DeFi Isn’t Safe From the SEC

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Good Morning,

Crypto markets are flat. Not like I paid attention though as Threads captivated my attention over the weekend. I have mixed feelings. Its exciting to see Meta embrace the open social graph, but it also shows the power of web2 social media platform. How about decentralized social media you might ask? — sigh.

In Today's Email:

• What Matters: SEC goes after DAOs 👨‍⚖️

• Products: Chain Vision, crypto dashboard 🖥️

• Charts: Atomic $100M exploit, NFTs downturn 📉

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WHAT MATTERS

The SEC Investigates BarnBridge DAO

State of play: BarnBridge DAO through its lawyer, Douglas Park, revealed that the SEC is investigating the DAO as well as all that involved with it.

BarnBridge decided to halt all work, including winding down its liquidity pools.

• Park and Tyler Ward, the co-founder of BarnBridge, did not explain why the SEC launched the investigation.

• All BarnBridge’s (BOND) tokenholders chose Park & Dibadj as their legal counsel before the revelation, indicating that the SEC may have launched a probe before June 30.

• Some DAO members accused BarnBridge’s founders of using the investigation as an excuse to facilitate an “exit strategy.”

What’s next: The investigation into BarnBridge suggests that the SEC is not exclusively targeting the “big fishes” in the crypto industry

• There’s a real risk to get served by the SEC if you’re a US person, operating in the US markets, targeting US users — even if its a DAO.

Our take: Regulators might change their target to small and mid-sized DAOs to get “quick results”, setting up the precedent that they need to go after the “big fishes”.

For builders and investors: You need to be extremely mindful about your token design, the level of decentralization of your protocol, where your team resides, and whether you target US users.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

PRODUCTS OF THE WEEK

ChainVision, A Customizable Crypto Dashboard

The customizable dashboard that can track crypto projects. ChainVision is a platform that enables users to craft their personalized dashboard and monitor real-time crypto data.

• ChainVision allows the dashboard to be shared publicly and its users to discover dashboards created by other users.

• ChainVision provides market data for crypto projects: rankings based on market cap, revenue, TVL, and more.

• ChainVision’s mission is to create a more inclusive cryptocurrency landscape by making crypto data transparent and accessible.

Other cool products:

• Ice, a democratize mineable digital currency.

• Ocean Templates, an Open-source toolkit to build full-stack dApps.

• SolarAssets, a solar energy investment platform driven by Web3.

• FanMake, a decentralized IP licensing & Derivative Creation platform.

• Cypher Wallet, a Multi-chain crypto wallet with a crypto debit card.

• Peeranha, an AI-driven Q&A protocol.

CHARTS OF THE WEEK

Atomic Wallet Heist Exceeds $100 Million

State of play: According to Elliptic's analysis, the reported losses experienced by users of Atomic Wallet have surpassed the $100M mark.

• Over ten crypto addresses lost $1M or more, with 164 addresses losing over $100,000 on average.

• In a tweet on June 3rd, Atomic acknowledged reports of compromised wallets and confirmed that the impact was limited to less than 1% of its users.

• Lazarus Group, associated with North Korea and known for stealing over $2B in crypto assets, is attributed to the incident, marking their first major crypto heist since the Horizon Bridge exploit in June 2022.

Atomic now faces a lawsuit claiming that they were aware of security vulnerabilities in Atomic Wallet since 2022 but failed to implement necessary measures to protect user data and funds.

• In early 2022, crypto research and security group Least Authority, hired by Atomic Wallet, discovered and notified the company about a critical vulnerability.

Our take: Spread your bets, including the number of hot wallets that you’re using to store your crypto.

The Shift of NFTs’ Underlying Purpose

State of Play: Many thinks that NFTs underlying purpose has shifted from representing digital identity/community to being speculative assets.

• Phase 1 was the first wave of PFP collectors and traders, it started from early 2020 to 2021.

• In Phase 2, NFTs shifted to a tool of representation of digital identity and community.

• In Phase 3, NFTs transformed from representing digital identity and community to being speculative assets.

Our take: The financialization of NFTs are not to blame for the bearish price action. Rising interest rates and simply the much more illiquid nature of NFTs are what causing the downtrend.

QUICK BITES

• The SEC investigates BarnBridge DAO, a DeFi protocol.

• 3AC liquidator might try to claw back $1.2B from DCG, BlockFi.

• JPMorgan comments on spot Bitcoin ETF approval.

• The SEC responded to Coinbase's filing.

• Arthur Hayes said Bitcoin will become AI’s native currency.

• Polygon Labs President departs, new CEO is named.

MEME & NOTEWORTHY READS

• DataFinnovation’s read on Genesis might’ve admitted it was insolvent.

• Ram Ahluwalia’s read on 10 reasons why he’s bullish on crypto.

• Katiewav’s read on the creative arena.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advic