[Weekly Xangle] SEC Notice to Coinbase, Arrest of Do Kwon, Hindenburg Report on Block

Xangle Research
Mar 27, 2023

Translated by elcreto

Xangle’s Take on the Market This Week

  • Crypto crept higher and Bitcoin gained 9% as the banking jitters spread in the wake of the Credit Suisse turmoil. Crypto clawed back the sharp losses from treasury Secretary Janet Yellen’s remarks on deposit insurance on the 23rd.
  • Arbitrum ecosystem tokens gained traction in the lead-up to the $ARB airdrop.


Top Stories & Takeaways


SEC Sends Wells Notice to Coinbase

  • Coinbase disclosed on the 22nd that it had received a Wells Notice from the U.S. SEC regarding aspects of its exchange, including staking service Coinbase Earn and Coinbase Wallet.
  • Coinbase expressed its confidence in the legitimacy of its assets and services and its willingness to go through a legal process to prove the regulator’s unfair and unreasonable approach to digital assets.

Xangle’s Take: The SEC continues to dole out actions against digital assets rather than providing a clear regulatory framework. Recently, the U.S. Bankruptcy Court dismissed SEC’s objection to Binance U.S.’s bid to acquire Voyager, expressing dissatisfaction with the regulator’s claim. The upcoming court decision on the SEC-Coinbase case will be a landmark event in determining the security status of PoS tokens.  

Link: Coinbase Statement on Wells Notice


Terraform Labs Founder Do Kwon Arrested

  • Terraform Labs co-founder Do Kwon and Chai Corporation CEO Han Chang Joon were arrested on the 23rd at an airport in Podgorica, the capital of Montenegro.
  • South Korean prosecutors will request the Ministry of Justice in Montenegro to extradite Do Kwon to South Korea.

Xangle’s Take: After the May 2022 Luna crash wiped out KRW 50 trillion (or USD 38 billion) from the market, South Korean prosecutors charged Do Kwon and other associates with fraud and illegal fundraising committed in violation of the Capital Markets Act. With his extradition to South Korea increasingly likely, speculation is mounting on whether the South Korean authority will press additional charges apart from the breach of the capital market law. On the same day, the U.S. Attorney's Office for the Southern District of New York indicted Do Kwon on eight counts, including securities fraud, wire fraud, and market manipulation, raising the possibility of his extradition to the U.S.

Link: CoinDesk Report



Avalanche C Chain Sees a Pause in Block Production

Avalanche’s C Chain has resumed block production after an hour-long outage that halted the process.

Link: Fan Long Twitter | Kevin Sekniqi Twitter | Github Node Upgrade Link


Immutable X Announces Partnership with Polygon

Immutable X announced its partnership with Polygon as well as its adoption of Polygon’s zkEVM.

Link: Immutable X Twitter Announcement | Polygon Blog Announcement | Immutable zkEVM



Nexon Seals Partnership with Polygon for MapleStory Universe

Nexon has selected Polygon Supernets to power MapleStory Universe.

Link: Polygon Blog Announcement

Regulatory Landscape


SEC Sues Justin Sun

The U.S. SEC filed a lawsuit against Tron founder Justin Sun and three of his wholly-owned companies, alleging TRX and BTT are unregistered securities.

Link: SEC Press Release


SEC Subpoenaed SushiSwap and Jared Grey

The U.S. SEC has served SushiSwap and its CEO Jared Grey with a subpoena.  

Link: Sushi Legal Defense Fund Proposal


Crypto Exchanges’ Listing Fees Increasingly in the Crosshairs of S. Korean Regulators

A probe into alleged illegal listing fees at crypto exchanges is widening to five crypto exchanges in South Korea.




Hindenburg Released Report on Block Inc.

Short seller Hindenburg Research released a short selling report on Twitter founder Jack Dorsey’s payments company, Block. Inc (formerly Square).


Microsoft Is Testing a Built-in Crypto Wallet for Edge

Microsoft is reportedly testing a crypto wallet to be embedded in the Edge browser. Coinbase, Moonpay, and NFTs will be supported.

Link: The Block’s Report


$USDT Added to Telegram Wallet Bot

Telegram has added a feature to its wallet bot that allows users to transfer $USDT within chats.

Link: CoinDesk Report


Conflict Between DefiLlama Founders Over Launch of LLAMA Token

The disagreements between DefiLlama founders over the launch of LLAMA token have now been resolved.

Link: Cointelegraph Report


Previous Weekly Xangle Reports

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