Crypto market cap remained untouched by more US lawsuits this week

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Welcome back to chain reaction.

If you thought last week was insane when the Securities and Exchange Commission cracked down on major crypto companies like Coinbase and Tron, buckle up for this week’s news.

Binance, the world’s largest crypto exchange by volume, its CEO Changpeng Zhao and chief compliance officer Samuel Lim are being sued by the US Commodity Futures and Trading Commission (CFTC), according to a filing filed Monday.

The company, Zhao and Lim are being sued for alleged violations of trading and derivatives rules.

The CFTC filing alleges the exchange has never registered with it in any capacity and “disregards federal laws” governing U.S. financial markets, including laws implementing controls to prevent and detect money laundering and terrorist financing, among other things.

After launching in June 2017, the exchange became the world’s largest crypto exchange within 180 days and has maintained this ranking ever since. Binance has spent $80 million on external partners such as KYC providers, transaction monitoring, market surveillance, and investigative tools to support its compliance programs, a company spokesperson told TechCrunch.

“This filing is unexpected and disappointing as we have been working with the CFTC for more than two years,” the spokesman added. “Nevertheless, we intend to continue working with regulators in the United States and around the world. The best way forward is to protect our users and work with regulators to develop a clear, thoughtful regulatory regime.”

The CFTC likely disagrees with this stance, as its filing found that Zhao and other involved parties on Binance’s senior management “failed to properly oversee Binance’s activities” and these actions “actively facilitated violations of U.S. law.” “.

In response to the CFTC announcement, Zhao said tweeted “4” which refers to a previous tweet from him from January using the number to tell others to “ignore FUD, fake news, attacks, etc.” FUD is an acronym for Fear, Uncertainty, and Doubt and usually refers to when a company feels disadvantaged.

This move comes at a time when the crypto industry – especially big players – is facing many US regulatory actions that some see as a good thing for clarity, but others see as unfair or a barrier to innovation. Whether this action will have a positive impact on the US crypto ecosystem remains to be seen in the long term.

But even after a series of regulatory enforcements, the cryptocurrency market appears to be untouched. According to CoinMarketCap data, the total crypto market cap increased slightly this week from $1.15 trillion to $1.18 trillion. At the time of writing, bitcoin and ether are up about 4% and 3%, respectively, over the same period.

This week on the web3

Binance CFTC Suit Shows “Regulators Will Keep Regulating and Will Regulate More” (TC+)

Continuing the topic from above, TechCrunch dove into the importance of the CFTC’s Binance lawsuit to the larger crypto industry — and the implications could be far-reaching. “Crypto is under attack,” Yankun Guo, a partner at Chicago-based law firm Ice Miller, told TechCrunch+. “The past six months have seen a spate of complaints and enforcement actions against blue-chip names like Coinbase, Kraken and KuCoin, and it was only a matter of time before it was Binance’s turn.” The ultimate impact on Binance could be Sending shockwaves through the global digital asset market, another market participant noted.

Former FTX CEO Sam Bankman-Fried has been charged with allegedly bribing Chinese officials

The (former) manager of another crypto exchange was also in the news this week, but for different reasons. US prosecutors filed a substitute indictment against former FTX CEO Sam Bankman-Fried, alleging he bribed Chinese officials. According to court documents from the U.S. District Court for the Southern District of New York, Bankman-Fried “authorized and directed a bribe of at least $40 million in 2021 to one or more Chinese government officials.”

Are cryptocurrencies commodities or securities? Depends on which US agency you are asking (TC+)

It’s a confusing time to be a crypto company. Markets are volatile and trading activity is shaky right now, but the biggest problem for crypto firms seems to be that at the moment there is no clarity on the laws they are expected to comply with. In the CFTC’s recent lawsuit against Binance, it claimed that some cryptocurrencies are commodities – a stance that differs from another major US government agency, the Securities and Exchange Commission (SEC), which controls most crypto assets (aside from Bitcoin ) considered securities.

The US and South Korea both seek Do Kwon’s extradition to face charges

Do Kwon, the founder of Terraform Labs, which operated the TerraUSD stablecoin and its sister token LUNA, was arrested in Montenegro last week while attempting to board a plane with forged documents to flee to Dubai. What’s next? We don’t know which country Kwon will be sent to as he now faces criminal charges in both the US and his native South Korea. And both countries appear to be seeking Kwon’s extradition.

Coinbase executives are weighing the future of crypto in the US amid regulatory scrutiny (TC+)

Coinbase was served with a Wells notice by the US Securities and Exchange Commission last week, and company executives took to Twitter Spaces to discuss the decision and Coinbase’s next steps to bring about a regulatory framework for the crypto world. “Regulators should make the rules, let everyone know the rules, and we follow them,” CEO Brian Armstrong said during the call. “The current laws are not clear and we would like to get more clarity.”

The newest pod

For last week’s episode, Jacquelyn interviewed Emin Gün Sirer, Founder and CEO of Ava Labs.

Ava Labs has raised around $640 million in total, according to Crunchbase, and is backed by firms like a16z and Polychain Capital. In recent months, Ava Labs has announced a number of partnerships with big brands and companies like Amazon Web Services, which TechCrunch reports exclusively.

Ava Labs created the Layer 1 blockchain Avalanche, a platform that enables developers to build multifunctional blockchains and decentralized applications with a focus on speed and low transaction costs.

We talked about Gün Sirer’s background; why he launched the Avalanche layer 1 blockchain in 2020; whether the room has too many L1s; and how blockchains can be scaled more efficiently.

We also discussed:

• How the layer 2 vision is broken
• US regulators crackdown on crypto
• Ava Labs growth in Asian markets
• Blockchain partnerships and business development
• Ava Labs’ focus for 2023 and beyond

Subscribe to something chain reaction At Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

follow the money

1. Crypto wallet company Ledger raises another $108 million
2. Web3 Protocol Polytrade Raises $3.8M to Improve Global Trade
3. Blockchain startup Fetch.ai snags $40 million to provide monetization and other tools for AI-generated intelligence
4. Aptos-based protocol Econia Labs raises $6.5 million to build decentralized order books
5. Eigen Labs Closes $50M Series A Round Led by Blockchain Capital

This list was compiled using information from Messari as well as TechCrunch’s own reporting.