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Crypto Watch

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Bitwise Asset Management, a prominent crypto index fund, has recently found itself needing to clarify that it has no ties to Bitwise Industries, a startup whose founders are now under charges by the United States Securities and Exchange Commission (SEC).

Distancing From Controversy: Bitwise Asset Management’s Stance

The charges against Bitwise Industries and its founders, Irma Olguin Jr. and Jake Soberal, appear severe. Announced on November 9, the SEC accused them of conspiring to commit wire fraud and misleading investors to gather $100 million in funding, regardless of the apparent failing state of their business model.

These allegations involve falsifying documents to deceive investors—a serious charge in the financial world. The similarity in names between the two entities has led to confusion, where Bitwise Asset Management’s logo was mistakenly used in discussions about the charges against Bitwise Industries.

In response to the growing confusion, the asset manager took swift action. The San Francisco-based company released a statement to clear the air earlier today.

The statement highlighted that Bitwise Asset Management, known as America’s largest crypto index fund, has never connected with the Fresno-based Bitwise Industries, now described as a “defunct” technology company. The Asset Management firm noted:

San Francisco-based Bitwise Asset Management, Inc., the largest crypto index fund manager in America, has no relationship with, and has never had a relationship with, the now-defunct Bitwise Industries, a former technology company based in Fresno, California.

Challenging The SEC: Bitwise’s Advocacy for Spot Bitcoin ETF Approval

While Bitwise Asset Management itself has also had issues with the SEC in the past, the asset manager being a part of the applicants of the yet-to-be-approved spot Bitcoin ETF has recently challenged the SEC’s stance with some academic insights for not approving their spot Bitcoin (BTC) fund.

Having recommenced the 19b-4 form filing process, renewing its application for the spot Bitcoin ETF, the asset manager recently came armed with academic insights, questioning the rationale behind the SEC’s reluctance to approve their ETF.

The SEC’s hesitation in approving spot BTC ETFs has frequently been attributed to concerns about the interplay between the Bitcoin futures and spot markets, labeling the academic view on this issue as “mixed” or “inconclusive.”

In response, Bitwise’s amendment through NYSE Arca offers a counterargument, reviewing all eleven of the SEC’s disapproval orders to clarify the academic perspective. This effort demonstrates that the relationship between markets isn’t as uncertain as the SEC suggests.

The asset manager analysis, grounded in academic research, consistently indicates that the Chicago Mercantile Exchange (CME) futures market leads in price discovery over the spot market, contrary to the SEC’s apprehensions about market manipulation.

According to the document, this conclusion is backed by extensive engagement with the SEC staff over nearly two years and supported by a detailed 107-page white paper, reinforcing the asset manager’s assertion of a more resilient Bitcoin market than the regulator perceives.

Featured image from iStock, Chart from TradingView