Illustration by Mitchell Preffer for Decrypt
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 those of several other leading coins, including Avalanche, Solana and Dogecoin.
The week’s downturn appeared to have been driven by U.S. regulators’ intensified scrutiny of the industry, which has been more or less ongoing since the fall of Terra in May last year. This week, popular exchange Kraken came up in the crosshairs of the Security and Exchange Commission (SEC).
On Thursday, the regulator announced it had hit Kraken with a $30 million fine and ordered it to shut down its staking service. The implications of this enforcement action are far-reaching. The exchange’s founder and former CEO Jesse Powell tweeted a video in which the SEC chair, Gary Gensler, told CNBC that those offering staking rewards should have “full, fair and truthful disclosure” to be deemed compliant. Powell was skeptical:
Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I’d seen this video before paying a $30m fine and agreeing to permanently shut down the service in the US. How dumb do I look. Gosh. ⛽️💡https://t.co/UPdQdnI6xN
— Jesse Powell (@jespow) February 10, 2023
Aside from regulatory heat, this week was also a decisive one in the ongoing feud between the Gemini exchange and its creditors Genesis, which allegedly owes users of Gemini’s now-frozen Earn product $900 million. Gemini co-founder Cameron Winklevoss on Monday announced that a deal had been reached on a plan to reimburse Earn users:
1/ Today, @Gemini reached an
