Morning Minute | The U.S. War on Crypto Begins

GM!

TylerD is on vacation this week, but the Lucky Trader team is filling in to keep you informed. Ghost here to catch you up on all the latest news in web3 and crypto. 

Today's top news includes:

• SEC puts Coinbase on notice

• Justin Sun, Celebrities charged with fraud

• NFTs continue bleeding

• Arbitrum Airdrop Day

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🚨 The War on Crypto Begins

The rumblings surrounding the SEC’s crusade against crypto have been growing louder — and on Wednesday afternoon, the government made a big move that could kick off the broader war in the courts over industry regulations.

Coinbase CEO and co-founder Brian Armstrong revealed that the exchange has been served a Wells notice by the SEC, which could lead to an injunction or cease-and-desist order.

For those unfamiliar, a Wells notice is a warning letter — telling a company they might have broken investment rules. It gives them a chance to explain themselves before any action is taken, but is usually a precursor to broader enforcement.

The problem here, as Armstrong and many point out, is that Coinbase HAS been explaining itself — but the SEC refuses to listen.

Unlike many of the other exchanges we’ve seen face regulatory scrutiny, Coinbase has consistently tried to work with the government to both stay compliant with the SEC’s murky/non-existent guidelines and help shape the future of the industry in the United States.

Coinbase has been in over 30 discussions with the SEC regarding registering and listing digital assets, but the agency has not provided any clear guidance on the matter.

This has led to public criticism of the SEC's regulatory structure, with Coinbase even petitioning the regulator to explain how digital assets fit within securities laws:

Armstrong sums up the lack of guidance well with this sports analogy:

“Imagine you've got both football and soccer refs on the field, but we're actually playing pickleball (fastest growing new sport in America). The refs can't really agree on the rules of this new game, and one of them decides to change a call they made back in April 2021.”

While this situation isn’t something that will be resolved quickly, it is a pivotal moment in the industry’s brief history — and this is a battle that won’t be easy on the SEC.

Coinbase has the resources and power to fight, and recent court battles against the SEC have not gone in their favor.

With the future of crypto exchanges in the U.S. potentially hanging in the balance, this feels like a final boss moment — with implications that will shape the future of the space.

⚠️ Justin Sun, Celebrities Charged

Coinbase wasn’t the only group in the SEC’s sights on Tuesday.

Justin Sun, founder of TRON, was charged by the SEC for fraud — alleging the unregistered sale of securities, manipulation of secondary markets through wash trading, and paying celebrities for promotion without disclosure.

Several celebrities were accused of illegally promoting the assets, including Lindsay Lohan, Soulja Boy, Akon, Ne-Yo, Jake Paul, and Lil Yachty.

This one came to the surprise of pretty much nobody — Sun is a notorious figure in the space, who falls on the opposite end of the spectrum from Coinbase when it comes to regulatory compliance.

But with Sun being charged Tuesday and SushiSwap reportedly served a subpoena on Tuesday, the SEC is clearly ready to wage war.

🤕 NFTs Continue Bleed, $ARB to the Rescue?

The aggressions from the SEC, coupled with the already reeling macro landscape, will likely only increase the market volatility. And if you’re wondering how all of this impacts our JPEGs… Definitely not a good thing!

NFTs continued their downturn Tuesday, with most of the major collections down on the day. The floors of both Wrapped CryptoPunks (60.5 ETH) and Bored Apes (58.5 ETH) continued to drop, with the latter bringing an old panic-inducing narrative back into play: BendDAO Liquidations.

In past situations like this, we’ve seen a sharp floor price decline as over-leveraged apes got auctioned — but with a usually quick recovery as the panic subsides.

But a drop now could have a chilling effect on an already frigid broader space — especially given the current backdrop of $BLUR farming, banking crises, and regulatory crackdown.

One factor that could warm things up – an airdrop! Today is the day many have been waiting for, with Arbitrum’s massive airdrop on the docket.

Here's the TLDR, courtesy of Tyler’s previous Morning Minute on the token:

• What? Governance token

• When? March 23

• Where?  https://arbitrum.foundation

• Why? Decentralization and security

• How? 1.275B $ARB token Airdrop to community

For more info on the airdrop, check out Tyler’s recap above.

