August 19, 2022 / Unchained Daily / Laura Shin
Daily Bits✍️✍️✍️
- US government officials want Celsius bankruptcy to be probed.
- South Korean authorities may shutter 16 crypto exchanges, including KuCoin and Poloniex, for not being registered properly.
- A Russian citizen who allegedly participated in a ransomware attack has been extradited from the Netherlands for trial in the US.
- The House Energy and Commerce Committee sent letters to four mining companies to understand the environmental impact.
- Tether hired accounting firm BDO Italia to issue its attestation reports.
- The CME will start offering ETH options on September 12, just days before the Merge.
- Gnosis Safe confirmed an airdrop for more than 21,000 users.
- Chainalysis reported people are falling less for scams, but hacks continue to grow.
Today in Crypto Adoption…
- MercadoLibre will launch a cryptocurrency as part of its loyalty program.
- Stepn partnered with soccer giant Atlético de Madrid and WhaleFin to launch an NFT sneaker collection.
The $$$ Corner…
- Tokenization firm Koibanx closed a $22 million round led by Algorand.
- Primitive raised $9 million in a Series A round led by Bain Capital Crypto.
- Blockchain Capital led a $4.4 million seed round for Unlockd, an NFT lending protocol.
- SuperLayer announced a $25 million fund led by Polygon.
- GitPOAP raised $4 million at an undisclosed valuation.
What Do You Meme?
What’s Poppin’?
Armstrong Hints That Coinbase Will Not Censor Ethereum
Coinbase CEO Brian Armstrong said on Twitter that he’d prefer to quit the exchange’s staking services business rather than censor transactions to comply with Office of Foreign Assets Control (OFAC) sanctions.
The conversation started with a concern raised by @TheEylon on Twitter, who is worried (as well as many others) about the fact that 66% of validators on the Beacon chain would comply with OFAC regulations. This puts into question the censorship-resistance ability of Ethereum.
“Fall out from the Tornado sanctioning & the realization that ~70% of validators are US-based, regulated custodians that have to comply with OFAC. This introduces the real possibility of base-layer protocol censorship being introduced on ETH,” said Miles Suter (first recommended read of the day).
The issue of the potential centralization post-merge in the Ethereum blockchain was covered by Unchained here and here.
Once Ethereum moves to proof-of-stake, it is expected that Coinbase will become one of the largest validators in the ecosystem.
However, it looks like Armstrong wanted to bring some calm to the situation. When asked what Coinbase would do if regulators asked the exchange to censor at the Ethereum protocol level with its validators, he responded that he would shut down the staking service. “Got to focus on the bigger picture. There may be some better option or a legal challenge as well that could help reach a better outcome,” he added.
Recommended Reads
- Miles Suter on the implications of the Merge
- Patrick Hansen on the regulatory risk for Bitcoin lightning network
- Jake Chervinsky on the arrested Tornado Cash developer
On The Pod…
Ari Redbord, Head of Legal and Government Affairs at TRM Labs, talks about the sanctions on Tornado Cash, and the role of blockchain analytics tools in crypto. Show highlights:
- Ari’s background as a federal prosecutor and his work for the US Treasury
- why regulators sanctioned Tornado Cash, according to Ari
- why the Ronin hack was important for regulators to start taking DeFi hacks more seriously
- the fact that for the first time the Treasury Department sanctioned software
- whether the Office of Foreign Assets Control (OFAC) messed up
- whether regulators understood the impact on regular users
- the role of TRM and blockchain analytics tools in mitigating risk
- how decentralized applications use tools like the ones provided by TRM to comply with regulations and to block addresses
- why, if Ari were a regulator, he would focus on regulation guidance
- whether the sanctions on Tornado Cash are unconstitutional
- what the future of privacy in crypto looks like and whether the government is going after privacy technologies
Book Update
My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!
You can purchase it here: http://bit.ly/cryptopians
