Learn about the SEC's enforcement action on Impact Theory, AAVE's GHO pool interruption, and impending tax rules affecting MetaMask.
Impact Theory Sued for $30 Million NFT Sale

Impact Theory Sued for $30 Million NFT Sale

Aug 29, 2023
| Issue

GM all and welcome to the first edition of Datawallet Daily for the week. As you’ve grown to expect, we bring you the hottest topics from the cryptosphere, regardless of your knowledge level or experience. Here are the top stories over the last 24 hours:

  • Impact Theory sued by SEC for $30 million
  • Liquid staking market exploded this year
  • AAVE halts GHO V3 pool temportarily
  • Balancer exploited, almost a million stolen
  • New tax rules mean KYC for Metamask, users warn

Impact Theory sued for $30 million for NFT sale

In a landmark move, the U.S. Securities and Exchange Commission (SEC) has taken its first enforcement action against a company in the non-fungible token (NFT) space. The regulatory body has ordered Los Angeles-based Impact Theory to compensate investors who purchased its NFTs, declaring that these were unregistered securities.

While this action doesn't imply that all NFTs are considered securities, the SEC’s ruling is a notable development. Impact Theory accumulated almost $30 million by selling three different tiers of NFTs, which the SEC has now categorized as securities. The key issue? Impact Theory marketed these NFTs as investments, stating that buyers would see a profit based on the company's success.

As part of the settlement, Impact Theory will establish a fund to reimburse its NFT investors and forfeit over $6.1 million in penalties to federal regulators.

Liquid staking market exploded this year

The liquid staking market, comprising protocols somewhat different than traditional Ethereum staking mechanisms, has experienced tremendous growth this year, new figures from Token Terminal are showing. In an X (formerly Twitter) thread posted earlier, Token Terminal’s researcher Sebastian Motelay reported the total value of assets being staked rose by more than 100% year-on-year, from $7.9 billion, to $18.8bn. With liquid staking protocols, users can stake their tokens and still use them elsewhere in other DeFi protocols. For a deeper dive you can read our liquid staking explainer.

AAVE GHO temporarily pauses AAVE V3 GHO Pool

Aave has temporarily halted GHO integration with its V3 GHO pool due to a technical issue. The pause was implemented by the Aave Guardians, but it's important to note that this does not affect the GHO that has already been minted and there is no risk to any funds. All other markets within Aave continue to function as usual. A resolution for this technical issue is already in the works, with a forthcoming AIP (Aave Improvement Proposal) expected to address the situation.

Balancer exploited, almost a million stolen

Automated market maker and decentralized finance protocol on the Ethereum blockchain, Balancer, has had a vulnerability exploited, with the threat actors walking away with almost a million dollars. In an X thread (formerly Twitter) posted earlier this week, the protocol confirmed discovering a vulnerability that affected multiple pools, adding that a threat actor managed to abuse it. 

“Balancer is aware of an exploit related to the vulnerability below,” the thread reads. The company said it deployed certain mitigation measures, but added that it can’t pause affected pools. “To prevent further exploits, users must withdraw from affected LPs,” the thread concluded. 

Following the announcement, Cointelegraph reported that the attacker’s wallet was discovered. They managed to steal roughly $894,000 worth of DAI stablecoin.

New tax rules mean KYC for MetaMask, users warn

New rules on how American citizens are to report crypto transactions for tax purposes means wallets such as MetaMask will be required to force users into KYC (Know Your Customer). This is the conclusion Spreek, and numerous other X users, have come to, following the news.

“So to recap the new proposed tax rules: Metamask is a broker and has to KYC and report all users unless it removes swaps,” Spreek says, sharing screenshots of the new proposed tax rules. “Uniswap is a broker and is required to update its UI to a new KYC version. Anything with a multisig is a broker and is required to add KYC.”

With the new rules, a form called 1099-DA is being introduced, which should help taxpayers understand if they need to pay taxes on their crypto transactions or not. 

Other news

Wrapping up

In a dynamic 24 hours, the SEC's action against Impact Theory and new KYC-related tax rules underscore regulatory shifts, while AAVE's pool pause and Balancer's exploit remind us of technical risks. Liquid staking's surge highlights market opportunities. We're here to help you navigate these complexities, stay tuned and stay secure. Thank you for making Datawallet Daily your trusted source for crypto news.