💰 1 big thing: SBF charged with bribing officials abroad

Samuel Bankman-Fried departs from federal court in New York, Feb. 2023.

🧑🏽‍💻 2. Charted: U.S. losing its share of crypto devs

🎨 3. Tokenized Warhol prints

Illustration of three of Andy Warhol's Campbell's soup cans, gradually becoming pixelated.

🕺4. Catch up quick 

Top coins

🌈 5. Culture hash: The great unlock

👀 $32 billion in ether will be tradable again in April after being locked up, sometimes for years, without any way to know for sure when the investor would be able to access it. Wild. Oh, and some crime stuff, if you're into that.

Today's newsletter is 1,131 words, a 4½-minute read.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

Off topic: Wes Anderson has a movie coming in June about 👽🛸👽! —C & B

Crypto

green

Follow how cryptocurrency and blockchain are upending markets and the regulatory shifts. With Brady Dale.

Axios Crypto

⛔️ 1 big thing: A path to registration

🎟 2. Charted: Fees

🧾 3.  The Fed's explanation 

🗺 4. Catch up quick 

⛏ 5. Culture hash: Altruistic Satoshi

GM! It's another week. No banks shut down during the weekend. How about that?

📆 Axios’ second annual What’s Next Summit is Wednesday in Washington, D.C.! You’ll hear from YouTube's chief and from the White House's science and tech office. Register for the livestream here.

Today's newsletter is 1,132 words, a 4-minute read.

👀 We followed up with Stripe about their crypto payments for freelancers program, launched last April to see if we could get a one-year update on adoption. The company declined to give us any numbers, however. —C & B

☎️ 1 big thing: SEC's hotline bling

Illustration of a rotary phone with a knot in the wire.

🚓 2. Charted: When the SEC charges

🌅 3. Dark day for Justin Sun

🦈 4. Catch up quick 

🤔 5. Culture hash: How now legal DAO?

🎵 When the SEC's hotline bling, that could only mean one thing.

🚨 Situational awareness: Authorities in Montenegro have announced the capture of someone they believe to be Terraform Labs founder Do Kwon, traveling under false documents.

Today's newsletter is 1,160 words, a 4-minute read.

🐎 Who's getting sued next? Place your bets. —C & B

1 big thing:  Open Exchange 

Illustration of a crypto coin glowing atop a pile of receipts

😬 2. Charted: In-FLEX-tion? 

🚔 3. They got Do

South Korean cryptocurrency entrepreneur and co-founder of Terraform Labs, Do Kwon, being escorted into court by two officers.

🏌️4. Catch up quick 

🗿 5. Culture hash: Based Greenpeace

The Skull of Satoshi in collaboration with art activist Benjamin Von Wong and Greenpeace USA

The plight of many opens up a window of opportunity for some. Plus, what's metal.

Today's newsletter is 1,290 words, a 5-minute read.

If Brady is ever an internationally wanted criminal with millions of dollars in cryptocurrency on a thumb drive, he's going to stick to boats and backwoods as he runs. Guaranteed. Like Harrison Ford in "The Fugitive." No airports for this crook. No, sir. —C & B

🤳 1 big thing: The CFTC's complaint

Illustration of a person testifying at a desk with an angry face emoji

👩‍💻 2. What's this: Virtual private network

Illustration of a padlock with a slide to unlock touch button. 

🫧 3. Charted: Wash-trading 

🥊 4. Catch up quick

🩴 5. Culture hash: Crypto taxonomy

Twitter user says "last week ETH was a security" in a nod to overlapping regulatory jurisdictions in crypto

⚰️ Binance's death might be greatly exaggerated. Plus, going around the rules. 

 🚨 Situational awareness: FTX's Sam Bankman-Fried is hit with a new indictment. DOJ alleges he paid over $40 million to bribe at least one Chinese government official.

Today's newsletter is 1,146 words, a 4-minute read.

The courts have put SBF back on flip phone life, which, honestly: kinda jealous. —C & B

National

A lawsuit against a cryptocurrency exchange by New York State looks a lot more like a referendum on the world's second biggest blockchain, Ethereum.

Why it matters: Ether has a nearly $200 billion market capitalization and something like 400,000 daily users. Its popularity was partly driven by the fact that entrepreneurs had become convinced that the coin had become exempt from securities regulations.

Details: New York Attorney General Letitia James announced a suit against the crypto exchange KuCoin on Thursday, specifically making note of the fact that it's the first such suit alleging that ether is a security.

