SEC’s Coinbase Complaint Sets Off Battle for Crypto’s Future

Jun 7, 2023

First Read

Hits & Takes
John Lothian & JLN Staff

Besides missing IDX in London later this month, I am missing the 25th annual conference of the AFM in Budapest going on right now. The conference started yesterday, June 6, with an opening pre-recorded keynote presentation by Richard Sandor, who like me stayed here in the States.

The Most Interesting Man in the World, CQG’s Pat Kenny, the chairman of the AFM, opened the conference in the city where he was first given his well-deserved moniker. Also speaking at the conference, as seems to be a tradition, is the loquacious Patrick Young. Tongue-tied he is not. The line-up of the program and list of speakers looked good.

Vermiculus announced that Miax and MGEX have successfully started using Vermiculus’s brand-new clearing system, VeriClear. Vermiculus said this represents “a record time to market for Vermiculus in deploying the elastically scalable and AI-powered real-time clearing system developed by Vermiculus.”

Yesterday the White House put forth the reappointments of Summer K. Mersinger as a CFTC commissioner and Mark Toshiro Uyeda as a SEC commissioner. Mersinger’s term would expire on April 13, 2028, and Uyeda’s term would expire on June 5, 2028.

The NYSE announced it will close on June 19 in observance of Juneteenth National Independence Day. The New York Stock Exchange, NYSE American Equities, NYSE Arca Equities, NYSE Chicago, NYSE National, NYSE American Options, NYSE Arca Options, and NYSE Bonds markets will be closed for the holiday.

The Financial Times has a Behind the Money podcast titled “Libor’s Long Goodbye” that features Harriet Clarfelt and Philip Stafford, who look at the “1980s origins of the scandal-ridden benchmark rate, how its reputation came apart and why, with just weeks to go before a June 30 deadline, one part of the financial world is still racing to leave it behind.”

The CEO of CNN who invited former President Donald Trump for a controversial televised town hall meeting with voters is out after only a year on the job. Chris Licht stepped down as chief executive of CNN, the network’s parent company said Wednesday, The Wall Street Journal reported.

Have a great day and stay safe and treat people the same way you want to be treated: with respect, equality and justice.~JJL

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The most read stories from JLN Options yesterday were: In a Low-Return World, Smart Investors Have Options and Exchange operator Cboe gets nod to launch leveraged crypto derivative products and Three Cboe Indices Up More Than 11% in 2023. Cboe getting busy.~JB

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0DTE Options and Single Stock Futures – Two Products Linked Together in My Mind
JohnLothianNews.com

Back in 2000 and years forward I was a huge proponent of single stock futures. I thought it was a product that was going to transform the futures industry as it opened up hundreds of new potential contracts to trade, new ways to hedge stocks, more efficient clearing and innovations in stock lending. Despite my enthusiasm, educational efforts, and even boosterism, the product and the exchanges listing the product ultimately failed in the United States.

Read the commentary »

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Arianne Adams celebrates three Cboe anniversaries and talks about the exchange’s evolving product lineup and opportunities for future growth at OIC 2023
JohnLothianNews.com

JLN spoke with Arianne Adams, senior vice president, Cboe Global Markets, at the OIC Conference in Nashville in April. She talked about Cboe’s three anniversaries in 2023 and the continued growth in Cboe’s proprietary products, enhancing capital efficiencies, the popularity of 0DTE options, and the 1-day Volatility Index.

Watch the video »

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SEC Chair Gary Gensler: The US Doesn’t Need Cryptocurrency
Mathew Di Salvo – Decrypt
Shortly after the U.S. Securities and Exchange Commission filed its lawsuit against Coinbase on Tuesday, SEC Chairman Gary Gensler said that the crypto industry’s entire business model is “built on non-compliance.” In a damning CNBC interview, top American securities regulator said: “We don’t need more digital currency.”
/jlne.ws/3oTHRth

***** I think when joke coins soared in value, the case was made for this sentiment.~JJL

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Who Is Brian Armstrong? Coinbase CEO Is Taking On the SEC; Company’s long-running clash with regulators is coming to a head
Alexander Osipovich – The Wall Street Journal
Brian Armstrong is on a collision course with regulators. Depending on whom you ask, his approach represents either a bold stance that will change history or reckless posturing by a Silicon Valley crypto bro who is overdue for a legal smackdown. The Securities and Exchange Commission’s lawsuit this week against Armstrong’s company, Coinbase Global, the biggest U.S. cryptocurrency exchange, follows years of warnings by the agency that crypto exchanges were breaking the rules by listing tokens subject to securities laws.
/jlne.ws/43rrTpg

****** Who is Brian Armstrong? He is the guy Gary Gensler is going to bury, along with this company.~JJL

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Martha Stewart says America will ‘go down the drain’ if people don’t return to office
Samantha Delouya – CNN Business
Martha Stewart has waded into the hotly contested remote work debate. In an interview with the magazine Footwear News, the author, TV personality and entrepreneur slammed hybrid work culture, saying that people cannot “possibly get everything done working three days a week in the office and two days remotely.” Stewart’s comments come as more managers push for an end to the work-from-home trend that took hold more than three years ago at the start of the pandemic.
/jlne.ws/42sszJB

****** It better be a big drain.~JJL
****** I deleted a comment I initially wrote here about Martha Stewart being a swimsuit pin up because my editors told me it could be considered sexist, which is true of any comment about a woman in a swimsuit. I am glad I have my editors to keep me kind, which is what I want to be.~JJL

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Tuesday’s Top Three
Our top story on Tuesday was Cboe Wins Approval for Margin Trades on Crypto Futures Exchange, from Bloomberg. Second was A Wall Street trader made a $7.5 million windfall on a suspiciously-timed investment ahead of a surprise debt limit deal concession, from Insider. Third was Sean Tully’s post on LinkedIn announcing his retirement from CME Group after 12 years.

