SEC declares war on crypto
Gary Gensler is determined to antagonize the entire industry, while Musk gets sued for insider trading.
Welcome to Stay on-chain! This week in the markets has been incredibly tumultuous. Fasten your seatbelts as we take you through what happened!
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SEC declares war on crypto
The US Securities and Exchange Commission (SEC) has filed a complaint against Binance.US and its CEO Changpeng Zhao (CZ), accusing them of mishandling customer funds, misleading investors and regulators, and violating securities rules. Binance responded by expressing disappointment with the complaint and stating its intention to vigorously defend the platform. The SEC also alleged that Binance improperly offered and sold two tokens, BNB and BUSD, as securities. The following day, the SEC took further action by requesting a freeze on their assets, both crypto and FIAT, totaling around $2 billion.
However, before the dust could settle, the SEC continued its offensive on the crypto industry by also suing Coinbase. The lawsuit alleges that Coinbase allowed users to trade unregistered securities disguised as crypto tokens, evading SEC regulations for years, and accuses the company of operating as an unregistered broker-dealer. In response, the CEO of Coinbase promptly pointed out that the company has been seeking clarifications on crypto regulations for many years and highlighted that the SEC reviewed and approved Coinbase's business status before its IPO in 2021.
Coinbase has repeatedly requested the SEC for clear rules regarding the crypto industry. The SEC never responded to these requests. The United States Court of Appeals has instructed the SEC to clarify its stance on Coinbase's petition for formal rulemaking within seven days. The SEC is now obligated to provide reasons for its decision regarding securities or present a timeline for reaching a conclusion.
In both lawsuits, the SEC explicitly identified multiple tokens as securities: BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, COTI, CHZ, FLOW, ICP, NEAR, VGX, DASH and NEXO. Notably, Ether (ETH) was not classified as a security, which can be seen, in an ironic way, as positive news for Ethereum.
Following these developments, Bitcoin experienced a 5% decrease in value, which may not seem significant (with the FTX saga, BTC lost over 25%). In the subsequent days, Bitcoin recovered almost all of its losses, demonstrating strong demand. On the other hand, Coinbase's stock fell by 20%.
Etherscan adds Advanced Filtering
The leading blockchain explorer Etherscan just released an advanced filtering tool that’s going to ease the pain of many. The new feature helps you query the blockchain with specific filters, such as type of transaction, sender, destination, amount, age, asset, and function used. Until now, Etherscan only had basic filtering, and advanced users had to resort to using SQL queries on websites like Dune—which require a certain amount of knowledge making it off-limits for novices. There’s still a long road ahead to truly make the blockchain human-readable, but companies like MetaDock that use AI to explain transactions are paving the way.
Dogecoin investors sue Elon Musk for insider trading
Dogecoin investors have filed a lawsuit accusing Elon Musk, the CEO of Tesla, of insider trading. Musk's support for Dogecoin through various actions, such as tweets and replacing the Twitter logo with DOGE, has significantly boosted the cryptocurrency's price. However, investors now claim that Musk's actions constitute insider trading and market manipulation. The lawsuit alleges that Musk deliberately deceived investors, promoted himself and his companies, and profited from Dogecoin through Tesla and his personal wallets. It also accuses him of selling $124 million worth of Dogecoin during the Twitter logo replacement, which caused a substantial increase in its value. This lawsuit adds to the previous $238 billion lawsuit that Musk sought to dismiss, accusing him of inflating Dogecoin's price.
US Senate passes debt ceiling bill
The Senate has recently passed a bill that extends the US debt ceiling for two years, thus preventing an economically catastrophic debt default. The bill, expected to be signed by President Joe Biden, includes various provisions such as capping spending, restarting federal student loan payments, and imposing work requirements for certain benefit recipients.
The bill also proposes to claw back about $28 billion in unspent Covid-19 relief funds, alter the permitting process for energy projects, and eliminate $1.4 billion in IRS funding. This legislative action could potentially impact various sectors, including decentralized finance (DeFi), due to its influence on economic conditions and fiscal management.
$35M siphoned out of Atomic wallet
Atomic Wallet, a notorious non-custodial wallet (meaning it cannot access your funds under any circumstance) has been recently hacked. At the time of writing, it’s estimated that about $35M has been compromised. Elliptic, a blockchain intelligence company, speculated that behind the attack stands the North Korean Lazarus group, which was the actor of the $100M Harmony exploit in 2022. The attack vector is still unknown, and Atomic stated that less than 1% of their active users have been affected. They are currently closely working with authorities and exchanges to track down and freeze the stolen funds. Although Atomic Wallet is technically non-custodial, its codebase is closed-source, necessitating a certain level of trust from the end user. Moreover, Least Authority, a privacy-focused firm, had previously warned them about vulnerabilities in their system.
As always: Don’t trust. Verify.
Moooore stuff for you
Bitcoin mining revenue topped $916M; Ordinals-based transactions have accounted for 34% of the data added to the Bitcoin blockchain in 2023, or close to 12.5GB—link
Binance.us delists 40 coins and pauses OTC trading following SEC lawsuit—link
Credit Suisse-backed Taurus integrates Polygon for its tokenization offering—link
Uniswap protocol fee proposal was rejected—link
Scammers impersonate UniSwap execs creating “the first Uniswap Asian Summit”—link
Optimism completes upgrade of its Layer 2 network—link
Around 40% of the circulating supply of BLUR is set to be unlocked on June 14—link
Aave prepares to launch GHO on the spree of crvUSD’s success—link
Coinbase is launching institutional-sized BTC and ETH futures in the coming days—link
Circle is launching USDC natively on Arbitrum today—link
Crypto-fundraising is the go-to tool if you’re curious about venture capitalists’ investments in the space. It lets you filter projects by round size & date, category, and funds involved; moreover, you can look into the portfolio of individual funds to check what eggs are in their basket.
To sum it up, they release weekly round-ups with the latest investments — currently, about $3.5B have been invested in the cryptocurrency industry since the beginning of 2023.
Arthur Hayes says BTC will never touch $20k again—link
frxETH v2 explained by its founder—link
LSDFi Summer Map: liquid staking derivative protocols ranked—link
Informal proposal to change ETH independent validator requirements—link
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Disclosure: Authors may own crypto assets named in this newsletter. Stay on-chain is meant for informational purposes only. It is not meant to serve as investment advice. Please consult your investment, tax, or legal advisor before making investment decisions.