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Law Decoded: Public companies, private markets, crypto offerings and you, Aug. 28–Sept. 4

In light of newly expanded qualifications for accredited investors, Law Decoded looks at recent interactions between crypto and public companies.

Republished by Plato

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Editor’s note

It is a cruel twist of fate that during the first hiatus week in Law Decoded’s existence, the SEC put out long-awaited updates to accredited investor qualifications. Upon reading the news, your faithful and ever-vigilant policy editor put down his phone, cast a wistful eye upon the sun’s reflection dancing in the midground of the Atlantic Ocean. Bracing himself with a deep quaff of Corona, he thought ‘Not today.’ Before the sorrow of not being the one to bring the news to you could overwhelm him, he grabbed a battered borrowed surfboard and made for the waves. 

Never one to dwell on the past, I will keep most of this week’s newsletter focused on more recent events. In our continuing mission to boldly present you with only the freshest of takes etc. Last week’s accredited investor shift is too fascinating to pass up, but it ties in with some broader trends about the barrier between public and private markets. 

This week has highlighted U.S. federal protection of publicly traded companies, while also amplifying discussion of what exactly public trading should and should not do. It’s an interesting debate in which crypto is a powerful case study. Aside from being a theoretical new monetary system, cryptocurrencies have a reputation for being among the most volatile investments accessible to the general public. In bringing them to heel, the SEC hopes to at least weed out overt frauds and scams. 

The flip side is that even without the example of crypto many people criticize the SEC for curating walled gardens of private investment for rich insiders. Crypto evangelists harp on about crypto breaching these walls. They do indeed have a point. But so too does the SEC. 

Accreditation rules the nation

Regarding the SEC’s announcement, the basic function of the commission for its nearly 90-year history has been to protect investors, full stop. A derived function is pruned investment markets are more attractive to investors. While everybody acknowledges that an overbearing regulator is bad for business, the commission has played a critical role in seeing the U.S.’s investment markets become the envy of the world since its Great Depression-era origins — though huge forces like the Second World War, decolonization and the collapse of old-world empires, Communism and even American innovation helped out over the years.

The accredited investor classification comes from Reg. D, an exemption to public filing that says some people don’t need as much protection. It dates to the Reagan years, though updates in the 2000s were a big part of ushering in the era of the “unicorn,” a company with a valuation of over $1 billion before its IPO — which doesn’t really happen without private investment. At the same time, recent years have seen private investment under Reg. D consistently dwarf IPO investment, which suggests that the rich can just get richer on the ripest returns while public investors are stuck waiting for companies who are in some sense already past their prime.

Largely due to high-profile attacks on crypto offerings using Reg. D in the U.S. (especially Telegram), 2020 has seen shifts to other exemptions that allow retail investors but have lower caps on how much total money can come in. The new rules are promising in that they open new avenues for people to demonstrate investment savvy rather than just resources to spare as a way of getting accreditation. But then again, will that just incentivize companies to stay private longer?

Remaining private saves firms from expensive disclosures and lets owners keep their power consolidated. But tilting the table further in favor of private equities runs the risk of cutting public markets off from new blood. 

FBI raids teenager’s home in Bitcoin giveaway Twitter hack investigation

The FBI searched the home of a 16-year-old in Massachusetts, who they claim may have masterminded July’s twitter hack alongside Graham Ivan Clark.

Clark is standing trial in Florida, where he faces charges that could add up to centuries behind bars. It seems the second mastermind evaded authorities for a month longer thanks to encrypted messaging services Signal and Wire, which should do a lot to advertise for those services. 

While this unnamed second mastermind has yet to face charges, a troubling component of the case is that it also seems like a really good advertisement for being a publicly traded company in the U.S. Very few murders see manhunts as far-reaching and efficient as this theft of some $117,000 at the expense of TWTR’s reputation. 

On the other hand, murder is generally a state crime that doesn’t invoke federal investigation in the same way as fraud committed across state lines. Given Twitter’s role in modern political discourse, the hack was especially scary because it brought out honest fears that more malicious hackers could have used the same exploit to start wars, 280 characters at a time. 

In defense of Tesla

In a case of a stitch in time saving nine, the FBI busted a Bitcoin ransomware attack aimed at Tesla.

Now-jailed Russian banker Pavel Kriuchkov allegedly spent a month in the U.S. trying to recruit a Tesla employee into a ransomware scheme that authorities say was aiming at extorting $4 million from the company. 

Unlike the Twitter case, which saw the attackers hoodwink an unwitting employee into turning over critical access to accounts, a loyal Tesla employee flagged Kriuckhov to the company, which in turn called on the FBI. The details of the case remain hazy. The original case against Kriuchkov doesn’t even name Tesla; CEO Elon Musk had to do that. 

Meanwhile, TSLA stock is seeing a plummet on the last few days, in step with the broader tech market. 

Further reads 

Jim Harper of the American Enterprise calls on Zcash’s grant committee to put more resources into philanthropic applications of its privacy technology. 

The Center for Strategic and International Studies looks at what China stands to gain from a digital yuan. 

Leaders at Coin Center argue that regulators are unlikely to demand that crypto exchanges restrict services to approved wallet addresses. For now.

Source: https://cointelegraph.com/news/law-decoded-public-companies-private-markets-crypto-offerings-and-you-aug-28sept-4

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Bitcoin Price to $1 Million in 10 Years ‘Very Reasonable’ Says Kraken CEO

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With bitcoin currently enjoying a near 70% YTD increase, bullish predictions see the asset topping into a six or even seven-digit territory in the following decade. These projections came recently from Kraken’s CEO, Jesse Powell, and the Managing Director of Magnetic, William Quigley.

