Axios Crypto

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Consensys is suing the SEC, and all of the commissioners too. Plus, BTC post-halving performance.

Update: The Ordinal made from the first satoshi after the latest Bitcoin halving has sold for 33.3 BTC (over $2 million), not 16.8 BTC ($1.07 million) as we said yesterday.

Today's newsletter is 897 words, a 3½-minute read.

1 big thing: 🦊 Consensys is suing the SEC... and Gary

Illustration: Aïda Amer/Axios

Consensys filed a lawsuit yesterday against the SEC.

Why it matters: "Sue before you get sued yourself" is an emerging offensive tactic that crypto firms are using against their No. 1 antagonist.

Driving the news: One of the biggest Ethereum-centric firms behind popular apps like MetaMask, Consensys is striking back — or first — amid reports of an ongoing campaign by the U.S. securities regulator to classify the world's second-largest digital asset as a security.

The big picture: At least two other firms involved in crypto sued the regulator in similar fashion, over different issues, earlier this year.

  • A Fort Worth-based crypto shop sued in February, and a Waco-based retailer sued in March, with industry advocacy groups Crypto Freedom Alliance of Texas (CFAT), and the DeFi Education Fund joining those suits, respectively.
  • They are separate cases, all three filed in Texas, but all say that the SEC is going too far.

Between the lines: Besides the SEC itself, Consensys' lawsuit was filed against all five SEC commissioners, by name, including chair Gary Gensler.

  • Turns out, the company got a Wells Notice two weeks ago, a heads up from the SEC that it's likely to file an enforcement action.
  • Consensys founder Joe Lubin said of the lawsuit in an accompanying blog post: "We don't take this step lightly, but we feel compelled to act."

💭 Our thought bubble: There are redactions in the lawsuit where the details get juicy.

  • The SEC declined to comment on the suit.

Zoom in: Fort Worth-based Consensys is asking a court to say that ether is not a security, that its MetaMask wallet is not a broker, and that its staking service didn't violate federal securities law, before the SEC sues them.

  • The issues are exactly those that the SEC staff detailed in its April 10 Wells Notice, according to the company.
  • Consensys is seeking injunctive relief, which if granted would prevent the SEC from continuing its investigation or handing the company an enforcement action in the future.
  • It also wants to recoup "reasonable costs" incurred, like legal fees for suing the SEC.

What they're saying: Consensys has been subject to "coercive investigation" by SEC staff and in 2023 received three subpoenas containing two dozen distinct requests for information, according to the lawsuit.

  • 📑 The company says it produced documents totaling over 88,000 pages.

What we're watching: SEC staff was interested in the company's sale of ether.

2. 🤓 Charted: Halving hindsight

Bitcoin price performance after halving
Data: Kaiko; Chart: Alice Feng/Axios Visuals

Following the 🥑 halving, some folks might be waiting for 🍊 bitcoin prices to rocket higher.

An analysis of price performance after halvings shows that the biggest returns come nine months after the event, or one year, according to Kaiko Research.

  • One year after the 2012 halving, BTC posted a 8,228% gain — the best performance it put up historically.
  • In 2020, its price was up just 542% one year after the halving.

The intrigue: Given the halving is an expected, and programmed event, and following Efficient Market Theory, one might proffer that the reduction in supply would already be priced in.

  • Other people have different thoughts about this.

Reality check: "Bitcoin's halving alone won't be a catalyst for a sustained bull run over the next 12 to 18 months," according to Kaiko.

  • The research firm also pointed out that BTC ran up in past halvings while interest rates were super low, and now they are not.

3. 🇹🇷 Turkey stablecoin spending reaches 4% of GDP

A Turkish national flag hangs above the Arasta Bazaar in Istanbul, Turkey. Photo: David Lombeida/Getty

Turkish people are leaning hard on stablecoins as the Turkish lira continues its decade-plus fall.

Why it matters: It's a sign that some parts of the world really are embracing cryptocurrency as an economic refuge when inflation becomes too severe.

Between the lines: According to the spring report from Chainalysis, spending with stablecoins in the Mediterranean nation has hit 4% of GDP.

Other developing nations are also seeing significant stablecoin use.

  • Using data from CCData, Chainalysis shows that Thailand is also seeing more than 1% of GDP in stablecoin transactions, and Georgia is at more than 0.5%.
  • The U.S., European Union and the U.K. represent fourth, fifth and sixth place for stablecoin use as a proportion of their economies, though each of those are much larger economies.

That said, Turkey is the second largest (after the U.S.) for fiat purchases of stablecoins.

4. 🏃 Catch up quick

Illustration: Natalie Peeples/Axios

👮‍♀️ The FBI published a PSA on crypto money transmitters yesterday, with tips to "protect yourself." (IC3)

🇪🇺 The European Parliament voted to adopt laws tightening money laundering and terrorist financing measures. (EU Parliament)

⛏️ The SEC charged Texas mining outfit Geosyn and its cofounders Wednesday for allegedly defrauding investors out of $5.6 million. (SEC)

5. 🤳 Stripe brings back crypto payments

Screenshot: @collision (social media)

Crypto payments are coming back to Stripe soon.

Why it matters: The European payments giant has had positive things to say over the years about cryptocurrency as a way to pay for things, but it nixed its experiments with using it after the market fell apart in 2018.

The latest: They have only incorporated Circle's usd coin (USDC) so far, but on several different blockchains.

  • It sounds like other cryptocurrencies may be coming.

But wait... there's more: Stripe co-founder John Collison seems genuinely delighted by how far the cryptocurrency user experience has come.

  • He buys something for 99 USDC on Solana live on stage, using the Phantom wallet, and it's done lickety-split.

The bottom line: This is a man who knows a little something about the UX of payments.

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

😼 The OP_CAT update we covered earlier this week really does have a Bitcoin Improvement Proposal number now (and it's not "420"). —B & C