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Ripple Lawsuit’s Intrigue: Allegations Of Insider Play By Former SEC Executives

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Attorney John Deaton, a vocal advocate for XRP, has shed light on the potential unfair play by former U.S. Securities and Exchange Commission (SEC) executives during the lawsuit against Ripple Labs Inc. Deaton’s claims revolve around an intricate web of connections involving former SEC Chairman Jay Clayton, top enforcer William Hinman, and Ethereum co-founder Joseph Lubin.

Deaton took to Twitter to share his findings, suggesting that Clayton’s appointment led to a chain of events benefiting his law firm, Sullivan & Cromwell (S&C), and Lubin’s ConsenSys. Clayton’s association with S&C prompted Lubin to hire the firm, ensuring Clayton’s recusal from any enforcement action involving his firm’s clients. This maneuver, as per Deaton, seemingly manipulated the voting process.

Hinman’s involvement adds another layer of intrigue. Clayton apparently recommended Hinman reach out to Lubin, implying a coordinated effort to support ConsenSys. Deaton’s revelations claim that Clayton’s inquisitiveness about Lubin’s meetings, particularly those involving ConsenSys, hints at potential manipulation.

Deaton further accuses Hinman of ethical misconduct, asserting that Hinman disregarded warnings from the SEC Ethics office and improperly declared Bitcoin and Ethereum as non-securities. Hinman’s alleged profiting from his law firm’s success after giving the speech raises concerns about potential conflicts of interest.

Clayton’s Post-SEC Employment & Ripple Lawsuit Outcome

The attorney’s claims extend to Clayton’s post-SEC employment with One River, a firm that had significant stakes in Bitcoin and Ethereum. Clayton’s subsequent vote for an enforcement action against Ripple, a competitor of his former client, has raised eyebrows.

Notably, Deaton points out the disparity in legal representation choices. If Ripple’s Brad Garlinghouse and Stuart Alderoty had engaged S&C, the outcome might have differed. Deaton’s exposé prompts a broader debate on the ethical boundaries of legal and regulatory actions, emphasizing the potential ramifications of such interconnected interests.

While Deaton’s allegations have yet to be officially substantiated, they raise pertinent questions about transparency, ethics, and potential conflicts of interest within regulatory bodies. However, the crypto industry is curre­ntly navigating complex legal terrain. In light of re­cent revelations, it be­comes necessary to close­ly examine the re­lationships and decisions that influence major cryptocurre­ncy lawsuits.

Related Reading | Prominent Dogecoin Developer Expresses Concerns Over Proof-of-Stake Transition

Ethereum Software Pioneer Shuts Down Cash-Strapped Rumors

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Leading Ethereum developer firm ConsenSys has refuted speculation that it is running out of cash and isn’t formally raising money. The spokesperson even went on to say that ConsenSys had been buying up its own “significantly undervalued” shares on the secondary market.

According to many people with knowledge of the situation, the company that created the Ethereum wallet Metamask recently spoke with prospective investors, which could have resulted in negotiations about a potential injection of capital.

This week, ConsenSys unveiled Linea, its layer-2 network, on the main Ethereum network. The introduction of Linea reflects zkEVM solutions’ burgeoning popularity in the Ethereum layer-2 ecosystem. The testnet portion of the new service was a success, with more than 46 million transactions being completed by 5.5 million different wallets.

As for the world’s No. 2 crypto, Ethereum has tapped the $2k mark for the first time since May, rising in tandem with the broader cryptocurrency market. The surge coincided with the landmark ruling where U.S. District Judge Analisa Torres declared that XRP is a security when sold to institutional investors but not to the general public.

Many saw the verdict as a win for the cryptocurrency industry over the Securities and Exchange Commission, which had sued Ripple in 2020. For more than two months prior to the XRP decision, ETH had difficulty breaking through the important $2k barrier. The new XRP judgment, however, raises the likelihood that Ethereum and other cryptocurrencies may soon be considered similar to XRP.

