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Grayscale wins lawsuit against SEC, while the agency settles first NFT case and hype crashes



Welcome back to Chain Reaction.

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If you’ve been dreaming about bitcoin spot ETFs, it’s time to talk to someone outside of the crypto world. This is coming from someone who literally had a dream about them this week. Pray for me.

There were cheers throughout the crypto community this week as Grayscale won its lawsuit against the SEC in regards to its bitcoin spot ETF application. While there’s still a 45-day review period, many believe this is a step in the right direction.

Although this was a win for the digital asset firm, the SEC was also making headlines separately for its suit against an NFT project, which was fined $6 million.

Meanwhile, in decentralized social media land, the hype — which I covered and highlighted community skepticism about — has fallen as daily transactions plummeted. Details below.

This week in web3

  1. As appeals court rules in favor of Grayscale, a bitcoin spot ETF could be on the horizon
  2. Grayscale’s legal head says bitcoin spot ETF approval is a ‘matter of when, not if’
  3. SEC settles first NFT enforcement case, fines LA media company $6M
  4. gets unfriended: Daily transactions drop 95% as hyped decentralized social app loses steam
  5. MoonPay launches venture arm to invest in web3 infra, gaming and fintech
  6. Bitcoin startups remain undercapitalized as funding drought drags on

The latest pod

For this week’s new episode, Jacquelyn interviewed Craig Salm, chief legal officer at Grayscale Investments.

Grayscale is a digital asset investment firm that aims to provide products and services, like its Grayscale Bitcoin Trust (GBTC), to institutional and individual investors. The company was founded in 2014 and is one of the world’s largest digital asset currency managers. It currently owns 3.4% of outstanding bitcoin, “worth tens of billions of dollars,” according to a recent legal filing.

As mentioned above, the firm was making headlines this week after the D.C. Circuit Court of Appeals ruled in favor of Grayscale in a lawsuit against the U.S. Securities and Exchange Commission (SEC) on the matter of a bitcoin ETF. This ruling is in response to the SEC denying Grayscale’s application to convert its GBTC product into a bitcoin spot ETF in June 2022.

We discussed why the ruling matters for Grayscale and its GBTC investment vehicle; as well as what it could mean for the crypto ecosystem and other firms like BlackRock, Citadel and Fidelity that also filed applications for bitcoin spot ETFs.

We also talked about the SEC’s argued difference between bitcoin futures ETFs, which have been approved by the agency, and bitcoin spot ETFs, which have not been approved by the agency.

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

Follow the money

  1. NFT-focused startup FirstMate raised $3.75 million in a round led by Dragonfly Capital
  2. Web3 engagement platform Raleon raised $3.8 million in a seed round
  3. Coral Finance obtained $500,000 in capital from Momentum Capital
  4. Web3 infrastructure startup Ironmill raised $2.6 million in funding
  5. Builder DAO raised $2 million in a round led by Sequoia China and Seven X Ventures

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

What else we’re writing

Want to branch out from the world of web3? Here are some articles on TechCrunch that caught our attention this week.

  1. This venture-backed startup has quietly bought more than 80 mom-and-pop shops
  2. Will the power of data in the AI era leave startups at a disadvantage?
  3. Tesla investors might get payout from SEC settlement
  4. The mugshot that launched a thousand memes
  5. Five takeaways from Instacart’s S-1 filing

Follow me on Twitter @Jacqmelinek for breaking crypto news, memes and more.

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.


Republicans still don’t know how to talk to young voters online



In an appeal to younger voters, Republican presidential candidate Vivek Ramaswamy — who proposed raising the voting age to 25 — launched his TikTok presence with an endorsement from Jake Paul, the YouTuber turned boxer who built a content empire by marketing to children. 

Ramaswamy is one of the only Republican politicians making an effort to connect with Gen Z and young millennials, a demographic that overwhelmingly supported Democrats in the midterm elections. Despite the popularity and growing influence of far-right creators online, Republican candidates have historically failed to engage young voters on social media, if they try at all. 

While Democratic politicians like Rep. Alexandria Ocasio-Cortez and Sen. John Fetterman’s social media campaign strategies set the blueprint for politicians seeking internet fame, Republicans have neglected to adopt the digital fluency required to secure the youth vote. As the 2024 election approaches, Republican candidates may again fall behind in mobilizing voters on social media platforms. 

