5 Things You Need to Know to Start Your Day

The crypto crackdown continues, inflation’s toll on global growth and China’s exports take a turn for the worse. — Kristine Aquino Coinbase [View in browser]( [Bloomberg]( The crypto crackdown continues, inflation’s toll on global growth and China’s exports take a turn for the worse. — [Kristine Aquino]( Crypto reckoning [Coinbase faces a near existential threat]( after the crypto exchange — which generated over 80% of its revenue in the US last year — was sued by the Securities and Exchange Commission. Chairman and CEO Brian Armstrong said he’s proud to represent the industry in court, and the company is expected to put up quite the fight. “Expect Coinbase to litigate this vigorously — it is alleged that virtually their entire US business is illegal,” said Ashok Ayyar, counsel at Ashbury Legal. The SEC’s crackdown has crushed crypto billionaires’ wealth, with Armstrong’s net worth slumping by $361 million to $2.2 billion, according to the [Bloomberg Billionaires Index](. Inflation burden [The global economic recovery will be dogged by persistent inflation and tighter monetary policy](, according to the Organisation for Economic Co-operation and Development. The Paris-based group sees world growth at 2.7% this year and only a modest pickup to 2.9% in 2024, both below the 3.4% average in the seven years before the pandemic. It’s a headache for central banks as they continue to battle stronger-than-expected core inflation. “Of course central banks need to remain vigilant and weigh both sides of the risk,” OECD chief economist Clare Lombardelli said. China risks [Chinese exports fell for the first time in three months in May](, with shipments to most destinations including the US and Japan seeing double-digit declines. Imports from most regions fell, with a 20% contraction for those from Taiwan and South Korea — a sign of weakness in global electronics demand. “The data reinforce our view that more policy support is needed, including a rate cut which we think will be delivered as soon as this month,” said Eric Zhu of Bloomberg Economics. Adrift markets S&P 500 and Nasdaq 100 futures edged lower as of 6:11 a.m. in New York. The Bloomberg Dollar Spot Index traded near the day’s lows, boosting most Group-of-10 currencies. Treasury yields were little changed amid listless trading global bond markets. Oil and gold were flat, while Bitcoin retreats a day after climbing more than 5%. Coming up… At 7 a.m., we’ll get the latest mortgage applications data, followed by April trade figures at 8:30 a.m and a consumer credit report at 3 p.m. The Bank of Canada will deliver a rate decision at 10 a.m. New York time. President Joe Biden will meet with his UK Prime Minister Rishi Sunak in Washington. What we’ve been reading Here’s what caught our eye over the past 24 hours: - [New York is now the world’s most expensive city]( for expats - The UK gets another reminder of the [downbeat housing market]( - $1.2 million per person: [how California is calculating the price of slavery]( - Omega blames staff for the [record $3 million sale of a faked SpeedmasterÂ]( - How[a golf-crazy Saudi wealth manager](orchestrated the PGA-LIV deal - [Take a rooftop bus tour:]( travel hacks from an elite party planner - [AI designed a couch that weighs 22 pounds]( and fits in an envelope And finally, here’s what Joe’s interested in this morning… Yesterday the SEC sued Coinbase for operating as an unregistered securities exchange. The action poses an existential threat to the company's business. [As one lawyer put it to Bloomberg](, "Expect Coinbase to litigate this vigorously — it is alleged that virtually their entire US business is illegal.” Of course, the company has known for awhile that a day like this was always a possibility. This exact scenario came up in March, [when we had CEO Brian Armstrong on the Odd Lots podcast]( to talk about the two big challenges that have been facing crypto: The bear market and the overhang of regulatory uncertainty. A lot of that discussion was about [whether or not Coinbase lists securities]( (of course the company says it does not) and what even constitutes a crypto security. One area where we tried to get some specificity is in what criteria Coinbase itself was using for determining whether a token is a security. Armstrong was a little bit vague, but one thing he said that stood out was "...if people are out there kind of really hyping these things like on YouTube and the tokenomics look sketchy, and there's really low float and the insiders are selling, these are all bad fact patterns. And those are the things we try to avoid for consumer protection." So basically, pumping the token price online, with an aim towards enriching insiders was a red flag. And the company would therefore avoid a listing. What's interesting though is that if you read the SEC complaint, [starting on page 37](, they go through why various coins that currently trade on Coinbase are, as the SEC believes "Crypto Asset Securities." And by and large, the SEC's test doesn't sound that different from the test that Coinbase itself made up. With each of the coins that the SEC identifies, the basic gist is similar. There is a team that exists. Members of that team made comments about working to improve the value of that coin. And the complaint also talks about how the coins were initially distributed to insiders. With each coin, the SEC spells it out in the complaint. Of course, there's thousands and thousands of cryptocurrencies in existence. And only a relative handful trade on Coinbase. So the ones that do trade are less sketchy or less vulgar or more professional in terms of how the teams talk about token price, and disseminate that information into the world. But the basic "bad fact patterns" that Armstrong describes in our Odd Lots episode aren't that wildly different than what the SEC is talking about. Anyway, this will all likely take years. [The SEC sued Ripple 2.5 years ago]( for conducting an unregistered securities offering and that's still ongoing. There's a ton of money at stake in all this. Arguably an entire industry. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](