoin.

Leah Wald, a co-founder and the then-chief executive of Valkyrie, resigned from the company last month, marking another significant change in the company’s structure. These strategic moves by Valkyrie reflect a broader trend in the crypto industry, where companies are adjusting their operations and portfolios in response to market conditions and regulatory pressures.

Future Implications for Abra

The acquisition of Valkyrie’s trusts presents an opportunity for Abra to diversify and enhance its product offerings. By integrating these trusts, Abra can attract a broader range of investors and solidify its position in the competitive crypto trading market. The possibility of making some of these trusts publicly traded could further enhance Abra’s market presence and appeal.

However, the company must navigate its regulatory challenges carefully. The recent settlements and accusations highlight the importance of compliance in the rapidly evolving crypto industry. As Abra moves forward, maintaining robust regulatory adherence will be crucial to its long-term success.

Conclusion

Abra’s acquisition of Valkyrie’s private crypto trusts represents a strategic expansion amid regulatory settlements. This move could significantly enhance Abra’s offerings and attract new investors. However, the company must continue to address its regulatory challenges to ensure sustainable growth. The crypto industry’s evolving regulatory landscape underscores the need for companies like Abra to adapt and comply with legal requirements while pursuing growth opportunities.

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Crypto trading platform Abra has announced the acquisition of several private cryptocurrency trusts from Valkyrie Investments. This move comes shortly before Abra settled with 25 U.S. state financial regulators for operating without the necessary licenses, marking a significant development in the crypto industry’s regulatory landscape.

Details of the Acquisition

Abra Capital Management LP, the asset management arm of Abra, took over several active trusts from Valkyrie in May. According to Marissa Kim, head of asset management at Abra, the deal includes Valkyrie’s Tron and Zilliqa trusts, as well as several trusts that have not yet been launched. The Zilliqa Trust had sold a total of $21.3 million in assets as of October last year, while the Tron Trust had sold $50 million in assets as of September 2022, according to filings with the U.S. Securities and Exchange Commission. However, the specific terms of the deal were not disclosed.

“This acquisition will provide ACM with a way to expand its current offering of spot and DeFi products to a new audience of investors,” Kim said. Abra may consider filing to make some of the trusts publicly traded in the future, depending on market demand, she added. Valkyrie did not immediately respond to requests for comment on the sale.

Regulatory Challenges and Settlements

Abra’s acquisition comes at a time when the company is navigating significant regulatory challenges. In June, Abra settled with a working group of regulators over claims that it had operated its business without the required state licenses to handle crypto asset activities. As part of the settlement, Abra is set to return $82.1 million in crypto assets to U.S. customers. This agreement follows Abra’s decision to halt offering services in the country last year. Abra Capital Management is an SEC-registered investment advisor, the firm stated.

Abra faced additional regulatory scrutiny when it was accused of securities fraud by the Texas State Securities Board in June 2023. The regulator alleged that Abra misled investors through the sale of two crypto interest account products and claimed that Abra had been insolvent or nearly insolvent. Texas was among the states involved in the recent settlements.

Valkyrie’s Strategic Moves

Valkyrie Investments has been offloading portions of its business throughout 2024. Earlier this year, Valkyrie sold its primary exchange-traded funds business to CoinShares International Ltd. The company’s private trusts business included funds tied to various cryptocurrencies, such as Algorand, Avalanche, BitTorrent, Dash, Polkadot, and Bitcoin.

Leah Wald, a co-founder and the then-chief executive of Valkyrie, resigned from the company last month, marking another significant change in the company’s structure. These strategic moves by Valkyrie reflect a broader trend in the crypto industry, where companies are adjusting their operations and portfolios in response to market conditions and regulatory pressures.

Future Implications for Abra

The acquisition of Valkyrie’s trusts presents an opportunity for Abra to diversify and enhance its product offerings. By integrating these trusts, Abra can attract a broader range of investors and solidify its position in the competitive crypto trading market. The possibility of making some of these trusts publicly traded could further enhance Abra’s market presence and appeal.

However, the company must navigate its regulatory challenges carefully. The recent settlements and accusations highlight the importance of compliance in the rapidly evolving crypto industry. As Abra moves forward, maintaining robust regulatory adherence will be crucial to its long-term success.

Conclusion

Abra’s acquisition of Valkyrie’s private crypto trusts represents a strategic expansion amid regulatory settlements. This move could significantly enhance Abra’s offerings and attract new investors. However, the company must continue to address its regulatory challenges to ensure sustainable growth. The crypto industry’s evolving regulatory landscape underscores the need for companies like Abra to adapt and comply with legal requirements while pursuing growth opportunities.