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MarketsWiki Stats
27,337 pages; 245,135 edits
MarketsWiki Statistics

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Lead Stories

SEC’s Coinbase Complaint Sets Off Battle for Crypto’s Future; Wide-ranging regulatory complaint goes well beyond what constitutes a security
Telis Demos – The Wall Street Journal
If the Securities and Exchange Commission is successful in its complaint against Coinbase COIN 0.99%increase; green up pointing triangle Global, a swath of the crypto industry might have to change how it operates. Despite the wide-ranging complaint filed on Tuesday, Coinbase shares fell just 12% on the day, which is a large but not outsize move for the relatively volatile stock. It is still up more than 45% year-to-date in 2023. There are many reasons investors might have backed the shares this year, like the collapse of some key competitors, a resurgence in the price of bitcoin and the growth of revenue from sources like interest income. Yet buying into the company now would be speculating that it can successfully defend itself in court-or that the laws can change faster than a regulator can act.
/jlne.ws/3Ngfizr

SEC lawsuits escalate Gary Gensler’s assault on crypto markets; US regulator fires broadside against digital assets market with Binance and Coinbase legal actions
Nikou Asgari and Stefania Palma – Financial Times
The US securities regulator’s lawsuits against crypto exchanges Binance and Coinbase this week marks its most aggressive legal assault on the digital asset market. The Securities and Exchange Commission accused Binance and Coinbase, two of the industry’s biggest companies, of violating US securities laws, offering unregistered securities and operating as unregistered venues, among other charges. The duo account for half of global trading in digital assets.
/jlne.ws/3ChiS6k

In Record Time-Vermiculus’ Microservice-Based Clearing SolutionLive on Minneapolis Grain Exchange
Vermiculus
Vermiculus today announced the deployment of its new real-time clearing platform based on Vermiculus’ clearing product VeriClear™ on Minneapolis Grain Exchange (MGEX), a wholly owned subsidiary of Miami International Holdings, Inc. (MIH). MGEX successfully launched the VeriClear™ clearing platform on June 2, 2023, representing a record time to market for Vermiculus in deploying the elastically scalable and AI-powered real-time clearing system developed by Vermiculus.
/jlne.ws/3CerD0X

Don’t let America’s ‘war on woke’ kill off climate collaboration; The disintegration of the insurance sector alliance under Gfanz emphasises such coalitions will need to adapt
Helen Thomas – Financial Times
It is a quiet way to run a revolution. The Glasgow Financial Alliance for Net Zero, usually a constant source of pronouncements, commitments, strategies and statements about tackling climate change, has been borderline mute this year. Gfanz, as it’s known, billed as a “watershed” by former Bank of England governor Mark Carney when it was announced in 2021, could be forgiven for keeping a low profile. A furious US backlash against all things ESG, led by Republican politicians and attorneys-general, has left the coalition of banks, asset managers, insurers and other money managers in peril.
/jlne.ws/3J0cc04

SEC files motion for restraining order to freeze Binance US assets
Kanishka Singh – Reuters
The U.S. Securities and Exchange Commission on Tuesday asked a federal court to issue a temporary restraining order to freeze the U.S. assets of cryptocurrency exchange Binance. The motion, in a filing to the U.S. District Court for the District of Columbia, comes a day after U.S. regulators sued Binance and its CEO Changpeng Zhao for allegedly operating a “web of deception,” piling further pressure on the world’s biggest cryptocurrency exchange. In the motion, the SEC accused Binance of years of violative conduct, including “disregard” for U.S. laws and “evasion of regulatory oversight.”
/jlne.ws/3OZIb47

Coinbase Is Facing a ‘Life or Death’ Battle With the SEC; Revenue at risk could be over 50%, Oppenheimer analyst says; Customers may be due restitution, ex-SEC official Stark says
Michael P. Regan, Muyao Shen and Yueqi Yang – Bloomberg
Coinbase Global Inc. knew all along that it could be courting trouble with regulators. More than two years ago, when the crypto exchange filed with the US Securities and Exchange Commission to start publicly trading its shares, it said there was a “high degree of uncertainty” regarding the legality of its operations, warning that “regulators may disagree” with the company’s view that it wasn’t covered by their rules.
/jlne.ws/3NipQyj

Crypto Bros Find There’s a New Sheriff in Town: the SEC; Even if Coinbase and Binance survive new federal charges, the wild west of digital currency will never be the same.
Jessica Karl – Bloomberg
I wonder if there’s someone at the Securities and Exchange Commission who read Matt Levine’s March 27 column where he said “a decent rule of thumb is that all cryptocurrency exchanges are doing crimes,” and forwarded it to all of his colleagues like, “Hey, guys, we better get on this …” Anyway: On Monday, the SEC filled 136 pages – god bless the intern who had to print that – with complaints against Binance for deceiving its customers and wrongly operating as an unregistered exchange, among other things.
/jlne.ws/3WSdFLs

SEC’s Regulatory Net Now Covers $120 Billion of Crypto After Coinbase, Binance Action; Lawsuits expand list of tokens seen as unregistered securities; Tokens held losses as regulatory crackdown unnerves investors
Yueqi Yang – Bloomberg
The list of digital tokens deemed as unregistered securities by the Securities and Exchange Commission now spans over $120 billion of crypto after the US agency’s lawsuits against Binance Holdings Ltd. and Coinbase Global Inc. The regulator in the complaints against Binance and Coinbase cited more than a dozen major coins as assets that fall under its purview.
/jlne.ws/3MSIYRS

SEC/crypto: the knives are out for exchanges; Binance and Coinbase will fight the regulator’s lawsuits but the damage has been done
LEX – Financial Times
A regulatory Big Bang is engulfing cryptocurrency exchanges. In the span of 48 hours, the US Securities and Exchange Commission has fixed two of the industry’s biggest operators in its sights. On Monday, it accused Binance, the world’s largest crypto exchange, and founder Changpeng Zhao, of committing some of the same malfeasances that led to the collapse of Sam Bankman-Fried’s FTX. The SEC alleged Binance had diverted customer money and used secret trading firms to prop up trading volumes.
/jlne.ws/3qAX8PZ

In light of SEC suing Coinbase and Binance, some memorable crypto press releases; Things sure have changed here on shitcoin mountain
Bryce Elder – Financial Times
HSBC, one of the world’s largest international banking and financial services providers, and The Sandbox, a leading decentralized gaming virtual world and subsidiary of Animoca Brands, today announced a new partnership that will open up a host of opportunities for virtual communities across the world to engage with global financial services providers and sports communities in The Sandbox metaverse.
/jlne.ws/3CemaXS

