Weekly Pizza Bits #16 - 12-Jun-2023 (It's a Bloody Week!)
1. SEC Filed a Lawsuit Against Binance & Coinbase With a Variety of Securities Law Violations
And so the war intensifies between the SEC and the whole crypto landscape. The US SEC has filed lawsuits against Binance & Coinbase for multiple securities law violations that will harm the crypto industry in the US.
I’m sure many of you especially the ones who are into the crypto space, have been up to speed with all the latest developments, but here’s a recap on all the things that have been said regarding the SEC war against crypto:
(A) Binance Highlights:
Some highlights regarding the SEC litigation on Binance. Original file attached here.
Internal chat logs between Sam Lin (former compliance lead at Binance) and Alvin “Bro” (previously head of business developer), which reveals evidence about the legality of Binance to be compliant to the SEC laws.
Binance US suspends USD deposits starting from 13-Jun-23, including a ban for ACH withdrawals, suspending USD recurring buy orders, delisting USD pairs (but continues to support crypto-stablecoin pairs). Other services such as trading, staking, deposits and withdrawals remain operational.
A rumour that Gary Gensler applied to serve as an advisor for Binance in 2019. It could be the other way around where Binance approached Gary Gensler to have him as advisor.
(B) Coinbase Highlights:
Some highlights regarding the SEC complaint against Coinbase. Original file attached here.
Paul Grewal (Chief Legal Officer for Coinbase) testified before the House Committee on Agriculture on the need for clear crypto rules and the Digital Asset Market Structure Discussion Draft Proposal.
An in-depth conversation between Coinbase CEO Brian Armstrong and the Wall Street Journal on the Crypto’s regulatory challenges.
(C) Other Highlights:
Robinhood ends support for ADA, MATIC & SOL after the SEC lawsuit on Binance & Coinbase announcement.
Crypto(.)com has also suspended their US institutional exchange services due to the “current market landscape”.
McHenry, Thompson, Hill, Johnson Release Digital Asset Market Structure Proposal to establish a viable regulatory framework for digital assets necessary to protect consumers and promote American innovation.
Senator Cynthia Lummis is working on a regulatory framework that will allow individuals and companies to own and trade digital assets in America.
More than 50 tokens have been clearly identified as securities by the US SEC.
Overall, I think it’s very immature of the SEC to call cryptocurrencies as securities without further research into the details on how they work, though I can understand why the SEC used this claim to sue crypto exchanges because currently, cryptocurrencies are listed in centralized exchanges like stocks, where they are being used to buy, sell and trade. In fact, these exchanges also offer other services such as staking & earn where there’s a touch of the Howey Test where there’s an investment of money in a common enterprise like Binance and Coinbase with the expectation of profits derived from them.
However, despite all the negativity that came in the aftermath of the SEC’s war on crypto, there’s also positivity in the fact that most people (even the senators who worked for the US Gov) denied of the definition of cryptocurrencies as securities.
In my opinion, cryptocurrencies are fundamentally more than just securities, they are a great option as an alternative currency and commodity to which I highlighted in my previous article in detail.
2. Atomic Wallet has been compromised, with the reported amount stolen has now surpassed $35M
In the sea of red, we also have more negative news on the wallet front. Atomic Wallet, one of the most popular crypto wallets that supports more than 1000 tokens, with other financial products such as staking, exchange and fiat onramps, has been compromised, where it’s been confirmed by ZachXBT (a very popular crypto detective for scams & hacks) that the total amount stolen has surpassed $35 Million.
Blockchain analysis firm Elliptic claimed that the hack may have potentially been linked to the Lazarus Group, the group that also hacked the Harmony ONE & Ronin bridges worth $100 million & $650 million respectively.
So far, there hasn’t been any further updates on the investigation, but some good crypto Samaritans managed to successfully rescue $1 million from the Atomic Wallet hacker for one of the victims, while most victims’ funds are not recovered.
The most important takeaway from this is:
Always use a hardware wallet if you’re planning to store large amounts of money, where your keys are kept offline as long as you don’t reveal them.
Never ever reveal your seed phrases to anyone! You’ll definitely be approached by many scammers if you try to ask for technical support in their socials. Always check for their official website, communicate via email for any enquiries and double check if it’s the correct email that you’re sending to with regards to the official website.
Atomic Wallet standardized a 12-word seed phrase format, but choose a 24-word seed phrase wallet will be more foolproof than a 12-word seed phrase.
3. Hong Kong has listed the tokens that are compliant for investors to purchased
To end this weekly bits on a positive tone, Hong Kong has listed the tokens that compliant exchanges allow retail investors to purchased, which are BTC, ETH, LTC, BCH, DOT, SOL, ADA, AVAX, MATIC & LINK.
The rise of crypto adoption from China, Hong Kong and other Asian countries like Singapore, Malaysia and Japan, with at least have a more supportive crypto regulatory framework than the US, will garner more attraction among the Asian communities to participate in a decentralized & self-sovereign economy that also enables poorer communities equal access to financial services in a permissionless manner.
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