There are all kinds of attacks. There are shark attacks, cyber attacks, even panic attacks when your in-laws arrive unexpectedly.

But what happens when an entire industry suffers an international attack from regulatory agencies? 

Well, it turns out, it can create quite the mess. In today’s newsletter, we’ll assess the damages from this latest attack on crypto.

Espresso Shots

☕️ CFTC Sues Binance 🚔 ⚖️

The Commodities and Futures Trade Commission (CFTC) has sued Changpeng Zhao and Binance for allegedly violating trading and derivatives regulations.

This suit is the fiery result of an ongoing investigation into Binance that dates back to 2021. While these are the first actions to result from the investigation, there may still be several more. 

The employees of Binance are admittedly frustrated, because while even doing everything to comply with American investigators, a lawsuit was still the end result.

“The complaint filed by the CFTC is unexpected and disappointing as we have been working collaboratively with the FTC for more than two years,” said an official Binance spokesperson. 

“Nevertheless, we intend to continue to collaborate with regulators in the U.S. and around the world.”

And despite this lawsuit just being announced, it’s already had rippling consequences throughout crypto, hitting stock and crypto prices alike.

We’ll be examining all of that and more in the deep dive section of this newsletter.

☕️ First Citizens Bank Buys SVB 🏦 🤝

First Citizens Bank arranged a deal with the FDIC to acquire Silicon Valley Bank’s deposits and loans.

The bottom line? First Citizens purchased $72 billion of SVB’s assets at a $16.5 billion discount, courtesy of Uncle Sam. 

But First Citizens bank is just happy to do their patriotic duty, of course.

“We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation’s banking system,” said Frank B. Holding, CEO of First Citizens.

Holding went on to assure the public that First Citizens would continue to uphold its relationship with start-ups and venture capital firms.

Now, in case you’ve been worried that the U.S. dollar is steadily declining, take solace in the fact that American banks can buy $72 billion with $55.5 billion.

☕️ Ticketmaster Unveils NFT-locked Tickets 🎟️ 🔐

Ticketmaster, famous for having fees so exorbitant that they woke Joe Biden up, has debuted their new NFT utility.

First partnering with the Death Bats Club Ethereum NFT collection, a community dedicated to the metal band, Avenged Sevenfold, Ticketmaster made early access tickets available to the NFTs 10,000 holders.

1,000 early access tickets were sold, prompting a pleased M. Shadows, frontman of Avenged Sevenfold to remark, “it went incredible.”

“Linking to live shows creates a unique value, and we developed our token-gating capabilities based on how artists want to connect their community to their concerts,” said David Marcus, Ticketmaster’s Executive Vice President of Global Music.

Ticketmaster is clearly thrilled with the results of this experiment, prompting insiders to wonder what would happen if they tried NFT-ticket sales with a good or popular band.

Spilling the Beans

Crypto Under Attack 🚨

The CFTC is bringing a lawsuit against the international crypto exchange, Binance, alleging that the exchange violated trading and derivatives rules.

Those aforementioned derivatives are digital asset derivatives, namely crypto.

And the entire suit is built around the allegation that Binance has been illegally operating an online trading facility within the U.S., violating the Commodity Exchanges Act as well as CFTC regulations.

And how did Binance accomplish this? By allegedly encouraging Americans to access their services through VPNs.

Now, Americans are going to use VPNs however they want to skirt American regulation. 

Before HBO had access to the entire backlog, we had quite a few friends and relatives using VPNs to access French Netflix to watch the first couple seasons of Rick and Morty.

But there is a distinct difference between individuals using a VPN of their own free will and an international company encouraging VPN use to access services banned in the US.

Or at the very least: that's the legal argument the CFTC plans to make.

Now, regular readers of this newsletter may remember that just last week, we said that if crypto was ever banned in the United States, that Americans could still bank however they pleased by utilizing VPNs.

This seems like a good time to remind everyone that this is a comedic, informational newsletter and should not be considered legal, financial, or investment advice.

Okay, we’re nodding to our legal team. They’re nodding back, not smiling. They’re giving us the go ahead. Okay, ahem. Moving on.

The lawsuit against Binance is pretty serious.

Adam Cochran, a professor, venture capitalist, and crypto pundit, detailed the consequences in a 23-tweet thread, with the opening thesis that, “they actually have really strong chances here of toppling the Binance empire.”

