This week, the internet was ablaze with the announcement by the Department of Justice that it had seized $3.6 billion in bitcoin and arrested two individuals, Ilya Lichtenstein and Heather Morgan, charged with money laundering bitcoin associated with a 2016 hack of crypto exchange Bitfinex.
While Crypto Twitter and the internet reveled in Morgan's shamelessly bad raps, the investigation does shed a light into how blockchain analytics are done and how the government was able to follow the trail Lichtenstein and Morgan allegedly left behind.
On this week's episode of Unchained, Tom Robinson, cofounder and chief scientist at Elliptic, explains how the government tracked the trail left behind by the Bitfinex hacked funds, what was the one crucial step that helped DOJ follow the trail, and whether blockchain analytics tools will always catch up to those who have engaged in illicit activity with crypto. Be sure not to miss this episode!
And now for the other big news of the week -- and there was a lot of it.
A year after BlackRock CIO Rick Rieder mentioned that the asset management giant was “starting to dabble” in Bitcoin, CoinDesk revealed that BlackRock is gearing up to offer crypto trading services to investor clients. BlackRock will begin by offering lending services using crypto as collateral. Additionally, one of CoinDesk’s sources says clients will have the ability to trade crypto via Aladdin, BlackRock’s investment management platform.
As covered in Thursday’s Unchained Daily, Chris Perkins, president of CoinFund, said this was an important move for two reasons. “First, Aladdin supports many of the largest sovereign wealth, pensions, and asset managers in the world, and this connectivity will solve many of the operational challenges that have been holding these institutions back,” he wrote in a message. “Second, Aladdin typically releases new functionality based on client demand. This tells you that many of the largest institutions in the world are asking for crypto capabilities.”
For context, BlackRock currently has $10 trillion in assets under management (AUM) – which is about five times the size of the market capitalization of all crypto assets.
In related news, the Canadian arm of the accounting giant KPMG announced the addition of both bitcoin and ether to its balance sheet on Monday via Gemini. The firm also hinted at future investments in DeFi, NFTs, and metaverse tokens.
This week, Ethereum Name Service community steward Brantly Millegan was fired after the unearthing of a tweet of his from May 2016, which said: “homosexual acts are evil. Transgenderism doesn’t exist. Abortion is murder. Contraception is perversion. So is masturbation and porn.”
Uniswap’s Hayden Adams, Rainbow’s dame.eth, ENS’s Future Alisha and numerous others condemned Brantly’s words. “As a big believer in ENS and member of the community, this is not something that the face of ENS can stand for,” wrote dame.eth.
Despite being fired, Brantly still holds the title of “director” at the ENS Foundation and is the largest ENS delegate (meaning he holds the most voting power in the ENS DAO), according to Inoue Makoto, an ENS developer.
Because of other recent incidents in which old tweets expressing discriminatory or offensive views had caused trouble for other members of the crypto community, a debate began over whether cancel culture was coming to crypto.
Forbes and Magnus Opus Acquisition Limited, the firm Forbes is partnering with via a SPAC, or special purpose acquisition vehicle, to go public on the New York Stock Exchange, recently received $200 million in funding from the cryptocurrency exchange Binance. (Disclosure: Forbes is my former employer.) The move will make Binance one of the two largest owners of the publication and two Binance execs will join the Forbes board.
Forbes plans to go public by the end of this quarter and would trade under the ticker symbol FRBS.
The news comes about a year and a half after Binance filed a defamation lawsuit against Forbes Media and two of its writers.
On Wednesday, all eyes and ears were on, of all places, a Senate Agriculture Committee meeting on cryptocurrencies.
During the meeting, CFTC Chairman Rostin Behnam made his case to bring crypto “into the regulatory fold.” According to The Block, Chairman Behnam asked for a 30% increase in the CFTC’s operating budget for 2022 after acknowledging that the CFTC currently lacks the resources necessary to regulate digital assets as it usually only handles futures and derivatives. Behnam cited as precedent the CFTC’s expansion following Dodd-Frank, which granted the regulator purview over swap markets and increased its budget by nearly 50%.
Sam Bankman-Fried, the CEO of FTX who also participated in the meeting, seemed to like the idea of the CFTC providing more regulatory clarity, adding, “I would love to see the CFTC play a more active role.”
