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Three complainants. $100. A possible class action.

Compound DAO is among eight defendants listed in a case brought by three complainants who claim they suffered damages after buying COMP tokens, which they allege are unlicensed securities sold by the defendants, according to a recently filed lawsuit that is seeking class-action status.

The lawsuit was filed on Dec. 8 in the U.S. District Court for the Northern District of California, San Francisco Division. It lists Amanda Houghton, Susan Franklin and Charles Douglas as plaintiffs on behalf of other COMP token hold.

The plaintiffs said they suffered damages by buying COMP tokens, the native token of DeFi lender Compound Finance. The suit also alleges that these damages were connected to the sale of COMP tokens as unregistered securities. 

Compound DAO is described as a general partnership in the suit. The lawsuit argued that the decentralized autonomous organization and its partners oversee the sale of COMP tokens as unlicensed securities. It also stated that the defendants made false and misleading statements about the prospect of profiting from holding COMP tokens.

Finally, the plaintiffs argued that the price of COMP has since collapsed and that the defendants are to blame. 

Apart from Compound DAO, the other defendants are Compound Finance co-founders Robert Leshner and Geoffrey Hayes. The lawsuit also listed Bain Capital Ventures, Polychain Alchemy and Paradigm Operations, among others, as co-defendants.

The price of COMP has largely declined over the past year. Image: CoinGecko

According to the court filing, Douglas bought $75 worth of COMP tokens when it was trading at $130 in January 2022. The other plaintiffs bought $2 and $3 worth of COMP tokens, respectively. Houghton and Franklin also earned additional COMP tokens as rewards for watching crypto adverts on their Coinbase accounts. They made $9 each for doing so, but these coins are now worth $1 apiece. Together, the named plaintiffs in the suit only held $98 worth of COMP tokens as a cost basis.

The plaintiffs, represented by Gerstein Harrow LLP and Fairmark Partners LLP, have asked the court to declare that COMP is a security. They also want the court to order Compound DAO and the other defendants to stop selling these tokens, pay damages and cover the plaintiffs’ legal fees.

Neither the plaintiffs’ lawyers nor Compound Labs have responded to The Block’s request for comments at the time of publishing.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Episode 124 of Season 4 of The Scoop was recorded live with The Block’s Frank Chaparro and NBA legend Scottie Pippen and Orange Comet CEO Dave Broome.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests can be sent to podcast@theblockcrypto.com.

Six-time NBA champion Scottie Pippen is making his mark on the metaverse with a digital sneaker collection featuring 1,000 unique ‘SP33’ NFTs.

For the launch, Pippen partnered with Orange Comet — the company that recently helped Sir Anthony Hopkins launch his own NFT collection.

In this episode of The Scoop, Scottie Pippen and Orange Comet CEO Dave Broome discuss how Web3 is creating new ways for celebrities and fans to connect, and share the story behind the upcoming ‘SP33’ NFT collection.

According to Pippen, launching a digital sneaker collection is a way to bring his brand into the digital era.

“I was a big sneakerhead growing up in the NBA world, so this is my opportunity to really resurface back into the sneaker world, but do it from a digital standpoint.”

Not only will holders be able to wear their SP33 shoes around the metaverse, but 33 of the 1,000 NFTs will also come with a real-world sneaker prototype.

During this conversation, Chaparro, Pippen, and Broome also discuss:

• The intersection of digital and physical goods;
• Why communities form around NFT collections;
• How NFTs allow celebrities to leave digital legacies

This episode is brought to you by our sponsors Tron, Ledn, NordVPN

About Tron
Founded in 2013, Huobi Global is one of the largest virtual asset exchanges in the world. Huobi Global serves millions of users across international markets. Since its establishment, Huobi Global has committed to providing first class virtual asset investment services. Huobi Global’s robust infrastructure, product innovation and capital strength provides a truly customer-centric and secure trading environment to help our international users to achieve their investment objectives. Please refer to Huobi’s official website for more information: huobi.com.

