The miner said its adjusted EBITDA swung to loss, compared to previous year’s profit.
The shares of bitcoin miner Marathon Digital (MARA) fell as much as 8% on Thursday post-market trading after the company’s second quarter revenue missed Wall Street’s expectations. The shares have recouped some of their losses since then.
Marathon reported revenue of $145.1 million versus an estimate of $157.9 million, according to FactSet data. The company’s sales took a hit in the second quarter due to several operational challenges which hindered its ability to mine bitcoin as well as recent halving weighing on the mining sector, Marathon said in its earnings release.
“During the second quarter of 2024, our BTC production was impacted by unexpected equipment failures and transmission line maintenance at the Ellendale site operated by Applied Digital, increased global hash rate, and the April halving event,” said Fred Thiel, the firm’s CEO, in a statement.
However, Marathon said that the issues have since been remedied and the company reached an all-time high mining power of 31.5 exahash per second (EH/s) in the second quarter.
The miner also said that its second quarter adjusted EBITDA swung to a loss of $85.1 million from a gain of $35.8 million in the previous year, mainly due to unfavorable fair value adjustments of its digital assets and lower BTC being mined in the quarter.
Despite the challenges, the miner continues to see reaching hashrate of 50 EH/s by the year-end and plans to growth it further next year.
Marathon sold 51% of the bitcoin it mined in the second quarter to fund its operating costs. However, it recently announced that it bought $100 million worth of bitcoin in the open market and re-adopted strategy to fully hold all BTC in its balance sheet. The miner now holds more than 20,000 BTC in its balance sheet.
“During the quarter, we organized the internal structure of the business to better align with our growth opportunities, sharpen our strategic focus, bolster accountability, and accelerate our speed and agility as we scale,” said Thiel.
Next week’s U.S. central bank interest rate decision and the bitcoin options expiry are unlikely to move markets, which have been stuck for weeks.
In another day of crypto market drudgery, bitcoin (BTC) briefly feinted higher Friday before settling back into its increasingly familiar environs below $30,000. The largest digital asset by market capitalization was recently trading at $29,904, up 0.3%.
Ether (ETH), the second largest cryptocurrency, remained largely unfazed during the day, lingering at around its weekly low below $1,900. Major alternative cryptocurrencies – so-called altcoins – including SOL and XRP recovered some of their losses endured earlier in the day.
MKR, governance token of decentralized finance lender MakerDAO, defied the broader market and enjoyed double-digit gains, buoyed by the activation of a token buyback program.
But micro-cap token CNC cratered as much as 75% during the day following a 1,700 ETH – some $3.2 million – exploit of Conic Finance, a Curve-adjacent decentralized finance protocol.
The CoinDesk Market Index, which tracks the performance of a basket of digital assets, inched up 0.3% in the last 24 hours, underscoring a somewhat tepid trading day. Investors will be eyeing a likely Federal Reserve interest rate increase and bitcoin options expiry next week.
In an email, Rachel Lin, CEO and co-founder of decentralized derivatives exchange SynFutures noted that the week started with enthusiasm over a favorable ruling in the Ripple-SEC case as investors expressed hopes for an altcoin season. But BTC and ETH failed to break resistance and returned to their weekly range lows, weighing on the market.
“[Bitcoin] options data reveal high open interest in $31,000 and $32,000 Call Options, denoting strong resistance at these levels,” Lin said. “The past day has been more favorable, with call options trading nearly 3x the volume of put options.”
“Fundamentally, the outlook remains bullish as money continues to flow into the crypto ecosystem,” she added. “This could represent a brief reversal, potentially leading to a move up to $34,000 if BTC achieves a sustained breakout above $31,500.”
Priced-In Spot BTC ETF
In an interview with CoinDesk TV’s “First Mover” program, Will Peck, head of digital assets for asset manager WisdomTree, said that it was “tough” to pinpoint a near-term bitcoin price target. But he also suggested that the impact of the Securities and Exchange Commission (SEC) approving a spot bitcoin ETF from any of the financial services giants that filed applications last month, including WisdomTree, was uncertain.
“An underlying question is how much institutional money there might be out there,” Peck said.
Lawrence Lewitinn, head of content at The Tie and CoinDesk TV contributor, said that neither the U.S. central bank’s likely 25 basis point rate (bps) on Wednesday nor the end-of-month options expiry would likely stir bitcoin from its current lull.
“We’ll see for the most part prices stay flat, at least for the upcoming,” Lewitinn said. “Unless there’s some exogenous variable, some sort of crazy news story – who knows what [SEC Chair Gary] Gensler could do. But all things being equal, we’re probably going to end up at about $30,000, a slow week.”
A policy paper next week won’t set legislative rules – but could point the way ahead on some key Web3 issues.
The European Commission’s metaverse strategy due next week is delayed and won’t have real teeth – but there are real policy concerns about how virtual worlds will cope with policy issues like property rights, technological standards and privacy.
