October 4, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits✍️✍️✍️

  • A federal court ruled that the CFTC legally served Ooki DAO through a website help bot.
  • The Financial Stability Oversight Council, chaired by Treasury Secretary Janet Yellen, claimed crypto could threaten the stability of the financial system.
  • According to blockchain analytics firm TRM Labs, pro-Russian paramilitary groups have raised $400,000 in crypto.
  • In September, Ethereum mining and staking revenues were down over 50% as Bitcoin mining revenues decreased 16.2%.
  • Genesis will no longer be the authorized entity for Grayscale’s crypto trust products.
  • Tether’s CTO Paolo Ardoino said U.S. Treasury bills account for 58.1% of the company’s reserves.
  • Fiat exchange volumes fell in September for the fifth consecutive month.
  • The LeXpunK Army filed a motion for amicus status in the SEC case against bZx/Ooki DAO.
  • Popular NFT project Moonbirds announced the creation of a DAO for governance purposes.

Today in Crypto Adoption…

  • Account provider Eaglebrook Advisors and Cathie Wood’s investment firm Ark Invest launched a partnership to make investing in crypto strategies more accessible.
  • Crypto exchange Binance signed an agreement with Kazakhstan to host its regional headquarters in the country.
  • YPF, Argentina’s state-owned energy company, announced it is supplying power to an undisclosed mining firm.

The $$$ Corner…

  • According to a filing with the SEC, NYDIG’s institutional bitcoin fund has raised $719.9 million to date.
  • Gaming technology startup Improbable is set to raise a new funding round of $111 million.
  • Crypto protocol Golden garnered $40 million in a round led by a16z.
  • Exponential, a decentralized finance platform, closed a $14 million seed round.
  • Stems, a Web3 music platform, raised $4 million in a pre-seed funding round.

What Do You Meme?

What’s Poppin’?

Kardashian Pays a $1.26 Million Fine for Allegedly Promoting a Security

by Juan Aranovich

 

Kim Kardashian settled charges with the Securities and Exchange Commission for promoting a crypto asset that the SEC considers a security without proper disclosures.

The reality star agreed to pay $1.26 million in penalties, disgorgement, and interest for touting a project called EthereumMax. Kardashian also agreed to cooperate with the ongoing investigation.

According to the SEC’s order, Kardashian received a $250,000 payment for an Instagram post about the EMAX tokens, which included a link to the project’s website and a guideline on how to purchase the token. As EMAX is considered a security by the SEC, Kardashian should have made a disclosure of the payment she received, and thus violated the anti-touting provision of the federal securities laws.

Andrew Hinkes, Web3 legal expert, said the settlement has implications for questions around which tokens are securities: “It’s interesting to see that the consent order (once again) includes conclusory allegations that the token at issue was a security without the SEC bringing a claim vs the issuer or giving the issuer an opportunity to dispute the conclusions found in the consent order. While the consent order doesn’t determine the issue & has no precedential effect against the issuer, it maintains the pattern of ‘indirect enforcement.’”

Anthony Sassano, host of the Daily Gwei, criticized this action from the SEC. “They went after Kim Kardashian because she makes a good headline and it shows the public that the SEC is ‘doing something’ about crypto scams,” he wrote on Twitter.

Tom Schmidt, managing partner of Dragonfly and host of The Chopping Block, took it a little more humorously. “In all truth, if you’re making investment decisions based on Kim K’s instagram stories, I’m not sure there’s any amount of investor protection that’s going to save you,” he said.

Gensler published a video warning investors about the potential risks of trusting an influencer to make financial or investment decisions. “Celebrity endorsements … don’t mean that an investment product is right for you or even, frankly, that it’s legitimate,” he says, as scenes of over-the-top influencers shilling tokens play on screen. The video is part of a series that the regulators call “Office hours with Gary Gensler,” in which the SEC Chair explains some topics related to the agency.

The token EMAX is trading at $0.000000006298, according to CoinGecko. At its peak in May last year, which coincided with the promotion of Kardashian and other celebrities, it hit a high of $0.000000597636. That’s a lot of zeros, but the takeaway is that since then, the token has lost 99% of its value.

Recommended Reads

  1. Ryan Berckmans on decentralized chains
  2. cs361 on capturing mercenary capital
  3. Christine Kim on the risks of Cosmos 2.0

On The Pod…

Sam Bankman-Fried, founder and CEO of FTX, discusses his views on crypto regulation, macroeconomics, and the role of FTX in a decentralized industry. Show highlights:

  • whether the market has already bottomed and the influence of macroeconomics
  • why Sam thinks regulation could have a significant impact on the crypto industry
  • the impact of the Terra collapse, Sam’s thoughts on stablecoins, and the importance of disclaimers
  • what the industry can do to prevent high leverage from crypto companies like Three Arrows Capital
  • how crypto lenders should manage risk in a sustainable way
  • whether the crypto collapses affected the opinion of lawmakers and regulators
  • the topics and proposals that Sam is discussing with regulators and his philosophy on financial regulation
  • what Sam thinks about building a centralized entity in a decentralized space
  • what it would take for FTX to move back to the United States
  • why Sam’s political donations more commonly support Democrats, among which are some prominent critics of crypto
  • whether he makes political donations based solely on candidates’ crypto stances
  • the role of FTX in the TradFi market and whether crypto and TradFi will evolve toward or away from each other
  • concerns about potential conflict of interests between FTX and Alameda Research
  • the impact of the Merge, the value proposition of Ethereum and whether it affects the narrative of Bitcoin as digital gold
  • how FTX is positioning itself in this macroeconomic environment
  • the type of acquisitions FTX is interested in

Book Update

My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!

You can purchase it here: http://bit.ly/cryptopians