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CFTC Charges Two Men Behind $44 Million Crypto Ponzi Scheme

The United States Commodity Futures Trading Commission (CFTC) has charged two U.S. residents and their entities for running a cryptocurrency investment scheme that defrauded over 170 investors.

CFTC Charges Two Men for $44M Crypto Scam

In an official press release, the CFTC alleged that the defendants, Sam Ikkurty and Ravishankar Avadhanam, had fraudulently solicited a total of $44 million from investors via several corporate entities under their control.

The regulator has also charged the defendants with operating an illegal commodity pool and failing to register as a Commodity Pool Operator with the CFTC.

According to the Commission’s complaint, the duo had promoted three so-called digital asset income funds – Ikkurty Capital, Rose City Income Fund, and Seneca Ventures – to investors. They’ve worked to lure in unsuspecting investors.

They started targeting investors in January 2021 through various channels such as an official website, a YouTube channel, and several other means. Some of the fraudulent claims were that the pooled funds would be used to invest in various digital assets, commodities, swaps, derivatives, and futures contracts, which would yield a high ROI annually. They were able to raise at least $44 million from around 170 investors.

The CFTC also alleged that rather than making any investment with funds from investors, they “misappropriated participant funds by distributing them to other participants, in a manner akin to a Ponzi scheme.”

Additionally, the Commission noted that Ikkurty and Avadhanam kept a portion of the funds for themselves and “other participants” and transferred the remaining to off-shore entities under their control.

“The defendants transferred some participant funds to other accounts under their control and for their benefit. The defendants also transferred millions of dollars to an off-shore entity that, in turn, may have transferred funds to a foreign cryptocurrency exchange. None of these funds were returned to the pool,” the complaint stated.

CFTC Seeks Restitution

A U.S. federal court has already issued an order to freeze the assets of the defendants, along with instructions to preserve documents relating to the scheme and the appointment of a temporary recipient of investor funds.

The CFTC is now seeking restitution and disgorgement of ill-gotten gains. It is also pushing for civil monetary penalties, permanent trading bans, and injunctions against future violations of the Commodity Exchange Act (CEA) and CFTC regulations.

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Delphi Digital Explains How the LUNA-UST Fiasco Harmed the Firm

The cataclysmic fall of the Terra ecosystem last week wiped nearly $40 billion off the cryptocurrency market, leaving UST and LUNA investors (both retail and investment firms) in severe losses.

As those affected by the crash are seeking ways to either move on or take legal action against Terra’s Do Kwon, leading crypto research and investment firm Delphi Digital has detailed how the LUNA-UST fiasco rendered its investments worthless.

Worst Event Since Mt Gox

In an official post earlier this week, Delphi noted that Terra’s crash is the “most catastrophic event” in the crypto industry since Mt Gox, a defunct Bitcoin exchange that lost 850,000 BTC to hackers in 2014.

Delphi stated that while it was a big fan of the Terra ecosystem, it always had concerns about the structure of UST and LUNA. However, the firm believed that the sizable reserves held by the Luna Foundation Guard (LFG) would prevent the collapse of the project.

“We always knew something like this was possible, and we tried to stress the risks to a system like this in our research and public commentary, but the fact is we miscalculated the risk of a ‘death spiral’ event coming to fruition. We’ve taken some heat for this over the last week, and we deserve it. The criticism is fair and we accept it,” Delphi wrote.

Delphi Suffers Large Unrealized Losses

The crypto investment firm went on to detail how the Terra crash had affected each of its various arms. It noted that its venture capital arm, Delphi Ventures Master Fund, had purchased a small amount of LUNA equivalent to 0.5% of its net asset value (NAV) in Q1 2021.

It gradually increased its exposure to LUNA and other Terra-native assets, including a $10 million investment in the LFG’s funding round in February. Delphi said it did not sell any LUNA during the crash and is currently sitting on “a large unrealized loss.”

