Edition No. 11
The XRP v. SEC heavyweight bout continues; 3AC's blame game; Airdropped S&Cs; Gary Gensler on crypto's future; Russia's new crypto ban; and more. Here's what happened from 7/12/2022 - 7/18/2022.
Welcome to another edition of Around the Blockchain, the weekly letter dedicated to keeping readers like you up to date on the fast-paced world of Crypto & Law by airdropping current stories and projects directly to your browser.
Table of Contents:
1. On the Docket (Top 5 Stories of the Week)
2. Podcasts, Videos, & Blogs (The faces, voices, and pens of Web3’s brightest contributors)
3. Women in Crypto (We need more women in Crypto - this is our small contribution: A bi-weekly segment dedicated to the women changing the space).
4. Bird Watching (Tweet, tweet!)
5. Motion to Compel (Meant to provoke thought and action)
6. The Public Ledger (Highlights from our weekly library of sources, built by our Feedly AI)
7. Closing Statements
On the Docket
Five things you might have missed last week:
1. Ripple Wins Latest Legal Round To Compel SEC To Produce Evidence in XRP Lawsuit
Round 11 of the Heavyweight Title fight goes to XRP:
The latest round between the SEC & XRP was scored definitively in favor of Ripple, with the Honorable Judge Sarah Netburn denying the SECs attempt to withhold internal documents pertaining to former SEC Director William Hinman’s 2018 speech in which he stated that Ethereum was not a security. After a number of legal motions made in an attempt to preclude this evidence, Judge Netburn returned her opinion as follows:
“The SEC has distanced itself from the Speech to avoid discovery and sought to preclude Hinman’s deposition on the grounds that whatever he said in the Speech, it had nothing to do with the SEC’s position.
The hypocrisy in arguing to the Court, on the one hand, that the Speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency, and on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his Speech, suggests that the SEC is adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law.”
This is what they refer to in boxing as a devastating body blow. And the bell for the final round is about to ring.
See Also: finbold.com; zycrypto.com
2. Three Arrows’ Su Zhu Breaks Silence Accusing Liquidators of Playing Dirty
Alexa, play ‘Blame Game’ by Kanye West:
Su Zhu, the co-founder of the now defunct 3AC, has broken his silence by pointing the finger of blame at his liquidators in a recent tweet:
This was Zhu’s first tweet or public statement since June 14th. Defiant author Aleksandar Gilbert notes:
“Since that tweet, Three Arrows has defaulted on a $700M loan, been ordered by a court to liquidate and filed for Chapter 15 bankruptcy. All the while, Zhu and co-founder Kyle Davies have gone dark, ignoring media inquiries and allegedly ghosting creditors and even the court-appointed liquidators, who have taken control of the fund.”
See also: cointelegraph.com; theblock.com
3. See You in Court, Anon: UK Judge Allows Lawsuits via NFT Airdrop
You’ve been (digitally) served:
A U.K. court has ruled that individuals and entities can now be served legal documents via NFTs. Decrypt author Kate Irwin breaks down the new UK precedent which would allow would-be plaintiffs to seek damages from unidentified defendants via suit served by blockchain.
“A U.K. court last month granted the firm Giambrone & Partners LLP permission to serve legal proceedings to an anonymous individual via an NFT airdrop sent to the individual's crypto wallet, the firm reported Tuesday. Fabrizio D’Aloia, who is represented by Giambrone, is suing an unknown person—as well as the crypto exchanges Binance, Poloniex, gate.io, OKA, and Bitkub—over a loss of crypto funds.”
Though this offers a resort to consumers who have been made victim of crypto-crime, attorney Joanna Bailey questions the commitment of exchanges in aiding these investigations, saying:
“Should cryptocurrency exchanges act contrary to such orders and fail to ringfence the identifiable cryptocurrency, they risk being held liable for breach of trust.”
4. Gary Gensler Clarifies Plans for Crypto Regulations, but how will the Community React?
Fast-Forward to Tailored Investor Protection
Gary Gensler sat in the interview chair once again trying to encourage crypto firms to engage with the SEC on compliance. When asked about the recent flurry of bankruptcies, Gensler was adamant that, in his opinion, the main issue is firms' non-compliance, and that the SEC has clear rules in place for firms that issue securities. These rules could be tailored for the crypto asset class as Gensler highlighted:
“I’ve said to the industry -To the lending platforms and the trading platforms - Come in and talk to us. We have robust authorities from congress to use our exemptive authority so we can tailor investor protection.”
What this means in practice remains to be seen. The SEC alternates between the carrot and stick when it comes to regulating crypto, and with many crypto firms intent on not being classified as a security, Gensler's request for engagement may go largely unanswered.
