Another flat week in crypto despite major macro headwinds, a currency crisis in the UK with GBP trading like an EM currency and BOE emergency stepping. We continue to trade in a narrow corridor and dollar strength is starting to hurt across asset classes. In the news we saw personnel changes at the large crypto institutions continue with, Celsius CEO stepping down, shuffles at FTX.US. Regulators stepping up with lawsuits issued against Nexo and the CFTC going after a DAO for the first time. And then of course we had a number of funding rounds completed most notably Deribit did a major down round and Strike another 80mm. Enjoy reading!
Bat Tai Chi — btc21@mail.com
This is one to watch. The CFTC last week used somewhat unconventional methods to serve a lawsuit against the pseudonymous members of Ooki DAO. This is the first time CFTC brought such a lawsuit against a DAO and could set a precedent for future DAO regulation. Members of Ooki DAO — which operates a protocol that offers illegal, off-exchange tokenized margin trading and lending services — were notified of the lawsuit when a CFTC paralegal posted the complaint and other documents to an online discussion forum meant for DAO members to discuss governance issues, a CFTC attorney claimed in a court filing. The documents were simultaneously submitted through a help chat box on the DAO’s website. The CFTC wants the District Court of the Northern District of California to approve the use of the chat bot and forum posts as proper service of the lawsuit to the defendants, which includes every voting member of the DAO. A member of the DAO has approximately 21 days to respond to the lawsuit to avoid a default judgment on the CFTC’s behalf. It’s a good reminder how pseudonymity and decentralization don’t offer a bypass of national laws, but of course it remains to be seen whether they are able to be enforced.
We are seeing the closing of two chapters here. FTX won the bid for the bankrupt lender voyager in what is widely believed a ‘cheap’ user acquisition for them. And it seems like they are not stopping there, FTX is in talks of another funding round and also targeting more M&A in the distressed land, particularly Celcius has been rumored. The fact that former CEO Mashinsky is now gone could open the path here too. There have been leaked transcript and recordings that he was still very much believing that things could be turned around so his resignation is taken as a sign by many that there’s a change in strategy. But ironically also FTX.US CEO Brett Harrison also stepping down. And then of course the big elephant in the room Nexo got into the spotlights this week. They were operating an arguably similar business model to blockfi and celsius but somehow managed to survive the storm. Now they are facing regulatory scrutiny as they also failed to register as interest accounts. They will have to stop that business in the US and probably get a fine a la BlockFi’s 100mm settlement earlier this year.
They’ve reportedly raised 40mm at a 400mm valuation from existing investors. Remember Deribit was valued at 2.1bn in its last funding deal in August last year, when it raised 100mm. But their Chief Commercial officer is arguing that valuations don’t really matter because this deal is more a way to claw back dividend payments. Whether this was specifically targeted vs 3AC or not its certainly not +ve because basically they are in bankruptcy and don’t have the cash to participate..Meaning likely their existing stake will become worth less. A somewhat similar issue seemed to have happened at their other remaining valuable equity investment with StarkWare where it appears they had initially missed out on a token drop.
It could have been any value. It’s more a clawback of dividends from existing shareholders. We paid a high dividend before and decided it’s more prudent to strengthen our balance sheet and retain assets instead of distributing them to shareholders
Luuk Strijers, Deribit’s chief commercial officer
Growth might occur if we have a well-regulated space. Bitcoin might double in price if there’s a CFTC-regulated market.
CFTC Chairman Rostin Behnam
Washing machines and Christmas lights both consume more energy than the Bitcoin network.
Ed Cooper, Revolut Head of Crypto
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