Not Financial Emojis 🚀📈💰
Dear Bankless Nation, After weeks of regulators bringing down the hammer, the top news in the crypto industry this week was actually about stuff being built. For our weekly recap, we dig into:
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1. Is everything a security now?The SEC’s lawsuit against Do Kwon and Terraform Labs last week alleges that the UST stablecoin is a security because it was a “right to subscribe or purchase” another security i.e., it was convertible to LUNA.
In addition, the SEC argues wLUNA, a wrapped asset, would count as a security in itself because it is a “receipt” for a security in turn.
The case against Terra is filled with broad proclamations that could make life miserable for more reputable crypto entities if the government is successful in every facet of their prosecution. 
Gensler’s next strategy is to go after Do Kwon and UST because he knows no one will defend them and if he wins he’ll establish broad precedent for more control over crypto. It’s evil genius.
Mike Selig @MikeSeligEsq
SEC complaint against TFL and Do Kwon alleges that LUNA and UST are securities. In a novel theory, the SEC not only characterizes UST as an investment contract but as a security bc it could be exchanged for a security (LUNA). Under this theory, nearly anything can be a security. NFTs didn’t come out of the week unscathed either. A federal judge of the Southern District of New York ruled this week in a class-action lawsuit against Dapper Labs that its NBA Top Shot NFTs “might be securities”. The judge ruled that “purchasers’ fortunes were tied to the overall success of Dapper Labs” due to the fact that the underlying Flow blockchain and NFT marketplace where Top Shots were traded was controlled by the company. Other elements of the underlying reasoning were a little… questionable. 
Don’t get caught using the wrong emojis, kids. Caitlin Long, founder and CEO of Custodia bank published a blog post this week which points to the regulatory failures of American financial regulators to act, despite evidence of crypto fraud:
I can’t tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years. “They’re offshore. It’s complicated. We’re looking at everybody.” FOR YEARS. Then to be used as their example.
Caitlin Long 🔑⚡️🟠 @CaitlinLong_
2/ First, the revelations. Today, I’m publicly disclosing for the first time that (a) I handed over evidence to law enforcement of probable crimes committed by a big crypto fraud, starting months before that company imploded and stuck its millions of customers with losses, and… To be continued… 2. Coinbase announces its Layer-2 rollup BaseIn case you’ve been living under a rock in crypto world, Coinbase announced this week it is launching its own blockchain: Base. This could be seen as the equivalent of BNB Chain to Binance, except that it is an L2 optimistic rollup, rather than a whole new L1. And no, (for the time-being) there is no forthcoming Base token. Base is built on OP Stack, Optimism’s developer toolkit for creating modular L2s. For all the details, see a full breakdown on the Bankless newsletter here, or our interview with Senior Director of Engineering at Coinbase Jesse Pollock below. Coinbase Announces Base🔵, an Ethereum L2 Network Powered by Optimism Expect dozens of builders to be deploying on Base. 
6/ Base is for Everyone. We’re excited to launch Base with an incredible group of builders from across the crypto ecosystem, with more joining in every day. The best products are built in community and Base will be an open ecosystem where anyone, anywhere can build.
Will Base succeed in a time where L2s are red-hot flipping mainnet and zkEVMs by Polygon and zkSync are just around the corner? Already, dozens of DeFi projects have signaled their desire to deploy on Base in a bid to court Coinbase’s massive user audience. Join the discussion on the Bankless open thread here. The chain is off to a turbulent start as some transactions weren’t being processed correctly at launch. 
base’s bridge is off to a rough start, every single transaction reverting and the bridge contract is unverified so nobody can figure out what’s going on
3. Spotify going Web3Spotify is experimenting with token-gated playlists by letting users connect their crypto wallets on the platform. Are music NFTs on the horizon?
At present, the 3-month pilot service is accessible to Moonbirds, Kingship, Overlord, and Fluf communities for Android users in the U.S., U.K., Australia, Germany and New Zealand. 
Overlord x @Spotify 🎶 We’ve been selected as one of Spotify’s partners in a new pilot. 🦎 Exclusive pilot of their token-enabled playlists 🎧 Launching with a holder-curated playlist Details below ⤵️
4. Ethereum newsETH withdrawals are coming. The Shapella (Shanghai + Capella) network upgrade is officially scheduled for Feb 28 2023 on the Sepolia testnet at 4AM UTC. After the Sepolia testnet deployment comes the Goerli testnet and finally Ethereum mainnet deployments, which will finally enable validators staking ETH on the Beacon chain to withdraw their ETH stake onto the execution layer of the blockchain. 
Sepolia Shapella scheduled for Feb 28, 4AM UTC 🌃 Read about the upgrade, and find links to the specs, client releases and withdrawals FAQ here: blog.ethereum.org/2023/02/21/sep… 😄
Flashbots is also announcing a new product MEV-Share. MEV-Share introduces a permissionless protocol that empowers users to recapture some MEV value, by choosing what transaction data to hide or reveal. Searchers then bid in a competitive auction for the right to execute against user’s transactions.
Finally, Obol announces its first Ethereum mainnet distributed validator. 
We’re thrilled to share that we’ve been running the first DV cluster on Mainnet Ethereum since Dec 30 with a 🔥 98.6% eff. rating! As this is the first phase of our Road to Mainnet 🛣 it’s time to discuss our design philosophy and approach. 👀🧵 #RunDVT blog.obol.tech/road-to-mainne…
5. DeFi launchesBase wasn’t the only big launch of the week, a handful of projects and protocols launched new features or found themselves in the news. We’ve collected a few below:
1/ Buy NFTs with ANY single ERC-20 token—starting today! ✨ Don’t have enough $ETH? No problem. Use any ERC20 token in your wallet to complete your transaction without swapping to ETH first.
Forking repos is good. It’s why open source is great, cuz we can iterate and improve on work. But prolly best to say “hey, we’re a clone of this other protocol, & here’s where we improved” rather than wait for the community to start recognizing vestigial code you forgot to remove
Introducing yETH, an LSD of LSDs. 💊 Get exposure to a basket of LSDs in one token. 🌈 Spread your risk. 🍄 Boosted yields. Get ready to expand your mind anon.
Mark your calendars stakers, the new and improved Swell is coming April 2023! 🌊 – Reward bearing LST – Built for composability – Fully fungible – Vetted node operators – Integrations with top DeFi protocols blog.swellnetwork.io/new-and-improv…
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👉 Visit Immutable.com to start building today. 🎙️NEW WEEKLY ROLLUPListen to podcast episode | Apple | Spotify | YouTube | RSS Feed 📅 Recap for the 4th week of February, 2022READ 📚METAVERSAL 📚BANKLESS DAO 🏴WATCH 🔊
GREEN PILL 🌳Go Bankless. $22 / mo. Includes archive access, Inner Circle & Badge—(pay w/ crypto) Not financial or tax 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 This newsletter is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.
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