Amid the newfound market resurgence, Ethereum also turned deflationary this year. Data from ultrasound.money indicated that ether’s net issuance, or the annualized inflation rate, has decreased to -0.07%, indicating that more ether is being burned than is being created.

ConsenSys CEO Says Ethereum Deflation Is Crucial

The spike in ether burned was attributed by Marcus Sotiriou, market analyst at digital asset broker GlobalBlock, to a rise in non-fungible token [NFT] transactions fueled by optimism about the overall crypto market.

“There’s money that you spend to buy a coffee. There’s money that you invest. There’s money you can lend or borrow. You want sort of your high economic bandwidth money, like ether, to be very fresh and to appreciate in value,” ConsenSys CEO Joe Lubin remarked.

ConsenSys Tax Talk: Two Months To Deliberate

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ConsenSys, an Ethereum-based blockchain firm and owner of the popular wallet MetaMask, has been making the rounds in the crypto-sphere of late.  

On July 11, United States Senate Financial Services Committee Chair Ron Wyden and ranking member Mike Crapo reached out to the digital asset community through an open letter, seeking input on the taxation of digital assets. The senators are seeking solutions to address the intricate tax issues, providing background reading from the Joint Committee on Taxation to aid respondents.

The senators pointed out that the Internal Revenue Code of 1986 lacks a straightforward classification for digital assets. Consequently, they posed numerous questions grouped into nine subject areas, highlighting the Committee on Finance’s recent bipartisan endeavor to identify critical questions at the intersection of digital assets and tax law. The letter covered topics such as fair value accounting, trading safe harbor, digital asset loans, wash sales, income from staking and mining, reporting by foreign firms, and valuation on an exchange, frequently referencing specific sections of the tax code.

The Internal Revenue Service (IRS) has primarily focused its efforts on countering criminal activities within the crypto realm, boasting about seizing $10 billion worth of cryptocurrency in law enforcement initiatives this year.

Additionally, the IRS is taking a more proactive approach to income taxation. In a recent case, it issued a summons to the crypto exchange Kraken in 2021, requesting user information on transactions exceeding $20,000. Kraken was ordered by the District Court for the Northern District of California to provide the requested information by June 30. Responses to the letter will be accepted by the Senate committee until September 8.

Consensys Delivers Linea, Ethereum’s Scaling Pioneer

The Ethereum ecosystem warmly welcomes ConsenSys as it begins onboarding partners to its Linea network, an Ethereum layer-2 scaling solution that has achieved significant scaling milestones during testing.

Linea functions as an Ethereum layer-2 scaling network, allowing developers to construct or migrate decentralized applications for Ethereum. It leverages zero-knowledge proofs and is equivalent to the Ethereum Virtual Machine (EVM), ensuring seamless interaction with the Ethereum blockchain.

Throughout an extensive testnet phase, Linea witnessed over 5.5 million unique wallets conducting more than 46 million transactions. ConsenSys has detailed improvements to Linea’s performance, transaction costs, and user experience based on the testing period.

The gradual alpha release commenced on July 11 with over 100 partners, boasting faster throughput and transaction fees 15 times lower than those on Ethereum’s mainnet.

Linea seamlessly integrates with ConsenSys’ Ethereum browser wallet, MetaMask, providing Linea users with access to token bridging, swapping, and purchasing functionalities.

ConsenSys founder and CEO Joseph Lubin highlights the abundance of layer 2 Ethereum scaling protocols and solutions as crucial drivers in advancing Web3 applications and functionality. The Merge to Proof of Stake and the widespread adoption of the rollup-centric roadmap are set to propel Ethereum layer 2’s scalability and usability.

The announcement emphasizes the migration of decentralized finance (DeFi) applications to Linea, benefiting from fast finality, capital-efficient bridging, and inheriting security from Ethereum’s mainnet.