KuCoin is the fourth largest crypto exchange by volume, according to CoinMarketCap. Founded in 2017, it has $3.1 billion in assets on its platform and does over $700 million in daily volume.

The complaint found that it violated the law by selling commodities and securities that were not properly registering in New York state, it offered a staking product similar to the one that got a U.S.-based exchange in trouble with the SEC and that it failed to register as an exchange in the state.

In the weeds: The complaint takes pains to argue that ether (ETH) is a security under existing law. 

It describes the initial coin offering that funded the development of Ethereum. Then it draws attention to the network's transition to a new consensus mechanism as evidence that a small group retains control over it.

"The developers of ETH promoted it as an investment that was contingent on the growth of the Ethereum network," the complaint notes.

Independent operators that verify the validity of transactions on the blockchain are paid automatically in new ethers issued by the network, securing its ledger against manipulation.

Of note: In order to verify that various cryptocurrencies were available in the state on KuCoin, a detective bought and sold digital assets on the platform from within its boundaries.

KuCoin did not immediately respond to a request for comment.

The bottom line: The AG is seeking disgorgement of ill-gotten gains from New Yorkers, injunctive relief and other remedies.

Yes, but: What everyone in the distributed ledger industry will actually be watching is whether or not the court sustains New York's contention that the second largest cryptocurrency in the world should be regulated as a security.

Editor's note: This story has been corrected to state that ether’s market capitalization is nearly $200 billion, not $200 million.

New York AG goes after the Ethereum blockchain

The state announced a suit against crypto exchange KuCoin, saying it's the first such suit alleging that ether is a security.

New York State Attorney General Letitia James speaks during a press conference, Sept 8, 2022.

New York State Attorney General Letitia James speaks during a press conference, Sept 8, 2022. (Photo: David Dee Delgado/Getty Images)

Cryptocurrencies

A lawsuit against a cryptocurrency exchange by New York State looks a lot more like a referendum on the world&#x27;s second biggest blockchain, Ethereum.Why it matters: Ether has a nearly $200 billion market capitalization and something like 400,000 daily users. Its popularity was partly driven by the fact that entrepreneurs had become convinced that the coin <a class="gtmContentClick" data-vars-link-text="had become exempt" data-vars-click-url="https://decrypt.co/46456/regulator-coined-term-sufficiently-decentralized-leave-sec" data-vars-content-id="01fd704d-4c2c-4951-a2d9-2ecffe584fa1" data-vars-headline="New York AG goes after the Ethereum blockchain" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://decrypt.co/46456/regulator-coined-term-sufficiently-decentralized-leave-sec" target="_blank">had become exempt</a> from securities regulations.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Circle's usd coin (USDC), the second-largest stablecoin in the world, fell below its $1 peg, as markets grappled with the fallout from Silicon Valley Bank's failure.

Why it matters:  Uncertainty in the U.S. banking system is creating fears for users of the $40 billion stablecoin, because a portion of its cash reserves were held at SVB, which the U.S. government took control of on Friday.

USDC's struggles suggest more financial turmoil is in store, as markets fully digest the collapse of SVB. The stablecoin first surrendered the 1:1 watermark late Friday, according to CoinMarketCap, and struggled to retake it on Saturday.

Last year, the cryptocurrency market was convulsed by the rapid collapse of Terra, another stablecoin; while Tether's USDT (the world's largest) also briefly de-pegged in November.

Zoom Out: The stablecoin's value proposition is that it is 100% backed by U.S. dollars or short-term U.S. treasuries, such that the tokens are always redeemable 1:1 for actual dollars in a traditional bank account. As such, it generally maintains a price of almost exactly $1, even in the hectic cryptocurrency markets.

USDC first fell below $0.99 at around 11:25 PM ET on Friday night, according to CoinMarketCap. It has fallen as low as $0.88.

As of this writing, the price has been gaining, currently at $0.98. 

What they're saying: In an update for users Saturday afternoon, Circle said that "While USDC can be used 24/7/365 on chain, issuance and redemption is constrained by the working hours of the U.S. banking system. 

Circle added: "USDC liquidity operations will resume as normal when banks open on Monday morning in the United States."

However, users seem unwilling to wait to shed USDC's counterparty risk. Tether is currently trading at $1.01, suggesting that many USDC holders are opting for the original, global stablecoin in this moment of uncertainty in the U.S.

