No-go from veto Joe
Biden nixes Congress-approved crypto rules
President Biden vetoes pre-crypto Congressional bill.
BetDEX launches crypto-native betting exchange.
Dapper Labs pays $4m to end securities suit.
Watford FC offers 10% of the club and adds tokens into the bargain.
Swaps group probes legality around tokenized collateral.
Hey Joe, where you goin' with that gun of your hand?
It’s a no from Joe
Don Veto: President Joe Biden has vetoed a resolution voted through by both the House and the Senate that would have overruled the Securities and Exchange Commission’s special rules for custodians of crypto assets.
The SEC’s Staff Accounting Bulletin (SAB) No. 121 instructs financial institutions holding custody crypto for customers to log the assets on their own balance sheets.
The legislation was passed by both chambers of Congress with a Senate vote on May 16.
A low block: “This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices,” Biden wrote in an official response to Congress, adding that SAB 121 represents the “considered technical” views of SEC staff.
He added his administration would block any measure that may put consumers and investors at risk.
Large financial institutions lobbied Biden along these lines, arguing that it would become too expensive for regulated entities to participate in the custody business and offer broader services to customers.
👀 The veto was not well-received on social media.
Coinbase super PAC donation
True to his word: Coinbase has donated $25m to the super PAC Fairshake, as the listed crypto exchange presses on with its efforts to achieve greater regulatory clarity via the ballot box.
Recall, during its recent Q1 earnings call, CEO Brian Armstrong said Coinbase hoped to activate the crypto voter base to elect pro-crypto candidates in this upcoming election.
Doing it for the kids: In a statement, Coinbase said that along with others in the industry it has funded Fairshake to help elect pro-crypto candidates and “defend the rights of our customers.”
Call to arms: In a blog, the company said that nearly nine in 10 Americans believe it is “time to update the financial system, but progress is being slowed by resistance of those in power who embrace the status quo.”
The blog cited data from a recent survey that showed 72% of 18-34s believe “crypto gives people direct control over their money.”
The survey also found that 72% agree digital assets are the “future of finance.”
Homing in: The blog noted the campaign would have a specific focus on nine key states that over-index when it comes to the number of crypto owners, including Ohio, Nevada, Georgia and Montana.
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Loose change
Back on the (block)chain gang: Binance founder Changpeng Zhao (CZ) has begun his four-month sentence in a US federal jail. The former boss of the world’s largest crypto exchange is doing time at a low-security facility in Santa Barbara, California, after admitting to violating banking laws.
CZ is worth approximately $36.5bn, according to Bloomberg.
This is not my beautiful home: Bitcoin bull Michael Saylor has agreed to pay $40m to the District of Columbia in what officials called its biggest-ever income tax fraud recovery. Saylor and the data analytics business he founded, MicroStrategy, were accused of lying about where the executive lived for 10 years to ensure he paid no tax to the district.
“Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia,” Saylor told The New York Times. “I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family and myself.”
Saylor has amassed Bitcoin holdings worth more than $7bn through MicroStrategy.
Floki of seagulls: Crypto trading firm DWF has announced it will buy $12m-worth of floki tokens in order to support the dog meme coin-turned-utility project’s growing ecosystem, a Floki developer told CoinDesk.
Stop us if you’ve heard this one before: A Japanese cryptocurrency exchange has said hackers have stolen more than $300m worth of bitcoin from its primary wallet. DMM Bitcoin said in a statement on Friday that approximately 4,503 BTC, valued at around $308m at the time, had been “illegally leaked.”
No further details of the hack have been revealed, but investigations are underway.
DMM Bitcoin said all BTC deposits would be guaranteed, however the processing of crypto withdrawals has been suspended for the time being.
The hack is the largest crypto-related theft this year and one of the most notable since 2011 when Mt. Gox famously sank after losing 25,000 bitcoins.
At that time, the Japanese exchange handled nearly 70% of all bitcoin transactions.
ETF watch
The BlackRock Bitcoin ETF IBIT has broken through the $20bn in assets under management barrier, adding $2bn in AUM within the last month.
What we’re reading
In another galaxy: Michael Novogratz, the billionaire founder and chief executive of Galaxy Digital, says Bitcoin will reach $100k by the end of this year. “That is a good enough target,” he told Bloomberg.
Annals of crypto-gambling
Making plans for Nigel: The crypto-native betting exchange BetDEX founded by former FanDuel head honcho Nigel Eccles has officially launched after being in beta for the past 12 months, with the aim of attracting a user base of price-conscious bettors.
Head to head: The exchange provides “highly competitive” odds across popular sports-betting markets and, unlike other platforms, users do not incur premium charges or discriminatory account limits for being a winning bettor.
