SEC - Page 274

Unstoppable Domains, a prominent platform in the Web3 decentralized domain space, has recently announced its support for .eth domain names from the Ethereum Name Service (ENS).

This integration brings together two key players in the field, offering users a unified experience for creating human-readable domain names and cryptocurrency wallet addresses.

In early 2023, Unstoppable Domains and ENS collectively accounted for six million domain registrations, showcasing a significant increase in registrations since 2022.

With this new development, users can now purchase .eth names through Unstoppable Domains, benefiting from additional payment methods and enhanced functionality to manage ENS domains seamlessly.

Any .eth domain bought from Unstoppable will be registered through the ENS smart contract, providing the same features as domains registered directly through ENS.

One notable feature is the option to buy .eth domains from Unstoppable without connecting them to an existing Ether wallet.

Unstoppable Vault, a noncustodial service, enables users to secure Web3 domains even without initially owning a cryptocurrency wallet.

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Additionally, Unstoppable offers an auto-renewal mechanism, eliminating the need to renew .eth domains on-chain and reducing the risk of losing a domain.

The integration with Unstoppable extends the payment options for .eth users, allowing them to purchase their desired Web3 domain using various methods.

These methods include Bitcoin and 12 other cryptocurrencies, as well as traditional fiat payment options such as credit cards, PayPal, Google Pay, and Apple Pay.

Unstoppable is actively developing management tools for .eth domains.

These tools will empower users to set cryptocurrency addresses, manage on-chain profile data, and transfer .eth domains conveniently.

However, it’s important to note that while .eth domains purchased through Unstoppable can benefit from ENS integrations, they will not function with Unstoppable’s existing 800 integrations.

In addition to .eth domains, Unstoppable Domains also supports several other Web3 domains, including .nft, .crypto, .wallet, .dao, .bitcoin, .polygon, .BinanceUS, and .blockchain.

With their continued efforts to expand their services and improve the Web3 domain space, Unstoppable Domains remains at the forefront of empowering users within the decentralized internet landscape.

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Caroline Pham, one of the commissioners of the Commodities Futures Trading Commission, believes that Ripple’s recent partial victory has paved the way for regulatory clarity in the United States regarding cryptocurrencies.

In an interview with Bloomberg TV on July 17, Commissioner Pham expressed her optimism that significant court decisions on the classification of crypto assets would eventually bring about regulatory clarity.

Commissioner Pham emphasized that she anticipated participating in regulatory working groups and hoped for collaboration among various U.S. regulators, including the Securities and Exchange Commission (SEC), to develop a comprehensive and holistic approach to crypto regulation.

Pham’s remarks came shortly after Ripple, a San Francisco-based fintech firm, achieved a crucial partial victory in an ongoing court battle against the SEC.

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The SEC had accused Ripple of selling unregistered securities. However, on July 14, Judge Analisa Torres of the Southern District of New York ruled that XRP, Ripple’s cryptocurrency, was not a security when sold to retail investors on digital asset exchanges.

The ruling received a negative response from SEC Chair Gary Gensler, who expressed disappointment during a press conference on July 17.

Gensler had previously indicated that, apart from Bitcoin, he considered every digital asset to be a security, although the SEC has not formally made the same declaration.

Despite the setback, Gensler affirmed the SEC’s commitment to pursuing enforcement actions in light of Ripple’s recent legal victory.

Commissioner Pham also highlighted the significance of tokenizing real-world assets (RWAs).

She identified “real opportunities” to modernize financial markets by leveraging blockchain technology to tokenize money market funds.

Notably, traditional finance companies have been increasingly engaging with real-world asset protocols, leading to several RWAs outperforming decentralized finance (DeFi) assets in recent times.

In summary, Commissioner Pham believes that recent court decisions, such as the one involving Ripple, will contribute to regulatory clarity in the United States regarding cryptocurrencies.

She expressed her eagerness to collaborate with other regulators to establish a comprehensive approach to crypto regulation.

Additionally, Pham emphasized the potential benefits of real-world asset tokenization for modernizing financial markets.

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United States-based cryptocurrency mining company Marathon Digital is facing legal action as its shareholders accuse CEO Fred Thiel and other top executives of breaching fiduciary duties, enriching themselves unfairly, and misusing corporate assets.

On July 8, a shareholder complaint was filed against Fred Thiel and nine other Marathon executives in the United States District Court for the District of Nevada.

The lawsuit includes five claims, including violations of the U.S. Securities Exchange Act, breach of fiduciary duties, unjust enrichment, and misappropriation of corporate assets.