In the weeds: Around $32.4 billion of the assets backing USDC are held in short-term U.S. treasuries, while $9.7 billion is held at six different depository institutions. One of those is SVB, which was seized by the Federal Deposit Insurance Corporation (FDIC) on Friday. 

Circle initiated a reshuffling of its cash holdings, as uncertainty about the bank grew. "Last week, we took action to reduce bank risk and deposited $5.4 billion with BNY Mellon, one of the largest and most stable financial institutions in the world, known for the strength of their balance sheet and as a custodian," the statement explains. 

The company also previously disclosed that $3.3 billion of its fund are currently stuck at SVB.

Bottomline: According to Circle, if the FDIC is not able to recover 100% of USDC's reserves held at the bank — or if it can't access them swiftly enough — it will pay for the difference out of company funds, or by raising money from investors to do so. 

Circle scrambles amid SVB fallout as USDC loses 1:1 peg

Circle seeks to reassure users of the world's second largest stablecoin following the collapse of one of its banking partners.

Jeremy Allaire, chief executive of Circle Internet Financial Inc., during  the World Economic Forum (WEF) in Davos, Switzerland, on 2023. Photo: Hollie Adams/Getty.

Silicon Valley Bank

Circle&#x27;s usd coin (USDC), the second-largest stablecoin in the world, fell below its $1 peg, as markets grappled with the fallout from <a class="gtmContentClick" data-vars-link-text="Silicon Valley Bank" data-vars-click-url="https://www.axios.com/economy-business/svb-silicon-valley-bank" data-vars-content-id="23bf2d6c-09a9-4308-adea-7eed33b5bab9" data-vars-headline="Circle scrambles amid SVB fallout as USDC loses 1:1 peg" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/economy-business/svb-silicon-valley-bank" target="_self">Silicon Valley Bank</a>&#x27;s failure.Why it matters: Uncertainty in the U.S. banking system is creating fears for users of the $40 billion stablecoin, because a portion of its cash reserves were held at SVB, which the U.S. government <a class="gtmContentClick" data-vars-link-text="took control of" data-vars-click-url="https://www.axios.com/2023/03/10/silicon-valley-bank-government-control-fdic" data-vars-content-id="23bf2d6c-09a9-4308-adea-7eed33b5bab9" data-vars-headline="Circle scrambles amid SVB fallout as USDC loses 1:1 peg" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/03/10/silicon-valley-bank-government-control-fdic" target="_self">took control of</a> on Friday.USDC&#x27;s struggles suggest more financial turmoil is in store, as markets fully digest the collapse of SVB. The stablecoin first surrendered the 1:1 watermark late Friday, according to CoinMarketCap, and struggled to retake it on Saturday.<ul><li>Last year, the cryptocurrency market was convulsed by the <a class="gtmContentClick" data-vars-link-text="rapid collapse of Terra" data-vars-click-url="https://www.axios.com/2022/06/06/terra-stablecoin-fell-apart-bitcoin-bear-report" data-vars-content-id="23bf2d6c-09a9-4308-adea-7eed33b5bab9" data-vars-headline="Circle scrambles amid SVB fallout as USDC loses 1:1 peg" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/06/06/terra-stablecoin-fell-apart-bitcoin-bear-report" target="_self">rapid collapse of Terra</a>, another stablecoin; while <a class="gtmContentClick" data-vars-link-text="Tether&#x27;s USDT" data-vars-click-url="https://www.axios.com/2022/11/10/tethers-usdt-stablecoin-depegs-from-dollar-for-a-brief-window" data-vars-content-id="23bf2d6c-09a9-4308-adea-7eed33b5bab9" data-vars-headline="Circle scrambles amid SVB fallout as USDC loses 1:1 peg" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/11/10/tethers-usdt-stablecoin-depegs-from-dollar-for-a-brief-window" target="_self">Tether&#x27;s USDT</a> (the world&#x27;s largest) also briefly de-pegged in November.</li></ul>

We now have an idea about crypto companies that have registered with the Securities and Exchange Commission (SEC), which lets us look at their subsequent success rate.

Why it matters: The SEC's pitch to companies has been that registration is as simple as a form on the agency's website. But according to a new list, only nine have attained some kind of registration with the agency. They've had mixed results afterward.

The big picture: It is not known how many others have tried to register and failed, or simply gave up on the process. But according to at least one that succeeded, the system is in need of improvement.

"The SEC needs to make a more friendly environment for people trying to adhere to the law," Alan Silbert, the North America CEO for crypto exchange INX, said on Twitter. "They need to advance registrations that have been toiling for too long."