As we’ve seen with BLUR recently — airdrops do inject liquidity into the market. The question is, where? Will recipients roll it back into Arbitrum projects? Onto the top projects in ETH? Or even into crypto or out of the market and risk-off completely?

We’ll find out, but it should be an eventual day — and a nice payday for many in the space.

🔄 NFT Round Up

Here is the list of the other major headlines in NFTs from Wednesday.

🚚 What else is happening in NFTs?

• Trading volume came in at just over 23,000 ETH on the day, with most NFTs continuing their recent down trend. Wrapped CryptoPunks led volume once again with over 5,000 ETH.

• Yuga Labs shared additional details for this weekend’s Otherside 2nd Trip, announcing four team captains for the experience.

• Magic Eden is launching Magic Eden Games, a dedicated hub for web3 games, according to a tweet from the platform.

• Arbitrum NFT project Smolverse announced that the Smols are going on-chain in a tweet Wednesday night.

• Otherside whale N0b0dy.eth picked up two rare artifact Otherdeeds for 323 ETH ($588K)

  Degen Toonz has launched "The Closet", an on-chain solution that allows Toonz NFT holders to dress their characters in digital wearables, including CULT&RAIN's sneakers.

• The Plague will migrate contracts on Friday in order to enforce royalties, per an announcement from the project.

🌎 Around Crypto and Web3

A few other Crypto and Web3 headlines that caught our eye:

• The crypto market was down slightly over the last 24 hours, with BTC -2% at $27,715, ETH -2% at $1,760, APE flat at $4.05 and BLUR up 4% to $0.60.

• Universal Music Group has filed two U.S. trademark applications for music-related virtual and digital goods authenticated by NFTs.

• Animoca Brands and Hex Trust announced the launch of Gryfyn, a joint venture to provide an NFT-centric wallet that enables users to interact easily and securely across multiple blockchains.

• OP3N raised $28 million in Series A funding to develop Superapp, which aims to bridge the gap between Web2 and Web3 by implementing blockchain and decentralized technologies into Web 2.0-friendly interfaces.

🚀 NFT Total Volume

• Wrapped CryptoPunks (5,124 ETH, 61.69 ETH Floor)

• Otherdeed (1,542 ETH, 1.50 ETH)

• MAYC (1,411 ETH, 11.98 ETH)

• Pudgy Penguins (1,301 ETH, 4.46 ETH)

• Doodles (1,216 ETH, 3.52 ETH)

📈 NFT Floor Price Increase

• CryptoCitizens (29%, 0.80 ETH Floor)

• Max Pain and Frens By XCOPY (28%, 1.04 ETH)

• Mocaverse (24%, 0.84 ETH)

• Art Gobblers (22%, 0.67 ETH)

• Potatoz (6%, 2.19 ETH)

🗓 Upcoming NFT Mints and Reveals

Another slow day for drops, but there are a few on the docket:

• Nakamigos, a collection of 20,000 pixelated crypto investor NFTs, drops 12:00 PM EST. Holders of an End of Sartoshi pass at the time of snapshot (Jan. 27) are able to mint for free — the public sale will be a dutch auction starting at 1 ETH.

• Grumbies Eternal Entry at 5:00 PM EST features 5,555 NFTs at 0.04 ETH. After the mint, a snapshot will be announced and holders of the Eternal Entry will be airdropped a Grumbie granting them access to the initial Grumbies Genesis Battle.

• Carpetdiem, is a collection of 1001 Magic Carpets from new media artist Orkhan Mammadov, blending generative and traditional art. Pre-sale access (0.1 ETH) begins at 2:00 PM EST, with the public mint launching on March 25.

Learn more about today’s drops here.

In addition to the new mints, we have several established projects teasing new updates:

• Cool Cats tweeted Wednesday that “Journey 4 is on the horizon”, teasing that a new journey begins on Thursday.

• RENGA is holding the project’s LA in-person event, with today’s date being cryptically tweeted out and speculation ramping that there is more to come.

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Enjoy this write-up? Follow along with me on Twitter @ghost_Z12 or reach out via email ghost@luckytrader.com.

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.