Crypto Billionaires’ Wealth Crushed by SEC After Big 2023 Bounce; Back-to-back lawsuits this week targeting Binance and Coinbase have shaken the crypto world and slashed $1.4 billion from the net worth of the industry’s richest person.
Biz Carson and Tom Maloney – Bloomberg
It was a great year for crypto billionaires – until this week. The Securities and Exchange Commission’s crackdown on Binance Holdings Ltd. and Coinbase Global Inc. – the largest crypto platforms in the world and the US, respectively – has upended the optimism that crept back into digital-asset markets after the miserable “crypto winter” of 2022.
/jlne.ws/3NfPJOX

SEC Sues Binance and CEO Zhao for Breaking Securities Rules; Regulator says firm operated unregistered securities exchange; Binance routinely flouted basic KYC rules, SEC alleges
Austin Weinstein, Allyson Versprille and Lydia Beyoud – Bloomberg
The US Securities and Exchange Commission accused Binance Holdings Ltd. and its Chief Executive Officer Changpeng Zhao of mishandling customer funds, misleading investors and regulators, and breaking securities rules. In a 136-page complaint filed Monday in US federal court in Washington, the SEC laid out a range of alleged violations against the world’s biggest crypto exchange and its leader.
/jlne.ws/3NhtJ6z

The SEC’s complaint reflects badly on Binance-and on the SEC
Jeff John Roberts – Fortune
What was CZ thinking? That was the question that came to me while reading the Securities and Exchange Commission’s 136-page complaint that dropped on Monday. What, I wondered, did Binance founder Changpeng Zhao think was going to happen when he set up a nominally arm’s-length U.S. subsidiary-and then had it flout nearly every compliance rule in the book? It could only be a matter of time until American regulators, who have been investigating Binance for years, caught on and came down hard. And that’s what happened.
/jlne.ws/3qmz0AA

Ukraine Invasion

EU says dam blast shows “barbaric” nature of Russian aggression
Bart Meijer – Reuters
The EU on Tuesday condemned the destruction of a major hydroelectric dam in the south of Ukraine as a new example of the “barbaric aggression” by Russia against Ukraine. “This is a new sign of escalation, bringing the horrific and barbaric nature of Russian aggression against Ukraine to unprecedented levels,” EU Commission spokesman Peter Stano said at a press conference in Brussels.
/jlne.ws/3oQqYj7

From Drone Strikes to Ground Incursions, War Comes to Russia; Emergence of pro-Kyiv Russian fighters brings fresh challenge for Putin
Yaroslav Trofimov – The Wall Street Journal
Viktor Bondarenko, a Russian art collector, was jolted awake by the sound of explosions over his upscale Moscow suburb on May 30. Russian air defenses were blasting away at Ukrainian drones. Bondarenko’s wife wanted to shelter in the cellar, he said in an Instagram post, but he “didn’t want to be buried in the basement should something strike.” One good thing, he said: “The kids are in Milan.”
/jlne.ws/3IZZzSI

Ukraine’s Zelenskiy says dam destruction is ‘environmental bomb of mass destruction’
Reuters
President Volodymyr Zelenskiy described the bursting of the Kakhovka dam in southern Ukraine on Tuesday as “an environmental bomb of mass destruction” and said only liberating the entire country could guarantee against new “terrorist” acts. “Such deliberate destruction by the Russian occupiers and other structures of the hydroelectric power station is an environmental bomb of mass destruction,” Zelenskiy said in his nightly video address.
/jlne.ws/3qzB9ZH

‘More alarming every hour’: Russians admit Ukraine gains. Is counteroffensive underway?
John Bacon and Jorge L. Ortiz – USA Today
The Ukrainian army claimed to be gaining ground Monday along a wide front in the Bakhmut area, the “epicenter” of hostilities, amid Russian claims that the long-awaited Ukraine counteroffensive may be underway. “We are successful, we occupy the dominant heights” surrounding Bakhmut, Deputy Minister of Defense Hanna Malyar said on Telegram. “The enemy is on the defensive. He wants to hold his position.”
/jlne.ws/3J1vbHt

Dam Destroyed in the Dead of Night Upstages Ukraine’s Counteroffensive; Floods tied to Russia, seen as major escalation of war; Russia saw Dnipro as potential secondary front in offensive
Marc Champion, Alberto Nardelli and Natalia Drozdiak – Bloomberg
The 24 hours before Tuesday’s flooding of the Dnipro River basin were already dramatic, as Ukraine appeared on the cusp of a counteroffensive that many in Kyiv see as their best chance to defeat Russia’s invasion. US President Joe Biden, just hours earlier, gave a fingers-crossed sign in response to a question on the Ukrainian campaign’s chances.
/jlne.ws/3qmlAoc

Exchanges, OTC and Clearing

Farmer sentiment sours as crop prices decline
CME Group
Producer sentiment fell to its weakest reading since July 2022, as the Purdue University/CME Group Ag Economy Barometer declined 19 points to a reading of 104 in May. The Index of Future Expectations was down 22 points to a reading of 98 in May, while the Index of Current Conditions was down 13 points to a reading of 116. This month’s lower sentiment was fueled by drops in both of the barometer’s sub-indices and likely triggered by weakened crop prices.
/jlne.ws/3CejYzJ

BME Growth companies increase turnover by 34% and staff by 24% in 2022
BME-X
Sales growth last year was higher than the 29.4% average of the last nine years despite the challenging environment; SME stock market companies increased their aggregate EBITDA to 992 million euros, 30% more than a year ago.
/jlne.ws/43rs2ZQ

Cboe Global Markets to Present at Morgan Stanley’s U.S. Financials, Payments & CRE Conference on Wednesday, June 14
Cboe Global Markets
Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced that Brian Schell, Executive Vice President, Chief Financial Officer and Treasurer, will present at Morgan Stanley’s U.S. Financials, Payments & CRE Conference on Wednesday, June 14 at 2:30 p.m. ET.
/jlne.ws/3MT70ft

