Hey buddy, take a seat, we need to talk to you.

Listen, two of the largest crypto firms are getting a divorce, but it’s not because they don’t love you anymore.

It’s because they stopped loving each other.

But look on the bright side, two Crypt-mas holidays!

Espresso Shots

☕️ ARK Claims Lead in ETF Race 🏎️🏁

Cathie Wood’s ARK Invest has filed for a spot Bitcoin ETF and though BlackRock has been getting all the publicity, ARK is actually first in line.

ARK Invest, along with the European asset manager, 21 Shares AG, reportedly filed an application together in April 2023.

This should put ARK and 21 Shares significantly ahead of BlackRock in the application process, but because BlackRock is the largest asset manager in the world, their application drew far more attention and caused firms like Wisdom Tree and Grayscale to follow suit.

But even if Cathie Wood and ARK are technically ahead of Larry Fink and BlackRock, BlackRock will continue to take the credit for this move in a classic case of a man repeating a woman’s idea, but much louder.

☕️ Riot Purchases 33,000 Miners ⛏️👷

Riot Platforms, one of the world’s largest Bitcoin mining companies, has purchased 33,000 Bitcoin miners for an estimated $162.9 million.

And no, Riot isn’t purchasing bearded men with sooty faces, but 33,000 Bitcoin mining machines.

8,320 of those machines are M56S+ models while the remaining 24,960 are M56S++ models, which are more powerful and boast slightly higher hash rates.

Upon hearing of Riot’s purchase of “33,000 miners,” the FBI agent eavesdropping on the company went pale and asked for a long break from surveillance.

☕️ FTX Lied to Judges ⚖️🫨

John Jay Ray III, the current CEO of FTX, claims that former management lied to banks for years in a new report.

A press release from FTX stated: “From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives.”

In a court filing on Monday, June 26, Ray alleged that misuse included using those customer funds to purchase luxury properties and speculative trading on Alameda Research.

Despite the legal and managerial mess that Ray inherited, he and his team have so far managed to recover $7 billion in liquid assets from FTX.

We have to give John Jay Ray III credit for trying to do right by the public despite having the name of an American assassin.

Spilling the Beans

The Divorce Threatening Bitcoin 💔

There’s a sliding scale for the magnitude of breakups.

The termination of a three-week-long middle school relationship is a drop in the bucket compared to the emotional hurricane of Brad Pitt and Angelina Jolie’s divorce.

And those more significant breakups often leave innocent hearts caught in the crossfire.

Much like Brad-gelina’s six kids, we’ve been swept up in the divorce of entities much larger than ourselves.

We’re talking about the breakup between two crypto firms called Bitgo and Prime Trust.

Bitgo was all set to acquire Prime Trust, but has since backed out of the deal.

What went wrong? What does it mean for crypto? And most importantly, what does it mean for us?

Well, the primary reason that Bitgo backed out of the deal is pretty concerning for all of us, and that’s that Prime Trust may be moments away from collapsing.

Prime Trust had a shortfall in customer funds this month.

That means that Prime Trust didn’t have enough money to cover customer withdrawals.

Sound familiar? It should.

The inability to meet customer withdrawals was the Jenga block that finally sent the FTX tower tumbling down.

FTX’s shortfall was the result of illegal activity with customer funds, while criminal activity has not been uncovered at Prime Trust, this situation certainly doesn’t scream “healthy company.”

And Prime Trust hasn’t been healthy for some time.

Prime Trust underwent massive layoffs in January. Just days later, Prime Trust was forced to shut down operations in Texas.

And after BitGo went public with the breakup, two crypto exchanges, Stably and CoinMetro, said Prime Trust couldn’t process withdrawals, and had halted all USD transactions.

No matter how emotionally generous you are, every breakup has a winner and a loser.

Prime Trust is unequivocally the loser in this separation.

But what’s in store for BitGo?

Well, it seems that it will be business as usual for the larger, healthier crypto custodian.

"We've got [other acquisitions] pending," said Bitgo CEO Mike Belshe in an interview with Coindesk TV. "I haven't been able to announce them yet, but I think there's going to be consolidation in the space over the next six months."

But what about us individual investors? We’re not a crypto firm, so are we going to take a beating from the fallout of this failed deal? Will our portfolios take a dive in the potential Prime Trust collapse?

As we all know, this space has weathered some pretty serious collapses before. See Terra Labs or FTX.

And in terms of market contagion, Prime Trust is closer to spilling a tub of expired yogurt than to the nuclear disaster that was FTX.

Crypto is a young industry and possesses the hardiness and resilience of youth.

Even the worst corporate divorce can’t cast too large a pall over DeFi.

Admittedly, we’re looking forward to watching Prime Trust and Bitgo compete for our affection.

And we’re pretty sure we can manipulate our way to a new dog out of this situation.

Meme of the Day

Crypto 101

Speculative Trading: This is a risky investment strategy in which investors engage in trades based on hearsay or assumptions.

They merely have heard or believe that stock will rise or fall and invest accordingly.

Speculative trading is high risk, but it’s technically legal. What is illegal is engaging in speculative trading using customers’ funds.

The Last Sip

The Last Sip: Riot Platforms has paid $162.9 million for 33,000 Bitcoin miners. But to support those machines they’ve also had to purchase:

20,000 Bitcoin Mining Machine Wives who stay above ground, living in fear every day that they’ll lose their spouses to a cave-in.

6,000 canaries prepared to give the ultimate sacrifice to warn the miners of poison gas.

40,000 Bitcoin mining machine children, whose dreams of getting out of this town are the only thing that keeps the Bitcoin mining machines returning to the mine, day after day.

Stay Caffeinated,

Coffee & Crypto Team

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