The plaintiffs are also seeking potential compensation from Thiel, Merrick Okamoto, Simeon Salzman, and Hugh Gallagher for their alleged wrongful acts leading to a complaint filed by the U.S. Securities and Exchange Commission (SEC) against the company.

The shareholders’ legal team did not specify a specific amount of compensation, leaving it to the court to decide.

Furthermore, the shareholders aim to rectify the company’s governance by enhancing the board’s oversight of operations, nominating at least four candidates from shareholders to the board, and eliminating the previous procedure for directors’ elections.

According to the legal team, the company’s management has downplayed its issues, artificially inflated Marathon’s valuation, received excessive compensation, engaged in lucrative insider sales, and obtained undeservedly high bonuses based on false and misleading statements.

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In May, Marathon received a subpoena from the SEC, which was related to transactions with related parties that took place during the construction of its facility in Montana.

In 2021, the regulator had previously requested the firm to provide documents and communications regarding the same mining facility.

Despite facing these challenges, Thiel expressed optimism in May when outlining the company’s strategy to reduce its net loss from $12.9 million ($0.12 per share) in Q1 2022 to $7.2 million ($0.05 per share) in 2023.

While the decline in the price of Bitcoin also impacted Marathon’s quarterly results, the mining firm managed to reduce its debt in March.

It paid off a term loan with Silvergate Bank, allowing the release of the 3,132 BTC held as collateral for the loan.

Marathon stated that this move would eliminate $50 million of debt and reduce its annual borrowing costs by $5 million.

The Eighth Judicial District Court of Nevada has approved a request from the state’s Financial Institutions Division (NFID) to place cryptocurrency custodian Prime Trust under receivership until a hearing can be held to determine the reasons behind the petition.

On July 14, the Nevada court issued an order appointing a receiver for Prime Trust, following a petition filed by the state financial regulator on June 26.

Prime Trust will have an opportunity to present its case against the petition during a hearing scheduled for August 22.

According to the NFID, the court-appointed receiver will assume control of Prime Trust’s day-to-day operations to identify the best course of action to safeguard the interests of the company’s clients.

The court order explicitly restricts Prime Trust’s employees and executives from taking actions that would interfere with the court’s decision.

Court documents indicate that Prime Trust consented to the receivership petition brought forth by the Financial Institutions Division, citing a significant discrepancy between the company’s assets and liabilities.

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The Nevada financial regulator had urgently requested the appointment of a receiver due to concerns about the potential for irreparable harm to users, the public, and the overall confidence in the cryptocurrency market.

The Financial Institutions Division had previously issued a cease-and-desist order to Prime Trust on June 21, stating that the company was unable to fulfill customer withdrawal requests.

As stated in the petition filed on June 26, Prime Trust owed its clients more than $85 million in fiat currency and $69.5 million in cryptocurrency.

However, the firm reportedly held only around $2.9 million in fiat currency and $68.6 million in cryptocurrency.

Prior to encountering financial difficulties, Prime Trust had been in discussions with BitGo, a provider of wallet infrastructure and digital asset custody services, regarding a potential acquisition.

However, on June 22, shortly after the NFID issued the cease-and-desist order, BitGo officially called off the deal.

The court’s decision to place Prime Trust under receivership signifies a significant development in the ongoing situation, as it allows for an impartial assessment of the company’s financial state and potential actions to protect the interests of its clients.

The upcoming hearing will provide an opportunity for Prime Trust to present its arguments and potentially address the concerns raised by the Financial Institutions Division.

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Cryptocurrency lending firm Celsius, currently facing bankruptcy, has submitted a request to the court seeking relief regarding the distribution of funds obtained from the sale of its self-custody platform, GK8.

According to the filing made by Celsius Network’s debtors on July 17, an agreement has been reached among the Series B holders to allocate $25 million from the proceeds of GK8’s sale.

This settlement was agreed upon by the debtors, the creditors’ committee, and the initial consenting Series B preferred holders.

The document outlines that $24 million will be designated for legal expenses, while the remaining $1 million will be distributed among the holders.

The debtors have shown support for this proposed allocation, emphasizing that the primary objective of the settlement is to reduce administrative costs.

The filing states that the proposed allocation provides reciprocal benefits to the initial consenting Series B holders.

The settlement agreement was primarily based on the mutual desire to avoid expensive litigation and a lengthy confirmation process, which would entail additional professional fees.

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The document highlights the benefits of the settlement, stating that it not only unlocks substantial value for the creditors but also provides clarity and certainty for all parties involved.

Consequently, the filing requests the court to overrule any objections and grant the relief sought in the motion.

Celsius had acquired the Israeli self-custody startup GK8 in late 2021 for $115 million but was compelled to sell it as part of the restructuring plan following the company’s collapse in 2022.

