Apple’s Initial Threat and Subsequent Reversal

Damus initially reported on Twitter that Apple was considering the ban due to the app’s integration with the Lightning Network. Damus referred to these payments as “zaps” on its underlying platform, Nostr. Apple’s primary worry appeared to be the potential misuse of zaps by content creators to sell digital content on the platform. Apple has a well-known history of prohibiting app developers from using in-app payments for additional content or add-ons unless these payments go through Apple’s system.

Following Damus’ tweet, Apple issued a statement highlighting their commitment to reviewing all apps against the same set of guidelines. They specifically mentioned a feature within Damus that allowed users to send tips in connection with digital content, violating App Store Review Guidelines. However, Apple later retracted its threat, but with the condition that Damus removes certain payment functionality, such as the “zap button” on posts, which Apple considers as “selling digital content.”

Jack Dorsey’s Displeasure and the Vision for Global Payment Protocol

Twitter co-founder Jack Dorsey expressed his displeasure with Apple’s actions. He argued that tipping on posts should not be categorized as selling digital content but rather as a form of feedback. Dorsey emphasized the need to allow people to send bitcoin to each other, citing the opportunity to build a truly global payment protocol for the internet. He believed that such a protocol would immensely benefit Apple and encouraged them to embrace it.

Jack Dorsey’s Advocacy for Decentralized Apps and Nostr

Jack Dorsey, also the CEO of payments company Block, has been a vocal advocate for decentralized apps as the next evolution of social media. These apps aim to offer users the freedom to express themselves without being subjected to the policies of social media operators. Dorsey’s company, Block, has made significant investments in cryptocurrency, including systems to facilitate bitcoin mining.

In December, Dorsey donated 14 bitcoins to the team building Nostr, a decentralized social media initiative that aims to avoid being controlled by any specific leader or commercial entity. Nostr empowers users to maintain their identities across multiple Nostr-powered apps like Damus, facilitating bitcoin exchanges via the Lightning Network.

Bluesky and the Shift to Decentralized Messaging

Apart from Damus and Nostr, Jack Dorsey is also a supporter of the Bluesky messaging app. Built on the AT Protocol, a decentralized networking technology, Bluesky gained popularity as users sought alternatives to Twitter due to concerns over hate speech and bugs. Although smaller in scale compared to established messaging apps, Bluesky has garnered attention as users value its lack of algorithms, absence of ads, and avoidance of collecting and selling user data.

Conclusion

The potential removal of Damus from the Apple App Store due to its payment functionality highlighted the ongoing clash between decentralized apps and centralized platforms. Damus, backed by Twitter co-founder Jack Dorsey, faced challenges in integrating Lightning Network-based payment features into its social messaging app. Apple’s strict guidelines regarding in-app payments raised concerns, resulting in a threat to remove Damus from the App Store. However, Apple later retracted the threat, provided Damus removed certain payment functionality.

Jack Dorsey, an advocate for decentralized apps, voiced his displeasure with Apple’s decision, emphasizing the potential for a global payment protocol and the advantages it could bring to companies like Apple. With the rise of decentralized platforms and messaging apps like Nostr and Bluesky, the future of social media and payment systems remains an evolving landscape.

One of the key allegations made by the SEC is that Binance and Zhao failed to restrict U.S. customers from accessing their platform, despite regulatory requirements. This alleged violation is significant as it raises concerns about Binance’s compliance with U.S. securities laws and the protection of U.S. investors. The SEC also claims that Binance misled investors about its market surveillance controls, which could have allowed for potential market manipulation and unfair practices.

The complaint further alleges that Binance and Zhao had secret control over customer assets, enabling them to commingle and divert funds for their own purposes. This accusation suggests a serious breach of trust and raises questions about the integrity and security of customer funds on the Binance platform. Additionally, the SEC points out that Binance created separate U.S. entities as part of an elaborate scheme to evade federal securities laws. This deliberate attempt to circumvent regulations adds another layer of complexity to the case.

SEC Chair Gary Gensler underscored the gravity of the allegations, emphasizing the extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law that the SEC believes Zhao and Binance entities engaged in.

While Binance has yet to formally respond to the charges, CEO Zhao took to Twitter to reassure users that the exchange’s systems were stable and that they were reviewing the SEC’s complaint. However, the news had an immediate impact on the cryptocurrency market, with Binance’s native cryptocurrency, BNB, experiencing a decline of over 5% in value. This reaction indicates the market’s sensitivity to legal actions against major players in the industry.

This lawsuit is just the latest addition to Binance’s growing list of legal troubles. In March, the exchange faced a lawsuit by the U.S. Commodity Futures Trading Commission (CFTC), which alleged that Binance operated an “illegal” exchange and had an inadequate compliance program. Binance CEO Zhao criticized the CFTC’s charges as “disappointing and an incomplete recitation of facts.” Additionally, the exchange is currently under investigation by the Justice Department for suspected money laundering and violations of sanctions, as reported by anonymous sources.

Binance, founded by Changpeng Zhao in 2017, has emerged as a dominant force in the global cryptocurrency trading landscape. While its holding company is based in the Cayman Islands, the location of its main Binance.com platform remains undisclosed. With a reported daily trading volume of around $65 billion and up to 70% of the market share, Binance has established itself as a major player in the industry.

The SEC’s lawsuit not only raises concerns about Binance’s compliance with financial regulations but also highlights the potential risks associated with the exchange’s operations. Previous reports have suggested that Binance facilitated at least $10 billion in payments for individuals and entities seeking to evade U.S. sanctions. There have also been allegations of Binance commingling customer deposits with company funds, which would violate U.S. financial rules requiring the separation of client money.

In addition to the charges against Binance, the SEC’s complaint also implicates Sigma Chain, a trading firm owned and controlled by CEO Zhao. The SEC alleges that Sigma Chain engaged in wash trading, artificially inflating the trading volume of crypto asset securities on the Binance.US platform from September 2019 to June 2022. This further underscores the interconnectedness of the alleged deceptive practices within Binance’s ecosystem.

As the legal battle between Binance and the SEC unfolds, the cryptocurrency industry is eagerly awaiting further developments and closely observing the potential impact on Binance’s operations and reputation. The outcome of this lawsuit will likely have significant implications for the regulation and oversight of cryptocurrency exchanges, not just in the United States but globally.

It is important to note that the information provided in this article is for informational purposes only and should not be considered as financial or legal advice. Readers are strongly advised to conduct their own research and consult with professionals before making any investment or legal decisions based on the information presented here.