Protocol - When the crypto crisis comes for you

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By Lindsey Choo, Nat Rubio-Licht and the Source Code team
June 21, 2022

Good morning! As Celsius and others freeze withdrawals, the question on everybody’s lips is: What happens to the investors?

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Crypto’s being held hostage

Consumers promised high returns and safe investments lost big in the UST-luna collapse, which in turn has caused DeFi entities like the Celsius Network to freeze withdrawals. Alongside the general crypto market downturn, the damage is tangible, giving urgency to efforts to regulate crypto with basic guardrails.

The questions of what happens to crypto held hostage by an exchange or a DeFi lender are puzzling for many of the new investors drawn to crypto recently.

In the context of DeFi lenders like Celsius, it’s unlikely consumers will be able to access their crypto deposits unless they are unfrozen by the lenders themselves.
How existing investor protection laws might apply to digital assets is largely untested, and the global and decentralized nature of many DeFi entities makes it hard to figure out where to start in pursuing a claim.

But risky behavior by crypto companies isn’t flying under regulators’ radar. A look at the ongoing investigations Terraform Labs is under after the UST-luna stablecoin collapse gives an idea of the repercussions a DeFi company can face from causing losses for investors.

Federal legislation and regulations could be expected in the next few years, with the introduction of the Responsible Financial Innovation Act in Congress and Biden’s executive order outlining how federal agencies should be working together for a regulatory framework for the crypto industry, federal legislation and regulations could be expected in the next few years.

In the meantime, SEC Commissioner Hester Peirce, a frequent critic of the agency’s scant rulemaking on crypto, gave one piece of advice to consumers back in May. “I think no matter what you're doing with your money as an individual, you need to be using your own brain, first and foremost. You need to be looking out for red flags,” she told Protocol.

Read the full story here.

— Lindsey Choo (email | twitter)

One charger to rule them all

Following in the footsteps of the EU, Democratic Sens. Elizabeth Warren, Ed Markey and Bernie Sanders called for the U.S. to establish uniform charging accessory standards in a letter to the Department of Commerce.

Planned obsolescence in consumer electronics is causing an excessive amount of e-waste, and a universal charging standard could help, the senators argue.

The letter comes on the heels of the EU's decision to require USB-C charging ports to be standard by 2024, but the senators’ letter didn’t specifically call for USB-C, rather an open-ended “comprehensive strategy."
In 2020 alone, there was a global total of 54 million tons of e-waste accumulated. The EU’s decision itself would save 11,000 tons of e-waste annually, and making a charging standard in the U.S. could help even more.

It could also save consumers a lot of money. The EU law, for example, will save consumers an estimated $268 million a year.

One European Commission study reported that consumers 38% of the time can't charge their device because they don't have a compatible charger on hand. Consumers also spend nearly $2.6 billion annually on standalone chargers that don’t come with their devices.

The charging port standard in the EU will already throw Apple for a loop, which holds 18% market share in the region, though the company is reportedly working on some USB-C iPhones now. But setting these standards in the U.S., where it controlled 50% of the U.S. smartphone market in the first quarter this year, could totally upend it.

— Nat Rubio-Licht (email | twitter)

People are talking

Elon Musk still has some outstanding issues with buying Twitter:

"Will the debt portion of the round come together? And then will the shareholders vote in favour?"

FTX’s Sam Bankman-Fried blames the Fed for the crypto crash:

"Literally, markets are scared. People with money are scared."

FBI agent Sean Ragan thinks crypto fraudsters on LinkedIn are a big threat:

“There are many potential victims, and there are many past and current victims.”

Coming this week

Closing arguments in Sunny Balwani's trial are expected to start today. They'll probably last more than a day.

NFT NYC is happening. WAGMI or NAGMI?

Collision started yesterday. Execs from FTX, Calendly, a16z and more are speaking. Protocol’s Michelle Ma will be there, too.

DevOps Loop begins tomorrow. Expect to hear from Snyk, VMware and Chainguard leaders.

VidCon also starts tomorrow at the Anaheim Convention Center.

In other news

Apple workers in Maryland voted to unionize, becoming the first of the company’s stores to do so.

Elon Musk clarified that Tesla's layoffs affect 3.5% of its workforce, not 10%. And on Sunday, two former Tesla employees sued the company over the layoffs, alleging they broke federal law.

Few companies actually followed through on their DEI promises in the two years after George Floyd's murder. These charts show about how much has changed.

Meet Butterscotch, Starburst, Holocake and Mirror Lake, a few of Meta’s newest VR headset prototypes. Meta also announced an avatar fashion store, where you can buy virtual clothing from Balenciaga, Prada and other high-fashion brands. Prices for items will be between $3 and $9.

U.S. lawmakers are urging Google to label and limit the reach of fake abortion clinics. The letter was prompted by a recent study that found that 11% of abortion-related searches directed users to anti-abortion centers.

The ex-Amazon worker behind the Capital One hack was found guilty of wire fraud and hacking. Paige Thompson also used Capital One’s servers to mine crypto.

Locals aren’t happy about Amazon’s drone delivery service. Many people in the rural town where the service will launch didn’t even know the project was happening.

Automate everything

Process docs and company wikis are invaluable when it comes to storing information. What happens if the only person who knows how to do one specific function is out sick? Scribe allows you to document a process as you’re doing it. Instead of taking videos or listing out all your steps, just go through the task, and Scribe will record your every move, spitting out clear directions and helpful screenshots.

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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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Key phrases

existing investor protection laws Responsible Financial Innovation Act SEC Commissioner Hester Peirce general crypto market downturn Source Code team USTluna stablecoin collapse many DeFi entities

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