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| 1 | | A New York-based crypto startup, Prometheum Ember Capital, has become the first crypto company to obtain a special-purpose broker-dealer license under the U.S. Securities and Exchange Commission (SEC) guidelines. The license will allow the firm to custody securities in the form of digital assets on behalf of its individual and institutional clients. More: - The firm said the license could ultimately pave the way for its parent company, Prometheum Inc., and subsidiaries to offer crypto trading services, which is not possible through this license yet.
- The approval was considered a demonstration of the possibility that crypto businesses can be registered with U.S. regulators.
- SEC Chair Gary Gensler has been famous for his strict regulatory approach toward crypto assets over the years and has reiterated his belief that all crypto assets other than Bitcoin (BTC) are securities several times.
- Gensler has also repeatedly stated that existing rules are clear, and firms offering digital asset services to U.S. customers must come and register.
- Aaron Kaplan, co-CEO of Prometheum Inc., has pointed out that they would adopt the same approach as Gensler and offer custody service for the majority of digital assets, except for Bitcoin.
- Prometheum has yet to specify the tokens it will support, though it will depend on the firm's internal determination of whether a digital asset is a security.
Zoom Out: - Over the last several months, many crypto exchanges, including Coinbase, Kraken, Bittrex, and Binance, came under increased scrutiny by the SEC over the claims that they violate securities laws through their services.
- In 2020, the SEC published a policy statement under the leadership of its former chair, Jay Clayton, urging crypto-related firms to register as special-purpose broker-dealers.
- Reviews and approvals for the applications of these licenses are conducted by the Financial Industry Regulatory Authority (FINRA).
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What the numbers say: Bankrupt crypto exchange FTX's native token, FTT, briefly jumped over 12% on May 23. The increase came right after a new staffing and compensation report filed with the U.S. Bankruptcy Court for the District of Delaware confirmed the firm's plans to relaunch the exchange. The court filing dated May 22 has shown that new CEO John J. Ray III spent around seven hours on activities regarding a potential relaunch, billing more than $8,000. The details in the filing caused the token to briefly skyrocket in value on May 23 when the news broke out before it retreated to the average figures a day later. The token's volume also saw a significant increase by nearly threefold, jumping from $5.72M on May 22 to $14.33M on May 23 and $20.66M today. Relevance: FTX's relaunch plans were first revealed by the firm's attorney, Andy Dietderich, in April. At the time, the attorney said FTX was assessing the possibility of relaunching the exchange with its stakeholders, adding that the company recovered over $7.3B of crypto assets in cash and liquid. Dietderich also stated that the bankrupt exchange would make a final decision on a possible relaunch within the current quarter and underlined that a possible restart would require a significant amount of capital. Since then, the bankrupt firm has filed many legal motions to recover funds from several entities, including the bankrupt crypto lender Genesis. Brands that should care: Following the disclosure of relaunch plans, a Bloomberg report in April pointed out that the potential restart saw attention from Tribe Capital, a San Francisco-based venture capital (VC) firm with over $1.6B assets under management. At the time, the report claimed that the firm was preparing to lead a $250M fundraising campaign to revive the exchange. | | | |
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| 3 | | The Montenegrin High Court in the capital Podgorica has canceled the lower court's decision to release Do Kwon, the co-founder of the collapsed Terra ecosystem, on a $436,000 bail. The overturn means that Kwon will continue to be under arrest in jail. More: - The move came nearly one week after Montenegrin prosecutors objected to the bail agreement, sending the case to the higher judge to decide.
- The decision has also canceled another $436,000 bail agreement for Han Chang-Joon, the chief financial officer of Terraform Labs.
- The Montenegrin court accepted the bail proposal for Do Kwon and Han Chang-Joon earlier in May.
- The lower court will need to make another decision considering the High Court's rule.
- The bail agreement was expected to see the pair being released from prison pending trial and put under house arrest at an address determined by the court following the payment.
- Do Kwon and Han Chang-Joon were arrested at the Podgorica Airport in Montenegro in March while trying to fly to Dubai carrying falsified traveling documents.
- Both the U.S. and Kwon's native South Korea seek the 31-year-old Terra founder's extradition, though they do not have a direct extradition treaty with Montenegro.
Zoom Out: - The multibillion-dollar Terra ecosystem collapsed last year after its native token Luna's price plummeted nearly to zero in May 2022 and lost all its value against the U.S. dollar (USD), triggering a prolonged crypto winter.
- The collapse caused over $60B of money to be wiped off the crypto market.
- Do Kwon currently faces many lawsuits and investigations in several countries, including South Korea and the U.S., with allegations such as tax fraud, deceiving investors, racket collecting, and building a Ponzi scheme.
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| 4 | | Speaking at the Wall Street Journal's CEO Council Summit in London, Tesla CEO Elon Musk said he is not advising anyone to buy crypto or bet the farm on Dogecoin (DOGE) despite his renowned commitment to the popular cryptocurrency. Musk's warnings came amid increased criticism of the famous CEO's insistent support for Dogecoin. More: - During the interview, Musk also said Dogecoin is his favorite cryptocurrency because it has the best humor and dogs.
