Ten31 Timestamp 794,038
The “crypto” industry got one step closer this week to the “regulatory clarity” it has ostensibly been seeking for years, as the SEC finally brought forth lawsuits against Binance and Coinbase after months of anticipation and speculation. The suits allege a wide variety of misconduct and violations on the parts of the two exchanges, perhaps the most significant of which is the claim that the businesses have been listing and making markets in unregistered securities. The agency explicitly listed many popular tokens – including BNB, BUSD, Cardano, and Solana – as securities, setting the stage for what is sure to be a protracted legal battle that will only further cloud the path forward for the non-bitcoin crypto industry. While we won’t hazard any guesses about the ultimate outcomes of these cases, this week’s events are unsurprising to us and further underscore the importance of Ten31’s exclusive focus on bitcoin and the companies building on it. The SEC and CTFC’s numerous restatements that bitcoin is a commodity may not be above long-term challenges from politically motivated regulators and legislators, but they clearly offer a level of de-risking that – along with bitcoin’s numerous fundamental differentiators – makes bitcoin the only digital asset worthy of serious institutional investment.
Portfolio Company Spotlight
Samourai Wallet offers a suite of tools to allow users to manage and spend bitcoin with an extremely high degree of privacy. The company’s flagship wallet app natively integrates Whirlpool, Samourai’s non-custodial CoinJoin implementation, and a host of other features – including PayNyms, Stonewall, and Stealth Mode – to smoothly facilitate anonymity-enhancing transactions that mitigate blockchain surveillance by potentially malicious actors. Samourai's tools can also be integrated into other applications through APIs and licensing.
Selected Portfolio News
Strike announced a wide variety of major infrastructure updates and new features, including the minimization of third parties within Strike’s bitcoin and fiat custody stack:
Swan also announced progress on its platform and infrastructure upgrades:
Fedi launched a “Pop-Up” Federation for participants at the BTC Prague conference:
Coinkite reduced the price of Tapsigners by nearly 50%:
Media
Fold Founder and CEO Will Reeves gave an overview of Fold’s bitcoin rewards model on the Wolf of All Streets podcast.
The Unchained data team released a new analysis called the “HODL Cave” (a riff on the company’s popular HODL Wave data sets). The Cave data offer a detailed look at the spreads of historical returns of investors who held bitcoin over various durations.
Popular bitcoin education channel BTC Sessions published a new guide for migrating LND nodes from Umbrel to Start9’s StartOS.
River Financial analyst Sam Wouters joined Robert Breedlove’s podcast to discuss bitcoin mining and prominent mining misconceptions.
Market Updates
New jobless claims for last week ticked up sharply to 261,000, above consensus and the highest weekly figure since October 2021.
The Fed’s emergency BTFP lending facility surpassed $100 billion in use for the first time since its inception following the collapse of Silicon Valley Bank.
Famed investor Stan Druckenmiller suggested this week that SVB was likely the “tip of the iceberg,” with more trouble ahead for banks and traditional asset classes.
Revised data out of Germany and Ireland this week indicated that the Eurozone officially entered a recession in the first quarter of the year.
Prominent cryptocurrency custodian BitGo announced it would acquire Prime Trust, which had been the subject of bankruptcy rumors throughout the week.
Crypto.com said it would wind down its US institutional business later this month in light of “limited demand.”
Regulatory Update
Regulators dominated headlines this week, as the SEC materially escalated their antagonism toward the “crypto” space by suing Binance and its CEO Changpeng Zhao on allegations that the exchange is offering unregistered securities in the form of exchange token BNB and the BUSD stablecoin. The suit also alleges a variety of other illegal activities including commingling of customer funds.
The SEC also sought a restraining order to freeze assets of Binance.US. In response, Binance.US announced it would suspend USD deposits and trading pairs starting next week.
A day later, the agency sued major US exchange Coinbase for improperly operating as an unregistered broker, exchange, and clearing agency. The suit also identified the “Coinbase Earn” staking offering, as well as a handful of “crypto” tokens, as unregistered securities.
Following the flurry of lawsuits, SEC Chairman Gary Gensler appeared on CNBC to declare “we don’t need more digital currency” because we already have the US dollar.
Over the weekend, Robinhood removed support for all tokens named in the SEC lawsuits as securities.
A US district court rejected the Kansas City Fed’s motion to dismiss Custodia Bank’s suit against the Fed branch, which revolves around the Fed’s denial of banking services to Custodia.
Noteworthy
The team behind Mercury Wallet announced the upcoming launch of MercuryLayer, a new bitcoin layer 2 protocol.
Atomic Wallet, a popular wallet supporting a variety of “crypto” tokens, was hacked for approximately $35 million, potentially by a group linked to North Korea.
Commercial real estate saw more negative headlines this week, as a recent survey of 350 real estate professionals at large firms suggested half of companies with over 50,000 employees intend to reduce their office space footprints.
Meanwhile, Park Hotels and Resorts, one of the US’s largest hotel REITs, announced it had stopped making mortgage payments on two of San Francisco’s largest hotels. The company plans to forfeit the properties given a “clouded” path to recovery for the city.
Volcano Energy, a mining operation based in El Salvador, announced $1 billion in commitments to build a 241 MW bitcoin mine using the country’s natural resources.
Travel
Nashville BitDevs, June 13
Nashville Investing in Bitcoin Businesses Summit, June 14
Austin BitDevs, June 15
Nashville Lightning Summit, July 13-14
BitBlockBoom 2023, August 24-27