Lawyers representing Kraken and the United States Securities and Exchange Commission (SEC) argued in a federal court about whether digital assets on the Kraken exchange could be considered securities.
At a June 20 hearing in the U.S. District Court for the Northern District of California, Kraken’s lawyer Matthew Solomon and SEC counsel Peter Moores presented their cases before Judge William Orrick.
The hearing focused on a motion to dismiss filed by Kraken in February.
Judge Orrick indicated he was “inclined to deny” the motion, suggesting it was “plausible” that digital assets were offered and sold as investment contracts on Kraken.
Solomon argued that Kraken’s case differed significantly from other litigated cases, such as those involving the SEC and Terraform Labs and Telegram.
He referenced Judge Analisa Torres’ decision in the SEC’s case against Ripple Labs, where the judge ruled the token was a security when sold to institutional investors, but noted the closest comparable case to Kraken’s was Coinbase’s.
The SEC’s argument hinged on treating Kraken as an “ecosystem” where tokens are sold as investment contracts, making them securities under the Howey test. Kraken’s legal team disputed these theories.
“I think conjuring up the notion of an ecosystem just for crypto — that’s not the way rules oughta be applied,” said Solomon.
“Crypto deserves no better than anybody else, but they oughta have the rules applied equally to them as they’ve applied to everyone else.”
Solomon added, “The SEC doesn’t just have to show that there is a security under Howey, they’ve gotta show that that security was brokered, traded, or cleared on Kraken.
That is impossible the way they’ve constructed their argument.”
Judge Orrick did not rule on the motion to dismiss during the hearing but indicated he was still inclined to deny it.
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He suggested that a year should be sufficient for discovery if the case proceeds.
The SEC filed its enforcement action against Kraken in November 2023. Prior to this, Kraken settled with the SEC in February 2023, agreeing to pay $30 million and cease offering staking services or programs to U.S. clients.
Although Ether was not specifically mentioned in the SEC v. Kraken case, it has been central in some crypto firms’ legal battles with the SEC.
In April, Consensys filed a lawsuit against the SEC after receiving a Wells notice regarding potential enforcement action based on Ether.
However, the SEC concluded its investigation on June 19, suggesting it considered Ether a commodity.
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Digital asset manager Bitwise launched its first spot Ether exchange-traded fund (ETF) commercial on Thursday, inviting non-fungible token (NFT) enthusiasts to mint the 39-second clip on Ethereum.
“Capture a piece of crypto history: the 1st national TV spot minted as an NFT,” Bitwise announced in a June 20 post on X.
The ad is themed around Ethereum’s constant availability, contrasting it with “big finance,” which operates on traditional hours. It draws inspiration from an early 2000s Apple ad comparing Mac computers to PCs.
The commercial features a conversation between a casually dressed, younger man representing Ethereum and an older man in business attire and a nightgown representing “Big Finance.”
The older man is preparing for bed as the trading day ends.
“You’d want a little shut-eye too if you’ve been moving billions around the world,” boasts Big Finance.
“Well, actually, I do,” replies the Ethereum man.
“Stablecoins, NFTs, loans, people can access me 24/7 […], but look, everyone’s different. You should get some rest,” he adds, tucking Big Finance into bed.
Bitwise described the ad as a “piece of history.”
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So far, 1,198 mints of the 39-second clip have been made by 530 unique minters, according to the Zora Network, an Ethereum layer-2 solution for artists and brands.
Bitwise announced that 50% of the NFT proceeds will support Protocol Guild, a funding mechanism created by Ethereum core contributors.
The remaining 50% will go to the ad’s actors, Jamie Kaler and Michael Tacconi.
Protocol Guild, Kaler, and Tacconi have collectively earned $1,865 or 0.53 Ether from the NFT mint so far.
Last month, Bitwise and seven other firms had their applications approved by the United States Securities and Exchange Commission (SEC) to list spot Ether ETFs.
Bitwise amended its S-1 registration statement on June 18 to include a potential $100 million investment into the Bitwise Ethereum ETF upon its launch.
S-1s are the final filings that must be approved by the SEC before these products can launch. According to Bloomberg ETF analyst Eric Balchunas, they may launch as early as July 2.
VanEck also released its spot Ether ETF ad shortly after the SEC’s approval of the 19b-4 filings.
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The amount of Bitcoin held by miners has dropped to its lowest level in over 14 years, as reported by IntoTheBlock.
On June 19, miner reserves decreased to 1.90 million Bitcoin, down from 1.95 million BTC at the beginning of the year.
Lucas Outumuro, head of research at IntoTheBlock, explained that miners are expected to hold less Bitcoin over time due to the halving process, which puts pressure on their margins and increases the likelihood of them selling their reserves.
In Bitcoin’s proof-of-work consensus mechanism, miners are rewarded with new Bitcoin for validating transactions and securing the network.
