Vesper Finance

James Cirrone

Former OKX brand and partnerships head Rachel Conlan is jumping ship to Binance. Given the <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">SEC lawsuit against the crypto exchange</a>, and the more than $2 billion in assets <a href="https://defillama.com/cexs">pulled</a> from the platform within the last seven days, Conlan is likely going to have her work cut out for her.&nbsp;



Conlan’s hiring as Binance’s vice president of global marketing came the same day as the <a href="https://blockworks.co/news/sec-allegations-against-binance">SEC’s suit against the exchange</a>.



According to a <a href="https://www.binance.com/en/blog/leadership/binance-hires-veteran-marketing-exec-rachel-conlan-as-vp-of-global-marketing-5745464614732405001">statement</a> from Binance, Conlan will be responsible for managing “regional and global marketing teams” to “help reinforce and expand Binance’s position as a trusted industry leader in the crypto space.”



Establishing trust could become an even more important priority for Conlan and her team, considering <a href="https://blockworks.co/news/binance-execs-unlicensed-securities-exchange">the wealth of Binance internal communications</a> the SEC blasted out to the world in their 136-page lawsuit.



For instance, the SEC claimed that a Binance chief compliance officer said in 2018 that “We are operating as a fking unlicensed securities exchange in the USA bro” and that “we do not want [Binance].com to be regulated ever.”



Besides dealing with the inevitable fallout of encroaching regulators, Conlan will also be tasked with overseeing and growing Binance’s collaborations with brands and celebrities, including Cristiano Ronaldo and The Weeknd.



She’ll report to Binance’s co-founder and chief marketing officer, Yi He, who spoke on her hiring in a statement: “With Rachel&#8217;s extensive experience, she will help propel the industry forward, introducing more people to blockchain, familiarizing them with Binance, and collectively building this still very early-stage industry.&#8221;



<h2 class="wp-block-heading">Circle and Kraken make big hires this week</h2>



USDC issuer Circle <a href="https://twitter.com/jerallaire/status/1666774116567773185">added</a> Heath Tarbert to its ranks as chief legal officer and head of corporate affairs. He’ll start on July 1.&nbsp;



Tarbert’s hiring is notable because of his extensive experience working in the US government, especially at a time when regulatory authorities are cracking down hard on crypto.&nbsp;



Arguably his most applicable role was as chair of the CFTC, a post he served from July 2019 to January 2021. Prior to that, Tarbert was high up in the US Treasury.&nbsp;



He’s also served high profile politicians and judges. He was former President George W. Bush’s associate counsel in the final six months of his tenure in the White House, and immediately before that, he was a law clerk to Associate Supreme Court Justice Clarence Thomas for a little over a year.



Jeremy Allaire, CEO of Circle, said that Tarbert will make a significant addition to the Circle team as it continues to pursue a growth strategy.



“As we continue building a bridge between traditional finance and Web3, Heath’s perspective, legal acumen and global regulatory experience will help us advance the utility value of USDC worldwide,” Allaire said in a <a href="https://www.circle.com/en/pressroom/circle-names-heath-tarbert-chief-legal-officer-head-of-corporate-affairs">statement</a>.



Blockworks reported Friday on <a href="https://blockworks.co/news/circles-public-listing-plans-undeterred">Circle’s plans to go public</a>, which they say are undeterred by the SEC’s recent enforcement actions.



Separately, Kraken <a href="https://blog.kraken.com/meet-krakens-new-chief-technology-officer-vishnu-patankar">appointed</a> tech veteran Vishnu Patankar as chief technology officer. Patankar’s last gig was chief technology officer at StockX, a job he’s held since 2020.&nbsp;



His experience as a tech executive and expert stretches back to 1998 when he was hired at Intel as a component design engineer. After that, he spent six years at Microsoft, then jumped ship to Amazon, where he stayed for 10 years in various roles.&nbsp;



Kraken CEO David Ripley, who took the helm at the crypto exchange in late April this year, said Patankar is a leader in the field that is “well equipped to build and optimize Kraken’s technology.”



“He is a seasoned executive with deep expertise across all aspects of product development and tech leadership. He has built and led large, globally distributed engineering teams at some of the most innovative companies,” Ripley said.



<h2 class="wp-block-heading">Other notable hires</h2>



<ul>
<li>GameStop <a href="https://news.gamestop.com/news-releases/news-release-details/gamestop-announces-election-ryan-cohen-executive-chairman">tapped</a> Ryan Cohen to be executive chair of the board, effective immediately.</li>



<li>Crypto accounting firm TaxBit <a href="https://www.forbes.com/sites/digital-assets/2023/06/08/taxbit-ceo-austin-woodword-steps-down-coo-lindsey-argalas-tapped-as-successor/?sh=52b578304a74">promoted</a> Chief Operating Officer Lindsey Argalas to chief executive, replacing Austin Woodward in the head role. Woodward will become chair of the board.</li>



<li>Tegan Kline has <a href="https://www.theblock.co/post/233809/the-graph-creator-edge-node-taps-new-ceo-tegan-kline-as-growth-becomes-top-priority?utm_source=news.xml&amp;utm_medium=rss">become</a> the CEO of Edge &amp; Node, one of the teams building The Graph protocol.</li>



<li>Crypto hedge fund Arca has laid off 30% of its staff, a move it chalked up to an “extended bear market and uncertain regulatory environment,” according to a statement Arca provided to Blockworks.</li>



<li>Bitdeer, a crypto mining platform, hired Haris Basit as its chief strategy officer.</li>
</ul>



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Crypto hiring: Binance, Circle make key hires amid SEC enforcement

Ben Strack

The latest SEC action against publicly traded company Coinbase has not deterred crypto payments tech company Circle — or others — from continuing its quest to go public.



Still, the path for most companies mulling a public listing is likely to be tough in the current environment, an industry executive said.&nbsp;&nbsp;



After revealing a plan to become a public company by merging with a special purpose acquisition company (SPAC) in 2021, Circle CEO Jeremy Allaire said in a December 2022 tweet that his company “did not complete SEC qualification in time.”



Executives said earlier this year <a href="https://blockworks.co/news/circle-stablecoin-usdc-public-hiring">going public remained a key part of Circle’s strategy</a> — a plan confirmed again this week by a company spokesperson and a recent job posting.&nbsp;



&#8220;We are not prepared to put a specific deadline on the decision, but we will be taking steps to continue our journey to go public as soon as practicable,&#8221; a Circle spokesperson told Blockworks.



A Circle job listing posted two weeks ago for corporate counsel also makes reference to these plans.



The professional would be tasked with “assisting with potential going public SEC process” as well as “supporting the building out of our public company policies, practices and processes,” the job description states.