- Tesla's CEO has a strong history with DOGE, including his attempts to promote the token in his appearance on Saturday Night Live, purchase it for his son, and accept the cryptocurrency as a payment method for several commercial products and services of Tesla, SpaceX, and The Boring Company.
- Most recently, he further briefly shifted the logo of Twitter, which he owns, to the DOGE symbol.
- Through these moves and his Twitter posts, Musk caused the price of several cryptocurrencies, including Bitcoin (BTC), Dogecoin (DOGE), and Shiba Inu (SHIB), to skyrocket many times, especially in 2021.
- His support even made the famous CEO a defendant with his companies in a $258B Dogecoin lawsuit that accuses him of conducting a Ponzi scheme to support the popular meme coin.
- The lawsuit claims that Musk deliberately caused Dogecoin's price to jump over 36,000% in two years before allowing it to plummet.
- Despite all the backlash, in 2022, Musk tweeted that he would continue supporting DOGE wherever possible.
Zoom Out: - The largest crypto exchange Binance's CEO, Changpeng Zhao (CZ), also recently said he is very surprised that Dogecoin has not faded away yet, crediting Musk for a significant role in extending the token's lifetime.
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| 5 | | Japanese lawmakers have agreed to implement stricter anti-money laundering rules for the crypto industry as of June 1. The tightened regulations will expand the existing rules to include the Travel Rule, allowing the country to track criminal crypto transactions more accurately. More: - The move came shortly after the global financial crimes watchdog, the Financial Action Task Force (FATF), found Japan's anti-money laundering measures insufficient.
- The tightened rules will aim to make the country's national framework more coherent with global regulations.
- The Travel Rule requires crypto exchanges to share information on senders and recipients, including the names, addresses, and account information, with the recipient platform and legal authorities when they process a transfer worth more than $3,000.
- The rule has come under fire by the crypto community many times since it contradicts the industry's characteristics related to anonymity.
- The FATF strongly recommended the travel rule to be implemented to combat money laundering and terrorism financing through crypto in 2019 and urged its member states to adopt the rule as soon as possible in June last year.
- The latest G7 meeting held in Japan earlier in May also showed strong support for the FATF's efforts to accelerate the global implementation of the Travel Rule.
- Japan's Financial Services Agency (FSA) and Virtual Currency Exchange Association (VCEA) have similarly requested virtual asset service providers to implement the rule over the last two years.
Zoom Out: - Japan's crypto regulations are considered some of the most strict ones globally.
- The country's FSA also recently published a warning letter for several foreign crypto exchanges, including Binance, Bybit, and Bitget, claiming they operate in the country without proper registration.
- Rival crypto exchange Coinbase halted its operations in Japan earlier in 2023.
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| 6 | | The Solana Foundation, a nonprofit organization behind the famous Solana blockchain, has integrated AI into its network using a ChatGPT plugin developed by Solana Labs. The integration will allow users to interact with the Solana network directly from OpenAI's popular AI-powered chatbot, ChatGPT. More: - The plugin is currently available for download on GitHub.
- Solana co-founder Anatoly Yakovenko said they expect AI to make the Solana blockchain more usable and understandable.
- The Solana Foundation has pointed out that the plugin can be used to buy NFTs, transfer tokens, inspect transactions, interpret public account data, and find NFT collections by floor price.
- The nonprofit organization has also announced that it would increase funding for grants dedicated to projects focusing on incorporating the Solana blockchain with AI from $1M to $10M.
- The ongoing grants program has already received 50 applications.
- Besides, the foundation has launched a three-month accelerator program for university students experimenting with blockchain and AI technologies.
Zoom Out: - AI has become a rising trend in the crypto industry over the last months as several crypto exchanges, including Bybit, OKX, Binance, and Crypto.com, integrated AI-powered tools into their platforms.
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- The Chinese city of Nanjing has launched a government-backed metaverse platform to boost research and development on the metaverse in the country.
- Num Finance, a decentralized finance (DeFi) protocol, has announced that it would offer stablecoins pegged to the Brazilian real, Colombian peso, Mexican peso, and Bahrain dinar within June, expanding stablecoins in Latin America and the Middle East.
- In its latest filing to the Third Circuit of the U.S. Court of Appeals, the crypto exchange Coinbase stated that the U.S. Securities and Exchange Commission (SEC) has no intention to provide clear rules for crypto in the near future.
- The U.S.-based crypto exchange Gemini's founders, Cameron and Tyler Winklevoss, met with the U.K.'s Financial Conduct Authority (FCA) and the Bank of England (BoE), the country's financial regulator and central bank, to discuss a potential move to London as the platform intensifies its global expansion plans due to the tightened regulatory environment in its native.
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INSIDE CRYPTOCURRENCY LEADERBOARD (30 DAYS) |
 | Staff Writer | | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. | | This newsletter was edited by Aaron Crutchfield | |
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