Thanks to all of you who bought my book. I had an incredible book publication day and week. For those of you who missed it, I had the scoop of a lifetime with this book: On publication day was able to announce that my sources and I, in the course of reporting for the book, believed we figured out who was behind the biggest whodunnit in crypto -- the 2016 DAO attack, which prompted Ethereum to hard fork and resulted in the creation of Ethereum Classic.
I announced who evidence indicates the hacker was in this Forbes article, and as I mentioned here in this New York Times piece and in this Business Insider Africa article, the reception has been has incredibly positive.
My agent says it's incredibly difficult for a book to rank in the top 1,000 on Amazon, and my book reached as high as 364!
Today's Unchained, in which Steven Ehrlich of Forbes interviews me, is more about the book, not just the DAO, and if you're also interested in more back story on the news about the apparent DAO attacker, check out this Twitter spaces I did the other night.
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Without further adieu, here is the weekly recap!
The market capitalization of all cryptocurrencies slid roughly 10% in the hours after news broke that Russia had launched a military operation in Ukraine.
Source: Ukraine
The crypto markets dropped from a high of ~$1.76 trillion to a low of $1.58 trillion between 11:30 am UTC on Wednesday and 1:30 am UTC on Thursday.
Liquidations were also severe, with over $680 million in positions wiped out in the 24 hours between Wednesday and Thursday afternoon (3:30 pm ET specifically), making it the largest liquidation date in February. According to The Block, these liquidations could more than double if the price of ETH falls below $2,100 – which would result in an automatic liquidation of $500 million in ETH if the positions of 7-Siblings, a larger Maker vault holder, are not re-collateralized.
That being said, following an announcement from US President Joe Biden of sanctions against Russia, Bitcoin rose by more than $4,000.
Russia’s decision to enter Ukraine was met with vociferous opposition by some of the biggest names in crypto. “Very upset by Putin's decision to abandon the possibility of a peaceful solution to the dispute with Ukraine and go to war instead," wrote Ethereum creator Vitalik Buterin, who also added that the invasion "is a crime against both the Ukrainian and Russian people."
Source: Vitalik Buterin
Digital Currency Group’s Barry Silbert was even more upfront, tweeting: “Fuck war.”
On Tuesday, I published an article on Forbes describing how, in the course of reporting and writing my book, my sources and I found the person that we believe is the 2016 DAO attacker – Toby Hoenisch, who denied it in an email. Investigation
Source: Laura Shin
Afterward, his new venture, Mimo Capital, expressed surprise at the result of my investigation, but also said it was conducting a new investigation into Hoenisch using a third-party firm.
Seventeen OpenSea customers fell prey to a complex phishing attack on Sunday morning. According to an internal investigation completed by the NFT marketplace, the attack was not specifically connected to OpenSea emails, domains, or its official website. Overall, the attack took place across 15 hours, during which thousands of dollars worth of NFTs were stolen.
In a tweet thread recapping the phishing scam, OpenSea CTO Nadav Hollander, explained the scam was most likely a “targeted attack as opposed to a systemic issue” regarding a contract upgrade on OpenSea that tricked users into signing a malicious smart contract.
Source: Nadav Hollander
Going forward, Hollander is confident that phishers will have trouble executing similar attacks because OpenSea is adding EIP 712 to its new contract. This upgrade will improve the security of signing off-chain messages (like signing a message to join a whitelist, raffle, or token-gated Discord group). Hollander also noted that OpenSea would be helping victims of the attack, even though it stemmed from outside the NFT marketplace.
Speaking of OpenSea and buggy code, a complaint filed by Timothy McKimmy in Texas federal court claims that he is the rightful owner of Bored Ape #3475 – despite Ethereum’s blockchain showing that he sold it for 0.01 ETH earlier this year due to an alleged bug on OpenSea’s website. In his suit, McKimmy is asking for the return of his NFT and damages over $1 million. He is accusing OpenSea of negligence and breach of contract. The current price floor for a Bored Ape Yacht Club NFT is somewhere around $200,000.
China’s Supreme Court ruled that raising money from the public via digital assets is illegal, according to a statement released on Thursday. While China has banned crypto in the past, this new ruling allows China to officially charge digital asset fundraisers with criminal sentences and jail time.
The Luna Foundation Guard announced a $1 billion token sale of LUNA, the native token of Terra, a smart contract blockchain specializing in stablecoins. Do Kwon, the founder of Terra, described the $1 billion raise as the “largest ever cap formation in crypto.” Investors who participated in the sale will see their LUNA locked on a four-year vesting schedule.