Miner reserves refer to the unsold Bitcoin held by miners. Approximately every four years, the network’s mining subsidy is cut in half.
The most recent halving on April 20, 2024, reduced mining rewards from 6.25 BTC to 3.125 BTC.
“That being said, historically, this has been at a relatively slow rate, so it hasn’t been a major selling pressure,” Outumuro told Cointelegraph.
Despite the reduction in rewards, the dollar value of miner reserves has remained around an all-time high of about $135 billion.
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This indicates that while miners hold fewer Bitcoin, the value in USD is higher.
“It seems today’s miners have learned from past cycles,” noted Sascha Grumbach, CEO of tokenized mining firm Green Mining DAO, in a written commentary shared with Cointelegraph.
“Gone are the days of overleveraging and holding onto too much Bitcoin, a strategy that backfired in the past.”
An April report by CoinShares forecasts a surge in Bitcoin’s hashrate in 2025 following a post-halving dip.
The decreasing Bitcoin rewards and increasing competition reduce the amount of Bitcoin produced per unit of hash power over time, raising production costs.
“[Miners’] focus seems to be on short-term financial stability rather than long-term, large-scale accumulation of Bitcoin.”
Grumbach concluded, “In other words, having less Bitcoin is normal in the market phase we are in.”
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Bitcoin has around 10 days until United States macro conditions support a return to BTC price upside, according to financial commentator Tedtalksmacro.
He tracks the correlation between BTC price action and U.S. Federal Reserve liquidity, revealing a strong connection that has persisted for several months.
Although Bitcoin is down about 3.2% in June, the trend may reverse before the month ends.
Tedtalksmacro highlighted this close correlation in his analysis of Fed liquidity conditions impacting BTC/USD.
“The correlation between Bitcoin + Fed Liquidity never ceases to amaze me,” he wrote on X, noting that liquidity is expected to bottom in the coming 10 days before rising again.
His chart from the macro data resource, Talking Macro, illustrated how BTC price highs and lows align with peaks and troughs in Fed liquidity.
Even Bitcoin’s recent all-time high of $73,800 in mid-March was accompanied by a spike in liquidity.
Tedtalksmacro explained that liquidity is calculated based on a mix of Fed assets, repo markets, and treasury data.
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However, Talking Macro pointed out some short-term headwinds for Bitcoin, particularly a recent decline in inflows to U.S. spot Bitcoin exchange-traded funds (ETFs).
After experiencing their second-highest daily inflows on record in early June, the trend reversed, with the past four Wall Street trading days showing net outflows.
Monitoring resources, including the UK-based investment firm Farside Investors, reported a four-day outflow tally of just over $700 million, compared to the June 4 inflow of $886 million.
Despite these short-term challenges, anticipation is building for the third quarter and beyond regarding a new wave of institutional interest in Bitcoin. U.S. wirehouses are expected to gain access to spot ETF products, which could significantly impact Bitcoin’s status as an institutional investment class.
As Cointelegraph reported, this event is crucial for Bitcoin’s ongoing transformation.
“Among those optimistic is Cathie Wood, CEO of ARK Invest, one of the spot ETF providers. “
“No platform has approved Bitcoin yet, so all of this price action has happened before they approve it, and so we haven’t even begun,” she said in a March interview about U.S. wirehouses.
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Blockchain security firm CertiK has publicly identified itself as the “security researcher” that cryptocurrency exchange Kraken accused of stealing $3 million worth of digital assets.
On June 19, CertiK announced via X that it had informed Kraken about an exploit that enabled it to withdraw millions of dollars from the exchange’s accounts.
Kraken’s chief security officer, Nicholas Percoco, had previously claimed that an unnamed security team had committed “extortion” by refusing to return the funds until Kraken agreed to provide a significant sum for the disclosure of the bug.
“After initial successful conversations on identifying and fixing the vulnerability, Kraken’s security operation team has THREATENED individual CertiK employees to repay a MISMATCHED amount of crypto in an UNREASONABLE time even WITHOUT providing repayment addresses,” stated CertiK.
“In the spirit of transparency and our commitment to the Web3 community, we are going public to protect all users’ security. We urge [Kraken] to cease any threats against whitehat hackers.”
CertiK released a timeline of events, beginning with identifying the exploit on June 5 and ending with claims that Kraken threatened a CertiK employee on June 18.
CertiK told Cointelegraph that it planned to transfer the funds “to an account that Kraken will be able to access.”
Many in the crypto community initially sided with Kraken, suggesting that CertiK’s actions did not align with typical white hat hacker behavior.
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It remains uncertain whether Kraken has grounds for legal action.
In April, CertiK reported that approximately $1 billion in digital assets had been lost to illicit activity in 2023.
