First Mover Americas: ETH Climbs 4% as Traders Are Optimistic About Upcoming Merge

Good morning, and welcome to First Mover. I’m Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

Crypto markets were mostly in the green, with ether (ETH) taking the lead, up 4%, while stock futures edged higher ahead of the U.S. jobs data release scheduled for Friday.

Investors in the U.S. awaited the jobs report from the Labor Department, which is released on Friday at 8:30 a.m. ET. Bitcoin (BTC) was down 3% over the last 24 hours, whereas ether was up by 4.3%, making it one of the top performing altcoins on the day.

Laurent Kssis, head of Europe at Hashdex, said that ETH’s uptick could be related to the optimism surrounding the upcoming Ethereum blockchain Merge. “This has encouraged a lot of retail investors to preempt an investment strategy for ETH,” said Kssis.

“But it may be short lived as there are still strong sell orders in the market supported by ETH liquidations,” Kssis said.

In traditional markets, the British pound was up slightly on Thursday after the news surfaced U.K. Prime Minister Boris Johnson would resign.

The departure is likely to delay the country's plans to create a friendly environment for the crypto industry.

Against the U.S. dollar, the pound lifted to $1.20 from $1.19, where it was Wednesday.

Meanwhile, after the news that Voyager Digital filed for bankruptcy Wednesday, shares of the broker have been suspended from trading on the Toronto Stock Exchange as it looks at whether the shares meet its listing requirements.

Genesis Global Trading, a CoinDesk sister company, has confirmed exposure to crypto hedge fund Three Arrows Capital. Genesis’s CEO Michael Moro confirmed Three Arrows Capital was the large counterparty that failed to meet a large margin call in June, forcing liquidation of the related collateral.

Adding to the list of departures moving from traditional finance over to crypto is another JPMorgan (JPM) executive, Eric Wragge, a former managing director at the bank. He joined the Algorand blockchain as head of business development and capital markets.

And finally, the developers behind meme coin, SHIB, has teased plans to expand the Shiba Inu ecosystem with a decentralized stablecoin. More on that here.

By Danny Nelson and Nikhilesh De

A class-action lawsuit filed in California federal court last week accuses key players in the Solana ecosystem of illegally profiting from SOL, the blockchain’s native token that according to the suit is an unregistered security.

“The cornerstone of the value of SOL securities is the sum of Solana Labs, Solana Foundation and [Anatoly] Yakovenko’s management and implementation of the Solana blockchain,” the suit alleged. It described SOL as a highly centralized cryptocurrency that has benefited its insiders to the detriment of retail traders.

Filed by California resident Mark Young, who said he bought SOL in late summer 2021, the suit names Solana Labs, the Solana Foundation, Solana’s Anatoly Yakovenko, crypto VC giant Multicoin Capital, Multicoin’s Kyle Samani and trading desk FalconX.

A Solana spokesperson declined to comment. Multicoin and FalconX did not immediately respond to a request for comment.

According to the complaint, Young alleges that the way SOL was created and sold meets the three tenets of the Howey Test, a U.S. Supreme Court precedent commonly used as a barometer for whether the sale of something is a security or not.

“Purchasers who bought SOL securities have invested money or given valuable services to a common enterprise, Solana. These purchasers have a reasonable expectation of profit based upon the efforts of the promoters, Solana Labs and the Solana Foundation, to build a blockchain network that will rival Bitcoin and Ethereum and become the accepted framework for transactions on the blockchain,” the filing said, addressing the three forks of the Howey Test.

In the filing, Young pointed to several sales of the SOL token or agreements to sell the SOL token ahead of the public sale of the token.

Solana Labs filed a Form D with the U.S. Securities and Exchange Commission (a filing saying the sale was of securities exempt from SEC registration), noting the company was selling “the future rights” to around 80 million SOL, according to the filing.

Multicoin, a major crypto venture capital firm that has invested heavily across the Solana ecosystem, “offloaded millions of dollars of SOL” onto retail after “relentlessly” promoting the token in spite of Solana blockchain’s tech issues, the suit alleged. This alleged offload passed through FalconX over-the-counter trading desks, the suit said.

Young’s law firm, Roche Freedman, also recently filed suit against Binance.US for allegedly misleading investors during the Terra implosion. A lawyer for Roche Freedman did not pick up the phone.

Today’s newsletter was edited by Bradley Keoun and produced by Stephen Alpher.