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Welcome to the latest weekly Tokengraph newsletter, bringing you the biggest current event updates from the wide, wide world of Web3. Today, we’re bringing updates on the SEC's stance toward recent Bitcoin ETF applications and a breakdown of the ongoing controversy surrounding Logan Paul's CryptoZoo project. Stay informed and stay ahead with Tokengraph!
On today’s agenda:
Bitcoin ETFs Face SEC Resistance
Is Logan Paul’s CryptoZoo a Scam?
Thailand + Singapore Ban Crypto Loans
Twitter, Coinbase CEOs upset @ Apple
Hong Kong Is Going Deep in Web3
And more…
The U.S. Securities and Exchange Commission (SEC) reportedly finds the recently submitted Bitcoin spot exchange-traded fund (ETF) applications, including those from industry giants BlackRock and Fidelity, inadequate, according to the Wall Street Journal. These applications were deemed lacking in specificity, particularly concerning the management of "surveillance-sharing agreements" aimed at deterring fraudulent activities and manipulation by monitoring trading, clearing activities, and customer identities.
JUST IN: SEC says spot #Bitcoin ETF filings are inadequate - WSJ
— Bitcoin Magazine (@BitcoinMagazine)
Jun 30, 2023
The flurry of applications from prominent fund managers, such as BlackRock, Fidelity, Invesco, Wisdom Tree, Valkyrie, and Bitwise, followed a surge in Bitcoin's price. We feel that these applications signal a growing interest in Bitcoin from the traditional finance (TradFi) world—because ETFs provide investors with the opportunity to engage with Bitcoin without directly holding it.
1/ last week's @BlackRock spot Bitcoin ETF filing was big news!
but, it's not the only story. many of the largest financial institutions in the US are actively working to provide access to Bitcoin and more.
a quick glance - $27 trillion of client assets here!
— Meltem Demirors (@Melt_Dem)
Jun 26, 2023
Despite investor interest, a spot Bitcoin ETF is yet to exist in the U.S. due to the SEC's reluctance to approve one, primarily citing Bitcoin's susceptibility to price manipulation. However, the SEC has recently approved the first leveraged Bitcoin futures ETF, the Volatility Shares 2x Bitcoin Strategy ETF (BITX), which launched on the Chicago Board Options (CBOE) BZX Exchange. We’re certainly receiving mixed messages here!
SEC is a "failed regulator" says Cameron Winklevoss.
- Refusal to approve #Bitcoin ETF has been a complete disaster for US investors.
— Bitcoin Archive (@BTC_Archive)
Jul 3, 2023
In their latest application, Fidelity argued that their Wise Bitcoin Trust, a spot Bitcoin ETF, would help American investors avoid risk. They contended that the absence of a Spot Bitcoin ETP (exchange-traded product) exposes U.S. investor assets to significant risk, pushing them to seek alternative exposure through generally riskier means.
Blackrock wants #Bitcoin ETF.
Fidelity wants #Bitcoin ETF.
Banks buying MSTR as proxy #BTC.
@saylor just bought 0.66% of remaining exchange coins.
NOW... North Carolina has passed a bill to explore holding #Bitcoin in their treasury.
REMEMBER:... 1.88 million #Bitcoin left.
— Luke Broyles (@luke_broyles)
Jun 29, 2023
Fidelity previously applied for a Bitcoin ETF in 2021 but was rejected. Besides their interest in Bitcoin ETFs, Fidelity launched two ETFs last year providing clients exposure to companies in the crypto and metaverse space. They also introduced a 401(k) that allows workers to save 20% of retirement funds in Bitcoin!
Meanwhile, Bitcoin is trading at $30,498, marking an uptick of 1.9% in the past week, from a starting price of less than $17,000 per coin at the beginning of the year. Time will tell where the price goes next, but we find it an extremely positive sign that TradFi institutions are showing so much interest in crypto ETFs.
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Logan Paul, the popular YouTuber, has been under scrutiny following the unfulfilled promises of his NFT-based game project, CryptoZoo, announced back in 2021. Despite commitments of token burns, financial reimbursements for users who “don’t want to wait for [the project] to be completed”, and ongoing development, users are left waiting in the shadows, six months on.
