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Market Check-in

This Week in Crypto

Ripple - Crypto’s white knight?

Encouraging news rippled through all of crypto when the SEC v. Ripple case judgement dropped. Let’s take a look at what happened:

According to analysis by respected crypto lawyers (Collins Belton, Gabriel Shapiro, Lewis Cohen, Jason Gottlieb, and Justin Slaughter), the SEC won on Ripple's institutional sales, claiming they violated securities laws. But importantly, they lost on the remaining sales/distributions (like selling on exchanges). Ripple won out on "programmatic" sales and non-cash distributions, and the judge rejected the concept that tokens may inherently be securities, which was enough for Coinbase and Gemini to decide to both relist the XRP token.

The implications of this ruling are expected to change legislative efforts surrounding cryptocurrencies. The SEC will likely push back with appeals, but this judgment is a blow to their current approach. Many crypto projects may find themselves in a better position following this ruling.

The SEC v Ripple decision revolved around whether Ripple violated Section 5 of the 1933 Act by offering or selling XRP as investment contract securities. The motion for summary judgment came about because there's no dispute they sold XRP; the contention lies on whether those sales were illegal under the law.

Ripple argued for an "actual contract" requirement in Howey under an "essential ingredients" test. However, the judge rejected this. The judge then classified XRP sales into three categories:

1. institutional sales (violating S5)

2. programmatic sales (no S5 violation)

3. and other distributions (no S5 violation)

For institutional sales, these were to sophisticated institutions or individuals. The judge concluded that the circumstances - including investment materials, contracts, and relationships - indicated an investment intent rather than a consumptive focus.

This ruling explicitly mentions XRP (the token) itself isn’t security but criticizes how it was sold in certain circumstances. The judge also distinguished between the entire scheme and the token, providing support to pro-crypto lawyers who argue that initial sale schemes can be distinguished from subsequent distributions of the token.

However, the ruling is a district court opinion and can be overturned on appeal. While it doesn't necessarily restrict the SEC, it could influence other judges. It's a significant decision for the crypto industry, with potential repercussions for pending SEC litigation and legislative efforts surrounding cryptocurrencies.

The markets rallied following the news. More breakdowns bellow:

Chainlink and Uniswap Unveil New Products at EthCC

Chainlink and Uniswap both unveiled products while at the EthCC conference in Paris.

Hayden Adams (Uniswap founder) revealed UniswapX, an open-source protocol that aggregates liquidity across decentralized exchange pools. The new feature aims to ensure users obtain optimal prices for their trades by pooling various liquidity sources. It is initially available as an opt-in beta feature. UniswapX plans to have an open network of third-party entities called "fillers" competing to fill swaps using on-chain liquidity like decentralized exchange pools or their own private inventory. This network aims to offer gas-free execution and protection against maximal extractable value (MEV). Users retain control over their funds throughout the swaps, and the protocol is immutable, with Uniswap Labs unable to modify or pause its contract.

Chainlink, on the other hand, launched its cross-chain interoperability protocol (CCIP) in an early access phase. This protocol aims to link applications across both public and private blockchains with a unified interface. CCIP, which is already being used by decentralized finance protocol Synthetix for cross-chain transfers, will be available to other developers across five testnets from July 20. Unlike conventional cross-chain bridges that use wrapping mechanisms, CCIP employs smart contract-enabled mechanisms between audited token pools across different chains. This allows more seamless interaction between various blockchain networks. The protocol also includes an active risk management (ARM) Network, offering an additional layer of security by continuously monitoring and validating the CCIP network's behavior.

Celsius sued by the CFTC, SEC, and FTC, while the founder is arrested.

Alex Mashinsky, the founder of Celsius Network, was arrested on charges of securities fraud in New York. The Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Trade Commission also filed civil lawsuits against Mashinsky and Celsius Network, accusing them of defrauding investors by misrepresenting its revenue, lending practices, and trading risk. Promoted as a safe alternative to banks, Celsius had more than $13 billion in investors' crypto balances at its peak. However, the platform stopped withdrawals in June 2022, leaving many users unable to access their assets. The company's remaining altcoin holdings are expected to be sold or converted to bitcoin or ether amid ongoing bankruptcy proceedings.

More reading from this week

1/ N.Y Congressman Torres Wants The SEC Investigated

2/ BNB is Heavily Shorted in Midst of Regulatory Pressure

3/ House Republican, Democrat Talk Up Need for Stablecoins Law

Why you should care about compound interest – An explainer

If you invest $1,000 every month at an 8% interest rate compounded annually, in 30 years you'd earn $1 million more than without compounding.

So what is compound interest and why is it so powerful? 👀 

A simple explainer 👇

Simply put, compound interest is when you earn interest on your interest.

Think of it like a snowball – it starts off small but the more snow it accumulates, the bigger it gets, and it starts getting bigger more rapidly ⛄️

To put simply, imagine you start with $1,000 and earn 8% during the first year, you'd have $1,080 - earning $80.

The next year, your basis is now $1,080 @ 8% interest instead of $1,000, and the return would be ~$86.

Do this for thirty years, and the magic starts to appear.

Compound interest is interest earned from the original principal plus accumulated interest.

So the principal keeps increasing each year.

It is important to know that compounding is a long term game that reaps significant rewards the longer you let it grow 🌱

To put that visually, if you invest $10k per year at 7%, it will take ~8 years to go from $0 to $100k, but just 2.5 yrs to go from $400k to $500k.

Compounding is not about getting rich quick but about passively growing wealth significantly over time 💰

Knowing the difference between simple interest and compound interest helps put things in perspective.

Simple interest → wealth grows steadily Compound interest → wealth grows exponentially.

So why is compounding so powerful? 🤔 

• It helps you reach your financial goals passively
• You don't have to be rich to make it work for you
• The longer you let it grow, the more significant the returns are

It's the definition of good things come to those who wait 📷🌱

The most important thing when it comes to compounding is to be patient.

The sooner you start, the more time you give for your investments to grow exponentially.

Time is on your side.

Compounding and long term thinking is at the core of what we're building at Alongside.

Less trading, more investing.

Find out more here:

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DISCLAIMER: This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.?