CME Group Chairman and Chief Executive Officer Terry Duffy to Present at Piper Sandler Global Exchange and FinTech Conference
CME Group
CME Group announced today that Terry Duffy, Chairman and Chief Executive Officer, will present at the Piper Sandler Global Exchange and FinTech Conference on Thursday, June 8, 2023, at 11:30 a.m. (Eastern Time).
/jlne.ws/43K57sh

Eurex to build an EU-based liquidity pool for Euro short-term interest rate derivatives
Eurex
Eurex will expand its Partnership Program for interest rate swaps to include short-term interest rate (STIR) derivatives segment. By combining an EU-based liquidity pool for STIR derivatives with its leading long-term interest rate (LTIR) derivatives segment and its OTC interest rate offering, Eurex further enhances margin efficiency. With this market-led solution to create an alternative liquidity pool for STIR derivatives, Eurex supports the EU’s systemic risk management and strategic autonomy agenda.
/jlne.ws/3P1U2is

Euronext announces June 2023 quarterly review results of the AEX Family
Euronext
Euronext today announced the results of the June 2023 quarterly review for the AEX, AMX, AScX and AEX ESG, which will be implemented after markets close on Friday 16 June 2023 and will be effective from Monday 19 June 2023.
/jlne.ws/43J6TKn

Fiserv Completes Listing Transfer to the New York Stock Exchange; Represents the second-largest transfer to the NYSE in exchange history; Ranks as industry-leading 10th transfer to the NYSE in 2023
Intercontinental Exchange
The New York Stock Exchange, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology, and market infrastructure, announced that Fiserv, Inc. (NYSE: FI) has completed its listing transfer and begins trading today as an NYSE-listed company.
/jlne.ws/43QpRPn

Miami International Holdings Launches New Real-time Clearing Platform on Minneapolis Grain Exchange
MIAX
Miami International Holdings, Inc. (MIH), owner of Miami International Securities Exchange, LLC (MIAX), MIAX PEARL, LLC (MIAX Pearl), MIAX Emerald, LLC (MIAX Emerald), Minneapolis Grain Exchange, LLC (MGEXTM), LedgerX LLC (LedgerX), The Bermuda Stock Exchange (BSX), and Dorman Trading LLC, today announced the successful launch of a new real-time clearing solution for MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO).
/jlne.ws/3Cit6mK

Nodal Exchange achieves records in power and environmental futures in May
Nodal Exchange
Nodal Exchange today announced new records in power and environmental futures. In power, Nodal set a calendar month record for May with traded power futures volume of 234 million MWh, up from 220 million MWh in May 2022. Nodal continues to be the market leader in North American power futures with 52.6% share of open interest at the end of May with 1.286 billion MWh open interest representing $111 Billion of notional value based on both sides.
/jlne.ws/3J0alsf

[Life at LuxSE] The position of Senior Communication Officer
Luxembourg Stock Exchange
In this video, the third episode of our series Life at LuxSE, we sit with Senior Communication Officer Lorraine Bedo. While highlighting the role of our communication team, Lorraine takes time to reflect on what it’s like to work at LuxSE and her leading role in our Gender Committee.
/youtu.be/Emd_HrM34Kg

Nasdaq Chair & CEO Adena Friedman to Present at the Piper Sandler Global Exchange & FinTech Conference
Nasdaq
Nasdaq (Nasdaq: NDAQ) will be presenting at the following conference with a webcast available at Nasdaq’s Investor Relations website: ir.nasdaq.com/events.cfm.
/jlne.ws/43saUmO

Fintech

Sam Altman says OpenAI won’t go public now because he may have to make ‘a very strange decision’ that investors will disagree with
Rachel Shin – Fortune
Sam Altman wants to maintain control of OpenAI and its popular A.I. chatbot technology and therefore won’t take the company public anytime soon because it would limit his freedom to make decisions, Bloomberg reported.
/jlne.ws/3J0kfKj

Marc Andreessen, the VC who famously said software will ‘eat the world,’ now says A.I. will save it – so people should stop ‘freaking out’ about A.I.
Andrea Guzman – Fortune
Marc Andreessen wants people to stop “freaking out” about artificial intelligence. In a nearly 7,000-word manifesto on Tuesday, the venture capitalist and internet industry pioneer, expressed disdain for the the “hysterical fear and paranoia” surrounding artificial intelligence technology, likening it to a “moral panic.” Taking aim at what he deemed the pessimistic outlook of A.I. critics, Andreessen said that A.I. will “make everything we care about better.” And he catalogued the myriad ways that A.I. technology-which is core to many of the startups that Andreessen invests in-will do so, from infinitely patient A.I. tutors available to every child in the world to a “golden age” of creative arts.
/jlne.ws/43K2YNf

Swift and Chainlink exploring how to connect financial institutions to blockchains
Marco Quiroz-Gutierrez – Fortune
The worldwide bank messaging system Swift has launched a set of experiments in partnership with decentralized oracle network provider Chainlink to examine more closely how major financial institutions might integrate with blockchains. The tests, which build on existing Swift infrastructure that powers the messages sent among global financial firms, can use Chainlink’s technology to move value in three key ways: between each institution’s private blockchains, between their private blockchains and public blockchains like Ethereum, and between two public blockchains.
/jlne.ws/43OlzHZ

BestEx Research launches bespoke algo creation and testing framework aimed at improving implementation shortfall industry standard; Adaptive Optimal IS addresses challenges buy-side traders face by completely redefining how IS algorithms are designed and customised from the ground up, BestEx Research CEO told The TRADE.
Wesley Bray – The Trade
BestEx Research is set to launch a new framework which allows users to create bespoke implementation shortfall (IS) algorithms for each client’s unique alpha profile and execution risk preferences, The TRADE can reveal.
/jlne.ws/43JbdJB

Asset managers are prioritising operational efficiency via automation above all, Linedata survey reveals; In the UK, almost half of respondents are prioritising investment in automation to drive business results, according to survey findings.
Claudia Preece – The Trade
Linedata’s 2023 global asset management survey has found the main focus globally is on future cost saving and automation. The biennial survey from Linedata included responses from 265 firms in the Americas, Europe, and APAC and includes comparative findings which pinpoint key variances between regions.
/jlne.ws/3J2FviG