Furthermore, Linea offers lower gas fees, high throughput, and low latency, making it ideal for powering nonfungible tokens, blockchain gaming, and social applications.

ConsenSys has also introduced the Linea Ecosystem Investment Alliance (EIA), involving over 30 venture capital firms providing capital and advisory support to ecosystem builders.

To ensure user protection, safeguarding DApps and the network itself, Linea’s alpha mainnet launch will implement necessary measures. These measures will initially restrict execution calls to launch partners for the first week.

ConsenSys plans to open up the network during ETHCC in France starting from July 17, with potential limits on withdrawals during the initial 90 days. The company will conduct a bug bounty program and closely monitor system performance before fully opening Linea to end users.

In 2023, Ethereum layer 2 solutions have become a significant topic of discussion. Polygon, a layer 2 development firm, publicly launched its zkEVM network in March 2023, while Starknet has focused on enhancing network throughput this year under the guidance of its founder, Eli Ben-Sasson, who pioneered zk-proofs.

Ethereum Is A Commodity And Not Security Asserts Consensys Founder

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Consensys creator Joseph Lubin asserted in a recent interview with CNBC that Ethereum (ETH), the cryptocurrency that runs the Ethereum network, should be categorised as a commodity.

In order to corroborate his claims, Lubin used prior statements made by regulatory agencies such as the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC). Despite this, Gary Gensler, the head of the SEC, has not yet declared Ether to be a commodity, despite having done so for Bitcoin.

In the interview, Lubin referred to Bill Hinman’s 2018 lecture, which he claimed effectively declared Ether to not be a security. The co-founder of Ethereum emphasized that 18 of Hinman’s coworkers contributed to the speech, demonstrating agreement within the SEC at the time. He did not consider it to be a major problem, although he acknowledged that some regulators would still be reluctant to accept that Ether is not a security.

Lubin also discussed the development of the bitcoin market during the previous 12 months. He emphasised the importance of the initiative to “clean up the CeFi rot” and cited successful advancements and launches in 2022 as evidence. For not adhering to the decentralised concept of cryptocurrencies, CeFi, or centralised finance, has received a lot of flak in the past. Despite how strong Lubin’s claims are, they have no bearing on the official classifications of ether. Ether has yet to receive official certification from Gensler and the SEC defining it as a commodity.

DApps On Ethereum Network Slows Down

Despite a 60% reduction in gas costs, DApp usage on the Ethereum network stalled out. Notably, on June 26, the seven-day average transaction cost fell to $3.7 from $9 four weeks earlier.

DApp active addresses decreased by 27% over the same time period as well.

30-day Ethereum DApp activity. Source: DappRadar

Uniswap and MetaMask Swap accounted for a substantial portion of the loss, whereas the majority of nonfungible token (NFT) marketplaces experienced an increase in their unique active wallets (UAW).

Despite Uniswap NFT Aggregator’s underwhelming result, OpenSea, Blur, Manifold, LooksRare, and Unick saw a respectable increase in user traffic.

The fact that the total value locked (TVL), which tracks the deposits locked in Ethereum smart contracts, has dropped to its lowest level since August 2020, is more worrisome. According to DefiLlama, the indicator dropped from 13.9 million ETH on April 28 to 13.9 million ETH on June 28.

Ethereum: MetaMask Leverage PayPal For Seamless ETH Transaction

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Ethereum will be now integrated via PayPal, MetaMask Wallet’s parent firm ConsenSys announced in a blog. MetaMask, a crypto wallet interacting with the ETH blockchain, boasts to be the first Web3 wallet to leverage PayPal to drive more successful on-ramp transactions.

Lorenzo Santos, Product Manager for MetaMask, added, “This integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through MetaMask, but also to easily explore the Web3 ecosystem.” 

For now, the new functionality is available to selected U.S. users which would be rolled out to all eligible U.S. customers in the coming weeks.

The MetaMask and PayPal collaboration is the latest attempt aimed at improving and diversifying payment options for users within the MetaMask app. 

