Newsletter: The "War" on Crypto

Welcome to issue 133: This week we cover SEC <> Crypto latest developments, 1kx team on multiplayer creation, Patrick Rivera w/ The Myth of Web3's Infrastructure Phase, Gucci <> Yuga Labs Collab, The YUP Web3 social app launch plus the latest mainstream news and more...

By Forefront - Mar 27, 2023

Welcome to edition 133:

▹ SEC <> Crypto
▹ Nichanan Kesonpat & Accel XR on multiplayer creation
▹ Patrick Rivera on Web3 Infrasctruture
▹ Gucci <> Yuga Labs Collab
▹ Balajis $1m <> Bitcoin Bet
▹ FWB Fest 2023 ▹ Mainstream news and more...

---This edition is brought to you by Otterspace

Week’s Highlight

The "war" on crypto in the United States is escalating rapidly.

This past week, Coinbase received a Wells notice from the SEC regarding an unspecified portion of our listed digital assets, our staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet. A Wells notice is the way that SEC staff tells a company that they are recommending that the SEC take enforcement action for possible violations of securities laws. It is not a formal charge or lawsuit, but it can lead to one.

Ironically enough, two years ago the SEC reviewed Coinbase's business in detail and approved Coinbase to go public. Their S1 clearly explained their asset listing process and included 57 references to staking. While there haven't been significant changes to the business model since then, the SEC seems to have changed their mind.

This is striking not only because Coinbase is one of the most widely known and trusted crypto exchanges in the world, but also because Coinbase is a public company that has actively worked with regulators in the past. The SEC doesn't seem to be willing to work with crypto companies on clarifying their point of view.

Paradigm's Policy team agrees. This week, they published a two-part report explaining why there is no truly viable path to registration for crypto projects, despite the SEC's claims that companies can just call them up to register.

Coinbase and co. seem to be ready to fight this battle in court. The future of the industry in the USA might depend on it.

As we publish this newsletter there is also news of Binance and its founder Changpeng "CZ" Zhao being sued by CFTC Over US Regulatory Violations.

What's Poppin'

Multiplayer Creation: Unlocking Participatory Media. Crypto unlocks multiplayer media and value creation on the internet. This week, the 1kx team published this report taking a deep dive into the multiplayer creation stack and flow. Among other things, they believe that crypto gives creators a new playing field where they can define a set of values, source ideas from within the community, and produce art that doesn't compromise to third-party interests. The team lists some companies and projects that are working on different parts of the stack, and creators and squads who are using these tools to unlock new ways to create together and build feedback loops with their communities for to-be-released work, de-risking distribution and crowd affinity. This is a must-read for anyone building at the intersection of web3 x creators.

The Myth of Web3's Infrastructure Phase. There's widespread belief that mainstream adoption is still being held back by lack of infrastructure. The sentiment is that we need better wallets, alt L1s, rollups, rollups on rollups, multi-chain bridges, web3-native growth tools, etc. Patrick Rivera disagrees. In this piece, he argues that the biggest problem most infrastructure teams face is that there aren't enough consumer teams building great apps on top. The future of web3 consumer will require building compelling products and experiences. He believes that, over time, most people won't be aware that they're interacting with blockchains or tokens. They may just refer to the web3 elements as digital collectibles, points, badges, membership cards, or any number of other more consumer-friendly terms. This is a much-needed take on the failure to focus on consumer experiences as an ecosystem.

Seed Club Ventures Emerges With $25M to Back DAOs. Our friends at Seed Club Ventures have emerged from stealth with $25 million committed to investing in DAOs and the DAO ecosystem. Organized as a DAO itself, Seed Club Ventures plans to back projects in the earliest stages of development. The community includes more than 60 investment firms and angel investors, including Multicoin Capital, Delphi Digital and Dragonfly. The fund has been "quietly investing" since the third quarter of 2021 and has backed projects like Guild, Stability AI, Lens, and Metalabel. Instigator NiMa Asghari said: "Crypto is definitely one of the big pieces of the puzzle, but we felt this philosophy was missing that communities can have ownership and have a source of funding, and we want to be an example of that." The team has and will continue to do fantastic work, and we're lucky to have them as part of the ecosystem.

Hitchhiker's Guide to Rollups-as-a-Service. According to 0xJim, the advent of modular blockchains, Ethereum's roll-up centric vision, and Vitalik's acknowledgement of centralisation for the sake of scalability in his Endgame pretty much makes the vision for millions of application-based blockchains inevitable. He believes this future will be unlocked through Rollups-as-a-Service (RaaS). Many application teams don't want to think about running infrastructure. Just like how AWS abstracted the complexity of hosting servers, RaaS projects are doing the same for standing up and maintaining blockchains. Jim walks us through a variety of projects and ecosystems, from Cosmos to Ethereum, exploring how RaaS will come about and how development is already in play. However, modular stalwarts --- like Fuel, Celestia, and the zk rollups --- have still not launched, meaning we're still very early in this vision. Nonetheless, this is an extremely insightful piece for anyone interested in the future of application development on the blockchain.

The Yup Web3 Social App. Web3 social has arrived. Our friends at Yup have officially launched the Yup app, an all-in-one feed for Lens, Farcaster, Twitter, Mirror, and the rest of your web3 social experience. The beta waitlist is live now, and folks are being onboarded as we speak. With transparent public data, blockchains are already social networks. Yup just makes them easier to explore. Yup leverages on-chain composability to aggregate content,  in line with our vision for web3 social and EVM Network Effects. Super exciting stuff from the Yup team -- we're excited to try out the app!

Latest on Mainstream...

Latest on Mainstream...

First off, federal prosecutors in New York charged Terraform Labs founder Do Kwon with fraud hours after he was arrested by police in Montenegro. Kwon, whose location had been a mystery for months, also faces an investigation in South Korea and has been on an Interpol wanted list in connection with last year's Terra (UST) collapse. Kwon already faced civil charges filed by the SEC, which alleged in February that he misled investors.

Next, SushiSwap confirmed that it was also served an SEC subpoena. A proposal to start a $3M Legal Defense fund for the DAO was posted this week. The SEC also charged Tron's Justin Sun, and celebrities including Lindsay Lohan and Jake Paul, for various involvement with crypto pump and dumps.

Finally, bankrupt cryptocurrency lender Celsius has received formal approval to let custody account holders receive more than 72% of their holdings. US bankruptcy judge Martin Glenn granted a settlement agreement stating custody account holders will have to sign an opt-in form to receive the settlement payment, a filing, released Tuesday, showed.

Signal Bites

▹ Read - Revenue? In This Economy?
▹ Opinion - Government <> Crypto
▹ Mainstream - G7 Members on Crypto
▹ Cool - FWB FEST 2023
▹ Collab - Gucci x Yuga Labs Collab
▹ NFT - Magic Eden on Bitcoin
▹ Interesting - Sony NFT Patent
▹ Cool - Quality drop 3
▹ Wild - Balaji $1m Bet
▹ Report - $1b in ETH lost
▹ Deep Dives - NFTs Directions
▹ Tooling - DAOhaus V3
▹ Techy - zkEVM Public Mainnet
▹ Tweet Check - Crypto x AI

Check out Signal  for daily top web3 social headlines

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The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.

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