August 31, 2023

๐Ÿฅ› The SEC’s “secret” move vs. crypto…๐Ÿ‘€

Todayโ€™s edition is brought to you by Phemex – a top crypto exchange that has launched a soulbound token to build a decentralized community. Grab your Soul Pass!


GM. This is Milk Road, where we slice and dice crypto trends like a hibachi chef.*

(*Fancy hat and onion volcano trick included)

Hereโ€™s what weโ€™re serving up today:

  • The SEC filed a secret sealed motion ๐Ÿ‘€

  • Crypto gets another big win in court โš–๏ธ

  • Thereโ€™s a 75% chance a Bitcoin ETF will launch this year ๐Ÿช

Prices as of 10:15 AM ET. Click here for our Fear & Greed Index


THE SEC FILED A SECRET SEALED MOTION ๐Ÿ‘€

Thereโ€™s been a lot to celebrate this weekโ€ฆ

  • The SEC lost in court.

  • The chances for a Bitcoin spot ETF getting approved have gone up to 75%.

  • I found my missing AirPod.

Itโ€™s been a good week.

But while we were all busy popping champagne bottles, a big move was madeโ€ฆ

It was quiet, subtle – but full of stink. Kinda like when youโ€™re riding in the elevator and suddenly get hit with the Smell of 1000 Deaths. (aka a silent fart)

So, what happened? The U.S. Securities and Exchange Commission filed a secret โ€œsealedโ€ motion against Binance.

This motion lets the SEC file sensitive and confidential information with a court, but itโ€™s kept off any public record.

Why this matters: This caught a lot of cryptoโ€™s attention because itโ€™s highly unusualโ€ฆ

  • The SEC is a civil enforcement agency that typically files everything in the open.

  • The agency usually wants its messages heard loud and clear to scare others from committing the same violations.

The SEC is like your mom at family gatherings – they tell everyone all your deepest darkest secrets.

So, why keep the motion under seal? Well, who better to answer than a former SEC officialโ€ฆ

Meet John Reed Stark. Heโ€™s spent 20 years in the SEC Enforcement Division, including 11 years as Chief of the SECโ€™s Office of Internet Enforcement.

There are 2 reasons John thinks the SEC made this move:

1/ The sealed motion could have secret details about an ongoing investigation by the U.S. Department of Justice (DOJ).

  • The DOJ could be working with whistleblowers, have wires or other listening devices in place, or have an active arrest warrant or undercover operation in the works.

  • The SECโ€™s new motion could have info that potentially jeopardizes the investigation.

2/ To protect a witness or company from risk. (But John mentioned this usually involves redactions vs. full-court sealings)

Johnโ€™s Take: In his 20 years at the SEC, he says he canโ€™t recall ever seeking to file a motion, or any other court document, under sealโ€ฆ

Which is why he thinks the secret SEC filing likely relates to an ongoing DOJ investigation of Binance – which the DOJ would prefer to keep a secret.

In other words, get your popcorn ready.

Even though crypto has gotten a few legal wins recently, the battle between the U.S. government and Binance is just beginningโ€ฆ

GRAB THE PHEMEX SOUL PASS

Thereโ€™s some big news brewing over at Milk Roadโ€ฆ

The latest? One ofย our favorite trading platforms is taking a big step towards decentralization.

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  • The Phemex Soul Pass is a soulbound token that traders can mint after reaching $10,000 of 30-day trading volume. That means you can grab yours after paying as low as just $10 in trading fees

Join Phemex to enjoy the most lucrative trading platform!

CRYPTO GETS ANOTHER BIG WIN IN COURT โš–๏ธ

**sniff sniff**

You smell that?

Itโ€™s the sweet, sweet smell of another legal win for crypto.

This time, the winner was Uniswap – one of the most popular decentralized exchanges.

Hereโ€™s what you need to know:

  • A handful of users lost money to scam tokens (like Matrix Samurai, Rocket Bunny, and Alphawolf Finance) on Uniswap last year

  • The users sued Uniswap and argued the decentralized exchange should be liable for the scams

Yesterday, a judge from the U.S. District Court for the Southern District of New York (SDNY) dismissed the class-action suit.

(btw – SDNY is nicknamed โ€œThe Mother Courtโ€ due to its age and influence over other federal courts. Weird, I always thought that was Judge Judy.)

The main reason the court dismissed the lawsuit? โ€œIt defies logic that computer code underlying a particular software could be liable under Section 29(b) [of the Exchange Act] for a third partyโ€™s misuse of that platform.โ€

Now Iโ€™ll be honest. I have no clue what Section 29(b) of the Exchange Act says.

But I do know Section 30(a) of the Survival of the Fittest Act says: โ€œThose who play with fire, will get burned.โ€

Thatโ€™s exactly what happened here.

A few users decided to invest in tokens with names like Matrix Samurai (wtf) and Rocket Bunny (wtf x2), then got burned and tried to blame Uniswap for it.

Itโ€™s like if criminals robbed a bank while using a self-driving car, and then the bank tried to go after the developers of the car, instead of the robbers.

It just doesnโ€™t make sense. And it seems the U.S. courts agree.

Big win for the future of DeFi.

BITE-SIZED COOKIES ๐Ÿช

The European Blockchain Convention kicks off on October 24th. The largest blockchain event in Europe takes place in Barcelona, with one day left to get a discounted price on tickets.*

โ€œThereโ€™s a 75% chance a Bitcoin spot ETF will launch this yearโ€ – Bloomberg analysts. Thereโ€™s a 95% chance it will happen by the end of 2024. Itโ€™s not if, itโ€™s when.

According to the latest Coinshares crypto fund report, institutional funds sold off $168M in crypto last week. Itโ€™s the highest week of outflows since March. Ouch.

Circle is teaming up with Mercado Pago to offer USDC as a payment option. Mercado Pago is one of the largest fintech companies in Latin America.

Robinhood has added support for Bitcoin and Dogecoin to its crypto wallet. Itโ€™s slowly also rolling out swap features that let users trade ETH for 200+ different assets.

Bitcoinโ€™s average trade size has jumped to its highest point since June. According to data from Kaiko, the average trade size for BTC on exchanges increased from $850 โ†’ $2000+ after the Grayscale ruling.

*This is sponsored content

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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.

kendall