To add crypto to the MetaMask wallet with PayPal one needs to log in to the app first and click on the Buy button, then select ‘PayPal’. By entering the desired dollar amount worth of ETH to add to your wallet; the user will be redirected to PayPal to log in.

There one can purchase crypto via PayPal, or send it without buying more. 

ConsenSys caused a huge outcry in the Ethereum community after the latest update in its privacy policy required it to collect users’ IP and wallet addresses while sending a transaction. 

Ethereum Wallet’s Latest Privacy Policy Caused Uproar

As reported by TronWeekly, ConsenSys MetaMask’s RPC [Remote Procedure Call] node Infura would collect the user’s IP address as well as wallet address while sending a transaction.

MetaMask [by default] utilizes Infura to get information on and off of blockchains. However, ConsenSys in a blog post downplayed the changes.

It said that only “clarity in relation to the information collected by Infura when users use Infura as their default RPC provider in MetaMask” was provided.

“The updates to the policy do not result in more intrusive data collection or data processing and were not made in response to any regulatory changes or inquiries”.

“Our policy has always stated that certain information is automatically collected about how users use our Sites and that this information may include IP addresses”, ConsenSys stated.

That said, Infura is vital to the Ethereum blockchain. The tool is used by many other notable Web3 projects such as Polygon, Filecoin, Aragon, Gnosis, and OpenZeppelin.

Ethereum: ConsenSys’s New Privacy Policy Causes Huge Uproar

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ConsenSys, an Ethereum-based blockchain firm and owner of the popular wallet MetaMask, has recently updated its privacy policy and Crypto Twitter is furious.

Under the new guidelines, MetaMask’s RPC [Remote Procedure Call] node Infura would collect the user’s IP address as well as wallet address while sending a transaction. MetaMask [by default] uses Infura to get information on and off of blockchains.

Consensys further said. “However, if you’re using your own Ethereum node or a third-party RPC provider with MetaMask, then neither Infura nor MetaMask will collect your IP address or Ethereum wallet address.”

Many in the community have urged users to uninstall MetaMask and migrate to a new wallet.

Just recently, popular decentralized exchange [DEX] Uniswap updated its privacy policy, attracting ire from the decentralized buffs. The concerns were similarly related to collecting and storing user data and how it goes against crypto’s core ethos of user privacy and anonymity. 

ConsenSys’s latest privacy policy comes in light of the FTX crisis, an event that brought attention to the need for transparency.

Transparency has now become the buzzword in the industry ever since the collapse of the crypto exchange FTX earlier this month. The once dominant platform was accused of misusing customer assets in risky trading.

Soon after the incident, the crypto entities rushed to win back clients’ faith by promising to be “transparent,” notably by introducing Proof of Reserves in the case of centralized exchanges.

Ethereum Software Firm’s Latest Privacy Policy Has Shined the Spotlight On Transparency

The world’s biggest crypto exchange Binance led the way and accordingly Kraken, Bitmex, Coinfloor, Gate.io HBTC, OKX, KuCoin and a host of other exchanges followed suit.

Ironically, Binance which championed Proof Of Reserves [PoR] in the wake of FTX’s bankruptcy was slammed for an undisclosed $2.7 billion USDT transfer that was initiated less than 24 hours after the audit publication, TronWeekly reported the other day.

A Reddit post by a user called OneThatNoseOne accused the trading platform of not revealing the wallet in their proof-of-reserves article.

The anonymous user urged Binance to take action in offering transparency at a time when users’ confidence in cryptocurrencies is at an all-time low so that people like him don’t have to dig through mountains of data for something they could have easily provided.

Microsoft joins $450M funding of crypto start-up ConsenSys

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Tech giant Microsoft Corp co-led a $450 million funding of New York-based start-up ConsenSys. The financial round was backed by ParaFi Capital, Temasek Holdings, and SoftBank Group Corp which doubled ConsenSys’s valuation to $7 billion.