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The U.S. Securities and Exchange Commission has concluded a three-year investigation into Hiro Systems, a blockchain software developer formerly known as Blockstack, without recommending enforcement action. This decision marks a significant victory for the crypto industry, which has long grappled with regulatory scrutiny.

Background of the Investigation

Hiro Systems raised $70 million through token sales from 2017 to 2019. The SEC’s probe into Hiro Systems is part of the broader regulatory landscape that has often challenged the crypto sector. On Friday, a filing indicated that the SEC’s division of enforcement does not intend to pursue any enforcement actions against Hiro Systems. The letter stated, “Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Hiro Systems PBC, formerly known as Blockstack PBC.”

However, the SEC included a standard caveat that this notice should not be interpreted as an exoneration or a guarantee that future actions will not arise from the investigation.

Hiro Systems and the Stacks Protocol

Hiro Systems is known for developing tools that enable developers to build applications on Stacks, a layer-2 blockchain designed to enhance Bitcoin. The Stacks protocol, spearheaded by crypto veteran Muneeb Ali, launched its first version along with its native token in 2018. Initially, the company treated the tokens as securities, conducting sales under the SEC’s Regulation A+, which permits limited public sales of securities without full registration. Other tokens were sold to accredited and international investors.

In January 2021, a new version of Stacks was launched featuring a new consensus mechanism called proof of transfer. Hiro Systems argued that the network had achieved full decentralization, and in an SEC filing that month, the company declared it was no longer providing essential managerial services to the Stacks Blockchain. Consequently, they claimed it was unnecessary to classify Stacks tokens as securities.

Despite these assertions, the SEC remained skeptical, and Hiro disclosed in September 2021 that it was responding to an SEC inquiry.

Conclusion of the Inquiry

The recent filing marks the end of the SEC’s investigation, relieving Hiro Systems from the prolonged regulatory scrutiny that had been looming over the company. This conclusion is particularly noteworthy following another significant development earlier in the week when the SEC ended its investigation into stablecoin issuer Paxos.

In a tweet following the release of the filing, Muneeb Ali clarified that the SEC’s probe encompassed the Stacks protocol in addition to the Hiro entity. Ali, who now serves as CEO of Trust Machines and remains a board member at Hiro, expressed relief at the investigation’s conclusion.

Implications for the Crypto Industry

The SEC dropping its investigation into Hiro Systems is a positive signal for the crypto industry, reflecting a potential shift in how regulatory bodies approach blockchain projects that achieve decentralization. The crypto sector has long been concerned about regulatory actions that could stifle innovation and growth. The conclusion of this investigation, along with the end of the probe into Paxos, could indicate a more nuanced understanding and acceptance of decentralized blockchain technologies by regulators.

Conclusion

The end of the SEC’s investigation into Hiro Systems marks a significant moment for the crypto industry, offering a reprieve from regulatory pressures. This development underscores the importance of achieving and demonstrating decentralization for blockchain projects to navigate regulatory challenges successfully. As the industry continues to evolve, clear and consistent regulatory frameworks will be crucial in fostering innovation while ensuring compliance.

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The U.S. Securities and Exchange Commission has concluded a three-year investigation into Hiro Systems, a blockchain software developer formerly known as Blockstack, without recommending enforcement action. This decision marks a significant victory for the crypto industry, which has long grappled with regulatory scrutiny.

Background of the Investigation

Hiro Systems raised $70 million through token sales from 2017 to 2019. The SEC’s probe into Hiro Systems is part of the broader regulatory landscape that has often challenged the crypto sector. On Friday, a filing indicated that the SEC’s division of enforcement does not intend to pursue any enforcement actions against Hiro Systems. The letter stated, “Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Hiro Systems PBC, formerly known as Blockstack PBC.”

However, the SEC included a standard caveat that this notice should not be interpreted as an exoneration or a guarantee that future actions will not arise from the investigation.

Hiro Systems and the Stacks Protocol

Hiro Systems is known for developing tools that enable developers to build applications on Stacks, a layer-2 blockchain designed to enhance Bitcoin. The Stacks protocol, spearheaded by crypto veteran Muneeb Ali, launched its first version along with its native token in 2018. Initially, the company treated the tokens as securities, conducting sales under the SEC’s Regulation A+, which permits limited public sales of securities without full registration. Other tokens were sold to accredited and international investors.

In January 2021, a new version of Stacks was launched featuring a new consensus mechanism called proof of transfer. Hiro Systems argued that the network had achieved full decentralization, and in an SEC filing that month, the company declared it was no longer providing essential managerial services to the Stacks Blockchain. Consequently, they claimed it was unnecessary to classify Stacks tokens as securities.

Despite these assertions, the SEC remained skeptical, and Hiro disclosed in September 2021 that it was responding to an SEC inquiry.

