> The Trust values its bitcoin as measured at 4:00 p.m. Eastern time using the Gemini Exchange Spot Price on each Business Day. The Gemini Exchange Spot Price is the price of bitcoin on the Gemini Exchange as of 4:00 p.m. Eastern time on each Business Day.
So they are using the exchange they founded to price their bitcoin trust.............hmmmm
> While the Trust’s investment objective is for the Shares to track the price of bitcoin as measured at 4:00 p.m. Eastern time using the Gemini Exchange Spot Price on each Business Day, the Shares may trade in the secondary market on BATS at prices that are lower or higher relative to the NAV. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours and liquidity between BATS and larger Bitcoin Exchanges in the Bitcoin Exchange Market.
This represents an interesting arbitrage opportunity. This could end up like PHYS or SBT/CGT where they tend to trade at a discount to NAV.
> Under the License Agreement, the Sponsor is required to pay a monthly royalty equal to a percent of the net Sponsor Fee received by the Sponsor during the previous month based on a running royalty rate of between eight (8) percent and sixteen (16) percent of such net Sponsor Fees. WIP retains the right, but is not required, to terminate the license if the Sponsor does not meet a minimum royalty payment of $300,000 during the prior 12-month period, starting on the third anniversary of the License Agreement. The Sponsor has the right to sublicense its rights within the Field of Use in exchange for an obligation to pay a seventy-five (75) percent royalty based on revenue and/or any other compensation, if any, collected from such sub-license.
I'm not sure what IP the wiklevoss' company WIP has licensed to the trust, but getting a free $300,000/year sounds like a good deal from them and not so much for the unit holders.
So the winklevoss' license IP to the fund , use their exchange to price the fund and the custodian of the fund is Gemini Trust Company, LLC, which they also control.
One other thing that looks dubious is that the sponsor is Digital Asset Services, LLC, You might google that and find Digial Assests https://digitalasset.com/ a legitimate blockchain company, but you'd be wrong.
> The Trust’s Sponsor is Digital Asset Services, LLC. The Sponsor is a Delaware limited liability company formed on May 9, 2013, and is wholly-owned by Winklevoss Capital Management, LLC (“WCM”).
So the name is about as close as you can get without being the same, I mean I'm trying really hard to see a way in which this isn't intentionally misleading, but sadly failing.
I mean, shit, why not just write these guys a cheque and buy your own bitcoins.
>One other thing that looks dubious is that the sponsor is Digital Asset Services, LLC, You might google that and find Digial Assests https://digitalasset.com/ a legitimate blockchain company, but you'd be wrong.
>> The Trust’s Sponsor is Digital Asset Services, LLC. The Sponsor is a Delaware limited liability company formed on May 9, 2013, and is wholly-owned by Winklevoss Capital Management, LLC (“WCM”).
>So the name is about as close as you can get without being the same, I mean I'm trying really hard to see a way in which this isn't intentionally misleading, but sadly failing.
I think I'm probably misinterpreting this, but you appear to be ignoring the really obvious fact that Winklevoss' "Digital Asset Services" predates digitalasset.com
> This represents an interesting arbitrage opportunity. This could end up like PHYS or SBT/CGT where they tend to trade at a discount to NAV.
It should trade at a discount to NAV. Bitcoin held indirectly through fractional ownership of an entity that can be defrauded or bankrupted is worth less than Bitcoin I can hold securely myself.
But since traders can short the Trust, there's a real possibility that a short squeeze could drive the price of shares much higher than NAV.
For example, see what happened to Volkswagen stock when there weren't enough shares for short sellers to cover.
I think this is made for rich people who don't understand computers let along technicals of bitcoins, who want to own hundreds of thousands of dollars or even millions worth, but don't want to worry their computer getting hacked or just even stop working, everyone has had that happen before.
This trust could be hacked, and it is probably a much larger target than any individual investor's bitcoin wallet. I think the risk of this trust having all of its bitcoin stolen, leaving the investors completely screwed, is pretty high.
If they actually use cold storage - as they say they do, then those bitcoins aren't going to be stolen. It would be far more likely that the system that accounts for ownership would get attacked, and that is a risk that existed long before bitcoin (and a problem solved by direct bitcoin ownership).
