Discovery Phase for Coinbase SEC Lawsuit

The Breakdown First Five - Thursday, March 28, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Fink: ETH ETF Still Possible

Blackrock CEO Larry Fink isn’t worried about the SEC labeling Ethereum a security. He still thinks an ETF is possible even in that circumstance. On the Bitcoin product, Fink said it was the "fastest growing ETF in the history of ETFs.” He said he’s “very bullish on the long-term viability of bitcoin.” Less than two months remain until the SEC will be forced to make a call on ETH ETFs. 

4. Investors Targeting 3% Allocation

The next stage for Bitcoin ETFs is the allocation from wealth managers and Bitwise CIO Matt Hougan thinks it will be a big one. He said that for professional investors “3% is the new 1%.” For a long time the goal was to get wealthy investors off zero, but it seems the stakes have been raised. On the ETF inflows, Hougan said it’s indicative of long-term sustained demand that will “continue for years.”

3. Unexplained Wealth 

A Canadian province has used a controversial new AML tool to interrogate the wealth of Quadriga co-founder Michael Patryn. This is the third time the British Columbian courts have used an unexplained wealth order. The province alleges that Patryn had $250,000, 45 gold bars, alternate passports and a pistol in a safety deposit box. The order argues that Patryn aka Sifu was deeply involved in the misappropriation of customer funds from Quadriga. 

2. Memecoin Fun Police

The UK Financial Conduct Authority are looking into memecoin ‘finfluencers’. Memecoin promotors could be falling afoul of the UK’s tough crypto marketing rules, which could be a criminal offense. The regulator also warned the public to beware of “dubious adverts and scams online.” The FCA had previously warned of non-compliant crypto memes in July 2023, this time around the promotion of other tokens on social media. 

1. Coinbase Trial Continues

The most substantive parts of the Coinbase motion to dismiss have been denied, moving their lawsuit against the SEC into the discovery phase. The judge found that the SEC had an arguable case that some crypto tokens offered on the platform are securities, as are staking services. The claim that Coinbase’s wallet is an unregistered securities exchange by itself was unconvincing, with that claim being dismissed.