Circle’s plans remain despite the SEC’s latest lawsuit against Coinbase, which has been a public company for more than two years.&nbsp;



Coinbase went public in April 2021 after the SEC “declared effective” its registration on Form S-1 — the initial registration document for new securities. But the regulator <a href="https://blockworks.co/news/sec-sues-coinbase#">alleged in a complaint Tuesday</a> that Coinbase has been operating as an unregistered exchange — charges the company has denied.



Read more: <a href="https://blockworks.co/news/coinbase-sec-hypocrisy-not-really">Coinbase Was Allowed to Go Public, Then Got Sued — Hypocrisy? Not Really, Some Say</a>



“Declaring effective a Form S-1 registration statement does not constitute an SEC or staff opinion on, or endorsement of, the legality of an issuer’s underlying business,” the SEC complaint states.&nbsp;&nbsp;



Galaxy Digital’s plans to go public by becoming a Delaware-incorporated company and subsequently list on the Nasdaq — <a href="https://blockworks.co/news/galaxy-public-sec-earnings">reiterated in March</a> — also remain, a spokesperson said Friday. The company’s latest amended registration was submitted to the SEC in February and is currently under review.



But the current environment could pose hurdles for most companies looking to go public, said Eric Risley, founder of crypto advisory firm Architect Partners.&nbsp;



“The fundamental requirements for a viable [initial public offering] is strong business momentum and a positive, or at least stable, business environment,” he told Blockworks in an email. “While each company is unique, it’s safe to conclude that neither of these requirements are present today. Until that changes, the IPO path will likely be postponed for most companies.”



<h2 class="wp-block-heading">Kraken job posting also hints at continued IPO plans</h2>



Crypto exchange Kraken also hinted at its continued quest to go public in a recent job posting for a senior corporate and securities counsel.&nbsp;



It lists “public company preparedness” as one of the matters Kraken’s legal team is focused on, adding that “public company reporting experience” is a preferred skill for candidates.



A company spokesperson did not return a request for comment.&nbsp;



Kraken mulling an IPO is nothing new.&nbsp;



A Kraken spokesperson told Blockworks in June 2021 that the crypto exchange might consider going public in 2022.&nbsp;



“At this point no decision has been made and we&#8217;re fully focused on scaling our business, filling key roles and making sure we&#8217;re giving clients the best experience and products in a time of unprecedented growth,” the representative added at the time.



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Circle’s public listing plans undeterred by latest SEC actions

Bessie Liu

As one of the largest blockchain ecosystems continues to grow, Ethereum co-founder Vitalik Buterin notes that it will be necessary to adopt the “three transitions” for Ethereum to be sustainable in the long term.&nbsp;



These transitions, as Buterin explains in his latest blog post are: layer-2 scaling, wallet security and privacy.&nbsp;



“It&#8217;s not just features of the protocol that need to improve; in some cases, the way that we interact with Ethereum needs to change pretty fundamentally, requiring deep changes from applications and wallets,” Buterin <a href="https://vitalik.eth.limo/general/2023/06/09/three_transitions.html">wrote</a>.



Buterin explains that it will be necessary to build cross-chain solutions of layer-2 blockchains, drawing on examples of how it is difficult now for users to have only one address with the multiple different scaling solutions that exist on top of Ethereum today.&nbsp;



“In an L2 scaling world, users are going to exist on lots of L2s. Are you a member of ExampleDAO, which lives on Optimism? Then you have an account on Optimism! Are you holding a CDP in a stablecoin system on ZkSync? Then you have an account on ZkSync… The days of a user having only one address will be gone,” he said.



This must be achieved at the same time as the further development of <a href="https://blockworks.co/news/what-are-smart-contract-wallets">smart contract wallets </a>and privacy.



<h2 class="wp-block-heading">Blockchain solutions are beginning to look more alike</h2>



These three transitions are not completely new to the blockchain ecosystem at large, and definitely not unique to Etheruem.&nbsp;



Cross-chain solutions that can help different networks communicate with one another, for example, has been explored in depth by the <a href="https://blockworks.co/tag/cosmos">Cosmos ecosystem</a> — a network of individual layer-1 app chains.&nbsp;



In an interview with Blockworks, Dougie DeLuca, an investor at Figment Capital, noted that rollup ecosystems are beginning to resemble Cosmos in a lot of ways.



“There’s conversations right now about how blockchain design is just going to be commoditized, and they&#8217;re going to look kind of similar. This is honestly the earliest sign of this that I’ve seen, where the Cosmos has proliferated the idea of app chains. And rollups right now are moving more and more towards app specific rollups, which is similar to an app chain,” DeLuca said.



Cosmos layer-1 blockchains, for example, communicate with each other through an <a href="https://ibcprotocol.org/">inter-blockchain communication</a> protocol (IBC). A more Ethereum-native solution to resolving the interoperability between layer-2s would be <a href="https://blockworks.co/news/connecting-multichain-with-chain-abstraction">Connext</a>, a team building out chain abstraction.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Interacting with a dApp across chains today is difficult and time-consuming: select the right network, bridge assets, get gas tokens,… Web3 users deserve a better experience. Introducing Chain Abstraction: onboard users from anywhere, regardless of the chain they are on. 1/ <a href="https://t.co/etSrO5DZ3X">pic.twitter.com/etSrO5DZ3X</a>&mdash; Connext (@ConnextNetwork) <a href="https://twitter.com/ConnextNetwork/status/1661439482950811650?ref_src=twsrc%5Etfw">May 24, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Similarly, with smart contract wallets, Etheruem is designing account abstraction <a href="https://notes.ethereum.org/@vbuterin/account_abstraction_roadmap">solutions</a> that will enable users to have self custody over their own wallets. In Cosmos, this is currently being explored by <a href="https://docs.cosmos.network/v0.46/modules/authz/">Authz</a>.



Although fundamentally different, the end goal is similar.&nbsp;



“I think it would be great for the Cosmos and rollup teams to work closely together…Ethereum has been focusing on one set of problems for a long time, and Cosmos another set. If we combine our knowledge, I think we actually have a pretty great solution that we can work towards,” DeLuca said.



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Vitalik Buterin: Ethereum must adopt ‘three transitions’ to succeed

Ethereum co-founder Vitalik Buterin and Polygon co-founder Sandeep Nailwal have joined forces to support additional Covid-19 research projects through Nailwal&#8217;s Crypto Relief fund. In pursuit of this objective, Buterin has been awarded a generous $90 million grant by Nailwal on Thursday.



Crypto Relief was started by Nailwal in April 2021 after India experienced its second Covid-19 wave. Buterin is perhaps the largest contributor to the fund, <a href="https://twitter.com/sandeepnailwal/status/1392562768692252673">donating</a> $1 billion worth of shiba inu (<a href="https://blockworks.co/price/shib">SHIB</a>) in May 2021.&nbsp;



The fund has since disbursed hundreds of millions of dollars, most of that money being from Buterin. In January 2022, the fund gave a $100 million grant to Buterin so he could put that money toward his preferred projects.



