The Breakdown First Five - Thursday September 14, 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Su and Kyle Banned in Singapore

The co-founders of 3AC have been prohibited from operating in the Singapore regulated financial services industry for nine years. The MAS concluded its investigation of the failed crypto fund, finding that the pair had misled the regulator about the appointment of a new fund manager and failed to have appropriate risk management in place. The MAS blasted the pair for “flagrant disregard” of regulations and “dereliction of their directors’ duties”.

4. DeFi Defense

Following the CFTC’s crackdown on DeFi last week, Coinbase CEO Brian Armstrong is rallying the troops. Armstrong is calling for DeFi protocols to fight enforcement actions in court to establish the precedent needed to defend DeFi. Armstrong stopped short of explicitly backing a defense fund but numerous others in the industry called for a collective defense and urged protocol founders to reach out.

3. Fortress Breach Explained

Coindesk has dug up the explanation behind a $15M crypto loss at Fortress Trust which required a bailout from Ripple earlier this week. It turns out software provider Retool has admitted to being phished. An attacker used a deep fake IT call to gain system level access. Although Fortress wasn’t directly at fault, the incident raises questions about their security model. Retool recommended against the service they were using “if security is important.”

2. FTX Sales Approved

The FTX estate has been given the green light to begin dumping their crypto. Galaxy Digital will handle the sales and have been approved to hedge ahead of sales. The exchange has $3.4B in crypto to liquidate. $50M can be sold this week and next, with $100M per week after that. Lawyers claimed it was impossible to return crypto to customers due to a lack of accounting. “It’s all part of one pool.” Creditors committee was on board, saying the sooner the better.

1. Enforcement of Stoner Cats

The SEC has announced its second enforcement action against an NFT project. Stoner Cats have settled for a $1M fine and full refunds to investors over their profile picture collection. The collection raised $8M in July 2021 to fund a token gated cartoon series. SEC dissenters argued that an NFT crackdown would stifle experiments with on-chain collectables and art, making the rules unclear. The SEC will protect you against the monkey pictures whether you like it or not.

Thanks for reading -NLW