About Ledn
Ledn was founded on the unshakeable conviction that digital assets have the power to democratize access to the global economy. We help you to experience the real life benefits of your Bitcoin without having to sell it. Start a savings account, take out a loan, or double your Bitcoin. For more information visit Ledn.io

About NordVPN
NordVPN is essential for keeping crypto transactions secure, and protects you from hackers and data theft. Get premium cyber-security on up to 6 devices for the price of a cup of coffee a month. Get your exclusive NordVPN Deal and try it risk-free now with a 30-day money-back guarantee: Visit https://nordvpn.com/thescoop.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance CEO Changpeng Zhao warned colleagues at the world’s biggest crypto exchange that the proverbial “crypto winter” isn’t over, and the months ahead won’t be easy, according to Bloomberg. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Known on Twitter as Zack Morris and PJ Matlock, the founders of Atlas Trading and several alleged co-conspirators have been accused of stock manipulation by the U.S. Securities and Exchange Commission.

The SEC alleges the group earned about $100 million in roughly three years of engaging in a fraudulent scheme to scam investors. Atlas Trading founders Edward Constantin, or @MrZackMorris on Twitter, and Perry Matlock, @PJ_Matlock on Twitter, are said to have conspired with several other individuals in pursuit of artificially boosting share prices of small-cap stocks.

In the complaint, filed late Tuesday with the U.S. District Court Southern District of Texas, the SEC alleges the group “promoted themselves as stock-picking gurus” to their “legions of followers” on Twitter and Discord. Crypto and NFT trades were also often discussed and promoted inside Atlas Trading’s Discord server, which has 236,000 members.

Although the complaint zeroes in on allegations of promoting small-cap stocks, the SEC’s claims of individuals using social media to shill faulty or risky investments come at a time when both the news and social media are afire with talk of the disastrous collapse of crypto exchange FTX. The company’s founder, Sam Bankman-Fried, like many other leaders in the crypto space, has often used Twitter to discuss investing in digital currencies.

A screenshot of Zack Morris’ verified Twitter account.

On Monday, authorities in the Bahamas arrested Bankman-Fried. The SEC charged him with fraud on Tuesday.

The SEC’s Atlas Trading complaint alleges Constantin and Matlock — with the help of Thomas Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin, John Rybarcyzk and podcast host Daniel Knight — “engaged in a long-running” scheme to defraud people online.

The defendants are alleged to have enlisted a phased approach of selecting stocks “ripe for manipulation” that they would then acquire at a low price. Then, using their reach on Twitter and Discord, the group told people to buy and hold the shares. Finally, the defendants would sell their shares “into the demand generated by their recommendations,” the complaint said. 

Outlining its case, the SEC details specific instances where the defendants allegedly advised people to buy or hold shares while they were simultaneously selling the same shares.

When promoting Camber Energy Inc., which trades on the New York Stock Exchange, the SEC noted Constantin’s tweet: “Too many of you act like little bitches when there’s dips. It’s all part of the game.” Camber Energy currently trades at less than $1 per share.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance.US introduced a new feature, Pay, that allows users to send, request and receive crypto with instant settlement and zero fees.

The feature was rolled out to users of Binance’s U.S.-specific subsidiary’s mobile app on Dec. 13. A web version is planned for “the near future,” according to an official blog post.

In addition to boasting zero transaction fees, Pay supports push notifications, request management, transaction histories, contact syncing and referrals. It supports nearly 150 cryptocurrencies, including obvious majors such as bitcoin and ether.

Binance.US claims Pay — which already exists on Binance — was its top-requested feature.

Earlier this month, Binance.US eliminated fees on spot ether trading for all customers. Six months prior, it similarly cut spot fees for bitcoin trading.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Australian government plans to establish a framework for licensing and regulating crypto service providers in 2023.

Specifically, the Albanese government aims to define what digital assets should be subject to financial services laws, and what rules are appropriate to safeguard consumers.

“The next steps in the Government’s ongoing ‘token mapping’ work will include the release of a consultation paper in early 2023 to inform what digital assets should be regulated by financial services laws, and the development of appropriate custody and licensing settings to safeguard consumers,” a joint media release states.

