April 19, 2023

Gensler’s Gobbledygook: Gags And Garbles On ETH, XRP’s Security Status

Tis’ but a pullback. ⚔️

There’s news galore and reasons aplenty on why the crypto market is down today – news is just one piece of data investors/traders seek out to find reasons for price movements.

From a technical perspective, this was expected, and it’s something we’ve looked at before – no major surprises here.

In today’s Litepaper, we explore the reasons behind Coinbase’s potential departure from the United States, Gensler’s heated questioning on Capitol Hill, and the possible downsides of Bitcoin reaching a valuation of $1 million.

Here’s how the market looked at the end of the trading day:

Tron (TRX)	$0.066	-0.65%
OKB (OKB)	$53.49	-1.31%
Monero (XMR)	$157.09	-2.76%
Bitcoin (BTC)	$29,321	-2.85%
Dogecoin (DOGE)	$0.089	-4.00%
Bitcoin Cash (BCH)	$126.84	-4.10%
Shiba Inu (SHIB)	$0.0000110	-4.26%
Cosmos (ATOM)	$11.90	-4.29%
Cardano (ADA)	$0.42	-4.40%
Polygon (MATIC)	$1.11	-4.46%
Altcoin Market Cap	$623 Billion	-4.71%
Total Market Cap	$1.19 Trillion	-4.13%

Crypto

Gensler’s Gamble: Glibly Avoids Answering If ETH, XRP Are Securities

Yesterday, during his testimony before the House Financial Services Committee, SEC Chairmen Gensler faced intense questioning and scrutiny.

And he got grilled. Hard. He looked about as comfortable as a penguin in the Sahara. 🐧

But instead of writing and paraphrasing the entirety of the hearing, I’ll leave some of the highlight reels from Twitter.

Representative Patrick McHenry asking the Chairman if $ETH is a security (visibly shaking hands when asked):

This entire opening exchange with Rep @PatrickMcHenry and Chair Gensler is worth watching in full.

Is Ether a security or no? It’s a very simple question.

“I asked you this in private. This shouldn’t be a surprise.” pic.twitter.com/DAx3fkGqSM

— Ryan Selkis 🪳 (@twobitidiot) April 18, 2023

Representative Warren Davidson on the SECs settlement with Kim Kardashian and the Ethereum Max debacle and :

I asked SEC Chair Gary Gensler about his selective enforcement in the @KimKardashian settlement.

Gary’s response? He can’t even answer the question.

Reason 1000 why Gensler needs to go! pic.twitter.com/eC9ji1Lwvg

— Warren Davidson 🇺🇸 (@WarrenDavidson) April 19, 2023

Representative Davidson introducing legislation to remove the Chairman from the SEC to “…correct a long series of abuses” 😲:

🚨I’m calling to restructure the @SECGov and the removal of Chair @GaryGensler.

Watch my closing remarks from today’s hearing where I lay out the abuse of power and failure to protect investors that has occurred. pic.twitter.com/SNXio9Zbej

— Warren Davidson 🇺🇸 (@WarrenDavidson) April 18, 2023

Representative Bryan Steil emphasized that although Chairman Gensler taught a course on blockchain technology at MIT and is now involved in regulating cryptocurrencies, he has never held any cryptocurrency himself:

We cheered Gensler when he became SEC Chairman because he taught about Bitcoin and blockchain at MIT.

Turns out, he’s never even owned it.

This guy is a sham. pic.twitter.com/wEdebrTZRg

— The Wolf Of All Streets (@scottmelker) April 18, 2023

And, finally, the exchange between Gensler and the biggest unabashed crypto supporter in Congress, Representative Tom Emmer 🔨:

🚨BREAKING!!!!! @GOPMajorityWhip TORCHING Gary Gensler and highlighting his and the SEC's complete and utter failure to protect ANY retail investors whatsoever

And lack of regulatory clarity + hostile enforcement against crypto in the US is pushing innovation offshores… pic.twitter.com/cDlt2BbUW2

— Tyler Strejilevich (@TylerSCrypto) April 18, 2023

Crypto

Regulatory Confusion in the US Could Send Coinbase Packing

$COIN CEO Brian Armstrong has hinted that the crypto exchange might consider moving its headquarters out of the United States due to ongoing regulatory uncertainty.