Suffering the worst blow was the company’s research and development arm, Delphi Labs, which had spent several months working on joint ventures building Terra-based protocols, Astroport and Mars. Delphi Labs received grants of 30,000 LUNA and 466,666 UST from Terraform Labs to support its work, all of which it still holds.

Learning From the Lesson

“As for the future, after making a big bet on Terra and failing, we want to make sure we learn our lessons and make the right choice on where to focus our efforts. We’ve put together a cross-sectional team of some of our brightest minds across Research and Labs and we’ll be taking our time to ensure we assess all possible options and make the right long-term decision.”

Delphi noted that while the latest Terra saga has deeply affected its balance sheet, it is making moves to bounce back and leave a positive impact on the industry with its new projects.

“Anyone who knows us – as a business and as individuals – knows how heartbreaking it is for us to see the space we fight so hard to push forward be set back by events like this. We stand committed to doing whatever we can to leave a positive impact on crypto and the world. We’ve always said actions speak louder than words, so we’ll let our work and efforts do the talking for what comes next,” the firm concluded.

Avalanche Loses $60 Million

Meanwhile, Delphi Digital is not the only crypto firm that has reported large unrealized losses in the aftermath of Terra’s fall.

Emin Gün Sirer, the founder of the Avalanche blockchain, said the project has about $60 million tied up in Terra. Recall that in April, Terraform Labs announced a partnership with Avalanche for a $100 million token swap to bolster the UST reserve.

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The Terra (LUNA) Collapse: 4 Lessons To Be Learned (Opinion)

As the stormy waters recede from this month’s crypto market bloodbath, one blockchain network has been washed ashore dead: Terra.

The network’s co-founder, Do Kwon, has forfeited any attempt at restoring the current chain to its former glory. He’s now advocating to hard fork and start anew with a different cryptocurrency – a highly questionable approach with no guarantees of recovering value to harmed investors.

What’s certain, however, is that neither TerraUSD (UST) nor the LUNA governance token will ever recover. The former now trades over 90% down from its intended dollar peg, while the latter has arguably suffered the most explosive and sudden collapse in the history of currency.

Financial implosions of this magnitude are virtually unheard of – even in crypto. How could the billions of dollars stored within such a widely supported protocol utterly evaporate within a week – not least from a so-called “stablecoin”?

Now would be a good time for the entire crypto community to re-examine its assumptions about stablecoins, investing, and developers alike. Here a five valuable lessons we can glean from the corpse left behind by the Terra network.

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From $100 to zero in days, LUNA. Source: TradingView

1. Stable Assets Require Stable Reserves

Stablecoins are designed to provide the best of both the new and old financial worlds: the decentralization and speed of cryptocurrency and the value stability of fiat currency.

However, the most successful stablecoins available right now don’t use an entirely “decentralized” model. Tether (USDT) value backs its stablecoin with non-decentralized, highly liquid, stable reserve assets (commercial paper, treasury bills, etc.). These reserves must be regularly audited by private companies to ensure that USDT is indeed fully backed and convertible.

TerraUSD, however, was an algorithmic stablecoin. It followed an alternative model whereby the token was programmatically backed by cryptocurrency – specifically LUNA – instead of dollars.

Any UST holder could redeem their stablecoin for one dollar worth of freshly minted LUNA at any time. Conversely, LUNA holders could always burn their holdings in return for a UST count equal to the exact dollar value of LUNA burned. This mechanism created stabilizing arbitrage incentives similar to USDT so that the market price of the stablecoin could always redirect back to one dollar.

However, unlike USDT, the asset “backing” UST was not nearly so stable nor liquid as actual dollars. In other words, if many UST holders were to redeem their holdings at once, the value of LUNA could significantly decline after exchanges were flooded with excess supply.

This is, unfortunately, the exact scenario that took place this month after wealthy UST holders commenced a short attack against the stablecoin. Investors were incentivized to redeem their UST holdings for LUNA en masse, hence creating an oversupply of the token. The result was a death spiral whereby the value and credibility of both UST and LUNA crumbled to nothing.

This phenomenon likely would have been prevented if UST was backed by an asset with a deeper market and less shaky value under pressure.