Ramaswamy is also the only Republican presidential candidate to engage with TikTok, and is one of the few in his party to even have an account. His Silicon Valley roots as a biotech entrepreneur and millennial upbringing set him apart from the other candidates, but he faces an uphill battle in convincing Gen Z to like him, much less show up at the polls. Though his videos receive hundreds of thousands of views, his comments are also overrun with sex jokes

Annie Wu Henry, the digital strategist behind Fetterman’s TikTok stardom, noted that younger voters who are very online tend to value raw, unfiltered authenticity. They don’t see that in many older politicians, and especially not in the Republican party.

“Gen Z does not put up with bullshit,” Henry said. “That’s so much of what platforms like TikTok and Twitch cater to, and why they thrive on those platforms, because you can just pull out your phone and be talking while you’re getting ready with the worst angle possible. Republicans in general, it goes against so much of how they act otherwise and young people know that.” 

Ramaswamy’s TikTok strategy is puzzling; he appears to be trying to replicate the success of previous candidates who became social media stars over the course of their campaigns, but his TikTok presence conflicts with his own stances on social media and young voters. His communications director, Tricia McLaughlin, did not immediately respond to TechCrunch’s request for comment. 

Like many of his Republican colleagues, Ramaswamy has accused TikTok of being a threat to national security, and during a town hall days before he launched his account, described the platform as “digital fentanyl” from China. He has also proposed barring anyone under 25 from voting, unless they serve in the military or pass a civics exam. 

His first videos portray him as the one candidate who cares about America’s youth. While his Republican colleagues have largely shunned TikTok, Ramaswamy is presenting himself as one of the Cool Politicians who will actually use it. 

“We have a generation of politicians that is badly out of touch,” Ramaswamy said in his inaugural video, which did not describe his policy stances. 


Getting Vivek on Tik Tok because i believe our politicians of the future should connect with gen z and milennials on social where we all live and breathe. Its bizarre that in this day and age our presidents have no connection with us via social. Only the occasional tweets. Meet @Vivek Ramaswamy

♬ original sound – GenosPicks

Establishing himself as the millennial politician who’s cool enough to use TikTok but anti-woke enough to play in the divisive culture war isn’t working in Ramaswamy’s favor, though. 

His account, which has amassed over 50,000 followers in the weeks since he joined, has been barraged with comments either criticizing his positions or trolling him. He’s been the butt of Gen Z’s relentless comments about getting off to his content (the top comments on his videos are consistently jokes about edging). He also incited the wrath of witchtok creators, who filmed themselves casting hexes upon him and other conservatives. 

Ramaswamy is raking in TikTok engagement — even if it’s not how he intended — but Democrats are still dominating the Republican party in digital strategy. Ocasio-Cortez’s Instagram Stories garnered her nationwide popularity when she campaigned in 2018, reaching further than her local constituency. In the years since, Democratic campaigns have increasingly prioritized social media strategy, establishing politician-influencers who wield content for votes.

A 2022 midterm report by the Alliance for Securing Democracy found that in the Senate races, 47% of Democratic candidates had TikTok accounts, compared to 12% of Republican candidates. Of the major party House candidates, 30% of Democrats and 10% of Republicans were on TikTok, which as a platform was most prevalent in gubernatorial races.

Though opposition to TikTok has been bipartisan, the crusade to ban the platform over national security concerns is primarily led by Republicans at the state level — a position that likely factors into the party’s social media struggles with young voters.

Mehmet Oz, one of the few Republican candidates on TikTok, had the advantage of already having a large social media following when he announced his candidacy thanks to his popularity as Dr. Oz. But his TikTok presence consisted of reformatted TV ads, rants attacking his opponent, now-Senator Fetterman, and unrelatable videos that inadvertently portrayed him as wealthy and out of touch. 

There have been Republican outliers who managed to build significant followings, but so far, none have managed to turn their social engagement into votes the way Trump’s Twitter account did in 2016. Pennsylvania Sen. Doug Mastriano shunned traditional media during the race, instead relying on Facebook Live to build a far-right grassroots network that secured him the Republican nomination in the state’s most recent gubernatorial race. He still lost to Josh Shapiro, whose campaign focused on reaching young voters through collaborations with Gen Z for Change, visiting college campuses and posting updates on BeReal

There’s clearly an audience for right-wing ideology online, as conservative influencers continue to build massive platforms, largely by provoking outrage. On Twitch, debate streams between creators across the political spectrum are wildly popular, and between May 2021 and May 2022, the site’s Politics tag tripled in viewership. The platform itself is a haven for some figures on the far-right who have since been kicked off of YouTube.

