Coinbase takes its case to the voters
Coinbase’s lobbying push, Block’s Bitcoin support, Robinhood’s SEC notice, ZKasino arrest +More
Coinbase is pushing on with its lobbying efforts ahead of November.
In loose change: BTC-e operator pleads guilty.
Block is putting its faith in Bitcoin as the internet’s native currency.
Robinhood receives SEC notice over crypto trading.
Arrest made after ZKasino rug pull.
Tether begins active token monitoring.
Your mom busted in and said, what's that noise?
Coinbase’s lobbying efforts
Fight the good fight: Coinbase continues to push for further regulatory clarity even as it continues to fight SEC charges that its Staking Plan product is engaged in the offering of unregistered securities. Speaking on the Q1 call, CEO Brian Armstrong said the company was contributing to the campaigns of pre-crypto candidates in November’s election.
Make crypto great again: Coinbase is a large contributor to pro-crypto organizations such as the Fairshake Super PAC, which has already had a “great impact in the market primaries in California, Texas and Alabama,” Armstrong said.
“We’re driving regulatory clarity,” he added. “We’re doing this through the courts, through collaboration with policymakers around the world to pass sensible rules and, most importantly, through activating the crypto voter base to elect pro-crypto candidates in this upcoming election.”
Hands up: He added that Coinbase also continued to work with organizations such as StandWithCrypto.org. It now boasts over 400,000 crypto advocates who, Armstrong said, “raised their hand indicating they want to elect pro-crypto candidates in November.”
Partial win: Of the SEC case, he said Coinbase was making “steady progress” with its litigation. He said the court’s dismissal of the SEC claims against the Coinbase Wallet product was a “significant win for self-custodial wallets across the industry.”
“This win provided clarity for us and developers to continue to drive our on-chain product growth, which we believe is an important element to fulfilling our mission of increasing economic freedom.”
While the court dismissed the rest of Coinbase’s motion, Armstrong said the company was “fully prepared for an intensive discovery phase” and remained confident in the strength of its legal arguments.
Double up: Armstrong was speaking after the company said Q1 revenue more than doubled YoY to $1.64bn, ahead of consensus estimates. Adj. EBITDA came in at $1bn, which was more in one quarter than the company achieved in all of 2023.
“Keeping our cost structure low while continuing to innovate is really paying off,” he said. “We’re driving utility in crypto.”
He added that the launch of Bitcoin ETFs helped drive new customer adoption across Coinbase’s product suite. COO Emilie Choi said the launch had “unlocked a flywheel of customer engagement” across the Coinbase Prime product suite.
“We saw both direct and indirect revenue impacts from the ETFs,” she added.
“We’ve long said that the ETFs would benefit the entire ecosystem and we’re thrilled to see that play out on our platform.”
Talking about the company’s plans for its Lightning Network with Bitcoin, Armstrong said one of Coinbase’s goals remained driving down the “cost and confirmation times” for crypto payments and “really all transactions” in the space.
“Bitcoin is the largest network out there and so Lightning was a big effort that we went on in partnership with Lightspark,” he noted.
Scoring goals: He added that his “excitement” about the effort is that it will allow Coinbase to “really start to fulfill some of the long-term goals of crypto, which are: How do we update the global financial system? How do we make it more fair and efficient and global?”
“And really kind of reduce those payment fees, which are a shocking burden for a lot of consumers and businesses.”
“It still boggles my mind that every time you swipe your credit card, the merchant is losing 2%. It’s really just moving bits of data, kind of like sending a WhatsApp message, which is free.”
Crypto education and media customized for you.
Bite-sized learning you can apply straight away in real life. Learn the fundamentals and master crypto while processing through LearnCrypto’s learning program, gain practical skills and explore content that is relevant to you.
Navigate crypto with confidence.
Loose change
Alexander Vinnik, one of the operators behind the former BTC-e crypto exchange, pleaded guilty to a charge of conspiring to commit money laundering on Friday. From its inception around 2011 until it was shut down by law enforcement in July 2017, BTC-e processed over $9bn-worth of transactions.
Cybersecurity veteran Justine Bone is the new executive director of the crypto industry’s first information sharing and analysis center Crypto ISAC. The full roster of Crypto ISAC’s founding members will be revealed later this month.
What we’re reading
A new study finds that more than 90% of stablecoin transactions aren’t from real users.
Dorsey’s Bitcoin vote of confidence
All in: Block is set to reinvest 10% of its profits from its Bitcoin activities in the currency itself, as CEO Jack Dorsey told shareholders that Bitcoin is the “best and only candidate” for an open protocol for money not owned or controlled by any single entity.
The vision thing: In his Q1 letter to shareholders, Dorsey said less than 3% of the payment providers’ resources are dedicated to Bitcoin-related products. But he added that the company believed it is “only a matter of time” before the internet will have a native currency and that Bitcoin is the “only candidate” because it is the only crypto “designed” to solve the problem of payments.
