Greetings from Seattle! I've had another wonderful week of my book tour, with a fantastic reading in San Francisco at the Commonwealth Club, and another in Seattle at Town Hall. It was incredibly fun meeting so many of you, and fielding a lot of great questions from you! Thanks to those of you who came out, and I hope you enjoy my book!
This week's Friday episode of Unchained is an interview with Chris Harland-Dunaway, a freelance reporter for The Verge, who published an investigative article on what he calls "the many escapes of Justin Sun." In the story, he details what he says are Sun's attempts at market manipulation and other finance malfeasance (see "Operation Couch Cushions), as well as his attempts to escape the reach of regulation. His report, which comes from 15 unnamed sources as well as a trove of leaked internal documents, is an eye-opening look at the disregard one of the biggest names in crypto has for the rules.
And now, below, we have the other big crypto stories of the week.
On Wednesday, President Joe Biden signed the much anticipated Executive Order on Ensuring Responsible Development of Digital Assets. The document requests preliminary research and policy proposals from various government agencies on digital assets, defined as CBDCs, cryptocurrencies, and stablecoins, by the executive order. The White House described the executive order as the “first ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.”
Source: The White House
The Attorney General, Secretary of State, Secretary of the Treasury, the Secretaries of Labor, Commerce, Energy, and Homeland Security appear to be spearheading the research along with directors, administrators, and chairs of various other agencies. Financial regulators like the Commodities Futures Trading Commission, Securities and Exchange Commission, Federal Deposite Insurance Corporation, and the Office of the Comptroller of the Currency will also add commentary. Topics expected to be covered include CBDC technology, which the Biden administration says it is considering with the “highest urgency,” along with the environmental impact of digital ledger technology and the potential money laundering and illicit finance risks associated with digital assets.
Coin Center’s executive director Jerry Brito felt the executive order struck a good tone, tweeting, “The message I take from this EO is that the federal government sees cryptocurrency as a legitimate, serious, and important part of the economy and society.” Blockchain Association’s Jake Chervinsky agreed with Brito. “Anyone worried that President Biden's executive order would spell doom & gloom for crypto can fully relax now. The main concern was that the EO might force rushed rulemaking or impose new & bad restrictions, but there's nothing like that here. It's about as good as we could ask.”
Based on crypto price movement, the market’s reaction to the order was also positive, with the total market capitalization of cryptocurrencies rising 6.2% on Wednesday from Tuesday.
On a related note, the US Labor Department’s Bureau of Labor Statistics reported that the Consumer Price Index, a tool gauging inflation, rose 7.9% over the past twelve months.
Credit:Kevin Dietsch / Staff
Data from blockchain analysis firm Ellipsis shows the government of Ukraine has received nearly $63 million in crypto donations to Ukraine’s blockchain addresses and the NGO Come Back Alive, which includes a $1 million gift in ETH from the Bored Ape Yacht Club NFT collection this week. A report from CoinDesk, which cites Ukraine’s deputy minister at the Ministry of Digital Transformation Alex Bornayakov, estimates the number is closer to $100 million – when factoring in money sent from other small funds.
It appears donations will not stop at $100 million because, on Wednesday, cryptocurrency exchange Kraken announced a $10 million package for Ukrainians that will see $1,000 in BTC dropped to any account based in Ukraine created before March 9th. Additionally, Kraken will donate an amount equivalent to the total trading fees paid by Russian clients in the first half of 2022 in a later package to Ukraine.
According to CoinDesk, the funds are being used for fuel, food, and other non-lethal supplies, like bulletproof vests, with the suppliers directly accepting BTC and ETH and Ukraine holding the funds in a multisig wallet with five potential signers. “It is easier, not complicated, transparent, and faster in comparison to a SWIFT transaction, which could take more than a day,” explained deputy minister Alex Bornyakov to CoinDesk on paying with crypto.
In related news, Coinbase, the second-largest cryptocurrency exchange in the world, announced on Monday that it had blocked 25,000 addresses related to Russian individuals or entities it believes to be engaging in illicit activity. Coinbase said that many of the addresses were identified “prior” to Russia’s invasion of Ukraine and that the exchange has “not seen a surge in sanctions evasion activity” in recent days. Coinbase reported that it has also shared its internal blocklist with the government to further support sanctions enforcement.
Stripe launched crypto support on Thursday for exchanges, wallet providers, and NFT marketplaces. As part of its crypto toolkit, Stripe is facilitating ID verification, fraud prevention, and fiat on on-ramps/off-ramps.
Source: @collison
FTX and FTX US have already partnered with Stripe to improve their KYC processes.
Andre Cronje, known as the “Godfather of DeFi,” is leaving the crypto industry. Anton Nell, a business partner of Andre’s who played a prominent role in Fantom’s success, wrote Sunday morning, “Andre and I have decided that we are closing the chapter of contributing to the defi/crypto space.”