5. Russia Bans Using Digital Assets for Payments
On Thursday, Russian President Vladimir Putin signed a bill into law prohibiting the use of digital assets as consideration for goods and services. Whilst the Central Bank of Russia called for a complete ban on crypto back in January, this latest bill focuses solely on payments and not investments, with the Russian Parliament website stating:
“It is prohibited to transfer or accept digital financial assets as a consideration for transferred goods, performed works, rendered services, as well as in any other way that allows one to assume payment for goods (works, services) by a digital financial asset, except as otherwise provided by federal laws.”
Claims that Russia could use crypto to side-step western sanctions have so far remained unproven. President Putin may think Russia has a competitive advantage when it comes to Bitcoin mining, but this latest bill may leave his citizens somewhat confused as to what the Russian government really thinks about cryptocurrency.
Podcasts, Videos, and Blogs
The brightest voices & sharpest pens:
Episode #55 of the Law of Code Podcast: Mike Wawszczak (@dotwavsz) is General Counsel at @alliancedao and a valuable contributor to the DAO ecosystem. Mike has written extensive twitter threads and insightful articles on all things DAOs.
The Bankless Podcast team covers Celsius, Vitalik’s upcoming book, the Aave Stablecoin, and more in this weeks ROLLUP:
The Unchained Podcast, hosted by Laura Shin, covers the events of this week in crypto:
The Thinking Crypto Podcast covers Gary Gensler’s most recent take on crypto regulation:
The Voices of Women in Crypto
Around the Blockchain firmly supports and advocates for gender equality in the community we all share, and that’s why we’re proud to announce our newest bi-weekly segment highlighting the Voices of Women in Crypto - written by Women, for Women.
By Nicole Fernandez Prada
Here’s the Tea:
The Voices of Women in Crypto will be a bi-weekly segment dedicated to highlighting women projects and talents in the Web3 space.
As this is our inaugural segment, we wanted to make it special by highlighting some of our friends from Around the Blockchain.
As women, we all know and understand how difficult it can be entering into a male dominated space. Luckily we’re so early in Web3 that we have the power to change the course.
Here are some of our favorite women telling us how their journey in web3 first started:
Co-Founder of Resolutio Cohort @Sne_vijayan:
“I started exploring blockchain as a means to develop affordable and accessible dispute mechanisms, in an age where cross-border commercial dispute resolution was inaccessible to many, due to its cost. Parallelly, I had been exploring the world of NFTs, primarily for my friends who had been looking for means to generate revenue doing something they were passionate about. In this process I learnt about the rise in NFT theft and duplication and the lack of affordable mechanisms to deal with. This led me to develop an affordable mechanism with decentralization and community participation as its foundation, and started building our platform Resolutio [www.resolutio.ai] with my co-founder Zarreen (@ZarreenNReza), to implement this.”
Law Student Collective Member @violetflocks:
“I first became interested in web3 during my first year of law school. I was exploring different specialty areas and, being a policy nerd, I naturally gravitated towards the hot topic of shifting regulation of crypto companies. Since then, I’ve joined a start up as a legal researcher and I’m fully invested in the web3 legal community.”
Blockchain Barristers Law Student Collective Member @tamaraszulc:
“I worked as an M&A research analyst prior to law school. Many of our work lunch conversations surrounded the GameStop short squeeze and Dogecoin. I began to self-study on investing, which eventually lead me to crypto and Web3. Now, I’m fully dedicated in educating myself more about the world of blockchain and their legal implications. Being part of Blockchain Barrister’s discord has played a big part in my growth, not only because of the friendly community but also because of the dedication many of the students and attorneys have.”
TryCrypto Community Lead @mari_0x:
“I graduated as an industrial engineer, but after working for 2 years in my field of studies, I decided I didn’t want to keep doing this anymore. Before quitting my full-time job, I signed up for Kernel B4, which is a web3 hackathon. I ended up learning about smart contracts, art and community. And this was the moment I fell in love with web3.”
TryCrypto Community and Marketing Team Lead/ Canes DAO Partnerships Manager @octopape:
“I dove into Web3 by accident. As a broke college student the pandemic really lit up my world to a completely new perspective on financial literacy, passive income, and my actual career. I started with learning about stocks, becoming a day trader, and onboarding into Web3. At first it was hard to keep up, I didn’t understand the capabilities of blockchain technology and the impact it can have. Now I collaborate with new exciting companies helping onboard women and new talents into the space.”
I hope you can realize that we all come from different backgrounds and are all in the space for individual reasons. In all, I think it’s quite nice to see everyone’s unique journeys into space. It shows that it’s possible for anyone to step in- even you.
This segment of the newsletter aims to be a collaborative one! Feel free to reach out to me on twitter @Ocotopape to let us know how you felt about this, if you have any comments, or if you want to be mentioned in the next one!
Make sure you read us next week to learn more about female-focus projects! - Nicole
Tweet, Tweet, Tweet!
At least my mom was proud of me.