First announced by Commission President Ursula von der Leyen as part of an annual address made back in September, a policy paper on virtual worlds has been put off as long as it could be. EU commissioners are due to agree to it next Tuesday; any later and they’d be running into preparations for the next edition of the State of the EU speech.
The commission has previously suggested the proposal won’t be legislative, discussing the policy issues rather than proposing a formal bill – but it might point the way towards stronger action in future.
The metaverse strategy is “the start of something, it sets the agenda,” said Patrick Grady, editor of Brussels-based website and research initiative Metaverse EU. “Once the machine gets moving it doesn’t really stop.”
Grady, who also leads the technology practice at consultancy Fourtold, points to the commission’s 2018 strategy on Artificial Intelligence – which, though it did little more than promise a stakeholder alliance and reinterpreted liability rules, proved the portent of more to come, and an AI bill followed in 2021.
That brings risks as well as opportunities. A clear regulatory framework is often welcomed by the industry, but EU rules in areas such as AI have proved controversial. The example of the bloc’s recent Data Act – nominally concerned with governing information gathered by connected objects like cars or fridges, but which some Web3 proponents worry could effectively make smart contracts illegal – shows there’s always the chance of unintended consequences.
European values
The commission has said the metaverse will need to embed “European values” – with officials specifying topics like discrimination, safety and data controls. A blog by Commissioner Thierry Breton, and a subsequent consultation from the commission, hinted at a more immediate EU fear – that Web3, like its predecessor, could be dominated by big players that squash competition.
That may include some familiar faces. Facebook has rebranded itself Meta (META) as it pivots towards a more immersive experience, and Apple’s (AAPL) move into the space could prove transformative.
At an April hearing, Meta’s EU Public Policy Director Aleksandra Kozik was cross-questioned by lawmakers interested in topics ranging from the impact of the technology on jobs, discrimination, and abuse by organized crime.
“The metaverse is not one single product that will be built by one company,” Kozik told members of the European Parliament’s Legal Affairs Committee. “It is a constellation of platforms, technologies and products that will be built by many different stakeholders, by companies big and small.”
The commission may be skeptical of such analogies, given that it has often taken Meta to task for trying to be the brightest, if not the only, star in its firmament. Grammar might offer a clue as to the EU executive’s real thinking, Grady points out.
As with the internet, the whole point of the metaverse is that it’s a single unfragmented space – “siloed metaverses is almost the situation the EU’s trying to avoid,” Grady said.
Yet the commission’s own paper is about virtual worlds, plural – suggesting Meta’s might be one of several separate walled gardens – while Breton talks about both the metaverse, and about different metaverses.
One solution is to ensure that developers like Meta work within common international standards. But, as Grady points out, the EU’s own antitrust rules can sometimes stand in the way, since any grouping of supposed competitors is liable to be treated as a cartel.
Rights
Some in the digital sector see an opportunity in whatever the commission might announce.
“Virtual worlds are increasingly part of a modern, digital industry and this is where Europe excels, so we’d like to see a strategy that aims to support this,” a spokesperson for lobby group DigitalEurope told CoinDesk in an emailed statement, citing possibilities like cheaper online job training, and virtual factories and power grids.
But there’s plenty more legal quandaries raised by the metaverse – including basic rights.
“Personal property interests in virtual worlds are radically undermined” by the fine print in online terms and conditions, Joshua Fairfield, a law professor at Washington and Lee University, told lawmakers back in April. “The metaverse end-user license agreement beats the United States Constitution, because it acts under this concept of consent to replace many of the social rules that we take for granted.”
How to deal with those fundamental problems remains hotly debated – and, in particular, whether the metaverse is really so new that it needs its own rulebook.
“The metaverse is not being built in a regulatory vacuum,” Meta said in its response to the EU’s consultation, citing existing online laws that continue to apply. “To the extent that any novel or unique issues arise over time as the metaverse continues to evolve, we call upon the Commission to address any emerging legislative gaps on a case-by-case basis, using evidence-based policy development.”
For others, virtual worlds are a step change, given how much they rely on potentially invasive technology such as headsets and glasses.
Extended reality tech “poses substantial risks to human rights” and “could continue the march towards ever-more-invasive sensitive data collection and ubiquitous surveillance” by governments and corporations, even going into people’s thoughts and emotions, said a consultation response by online rights activists the Electronic Frontier Foundation.
Does any of this matter for your average crypto fan? It likely will do, if the predictions of the commission’s own Joint Research Centre come true.
“Blockchain and cryptocurrencies are likely to be the technological building blocks of a decentralized infrastructure” that underpins the metaverse, a JRC report published Monday said.
That will be music to the ears of those who believe online virtual worlds require a radically different way of thinking than the centralized structures that came to dominate Web2. It also means metaverse regulation carries a risk for the crypto sphere.
FBI agents searched Powell’s Los Angeles home as it probes whether he interfered with computer accounts of Verge Center for the Arts. A lawyer for Powell said he’s done “nothing wrong” and unrelated to “his conduct in the cryptocurrency arena.”
