September 9, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits✍️✍️✍️

• Federal Reserve Chairman Jerome Powell called for stablecoin regulation to provide clarity and transparency.
• US law enforcement and Chainalysis recovered $30 million from the $600 million exploit on Axie Infinity’s Ronin bridge.
• The White House warned about the negative environmental consequences of crypto mining.
• The SEC’s division of corporate finance is creating a new office for crypto disclosures.
• Joshua David Nicholas pleaded guilty for his role in the $100 million global crypto Ponzi scheme, EmpiresX.
• The US Treasury recommended issuing a digital dollar only if it’s in the country’s best interest.
• SEC Chair Gary Gensler is pushing crypto exchanges to register with the SEC and comply with securities rules.
• Three senior executives are reportedly leaving troubled crypto lender BlockFi.
• Celsius borrowers are asking the bankruptcy court to appoint an independent examiner to look into Celsius financials, but not one working for the U.S. Trustee office.
• True Names Ltd, the company behind Ethereum Name Service (ENS), filed a lawsuit against GoDaddy over one domain.
• El Salvador’s BTC law had its first anniversary and its bitcoin portfolio is down more than 50%.
• BNB Chain, Binance’s layer 1 blockchain, announced the launch of its zero-knowledge proof scaling technology, zkBNB.

Today in Crypto Adoption…

• Binance will issue soulbound tokens (SBTs) to the customers who complete KYC checks.

The $$$ Corner…

• Mysten Labs closed a $300 million funding round at a $2 billion valuation led by FTX Ventures.
• Temasek, Boyu Capital, and GGV Capital led a $110 million round for Animoca Brands.
• MetaWeb, a venture capital firm, raised $30 million for its first crypto fund.
• Slide, a crypto startup, raised $12.3 million led by Polychain Capital and Framework Ventures.
• Solana-based Hubble Protocol, issuer of the stablecoin USDH, announced a $5 million funding round.

What Do You Meme?

What’s Poppin’?

Coinbase Funds Lawsuit Against Treasury Over Tornado Cash Sanctions

by Juan Aranovich

Yesterday, six Tornado Cash users filed a lawsuit against the Treasury Department over the sanctions on the platform.

In August, the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned crypto mixing service Tornado Cash for allegedly being used to launder billions of dollars’ worth of crypto – in particular, funds stolen by North Korean hackers. However, because sanctioning a set of smart contracts, rather than a person or organization, was an unprecedented move, there were some innocent Tornado Cash users affected by the sanctions as well.

Crypto exchange Coinbase will provide financial support to cover the costs associated with pursuing the claims in the federal court and will also pay for the plaintiff’s lawyers.

“It [the sanctions] sets a dangerous precedent — if this code can be designated without any limits imposed by law, any technology any tool or system could be fair game,” Coinbase’s chief legal officer Paul Grewal told CNBC.

Grewal had said earlier this week that Coinbase’s interpretation of the sanctions on Tornado Cash is that validators are not compelled to censor transactions.

Among the six plaintiffs are some Coinbase employees and Preston Van Loon, Ethereum core developer, who was on today’s show with Laura to talk about the Merge and his role in the lawsuit. He said, of his participation, “Code is speech and free speech is a constitutional right.”

The suit claims the plaintiffs have some ETH locked in the platform, which was used for legal reasons (like donating to Ukraine), but they can’t access it because of the sanctions.

Grewal also claimed that OFAC “exceeded the authority Congress and the President granted it in sanctioning open source technology (…) No one wants criminals to use software, but blocking the technology entirely (which is what this sanction does) is not what Congress authorized, and for good reason.”

Recommended Reads

1. Bloomberg’s Matt Levine on Gary Gensler wanting to regulate crypto
2. “For the War” by Arthur Hayes
3. Haym Salomon on merkle trees and merkle proofs

On The Pod…

Preston Van Loon, cofounder and Ethereum core developer at Prysmatic Labs, talks about the Merge, its impact on an environmental level, and why he is a plaintiff in the lawsuit against the Treasury Department over Tornado Cash. Show highlights:

• what the Merge is on a technical level and what its impact will be
• whether the proof of stake consensus mechanism makes the network more decentralized and secure
• what happens if the Merge fails and whether there’s a contingency plan
• why Preston founded Prysmatic Labs and how Prysm works
• what the next steps are for Ethereum and what the community is working on
• whether Preston thinks a proof of work Ethereum fork would succeed
• when and how Ethereum’s high fees and scaling issues are going to be resolved
• why Preston joined the lawsuit against the US Treasury over the Tornado Cash sanctions
• how Preston would celebrate a successful Ethereum Merge

Book Update

You can purchase it here: http://bit.ly/cryptopians