@muneeb presents an examination of Ethereum through the Howey Lens:
@milesjennings calls out sub-par regulatory guidance as one of the primary causes of the recent lending crash:
The DAO Research Collective announces the 2022 Stanford DAO workshop, an intimate solution-oriented experience coming September 1st in collaboration with the Metagovernance Project and the Smart Contract Research Forum. If you’re interested in attending, apply here!
This newsletter is a warrant to knowledge equity
Motion To Compel
Thought-provoking questions and arguments for your consideration each week:
Crypto Lender Celsius Files for Bankruptcy After Cash Crunch
Another one bites the dust - by Yitzy Hammer
Recent events with crypto’s biggest lender, Celsius, serve to prove the importance of both DeFi protocols and DAOs within this burgeoning sector.
On June 13th, Celsius made the decision to halt withdrawals citing “extreme market conditions”.
It’s been a rough six weeks for Celsius users. But its about to get worse.
Yesterday, Celsius paid back $50 million in overcollateralized DAI to DeFi lending protocol Compound, signifying the clearance of the last of Celsius’ major debts to decentralized finance lenders. Earlier this month, Celsius paid off another loan to DeFi protocol Maker.
Altogether, Celsius has retrieved almost 1 billion dollars in loan collateral from repaying its DeFi debts.
However, no sooner after they had made these payments, Celsius filed for bankruptcy.
Oh well, another one bites the dust.
But there’s always a silver lining.
If anything good can come from the current crypto winter, its a renewed respect for DeFi. If nothing else, Celsius’ careful moves to repay their DeFi debts in order to release collateral, supports the notion that DeFi protocols are less susceptible to the dangers of financial antics than conventional finance.
The Public Ledger
Highlights from the hundreds of sources gathered each week by our research AI. Always DYOR - but in case you don’t have time, here’s some of ours:
General News and Opinion
An Open Letter to the Members of the House Financial Services Committee and of the U.S. Securities and Exchange Commission
Bitcoin requires an immense amount of energy. Here’s why that’s sparking a crypto backlash
U.S. - Federal
SEC Fines John McAfee’s Associate $375K in Penalties for ICO Promotions
Former Crypto Adviser Michael Barr Confirmed as Top US Financial Watchdog
US DOJ Announces Four Cryptocurrency-Related Fraud Prosecutions
CFTC Bitcoin Fraud Action Shows Authority Over Crypto Industry
Crypto Bill Would Put Energy Use Of Digital Assets In Context **
Voyager Judge Gets a Lesson in Crypto as Bankruptcy Kicks Off **
Crypto Co. Owner Duped Backers With Golden Lies, Jury Told **
Class action law firm starts investigating Solana Labs over potential securities violations
U.S. - State Law
South Florida Law Firm Accepting Cryptocurrency in 'Leap of Faith' Sparked by Client Desire
Proposed CA Crypto Regulatory Scheme Would Require Licenses, Disclosures for Digital Asset Businesses
NY Court Backs $5.2M Arbitration Award For Bitcoin SV Hack **
Proposed Legislation in New York Could Reduce State’s Carbon Footprint, But May Present New Challenges For Cryptocurrency Miners
State Attorneys General Poised to Elevate Regulatory Scrutiny of Digital Asset Businesses
New York judge freezes assets of Three Arrows Capital as crypto firm's founders remain underground
Binance ban off the cards, says Philippine trade and industry department
Indonesia regulator bans trading firms from issuing certain financial products
Bank of England Governor on Crypto Regulation: ‘People Don’t Fly for Long on Unsafe Airplanes’
South African Reserve Bank Set to Regulate Cryptocurrencies as Financial Assets
Sri Lanka Keeps Crypto Illegal Despite Ongoing Economic Turbulence
Cryptocurrency exchange OKX gains approval to operate in Dubai
MiCA and ToFR: The EU moves to regulate the crypto-asset market
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If you didn’t enjoy it, let us know why! We value the opinion of our readers above all else. After all, this letter is for you. - Kyler & Chris
Quote of the Week:
“Change is the law of life. And those who look only to the past or present are certain to miss the future.” - John F. Kennedy
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This newsletter is curated, annotated, and edited by Christopher Foreman (Twitter - @CryptlessInSEA) and Kyler Wandler (Twitter - @KylerW56); with consultation and input from Jacob Robinson of the Law of Code Podcast; editing courtesy of TΞxas ₿l◎ckchain LawyΞr ; in collaboration with Ann Sofie Cloots; and support from the Blockchain Barristers Law Student Collective and the Stetson Blockchain & Law Society.
The articles and opinions in this newsletter are not legal or financial advice. For legal and financial guidance, please consult a qualified attorney or financial advisor.
Special thanks / image credits:
Law / Scale Image; Twitter Image; Blockchain Image; Podcast Image; P / L Image; Tea GIF;