A Week in Crypto (13 October 2023)

If you are here, you survived Friday the 13th! Congratulations on being part of our “Initial News Offering”! The Crypto 101 series will continue to expand, providing education and crypto awareness for all. However, as a subscriber, you have exclusive access to our coverage of weekly crypto news! Here are some of the good, the bad, and the ugly from this week.

A Win for the BTC ETF?!

Source: CNBC

The pursuit of getting approval for a spot Bitcoin exchange-traded fund (ETF) from the U.S. Securities and Exchange Commission (SEC) seemed to be making progress, and we finally got some exciting news!

The SEC decided not to challenge a crucial court ruling that said their rejection of Grayscale Investments' application for a spot bitcoin ETF was wrong. This development is significant for both the cryptocurrency industry and traditional finance. In response, the Bitcoin price surged on Friday to above $27k and many other crypto projects followed.

In August, the District of Columbia Court of Appeals in Washington made a decision that shook things up. They said the SEC made an error in turning down Grayscale's proposal for a bitcoin ETF. This case has been closely followed because many have been eagerly waiting for such products.

With the SEC choosing not to appeal, it means they can now take another look at Grayscale's application. Grayscale has been arguing that the same safeguards the SEC approved to prevent fraud in bitcoin futures-based ETFs should also be suitable for their spot ETF. This is because both types of funds rely on the price of bitcoin.

The appeals court ruled that the SEC's denial of Grayscale's application was unfair and didn't give good reasons for treating the two types of ETFs differently. They are expected to provide further instructions for the SEC on how to handle Grayscale's application.

It's worth noting that other big players like BlackRock, Fidelity, and Invesco have applications pending with the SEC for spot bitcoin ETFs. The SEC is expected to make decisions on these applications by the end of next year.

So What?

The SEC's decision not to challenge the court ruling on Grayscale's spot Bitcoin ETF application marks a significant milestone with potential implications for the world of cryptocurrency and traditional finance. This move suggests a growing recognition of the need to provide investors with legitimate and regulated ways to access cryptocurrencies like Bitcoin. The recent surge in Bitcoin's price reflects the market's optimism about these possibilities. However, the SEC's regulatory decisions carry broader implications, setting standards for the industry. While exciting, the road ahead involves careful consideration, ensuring that investor protection remains paramount. The crypto community eagerly awaits further developments in this evolving landscape.

SBF Trail Update

In the trial of Sam Bankman-Fried (SBF), the former CEO of the FTX cryptocurrency exchange, significant testimony has emerged from Caroline Ellison, who serves as the CEO of Alameda Research and was once romantically involved with SBF. During the trial, Ellison acknowledged her involvement in a fraudulent scheme alongside SBF. She revealed that Alameda Research used billions of dollars from FTX customers for various investments and to settle debts. Ellison went on to assert that SBF not only had knowledge of this misappropriation but also directed these actions, contributing to the financial difficulties faced by FTX.

SBF is currently facing charges related to the alleged misappropriation of over $8 billion in user funds from FTX to cover losses at Alameda Research. Witnesses like Ellison have placed SBF in a compromising position, although his defense suggests they may be distancing themselves to avoid legal repercussions.

The trial continues to provide insights into the alleged wrongdoing that resulted in substantial losses for FTX customers. If convicted, SBF could face a sentence of up to 110 years in prison although this would do little to make whole the investors he scammed.

Chinese Owed BTC Mining in the U.S. - National Security Concern?

Source: The New York Times

Last year, a company from China began setting up a cryptocurrency mining operation in Cheyenne, Wyoming. It caught the attention of a team at Microsoft responsible for national security. They were concerned because this new operation was very close to a Microsoft data center that supported the Pentagon, and just a mile away from an Air Force base with nuclear-armed missiles.

Microsoft's team believed that this location could allow the Chinese to engage in extensive intelligence collection activities. They shared these concerns with the Committee on Foreign Investment in the United States, a federal body that monitors threats from foreign investors, in August 2022.

The U.S. government had also been keeping an eye on this operation. They took steps to reduce the potential risks but didn't provide details. The mining company responded to inquiries from the federal investment committee.

These concerns are not limited to just this site in Wyoming. There has been a significant increase in Chinese-owned Bitcoin mining operations across the United States. These mining facilities, which use a lot of electricity and high-performance computers, can strain power grids and pose security risks. They could even potentially cause blackouts or cyberattacks if coordinated.

Since Bitcoin mining was banned in China in 2021 due to concerns about energy usage, a company called Bitmain, which makes specialized computers for Bitcoin mining, has significantly increased shipments to the United States. Some of the U.S. mining operations are straightforward businesses run by wealthy Chinese individuals, while others have unclear ownership and links to the Chinese government.

The mine in Cheyenne, Wyoming, is connected to several companies, but there are no direct links to the Chinese government or the Communist Party. However, Microsoft has suggested that the proximity of this mining operation to its data center and a U.S. missile base poses a potential security threat.

These new risks come as Bitcoin mining has surged in the United States, with growing concerns about energy consumption and its impact on power grids. Many of these mines have the ability to quickly turn off or on, which can disrupt power grids. Some have digital connections to grid operators, which could be misused.

Bitmain's dominance in the mining machine market has raised concerns about potential vulnerabilities. In the past, researchers found "back doors" in Bitmain's equipment that could have allowed covert operation. The company did not respond to questions about these vulnerabilities.

The North American Electric Reliability Corporation and the Office of the Director of National Intelligence have warned about the potential for Chinese cyberattacks and aggressive cyber operations against U.S. critical infrastructure.

As a result, security advisory firms like the Chertoff Group have been approached by critical infrastructure providers seeking advice about the risks associated with Chinese-owned Bitcoin mining operations.

The situation has raised concerns, with some people questioning why more attention is not being paid to these Chinese companies' connections to U.S. power grids, especially given the potential risks involved.

Crypto Fear and Greed Index

Crypto Fear and Greed Index Source: alternative.me

Weekly Token Watch: Top movers within the top 100

XDC Network (XDC), Coin #52, 7.7%,, $ 0.049

Rocket Pool (RPL) Coin #98, -5.0%, $17.60

Thank you for being a part of the Token Mindset newsletter community this week! Our mission remains to keep you informed about the latest developments in the crypto space, making sure you're well-prepared for the exciting journey ahead.

Stay informed. Stay ahead. Wishing you a wonderful week ahead filled with crypto insights and positive token vibes and remember, the BTC halving is only ~193 days away 🚀!

-The Token Mindset Team

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