The firm has a history of identifying vulnerabilities, including issues with the Wormhole bridge on Aptos and the Telegram app.
CertiK’s decision to go public reflects its commitment to transparency and the security of the Web3 community.
The firm’s actions aim to protect users and uphold ethical standards within the industry.
As this situation unfolds, the crypto world watches closely, awaiting further developments and possible resolutions.
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The Kraken-CertiK saga has taken another twist. Security firm CertiK claims it conducted a white hat operation on specific Kraken accounts, draining nearly $3 million, according to Kraken.
However, Kraken contends that the total exploited amount was not returned, while CertiK asserts it has returned all funds according to their records.
On June 20, CertiK provided an update on X, stating it had returned 734 Ether, 29,001 Tether tokens, and 1,021 Monero coins.
In contrast, Kraken requested 155,818 Polygon tokens, 907,400 USDT, 475.5 ETH, and 1,089.8 XMR.
The saga began on June 9, when Kraken reported receiving a bug bounty alert from an alleged security researcher.
The alert highlighted a bug in Kraken’s system allowing users to inflate their account balances. While patching the bug, Kraken discovered three accounts exploiting the flaw, stealing $3 million.
Kraken found that one of these accounts was KYC-verified and used the bug to credit $4 to their account.
Kraken chief security officer Nick Percoco noted, “This would have been enough to prove the bug and claim the bounty,” but the account allegedly shared the flaw with two others, resulting in the $3 million theft.
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When Kraken requested the alleged “security researcher” return the funds and collect the bounty after providing the required onchain proofs, the white hat hacker allegedly refused and demanded the bounty first.
Although Kraken did not disclose the security firm behind the exploit, CertiK revealed its involvement.
CertiK claimed its employee, who found the vulnerability, was threatened to return the stolen funds but did not receive a wallet address.
CertiK co-founder Ronghui Gu told Cointelegraph:
“The verbal consensus reached during our meeting was not confirmed afterward.
“Ultimately, they [Kraken] publicly accused us of theft and even directly threatened our employees, which is completely unacceptable.”
CertiK reportedly sent the stolen funds to Tornado Cash, a crypto mixing service, to avoid them being frozen by exchanges.
This move drew heavy criticism, with many questioning CertiK’s motives behind the white hat operation.
The crypto community largely sided with Kraken, accusing CertiK of theft and blackmail.
Kraken informed Cointelegraph it is in contact with law enforcement agencies regarding the matter.
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Australia’s leading stock exchange, the Australian Securities Exchange (ASX), saw the first Bitcoin exchange-traded fund (ETF) approved and commence trading, closing its debut day with $1.3 million (1.9 million Australian dollars) in trading volume.
This figure falls short compared to the United States’ spot Bitcoin ETFs, which collectively amassed $4.5 billion in trading volume on their first day, averaging around $450 million per fund.
VanEck, the investment firm behind the VanEck Bitcoin ETF (VBTC), expressed optimism about the potential growth of the product in Australia, despite the market size difference between the two countries.
“Notwithstanding the Australian market being a lot smaller than the U.S. and most of our flow being retail rather than institutional, there is a possibility that we may follow a similar path,” Jamie Hannah, VanEck’s deputy head of investments and capital markets, told Cointelegraph.
Hannah also highlighted the significant interest from both retail and professional investors in gaining Bitcoin exposure through the ASX.
“We have had a significant amount of retail and professional investors express strong interest in getting Bitcoin exposure through ASX,” he added.
On its first day, VBTC started trading at $13.24 and ended at $13.34, with a total of 96,476 shares traded during the day, as per ASX data.
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Cointelegraph reported on June 15 that Arian Neiron, VanEck’s CEO for the Asia-Pacific region, emphasized the growing demand for Bitcoin in Australia, especially through a “regulated, transparent and familiar investment vehicle.”
Neiron stated, “We recognize Bitcoin is an emerging asset class that many advisers and investors want to access.”
He further added, “VBTC also makes Bitcoin more accessible by managing all the back-end complexity.
“Understanding the technical aspects of acquiring, storing, and securing digital assets is no longer necessary.”
While VBTC is the first spot Bitcoin ETF listed on ASX, Australia has seen the launch of two other Bitcoin ETF products.
The Monochrome Bitcoin ETF recently began trading on Australia’s second-largest stock exchange, the Cboe Australia exchange.
Additionally, in April 2022, the Global X 21Shares Bitcoin ETF was the first Bitcoin ETF product to debut in Australia.
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Nearly a week after Terraform Labs settled with the United States Securities and Exchange Commission (SEC), a new controversy has emerged from an April court document.
A report from Montenegrin media outlet Vijesti revealed that Prime Minister Milojko Spajic, who assumed office in October 2023, invested $75,000 in Terraform Labs in April 2018 to purchase 750,000 Terra (LUNA) tokens.
