- Crypto market faced losses this week due to U.S. regulators’ heightened scrutiny of the industry.
- SEC ordered Kraken exchange to shut down its staking service and imposed a $30 million fine.
- Gemini exchange reached a deal to reimburse its Earn users, while Jameson Lopp, CTO of crypto wallet Casa, expressed concern about the rise of NFT-style assets on Bitcoin.
This Week in Crypto: Regulatory Scrutiny and Community Support
In the crypto world this week, regulatory scrutiny was at the forefront of industry developments. The Security and Exchange Commission (SEC) took action against popular exchange Kraken, ordering it to shut down its staking service and imposing a $30 million fine. This enforcement action is expected to have far-reaching implications, as the SEC Chair Gary Gensler emphasized the need for “full, fair and truthful disclosure” in offerings of staking rewards.
With the crackdown on Kraken by the SEC, the crypto industry has seen a flurry of reactions. On Thursday, the regulator announced that it had fined the popular exchange for the aforementioned $30 million and ordered it to shut down its staking service. In response, Kraken’s founder and former CEO Jesse Powell shared a video on Twitter in which SEC Chair Gary Gensler stated that those offering staking rewards must have “full, fair, and truthful disclosure” in order to be deemed compliant. However, Powell appeared to be skeptical of the statement.
Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I'd seen this video before paying a $30m fine and agreeing to permanently shut down the service in the US. How dumb do I look. Gosh. ⛽️💡https://t.co/UPdQdnI6xN— Jesse Powell (@jespow) February 10, 2023
Andreessen Horowitz’s General Counsel, Miles Jennings, shared his thoughts on the case via Twitter. “Fortunately, we don’t believe this settlement will have any bearing on exchanges that have structured their programs so as not to implicate securities laws,” he said. Jennings then went on to criticize SEC Chair Gensler’s regulation-by-enforcement strategy.
It has now been FOUR years since the last crypto-related guidance from the SEC, whose Chairman continues to focus on headlines rather than a legitimate effort to protect investors in accordance with the SEC’s core mission.— miles jennings | milesjennings.eth (@milesjennings) February 10, 2023
U.S. Representative for Michigan’s fourth congressional district, Bill Huizenga, also had strong words for Gensler. Meanwhile, Coinbase’s CEO Brian Armstrong defended Ethereum staking, stating that it does not make Ethereum a security and is therefore outside of the SEC’s jurisdiction.
Since @garygensler won't abide by his own polices to "come in and talk”, the House GOP will hold him accountable. Today, as promised, our oversight of the @SECGov begins with a request for documents surrounding their interactions with @SBF_FTX, @FTX_Official, and @TheJusticeDept pic.twitter.com/cQ9L66I0t5— Rep. Bill Huizenga (@RepHuizenga) February 10, 2023
In other news, this week saw a resolution in the ongoing feud between the Gemini exchange and its creditors Genesis. Gemini co-founder Cameron Winklevoss announced that a plan to reimburse Earn users, who Genesis allegedly owes $900 million, had been reached.
1/ Today, @Gemini reached an agreement in principle with Genesis Global Capital, LLC (Genesis), @DCGco, and other creditors on a plan that provides a path for Earn users to recover their assets. This agreement was announced in Bankruptcy Court today.— Cameron Winklevoss (@cameron) February 6, 2023
Additionally, a multi-tweet thread from Zhu Su, the co-founder of bankrupt crypto hedge fund Three Arrows Capital, revealed his next project to be a centralized exchange with fully decentralized custody. On the other hand, Jameson Lopp, co-founder and CTO of crypto wallet Casa, expressed negative views on the rise of NFT-style assets on Bitcoin.
1/ june/july was total darkness for me, kyle & our creditors after our bet on accelerating crypto adoption proved fatally wrong— Zhu Su 🔺 (@zhusu) February 9, 2023
we were crushed by the collapse of the market & the way our misplaced conviction had contributed to the pain https://t.co/eO5jLjrLU7
NFT art was dumb on Bitcoin and then— Jameson Lopp (@lopp) February 9, 2023
NFT art was dumb on Ethereum and then
NFT art was dumb on Solana and now
NFT art is dumb on Bitcoin again.
But folks should be free to have fun.
Finally, the crypto community demonstrated its philanthropic spirit by raising millions for earthquake victims in Turkey and Syria. With all these developments in the industry, the crypto world continues to be an ever-evolving and dynamic space.
Our thoughts are with all the people who have been affected by the tragic Turkey-Syria earthquake today.— BitMEX (@BitMEX) February 6, 2023
BitMEX will be donating the proceeds of this week’s Trading Competition to the @RedCrescent, and we encourage those who can donate to do the same. #GeçmişOlsunTürkiye
The @ahbap charity addresses have so far raised over half a milly, with the majority coming from ERC-20m and BEP-20 transactions.— Andrew T (@Blockanalia) February 7, 2023
Stablecoins make up the overwhelming majority, but also $ETH, $BNB and $SHIB
Track all three wallets as one Portfolio here: https://t.co/GRDBSKD4bZ https://t.co/Jya3HGaELY pic.twitter.com/VIhTpBweLU
Overall, the crypto industry continues to evolve and face challenges, but remains resilient in the face of regulatory scrutiny and community support.