This week in The Context, we look into Venezuelan sanctions, the DOJ’s recommended sentence for Binance’s erstwhile CEO, and the SEC’s alleged habit of overreaching.
[Oiled or foiled? 🛢️]
With the U.S. set to reimpose sanctions against Venezuela in June, the country’s nationally owned oil company, PDVSA, said it will switch from dollars to the Tether stablecoin.
What Journalists Said 🧑💻:
PDVSA has been “slowly moving oil sales to USDT” since last year, reported Marianna Parraga and Deisy Buitrago (Reuters). But looming oil sanctions—a result of the country not instituting electoral reforms—are “speeding up the shift.”
However, If Venezuela’s goal is to prevent money from getting “frozen in foreign bank accounts,” switching to Tether probably won’t help, wrote Gareth Jenkinson (Cointelegraph). Tether confirmed it will block payments linked to entities sanctioned by the U.S. Treasury.
PR Perspective 🔎:
Venezuela may want to defy U.S. sanctions, but Tether is likely just as determined to keep its hands clean lest it come back into prosecutors’ crosshairs. However Venezuela navigates this junction, will serve as an example for other sanctioned countries grappling with similar challenges.
[Justice served?🧑⚖️]
The U.S. Department of Justice wants a three-year prison sentence for former Binance CEO Changpeng “CZ” Zhao, who pled guilty to violating the Bank Secrecy Act last year. The defense is seeking probation and home detention in Dubai. Sentencing is on April 30.
What Journalists Said🧑💻:
This is a departure from CZ’s plea deal, which called for an 18-month sentence, noted Nikhilesh De (CoinDesk). The filing also notes that sentencing “guidelines recommend 12 to 18 months, but [says] Zhao knew Binance was violating the law and encouraged it.”
Other parts of CZ’s deal stand, wrote Siladitya Ray (Forbes). “Zhao agreed to step down as Binance’s CEO,” pay a $50 million fine, and stay in the U.S. (despite his Canadian and UAE citizenship) after posting a $175 million bond.
Why It Matters ⁉️:
Binance is the biggest exchange in the world. According to the DOJ, the crucial ingredient in its recipe for success was breaking the law. It’s seeking to make a big statement to discourage other crypto founders from borrowing the recipe.
[SEC what we did there? 👀 ]
Crypto proponents are pushing back against the U.S. Securities and Exchange Commission’s perceived legal overreach.
What Journalists Said 🧑💻:
First, the Blockchain Association and Crypto Freedom Alliance of Texas sued the agency, wrote Samyuktha Sriram (Unchained), for expanding the definition of “dealer” in February. The suit claims this would subject people using DeFi “to the same requirements as securities dealers in traditional financial markets.”
Meanwhile, the SEC has asked Ripple to pay $2B for sales of XRP that allegedly constituted unregistered securities offerings, wrote Sarah Wynn (The Block). To which Ripple said: How about $10M? Ripple has won several key legal battles in the case, so its chief legal officer views the SEC’s proposal as “more evidence of its ongoing intimidation against all of crypto in the U.S.”
At least one judge might agree. SEC lawyers representing the regulator against crypto company DEBT Box resigned after a judge found the suit “marred by false statements and misrepresentations, as well as a lack of evidence,” wrote Austin Weinstein (Bloomberg).
PR Perspective:
This isn’t just a few ticked-off crypto firms making noise. In that final case, the judge accused the SEC of “gross abuse” of its power. With crypto expanding into traditional finance (e.g. via Bitcoin ETFs) and regulators not getting a free pass, the industry senses a chance to put the SEC on the back foot.
[Tweet Of The Week]
Credit: @alancarroll
[DeFi Definitions]
A segment exploring one particular aspect of DeFi. View previous entries here.
This week: ‘’Death Cross” by Tiffany Mac Sherry.
The Death Cross is a significant signal in crypto and finance, indicating a shift from a positive market sentiment to a concerning one. This occurs when a short-term average of prices (typically over 50 days) falls below a long-term one (often spanning 200 days). This occurrence suggests that recent prices are lower than their longer-term average, signaling a loss of momentum and an increase in selling pressure. Traders interpret it as a potential sign that prices might continue to decline in the near future, potentially signalling the beginning of a bear market.
Despite its ominous name, the Death Cross is just one of many indicators used by traders and analysts. It's essential to consider other factors, such as market fundamentals and investor sentiment, before making significant decisions based solely on this signal.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Ewan Brewster, Andrew Wickerson, Tiffany Mac Sherry, Delon Chan, Emma Murphy, and Lauren Platt. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.