The Tale of 2 Charges: SEC vs Crypto?

Welcome to another edition of the DIFX Dispatch.?

It’s the first week of June and we have a lot going on. We repeat A LOT going on!

So sit back, find a nook and get ready for a jam-packed Dispatch

The Legal Elephant In the Room

Well if you haven't heard the news by now the SEC sued Binance on Monday 5th June 2023, which coincidentally was also the 89th anniversary of the SEC’s establishment. Now we’re not saying that's a coincidence but you are free to assume your conspiracies. ??

And just a mere 24 hrs later, the SEC went ahead and sued Coinbase.? Now bear in mind that although the headlines say both exchanges are sued, the charges they’re facing are different.

A deeper look at this tale of two cities or charges in this case… Binance is being accused of moving around customers' funds as they please

cough cough ring any bells? ??

With regards to Coinbase, the SEC alleges that the San Francisco-based company for years operated as an unregistered national securities exchange, broker and clearing agency. It also alleges that Coinbase offered and sold unregistered securities via its staking service.

And to put the cherry on top, beloved community tokens are now securities. Solana, Cardano, Polygon, Filecoin, Cosmos Hub, The Sandbox, Decentraland, Algorand, Axie Infinity are now all considered to be securities by the SEC.?

But in the modern era of blockchain and future-changing technology are the current rules on what is security outdated? Is it wise for the SEC to rely on rulings established in the 1930s and 1940s without the acknowledgement of a revamp given the changing technological and financial landscape??

What we’re seeing through Gensler, is that the rules to govern securities already exist, and it’s the obligation of anyone dealing with securities to abide by those rules.?

Any cryptocurrency – even Ethereum, whose status as a security has yet to be determined by the SEC – is likely to be labelled as such. Expecting anything else from the organization is unwise.?

But on the other hand

Some may allude that just because crypto is a new asset class, it isn’t free to navigate the market without abiding by traditional financial practices.?

This is a narrative that touches on the naivety of Bitcoin Maxis, who push the paradigm shift from traditional assets to digital assets with the primary focus being, abandoning the centralized actors which control the financial system.

Yet, without some sort of control and regulation to follow, the crypto community leaves itself unprotected from criminal activity thus the influx of hacks and scams which have been detrimental to confidence in crypto.?

This is a good argument but as Brian Armstrong has mentioned, the SEC has not been clear and decisive in a legislative path forward, where regulatory authorities in other countries have been.

So does this mean we make like Cathy Wood and conclude: That the US is no longer the centre of gravity on cryptocurrencies but rather there are more interesting regions around the world that have shown a willingness to understand the true value of digital assets, their impact on regular people and most of all governments who want to adopt!?

A New Month but the Same Old Hack…

The committed on-chain sleuth ZachXBT unveiled yet another trail of the stolen funds by the notorious Lazarus Group. This time around the group targeted Atomic Wallet, a non-custodial decentralised wallet service, making away with $35M in crypto assets!?

According to the Atomic Wallet team, only 1% of its five million monthly user base was attacked, with the key tokens being targeted being Ethereum, USDT, Dogecoin, etc. were swapped into Bitcoin and sent to Sinbad.io which is a crypto mixer.

Crypto mixers are services that hide the origin and destination of crypto transactions by mixing them at random with other legal transfers. By doing this they make sure that transactions are anonymous and can't be easily traced on the blockchain.?

Adding on to this Elliptic, a blockchain analytics and compliance firm, stated that through their investigations, they’ve uncovered that Sinbad.io has a direct connection with the Lazarus Group, ie the North Korean crypto hacking group. Apparently, Sinbad.io is a remodelled version of Blender.io ( A Crypto mixer by the Lazarus Group, which was sanctioned by the U.S. Treasury Department for laundering up to $100 million in crypto assets in 2022).

Although Atomic Wallets have advised its users to report the illicit transfers to the most popular crypto exchanges, which could prevent the hackers from exchanging their funds, Elliptic believes that it may be too late for the affected victims, as their funds are already being mixed and laundered away through Sinbad.io.

Louis Vuitton is Launching NFTs Which Cannot be Resold

The French luxury retailer is no stranger to the world of NFT but this time they are doing it a little differently. The “Treasure Trunk” collection will be valued at $41,000 and will be limited to only a few hundred pieces. Owners of the Treasure Trunk will be granted access to token-gated portals with limited product drops which will occur at regular intervals throughout the year.?

Brands are beginning to recognise the value of how tokens (NFTs) can create additional revenue streams by offering a more unique and rewarding experience to their “most loyal” consumer base. Holders of the Treasure Trunk will additionally be able to purchase “Keys” which will give further access to limited edition drops of products and experiences linked to those Keys. This is another step forward for attaching digital assets with real-world tangible products as each digital asset purchased will have a corresponding physical product or “Phygital" that token holders will receive in the real world.?

Check out our previous edition for a Phygital breakdown!

Now back to LV…

An interesting concept that LV plans to deploy with this collection is the removal of the speculative nature of NFTs by introducing soulbound tech to their NFTs.

This means that the tokens cannot be resold or transferred. This non–transferrable strategy removes an underlying issue which is prevalent in today's NFT industry; the secondary market. Without speculation by “NFT Traders” the value of this NFT collection will not rise and fall with the market. This is a major move and one which we agree will only bring further stability to the space as creators and brands will need to offer more utility and tangible value rather than rely on royalties brought in from the secondary market.?

The collection has started taking registrations from June 8 onwards where prospective buyers will link their digital wallets and fill in all relevant information, by June 14 the pre-selected list of potential buyers will be given information on what to expect next and on June 16 they will be invited to purchase from the marketplace.?

Its Time To Reimagine the AR/VR Experience

To round this dispatch off, there’s just ONE MORE THING…

Introducing the AppleVision Pro that's going to stir up a storm, next year...

On 6th June 2023, Apple launched the Vision Pro accompanying a promotional video that just showcased how close we are to being our very own Tony Stark.

The device is basically a mixed-reality headset that seamlessly blends the space around you with digital items from Safari windows and FaceTime to AR objects and a theatre-sized screen for watching Ted Lasso.

However, there was one glaring omission from the launch, a single mention of the word metaverse. Many questions arise for those in or interested in the Web3 space:

• How will this new innovation implement the already floating ideas of the metaverse?
• ?Can it be the solution to create a hyper-immersive world?
• Is this pushing the industry or causing the added weight to figure out how or who can access these products?
• Should we reconsider what we call metaverse and AR/VR experiences?

There are one too many questions to keep track of but all we can tell you, for now, is that if you’re in the market to buy the visionary Vision Pro,

it’ll only cost you a Kidney ??

Well, that's all for this week folks, tune in for the next edition and prepare yourself for the next set of web3 festivities of SEC battles, innovative project launches and hey maybe some defined regulatory framework?as well :)

About DIFX

Digital Financial Exchange (DIFX)?is a global multi-asset trading platform that provides a secure and reliable way for users to Trade, Invest, and Store both digital and traditional assets. The platform is designed to meet the needs of both retail and institutional traders, offering a wide range of assets like Commodities, Stocks, Crypto, Indices etc; a 3rd party secure custodian wallet, IB & affiliate programs, advanced trading tools, and more. To begin your journey in diversifying your wealth, download the app now from the?iOS?or?Google Play Store, or visit us at?difx.com

Disclaimer:?The content of this newsletter is only for educational purposes and should not be construed as financial advice, opinion or statements of any kind. Remember investing and trading in volatile markets like cryptocurrencies is highly risky and should only be done with the proper knowledge and understanding.