Jifiti and FIS Work Together to Deliver Comprehensive End-to-End Embedded Lending Services to Banks, Financial Institutions and Merchants
Jifiti
Jifiti, a multinational embedded lending technology company, today announced that they have signed an agreement to launch an embedded lending solution with FIS® (NYSE: FIS), a global leader in financial services technology. The collaboration will bring to market an end-to-end embedded solution for banks and financial institutions to deliver services to merchants like advanced Buy Now, Pay Later (BNPL) programs.
/jlne.ws/43O3byW

Cybersecurity

Report: Atomic Wallet Hack May Be Connected to North Korean Hacking Group
Kyle Torpey – CoinMarketCap
A recent cyberattack on Atomic Wallet, a popular cryptocurrency wallet service, resulted in the theft of $35 million worth of digital assets from its users. According to Elliptic, a blockchain compliance analytics firm, some of the stolen funds have been converted to Bitcoin and sent to a crypto mixer called Sinbad.io. This mixer is known to be used by the Lazarus Group, a notorious hacking group linked to North Korea. Additionally, wallets connected to the Atomic Wallet hack have been connected to wallets connected to previous hacks by the Lazarus Group.
/jlne.ws/3WTf18Q

Recent New York Cybersecurity Enforcement Provides Latest Reason for Companies to be Proactive
Harris Beach PLLC – JDSupra
New York’s Department of Financial Services signaled once again its intent to strongly enforce the state’s Cybersecurity Regulation by finding OneMain Financial Group violated the law in several ways and imposing a $4.25 million penalty payment.
/jlne.ws/3WTzdYa

Verizon warns cybersecurity attacks are ‘still alive and well’ in latest data breach report
Kristen Altus – Fox Business
Giving a FOX Business-exclusive look into why and how data security breaches occur in the first place, Verizon Business Managing Director of Cybersecurity Chris Novak joined “Mornings with Maria,” Tuesday, to break down the latest findings on the underbelly of cyber-crime.
/jlne.ws/3Chn2Lp

Tech help wanted: US needs 466,000 cybersecurity workers
WRAL TechWire
Demand for cybersecurity talent continues to outpace supply, according to the latest data from CyberSeek, the joint initiative of the National Institute of Standards and Technology’s (NIST) NICE program, Lightcast and CompTIA. CyberSeek data confirms a persistently tight cybersecurity labor market with a supply-demand ratio of 69% (69 workers for every 100 job openings). Employers deployed 663,434 job postings for cybersecurity positions over the past 12 months, building on the growing base of 1.1 million U.S. cybersecurity professionals.
/jlne.ws/3J5866P

Cryptocurrencies

Robinhood May Remove Tokens Listed in SEC Lawsuits
Kyle Torpey – CoinMarketCap
Fintech trading app Robinhood is currently evaluating the listing of tokens that have been named as unregistered securities in recent enforcement actions by the Securities and Exchange Commission (SEC). Robinhood’s Chief Legal Compliance Officer, Dan Gallagher, testified before the House Agriculture Committee, stating that the company is actively reviewing the SEC’s analysis to determine appropriate actions.
/jlne.ws/42vgymN

How to Build a Compliant Crypto Exchange Post-Coinbase
Preston J. Byrne – CoinDesk
I developed something of a reputation for being a skeptic about the legal propriety of selling cryptocurrency tokens in the United States. I used to write about this extensively, particularly in 2017 when I was studying for my master’s in law and, accordingly, had more free time and latitude to say what I wanted. Moreover, I held this position when it was unpopular and non-obvious, unlike the recent crop of crypto critics like former government lawyer John Reed Stark (who seems to take endless glee in kicking the industry while it’s down). See, for example, on July 9th, 2014, when my friend Tim Swanson and I were quoted in a CoinTelegraph article, “Mitigating the Legal Risks of Issuing Securities on a Cryptoledger,” when I said that “[Virtually] nobody has done this correctly. To date I have not seen a single crypto-security that has been properly structured.”
/jlne.ws/3Nhg1Aw

‘At Least We Are Regulating,’ Says President of Ethereum France on EU Crypto Rules
Andrew Asmakov – Decrypt
The recently adopted Markets in Crypto Assets (MiCA) regulatory framework has been to a large extent inspired by the regulatory regime that is already in place in France, according to Jerome de Tychey, the President of the non-profit organization Ethereum France.
/jlne.ws/43LAB1f

Gary Gensler’s Evolving Position on Crypto – in Quotes
Anna Baydakova – CoinDesk
This week, the U.S. Securities and Exchange Commission (SEC) launched two major legal actions against Binance and Coinbase, accusing the exchanges of flouting U.S. securities laws. At the heart of this offensive is one man: Gary Gensler, who was appointed chair of the SEC in February 2021. Gensler today looks like the crypto industry’s worst enemy, issuing what sounds like a blanket disavowal of crypto’s whole point-of-being. “We don’t need more digital currency…we already have digital currency, it’s called the U.S. dollar,” Gensler said Tuesday June 6.
/jlne.ws/3IW6axx

The SEC is wrong about crypto exchanges; But not for the reasons the exchanges think
Robert Armstrong – Financial Times
Good morning. Stock selection is hard. As of this morning, four out of five of Unhedged’s picks in the FT’s 2023 stockpicking contest are going badly (badly!) awry. In that limited sense, it is good news that the SEC is suing one of the companies we are short in the contest, Coinbase, and that its stock fell hard yesterday. It is with a heavy heart, therefore, that I argue below that the SEC should just leave Coinbase alone. I recognise that this view puts me in a distinct minority. Even Ethan says I’m wrong, and he works for me. If you happen to agree with me, then, please send me an email: robert.armstrong@ft.com.
/jlne.ws/3CgmAwR

Crypto Tokens’ Status as Securities or Commodities Is Key to SEC’s Binance, Coinbase Suits: Bernstein
Will Canny – CoinDesk
/jlne.ws/45OWX3S

