In January, BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin ETF (FBTC) achieved notable success, securing the eighth and tenth positions, respectively, among all ETFs in terms of largest flows. The spot Bitcoin exchange-traded funds (ETFs) offered by BlackRock and Fidelity collectively attracted approximately $4.8 billion in January flows, with IBIT contributing $2.6 billion in net flows, claiming the eighth spot, and FBTC securing the tenth position with $2.2 billion, according to a Feb. 3 report from Morningstar.
Interestingly, the data revealed contrasting trends, as the Grayscale Bitcoin Trust (GBTC) experienced the second-highest outflows among ETFs in January, totalling $5.7 billion. Nate Geraci, president of ETF Store, expressed surprise at the success of BlackRock and Fidelity's funds, labelling them as engaged in a "clear two-horse race" among the nine new Bitcoin funds. Additionally, Geraci identified a developing "strong middle class" within the sector, pointing to joint ETFs from ARK Invest and 21 Shares, as well as Bitwise’s funds, both with assets under $650 million, and predicting they would soon reach $1 billion in assets.
In the broader context, Morningstar's report coincided with six consecutive days of positive net inflows totalling nearly $715 million for U.S. spot Bitcoin ETFs. BitMEX Research data highlighted that a significant portion of these inflows was driven by BlackRock and Fidelity's funds. Bloomberg senior ETF analyst Eric Balchunas remarked on the resilience of the nine ETFs, excluding GBTC, noting their ability to bounce back from a dip the previous week. Balchunas emphasized that, contrary to the typical slow decline after a hyped launch, these ETFs displayed sustained strength, indicating a promising trajectory into their third week of trading.
Artists Ryder Ripps and Jeremy Cahen are facing a substantial financial setback in their legal dispute against Yuga Labs, the creator of Bored Ape Yacht Club (BAYC), as their counterclaims have been dismissed. Following a prior ruling in favour of Yuga Labs, which accused Ripps and Cahen of violating copyright laws by producing unauthorized BAYC nonfungible tokens (NFTs), the artists were initially ordered to pay $1.57 million in damages along with legal fees.
In a recent development, the court not only rejected Ripps and Cahen's counterclaims but also imposed a much larger financial burden of almost $9 million, covering various costs such as lawyer fees, expert witness fees, and disgorgement. Furthermore, the court directed the artists to dispose of any RR/BAYC NFTs they possess, specifying the option to either destroy ("burn") the NFTs or provide them to Yuga Labs for burning. Despite this setback, Cahen has expressed its intention to appeal the decision, underscoring the ongoing legal complexities within the NFT space and the significant financial consequences for artists found in violation of intellectual property laws.
The FTX restructuring plan has sparked concerns, with former SEC official John Reed Stark characterizing it as a potential avenue for the legal team to profit from the bankruptcy process. Stark's scepticism was shared on the social media platform X, where he humorously suggested that all FTX customers should receive a sarcastic "Thank You" note from the defunct exchange's legal team, highlighting the substantial profits accrued during the bankruptcy proceedings. During a January 31 hearing in the U.S. Bankruptcy Court, FTX lawyer Andy Dietderich clarified that despite extensive efforts, there were no plans to relaunch FTX, known as FTX 2.0, within the Chapter 11 bankruptcy framework.
Stark, foreseeing the challenges of the Chapter 11 FTX reorganization plan, likened the endeavour to reorganizing a combination of notorious entities, including "Murder Incorporated, The Cali Drug Cartel, and Madoff Investment Advisory Services." The legal and restructuring team overseeing the bankrupt crypto exchange FTX billed over $200 million from November 2022 to June 2023. While these fees were deemed reasonable by the court-appointed fee examiner, recent compensation filings revealed that FTX spent around $53,000 per hour on legal and advisory fees in the quarter ending October 31, 2023.
Documents from December 5 to December 16, 2023, further disclosed that the bankruptcy legal team billed at least $118.1 million from August 1 to October 31, 2023, averaging $1.3 million per day or $53,300 per hour over the course of 92 days. The financial dynamics of the FTX restructuring process, particularly the substantial costs involved, have raised alarms over the potential profits for the legal team.