2. Buy Value, Not Hype

Just because something has a high market value doesn’t mean it’s a reliable investment. Do not rely on the “wisdom” of the greedy, bullish mob to tell you where your money should go. Do your own research.

This point cannot be stressed enough. In retrospect, Terra collapsed due to a flawed stabilization mechanism open for all to examine and scrutinize from its outset. In fact, previous coins with similar stabilization models had already been tried – and failed – many years ago.

Such details didn’t matter much to most investors – nor did the unusually high 20% yield offered to UST holders through Anchor protocol. When given the opportunity to escape the flood before it happened, thousands of investors failed to use due diligence.

Even trusted billionaires across the crypto community aped into Terra without a second thought, inspiring more to follow. Mike Novogratz, who had a LUNA-themed Tattoo emblazoned across his arm in January, now calls the artwork “a constant reminder that venture investing requires humility.”

This month’s events prove that even experienced investors know little more about what’s safe in crypto than you do. They should not be relied upon.

As the Bitcoiners say: Don’t trust; Verify.

3. Crypto Isn’t All “Decentralized”

Terra’s devs pedaled a lot of hype about creating “decentralized money” for a “decentralized economy.” But when push came to shove, the community revealed its highly centralized and opaque governance structure underneath.

Between Do Kwon, Terraform Labs, and the Luna Foundation Guard (LFG), the average user held virtually no power during Terra’s final moments. The aforementioned parties made numerous hasty and monumental decisions in an attempt to rescue the network – all of which failed anyhow.

For example, on May 9th, Do Kwon and merely six other members of the LFG voted to deploy $1.5 billion from its reserve pool to defend the value of UST. The Guard then left the community with no updates until May 16th, when it explained that virtually all reserve assets – including 80,000 BTC – had been sold.

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Do Kwon, Terra’s Founder

Furthermore, on May 12th, Terraform Labs collaborated with validators behind the scenes to freeze the Terra blockchain without warning. This was done without community consent – ironically with the stated goal to “prevent governance attacks.” For context, Terra’s chain only has 130 validators.

Even Do Kwon himself retweeted a post stating that the LFG was indeed a centralized system (which he planned to transition away from in time).

When it comes to “decentralization,” there’s a difference between “can’t” and “won’t.” If a small party can take control of a blockchain network whenever it deems that control necessary, is it truly decentralized?

4. Stay Humble, Even If You’re Rich

On one hand, it’s in poor taste to kick a man while he’s down – especially when he’s already faced with lawsuits and multi-million dollar fines.

On the other hand, it can be quite entertaining watching companies die – especially when governed by people who were once so brazenly rude and self-assured.

Don’t take it from me. Take it from Do Kwon himself. Mere days prior to Terra’s meltdown, he spoke with a popular streamer about the crypto industry, claiming there would be “entertainment” in watching 95% of industry startups die over time.

This was no lighthearted joke but a dangerous demonstration of self-certainty and condescension towards Kwon’s competitors and critics. This was made clear in the days to come when Kwon publicly attacked multiple people that tried warning him about his protocol’s security flaws.

“You could listen to CT influensooors about UST depegging for the 69th time, or you could remember they’re all now poor, and go for a run instead,” he tweeted on May 7th.

The following day, Kwon suggested that those fearing a UST de-peg would be “waiting until the age of men expires.”

Yet the worst of Kwon’s behavior was at the height of crypto’s bull market in November. When a Twitter user-outlined a process by which he predicted Terra would fall due to a short attack, the co-founder called it “the most retarded thread” he’d read this decade. He then deemed the user “stupid” and invited his “billionaire” followers to try out the attack.

If Terra’s collapse were truly a black swan event, Kwon might have been able to salvage his reputation from its remains. But after repeatedly mocking his critics for being poor, openly inviting whales to short attack the network, and losing a $200 million “bet” on LUNA’s demise… is it any surprise that his followers are short of sympathy?

