Another crazy week in the world of Web3. Here’s everything that happened over the last seven days – buckle up for another instalment of The Chainsaw Weekly Wrap.
SEC is coming at crypto, left, right, and centre
Gary Gensler is coming in like a nosy relative at a family dinner. While some welcome his iron fist, others are convinced it could move innovation ashore. Either way, it has become very clear that Uncle Gary and the SEC are reigning in on crypto, and he wants to bring in some new rules — and rightfully so.
What’s the main point he’s hammering in? It’s that all crypto ought to be considered securities. At the start of the week, the SEC filed a lawsuit against Terraform Labs and its founder Do Kwon for “orchestrating a multi-billion-dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.”
He also just proposed a new rule that all investment advisers must have a qualified custodian across asset classes of privately issued securities, real estate and derivatives.
Here’s Gaz sharing the details:
The SEC also fined Kraken US$30 million over the crypto exchange’s staking services, viewing the service as offering “unregistered securities”, and got Kraken to stop the service in the US. Coinbase’s Brian Armstrong shared this could be a “terrible path for the US”, and other crypto experts believe it could set a worrying precendent.
In a deep dive by The Chainsaw, Mark Monfort, the Director of the Australian Web3 Venture Studio Not Centralised, shared that staking could “significantly impact Proof of Stake blockchains like Ethereum that rely on this for their consensus mechanism, [reducing] the incentive for folks to participate in networks and thereby further reducing security and overall decentralisation.”
What’s crypto staking?
To understand what’s at stake, it’s important to note how staking works and what the SEC is cracking down on. Staking on a crypto exchange like Kraken provides investors with interest on their deposits in exchange for locking up tokens on their platforms, known as staking as a service. The other type of staking refers to the act of staking one’s tokens to secure and maintain a blockchain network, by staking and interacting with the blockchain network directly.
For now, the SEC is clamping down on staking as a service to those in the US and not both just yet, but proponents are concerned this could set a precedent for other nations to follow suit, impacting contributions to blockchain networks.
The final hammer for the week involved Paxos’s offering of its stablecoin, BinanceUSD (BUSD), to which Garry claims is an “unregistered security”. Investors have taken issue with the allegation due to the fact that stablecoins don’t generate profit or any form of yield for investors, and the ‘catch-all’ hammer-down approach will cause further complexities in the regulation of virtual asset classes. BUSD was issued with blockchain platform Paxos and at the time of writing, Paxos says BUSD will remain fully redeemable to customers until February 2024.
Like a kid who’s got his hands in the cookie jar, Uncle Gary is not done yet. An unverified source by a journalist says that Gensler plans to embark on a “midnight massacre” on the crypto industry in the coming weeks.
SBF can’t play League of Legends anymore
In this week’s episode of Keeping Up With The Bankman-Frieds, it looks like SBF just can’t get off his phone. His access to the internet is limited at the moment, but he reportedly used a VPN to watch the Super Bowl (probably wanted to see Rihanna).
Prosecutors of the case have made a new proposal to expand restrictions on his electronic device usage to include cellphones, tablets, computers, or the internet. They say he should be prohibited from using them unless it’s for cases like “reviewing discovery” and using Zoom “solely for communicating with his counsel.”
Elon Musk is Chief Twit … but maybe not for long!
This week, speaking at the World Government Summit in Dubai, ‘Chief Twit’ hinted that he’ll soon find someone to replace him as CEO of Twitter:
“I think I need to stabilise the organisation and make sure it’s in a financially healthy place … so, I don’t know, I’m guessing probably towards the end of this year would be good timing to find someone else to run the company.”Elon Musk
Oh, he also gave another warning about the potential dangers of AI at the summit. In case you didn’t know already, that man really doesn’t like where AI is going right now.
This week, he reportedly woke up Twitter engineers in the wee hours of the morning because his tweet about the Super Bowl wasn’t getting as much engagement as President Joe Biden. Yeah.
Blur shakes up the NFT world
OpenSea, the Amazon equivalent of the NFT world, has a new challenger.
Blur, an NFT marketplace that’s launched in October 2022, released a particularly hyped airdrop of its native token $BLUR before making it available to the public. The newly popular marketplace is giving OpenSea a run for its money: According to data from DAppradar, 24-hour trading volume on Blur surpassed that of OpenSea with $83.57 million as of writing, up over 90%, compared to $16.24 million.
AI gets it (very) wrong sometimes
Al is the main character. It has been since ChatGPT was introduced to the world in December last year. Microsoft and Google quickly joined the race with “new Bing” and Bard, but both came under criticism for generating inaccurate and sometimes factually incorrect answers. Just ask software engineer Dmitri Brereton, who highlighted Bing’s three main mistakes, all of which were pretty funny, covered here.
Where is Meta, you ask? Mark Zuckerberg is still knees deep in the metaverse, but did you know that Meta actually released an AI chatbot last year before ChatGPT? But it was quickly pulled from the internet after three days.
Winners and Losers
This week’s biggest winner is $MINA, the native token of the Mina Protocol that’s building a privacy security layer for Web3, gaining ~42.4%.
Local Aussie unicorns ImmutableX saw a 24% increase in their native token, announcing a range of new partnerships for the week including Layerswap — an on-ramp for ETH, IMX and USDC from centralised exchanges, while Rooniverse, a mobile Web3 game from Unity Studios, launched on the marketplace.
This week’s biggest loser is $FXS, native token of Frax Share, a fractional-algorithmic stablecoin protocol, falling ~17.2%. While the second-biggest loser of the week is $CSPR, native token of Casper, a Proof of Stake blockchain network.
Bitcoin reached new heights above pre-FTX-collapse times, hitting US$25,000 for the week. But our new robot friends aren’t convinced a positive direction will continue, after ChatGPT reportedly predicted that we will see a stock market crash on March 15, 2023.
Anyway, time to chill. Here’s some memes.