Track market-moving stories before they get noisy

Coinbase is set to restrict European users from trading certain stablecoins that do not comply with the EU's Markets in Crypto-Assets (MiCA) regulations, effective December 13, 2024

Coinbase is set to restrict European users from trading certain stablecoins that do not comply with the EU's Markets in Crypto-Assets (MiCA) regulations, effective December 13, 2024.

The stablecoins affected include Tether's USDT, GUSD, GYEN, DAI, PAX, and PYUSD. Only USDC will remain available for trading on the platform.

This decision aligns with the enforcement of the MiCA regulations, which aim to provide a comprehensive regulatory framework for cryptocurrencies in the EU. The move follows increasing scrutiny of meme coin fraud globally, with regulators in the US, EU, and Hong Kong intensifying enforcement actions, including fines and fraud charges against influencers promoting fraudulent projects. High-profile cases, such as Kim Kardashian's $1.26 million penalty, highlight the regulatory priorities in the cryptocurrency space.

This is an AI-generated article powered by DeepNewz, curated by The Defiant. For more information, including article sources, visit DeepNewz.

Rubio: US and Iran to continue technical consultations at the end of this month

Multiple foreign media outlets reported on the 24th that US Secretary of State Rubio said technical teams from the United States and Iran will hold further talks in Switzerland by the end of June. (Xinhua News Agency)

6 hours ago

Over the past 24 hours, total crypto market liquidations hit $606 million, with more than 130,000 traders liquidated.

According to Coinglass data, the global cryptocurrency market recorded $606 million in liquidations over the past 24 hours, including $542 million in long-position liquidations and $68.22 million in short-position liquidations. A total of 135,785 traders worldwide were liquidated in the same period, with the largest single liquidation order occurring on Binance’s BTCUSDT trading pair, valued at $12.0111 million.

6 hours ago

Bitcoin falls below $60,000

According to HTX market data, Bitcoin has fallen below $60,000, with a 4.3% drop in the past 24 hours.

6 hours ago

US Treasury Secretary: AI boom may boost productivity and help curb inflation.

US Treasury Secretary Bessent told CNBC in an interview that he hopes the Federal Reserve will remain "open-minded" about the inflation pattern after the reversal of Iran-related energy price hikes. Bessent noted that the U.S. could enter an economic environment marked by high GDP growth without a corresponding rise in traditional inflation. He cited that in the 1990s, Alan Greenspan foresaw that office modernization and the internet could drive non-inflationary growth, and allowed the economy to keep expanding. Bessent believes the U.S. has a strong chance of seeing a similar scenario again. When asked whether the Fed still needs to worry about potential inflation and whether interest rate cuts are possible this year or next, Bessent declined to comment. However, he argued that it is necessary to stay open-minded about the price or inflation impacts from the Iran conflict, and monitor inflation performance after those effects subside. Bessent also said an open mind is needed, as the AI boom could boost productivity and deliver disinflationary effects, helping inflation return to the Fed’s target level. He added that he believes Kevin Warsh will choose the optimal path that meets both the Fed’s inflation and growth mandates. Bessent also noted that Warsh previously took a hawkish stance on inflation.

6 hours ago

US stocks' intraday storage sector sees broad declines, with Western Digital and Seagate Technology both falling over 4%.

According to Bitget data, during U.S. stock trading hours, the storage sector saw broad declines: Western Digital (WDC) fell 4.47%, Seagate Technology (STX) dropped 4.17%, SanDisk (SNDK) declined 2.31%, and Micron Technology (MU) edged down 0.96%. Most optical communication concept stocks rose, with Corning (GLW) leading the gains at 9.75%, followed by Ciena (CIEN) up 3.24%, Coherent (COHR) rising 2.93%, Lumentum (LITE) gaining 2.61%, and Nokia (NOK) advancing 1.82%. Additionally, Marvell Technology (MRVL) fell 2.59% and Applied Optoelectronics (AAOI) declined 1.90%.

6 hours ago

During intraday trading in U.S. stocks, crypto-related concept stocks fell broadly, with MSTR dropping more than 7%.

According to Bitget market data, the three major U.S. stock indexes rose broadly: the Dow Jones Industrial Average gained 0.94%, the S&P 500 increased 0.60%, and the Nasdaq rose 0.63%. Crypto-related stocks fell across the board, with declines as follows: Strategy (MSTR) down 7.33%; Circle (CRCL) down 4.35%; Bitmine (BMNR) down 3.97%; Coinbase (COIN) down 3.73%; Robinhood (HOOD) down 3.70%; Gemini (GEMI) down 3.27%; Bullish (BLSH) down 3.25%; Sharplink (SBET) down 3.19%.

6 hours ago

Gotbit’s fake trades haunt Cere as $157m suits hit Lime chair

Shiba Inu (SHIB) is threatened to note a decline due to the lack of recovery observed in the broader market cues.

SHIB investors are not keenly bullish either, which could translate into losses for the meme coin.

Shiba Inu Whales Are a ProblemShiba Inu’s price could experience a price correction due to the waning support from SHIB holders. These meme coin enthusiasts have been losing optimism toward a rally, which is visible in their increasing selling pressure.