While in beta, the exchange has expanded its list of events from just soccer to betting markets across soccer, football, tennis, hockey, basketball, baseball, MMA and more.
It said that key betting markets now routinely have ~$5k-10k+ of available liquidity. The company noted this would continue to grow as the platform scales.
Varun Sudhakar, CEO and co-founder of BetDEX Labs noted the core of the company’s team were early developers and employees at FanDuel, Betfair, Betdaq and BoyleSports
“We’re motivated to democratize access to sports betting,” he told The Token Word.
“Sports betting is a massive industry but bettors have suffered from hidden fees and arbitrary limits on winners for too long.”
“It has created an extremely poor player experience so we are very pleased to have built a platform that rewards bettors for their success, not penalizes them.”
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Prediction success
Predictable: The crypto-based prediction betting platform Polymarket recorded its biggest ever month for bets transacted, according to data from Dune Analytics, which showed over $63m worth of bets were traded in May. This was 15% better than the previous record set in January.
The number of active traders rose to 13,600 in the last month.
Polymarket completed a $45m Series B funding round in May led by Peter Thiel’s Founders Fund and with the participation of Ethereum creator Vitalik Buterin, 1confirmation, ParaFi and Dragonfly Capital.
The company has now raised $70m in total.
MyPrize launch
Hands off, she’s mine: The multiplayer online cryptocurrency casino MyPrize launched its social gaming platform in the US alongside select international markets. The platform allows users to stream to and play with other users in an online social casino environment.
Dapper Labs settlement
Dapper’s Delight: Dapper Labs has agreed to pay $4m to settle a three-year suit concerning the legal and regulatory status of its NBA Top Shot non-fungible tokens. A group of investors sued the NFT company and its co-founder and CEO Roham Gharegozlou in 2021 for securities law violations.
Take a shot: Dapper Labs’ most popular product, NBA Top Shot Moments, was likened to an unregistered security in the suit, which claimed the blockchain business stopped investors from cashing out for extended periods. Doing so locked the value on the platform, the parties alleged.
Lawyers for Dapper Labs said the NFTs were more like digital basketball trading cards, rather than securities, operating on “a decentralized public network.”
You can’t say that again: The settlement agreement prohibits Dapper Labs from calling their NFTs securities, and the business has also agreed to increase payment and withdrawal speeds, among other improvements to its service.
Gharegozlou called the agreement a positive step towards greater regulatory clarity around the classification of NFTs.
“We are continuing to push for more overarching regulatory clarity to showcase that consumer NFTs are not financial products and should be regulated under well-established consumer protection regimes at the state level,” he said.
Dapper Labs shed 22% of its workforce last year following a round of cuts, as the price of NFTs crashed 97% from their 2022 highs. A judge still needs to sign off the settlement.
Watford fan sale
Hornets nest: English Football league Championship club Watford FC has announced it will be offering 10% of the club to supporters via the Seedrs platform, with fans receiving a digital token in addition to their equity stake, which will give them access to exclusive offers.
The club said fans would not have any voting rights with their investment but the digital shares would pay out any dividends.
Going up: Watford generated revenue of £66.2m in the year to June 2023 and is being valued at £175m as part of the equity offering. The club made a profit of £24m after taking into account player trading.
Watford is currently owned almost 100% by the Pozzo family, who also own the Italian team Udinese.
“We are always looking at ways we can help grow Watford FC to deliver on our plans,” said the club’s chair and chief executive Scott Duxbury.
From small seeds: Seedrs is owned by New York-based private investment firm Republic. Andrew Durgee, Republic president, said the sale would be the largest digital equity offering of shares in an English football club.
ISDA guidance
Collateral damage: The International Swaps and Derivatives Association (ISDA), a top financial trade group, has issued guidance on legal issues that may bubble up around tokenized collateral. The paper concerns the enforceability of collateral arrangements, with the ISDA stating tokenization can exist in many forms without legal uniformity.
“These technological differences may create significantly different legal outcomes. In some cases, differences in functionality which may appear limited from a user experience perspective will give rise to important legal distinctions,” ISDA said.
Mr. Brightside: Control of the token, transfer mechanisms and property status are all reviewed in the paper, which presents issues for consideration by parties that structure tokens to be used as collateral.
“While it raises a lot of questions for those considering creating tokenized collateral, it is an indicator that tokenized assets will be used as eligible collateral in the future and further evidences that all financial assets and associated processes are moving on chain,” said Graham Rodford, CEO of crypto broker Archax.
“We are speaking to several institutions around using our tokenized offerings as collateral in a variety of instances and it is great to see some thinking on this subject,” Rodford said.
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