Crypto Relief is now doubling down, with Nailwal announcing he’s giving Buterin 90 million USDC from his original SHIB donation. Buterin said he’ll also kick in $10 million of his own money.&nbsp;



Nailwal took to Twitter on Thursday to let people in on Buterin’s humanitarian side and to express his approval of the “moonshot” projects Buterin has funded in an effort to prevent future pandemics.



“[Buterin] feels for the problems of the world, problems of the poor and the underprivileged,” Nailwal wrote. “I am very happy with some of the projects he and his team has funded and some of them need some more push to reach their final completion.”



One of Buterin’s research focuses will be on long Covid, which he says has “the most salient risks” going forward.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The most salient risks from Covid today are the very high number of people experiencing very-long-term symptoms (aka <a href="https://twitter.com/hashtag/LongCovid?src=hash&amp;ref_src=twsrc%5Etfw">#LongCovid</a>), and so Long Covid research continues to be a primary focus.&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1666860085375643676?ref_src=twsrc%5Etfw">June 8, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



He added that studies of samples of wastewater have led him to the conclusion that “viral persistence” is a “deep cause of Long Covid.”



Buterin also wants to figure out how to improve air filtration and ventilation in buildings around the world, should there be another pandemic. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">A particular focus is on indoor air quality. <a href="https://twitter.com/hashtag/CovidIsAirborne?src=hash&amp;ref_src=twsrc%5Etfw">#CovidIsAirborne</a>, so a focus on airborne transmission is a necessary part of a long-term solution to both Covid and many other pandemics. This includes improving ventilation, HEPA filtering, and experimental tech like UVC irradiation.&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1666860083043524608?ref_src=twsrc%5Etfw">June 8, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Buterin ended his Twitter thread stating that pandemics will continue to be a risk throughout the 21st century, something humans will have to grapple with, he said.



“Pandemics beyond Covid continue to be a large risk in the 21st century. We look forward to continuing our efforts to better live with airborne viruses and eventually live without them,” he wrote.&nbsp;



He continued, “And we can stop airborne pathogens with clean air the same way that we stopped cholera over 100 years ago with clean water.”



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Buterin, Nailwal double down on funding Covid-19 research

Crypto.com said Friday that it will shut down its institutional exchange service for US customers in less than two weeks, saying demand is drying up.



In a statement provided to Blockworks, Crypto.com explained that there is a lack of demand due to the market landscape in the US — no doubt a reference to the lawsuits against fellow exchanges <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">Binance</a> and <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a>. 



Read more: <a href="https://blockworks.co/news/crypto-firms-up-legal-teams">Crypto firms beefing up legal support amid regulatory crackdown</a>



“We recently made a business decision to suspend the institutional offering of the Crypto.com Exchange in the U.S. as of 11:59pm EDT June 21, 2023 due to limited demand from institutions in the U.S. in the current market landscape. Impacted institutional users were given advance notice to support a smooth transition,” the statement said.&nbsp;



<a href="https://blockworks.co/tag/cryptocom">Crypto.com</a> also stressed that this closure does not affect its retail trading app, which includes its CFTC-regulated crypto derivatives product, UpDown Options. 



The Singapore-based crypto exchange added that it could reopen the institutional trading platform in the future, though it declined to provide more details on what conditions would need to be met to open its doors again.



Crypto.com started the month of June with a win, announcing that it had received a license for digital payment token services in <a href="https://blockworks.co/tag/singapore">Singapore</a>, allowing the exchange to offer its services in the country.



Blockworks previously reported that the head of product for Crypto.com, Abhi Bisarya, <a href="https://blockworks.co/news/crypto-com-ai-exchanges">believes that AI will be “game-changing” for crypto exchanges</a>.



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Crypto.com to suspend US institutional exchange

Katherine Ross

US charges against two Russian nationals tied to the 2011 hack of Mt. Gox, the then-massive bitcoin exchange, were unsealed on Friday.&nbsp;



The Department of Justice named Alexey Bilyuchenko and Aleksandr Verner with conspiracy to commit money laundering. Bilyuchenko was also charged in another investigation from the Northern District of California, which alleged that Bilyuchenko worked with Alexander Vinnik.&nbsp;



Bilyuchenko was charged with an additional count of money laundering conspiracy, as well as operating an unlicensed money services business.&nbsp;



Assistant Attorney General Kenneth Polite <a href="https://www.justice.gov/opa/pr/russian-nationals-charged-hacking-one-cryptocurrency-exchange-and-illicitly-operating-another">said</a> that the charges mark an “important milestone” in prosecutors’ dual “major cryptocurrency investigations.”&nbsp;



“As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency,” Polite said. “Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide.”&nbsp;



The Mt. Gox hack, which began in September 2011 and lasted through May 2014, resulted in the loss of approximately 647,000 bitcoins (<a href="https://blockworks.co/price/btc">BTC</a>). It went down as the largest ever disappearance of bitcoin in both bitcoin and dollar terms at the time, a designation that lasted for years.&nbsp;&nbsp;



Bilyuchenko and Verner, as well as additional unnamed co-conspirators, were behind the theft from Mt. Gox, prosecutors said.&nbsp;



“According to court documents unsealed in the Southern District of New York (SDNY), in or about September 2011, Bilyuchenko, Verner, and their co-conspirators allegedly gained unauthorized access to the server holding the cryptocurrency wallets for Mt. Gox,” the DOJ’s statement said.&nbsp;



Prosecutors said that “between in or about March 2012 and in or about April 2013, the New York Bitcoin Broker allegedly transferred more than approximately $6.6 million to overseas bank accounts controlled by Bilyuchenko, Verner, and their co-conspirators.”



“In exchange for the wire transfers, the New York Bitcoin Broker allegedly received “credit” on Exchange-1, through which Bilyuchenko, Verner, and their co-conspirators allegedly laundered more than 300,000 of the bitcoins stolen from Mt. Gox,” the release continued.



The claims additionally tie Bilyuchenko to bitcoin launderer Vinnik to operate BTC-e from 2011 to 2017.



Vinnik was <a href="https://blockworks.co/news/bitcoin-launderer-prisoner-swap">charged with a 21-count indictment</a> in 2017, which alleged he had laundered over $4 billion in bitcoin through BTC-e.&nbsp;



Last August, <a href="https://blockworks.co/news/alleged-bitcoin-launderer-extradited-to-us-after-5-years-in-jail">he was extradited </a>to the US to face charges.



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DOJ unseals Mt. Gox charges against 2 Russian nationals

In a new letter to the SEC, Paradigm argues that the SEC’s approach to its exchange definition proposal has been “haphazard” and violated the “rulemaking procedures of the Administrative Procedure Act (APA).”