For some reason I suspect that were the trust hacked and all your bitcoin nabbed, then you'd also discover that there was no recourse to recoup from anyone due to the way the corporation is set up?
This trust would make it trivial to hold Bitcoin in an IRA with tax free gains. The demand for this is so high that one alternative, GBTC, is trading at nearly twice the market price of Bitcoin.
That is plausible, but you have to believe that the bitcoin custodian will not lose your money or otherwise defraud you. Paper gains could be eroded in an instant. This is not like investing your IRA in a REIT or something.
Same as with gold ETFs or any other ETF. The amount of regulation in this space is enormous so these are hardly fly-by-night operations. This application has been pending SEC approval for years.
That doesn't mean much for the security of the trust's bitcoin wallets. The SEC has zero expertise in that area. What assurances do the investors have that they will not get screwed if some hackers steal all of the trust's bitcoins?
The investors certainly would be screwed if someone stole the trust's bitcoins.
There are a lot of risks inherent to investing in Bitcoin. I think risks to the network itself (mining centralization, regulatory concerns esp. in China, the halving, a catastrophic bug in Bitcoin Core, loss of market share to a competitor such as Ethereum, etc) are more worth worrying about than theft from this trust in particular. Cold storage procedures are well known and many exchanges have been successful in securing systems with a lot more exposure than this trust will have (including Gemini, which is backing this trust).
Risk is inherent in investing, after all. Without the risk you wouldn't have the potential for extreme returns that Bitcoin has.
That is all true. My concern about bitcoin ETF is that the custodian is a high value target. To paraphrase Brian Armstrong, it's a potential 1B dollar bug bounty. So you have to be really convinced that the security is flawless. Of course you could easily lose bitcoins that you hold yourself as well.
> The Trust values its bitcoin as measured at 4:00 p.m. Eastern time using the Gemini Exchange Spot Price on each Business Day. The Gemini Exchange Spot Price is the price of bitcoin on the Gemini Exchange as of 4:00 p.m. Eastern time on each Business Day.
So they are using the exchange they founded to price their bitcoin trust.............hmmmm
> While the Trust’s investment objective is for the Shares to track the price of bitcoin as measured at 4:00 p.m. Eastern time using the Gemini Exchange Spot Price on each Business Day, the Shares may trade in the secondary market on BATS at prices that are lower or higher relative to the NAV. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours and liquidity between BATS and larger Bitcoin Exchanges in the Bitcoin Exchange Market.
This represents an interesting arbitrage opportunity. This could end up like PHYS or SBT/CGT where they tend to trade at a discount to NAV.
> Under the License Agreement, the Sponsor is required to pay a monthly royalty equal to a percent of the net Sponsor Fee received by the Sponsor during the previous month based on a running royalty rate of between eight (8) percent and sixteen (16) percent of such net Sponsor Fees. WIP retains the right, but is not required, to terminate the license if the Sponsor does not meet a minimum royalty payment of $300,000 during the prior 12-month period, starting on the third anniversary of the License Agreement. The Sponsor has the right to sublicense its rights within the Field of Use in exchange for an obligation to pay a seventy-five (75) percent royalty based on revenue and/or any other compensation, if any, collected from such sub-license.
I'm not sure what IP the wiklevoss' company WIP has licensed to the trust, but getting a free $300,000/year sounds like a good deal from them and not so much for the unit holders.
So the winklevoss' license IP to the fund , use their exchange to price the fund and the custodian of the fund is Gemini Trust Company, LLC, which they also control.
One other thing that looks dubious is that the sponsor is Digital Asset Services, LLC, You might google that and find Digial Assests https://digitalasset.com/ a legitimate blockchain company, but you'd be wrong.
> The Trust’s Sponsor is Digital Asset Services, LLC. The Sponsor is a Delaware limited liability company formed on May 9, 2013, and is wholly-owned by Winklevoss Capital Management, LLC (“WCM”).
So the name is about as close as you can get without being the same, I mean I'm trying really hard to see a way in which this isn't intentionally misleading, but sadly failing.
I mean, shit, why not just write these guys a cheque and buy your own bitcoins.