In the last two months, the addresses holding more than $1 million and $10 million worth of SHIB have sold off a huge chunk of their supply. Nearly $10 billion worth of SHIB has left their wallets, creating a bearish impact on the meme coin.

Such major selling tends to counter any potential an asset has at rallying, which could be the case with Shiba Inu.

Shiba Inu Whale Holdings. Source: IntoTheBlockFurthermore, the correlation this meme coin shares with Bitcoin also threatens its gains. SHIB shares a high correlation of 0.81 with BTC. A high correlation indicates a strong statistical relationship between the two assets. This implies that changes in one of them are closely associated with changes in the other.

Given Bitcoin is the bigger asset and is also noting bearish cues, it is difficult to predict a bullish outcome for Shiba Inu. Thus, there is a good chance that the meme coin could have a bearish weekend.

Read More: How To Buy Shiba Inu (SHIB) and Everything You Need To Know

Shiba Inu Correlation with Bitcoin. Source: IntoTheBlockSHIB Price Prediction: Support Could FailShiba Inu’s price has been trading under a downward trendline for the most part since the beginning of March. Even though the meme coin attempted breakouts in the past, it failed to retain the rally.

Consequently, SHIB is now threatened to fail the breach of the downtrend line and fall back to $0.00002093. Losing this support would result in a significant correction to $0.00001491.

Read More: Shiba Inu (SHIB) Price Prediction 2024/2025/2030

Shiba Inu Price Analysis. Source: TradingViewShina Inu must print a daily candlestick close above $0.00002584 to invalidate the bearish thesis. Such upward movement could break the descending trendline SHIB has maintained since March and push prices toward $0.00002835 or higher.

MoonBag’s Top Crypto Presale in June 2024 Delivers 88% APY, Attracting Investors Seeking Diversification Beyond Dogecoin and Shina Inu’s Challenges

Shiba Inu has taken a hit, losing $1.3 million in market value this month, with whales leading the charge in shedding their holdings.  Could the memecoin be on the verge of another election-like rally? Following the recent market-wide dip, it seems that whales have stepped in to provide support. Even memecoins are not being left behind, as a single whale wallet accumulated 257.5 billion Shiba Inu [SHIB] coins.

Could this signal the start of a fresh bull rally, or is it just another act of manipulation?

Shiba Inu on whale alert The top ten exchange addresses hold 130.47 trillion SHIB, with 3 trillion added this month.

Despite this accumulation, the memecoin was struggling. It was trading 13% below its New Year opening price and nearing its critical $0.00001500 support line, at press time.

Source: TradingView Since the TRUMP launch, Shiba Inu has been on a steady decline, hitting daily lows while staying far from the overbought territory on the RSI. The CMF also flashed bearish signals.

Adding to the intrigue, the top ten addresses have dumped 30 trillion SHIB in the last ten days.

This sharp supply-demand imbalance has thrown SHIB into a downward spiral, erasing $1.31 million in market value throughout January.

But could things finally be turning around? At the time of writing, SHIB was up 6% in the last 24 hours, trading at a price similar to when it rebounded during the election rally, which saw a 58% surge in a week.

Now, with whales starting to re-accumulate, could this be the start of a much bigger rally?

Just another manipulative stunt? After two months of relentless downtrend, Shiba Inu has been oversold. The big gains have been realized and locked in, and the cycle seems to have shifted. 

Now, with the dust settling, there’s potential for growth ahead.

Yet, the buying volume has remained flat at just $600 million, far from the explosive $7.6 billion seen in December. Retail investors haven’t returned, meaning this recent pump is largely driven by whales.

Source: Santiment In January alone, whale wallets have gobbled up an astounding 40 trillion Shiba Inu coins. As the new month begins, these whales are poised to re-accumulate, with the 256 million currently held possibly just the beginning.

Realistic or not, here’s SHIB market cap in BTC’s terms

But don’t be fooled—a lasting rally is far from guaranteed. With volume still low and volatility rising before the FOMC meeting, that 6% gain could be a manipulation tactic.

However, if the market turns bullish, a 58% rally could materialize.

The Calm Before the Storm – Why Buying $HUGS Now is Smarter Than Chasing the Next SHIB or SOL Rally!

A whale is suspected of selling 20.92 million APX, worth approximately $12.3 million.

PANews reported on September 19 that according to Lookonchain monitoring, the giant whale 0xD3DA is suspected of selling 20.92 million APX (worth approximately US$12.3 million) on Aster.

The whale deposited 20.92 million APX to Aster two days ago, and then withdrew 10.75 million USDT from it, with an average transaction price of US$0.514.

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US Three Major Indexes Mixed, HOOD Down Over 6.11%

PANews Newsflash3 hours ago

Key Takeaways What triggered Aster’s 105% surge, and how did whales impact its price?  Aster’s significant price surge was primarily driven by the 1.1 APX to Aster token swap, which created increased demand for the token. 

Can Aster’s price rally continue, or is it likely to pull back? If speculation fades and the hype diminishes, Aster’s price may retreat back to the $0.54 level. 

Aster [ASTER] surged 105%, hiking from $0.38 to a new all-time high of $0.78 before retracing. In fact, at the time of writing, Aster was trading at $0.6512, marking a 55.12% increase on daily charts. 

