Meeting called in accordance with Index Rule “III.A.ii.c” due to New York Attorney General claims toward Tether and Bitfinex.
Date: April 25, 2019
Time: 4:30 – 5:30 p.m. PT
Reason for Meeting: Meeting called in accordance with Index Rule “III.A.ii.b” due to NY AG claims toward Tether and Bitfinex.
In Attendance: Matt Hougan (Chair), Hunter Horsley (Member), Hong Kim (Observer)
Item 1: Response to NY AG Allegation With Regard to Tether and Bitfinex
Explanation: The New York Attorney General has retained a court order against iFinex Inc., operator of the Bitfinex virtual asset trading platform, and Tether Limited, issuer of the “tether” virtual currency, and their related entities, based on allegations of fraudulent behavior while attempting to hide the “apparent loss of $850 million dollars” of co-mingled client and corporate funds.
The Bitwise Crypto Index Methodology Rule III.a.i.c governing the eligibility of cryptoasset exchanges to contribute prices to Bitwise indexes lists the following requirement:
Is in compliance with local regulations and not subject to extraordinary regulatory or legal action.
Explainer: This requirement exists to limit exchanges to those that are positive actors in the community, and to limit the potential for interruptions in service or unusual pricing due to government or regulatory enforcement actions.
A vote was taken to determine if, in light of the New York Attorney General’s court order, Bitfinex should be removed from contributing prices to the indexes.
Conclusion: 2/2 vote yes to remove. Bitfinex is removed from contributing prices to the Bitwise indexes, effective immediately.
Discussion: The removal of this exchange doesn’t substantially harm price discovery or ability to access liquidity, thus being cautious comes at no detriment to the indexes and funds.
Based in San Francisco, Bitwise is one of the largest and fastest-growing crypto asset managers, offering both index and active strategies across a wide array of investment vehicles. The firm is known for creating the world’s largest crypto index fund (OTCQX: BITW), a suite of crypto-focused equity and futures ETFs, and investment products that span Bitcoin, Ethereum, DeFi, NFTs, and the Metaverse. Bitwise focuses on partnering with financial advisors and investment professionals to provide quality education and research. The team at Bitwise combines expertise in technology with decades of experience in traditional asset management and indexing, coming from firms including BlackRock, Blackstone, Meta, and Google, as well as the U.S. Attorney’s Office. Bitwise is backed by leading institutional investors and asset management executives, and has been profiled in Institutional Investor, CNBC, Barron’s, Bloomberg, and The Wall Street Journal.
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