Between the lines: Given the mixed track record of the few that have registered, the rewards to this point haven't opened the floodgate for others to apply.

Quick take: Founders aren't going to want to follow the rules if it doesn't also engender companies' survival.

The latest: For the first time, SEC staff provided a list of firms that have attained some kind of registration with the agency. It was first given to a reporter with Fox Business and subsequently confirmed for Axios.

Details: Here's what's happened with the various firms that have collaborated with regulators so far.

Blockchain of Things, which made it easier to build apps on bitcoin. After 7.5 years, it announced it was shutting down at the end of February, and open sourcing its work so far.

ParagonCoin, which made a token for weed entrepreneurs. It also got in trouble over an ICO and it is long gone. 

YouNow, a livestreaming company, registered its PROPS token. The company gave up on its token in 2021.  

Airfox (Carrier EQ), enabled users to earn prepaid mobile time with ads. It was fined by the SEC after failure to register its initial coin offering (ICO). Two years later, the Boston-based company was bought by a firm in Brazil.

Enigma MPC, a builder of privacy technology. Also registered out of a settlement over an ICO. Its website is gone though its last blog post from 2020 said it would persist. Instead, the token swapped for SCRT and the firm rolled into the Secret Network, which is a blockchain with a $166 million market cap.

SALT Lending, a crypto lender. It registered following a 2020 settlement over its ICO. Apparently the business is on pause, but it just announced a conversion of debt to equity. 

Hiro Systems (formerly known as Blockstack), a maker of a smart contract blockchain that uses bitcoin for security that has spun out into a number of entities since. The family has carried on after it did an expensive Reg A registration and then announced its STX token was no longer a security two years later. The Stacks chain is the 43rd largest on CoinGecko. 

INX, an exchange, which did an F-1 filing. It's leaning into tokenized securities.

Ceres. It's a payment processor for the cannabis industry that also went the Reg A route. The company confirms it is still a going concern.

What they're saying:  Stuart Alderoty, the chief counsel of Ripple — a crypto firm that's been in a years-long battle with the agency — gave this advice in a Blockworks interview for emerging crypto companies: "Don’t launch it in the US."

Our thought bubble: If compliance is a strategy for success, entrepreneurs will do it — but they get into business to succeed, not to comply.

The few crypto firms that have registered with the SEC

The list is only nine deep, and they've had mixed results so far.

We now have an idea about crypto companies that have registered with the Securities and Exchange Commission (SEC), which lets us look at their subsequent success rate.Why it matters: The SEC&#x27;s pitch to companies has been that registration is as simple as <a class="gtmContentClick" data-vars-link-text="a form on the agency&#x27;s website" data-vars-click-url="https://www.youtube.com/watch?v=dlzX2UDTtUI" data-vars-content-id="963ad153-4e96-4a30-989f-677fc7d60fc4" data-vars-headline="The few crypto firms that have registered with the SEC" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.youtube.com/watch?v=dlzX2UDTtUI" target="_blank">a form on the agency&#x27;s website</a>. But according to a new list, only nine have attained some kind of registration with the agency. They&#x27;ve had mixed results afterward.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Crypto staking is a way of maintaining consensus over bookkeeping systems with thousands of simultaneously updated copies — that is, a blockchain.

Why it matters: A massive amount of value is tied up in staking. On Ethereum alone, 17.6 million ethers (about $30 billion in value, or 14% of ether's total market cap) is staked on the network, guaranteeing its transactions are provably fair.

Many other blockchains also use staking, such as everything in the Cosmos ecosystem, Avalanche and Tezos. Each of them also has a massive amount of value staked.

Big picture: Stakers are like the bookkeepers on the blockchains.

They check every transaction and make sure that the person sending it actually has the funds to send. If the sender does, it gets logged permanently on chain.

Zoom in: With billions of dollars in value at stake, such bookkeepers might be tempted to cheat and put funds in their own pockets or those of their friends.

But that puts their stake at risk. Those funds posted on the network are a sort of surety, and could be taken by other bookkeepers if one is found to be misbehaving.

In short, Ethereum has $30 billion in crypto ensuring that everyone plays fair.

The upshot: These bookkeepers are willing to take this risk because they get paid to do so. They get fresh new emissions of cryptocurrency for every block they take responsibility for validating.

Plus they get all the fees associated with transactions in that block.