The SEC’s proposal would expand the definition of exchanges to cover platforms that trade crypto asset securities and some DeFi systems.&nbsp;



The APA guides and <a href="https://www.epa.gov/laws-regulations/summary-administrative-procedure-act#:~:text=The%20Administrative%20Procedure%20Act%20(APA,on%20notices%20of%20proposed%20rulemaking.">governs</a> the way that government agencies both develop and issue regulations, including requirements and allowing the public to provide commentary and feedback on proposed changes.



“Accordingly, we write to request that the Commission withdraw its proposed redefinition of ‘exchange’ and begin its consideration of how to adapt its regulations in the DeFi context anew — after rigorous economic analysis, genuine, broad engagement with the industry, and a close look at the limits of its statutory jurisdiction,” Paradigm <a href="https://policy.paradigm.xyz/assets/writing/SEC-3b-16-Comment.pdf">wrote</a>.



The SEC originally <a href="https://www.sec.gov/news/press-release/2022-10">announced</a> potential changes to its exchange definition in 2022. However, it hadn’t clearly included crypto in the original changes. Instead, the SEC said it wanted to bring more alternative trading systems — which trade Treasurys — and other “government securities” under the helm of exchanges.



Then, in April, the SEC <a href="https://www.sec.gov/news/press-release/2023-77">announced</a> that it was opening <a href="https://blockworks.co/news/sec-defi-proposed-exchange-definition">another comment period for the proposed amendment</a> changes to the exchange definition. This time, it <a href="https://blockworks.co/news/sec-revisits-exchanges-definition">targeted crypto and DeFi</a>.&nbsp;



“The reopening release reiterated the applicability of existing rules to platforms that trade crypto asset securities, including so-called ‘DeFi’ systems, and provides supplemental information and economic analysis for systems that would be included in the new, proposed exchange definition,” the press release said.



One key argument Paradigm makes in its 14-page letter to the SEC is that decentralized exchanges or DEXs should not be included in the SEC’s exchange definition proposal.&nbsp;



“A DEX, particularly those using automated market maker mechanisms, involves no person or entity playing an intermediating role between buyers and sellers — instead, it uses an algorithm to balance pools of cryptoassets that potential buyers or sellers can freely access,”&nbsp; Paradigm wrote.



“Nor is a DEX run by any organization, association, or group capable of collective action, but rather relies on self-executing code that in many instances cannot be changed or upgraded,” it added.&nbsp;



If the commission proceeds to try to regulate DEXs as exchanges, then it will be forcing DEXs into “the same <a href="https://en.wikipedia.org/wiki/Hobson%27s_choice">Hobson’s choice</a>” as Coinbase after the SEC sued the exchange for “failing to do the impossible — registering as a securities exchange when it was incapable of doing so.”



The <a href="https://blockworks.co/news/sec-sues-coinbase">SEC filed a lawsuit against Coinbase</a> earlier this week, alleging that the publicly traded company — which went public in 2021 — had been operating as an unlicensed securities exchange since 2019 and also listed and sold unregistered securities.&nbsp;



The SEC also filed a <a href="https://blockworks.co/news/coinbase-binance-suits-different">similar but distinct lawsuit</a> against Binance.&nbsp;



In the April press release from the SEC, Chair Gary Gensler alluded to the regulator’s thinking on companies such as Coinbase and Binance.&nbsp;



&nbsp;“Make no mistake: Many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws. Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets,” Gensler said.&nbsp;



“The Commission’s procrustean effort to regulate DEXs like traditional exchanges also, predictably, has led it to draw arbitrary and capricious distinctions amongst quickly developing technologies. The changes it has made to the regulatory definition of “exchange” involve replacing traditional and understood terms with novel, vague, and ambiguous ones — with the result that the newfound definition of ‘exchange’ is so far-reaching that it would facially encompass entities that are plainly nothing like exchanges,” Paradigm said.



The comment period on the proposed changes ends on June 13.



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SEC should ‘withdraw’ exchange definitions proposal: Paradigm

Robinhood is ending support for cardano (ADA), polygon (MATIC) and solana (SOL) — just days after <a href="https://blockworks.co/news/sec-10-tokens-securities">all three were targeted by the SEC</a> in both of the SEC’s suits against Binance and Coinbase.&nbsp;



The assets won’t be tradable via Robinhood as of June 27, with the brokerage saying that customers with <a href="https://blockworks.co/price/ada">ADA</a>, <a href="https://blockworks.co/price/matic">MATIC</a> and <a href="https://blockworks.co/price/sol">SOL</a> “still on Robinhood after the deadline will be automatically sold and credited” to their Robinhood account. 



“Earlier this week the SEC sued crypto companies Binance and Coinbase and alleged that a number of cryptocurrencies are unregistered securities. This includes Solana (SOL), Polygon (MATIC), and Cardano (ADA), which are currently supported on the Robinhood Crypto platform,” Robinhood said in an email to Blockworks. 



“This introduced a cloud of uncertainty around these assets and, as a result, our team has decided to end support for them,” Robinhood continued.



The <a href="https://blockworks.co/tag/sec">SEC</a> is alleging that ADA, MATIC and SOL are all securities in the lawsuits.



In arguing SOL is a security, the SEC wrote that the “marketed burning of SOL as part of the Solana network’s ‘deflationary mechanism’ has led investors to reasonably view their purchase of SOL as having the potential for profit to the extent there is a built-in mechanism to decrease the supply and therefore increase the price of SOL.”



For MATIC, <a href="https://blockworks.co/news/the-sec-says-these-crypto-assets-are-securities-their-reasoning-is-wrong">the SEC claims that Polygon marketed</a> that it burns MATIC tokens accumulated as fees, and also indicated that the supply of MATIC would decrease.



“Any ADA, MATIC, and SOL that’s still on Robinhood after the deadline will be automatically sold and credited to your Robinhood buying power,” Robinhood <a href="https://robinhood.com/us/en/support/articles/cardano-polygon-solana-update/">wrote</a> in a blog post.&nbsp;



“But while paying lip service to its desire to comply with applicable laws, Coinbase has for years made available for trading crypto assets that are investment contracts under the Howey test and well-established principles of the federal securities laws,” the SEC said in its lawsuit against Coinbase.&nbsp;



“Defendants have unlawfully solicited US investors to buy, sell and trade crypto asset securities through unregistered trading platforms,” the SEC wrote in the filing against Binance.



Robinhood did not immediately respond to requests for comment.



Updated June 9, 2023 at 10:18 am ET: Added comments and context throughout.



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‘Cloud of uncertainty’ prompts Robinhood to nix ADA, MATIC, SOL

David Canellis

Crypto is holding up surprisingly well despite the SEC-imposed doom wafting over the US, having only shed 2.5% from its total market capitalization.



But the 18 tokens (excluding BUSD) listed as crypto securities in the SEC’s <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a> and <a href="https://blockworks.co/news/binance-doubled-down-illegal-activity">Binance</a> aren’t doing so hot, having collapsed more than 11% on average.



Bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) — not featured in either court document — are down only about 2% each as of 9 am ET.



Monday’s Binance suit “led to an extreme selloff in the span of less than an hour, where we witnessed long liquidations totaling almost $300 million — a 2023 daily record as Bitcoin dropped over 5% and Ethereum around 4%,” Mike Tauckus, head of trading at BitOoda wrote in an analyst note.&nbsp;



Coinbase’s case was disclosed the next day, but the market rallied in the afternoon to erase the Binance-associated losses almost completely.



Due to its relatively small market caps and illiquid market, <a href="https://blockworks.co/price/coti" target="_blank" rel="noreferrer noopener">COTI</a> underperformance (down 20%) is somewhat expected after it was labeled a security.&nbsp;



More robust projects are also struggling after the SEC’s claims, however.&nbsp;



The sandbox (<a href="https://blockworks.co/price/sand" target="_blank" rel="noreferrer noopener">SAND</a>), algorand (<a href="https://blockworks.co/price/algo" target="_blank" rel="noreferrer noopener">ALGO</a>), cardano (<a href="https://blockworks.co/price/ada" target="_blank" rel="noreferrer noopener">ADA</a>), binance coin (<a href="https://blockworks.co/price/bnb" target="_blank" rel="noreferrer noopener">BNB</a>), <a href="https://blockworks.co/price/flow">FLOW</a>, filecoin (<a href="https://blockworks.co/price/fil" target="_blank" rel="noreferrer noopener">FIL</a>), polygon (<a href="https://blockworks.co/price/matic" target="_blank" rel="noreferrer noopener">MATIC</a>), chiliz (<a href="https://blockworks.co/price/chz" target="_blank" rel="noreferrer noopener">CHZ</a>), cosmos (<a href="https://blockworks.co/price/atom" target="_blank" rel="noreferrer noopener">ATOM</a>), internet computer (<a href="https://blockworks.co/price/icp" target="_blank" rel="noreferrer noopener">ICP</a>), voyager (<a href="https://blockworks.co/price/vgx">VGX</a>), decentraland (<a href="https://blockworks.co/price/mana">MANA</a>), axie infinity (<a href="https://blockworks.co/price/axs">AXS</a>), <a href="https://blockworks.co/price/near">NEAR</a> and solana (<a href="https://blockworks.co/price/sol">SOL</a>) have all collapsed between 10% and 18% since word of the SEC lawsuits first broke.



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With $12.6 billion collectively wiped from their market caps, those tokens are responsible for more than 25% of crypto’s total losses since the SEC sued Binance on Monday.&nbsp;Coinbase stock, meanwhile, has tanked 15.5%.&nbsp;



On average, all tokens listed in either lawsuit are down 14% over the past month, but still up 9% year to date.



<h2 class="wp-block-heading">SEC shouldn’t phase crypto volatility traders&nbsp;</h2>



Markets have reacted sharply to the SEC’s view on those tokens, but industry insiders aren’t totally sold on the agency’s reasoning.&nbsp;



Some claim <a href="https://blockworks.co/news/sec-coinbase-binance-security">evidence</a> provided <a href="https://blockworks.co/news/the-sec-says-these-crypto-assets-are-securities-their-reasoning-is-wrong">relies on technical misunderstandings</a> and misses key context.



Still, SEC chair Gensler has defended his agency’s actions, insisting that crypto startups know <a href="https://blockworks.co/news/gensler-crypto-firms-know-exactly-how-to-register-they-just-dont-want-to">exactly how to register</a> but simply don’t want to.



All this while implied <a href="https://www.tradingview.com/script/tqitSsyG-Bollinger-Band-Width-Percentile" target="_blank" rel="noreferrer noopener">volatility</a> for bitcoin and ether are sitting at historically low levels. “This low volatility regime may stick around until the market can make a sustained push through one end of the narrowing range,” BitOoda’s Tauckus said.



“A conscientious trader can take advantage of the current low liquidity and complacency in the market to profit via several low risk/high reward scenarios.”



Updated Jun. 9, 2023 at 10:10 am ET: Updated figures.



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Alleged crypto securities tank alongside BNB after SEC suits

Stephen Diehl

The crypto mania has enchanted investors worldwide for years.



The Biden administration&#8217;s recent crackdown on crypto exchanges, led by the Securities and Exchange Commission, is a much-needed intervention for an industry that has far too long operated in a lawless manner.&nbsp;



While the industry may decry this regulatory action as an affront to financial freedom, the more level-headed among us must recognize it as a necessary step toward safeguarding the interests of investors and ensuring the long-term stability of capital markets.



Financial products and technologies may change over the decades, but our markets&#8217; basic bargain remains the same — entrepreneurs must register their offerings and provide full, fair and truthful disclosures to the investing public.&nbsp;



In parallel, intermediaries that make markets and provide platforms for buyers and sellers to interact must also maintain the integrity of these markets. It is imperative to remove conflicts of interest and address information asymmetries that can undermine the basic bargain.&nbsp;



This arrangement — enshrined in our laws after the market crash of 1929 — fosters transparency, liquidity and price discovery, allowing investors to make informed decisions and allocate capital efficiently.&nbsp;



This system and the continuity of the basic bargain have produced immense prosperity and the deepest capital markets, which are the envy of the world.



However, what is clear from the SEC&#8217;s latest 136-page lawsuit against <a href="https://blockworks.co/tag/binance">Binance</a> is that many actors in the crypto industry have a flagrant disregard for the rule of law, common decency and basic market protections. In the words of their own former head of compliance, showing a remarkable amount of self-awareness, &#8220;we are operating as a fking unlicensed securities exchange in the USA bro.&#8221; 



This <a href="https://blockworks.co/news/binance-pushes-back-sec-lawsuit" target="_blank" rel="noreferrer noopener">lawsuit</a> against Binance hearkens back to the infamous bucket shops of the 1920s, an era that saw shadowy establishments offering speculative trading on stocks without executing the trades on the market. These establishments lured investors with promises of quick profits and easy wealth, exploiting their lack of knowledge, creating fear of missing out based on obfuscation, and constructing deeply rigged markets fraught with wash trading and manipulation. 



The reality of crypto is made crystal clear by this lawsuit; crypto exchanges have arbitraged international financial regulation, exploited loopholes in our banking system, and capitalized on legislative sclerosis to create what can only be described as a series of lawless casinos run by a cabal of insiders whose explicit intent is to defraud the public and enrich themselves.



The SEC <a href="https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdf">alleges</a> that the exchange has regularly commingled its client money, embezzled funds to purchase yachts, facilitated markets in which 99% of the volume was fake, listed tens of thousands of unregistered securities offerings, and whose entire corporate operation can most aptly be described as a vertically integrated stack of conflicts of interest.&nbsp;



In light of this evidence, it remains hard to call what Binance provides a &#8220;market&#8221; given the sheer level of alleged fraud and manipulation, while simultaneously rooted in the inescapable fact that crypto offerings do not provide any financial intermediation function, facilitate capital formation or have any intrinsic value.



