Edition No. 2
They say a news week in crypto is equal to six months in any other industry. Here's what happened from 5/08/22 - 5/16/22.
Welcome to another edition of Around the Blockchain, a 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.
On the Docket
Five things you might have missed last week:
1. Terra (UST) & Luna Fall Over 90% in Crypto “Black Wednesday”
Three “Wise Men” & A De-Pegged Stable
By now, gentle reader, you’ve no doubt heard about the collapse of the Terra Blockchain, with both UST (the stablecoin) and Luna (the burn token) collapsing with unprecedented speed & force following the depegging of UST from the Dollar. In a matter of hours, upwards of $40 billion evaporated from the market. Terraforms Labs founder Do Kwon expressed his “heartbreak” for the protocol’s users and maintains that the protocol is salvageable despite the record-breaking losses.
The Collapse prompted US Treasury Secretary Janet Yellen to call for expedited implementation of a proposed regulatory framework designed by the PWG, FDIC, and OCC.
Additionally, Binance CEO Changpeng Zhao spoke on his disappointment over Terra’s handling of the collapse.
See Also: Blockworks.co/yellen-ust; coindesk.com/do-kwon; twitter.com/ben-di-francesco; YouTube.com/Terra Collapse Explained;
2. Empower Oversight Requests Investigation Into SEC Ethics Office In Ripple Case
Who Oversees the Overseers?
The nonprofit whistleblower and research organization Empower Oversight sent a letter to the Office of the Inspector General of the Securities and Exchange Commission (SEC-OIG) requesting an investigation into the SEC’s Ethics Office for failing to prevent conflicts of interest by former high-level SEC officials in the ongoing litigation against Ripple.
See Also: Text of Empower Oversight’s request; COINTELEGRAPH
3. South Korea’s Crypto Integrations
Bit By Bit.
Per leaked documents; South Korea appears poised to introduce a “Digital Asset Basics Act” seemingly aimed at building crypto-positive infrastructure, taxation guidelines, and financial regulations in the country over the next several years. Additionally, South Korea’s leading crypto exchanges have agreed to cooperate with the judiciary by including crypto assets in bankruptcy hearings.
See Also: Cryptonews.com; Cryptonary.com
4. Coinbase Registers With the SEC To Prevent Regulatory Setbacks
Prepare & Prevent or Repair & Repent.
In a preemptive move that surprised many in the Web3 community, Coinbase announced that they had shelf filed with the SEC during their earnings report earlier this week. The crypto-exchange giant claims to have done so in order to “have better access to capital markets quickly and efficiently when needed.”, but many see the move as preparation for compliance if the SEC wins it’s battle for regulatory authority over digitalized assets.
See also: blog.coinbase.com
5. Five States Order a Metaverse Casino with Alleged Ties to Russia to Halt Sale of NFTs
The House Always Wins?
Regulators from five U.S. States filed an emergency cease-and-desist order against Flamingo Casino Club’s selling of NFTs. The state securities boards claim that the metaverse-based virtual casino failed to disclose ties with Russian business interests, assets, and other required information.
The Public Ledger
Web-3 regulatory and legal news from around the world. Always DYOR - but in case you don’t have time - here’s some of ours.
General News and Opinion
DAO members may be jointly and severally liable for $55 million crypto theft
How Law Firms Should Prepare to Service the Growing Demand for NFT Work
She’s not your ‘Crypto Mom’: Hester Peirce’s fight with the SEC
Left to their own devices: No duty arises between cryptoasset software developers / controllers and cryptoasset owners
From 'Practically Nothing' to Full Practices: Law Firms See Growing Business in NFT Market
U.S. - Federal
U.S. charges New York man with fraudulently promising fast crypto riches
Nike requests counterfeiting claims be added to StockX lawsuit while Hermès NFT case moves forward
Regulators Considering Plan B If Congress Fails to Act on Crypto
Insider-trading scourge wooed to be crypto ally in U.S. Senate
SEC Charges Issuer with Failure to Disclose Source of Revenue Growth
Analysis: SEC’s Proposed Cyber Rules for RIAs, RICs, and BDCs
Chairmen from the SEC and CFTC talk crypto regulation at ISDA meeting
SEC's proposed amendments to definition of 'exchange': a potential game-changing impact on crypto companies
U.S. - State Law
New York State Department of Financial Services Takes Aim at Blockchain Entities Circumventing Sanctions on Russia
Tennessee's DAO Statute: A Trendsetter For Blockchain-Based Corporate Governance
Louisville real estate: City sees first Bitcoin purchase of home
Utah to Create Blockchain and Digital Innovation Task Force; Governor Signs Bill
Shanghai High Court Declares Bitcoin Virtual Asset Protected by Chinese Law
EU Commission Favors Ban on Large-Scale Stablecoins, Document Shows
France's drive to become European crypto hub blasted over regulation holes
Coinbase Warns Some Russian Users Their Accounts May Be Blocked
Belgium’s Crypto Service Providers To Go For Compulsory Registration
Podcasts & Videos
The brightest voices & sharpest takes.
In Episode #43 of the Law of Code podcast, Jacob Robinson & Jesse Pollak of Coinbase discuss all things Web3:
Laura Shin discusses the possibility of a deliberate attack on the Terra Blockchain in Episode #351 of Unchained:
Motion To Compel
Thought-provoking questions and arguments for your consideration this week.
Heads v. Tails - The Terra Collapse
Which side of the coin do you land on?
May 7 - @terra_money tweets about an “eventful day”, concludes protocol is still “humming” and $UST peg is “fine”.
May 8 through May 12 - Several more eventful days ensue, eventually Terra Validators halt the blockchain.
May 13th - Terra Founder Do Kwon (@stablekwon) addresses the community, expressing remorse for the fallout stemming from the collapse of $UST, optimism towards the future of decentralized economies in general, and stating nether he or any institutions he is involved with have profited from the incident.
May 16 - Luna Foundation Guard (@LFG_org) posts a thread breaking down a timeline and the organization’s response to the events of the week.
May 16 - One opinion (among very, very many) asserts that there may be some additional hard questions to be asked in the near future about Terra’s response and who was let off the hook while others were left holding the bags.
As always, DYOR and come to your own conclusions on these hard questions. The purpose of this segment is not to convince you one way or another, but rather, to surface opposing arguments and let you decide which is the most convincing. Here are some additional links to just a few of the litany of responses, analyses, and speculation surrounding this event that we came across over the last few days: @LFG_org; @coinbureau; @BenDiFrancesco; @BriannaWu; @jchervinsky; @web3canada; @DeFiDefenseLaw; @VitalikButerin; @OnChainWizard
Tweet, tweet, tweet!
After a week like this, some perspective from a guy who’s seen a thing or two can set the head & the heart at ease. A thread:
He’s got a point. Now if I could just fix my slice…
Ouch. Just ouch.
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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:
“Justice is itself the great standing policy of civil society; and any eminent departure from it, under any circumstances, lies under the suspicion of being no policy at all.” -Edmund Burke
Ok, all done! You can go ahead and check your P/L now (Coin Market Cap)
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 as well as support from the Blockchain Barristers Law Student Collective.
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.ojhh
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