Cronje’s departure is not exactly surprising. His LinkedIn was updated last week to show jobs at Fantom Foundation, CryptoBriefing, Yearn.Finance, and “DeFi Architect” ending in February of 2022. His Twitter account was also recently deleted. Additionally, his relationship with the crypto industry has been exceptionally rocky. Andre has been threatening to quit for almost two years and once published a two-part blog titled “building in DeFi sucks.”
Source: Andre Cronje's Medium page
It appears Cronje is leaving for good this time. Nell wrote, “Unlike previous ‘building in defi sucks’ rage quits, this is not a knee jerk reaction to the hate received from releasing a project, but a decision that has been coming for a while now. Thank you to everyone that supported us over the past few years.”
According to Nell, Cronje’s departure will mark the end of support for 25 apps and services, such as Andre’s personal front-end for Yearn.Finance. However, any smart contracts deployed by Cronje, like Yearn.Finance and Solidly, will continue to run on Ethereum and Fantom, respectively.
Cronje-associated tokens like SOLID, IB, and KP3R each saw substantial dips in prices on the news. Yearn Finance, probably Cronje’s most successful and influential innovations, dropped more than 10% after Nell’s tweets. However, as pointed out by Banteg, an anon dev on Yearn Finance, Andre has not been active in building Yearn for some time. “People burying YFI, you do realize Andre hasn’t worked on it for over a year? And even if he did, there are 50 full-time people and 140 part-time contributors to back things up.”
That being said, as covered on The Chopping Block, Compound Labs CEO Robert Leshner still thinks Andre’s departure is a “rug pull” due to the billions in wealth Cronje created for himself.
It was a tough week for Ponzi schemes, fraudsters, and the third BitMEX founder.
On Tuesday, the CFTC brought charges against four men for their alleged role in operating a Ponzi scheme. Separately, three of them were indicted on criminal charges of wire fraud and money laundering in New York by the Justice Department. According to a filing from the CFTC, the men allegedly ran two Ponzi schemes that promised users daily interest between 2%-5%. Ecoinplus brought in over $23 million in BTC from investors, of which the alleged business partners kept $10 million for themselves. They also started a project called JetCoin, which took in $21.7 million in BTC (of which the men kept 36%).
The SEC went after an even larger project, alleging that John and JonAtina Barksdale defrauded investors out of $124 million through their token Ormeus Coin by giving buyers false information about the project. “We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit,” Melissa Hodgman, associate director in the SEC’s Division of Enforcement, wrote in a statement.
Following the recent guilty pleas of Arthur Hayes and Benjamin Delo, the third founder of BitMEX, Samuel Reed, pleaded guilty to violating US anti-money laundering rules on Wednesday. Reed will pay a $10 million fine and faces a maximum sentence of 5 years in prison. “As today’s guilty plea reflects, this Office will not permit cryptocurrency exchanges to operate as a shadow financial system that enables criminal actors to move their illicit proceeds without detection,” declared U.S. Attorney Damian Williams in a statement.
This week, Bain Capital, an investment firm with approximately $155 billion in assets under management, announced its first crypto-based fund, Bain Capital Crypto. The fund will utilize $560 million to “support the renegades and pioneers building the next generation of the internet,” according to partner Stefan Cohen.
In a conversation with The Block, Cohen revealed that the crypto unit had been in the works for about a year – and that it planned to get its hands dirty on-chain. “A little more than a year ago we set out to design a founder-oriented fund to help them through inception to growth," Cohen explained. "Advising on key economics, interacting with on-chain governance, providing liquidity and staking."
Bain’s arrival to crypto comes when funding is exploding, with Sequoia, Pantera, Electric Capital, and FTX all announcing $100M+ funds in 2022. It was, however, not a completely smooth arrival, as the team was meme’d for its all-male composition, and the fact that its announcement occurred on International Women’s Day.
Source: @shardulgo
Cohen later proclaimed that Bain is “committed to hiring women, investing in women-led projects, and being a driving force in the industry for sponsoring the creativity and genius of women, non-binary people, and people of color.”
Crypto influencer Bianca ‘de Medici revealed her true identity this week to be… the pop singer Sia (one of my favorite artists)!
Sia being awesome at the 2020 MTV awards :) (Credit:Kevin Mazur/2020 MTV Movie & TV Awards / Contributor)
She doxxed herself on both her own and Bianca’s account and wrote the following:
Dear frens
Thanks for being so cool and letting me into your world. I got into btc in 2016, picked up some alt coins in '17 but was never much of a speculator. I became a fan of @VitalikButerin
and his particular genius but it wasn't until I saw the birth of punks, kitties...and the wave of art that followed that I truly fell in love. And I mean down the rabbit hole, total degen, multiple wallets, jpeg addict, kind of love... At the core...I'm an artist and appreciate any medium that allows people to express who they are inside. I hope that you'll allow me to keep supporting this ecosystem, sharing and creating things that can help move the genre forward.
I love you all!
- SIA
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Cover photo credit:C.E. Seo
