Some of the greatest threats can come from our past. Jilted lovers. Grade school bullies. A crime family with a blood debt.

But scarier than our collective pasts, the greatest threats emerge out of Florida.

So, today, we’ll find out what elderly terror has crawled out of the Everglades to threaten crypto.

Espresso Shots

☕️ Ethereum Shanghai Upgrade Complete 🔋 🆙

Analysts estimated huge sell-offs in the aftermath of the Shanghai update, which unlocked previously staked Ethereum on the network.

The Ethereum Upgrade (also called Shapella, more on that later) is complete! Which means a ton of locked up ETH is now available for withdrawal.

So, how much Eth was actually locked up?

18 million ETH, worth roughly $3.4 billion. The ETH was locked up back in December 2020 to secure the network as Ethereum began its transition to proof of stake.

So how much Ethereum do these analysts predict will be sold? Well, the current estimate is around 170,000 or $326 million.

In the short term, the Ethereum flooding the market could be bad for the price of ETH, but at the moment, ETH appears to be holding steady around $1,900.

In the long term, experts believe this will make Ethereum an all around healthier coin and a more stable investment.

It’s kind of like when you neuter your cat so it stops getting into street fights. It sucks for a week but it's good in the long run. Does that make sense?

☕️ Refund Inbound For SushiSwap Victims 💰 ✉️

Defi trading platform SushiSwap has unveiled its refund plans after suffering a $3.3 million hack last weekend.

For users to get their refund, they have to send an email with their transaction IDs and blockchain data to SushiSwap’s security team, because not all of these hacks were created equally.

Some of the funds were stolen by genuine thieves, blackhat hackers, while others were removed by white hat hackers as part of a security protocol.

Those white hat funds were going to be returned via a Merkle Contract anyway, so SushiSwap needs to get its returns straight.

“Our goal is to return all user funds to legitimate claimants,” said an official spokesperson from SushiSwap. “We appreciate everyone’s patience and understand your frustration as we work through returning funds to affected users.”

We’re jealous of the SushiSwap victims. We got poisoned from eating blowfish at the “sushi spot” inside the gas station and we never even got a coupon.

☕️ Buffett’s Bitcoin Burn 🤬 🔥

Warren Buffett, the dark lord of finance, has spoken out against crypto, yet again.

“It appeals to the gambling instinct. We’ve had an explosion of gambling,” said Buffett when asked about the Bitcoin rise in an interview with CNBC.

“I like to bet on a football game if I’m sitting and watching– it makes it more interesting. But I don’t think I want to make a living trying to bet against the house.”

But this is far from the first time that Buffett has spoken out against crypto. Buffett has a well-documented, anti-crypto record.

In 2018, Buffett called crypto, “rat poison squared.” In a 2014 interview, Buffett insisted that, “the idea that it (crypto) has some huge intrinsic value is just a joke.”

But we can hardly expect the human personification of the stock market to be bullish on decentralized finance.

Off the record, Buffett has expressed that he won’t be interested in crypto until it’s involved in procuring him the goat’s blood that keeps him alive.

Spilling the Beans

The 77 Year Old Ruining Crypto 👵🏻

Believe it or not, the 77 year old ruining crypto isn't even a person… no, it’s far worse. It's not even a law, really...

It’s an old legal precedent. Disgusting.

The “Howey Test” is considered the gold standard in America for determining whether or not an investment is a security.

And how did the Howey Test come about?

Well, it dates back 77 years to a Supreme Court Case concerning a Florida citrus grove.

The case was The SEC vs. W.J. Howey Co. and it concerned one Florida entrepreneur’s business model to bring investors into his citrus grove.

The Howey Company would sell groves to investors who would immediately turn around and lease that land back to Howey.

This suited the investors fine, because despite not knowing anything about agriculture, they soon saw massive returns on their investments.

The Howey Company was making money hand over fist with this model, but they never registered these investment contracts as securities.

So, the SEC intervened. Some things never change.

Now, the Howey precedent is called upon whenever the SEC is unsure if an American investment qualifies as a security.

There are four key elements in the Howey test which determine if an investment qualifies as a security. And those are:

1. An investment of money.

2. A common enterprise.

3. A reasonable expectation of profit.

4. The profit is derived from the efforts of others.

Gary Gensler, head of the SEC, has loudly and proudly stated that the Howey test has been applied to determining whether crypto tokens purchased in America can be classified as securities.

This is more than trying to put a square peg in a round hole. This is like trying to stuff a scroll of Egyptian parchment into a USB drive.

By legal standards, this statute is ancient and desperately in need of an update.

In 1946 when this case was settled, the concept of a computer was entirely different. They took up entire rooms and required special training to operate.

Try explaining Bitcoin to someone from 1946, I'm sure it'll go great.

Even so, American regulators seem keen to apply a decades-old precedent to an enterprising, young industry.

Why? Because as we’ve recounted in previous newsletters, when it comes to crypto, the American legislative body has been asleep at the wheel.

And while they’re passed out, independent federal agencies such as the SEC and CFTC have run rampant, slapping crypto exchanges with lawsuits any chance they can get.

We desperately need new laws and regulations for crypto.

The Howey test only fits crypto if you squint your eyes. Crypto is entirely decentralized, the uses of a token are nothing like the uses of a stock, even if they share similarities.

This isn't to say we shouldn't regulate crypto, it's merely to say we should do a little better than slapping an old ruling on this new trick.

Other countries and even entire continents are doing a better job of adapting to this new tech than America.

They’re creating hubs and new laws to actually draw crypto to their countries, instead of sitting on the fence, unsure of whether or not they’re going to kick crypto out entirely.

And here the U.S. sits, proudly applying legal precedents that were created during a time when you could smoke cigarettes inside hospitals.

It’s not just that the U.S. is losing this race, or is in danger of getting lapped, they’re not even facing in the right direction.

Meme of the Day

Easy mistake to make.

Crypto 101

Shapella: Why does everyone keep calling the Shanghai update, “Shapella?”

Well, it’s actually a pretty simple portmanteau. “Shanghai” is the name of the update to the Blockchain’s execution layer.

“Capella” is the name of the update to Ethereum’s consensus layer.

You put the two of those together, you get “Shapella.” So, don’t worry. It’s just another name for the Ethereum update, not an expensive new music festival.

The Last Sip

The three biggest things to come out of Florida since the Howey Test in 1946:

• Gatorade

• Smoking Bath Salts

• The political takes of Ron DeSantis.

Stay Caffeinated,

Coffee & Crypto Team

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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.