These new offshore crypto bucket shops are simply a repeat of the mistakes of financial disasters past, and their continued existence represents a direct assault on the very principles of capitalism. These bucket shops operate outside the bounds of regulatory oversight, and with blatant disregard for the rule of law; these lawless exchanges undermine the foundations of free and fair markets.



The American legal scholar Michael Barr describes crypto as a contagious economic narrative whose &#8220;[..] value proposition taps into the fears of government control with the promise that, through superior technology, a new product can yield untold riches.&#8221;&nbsp;



Crypto has far too long wrapped its charlatanism in the language of economic populism, tapping into a genuine desire to revolt against financial institutions and offering the illusory promises of a financial system built from a blank slate.&nbsp;



However, the reality of what has been built is fueled by rampant fraud, market manipulation and the creation of risk wholly detached from actual economic activity, which perpetuates an environment where deceit trumps transparency, and individual investors — often the poorest and most marginalized in our society — are left vulnerable to exploitation.&nbsp;



Crypto remains an affront to capitalism itself by operating in a lawless manner that is detrimental to investor confidence and market integrity, and undermines the fundamental tenets of trust in markets, accountability and the pursuit of genuine value creation.&nbsp;



To dismiss the nuances of regulation and the lessons of history that define our financial system is to invite a tempest that engulfs the vulnerable while empowering those who thrive on chaos. Attempting to unravel the foundations of our financial system, challenge the basic bargain and supplant markets for casinos only paves the way for opportunistic wolves to exploit the ensuing vacuum, perpetuating the very inequities that were initially denounced.&nbsp;



Nowhere do we hear the howl of these wolves more clearly than in crypto&#8217;s hucksterism, buffoonery and boorishness.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Stephen Diehl is a software engineer and outspoken crypto skeptic. He runs the UK-based Center for Emerging Technology Policy which advances public policy advocacy on behalf of technologists.</div>


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Binance deserves everything that’s coming to them

Shalini Nagarajan

ParaFi Digital Opportunities, Framework Ventures, and 1kx allege that <a href="https://blockworks.co/tag/curve" target="_blank" rel="noreferrer noopener">Curve</a> founder Michael Egorov carried out an elaborate fraudulent scheme that spanned six months, deceiving them in multiple ways.



Egorov purportedly misled the three venture capitalists starting in 2020 by making false promises of granting them a stake in Curve.&nbsp;



He is said to have used their network and reputation to gain trust and legitimize Curve, according to their most recent <a href="https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=1F4572B39AD289AEBB9F14C065325F8203E47EB8&amp;URL=https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%26MINDS_Server%3Dhoj-imx-01%26Category%3DC%26DocID%3D08533304%26Timestamp%3D20230609013525%26Digest%3D05da02677bf2046d8a4610a17a67437b96563648" target="_blank" rel="noreferrer noopener">complaint</a> filed in San Francisco in April. The litigation, first <a href="https://www.dlnews.com/articles/people-culture/vcs-parafi-framework-1kx-sue-curve-founder-michael-egorov/" target="_blank" rel="noreferrer noopener">reported</a> by DL News, was originally filed in October.



As things unfolded, Egorov supposedly stole the plaintiffs&#8217; trade secrets, which included valuable information like industry contacts, investors and investment know-how for Curve.&nbsp;



Curve Finance is a platform meant for exchanging tokens with low fees by using pools of similar assets. Liquidity providers to the platform are rewarded with the protocols native token <a href="https://blockworks.co/price/crv" target="_blank" rel="noreferrer noopener">CRV</a> and trading fees.



Egorov is accused of fraudulently luring the plaintiffs to invest in his company. He then allegedly used their money to boost the value of Curve, denied them their promised shares and fled to Switzerland, renouncing his US residency. All this was done to keep the profits for himself, leaving the plaintiffs out in the cold, they claim.



The plaintiffs’ claimed that Egorov justified “significantly shifting the power [to govern Curve] in his favor.” Instead of letting go of his power in the Curve DAO, he sold some CRV tokens to enrich himself while still keeping significant control, they added.



“Because he deposited plaintiffs’ funds into Curve’s liquidity pools, Egorov has received CRV tokens and fees as an incentive for providing liquidity,” attorneys for the VCs said.



Blockworks has reached out to ParaFi, Framework Ventures, 1kx and Egorov for comment.



<h2 class="wp-block-heading">Egorov seeks Swiss resolution for lawsuit</h2>



According to <a href="https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=1F4572B39AD289AEBB9F14C065325F8203E47EB8&amp;URL=https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%26MINDS_Server%3Dhoj-imx-01%26Category%3DC%26DocID%3D08575322%26Timestamp%3D20230609020055%26Digest%3D21fc360c443dd4f9b50e8af253e5fe25bc485782">court documents</a> filed on May 22, Egorov&#8217;s attorneys claim that the lawsuit filed in San Francisco is a response to ongoing litigation in Switzerland that began three years ago. They argue that Egorov&#8217;s company, Swiss Stake (Curve’s license holder), had the right to terminate that litigation.



Egorov is now requesting to either postpone or dismiss the lawsuit filed by the plaintiffs, arguing that the case should be handled in Switzerland, as the parties contractually agreed to resolve it there.



“To justify their blatant forum shopping, plaintiffs concocted a new and compelling story painting Egorov as an evil villain who duped three naïve VC firms into giving up ‘trade secrets’ (such as the names of widely known investors) and $1M in invested funds (that Swiss Stake promptly offered to return),” Egorov’s lawyers said in the filing.



“This tale of woe — which, in three years of Swiss litigation, Plaintiffs somehow never mentioned — is fiction,” they added.



They further claimed that Egorov established Swiss Stake in 2019 in Switzerland, as the country is known for being a leading hub for blockchain tech. And during their negotiations, the plaintiffs desired to invest in Swiss Stake and engaged their own Swiss legal representation to draft and finalize an investment agreement with Egorov, they said.



Swiss Stake ultimately decided to end the investment agreement involving the plaintiffs and started refunding the funds that investors had initially paid, according to them.



While other investors allegedly accepted the refunds, the plaintiffs refused them and instead filed a lawsuit in Zug against Egorov and Swiss Stake in August 2020. They claimed breach of contract and specifically referred to the Swiss forum selection clause.



A hearing on the matter is scheduled for July 19.



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Venture firms accuse Curve founder of elaborate fraud

Ratings agency Moody’s slashed Coinbase’s outlook to “negative” from “stable” two days after the Securities and Exchange Commission alleged that the exchange <a href="https://blockworks.co/news/sec-sues-coinbase">operated as an unregistered broker</a> and sold unregistered securities since 2019.



