SEC puts kibosh on Grayscale ETF

Good morning. FTX counters Morgan Creek Digital with a rumored BlockFi acquisition offer, Lido says thanks, but no thanks to staking cap, and Grayscale gets rejected. That's all right here, right now in the CT5!

Programming note: the CT5 will be off starting tomorrow and returning on Monday, July 11th

Market Update (as of 7:31am ET):

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Top 5:

1. FTX seeks to acquire troubled crypto lender BlockFi. The rumors continue to swirl around BlockFi with the latest being that FTX is seeking to acquire the crypto lender outright. The FTX bid comes just days after details from a Morgan Creek Digital call were leaked that suggested the investment firm, which already owns an equity stake in BlockFi, was trying to pool capital together in order to purchase a majority share in company. The same sources also reported that if the FTX deal is successful, 80% of BlockFi staff would be let go.

2. Grayscale sues SEC over bitcoin ETF application rejection. Just an hour after the SEC rejected Grayscale's spot bitcoin ETF application the firm returned fire by suing the Commission. In its rejection, the SEC cited concerns over market manipulation, the role of Tether is the broader bitcoin ecosystem, and the lack of surveillance-sharing agreements between regulated exchanges and a "regulated market of significant size". In their suit, Grayscale will argue that the SEC has allowed products similar to a spot bitcoin ETF to trade, such as the bitcoin futures ETF.

3. Lido community signals intent to keep Ethereum staking uncapped. In response to concerns over large quantities of Ethereum being staked in a single staking pool the Lido team put forward a governance proposal asking users to vote on whether or not Lido should self-limit the amount of Ethereum they are staking. While the vote doesn't wrap up until Friday, it is all but decided with 99.8% of users voting to not limit the amount of Ethereum staked by Lido. According to Dune Analytics, Lido accounts for 31.8% of all staked Ethereum on the Beacon Chain which many see as a threat to decentralization after the shift to proof-of-stake. Lido countered that their main aims are "to democratize access to staking, and to prevent centralized exchanges from gaining the lion's share of staked Ethereum."

4. Crypto derivatives exchange Bybit to settle options contracts in USDC. Most existing crypto options contracts are margined and settled using the same currency (e.g., if bitcoin is the collateral in a contract it will also be used for settlements). Bybit says the move to offer settlements in USDC will provide stable prices for the duration of each options contract. Bybit currently supports BTC, ETH, USDT, and now USDC as collateral. The addition of USDC comes after the collapse of the Terra stablecoin and a major flight of capital ($10 billion) from USDT.

5. Happy Fourth of July! Reminder that the CT5 gives its employees the week of the Fourth off, so we'll be back on July 11th with a new issue. Hope everyone has a fun and safe holiday!

Updates and other stories:
- MicroStrategy buys the bitcoin dip, draws criticism from analysts...Read More
- Coinbase adds Solana staking rewards—with higher return than Ethereum...Read More
- Genesis faces ‘hundreds of millions’ in losses as 3AC exposure swamps crypto lenders...Read More

Top Sharers of the Crypto Top 5:
1. Donna Y. - Nashville, TN
2. Jake Y. - Greenville, SC
3. Forrest H. - Evansville, IN

External Resources:
1. Cryptopedia from Gemini - if you see a word, acronym, or phrase in this newsletter that you don't understand, there's a good chance you can find an explanation here
2. Crypto Explainer+ - intro level courses on Bitcoin, Ethereum, decentralized finance, NFTs, and more
3. Crypto Jobs! - looking for a new job? Check out this page from Anthony Pompliano with hundreds, if not thousands of listings

Disclaimer: The information contained in this newsletter shall not be understood or construed as financial advice. I am not an attorney, accountant, or financial advisor, nor am I holding myself out to be, and the information provided is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.