Coinbase Hit With Pending Cease and Desist Orders From 11 States
Pedro Solimano – CoinDesk
/jlne.ws/42tnjW4

SEC’s Latest Crackdown Could Drive Crypto Firms Out of the U.S.
Helene Braun – CoinDesk
/jlne.ws/45KffTX

FTX Looking to Sell Shares in Anthropic Amid AI Boom: Semafor
Jason Nelson – Decrypt
/jlne.ws/3qzDvYA

Centralized Exchanges Are Here to Stay
Lionel Lim – CoinDesk Opinion
/jlne.ws/3quvd4i

Louis Vuitton To Release $42,000 Physical-Backed NFTs
Cam Thompson – CoinDesk
/jlne.ws/3qug6rB

Politics

U.S. Lawmakers Urge IRS, Treasury to Hurry Crypto Tax Rules
Sandali Handagama – CoinDesk
The U.S. Treasury Department and Internal Revenue Service (IRS) should promptly release planned crypto tax rules so the industry can be brought into full compliance, Reps. Brad Sherman (D-Calif) and Stephen Lynch (D-Mass) said in a Monday letter.
/jlne.ws/3IZFJqG

Jamie Dimon told House Democrats that Congress should ‘get rid of’ the debt ceiling, source says
Matt Egan – CNN
During a closed-door lunch on Tuesday, JPMorgan Chase CEO Jamie Dimon told moderate House Democrats that Congress should abolish the debt ceiling, a person familiar with the matter tells CNN. “Get rid of it,” Dimon told lawmakers of the debt ceiling, according to the source.
/jlne.ws/3qzPuFv

Congress may be done with crypto
Joseph Zeballos-Roig – Semafor
Eight months after the high-profile collapse of FTX, there’s still a lingering appetite in Congress to build guardrails for crypto. But the chances of major legislation may be fading as the Senate loses interest in potential bills and the top proposal in the House struggles to attract bipartisan support.
/jlne.ws/42wNQSq

Jamie Dimon Says US Is Pursuing the Right Strategy on China; Focus should be on vital interests such as national security; ‘This takes time. It will take a lot of work,’ CEO says
Steven T. Dennis – Bloomberg
Jamie Dimon said the Biden administration is pursuing the right strategy on China by focusing on national security and working with allies and the business community. “They’re talking about the right things,” the JPMorgan Chase & Co. chief executive officer told reporters at the US Capitol Tuesday, referring to top administration officials.
/jlne.ws/3NfWmki

California Puts a Price on Slavery’s Legacy and Draws a Blueprint for Reparations
Karen Breslau – Bloomberg
The numbers are striking in their precision. The statistical value of each year of human life, accounting for racial differences in life expectancy: $13,619. Wealth missing due to lower rates of Black home ownership: $148,099. Average devaluation of Black-owned businesses: $77,000. Each year of disproportionate incarceration factored by race, combining lost wages and freedom: $159,792.
/jlne.ws/43GDwsJ

Regulation

Kardashian Crypto Hype Lawsuit Advances Over Alleged False Ads
Peter Blumberg – Bloomberg
Kim Kardashian failed to persuade a judge to throw out a lawsuit in which she’s accused of scamming investors in a cryptocurrency called EthereumMax by falsely hyping the digital tokens. Floyd Mayweather Jr. fared better, with the judge finding that his public statements about the growth prospects for the EMAX token were mostly harmless.
/jlne.ws/45NSpuy

EU and UK need to overhaul securitisation rules, finance group urges; Call by AFME and former Brussels commissioner comes as data shows market shrank further in 2022
Laura Noonan – Financial Times
Europe needs to urgently overhaul rules holding back securitisation, a finance lobby group and former EU finance commissioner said, as fresh data shows the continent’s shrinking market for bundling loans contracted by a further 7 per cent last year. The EU and UK are both considering reforms to the securitisation market, which was all but blacklisted by European policymakers after it was blamed for stoking the 2007-08 financial crisis by exaggerating the safety of products that packaged inherently risky loans.
/jlne.ws/3NcZxJD

Those Binance charges in full (updated); “Yikes”
FT Alphaville
The Securities and Exchange Commission has filed 13 charges against Binance and its founder Changpeng Zhao. The full complaint from regulators is a 136-page document, which looks to be absolutely full of juice about the world’s biggest crypto exchange.
/jlne.ws/3OZK3tL

Mizuho: SEC’s complaint against Binance puts a third of Coinbase sales at risk
Investing.com
The U.S. Securities and Exchange Commission’s complaint against the world’s biggest cryptocurrency exchange Binance includes language that could place a third of rival Coinbase’s (NASDAQ:COIN) sales at risk, analysts at Mizuho warned on Tuesday. The SEC’s filing against Binance alleges that the company “unlawfully engaged in unregistered offers and sales of crypto asset securities.”
/jlne.ws/42nE5G5

Coinbase Threatens to Take SEC Fight to Supreme Court If Needed
Sonali Basak – Bloomberg
Coinbase Inc. said it is willing to take its legal fight with the US Securities Exchange Commission all the way to the nation’s highest court as the government agency widens its crackdown on tokens that it considers listed securities.
/jlne.ws/45PvsqK

Updated Agenda for the June 7 Open Commission Meeting
CFTC
/jlne.ws/42HWu0N

Testimony of Chairman Rostin Behnam Before The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets, U.S. House Committee on Agriculture
CFTC
/jlne.ws/3oQInYZ

Commissioner Pham to Speak at the CCP12 Annual General Meeting
Commodity Futures Trading Commission
Commissioner Caroline D. Pham will participate in a fireside chat at the CCP12 Annual General Meeting.
/jlne.ws/3NfOWNZ

Commissioner Johnson to Moderate a Panel at the Thailand Securities and Exchange Commission Public Conference 2023
Commodity Futures Trading Commission
/jlne.ws/3Nhyddg

Regulation by Enforcement Is Unsustainable, CFTC Chair Tells Congress
Casey Wagner – Blockworks
/jlne.ws/43oX8Bt

