ICYMI - Last week in crypto: US SEC slams Kim Kardashian with $1.2M fine, Meta announces employee cutback and Warner Music Group partners with Opensea
We are entering Q4 with a bang!
The last week of Q3 saw a myriad of mixed feelings amongst Crypto enthusiasts with many experts warning of a continued bear market and some hopeful of a relief bounce in “Uptober”. However, major events from last week saw the CEO of Celsius step down, causing a further meltdown in the price of $CEL, while Meta rolls out NFT functionality on Facebook and Instagram in the United States. Also, Warner Music Group announces a new partnership with Opensea, and users turn to blockchain gaming to “stack crypto” amidst the bear market.
SEC Charges Kim Kardashian to pay $1.26M for “unlawfully” Promoting EthereumMax
Popular reality TV star, Kim Kardashian has paid $1.26 million to the Securities and Exchange Commission (SEC) to resolve allegations that she unlawfully promoted EthereumMax.
According to an SEC press release, the "Keeping Up With the Kardashians" star was charged by the SEC for failing to disclose the $250,000 payment she received in exchange for posting promotional materials for EthereumMax. Kardashian also consented to refrain for three years from promoting any cryptocurrencies.
Kim Kardashian shared promotional content with her Instagram followers in 2021. With close to 74 million Twitter followers and 331 million Instagram followers, Kardashian has one of the biggest social media followings.
Professional boxer Floyd Mayweather Jr. also promoted EthereumMax, which is unrelated to Ethereum coin itself. Investors in EthereumMax sued both Kardashian and Mayweather in January.
Kim Kardashian was charged today by the commission for endorsing on social media a crypto asset security offered and sold by EthereumMax without disclosing the compensation she received for the promotion. As part of the settlement, Kardashian agreed to cooperate with the Commission's ongoing investigation and pay $1.26 million in fines, disgorgement, and penalties.
According to the SEC's order, Kardashian failed to disclose that she was paid $250,000 to post on her Instagram account about EMAX tokens, the digital asset security that EthereumMax was promoting. A link in Kardashian's post led to the EthereumMax website, where instructions were provided for potential investors to purchase EMAX tokens at the the time.
"This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors," SEC Chairman Gary Gensler said in a tweet.
CEO Alex Mashinsky Steps Down From Celsius
The CEO of Celsius, Alex Mashinsky, has stepped down.
Mashinsky resigned from the position effective immediately, according to a press release last Tuesday.
“I elected to resign my post as CEO of Celsius Network today. Nevertheless, I will continue to maintain my focus on working to help the community unite behind a plan that will provide the best outcome for all creditors – which is what I have been doing since the Company filed for bankruptcy,” Mashinsky said.
Mashinsky continued by expressing his "sincere regret" for the difficulties Celsius customers are having paying their bills as a result of the company's collapse earlier this year. The cryptocurrency lender famously stopped allowing customer withdrawals in June due to insolvency issues brought on by the market crash. In the course of the events, Three Arrows Capital and Voyager Digital went bankrupt in addition to several other crypto giants suffering during a weeks-long crypto liquidity crisis (Celsius also lent funds to Three Arrows before the hedge fund went bankrupt). On July 13, Celsius submitted a Chapter 11 bankruptcy filing. When the company went bankrupt, customers who had deposited money found they could not withdraw their assets. The company has since announced a recovery plan, but customers have not yet been notified of it or reimbursed. Meanwhile, A U.S. Trustee working under the Department of Justice has argued before the court that Celsius shouldn't be permitted to start customer withdrawals until a more thorough investigation has been conducted.
NFTs launches on Facebook and Instagram… But Stormy Clouds gather at Meta
Finally, Meta has enabled NFT functionality for all Facebook and Instagram users in the United States. American users now enjoy the ability to share NFTs and cross-post them on Facebook and Instagram.
Additionally, according to Meta, the service is now accessible to all users in the 100 nations where Instagram sells digital collectibles.
The software company claims there are no costs associated with uploading or sharing NFTs, and has been gradually introducing crypto collectibles to its consumers.
This could be a turning point for adoption because it allows millions of consumers to interact with non-fungible tokens on popular websites.
Over the course of this summer, Meta gradually rolled out its NFT features. In May, the company gave Instagram early NFT support, and in June, Facebook received support. In August, the company started enabling NFT to be shared across the two social media sites.
The NFT feature, however, has only been accessible to a small number of users up until now. Today's update will significantly increase the reach of Meta's NFT features because there are over 2.9 billion Facebook users and 1.4 billion Instagram users.
At the moment, Meta supports NFTs on Flow, Polygon, and Ethereum blockchains. Future plans include adding support for the Solana blockchain.
…but storm clouds are gathering at Meta 🌩
Amidst the NFT functionality roll-out, dark clouds are beginning to gather over Meta following Mark Zuckerberg's announcement that the company will for the first time ever reduce its headcount.
Bloomberg reports that the company is preparing to make its first significant budget cut since its founding in 2004 and that teams will be reorganized to reduce costs. According to a quote from Zuckerberg:
"I had hoped the economy would have more clearly stabilized by now. But from what we're seeing it doesn't yet seem like it has, so we want to plan somewhat conservatively."
TikTok, which is luring away younger users, is posing a serious threat to Meta, which has been struggling to compete. The social company has been making aggressive investments in the metaverse as well, but some analysts have cautioned that this could be a costly gamble that fails.
