CFTC Change

In this week’s edition of The Context, we talk Do Kwon, Rostin Behnam, Brad Garlinghouse, and Donald Trump.

[Kwon Million Victims ??]

Terra co-founder Do Kwon, who was extradited from Montenegro to the U.S. on December 31, pleaded not guilty to nine counts of fraud. The trial will begin January 26…of next year.

What Media Said ????:

• Kwon’s cryptocurrencies—LUNA and the Terra stablecoin it ostensibly backed—once had a market cap of $40B but imploded after the latter lost its peg, wrote Mat Di Salvo (Decrypt). “Authorities in both the U.S. and South Korea now allege that the entrepreneur was a scammer who conned investors into buying his cryptocurrency.”
• Prosecutors claim more than one million victims were “misled…into believing [Terra] was a reliable and functional financial system,” wrote Adrian Zmudzinski (ReadWrite). Since it’s not practical to notify everyone individually, the prosecution asked the court for permission to instead “post a public notice of the proceedings online.”
• Don’t hold your breath for a quick resolution. The judge in the case said this would be the first time he presided over a trial that needed more than a year to get underway, noted Aleks Gilbert (DLNews). But the judge cited “the ‘daunting’ amount of evidence facing prosecutors and defense attorneys.”

PR Perspective ??:

If found guilty on all counts, Kwon faces 130 years in prison. During SBF’s trial, many crypto industry members, feeling betrayed, argued for a maximum sentence. But that was during a bear market that SBF and Do Kwon arguably helped create. With a bull market roaring, the industry may not be able to muster the same level of vitriol for Do.

[Rostin Peace ???]

Rostin Behnam, chair of the U.S. Commodity Futures Trading Commission, announced he will resign when President-elect Trump takes office on January 20.

What Media Said ????:

• Early in President Biden’s term, Behnam and SEC chief Gary Gensler lobbied for more power for their respective agencies. “As chairman, Behnam advocated for legislation to make the agency the main Bitcoin regulator and give it oversight of cryptocurrency exchanges,” wrote Nicola M. White & Lydia Beyoud (Bloomberg). “The agency also scrutinized and sometimes tried to block companies that let Americans bet on US election outcomes.”
• While Behnam wasn’t villainized within the crypto industry like Gensler was, he did preside over “high-profile cases, including a $4.3 billion settlement with Binance,” said Josh O’Sullivan (Cointelegraph).
• Behnam “leaves the CFTC on the cusp of what's likely a future ascension to take over regulation of crypto spot markets, including the trading of bitcoin (BTC), wrote Jesse Hamilton (CoinDesk). “Behnam's Republican replacement will likely steer that new assignment if Congress finally approves a bill.”

PR Perspective ??:

One word: Polymarket. The prediction market isn’t allowed to have U.S. users thanks to a dustup with the CFTC. Kalshi, its rival, took the agency to court to win the right to host election-based markets. Will a new CFTC chair orchestrate a homecoming for Polymarket?

[Optimist Prime ??]

Ripple Labs CEO Brad Garlinghouse kicked off a PR blitz this week with an X post that said, “The Trump bull market is real.” He announced that, in a reversal of previous years, most of the company’s open roles are in the U.S. and it’s signed a lot of U.S. deals post-election.

What Media Said ????:

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Yapper Corner ??

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The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).

The team: Founder Samantha Yap and consulting editor Jeff Benson, Andrew Wickerson, Emma Murphy, Nathalie Larrea, Trisha Goswami and Shajar Qureshi. Your feedback is, as always, welcome. Ping us at [email protected]. Old newsletters can be found here.

This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.