His actions haven’t affected him alone: for better or worse, Kwon was Terra’s biggest leader. The implicit responsibility of guiding the community out of a crisis has fallen on his shoulders.

But after destroying his own credibility, the crypto scene is largely unwilling to unite behind his last resort hard fork plan. Some even distrust the legitimacy surrounding the ongoing governance vote for his proposal, believing the vote to be rigged.

Whether such claims have any merit is beside the point. Trust is fragile – especially in an industry already rife with scams and bugs. Earning it is an uphill battle, and losing it is as easy as a few stupid tweets.

Conclusion: Learn Now, Not Later

Crypto is home to a potential revolution in financial innovation. It also suffers from a gross lack of regulation, market manipulation, hacks, thefts, anonymity, lack of transparency, and a reckless FOMO culture.

The investors whom you think know what they’re buying do not, in fact, know much more about crypto than you do. The developers who assured you that everything was under control could not, in reality, control the market around their stablecoin.

Take what you can learn from Terra’s failure, and see if you can understand the inner workings of your other crypto investments a little bit better. Nobody is doing the learning for you, and likewise, nobody will save you if those investments fall apart.

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OpenSea Announces Smart NFT Marketplace Seaport

On May 20, OpenSea unveiled Seaport, a brand new Web3 NFT marketplace for trading popular token collections. The new decentralized protocol is not just for OpenSea, but all developers, content creators, and collectors can build on it.

Seaport is taking a different approach to the standard model of NFT trading, which involves a platform facilitating a deal between seller and buyer.

Sellers can agree to supply a number of items in the ERC-20, ERC-721, or ERC-1155 format, which will be known as the “offer.” The “consideration” is when several items are received by the buyer. However, the process will be automated and governed by the decentralized smart contract, according to the announcement.

“Every Seaport listing consists of the same basic structure, including an improved EIP-712 signature payload that clearly outlines what can be spent and what will be received back by whom.”

Automated NFT Marketplace

The announcement explained how exactly Seaport would facilitate the transactions by using “fulfillments” to ensure they are processed correctly.

It added that the new system eliminates redundant transfers, which are usually the most gas-intensive, and allows for “novel and efficient transactions.”

There are several other functions such as “zones” and “channels” that improve the transaction process, allow for bartering, and prevent abuse of the system. Seaport also supports “tipping,” which allows alternative interfaces to include their own fees and facilitates dynamic listings.

The firm added that the platform is completely decentralized and open source:

“OpenSea does not control or operate the Seaport protocol — we will be just one, among many, building on top of this shared protocol.”

Seaport has been audited by OpenZeppelin, and they are also starting a two-week audit contest with code4rena with a $1 million prize pool.

NFT Ecosystem Outlook

The NFT space has contracted in terms of sales this month as crypto markets continue to take a beating. According to market tracker Nonfungible, USD sales figures are down from over $60 million per day in early May to around $25 million as of May 20.

The number of sales was more than 100,000 per day at the beginning of the month, but that had slumped to around 23,000 by the end of last week.

Cryptoslam reports that the Otherdeed Metaverse land NFT collection has been the most popular over the past seven days, with around $27 million in secondary sales for the period.

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Litecoin Activates MimbleWimble Extension Blocks (MWEB)

Litecoin has finally announced the activation of Mimblewimble Extension Blocks (MWEB) more than two years after it was first introduced.

On May 2nd, Litecoin achieved the 75% network consensus threshold required for activation after months of dialogue with different miners of the network. Following this, MWEB officially locked in for activation at block height 2257920.

Mimblewimble’s Integration Into Litecoin

A privacy-focused decentralized protocol that gets its name from a tongue-tying spell made famous in the Harry Potter book series, MimbleWimble enables users to conceal transaction data with its confidentiality feature while providing a foundation for other blockchains to improve the usability of their token.

With Mimblewimble Extension Block, users of the network can opt-in to confidential transactions. The end goal is to enhance the viability of Litecoin as a fungible currency that can be used for real-world transactions by lowering fees and adding privacy, throughput, and scalability. David Burkett, a Mimblewimble expert, and developer of Grin ++, was tasked with leading the development of the MimbleWimble protocol for Litecoin.