Bitcoin to $150K in the Next Year

Founded in 2010, Magnetic is an investment firm with a pro-cryptocurrency approach, having allocated funds in the industry as well. In a CNN appearance, the company’s Managing Director and Co-Founder, William Quigley, spoke about bitcoin’s future, price performance, and the impact of the COVID-19-induced financial crisis on the asset.

By referring to historical price developments after each halving, the executive forecasted a somewhat bullish projection that can take the cryptocurrency up to $150,000 in the following months.

“We are about half-way through the post-halving bull run, so, by my judgment, we have a lot more to go with bitcoin. Certainly – $100,000 and quite possible $150,000 by the end of this year or maybe Q1 next year.”

Quigley also touched upon the growing number of companies putting BTC on their balance sheet, which he classified as “huge.” He believes that the general narrative for corporations to allocate some of their trillions of dollars currently held in cash in government bonds is fading. Instead, they will continue to look for an asset with a finite supply, namely bitcoin.

He noted that the most critical issues for corporations are inflation and the diminishing of the dollar. In contrast, being a limited-supply type of asset, BTC could serve as a hedge with its decreasing inflation.

BTC to $1M, Says Kraken CEO

In another widely-bullish prediction, Jesse Powell, the CEO of the US veteran crypto exchange Kraken, said that the asset price is going to “infinity.”

When asked to specify in dollar terms what that amount would represent, Powell said that even reaching $1 million per bitcoin sounds “reasonable.”

“People that are believers in bitcoin see it’s going to replace all of the world fiat currencies, so that means basically whatever the market cap of the dollar is, the euro, all of that combined is what bitcoin could be worth.

In the near time, people see it surpassing gold as a store of value. So, a million dollars as a price target within the next ten years is very reasonable.”

He justified his quite optimistic prediction with the excessive amounts of fiat currencies printed by the US and other global superpowers following the COVID-19 pandemic. Additionally, Powell believes that the younger generations are keen to adopt the primary cryptocurrency, which could skyrocket its price.

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Source: https://cryptopotato.com/bitcoin-price-to-1-million-in-10-years-very-reasonable-says-kraken-ceo/

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First Major Rug Pull on Binance Smart Chain? Over $30 Million Drained

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  • Binance Smart Chain has become somewhat of a hot topic amid DeFi gem seekers in the past few weeks.
  • The network saw an influx of new projects, reminiscing of the early days of the DeFi craziness last summer.
  • In any case, hours ago, the community was shocked earlier today when news broke out that one of the newer protocols, Meerkat Finance, was drained.
  • Meerkat Finance is a yield farming protocol that runs on Binance Smart Chain, and a few hours ago, the team revealed that it was “hacked” and drained by 73,000 BNB and 13 million BUSD. The total number amounts to roughly over $30 million at the time of this writing.
  • It appears that the alleged hacker stole the money by changing the protocol’s smart contract using the original deployer’s account. In other words – the private key of the deployer contract must have been compromised.
  • The Twitter account of the project, as well as the website, have also been taken down, causing some to believe that the team rug pulled the entire thing.
  • Meanwhile, the official account of Binance prompted the community to provide any additional information they may have on the case.
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Source: https://cryptopotato.com/first-major-rug-pull-on-binance-smart-chain-over-30-million-drained/

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Parity To Educate Berkeley Students on Developing Blockchain Projects on Polkadot

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The popular DLT protocol Parity Technologies has partnered with Berkeley’s Blockchain Xcelerator program to provide educational panels for students in the university’s blockchain curriculum.

As part of the collaboration, Polkadot’s co-founder Gavin Woods will be a guest lecturer in the A. Richard Newton Distinguished Innovator Lecture Series.

Parity to Educate Berkeley Students About Blockchain

Parity Technologies, a core DLT infrastructure company, announced its latest partnership in a press release shared with CryptoPotato.

According to the document, Parity will employ its substrate blockchain-building framework to educate and work together with the university to raise “the overall awareness of next-generation blockchain technologies in order to promote adoption among students and the community at UC Berkeley.”

For the ongoing 2020-2021 academic year, Parity’s developer education team will collaborate with the faculty, students, and the community studying blockchain technologies in their respective coursework. This includes involvement in curriculum preparation, project ideas, and resources to “enrich the educational experience.”

Furthermore, Parity and the university’s DLT-oriented program called the Berkeley Blockchain Xcelerator will advise students and entrepreneurs on how to develop and eventually launch blockchain startups on Polkadot and Web 3.0 ecosystem.

Jocelyn Weber, an executive at the Berkeley Blockchain Xcelerator, said that the “work with parity and other Polkadot ecosystem startups had demonstrated the potential of this technology in educating our community.”

“We strive to expose our students to the tools and skills they will need to enter this space and immediately start making significant contributions – which is why improving their knowledge with tools such as Substrate and networks like Polkadot will be an important part of our curriculum development.” – Weber added.

Gavin Woods to Give a Lecture

The statement also outlined that Dr. Gavin Woods, the co-founder of Ethereum, Polkadot, and Parity, will give a lecture in the A. Richard Newton Distinguished Innovator Lecture series this month.

Wood commented that blockchain innovation is expanding at a rapid pace and has advanced “beyond legacy networks into next-generation, production-grade blockchains like Polkadot.” This makes it “critical” for the newer coders, engineers, and entrepreneurs to be able to take on the growing competition and develop ground-breaking projects.

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Source: https://cryptopotato.com/parity-to-educate-berkeley-students-on-developing-blockchain-projects-on-polkadot/

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