A negative outlook suggests that the agency could downgrade Coinbase’s rating in the future.



Moody&#8217;s decision to change the outlook stems from uncertainty about how much the SEC&#8217;s charges will affect Coinbase&#8217;s business model and cash flows, the agency said in a <a href="https://ratings.moodys.com/ratings-news/403841?mod=article_inline" target="_blank" rel="noreferrer noopener">statement</a> published Thursday.



The commission also alleges that Coinbase&#8217;s staking-as-a-service products break the Securities Act of 1933 because &#8220;the Staking Program has five stakeable crypto assets, and each of these assets is considered an investment contract and therefore a security.&#8221;



The SEC further claims that Coinbase didn&#8217;t make sure that the crypto assets it sold were not considered <a href="https://blockworks.co/news/ava-labs-howey-test-wrong">securities according to the Howey test</a>.



After the lawsuit, regulators from 11 states, including California and Washington, <a href="https://blockworks.co/news/us-states-are-going-after-coinbase-following-sec-lawsuit-heres-how">sent Coinbase a show cause order</a>. The order requires Coinbase to explain why it shouldn&#8217;t be told to stop selling cryptocurrencies in those states within 28 days.



Moody&#8217;s warned that Coinbase could face some serious consequences from the regulators.&nbsp;



These might involve returning any money earned unlawfully, paying fines and penalties, and suffering setbacks in its staking rewards business and other activities.&nbsp;



The agency also noted that it&#8217;s unclear when and how these issues will be resolved and what it means for Coinbase&#8217;s finances.



Moody’s isn’t the only one warning about Coinbase’s rating. Berenberg analyst Mark Palmer <a href="https://blockworks.co/news/coinbase-shares-uninvestable">slashed the company’s price</a> target on Thursday from $55 to $39.



Coinbase has reacted to the SEC&#8217;s lawsuit by stating that the agency <a href="https://blockworks.co/news/coinbase-responds-sec-lawsuit">conducted a review of its business</a> in 2021 and granted permission for the company to go public, despite the 2019 allegations made in the lawsuit.



Coinbase Chief Legal Officer Paul Grewal previously told Blockworks: “The solution is legislation that allows fair rules for the road to be developed transparently and applied equally, not litigation. In the meantime, we’ll continue to operate our business as usual.”



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Moody’s warns Coinbase faces serious consequences

Jon Rice

In the wake of a blistering lawsuit from the SEC, Binance.US notified users this evening that it would be pausing all customer withdrawals and transitioning, at least temporarily, to an all-crypto exchange.



Binance US attributed the decision to &#8220;banking partners [who] have signaled their intent to pause USD fiat channels.&#8221;



In a statement the exchange, operated by BAM Trading, <a href="https://www.binance.us/status">said</a> that it would be suspending all USD deposits as banking partners prepared to pause USD withdrawals ‘as early as June 13 2023.’



Binance.US noted in their statement that they maintain 1:1 reserves for all customers, and that all operations are currently functioning.



The exchange <a href="https://twitter.com/binanceus/status/1666996908651323393">encouraged customers</a> to withdraw USD via bank transfer by June 13, 2023.



The exchange noted that all USD trading pairs would be suspended next week, and that any USD balances held in reserve may be converted to stablecoins after June 15.



The notice also stated that ACH transfers in US dollars would potentially be subject to delays, which it suggested may be due to the weekend bank closures and elevated volumes.



Binance US had already noted that it would <a href="https://cms.blockworks.co/news/binance-culls-usdt-trading-pairs/">delist some trading pairs</a>.



In the notice, Binance US described the <a href="https://cms.blockworks.co/news/sec-allegations-against-binance/">SEC lawsuit</a> as making &#8220;baseless claims&#8221; and described the agency&#8217;s tactics as &#8220;aggressive&#8221; and &#8220;unjustified.&#8221;



The exchange has also been <a href="https://cms.blockworks.co/news/binance-us-sec-assets-freeze/">threatened with an asset freeze.</a>



Binance.US has had a checkered history, with one CEO — Catherine Coley — disappearing from public view, and another resigning after an extremely short tenure at the business. The latter, Brian Brooks, <a href="https://cms.blockworks.co/news/cz-ceo-bam-trading/">provided testimony</a> to the SEC that questioned the nominal independence of the exchange.



<a href="https://blockworks.co/price/bnb">BNB</a>, the native token of Binance, has fallen from just over $308 to around $259 over the past week, at the time of writing.



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Binance.US to halt all fiat withdrawals ‘as early as June 13’

Blockchain gaming provider Polemos has announced a new chain-agnostic blockchain game platform it calls &#8220;The Armory.&#8221; This platform intends to offer gamers the ability to rent digital assets without collateral or deposit requirements.



Traditionally in <a href="https://blockworks.co/tag/gaming" target="_blank" rel="noreferrer noopener">gaming</a>, digital asset rentals require a deposit, or the borrowers are only given copies of the original item. The Armory, on the other hand, will not ask for any collateral or deposits beyond a borrowing cost and give users the chance to use the digital assets as they like.



Players retain any rewards earned through their borrowed items, giving them an opportunity to experiment with different digital assets without the need to invest a large amount of time and money.



Lenders will be able to earn money from digital assets sitting idly in their wallets, though there is a small fee required to list each digital asset.



Halborn, a blockchain security firm, has audited the platform&#8217;s smart contract, potentially providing lenders with enhanced security. Smart contract audits are crucial for blockchain security, and multiple audit firms may review the code for some companies. This helps to ensure untampered item returns and reinforces overall platform security.



The Armory will be chain agnostic and integrated into Polemos’ <a href="https://forge.polemos.io/" target="_blank" rel="noreferrer noopener">Forge</a>, meaning it will be able to operate on a variety of different blockchains. 



Initially, The Armory will support all <a href="https://blockworks.co/tag/polygon" target="_blank" rel="noreferrer noopener">Polygon</a> proof-of-stake games, including Galaxy Fight Club, and in development games such as Apeiron, Deadrop and others. It plans to later integrate with other blockchains including Immutable, Solana, Avalanche and Ton.



“By providing a convenient solution for borrowers and lenders alike, we’ve opened up lending of game assets to the whole industry — with no work required by games to enable these great benefits,” Sascha Zehe, cofounder and co-CEO of Polemos, said in a statement.



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Polemos launches platform for collateral-free digital asset rental

In response to increased regulatory scrutiny in the US, crypto companies have begun placing a greater emphasis on hiring legal professionals. This follows recent developments regarding the SEC&#8217;s ongoing lawsuits against Binance and Coinbase.



<a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">The SEC targeted Binance on Monday</a> for allegedly engaging in the unlawful sale of securities and failing to register under the Exchange Act, among other charges.