Crypto exchange Kraken co-founder Jesse Powell is being investigated by Federal law enforcement on claims that he hacked and cyberstalked a non-profit that he founded, a lawyer for Powell confirmed after a report by The New York Times on Thursday.
The criminal probe is looking into Verge Center for the Arts’ allegations that Powell hindered its computer accounts, obstructing access to emails and other messages, The Times reported, citing three unnamed sources.
The paper reported that agents had searched Powell’s Brentwood home in Los Angeles’ Westside, seizing electronic devices and said that law enforcement from the FBI and the U.S. attorney’s office for the Northern District of California have been investigating Powell since at least the fall.
Powell has not been charged with any crimes. Brandon Fox, a lawyer with Jenner & Block, said in a statement shared with CoinDesk that Verge “provided a one-sided account that did not provide the government with the full picture, showing that Powell “did nothing wrong.” Fox added that the matter is unrelated to “Mr. Powell’s employment or his conduct in the cryptocurrency arena.”
Last month, Powell sued Verge in California Superior Court, claiming that has “owns and has rightful access” to the email accounts and that he remains a Verge board member, Fox said. A lawyer for Verge said the Powell’s claims were unfounded, The Times reported. At the time of publication, Verge had not responded to a CoinDesk request for comment.
Powell co-founded the Sacramento-based Verge in 2007, but the organization removed him from its board in 2022, saying that he had violated Verge’s “guiding principles,” The Times reported.
In a statement shared with CoinDesk, a Kraken spokesperson said the exchange was aware of the civil dispute, investigation and search warrants.
“The US Attorney has advised us that Kraken is not a part of the investigation in any way, and the investigation does not concern Jesse’s affiliation with Kraken,” the spokesperson said.
Obtained by CoinDesk under a Freedom of Information Law request, the documents offer a rare but limited window into the reserves behind USDT, the crypto market’s largest stablecoin.
CoinDesk tarafından elde edilen belgelere göre, Stablecoin ihraççısı Tether, fonlarını Mart 2021’de dört banka, iki yatırım yönetimi firması, iki altın deposu ve bir altın komisyoncusu ve kendi kardeş şirketi Bitfinex’te tuttu.
Ayrıca, Qatar National Bank QPSC, Barclays Bank PLC, Deutsche Bank AG, Emirates NBD Bank PJSC ve Natwest Group PLC dahil olmak üzere çeşitli kuruluşlar tarafından ihraç edilen ticari kağıtlarda fonları vardı. Ve ihraççılarının büyük bir yüzdesi çeşitli Çin bankaları ve finans kurumlarıydı.
Tether’in geçmişte ticari kağıtlara olan güveni haber değil. Piyasa değerine göre dünyanın en büyük stablecoin’ini çıkaran ve elinde bulunduran şirket, 2021’de ticari senete fon koyduğunu kabul etti. Ancak şirketin bu tür varlıklara ne ölçüde güvendiği daha önce bilinmiyordu.
Ziraat Bankası Çin Ltd, Bank of China Hong Kong, Bank of Communications Co Ltd, Industrial and Commercial Bank of China, China Merchants Bank, China Construction Bank, China Everbright Bank Co ve daha fazlası, Tether’in kullandığı ticari kağıt çıkardı. jeton.
Editörün notu: Bu makale, New York Başsavcılığı’na Bilgi Edinme Özgürlüğü Yasası talebiyle alınan belgelere dayanmaktadır. CoinDesk, kısmen hiç kimsenin özel bilgilerinin yanlışlıkla paylaşılmadığından emin olmak için belgeleri inceliyor ve tam olarak yayınlamadan önce uygun olduğunda düzeltiyor.
Belgelere göre 31 Mart 2021’de Tether, bu kurumlarda 35,5 milyar dolardan fazla ABD doları eşdeğeri olduğunu iddia etti. Haziran 2021’de yapılan bir eyalet Bilgi Edinme Özgürlüğü Kanunu (FOIL) talebine cevaben New York Başsavcılığı (NYAG) tarafından CoinDesk ile paylaşıldılar. Belgelerin 4 Ağustos 2021’de oluşturulmuş olduğu görülüyor ve Tether’in o günkü operasyonlarının anlık görüntüsü. 5,1 milyar dolar daha, “USDT kredileri” ve diğer varlıklar altında detaylandırıldı ve toplam 40,6 milyar dolarlık bir varlık için, kabaca o sırada dolaşımdaki 40,8 milyar USDT’ye denk geldi.
Bu nedenle, belgeler, kripto endüstrisinde uzun süredir tartışma ve varsayım konusu olan Tether’in finansmanına nadir ancak sınırlı bir pencere sunuyor. Başsavcı Letitia James, Şubat 2021’de ofisinin Tether ile anlaşmaya vardığını açıkladığında, 2017 ve 2018’de Tether’in stablecoin’i USDT’nin tam olarak desteklenmediği zamanlar olduğunu söyledi. NYAG’ın soruşturmasının sonuçlanmasından altı ay sonra oluşturulan yeni belgeler, bu iddiayı ne kanıtlıyor ne de çürütüyor.
Bununla birlikte, Tether’in belirteci destekleyen varlıkları depoladığı bulmacaya bir parça daha eklerler. Yıllar boyunca, şirketin bankacılık ilişkileri hakkındaki bilgiler yalnızca damla damla ortaya çıktı.
Tether (USDT), sayısız borsada kripto alım satımı için karşı taraf varlığı olarak önemli bir role sahip, dünyanın en büyük stablecoin’idir. Tether, dolaşımdaki her bir USDT tokeni için en az bir dolar değerinde varlık rezervi tuttuğunu iddia ederek, değerini ABD dolarına karşı tutacak şekilde tasarlanmıştır. Şirket uzun süredir USDT’nin tam olarak desteklenmediğine dair endişelerle boğuşuyor, New York Eyalet Başsavcılığı’nın Nisan 2019’da Tether’in kurumsal hisselerini paylaştığı bir borsa olan Bitfinex’e yaklaşık 850 milyon dolar borç verdiğini açıkladığında haklı çıktığı endişeleri. memurlar ve ebeveynlik ile. Bitfinex, ödeme işlemcisi yetkililer tarafından ele geçirildiğinde, kendi fonlarının bu miktarına erişimini kaybetti.
CoinDesk, FOIL talebinde, Tether’in rezervlerinin nelerden oluştuğunu ortaya koyan ilk kamuya açık belgesini yayınlamasının ardından USDT stablecoin’in desteğini detaylandıran belgeler istedi. O zamanlar, neredeyse yarısı belirtilmemiş ticari kağıttaydı.
Tether, 2021’de NYAG’ın ofisi ile anlaşmasını duyururken, NYAG ile paylaştığı bilgilerin aynısını rezervleri hakkında en az iki yıl boyunca yayınlayacağını iddia etti. Mayıs 2021’deki ilk halka açık sürümü, bir çift pasta grafik ve kısa bir açıklamaydı.
Yayınlanan belgelerdeki 7 Nisan 2021 tarihli bir portföy raporu, benzer pasta grafikler içeriyor ancak çok daha fazla bilgi içeriyor ve Tether’in rezervleri için belirli ABD doları miktarları sağlıyor. Gerçek sabit vadeli mevduatlara ilişkin bilgiler yeniden düzenlendi, ancak Tether’in mevduat sertifikalarında, tahvillerde ve özellikle ticari senetlerde milyonlarca rezerv tuttuğunu gösteriyor.
4 Haziran 2021 tarihli bir mektuba göre Tether, Ansbacher (Bahamas) Limited’de (bu yılın Şubat ayındaki Forbes raporunu onaylıyor) ve Bahamalar’daki Capital Union Bank’ta (ikinci ilişki daha önce Financial Times tarafından rapor edilmişti) ve Far’da fon bulunduruyordu. Tayvan’daki Eastern International Bank (Tether’in Tayvan bankalarını kullandığı daha önce Bloomberg tarafından rapor edilmişti, ancak isim verilmemişti). Bununla birlikte, varlıklarının büyük çoğunluğu Bahamalar merkezli Deltec Bank and Trust’taydı – o yılın Mart ayı itibariyle 26 milyar dolardan fazla. (Deltec ilişkisi, Kasım 2018’de Tether’in bankanın antetli kağıdında imzası olan ve çalışanın adını içermeyen bir mektup yayınladığından beri halka açık. Deltec’in başkanı daha sonra belgenin gerçek olduğunu CoinDesk’e doğruladı.)
CoinGecko’ya göre, 31 Mart 2021 22:30 ET itibariyle dolaşımda 40,8 milyar dolar değerinde USDT vardı.
Aynı belge, Tether’in önemli miktarda ticari senet rezervine sahip olduğunu doğrulayarak, ilgili kurumun elindeki her bir varlıkta hangi varlıkların bulunduğunu ayrıntılarıyla açıklayarak devam ediyor.
Ansbacher tarafından yayınlanan başka bir portföy raporu, Tether’in finans kuruluşundaki varlıklarının yaklaşık %85’inin ticari senet olduğunu göstererek bu ayrıntıları daha da detaylandırıyor. Tether’in varlıklarının %13,7’sinin bu şekilde olmasıyla şirket tahvilleri geri kalanının büyük bölümünü oluşturuyordu. Geri kalanı yüksek getirili tahviller, değişken faizli senetler ve kredi hesapları oluşturuyordu.
Belge imzalanmadı.
Benzer şekilde, Capital Union Bank, Tether’in varlıklarının yaklaşık %88’inin “likit varlıklar” olduğunu söyleyen bir rapor sunsa da, daha fazla bir döküm sağlamadı.
Bu belgelerin birçoğu, Tether hukuk ekibinin, düzenleyicinin Tether ile ilgili uzun süredir devam eden soruşturmasını sonuçlandırmasının hemen ardından NYAG’ın ofisi ile iletişimini detaylandırıyor.