Over the same period, the altcoin’s market cap surged 51% to $1.3 billion, while Volume jumped 25% to $400 million. Such as a spike in both indicated steady capital influx and growing on-chain activity. 

But what inspired the Uptick?

According to AMBCrypto’s analysis, Aster’s recent price surge was primarily driven by the 1.1 APX-to-Aster token swap.

Once the swap went live, holders rushed to convert their APX, triggering a wave of demand that pushed Aster’s price higher.

Binance also stepped in to support the swap, suspending APX trading on the 19th of September to facilitate the transition. All APX held by Binance Alpha users will be automatically converted to Aster.

Adding to the momentum, Binance’s former CEO CZ amplified the news through his social media posts, further fueling interest and market activity.

CZ took to his X (formerly Twitter) account and shared the altcoin’s price charts and added that, 

“Well done!  Good start. Keep building!”

Many market players and investors viewed this as an endorsement for the token, thus driving market participation. 

Finally, Aster unlocked 704 million through aidrops, but unlike the common trend where unlocks result in selloffs, it surged. The surge was a sign of market confidence, as holders decided to maintain their holdings.

Whales accumulate aggressively Notably, as the market stabilized, whales began to accumulate the altcoin aggressively. According to Nansen, whales have accumulated approximately 1.7 billion tokens in three days.

Source: Nansen Lookonchain reported one such whale transaction. As per the on-chain monitor, a whale bought 3.59 million ASTER tokens worth $2.11 million.

Such a sustained accumulation from whales signals a firm conviction in the market, a clear bullish signal.

On-chain activity follows suit Notably, on-chain activity skyrocketed as users jumped into the market in droves.

According to Dune, the number of Total Users surged to 1.8 million, with 24 Hour New Users hiking to 53.3k, at press time.

Source: Dune Typically, such a substantial uptick in active users signals increased network usage and adoption. Thus, the price rally was backed by strong organic demand, a prelude to more gains.

Can Aster’s momentum hold? According to AMBCrypto’s analysis, Aster rallied as investors rushed into the market to swap Apx for Aster, resulting in massive on-chain activity.

At the same time, capital flowed into the market from whales as they turned to accumulate.

Therefore, these market conditions position the altcoin for more gains. If they hold, Aster will reclaim $0.78 and attempt another high.

However, if speculation fades, the altcoin will retreat to $0.54.

Can Aster Price Hit $2 Soon?

PANews reported on September 21st that according to on-chain analyst Yu Jin, a whale who staked 13.3 million APX tokens two years ago sold 9.07 million APX tokens over the past four days for $2.27 million, at an average price of $0.25. When the whale staked two years ago, the APX price was just $0.033, and the APX tokens were worth only $440,000. Over the past two years, their staking returns have exceeded their initial investment of $440,000. However, at an average price of $0.25, at the current price of $1.60, they sold before the initial takeoff, missing out on $12.7 million in profits. Currently, 5.35 million APX tokens remain unsold, valued at $8.82 million.

PANews reported on September 21st that according to on-chain analyst Yu Jin Jia Memory, an address withdrew 2.78 million APX from Gate to an on-chain address nine months ago. At the time, the APX was worth only $360,000, with an average price of $0.13. Twenty minutes ago, the APX was exchanged 1:1 for 2.78 million ASTER tokens, which are now worth $5.2 million.

‘Diamond hand’ APX holder turns $226K into $7M amid ASTER swap rally

An address converts half of its APX to ASTER and deploys an APX/ASTER liquidity pool on PancakeSwap

PANews reported on September 22nd that according to Yu Jin, an address purchased 2.87 million APX tokens for 184,000 USDC at the end of November last year , at a price of approximately $0.064 per token . Three hours ago, the address converted half of the APX tokens into ASTER and established an APX/ASTER liquidity pool on PancakeSwap. The APX/ASTER assets are currently valued at $4.13 million, a 22- fold increase in value.

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US Three Major Indexes Mixed, HOOD Down Over 6.11%

PANews Newsflash3 hours ago

In crypto, fortunes are made not by following the crowd, but by moving before the world catches on. This truth was reinforced again when an APX investor who put in about $226,000 back in 2022 saw their holdings surge to more than $7 million during the recent ASTER swap rally.

The story shows how powerful early-stage investments can be. It also sparks a big question: where will the next wave of wealth come from? The APX success proves that timing matters. Vision matters. And today, many investors are looking toward presales like MAGAX.

Source: Lookonchain

How APX Delivered a Multi-Million Dollar Payoff Table of Contents

How APX Delivered a Multi-Million Dollar PayoffThe Lesson: Early Entry Creates the Biggest MultipliersMoonshot MAGAX and the Rise of Meme-to-Earn CultureDeFi Innovation Sets MAGAX Apart From Traditional Meme TokensWhy Joining the MAGAX Community Is a Strategic MoveLearning From APX Without Competing Against ItJoining the Meme Presale is the Next Big Move, Just like APX APX Finance began as a decentralized exchange offering leveraged trading and derivatives on chains like BNB and Arbitrum. The platform rewarded early supporters, but its real turning point came with the launch of the ASTER swap in 2025.

