Weekly Roundup

SEC Lawsuit: The SEC sued Genesis Global Capital LLC and Gemini Trust Company LLC over a $900 million crypto-lending program that allegedly violated investor-protection laws, claiming they were offering unregistered securities. Gemini cofounder Tyler Winklevoss called the charges “totally counterproductive.”

Automated Trading: A Modern Markets Initiative study noted the benefit of automated trading technology for investors, including those rebalancing their portfolios in these uncertain times. Among other things, the study concluded that investors benefit from reduced bid-ask spreads, with 30% more lifetime savings as a result of reduced trading costs of market automation.

Crypto Crime: According to estimates from blockchain analysis firm Chainalysis, illegal cryptocurrency activity reached a record $20.3 billion in 2022. The report states that this high is mostly due to the growing number of crypto-related entities that the U.S. government sanctioned in 2022.

Crypto Enforcement: The SEC issued 30 cryptocurrency-related enforcement actions in 2022, a 50% increase from 2021 and the highest number since 2013, when the agency began issuing the actions. According to a Cornerstone Research report, 73% of the SEC’s crypto-related enforcement actions in 2022 alleged unregistered securities offerings, 70% alleged fraud, and 50% alleged both.

Bitcoin ETF Appeal: Grayscale filed a reply brief to the SEC regarding its efforts to appeal for the approval of a spot bitcoin ETF, which is currently in litigation. Grayscale claims that the SEC had acted arbitrarily in treating spot traded exchange-traded products differently than futures traded products.

ETF Inflows: According to data released by ETFGI, the global ETF industry reached $856.16 billion of net inflows in 2022. This is the second-highest annual net inflow, following 2021 at $1.29 trillion. 

In the Mix: This Week’s Top FinTech Thought Leader

  • Jacob Sansbury, Pluto Co-Founder & CEO, published an op-ed highlighting data that points to ongoing retail investor concern about a potential recession and economic uncertainty. The op-ed discusses how retail investors can navigate uncertainty in 2023 by incorporating technology to reduce bias.

  • Brandon Tepper, SVP of Investment Intelligence at Nasdaq, spoke with Traders Magazine about key themes in 2022 and what he expects for 2023. “To improve optionality, Investors will likely look toward data that is available from simple APIs via the cloud. There is also potential for a greater shift toward open-source delivery standards rather than relying on traditional hardware and connectivity.”

  • Joshua Topolsky, veteran tech editor and media entrepreneur, will become editor-in-chief and president of Sherwood Media, a new subsidiary of retail trading platform Robinhood. The subsidiary will build on existing newsletter Snacks and will focus on original reporting and analysis across newsletters, social media, and events.

  • Mark Uyeda, SEC commissioner, thinks the SEC should be doing more to advance opportunities for retail investors. In a conversation with Law360, he said the SEC’s recent market structure proposals contain “very little about improving opportunities for retail investors to broaden their investment opportunities.”

  • Brad Garlinghouse, Ripple CEO, is hopeful there with be a resolution with the SEC lawsuit alleging that Ripple and its executives illegally sold XRP. The decision on whether XRP should be treated as a security has important implications for the broader crypto space.