Monkey business

Gm. Not to boast, but all 1,111 Coinsider Bear NFTs sold out like flat screen TVs on Black Friday. In case you’re late to the party…don’t worry. NFT hodler or not, we love everyone who reads this newsletter every week (and we have some very special projects coming up soon—watch this space).

Today: The SEC strikes again, Zuck’s metaverse takes another hit, and Solana suffers malware airdrops. Let’s dive in.

––Angelina

The SEC Apes Out

What do Eminem, Madonna, and Tom Brady have in common? They all own Bored Ape Yacht Club (BAYC) NFTs. In case that’s not enough to convince your mother-in-law that monkey JPEGs are an investment class, she’s bound to believe the SEC—which is now taking BAYC pretty seriously.

The SEC is investigating whether BAYC creator Yuga Labs violated U.S. securities laws with its digital asset offerings, according to Bloomberg.

• FYI: Securities are financial instruments sold by enterprises to raise money. Issuers of securities must register with the SEC and adopt strict disclosure rules. We wrote about how securities are classified a few Sundays back—read this for a refresher.

Context: The investigation into Yuga Labs is part of the SEC’s broader probe of NFTs designed to determine whether they’re securities. One important detail? Yuga hasn’t been accused of any wrongdoing (yet) and the investigation doesn’t mean that the SEC will sue.

In addition to BAYC, the SEC is looking into the distribution of ApeCoin (APE). While APE wasn’t designed or launched by Yuga Labs (it’s instead the work of the ApeCoin DAO), it serves as the native currency for Otherside, Yuga’s metaverse project.

This investigation doesn’t surprise us, tbh: SEC Chair Gary Gensler made it clear that he believes most cryptocurrencies, including ERC20 tokens such as APE, are securities.

Big picture: First the SEC sued crypto YouTuber Ian Balina, then it took action against Kim Kardashian for touting EthereumMax, and now it’s probing one of the most prominent brands in crypto…we’re sensing a pattern.

Picking high-profile targets is a sign of aggression from the SEC, fitting into the larger pattern of “regulation by enforcement” Gensler has been pursuing over the last year. By digging into BAYC, he’s sending a clear message: NFTs are not beyond the SEC’s reach.

Horizon World Devs Are Not Impressed

Two things Meta employees don’t vibe with: 1) data privacy and 2) the metaverse they’re building. According to a new report from The Verge, leaked internal memos reveal that the developers of Horizon Worlds, Meta’s flagship metaverse project, aren’t convinced of their own product.

• Meta VP of Metaverse Vishal Shah admitted in one memo that Horizon is currently too buggy for employees to use it.

• As a result, Shah proposed a plan to “hold managers accountable” by ensuring their teams use Horizon at least once a week.

Zoom out: Meta needs its metaverse project to work out—Zuckerberg bet his company’s future (and name) on it. But so far, Horizon Worlds has been a swing and a miss for Zuck. Last year, the metaverse business cost Meta over $10 billion, and the losses keep growing.

In addition to money burning and horrible graphics, Horizon Worlds faces another issue: No one really knows what the metaverse will look like, let alone when (or if) it will take off.

Bottom line: As with any good story, there’s a lesson to be learned from Meta’s foray into the metaverse…don’t bet all of your money on one horse.

Malicious Phantom Wallet Airdrops

Solana’s bad luck streak continues. This time, it’s not a network outage but an attack on its Phantom wallet.

• For the last two weeks, hackers have been airdropping NFTs (entitled PHANTOMUPDATE or UPDATEPHANTOM) to Solana users, passing them off as important Phantom wallet security upgrades.

• Spoiler: Instead of security enhancements, users who engage download malware designed to pocket their funds and steal their browser data.

It’s a bad look for Solana. In August, Phantom wallet suffered a major attack. Paired with a recent slew of network outages, these exploits could seriously affect investors’ trust in the Solana ecosystem.

In other news:

• India’s central bank has released its vision for a CBDC. Timeline to launch: TBD.

• Google is partnering with Coinbase to accept crypto payments for its cloud services.

• BNY Mellon, America’s oldest bank, will offer clients a digital custody platform to manage their crypto holdings.

• CNN abruptly called off its NFT experiment.

• Solana-based DeFi trading platform Mango Markets lost $100 million in yet another crypto hack.

And that’s what you need on your radar today in crypto. We’re curious: Do you think Zuck’s metaverse will ever take off? Shoot us a reply. See you on Sunday!