Crypto Industry Views SEC-Coinbase Battle as "Existential Threat"

SEC’s Coinbase Fight Puts Exchange, Crypto Survival on the Line

Coinbase revealed last week that the Securities and Exchange Commission had served it with a Wells Notice, a notification that the agency is planning to recommend enforcement action for alleged securities law violations. Already reeling from its increasing exclusion from the traditional financial system, the US crypto industry sees the Coinbase action as a signal that the SEC—and its determined chairman, Gary Gensler—intend to regulate the industry out of business.

“It is hard to look at what’s happening at the federal regulatory level and not see it’s an existential threat,” said Sheila Warren, CEO of the Crypto Council for Innovation. “Between challenges around obtaining basic banking services, making payroll, to open hostility from this SEC, operating in the US is not for the faint of heart.”

Exercise Caution with Crypto Asset Securities: Investor Alert

TLDR:  The SEC’s Office of Investor Education and Advocacy continues to urge investors to be cautious if considering an investment involving crypto asset securities.  Investments in crypto asset securities can be exceptionally volatile and speculative, and the platforms where investors buy, sell, borrow, or lend these securities may lack important protections for investors.  The risk of loss for individual investors who participate in transactions involving crypto assets, including crypto asset securities, remains significant.  The only money you should put at risk with any speculative investment is money you can afford to lose entirely….

JPMorgan’s Mystery ‘Nickel’ Rocks: The Hunt for Clues Begins With a Kick

The revelation that about $2 million of “nickel” on the London Metal Exchange was actually just bags of stones has thrown a spotlight on the sprawling web of warehouses and metal stashes underpinning the billions of dollars of derivatives traded daily on the LME.

Over the past week, warehouse staff from Busan in South Korea to Genoa in Italy have rushed to check tens of thousands of two-ton bags of nickel – in some cases, by literally kicking them.

The LME advised warehouse operators to wear steel toe-capped boots for safety, one person who received the instructions said. The rule of thumb: If it hurts when you kick it, it’s probably nickel.

SEC Fines for Flutter and Rio Tinto Are Outside its JurisdictionThis month the Securities and Exchange Commission announced two settlements that illustrate the agency’s largely unchecked power to shake down companies with astronomical penalties that far exceed statutory limits set by Congress. The broader scandal is that these cases are now routine rather than exceptional.

The cases include the SEC’s $15 million settlement with UK-based global mining giant Rio Tinto and a separate $4 million settlement with Ireland-based Flutter International, which currently owns the PokerStars website and other gaming and sports betting brands.

Do Kwon, Crypto Fugitive, Led a Very Public Life While on the Run

On Thursday, Mr. Kwon, 31, was arrested in Podgorica, the capital of Montenegro, as he and a travel companion tried to board a private flight to Dubai, United Arab Emirates. They were apprehended after using forged Costa Rican passports, according to the authorities, and they were also carrying travel documents from Belgium that appeared to be falsified.

The arrest was the culmination of a remarkable tale of international intrigue and crypto industry chutzpah. Mr. Kwon became a target of criminal investigators in at least three countries after two cryptocurrencies issued by his company, Terraform Labs, collapsed virtually overnight.

Coinbase Ex-Manager Convicted of Insider Trading Is Crypto’s Latest Legal Hope

Crypto has picked an unlikely ally in its battle against oversight by Wall Street’s chief regulator: a former Coinbase Global Inc. employee convicted of insider trading.

Ishan Wahi, a former manager at Coinbase, pleaded guilty this year to giving his brother and a college friend trading tips that generated almost $1.5 million in illicit profits. An Indian immigrant, he could serve more than three years in prison and be deported after doing time.

But Mr. Wahi is still fighting the Securities and Exchange Commission, which sued him because it says some of the Coinbase assets were securities. The outcome of that civil case isn’t likely to change Mr. Wahi’s future, dimmed by his prosecution and likely imprisonment. But it could affect how digital assets are regulated in the U.S.

SVB Collapse Threatens VC Industry With a $500 Billion Markdown

The $2 trillion venture capital industry could see portfolio markdowns of 25% to 30% — a “haircut” of possibly $500 billion — following the Silicon Valley Bank debacle, according to Bloomberg Intelligence.

“After the failure of SVB, we expect greater valuation scrutiny and disclosure, especially as a large chunk of ‘fiduciary’ capital from pension funds has flowed into these markets — and unlike endowments and family offices, there are no avenues to extend and pretend,” Bloomberg Intelligence analyst Gaurav Patankar writes in a note Friday.

Nasdaq Eyes Crypto Safekeeping Launch by End of Second Quarter

Nasdaq Inc. expects its custody services for digital assets to launch by the end of the second quarter as it joins a growing pool of traditional financial firms that could fill the role of crypto middlemen following a spate of bankruptcies in the industry.

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The project, which was initially announced in September, will mark the first major foray into crypto for the exchange operator. Safekeeping Bitcoin and Ether would be the first step to building a broad suite of services for the group’s digital assets division, eventually including execution for financial institutions, Auerbach said.