CryptoZoo's initial launch consisted of selling NFTs and releasing $ZOO tokens. However, the much-anticipated game never launched, stirring up widespread accusations of a “rug pull.” Paul, in response, introduced a three-part plan to fix things in January 2023, promising to burn $ZOO tokens, refund investors, and continue game development. However, the investigation by internet detective Stephen “Coffeezilla” Findeisen indicates that these promises have remained empty.
YouTuber Coffeezilla called out Logan Paul for not refunding CryptoZoo investors as promised 6 months ago
— Dexerto (@Dexerto)
Jun 30, 2023
Close inspection of $ZOs blockchain transactions and the game's tokenomics shows that neither Paul nor his manager, Jeffrey Levin, have burned their own $ZOO tokens as they promised.
Presently, the majority of $ZOO tokens, about 70%, are held by what seems to be a CryptoZoo game wallet. The rest are distributed amongst other wallets, none of which have shown any substantial $ZOO burns. The token's value has plummeted significantly, down 82% in the past year, further diminishing the worth of these holdings.
Logan Paul’s lawyers contacts Coffeezilla following him calling out Logan for manipulation with CryptoZoo scam #DramaAlert
— DramaAlert (@DramaAlert)
Jun 30, 2023
Paul's pledge to reimburse NFT holders at 0.1 ETH each, approximately $193, totaling over $1.8 million, is yet to be fulfilled.
On top of disappointed investors, key team members like CryptoZoo's first CTO, Zach Kelling, and his fiancée Antje Worring, have expressed their dissatisfaction. Kelling claimed he is still owed over $1 million for his work. Worring, who started her spinoff philanthropy project after the duo felt Paul was not going to pay Kelling, shared her resentment towards the management of CryptoZoo, including developer Eddie Ibanez.
@WWE Hey Logan great job tonight. Just curious, any timeline when you’ll pay back the crypto zoo investors?
— MAK (@MAK112345)
Jul 2, 2023
Concerning the game's progress, there has been no substantial update since January 2023. The official website, social media handles, and blogs have been inactive for over a year, leaving users completely in the dark about its actual status.
Despite the various unfulfilled promises, Paul has responded to the ongoing lawsuit against him and the CryptoZoo team, filed in February 2023, citing a lack of "personal jurisdiction." However, the plaintiffs argue otherwise.
In the midst of the ongoing lawsuit and a wave of discontentment from his community, Paul's intentions and next steps for CryptoZoo remain uncertain. As for now, CryptoZoo holders continue to wait, hoping for a resolution that remains undelivered.
What is the name of the first blockchain-based game ever?
A. Gods Unchained
B. The Sandbox
C. CryptoKitties
D. Decentraland
Scroll down to the bottom to see if you're right!
⚡ Lightning Round: Weekly Updates
In a move prioritizing investor protection, Thailand's SEC has banned crypto exchanges from offering lending and staking services. Following Singapore's lead (which enacted similar rules this week), the rule, effective from July 31, 2023, also mandates a clear trading risks disclaimer and user suitability assessments for investments. This development reflects increased regional regulation after the FTX exchange's fallout last year.
This week's highlights from crypto Twitter include Apple's controversial removal of Damus, a decentralized social networking app, due to its Bitcoin tipping feature. This decision drew criticism from Bitcoin advocates like Block CEO Jack Dorsey and Coinbase CEO Brian Armstrong.
Hong Kong has launched a task force to bolster Web3 development, exemplifying its desire to become a major Web3 hub. Led by the pro-crypto financial secretary, Paul Chan, and featuring industry experts, the task force aims to leverage the potential of blockchain technology and capitalize on the emerging Web3 trend for future development and innovation.
❓ Trivia Answer
Answer: C.
CryptoKitties was developed by Dapper Labs, a Canadian studio, and it allows players to buy, breed, and trade virtual cats with different features and rarity. The game was so popular in 2017 that it single-handedly congested the Ethereum network, causing transactions to slow down significantly.
Web3 Resource of the Day
Bitcoin ETF Explained | Should You Invest? | Video from Marko - Whiteboard Finance
This is a video from a couple of years ago that’s still just as applicable today—if you want to gain a better understanding of just what a Bitcoin ETF is, and are curious to hear some pros and cons of the ETF vs. investing directly into Bitcoin itself, this video is for you. The video is mainly about the Bitcoin-linked futures ETF from Proshares that hit the New York Stock Exchange (NYSE) in 2021, but the general principles are possibly even more important in the context of today’s TradFi industry than ever.
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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice to buy or sell any assets or to make any financial decisions. Do your own research.