This Week on Crypto Twitter: SEC Crypto Crackdown Met with Colossal Criticism

Most leading coins grew in value this week, largely offsetting the losses inflicted last week—the first red week of 2023. 

Meanwhile, regulators in Europe and the Americas were having heated discussions about how to reign in crypto. The U.S. Securities and Exchange Commission (SEC) last week hit Kraken with a $30 million fine and ordered the exchange to shut down its staking service. This week, the agency lined up Terra in its crosshairs.

Across the Atlantic, the European Central Bank (ECB) told European banks to cap their crypto holdings to hedge against crypto’s inherent risks. The move came a week after the bloc published a new legal draft obliging banks to assign crypto the highest possible risk rating. 

The conversation around regulation continued over on Crypto Twitter. Coinbase CEO Brian Armstrong was looking for people in Washington to talk strategy with over a cup of coffee on Monday: 

Also that day, popular NFT collector Cozomo de’ Medici—who may be an alias of rap legend and NFT fan Snoop Dogg—announced he was donating a shedload of digital art to the Los Angeles County Museum of Art.

Valentine’s Day meant heartbreak for at least 22 former employees of NFT marketplace Magic Eden, as the company undergoes “restructuring.”

Fox journalist Eleanor Terrett shared a suggestion for regulating stablecoins by Lee Reiners, a policy director at Duke Financial Economics Center. 

Milena Mayorga, an Ambassador of El Salvador to the U.S., tweeted that she was in Texas talking to Deputy Secretary of the Government of Texas, Joe Esparza, about opening up a Bitcoin mission, or “embassy,” in the country’s second-largest state. 

If you think big crypto lobbying groups like Blockchain Association represent retail, think again, said crypto advocate Chris Bles on Wednesday. 

An account called @LeonidasNFT, who describes themself as an “NFT Historian” on Thursday tweeted news about the sale of the most expensive digital rock doodle on Bitcoin. It looks suspiciously like an EtherRock. 

On Friday, an artist who goes by the handle @Jdotcolombo accused Yuga Labs of shamelessly plagiarizing its iconic skull logo. The company blamed a freelance designer and promised to replace the drawing.

That day, Caitlin Long, founder of crypto bank Custodia, posted an open letter to Washington asking for a seat at the table when it comes to discussions about crypto regulation. She also hinted that she’d previously shared with law enforcement concerns that a huge crypto company would go bust and take its customers with it, long before it actually happened, but was met with deaf ears. 

 The SEC versus everyone

Crypto Twitter was aggressively locking horns with the SEC this week as the agency continued its regulation-by-enforcement (crackdown) strategy on the industry with several aggressive maneuvers. Kraken founder and former CEO Jesse Powell was still seeing red from last week. 

SEC Commissioner Hester Pierce on Thursday criticized her agency’s crypto custody proposal. She specifically mentioned the proposal’s timing, workability, and the agency’s jurisdiction as potentially problematic and said the public needs more time to analyze and discuss it. 

Coinbase’s Chief Legal Officer Paul Grewal reacted to the proposal by inviting the SEC to follow due process.

That same day, news broke that the SEC also charged Singapore-based Terraform Labs and founder and CEO Do Hyeong Kwon—better known as Do Kwon—with securities fraud involving its algorithmic stablecoin Terra USD and the LUNA token.

U.S. attorney Gabriel Shapiro, General Counsel at Delphi Labs, the protocol R&D arm of crypto research and investment firm Delphi digital, shared his response to the Terra lawsuit in a thread. 

Finally, the SEC on Friday levied a $1.4 million fine against former NBA star Paul Pierce for shilling EthereumMax, the same token Kim Kardashian got fined $1.26 million for promoting.