During this upgrade, APX holders were allowed to swap tokens for ASTER, the new native token. A tiered system rewarded those who moved quickly, and the excitement pushed APX’s price up by 120% in just 24 hours, briefly hitting $1.98.

One early wallet, which had invested in 2022 when APX was near rock bottom, suddenly saw its holdings balloon to $7 million. For those who had the conviction to buy early, the payoff was extraordinary.

The Lesson: Early Entry Creates the Biggest Multipliers APX’s story is not unique. Time and again, crypto rewards those who enter before the rush. Ethereum traded for under $1 in presale. Solana was nearly free before its DeFi boom. Shiba Inu turned meme culture into billions of dollars.

What unites these examples is simple: by the time tokens hit major exchanges, much of the upside is gone. The biggest fortunes are made when investors see the vision early and position themselves before mainstream adoption.

Moonshot MAGAX and the Rise of Meme-to-Earn Culture This is where MAGAX enters the conversation. While APX succeeded by innovating in decentralized trading, MAGAX is redefining what meme tokens can achieve. Instead of being driven only by hype, MAGAX introduces a Meme-to-Earn model, where users are rewarded for creating and sharing memes that fuel the community’s growth.

With tokens priced at just $0.000293 in Stage 2, MAGAX sits in the same position APX once did—an ambitious project that the wider market hasn’t fully noticed yet. But unlike many meme coins, it has structural features that strengthen long-term value.

DeFi Innovation Sets MAGAX Apart From Traditional Meme Tokens APX proved its strength in DeFi by building one of the busiest decentralized derivatives platforms, showing that real liquidity thrives beyond centralized exchanges. MAGAX follows a similar path but through culture.

It blends meme virality with DeFi incentives, turning engagement into real yield. This makes it more than a meme coin—it’s a cultural token rooted in DeFi, powered by both community and blockchain.

Why Joining the MAGAX Community Is a Strategic Move Communities make or break crypto projects. APX benefited from strong early believers who trusted the project during its quiet years. MAGAX is already building that same loyalty at a much earlier stage.

With over 80,000 participants in its presale, MAGAX isn’t just growing in numbers—it’s creating a collaborative environment where creativity pays. Members can earn through meme creation, sharing, and promoting content, making the community itself an engine of value.

For investors, joining MAGAX means plugging into a cycle where growth is self-sustaining. Every new meme isn’t just entertainment—it’s marketing, culture, and adoption rolled into one.

Learning From APX Without Competing Against It The rise of APX proved how DeFi can turn early conviction into massive wealth. It didn’t compete with bigger players—it created its own lane in leveraged trading.

MAGAX is taking a similar path but through culture. It introduces Meme-to-Earn within a DeFi framework, rewarding creativity while strengthening utility. This isn’t just hype; it’s a new model of decentralized growth. APX showed that innovation and timing equal results. MAGAX is ready to write the next chapter with its own unique approach.

Joining the Meme Presale is the Next Big Move, Just like APX The APX story proved that early conviction pays off. A modest DeFi project turned into a $7M windfall for those who acted before the crowd.

MAGAX is now offering a similar moment—only bigger. By blending DeFi principles with meme culture, it creates both financial rewards and social incentives for participation. It isn’t just a presale; it’s the start of a self-sustaining Meme-to-Earn ecosystem powered by its community.

For investors, the choice is clear. XRP’s ETF shows crypto has gone mainstream, but the real multipliers are still in presales. MAGAX Stage 2 is live at $0.000293, and with momentum building fast, the window for entry is closing. The APX millionaire proved what’s possible—the next breakout could belong to those who join MAGAX today.

Disclaimer: This is a Press Release provided by a third party who is responsible for the content. Please conduct your own research before taking any action based on the content.

APX Whale Converts Token to ASTER, Profits 16.6 Times on Binance

Aster is a decentralized exchange that offers both spot and perpetual trading across several blockchains. It blends features from centralized exchanges, such as hidden orders and high leverage, with the self-custody model found in DeFi. The ASTER token is the governance and incentive asset for the platform.

The exchange grew out of a merger in late 2024 between APX Finance and the Astherus project. The rebrand brought a new structure, a new supply system, and a tokenomics plan built around gradual distribution and direct community involvement.

Aster supports trading on BNB Chain, Ethereum, Solana, and Arbitrum. Users do not need to bridge assets because all supported chains are integrated directly into the platform. The system also accepts yield-generating collateral, such as asBNB and USDF, to improve capital efficiency.

ASTER Tokenomics OverviewAster uses a fixed total supply of 8,000,000,000 ASTER. The supply is divided across five categories:

AirdropEcosystem and CommunityTreasuryTeamLiquidity and ListingEach category has its own vesting schedule, purpose, and effect on circulating supply. The model prioritizes the community, long-term incentives, and a clear unlock structure overseen by governance.

ASTER tokenomics (Image: Aster Docs)Airdrop Allocation: 53.5%The largest share of the supply goes to the community through the airdrop category. This equals 4,280,000,000 ASTER, or 53.5% of total supply.

