Last week it was reported that OpenSea, the world’s leading NFT marketplace, received a Wells notice from the US Securities and Exchange Commission (SEC), leading to lots of noise in the crypto space.
What is a Wells Notice?
The name of this type of notice comes from the Wells Committee, a legal advisory group created by the SEC in 1972 to review the agency’s enforcement practices, named after the SEC general counsel at that time, John A. Wells.
A Wells notice is given to a person or company following a completed investigation. It is a formal notice used to inform the subject that infractions have been discovered by the SEC, giving the investigated company or person an opportunity to publicly address and respond to the investigation prior to any rulings that might follow.
While the SEC neither confirmed nor denied any such regulatory investigation of OpenSea, in the NFT platform’s August 28th response, it stated that the notice “indicates that the SEC is considering bringing a lawsuit against OpenSea.”
OpenSea’s Position
OpenSea has received a Wells notice from the SEC.
We're shocked that the SEC would make a move that threatens creators and artists, and we're ready to stand up and fight for our industry. https://t.co/7FyFH3NLdm
OpenSea has not wavered in its position that NFTs on its platform should not be regulated as securities. Openly taking a stand for the rights of creators, artists and innovators who use the OpenSea platform, CEO Devin Finzer has pledged $5M (in addition to its own defense) to assist with legal fees for any creators or developers who have also received a Wells notice related to their NFT activity.
“NFTs are fundamentally creative goods: art, collectibles, video game items, domain names, event tickets, and more. We should not regulate digital art in the same way we regulate collateralized debt obligations.”
“We hope that the SEC will reconsider its stance and approach this issue with the open-mindedness it deserves.” –Devin Finzer, OpenSea CEO
Ongoing Debate
The question of whether regulatory agencies would consider treating non-fungible tokens as securities has been looming over the web3 space for the last few years.
While the debate has attracted the attention of the wider crypto world and concern from NFT collectors, the consequences of classifying NFTs as securities under US law would fall primarily on the creators and sellers of NFTs.
The SEC’s mission is to protect investors by maintaining fair, orderly and efficient markets. If NFTs were considered securities, then those who purchased them would be considered “investors” – The SEC would then be obligated to protect them.
Previous Enforcement Actions
While this is the first Wells notice from the SEC to target an NFT marketplace, several exchange platforms have received Wells notices, including Coinbase, Kraken, Robinhood, and decentralized exchange protocol Uniswap.
The question of whether or not certain types of digital goods will be regulated as securities has been approaching for some time, and veterans of the space have seen it coming.
Looking Ahead
Like regulation of cryptocurrency, regulation of non-fungible tokens on some level is inevitable. The majority of web3 innovators welcome such regulation with openness and compliance, because it allows the clarity needed to create and effectively execute projects.
At Gala, we stand with OpenSea that NFTs are not securities and their owners are not investors. We are however fully committed to regulatory compliance as these questions are settled over the coming months and years.
Ultimately, coming regulations should be seen as a sign of web3 adoption and we look forward to a world where such issues are settled, where we can fully focus on the empowerment and progress made possible by blockchain technology.
Imagine a company or an organization that instead of being controlled by a CEO or a board of directors, is run by the people who use its services or participate in its community. This is essentially what a DAO, or Decentralized Autonomous Organization, is.
In simpler terms, a DAO is like a cooperative business or club where everyone involved gets a say in how things are done. But instead of having meetings in person, all decisions and rules are managed online, using blockchain technology. This setup ensures that the organization is decentralized, meaning no single person or group has complete control.
It’s autonomous because it essentially operates itself according to rules encoded in smart contracts, which are self-executing pieces of code on a blockchain.
How Does a DAO Work?
DAOs work through a series of smart contracts, which are basically programs running on a blockchain. These contracts define the rules of the organization, automatically enforcing decisions made by the community. Here’s a breakdown:
Proposals: Any member of the DAO can propose changes, new projects or other decisions about current operations or the future of the DAO.
Voting: Members then vote on these proposals. In a truly decentralized system, each vote is weighted by how much stake (often in the form of tokens) each member holds.
Execution: Once a proposal is approved by the majority, the smart contract automatically executes the decision without need for any human intervention.