Biden’s crypto cop taunts Republicans; The SEC announced major lawsuits against the world’s largest digital currency exchange, Binance, and the largest U.S.-based exchange, Coinbase.
Zachary Warmbrodt, Eleanor Mueller and Declan Harty – Politico
/jlne.ws/3qz3qQ6

SEC Seeks Emergency Relief to Ensure Binance.US Customers’ Assets are Protected
SEC
/jlne.ws/45RdSTd

Investing and Trading

Change to Brent barrel shakes up global oil market
Luke Jeffs – Global Investor Group
Brent has been the international crude oil benchmark for decades but a recent change to the make-up of the North Sea barrel will likely affect how firms trade and hedge the commodity. Commodity index firms Platts and Argus added on May 2 West Texas Intermediate (WTI) Midland to the basket of crude oils used to calculate Brent for deliveries dated June 2023, the first time a US barrel has contributed to the European benchmark.
/jlne.ws/3J4NWtF

Dell Family Office to Diversify Portfolio as Big Payday Looms; Alisa Mall says she’s looking to credit and real assets; DFO Management poised to get cash and stock from VMware sale
Katherine Burton – Bloomberg
Alisa Mall, the chief investment officer for Michael Dell’s family office, is looking to diversify her portfolio as the firm is poised to absorb an influx of cash and stock that together is worth more than $20 billion. The money will come in after Broadcom Inc. closes on its $61 billion purchase of cloud-computing company VMware Inc., which counts Dell as its largest shareholder with a 36% stake.
/jlne.ws/45TjD35

Wall Street’s Once-Hot Trades of 2023 Are Unraveling in Markets
Lu Wang and Ye Xie – Bloomberg
The once-hot Wall Street trades of 2023 are all falling apart, in a fresh blow to market pros blindsided again and again ever since the pandemic broke out. Nearly half way into the year, a slew of consensus bets are losing big time as the US economy defies the recession bears, the artificial-intelligence craze heats up and more.
/jlne.ws/3NiHIJ2

US Treasury’s $1tn borrowing drive set to put banks under strain; Analysts fear scale of new issuance following debt ceiling fight will push up yields and suck cash out of deposits
Kate Duguid – Financial Times
A $1tn US government borrowing spree is set to increase the strain on the country’s banking system as Washington returns to the markets in the aftermath of the debt ceiling fight, traders and analysts say. Following the resolution of that dispute – which had previously prevented the US from increasing its borrowing – the Treasury department will seek to rebuild its cash balance, which last week hit its lowest level since 2017.
/jlne.ws/3qr9Ocd

Energy crisis drives record profits at commodity trader Trafigura; Earnings cushion blow from impairment charges over alleged nickel fraud
Leslie Hook and David Sheppard – Financial Times
Commodity trader Trafigura reported record net profits of $5.5bn in the first half of its financial year – more than double the same period 12 months ago – underscoring the bumper earnings these groups have reaped from the energy crisis. It also paid a record $3bn dividend to be shared among about 1,200 shareholders in the privately held company, which are almost all traders and executives at the firm. That was up from $1.7bn in the previous year.
/jlne.ws/3oTzpu8

Eight Megacap Stocks Make for a Funny Sort of Bull Market; Renaissance of megacapitalization stocks accounts for shift from bear to tentative new bull market-but comes with significant shifts in market behavior
James Mackintosh – The Wall Street Journal
Investors need a new acronym. The FANGs and various remixes worked for a while, but 2023 has expanded the market leadership to seven, or perhaps eight, stocks that now dominate the market and seem to move to a different tune to the rest. There’s no word-in English at least-that neatly links Nvidia, Apple, Microsoft, Amazon, Meta (nee Facebook), Alphabet (Google), Tesla and the optional Netflix, and my creative efforts have come to naught. Wall Street’s attempts haven’t really caught on, although Ed Yardeni of Yardeni Research’s “MegaCap-8” is simple and to the point.
/jlne.ws/43ry5xw

Environmental, Social and Corporate Governance

You Are What You Eat; The EU’s much-anticipated Sustainable Food Systems Law has the potential to revolutionise the food value chain as we know it.
Emmy Hawker – ESG Investor
Beyond thinking about the energy sources fuelling our lifestyles and livelihoods, it’s just as important to consider how we are fuelling our own bodies.
/jlne.ws/3oHzbWY

Brazil Is Key to Slowing Global Warming. But Its Carbon Market Has Struggled. A new attempt to create a regulated cap-and-trade system that is seen as critical to corporate competitiveness and economic resilience faces political headwinds
Paulo Trevisani – The Wall Street Journal
With Brazil struggling in its efforts to create a regulated carbon market, the country’s new president is moving to scrap his predecessor’s approach and start anew. But success is still far from guaranteed. The administration of President Luiz Inácio Lula da Silva is putting the finishing touches on a proposal laying the groundwork for a new, regulated cap-and-trade system, which he is expected to send to Congress later this month.
/jlne.ws/45Rvfn1

The money behind the coming wave of climate litigation; Those affected by environmental disasters are turning to the courts for redress, stoking debate about who should pay to bring the cases
Camilla Hodgson – Financial Times
In 2009, huge volumes of oil spilled into the Timor Sea from a well off the coast of Western Australia. The two and a half month long leak caused catastrophic damage to marine wildlife and upended the livelihoods of thousands of Indonesian farmers whose seaweed crops were destroyed.
/jlne.ws/3C9BBAy

Global Carbon Markets Face Upheaval as Nations Remake the Rules
Natasha White and Ewa Krukowska – Bloomberg
The $2 billion market for carbon offsets is heading for a massive reset, as a growing number of sovereign governments announce their intention to tax, regulate or restrict trade in credits generated within their borders. The details vary, but from Indonesia to Kenya to Honduras, the goals are the same: Governments want to retain more of the benefits of emissions-reduction projects, whether as revenue or as credit toward their own national climate goals.
/jlne.ws/3CfN7uf

UK Bans ‘Misleading’ Fossil Fuel Ads That Overemphasize Renewables
Olivia Rudgard – Bloomberg
The UK’s advertising regulator is cracking down on what it considers greenwashing by fossil fuel giants. A handful of newspaper, TV and poster adverts from Shell Plc, Repsol SA and Petronas International Corp. were banned in the country for touting investments in renewable energy without mentioning the extent of each company’s polluting activities.
/jlne.ws/3WR8PhN

More reporting from the [[https://jlne.ws/3OZQRaJ|Financial Times.]]

