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GM. This is Milk Road, where we serve crypto insights with more punch than a left hook from Mike Tyson.
Here’s what we got today:
- The SEC’s first enforcement action against NFTs ⚖️
- BlackRock: Good or bad for crypto? 🧐
- Liquid staking continues its rally 🍪
Prices as of 10 AM ET. Click here for our Fear & Greed Index
THE SEC’S FIRST ENFORCEMENT ACTION AGAINST NFTS ⚖️
Yesterday we saw something we’ve never seen before…
The U.S. Securities and Exchange Commission (SEC) announced its first NFT-related enforcement action. **cue dramatic music**
Here’s what happened: The SEC charged a media company called Impact Theory for selling NFTs as unregistered securities.
- The company raised $30M selling NFTs with a project called Founder’s Keys
- The project marketed itself as “the next Disney” and promised to “deliver tremendous value”
- Impact Theory allegedly told investors to view the NFT “as an investment into the business”
I’m not too good with Zodiac signs but I hear raising millions of dollars from investors while promising big returns and calling yourself Disney 2.0 makes you Saggitarius “Securities”.
As a result… Impact Theory agreed to a cease-and-desist order, will pay $6M+ in fines, will create a fund to refund investors, and must do a mental walk of shame.
Why this matters: While this is a first for the industry, it probably won’t be the last.
The SEC is like the hall monitor of the government and is known for cracking down on crypto.
The concerning part is that there have been plenty of NFT projects that made big promises, used similar language as Impact Theory, and raised millions of dollars in the process.
(If I had a nickel every time I heard a project was gonna be “the next Disney”, I could probably buy Disney.)
So it’ll be interesting to see if more regulatory action will follow.
P.S.A - All NFT investors should be keeping a close eye on this.
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BLACKROCK - THE KING OF BITCOIN MINING?
There’s been one name dominating the crypto news over the last few months…BlackRock.
- It applied for a Bitcoin ETF
- The CEO (Larry Fink) has been on an “I Love Crypto” media tour calling Bitcoin the next big thing
Well, turns out the largest asset manager in the world has also *quietly* been buying up shares of Bitcoin mining companies…
The result: BlackRock is now the second largest shareholder of 4 out of the 5 top Bitcoin mining companies.
Source: Twitter (@TheBTCTherapist)
The craziest part? BlackRock is also a top shareholder of some of the other majority shareholders of the Bitcoin mining companies.
For example…
- Riot Blockchain is the biggest Bitcoin miner in the world
- BlackRock owns ~6% of it
- Other Riot Blockchain shareholders include Vanguard, Geode Capital, Invesco Capital, and SSgA Funds
- BlackRock is a majority shareholder of each of those companies (i.e. it owns 13% of Vanguard, 15% of Geode Capital, 8% of Invesco, etc.)
Just in case it’s still confusing, allow me to explain with a diagram…
In simple words: BlackRock has a piece of everything. And now, it has its eyes set on crypto.
But the million-dollar question is… how good is this, really?
To help answer let’s play a game called Good Cop, Bad Cop.
GOOD COP: BLACKROCK IS GOOD FOR THE FUTURE OF CRYPTO
- BlackRock joining crypto will bring in a wave of other traditional investors.
- If there’s one entity the U.S. government will give regulatory approval to, it’s BlackRock.
- Regulatory approval can unlock massive growth and make big players more comfortable playing bigger games.
In a nutshell: BlackRock in crypto = better chance for regulations = more investors joining the space = prices go up.
BAD COP: BLACKROCK IS BAD FOR THE FUTURE OF CRYPTO
Arthur Hayes (founder of BitMEX and former crypto billionaire) recently dropped a blog post where he brought up some valid points about the recent “TradFi takeover”…
- BlackRock doesn’t care about decentralization - in fact, it’s made a trillion-dollar business based on centralizing assets.
- The traditional finance system is struggling, so now finance giants are looking toward the antidote to inflation (crypto) and want to control it.
- Traditional finance giants are trying to become the “crypto gatekeepers” and only want to get into the space to charge egregious fees to buy/sell crypto.
In a nutshell: Bitcoin was created as an alternative to the traditional financial system, but if all the big TradFi players end up taking over the space (i.e. buying up tokens, becoming majority shareholders of the biggest miners, etc.) then aren’t we back at square one?
But we’re curious… how do YOU feel about it? Vote below by clicking on your answer! We’ll share the results later this week.
Is BlackRock good or bad for the future of crypto?
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BITE-SIZED COOKIES 🍪
Arch Lending is putting security and trust first when it comes to crypto loans. By storing your collateral in cold storage with a qualified custodian. We took the time to review their offerings and broke it all down for you Roaders.
Balancer gets hacked for $1M a few days after announcing it had a vulnerability that could be exploited. This is like your local bank telling the whole town that its security system is down and the vault won’t lock… the robbers are bound to show up.
The total value of crypto assets staked through liquid staking protocols has increased by 138% this year. Crypto staked through liquid staking protocols has gone from $7.9B → $18.8B year-to-date. Wowza.
Binance is considering exiting the Russian market due to the recent sanctions drama. The crypto exchange has already removed certain sanctioned Russian institutions from its peer-to-peer platform and has added fiat restrictions for Russia-based users.
1,777 Bitcoin from a dormant wallet moved for the first time in over 6 years. In 2017, the investment was worth $3.38M. Today, it’s worth over $30M. (A 10x return and a 6-year nap - not too shabby)
Shiba Inu relaunched its Shibarium bridge and reopened token withdrawals. We hope Round 2 goes better than the first…
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