Conclusion of the Inquiry

The recent filing marks the end of the SEC’s investigation, relieving Hiro Systems from the prolonged regulatory scrutiny that had been looming over the company. This conclusion is particularly noteworthy following another significant development earlier in the week when the SEC ended its investigation into stablecoin issuer Paxos.

In a tweet following the release of the filing, Muneeb Ali clarified that the SEC’s probe encompassed the Stacks protocol in addition to the Hiro entity. Ali, who now serves as CEO of Trust Machines and remains a board member at Hiro, expressed relief at the investigation’s conclusion.

Implications for the Crypto Industry

The SEC dropping its investigation into Hiro Systems is a positive signal for the crypto industry, reflecting a potential shift in how regulatory bodies approach blockchain projects that achieve decentralization. The crypto sector has long been concerned about regulatory actions that could stifle innovation and growth. The conclusion of this investigation, along with the end of the probe into Paxos, could indicate a more nuanced understanding and acceptance of decentralized blockchain technologies by regulators.

Conclusion

The end of the SEC’s investigation into Hiro Systems marks a significant moment for the crypto industry, offering a reprieve from regulatory pressures. This development underscores the importance of achieving and demonstrating decentralization for blockchain projects to navigate regulatory challenges successfully. As the industry continues to evolve, clear and consistent regulatory frameworks will be crucial in fostering innovation while ensuring compliance.

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XRP emerged as the sole crypto major in the green, gaining 5% in the past 24 hours while the broader crypto market, including Bitcoin (BTC), faced declines. This surprising resilience of XRP comes in the wake of recent market events and announcements that have affected major cryptocurrencies.

Bitcoin’s Struggle Post-CPI Readings

Bitcoin (BTC) slumped 2.3% in the past 24 hours, erasing Thursday’s brief gains that followed the latest U.S. Consumer Price Index readings. The core CPI for June rose 3.3%, lower than the expected 3.5%, which initially appeared bullish for risk assets such as cryptocurrencies. However, this turned out to be a classic “buy the rumor, sell the news” scenario, as prices had already been driven up in anticipation of a positive report.

BTC briefly traded above $59,000 on Thursday before falling to $57,000 by Friday afternoon in Europe. This decline in Bitcoin led to losses in other major tokens, with Ethereum (ETH) and Binance Coin (BNB) each dropping 2.2%, while Solana (SOL) and Dogecoin (DOGE) saw losses of up to 5%.

Broad Market Impact

The CoinDesk 20, a liquid index tracking the largest tokens by market capitalization, fell by 2.48%, indicating widespread losses across the crypto market. Despite these declines, XRP stood out with a notable gain, highlighting its unique position in the current market environment.

XRP’s Resilience and Institutional Support

XRP’s 5% gain can be attributed to a significant announcement from CME and CF Benchmarks regarding the debut of indices and reference rates for XRP. This move, which was endorsed by Brad Garlinghouse, CEO of Ripple, is expected to boost institutional adoption of XRP, providing a strong foundation for its recent price increase.

The announcement marks a significant step for XRP, positioning it as a more attractive option for institutional investors. This development contrasts sharply with the broader market trend, where many investors remain cautious due to ongoing pressures.

Market Participants on the Sidelines

Some traders attribute the current price lull to the cautious stance of market participants amidst sales pressure from defunct exchange Mt. Gox and the German state of Saxony. Alex Kuptsikevich, senior market analyst at FxPro, explained in an email to CoinDesk that “Bitcoin is back at $57K after a failed assault on $60K on Thursday.” He noted that German authorities are actively selling previously confiscated Bitcoins, creating an overhang of sales that deters potential buyers.

Kuptsikevich suggested that major tokens are unlikely to see gains until Bitcoin makes a significant upward move. He stated, “An altcoin season could only begin when the prices of the largest coins, such as Bitcoin, have reached all-time highs and appear overvalued to some.”

Large BTC Movements by German Authorities

Adding to the market pressure, the German state of Saxony transferred over $600 million worth of BTC to exchanges on Thursday, moving one of the largest chunks in weeks. Arkham data revealed that more than 3,000 BTC were moved in early Asian hours on Friday to various exchanges and OTC trading firms, leaving just over 6,000 BTC in the state’s wallets, worth approximately $340 million at current prices.

Conclusion

While the broader crypto market grapples with declines and investor caution, XRP’s recent gains highlight the potential for specific tokens to outperform amid market volatility. Institutional support and strategic announcements have played a critical role in XRP’s resilience, offering a glimmer of optimism for investors. As Bitcoin and other major tokens navigate these challenging conditions, the focus remains on key market developments and their implications for future price movements.

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