In related news, the Federal Deposit Insurance Corporation (FDIC) announced its 2022 priorities this week, which included evaluating the risks related to crypto.
The short answer is yes, GameStop did just sell off millions of dollars of IMX tokens.
Last Thursday, GameStop announced a partnership with Immutable X, an Ethereum layer 2 solution (and, disclosure, a former sponsor of my show), to launch its own NFT marketplace. As part of the deal, Immutable X set up an incentive fund for GameStop that will provide up to $150 million in IMX tokens for the gaming company’s expansion into the NFT space.
However, it appears that Immutable X granted the tokens to GameStop without any vesting or lock-up requirements. So, when GameStop received roughly 39.17 million IMX tokens after hitting the first few milestones of the partnership, the gaming company could do anything it wanted with the tokens. Based on data from Etherscan, it appears that GameStop began dumping IMX tokens on the open market.
The gaming giant made five IMX transactions in February – in amounts such as 6.5 million IMX, a little over 8 million IMX and 2 million IMX, with two of the transactions coming before the Immutable partnership announcement.
Notably, IMX’s token supply is only about 225 million coins – meaning GameStop’s IMX token transfer of approximately 19 million tokens equates to roughly 8.4% of all IMX tokens being moved. The flood of tokens into the market from GameStop appears to have suppressed the price of IMX, which hit a peak above $4.00 on the heels of the GameStop announcement last week, only to immediately drop back down under $3, where it had been trading over the previous 14 days.
Zynga, the mobile gaming company that produced Farmville and Words With Friends, has plans to jump into the blockchain metaverse, according to Axios. The firm is reportedly looking to expand its blockchain team from 15 to as many as 100 members. Additionally, Zynga revealed that it hopes to release a blockchain game in 2022 that will target crypto-centric gamers. On that note, Matt Wolf, Zynga’s blockchain chief, said the company plans to separate its NFT game ideas from its current ones – so a crypto Words With Friends does not appear to be in the works.
Speaking of crypto adoption, CNBC reported that Salesforce told employees at a private event online that it would be building an NFT cloud.
A report from Kommersant, a Russian newspaper, revealed this week that the Russian government and Bank of Russia are preparing a draft law that will make cryptocurrencies an “analogue of currencies,” rather than just simply “digital financial assets.” The newspaper reports that the proposal will be done before February 18th.
There’s been conflicting news coming out of Russia. Earlier, in January, the Bank of Russia was reportedly pushing for a blanket ban on crypto. However, separate accounts show that President Vladimir Putin is in favor of regulating, rather than banning, crypto mining within the country.
Least Authority, a security auditor firm, believes that Atomic Wallet, a popular crypto wallet supporting 300+ coins, could be at risk.
“We strongly recommend that the Atomic Wallet team immediately notify users of the existing security vulnerabilities,” wrote Least Authority. “In addition, until the issues and suggestions outlined in the report have been sufficiently remediated and the Atomic Wallet has undergone subsequent security audits, we strongly recommend against the Atomic Wallet’s deployment and use.”
The risks to Atomic wallet were initially disclosed over 10 months ago by Least Authority to Atomic Wallet, but a significant number of issues have yet to be resolved, forcing the audit firm to make its disclosure public. "We hope that this disclosure of the existence of significant vulnerabilities without providing details helps to app
You’ve probably seen Matt Damon traversing down gilded halls to proclaim that “fortune favors the bold” while an astronaut with a not-so-slyly planted Satoshi nameplate clanks behind him. This ad by Crypto.com (which, disclosure, is a sponsor of my shows) is just a taste of how crypto commercials are about to take over the biggest television event of the year.
Super Bowl Sunday’s main broadcast, where 30-second ads can cost up to $7 million, will feature spots from Coinbase, FTX, and Crypto.com. Bitbuy will run an ad on the Canadian broadcast. Miller Lite will be running an advertisement in Decentraland, aka the metaverse.
In addition to the crypto-takeover of commercial breaks, the National Football League is also bringing crypto to the actual game – each person at the game will receive a commemorative NFT (from the NFL).
No weekly news recap this week would be complete without a rap from the new crypto celebrity, or should I say, crypto rap celebrity Heather Morgan, she, allegedly of Bitfinex hack money laundering fame.
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