Bu iletişimlerden birine göre, NYAG ofisinin anlaşmadan sonra Tether’in elindeki ticari kağıtlar hakkında soruları vardı.
“Tether’in ticari senet varlıklarını satın almasıyla ilgili olarak Tether, önceki mektubumuzda belirtildiği gibi farklı bankalarda hesaplar tutmaktadır. Tether, ticari kağıt teklifleri için teklifleri talep eden bankalardan, bunları doğrudan ticari kağıt ihraç etmek için ihraççılarla ilgilenen veya ticari kağıt satın almak için ikincil piyasalarda işlem yapan aracılardan ve diğer karşı taraflardan talep eder. Tether’in 25 Haziran 2021’de gönderilen dış danışmanından.
CoinDesk, Tether’in NYAG’ın belgeleri serbest bırakmasını engellemek için başvurmasının ardından yaklaşık iki yıllık bir hukuk mücadelesinin ardından belgeleri aldı. Klaris Law, CoinDesk’i mahkemede temsil ederek Şubat ayında bir zafer kazandı.
Bu makalenin yayınlanmasından önce Tether, şirketin belgelerin paylaşılmasını emreden bir mahkeme kararına itiraz etmek için gerekli adımları atmaması üzerine NYAG FOIL görevlisinin belgeleri serbest bıraktığını kabul eden bir bildiri yayınladı. Cuma günü yayınlanan ikinci bir bildiride, belgelerde nelerin yer aldığının ayrıntıları verildiği iddia ediliyor.
İlk açıklamada, “Tether, gizli müşteri verilerinin kamuya yayılmasını önlemek ve potansiyel olarak kötü niyetli kişiler tarafından istismar edilebilecek hassas ticari bilgilerin kullanılmasını önlemek için bu işlemleri ilk etapta başlattı” denildi. “Ancak, şeffaflığa olan devam eden ve kanıtlanabilir taahhüdümüz, dikkati toplumumuzun karşı karşıya olduğu gerçek sorunlardan uzaklaştıran daha fazla zaman alan ve verimsiz Amerikan davaları yerine açıklığa öncelik vermemiz gerektiği anlamına geliyor.”
Tether, bazı belgelerle ilgili ayrıntılı bir soru listesine hemen yanıt vermedi.
Tether ayrıca yaptığı açıklamada, New York hükümetinin belgeleri CoinDesk ile paylaştığı “aynı gün” merkezi olmayan finans havuzlarında milyonlarca dolar değerindeki milyonlarca doların satılmasının ardından USDT’nin depeg edilmesini “şüpheli bulduğunu” söyledi.
Aslında, stablecoin, NYAG FOIL görevlisinin belgeleri CoinDesk’in avukatlarıyla paylaşmasından en az beş saat önce, 15 Haziran’da 07:00 UTC’den (3:00 am ET) önce kısa bir süre için mandalını kaybetti.
CoinDesk Genel Yayın Yönetmeni Marc Hochstein, “CoinDesk, 12 Haziran’da avukatlarımızdan, Tether’in belgelerin ifşasını engellemeye çalıştığı uzun bir mahkeme anlaşmazlığının ardından belgeleri nihayet alacağımızı öğrendi” dedi. “Kazanma haberimizi, 15 Haziran sabahı New York’ta USDT’nin çıpasını kaybetmesinden saatler sonra belgeleri alana kadar yazı işleri kadromuz dışında kimseyle paylaşmadık. CoinDesk, raporlamamızın bütünlüğünün yanındadır.”
Gurbir Grewal spoke about the SEC’s recent actions during a panel Friday.
“Regulation by enforcement” is “a catchy but tired refrain that’s used effectively by crypto market participants and lobbyists,” said the head of the U.S. Securities and Exchange Commission’s Enforcement Division Friday.
The SEC has been enforcing existing rules and regulations, said Gurbir Grewal to an audience of academics and lawyers during a panel co-hosted by the Lowenstein Sandler law firm and Rutgers Law School, in some of his first public remarks since the SEC brought charges against crypto exchanges Coinbase and Binance.
The moderators asked about the SEC’s recent actions and the concept of regulation by enforcement. The regulator, who used to be the Attorney General in New Jersey, said the agency was continuing to oversee the crypto industry but that it was focused on activities within the sector, rather than the tokens themselves.
“We’re not concerned with the labels. We’re concerned with the offerings, the labels are not important to us,” Grewal said. “The technology is important. What’s underneath the hood, because when we look underneath the hood, when we kick the tires, we’ve seen plenty … DeFi [decentralized finance] offers that are neither decentralized nor finance but rather just straight [fraud].”
He also spoke to the rise in recent enforcement actions within the crypto sector.
“I think what you’ve seen is that the crypto markets in the downturn, the increase in risk has forced us to focus our efforts here. Maybe that’s been perceived as an uptick, but I think it’s us just doing our jobs as we have been for the last few years,” he said.