DAOs represent a shift from traditional hierarchical structures to more community-driven models. Here’s why they’re significant in the web3 world:
Decentralization: Power is distributed among all members instead of concentrated into a single centralized entity, reducing the risk of corruption or poor management. This distribution also reduces the consumer-to-business trust necessary for an effective organization. In fact, DAOs could almost alternately be called democratized autonomous organizations, but decentralization is a more apt description.
Transparency: Every decision and transaction is recorded on the blockchain, making the organization’s operations fully transparent. For centralized organizations to achieve this level of transparency, there must be a well established routine of sharing information with the users, such as the way publicly owned companies share quarterly financial reports or how a traditional non-profit organization’s financials are shared with its community.
Inclusivity: Anyone with internet access and the required tokens can participate, making DAOs more inclusive than traditional organizations. Because of their ability to essentially manage themselves, DAOs lend themselves well to greater specialization, allowing people to participate in governance in fields for which they are especially qualified, no matter where they live in the world.
Global Reach: DAOs can operate across borders, allowing global participation without the need for a centralized authority.
Examples of DAO Benefits
To make this concept more relatable, let’s consider a few scenarios:
Community-Driven Development
Imagine a group of indie game developers who come together to create a new game. Instead of going through a traditional publisher, they form a DAO. Players and fans can buy tokens to join the DAO and vote on game features, funding allocation, or marketing strategies. This way, the game evolves according to the community’s preferences, and profits are distributed among all contributors.
In this example, the use of a DAO not only covers the governance of their project, but also provides development funding through the sale of tokens.
Charitable Organizations
A charity could be run as a DAO, where donors get to vote on which causes should receive funding. Because all transactions are on the blockchain, donors can see exactly how their money is being used, ensuring transparency and trust. As a result of these benefits, more people could be inclined to donate.
Government Organizations
While the governments of the world are understandably hesitant to begin using a technology as new as blockchain, DAOs would serve well for many aspects of government operations. As traditional democratized voting processes become more corruptible, the security and transparency of DAOs could help protect voting rights and election sovereignty, aligning more closely with the will of the people.
While the Gala ecosystem doesn’t currently operate as an official DAO, it shares many of the principles that make DAOs powerful. At Gala, community input is highly valued, especially through platforms like Discord and Telegram, where feedback is actively monitored and considered in decision-making.
For instance, Gala’s Founder’s Nodes—a network of community-run nodes—play a crucial role in maintaining and securing the GalaChain, which is a key part of the Gala ecosystem. These nodes are operated by community members, and the decisions regarding the ecosystem’s future increasingly involve community voting and participation, which mirrors the decentralized governance seen in DAOs. Nearly all important decisions about $GALA tokenomics are presented to the Founder’s Node community for a governance vote before being put into practice.
Gala’s Path Toward Decentralization
Gala is not just stopping at community feedback. The long-term vision is to move toward greater decentralized autonomy, similar to what a DAO offers. This means that as GalaChain evolves, Gala wishes to see control over the ecosystem gradually shift more toward the community, aligning with the ultimate goal of decentralization.
Even if Founder’s Node operators do not technically represent a DAO themselves, the goal is to see GalaChain channel creators ultimately having the ability to create DAOs for their project, platform, service, etc. We are creating a secure and scalable web3 ecosystem built on a layer-1 blockchain with the power to host numerous community-created DAOs.
In summary, while Gala isn’t a DAO in the strictest sense today, it embodies many DAO principles and is progressing toward a future where the community could have even more say in the governance and direction of the ecosystem.
Thanks for reading our latest web3 explainer article! Hopefully you learned a little something!
Some of the largest Bitcoin mining operations in the world are amplifying their efforts, even in the face of some of the steepest mining cost increases they have ever seen. This is a clear sign of their expectations for the future of the world’s first and largest cryptocurrency.
Following the recently released Q2 financial report from Singapore-based cloud mining company BitFuFu, analysts are observing some fascinating patterns that paint a bullish picture of large scale BTC mining operations’ outlooks for the future of the industry.
Even with a substantial increase in per-BTC mining cost to $51,887 per Bitcoin (compared to $19,344 for Q2 2023), BiFuFu has reported a scale up of 60% from its previous year’s operation.
While the massive increases in mining costs have required BitFuFu to spend more money per BTC, the company has experienced revenue growth of almost 70% ($76.3 million in Q2 2023 to $129.4 million in Q2 2024)
Seasonal Optimism
With the sell waves of Mt. GoX payouts now fading toward the distant horizon and the dust of the 2024 Bitcoin halving settling, some crypto analysts are concluding that BTC is headed for another season of growth.