Litecoin founder Charlie Lee commented:

“In terms of fungibility and privacy, I believe MWEB gets you 90% there. For most people, that’s good enough. It’s the difference between living in a glass house vs living in a house with windows. For people who need 100% privacy, they can live in a house with no windows.”

MWEB Implementation on Bitcoin?

Litecoin had acted as a testnet for Bitcoin, especially in the case of the Segregated Witness (SegWit), something that was observed by Lee as well. The upgrade was activated on Litecoin in April 2017. A few months later, Bitcoin followed with its activation of SegWit.

As for MWEB, Vlad Costea, founder of Bitcoin Takeover, said that he is in favor of bringing it into the world’s largest cryptocurrency. The OG cypherpunk Adam Back was, however, not impressed by MWEB. While responding to a tweet that speculated many Bitcoiners believe that Bitcoin may soon activate the protocol, Back said that he does not think MWEB enhances much privacy.

“IMO Mimble Wimble is not much of a privacy improvement as the transaction history will be recorded even if later elided, and the scaling gains only start to win at large size as transactions are bigger. also, receiver online is inconvenient. Confidential Transactions I like ofc.”

Interestingly, the design of the MW protocol supports and extends the idea of Confidential Transactions (CT), which was proposed by the Blockstream CEO nearly a decade ago. It was later implemented by Greg Maxwell and Pieter Wuille.  Now, It remains to be seen if a BIP focused on MWEB will be out anytime soon.

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The Reasons Why Some Crypto Skeptics Have Not Entered the Market: Survey

The online web platform CouponFollow conducted research among over 1,100 individuals who have not entered the crypto market to determine what is stopping them from doing so. 42% said they don’t understand the value of digital assets, while 35% admitted they stay away because it “seems like a scam.”

Reasons Behind the Hesitation

Cryptocurrencies, particularly bitcoin, have rapidly expanded their popularity over the past few years. For one, the primary digital asset became legal tender in El Salvador and the Central African Republic. At the same time, its merits, such as decentralization, transparency, and accessibility, are often touted by numerous experts and prominent individuals.

However, it’s still safe to say that the majority of the globe’s population remains unconvinced about the asset class. According to CouponFollow, the interest in crypto spikes significantly when bitcoin or some altcoins reach all-time high prices. On the contrary, individuals withdraw their enthusiasm when the USD valuation heads south like in the past few months.

The crypto non-HODLers also explained their main reasons why they have not hopped on the bandwagon. 42% said they don’t understand the value of digital assets, while 39% are concerned about their volatile nature.

Critics of the sector often describe cryptocurrencies as a scam. 35% of the survey respondents agreed with that assumption, while 31% said they have not diversified their portfolios due to “security concerns.”

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CouponFollow Survey, Source: CouponFollow

Interestingly, nearly every fifth person has installed a cryptocurrency exchange mobile app but didn’t end up buying any tokens. “Insufficient knowledge” of how to purchase, “worry over price fluctuations,” and “safety concerns” are the top three reasons why.

What Do Other Surveys Say?

Despite the aforementioned skepticism that some people might have, cryptocurrencies have become an attractive investment option for numerous investors. Younger generations, especially millennials, seem to be the most intrigued.

A recent CNBC study estimated that 83% of millennial millionaires own digital currencies, while 48% intend to increase their holdings in 2022. More than half of the participants admitted investing over 50% of their wealth in crypto.

Other analyses evaluated that the digital asset sector gained massive popularity in 2021. For example, a Huobi research determined that nearly 70% of all investors jumped on the bandwagon last year. This assumption comes without surprise since, in 2021, most coins recorded all-time high prices and thus caught the attention of broad society. In comparison, only 9% said they entered the ecosystem more than four years ago.

Subsequently, a StarkWare poll revealed that 53% of the American participants view cryptocurrencies as the “future of finance.” Unsurprisingly, this percentage is higher among the younger generations. 68% of those between 25 and 34 years old and 61% of the 35 to 44 years old believe in this concept.

