Coinbase seeks to dismiss SEC Charges
TFL #26: "Razzlekhan" couple pleads guilty, Revolut to exit US Crypto trading
Good morning fintech Illuminati 🧐.
Welcome back to The Fintech Ledger! 🔥
In this newsletter: America’s credit rating gets a downgrade, the labor market remains strong in the US (for some), the ‘Razzlekhan’ couple - remember them - pleads guilty in Bitfinex $4.5bn bitcoin hack case, Coinbase argues the SEC is operating outside its authority, and Revolut to shutter it’s crypto offering in the US.
Let’s jump in.
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Coinbase argues SEC is operating outside its authority, doesn't trade in Securities
In a motion filed this past Friday, Coinbase is seeking the dismissal of the lawsuit brought against it by the Securities and Exchange Commission (SEC). Coinbase asserts that it does not trade securities, thereby refuting the validity of the SEC's arguments.
In June, the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, alleging that the crypto exchange violated securities laws by operating as an unregistered broker, exchange, and clearing agency. The SEC further accused the company of offering and selling unregistered securities through its staking-as-a-service program. This program rewarded users with crypto for participating in the proof-of-stake process on the blockchain.
Coinbase has long maintained that it does not list securities on its platform. In a post on X (Twitter) announcing Coinbase’s motion to dismiss, Coinbase’s Chief Legal Officer Paul Grewal made a pretty blunt argument:
The SEC has violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws.
Coinbase Chief Legal Officer Paul Grewel
If successful, it would be a big blow to the agency who are currently suing Binance, Tron and other’s for selling unregistered securities. You may recall the agency’s recent “L” a few weeks back when a U.S. Judge ruled Ripple Labs XRP was not a security.
It’s an interesting time for crypto regulatory onlookers.
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Revolut to sunset crypto trading in U.S., citing regulatory concerns
It looks like the British fintech Revolut does not have the same stomach to fight the U.S. regulator as Coinbase. This week, they announced they will stop allowing U.S. customers to trade cryptocurrencies. In a prepared statement, the company said that the ongoing uncertainty in the U.S. regulatory environment was the culprit.
As a result of the evolving regulatory environment and the uncertainties around the crypto market in the U.S., we’ve taken the difficult decision, together with our U.S. banking partner, to suspend access to cryptocurrencies through Revolut in the U.S.
Revolut spokesperson via email to Reuters
Read between the lines and this does not appear Revolut had a choice in the matter. My guess is their bank partner told them they were exiting crypto - after feeling pressure from the agency. Many in the industry have taken to calling the SECs approach to crypto “Operation Chokepoint 2.0.,” in reference to the Obama era United States Department of Justice’s controversial initiative investigating banks in the US and the business they did with firearm dealers, payday lenders, and other companies who were operating otherwise legal businesses but believed to be at a high risk for fraud and money laundering, effectively shadow banning those industries.
While it is a white flag, it appears that Revolut is actively seeking alternatives.
Revolut is actively pursuing alternative means of providing access to crypto products and we hope to offer crypto in the US again in the future.
Revolut spokesperson to Decrypt.
Fitch downgrades U.S. long-term rating: Nothingburger or cause for concern?
Fitch Ratings downgraded the United States’ long-term foreign currency issuer default rating to AA+ from AAA this past Tuesday, citing concerns about growing federal deficits and political polarization. The move was seen by many as largely symbolic, with many shaking it off as a nothingburger. JPMorgan CEO thinks it “doesn’t matter”, is “ridiculous,” while the Oracle of Omaha Warren Buffett had this to say: “There are some things people shouldn’t worry about. This is one.”
Others point to what they see as legitimate concerns. Former Treasury secretaries Hank Paulson and Tim Geithner urged Washington to tame growing federal deficits, stating separately:
“Our fiscal trajectory is concerning,” - Hank Paulson told Bloomberg Television
“You want to move the system to act before it’s late and hard.” - Tim Geithner
And Quincy Krosby, the chief global strategist for LPL Financial, seemed to agree with the two former Treasury secretaries:
Ultimately, if the deficit isn’t contained, taxes will be raised to the point that the engine of the US economy — the all-important consumer — will have considerably less discretionary income.
Quincy Krosby, the chief global strategist for LPL Financial, speaking to Bloomberg
X (nee Twitter) is not all memes and shitposts (but yeah, there’s also that!). A well-curated timeline can provide a straight-to-the-source education . Check out my FintechTweeps for a curated list of Fintwit’s best & follow me @fintech_ryan for more (X).
“Fintech Mayor” - at least that’s what I call him, VC at Better Tomorrow Ventures and erstwhile Taco Bell Metaverse groom Sheel Mohnot seeks to answer the age old question once and for all:
Should burritos eliminate the rice?
Real time payments received a much needed upgrade in the US a few weeks ago with the launch of FedNow. While it will likely take years for wide adoption, the US is a laggard in this technology globally (like much in the payments space).
Zach Anderson Pettet of Fintech Family Hour interview’s Zach Perret, CEO of Plaid - seeking to solve the Pettet/Perret dilemma. They also get into Zach’s early life and career, the early days of Plaid, how he’s grown as an individual and a leader, that now infamous (non) Visa transaction, and more.
Lula, a startup which aims to be the “Stripe for insurance,” has raised $35.5 million in a Series B funding round.
Tradeshift, a platform for building B2B payments, supply chain procurement and B2B marketplace services raises $70M, JV with HSBC.
Mercury Financial secures $200m for its credit card business expansion.
Shopify forecasts solid revenue growth on higher prices, more signups.
Petal Closes New $200 Million Debt Facility from Victory Park Capital, Raises Additional Debt and Equity Funding.
U.S. broker Public launches in the UK in first foray overseas.
Brazil's Ebanx partners with Nubank to offer payment service to customers
Earnest and Nova Credit Launch International Private Student Loans.
PayNearMe Expands Bill Pay Options with Cash App Pay Integration.
SMB Neobank Novo Launched Novo Funding With $125M Facility From Victory Park Capital.
Brex and Rho each announced AI-powered/enabled accounts payables offerings.
Amex: Card Spending by Gen Z and Millennials - the generation “shunning credit” Surges 21%.
PE Firms Warburg Pincus and Centerbridge Partners inject $400M of equity to facilitate the merger of Banc of California and PacWest Bancorp.
Jeeves hits over $40M in annualized revenue as it expands beyond corporate credit cards.
Hex loses $500M in market cap after SEC lawsuit; token removed from MetaMask, Uniswap.
Metaverse Giant Animoca Brands Plunges $30M Into Crypto 'Super App' hi.
FTX sues Bankman-Fried, others to recoup more than $1 billion.
Flashbots, an ETH Infrastructure Provider, Raises $60 Million in Series B Funding.
Sam Bankman-Fried enlists Harvard Law's Tribe to stay out of jail.
FalconX and CF Benchmarks partner to provide regulated access to crypto derivative markets.
U.S. prosecutors worry Binance charges could cause run on exchange.
78% of Americans Believe Bitcoin Will Hit New ATH, New Study Reveals.
Miami Mayor Francis Suarez to Accept Presidential Campaign Donations in BTC.
‘Razzlekhan’ couple pleads guilty in Bitfinex bitcoin hack case.
Embedded Finance and Banking-as-a-Service Report 2023 (The Paypers). The report looks at Embedded Finance and BaaS through a broad lens looking at the value chain and growth drivers, business models, regulatory considerations and use cases while going deeper by looking at how loyalty is being reinvented, integrations with web3, and covers both B2C and B2B.
600 Kindergartners Were Given Bank Accounts. Here’s What They Learned (WSJ). The Kindergarten to College Program in San Francisco provides $50 in savings accounts to low-income public-school students to promote financial education and college savings. The program has been successful, with 52,000 active accounts and a total balance of $15 million, $10 million of which came from deposits made by students and their families. The program itself is based on research suggesting that even a small amount of college savings significantly increases the likelihood of low-income families attending and finishing college. It’s a great look at how smart investments early can pay big dividends.
Alas all good things must come to an end. If you enjoyed this content, please hit “like” button. Ideas for an area you’d like to learn more on, leave a comment!
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Until next week, fare thee well friends.
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