And that would ultimately include billions in losses for Binance, the likely shutdown of Binance U.S., and undoubtedly devastation throughout crypto.

And as confident as we are that crypto can outlast any independent company, the toppling of the world's biggest crypto exchange could be massive.

Today alone, this suit has already had consequences well beyond Binance.

After a harrowing crypto winter, cryptocurrencies have been blooming like tulips in Spring.

But this latest action from the CFTC has sent a chill through the space.

Bitcoin, which has been at its highest since June of last year, plummeted 3.6% from $27,781 to $26,755 in just the hour and fifteen minutes after the lawsuit was announced. 

With Ethereum, Litecoin, and several other currencies following suit.

And this wasn’t the only major action against crypto this week.

EU regulators voted to ban anonymous crypto transfers of more than 1,000 euros.

Now, this may seem like a step forward in anti-money laundering regulation, but this sort of action undermines crypto’s essential purpose.

To allow individual users to exchange currency without the government poking its head in.

It would be like the American government trying to tax yard sales, children’s lemonade stands, or the funnel cake booth at the county fair.

Sometimes it’s actually appropriate to buy and sell something without the government taking note of it. 

Now, we’re not trying to victimize crypto here, but as the saying goes: “Is it really paranoia if everyone’s actually out to get you?”

Because it’s certainly starting to feel that way.

If these two largest government actions aren’t enough, we’ve compiled a quick list of the most recent threats against crypto.

• The SEC’s Lawsuit Against Kraken and Shutdown of their Staking Program

• SEC Lawsuit Against Paxos for its BUSD Stablecoin Issuance

• Gary Gensler labeling every crypto except Bitcoin a security and making them vulnerable to unregistered securities suits.

• The Collapse of Silvergate, Silicon Valley, and Signature, three crypto-friendly banks

• Coinbase receiving a “Well’s Notice” warning from the SEC, expecting future legal action

• The SEC lawsuit against crypto influencers, such as paid celebrity spokespeople and Youtubers.

• The Biden Administration’s 30% tax on crypto mining electricity consumption as well as the Senate’s hearing on crypto’s negative environmental impact

Now, when you lay it all out like that... it really does seem like they’re out to get us?

But as Kenny Powers once said, “When you’re on top, everyone wants a piece of your ass.”

As crypto strides higher and further diverges from old institutions, those institutions are only going to drag their feet harder to try to stop inevitable change.

Don’t take these actions as heralds of the end times, but rather as signs of a new beginning.

The Great Decoupling is on the horizon, and on some level, these governments know that they’re powerless to stop it.

These aren’t the calm, iron fists of government censure, these are the flailing arms of a Michelin-starred chef as his patrons head out the door to the new, decentralized gastropubs down the street.

Meme of the Day

So you're saying that's... illegal? 

Crypto 101

CFTC: Commodities Futures Trading Commission. This is the regulatory body that manages futures, swaps, options, and derivative markets.

Thought the SEC was alone atop American financial regulation? Think again. We have so many niche financial functions that we had to establish all different kinds of regulation.

The CFTC, the government agency that manages futures and derivates, are the ones that currently have beef with Binance.

The Last Sip

After having recounted the SEC’s recent actions against crypto, here are some future actions that we can anticipate:

• Gary Gensler will attempt to tie Changpeng Zhao’s shoelaces together so that he’ll trip, but CZ will catch him under the table and patiently ask, “What are you doing?”

• The American government will attempt to ban VPNs, and then realizing that like guns and marijuana, they’re way too late to the game, and will promptly give up.

• Joe Biden will issue a stuttering warning against crypto investments, before pulling his grandkids aside to ask for their help to set up a FoxFace (Metamask) account.

Stay Caffeinated,

Coffee & Crypto Team

That's all for today! If this email got you hooked on our unhinged crypto takes, be sure to get a full dose on Twitter @GetCoffeeCrypto.

If you find yourself smiling at any of our dumb jokes, or even *learning* something - make sure to share this newsletter with your friends!

If you get 10 friends to sign up - or even enemies, we don't care - we'll send you a swag box with some epic Coffee & Crypto merch! Just hit the Click to Share button in the section below to get started!

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.