The US securities regulator <a href="https://blockworks.co/news/sec-sues-coinbase">then sued Coinbase</a>, claiming it was operating as an unregistered exchange. Agencies from individual US states <a href="https://blockworks.co/news/us-states-are-going-after-coinbase-following-sec-lawsuit-heres-how">also went after the company’s trading and staking services</a> in separate legal actions.



Both exchanges have denied wrongdoing.&nbsp;



Ari Redbord, head of legal and government affairs at TRM Labs, noted that the heart of cases alleging unregistered securities hinges on whether certain digital assets are, in fact, securities. Redbord was named vice chair of the CFTC’s technology advisory committee in March.&nbsp;



Redbord said that he expects this issue to be initially addressed by the courts and eventually by Congress.



“In the meantime, crypto businesses can seek legal counsel from those versed in these complex issues, invest in compliance teams, use blockchain intelligence solutions, work with law enforcement to weed out bad actors and build robust corporate governance structures,” Redbord told Blockworks.



Some companies said new developments don’t impact their long-standing focus on compliance. They have acknowledged the need for additional vigilance after the latest allegations against Binance and Coinbase, however.



A representative for crypto exchange Bitstamp told Blockworks in an email Thursday that while the company has been “a compliance-first exchange” since launching in 2011, it takes new regulatory developments “very seriously.”&nbsp;



“As such, we are currently reviewing the new information that has come out this week to determine what actions to take,” the spokesperson added.&nbsp;&nbsp;&nbsp;



Marc D&#8217;Annunzio, general counsel for crypto marketplace Bakkt, said the company intentionally separated its crypto trading and custody functions, and has historically chosen to move slowly and evaluate the implications of its decisions.



He added that the actions against Binance and Coinbase continue a trend. The company is actively discussing with regulators and legislators ways to develop clear, actionable guidance — alongside enforcement — for crypto companies wanting to comply with laws.&nbsp;



“While some of the headlines are new, our approach is not,” D&#8217;Annunzio said. “While there’s arguably more developments to monitor on any given day, our process for doing that and considering impacts to our business remains unchanged.”



After closing its deal to acquire Apex Crypto last month, Bakkt delisted 25 coins to maintain its “compliance-first and consumer protection-focused approach,” D&#8217;Annunzio told Blockworks Thursday.&nbsp;



The company also acquired a broker-dealer license from Bumped Financial earlier this year. This was done “so that when there is a clearer framework for offering coins that are deemed to be securities, we are in a position to offer them,” D&#8217;Annunzio added.



<h2 class="wp-block-heading">A push to build legal teams in lead-up to latest actions</h2>



Zachary Plotkin, a managing director at recruiting firm Madison-Davis, said that crypto companies have traditionally prioritized professionals specializing in know-your-customer (KYC), onboarding, and due diligence. However, in 2023, there has been a noticeable increase in demand for legal support in specific areas.



In terms of full-time roles, Plotkin said more crypto companies have been hiring counsel in recent weeks.&nbsp;



Crypto.com posted a job listing Thursday for legal counsel tasked with “representing the company in negotiations and interactions with regulators, policymakers and industry stakeholders on tech-related matters,” it states.&nbsp;



Kraken last week listed the opening for a senior corporate and securities counsel to join its “growing” corporate legal team of nearly a dozen.



Representatives for Kraken and Crypto.com did not return requests for comment about the job postings, or other efforts.



Crypto asset manager Grayscale Investments — in the middle of its own legal battle with the SEC — posted a job posting for regulatory counsel last week. The professional would engage with the SEC and FINRA “as Grayscale’s regulated entities grow their private placement, public quotation, ETF and ETP business lines,” the listing states.



Even eBay, which acquired NFT marketplace KnownOrigin last year, is seeking crypto counsel to offer legal advice related to NFTs, blockchain and other Web3 matters.



<a href="https://workincrypto.global/">WorkInCrypto.Global</a> founder Sam Wellalage said he recently helped various “major players” hire legal and regulatory senior professionals, noting the market for such talent has recently heated up.



In addition to full-time professionals, the demand for temporary legal consultants, as well as those focused on fraud and third-party risk, has increased in the last six months amid regulatory uncertainty in the segment, Plotkin added.



These employees are mainly being hired on a contractual basis for periods ranging from three months to two years, which Plotkin attributes to firms wanting to stay cost-efficient and nimble during what he called an “economic downturn.”&nbsp;



The SEC’s lawsuits against Binance and Coinbase, however, have caused larger crypto firms to pause hiring, Plotkin said, adding that the space has entered “a wait-and-see period.”&nbsp;



“[With] Coinbase, Binance and all these other companies … there is definitely pressure from the government on them,” Plotkin said. “Before people take action or spend money to bring on new resources, they want to see how the government is going to react.”



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Crypto firms beefing up legal support amid regulatory crackdown

Michael Bodley

On Thursday, BitGo reached a preliminary agreement to acquire the parent company of Prime Trust. This marks a significant step forward in Prime Trust&#8217;s quest for emergency funding to address its financial challenges.



BitGo’s purchase, as denominated in a “non-binding term sheet,” snapped up “100% of the equity of Prime Core Technologies, Inc., the parent company of Prime Trust,” according to a BitGo <a href="https://blog.bitgo.com/bitgo-signs-letter-of-intent-to-acquire-prime-trust-to-expand-digital-asset-and-fintech-b1868391784a">statement</a>. Terms of the deal were not disclosed.&nbsp;



Prime Trust executives this week had <a href="https://blockworks.co/news/prime-trust-said-to-be-scrambling-for-emergency-cash-package">embarked on a whirlwind attempt to raise $25 million</a> or so in financing by this weekend, two sources familiar with the matter told Blockworks.&nbsp;



For <a href="https://blockworks.co/tag/bitgo">BitGo</a>, a well-capitalized firm with a number of cryptocurrency business lines, the move looked to give the company a leg up in terms of its technology stack as mergers and acquisition interest remains rampant throughout the industry.&nbsp;



A number of distressed crypto companies in 2023, as well as strict oversight from the SEC and other regulators, has led industry participants to closely monitor the market for buying opportunities.&nbsp;



It wasn’t immediately clear on Thursday whether the tentative deal — which is presumably subject to additional internal approvals — would affect Prime Trust employees.&nbsp;



BitGo CEO Mike Belshe in the statement called the planned acquisition a “landmark transaction,” which he said would serve as the vanguard for a “greater shift in the digital asset landscape toward a more secure and sustainable future.”



The plan is for Prime Trust’s Nevada-registered trust company to be folded into BitGo’s own regulated crypto-oriented trusts. Those affiliated companies for BitGo are located in Germany, New York, South Dakota and Switzerland.



And the idea is to plug in Prime Trust API product’s to help “reinforce” core BitGo products — including custody, settlement and compliance functions.&nbsp;



In another development on Thursday, BitGo played up its pending access to Prime Trust’s “world-class network of banking partners and payment rails, crypto IRA, and additional wealth management offerings.”



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