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Assault on Crypto

Weekly Recap: FBI goes after crypto, CZ going to jail?
David C David C Apr 27, 20243 min read
Assault on Crypto

1️⃣ SEC & FBI Launch Assault on Crypto

It was a bold week for the U.S. government's overreach in going after the crypto industry.

As the SEC guns for Ethereum, declaring it a security, Consensys struck back this week with a lawsuit to counteract the SEC's overreach. This came amid their disclosure that Consensys had received a Wells Notice from the SEC claiming Metamask operates as an unregistered securities exchange.

Everything happens at once, it seems, with the FBI also issuing a warning, urging Americans only to use crypto services registered as Money Services Businesses under federal law — i.e. No self-custodial services. The government recently seems to have accelerated its war on crypto and privacy overall to the extent that even courts have called their behavior in crypto cases a “gross abuse of power.”

2️⃣ Franklin Templeton's Onchain Fund

Franklin Templeton, the fund known for, among other things, their laser eyes and WIF hat on Twitter, announced on Thursday the launch of an onchain money market fund. Sized at $380M, the Franklin OnChain U.S. Government Money Fund has now been enabled on both Stellar and Polygon blockchains, with its BENJI token representing a direct claim on government securities, cash, and repurchase agreements. 

3️⃣ DOJ Wants CZ to Serve 3 Years

The legal woes for Binance's former CEO, Changpeng Zhao, have escalated as the U.S. Department of Justice pushes for a three-year prison sentence over allegations of sanction violations and anti-money laundering failures at the exchange. Despite CZ's defense claiming ignorance of the particular transactions flagged, the prosecution argues that his oversight led to significant compliance failures for which he must be held responsible. In response, CZ issued a heartfelt apology letter, expressing commitment to correcting the compliance shortcomings at Binance. Additionally, 161 letters from family, friends, and influential figures, such as the former U.S. Ambassador to China and members of the ruling family of the United Arab Emirates, supported his plea for a lessened sentence.

4️⃣ Stripe Announces Upcoming USDC Payments

This week, Fintech titan Stripe announced its reentry into crypto payments, demoing its upcoming support for USDC on Solana, Ethereum, and Polygon. Stripe aims to position crypto as a viable medium of exchange by leveraging improved transaction speeds and reduced costs — (Solana, *cough cough*) — underscoring its belief in crypto's maturing infrastructure and its potential to streamline online payments. This move signals a significant endorsement of stablecoin utility in bridging Tradfi with crypto.

5️⃣ Renzo Sees 80% Depeg

In a dramatic turn of events, Renzo’s ezETH token experienced a drastic 80% depeg from its intended ETH parity, spotlighting the fragility of liquid restaking tokens (LRTs). It occurred shortly after Renzo announced an upcoming airdrop, which seemed to destabilize investor confidence, leading to a liquidity crunch as the token plummeted. Although the price has since mostly recovered, the depeg highlights the inherent risks of the nascent, restaking ecosystem that stands heavily leveraged in some instances. 

David C

Written by David C

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David is a writer/analyst at Bankless. Prior to joining Bankless, he worked for a series of early-stage crypto startups and on grants from the Ethereum, Solana, and Urbit Foundations. He graduated from Skidmore College in New York. He currently lives in the Midwest and enjoys NFTs, but no longer participates in them.

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