How the Airdrop WorksThe airdrop rewards:

Users who earned Rh or Au points in Aster Spectra Stage 0 and 1Community members who received Aster Gems through partner and ecosystem campaignsA total of 704,000,000 ASTER (8.8% of total supply) unlocks immediately at the token-generation event (TGE). This is the only portion from this category that becomes liquid on day one.

Unclaimed rewards return to the Airdrop and Community pool. All other tokens in this category unlock gradually over 80 months, which equals roughly seven years. The pace can be adjusted by protocol governance if needed.

The long vesting period keeps early participants engaged while preventing large swings in circulating supply.

The second-largest allocation is the 2,400,000,000 ASTER set aside for ecosystem and community development.

This pool covers:

APX to ASTER token upgradesLiquidity bootstrappingEcosystem partnershipsGrants for buildersMarketing needsAPX holders will exchange their tokens for ASTER during a specific period. The conversion ratio falls over time, which encourages early swaps.

Tokens from this category (excluding the APX upgrade portion) unlock over 20 months using linear distribution. This prevents sudden supply shocks while giving the protocol resources for expansion.

Treasury: 7%The treasury receives 560,000,000 ASTER, or 7% of supply. These funds remain locked after TGE and will only be used through governance-approved decisions.

The treasury covers:

Strategic initiativesOperational reservesLong-term governance actionsSince the tokens do not enter circulation until governance decides, the treasury acts as a buffer for future needs rather than a near-term supply source.

Team Allocation: 5%Core contributors and advisors receive 400,000,000 ASTER, or 5% of supply.

The vesting schedule is built around long-term alignment:

A full 12-month cliff (0% unlocked in year one)Followed by 40 months of linear vestingThis prevents early sell pressure and keeps incentives tied to ongoing development.

Liquidity & Listing: 4.5%A total of 360,000,000 ASTER (4.5%) is set aside for liquidity and exchange listings.

This allocation is fully unlocked at TGE, allowing the exchange to provide initial liquidity across supported platforms. Early liquidity helps stabilize trading and ensures that ASTER is usable as soon as the platform goes live.

Overall Tokenomics HighlightsAster’s distribution model is shaped by four core principles:

More than half the supply (53.5%) goes directly to the community.APX holders can upgrade their tokens to ASTER using a time-decaying exchange ratio.Unclaimed tokens remain in the community pool and are redistributed in the future.Long vesting periods spread out unlocks and prevent sudden increases in supply.The structure aims to support stable growth, governance participation, and continued ecosystem activity.

APX to ASTER Upgrade ExplainedThe move from APX to ASTER is one of the most important parts of the tokenomics plan. The upgrade page opened on September 17, 2025, and APX holders can swap tokens immediately.

The upgrade will follow five cycles, each with its own exchange ratio. The ratio decreases over time, so early participation offers a higher amount of ASTER per APX.

APX DAO stakers can unlock their veNFT without penalty on September 16, then exchange the retrieved APX at the same ratio as spot holders.

APX Token Upgrade Ratio (Image: Aster Docs)How to Upgrade APX to ASTERThe process is as follows:

Visit the APX Token Upgrade page.Connect your wallet.Deposit your APX into your Aster spot account.Choose the amount to upgrade.Receive ASTER instantly in your spot account.Users can then trade ASTER on the spot market or withdraw it to an external wallet once withdrawals open.

For APX DAO StakersUnlock the veNFT on September 16 using the penalty-free option.Retrieve the APX tokens.Move to the upgrade page and complete the swap like any other holder.All rewards should be claimed before unlocking the veNFT.

Protocol Revenue Buyback InitiativeTo support token stability and governance, part of Aster's protocol revenue will be used for ASTER buybacks. The buybacks serve two direct functions:

Aster Foundation: stabilization of long-term token flowsGovernance incentives: rewarding users who participate in decentralized votingThis connects protocol usage with token demand and governance activity.

Tokenomics Clarification After CMC ConfusionAster recently faced community questions after an update on CoinMarketCap (CMC) appeared to show major unlock events scheduled for 2025 and 2035. The numbers suggested that most of the supply was locked, and that unlocks had been moved by several years.

Aster clarified that:

Tokenomics have not changed.The misunderstanding came from how unlocked-but-unused ecosystem tokens were displayed.These tokens unlock monthly but remain untouched in a locked address until needed.To avoid confusion, Aster will move these tokens to a separate, public unlock address.The project has no plans to spend these tokens in the near term.The update was intended to reflect the current circulating supply more accurately, not to alter the tokenomics model.

ConclusionAster’s tokenomics follow a straightforward design built to support long-term stability rather than short-term excitement. The supply schedule is clear, the allocations are predictable, and the utility is tied to real activity inside the network. 

If Aster keeps delivering on its roadmap and maintains discipline in emissions, the token model has enough structure to support steady growth over time.

Resources:Aster DEX X platform: https://x.com/Aster_DEX

Aster Docs: https://docs.asterdex.com/usdaster/overview

ASTER tokenomics: https://docs.asterdex.com/usdaster/tokenomics

ASTER data by CoinMarketCap: https://coinmarketcap.com/currencies/aster/

When Bitcoin began gaining prominence, few bodies were as concerned as the United States’ Securities and Exchange Commission [SEC]. A currency that is not tethered to a single person or entity, operating on something that cannot be shut down, and plied by a technology that is immutable, irreversible and transparent, it was the perfect problem for regulators.