Water Crisis Threatens Alcoholic Drinks Supply, Top Distiller Diageo Warns; The maker of Baileys Irish Cream says the crunch in water supply due to droughts and erratic rain is emerging as a massive risk for its operations.
Dasha Afanasieva and Laura Millan – Bloomberg
/jlne.ws/3J2L00F

America’s Iconic Beech Trees Are Under Attack; The number of states with trees battling beech leaf disease tripled from 2019 to 2022. It is especially common in trees around Lake Erie, where the disease turned up in half of the beeches studied.
Grant Segall – Inside Climate News
/jlne.ws/43uR0aS

Puerto Rico Is so Hot This Week, It’s Astonishing Some Meteorologists; Parts of the U.S. territory reached a “life-threatening” heat index of 125 degrees Fahrenheit on Monday, driven by a combination of an intense heat dome, El Nino and climate change.
Kristoffer Tigue – Inside Climate News
/jlne.ws/3oKE2qm

Abandoned Oil and Gas Wells Emit Carcinogens and Other Harmful Pollutants, Groundbreaking Study Shows; The release of cancer-causing benzene and other toxic gases from sites in Pennsylvania raises concerns about millions of other abandoned wells across the U.S.
Liza Gross – Inside Climate News
/jlne.ws/3P54Lst

Institutions

Ex-Mellon CIO Seeks $250 Million for Big Short on Corporate Debt; Money manager expects recession to fuel wave of credit woes; Complacent market is offering ‘once in a lifetime’ opportunity
Lu Wang – Bloomberg
David Daglio, the former chief investment officer of Mellon Investments, is on a $250 million fund-raising drive to power his new bearish investment fund that’s going all-in on credit market stress. The veteran reckons an oncoming US recession will spark a fresh wave of corporate downgrades and debt defaults, with risk premiums for investment-grade firms more than doubling.
/jlne.ws/3qwSjYd

UK Bans ‘Misleading’ Fossil Fuel Ads That Overemphasize Renewables
Olivia Rudgard – Bloomberg
The UK’s advertising regulator is cracking down on what it considers greenwashing by fossil fuel giants. A handful of newspaper, TV and poster adverts from Shell Plc, Repsol SA and Petronas International Corp. were banned in the country for touting investments in renewable energy without mentioning the extent of each company’s polluting activities.
/jlne.ws/3WR8PhN

UBS Wins More Than Two Years’ Grace on Swiss Capital Rules
Marion Halftermeyer – Bloomberg
UBS Group AG will benefit from a more-than two year grace period before Switzerland imposes higher capital requirements related to its takeover of Credit Suisse Group AG.
/jlne.ws/3qzhg50

Work & Management

Too good to be true? The fake recruiters targeting jobseekers; Elaborate scams are on the rise, putting candidates and reputable employers at risk
Ian Johnston and Emma Jacobs – Financial Times
Mia* became suspicious when she was asked basic questions during a Zoom interview for a job in human resources. Her doubts were confirmed when her would-be employer demanded she pay 275 pounds upfront for recruitment training. Suspecting it was fraudulent, she backed out. “When you think about scamming, you might think of a pickpocketer or, online, someone sending a faulty link to you. Not something this elaborate and not in the employment market,” she said. “I’m glad I was suspicious from the beginning.”
/jlne.ws/3qqUfBn

Regions

Golf-Crazy Saudi Wealth Manager Orchestrated the Shock PGA-LIV Truce; LIV backer Rumayyan pushed for the warring sides to talk; Meetings in London, Venice, San Francisco helped lead to deal
Malathi Nayak, Liana Baker and Dinesh Nair – Bloomberg
PGA Tour and LIV Golf have been at each other’s throats in public for years. But in recent weeks, leaders of the rival golf circuits had been hard at work in secret on a detente. Yasir Al Rumayyan, the golf-crazy chairman of Saudi Arabia’s Public Investment Fund that is LIV’s biggest backer, jetted around the world for several rounds of discussions with top officials from the PGA Tour about a possible combination, according to people familiar with the matter.
/jlne.ws/45PgX6i

California Insurers’ Inability to Price Risk Is Causing Headaches; State regulations eschew catastrophe models that would take climate change-fueled wildfire danger into account, experts say.
Eric Roston – Bloomberg
California regulations restrict insurers from using sophisticated computer models to consider the rapidly growing wildfire risks from climate change – and that limitation is a factor pushing US insurers out of the state. State Farm General Insurance Co. announced at the end of May that it had stopped accepting new policy applications for property and casualty insurance in California, citing in part “rapidly growing catastrophe exposure” and the challenge of managing wildfire-related losses. Allstate Corp. quietly did the same thing last year.
/jlne.ws/3qtfSkG

Any crime-fighting Rx needs to include more police
Crain’s Chicago Business Opinion
On the mayoral campaign trail, Brandon Johnson was the only candidate who refused to pledge to restaff the Chicago Police Department’s officer corps, arguing the city needed to get smarter about crime, not tougher. During the run-up to Election Day, that message didn’t entirely match what many in the business community wanted to hear.
/jlne.ws/43qkO8x

Downtown LA’s Office Distress Shows the Pain Coming for Cities; Brookfield has defaulted on three towers, while other landlords have sold for a loss or face foreclosure.
John Gittelsohn – Bloomberg
America’s second-largest city is at the forefront of mounting property distress that threatens to bring widespread defaults and deeper pain for landlords. With downtown LA’s office vacancy rate at a record 30%, buildings have plunged in value as workers stay away from the urban core of a sprawling, car-centric region.
/jlne.ws/4254atE

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The Spread

Traders Betting on China Easing Boost Bearish Options on Banks

Observations & Insight Miami International Holdings, Inc. (MIH) announced that the SEC has approved MIAX Sapphire LLC's application to become a national securities exchange. MIAX Sapphire, MIH's fourth national securities exchange for U.S. multi-listed options,...

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