What is happening? SEC sues Coinbase, just days after it launched the legal high-voltage signal on Binance: “The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase Global Inc., the largest U.S. crypto asset trading platform, for allegedly violating securities laws. The SEC claims that Coinbase has been operating as an unregistered broker, exchange and clearing agency since 2019, and has allowed its users to trade 13 crypto tokens that were actually unregistered securities.”

Hodlers, the government is making its point. Let’s see how you guys react. It is an illusion to think you can be on this earth and have another god!

I have maintained this point for years: the government does not need to pursue the decentralized coins (debatable since the mining is under the control of few lords), all it needs is to disconnect the exchanges, and once that is done, everything will fade for institutional investors, even if small peer-to-peer marginal hodlers continue to believe. Shine ya eyes!

The Securities and Exchange Commission sued Coinbase for violating securities laws on Tuesday in New York federal court, just a day after charging crypto rival Binance. The SEC alleges that Coinbase, the biggest U.S. crypto platform, broke its rules by operating without registering with the regulator and letting users trade 13 assets that are securities. It comes just a day after the SEC charged fellow crypto platform Binance and its founder Changpeng Zhao with securities law violations, leading investors to pull $780 million in 24 hours, reports Reuters.

The SEC lawsuit alleges that Binance misused customer funds and lied to regulators and investors, with claims that it commingled billions of dollars in client funds and diverted them to a separate firm run by Zhao.

In a statement, Binance said allegations that user assets were put at risk “are simply wrong.”

Exchanges outside the United States will be celebrating now as most US holders will move their assets outside the US. This is not the end of the crypto economy; it could just be a transmutation in the US.

The crypto world has been rocked in the past 48 hours, as the Securities and Exchange Commission clamps down on both Binance and Coinbase. The move deeply affected its CEOs’ wallets in the last two days, per the Bloomberg Billionaires Index. Binance boss Changpeng Zhao saw his wealth drop by $1.4 billion to $26 billion, while Coinbase CEO Brian Armstrong’s fell $361 million to $2.2 billion. The SEC charged Binance and Zhao with several securities law violations Monday and the following day filed a lawsuit against U.S. crypto platform Coinbase. A lawyer for the platform said it was prepared to take its legal fight with the SEC to the Supreme Court.

The SEC has also asked a federal court to freeze the assets of Binance’s U.S. operation, alleging that the world’s largest crypto exchange has shown “disregard” for the law and that customers’ funds are at risk.

Binance said allegations that user assets were ever put at risk “are simply wrong.”

The two exchanges both saw net outflows — the difference between deposits and withdrawals — of more than $1 billion in the 24 hours after the SEC’s lawsuits were announced, Fortune reports. (LinkedIn News)

The Amazon revenue for the last reported full year was $524.897 billion. Walmart recorded  $572.75 billion over the same period. Walmart market capitalization is $402.61 billion while Amazon’s is $1.3 trillion. In other words, even though Walmart generates more revenue, leading Fortune 500, Amazon is worth more by at least a factor of 4.

Indeed, there are many factors investors consider as they value companies, including growth rate, profitability, business model, margin – and revenue is just one of the components. How you make money, most times, is more important than how much money you have made!

Builders: re-check that business model, and re-examine why potential investors do not value the company higher. Look beyond your revenue to other indicators.

Comment on Feed

Comment 1: Prof. Ndubuisi Ekekwe please elaborate a bit more on this statement you made, “How you make money, most times, is more important than how much money you have made!”.

Thanks for the daily loads of knowledge and learning you dish out here.

My Response: If you run a website and people come and buy things and go. And you make $10,000 monthly. Another makes a website and sells the same things you do. But his users are subscription customers and he is making $8,000 monthly. We will value his company more than yours because with the subscriptions, we see a customer-base (yours are consumers). 

He can do many things to increase that subscription via loyalty programs, etc. Largely, even though you are making more money, your risk is higher and your growth paths are not clear. But the subscription competitor is well positioned. So, how he is making money has been considered to be more important besides the amount of money made during the company valuation.

Comment 2: The valuation could potentially be different if Amazon is disaggregated into separate business units. I would wager that the valuation of e-commerce/retail business,as a standalone business, may be at parity with Walmart. I would not be surprised if the market has priced in the valuation of the cloud service business in the overall valuation of Amazon.

My Response:Market did price AWS and that is part of the conversation. But developing AWS without the one oasis of ecommerce would have been impossible! I explain here https://www.tekedia.com/capture-value-even-as-you-deliver-value-to-customers/

We began yesterday. Yes, the big academic festival – Tekedia Mini-MBA –  has started.  My understanding is that everyone is ready and the WhatsApp Group is also becoming a temple for knowledge sharing. On Saturday, I will open the Live Zoom session with “Mission, Innovation and the Growth of Firms”. Then more; we have scheduled our Faculty members as follows:

– June 13 – Design Thinking and Innovation –  Aderinola Oloruntoye, SAP Africa

– June 15 – Lean Supply Chain Applications in Business – Chibueze Noshiri, NATO Luxembourg

– June 17- Ndubuisi Ekekwe

– June 20 – Business Strategy and Execution-  Eromosele Omomhenle. Microsoft USA

– June 22 – Developing Effective People Management System in Companies, Ibironke Tolu-Ogunpolu, Afterschool Careers Hub

– June 24- Ndubuisi Ekekwe

-June  27 – Human-Centered Product Design, Dr. Obinna Anya, Google USA

-ETC ETC

More than 120 faculty members, from some of the leading companies in the world will teach, live and offline, in this edition. It is going to be the best edition yet.

Welcome to Tekedia Institute, honoured by Velocity Mhagic as the best business school for entrepreneurial capitalism in Africa.

To join us, go here and register.