From being touted as the currency of the Dark Web, to having derivatives contracts in its name being traded on the CBOE and CME, the regulatory journey of Bitcoin has been like no other. One would think regulators have eased their concerns with cryptocurrencies, but things were just getting started.

ICO: Initial Coin Onslaught Regulators were not immediately taken aback by the 2017-price surge. Instead, they remained on their toes and began a severe crackdown on the digital assets market.

In 2019, many crypto-entrepreneurs began registering their issuances as “tokens” and hence, escaped the regulatory hassle that would follow a security registration, which was when the SEC began to take a closer look. Stephanie Avakian, the SEC’s Co-director of Enforcement, said in a statement following one such case,

“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities…we continue to be on the lookout for violations of the federal securities laws with respect to digital assets.”

Some were genuine cases, however, there were multiple cases of deliberate manipulation. Take the case of Maksim Zaslaviky, who raised money for two separate projects, “RECoin” and “Diamond,” tokens allegedly backed by real estate and diamonds. Zaslaviky pleaded guilty to the charge of conspiracy to commit securities fraud and argued that laws surrounding digital currencies were “unconstitutionally vague.”

Jay Clayton, the SEC’s Chairman, made it clear that the SEC will not budge on the definition of a “security.” Months after clarifying that all ICOs are securities and “if it’s a security, we’re regulating it,” Clayton stated,

“If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules. If you want to do any IPO with a token, come see us.”

In fact, the ICO fervor got so tense that the SEC created a new role to oversee cryptocurrencies. Valerie Szczepanik, who previously served in the SEC’s cyber-unit, was given the brand new position of Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation. In the SEC’s press release, her role was defined as,

“Ms. Szczepanik will coordinate efforts across all SEC Divisions and Offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including Initial Coin Offerings and cryptocurrencies.”

SEC’s home turf Due to increased regulatory oversight of the SEC, projects began leaving the US in search of other markets. The main concern for entrepreneurs was the definition of their issuance and if that would lead to the SEC stepping in, especially if they confer a “security” tag. Robert Greene, a former member of the Chamber of Digital Commerce’s Token Alliance, told Longhash,

“The SEC’s regulatory posture has certainly driven projects seeking to conduct an open digital token offering to locate outside of the United States.”

Some projects went a step further. BitTorrent, which saw its early-2019 token sale finish in 15 minutes and generated $7.1 billion, restricted US residents from taking part, owing to increased regulatory scrutiny.

The ICO craze didn’t continue to 2019, particularly in the US. As seen in the chart below, the number of projects from January 2018 to November 2019 almost dropped to 0.

Token Problem The setting in 2018 was vastly different from the one in 2019. ICOs were on a decline, moving to the premise of Initial Exchange Offerings [IEO] where internal governance of partnered exchanges come into play, rather than external regulation. The SEC’s focus hence waned from nabbing ICO criminals to defining a “token.”

Even though issuances present different regulatory cases, they’re unified by a common theme – the SEC is concerned not with the tag “security” or “token,” but the underlying means of fundraising and its purpose, said Chainalysis’ Chief Technical Counsel, Michael Moiser.

In a joint statement, the three most important financial regulatory bodies of the United States – the SEC, the Commodity Futures Trading Commission [CFTC], and the Financial Crimes Enforcement Network [FinCEN] reiterated this principle,

“As such, regardless of the label or terminology that market participants may use, or the level or type of technology employed, it isthe facts and circumstances underlying an asset, activity or service, including its economic reality and use (whether intended or organically developed or repurposed),that determines the general categorization of an asset.”

Four token issuances which caught the SEC’s attention and set the stage for regulation were – Block.one, Telegram, Kik, and Blockstack.

Block.one’s EOS

A previous piece covering Block.one’s regulatory issues can be found here.

Block.one was fined $24 million by the SEC for its EOS token sale in 2017-2018. The Brendan Blumer-led company clarified that the fine pertained to ERC-20 tokens issued on the Ethereum blockchain which are “no longer in circulation or traded.”

Stephen McKeon, Associate professor of finance at the University of Oregon and former Chief Strategy Officer at Security Token Academy, told AMBCrypto that this is an issue of “transitional securities,” based on when the token sale occurred and when the fine was imposed. He stated,

“The settlement could affirm the viewpoint that a network’s token should always be offered as a security during an initial raise, but a future sale of that asset might later be deemed to fall outside of securities laws once the asset’s network is “sufficiently decentralized.”

In relation to the Howey Test, once a network is “sufficiently decentralised,” it would not satisfy two of the determining factors and hence, “what was once a security is no longer treated that way by the SEC,” clarified McKeon.

Like the case of EOS, cryptocurrencies can essentially fall out of the “security” definition if it “evolves,” according to the SEC’s Director of Corporation Finance, Bill Hinman. Clayton seconded the ‘Hinman doctrine’ in a letter to cryptocurrency advocacy firm, Coincentre, stating,

“A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition.”

