Bitcoin ETFs Bleed $490 Million as BlackRock Faces Fraud Scandal
Major crypto ETFs (Bitcoin and Ethereum) posted $672 million in mixed outflows on Thursday, October 30. BlackRock’s IBIT ETF misplaced $291 million, and ETHA shed $118 million.
Meanwhile, a $500 million telecom-financing fraud tied to BlackRock’s private-credit arm has rocked institutional markets, elevating new issues about danger administration and due diligence.
Institutional ETF Redemptions Show Risk Aversion
Institutional purchasers of main asset managers pulled $490 million from Bitcoin ETFs on October 30, in keeping with data from Farside Investors.
BlackRock’s IBIT led the exodus with $290.9 million in redemptions. Fidelity, Bitwise, ARK, Invesco, VanEck, and Grayscale additionally recorded heavy outflows. Ethereum ETFs noticed $184 million in losses, with BlackRock’s ETHA accountable for $118 million.
The magnitude of those withdrawals indicators a broader retreat from danger as macroeconomic uncertainty grows. Analysts see the outflows as profit-taking and portfolio trimming moderately than panic promoting.
Notably, this coincides with a better scrutiny of BlackRock following revelations of large-scale fraud in its non-public credit score division. The timing has elevated nervousness amongst traders.
BlackRock Fraud Scandal Reveals Private Credit Risks
BlackRock’s difficulties transcend ETF outflows. Bloomberg stories that its private-credit arm, HPS Investment Partners, misplaced over $500 million in a telecom-financing scheme involving pretend accounts receivable.
Court filings within the New York Supreme Court allege that debtors Broadband Telecom and Bridgevoice used cast contracts and invoices from corporations like T-Mobile and Telstra as collateral for sizable loans. The court docket paperwork additionally define years of systematic forgery and misrepresentation.
The fraud was uncovered in August 2025, leading to bankruptcies and lawsuits. BNP Paribas, BlackRock’s companion in making these loans, can be named within the litigation.
The scandal emerged simply 90 days after BlackRock acquired HPS for $12 billion. The buy, finalized on July 1, 2025, aimed to broaden BlackRock’s attain in non-public credit score. Instead, the invention has raised questions concerning the firm’s due diligence and danger oversight through the course of.
Notwithstanding, BlackRock stays the clear chief within the ETF area regardless of this turbulence. According to US Crypto News analysis, IBIT attracted $28.1 billion in web inflows because the begin of 2025, outpacing all opponents mixed.
Removing IBIT, the sector would have seen web outflows of $1.2 billion this yr. Such focus raises issues about systemic dangers if BlackRock have been compelled to chop publicity or confronted main redemptions, doubtlessly draining liquidity throughout the crypto ETFs market.
Short Liquidations and Market Volatility on the Horizon
As institutional cash exits Bitcoin ETFs, leveraged merchants now face extra danger. Whale Insider noted on X that greater than $3 billion in Bitcoin brief positions could possibly be liquidated if the value reaches $112,600.
With Bitcoin buying and selling close to $109,287 as of this writing, it’s simply 2.48% away from this threshold. Therefore, even a modest rally would possibly set off a brief squeeze and speedy market turnaround.
This potential for sharp value strikes complicates the bearish outlook advised by ETF outflows. Liquidation information from Coinglass shows many brief positions gathered simply above present ranges. Any upward transfer may spark a cascade of masking.
The interaction between institutional redemptions and leveraged bets creates a precarious situation the place sentiment might flip rapidly.
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