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SEC Continues to Target Crypto, Spot Bitcoin ETFs Pick Up Momentum

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Welcome to our Weekly Market Update.* Explore weekly crypto price movements, read a quick digest of notable market news, and dive into a crypto topic — this week we learn more about smart contracts dApps.

Crypto Movers
Crypto News
BitcoinBuzz Indicator
Topic of the Week

Frame 1

TokenChange*Price**
Bitcoin

BTC

-1.41% $60,277.39
$60,277.39 -1.41%
Ether

ETH

-1.55% $3,300.10
$3,300.10 -1.55%
Cryptex

CTX

+33.9% $3.4994
$3.4994 +33.9%
Fetch.ai

FET

-29.6% $1.23813
$1.23813 -29.6%
Lido DAO Token

LDO

-23.5% $1.784
$1.784 -23.5%

*Percentages reflect trends over the past seven days.
**Crypto prices as of Wednesday, July 3, 2024, at 1:37 pm ET. Check out the latest crypto prices here. All prices in USD.

Frame 2

Takeaways

  • SEC sues Consensys: The regulator alleged the company’s MetaMask service acted as an unregistered broker that facilitated the sale of securities.
  • US spot bitcoin ETFs report $129.5M in net inflows Monday, their largest since June 7: The influx was led by Fidelity’s FBTC and Bitwise’s BITB. Meanwhile, the price of bitcoin dipped to slightly above $60,000.
  • Plaintiffs dismiss a class-action lawsuit against Keith Gill, aka "Roaring Kitty," accusing him of manipulating GameStop stock: The move came just a day after the lawsuit was filed.

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SEC Sues Consensys Over MetaMask, Cites Unregistered Securities

This past Friday, the SEC filed a lawsuit against Ethereum software provider Consensys, alleging its MetaMask service operated as an unregistered broker by facilitating the offer and sale of securities. The suit also includes Ethereum staking services Lido (LDO) and Rocket Pool (RPL), which MetaMask utilizes for its staking feature.

The lawsuit indicated that the SEC aims to regulate liquid staking derivatives like Lido's stETH token. The agency has previously secured settlements related to staking services, including with Kraken, and has influenced Coinbase to cease its staking operations in certain states.

MetaMask, the most popular wallet for Ethereum and several other blockchains, allows users to store and trade digital assets directly within the app via its "Swaps" service, which is a focal point of the SEC’s lawsuit. According to the SEC, Consensys has facilitated more than 36 million crypto transactions in the past four years, with at least 5 million involving what are alleged to be "crypto asset securities" including Polygon (MATIC), Mana (MANA), and Sandbox (SAND).

The lawsuit filed Friday comes just weeks after Consensys announced that the SEC had concluded its investigations related to Ethereum, referencing two letters received from the regulator.

Consensys appeared undeterred on Wednesday, acquiring Web3 security company Wallet Guard to protect MetaMask customers from hacks and scams.

US Spot Bitcoin ETFs See Largest Daily Inflow in a Month

On Monday, the 11 US spot bitcoin ETFs reported a total daily net inflow of $129.5 million, marking their fifth consecutive day of positive flows. This represents the largest fund intake since nearly a month ago on June 7.

Leading the inflows was Fidelity’s FBTC with $65 million, followed by Bitwise’s BITB with $41 million. Ark Invest and 21Shares’ ARKB also reported net inflows of $13 million. Invesco, Galaxy Digital, VanEck, and Franklin Templeton saw relatively minor inflows, each around or under $5 million. Surprisingly, BlackRock’s IBIT and Grayscale’s GBTC saw no inflow on Monday, despite being the two largest spot bitcoin ETFs by net asset value.

Overall, the 11 spot bitcoin ETFs experienced approximately $1.4 billion in trading volume on Monday. Since their inception in January, these ETFs have accumulated total net inflows of $14.7 billion. Meanwhile, the price of bitcoin recovered from last week’s very brief dip below $60,000, but was trading at around $60,320 on Wednesday–well off its early June price of over $71,000.

Lawsuit Against "Roaring Kitty" Quickly Dismissed

On Friday, Keith Gill, known as "Roaring Kitty," faced a class action lawsuit alleging that his social media activity drove up the price of GameStop (GME) stock for personal gain. However, by Monday, the plaintiffs had voluntarily dismissed the lawsuit.

The case was only on the court docket for one day before being withdrawn. Shortly after the court issued a summons for Gill to respond within 21 days, the plaintiffs' attorneys filed a brief notice to drop the lawsuit without prejudice, allowing for the possibility of re-filing in the future.

This rapid development adds to the drama surrounding Gill, who became prominent during the 2021 "meme stock" surge. Empowered by platforms like Robinhood, retail investors significantly boosted the stock prices of companies such as GameStop, challenging Wall Street norms. The lawsuit detailed Gill's involvement in the stock surge and tracked his recent activities, including his return to Twitter/X in May and Reddit in June, suggesting a correlation between his posts and the volatility in GME stock prices.

The plaintiffs provided various screenshots from Twitter and Reddit, and cited reports of financial regulators investigating Gill and ETrade contemplating banning him from their platform. They alleged that Gill orchestrated a pump-and-dump scheme with GameStop stock, violating federal securities laws and causing significant losses to investors who bought at inflated prices.

-From Team Gemini

BTCBuzz bar new 050924

BitcoinBuzz data as of 1:37 pm ET on July 3, 2024.

To learn more about the BitcoinBuzz Indicator and its components, read our introduction here. Check back every week for an updated score!

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Real-World Use Cases for Smart Contracts and dApps

Smart contracts are one of the key components of many blockchain-based ecosystems, and an especially important element of many application-focused blockchains like Ethereum. These digital contracts are trustless, autonomous, decentralized, and transparent — and are usually irreversible and unmodifiable once deployed. Smart contract advantages include reducing — or even removing — the need for intermediaries and contract enforcement in an agreement or transaction. That’s because with a smart contract, the code defines the mechanisms of the transaction and is the final arbiter of the terms. For this reason, smart contracts have become the building blocks of an entire ecosystem of decentralized applications (dApps) and represent a major focal point of blockchain development in general.

A solitary smart contract can only be used for one transaction type: If something happens, then something else happens. However, most dApps work by bundling smart contracts together to enable a sophisticated, synergistic set of functionalities. There are thousands of dApps across various blockchain networks, including finance, gaming, exchanges, and media — and they can all utilize smart contracts in different ways and to different ends. Examples of smart contract applications include financial purposes like trading, investing, lending, and borrowing. They can be used for applications in gaming, healthcare, and real estate; and they can even be used to configure entire corporate structures. In this article, we’ll cover some of the real world examples of smart contracts and dApps, and explore their potential to shape the future as well.

Read more about smart contract use cases here.

Onward and Upward,
Team Gemini

*This material is for informational purposes only and is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations, or (iii) an official statement of Gemini. Gemini, its affiliates and its employees do not make any representation or warranty, expressed or implied, as to accuracy or completeness of the information or any other information transmitted or made available. Buying, selling, and trading cryptocurrency involves risks, including the risk of losing all of the invested amount. Recipients should consult their advisors before making any investment decision. Any use, review, retransmission, distribution, or reproduction of these materials, in whole or in part, is strictly prohibited in any form without the express written approval of Gemini.

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