Republican politicians, however, have failed to establish the rapport with young voters that their Democratic counterparts have. While X, the site previously known as Twitter, has become a conservative incubator, Republican politicians haven’t taken advantage of the platform the way far-right influencers have. 

That gap in digital fluency is most apparent in the way politicians approach new platforms. In 2020, Ocasio-Cortez encouraged viewers to vote in the upcoming presidential election by inviting the most popular streamers to play the pandemic’s most popular game on her newly launched Twitch channel. Her “Among Us” stream, which featured creators like Pokimane, Hasan Piker, Corpse Husband, Mxmtoon and other Twitch celebrities, was one of the most viewed streams in the site’s history. Ocasio-Cortez has hosted multiple wildly successful streams since, from charity fundraising streams to discussing labor issues with viewers. 

Rep. Matt Gaetz (R-FL) famously struggled with his own Twitch debut. Last year, he launched his channel with a 30-minute diatribe about the January. 6 Capitol riot, featuring former Trump speechwriter Darren Beattie. The stream peaked at just six live viewers. He left his chat room open when he finally went offline, which allowed Twitch users to bombard his channel with ASCII dicks. Between walls of lewd — but incredibly creative — text art, users bashed Gaetz and encouraged other viewers to read about the allegations of sex trafficking against him. (The Justice Department ultimately concluded its investigation without charging Gaetz.) 

Platform culture matters

To engage with users online, politicians must understand the culture of the platform. The streamers who appeared on Ocasio-Cortez’s stream brought their own fans, who may not have been politically engaged at all before their favorite creator introduced it to them. As a regular gamer herself, the representative is also up to date on the most popular games on Twitch; in 2020, it was “Among Us,” but in her most recent stream, she played the cooperative puzzle game “Pico Park.” Gaetz, on the other hand, fumbled his launch by treating his stream like a podcast recording, limiting the back-and-forth banter with viewers that makes Twitch so engaging. 

“The amount of media and content that we consume, political and cultural, where people get their information … It’s getting more and more intertwined,” Henry said. “To be effective ideologically, when it comes to campaigns and these wins that we want, we have to understand how these ecosystems work, and be strategically using them or else we risk being left behind.” 

Engaging with voters online requires more than just working with popular creators. In Ramaswamy’s case, an endorsement from Jake Paul only drove animosity from TikTok viewers. While his older brother, Logan Paul, has made the occasional social commentary on his podcast, the younger Paul has rarely engaged with politics or social issues. Jake Paul is generally disliked online for the running list of allegations against him, including sexual assault accusations

The Paul brothers have a reputation of promoting anyone and anything for a paycheck, and when Jake Paul posted a political endorsement out of the blue, viewers immediately questioned how much Ramaswamy paid him. 

Even if Jake Paul was less despised online, endorsements aren’t as valuable as they used to be. A paper published in the International Journal of Communication this year reported that mobilizing influencers to build support for political causes is more effective than using their endorsements to gain votes. Blatant endorsements lack personal connection, and create an “authenticity gap.” Authentic creators are trustworthy, and in campaign strategy, that’s more valuable than the size of their following. 

Martin Riedl, a University of Tennessee, Knoxville professor who studies social media and co-authored the paper, said that society tends to reward public figures for speaking out on social justice issues because there’s more “situational awareness.” 

“If you use influencers in your campaign, it’s important that they can authentically believe in what you promote,” Riedl said. “And if that’s not the case, that makes it really difficult for people to take your campaign seriously.” 

Authenticity reigns

Facebook ads, celebrity endorsements and campaign trail rallies aren’t enough to engage voters online. Neither is recycling press releases as posts. To keep up with the evolving culture, candidates are expected to be content creators as much as they are politicians, regardless of the social media platform they’re using. Authenticity is currency online, even if it’s manufactured by a team of strategists. Candidates don’t need to have the innate knack for posting for successful campaigns, Riedl said, as long as they hire someone who does. 

