It was another week where lots of pieces on the chess board moved around but not a lot happened, with the new SEC Chair stepping into his role and various litigation matters getting updates. Crypto banking was also in the news, with the Fed removing certain supervisory guidance regarding crypto assets, and a decision regarding a bank’s responsibilities (or lack thereof) to protect customers from pig butchering scams.
Here’s everything that happened last week in Web3 legal:
Other Stories
Paul Atkins Sworn in as SEC Chair: Paul Atkins has finally been sworn in as SEC Chair. During his confirmation process, the SEC was busy, so assumedly he has been in the loop and had agreed with those actions, but he will now be able to enact a full new agenda in the post-Gensler era. His first public statements are certainly promising.
Richard Heart SEC Matter Over: The SEC has announced it will not be amending its complaint against Hex founder, Richard Heart, after the case was previously dismissed on jurisdictional grounds. This is the right result, as no matter what you think about the guy, doing a single podcast in the U.S. and using source code developed in the U.S. does not give U.S. regulators the jurisdiction to be the world’s regulators.
Vitalik Proposes ETH Smart Contract Language Swap: Ethereum co-founder Vitalik Buterin has posted a new blog floating replacing the Ethereum Virtual Machine’s (EVM) code with the open-source RISC-V architecture. Big picture issue with no immediate consequence but worth adding in the update.
Bank Not Responsible for Crypto Scam: Sorry for the paywall story, but this story about a man who tried to sue his bank for allowing him to take out money to buy crypto that the guy was scammed out of was a good read. In a shock to nobody, the court ruled that the bank is not responsible for protecting the individual from his own bad choices.
Avi Faces 8 Years for “Profitable Trading Strategy”: The Avi/Mango markets exploit has always fascinated me, so worth an update now that sentencing is coming that the prosecutors in his case are looking for a sentence of 78 to 97 months in prison. It is insane to me that somebody so smart can also be so dumb.
New MicroStrategy: It looks like Tether and others are backing a MicroStrategy clone “Twenty One Capital” that is basically only set up to acquire and hold Bitcoin. Bitcoin dominance continues.
SEC Charges Crypto Ponzi: The SEC is alleging PGI Global founder Ramil Palafox of orchestrating a fraudulent crypto scheme claiming to be a foreign exchange trading platform. This is the type of stuff the SEC should have always focused on instead of exchanges and software developers.
Ether.fi U.S. Expansion: Either.fi, which has to-date blocked U.S. users, is expanding to try to offer a decentralized and non-custodial alternative to traditional banks. Things like this and Moonwell virtual accounts have me excited about taking back control over finances. The days of earning .00001% on your cash in checking accounts are almost over.
Curve Tries to Solve Bitcoin LP Impermanent Loss: Everybody who tries to LP learns at some point the hard lesson of impermanent loss. Looking forward to digging into the proposed solution being pitched by the founder of Curve.
Polygon CEO Talks DeFi: Polygon CEO Marc Boiron gave an interview advocating for more focus on long term sustainability. Hard agree. Whether it is juiced yields or points systems or whatever, if users are there for the short term gain rather than technical functionalities those users will be fleeting. Also adding the DeFi Education Fund’s letter regarding a token safe harbor to my reading list.
Meteora Class Action: I am on record that the “firm” (i.e., one plaintiff’s attorney with rudimentary blockchain knowledge) behind this lawsuit is a joke. But I need to at least note the recent lawsuit they brought against Meteora. There are bad actors in the space, so it would be nice to have a better quality of plaintiffs firms going after them.
Federal Reserve Retracts Supervisory Guidance: The Federal Reserve Board has retracted guidance that required banks obtain their approval before implementing any (even vanilla) activity that involved crypto. Nature continues to heal.
Coinbase/PayPal Partnership: Coinbase is removing fees from PYUSD similar to how fees were removed from USDC. With stablecoins potentially being a multi-trillion asset class in the near future, anything that pushes that along is good with me.
Financial Surveillance Interviews: When Congress is on break, I always like reading the interviews that CapHillCrypto lines up. This week, it is worth including in my update since it deals with privacy as well as crypto, both of which are near and dear to me. He even gave a shoutout to Bernstein which I scream the dicta from over 4th Amendment issues at every chance I get!
CONCLUSION
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Warpcast. As always, I am an attorney, I am not your attorney. For legal advice, you should always consult (and pay for) an attorney.
Outro/Disclaimer: Since late 2022, I’ve prepared weekly updates for attorneys at my firm to stay abreast of the latest Web3 legal developments. The biggest stories are included in Bi-Weekly posts on the firm’s BitBlog, where we provide tl;dr overviews and insights into the biggest stories from the past two weeks. I post the weekly updates on my personal blog every Tuesday, where I also provide links to more obscure legal developments and otherwise discuss industry trends and stories. Please note, the views and opinions I express, both on BitBlog and my personal blog, are solely my own. They do not reflect the official stance or endorsement of my firm.
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