#1 Coinbase sues the SEC, PEPE creates millionaires overnight and USDT rules

The past week has seen a regulation outburst, with Coinbase suing the SEC and Europe approving MiCa. PEPE memecoin creates overnight millionaires, while major coins suffer.

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Apr 27, 2023

Reading time: 5 minutes.

Welcome to DeFi Leaks’ first publication! Today, we’ll chronicle the events that have characterized the DeFi space in the past week. If you haven’t yet, subscribe below to receive the next edition of DeFi leaks directly in your inbox.

Market performance 🏄🏼‍♂️

If you’re not surfing the markets regularly, we got your back! Here’s what happened over the past week:

Crypto-Twitter sentiment described in one meme

Now to this week’s news: red pill, or blue pill?

State of staked ETH withdrawals

The recent Shappella upgrade to the Ethereum network led many to speculate on how the upgrade would unfold, particularly in regard to the 15% of ETH's total supply that is now unlocked and available to sell. However, withdrawals are rate-limited; a maximum of 1800 validators are allowed to exit per day, resulting in a significant withdrawal backlog of around 24.5k validators waiting to withdraw. It's important to note that while withdrawals may result in the sale of ETH, it's not a certainty, as holders may choose to hold native ETH or use it in other ways. Since the upgrade went live, over 300,000 Ethereum tokens have been withdrawn, resulting in around 130k ETH in net withdrawals when taking into account deposits. The ability to withdraw staked ETH at any time has lowered the risk for investors, leading some to deposit and stake even more ETH.

Europe approves MiCa and TFR

Following a lengthy and complex legislation phase, the European Parliament finally approved the Market in Crypto assets (MiCa) and TFR regulations. The former is going to set clear boundaries for service providers such as exchanges and token issuers — apparently excluding DeFi and NFTs, while the latter lays out anti-money laundering regulations forcing centralized entities to require KYC above certain limits. Binance’s CEO, along with many others, welcomes clear regulations in the space — which could attract crypto companies to Europe. Laws are set to be effective between July 2024 and January 2025, overriding the national rules of member states. Read more on this article.

Tornado Cash developer released

Alex Pertsev, the developer of Tornado Cash, a crypto mixing service, was released from jail after spending nearly nine months in prison on suspicion of money laundering. Dutch authorities arrested Pertsev in August last year, and the date of his release was yesterday, April 26 (his birthday). He was released under surveillance with an ankle monitor, allowing him to await trial from home. Crypto mixers are used to make transactions anonymous and difficult to trace, and Tornado Cash was one of the most popular services before OFAC sanctions. The news of Pertsev's release was met with rejoicing in the crypto community, as it will allow him to work on his defense.

It’s MEME-coin season

Pepe Coin, "the most meme-able meme-coin in existence”, was born. The coin's mascot is Pepe the Frog, a popular internet meme character. PEPE aims to overtake dog-themed coins like DOGE and SHIBA as the new go-to meme coin. In just a few days, the token has experienced a staggering increase of over 4000%, enabling one fortunate individual to turn $27 into $1 million! However, greedy investors should exercise caution when considering investing in this coin, as seven insider wallets control over 10% of the total supply. If these wallets decide to sell, realizing their massive profits, it could result in the token's price dumping into the abyss of forgiveness.

Our friend Gary Gensler doesn’t want to answer

Gary Gensler, chairman of the SEC, faced questions from the US Congress in court and is unable to confirm whether ETH is a security or not. Gensler changed his mind many times on the matter: first declaring it a security in 2014, then stating it was not in 2019 due to its decentralization during a lesson at MIT. Amidst the regulatory uncertainty in the US, Coinbase, a major cryptocurrency exchange, is reportedly considering relocating its operations off-shore, all while suing the SEC in an effort to obtain clear regulations for the crypto industry.

EURCV, the institutional Euro-backed stablecoin on a public blockchain

Societe Generale's cryptocurrency division, SG Forge, has announced the launch of EUR CoinVertible (EURCV), a euro-pegged stablecoin built on Ethereum. The stablecoin has been designed to facilitate on-chain transactions, liquidity financing, cash management, and corporate treasury activities aimed at institutional clients seeking solutions in the digital asset ecosystem. While some crypto developers have raised concerns about the additional centralized transactions required for approval in every ERC20 single transfer, the launch of EURCV by Societe Generale represents a step towards the integration of traditional financial institutions with digital assets. The move highlights the increasing recognition by banks of the potential of stablecoins and blockchain technology to reshape the financial landscape.

Tether’s dominance keeps rising

Following Circle’s USDC suffering US banks crackdown and BUSD winding down operations in favor of TUSD after regulatory concerns in the US, Tether’s USDT shines, reaching an $81B market capitalization, second only to its $83B top in May 2022 just days before the TerraLuna UST stablecoin collapsed causing fear in the whole industry.

Future events you should keep in mind

An upgrade of GMX, a derivatives trading platform on Arbitrum, is on the horizon. GMX V2 will bring new synthetic assets and a revised fee structure;

crvUSD and GHO, Curve’s and AAVE’s decentralized stablecoins, are rumored to launch soon;
SUI Mainnet will launch on May 3rd.

Tools you should try

DefiLlama can be a very useful tool when managing assets in DeFi.

It is an analytics platform that provides real-time data on DeFi protocols and their associated assets. It allows users to track key metrics such as total value locked (TVL), trading volumes, and liquidity across multiple DeFi platforms. DefiLlama also features a portfolio tracker, yield farming calculator, and other useful tools to help you make informed investment decisions. Try it out!

Learn from great minds

GCR’s final tweet regarding crypto
Arthur Hayes' in-depth article on exit liquidity
A story by Jordi Alexander, a famous game theorist that predicted Terra’s collapse.

If you would like to further expand your opinion on the newsletter, or the content in it, please leave a comment below.