Issue #45

Market Overview

As of the time of writing (Monday 5pm), the total market cap of the crypto asset market is $US1.09T, down (7.5%) from last week.

Below is the weekly performance of the top crypto and NFT assets. 

News Headline Highlights

• The US Securities and Exchange Commission (SEC) has sued Binance, Binance.US and CEO Changpeng Zhao (CZ) for alleged crimes including operating an unregistered securities exchange, flouting Know-Your-Customer rules, mishandling customers funds and misleading investors and regulators. The complaint also alleges that the following tokens are securities: BNB, BUSD, Solana, Cardano, Polygon, Filecoin, Cosmos, Sandbox, Mana, Algorand, Axie Infinity, Coti. 
  • In a blog post, Binance said: "We intend to defend our platform vigorously," adding that "because Binance is not a U.S. exchange, the SEC's actions are limited in reach."
• The following day, the US Securities and Exchange Commission (SEC) then sued Coinbase for alleged crimes including operating an unregistered securities exchange, broker and clearing agency. The assets that the SEC alleges are securities include: Solana, Cardano, Polygon, Filecoin, Sandbox, Axie Infinity, Chilliz, Flow, Dfinity, Near, VGX, Dash and Nexo.
  • Founder and CEO Brian Armstrong appeared on CNBC to share his perspective on the SEC’s actions. He also issued a statement on Twitter. 
  • Coinbase put out a video of relevant statistics.
  • Coinbase Chief Legal Officer Paul Grewal appeared on a podcast stating that the company will take the SEC fight to the Supreme Court if necessary.
• Binance Lawyers allege that SEC Chair Gary Gensler offered to serve as an advisor to Binance’s parent company in 2019.
• US Politicians have damned the SEC’s actions:
  • Senator Cynthia Lummis (R-WY) issued a statement criticising the SEC.
  • Senator Bill Hagerty (R-TN) issued commentary stating the SEC is attempting to unjustly destroy an industry.
  • Congressman Richie Torres (D-NY) shared thoughts with Market watch, noting that "The latest enforcement action against Coinbase is an egregious example of regulation by enforcement. It demonstrates a complete contempt for Congress which is in the process of developing a framework”.
  • Congressman French Hill (R-AR) blasted SEC Chair Gary Gensler for how his agency has handled cryptocurrency exchange FTX, commenting that the recent crackdown is a “cover your ass” (CYA) move. “He was out bashing Kim Kardashian, because she’s promoted crypto on some Super Bowl ad or something, when he should have been overseeing FTX, the biggest fraud and the biggest malfeasance in American financial history. And he’s opened up this year, in 2023, with all these enforcement actions, I think it looks like CYA to me.”
• The US Commodities and Futures Trade Commission (CFTC) approved CBOE Digital to clear margined digital asset futures. CBOE is now the first exchange/clearinghouse to be able to offer margin (as opposed to fully collateralized contracts).
• Dawn Fitzpatrick, CEO of Soros Fund Management shared beliefs that “crypto is here to stay,” at a Bloomberg investment summit. Adding “what’s happened is clearly a setback. But right now I actually think it’s a huge opportunity for the incumbent financial firms to actually take the lead.”
• Schroders, a £738 billion ($916 billion) asset manager, is seeking to hire a third-party custodian for cryptocurrencies as they prepare an expansion into digital assets.

 Crypto Asset Project Updates

• The same day the SEC sued Binance, Thorchain integrated Binance Smart Chain, enabling users to trade BNB in a decentralised, trustless, permissionless and censorship resistant manner.
• Chainlink is working with SWIFT and more than a dozen major financial institutions on experiments to enable connectivity to and interoperability across public and private blockchains.
• Ethereum developers have agreed on the specifications of the upcoming ‘Dencun’ upgrade, which is supposed to go live at the end of 2023. The core upgrade is EIP-4844, known as proto-danksharding, to decrease gas fees for layer 2 rollups. It also included four other EIPs.
• Optimism, a layer 2 scaling solution to Ethereum, successfully completed its Bedrock upgrade, improving the functionality of the chain by cutting deposit-confirmation times from 10 minutes to 1 minute, and lowering gas fees by 40%.

Regulation Station

• House Financial Services Committee Chairman Patrick McHenry announced a full committee hearing for Tuesday June 13th entitled: "The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem".
• Congressman Patrick McHenry (R-NC), chair of the House Financial Services Committee, released a new draft of the leading U.S. legislative proposal for overseeing stablecoins, and it includes some of the positions of Democratic lawmakers.
• Robinhood Chief Compliance Officer Dan Gallagher told lawmakers that the popular trading firm tried unsuccessfully to register with the SEC as a special-purpose broker for digital assets. Gallagher commented that the SEC was unable to guide them into compliance. Magnet quick take: If Dan Gallagher, a former SEC commissioner who has spent a career in securities and corporate law, cannot get answers from the SEC then it is unlikely anyone will without a regime change… The agenda of the SEC is becoming pretty clear…
• Circle, the company behind the USDC stablecoin, hired Heath Tarbert, the former Chairman of the CFTC as their new Chief Legal Officer.
• Circle obtained a Major Payment Institution (MPI) licence from the Monetary Authority of Singapore — allowing their affiliate, Circle Internet Singapore, to offer digital payment token services and cross-border and domestic money transfer services in the city-state.

The Weekly Deal Room

• BitGo, a leading provider of digital asset custody solutions, signed a non-binding term sheet to acquire 100% of the equity of Prime Core Technologies.
• Taiko Labs, a crypto startup focused on scaling the Ethereum blockchain, announced they’d raised $22m across two rounds. The first (Q3 ‘22) was a $10m Seed raise led by Sequoia China and the second was a recent $12 million pre-Series A round led by Generative Ventures.
• Meanwhile, a life insurer whose policies are denominated in BTC, raised $19m at $100m valuation from Sam Altman, Lachy Groomand Gradient Ventures.
• Lens Protocol, a decentralised social media application (like twitter), raised $15m in a funding round led by IDEO CoLab Ventures.
• Argus, a web3 game developer and publisher, raised $10m in a Seed Round led by Haun Ventures.
• Nori, a web3 carbon removal marketplace, raised $6.25m in a funding round co-led by M13, Toyota Ventures, Placeholder and Cargill.
• Informal Systems, a Cosmos developer group, raised $5.3m in their first funding round led by CCMC Global.