Gen Z voters are particularly resistant to flagrant pandering, and quick to shut down any forced pop culture reference as cringe. Cringe exists across party lines — Hillary Clinton’s Pokémon Go to the polls still haunts the internet — but candidates don’t need to rely on youth culture to build followings. 

Memeing throughout his campaign worked for Fetterman, Henry said, because that dry humor aligns with his background as “a guy from rugged Pennsylvania” who “doesn’t try to act cool.” Ken Russell, a Democrat who left the Miami City Commission to run for a House seat in 2022, leaned into the cringe with bait-and-switch thirst traps reminding viewers to vote. In another video titled “Appealing to the youth vote,” he recreated Steve Buscemi’s “How do you do, fellow kids?” to encourage voter registration.

Audience engagement doesn’t rely on forcing fun. North Carolina Rep. Jeff Jackson updates constituents on TikTok, breaking down topics like the government shutdown in concise explanatory videos without the frills of internet humor. Even though his content is less exciting, his account has over 2.2 million followers. 

As an alternative to the politician-influencer, some campaigns are focusing on mobilizing creators who already have an engaged audience. Biden is not on TikTok, but his digital strategy team is building an “army of influencers” to reach viewers who wouldn’t typically keep up with the White House press corps. White House deputy chief of staff Jen O’Malley Dillon told Axios that the administration is trying to not only reach young people, but “people whose main way of getting information is digital.” 

“If you’re not going to be directly on the platform, having surrogates — whether those be influencers, celebrities, normal people — do the messaging, that’s likely going to be reaching people at a more personal level anyway,” Henry said.

“Everyone has a vested interest, for the most part, in what the president of the United States has to say, but if it’s your friend, if it’s this person you’ve followed for five years, you have a vested interest that’s a little bit more personal. Usually that’s more effective.” 

The “influencer army” strategy could be legally and ethically murky when influencers are paid to spread political messaging, potentially skirting both federal campaign ad laws and platform rules. TikTok bans political ads, and in recent elections, cracked down on posting sponsored political content. Influencer marketing agencies on both ends of the political spectrum are ramping up their recruitment faster than the Federal Elections Commission can regulate the industry. This year, the conservative agency Influenceable has been recruiting Gen Z creators to rally behind far-right politicians and parrot GOP talking points, without disclosing their pay. The tactic irked some Republicans, the Texas Tribune reported, including a Texas state representative who called for an investigation into the company. 

Given the resistance to Republican politicians in online spaces that attract young people, it’s unsurprising that candidates may rely on shadowy agencies like Influenceable to do the work for them. Republican politicians have a reputation for botching even the most straightforward digital campaigns. In May, Florida Gov. Ron DeSantis launched his presidential campaign on Twitter Spaces in an audio conversation with Elon Musk. The conversation started late and was so riddled with technical issues that it ended after just 21 minutes. Critics on both the right and the left described the launch as a disaster

Conservative organizations have proven especially out of their depth when facing the wrath of extremely online social media users, who mobilize trolling for social justice. In 2020, TikTok users reserved hundreds of tickets for a Trump rally and never showed up, leaving the president to face swaths of empty seats. When a Texas anti-abortion group opened an anonymous tip form to enforce the state’s ban on abortion after six weeks, Gen Z activists flooded the site with Shrek porn. This year, TikTok and Twitter users shut down the Missouri attorney general’s tip form for reporting clinics that provide gender-affirming care. Within days of launching, the site was spammed with fanfiction, satirical anecdotes about kids getting “transed” and fanfiction. The attorney general’s press secretary blamed the site’s downfall on activists “hacking the system.” 

The presidential election is more than a year away, but it may be too late for Ramaswamy to make any headway on TikTok, where the platform’s young users still don’t take him seriously. He recently posted a video about getting ready for the next Republican debate, and was hit with yet another wall of edging comments.

Even if candidates like Ramaswamy did everything right — like having a platform that didn’t alienate young voters and working with creators with more favorable reputations — they’d still represent a party that many Gen Z and millennial voters aren’t aligned with.

“It’s really hard to be effective with a generation when a lot of your policy is attacking them,” Henry said. “If all of your policy is highly unfavorable for that generation, that’s a hard sell in itself, even if you’re an effective communicator with all the strategy in the world, to sell someone something they don’t want.”

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.

