SEC vs Kwonzinomics 👨‍⚖️

GM folks 👋🏻 - Happy Friday.

Crypto markets retraced a bit with BTC and ETH hovering around the $23,700 and $1,660 levels respectively. We also got two big news right before the weekend. The SEC has finally sued Terraform Labs and Binance was reportedly moving money from Binance US via secret access 🤔

Seems like it's going to be another weekend full of threads to digest. Don't forget to tune in on Monday!

In Today's Email:

• What Matters: SEC sues Terraform Labs and Do Kwon 👨‍⚖️

• Founders Highlight: Jason Choi, Co-Founder of Tangent Collective 🤝

• Deal Flows: Abu Dhabi readies $2 billion web3 fund 📈

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WHAT MATTERS

SEC Sues Terraform Labs & Do Kwon 👨‍⚖️

State of play: The SEC has sued Terraform Labs and Do Kwon, alleging them for offering and selling "crypto asset securities" and perpetrated a "fraudulent scheme" that led to the loss of $40 billion+ in market value, which also impacted US retail and institutional investors.

• The SEC also accused the firm and Kwon of misleading investors by making false statements regarding Terra's relationship with the South Korean mobile payment app called Chai.

• Kwon and Terra are also alleged of moving 10,000+ BTC out of the now defunct project, turning some into cash via a Swiss bank. The SEC stated, “Between June 2022 and the date of this complaint, over $100 million in fiat currency has been withdrawn from that Swiss bank,”

• Do Kwon's whereabouts are currently unknown, with the latest reports stating that he's in Serbia.

The key takeaway: The SEC's complaints filing against Terraform Labs and Do Kwon is one of the most comprehensive the industry has ever seen. It went through the Howey test for various assets. This might create another precedent as to how tokens will be classified.

Here are some tweets from notable figures in the space summarizing critical findings:

Why it matters: Under this filing, almost everything can be considered as securities. Once again, we don't know how this will play out, but paying close attention to all ongoing legal cases and studying the precedents that they make will be critical in the coming years.

For builders: Do the right things post-launch. Conducting a fair launch but then utilizing any insider information to profit off the protocol while hurting your users, or faking volume will eventually get to you in the end.

For investors: Be careful about your involvement with mechanisms that are borderline shady. Jump Trading was allegedly involved in saving UST's peg in 2021 and made $1.28B from Terra through 2021. Jeffry Picower, who made $7.2B from Madoff's Ponzi, eventually had to return his money back.

BUILDER-INVESTOR HIGHLIGHT

Jason Choi, Co-Founder of Tangent Angel Collective

Jason Choi is the founder of Tangent web3 angel collective. He's a notable crypto investor that has been active in the space since 2016. Jason is most notable for his prior role as the General Partner of The Spartan Group, one of the largest crypto funds in Asia.

• During his leadership tenure, Spartan managed to become the #1 Performing APAC Hedge Fund in 2021.

• Spartan focuses on investing in crypto asset secondary markets and seed-stage venture investing. Notable Spartan's investments include Maker, 1inch, DYDX, and many more.

Previous backgrounds:

• Post Wharton, Jason started his investing career as an associate at Ray Dalio's Bridgewater before working as an analyst at Deloitte.

• He eventually became a Founding Partner of Contrary Capital before moving to the Spartan Group as an investment associate.

The big idea: Tangent is a web3 angel collective, for crypto native-by crypto native, that aims to be the most value-add investor per dollar on any cap table. There is no external capital and the collective only invests in select projects every quarter.

• Tangent also provides support for founders from its own group of a personal Board of Advisors. Members of this Board include Bryan Pellegrino of LayerZero Labs, Sam Kazemian of Frax Finance, State.eth of SudoSwap, and many more.

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DEAL FLOWS

Abu Dhabi $2 Billion Digital Assets Fund

🌊 Deal flows remain stable. This week we saw $220M in deals, not counting Citadel Securities and Susquehanna Advisors Group acquisitions of Silvergate's bank stakes.

Abu Dhabi's Hub71+ $2B Fund: In partnership with First Abu Dhabi Bank (FAB), Hub71 launches its web3-focused fund called Hub71+. The new fund will allocate $2 billion towards web3 startups ranging from seed to unicorn stage.

• The fund will also support crypto businesses that want to relocate to Abu Dhabi, helping promote startup growth in the Middle East.

• Its partners include Binance, AWS, Mastercard, and many more.

• Ahmad Ali Alwan, Deputy Chief Executive Officer of Hub71, said: “Hub71+ Digital Assets signifies that Abu Dhabi is open to disruptive businesses driving forward change and transformation on a global level. Decentralization is the future of a blockchain-based internet, and Web3 startups will play an immense role in accelerating this transition. Teaming up with ADGM, FAB and its research and innovation centre, FABRIC, alongside the world’s leading Web3 companies and enablers under one roof will provide founders with an opportunity to fundraise, develop and commercialize innovations safely while operating within the largest regulated jurisdiction of virtual assets in the MENA region.”

Deal flows in the past week:

• Ajuna, $5M Private Round

• Modular Cloud, $1.7M Pre-Seed Round

• Insrt Finance, $2.3M Pre-Seed Round

• NFEX, $3M Seed Round

• Orb Labs, $4.5M Seed Round

• C3 Protocol, $6M Seed Round

• Dymension, $6.7M Seed Round

• Ironblocks, $7M Seed Round

• Alongside, $11M Seed Round

• Monad Labs, $19M Seed Round

• Aura Network, $4M Pre Series A

• Vault, $4M Series A

• Cub3, $6.5M Series A

• Super Plastic, $20M Series A-4

• Mino Games, $15M Series B

• Taurus, $65M Series B

• Omega Royale, $2.1M Unknown Round

• Caldera, $9M Unknown Round

• Coincover, $30M Unknown Round

• NFT Explorer, Undisclosed $ Acquisition

• Mint Songs, Undisclosed $ Acquisition

• Stronghold Digital Mining, Undisclosed $ Acquisition

• Infinity, Undisclosed $ Acquisition

• Solana Monkey Business, Undisclosed $ Acquisition

• Vortex Protocol, Undisclosed $ Acquisition

• NFT Gaming Company, $7M IPO

QUICK BITES

• SEC sues Terraform Labs and Do Kwon.

• SEC focuses on crypto custody firms.

• Binance moved $400M from Binance US to firm managed by CEO Zhao.

• Binance prepares to pay penalties to resolve US investigations.

• Mysten Labs CEO seeks to raise a $100M web3 fund.

• Ethereum Shapella Testnet reveals a few bugs.

• Tencent teams up with MultiversX

• SBF bond signers revealed.

• Celsius plans to sell to NovaWulf.

MEME & NOTEWORTHY READS

• DLNews' article on zero-knowledge proofs and regulatory sweet spot.

• @ThorHartvigsen's thread on 8 largest crypto VCs wallets movement.

• New Order DAO's report on crypto's next frontier on AI & DeFi.

If you enjoy reading this issue, please consider subscribing. It takes 1 minute of your time but it would mean the world to us 🙇

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 advice.