Kategorie: Crypto Markets

• Robinhood Markets Inc. disclosed investigation by the SEC in its most recent 10-K filing with the SEC
• Robinhood has listed a number of cryptocurrencies and also offers crypto custody and trading services.
• It was issued with an investigative subpoena on December 22 just after the collapse of FTX.

The crypto industry is facing a major regulatory crackdown, especially in the United States of America as the US Securities and Exchanges Commission (SEC) take on several crypto projects. Robinhood recently confirmed through its recent 10-K filing with the SEC that the US SEC is also on its neck for its cryptocurrency activities.

Robinhood has revealed that it received an investigative subpoena from the SEC in December 2022, just weeks after the collapse of the FTX crypto exchange. The move by the SEC is the latest against a series of crackdowns against the cryptocurrency industry following the collapse of the FTX and the bankruptcy filing of several other crypto firms.

Potential risks to Robinhood’s business

Robinhood disclosed in the filing that the subpoena from the SEC regarding its “supported cryptocurrencies, custody of cryptocurrencies, and platform operations” is among potential risks to its business.

A subpoena normally requires the respondent to appear before a court and testify for an ongoing investigation.

Besides the SEC subpoena, Robinhood revealed that it also received another subpoena from the California Attorney General’s office regarding its trading platform, custody of customer assets, customer disclosures and cryptocurrency listing. The firm stated that it is cooperating with the California investigations.

At the moment, Robinhood lists 18 cryptocurrencies on its trading app including Ethereum (ETH), Bitcoin (BTC), and Dogecoin (DOGE) in addition to stocks. It went through rapid growth during the COVID-19 pandemic because it offers an easy way to start trading, low-interest rates, and stimulus checks.

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• Gary Gensler, the Chair of US US Securities and Exchange Commission (SEC) is increasingly aggressive on crypto.
• He recently told the New York Magazine that nearly every token had features that point to them being securities.
• Marcus Sotiriou says the SEC cannot prosecute all the companies and that Gensler’s opinion isn’t law.

Securities and Exchange Commission (SEC) Chair Gary Gensler recently opined that all tokens, except for Bitcoin (BTC), are securities.

The SEC chair’s comments are part of an aggressive stance he has taken against crypto tokens. However, Gensler’s opinion isn’t the law, Marcus Sotiriou, an analyst at publicly-listed digital asset broker GlobalBlock said in a market commetary.

SEC Chair said all crypto except BTC are unregistered securities

Gensler recently told the New York Magazine that for every other cryptocurrency that’s not bitcoin, there is a website, a foundation, entrepreneurs, or legal entities set up in a tax haven. 

According to him, the projects still qualify as securities offerings even if they try to make it difficult to jurisdictionally bring them under the existing securities laws.

The SEC boss has previously said it will not ban crypto, but it also over the past two years increased its enforcement actions across the space. Indeed, the regulator continues to battle in court with Ripple Labs, the creator of cryptocurrency XRP, over allegations that the token was offered as an unregistered security. 

Ripple Chief Legal Officer has highlighted that Gensler needs to “recuse himself” from any further enforcement actions on the basis of his prejudgement of outcomes.

Crypto lawyer PSA: Chair Gensler has again proclaimed that every cryptocurrency, except BTC, is an unregistered security. He now must recuse himself from voting on any enforcement case that raises that issue since he has prejudged the outcome. Antoniu v. SEC (8th Cir. 1989)

— Stuart Alderoty (@s_alderoty) February 27, 2023

Elsewhere, the regulator has sued numerous entities and individuals, striking settlement deals with a number of them amid a growing environment of enforcement actions.

SEC Chair’s stance “not the law”

Sotiriou says the SEC taking the current path could see it lose ground relative to the number of new crypto tokens coming into use across the industry. Ideally, the number of tokens the SEC wants registered as securities are more than 9,000.

“I think we need to ask what the SEC’s capacity to prosecute digital asset trading companies is. If they were able to prosecute less than 500 companies, they will probably be losing ground relative to new tokens being created,” Sotiriou noted.

If it cannot prosecute all the companies it might be targeting, the regulator might have to “prioritise.” But how does the watchdog determine who to sue and who not to? According to the analyst, this might come down to the SEC’s opinion – which isn’t the law.

“Ultimately, Gensler’s opinion is not the law, and every case the SEC brings up has to be proven in court. The longer this uncertainty is in limbo though, the worse it is for the whole industry,” he added.

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• Gamium is a metaverse project.
• It provides users with a digital identity to use across the internet, blockchains, and the metaverse.
• The project has today announced partnerships with Meta and Telefonica.