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Tesla Autopilot arbitration win could set legal benchmark in auto industry



In a victory for Tesla, a California federal judge ruled over the weekend that a group of Tesla owners cannot pursue in court claims that the company falsely advertised its automated features. Instead, they will have to face individual arbitration.

U.S. District Judge Haywood Gilliam’s ruling isn’t a win for the defensibility of Tesla’s advanced driver assistance systems, Autopilot and Full Self-Driving (FSD), but simply for Tesla’s terms and conditions. The plaintiffs who filed the proposed class action in September 2022 did in fact agree to arbitrate any legal claims against the company when they signed on the dotted line, according to the judge. They had 30 days to opt out, and none chose to do so.

Forced arbitration has been a stalwart partner in the tech industry. Tesla’s success in dodging a class action lawsuit could encourage other automakers to lean more heavily on this tactic.

“In some respects, it probably does put down a marker that these types of claims will likely face these types of challenges,” Ryan Koppelman, partner at law firm Alston & Bird, told TechCrunch.

Koppelman noted that arbitration is a common legal strategy used by companies to avoid individual claims and class actions like this one.

In this specific case, a fifth plaintiff did opt out of arbitration, but Judge Gilliam ruled to dismiss their claims, as they waited too long to sue, according to court documents.

“The statue of limitation aspect is interesting because the claims at issue here had to do with what the Tesla products will be capable of in the future, as well as what they were supposedly capable of at the time of sale,” said Koppelman.

The plaintiffs in the case all claimed to have spent thousands of dollars on unreliable and dangerous technology that has caused accidents, some resulting in death. Tesla has denied wrongdoing and moved to send the claims to arbitration, after citing the plaintiffs’ acceptance of the arbitration agreement.

Judge Gilliam also denied the plaintiffs’ motion for preliminary injunction “prohibiting the defendant from continuing to engage in its allegedly illegal and deceptive practices.” In effect, the plaintiffs asked the court to force Tesla to stop marketing their ADAS as providing “full self-driving capability”; to stop selling and de-activate their FSD beta software; and to alert all customers that Tesla’s use of terms like “full self-driving capability,” “self-driving” and “autonomous” to describe the ADAS technology was inaccurate.

Falsely advertising Autopilot and FSD

The original complaint, filed in September 2022, alleged that Tesla and its CEO Elon Musk have been deceitfully advertising its automated driving features as either fully functioning or close to being “solved” since 2016, despite knowing full well that the capabilities of Autopilot and FSD don’t live up to the hype.

The plaintiffs alleged that Tesla’s ADAS cause vehicles to run red lights, miss turns and veer into traffic, all the while costing Tesla owners thousands of dollars.

Briggs Matsko, the named plaintiff in the lawsuit, said he paid $5,000 for his 2018 Tesla Model X to get Enhanced Autopilot. Tesla’s FSD costs an additional $12,000.

The failed class action isn’t the only time Tesla’s so-called self-driving technology has come under scrutiny. Earlier this year, Musk was found to have overseen a 2016 video that overstated the capabilities of Autopilot.

The revelation came from a deposition from a senior engineer taken as evidence in a lawsuit against Tesla for a fatal 2018 crash involving former Apple engineer Walter Huang. The lawsuit alleges that errors by Autopilot, and Huang’s misplaced trust in the capabilities of the system, caused the crash.

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.

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Max Q: Mining moon water



Hello and welcome back to Max Q!

In this issue:

  • Mining water on the moon with Starpath Robotics
  • News from Blue Origin, SpaceX and more

Starpath Robotics has emerged from stealth with an ambitious plan to design, launch and operate machines to mine and refine water for rocket propellant using resources on the moon and Mars.

In-situ resource utilization of water for the purposes of making rocket propellant is not a new idea. Rocket propellant is a mix of liquid oxygen (LOX) and some other combustible fuel, like hydrogen, kerosene or methane. Given that there is plenty of water on the surface of the moon and Mars, people have long speculated that these resources could be put toward making propellant in space — and building a self-sustaining human colony off-world.

Click the link above to read more about how Starpath envisions turning this science fiction into a reality.

Starpath Robotics render; mining and refining moon water

Image Credits: Starpath Robotics

More news from across TC

Concept image of a Dream Chaser craft attached to an inflatable habitat. Image Credits: Sierra Space

Max Q is brought to you by me, Aria Alamalhodaei. If you enjoy reading Max Q, consider forwarding it to a friend. 

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.

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