This investment was made just days before Terraform Labs was registered in Singapore on April 23, 2018.
The court document, filed by the SEC, disclosed that Spajic was one of the early investors in Terraform Labs.
Before the public release of these documents, Spajic had maintained that he never personally invested in the failed crypto project.
Instead, he claimed that Das Capital SG, a Singaporean company he worked for from 2017 to 2020, was the actual investor.
However, the SEC’s documents list Spajic as an individual investor with a contract dated April 17, 2018.
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Terraform Labs is known for the notorious LUNA and TerraUSD (UST) crypto tokens, which once reached a market cap of $2 billion before their collapse in May 2022.
This collapse wiped out nearly $40 billion from the crypto market and led to the downfall of several crypto hedge funds that had offered collateral to Terraform Labs.
In April 2024, a jury found Terraform Labs and its co-founder Do Kwon liable for defrauding investors in a civil case with the SEC.
Kwon was arrested in March 2023 by international law enforcement after being on the run for months.
The newly surfaced documents establishing a direct contract between Spajic and Terraform Labs could pose significant issues for the prime minister.
His failure to disclose his personal investment in the project raises serious concerns about transparency and accountability.
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Asset management firm Bitwise has updated its spot Ether exchange-traded fund (ETF) Form S-1 registration statement, revealing a potential $100 million investment in the ETF at its trading launch.
According to Bitwise’s June 18 filing with the United States Securities and Exchange Commission (SEC), investment firm Pantera Capital Management “has indicated an interest in purchasing an aggregate of up to $100 million of Shares” in the spot Ether ETF.
“However, because indications of interest are not binding agreements or commitments to purchase, these potential purchasers could determine to purchase more, fewer or no Shares,” the filing stated.
A Form S-1 is a document submitted to the SEC before a security starts trading, detailing financials, operations, and risk analysis.
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These filings are the final step in the approval process before the spot Ether ETFs can be publicly traded, an event that SEC Chair Gary Gensler anticipates will happen “sometime over the course of this summer.”
On May 23, the SEC approved 19b-4 filings from eight Ether ETF applicants, but these applications require Form S-1 approvals before the ETFs can begin trading on U.S. exchanges.
The revised filing coincides with the SEC ending its investigation into whether Ether is a security.
“The Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0,” Ethereum developer Consensys announced in a June 19 X post.
“This means that the SEC will not bring charges alleging that sales of ETH are securities transactions,” the firm explained.
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Nomura’s cryptocurrency division, Laser Digital, has secured a broker license in Abu Dhabi, permitting it to handle both traditional and digital assets.
The Financial Services Regulatory Authority of Abu Dhabi granted Laser Digital a Financial Services Permission (FSP) license, marking the conclusion of its comprehensive licensing process with the Abu Dhabi Global Market (ADGM).
This new license empowers Laser Digital to offer broker-dealer services along with asset and fund management for both digital and traditional assets within the region.
Laser Digital views this licensing approval as a “significant milestone.” CEO Jez Mohideen stated, “We are eager to contribute responsibly to the virtual asset industry in the UAE.
“We have always been committed to upholding the highest standards of compliance and regulations at ADGM, and we look forward to contributing to ADGM’s ecosystem.”
The United Arab Emirates is poised to become a global crypto hub due to its innovation-friendly regulations.
Laser Digital’s operational license arrives nearly nine months after receiving in-principle approval from ADGM in September 2023.
The decision to expand to Abu Dhabi was influenced by the region’s favorable crypto regulations.
Mohideen explained, “Laser Digital chose Abu Dhabi as its destination of choice due to ADGM’s progressive and transparent approach to regulation, based on strong cross-industry dialogue and collaboration with different sector players including the digital asset sector.”
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ADGM’s chief of market development, Arvind Ramamurthy, expressed delight in welcoming innovative crypto firms.
He stated, “We’re delighted to welcome Laser Digital as we expand our financial community to include partners such as Laser, whose offerings align with ADGM and the FSRA’s international best practices and progressive regulatory ecosystem.”
Highlighting the region’s commitment to innovation, the Central Bank of the UAE approved a new stablecoin licensing and monitoring system on June 5.
More crypto service providers and Web3 companies are expanding into Abu Dhabi, solidifying its status as a major cryptocurrency hub.
In May, QCP Capital received in-principle approval for regulated digital asset activities from ADGM, becoming the first Singapore-based crypto market maker and broker to achieve this milestone.
Chainalysis, an on-chain security firm, established its regional headquarters in Dubai on May 8, after engaging with local government stakeholders on regulatory best practices.
In April, Binance obtained a Virtual Asset Service Provider license in Dubai, and in February, ADGM signed an MoU with the Solana Foundation to advance distributed ledger technology development.
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