The investment firm Galaxy Digital, led by Mike Novogratz, emerged as the winner of the bidding process to purchase GK8 in late 2022.

As part of the acquisition, Galaxy obtained GK8’s team of 40 experts and their Tel Aviv office. In July 2023, GK8 held a meeting with financial executives at its New York offices.

These recent developments come at a time when Celsius is grappling with various legal challenges.

On July 13, the United States Securities and Exchange Commission filed a lawsuit against Celsius, coinciding with reports of the former CEO Alex Mashinsky’s arrest.

Additionally, the U.S. Federal Trade Commission imposed a $4.7 billion fine on Celsius on the same day.

Mashinsky, after pleading not guilty to charges of misleading customers and inflating the Celsius CEL token, was released on bail of $40 million.

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A wallet address holding a substantial amount of pre-mined Ethereum, valued at $116 million, has recently made a significant move.

After being dormant for eight years, the wallet transferred its entire stash of 61,216 Ether (ETH) to an address on the Kraken crypto exchange.

The pre-mined Ether was accumulated by early team members and co-founders of the Ethereum ecosystem during a sale event in June 2014.

At that time, the network was unable to generate tokens independently, so this sale allowed participants to acquire pre-mined Ether.

The tokens were valued at around $300–$400 during the pre-mine phase, making the wallet worth approximately $20 million.

However, the value of the tokens has grown exponentially over the years, and at present, they are worth over $116 million.

Data from Etherscan, a blockchain explorer for Ethereum, confirms that the 61,216 ETH were transferred to a Kraken wallet address on July 18 at 7:30 pm Eastern Time.

Remarkably, the transaction fee for moving $116 million worth of Ether amounted to only $1.5, with a gas price of 25.475673161 gwei.

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The identity of the wallet owner remains unknown, underscoring the importance of hodling—a strategy that emphasizes long-term accumulation of cryptocurrencies.

The owner’s cautious approach is evident from the initial test transaction of 0.05 ETH sent to the Kraken address, ensuring no loss of funds due to human error.

Meanwhile, at the Ethereum Community Conference event in Paris on July 18, Ethereum co-founder Vitalik Buterin discussed the challenges associated with implementing a new blockchain feature.

He mentioned the concept of account abstraction extensions, referred to as “paymasters,” which would allow users to pay their fees using any coins they are transferring.

Buterin acknowledged the potential benefits of account abstraction for users but also recognized the need for developers to address challenges.

This includes the requirement of an Ethereum Improvement Proposal to upgrade current externally-owned accounts into smart contracts, as well as ensuring the protocol functions effectively in layer-2 solutions.

The movement of such a significant amount of pre-mined Ether highlights the ongoing evolution and adoption of cryptocurrencies, while also shedding light on the technical advancements being pursued by Ethereum developers.

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Crypto venture capital firms Polychain Capital and Coinfund have collectively raised over $350 million in funding.

Polychain Capital secured $200 million for its fourth investment fund in a recent “first close,” signaling that agreements have been made with investors and the funding process for startups and projects can begin.

Although the firm still aims to raise a total of $400 million for the fund, it has shifted its investment priorities and consequently had to release three members of its research team.

Polychain Capital currently manages three funds with approximately $2.6 billion in assets under management, as per Pitchbook data.

Despite a decline in venture capital funding for crypto projects over the past year, Coinfund managed to raise $152 million for its fourth seed fund.

The CEO, Jake Brukhman, initially targeted $125 million but exceeded expectations by attracting an additional $27 million due to renewed interest in the industry.

However, overall venture funding for crypto and Web3 startups has seen a 76% decrease compared to the same period last year, according to data from Crunchbase.

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Investors have become cautious in the wake of high-profile project failures, such as Do Kwon’s Terra Money ecosystem and Sam Bankman-Fried’s FTX.

Consequently, venture capitalists have shifted their focus towards more traditional market sectors, resulting in reduced investments across the board, except for the flourishing field of artificial intelligence.

The AI industry, in particular, has attracted significant attention from investors, with over $12 billion in venture funding pouring in since January 1.

Recognizing the immense potential and growth prospects in the nascent AI sector, investors have been eager to capitalize on this emerging field.

The recent fundraising achievements by Polychain Capital and Coinfund demonstrate that, despite the overall decline in crypto venture capital funding, there are still notable exceptions where funds are successfully raised.

The shifting investment landscape and cautious approach of venture capitalists highlight the need for careful evaluation and scrutiny of potential projects in the crypto sector.

Meanwhile, the AI industry continues to be a focal point for investors, indicating their ongoing interest in technological advancements and disruptive innovations.

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