This week on Crypto Twitter: Gensler unleashes critics to crack down on Kraken

The crypto market’s steady growth since the start of 2023 was checked by pronounced losses this week. Bitcoin and Ethereum’s price drops managed to stay within single-digit percentages, but not for several other leading coins, including Avalanche, Solana and Dogecoin.

This week’s decline appeared to have been driven by US regulators intensified scrutiny of the industry, which has been going on more or less since Terra’s fall last May. This week, popular exchange Kraken came up in the crosshairs of the Security and Exchange Commission (SEC).

On Thursday, the regulator announced that it had done so hit Kraken with a $30 million fine and ordered it to cease its picket service. The implications of this enforcement action is far-reaching. The exchange’s founder and former CEO Jesse Powell tweeted a video in which the SEC chairman, Gary Gensler, told CNBC that those offering stake rewards should have “full, fair and truthful disclosure” to be considered compliant. Powell was skeptical:

Regulatory heat aside, this week was also a crucial one in the ongoing feud between the Gemini exchange and creditors Genesis, which reportedly owes users of Gemini’s now-frozen Earn product $900 million. Gemini co-founder Cameron Winklevoss announced on Monday that an agreement had been reached on a plan to refund Earn users:

Also that day, an email from the late American software developer Hal Finney resurfaced and was widely shared on Twitter. In it, Finney referred to crypto collectibles two decades before the fact:

The next day, entrepreneur Liron Shapiro posted a new company pitch by Israeli-American businessman Adam Neumann, who studiously avoided using the word “crypto” despite being backed by crypto investment firm Andreessen Horowitz (aka a16z).

Crypto news account @Tier10k on Wednesday revealed how much of Coinbase’s revenue came from stakes in the 3rd quarter of last year.

That day, Coinbase CEO Brian Armstrong reacted to rumors of the SEC’s efforts. He defended Ethereum staking, where anyone with 32 ETH (about $50,000) can lock their coins and start mining Ethereum, arguing that this does not make Ethereum a security, meaning the matter is outside the SEC’s jurisdiction.

Also on Wednesday, the Multi-chain crypto wallet Trust broke down details of a new type of socially engineered crypto heist recently executed by organized criminals in Italy. Crypto’s Italian job, if you will.

On Thursday, the co-founder of bankrupt crypto hedge fund Three Arrows Capital, Zhu Su, announced in a multi-tweet thread that his next project will be “next level cex” (centralized exchange) with “fully decentralized custody.”

On the same day, Jameson Lopp, co-founder and CTO of crypto wallet Casa, reacted negatively to the emergence of NFT-like assets on Bitcoin:

On Friday, Andreessen Horowitz’s general counsel, Miles Jennings, tweeted his thoughts on the SEC vs. The Kraken case. “Fortunately, we don’t think this settlement will have any impact on exchanges that have structured their programs so they don’t implicate securities laws,” he said, then criticized SEC Chairman Gensler’s notorious regulation-by-enforcement strategy.

Bill Huizenga, the US representative for Michigan’s 4th congressional district, also had some sharp words for Gensler:

Finally, the crypto community offered its philanthropic support to earthquake victims this week: