Coinbase, Ledger, Trump, SafeMoon, NFT Trader: Weekly Recap

Today’s Weekly Recap dives into U.S. regulators’ rejecting Coinbase’s petition for clear rules; the Ledger hack; SafeMoon’s bankruptcy; former U.S. President Donald Trump’s new NFTs; and the massive breach at NFT Trader.

Regulatory efforts

• One of the highlights this week was a slew of events related to crypto regulations. Chairperson of the U.S. CFTC Rostin Behnam claimed in a CNBC interview on Dec. 12 that most crypto assets are commodities under existing laws, as opposed to the SEC’s stance.

• Stablecoin issuer Tether reaffirmed its readiness to work with U.S. authorities in a letter shared with the U.S. Congress. The firm confirmed its emphasis on robust AML measures and proper KYC procedures to mitigate illegal financing.

• Recall that the SEC argued last week that Binance’s admission of guilt in a Department of Justice lawsuit meant that the company was also guilty of the charges the agency leveled against it. Binance replied to this argument this week, claiming it was erroneous. 

KuCoin exits New York, Sen. Warren introduces crypto bill

• Seychelles-based crypto exchange KuCoin agreed to settle charges from New York regulators with a fine of $22 million, as the state amplifies its crackdown on non-compliant crypto entities. The exchange also agreed to exit the state, as part of the settlement terms.

• U.S. Senator Elizabeth Warren introduced a bill on Dec. 11 to crack down on cryptocurrencies in a bid to tackle their use in terror financing, money laundering, and other illegal activities.

• The bill, called the Digital Assets Anti-Money Laundering Bill, swiftly garnered support from other democratic lawmakers. However, the crypto community expressed dissatisfaction, claiming it is geared towards snuffing crypto innovation in the U.S.

SEC denies Coinbase’s petition for clear rules

• Amid the clamor for regulatory clarity in the U.S., the SEC, which has continued its clampdown on crypto exchanges, insists the crypto industry already has clear rules. As a result, on Dec. 15, the securities regulator denied Coinbase’s petition, seeking that they enact clear rules.

• Coinbase immediately responded to the denial, taking the case to the U.S. Court of Appeals. Pro-crypto attorney John E. Deaton argued that the SEC was in cahoots with Sen. Warren to gaslight U.S. citizens through its enforcement actions and refusal to make clear rules. 

Update on Bitcoin ETF developments

• Meanwhile, the SEC continued to engage the multiple asset managers looking to launch a spot Bitcoin ETF. On Dec. 14 asset management firm Valkyrie Investments filed a new S-1 with the SEC, opting for a cash-only method for its spot Bitcoin ETF.

• This week, the SEC delayed another spot ETF filing. The agency was supposed to decide on the spot Ethereum ETF filing from Invesco Galaxy on or before Dec. 23. They shifted the deadline to Feb. 6. 

• With the multiple delays and the heightened anticipation of spot Bitcoin and Ethereum ETFs in the U.S. market, SEC Chairperson Gary Gensler disclosed on Dec. 14 that the regulatory body is now considering the applications with a fresh outlook.

• Bloomberg ETF analyst James Seyffart revealed on Dec. 15 that Gensler and his staff again met with asset manager BlackRock this week to further discuss BlackRock’s iShares Bitcoin ETF vehicle.

• Seyffart and his colleague Eric Balchunas forecasted that it is very likely that the SEC would approve multiple filings between Jan. 5 and 10. As the crypto community continued in anticipation, Google updated its advertising rules this week to accommodate crypto products such as ETFs.

Ledger Connect Kit faces exploit

• This week was not devoid of hacks. SushiSwap CTO Matthew Liley at first sounded the alarm on Dec. 14, calling attention to an exploit targeting the Connect Kit tool from hardware wallet manufacturer Ledger.

• The hackers had compromised the Ledger Connect Kit, uploading a malicious version of the tool that enabled them to siphon users’ funds when the users tried to connect to dApps that use the Kit, including SushiSwap, MetaMask and Lido. Up to $484,000 was stolen at the time of the disclosure.

• In an update on the incident, Ledger revealed that the exploit occurred because a former employee had fallen victim to a phishing exploit, through which the hackers gained access to the employee’s NPMJS account. Ledger later confirmed that it had fixed the issue.

Trump releases new NFT series

• Developments surrounding crypto adoption also made headlines this week as Trump released a third NFT series, which featured his infamous mugshots.

• David Riegelnig, a former executive at Swiss-based investment bank Credit Suisse, made an entrance into the crypto scene with the launch of Rulematch, a crypto trading platform tailored for banks alone. The platform is to support BTC and ETH.

SafeMoon bankrupt, Do Kwon’s custody extended

• SafeMoon’s struggles spilled into this week, following the SEC’s charges against its executives last month. The project filed for a Chapter 7 bankruptcy, which would result in a full-blown dissolution, so its assets could be sold to compensate creditors. 

• Meanwhile, Su Zhu, founder of defunct crypto hedge fund 3AC which went bankrupt last year, stood before a Singaporean court this week to answer questions regarding the collapse of the crypto hedge fund last year. This was his first appearance.

• Authorities in Montenegro extended the custody of Do Kwon, founder of the collapsed Terra ecosystem, for two extra months. Recall that Kwon is facing a possible extradition to the U.S. or South Korea to answer for his alleged crimes.

NFT Trader breached

• P2P platform NFT Trader was hacked on Dec. 16.
• The whole collection of the stolen NFTs, including 37 BAYC, 13 MAYC, four World OF Women and six VeeFriends, were worth roughly $2.4 million at the time of the hack.
• The current holder of the NFTs claims that he has rescued the collectibles and asked for a 10% bounty to return the assets.
• Market analyst ZachXBT told the NFT Trader users to proceed with the bounty very cautiously.