Telegram’s GRAM

The SEC halted Telegram’s GRAM token sale less than a month before its opening. Telegram told investors that discussions with the federal agency had been ongoing for eighteen months. Yet on 11 October, the SEC filed an emergency action against the platform for “conducting an alleged unregistered, ongoing digital token offering in the U.S.”

Steven Peikin, Co-director of the SEC’s Division of Enforcement, stated,

“Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”

Moiser said that the case of Telegram directly ties to the SEC, CFTC and FinCEN’s joint statement [issued on the same day as the Telegram complaint], and is based on ‘function, not label.’ Next, the coming together of messaging and token sales is a case in its own regard, and hence, the SEC took the extra measure. Moiser added,

“The messaging app-to-crypto token space is an important one to watch, for fast adoption through existing networks, as well as natural synchronicity with privacy-oriented users.”

Telegram’s use as a covert-messaging device was also a concern. The Chainalysis CTO added that the messaging application came in for far more “scrutiny” owing to its alleged use by “nefarious actors.” The privacy messaging platform is the “number one source for terrorist organizations online,” according to Steven Stalinsky, Executive Director of the Middle Eastern Media Research Institute [MEMRI], a think-tank that released a 253-page report on how terror-outfits’ use of GRAM could be a “security threat.”

Moiser was surprised that Telegram, with its deep pockets and ability to put forth a strong legal team, could not, at the very least, avoid a “temporary restraining order.” He stated,

“Given their resources, knowledge of the publicly stated illicit finance concerns and ability to work through these issues in advance with regulators before market actions, the impact on investors from them not doing so makes this important in an unfortunate way.”

Kik’s KIN

In 2017, Kik, another lesser-known messaging platform, issued a token sale for their crypto Kin, raising $55 million from US investors in the process. Kin’s sale commenced during a period when the messaging service saw little use. The same was attested in the SEC’s June 2019 filing.

The crux of SEC’s complaint follows previous cases, stating that Kik “sold the tokens to U.S. investors without registering their offer.” The complaint was further divided into two parts – the value and the promotion. The value at the time of the complaint was “about half of the value that public investors paid in the offering.” Secondly, the SEC alleged that Kin was marketed as an “investment opportunity.”

Kik further told investors that a “profit” could be expected from their investment, which, according to the Chief of Enforcement in the Cyber Unit division of the SEC, Robert A. Cohen, satisfies the Howey Test. He stated,

“Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”

Months after the complaint, Kik hit back, stating that the regulator has made a consistent effort to “twist the facts” by “misrepresenting the documents and testimony” gathered. Kik demanded a Jury trial and detailed 200 points of clarification against the SEC’s initial complaint. 

The tussle got so heated that FT called it the “acid test for whether certain digital tokens count as securities.” It was hence, one of the most pivotal regulatory cases of 2019.

Blockstack’s STX 

In July 2019, Blockstack saw its token offering – Stack [STX], approved by the SEC under Regulation-A. This was the first case of token issuances that was approved by the regulator. An alternative to an IPO, Regulation A is based on two tiers. Tier 1 pertains to offerings up to $20 million within a 12-month window, while Tier 2 has a ceiling of $50 million over the same period.

The case of Blockstack’s approval was hailed as being historical for token issuances under the purview of the SEC. The National Law board stated,

“The SEC’s decision to qualify Blockstack’s offering circular represents a milestone for Blockstack, as well as the blockchain industry as a whole. It is a key step down what may be a viable pathway for companies to raise capital to develop open, cryptographically secured networks powered by digital assets.”

Kraken’s Steven Ehrlich, in a piece for Forbes, stated that Blockstack’s approval was important for three reasons. The $28 million offering will be widespread between retail and institutional investors. Blockstack is ahead on development, having over 170 applications operating on its blockchain. Being over half a decade old, Blockstack belongs to the ‘old-guard’ of crypto-companies and serves as a “good barometer to assess the industry’s progress as a whole.”

With the cases of Kik and Telegram happening before and after Blockstack’s approval, the SEC took a more nuanced view with the blockchain company, compared to the messaging giants. Blockstack’s fundraising could be a “path to SEC-approved IPO-type fundraising with a crypto-token,” stated Moiser. He added,

“While many noted the $2mm that Blockstack spent to achieve this, it sets a precedent and blueprint that can be replicated on the shoulders of that capital investment.”

Lowering of the Iron-Fist

Token issuances were the most important regulatory decisions that the SEC had to make this year, and their approach from 2018 to 2019 has evolved. While in 2018, retail fever was pushing projects towards ICOs, the basket was spoiled by a few bad apples that used the method of raising funds for nefarious reasons, which rightly ushered scrutiny.

Moving on from the iron-fist decisions, the SEC immediately came out and stated that the ‘tag’ is secondary to ‘activity’ and ‘means.’ Four token security decisions dominated the sphere, with the messaging giants getting the short-end of the stick, more so due to other reasons surrounding their issuances, rather than the method itself.

For Kik, it was the financial situation and Kin’s drop in valuation, while for Telegram, it was the platform’s reported use by terror-elements. The regulatory decision for Block.one underlined the case for a more nuanced approach to token regulations, which looked at the lifetime of a token. Blockstack’s case also spelled out the alternative to IPO-means towards securing an SEC green light for crypto-fundraising.

