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SEC To Crypto: Kill It Till It’s Dead

Coinbase IPO Year: 2021

The year the SEC claims $COIN has operated as an unregistered broker: 2019

Feels kind of like you get the ok to do something, but later you get into trouble. 😖

That’s like a traffic cop giving you a driver’s license and then later claiming you were driving without a license all along.

It’s akin to a bank approving a loan application and then, two years later, retroactively claiming the borrower never met the eligibility criteria.

Today’s Litepaper is all about the SEC’s war on crypto. ☢️

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

TRON (TRX) $0.077 -0.80%
OKB (OKB) $45.04 -0.99%
Monero (XMR) $144.97 -1.23%
Stellar (XLM)
Bitcoin (BTC)
XRP (XRP) $0.518 -1.81%
Ethereum (ETH) $1,855 -1.92%
Litecoin (LTC) $88.95 -1.97%
Shiba Inu (SHIB) $0.00000793 -2.09%
 Avalanche (AVAX)
Altcoin Market Cap
$583 Billion
Total Market Cap $1.112 Trillion -3.01%

Everyone Is Pissed At The SEC Featured Image

Here’s a quick rundown of just some of the responses out there to the SEC’s attack on crypto:

Senator Bill Hagerty – “The SEC is weaponizing their role to kill an industry. Allowing a company to list publicly and then stonewalling their attempts to register is indefensible. Expect to hear from Congress.”

Senator Cynthia Lummis – “… The SEC’s continued reliance on regulation by enforcement continues to harm consumers.”

Cameron Winklevoss – “Being sued by the SEC used to mean you probably did something wrong. Now it means you’re probably doing something right.”

Jim Cramer – “All these crypto assets seem to be fraudulent, and I want you to get out of them”

Zmanian – “The claim NewTendermint is a significant contributor to Cosmos. No contribution occurred.”

$COIN CEO Brian Armstrong: 

$COTI‘s Shahaf Bar-Geffen says a lot and nothing at all in a three-piece Twitter thread:

Ripple’s ($XRP) Brad Garlinghouse:

The Cardano Foundation, in a typical professional fashion, tweeted it disagreed with the SEC’s classification of $ADA as a security:

Just a taste of what’s going on and being said out there – and they keep piling up. 

And Now Coinbase Featured Image

Probably don’t have to spend a whole heck of a lot of time here, but if you didn’t know already, *gasp* the SEC is going after Coinbase now, too.

The SEC claims that $COIN has operated as an unregistered broker since at least 2019. The other things Coinbase is accused of:

  • Operating as an unregistered Securities Exchange
  • Operating as an unregistered Clearing Agency

But, they were cool with Coinbase’s IPO in April 2021. 

On the same day, *gasp* Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin have likewise gone after Coinbase. 

While Coinbase has expressed a willingness to work with the SEC, it disagrees with the SEC’s position that all digital assets on its platform should be registered as securities.

In the February 13, 2023, Litepaper, we looked at Coinbase’s public posts that they’re ready, willing, and want to duke it out with the SEC, so this isn’t a big surprise. 

Gensler In 2021 Said SEC Does Not Have Authority To Regulate Crypto Featured Image

From May 6, 2021, in front of the House Committee on Financial Services:

You can’t blame the SEC for these kinds of oversights; they only have thousands of employees versus the tens of millions of internet sleuths in crypto. 

The Twitter thread from MetaLawMan (a popular crypto attorney) is very informative but do your research and due diligence. 

With the war for crypto independence in full swing, traders, investors, and degens alike must treat any information as suspect. 🕵️‍♂️

The Hateful Eight Featured Image

The SEC listed several cryptocurrencies as securities in their lawsuits against Binance and Coinbase – eight of the nineteen were mentioned in both.

How are they doing today? Let’s look:

$SOL  -7.46% 

$ADA -9.06%

$FIL -5.61%

$MATIC -6.45%

 $SAND -7.47%

$MANA -8.15%

$ALGO -7.61%

$AXS -7.01%

Not so great when compared to the total market cap, which is down only -2.88%. And some of their charts look worse than the others. 

But none look as bad as Algorand’s weekly chart. Oof. 

ALGOUSD Weekly Chart – Click to enlarge.

ALGO is on its eighth straight week in the red and poised to hit a new all-time low for a weekly close, surpassing the March 2020 low. 


Bullets From The Day:

🛳️ $ARK Invest Management has continued to increase its stake in Coinbase, purchasing an additional $21.6 million worth of shares and reaching a total stake of 11.44 million $COIN shares. Despite the lawsuit between Coinbase and the SEC, ARK Invest has doubled its investment in the crypto-exchange platform. Cathie Wood, the renowned investment figure, remains a staunch supporter of Bitcoin and the crypto sector, believing they hold revolutionary potential for various industries. Coinbase’s share price has recently dropped by 18% due to the lawsuit, with CEO Brian Armstrong suggesting that a resolution may come from new legislation introduced by the US Congress.

👋 Outgoing Montenegro Prime Minister Dritan Abazovic has called for an investigation into alleged business connections between Do Kwon and Milojko Spajic, leader of the Europe Now political movement. The allegations arose from a letter sent by Kwon to Abazovic, the outgoing Justice Minister Marko Kovac, and the Special State Prosecution, claiming financial backing for Europe Now.  Abazovic expressed concerns about Montenegro becoming a hub for global fraudsters and confirmed that he received Kwon’s letter. While Spajic denies the allegations, he admitted to investing in Terra and accused Kwon of being a fraudster. Spajic has shown interest in cryptocurrency and blockchain, including hosting an $ETH panel discussion and promoting the blockchain industry’s potential impact on Montenegro’s economy.

🏦 U.S. Treasury Secretary Janet Yellen discussed her evolving views on cryptocurrencies and emphasized the need for enhanced regulation to protect consumers and investors. Yellen referred to reports from the Treasury that examined the risks associated with cryptocurrencies and acknowledged the existing risks to consumers and investors. While she expressed confidence in the current legal framework and regulatory bodies like the SEC and CFTC, Yellen identified gaps that could be addressed with additional regulation. She voiced support for these agencies to utilize their regulatory powers and expressed her desire to collaborate with Congress to strengthen the regulatory framework for cryptocurrencies.

🪙 The US House Financial Services Committee has scheduled a hearing on June 13th titled “The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem.” The hearing aims to address the regulatory landscape of cryptocurrencies and offer guidance for the industry. Republican lawmakers have also released a draft bill proposing a clearer regulatory framework.