Users of blockchains have to pay them to run transactions. It's not much, but it adds up.

Between the lines: It actually isn't just that they play fair. It's also that they do the job well. A staker can lose some stake if it goes offline or screws up (though it won't be as bad as if they steal).

This has made staking a highly professionalized field with big companies that have whole tech teams running them, which isn't super democratic.

Of note: Obol Labs is a new startup making it feasible to split up duties, which could enable more kinds of entities to participate.

Even as it stands, tens of thousands of validators are running around the world.

The intrigue: A person or company doesn't have to do the validation in order to participate though. It's also possible to delegate.

Basically, you entrust your crypto to one of these bookkeepers and you share in the rewards it earns pro rata.

The biggest network of delegators is called Lido, which has $9 billion of cryptocurrency allotted to it across five different blockchains.

Another really big network is Coinbase, which enables its users to stake their assets seamlessly in the app. So far, $1.8 billion in ether has been staked on the largest U.S. exchange.

Kraken, a competing exchange, recently shut down a similar program at the behest of the SEC.

Be smart: Both Lido and Coinbase tokenize people's stakes. That means they get a sort of cryptocurrency coupon for their deposits, one that tracks their staking earnings and that can be traded on chain, without unstaking.

What we're watching: Ethereum's staking program has been unique. What has gone into Ethereum as a stake has not come out again, by design. But when the Ethereum protocol undergoes its next big upgrade this month, stakers can start withdrawing ether.

It's anyone's guess how much of those billions of dollars in locked up assets will actually hit the market again.

Kraken, under SEC pressure, ends U.S. ether staking

How crypto staking connects to financial censorship

Staking-made-easy tools come with caveats

The promise and perils of staking cryptocurrency

A massive amount of value is tied up in staking. On the Ethereum blockchain alone, $30 billion in value is staked on the network, guaranteeing its transactions are provably fair.

Illustration of quarters transformed into nails.

Crypto staking is a way of maintaining consensus over bookkeeping systems with thousands of simultaneously updated copies — that is, a blockchain.Why it matters: A massive amount of value is tied up in staking. On Ethereum alone, <a class="gtmContentClick" data-vars-link-text="17.6 million ethers" data-vars-click-url="https://link.axios.com/click/30844329.11/aHR0cHM6Ly9ldGhlcmV1bS5vcmcvZW4vc3Rha2luZy8_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXNlbmR0b19uZXdzbGV0dGVydGVzdF9idXNpbmVzcyZzdHJlYW09dG9w/61d4c32113dff9036e0a6074Bad3a2250" data-vars-content-id="b03fc89e-6bb8-4a8f-b15b-fb882670583e" data-vars-headline="The promise and perils of staking cryptocurrency" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/30844329.11/aHR0cHM6Ly9ldGhlcmV1bS5vcmcvZW4vc3Rha2luZy8_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXNlbmR0b19uZXdzbGV0dGVydGVzdF9idXNpbmVzcyZzdHJlYW09dG9w/61d4c32113dff9036e0a6074Bad3a2250" target="_blank">17.6 million ethers</a> (about $30 billion in value, or 14% of ether&#x27;s total market cap) is staked on the network, guaranteeing its transactions are provably fair.

Justin Sun, creator of the Tron blockchain, is one of the best known and least credible major characters in the cryptocurrency industry. And now he has a new facet to his notoriety: allegations of market manipulation by the U.S. Securities and Exchange Commission.

Why it matters: Everyone has known for some time that a lot of crypto trading is fake, driven by large players looking to drive up the value of their holdings. By taking on one of the most prominent faces in the industry, D.C. has shown it's paying attention.

What they're saying: “While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” Gurbir S. Grewal, from the SEC’s Division of Enforcement, said in a statement.

“As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors."

Zoom in: The SEC's complaint goes into great detail explaining how different members of staff at three companies controlled by Sun were recruited in a so-called wash trading scheme.

Wash trading is when an asset is traded back and forth in a market to make it look like there's demand, when really it's one person — or colluding people — just sending the asset back and forth. 

Be smart: Unregulated exchanges have little incentive to police wash trading, as the transactions earn trading fees, like any other trades.

In one report from 2018, the SEC quotes one of Sun's employee's writing, “The boss reminded us of the need to increase trade volume, we need to increase the liquid parameter next week, concentrate on binance, bittrex, bithumb, upbit exhanges." 

Based on that quote, the budget for wash trading at that time was 2.5 BTC per day, or roughly $16,000 per day, at October 2018 prices.