In 2018, Block became the first listed company to offer Bitcoin product,s with a platform built into its Cash App where users can buy, hold, withdraw and sell the currency.
Cash App Bitcoin products generated 4.2% of Block’s gross profit in 2023 and only 0.7% of related expenses.
By the numbers: In Q1, group revenue rose 19% to $5.96bn, while adj. EBITDA nearly doubled to $705m and upped its guidance for FY24 to $2.76bn. Cash App revenues rose 23% to $4.17bn, while Square revenues were up 11% to $1.73bn.
Block’s investments in Bitcoin rose in Q1 to $573m, up 160% during the quarter.
Block’s share price took a dive on the day of the earnings after reports that federal prosecutors were investigating the company’s internal compliance procedures with regard to transactions involving sanctioned countries.
Dorsey noted on the call the report “relates to an existing inquiry.”
When it comes to preventing terrorist financing via Bitcoin, Block has a “robust control environment in place to mitigate exposure from adversaries,” he said.
He added that the company maintained “some of the most restrictive limits in the industry for on-chain Bitcoin withdrawals, which are deliberately calibrated to prevent bad activity.”
Robinhood’s SEC notice
Not so merry: The retail trading platform said this week it had received a so-called Wells notice from the SEC regarding its cryptocurrency listings, custody of cryptocurrencies and platform operations. Informing the market, Robinhood said the SEC had made a “preliminary determination” that an enforcement action would be forthcoming.
A spokesperson for the company told Reuters that Robinhood “firmly believes” the assets listed on its platform are not securities.
“We look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be," the statement continued.
Fighting talk: Taking to X, CEO Vlad Tenev said in the past three years “we’ve reached a state of regulatory onslaught that is harmful to American companies and consumers.”
“The SEC’s continued attack on crypto, coupled with recent rule proposals like the one related to predictive data analytics, mark yet another improper attempt by the administrative state to stifle innovation.”
He said Robinhood would contest the move in the courts “with the intent of both defending our crypto business and establishing regulatory clarity in the United States for the benefit of our customers.”
A boy named sue: Last year, Robinhood delisted the digital tokens Solana, Cardano and Polygon from its platform. On X, Nigel Eccles from BetDex subtweeted that Tenev and Robinhood should relist Solana. “They are suing you anyway,” he added.
Robinhood previously attempted to register as a special purpose broker-dealer with the agency.
The SPBD system was introduced to allow firms to work in custody and transactions involving crypto-asset securities.
However, Robinhood’s application was denied in March.
Legal back and forth: Recall, the SEC is currently involved in a similar action against Coinbase, while Ripple is contesting a proposed $2bn penalty for alleged securities fraud and Ethereum blockchain leader Consensys is suing the SEC rather than wait for the regulator to file.
ZKasino arrest
Poker farce: Dutch police have arrested a 26-year-old man linked to crypto gambling platform ZKasino, which had been accused of bilking millions from investors. The arrest is part of an ongoing investigation into charges of fraud, embezzlement and money laundering, according to the Fiscal Information and Investigation Service of the Netherlands (FIOD).
Officers raided the suspect’s residence on April 29, seizing records and assets worth around $12.2m including real estate, luxury cars and a range of cryptocurrencies.
The old switcheroo: ZKasino, initially promoted as a decentralized gambling network, drew scorn when it changed its redemption policies upon launch to block investors from reclaiming their tokens. The U-turn affected over 10,000 investors who had pumped more than $33m into the platform, leading to widespread accusations that ZKasino had executed a ‘rug pull’.
Investors had been promised a 30-day window to retrieve their money, but the smart contract on the blockchain stopped this from happening.
Officers opened the probe after reports from the crypto community and accompanying intelligence from Binance’s financial crime compliance team.
Tether monitoring
A snitch in time: Sick of being touted as the criminal’s crypto token of choice, Tether has joined forces with blockchain analysts Chainalysis to monitor for illicit activity. Chainalysis will provide tools to help Tether spot sanctioned and unlawful wallet activity, and analyze the secondary market for its stablecoin.
Earlier this year, US Senator Cynthia Lummis sent a letter to Attorney General Merrick Garland demanding a probe into the role Tether and Binance played in the Hamas attacks on Israel in October.
She accused the token issuer and exchange of “knowingly facilitating violations of applicable sanctions laws.”
I’m the problem, it’s me: A report from the United Nations Office on Drugs and Crime on organized crime in East and Southeast Asia in January fingered Tether as the central cog in a sprawling underground operation.
Officials said Tether was key to a nexus of casinos, junkets and cryptocurrencies fuelling transnational organized crime across much of Asia and beyond.
Tether is a stablecoin pegged to the value of fiat currencies, most notably the dollar, and it emerged as the money launderer’s friend due to its stability, speed, low fees and anonymous nature, the UNODC said.
In response, Tether said it has collaborated with authorities in 43 jurisdictions “to address illicit activities.”
An +More Media publication.
For sponsorship inquiries email scott@andmore.media.
