☕️ Grayscale: The SEC Dragon Slayer ⚔️ 🐉

🏰 Can Grayscale save the entire crypto kingdom with a deadly maneuver against the SEC? 🗡

They say let sleeping dogs lie and if you’re a big nerd, you’ll remember that the Latin in the Hogwarts motto translates to “Never tickle a sleeping dragon.”

But heroes don’t wait until the dragon is outside the castle walls. Being a hero means dragging yourself up to its mountain lair, where you face down the dragon before it gets bored of devouring sheep.

Grayscale, the company with the most medieval-fantasy-sounding name, has become crypto’s unexpected hero by successfully challenging the SEC.

And the outcome could lead to the final deliverance of the Bitcoin ETF.

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Espresso Shots

☕️ Friend.tech DOA? 🤝 💵

Friend.tech, the app that once seemed so full of promise, has taken an abrupt and staggering nose dive.

Despite its dystopian implications, Friend.tech offered a new and exciting platform where users could buy and sell their friends like stock.

But it appears the Friend.tech market has already crashed, as last Sunday, buyers, sellers, and all transactions, took a massive nose dive.

Will Friend.tech recover? Probably not.

It was a deadly mix of getting too big too fast, being too strange, and, of course, classic Friend.technical issues.

☕️ BitBoy Booted From Brand 🥾 💔

BitBoy Crypto, the brand established by Ben “BitBoy” Armstrong, has officially cut ties with its creator.

Why? The company released a video on YouTube alleging that Armstrong faces financial damages for negative interactions with employees and substance abuse.

This is far from Armstrong’s first legal trouble. Armstrong has previously faced a lawsuit for harassment, and was also one of the influencers named in a $1-billion class-action lawsuit, who did not disclose their paid endorsements from FTX.

BitBoy responded to the separation with his typical grace and aplomb.

But it would appear that the mutiny has already happened. And as far as cloning, where are they ever going to find another unhinged, middle-aged white guy who spends too much time on the internet?

☕️ SEC Charges Podcasters for NFT Sales 🎙 ⚖

In an unnerving new development, the SEC has brought a lawsuit against Impact Theory, a media and entertainment company with a focus on podcasting.

Impact Theory allegedly raised $30 million through the sale of “Founder’s Keys,” a multi-tier NFT collectible.

Impact Theory encouraged buyers to think of the keys as investments, as the company and its “investors” moved toward creating the next media giant.

The SEC also thought of the NFTs as investments. Or, specifically, as investment contracts that would violate the Howey Test. Now, the SEC is slamming Impact with the classic unregistered securities suit, but in a fun new flavor.

This litigation won’t only be the first SEC lawsuit against podcasters. It will also be the first lawsuit sponsored by Mac Weldon Underwear and BlueChew.

Spilling the Beans

Grayscale: The SEC Dragon Slayer ⚔️ 🐉

The Bitcoin ETF applications have been stuck in a holding pattern.

TradFi went all-in on Bitcoin ETFs, and the biggest names on Wall Street joined the movement — including BlackRock, Fidelity, ARK Invest, and Grayscale.

And until now, the most recent communique from the SEC criticized the surveillance-sharing agreements in the BlackRock and ARK Invest Bitcoin spot ETF applications.

We’re all waiting with bated breath for the SEC to deliver any kind of verdict.

But now Grayscale has broken rank, and this direct assault on the SEC may make all the difference.

Grayscale had proposed to the SEC a conversion of the company’s Bitcoin trust to an ETF, a proposal which was denied.

Grayscale then appealed the SEC’s refusal to a federal court, an appeal it won this week.

“The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” wrote Judge Neomi Rao in the official court ruling.

But note well: this is less a victory than it is a drawing of battle lines.

Here’s the deal: the SEC will have to review Grayscale’s proposal again. And while it will be able to deny Grayscale’s application, this time it’ll have to provide comprehensive reasoning as to why it did so.

This explanation will create an opening that future Bitcoin ETF applications and revisions can exploit.

When the SEC provides reasoning as to why it denied the application, it’ll inadvertently force itself to offer clear guidelines for any future application’s successful approval.

It’s sort of like an ongoing game of legislative “Battleship.” Even if you keep guessing incorrectly, you’re narrowing the space where your opponents' boats could be.

And that’s a game that can’t go on forever. In other words, this single piece of federal intervention has begun the long, lengthy battle of finally getting one of these ETFs approved.

So, would we say that Grayscale slayed the SEC dragon? No, not quite yet.

What Grayscale did do was loose a single scale on the SEC’s underbelly, exposing the pink, vulnerable flesh beneath.

If Wall Street or any other company gunning for an ETF peppers the SEC with accordingly revised arrows for months, or even years, it’s only a matter of time before one finds its mark, and sends the dying body of the beast plummeting into the icy waters around Lake Town.

Now, we’ve got a long way to go before that happens, and many good ETF applications will have to give the ultimate sacrifice.

But if defeating a dragon was easy, all those books and movies wouldn’t be so long.

Meme of the Day

“Are you not entertained?!” ~ Grayscale

Crypto 101

Series-B Funding: At this point, the company should be well out of the development stage and looking to expand its market reach.

The investors generally help to expand that market reach, which is far easier to do in this stage of development, as companies in Series-B funding rounds are well-established.

The Last Sip

If we’re going to continue our high-fantasy, Tolkien-esque reimagining where the SEC is a dragon threatening all of crypto, here are our next three takes:

Hester Pierce as Galadriel: She’s supposed to be a force for good, but you get the sense that if she had enough power she’d be worse than Sauron.

Elon Musk as Gandalf: He should be a leader, but he’s prone to frequent disappearances, only to return with a new identity, which seems to involve screaming wild proclamations and stopping orc armies in their tracks.

Gary Gensler as Gollum: The CGI Gollum won Academy Awards for groundbreaking special effects. But what’s crazy about this transformation is you wouldn’t even need make-up, just a loincloth.

Stay Caffeinated,

Coffee & Crypto Team

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