ConsenSys was founded in 2014 by Joseph Lubin, a co-founder of Ethereum, the world’s second-biggest cryptocurrency. The firm’s most popular products include the MetaMask digital asset wallet and Infura, a suite of tools that helps developers build Ethereum apps.

The recent capital injections highlight the firm’s positive outlook by investors who see the former as one of the companies that will power Web3. It has also managed to secure funds into areas such as decentralized finance, or DeFi, and nonfungible tokens, NFTs.

Besides that, ConsenSys said all the proceeds from its latest round would be converted into the ether. The funds will be utilized for recruiting additional 600 employees, an updated version of MetaMask that would be launched later this year, and expanding its NFT business.

That said, Microsoft’s involvement underscores the growing interest from the world’s largest tech firms in Web3. Last year, its venture fund M12 led a $27 million early-stage funding round in Palm NFT Studio, a start-up also co-founded by Lubin.

Microsoft ‘s Rendezvous With Crypto And Metaverse

The software firm began its first step by working towards integrating blockchain and cryptocurrencies in its business structure. The company last month announced a new job opening for a “Director of Business Development – Cryptocurrencies” on its career website. The role is integrated into its AI and Emerging Technologies business development team, which is the company’s spearhead division for emerging new technologies. 

Next, Microsoft’s acquisition of $68.7 billion gaming giant Activision Blizzard made it clear that the tech firm’s ambition was not limited to video game domination. In fact, gaming is the crucial vehicle to help power Microsoft’s metaverse plans.

In a press release published in January, the firm wrote that buying the “Call of Duty” and “Warcraft” maker “will provide building blocks for the metaverse.” Later Microsoft CEO Satya Nadella reportedly said that gaming “will play a key role in the development of metaverse platforms.”

ConsenSys acquires MyCrypto: Plans to team up with MetaMask

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ConsenSys, a renowned Ethereum software corporation, just announced its acquisition of MyCrypto. MyCrypto is an open-source platform that allows you to manage your Ethereum accounts in a safe and accessible setting. They also intend to integrate with MetaMask ultimately. They made the announcement through their official blog post.

MetaMask and MyCrypto will be tying their efforts under a unified brand to strengthen the security of all the products and offer a consistent user experience across desktop, mobile, extension, and browser wallets.

MetaMask has focused on general-purpose dapp interactions and has developed to become the world’s biggest non-custodial crypto wallet for mobile and browser extensions with over 21 million monthly active users. MetaMask and MyCrypto visions to give users a heightened experience that is even more extensive and safe through this collaboration.

ConsenSys and Metamask: What can users expect?

“User safety and product security are the key facets of both MetaMask and MyCrypto,” said Taylor Monahan, founder, and CEO of MyCrypto. Security, she added, is of growing relevance as the ecosystem evolves and a wider broad variety of individuals enter the crypto realm.

“We want to make sure that everyone has a nice experience with cryptocurrencies. Namely, not losing all of their crypto.”

The collaboration with MyCrypto will not only introduce MetaMask to further platforms and stimulate further integrations with the wallet, but it will also give users a better and more secure experience.

ConsenSys did not reveal the terms of the acquisition. They highlighted that both wallets would continue to function individually shortly with the final purpose of incorporating features and branding.

Crypto wallets and their safety concerns

Crypto wallets, including Metamask, have been victimized for easy to breach security systems. A cryptographer and security analyst Alexandru Lupascu pointed out a vulnerability of Metamask that can jeopardize the funds of 21 million users. Cold wallets, including Trezor, were hacked by an engineer, who went out and explained in a video of the process.

The recent spree of hacks has put users in a tight spot whether their funds are safe. Collaborations like this with an intention to provide a more secure platform for users will soon grow to fame.

