Web3 is Going Just Great

The US Trustee reportedly warned BlockFi counsel on March 6 that the company needed to "immediately take steps to safeguard these funds in compliance with" the depository agreement, because a MMMF was not in compliance. BlockFi responded that the account was FDIC insured (up to the FDIC's $250,000 limit), but the Trustee maintains that that is not accurate.

Sun also announced that he had transferred $100 million to Huobi to provide more liquidity. He also announced that "Huobi will bear all leverage-through position losses on the platform resulted from this market volatility event of HT."

Although the token recovered quickly, the flash crash sparked rumors that Huobi was insolvent.

The NYAG took the additional step of alleging that ETH is a security. Many have argued that Bitcoin and ETH, the native token of Ethereum, are not securities because they are "sufficiently decentralized". The NYAG, however, wrote in the press release announcing the lawsuit that, "This action is one of the first times a regulator is claiming in court that ETH, one of the largest cryptocurrencies available, is a security. The petition argues that ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH."

The NYAG is also going after KuCoin for offering a lending and staking product, a category of product that has recently been a focus of various enforcement actions. They claim that KuCoin did not comply with a subpoena.

However, shortly after the NFT sales began, the platform crashed. Then, very soon after the sale began and Togg began addressing the issues with the platform, a series of earthquakes devastated portions of Turkey. As a result, Togg announced they would be postponing the sale until a later announcement.

On March 8, Togg announced that they had canceled their plans to conduct the pre-order process by NFT drawing, and that any NFT holders would not be prioritized in the pre-order.

This infuriated some customers who had purchased AVAX solely intending to use it to obtain a pre-order slot — particularly because AVAX is now priced below $15, meaning those who've been holding AVAX since purchasing it have lost 25%.

Silvergate's collapse may worsen crypto's already tenuous relationship with US banks. Silvergate was one of the few "crypto-friendly" banks, and the clients it previously served — among them, Crypto.com, Bitstamp, and Paxos — may face challenges finding a reliable replacement.