“We will extend our jurisdiction as far as the law allows,” Grewal said. “We have tremendous cooperation with a lot of regulators. We meet with them frequently, we have MOUs [memoranda of understanding] with a lot of regulators that facilitate our ability to collect evidence abroad. And I think the more we do that, the more cooperation that exists among regulators, the less space that there is between us and the [U.K.’s] FCA and [Australia’s] ASIC and others that we work [with]… I think the less opportunity [there is] for regulatory arbitrage by bad actors.”
SEC emails illuminated ex-official Hinman’s 2018 view on ETH, which Ripple’s top lawyer said was used to ‘destroy and disrupt’ U.S. crypto, but this probably won’t steer agency policy.
Ripple Labs and the U.S. Securities and Exchange Commission (SEC) seem to be on the same page about the documents known as the Hinman Emails: The former official’s past remarks shouldn’t govern current policy.
Despite the rush of attention this week on the insider deliberations that went into writing a five-year-old speech from William Hinman – the former head of the SEC’s corporation finance division – the agency’s past uncertainty over the status of ether (ETH) never amounted to formal commission-approved rules or guidance. So the dialogue over the ex-official’s one-time remarks may offer some insights, but it’s unlikely to move the needle on the agency’s crypto policy.
“Nothing in these documents creates precedent or establishes law,” said Andrew Hinkes, a lawyer at K&L Gates who co-chairs its digital assets practice. At best, the emails give “a helpful snapshot of certain SEC staffers’ views on some issues at a point in time,” so it’s useful for those trying to understand where the agency has been coming from on the crypto-as-securities debate, but there’s nothing the SEC can be held to, Hinkes said.
Hinman, in his speech that’s still posted on the SEC website, had said he didn’t “see a need to regulate ether” – a view that was debated among officials inside the agency even as he said it. The remarks have been a particular focus of Ripple, in light of the parallels between ETH and the XRP token closely associated with Ripple’s business.
“The SEC fostered regulatory confusion in the marketplace,” Ripple Chief Legal Officer Stuart Alderoty said Thursday in an interview on CoinDesk TV. “They knew the marketplace was confused, then they took steps to deliberately aggravate that confusion.”
Alderoty had also tweeted what he thinks the emails should mean: “Hinman’s speech should never again be invoked in any serious discussion about whether a token is or is not a security.”
As it happens, that seems fine with the SEC. The agency hasn’t relied on Hinman’s position in recent years and has moved on with other remarks from SEC Chair Gary Gensler that suggest a different view. After Ethereum’s high-profile move to proof-of-stake, Gensler said that such tokens may actually be securities, though he didn’t specify ETH.
Agency spokespeople declined to comment on the release of the emails this week, and Hinman didn’t respond to a request for comment.
Still, none of the issues debated around Hinman’s speech have legal bearing until the SEC’s five commissioners make a new rule, issue guidance or bring an enforcement action that explicitly makes the case that ETH is a security. That’s the chief point of interest for Ripple, which has been fighting with the regulator in court over whether the XRP token associated with its products is a security.
After the company also waged this fierce campaign to win access to the SEC’s emails, Ripple’s Alderoty would like to see them remain in the limelight, arguing that an investigation should be conducted into why Hinman said what he did. He said the SEC has relied on those remarks in its ongoing battles with the sector.
“They’ve weaponized it to bring a series of enforcement actions and trying – through regulation-by-enforcement, we now know – to really destroy and disrupt this crypto economy in the United States,” Alderoty told CoinDesk TV.
But others aren’t sure there’s anything in the messages to alter the high-stakes debate over how crypto will be regulated in the U.S.
“Those who expected bombshells were probably disappointed, but for those who work to understand these markets, there are helpful inclusions that merit further consideration,” Hinkes said.
“I don’t believe that the Hinman emails are particularly significant from a legal standpoint,” said Grant Gulovsen, an Illinois-based lawyer who works with crypto clients, in an email. “I don’t see how it helps Ripple/XRP. And if the Hinman speech is no longer (or never was) the view of the SEC, then it’s not good for crypto generally.”
Hinman – who noted during the 2018 speech that it was his personal view – took a position that crypto projects could become “sufficiently decentralized” that buyers wouldn’t expect anybody was at the helm, so they couldn’t be investment contracts regulated by the SEC. Gulovsen said that idea is still useful as “a reasonable application” of securities law for digital assets.
The companies’ top lawyers testified in a House crypto hearing that they spent months trying to get the SEC to help them comply before being rebuffed.
With Coinbase (COIN) and Binance accused of running illegal exchanges by the U.S. Securities and Exchange Commission (SEC), the latest industry testimony in the U.S. House of Representatives this week revealed that companies had desperately sought the agency’s help to properly register but were turned away.
SEC Chair Gary Gensler has a go-to crypto invitation to the firms that are operating without the agency’s approval and oversight, which he’s repeated so often it’s become a messaging mantra: They just need to come in and register.
