Federal judge sides with SEC, ruling Do Kwon and Terraform Labs violated U.S. law: CNBC Crypto World

CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what’s ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today’s show, we explore how venture capital funding for crypto projects evolved in 2023 and what to expect from Web3 startups in the new year.

Chapters:
00:00 – CNBC Crypto World, Dec 29, 2023
0:23 – Bitcoin falls
2:25 – The headlines
5:52- Web3 startup VC funding

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Federal judge sides with SEC, ruling Do Kwon and Terraform Labs violated U.S. law: CNBC Crypto World

Today a federal judge rules that dquan and the company he co-founded violated the law bankrupt crypto lender Celsius wins Court approval to Pivot to Bitcoin mining and we speak with industry experts about what to expect from web 3’s startups in the New Year welcome to cnbc’s crypto world I’m

Kate Rooney major cryptocurrencies in the red to end the year as of noon Eastern Bitcoin dropped more than 1% trading close to 42 $2,000 ether meanwhile fell nearly 3% trading close to the $2,300 Mark and then salana climbing nearly 5% trading above $100 after falling below that level yesterday for

More on crypto prices crypto World na mckel brings us an in-depth look at crypto’s overall performance in 2023 thanks Kate Bitcoin on Pace to end the year Higher by more than 150% outperforming all the major stock averages but not the crypto related stocks bitcoin’s big run has fueled some

Of the biggest gains in the stock market let’s take a look at some of them starting with coinbase up 385 year-to dat as of around noon Eastern micro strategy which acts as a proxy for the Bitcoin price is up 342 far outpacing Bitcoin itself then there are the miners Wall Street

Darlings clean spark and Iris energy each at more than 400% on the year Riot one of the bigger ones also favored on the street up about 350% and Marathon digital the biggest winner of them all on track to post a roughly 600% gain for 2023 now the setup for Bitcoin is very

Strong heading into the new year with the potential Bitcoin ETF next month the having in the spring and of course the interest rate environment analysts tell me however it really should see R to above $555,000 so that’s going to be about 30% from current levels in order

For some of these miners to survive the year because although bitcoin’s price has climbed which is great for miners its hash rate has also kept hitting all-time highs which hurts miners margins and profitability not to mention their mining revenue is getting cut in half after the having in the spring so

That’ll be something to watch at the start of the year if we get a decision on these ETFs there are concerns it could be a sell the news event but nevertheless many expecting Bitcoin to set a new record in 2024 the number to beat is just below $69,000 so that would

Be a roughly 64% run from its current level all right let’s talk about some of the top stories a federal judge sided with the SEC and the agency’s case stemming from the collapse of Tera USD and Luna on Thursday a federal judge ruled the terraform lab’s co-founder

Dquan and the company violated US law by failing to register the two digital currencies yesterday the judge also rejected summary judgment to both parties on the sec’s fraud claims which will move ahead with the trial scheduled for the end of next year we reached out to terraform labs and a spokesperson

Told us it strongly disagrees with the decisions and does not believe that the US stablecoin or other tokens at issue are securities the spokesperson went on to say that the sec’s fraud claims are not supported by evidence and called the allegations meritless the development comes as do Kuan fights extradition to

The US from Montenegro collaps of tera’s stablecoin us and its sister token Luna in 2022 led to losses of about $60 billion at the time the controversial algorithmic stable coin as it’s known was supposed to be pegged to the US dollar but that decoupled from that Target price and Trigger a massive

Crypto crash at the time next up bankrupt crypto lender Celsius got court approval to restructure as a Bitcoin mining company the US bankruptcy judge ruled on Wednesday that Celsius could deviate from a previously approved bankruptcy plan because customers and creditors are not deemed worse off under

The new plan according to a court filing Wednesday creditors would get part of their recovery through stock in the newly created company Reuters reports that the approved bankruptcy plan also frees up two $225 million in crypto assets that would have been used to fund the new business lines that the SEC

Rejected the bankruptcy judge wrote that as a result more crypto from Celsius will be returned to customers and in a post on X Celsius stated that this Milestone moves the company quote closer toward its goal of maximizing and returning value to customers Celsius expects to emerge from bankruptcy early

Next year last up binance says its user base grew 30% this year even amid that multi billion doll settlement with US government officials last month according to binance’s year and review report the world’s largest crypto exchange added 40 million accounts this year the report says that binance saw a quote significant uptick in

Institutional inflows and transaction volumes by institutional investors on its platform in the aftermath of the crypto platform’s resolution with us Regulators suggesting that institutions have confidence in some of the strict compliance standards as they put it that binance says it adheres to today that back in November binance agreed to pay

More than $4 billion as part of a settlement with the US government company’s founder and CEO Chang pangao stepped down from his role and pleaded guilty to a felony related to his failure to prevent money laundering on that platform separately binance is in a legal battle with the SEC which alleges

The crypto firm operated an unregistered Securities Exchange and misrepresented its oversight on the binance US platform all right turning to web 3 startups for our main story today they have taken a big hit in 2023 in fact for the entirety of 2023 significantly less Capital was raised for startups in the

Space compared to the money raised in the second quarter of 2022 so what was behind the big drop in funding crypto world’s con oo spoke with company Founders and venture capitalist for their take on the state of web 3 startups in 2023 and what we can expect in