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Ripple Price Analysis: XRP Fights to Reclaim Trendline Providing Support Since the March 20 Crash

Ripple has corrected about 80% since touching the 2021 ATH at $1.97. The downtrend, which has lasted more than 400 days, has left many XRP holders frustrated and exhausted.

Technical Analysis

Technical Analysis By Grizzly

The Daily Chart

As seen below, the orange ascending line broke after successfully providing support for the price since the COVID crash of March 2020.

For a possible reversal, the bulls must first reclaim this trendline and then break above the critical static level at $0.50 (marked blue).

The bull’s mission will not end there: further above lies the dynamic resistance (marked red), which intersects with the daily MA200 (in white) — a challenging scenario for bulls at this point. There is no doubt that the bears now have complete control of the market.

Key Support Levels: $0.33 & $0.17

Key Resistance Levels: $0.50 & $0.68

Moving Averages:

MA20: $0.48

MA50: $0.62

MA100: $0.70

MA200: $0.78

The XRP/BTC chart

Against the BTC pair on the weekly chart, Ripple’s price fluctuates within a symmetrical triangle (in yellow). Since the price entered the triangle from the upper side, this pattern is technically bearish.

The thick Ichimoku cloud covers the upper side of the triangle, which contributes to its bearish strength. As long as the price can not break out from the lower side of the Ichimoku cloud, reaching the target of 700 Sats will be possible. This will likely lead to a significant drop in the USD pair chart.

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BTC Facing Critical Decision Ahead of a New Week (Bitcoin Price Analysis)

Currently, the price is consolidating inside a crucial demand zone. However, considering the current global markets’ sentiment and recent price action, it’s too early to label the present region as the bottom.

Technical Analysis

Technical Analysis By Shayan

The Daily Chart

Despite the recent equilibrium in the $29-30K range, the price might simply be forming a mid-downtrend consolidation pattern before another leg to the downside.

On the other hand, the daily RSI attempts to break above a mid-term descending trendline. If this plays out, a relief correction could take place in the short term. The first significant supply zone, in any upward movement, would be the $37-40K range (on the daily timeframe).

The 4-Hour Chart

On the lower timeframes (LTF), Bitcoin is forming a wedge pattern and will decide on its next direction upon breaking out of the wedge.

If the wedge gets broken down, a bearish expansion phase will be the most likely scenario for the following few weeks. On the other hand, a bullish breakout might signal a reversal, pushing Bitcoin’s price to the $34K critical resistance level.

Furthermore, on the 4-hour timeframe, the RSI has reached its resistance trendline and is struggling to break it. The reversal scenario will be imminent if this breakout occurs.

Onchain Analysis

Onchain Analysis By Shayan

The following chart shows the price of Bitcoin and the percentage of UTXOs that were last active over a year ago.

As can be seen below, the percentage of coins that have been dormant for more than a year has just reached a new all-time high. This indicates that long-term investors have been careless about the previous weeks’ price fluctuations and continue holding their bitcoin.

This behavior indicates on a possible supply shock; however, demand must enter the market in order to increase the chance for a bullish reversal.

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Swiss Luxury Watchmaker Tag Heuer Accepts Bitcoin, Shiba Inu, Stablecoin Payments in the US

LVMH-owned Swiss luxury brand Tag Heuer announced earlier this week that it will accept a total of twelve major cryptocurrencies plus five stablecoins as payment options on its US website. The globally renowned watchmaker had previously revealed that it would soon allow digital currency payments on all websites.

An Early Push into Web3

Tag Heuer’s latest adoption of digital currencies came into reality by collaborating with the payment service provider BitPay. It made it possible that users could choose major digital currencies, like Bitcoin, Ethereum, stabelcoins, and more, to pay for luxury products.

The new payment route accepts Exodus Wallet, Ledger Wallet, and many other crypto wallets and allows up to $10,000 per transaction with no requirements on minimal spending.