Though the Albanese government is taking action in regard to the regulation of crypto service providers in Australia, actual legislation won’t come before the government consults on its planned custody and licensing framework.

Aside from crypto, the government also plans on strengthening Australia’s payments systems and financial market infrastructure, as well as establishing a regulatory framework for Buy Now Pay Later, in 2023.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

With Coinbase’s shares are at an all-time low, CEO Brian Armstrong sent out a memo to staff reassuring them that unlike other struggling or failed crypto exchanges, their company would persevere.

“This is our moment to shine,” wrote Armstrong in a communication obtained by The Block. “It was not always easy, as we saw competitors skirt rules and rocket up in value and media attention.”

Armstrong also urged employees to be “prepared to serve” customers amid market volatility, citing what he called “large withdrawals happening on Binance” as potentially a contributing factor.

The 39-year-old chief executive also sought to remind staff that Coinbase does not have material exposure to rival Binance, safely stores customer assets and possesses $5 billion on its balance sheet. Coinbase shares closed Tuesday’s trading session below $39 apiece, marking an all-time low.

The comments come on the heels of weeks of turmoil spurred by liquidity uncertainty and crisis, bankruptcies and layoffs spurred by the collapse of multi-billion dollar crypto exchange FTX.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Adrienne Harris, the leader of New York’s state banking and financial regulatory agency that oversees the state’s BitLicense, has been named to a non-voting seat on the Financial Stability Oversight Counsel, or FSOC.

Harris is the superintendent of New York’s Department of Financial Services, or NYDFS. The Conference of State Bank Supervisors, or CSBS, appoints a state representative to fill the federal seat that Harris is taking. 

In her current New York state role, Harris oversees the BitLicense, an influential state regulatory regimes for crypto companies in the U.S. that she has championed as a model for digital asset regulation across the country, despite the regulatory regime being a longtime source of criticism from the crypto industry. Notably, FTX.US’s BitLicense application was stuck in regulatory limbo meaning the firm could never legally operate in the state, which Harris has touted as evidence of its effectiveness.

A product of the Dodd-Frank Act that followed the 2008 financial crisis, FSOC is a forum for leaders of U.S. regulatory agencies to set policy aimed at preventing financial crises. The Secretary of the Treasury, currently Janet Yellen, chairs the body, while voting members include the chairs of the Federal Reserve, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. The heads of the federal banking regulators also sit on the panel. 

Despite Harris’ new seat lacking a vote, it is a visible federal venue for a state regulator. She will replace Texas Banking Commissioner Charles Cooper, who has been in the role since September 2018. An announcement from the CSBS said that Cooper had been “influential in ensuring that the FSOC’s recommendations on digital assets considered state banking regulators and adequately reflected state laws and regulations.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin mining stocks tracked by The Block showed mixed results with about half a dozen trading up and the others down.

Argo Blockchain’s shares plunged 38% in the UK and 37% in the U.S. in its first day of trading after the miner accidentally published a document saying that it had filed for Chapter 11 bankruptcy. The firm is actually looking to sell assets as it attempts to avoid filing for bankruptcy protection. On Friday, after the document was published, the London Stock Exchange temporarily suspended trading in the stock.

Bitcoin was trading at around $17,700 by market close, according to data from TradingView.

BTCUSD Chart by TradingView

Core Scientific’s share price rose by 11%, followed by SAI.TECH at 11%. TeraWulf declined by 13%, followed by Greenidge Generation Holdings at 9.03%.

Here’s how crypto mining companies performed on Tuesday, Dec. 13:

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Sam Bankman-Fried is headed to jail after a magistrate judge in the Bahamas denied his bail application and remanded him to the Department of Corrections, Reuters said. 

The disgraced former CEO of FTX was was deemed a flight risk and will be held until at least Feb. 8 when “the matter resumes.” 

Bankman-Fried was slapped with a bevy of charges from the U.S. Department of Justice, Securities and Exchange Commission and the Commodities Futures Trading Commission earlier in the day after being arrested last night. 

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.