Robinhood Markets’ chief compliance lawyer told lawmakers that the popular trading firm was trying to register as a special-purpose broker for digital assets. Dan Gallagher, a former SEC commissioner who has spent a career in securities and corporate law, couldn’t get the agency to guide Robinhood into crypto compliance, though he said the staff seemed to want to help.
“When Chair Gensler at the SEC in 2021 said, ‘Come in and register,’ we did,” Gallagher said in his testimony. “We went through a 16-month process with the SEC staff trying to register a special purpose broker dealer. And then we were pretty summarily told in March that that process was over and we would not see any fruits of that effort.”
His story echoes longstanding complaints from Coinbase, whose top lawyer was also present at the House Agriculture Committee on Tuesday and is now facing an SEC lawsuit alleging his company offered unregistered securities and didn’t get approval as an exchange.
“When Coinbase has attempted to do just that, to talk about how we could register as a broker-dealer or an [alternative trading system] or even as a [national securities exchange] after months and months of discussion, we’re simply dismissed with no response or any counter proposal or ideas coming back from the SEC,” said Paul Grewal, Coinbase’s chief legal officer.
Gallagher said one of the regulator’s final sticking points for Robinhood was the lack of registration and disclosures from issuers of tokens that trade on the platform, and Gallagher argued there’s no way for his company to insist that outside issuers meet SEC demands.
Sen. Cynthia Lummnis (R-Wyo.) jumped into the debate with a tweet this week promoting her crypto bill: “The SEC has failed to provide a path for digital asset exchanges to register.”
The possible counterweight to this argument is the series of approvals of digital-assets broker-dealers by the Financial Industry Regulatory Authority (FINRA), an industry-funded oversight arm created by the SEC. The brokerages, including Prometheum Ember Capital LLC, Bosonic Securities and OTC Markets Group, are officially approved to trade crypto securities, a category of assets whose borders aren’t yet well defined. Meanwhile, the companies trying to navigate a path as compliant crypto firms haven’t yet demonstrated a fully formed business model.
In comments after his agency’s enforcement actions, Gensler now seems to suggest the U.S. “doesn’t need more digital currency,” and that the industry must fix its compliance problems or he foresees a possibility of it “collapsing like a house of cards.”
However, this compliance dispute is no longer in the hands of the industry or the SEC but will be decided in the courts.
“We have to go to court and really see, otherwise this industry is just not going to exist in the United States,” Coinbase CEO Brian Armstrong said in a CNBC interview on Wednesday.
Two bills that seem to embrace mining have been sent to the governor, whereas one that would adversely affect miners was stopped at the committee stage.
Texas legislators are throwing their weight behind bitcoin mining with two bills passed in the latest legislative session that are signaling support for the industry — and one thwarted for the time being.
In the past few weeks, two bills — SB 1929 and HB 591 — that show support for miners have made it through the legislative stage and are awaiting Gov. Greg Abbott’s signature. If signed, they take effect on Sept. 1.
The bill SB 1929 requires miners whose energy capacity is larger than 75 megawatts (MW) to register with the Public Utilities Commission (PUC) of Texas as large loads operators, which then shares their data with the Electricity Reliability Council of Texas (ERCOT), the grid operator. The bill is in line with the March 2022 interim interconnection process formed by ERCOT’s Large Flexible Loads Taskforce, which is responsible for drafting policy to manage big electric loads such as bitcoin miners.
Meanwhile, HB 591 was sent to the governor on April 18, and will introduce tax exemptions from companies that put to use otherwise wasted gas, including data centers.
“These bills signal that Texas remains the jurisdiction of choice for bitcoin, blockchain, and digital assets,” said Lee Bratcher, president of local industry group Texas Blockchain Council (TBC).
The third bill, SB 1751 — dubbed by some the “anti bitcoin mining bill” and which would have capped the industry’s participation in cost-saving demand-response programs — was stopped at the committee stage. Demand-response programs are various schemes in which miners get power credits for curtailing their operations at times of peak energy demand.
State Sen. Lois Kolkhorst, the bill’s lead sponsor did not respond to CoinDesk’s request for comment on this story.
“More miners in the [demand-response] program means more load can be reliably called on to help balance the grid,” said Dennis Porter, who leads another industry advocacy group, Satoshi Action Fund. “We are increasing communication with the PUC and ERCOT which will improve transparency and publicly available data on mining which ultimately is good for the industry,” he noted.
However, the opposition of SB 1751 isn’t what defeated it, said Jackie Sawicky, who has brought together hundreds of Texas residents in an activist group called Concerned Citizens of Navarro County. “The house just didn’t prioritize it and the session ended/ran out of time,” so the bill can be reintroduced in the next session, she said. The next session will start in January 2025.
Bill SB 1751 would have taken the threshold for registering with state grid authorities to 10 MW.
“Texas is setting a standard for how to adopt this new and innovative technology,” said Porter.
