SEC Charges DeFi Trader over Solana-based Exchange

01.23.2023

Market Overview:

 A Sharp Rebound in the Markets

The crypto markets experienced quite a significant rally over the last few weeks, with Bitcoin trading at $22,500 (a 44.17% increase from it’s lows) and Ethereum trading at $1,575 (a 33% increase from its January lows). After the FTX collapse, it appears investors have regained confidence and participants are willing to purchase risk assets again. Last week, Genesis Lending, whose parent company is Digital Currency Group, officially filed for chapter 11, which had no negative effect on the market whatsoever. Quite surprisingly, the markets actually rallied 7%+ following the major news. Some notable gainers include Aptos (+346% from its January lows) and Lido (+154% from its January lows). With such a high surge in buys within such a short period of time, the next couple weeks are crucial to confirm whether the market has truly bottomed out, or if this was a manipulated rally.

NFT Market News:

WGMI.IO Gets Acquired by Floor

Floor, the token-gated app for NFT collectors, has made a strategic acquisition of NFT analytics platform WGMI.io in order to accelerate its expansion plans and reach its goal of becoming the go-to app for NFT valuations, and trading. Last year, Floor raised $8 million in seed funding led by 6th Man Ventures, and numerous sources report  significant growth for its app despite the NFT bear market. The platform debuted in October 2021 and quickly gained traction through word-of-mouth among traders, and through subsequent NFT mints in the following months. In June 2022, Floor announced that Christine Hall, previously the COO at Robinhood Crypto, had joined as COO and co-founder.

We see the acquisition of WGMI.io as a key step in Floor’s plans to expand its feature set and reach a larger audience. WGMI.io is focused on providing analytics around market activity and trading trends, while Floor delivers a streamlined way for NFT collectors to view and track their holdings. Together, the two companies aim to deliver a more comprehensive and user-friendly experience for NFT enthusiasts. Floor CEO and co-founder Chris Maddern said in a statement, “There were big chunks of what they do that we thought could help accelerate us. I saw a real interest and passion from WGMI founder Thomas Mancini in expanding the platform’s features and functionality beyond its relatively small audience of die-hard ‘degen’ traders, and there was a ton of alignment on a united path forward.”

As part of the deal, Thomas Mancini has joined Floor full-time and will be working closely with the team to integrate WGMI’s analytics capabilities into the Floor app. The terms of the deal have not been disclosed. In the short term, users can expect new features like trading analysis and trait pricing, which will allow them to track demand for the individual traits of NFT projects, such as the various visual details that make up a Bored Ape Yacht Club profile picture. Maddern also envisions a feature that would let users specify what kind of NFT they want from a certain project at a specific price point, and receive an alert when a marketplace listing matches those criteria. This feature will be similar to what StreetEasy offers for real estate, but for digital assets like Doodles and Apes.

Floor’s larger vision is to ultimately become the go-to destination for NFT collectors to not only view their own assets and track trends, but also to stay connected with projects, receive updates, and connect with other collectors. The acquisition of WGMI.io is a significant step in achieving this goal and positioning Floor as a leader in the NFT space.

Latest News:

Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking this metric in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Seoul’s government has opened the city’s metaverse project to the public. According to Seoul Mayor Oh Se-hoon, the virtual environment will allow residents to access official documents, file complaints, and receive answers to questions on filing taxes.
• The National Australia Bank announced that it will soon launch a new stablecoin backed by the Australian dollar on Ethereum and Algorand later this year.
• Cité Gestion, an independent Swiss private bank founded in 2009, is using Taurus technology to tokenize its own shares. The move will be the first by a private bank to issue shares as ledger-based securities under Swiss law. Cité will be partnering with digital assets firm Taurus to issue its tokenized shares, as well as manage the smart contract that creates the shares and perform asset servicing of its securities

REGULATORY ROUNDUP

We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and exerting political influence.

• The U.S. SEC charged decentralized finance (DeFi) trader Avraham Eisenberg over his draining of $116 million from Solana-based decentralized exchange Mango Markets. The SEC’s charges rest on the agency’s assertion that MNGO, Mango Markets’ governance token, is a security. The SEC noted that despite MNGO’s labeling as a “governance token,” it “was purchased and sold as a crypto asset security.” Its holders had expectations of profit and “entered into a common enterprise” – two of the factors the SEC looks for in identifying investment contracts that fall under securities laws.

Disclaimer: The views and opinions expressed herein are those of the author alone and do not represent Wave Digital Assets LLC or any of its affiliates (collectively, “Wave”). The author and/or Wave may hold investment positions in some of the assets discussed. Nothing in this material or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. This material is not intended to provide accounting, legal or tax advice. Certain information contained herein has been obtained from third-party sources, has not been independently verified and should not be viewed as being endorsed by Wave. Such information is believed to be accurate as of the date of its publication. No representation or warranty is made, express or implied, with respect to the accuracy or completeness, and readers should not place undue reliance on the information contained or linked to herein. Certain statements in this material provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Past performance is not indicative of future results.

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