SEC clamps down on Coinbase and Tron, while Do Kwon is arrested overseas
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Welcome back to Chain Reaction.
It was a big week in the crypto world as the U.S. Securities and Exchange Commission clamped down on major crypto companies like Coinbase and Tron — more on that below — and Do Kwon, the founder of Terraform Labs, has reportedly been arrested in Montenegro, according to a local government official.
On Thursday morning, Filip Adzic, the minister of interior of Montenegro, tweeted in Bosnian that Kwon was arrested at the airport in Podgorica, the capital of Montenegro, with falsified documents.
Kwon has been under investigation for the past 11 months since the Terra/LUNA collapse, which wiped out about $40 billion from the cryptocurrency market.
In mid-September, Kwon tweeted, “I am not ‘on the run’ or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide.”
While Kwon declined claims he wasn’t hiding from authorities, prosecutors have refuted those claims.
In late September, his whereabouts were unknown and Interpol issued a red notice requesting law enforcement agencies worldwide search for and arrest him. Shortly after, the South Korean government ordered Kwon to surrender his passport or risk it getting revoked.
Kwon has said that charges leveled against him by the South Korean prosecutors are not legitimate and are politically motivated, TechCrunch previously reported.
Fast-forward to February, prosecutors in South Korea traveled to Serbia, suspecting that was where Kwon was staying. In mid-February, the U.S. Securities and Exchange Commission charged Terraform Labs and Kwon with defrauding U.S. investors who purchased its crypto assets, LUNA and the not-so-stable stablecoin, Terra.
Now that Kwon is in shiny silver handcuffs, it’ll be interesting to see what transpires next. TBD.
This week in web3
Coinbase stock drops after SEC Wells notice, a possible prelude to ‘enforcement action’
American crypto giant Coinbase received a Wells notice today from the Securities and Exchange Commission. Per a Coinbase SEC filing regarding the matter, the company writes that the government agency’s staff has “advised the Company that it made a ‘preliminary determination’ to recommend that the SEC file an enforcement action against the Company alleging violations of the federal securities law.”
As TikTok and Coinbase face regulators, some questions are simpler than others (TC+)
We learned last night that the SEC served Coinbase with a Wells notice, a prelude to taking enforcement action against the U.S. crypto giant over potential “violations of the federal securities laws.” The company intends to put up a fight, according to its CEO. But exactly how the SEC thinks Coinbase may be violating the rules will help us determine what course of action makes the most sense. While regulatory action against TikTok feels rather simple, in the case of Coinbase, we’re stuck in the middle of something with far more gray area.
The SEC also took legal action Wednesday against Justin Sun, the founder of Tron, for possible securities violations. The government agency is also suing a handful of celebrities and influencers, including Lindsay Lohan, Jake Paul, Soulja Boy, Austin Mahone, Michelle Mason, Lil Yachty, Ne-Yo and Akon. All the celebrities aside from Soulja Boy and Mahone have agreed to pay a total of over $400,000 “in disgorgement, interest, and penalties” to settle the charges, without admitting or denying culpability regarding the SEC’s allegations.
Web3 gaming will onboard up to 100M gamers in next 2 years, Polygon and Immutable presidents predict (TC+)
Robbie Ferguson, co-founder and president of web3 gaming company Immutable, and Ryan Wyatt, president of layer-2 chain Polygon Labs, told TechCrunch+ that web3 will add the first 10 million to 100 million gamers within the next year or two. “We’re going to see 40% of the web3 games [ever] built go live over the next 12 to 18 months, which will be a huge amount of attempts or shot-on-goal to have that 100 million players,” Ferguson added. If this prediction becomes true, it would represent a massive wave of adoption that the decentralized gaming industry didn’t have before.
Magic Eden launches Bitcoin marketplace as Ordinal inscriptions continue to grow
Magic Eden, one of the largest cross-chain NFT platforms, launched a Bitcoin marketplace for digital artifacts, the company shared on Tuesday. “We are already a multichain platform and believe that adding Bitcoin will connect us to a deep community of people and a rapidly growing collectibles market thanks to Ordinals,” Zhuoxun Yin, COO and co-founder of Magic Eden, said to TechCrunch. “Adding a Bitcoin marketplace allows us to continue our multichain vision.” Prior to the announcement, Magic Eden supported NFT trading on Solana and Polygon and provided aggregated listings for Ethereum-based NFTs.
The latest pod
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Follow the money
Seed Club Ventures emerges from stealth with $25 million fund focused on DAOs
eToro secures $250 million at a $3.5 billion valuation after scrapping SPAC
OP3N raises $28 million to build “WhatsApp meets Amazon” for web3
Crypto exchange Bitget invests $30 million in multichain wallet Bitkeep
DAO-operated tomi raises $40 million for its “alternative internet”
This list was compiled with information from Messari as well as TechCrunch’s own reporting.
SEC clamps down on Coinbase and Tron, while Do Kwon is arrested overseas by Jacquelyn Melinek originally published on TechCrunch