Hodler’s Digest, Jan. 14-20 – Cointelegraph Magazine

Coinbase argues stocks, Terraform Labs and Howey in 5-hour SEC face-off

United States District Judge Katherine Polk Failla has heard arguments from the U.S. Securities and Exchange Commission (SEC) and Coinbase on the crypto exchange’s motion for dismissal of a lawsuit filed by the regulator in June 2022. The hearing was held for nearly five hours and provided an extensive overview of the key arguments in courts regarding the crypto space, assets and the SEC’s role in regulating the industry. During the hearing, the SEC argued that buyers of tokens are also investing in the network or ecosystem behind it, indicating there is a value proposition behind a token purchase. Coinbase’s attorneys, however, challenged the argument, claiming that Bitcoin — described as a commodity by an SEC attorney during the hearing — is also backed by a community and has a network.

Sam Bankman-Fried’s parents seek dismissal of FTX clawback lawsuit

The parents of former FTX CEO Sam Bankman-Fried are seeking to have FTX’s lawsuit against them dismissed, rejecting claims that they knew about the problems at the crypto exchange and knowingly benefitted from misconduct at the firm. According to a court filing, lawyers representing Joseph Bankman and Barbara Fried argued that FTX’s lawsuit sought to “capitalize on the sheer fact” that they were the parents of the former FTX CEO. In September 2023, FTX sued Bankman and Fried for allegedly exploiting their influence and access within the FTX empire to enrich themselves.

Ethereum Dencun upgrade goes live on testnet after 4-hour delay

The newest upgrade to the Ethereum network, codenamed “Cancun-Deneb” or “Dencun,” has gone live on the Goerli testnet for the first time, according to a Jan. 17 social media post from Ethereum developer Parithosh Jayanthi. A bug delayed the network’s launch for approximately four hours. Once implemented on the mainnet, the Dencun upgrade will significantly lower the cost of transactions on Ethereum layer 2s such as Optimism, Base, Polygon zkEVM and others, developers have claimed. It will also limit self-destruct operations and allow for new bridge and staking pool features.

IRS steps back crypto tax rules, exempting TXs over $10K from obligations

United States businesses won’t yet need to report cryptocurrency transactions above $10,000 to the Internal Revenue Service (IRS) until the tax agency releases a regulatory framework. The decision follows a revision of the Infrastructure Investment and Jobs Act by the U.S. Treasury Department and the IRS. The law came into effect on Jan. 1 and required all U.S. businesses to report crypto transactions over $10,000. However, the tax regulator has stepped back from enforcing the rule for now. The IRS said it and the Treasury intend to issue proposed regulations concerning digital asset reporting but didn’t specify when they would be introduced.

Spot Bitcoin ETFs scoop up another 10,600 BTC on day 5

Issuers of Bitcoin exchange-traded funds (ETFs) added another net 10,667 Bitcoin to their spot products on the fifth trading day amid increasing volume. Data compiled by X account CC15Capital for Jan. 17 shows that a net $440 million in Bitcoin was added to funds’ holdings at the end of the day. BlackRock’s ETF accounted for the lion’s share of the purchases with 8,700 BTC, worth nearly $358 million. The data also shows that nine ETFs (excluding Grayscale) have purchased nearly 68,500 BTC since their launch, currently worth around $2.8 billion. The funds also saw a 34% jump in daily volume as of the fifth day of trading.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $42,067, Ether (ETH) at $2,497 and XRP at $0.54. The total market cap is at $1.57 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Flare (FLR) at 29.32%, Siacoin (SC) at 28.79% and Astar (ASTR) at 12.24%.

The top three altcoin losers of the week are Optimism (OP) at -21.12%, Helium (HNT) at -18.70% and FTX Token (FTT) at -17.66%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“I will never allow the creation of a central bank digital currency.”

Donald Trump, presidential candidate and former president of the United States

“Most people are not comprehending the enormity of the barrier that has been lifted, making the ETF an easily investable commodity like any other.”

John Nahas, senior vice president of business development at Ava Labs

“Today’s [Coinbase] hearing revealed a key flaw in the SEC’s legal theory: it turns nearly every asset on the planet into a security.”

Jake Chervinsky, chief legal officer at Variant

“I think the chair of the SEC, Gary Gensler, has become a political liability in the United States.”

Brad Garlinghouse, CEO of Ripple

“With their increasing importance, dollar-backed stablecoins are set to have a profound impact on the financial sector, potentially reshaping how money is moved across borders.”

Andrew Peel, head of digital assets at Morgan Stanley

“The U.S. wants to be competitive in blockchain technology, but regulators are doing their utmost to prevent or control that as best they can.”

Sandra Carter, chief operating officer at Unstoppable Domains

Prediction of the week

Bitcoin trader who called $48K BTC price top flags new bearish signal

Bitcoin may have more to lose if one BTC price chart pattern plays out as usual, warns veteran pseudonymous analyst Filbfilb.

According to the analyst, when the three-day chart crosses below the daily 50-period simple moving average (DMA), further downside tends to result. “3 Day red with a break below 50 DMA. There are a few examples of this happening in the past,” he commented.

In addition, financial commentator Tedtalksmacro flagged $40,000 as the next crucial level to hold.

BTC price action fell to $40,600 on Jan. 19, marking an almost 20% retreat from last week’s local highs, data from Cointelegraph Markets Pro and TradingView confirms. Various market participants view the mid-$30,000 range as a potential bounce zone to come.

FUD of the Week

Alex Mashinsky seeks dismissal of two charges, asks court not to mention Celsius bankruptcy

Lawyers representing former Celsius CEO Alex Mashinsky filed a motion in federal court requesting a judge drop charges related to commodities fraud and market manipulation. According to the filing, the second count of commodities fraud was “repugnant” and “inconsistent” with the first count of securities fraud based on the government’s treatment of crypto. Mashinsky was indicted on seven felony counts in July 2023 and is currently free on a $40 million bail.

Manta Network experiences DDoS attack amid exchange listing

Manta Network experienced a widespread distributed denial-of-service attack amid a successful token listing on multiple exchanges on Jan. 18. Kenny Li, co-founder of P0x Labs, the team behind Manta Network, said the blockchain’s nodes experienced over 135 million remote procedure call requests. “This is a very aggressive and timed attack,” commented Li, while adding that “the blockchain is running safely” and “funds are safe.” Communication between apps and the network was severely affected by the attack.

GameStop to shut down NFT marketplace due to regulatory limbo

Gaming retailer GameStop has warned its users that it will be phasing out its nonfungible token (NFT) marketplace next month due to regulatory uncertainty. The company said users have only two weeks remaining to access its NFT platform. However, the company assured NFT holders that the decision to further scale down its relationship with crypto will not impact their NFTs. The gaming company cited a lack of regulation as the cause for further diminishing its crypto services. In December 2022, GameStop announced a shift away from crypto initiatives following a $94.7 million net loss in Q3 and staff reductions in its digital assets department.