Source: Do Kwon
Luna Foundation Guard (LFG for short, because crypto) is a non-profit organization focused on supporting Terra and UST, the largest stablecoin on Terra and fourth-largest stablecoin by total market capitalization writ large. Notably, proceeds from the $1 billion LUNA sale will be used to purchase Bitcoin and create a “Forex Reserve” available to tap during times of extreme market volatility to keep UST’s value pegged to the dollar. According to a thread by Terra, the move is designed to assuage concerns regarding a crypto “bank run” scenario and Bitcoin is the ideal asset for such a plan.
“Although the widespread adoption of $UST as a consistently stable asset through market volatility should already refute this, a decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system…The $UST Forex Reserve is an LFG initiative to provide a further layer of support for the $UST peg using assets that are considered less correlated to the Terra ecosystem, like Bitcoin.”
In addition to the Terra news, a judge in New York ordered Terraform Labs, the development firm behind Terra, to comply with an investigative subpoena into whether Terraform Labs had violated US securities laws via Mirror Protocol, a synthetic asset DeFi platform. Kwon, who is also the CEO of Terraform Labs, initially pushed back against complying with the SEC and had filed a separate lawsuit against the securities regulator.
Arthur Hayes and Benjamin Delo, founders and executives of the crypto exchange BitMEX, pled guilty to violating the Bank Secrecy Act on Thursday, which carries a maximum sentence of five years. A press release by the US Department of Justice listed their transgressions as “willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX.” Both Hayes and Delo will pay a $10 million criminal fine.
According to a report from The Leader Post, the Ontario Securities Commission contacted law enforcement agencies regarding tweets from two prominent crypto CEOs, flagging the comments because the regulator felt the executives were offering advice on evading sanctions.
The news comes after Canadian law enforcement asked Canadian crypto-trading platforms to freeze assets associated with a list of cryptocurrency addresses involved in sending funds to the “Freedom Convoy” trucker protests. The flagged tweets came from Coinbase CEO Brian Armstrong and Kraken CEO Jesse Powell. They recommended that users concerned about government seizure move their assets off of crypto exchanges to self-custodied wallets. In response to a comment asking if Kraken would comply with authorities to freeze accounts, Powell had this to say:
Source: Jesse Powell
As for Armstrong, he simply professed agreement with his fellow CEO, tweeting in response to a question about Coinbase custody and Canada: “I agree with @jespow on this.”
Despite Canada’s attempt to freeze funds associated with roughly 30 bitcoin wallets, on-chain data shows that ~20 BTC have been moved since last week, with some of the funds ending up on Coinbase and Crypto.com (which, disclosure, is a sponsor of my show). As of press time, it is unclear if the funds were cashed out or whether crypto exchanges not listed as financial institutions in Canada would have to comply with Canadian law.
Two weeks ago, CNBC reported that Salesforce, a top 75 company by market cap in the world, is working on an NFT cloud service. However, as with many NFT projects that hit mainstream companies, the software provider is being met with immediate pushback, this time in the form of 400 employees signing a letter objecting to the NFT initiative over environmental and scam concerns. Reuters cited one Salesforce employee who would quit if the NFT plan came to fruition and says the firm will be hosting a “listening session” about its future plans soon.
Former presidential candidate Andrew Yang launched a DAO last week. Dubbed “Lobby3,” the DAO’s focus will be to advocate for web3 policies in Washington DC. “Unfortunately, ill-informed and poorly-designed policy can prevent Web3 from reaching its full potential. That’s why we’re building Lobby3,” explains the website.
Source: Andrew Yang
Membership in the DAO will be controlled via an NFT with three tiers that will help operate the DAO via policy suggestions, speaker requests, and treasury decisions. The mint for Lobby3 will go live next Monday.
An auction for 104 CryptoPunks at Sotheby’s was canceled at the last second on Thursday night. 0x650d, the CryptoPunks owner, explained the cancellation on Twitter, writing, “nvm, decided to hodl.” He also posted a meme saying that he was “taking punks mainstream by rugging Sothebys.”
Source: @0x650d
The value of the CryptoPunks had been estimated to be between $20 million-$30 million.
To prove that the NFT space is full of “really extractive, zero-sum practices,” as an artist called Shl0ms told The Block, they decided to blow up a $250,000 Lamborghini. Somewhat humorously, the charred parts are now being sold as a collection of 888 NFTs – in a supposed protest of crypto’s get-rich-quick culture, as The Block reports.
Shl0ms told Fortune that the majority of the sale would go to fund public art installations.
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Cover Photo Credit: George Mdivanian / EyeEm
