⚔️ Endgame: Will Coinbase Survive?

Nascent's Dan Elitzer | $30M BitKeep Wallet

March 24, 2023

GM folks 👋🏻 - Happy Friday

Do Kwon arrested in Montenegro. Crypto markets are flat despite Arbitrum's $1B injection. Institutional participants seem to be at the crossroad between Fed’s pivot and regulators’ adversarial action towards crypto. Let’s dive in 👇

In Today's Email:

What Matters: Coinbase goes to fight ⚔️
Founders-Investors Highlight: Dan Elitzer, Co-Founder of Nascent.xyz 🌱
Deal Flows: Bitget $30M investments in BitKeep wallet 💰

We plan to start a Saturday issue breaking down crypto businesses. Reply to this email to let us know what protocols/companies you want us to cover!

Narratives: Still on Arbitrum, but pay attention to mid and large cap that will be affected when people cycle out of BTC. Market beta play seems poised here.

WHAT MATTERS

Endgame: Coinbase vs SEC

State of play: Coinbase received a Wells notice from the SEC. The notice means that the SEC intends to bring an enforcement action. No specific issue has been mentioned. It can be on specific products, or on the topic of operating an unregistered securities exchange.

If it's the latter, the issue is much larger and systemic to the broader crypto industry.
Paradigm, one of the largest crypto VC fund that was co-founded by the former founder of Coinbase have also outlined why registration is not a viable path for crypto projects.

Must-read piece wherein @RSSH273 takes on the Gensler SEC's claim that crypto should "just come in and register." It's just not true, and it never has been.
policy.paradigm.xyz/writing/secs-p…
— Katie Biber (@katiebiber)
8:45 PM • Mar 23, 2023

The key takeaway: If the SEC ends up bringing legal action against Coinbase, the crypto industry might finally get some clarity around what crypto assets are considered securities, and how to innovate in the asset class in a compliant manner.

So what happens next? We avail ourselves of the court system to finally start to get some clarity for the crypto industry in the U.S. Ironically, establishing some case law may be our best shot at getting the regulatory clarity that the industry deserves. 14/15
— paulgrewal.eth (@iampaulgrewal)
9:52 PM • Mar 22, 2023

Why it matters: The crypto industry's ability to move forward in any meaningful capacity is currently halted by the ongoing regulations by enforcement. This case, without a doubt, will by far become the single most important crypto event for the coming years.

For builders: The development and outcome of Coinbase vs SEC will determine what founders can and can't do regarding tokens and dApps. Sure, you can just not accept US customers, but we both know things don't work that way. Pay attention.

For investors: Support Coinbase. If you're not in the US, engage your local policymakers. When a good actor that has been trying to engage is ignored, the only path forward is via the rule of law.

BUILDER-INVESTOR HIGHLIGHT

Dan Elitzer, Founder of Nascent.xyz

Dan Elitzer is the Co-Founder of Nascent. Previously, he co-founded IDEO CoLab Ventures, a crypto-focused fund associated with the coveted design agency, IDEO. He also contributed to the launch of YAM Finance.

Nascent is a prominent investment firm in crypto. Its portfolio companies include notable names such as Flashbots, Optimism, Etherscan, Aztec, and 0x Labs.
The AUM of Nascent is not publicly known.

Previous backgrounds:

Dan is an OG in the crypto space. He co-founded the MIT Bitcoin Club in 2013 and was a product intern for Circle in 2014 🌱
Prior to his crypto career, he was a finance professional at Grameen Foundation and an associated at Community Wealth Partners.

The big idea: Nascent is a collective of builders and investors. They are not only investing in projects but are also working on launching their own tools. Nascent’s latest project is called Pyrometer, an open-source security tool for analyzing smart contracts 👨‍💻

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DEAL FLOWS

BitKeep Wallet $30M Equity Stake

🤝 Deal flows recovered this week. We saw $230M+ in deals.

Bitget $30M Investment in BitKeep: Crypto exchange Bitget has invested $30M in BitKeep, a multi-chain crypto wallet, at a $300M valuation. Bitget now holds the controlling stake over the wallet provider.

BitKeep is one of the largest crypto wallet in Asia, with 9.5 million users and 1.6 million in monthly active users.
BitKeep last raised a $15M Series A in May 2022 at a $100M valuation.
Many draw Bitget's acquisition of BitKeep akin to Binance's acquisition of Trust Wallet in 2018.

WuBlockchain wrote a great piece on the growth of Bitget exchange:

"Today, Bitget has more than 1,300 people in more than 60 countries and regions around the world. From the perspective of the scale of centralized exchanges, perhaps only Binance and OKX have larger team sizes."

Deal flows in the past week:

Saferoot, $1.1M Pre-Seed Round
Wakweli, $1.1M Seed Round
Blueberry, $1.2M Seed Round
Carbonable, $1.2M Seed Round
Megaton Finance, $1.5M Seed Round
Foresight News, $2M Seed Round
Soul Wallet, $3M Seed Round
Metalink, $6M Seed Round
CrossX, $6.35M Seed Round
Turnkey, $7.5M Seed Round
Metatime, $11M Seed Round
CCP Games, $40M Seed Round
OP3N, $28M Series A
OnChainTrade, $700k Initial Farm Offering
Perpy, $5M Token Sale
Aavegotchi, $30M Token Sale
Nuqtah, Undisclosed $ Seed Round
Bravo Ready, Undisclosed $ Strategic Round
LSDx Finance, $2M Strategic Round
Gryfyn, $7.5M Unknown Round
Auros, $17M Unknown Round
BH Digital, $9M Liquid Token Fund
Seed Club Ventures, $25M DAO Focused Fund
BitKeep, $30M Stake Acquisition by Bitget

QUICK BITES

Coinbase receives the SEC’s Wells Notice.
Brian Armstrong says the SEC risks crypto development in the US.
SEC sues Tron founder Justin Sun, and other celebrities.
Do Kwon arrested in Montenegro, charged by the US with fraud.
Circle sees $6B in USDC redemptions.
Telegram supports USDT transfer via chat.
Block tumbles as short seller Hindenburg published its report.
Ted Cruz proposes CBDC ban.
Google wants to innovate for web3.
Ethereum increases bug bounty to $500,000.
Zipmex warns of liquidation as rescue investors missed payment.

MEME & NOTEWORTHY READS

Nic Carter’s read on the US government’s attempt to destroy crypto.
Paradigm VC’s read on the SEC’s inaction and why registration is not a viable path.
DataFinnovation’s read on TUSD early days & SBF.

New album out!
— KKGB Kitty (Carlo Casio) (@INArteCarloDoss)
8:46 AM • Mar 23, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.