All-in-all, it can be stated that the SEC is looking at the complete picture of token issuance, issuer, network, means, and amount before regulations are meted out.

Token issuances are not dead, they’re evolving.

Kik Continues Legal Battle With SEC, Requests Trial Date Definition

Is the Future of Blockchain Tech Innovation in the East?

In brief A judge didn't buy Ripple's request to dismiss a class-action lawsuit against it. The judge seemed to assume, for now, that XRP is a security, a lawyer told Decrypt. Should the court rule in favor of the plaintiffs, it could have widespread effects on the market. Ripple Lab Inc., the company behind the XRP cryptocurrency, failed to convince a judge on Wednesday to dismiss a class-action lawsuit that could force the San Francisco-based company to return all of XRP’s investors’ money, and take the coin off the market entirely. 

Since XRP is the third-most popular cryptocurrency by market cap and trades almost $3 billion per day, such a ruling could crash the cryptocurrency market. A ruling against Ripple would also set a legal precedent that would make it easier for disgruntled investors to go after the creators of other cryptocurrencies, such as Kik Messenger and Telegram, which are battling similar allegations from the SEC.

The plaintiffs, various disgruntled investors who bought into XRP at an early stage, allege that San Francisco-headquartered Ripple sold them XRP under false pretenses, and that the sale constituted an unregistered securities offering under US law. 

They argue that under the decades-old yardstick for determining whether or not an asset constitutes a security, the Howey Test, XRP constitutes a security. And if a cryptocurrency token is an unregistered security, then Ripple’s token sale would have been illegal, and Ripple might have to give investors their money back.

Ripple asked a federal judge in Oakland, California to throw the case out because of the amount of time that has passed since the initial sale: XRP was offered over five years ago. But US District Judge Phyllis Hamilton refused to dismiss the case. 

And, what’s more, her arguments for doing so appear to rely on the assumption—for the purposes of this early-stage motion, at least—that XRP does, in fact, constitute a security under US Securities Law, Jason Gottlieb, a partner of Morrison Cohen LLP who’s experienced in crypto litigation, told Decrypt.

In her response to the motion to dismiss, Judge Hamilton refers to a statute of limitations issue under the Private Securities Litigation Reform Act, “which would only apply if XRP were a security,” he said. 

Judge Hamilton also evaluated whether Ripple was a “seller” under securities laws, as well as liability issues under federal securities laws. “You wouldn’t be looking at those unless you had determined, for the purposes of this motion, that XRP is a security,” said Gottlieb.

Jake Chervinsky, General Counsel of DeFi product Compound Finance, agreed: “The securities claims survive. XRP stays in the crosshairs,” he tweeted on Wednesday.

Gottlieb pointed out that Judge Hamilton doesn’t exclude an argument against this at a later stage of litigation. But at this stage, “Even Ripple knows that arguing that [XRP] is not a security on a motion to dismiss is a fool's errand,” he said. 

The case won’t be settled anytime soon, said Gottlieb. Judge Hamilton invited the plaintiff’s to amend their complaint that Ripple lied to them, but should Judge Hamilton deny another motion to dismiss after that; then to discovery; and then, if things still aren’t resolved, a trial. “It's hard to imagine a trial happening in calendar 2020,” he said. (Of course, the parties could settle at any point). 

But should a judge rule that XRP is a security, that could have widespread effects on the cryptocurrency industry—and not just because Ripple might have to give investors their money back. Such a legal precedent could make it easier for investors to claim back billions raised in other token sales, which could also be ruled to constitute unregistered securities offerings. 

“XRP is widely traded in the secondary market; it could really create some havoc,” said Gottlieb.

And should financial institutions wish to keep trading securities, financial service firms, like crypto exchanges, investment funds, and trading firms, might be subject to registration and licensing, according to the website of the Crypto Ratings Council, an industry body set up to help crypto startups determine which blockchain-based tokens qualify as securities.

Other major ongoing cases are those levied by the SEC against the blockchain networks of Telegram, the operator of the 300-million-strong messaging app, and Kin, a blockchain network formerly owned by Kik, which coincidentally also runs a messaging app of a similar size. The SEC claims that the $1.7 billion Telegram raised, and the $100 million Kin raised, in ICOs constituted an unregistered securities sale. 

Just like the XRP case, if the judge rules in the SEC’s favor, Telegram might have to give investors their money back. It would also create a legal precedent, said Gottlieb, but would come with the SEC’s additional bite of “injunctive relief,” which would prevent Telegram from running token sales in the future. 

What it all boils down to is this: should any of these major cases result in a judgment that one of these token sales constitutes an unregistered securities sale, then not only will that affect the other major cases, but the legal precedent developed could make it easier for similar cases to be settled in the future.

Yankun Guo, a lawyer who set up her own practice in Chicago to help early-stage startups, told Decrypt that crypto startups, hedge funds, and companies considering token offerings ought to "pay attention to who their investors are (accredited or not), as well as the disclosures they are putting out around their companies and tokens."

Her advice might have come too late for the crypto companies battling court cases with investors. Though investors would surely benefit from court rulings in their favor, the crypto economy as a whole might suffer, particularly if future lawsuits drain money from the market.

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