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| Hey Insider! The week has closed with new developments regarding several ongoing legal disputes between leading crypto companies and U.S. regulators. Today's issue covers the details of these developments as well as some of the other biggest stories from the crypto market, such as Revolut's plans to expand its crypto team by 20% despite U.S. exit, Argentine regulators' investigation into OpenAI CEO Sam Altman's crypto project, Uniswap's leading position among decentralized crypto exchanges, and more. Enjoy your reading, and if you find this newsletter useful, please share it with your friends and colleagues! Doğa
p/dogayurduneri | |
| 1 | | Bankrupt crypto exchange Bittrex has agreed to pay a $24M penalty to settle the charges brought by the U.S. Securities and Exchange Commission (SEC) against it. In a lawsuit filed in April, the SEC alleged the company of offering securities services to U.S. customers without registering with the regulator. More: - The agency also claimed that the exchange violated investor protection laws by running as an exchange, broker-dealer, and clearinghouse at the same time without registration from 2017 to 2022, generating at least $1.3B in revenue.
- The commission believes these three functions should be separated, just as in traditional securities markets.
- The lawsuit named former Bittrex CEO and co-founder Bill Shihara and the global affiliate Bittrex Global GmbH as defendants in addition to the U.S. unit.
- In July, the firm filed a motion asking the court to dismiss the SEC's charges, arguing that the agency does not have the authority to regulate the crypto market unless Congress explicitly grants this authority to the regulator.
- In its motion, the platform also stated that crypto assets traded on secondary markets should not be classified as securities but as commodities.
- Following the latest decision, Shihara said he hoped the settlement plan would help the U.S. find a balance between protecting investors and promoting innovation.
Zoom Out: - Bittrex filed for Chapter 11 bankruptcy protection in the U.S. in May, nearly one month after it announced that it would gradually halt its operations there.
- In the filing, the exchange's Liechtenstein-based global entity, Bittrex Global GmbH, was excluded from the bankruptcy process, and the company said it does not plan to halt its global operations.
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What the numbers say: A recent report from the crypto data website CoinGecko has revealed the top ten decentralized crypto exchanges (DEX) by market share as of the end of Q2 2023. Uniswap kept its leading position among other exchanges, closing June with a 64.6% market share. The closest rival of Uniswap, Curve, was able to receive only an 11.5% share of the pie. In the top five, Uniswap and Curve were followed by PancakeSwap, Dodo, and Balancer, respectively. The market shares of the exchanges in the rest of the list failed to surpass 2%. Relevance: On the other hand, the decentralized exchanges' trading volumes briefly saw a strong jump, especially in June. From June 5 to 7, total daily trading volumes of Uniswap and Pancakeswap experienced a whopping 444% increase, reaching $792M. The sudden jump was mainly triggered by the increased crackdown of U.S. regulators on the centralized crypto exchanges. On June 5 and 6, the U.S. Securities and Exchange Commission (SEC) filed consecutive lawsuits against two major crypto exchanges, Binance and Coinbase, over alleged U.S. securities law violations. In the complaints, the agency labeled more than a dozen tokens as unregistered securities. Brands that should care: Within the last several months alone, many other crypto exchanges, such as Kraken, Gemini, and Bittrex, also faced intensified scrutiny by the SEC. The agency has long claimed jurisdiction over the industry based on SEC Chair Gary Gensler's argument that all crypto assets other than Bitcoin (BTC) are securities. Q: Do you find the SEC right about its jurisdiction claim over the crypto industry? Share your thoughts with us in the comments box. | | | |
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| 3 | | U.S.-based crypto conglomerate Digital Currency Group (DCG) has filed a new legal motion, asking a federal court to dismiss a lawsuit filed by the crypto exchange Gemini against the company. In its motion, the firm accused Genesis and its twin founders, Cameron and Tyler Winklevoss, of conducting a character assassination campaign against DCG and its CEO, Barry Silbert. More: - Gemini sued the bankrupt crypto lender Genesis Global's parent company, DCG, and Silbert last month, accusing the two of fraud and deception.
- The lawsuit claimed that DCG and Silbert made Genesis' troubles look like problems that would last a short time while they were, in fact, far deeper issues as the company was approaching bankruptcy.
- The dispute between Genesis and Gemini originated from a service dubbed Earn offered by the two entities to allow Gemini users to lend their coins out through Genesis to generate interest.
- However, Genesis' bankruptcy in January caused Gemini's Earn product to be halted, making some customer funds stuck.
- In May, Gemini submitted a claim to reimburse 232,000 Earn customers with more than $1.1B in assets as a major creditor in Genesis' bankruptcy process.
- In its lawsuit, Gemini also sought to recover damages and losses incurred directly from DCG's and Silbert's false, misleading, and incomplete representations.
- However, DCG's recent motion pointed out that Gemini failed to properly allege fraud charges.
Zoom Out: - Genesis Global filed for bankruptcy in January after freezing withdrawals in November 2022, mainly due to its exposure to the collapses of the crypto exchange FTX and crypto hedge fund Three Arrows Capital (3AC).