Matthew Sigel, head of digital assets research at VanEck shed some light on the BTC situation, highlighting the growing connections and opportunities between AI and BTC mining, and discussing the aftermath of “forced selling” and seasonal patterns.
“This is a typical seasonal pattern where Bitcoin tends to struggle in one to three months after the halving, which was in April. And pre-election, as the market comes to grips with whatever candidate wins, we’re in for four more years of reckless fiscal policy. The history is that Bitcoin really hits its stride at that point. So we’re buyers here. We think it recovers.”
As the Web3 ecosystem continues to grow, so does the threat of crypto scams.
Recently in the news, the Australian Securities and Investments Commission (ASIC) reported having uncovered and shut down over 600 cryptocurrency investment scams in just one year, highlighting the increasing sophistication and prevalence of these threats. Even more concerning is the fact that the 600+ operations that were shut down comprises a mere 9% of the 7000+ total phishing and scam investment websites identified.
These somewhat alarming statistics are part of a broader trend where scammers exploit new technologies like artificial intelligence to deceive unsuspecting investors.
The Anatomy of a Modern Crypto Scam
Cryptocurrency scams today are not just about tricking individuals into sending funds to a fraudulent address. They have evolved into complex schemes, keeping up with the growth of the typical Web3 user. Today’s scams often involve fake investment websites, phishing attacks to steal personal data, false promises of AI-powered trading systems that guarantee unrealistically high returns or falsely claimed international regulation. ASIC’s crackdown on these operations is a clear indication that the landscape of financial crime is adapting quickly to the innovations within the Web3 space.
The Role of AI in Amplifying the Scam Threat
One of the most concerning developments is the use of AI by scammers. While these emerging technologies are beneficial in many aspects, they can also provide tools for criminals to automate and enhance their scams, sometimes multiplying the potential damage. This can include creating convincing fake identities, automating phishing attacks and even generating fraudulent financial reports that appear entirely legitimate to the untrained eye.
As the Gala ecosystem continues to advocate for decentralized technology and the empowerment it offers, it’s crucial that our community remains vigilant against these emerging threats. Awareness is the gateway to knowledge, and knowledge is power and safety in this new Web3 world.
ASIC’s Efforts: A Wake-Up Call for the Global Crypto Community
ASIC’s successful takedown of 615 crypto investment scams serves as both a warning and a call to action for the global Web3 community. With Australians losing an estimated A$1.3 billion to these scams in the last year alone, the scale of the issue is undeniable. This is not just a problem for regulators but for every participant in the Web3 space, including those within the Gala community.
GalaChain’s Commitment to Security and Education
At Gala, we are committed to creating a safe and secure environment for all our users. GalaChain, our purpose-built Layer 1 blockchain, is designed with security at its core. Our ecosystem includes robust measures to protect against malicious activities and ensure that users can engage with Web3 technology safely. However, technology alone is not enough. Ongoing self education and awareness are key to avoiding and preventing scams.
We encourage our community to stay informed about the latest threats and to always verify the legitimacy of any opportunities in the Web3 space. Remember, if something sounds too good to be true, it probably is.
Building a Safer Web3 Future Together
The fight against crypto scams is a collective effort. As we continue to build and expand the Gala ecosystem, we must all remain vigilant and proactive in protecting ourselves and each other. By fostering a well-informed and cautious community, we can mitigate the risks and continue to enjoy the benefits of decentralized technology without falling victim to fraudulent schemes.
The content of this article is not investment advice.
As we continue to explore the many avenues that can lead to the widespread adoption of blockchain tech, one financial instrument has been making waves in both traditional finance and the emerging Web3 space—Exchange-Traded Funds (ETFs).
With vastly increased attention over the past few months, it’s clear that ETFs will play a significant role in driving mainstream acceptance of blockchain and Web3 technologies. But what exactly are ETFs, and why are they so crucial to the mass adoption of Web3? Let’s dive in.
What Are ETFs? Breaking It Down
An Exchange-Traded Fund (ETF) is a type of investment fund and exchange-traded product that holds assets such as stocks, commodities or bonds. ETFs are traded on stock exchanges like individual stocks. This means they can be bought and sold throughout the trading day at market price, which fluctuates with the value of the underlying assets within the particular ETF.
