Morning Minute | The SEC Is Losing the War on Crypto
Take a minute to catch up on the latest in the Web3 space with today's NFT market analysis, top movers, and upcoming mints:
TylerD's Market Summary
The SEC just got dealt a major blow in its battle vs. Coinbase. Find out what it means, plus catch up on the major scandal brewing with Paraspace and how the NFT market could be impacted.
👩⚖️ Coinbase vs The SEC Just Got Interesting
Coinbase is about to get some help in its fight against the SEC.
In a groundbreaking move, the U.S. Chamber of Commerce has filed a brief in the Coinbase v. SEC case, accusing the SEC of acting "unlawfully" in the digital asset domain.
And the brief opens with a strong attack:
"As it stands today, nobody knows for certain which digital assets, if any, are 'securities' under federal law."
They're implying the SEC is not doing their job.
The U.S. Chamber's argument has 3 primary points, summarized very well by MetaLawMan:
- Regulatory uncertainty is killing innovation in the U.S.
- The SEC is destabilizing the digital assets regulatory environment.
- The SEC is violating Constitutional Due Process and Fair Notice rights.
They go further to state that not only are the SEC's actions harmful, they're actually unlawful.
Mic drop from the U.S. Chamber.
These are huge issues, and we have already seen the impact with companies opting to move or build offshore (with Coinbase being the latest major one).
Why It Matters:
Coinbase now has an ally in one of the biggest and most powerful organizations in the U.S. with the Chamber of Commerce.
The Chamber is clearly pro-crypto and pro-digital assets and sees the importance of clarity for business development.
It's hard to overstate the importance of this, in Coinbase's battle against the SEC.
It should also provide a bit more confidence for those building crypto and digital asset businesses in the U.S., that there are major organizations who believe in the cause and trying to help.
The scales are starting to tip, and political agendas may not be able to outweigh the force of the law here soon.
It feels like the SEC is losing.
Your move, Gensler.
🙈 The Paraspace Controversy and Yuga Impact
There's a major scandal brewing in one of the NFT market's premiere NFTfi protocols in ParaSpace.
The scandal is hitting the Yuga ecosystem especially hard, as ParaSpace has been a primary focus point for BAYC, MAYC, and BAKC holders to deposit their NFTs and stake their $APE.
But the fallout may impact everyone still in the market.
On March 17, 2023, ParaSpace was hacked due to a vulnerability in one of its smart contracts.
Long story short, the hacker didn’t use enough gas, so the transaction failed.
Blocksec (a white hat) recovered 2,909 ETH (~$5 million USD) and returned the funds to ParaSpace.
This is where things get interesting.
- The team now claims the CEO Ruan Yubp kept over 50% of the user funds for himself.
- Ruan has allegedly refused to comply with the team’s requests to return the funds and step down from his roles as CEO and CTO.
- Now 19 team members (including COO Thomas Schmidt and Chief Business Officer Jay Yao) have accused founder and CEO/CTO Ruan Yubo (@yuboruan) of misappropriating the users’ funds in question.
This means that there are not enough recovered funds to fix the hole in their treasury.
The assets don't seem as "safe and secure" as ParaSpace had promised.
And then just yesterday, the Paraspace team announced they were going to use Zeneca to moderate a private meeting between the team and Yubo.
The private nature of the meeting caught backlash, so they turned it into a Twitter Spaces so all could hear.
Yubo didn't show up.
This led to the team issuing a response this morning, outlining their plan forward and to transfer the team's multi-sig wallet away from Yubo's control.
A total shitshow.
While this has been going down, users have been pulling assets rapidly.
And this is where the market could be impacted.
By the Numbers
ParaSpace is no small player, holding over $100M in NFT and tokens (i.e. $APE) in their protocol as of a week ago.
Well, not anymore.
As of last night, their holdings were down to $60M, almost a full 50% withdrawal in a few days.