"During the 249 days when those accounts were active, Sun’s team engaged in at least 609,790 wash trades of TRX, averaging about 2,449 wash trades per day," the complaint alleges, referring to the blockchain's core token.

Meanwhile, it meticulously details how Sun and his team were unambiguous in marketing TRX to the public in a way that created an expectation of profit.

That's a key point in establishing that a financial instrument constitutes a security under the SEC's authority. 

The details include outright statements assuring buyers it would go up in value.

Zoom out: If there's one thing Sun and his team are known for, it's marketing. He has a gift for drawing attention to himself and his projects.

So it's no surprise that the SEC also alleges that the companies solicited celebrities to make inappropriate endorsements of the blockchain.

The Tron Foundation did not immediately respond to a request for comment from Axios.

When the Tron whitepaper was first proposed, it was immediately accused of lifting text and key concepts from the language and materials used by other projects. 

Tron uses a delegated proof-of-stake consensus model, one that's proved susceptible to power concentration on other blockchains.

Indeed, Sun swiftly won an election to serve as one of the leading nodes almost immediately when he announced his candidacy. 

Tron's war chest was established in part via a $70 million initial coin offering. Then its treasury expanded with a stash of the same coins crated for that sale, TRX.

In 2018, the Tron Foundation acquired the company behind BitTorrent for a reported $120 million, changing its name to Rainberry, and losing many of its staff.

BitTorrent is a peer-to-peer filesharing protocol which has been crucial for how the web works behind the scenes, but has never really made money for its creators.

Shortly therafter, the Tron Foundation announced it would create a new token called BTT to encourage more use of the network, which works better the more people seed it with copies of data.

The BTT token was then given pro rata to anyone who held TRX tokens on the Tron blockchain in a series of airdrops.

Of note: That was just one of a number of promotions the SEC describes, using this new token to drive interest in TRX.

While the SEC suit focuses on use by U.S. citizens as a way to establish jurisdiction, Tron has mainly been popular in Asia. 

By far the largest amount of Tether, the leading stablecoin popular with Asian traders, has been issued on Tron, with $43 billion running there.

Sun himself is a Chinese national, who became the World Trade Organization representative for the nation of Grenada in 2021.

He has remained active in the Tron ecosystem and crypto in general, however.

Tron's TRX token has fallen from 12%, from $0.068 to as low as $0.058, making it one of the worst losers on an already bad day in the crypto markets (following the Fed's interest rate hike).

The BTT token is hardly worth anything, really, so it only fell a little.

The bottom line: The SEC seeks a jury trial, but it's worth noting that wash trading allegations in the past have at times resulted in criminal action. 

SEC's new crypto suit alleges market manipulation

U.S. regulators go after the notorious blockchain ecosystem known as Tron over fake trades that made it look like the token had more demand than it did.

Illustration of a digital coin rising from the horizon with beams of light around it

Justin Sun, creator of the Tron blockchain, is one of the best known and least credible major characters in the cryptocurrency industry. And now he has a new facet to his notoriety: <a class="gtmContentClick" data-vars-link-text="allegations of market manipulation" data-vars-click-url="https://www.sec.gov/news/press-release/2023-59" data-vars-content-id="f5906778-f655-48c9-a558-46a411248a4f" data-vars-headline="SEC&#x27;s new crypto suit alleges market manipulation" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.sec.gov/news/press-release/2023-59" target="_blank">allegations of market manipulation</a> by the U.S. Securities and Exchange Commission.Why it matters: Everyone has known for some time that a lot of crypto trading is fake, driven by large players looking to drive up the value of their holdings. By taking on one of the most prominent faces in the industry, <a class="gtmContentClick" data-vars-link-text="D.C. has shown" data-vars-click-url="https://www.axios.com/2023/02/06/crypto-washington-federal-reserve" data-vars-content-id="f5906778-f655-48c9-a558-46a411248a4f" data-vars-headline="SEC&#x27;s new crypto suit alleges market manipulation" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/02/06/crypto-washington-federal-reserve" target="_self">D.C. has shown</a> it&#x27;s paying attention.

Brady Dale

Stories

SEC's new crypto suit alleges market manipulation

The promise and perils of staking cryptocurrency

Circle scrambles amid SVB fallout as USDC loses 1:1 peg

New York AG goes after the Ethereum blockchain

The few crypto firms that have registered with the SEC

Newsletter editions

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☎️ The SEC is calling