2024 bitcoin’s price staged the ultimate comeback in 2023 the crypto industry though still has big problems value ation have cratered and so has funding for new projects most adventure Capital right now is trending back toward the kind of 2018 2019 numbers I would add one caveat though with web 3 to remember

Is that when you’re looking at numbers that go back to 19 or 20 you’re you’re talking about a a pretty much a nent industry people didn’t even know what web 3 was at the time Global VC funding is down across the board in the first 3 quarters of 2023 VC funding has plunged

42% compared to the same time period from 2022 web 3 companies have fared much worse in the fourth quarter of 2023 web 3 companies raised a poultry $1 billion that’s a far cry from web 3’s Peak funding rounds in late 2021 and early 2022 when web 3 companies were

Pulling in just under 11 billion a quarter web 3 really started to be affected even kind of maybe in the first half of 2022 and then we really saw it uh we saw a substantial decline that doesn’t mean web 3 development has totally disappeared some like an Stefan

Of Cubist even found ways to raise money as funding tried up we raised our seed round actually in the summer of 2022 in the midst of the taluna crash three of my Founders are computer security professors and I’ve got a a background as a COO at a fintech company I think

That really helped us come in and secure a good solid round of seed funding in a difficult environment in terms of operating through a crypto winter I think we are a little bit fortunate in the sense that we get to work with um usually folks that have uh raised

Capital and have a a very long time Horizon to execute and so a lot of our customers are folks building right now and are building things that are going to launch now or 2024 What’s Left Behind after the Cascade of crypto scandals in 2023 are the most dedicated developers

Working on projects like layer 2 Technologies which boost Bo the speed of transactions I think that if you’re an infrastructure player right now on web 3 you know if if you’re building if you’re kind of a layer two platform building off an established blockchain I think those uh those players those startups

Have significant space to grow I think they’ll continue to see investment there’s been huge developer interest and sustained developer growth in l2s especially ethereum l2s Electric Capital tracks the pace of Open Source development through its develop report and what the data shows is that monthly active developers aren’t necessarily

Beholden to the price of crypto development activity Rises when the price of say Bitcoin goes up but when prices come down activity doesn’t necessarily fall at the same Pace the pace of development heading into 2024 is still about 75% higher than it was at the start of the last bull cycle one

Important point though this data doesn’t track all developers another category that has a lot of growth but doesn’t get captured in these numbers would be gaming a ton of teams are working on games games tend to be closed source and so it’s hard to see that reflected in open source

Numbers as institutional interest in web 3 picks up again developers and VC firms are also gearing up to fund what they deem important Technologies like tokenization so you’re starting to see a lot of this concept of making kind of bringing assets that were historically not as liquid and creating liquidity

Around them by leveraging crypto as kind of crypto rails as of today um cryptocurrencies are by far the largest subset digital assets asset class and I would predict that some period of time it will not be we will see tokenized everything tokenized finan Securities toize real estate organize other Assets

In 2023 SC Ventures announced a partnership with DOA Bank to test a challenger to the traditional banking system which would allow transactions of stable coins cbdcs and more in 2024 many expect that institutions like big Banks and governments will be a primary focus for crypto developers institutions ultimately serve retail so when I’m

Predicting that over time un will get access to digital assets products in a curated way that is complying with rules around suitability and the rest it is institutions who are going to do this for retail consumers why did we start with institutions as opposed to retail well because the infrastructure was

Ready for retail the asset class is here to say therefore institutional adoption will occur it is inevitable but for institutional adoption to happen we need institutional grade infrastructure another big focus in the new year will be crypto regulation regulatory uncertainty still persists as the SEC sues major players in the crypto

Space which may be a factor leading into the decline in web 3 development here what is alarming is the clear downward Trend in US share of Developers and so that that clear 2% loss of developer share every year is something that’s unique to the United States and you

Don’t really see that in other regions of the world um anecdotally I’ve also been speaking to a lot of developers and and crypto teams and I think there is a lot of concern around a lack of regulatory Clarity in the US that’s driving people to think about moving

Abroad meanwhile in the UAE has been laed as a crypto-friendly hub the UAE is building a very powerful e EOS system around fintex and specifically digital assets what I mean by ecosystem is the combination of the bits and pieces that it takes create a hub meaning obviously startups but also early stage capital

And also growth capital and also Academia and also the body of professionals around this from lawyers to accountants to to technology that it takes to to do this and yes there’s a regulatory framework in 2024 the projects that are likely to get the most attention could be the ones that are

Most creative and most forward-looking we think everything out there turns into a wallet in 5 years so if you’re going to open your phone and you’re going to look at all the apps on your phone they’re going to have a wallet component you might not know about it it might be

In the background I’m excited for the market to come back and for new startups to get funded and I’m also excited to see some of the existing startups take on additional funding as well so that they can start to scale as they see traction I think the types of things

That we’ll take off will be completely out of the box and things that we haven’t seen before or haven’t even imagined and so I would definitely encourage Founders to rather than taking something that you know maybe Works in web 2 and applying it to web 3 really

Think about what can be uniquely enabled by blockchain and by crypto all right that’s it for crypto world this year we’ll be back again on Tuesday after New Year’s Day Happy New Year we’ll see you then