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Here’s what we got for you today:
Coinbase vs. the SEC ⚔️
How Bitcoin miners are stabilizing Texas’ energy grid
Bitcoin just lapped silver 🍪
COINBASE VS. THE SEC ⚔️
Crypto is a lot like a video game – before leveling up, there’s a boss fight.
Except in crypto, it’s the same big, bad boss every time… the SEC.
Right now, the fight is the SEC vs Coinbase.
Here’s what’s going on:
The SEC sued Coinbase for “operating as an unregistered broker, exchange, and clearing agency” last year.
The SEC is arguing those tokens are securities because people buy them as a way to invest in a common “enterprise” and possibly profit from its success. (According to the Howey Test, that makes it a security).
Coinbase is arguing that buying tokens doesn’t guarantee the buyer any rights (or profits) as part of the purchase. The exchange compared buying tokens to buying Beanie Babies, which aren’t securities.
Earlier this week, both sides were able to make their oral arguments in court, in front of a judge.
The bad news… the Judge hasn’t made any official ruling yet.
The good news… many people think Coinbase is the “favorite” to win and can get the case dismissed after this week's arguments.
Here are some of the best reactions from Twitter:
Favorite moment of argument so far:
SEC— “the tokens themselves are not a security”
Failla— “that’s what the folks in the back table think (Coinbase). And they are wondering why we are here”
— Rodrigo (@RSSH273)
Jan 17, 2024
The SEC’s résumé vs crypto:
•Did not protect investors from FTX
•Did not protect investors from Luna
•Lost court case vs Ripple
•Lost court case vs Grayscale
Now getting mogged by a Federal Judge in Coinbase case today.
Gensler’s career rapidly approaching liquidation.
— Luke Martin (@VentureCoinist)
Jan 17, 2024
SEC vs Coinbase trial update:
Judge Katherine Polk Failla says to the SEC lawyer:
“These 1933 laws had a great run for 90 years but we have new tools now and new things and we need to readdress.” !!!!!!
— MartyParty (@martypartymusic)
Jan 17, 2024
If Coinbase wins this motion I think we enter a full blown bull market
For context Coinbase filed a motion to dismiss the charges of operating an unlicensed securities exchange
If the SEC loses here it would be a massive win for the industry tbh
— ℳiLLiΞ X (@llamaonthebrink)
Jan 17, 2024
1/ Today’s @coinbase hearing revealed a key flaw in the SEC’s legal theory: it turns nearly every asset on the planet into a security.
That can’t be true. The SEC was created to regulate markets for *financial* instruments, not digital goods or the technologies empowering them.
— Jake Chervinsky (@jchervinsky)
Jan 17, 2024
Why this case matters: The judge's decision in this case will likely clarify the SEC's jurisdiction over the crypto sector and could set a precedent for how crypto is regulated in the U.S.
If Coinbase wins, it could put a lot of tokens “in the clear.”
If the SEC wins, it could further muddy the waters around what tokens are securities and which ones aren’t.
We’ll be keeping a close eye on this one.
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HOW BITCOIN MINERS ARE STABILIZING TEXAS’ ENERGY GRID
Texas is one of the weirdest places on Earth…
In the summer, it gets so hot you can go outside and fry an egg on the sidewalk (not recommended, but it is possible).
In the winter, it gets so cold you don’t even need a fridge/freezer – just leave your food outside and it’ll stay cool (again… not recommended, but possible).
You get the best worst of both worlds in Texas.
Right now, it’s getting hit by an “Arctic Blast”. Which sounds like a new drink at Taco Bell, but it just means it’s cold as f*ck.
The problem: when Texas gets hit by extreme weather, the energy grid goes through a lot of stress.
The solution: Bitcoin miners are helping stabilize the energy grid.
Miners get paid to curtail their operations and shut off their machines.
As a result, it frees up energy on the grid that can be used elsewhere (i.e., homes, hospitals, local businesses).
It’s a win-win for everyone.
A Bitcoin miner in Texas switched off machines to support the grid during extreme cold weather.
Bitcoin mining is the only industry that can respond immediately in times of emergency, while being a “buyer of last resort” to improve viability of energy projects.
— Bitcoin Archive (@BTC_Archive)
Jan 18, 2024
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Bitcoin surpasses silver to become the second-largest ETF commodity in the U.S. In the words of the great Ludacris… ‘move, b*tch, get out the way!’
dYdX passed Uniswap as the largest decentralized exchange (DEX) by volume. The DEX recently migrated from Ethereum to Cosmos and just saw $757M in volume over 24 hours.
The total value of crypto received by “illicit addresses” has dropped from $39B → $24.2B. This only made up about 0.34% of all on-chain transaction volume last year.
Tether bought $380M worth of Bitcoin. The stablecoin issuer now owns 66,464 BTC (worth ~$2.8B).
Bitcoin’s hash rate dropped 25% this week. The big reason why? There’s a huge winter storm in Texas, so miners there are curtailing power to help strengthen the local power grid.
BlackRock says its spot bitcoin ETF is attracting a diverse investor base. BlackRock Head of U.S. iShares Product Rachel Aguirre said both retail and new investors are interested in the firm’s spot bitcoin ETF.
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Jan 19, 2024
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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.