Last years crypto market crash it triggered a series of bankruptcies that almost completely reshaped the digital asset industry. This year, government watchdogs appear to be arriving on the scene to finish the job.
Last week, the industry was hit with another deluge of compliance news, from the The SEC's threat to take legal action against coin base Inc. and its lawsuit against the Tron Blockchain Network to the apprehension of cryptofugitive Do Kwon. Even famous cryptocurrency promoters like actress Lindsay Lohan and rapper Soulja Boy got caught up in repression.
As the headlines piled up, events capped at a rally in Bitcoin that had been pushing the oldest token towards the closely watched $30,000 level. TO fails friday morning On the cryptocurrency exchange, Binance stopped trading spot for more than two hours on a platform whose market dominance has only grown as other players pull out, adding to the bad mood. Bitcoin moved around $27,500 on Saturday.
The course of the collision between the US government and the vision of true cryptocurrency believers of a system in which money can be freely exchanged around the world without "censorship" by the authorities accelerated by Terra blockchain failure stablecoin to maintain its $1 peg and the FTX bankruptcy last year, which combined to vaporize nearly $2 trillion of digital wealth. This month's implosion of crypto-friendly banks Silvergate Capital Corp. and signature bank has added fuel.
At the center of much of the recent action is the SEC's decision to treat many crypto assets. as values which must be registered with the agency and subject to all accompanying regulations. Needless to say, digital asset aficionados were furious with much of the news flow of the week, especially when it comes to publicly traded Coinbase, which says it has tried repeatedly engaging with the regulator was to no avail.
"A reprehensible amount of resources and brainpower have been spent in the US trying to engage with this SEC and trying to create substance and a path out of the spectral comments issued by the agency," Sheila Warren, executive director of the Crypto Council for Innovation. trade group, he said in an email. "In the meantime, most other major economies are actively in productive consultations with experts on how to land the regulatory plane."
The treatment of many cryptocurrencies as securities means the SEC is testing its authority, leaving a choice for those caught in its crosshairs: capitulate and pay a settlement with the regulator, or fight in court. Coinbase CEO Brian Armstrong has made it clear that the company will fight the complaint, tweeting that the process will prove "that the SEC has simply not been fair, reasonable, or even shown seriousness of purpose when it comes to its commitment to digital assets". .”
Six of eight celebrities promoting cryptocurrency, including Lohan and YouTube prankster turned boxer Jake Paul – Decided to simply cut the SEC a check after the regulator accused them of promoting coins traded on the Tron blockchain without disclosing that they were paid to do so.
DeAndre Cortez Way - aka rapper soulja boy – and singer Austin Mahone have not settled. Celebrities are silent on the whole issue. (For what it's worth, the only thing Soulja Boy was falconry this week in Twitter it was a pink hoodie with a cartoon image of her smiling face. That is almost definitely not a security.)
Of course, some of the reported crimes went beyond mere trading in unregistered securities. The case against Justin Sun and three of his companies connected to the Tron blockchain also involves accusations of fraud and market manipulation that artificially inflated token trading volume by encouraging employees to perform more than 600,000 laundering operations. Sun wrote on Twitter that he believes the SEC's complaint is without merit.
Do Kwon's indictment in the US, which came shortly after his arrest on Thursday in Montenegro, also revealed that the government believes the collapse of his Terra blockchain project was more than just a $60 billion accident. According to prosecutors, Kwon also allegedly participated in market manipulation and misled investors about certain aspects of the project. His US attorney did not respond to Bloomberg's request for comment.
By the end of the week, everything had started to look like a drama that could be called “Law & Order: Web3”. So what will the next episode entail? Many industry watchers are bracing for more shoes to drop.
"Overall, I expect we'll see more enforcement news like this in the future given that we're operating in an environment with little to no regulatory guidance," said Duke University finance professor Campbell Harvey.
For crypto-optimists looking for a silver lining, it's about looking to the future instead of dwelling on the ugliness of the past week. The latest bout of market drama “tells us nothing,” according to Aaron Brown, a crypto investor writing for Bloomberg Opinion.
“Useful attention should be paid to the new ships preparing to depart, the ones that will lead the next boom,” he said. Many of the events of the past week were just "the flotsam and debris washing up on shore long after the storm has passed."
Or maybe Soulja Boy put it best in his MySpace days when struck:: "On the Internet, I made them jump off the wall."
— With the help of Emily Nicolle
