CFTC vs DeFi ⚖️

Friend Tech’s Profit | Crypto Influencer PnD

Marco Manoppo & Karon Pangestu
September 11, 2023

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Good Morning,

Ethereum finally breaks below $1,600 as we enter conference season. It’s a tale as old as time.

While we’ve been getting legal wins with Ripple and Grayscale, the CFTC’s recent action towards DeFi is not a good sign for the crypto ecosystem in the US. Perhaps that’s why the spirit in Singapore is magnetic right now.

We’ll be in Singapore for Token 2049 this week. Reply to this email if you want to catch up, cheers.

In Today's Email:

What Matters: CFTC vs DeFi ⚖️
Products: Bizzllet wallet 💼
Charts: Friend Tech soared, Influencer PnD 📊

Narratives: De nada. Maybe just Friend Tech farming if you’re really craving some action.

NOTEWORTHY READS

Our Network’s read on Layer 2s (again!).
Christine Kim’s read on Ethereum all core devs call #117 summary.
Folius Ventures’ read on Friend Tech.

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WHAT MATTERS

CFTC Charged Three DeFi Platforms

CFTC

State of play: The US CFTC has charged Opyn, ZeroEx, and Deridex for allegedly offering illegal digital asset derivative trading. The CFTC has reached settlements with these three firms.

Opyn, ZeroEx, and Deridex are alleged to have operated unregistered trading platforms and engaged in illegal leveraged transactions with digital assets.
Opyn, ZeroEx, and Deridex are Delaware-registered companies.
Opyn, ZeroEx and Deridex have been ordered to pay $250K, $200K and $100K penalties, respectively.

The CFTC achieved a legal victory against Ooki DAO in June when a federal judge issued an order for the firm to shut down and imposed a penalty exceeding $600K.

ZeroEx's DEX aggregator Matcha permitted the trading of third-party tokens, offering 2:1 leverage on assets like ETH and BTC.

The CFTC stated that leveraged or margined retail commodity transactions can be offered only on a registered exchange in accordance with the Commodity Exchange Act and CFTC regulations.
The CFTC claimed that Opyn and Deridex failed to adopt KYC as required by the Bank Secrecy Act for the futures commission merchant (FCM).
CFTC asserts that geoblocking is not sufficient to block US users from accessing Opyn Protocol.

What’s next: The CFTC is signalling that there will be more DeFi enforcement coming.

Our take: The order to adopt KYC is like an order for US-based DeFi to kill themselves. This will lead to a massive DeFi exodus from the US.

For builders and investors: I’ll just share this tweet from Gabriel.

if you run any kind of interface etc. for a DeFi credit protocol, block the U.S.
many people told me I was crazy when I said that the CFTC's case against OokiDAO simply makes DeFi illegal under the CFTC's view of U.S. law; I was right--they were wrong
— _gabrielShapir0 (@lex_node)
10:29 PM • Sep 7, 2023

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PRODUCTS OF THE WEEK

Bizzllet, a Self-Custody Business Wallet

Bizzllet

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Bizzllet applies MPC-powered security that ensures all requests are approved conveniently and securely, while all the data and keys for the digital assets remain in control.
Bizzllet allows users to set different roles & rules on their teams (e.g., spending limits).
Bizzllet does not apply seed phrases and KYC in its authentication processes.

Other cool products:

Credit Chip, an instant p2p payment using Metamask, Ledger.
ScrapyFizz, a data scraper for crypto projects.
Stakan.io, a crypto trading app for scalpers.
Blok3, a Web3 wallet API.
AlphaTrace, a profit tracker for DEX traders.

CHARTS OF THE WEEK

Friend.Tech Good First Month

@0xCygaar

State of play: Friend.Tech reached $16.3M in TVL in its first month, showing that people are actually using the app.

Friend.Tech has paid $5.3M to creators.
Friend.Tech recorded a $5.3M in-app revenue.
Friend.Tech has 135K active wallets with at least 1 trade.

Our take: Friend.Tech has a real traction but one of the issue it needs to solve is the following:

one problem with friendtech is the content quality doesn’t scale as aggressively as the bonding curve.
the market has decided the picture of a girl’s anus costs no more than $5. there is no angle she can come up with for a slightly better picture to cost $5000.
— banteg (@bantg)
10:49 AM • Sep 10, 2023

Crypto Influencers Dump Tokens

@zachxbt

State of play: @zachxbt tweeted a breakdown on how @TraderNJ1, @PetaByteCapital, @trader1sz, and @Trader_XO pump and dump CBOT, BabyShib, and PAAL.

An audio clip of Trader NJ asking for a percentage of the CBOT token supply for him and his influencer friends to promote the project as the next 10x-20x resurfaced online.
Trader NJ and Peta asked for 3.5% of BabyShib’s supply for “marketing” and stated that they have no intentions to sell it soon. On August 30, they began the unloading of all Babyshib worth $115K.
The PAAL team also confirmed that Trader NJ, Peta, XO, and SJ were dumping their PAAL tokens after “shilling”.

Our take: Just don’t believe any “pro trader” account on Twitter. It’s a lesson as old as time.

QUICK BITES & MEME

Ripple acquires Fortress Trust.
FTX sues LayerZero to recover $86M.
FTX probes to reverse millions in payments to celebrities.
Sushi announces expansion to Aptos.
Infura plans to start decentralizing by the end of 2023.
Utah man settles with CFTC, will pay $2.5M.
Binance to remove support for Polygon NFTs.
Founder of Thodex sentenced to 11,196 years in jail.
Vitalik’s Twitter was hacked to carry out a phishing attack.
SEC snaps back against Ripple in a push for an interlocutory appeal.
Brian Armstrong eyes flatcoins as the ‘next iteration of stablecoins.’

— Gambling is Life (@GamblingMemez)
6:32 PM • Sep 10, 2023

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