Kin Launches $5 Million DefendCrypto Fund to Take on the SEC

Crescent Crypto
Jun 6 · 6 min read

Weekly Market Recap

May 30 — Crypto assets rose 17.3% this week ($5.6 billion), bringing the total market cap above $280 billion. The Crescent Crypto Market Index () was up 17.4% while BTC gained 13.7% over the same period.

The crypto market has rebounded quite substantially after its mild pullback last week. The total value of the crypto market has more than doubled year-to-date, gaining roughly 60% in May alone. Bitcoin lagged many of its large peers this week, but still managed to post a double digit gain. Bitcoin is currently trading around $8,725.

Bitcoin vs. CCMIX

May 23rd — May 30th, 2019

Crescent Crypto Market Index (CCMIX)

Constituent Performance

May 23rd — May 30th, 2019

Summary

  • Week-over-week volatility has returned to the crypto market, evident in this week’s rebound following the sea of red last week. Every constituent rose at least 10% this week, led by EOS (37%) and LTC (34%). BTC lagged its peers, but still gained almost 14%. DASH also found itself on the lower end of the return spectrum this week following its outperformance last week.
  • All twelve index constituents have seen significant gains over the last 90 days, led by BCH and LTC.
  • BTC is on pace for its best month since late 2017, which has sparked a revamped interest among both retail and institutional market participants. Bitcoin is up over 125% since the start of the year.
  • BTC dominance fell from 56.9% of the total crypto market cap this time last week to 55.2% today.

Notable News

What Happened?

The Kin Foundation plans to launch DefendCrypto.org, a $5 million dollar initiative to combat a potential court battle with the Securities and Exchange Commission. Opening up on the Unchained podcast, Ted Livingston states how the current regulatory climate is giving “ourselves a fundamental handicap to compete on the global stage…enough is enough, we need clarity, and the only way we’re going to get clarity is if we go to court, so let’s do that.” Kik, a messaging app built by the Kin Foundation, raised $100 million in its ICO, and last fall the SEC decided to pursue an enforcement action against Kik and the Kin Foundation. The Kin Foundation responded with a detailed piece on how it did not violate security laws and plans to take the SEC to court if the SEC continues with their enforcement action. In so far, The Kin Foundation has rallied support from Coinbase, Circle, Messari, and ShapeShift.

Why Does This Matter?

Ted Livingston’s decision to create this fund is indicative of a widespread fear that U.S regulation is directly hindering the U.S in becoming the future innovation center of crypto. This is already evident in the lack of U.S involvement in Initial Exchange Offerings, and projects moving their regulatory base outside of the U.S. It remains to be seen how this ambitious initiative will play out, regardless, Kin’s decision represents a possible shift towards a more outspoken animosity towards the SEC from large ICO funded projects and crypto companies. The SEC’s response to this initiative would also illuminate if they can actually prove digital tokens as securities in the court of law. This event signals the need for more regulatory clarity on the classification of tokens, such as the Token Taxonomy Act, which would create a new class for digital tokens that would not be classified as securities.

What Happened?

Diar reported the number of ‘firm size’ addresses (1,000–10,000 BTC) has been on the rise and have accumulated 450,000 BTC in under nine months. At the time of the article, over 26% of the circulating supply, $36 billion worth of Bitcoin, sits in addresses holding between 1,000 to 10,000 BTC. In about a year, the accumulation of these firm sized addresses has increased sharply by 7% from under 20%. Since Bitcoin’s recent bottom in December 2018, the firm sized address bracket has seen over 1.2 million added, the largest growth across all address groupings (retail and exchanges make up the other brackets). On-chain data shows that out of the 955k BTC minted since January 2018, firm sized addresses have taken up around half of this new market supply. Retail addresses contain 38% of Bitcoins circulating supply but remain fairly stable in growth. Lastly, exchanges have seen a decline from 21% of the circulating supply to 16% over the same timeframe.

Why Does This Matter?

Diar notes that these metrics signal retail size wallets as most likely not the drivers of the recent Bitcoin price rally, and confirm other metrics (Bitcoin inflows into Grayscale Bitcoin Trust) that suggest institutional investors are the likely market drivers. Over the last few months, institutional demand garnered a fair share of attention as futures and GBTC inflows reached all-time highs. What is important to recognize is the distribution of this institutional demand, with firm-sized addresses increasing alongside the notional amount of BTC. This suggests new market entrants playing a part in driving institutional demand, in conjunction with existing players.

What Happened?

JP Morgan Chase’s blockchain team has developed a privacy feature that obscures sending/receiving addresses and the amount sent for Ethereum-based blockchains. Using the Zether protocol, a decentralized protocol for confidential payments, JPM built an extension to leverage Zether’s transaction anonymity technology. JPM plans to open-source this extension and utilize it for Quorum, their Etherum-based private protocol. Similar to Zcash, this extension will utilize Zero-knowledge proofs (ZKPs) but incorporates an account-based approach employed by Ethereum, as opposed to the unspent transaction output, used by bitcoin and Zcash. This technology will effectively keep all parts of transactions between banks private, a necessary progression in actualizing a tangible use-case for Quorum.

Why Does This Matter?

Zether obscures account balances and transfer accounts, but participant identities are publicly available. JPM’s Quorum team understood encrypted transactions with address privacy as a vital feature in creating a real-world use case for Quorum, and they are now are one step closer in realizing their goal. Another relevant aspect of this headline is JPM’s decision to open-source its extension. This move suggests JPM buying into the potential of open-source technology as Oli Harris, JPM’s head of Quorum, states “that’s why we wanted to open-source it back to the community so anyone can build on it further and continue enhancing it and potentially put it into their use cases as needed.” Finally, this extension further illustrates Ethereum’s progress in disrupting the traditional financial stack towards and open-financial system.

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