Some notable data highlighting the assets being pulled off the platform:
- BAYC supply down from 846 to 421 (-50%)
- MAYC from 1774 to 949 (-47%)
- Otherdeeds from 683 to 361 (-47%)
- Staked $APE down from 15.3M to 8.97M (-41%)
That's a big exodus, freeing up ~4% of the supply of BAYC and MAYC.
And this could not have come at a worse time.
There's panic in the NFT market right now, as prices continue to fall. Crypto is looking rough as well, with ETH falling.
Some holders who may have been fine just keeping their Yuga assets in ParaSpace are now facing a decision on what to do with them.
And some might look hard at that Sell button.
Given the importance of the Yuga ecosystem to the broader PFP space, if these assets take a hit, the whole market is likely looking at more blood.
Let's hope Yubo does the right thing and the situation gets resolved.
🚚 What else is happening in NFTs?
Here is the list of other notable headlines from the day in NFTs:
- Trading volume fell back to 13k ETH on Thursday, with NFTs seeing a mix of red and green on the day
- Ten Squiggles are coming up for auction, as 10 unminted Chromie Squiggles are set to be sold in "Snowfro's Squiggles: The Auction" to benefit ALS research
- Moonbirds made 2 announcements, including 1) that the Diamond Exhibition reshuffle is complete and 2)they are partnering with Spotify to launch a token-gated playlist initiative
- LooksRare launched a mobile app, offering its users portfolio and rewards tracking along with collection browsing on iOS and Android
- Cool Cats airdropped "Aurorium" to those who participated in Journey 6, a symbolic token with "transformative potential"
🌎 Around Crypto and Web3
A few other Crypto and Web3 headlines that caught my eye:
- The crypto market fell hard on Thursday as pundits tout lower liquidity becoming an issue; BTC -4% at $26,360; ETH -3% at $1,765
- Coinbase apologized to the broader community after their email tying $PEPE to the alt-right faced wide backlash ($PEPE fell another 20% to $540M on the day)
- Nike's Our Force 1 collection is set for its first mint on Monday for holders of the airdropped Posters
🚀 NFT Total Volume
- Milady (1,813 ETH; 4.13 ETH Floor)
- BAYC (1,364 ETH, 44 ETH)
- MAYC (1,307 ETH, 9.3 ETH)
- Wrapped Cryptopunks (674 ETH, 48.4 ETH)
- Azuki (489 ETH, 13.2 ETH)
📈 NFT Floor Price Increase
- 0n1 Force (35%, 0.8 ETH Floor)
- Rug Radio Genesis (33%, 0.15 ETH)
- Kanpai Pandas (27%, 1.2 ETH)
- Valhalla (21%, 0.5 ETH)
- Otherdeeds (20%, 1.17 ETH)
🗓 Upcoming NFT Mints and Reveals
Today's featured drop is from Art Blocks Curated, a fitting end to the week.
Artist Kazuhiro Tanimoto brings "Memories of Digital Data," a collection of 450 NFTs where Kazuhiro depicts a "fictional collapsed blockchain world with visuals and sound."
The min resting price is set at 0.14 ETH, the lowest min we've seen in quite some time and representative of the market. At that level, this one has a higher chance to mint out.
But the last Curated "Still Moving" is still sitting with 205/400 left after keeping their resting price at 0.2 ETH, so a sell out is definitely not guaranteed here.
Then, Maxy is back for the next chapter in the Mems journey with Mingle, at an attractive entry price of 0.01 ETH for those who enjoy the art.
- Memes by 6529 (11:00 a.m. ET); 0.06529 ETH
- AB Curated: Memories of Digital Data by Kazuhiro Tanimoto (10:00 a.m. ET); Dutch auction
- Tur by Ganchitecture + TENDER (12:00 p.m. ET); 0.08 ETH
- Mems: Mingle (12:00 p.m. ET); 0.01 ETH
Enjoy this write-up? Follow along with me on Twitter @tyler_did_it or reach out via email firstname.lastname@example.org.
For all volume and floor price data, see Lucky Trader's Project Rankings page.
For all upcoming mints, see Lucky Trader's Project Schedule page.