The Appeal of ETFs
In the more traditional world of finances, ETFs have gained popularity because they offer investors exposure to a wide array of assets without requiring them to buy each asset individually. For instance, an investor can buy shares of an ETF that tracks the performance of the S&P 500, thereby gaining exposure to the top 500 companies in the U.S. stock market with a single purchase. This convenience, combined with generally lower fees compared to mutual funds, makes ETFs an attractive option for both novice and seasoned investors.
ETFs and the Web3 Ecosystem: A Perfect Match?
Bridging Traditional Finance and Blockchain
The connection between ETFs and crypto is becoming increasingly significant. As blockchain-based assets continue to steadily gain traction, the introduction of ETFs that track some of these assets allows traditional investors to gain exposure to the blockchain space without directly buying or managing cryptocurrencies.
In the same way that the traditional financial system can appear mysterious and daunting to many early adopters of web3, it can be difficult for traditional investors to dive directly into the web3 pool. ETFs present a shallow end with easier entry, allowing those investors to first get their feet wet without becoming overwhelmed by the less regulated deep end.
Essentially, ETFs are particularly appealing to those who are curious about blockchain but wary of its volatility and technical complexity.
Accessibility: ETFs provide a familiar and regulated investment vehicle for traditional investors to explore the world of blockchain. This ease of access is crucial for onboarding new users to the Web3 space, where unfamiliarity has consistently proven itself a significant barrier.
Institutional Interest: The approval and adoption of blockchain-based ETFs by regulatory bodies signal a growing institutional acceptance of blockchain. As large financial institutions enter the space through ETFs, legitimacy is lended to the entire Web3 ecosystem, encouraging a community of increasingly more conservative investors to participate.
Market Stability: By providing a diversified and regulated way to invest in blockchain technology, ETFs can help stabilize the market. This can reduce the extreme volatility often associated with cryptocurrencies, making the Web3 space more attractive to the general public. As more traditional money flows into these markets, they generally will become more difficult for whales to manipulate.
The Road Ahead: ETFs as Catalysts for Mass Adoption
Looking back several years from now, ther’s a good chance that 2024 will be remembered as the “year of the ETF” in the same way that 2018 was all about ICOs and 2021 centered around NFTs.
ETFs represent a bridge between the traditional financial system and the emerging world of Web3, and bridges are incredibly important when it comes to mass adoption. By offering a regulated, accessible and relatively low-risk entry point into blockchain, ETFs are likely to play a pivotal role in bringing blockchain technology into the mainstream.
As we continue to develop the GalaChain ecosystem, we recognize the importance of such instruments in shaping the future of Web3. By keeping an eye on these trends, we position ourselves—and our community—at the forefront of the blockchain revolution.
The first Bitcoin ETFs were approved by the US Securities and Exchange Commission (SEC) in the first weeks of 2024, with a total of 11 BTC ETFs approved, opening the floodgates.
In mid July, Ethereum-containing ETFs were finally approved for market trading. “We’ve now fully entered the ETF era of crypto. Investors can now access more than 70% of the liquid crypto asset market through low-cost ETPs,” said Matt Hougan, Chief Investment Officer at Bitwise.
There is a constant flow of news in the financial sector about crypto-related ETFs. Such extensive intersection of crypto and traditional finance is unprecedented.
At Gala, we’re not looking to make any predictions or speculations about token prices, and we’re not offering financial advice of any kind. We support the empowerment that comes with adoption of blockchain technology, regardless of how that empowerment interacts with markets. When we see the mainstream financial world (and its most trusted regulators) paying more attention to cryptocurrency, we recognize that global awareness of web3 is on the rise.
We encourage our readers to stay informed and try to keep up with the latest developments at the intersection of centralized and decentralized finance. Knowledge is empowerment, especially in the web3 world.
The intersection of ETFs and blockchain is a powerful indicator of how traditional finance and emerging technologies are beginning to converge. As we look to the future, ETFs could very well be the key that unlocks widespread adoption of Web3 technologies. At Gala, we are excited to be part of this journey and are committed to leading the charge in integrating these financial innovations into our ecosystem.
Recent studies show that over 90% of users are using mobile phones to access the internet. As phones have been streamlined for on-the-go media playback and mobile apps have been created to increase the convenience and accessibility of nearly every type of resource, “phone as computer” is a concept that is overtaking more traditional computation methods.
