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SEC Abandons Ethereum Fight: "We Can’t Afford More Embarrassment"
The SEC drops its ETH investigation, CertiK hacked Kraken, and Animoca keeps throwing money
OVERVIEW
SEC Abandons Ethereum Fight: "We Can’t Afford More Embarrassment"
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If you are looking for good news to move this market, well, you’ll probably have to wait for something more bullish than the SEC dropping their Consensys/ETH case. 🤷♂️
In today’s Litepaper, we’re looking at the SEC’s recent decision to tuck-tail-and-run, run away, fly you fools, abandon ship, let Ethereum be.
Also on deck: Certik’s absolutely crazy (and ongoing) hack of Kraken and Animoca Brands throwing more wads of cash at another Web3 game. 📰
Before we dive in, here’s today’s crypto market heatmap:
And here’s a look at crypto’s total and altcoin market cap YTD:
ETHEREUM
SEC Drops Ethereum Investigation 🫳
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The SEC has officially closed its investigation into whether Ethereum ($ETH) is a security, saving itself from another major losing crypto battle. 🧑⚖️
A Bit of Backstory
In 2018, the SEC declared that Ethereum was not a security.
Fast forward to 2023, and the SEC had a change of heart, quietly deciding it had jurisdiction over Ethereum.
Consensys wasn't having it. They sued the SEC on April 25, 2024, to halt what they deemed an invalid investigation.
The crypto community, including policymakers and members of Congress, rallied behind Consensys, pushing the SEC to back down.
The Tipping Point
The SEC's approval of Ether ETFs in May hinted at a shift in its stance, aligning with the notion that ETH is a commodity, not a security. This approval became a focal point in Consensys' legal strategy, leading to a June 7 letter demanding clarity from the SEC. ✉️
On June 19, the SEC officially closed its Ethereum 2.0 investigation, a move likely driven by their weak legal standing rather than a change of heart.
While Consensys and the broader crypto community celebrate this victory, it's not the end of the war. The SEC’s regulation-by-enforcement approach continues to loom over the industry. Consensys' lawsuit also targets the SEC's stance on their software offerings: MetaMask Swaps and Staking, arguing they don’t function as securities.
The closure of the Ethereum investigation is a win, but it’s far from a resolution. As Consensys aptly put it, they—and the broader crypto community—deserve to operate without the constant threat of unclear and overreaching regulations. 💼
Open Interest Drops, ETH Hodls to $3,500
From a price action perspective, Ethereum is holding the fort above $3,500 while open interest takes a nosedive. Open interest has plummeted to $11.5 billion, shedding $1.5 billion in just two weeks.
According to Decrypt, the decline suggests traders aren't expecting any roller-coaster rides in the near future. Ethereum’s open interest hit a peak on June 5, only to be followed by $400M in liquidations—$285 million from long liquidations alone.
For the uninitiated, open interest refers to the total number of unsettled derivative contracts. A drop in open interest usually means fewer wild price swings, as it indicates less leverage in the market. 📊