Although Meta's foray into Web3 is not its first, the company undoubtedly hopes that this effort will be more successful than some of its earlier ones. For example, the company has already abandoned its Diem stablecoin and Novi wallet, and its Horizon Worlds Metaverse has largely been met with ridicule and criticism. Zuckerberg needs a triumph after turning his business toward Web3 a year ago, and perhaps digital collectibles will provide it.
Warner Music Group announces Partnership with OpenSea to create more Web3 opportunities for artists
A partnership between Warner Music Group (WMG) and nonfungible token (NFT) market OpenSea was announced last week on September 29. The new coalition is set to give a few musical artists a platform to grow and expand their fan bases within the Web3 community.
According to the press release, the partnership between these two organizations will enable a select group of WMG artists to gain early access to a newly launched feature of OpenSea that enables artists to launch their NFT collections and limited-edition projects on their own specialized drop pages.
These WMG artists will have access to OpenSea's market-leading safety and security features as well as personalized storytelling on tailored landing pages. The collaboration, which aims to support WMG artists in creating new Web3 communities, will provide existing OpenSea fan communities with new opportunities for connection and creativity through NFTs and give fans new ways to interact with music and artists within the Web3 community.
Shiva Rajaraman, OpenSea’s vice president of product, said:
“For artists and musicians, NFTs represent a new creative medium and a mechanism to build community, engage directly with fans, and express themselves across borders and languages.”
"Community is fundamental to music's DNA; it's artists and fans coming together to celebrate the music that they love," added Oana Ruxandra, chief digital officer and executive vice president of business development at WMG. By making Web3 tools and resources available, our partnership with OpenSea makes it possible for artists to create opportunities for greater engagement, access, and ownership.
A collaboration between Web3 company Probably Nothing and Warner Records UK is currently creating the first music collection NFTs. This partnership, according to WMG, is the most recent in a line of initiatives to increase the music label's expertise in the Web3 market.
Warner Music Group and Splinterlands, a maker of collectible card games with a fantasy theme, collaborated to develop play-to-earn blockchain games earlier this year.
Blockchain gamers surge as users attempt ‘stacking crypto’ — DappRadar
Despite the FUD, active users of blockchain games increased in September, and God's Unchained ranked among the top 10 projects in terms of total NFT sales volume.
Decentralized gaming applications (DApps) on the blockchain saw a spike in user activity in September, with numerous games reporting notable increases in the number of active players.
Data from DappRadar shows that over the past 30 days, seven out of the top 10 games in terms of "unique wallet addresses interacting with dapp's smart contracts" increased, with all of the top five games showing a profit.
The Web3 gaming platform Gameta, the blockchain-based games Alien Worlds, Solitaire Blitz, Benji Bananas and Splinterlands, Farmers World, and Arc8 by GAMEE, are among the DApps that are currently registering growth during the period.
Eight of the top 10 blockchain games right now are mobile-only, according to DappRadar, who noted this in a blog post on September 27. This could eventually "bring millions of users to the blockchain," they wrote.
“Dapp games like Gameta, Benji Bananas, Upland, and Trickshot Blitz let anyone with a mobile device earn crypto with little prior knowledge, investment, or risk.”
“Using daily activities like hyper-casual mobile games as a hook ensures users find fun once they interact, while solid tokenomics can encourage everyday use and retention,” it added.
The concept of "bleed in the bear and run in the bull," according to DappRadar, is one of the potential explanations for the rise in popularity of blockchain games despite the bear market:
“The idea that stacking crypto and investments in a bear market pays off in the bull is almost proven at this point.”
The Benji Bananas (Polygon) app from Animoca Brands saw the biggest increase in users over the last 30 days, rising by 2016.54%. Notably, up until March of this year, this game was a Web2 mobile app. Play-to-earn (P2E) components were then introduced by Animoca through the Bored Ape Yacht Club-affiliated Ape Coin (APE).
While it's unclear what specifically caused the number of Benji Bananas users to soar, the company did host a P2E gaming event this month where the winners received a number of worthwhile in-game NFTs.
Only Axie Infinity, Trickshot Blitz, and Upland saw declines over the past 30 days among the top 10 games.
The rise in blockchain gamers this month coincides with reports from publications like Bloomberg that the highly correlated NFT market trading "frenzy is almost dead," according to an article published on September 28. It uses the 97% decline in overall NFT trading volumes since January as proof of this.
Yat Siu, a co-founder of Animoca Brands, noted on Twitter on September 30 that focusing solely on the metric of NFT sales volume may not accurately depict the entire picture in NFTs or gaming.
… meanwhile, Gods Unchained breaks the Top 10 NFT sales
Gods Unchained, a card battle game based on NFT, has seen its NFT sales volume nudge its way into the top 10 over the previous 30 days, according to Cryptoslam.
Gods Unchained's revenue over the last 30 days has increased by 373.25% to $10.8 million at the time of writing. After a very slow period from February to August, this is the first time since January that the game's NFT sales have exceeded $10 million.
According to Cryptoslam, Gods Unchained, a card battle game based on NFT, saw its NFT sales volume nudge its way into the top 10 over the previous 30 days.
At the time of writing, Gods Unchained's 30-day revenue growth was 373.25%, bringing it to $10.8 million. This is the first time since January that the game's NFT sales have exceeded $10 million, following a very slow stretch from February to August.
See you next week!
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