“Anything is on the table, including relocating or whatever is necessary. I think the U.S. has the potential to be an important market for crypto, but right now, we are not seeing the regulatory clarity that we need. I think in a number of years, if we don’t see that regulatory clarity emerges in the U.S., we may have to consider investing more elsewhere in the world.” – Coinbase’s Brian Armstrong

Speaking at London’s Fintech Week, Armstrong applauded the UK’s clear regulatory environment, which assigns the Financial Conduct Authority (FCA) as the sole regulatory body for securities and commodities.

Meanwhile, in the US, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) continue to have disagreements, leading to an unclear regulatory landscape that affects businesses like Coinbase.

Crypto

Maybe BTC At $1M Not Good?

Remember the wager Coinbase’s former CTO Balaji Srinivasan made calling $BTC at $1 million in 90 days (well, 60ish days now)? 🤔

Galaxy Digital Holdings’ CEO, Mike Novogratz, thinks that might not be such a good thing.

He recently shared his concerns about Bitcoin rocketing to $1 million a pop, saying it’d destabilize the economy and wreak havoc on civil society.

Although Srinivasan moved $2 million into USDC stablecoin to back his bet, an analyst dubbed “Pentoshi” warned that Bitcoin’s value soaring to $1 million, along with hyperinflation, might trigger civil unrest and restricted access to essential goods.

Novogratz also cautioned that Srinivasan’s bold bet could tick off the U.S. Treasury Department, stressing the need for a good relationship with regulators.

During his company’s Q4 2022 earnings call, Novogratz praised the crypto community’s resilience and the strong price action for Bitcoin and $ETH. He also criticized the US regulatory environment for stifling innovation and urged for a framework that enables legitimate players to operate in the US. 😤

Bullets

Bullets From The Day:

🩴 Bakkt (the one no one really remembers from 2019) is shifting to B2B2C crypto. They recently bought Apex Crypto for $150 million, a firm that enables clients to launch crypto offerings quickly while maintaining their brand identity. Bakkt’s new direction aims to find a better market fit while establishing trust in the crypto space where traditional finance brands don’t necessarily hold weight.

🏖️ This guy might have to sell his nudist beach due to a crypto scam. A LAIRD in Scotland resulted in a well-off property owner losing £130,000 to a counterfeit crypto exchange. Initially, he thought he had earned £400,000 on the phony platform, only to later discover that he could not withdraw his funds. What’s a LAIRD. Well, it has nothing to do with what I originally thought it was: something to do with LARPing. A LAIRD is someone who owns a big estate in Scotland. True story.

🚨 Do Kwon lost his bid to prevent the SEC from accessing his records at the Monetary Authority of Singapore. Accused of being the mastermind behind the multi-billion crash of $UST and $LUNA, Kwon has been on the run, finally nabbed in Montenegro last month. With a red notice from Interpol, the former crypto mogul might face over 100 years in prison in the US, while his homeland, South Korea, would hand him a “mere” 40 years if found guilty.

🍎 $APPL crypto users are at risk due to high-threat vulnerabilities in iOS and macOS operating systems, as reported by Kaspersky. The vulnerabilities enable attackers to gain root privileges and potentially compromise users’ crypto assets. Apple has issued updates to patch the latest operating systems and some previous versions in response to the threat. To protect their devices, users are advised to install the newest Apple updates and ensure their devices are running the recommended versions.

🕸️ Web3 development platform Alchemy’s report on DeFi opened some eyes. After Silicon Valley Bank’s collapse on March 10th, decentralized exchanges (DEXs) experienced a surge in activity, with daily transaction volumes nearly reaching 25 billion the following day, according to Alchemy. Although DEX trading volumes initially dropped 38% yearly, they bounced back with a 43% increase in Q1 2023. The report also highlighted a 126% YoY increase in NFT trading volume and a growing appreciation for their diverse use cases.