Good Morning. Stocks have recovered some of their losses from last week but remained relatively flat yesterday. Treasury yields have increased adding more pressure on the stock market.
Crypto had a nice spike in response to the halving which occurred over the weekend. The halving was right on the predicted schedule and it has been 4 years since the previous one. The biggest price movement in bitcoin tends to be a few months after the halving event occurs, enough time to feel the halving’s effect according to investors.
What’s the latest legal drama in crypto? First, the SEC took a major blow after it was found that they made some pretty serious false representations against defendants. Read more in the news section. The FTX drama continues as a class action was brought against Hollywood and ESPN’s biggest and brightest. Read more on that in the media section. Lastly, check out why Telegram is a company you should keep your eye on. As one of the biggest messaging apps out there, its movement towards payments utilizing blockchain technology could be transformative. Enjoy!
Crypto News You Can’t Miss: SEC Takes a Hit From Crypto Suit
A few weeks ago, we discussed an ongoing crypto case that the SEC brought again Digital Licensing, Inc. or DEBT Box. The SEC brought suit against the crypto platform, accusing the platform and its executives of defrauding investors of at least $49 million. The SEC asked the judge in the matter, Judge Robert Shelby, to freeze the company’s assets and put the firm into receivership.
Judge Shelby has since reversed the order after it was found that the SEC made “materially false and misleading representations,” such as claiming that DEBT Box was “closing bank accounts and transferring assets overseas.” Judge Shelby further reprimanded the regulator for their conduct and sanctioned the agency for their “gross abuse of power.”
The Judge pointed out the faulty arguments made from Michael Welsh, the SEC’s lead trial attorney on the matter, as well as evidence given by Joseph Watkins, the agency’s lead investigative attorney on the case, and his team. Welsh apologized to the court with another investigator claiming it was due to a ‘miscommunication error.’
SEC enforcement chief Gurbir Grewel removed the two attorneys on the case. The Judge had also ordered the SEC to pay for some of DEBT Box’s attorney fees. Furthermore, the SEC moved to ‘dismiss the case against DEBT Box with prejudice.’ Last week, it seems DEBT Box wasn’t satisfied and have filed a motion requesting the SEC pay more than $1.5 million in fees and costs incurred from the case.
As for Welsh and Watkins, their time at the regulator has come to an end. While the two resigned, according to ‘people familiar with the matter’, the SEC made it clear they would be terminated if they didn’t.
Challenging the Status Quo: How Telegram's Blockchain Initiative Could Transform Smartphone Payments
In the world of digital payments, the dominance of major players like Apple and Google has long been a contentious issue, especially with their hefty fees imposed on transactions within apps. Apple, for instance, levies a 30% fee on all purchases made through its App Store, a policy that has increasingly been criticized by app developers and entrepreneurs. Among the vocal opponents of this policy is Pavel Durov, the founder of the encrypted messaging service Telegram. Durov argues that these fees stifle innovation and disproportionately impact small developers by taking a significant share of their earnings.
Enter blockchain technology, which presents a promising alternative to traditional payment systems dominated by these tech giants. During his speech at the Token2049 conference in Dubai, Durov outlined ambitious plans for leveraging The Open Network (TON), a blockchain originally developed by Telegram and now managed by the TON Foundation. His vision extends far beyond simple messaging; it encompasses a new framework for digital commerce and creator monetization without the exorbitant fees charged by app stores.
By integrating blockchain technology, Telegram aims to decentralize the control over payments, allowing developers and content creators to conduct transactions directly with users. This approach not only bypasses the hefty fees but also mitigates the influence of centralized entities that impose arbitrary regulations and restrictions. For instance, Telegram has enabled the integration of over 40 payment providers, allowing for more flexibility compared to the rigid structures of the App Store and Google Play.
Moreover, Durov announced a novel revenue-sharing model through Telegram's Ad Network, where 50% of the revenue generated from ads and broadcasts will be shared with channel owners and content creators utilizing the TON network. This model represents one of the most generous in social media history, directly challenging the economic models of existing platforms that offer minimal or no revenue sharing.
Durov’s criticism extends to the regulatory environment, urging bodies in the European Union, India, and elsewhere to reassess the fairness of the App Store's fees and policies. He highlights the broader implications of these policies, including higher costs for consumers, privacy concerns, and the stifling of innovation due to economic constraints on developers.
The implementation of blockchain technology in this context is not merely a technical upgrade but a strategic move towards creating a more equitable digital ecosystem. The potential reduction in transaction fees, coupled with direct payment pathways facilitated by blockchain, could significantly alter the financial dynamics of app development and digital content creation.
As regulatory scrutiny around the practices of tech giants intensifies, Telegram's pivot to blockchain could be a game-changer in the digital payment landscape. By providing an alternative that promises more freedom, lower fees, and greater privacy, Telegram is not just challenging the status quo but is paving the way for a new era of digital entrepreneurship. The success of this initiative could inspire other platforms to adopt similar technologies, potentially leading to a more decentralized and creator-friendly internet.
Media of the Week: Celebrities and Athletes On Trial Next
A group of investors and customers of the former FTX have filed a class-action lawsuit against Sam Bankman-Fried and the powerhouse list of high profile celebrities and athletes he recruited to endorse him.
The lawsuit is filed in the District Court of Southern Florida. The all-star list named in the complaint includes Tom Brady, Larry David, Shaquille O’Neil, Steph Curry, Naomi Osaka and of course, Sam Bankman-Fried himself. There is a curveball though, the plaintiffs have proposed that SBF aid them in prosecuting the influencers in exchange for them dropping him from the civil suit.
The lawsuit describes the celebrities as “parties who either controlled, promoted, assisted in, and actively participated in” FTX’s operations, allegedly in breach of Florida law.” It will be interesting to see how this plays out and is a heavy lesson for celebrities and athletes who no doubt are often bribed with massive endorsement deals for products they neither use nor understand. Stay tuned and read the full spread here.