Rug Radio Recap - June 11, 2023
In this week's recap, we're breaking down the SEC's charges against Binance and Coinbase. Also, Louis Vuitton unveils their Treasure Trunks NFTs.
gm fam! The week started off with a bang with the SEC filing charges against Binance on Monday, followed by Coinbase on Tuesday, accusing both of offering and selling unregistered securities, among other charges. The interesting point lies in the developments following the announcements as well as how the two companies responded.
The web3 community of course had a field day (or week) with the memes and videos flying everywhere. How did the markets respond, and what does it mean for the future of crypto? Let’s dive in.
Here's what we've got in this week's recap...
Rug Radio Updates
SEC sues Coinbase and Binance
Louis Vuitton unveils Treasure Trunks NFTs
Did you claim your Stubs Mint Passes or are you holding onto a few?
This week’s featured artist is Laurence Fuller, who created The Tulip Bulb Farmer, a poetic cinematic fine art piece. Laurence is an actor, poet, producer, and composer whose mission is to carve out a space for poetry in web3.
Today our STUBS Burn Artist is @LaurenceFuller 💎🌷
Burn 3 STUBS to claim their incredible piece titled "The Tulip Bulb Farmer" 🔥 🎟️
— Rug Radio (@RugRadio)
Jun 9, 2023
UNDER THE HOOD, CONSENSUS 2023
We’re a little late on this one, but our vlog from Consensus 2023 is up featuring scenes from the conference, LinksDAO Linkup golf tournament, and our Vibes in Austin event. In typical Austin fashion, shirts are optional.
SEC Sues Binance & Coinbase
Binance and Coinbase, two of the largest cryptocurrency exchanges, have recently found themselves entangled in legal battles with the U.S. Securities and Exchange Commission (SEC). While both exchanges are being accused of operating an unregistered securities exchange, the accusations against Binance are more complex and quite shocking.
The list of assets in the complaints that are being labeled as securities include popular tokens such Solana, Cardano, and Polygon, although each denied being securities as they are sufficiently decentralized and therefore don’t meet the common enterprise requirement of the Howey Test. However, Robinhood, another popular investing platform for crypto, announced its decision to cut support for these assets given the uncertainty.
Of the two platforms, the SEC came after Binance the hardest with charges including:
Operating an unregistered exchange, broker-dealer, and clearing agency
Misrepresenting trading controls and oversight
Commingling customer funds
And just when you thought the charges were tough, it got more interesting…
It was revealed that Gary Gensler, the chair of the SEC, had previously offered to be an advisor for Binance sparking speculation of a personal vendetta and conflict of interest.
The SEC filed a temporary restraining order to freeze assets on Binance.US citing a history of commingling.
As banking partners seek to distance themselves, Binance.US announced a pause on USD deposits and withdrawals as it transitions to a crypto only exchange. Another reminder to get your crypto off of exchanges.
Additionally, Bloomberg reported that senators Elizabeth Warren and Chris Van Hollen sent a letter to the US Attorney General claiming that Binance lied to US lawmakers about their practices.
The charges against Coinbase are a lot less harsh as the SEC is primarily targeting it’s staking-as-a-service program and the assets being offered as a part of it. Furthermore, the SEC alleges that Coinbase has been violating securities laws since 2019 despite approving their IPO in 2021.
In response to the complaint, Coinbase went on the offensive…
The company released a video fact-checking the allegations and stated that it had repeatedly requested to register without receiving a response.
Coinbase reiterated that it would not shut down its staking service
The Third Circuit court issued an order to the SEC to respond to Coinbase’s pending petition for rule-making, giving 7 days for a response.
Coinbase's assertive response has garnered attention from the crypto community, with many expressing support for the exchange's efforts to address the charges and fight for regulatory clarity.
Regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules.
1. The SEC reviewed our business and allowed us to become a public company in 2021.
2. There is no path to "come in and… twitter.com/i/web/status/1…
— Brian Armstrong 🛡️ (@brian_armstrong)
Jun 6, 2023
The numbers don't lie.
— Coinbase 🛡️ (@coinbase)
Jun 6, 2023
Let’s be clear: the @SECGov complaint doesn’t mention this, but there is currently NO way for a platform like @coinbase to register as a securities exchange, broker, or clearing agent. That’s why they’ve been begging @SECGov for YEARS to give them a path to compliance.
— TuongVy Le 🍎🗽🛡️ (@TuongvyLe12)
Jun 6, 2023
gary gensler be like:
— kmoney (@kmoney_69)
Jun 9, 2023
The SEC suing binance be like:
— MinisterOfNFTs 🔮 (@MinisterOfNFTs)
Jun 5, 2023
Well, we’ll honestly just have to wait and see how these cases turn out, and that can take years with penalties ranging from hefty fines to being ordered to shut down operations completely…if the SEC wins the cases.
Binance and Coinbase both have to make the case that the assets on their platforms are not securities against outdated regulation and an already unfriendly environment towards crypto, and Binance faces an even greater uphill battle.
Despite the persistent FUD and ongoing challenges, the crypto community has demonstrated remarkable resilience, and people who truly believe in the technology will continue to keep building products and services that push the space forward…Keep going.
Luxury fashion brand, Louis Vuitton, unveiled their $41,000 USD Treasure Trunks NFTs, a soul-bound token that offers exclusive access to products and experiences.
SuperRare announced that our very own OSF will be the artist for their June airdrop for Rare Pass holders.
Kraken, a US crypto exchange, launched their NFT marketplace which will feature 250+ collections, support Ethereum, Solana, and Polygon NFTs, and have zero gas fee trading.
Gutter Cat Gang unveiled GutterMelo, a sneaker collab with Puma and NBA star LaMelo Ball, that will debut as an NFT which can be claimed for the physical sneakers.
Prices as of 8pm ET on June 10.
NFT Volumes on OpenSea hit the lowest weekly number of the year, while the art market continues to see some action, including a 625 ETH Fidenza sale.
Crypto sold off aggressively on the news of the SEC suing Coinbase and Binance. Altcoins like MATIC and SOL, which were labeled as securities in the complaints, took the hardest hit selling off double digit percentages.
In the week ahead, expect even more volatility with US CPI and PPI numbers as well as the outcome of the FOMC meeting and latest interest rate hike decision. Let’s also hope the SEC gives crypto a break.
What did you think of this week's newsletter?