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Block 1: Essential news
- Tether goes mining in El Salvador
The Volcano Energy project has raised $250 million to develop a Bitcoin mining farm powered by 241 megawatts of renewable energy in El Salvador. Tether, the USDT issuer, participated in the financing, which is expected to reach $1 billion. The aim is to make El Salvador a leader in sustainable Bitcoin mining. The government will receive 23% of future revenues, investors will share 27%, and 50% will be used to further develop energy and mining production.
- Binance accelerates its development in France
Binance Pay has partnered with payment app Lyzi to enable the use of cryptocurrencies at 440 merchants in France, with a further 330 European outlets planned. Lyzi offers 1% to 5% cashback on daily purchases in various sectors such as food and pharmaceuticals. Users can link their Binance account to the app to access a variety of cryptocurrencies for their purchases. The payment process is carried out by scanning a QR code.
- When Justice adopts NFTs
The Commissaires de Justice of the Paris Court of Appeal have teamed up with Unikbase to create NFTs (Non-Fungible Tokens) on a dedicated blockchain called Legide, to authenticate and secure their documents. Physical documents are marked with invisible ink, linked to a digital marking on the NFTs, creating "digital twins" certifying the authenticity of documents and certain objects. This innovation opens the way to new practices and prospects for securing data transmissions.
- Will Do Kwon soon be extradited to the USA?
Do Kwon, co-founder and CEO of Terraform Labs, could be imprisoned in South Korea and then in the United States, according to Dan Sunghan, who is in charge of the investigation into the entrepreneur. Kwon is accused of using false travel documents and securities fraud, including with the cryptocurrencies Luna and UST. He has denied all charges and his representatives have disputed the allegations made by Seoul prosecutors.
Block 2: Crypto Analysis of the Week
The U.S. Securities and Exchange Commission (SEC) shook up the cryptosphere this week by filing lawsuits against two industry heavyweights, Binance and Coinbase.
This offensive didn't suddenly appear as a thunderclap; on the contrary, it's the fruit of years of latent debate on how to regulate cryptocurrency platforms. The SEC, in the midst of endless debate over its precise approach to regulating the industry, was bound to take action against the sector's giants sooner or later.
However, the SEC's message around these legal battles presents an image of reactive and politicized action, lacking the force its muscular rhetoric might suggest.
More to the point, the SEC seems intent on lumping Coinbase and Binance into the same category as fraudulent 2022 operations such as Luna, Celsius and especially FTX. The SEC has already been criticized for its apparently preferential treatment of FTX before its fraudulent activities were revealed. Today, it appears that the regulator is attempting to rectify this perception of leniency by demonstrating its ability to be a strict regulator.
However, this change in enforcement comes a few years late and is aimed at potentially inappropriate targets, most notably Coinbase, which has been trading for a decade and has joined the Nasdaq index after going public in 2021.
Basically, the SEC presents its recent prosecutions as part of an ongoing war against fraudulent activity. The fundamental charge made by the SEC in its court document against Coinbase is that the company deliberately made business decisions to increase its revenues, primarily from customer trading fees, by making cryptoassets available for trading to the casual investor.
Whether Coinbase could have complied with regulations in the manner suggested by the SEC is a complex debate. However, the real crux of the SEC's argument is that Coinbase broke the rules by creating a trading service for crypto-currencies, some of which are considered unregistered securities, that customers actively use.
Despite this, the SEC's accusations against Coinbase are twisted to portray the company as a manipulative and predatory entity. SEC Enforcement Director Gurbir S. Grewal is quoted as saying that "Coinbase's calculated decisions allowed it to make billions [...] at the expense of investors by depriving them of the protections to which they were entitled."
Today we charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its crypto asset staking-as-a-service program.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v
- U.S. Securities and Exchange Commission (@SECGov) June 6, 2023
On the other hand, Binance is accused of engaging in activities that could be considered wrongdoing, including price manipulation and commingling of customer funds that negatively impacted customers. In other words, Binance's legal problems are in a much higher category than Coinbase's.
The SEC's legal action against Coinbase and Binance must be understood in the broader context of the SEC's attitude to cryptocurrencies. The lawsuits are based on a moral premise that cryptocurrencies are inherently fraudulent and worthless. This premise allows the SEC to lump Coinbase CEO Brian Armstrong in with Sam Bankman-Fried, former CEO of the now-defunct FTX platform.
SEC Chairman Gary Gensler reiterated this position in a recent Bloomberg interview, where he stated that "we don't need more digital currency, we already have it. It's called the U.S. dollar. It's called the euro. It's called the yen. They're all digital right now.
Mr. Gensler's statement is not only a gross oversimplification, but one that he must know is wrong. Given that he was an instructor at MIT and taught students about blockchain technology, it's implausible to believe that he doesn't recognize the difference between traditional banking systems, on which the government has a monopoly, and blockchain.traditional banking systems, over which the US government exercises immense and politicized control, and decentralized cryptocurrency networks, most notably Bitcoin, which resists centralized control.
Without debating the usefulness of inserting bitcoin into the economic circuit, lumping bitcoin, the euro, the dollar and the yen together in the same "digital currency" basket is an oversimplification of the concept of bitcoin, which is detrimental to the general public's understanding.
However, Gensler itself found itself in a tricky situation when Sam Bankman-Fried was at the height of his fame. Gensler staff reportedly engaged in ongoing discussions on cryptocurrency regulation with the FTX team, leading to speculation of favoritism. This proximity may have prevented them from recognizing FTX's fraudulent activities. The accusations became so serious that at least one member of Congress publicly blamed Mr. Gensler for the FTX fiasco. Bankman-Fried's appearances before Congress only fueled the argument for preferential access to regulation.
In the current climate, although the SEC's accusations against Binance and Coinbase are well-founded, one can't help but feel that they are being used as a second chance for the SEC and Gensler to make up for the FTX debacle. Yet it's important to remember that the situations are, for the moment, fundamentally different, especially for Coinbase. Presenting them as identical could potentially undermine the credibility of both Gensler and the SEC on this subject.
Indeed, the intertwined histories and mutual influences of the SEC and the cryptocurrency world have led to a complex web of actions and reactions, where motivations, intentions and outcomes can be difficult to untangle. But to foster a healthy and thriving financial ecosystem, it's essential that these complexities are managed with fairness, transparency and dedication to the truth.
Block 3: Gainers & Losers
Block 4: Things to read this week
Blockchain is a key technology - a computer scientist explains why the post-crypto-crash future is bright (The Conversation)
Coinbase and Binance lawsuits make crypto icy (Wired)
AI doomerism is a red herring (The Atlantic)
Who's got Bitcoin? A closer look at what Bitcoin has to offer (Bitcoin Magazine)
