| | Good afternoon. All eyes are on NVIDIA today, described by one analyst as "the most important" quarterly earnings report in years. | As of today, NVIDIAs market cap is nearly 3x that of BTC. We’ll see how long that lasts ;) | Today’s Stories: 🖼️ SEC Goes After NFTs 💬 What’s Going on With Free Speech? 🐙 Kraken’s Case Against the SEC | Today's newsletter is 1,092 words, a 5-minute good read. |
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SEC Attacks OpenSea With Wells Notice |
NFT marketplace, OpenSea, has received a Wells notice from the SEC according to CEO Devin Finzer in a post on X today. |
| Devin Finzer (dfinzer.eth) @dfinzer | |
| OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities. We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight. Cryptocurrencies have long… x.com/i/web/status/1… | | 1:48 PM • Aug 28, 2024 | | |
| 2.88K Likes 597 Retweets | 493 Replies |
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Finzer stated that the company is “ready to stand up and fight,” adding that OpenSea will also added the company is also “pledging $5M to help cover legal fees for NFT creators and devs that receive a Wells notice.” |
OpenSea now joins the ranks of other crypto companies that have been targeted by the SEC with Wells notices this year including Uniswap, Consensys and Robinhood. |
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| PARTNER
| This won’t be disclosed in NVDA earnings… | Nvidia's (NVDA) stock has rebounded ~25% in anticipation of the company's earnings this Wednesday. | Investors are hoping for an update on the company's new AI super chip, Blackwell, which could produce billions in revenue. | That said, there is one thing I can practically guarantee Nvidia CEO Jensen Huang won't mention during his earnings call. | It has to do with 3 under-the radar companies with exposure to Nvidia's new Blackwell chip technology. Once the Blackwell chip hits the market, these 3 companies could end up outperforming Nvidia. | I recently flew to San Francisco to talk to a former AI chip engineer to learn more about the emerging industries surrounding this type of technology. | You can learn more about that meeting here. |
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Telegram Founder Pavel Durov Arrested. What’s Really Going On? |
Pavel Durov, the founder of Telegram, was arrested at Paris’s Bourget Airport and held for 96 hours — the maximum allowed under French law.
The official reason? Telegram’s alleged lack of moderation. Authorities claim his platform was complicit in aiding fraudsters, drug traffickers, and helping people spread child pornography. |
But is that the full story? Telegram, with over 950 million users (~10% of the global population), has become a critical tool for communication and privacy, especially in regions like Russia and Ukraine. Unlike most applications we use on the internet today, Telegram does not apply monitoring to any type of messaging between users. The platform also gives users the option to encrypt some of its chats. |
Either way, it’s hard to ignore the timing and broader implications of Durov’s arrest, which raises questions about whether this is truly about justice or something more politically motivated. |
As Durov faces initial questioning, it’s worth considering the bigger picture. Is this a move against free speech? Is it a privacy concern? Or a warning shot for any platforms that resist government oversight? |
While all of media and several tech moguls pontificate on what’s going on behind the scenes (see below)… we suggest readers to simply watch Durov’s pre-arrest interview with Tucker Carlson and make judgements of their own. |
| Noelle Acheson @NoelleInMadrid | |
| After hours scrolling through the outrage around the arrest last night of Telegram founder Pavel Durov and reading the few reliable news reports I could find, I think we're getting it wrong. It's not about Telegram censorship. It’s worse. Durov's arrest is the latest and… x.com/i/web/status/1… | | 8:03 PM • Aug 25, 2024 | | |
| 515 Likes 122 Retweets | 42 Replies |
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| | Jake Chervinsky @jchervinsky | |
| Governments don’t like it when the people can talk to each other too freely and easily. It’s dangerous (for them). | | 1:37 PM • Aug 25, 2024 | | |
| 730 Likes 79 Retweets | 36 Replies |
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| | zooko🛡🦓🦓🦓 ⓩ @zooko | |
| Look, I really hate speculating about this spy-vs-spy bullshit, but it is really bothering me to see the great and the good of my tribe (Balaji, Vitalik, Roman Storm, Noelle Acheson, Josh Swihart) treating Pavel Durov as an oppressed hero. Please consider the following facts: ⤵️ | | 8:31 PM • Aug 25, 2024 | | |
| 2.01K Likes 363 Retweets | 7 Replies |
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| | Paul Graham @paulg | |
| It's hard to imagine a country both arresting the founder of Telegram and being a major startup hub. | | 2:32 AM • Aug 25, 2024 | | |
| 14K Likes 1.21K Retweets | 574 Replies |
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Related: Mark Zuckerberg regrets not being more outspoken about government pressure to censor his social media platform. |
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SECs Lawsuit Against Kraken Allowed to Move Forward |
On Friday, a California judge ruled that the SECs lawsuit against Kraken for operating an unregistered securities exchange may move proceed to trial. |
“The SEC has plausibly alleged that at least some of the cryptocurrency transactions that Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to securities laws” | | - U.S. District Judge William Orrick of the Northern District of California |
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Flash back: The SEC sued Kraken in the Northern District of California in November, alleging that the exchange violated securities laws for failing to register with the SEC as a broker, clearinghouse or an exchange. |
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Fast forward to today… and it turns out that the judge partially agrees with, well… both parties. The judge stated that the cryptoassets named by the SEC in its lawsuit were “not themselves investment contracts” and that the way the SEC labels tokens is “unclear at best and confusing at worst.” But the judge also believes that it is fair for the SEC to interpret that the way the tokens were sold to be investment contracts. |
TL;DR: Tokens aren’t securities, but agreements around them can be. |
So was this a win for the SEC? Or a win for Kraken? It of course depends who you ask. |
Kraken’s Chief Legal Officer Marco Santori was quick to frame the ruling as a win stating: |
“This is a significant win for Kraken, for the principle of clarity and for crypto users everywhere. It also confirms Kraken’s long-standing position that it does not list securities.” |
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Furthermore he stated: |
“The SEC unqualifiedly lost on this “tokens are securities” theory, and will not be permitted to rely on it going forward. Instead, it will need to prove, for every alleged transaction on Kraken, that the Howey Test factors are satisfied. They aren’t, and we look forward to proving this in discovery. Kraken will fight and Kraken will win.” |
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| House Judiciary GOP 🇺🇸🇺🇸🇺🇸 @JudiciaryGOP | |
| Mark Zuckerberg just admitted three things: 1. Biden-Harris Admin "pressured" Facebook to censor Americans. 2. Facebook censored Americans. 3. Facebook throttled the Hunter Biden laptop story. Big win for free speech. | |
| | 10:44 PM • Aug 26, 2024 | | |
| 150K Likes 49.6K Retweets | 11.7K Replies |
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