DeFi Hearing Sparks Partisan Clash, eToro Settles With SEC: Weekly Crypto Recap
Regulatory Showdowns, Market Moves, and Scams: The Week That Shook Crypto
Welcome to this week's crypto roundup! In today's newsletter, we delve into the partisan clashes from the first-ever Congressional hearing on decentralized finance (DeFi), eToro's $1.5 million settlement with the SEC, and other significant events shaping the crypto landscape. Let's dive in.
Congressional Hearing on DeFi Reveals Sharp Partisan Divide
The first Congressional hearing dedicated to DeFi took place this week, revealing significant partisan differences. Republicans, led by Representative French Hill, praised DeFi as a groundbreaking financial innovation that enhances economic freedom by eliminating intermediaries. Hill emphasized that DeFi is crucial for maintaining U.S. leadership in global markets.
In contrast, Democrats expressed grave concerns about the risks associated with unregulated DeFi platforms, highlighting the potential for fraud, tax evasion, and criminal activities. Representative Brad Sherman argued that DeFi poses serious threats, benefiting bad actors at the expense of honest citizens.
The hearing featured testimonies from several industry experts who advocated for balanced regulation that addresses risks without stifling innovation. However, the discussions underscored the deep partisan divide over how to manage the rapidly growing DeFi sector, which now boasts a market cap of 67billionandatotalvaluelockedof67billionandatotalvaluelockedof89 billion.
eToro Settles with SEC for $1.5 Million, Scales Back Crypto Offering
Financial services firm eToro has settled with the U.S. Securities and Exchange Commission (SEC) for $1.5 million over allegations that it operated as an unregistered broker and clearing agency in its crypto business. Without admitting or denying the charges, eToro agreed to limit its crypto trading offerings to a select few, including Bitcoin, Bitcoin Cash, and Ether.
Law professor Drew Hinkes noted that this settlement provides more ammunition for the contention that these assets are not securities. However, he also criticized the SEC for not naming the securities, leaving market actors guessing which assets the SEC considers securities.
Ki Wins Court Battle Against CFTC, Launches Election Contracts
Ki, a New York-based prediction market platform, has launched its election contracts after a federal judge ruled in its favor against the Commodity Futures Trading Commission (CFTC). The contracts allow users to bet on which party will control the Senate and House. The ruling followed a nearly year-long legal battle in which the CFTC argued that such contracts could undermine election integrity.
Despite the judge's decision, the CFTC swiftly appealed, expressing concerns that the contracts could be manipulated, potentially affecting public trust in elections.
Friend.Tech Creators Abandon Ethereum-Based Social Platform
The creators of the social media Web3 platform Friend.Tech have exited the project just four months after launching its token. They transferred control of the platform's smart contracts to a burn address, indicating that no further development will occur. The platform, which allowed users to buy and sell keys linked to Twitter accounts for access to private chats, saw significant early success but quickly declined.
Presidential Debate Features Silence on Crypto, Followed by Meme Coin Selloff
During the recent debate between Donald Trump and Kamala Harris, neither candidate mentioned cryptocurrency. Despite Trump's previous statements about making the U.S. a leader in crypto, the debate focused on other issues. Following the event, several Trump-themed meme coins experienced significant sell-offs.
Caroline Ellison Faces Sentencing for Role in FTX Scandal
Caroline Ellison, the former CEO of Alameda Research, is set to be sentenced for her involvement in the collapse of FTX. Ellison, who pleaded guilty to multiple fraud charges, has been a key cooperating witness in the investigation. Her attorneys are pushing for leniency, citing her cooperation with prosecutors.
FTX Seeks $14 Million Settlement Over Robinhood Shares
FTX has proposed a 14millionsettlementwithEmergentFidelityTechnologies,involvingclaimstoover14millionsettlementwithEmergentFidelityTechnologies,involvingclaimstoover600 million in Robinhood shares. This settlement is seen as crucial to avoiding costly litigation and advancing FTX's reorganization plan.
Crypto Scams Reach Record High as Authorities Crack Down
In 2023, investors lost $5.6 billion to crypto scams, marking a 45% increase from the previous year. In response, Tron, Tether, and TRM Labs have launched the T3 Financial Crime Unit to combat illicit activity involving USDT. The CFTC has also partnered with multiple organizations to raise awareness about scams.
PayPal and Venmo Integrate Ethereum Name Service for Crypto Payments
PayPal and Venmo have integrated the Ethereum Name Service (ENS) into their platforms, allowing U.S. users to send cryptocurrency by entering an ENS name instead of a traditional wallet address. This feature aims to streamline crypto transactions and reduce errors.
Key Takeaways
Regulatory Landscape: The partisan divide in the DeFi hearing suggests future regulations could be contentious. Staying informed and compliant is crucial.
eToro Settlement: Focus on well-established cryptocurrencies like Bitcoin and Ether to reduce regulatory risks.
Prediction Markets: Ki's victory opens new opportunities for election-based betting, but ongoing legal challenges remain.
Web3 Volatility: The exit of Friend.Tech's creators highlights the risks associated with new platforms.
Meme Coin Speculation: Market reactions to external events can be swift and severe. Diversify investments to manage risks.
FTX Legal Developments: Monitoring legal outcomes in the FTX scandal can provide insights into market impacts.
Crypto Scams: Increasing vigilance against scams is essential. Utilize resources from trusted organizations to protect investments.
ENS Integration: PayPal and Venmo's integration of ENS simplifies crypto transactions and enhances security.