Tag Heuer CEO Frédéric Arnault said the company had paid attention to Bitcoin since its birth and that the recent ups and downs of the crypto market did not change its view of digital currencies as a transformative technology. He touted that the announcement was just the beginning of the giant’s push into Web3:

“Tag Heuer would adopt what promises to be a globally integrated technology in the near future despite the fluctuations – one that will deeply transform our industry and beyond…This new crypto payment feature is just the beginning of many exciting projects for Tag Heuer in the Web3 universes.”

It’s worth noting that Tag Heuer’s adoption of cryptocurrencies should not come as a surprise since Arnault, son of billionaire LVMH chairman Bernard Arnault, is known for his favorable opinions on NFTs and Web3. The 27-years-old Tag Heuer boss personally owns NFT collections like Clone X PFP by Rtfkt through a collaboration with Takashi Murakami and an Invisible Friends by Markus Magnusson.

Luxury Fashion Industry Embraces Crypto

Italian high-end luxury fashion house Gucci announced earlier that it will accept digital currencies in a selection of US stores this month. The CEO said the pilot program was “a natural evolution for those customers who would like to have this option available to them.”

Though Tag Heuer does not accept digital currencies in its physical stores yet, the company noted that this option might arrive in the future, but it isn’t a priority for now.

Due to the exponential growth of NFTs in the past years, well-known luxury brands find stepping into the field as a critical strategy for their development. In February, Gucci developed a virtual concept store, dubbed “Gucci Vault,” for Gucci-themed NFTs on the Sandbox, and it was seen as its foray into the Metaverse.

Featured Image Courtesy of Loop-CN

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Stablecoins May Not Be Part of SEC’s Jurisdiction, Commissioner Peirce Says

The recent havoc in the crypto market wreaked by Terra’s collapse has put stablecoins under the spotlight again. As of now, the next move by America’s top financial watchdog (the Securities and Exchange Commission) on crypto regulations remains unclear.

An SEC Commissioner revealed in a recent interview that stablecoin regulations might not fall into SEC’s jurisdiction, and the US Congress has looked into the matter for offering guidelines.

Congress Has a Role to Play

Only a day after the SEC’s Chairman Gary Gensler warned crypto investors that more coins would fall to nearly zero as Terra did, a disaster that may hurt many investors, Commissioner Hester Peirce also weighed in on regulations regarding stablecoins and other cryptocurrencies.

Peirce, known for her pro-crypto stance, said in an interview that she personally would like to see a clear SEC-initiated regulatory framework for the industry, but, at the same time, it may not be something within the authority’s jurisdiction.

“Stablecoins may or may not be within the SEC’s jurisdiction, but facts and circumstances matter… It’s something that the Congress has been looking at.”

Due to the size of the impact caused by Terra’s crash, she added, Congress may work quickly to make new regulations on the industry.

When asked about the jurisdictional division for crypto regulations between the SEC and the Commodity Futures Trading Commission (CFTC), which oversees the derivatives market, Peirce admitted that some of the aspects are still unclear, and, for that reason, Congress may need to specify the respective area of responsibilities.

She also used the example of “broker-dealers” or “investment advisors” who want to work with crypto as part of the areas where the SEC should step in and provide regulatory clarity. In addition, when asked about the SEC doubling its crypto enforcement team to strengthen protection for crypto investors, the commissioner noted that she would rather put more resources on the “regulatory and compliant side.”

SEC’s Role in Elon Musk’s Twitter Bid

In the interview, the commissioner also responded to a question regarding SEC’s jurisdiction when it comes to Elon Musk’s bid on Twitter – which is currently on hold. She explained that the Commission is a disclosure regulator making sure the disclosures are in-line with its rules, but the authority is not a “merit regulator.”

Last week, Elon Musk halted the acquisition of Twitter because of issues related to fake accounts and scams on the popular social medial platform. Reportedly, the high-anticipated deal was put on hold pending details supporting the claim that spam and fake accounts are less than 5% of total Twitter users.