- Gemini and Genesis also face a lawsuit by the U.S. Securities and Exchange Commission (SEC) over the allegation that the Earn product offered unregistered securities.
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| 4 | | The U.K.-based neobank and financial technology (FinTech) company Revolut has decided to increase the number of employees in its crypto division by 20% by the end of 2023. The decision came shortly after the company announced that it would halt offering its crypto services in the U.S., citing the evolving regulatory landscape and uncertainties surrounding the crypto market in the country. More: - As part of the decision, the firm will hire more than 1,000 new employees across the U.K., Europe, and India.
- The move will add 40% of newly-hired employees to Revolut's U.K. unit.
- The potential candidates will be placed in various positions related to crypto compliance and investigations for global markets such as Spain, India, and Poland.
- At the time of the announcement of the U.S. exit, Revolut said its operations outside the U.S. would not be affected by the decision, and non-U.S. customers would be able to continue to use the firm's crypto services.
- The latest move also confirmed the company's commitment to the crypto industry, though the regulatory environment forced it to withdraw from the U.S.
Zoom Out: - Revolut's decision to leave the U.S. market followed two consecutive lawsuits filed by the U.S. Securities and Exchange Commission (SEC) against major crypto exchanges, Binance and Coinbase, over alleged U.S. law violations.
- In the lawsuits, the agency labeled more than a dozen tokens listed on these exchanges as unregistered securities, causing several platforms, including Revolut, eToro, and Robinhood, to delist some of those tokens.
- As part of its withdrawal, Revolut users in the U.S. will not be able to purchase any cryptocurrencies through the platform as of Sept. 2, while the wider restrictions related to selling and holding crypto will take effect on Oct. 3.
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| 5 | | Payment processing giant Visa has started working on a new experimental solution to allow users to pay Ethereum gas fees with a Visa card. The solution, tested on Ethereum's Goerli testnet, aims to remove one of the major barriers related to paying gas fees on the network. More: - The new solution utilizes the account abstraction technology and the ERC-4337 standard to eliminate the need to hold Ethereum's native token, Ether (ETH), to pay gas fees for the end-users.
- The method lets users pay gas fees with any USD-pegged token, such as USD Coin (USDC) and Tether (USDT).
- Currently, the obligation to keep ETH balance for gas fees forces users to use a third-party platform like Coinbase and Moonpay to convert fiat currency into ETH, causing new challenges.
- Visa's experimental solution targets eliminating these challenges with the help of a specialized smart contract, paymaster, that allows users to pay on-chain gas fees directly through a Visa card without having to maintain native tokens.
Zoom Out: - Visa deployed the paymaster contract on the Goerli testnet in May.
- Ethereum users pay gas fees to process transactions or use smart contracts on the network.
- Currently, these fees can only be paid in Ether (ETH).
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| 6 | | Argentina has joined other countries in launching an investigation into OpenAI CEO Sam Altman's crypto project, Worldcoin, to look into whether the project complies with the local data protection rules. The Argentine Agency for Access to Public Information (AAIP) said it opened a probe against Worldcoin over its customer data collection, storage, and usage practices. More: - The investigation aims to ensure that the project complies with the country's security and privacy regulations.
- The AAIP stated that citizens have the right to access clear information about the assignment, use, and purpose of the data collection and processing, especially when it comes to sensitive information like biometric data.
- The agency also underlined that such an entity must register with the AAIP, provide information about its data processing policy, indicate the purpose for collecting sensitive data, the retention period for that data, and offer details of the measures applied to protect personal information.
- The investigation came more than two weeks after Worldcoin officially launched its long-awaited WLD token.
- Since the launch, the project collected biometric data of customers in many Argentine provinces, including Buenos Aires, Córdoba, Mendoza, and Río Negro, in exchange for financial compensation.
- In response to the investigation, Worldcoin said it complies with all laws and regulations governing the processing of personal data in the markets where it is available, including Argentina's Personal Data Protection Act 25.326.
- The project has also previously come under scrutiny by data watchdogs in several other countries, including the U.K., France, Germany, and Kenya.
Zoom Out: - Worldcoin defines itself as a digital passport helping holders prove their identity, humanness, and uniqueness securely and privately through iris-scanning devices dubbed the "Orb."
- At the launch, the project already had two million users, who signed up and were verified through an Orb during the beta testing phase to receive the WLD tokens.
- However, the team behind the project plans to accelerate sign-ups by deploying the Orbs in over 35 cities across 20 countries worldwide.
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- A judge in New York revoked Sam Bankman-Fried's bail, sending him to jail to await trial after finding that the former FTX CEO tampered with witnesses.
- A new paper from the Bank of Canada, the Canadian central bank, has shown that an average Canadian citizen has little reason to adopt a central bank digital currency (CBDC).
- Cross-chain wallet BitKeep has been rebranded as Bitget Wallet, nearly five months after the Seychelles-based crypto exchange Bitget bought a controlling stake in BitKeep for $30M.
- Chinese tech giant Huawei's cloud computing unit, Huawei Cloud, has updated its documentation and user guides by adding a new section dubbed Web3.0 Node Engine Service, hinting at its intention to expand into the Web3 industry.
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 | 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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