The price of GMM, the native token of the metaverse project Gamium, has shot through the roof after the project announces sealing deals with social media giant Meta (META) and telecommunications giant Telefonica (TEF). The token has hit a daily high of $0.004539 after surging by more than 450% in hours.

Although the token is little known within the crypto space, its blockchain is an upcoming metaverse project that aims to change the way humans interact by introducing digital identity. Besides being traded on secondary crypto markets, the GMM token is used for Metaverse governance through the Gamium DAO, Avatar governance, launching and managing community-owned cities, applying for specific metaverse jobs, receiving exclusive NFTs or token airdrops, and accessing exclusive events.

Gamium’s deal with Meta and Telefonica

As part of the deal, Gamium will work with Telefonica and Meta on a project called Metaverse Activation Program, which is an initiative that was started to help in scaling up startups within the Web3 space. Through the program, startups will be able to access propriety technology provided by Meta AI and also receive commercial support from both Telefonica and Meta.

It is not the first time that Meta is investing in the metaverse since it has invested heavily in the metaverse. Meta was also the parent company of Diem, which planned to create its own cryptocurrency.

Telefonica on the other hand recently announced that it enabled crypto purchases and has also invested in a Spanish cryptocurrency exchange.

Gamium’s partnership will probably spur increased GMM trading activity besides an increase in the token’s value. GMM currently has a market capitalization of about $32 million.

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• Trading volume at Coinbase Global Inc surpasses that of Uniswap.
• Analyst says CEXs will always be essential to exchange landscape.
• Coinbase also terminated trading Binance USD on Monday.

Kaiko – a notable digital assets data provider, on Monday, confirmed that trading volume at Coinbase has now surpassed Uniswap.

Coinbase trading volumes surpass $185 billion

Trading volumes at the cryptocurrency exchange as of end of the recent week climbed to over $185 billion. That’s about double the $93 billion on its decentralised counterpart, Uniswap.

Following the collapse of centralised platforms, including the FTX exchange last year, many expected an increased shift to decentralised exchanges (DEX). But that’s “a bit premature” as per Conor Ryder’s (Kaiko research analyst) response to CoinDesk on Twitter.

Average investor is still put off by worse user experience on some of these DEXs, compared to more straightforward experience on CEXs. I think CEXs will always be an essential part of the exchange landscape.

DEX trading volumes had once hit $113 billion

It is noteworthy here that at one point last year, trading volumes at Coinbase and Uniswap were roughly the same.

Following the FTX fiasco in November, volumes on decentralised exchanges were reported to have touched a whopping $113 billion. In comparison, they’re unlikely to top even $100 billion this month.

Last week, the crypto exchange reported better-than-expected revenue for its fourth financial quarter. Also on Monday, Coinbase terminated trading of Binance USD, saying it fails to justify listing standards. Its shares are currently up more than 75% versus the start of the year.

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• Binance reportedly moved the funds between August and December 2022.
• A Forbes report claims Binance sent the money to various hedge funds and platforms, including Cumberland, Alameda Research and Tron.
• CSO Patrick Hillmann says there was no commingling of funds.

Binance reportedly moved more than $1.8 billion in customer funds to different firms, sending them to various hedge funds in a move that was “eerily similar” to what happened before the collapse of FTX.

Per the Forbes report published on Monday 27 February, the commingled funds were collateral to Binance-peg tokens, particularly for the stablecoin USD Coin (USDC). The exchange moved the funds without its customers’ knowledge, and involved transactions from around mid-August to early December 2022, the report added.

Binance sent customers’ funds to multiple firms

Ostensibly, the exchange moved roughly $1.1 billion of its customers’ funds to crypto trading platform Cumberland, a subsidiary of DRW. The trading firm might then have helped convert the funds to Binance USD (BUSD), a stablecoin that was the main trading pair on the Binance exchange.

As reported earlier this month, BUSD issuer Paxos was ordered to stop minting the stablecoin and today, crypto exchange Coinbase announced it would be halting support for BUSD on 13 March 2023.

Apart from Cumberland, other firms that reportedly received customer funds from Binance were digital assets firm Amber Group, FTX subsidiary Alameda Research, and Tron. Binance sent millions of dollars worth of collateral to these companies too.

Earlier this year, Binance acknowledged it had mistakenly stored customers’ funds into the same wallet it keeps collateral for B-tokens. On the events described in the latest report, CSO Patrick Hillmann said what happened before is “normal business” and that there had been no such thing as commingling of funds.

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