Ethereum’s Josep Lubin Dives into Compliance; Consensys Develop Product for DeFi

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Consensys, an organization providing solutions to Ethereum(ETH) based blockchain applications is ready to launch a compliance service that will assist various exchanges and decentralized finance (DeFi) projects to analyze and keep track of trading activities on Ethereum.

According to Bloomberg, Joseph Lubin, co-founder of Ethereum(ETH) and head of Consensys, indicated that the company is looking forward to developing a product that would focus on the regulatory requirements of the know-your-customer, which has been a significant hurdle for various digital asset firms.

Compliance services have been a major issue in the past as the lack of standardized rules has led to various illegal activities in the industry. In order to avoid various money laundering transactions, various cryptocurrency firms have to rely on analytical firms such as Chainalysis and CipherTrace to identify users and tokens that are linked to criminal activity.

Lex Sokolin, ConsenSys’s global fintech co-head said,

“There are more and more people building decentralized apps that need this as a Lego piece. What we are trying to do is make activity on the decentralized financial infrastructure much more safe, transparent, much easier to trace.”

Since Consensys is focused on Ethereum, the new services launched by the organization would track up to 280,000 different tokens, those which are built on the ERC-20 or ERC-721 standard. According to their press release, the objective remains to implement a more stable and regularised compliance in crypto, usually tagged with the traditional payments sector.

Ethereum(ETH) continues to be the development Hub

It is hard not to pin-point that the entire system continues to under Ethereum. Sokolin has mentioned last year that the improvement of the DeFi space in terms of functionality and now, compliance is highly important for the ever-improving space of Ethereum. When the number of unique numbers rose nearly up to 530 percent in 2019, according to DappRader report, Sokolin had stated,

“Providing robust AML/CFT compliance for Ethereum-based digital assets is a keystone step in bringing the institutional financial industry to decentralized finance. Code Compliance is the next module in our product suite to eliminate complexity and risk in using DeFi, and help any business benefit from using digital assets.”

JP Morgan’s Quorum to Merge With Ethereum Based ConsenSys; Has Mainstream Finance Finally Decided to Trust Crypto?

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Mainstream companies have understood that integrating blockchain technology into their peripherals would result in added advantages in business. This was also a mantra followed by one of the world’s biggest banks, JP Morgan.

Recently, JP Morgan revealed that they were considering merging their popular Quorum blockchain unit with the ConsenSys Joseph Lubin. The news is coming in the wake of a report that indicated some troubled times for ConsenSys

Sources close to the bank stated that they were in initial talks to merge Quorum because of its functionalities and abilities to utilize blockchain. There have been no formal announcements as of yet but a concrete plan is expected to be revealed in 4-6 months.

ConsenSys is expected to be a good fit for Quorum because the latter too is based on Ethereum. Quorum is used by JP Morgan to run the Interbank Information Network which acts as a payments network for over 300 banks. There were also earlier comments that mentioned Quorum would be used to create the bank’s native crypto called JP Morgan Coin.

Ethereum’s commonality was one of the main reasons why the companies decided to merge. The bank revealed that they were planning to spin-off Quorum for another two years. Along with this, JP Morgan also has plans to set up an open-source foundation as well as creating a new startup. The spin-off idea was first suggested back in May 2019 but it was anything but concrete.

Quorum blockchain has also gone through some upgrades over the months, forcing many people to sit up and take notice. Quorum now has added privacy features from Ethereum as well as an upgrade within the Java programming language.

The news was also met with some trepidation as there was growing concern that a change in integration would affect existing projects on Quorum. People close to the initiative stated that the merger with ConsenSys would not change a thing to exiting compounds.

ConsenSys was also in the news recently when a project based on it launched its own ‘Proof-of-Use’ Network to discourage speculation. The project is titled, Activate and is part of the ConsenSys Codefi. It is an Ethereum-based operating system for decentralized finance products.

The updates from ConsenSys is expected to generate more interest from JP Morgan for the Quorum integration. Many proponents of the space see it as an opportunity to bring in more developments into the digital asset industry by involving mainstream finance.