Texas innovation
Texas is one of the largest bitcoin mining hubs in the world due to cheap energy and friendly regulators. As policy on bitcoin mining at the federal level has lagged, the state, the largest by energy production in the U.S., is marching on with its own rules.
However, it’s not the only state that’s pro-mining. Legislation protecting mining was passed in Arkansas and Montana. Similar bills in Missouri and Mississippi have died.
By contrast, New York imposed a two-year moratorium on new fossil fuel-based bitcoin mines. Oregon is currently considering legislation that would require data centers, including miners, to reduce their greenhouse gas emissions.
Meanwhile, a 30% tax on bitcoin mining proposed by the Biden administration appears to have stalled. The tax didn’t make it into a bill on the debt ceiling, which passed on Wednesday. According to Rep. Warren Davidson, the tax will likely not return as part of the U.S. budget.
“With policy stagnation at the federal level, the states are stepping up to be the incubators of innovation,” TBC’s Bratcher said.
Ha Long Bay is one of Vietnam’s most beautiful nature site. But the UNESCO world heritage site threatened by deluge of plastic waste.
Squinting in the bright light of a hot summer morning, Vu Thi Thinh perches on the edge of her small wooden boat and plucks a polystyrene block from the calm waters of Vietnam’s Ha Long Bay.
It’s not yet 9am, but a mound of styrofoam buoys, plastic bottles and beer cans sit behind her.
They are the most visible sign of the human impacts that have degraded the UNESCO World Heritage Site, famed for its brilliant turquoise waters dotted with towering rainforest-topped limestone islands.
“I feel very tired because I collect trash on the bay all day without much rest,” said Thinh, 50, who has been working for close to a decade as a trash picker.
“I have to make five to seven trips on the boat every day to collect it all.”
Waste threatens spectacular Ha Long Bay
Since the beginning of March, 10,000 cubic metres of rubbish – enough to fill four Olympic swimming pools – have been collected from the water, according to the Ha Long Bay management board.
The trash problem has been particularly acute over the past two months, as a scheme to replace styrofoam buoys at fish farms with more sustainable alternatives backfired and fishermen chucked their redundant polystyrene into the sea.
Authorities ordered 20 barges, eight boats and a team of dozens of people to launch a clean-up, state media said.
Do Tien Thanh, a conservationist at the Ha Long Bay Management Department, said the buoys were a short-term issue but admitted: “Ha Long Bay… is under pressure”.
More than seven million visitors came to visit the spectacular limestone karsts of Ha Long Bay, on Vietnam’s northeastern coast, in 2022.
Authorities hope that number will jump to eight and a half million this year.
But the site’s popularity, and the subsequent rapid growth of Ha Long City – which is now home to a cable car, amusement park, luxury hotels and thousands of new homes – have severely damaged its ecosystem.
Conservationists estimate there were originally around 234 types of coral in the bay. Now the number is around half.
There have been signs of recovery in the past decade, with coral coverage slowly increasing again and dolphins — pushed out of the bay a decade ago — coming back in small numbers, as a ban on fishing in the core parts of the heritage site expanded their food source.
But the waste, both plastic and human, is still a huge concern.
Ha Long Bay is known for its stunning natural beauty.
“There are so many big residential areas near Ha Long Bay,” said conservationist Thanh.
“The domestic waste from these areas, if not dealt with properly, greatly impacts the ecological system, which includes the coral reefs.
“Ha Long City can now handle just over 40 percent of its wastewater.”
Single-use plastic is now banned on tourist boats, and the Ha Long Bay management board says general plastic use on board is down 90 percent from its peak.
But trash generated onshore still lines parts of the beach, with a team of rubbish collectors not able to block the eyesore from tourists.
‘Plastic pollution crisis’ in Ha Long Bay
Pham Van Tu, a local resident and freelance tour guide, said he had received a lot of complaints from visitors.
“They read in the media that Ha Long Bay is beautiful, but when they saw a lot of floating trash, they didn’t want to swim or go canoeing and they hesitated to tell their friends and family to visit,” he said.
Rapid economic growth, urbanisation and changing lifestyles in communist Vietnam have led to a “plastic pollution crisis”, according to the World Bank.
A report in 2022 estimated 3.1 million tonnes of plastic waste are generated every year, with at least 10 per cent leaking into the waterways, making Vietnam one of the top five plastic polluters of the world’s oceans.
The volume of leakage could more than double by 2030, the World Bank warns.
Larissa Helfer, 21, who travelled to Vietnam from her home in Germany, said Ha Long Bay was beautiful but the trash problem would be one of her strongest memories of the trip.
“Normally you (might say) ‘Look at the view! Look at the fishing villages!” she told AFP.
But here “you have to talk about the trash, (you say) ‘oh god… look at the plastic bottles and things in the sea.’ And it makes you sad.”
Thinh, the trash collector, grew up in Ha Long and remembers a very different bay.
“It didn’t look so terrible,” she said.
“Of course, a lot of work makes me tired and irritated,” she admitted. “But we must do our work.”