We still refer to these devices as smart “phones,” but it won’t be long before these devices have entirely left the limiting realm of anything that can be classified as a phone. In fact, the concept of telephone will soon be a relic of the past, with modern communication devices barely resembling the original apparatus patented by Alexander Graham Bell in 1876.
Several years ago, the earliest web3 pioneers liked to speculate about what mass adoption would look like. For fans of cryptocurrency, NFTs and decentralized ecosystems like Gala, mass adoption was one of the hottest phrases around, a constant topic of discussion.
Most of those early adopters considered that worldwide acceptance of web3 tech would involve some kind of overthrow of the web2 era, replacing the social-focused platforms the world had come to know with less centralized and more sustainable alternatives that allowed users greater control over their data. I wonder how many of them could have predicted that the rise of The Open Network (TON) would be so closely connected to one of the most widely used social messaging platforms in the world.
There’s no denying that The Open Network (TON) has taken huge strides toward mass adoption of web3 on multiple levels. Gala users have already seen multiple examples of it in the recent release of our first wave of mini app “tapper” games, Treasure Tapper and Music Miner, both playable now with a Telegram account. Rewards in these casual Telegram games will eventually amount to $TREZ, the tapper token of Gala Games, which will be issued on both TON and GalaChain and bridgeable from one to the other.
The combination of Telegram’s powerhouse widely used social messaging platform, TON’s speed and scalability as a blockchain, and Telegram’s mini app infrastructure makes it possible for an entirely new generation of highly accessible web3 tools to hit the scene. It would seem that Telegram finally cracked the code of comfortably onboarding web2 users to web3 technology, and every effective web3 community stands to benefit.
The Universal Basic Smartphone
The upcoming web3 smartphone (UBS) that has everyone talking was created by Oyster Labs (not directly affiliated with the TON Foundation). It can currently be preordered for $130 through their website, with estimated delivery in September of this year.
WEN PHONE, WEN PHONE!
We're one step closer to the final shipment! Building a Web3 phone isn't an easy task, and we are incredibly grateful to have the support of such a dedicated community like ours. Your enthusiasm and encouragement have been instrumental in getting us to this… https://t.co/42vmiTfREE
— Oyster Labs: Universal Basic Smartphone (@oysterecosystem) August 1, 2024
According to the front page of Oyster Labs’ UBS site, “Universal Basic Smartphone(UBS) is creating an equitable digital economy where everyone is fairly compensated for their data. In the era of AI, while we have little control over what happens to the data we produce, companies profit from it for free. UBS gives you the power to control and benefit from your data to build a future where everyone gets a share. UBS believes in a digital economy that gives back to those who participate.”
In addition to its Android 10 OS and other standard smartphone features that make it comparable to many phones on the market today, this unique “powered by blockchain” smartphone aims to bring a new level of web3 interaction to a massive new group of mobile users worldwide.
With the highly scalable TON blockchain’s ability to handle large volume transactions per second (TPS) and the potential for notable partnerships, this groundbreaking phone could become a cornerstone of the mass adoption we’ve all been waiting for.
Built-In Web3 with TON
Preordering a UBS involves connecting a non-custodial TON blockchain wallet, establishing the intrinsic web3 connection at the core of this device. Owners will have seamless access to hundreds of mobile dApps from the TON ecosystem in addition to the full range of mainstream Android apps.
Rewards from the Start
IN classic web3 fashion, Oyster Labs is offering a plethora of enticing reward opportunities even before the first UBS are delivered to pre-orderers.
$OYS Tokens – Oyster Labs is offering free $OYS* tokens as a benefit to pre-ordering the UBS. In the initial “Founding” series, 1000 $OYS was given for each pre-order. The presale is currently in its 2nd series, “Friend With Benefits” (FWB), gaining 300 $OYS for pre-order. Additional $OYS can also be picked up by referring others to pre-purchase the phone. *$OYS is currently tracked as a reward point system, not yet listed on any markets or minted on TON.
OysterEarn – Owners of the UBS will enjoy cashback benefits from both web2 and web3 companies
Genesis Pass – Preorder of the UBS comes with a special Genesis Pass and the opportunity to “claim daily data dividends and more.”
Learn More about UBS
This article is merely reporting and speculating on publicly available information, and does not indicate any sort of partnership or endorsement of The Open Network, Oyster Labs, Telegram or any other entity mentioned in this article.
We encourage our readers to do their own research in all aspects of web3.
