Dispatch #109: The SEC Gets Bored With Apes
In this patch of your weekly Dispatch:
- The SEC is reportedly probing Yuga Labs
- Bitcoin mining difficulty reaches an ATH
- Elon launches perfume as JPMorgan kicks Kanye out
The Big Idea
Legal Challenges Inbound for BAYC?
2022 has been a big year for regulatory enforcement actions. This week, Bloomberg reported that the SEC is looking into Yuga Labs, the parent company of the Bored Ape Yacht Club. According to their sources, the SEC is examining whether certain of Yuga’s NFT sales constitute an unregistered securities offering.
Based on the little information we have, it appears the SEC is looking at the distribution of ApeCoin, a token that was airdropped to BAYC holders. They’re also examining whether some of the other NFT sales violated federal law.
On the one hand, SEC probes don’t necessarily mean anything will happen. Yuga hasn’t yet been accused of wrongdoing. On the other hand, there could be significant consequences for the NFT space should the SEC make the argument that Yuga’s NFTs were securities. You can almost hear the sound of NFT projects ringing their lawyers.
What’s clear is NFTs can’t be ignored anymore.
The Latest In…
Institutions and Adoption
The story of this bear market has been very clear. Regulatory enforcement on the one hand, and continued (quiet) institutional adoption/ infrastructure building on the other. This week, a Senior House Republican told The Block that Biden administration officials have been holding up the comprehensive stablecoin bill but there’s still a chance it can pass this Congress.On the institutional front BNY Mellon – America’s oldest bank – was approved to custody certain cryptos, which could be a huge development in normalizing the asset class.
The Latest In…
Smells Like Elon
There’s something about Elon Musk and fire-related merchandise. After the fire sale (pun intended) of his Boring Company “flamethrowers” in 2018, Elon played it rather safe and launched a perfume. It’s called “Burnt Hair” and, according to the fragrance encyclopedia Fragrantica’s users, it has intimate sillage and is way overpriced. As fans of musk, we’ve got one thing to say about the launch: “in retrospect, it was inevitable.” Oh, and don’t spend crypto to buy perfume. In other celebrity news, JPMorgan Chase cut ties with Kanye West’s company, asking him to move his business elsewhere. Boy, oh boy.
The Latest In…
Our Co-Founder Antoni Trenchev sat down live with Bloomberg's Anna Edwards and team to talk about the current state of affairs in the digital assets space. Against a bleak macro backdrop but also humongous capital raises – like Uniswap’s $165M deal – see what Antoni reckons is driving crypto prices currently, as well as his insight on Nexo’s ability to consolidate the space. Watch here.
The Week’s Most Interesting Data Story
Miner Capitulation Risk
It’s not easy out there right now for Bitcoin miners. With the most recent adjustment, mining difficulty has now reached a new all-time high. This reflects a significant and rapid increase in network hashpower. This is good for the security of the network but also makes it more expensive to be a miner and produce Bitcoin. At the moment, BTC miners hold around 78.2k BTC in their treasuries. This number has been increasing in the aggregate since the middle of 2019 but in the last three months, we’ve seen the most notable slowdown in miner treasury growth over the previous 3 years. Will some miners be forced to turn off their machines?
What the Community Is Discussing
We’re all slaves to the macro.
It is a little weird…
What to Watch for Next Week:
- Can we go one week without a hack?
- Will we see cracks in financial markets as the Fed keeps tightening?
- Will the SEC respond to Grayscale’s lawsuit around their ETF application?