I didn’t say this! Someone else did!
If you missed this week’s Unchained with Yeonmi Park, it was, I believe, the best interview I’ve ever done on the show. Based on the responses on Twitter, I think a lot of other people felt the same way. While, on the surface, it doesn’t have a lot to do with cryptocurrencies, it most definitely illustrates why crypto people so often speak of the ideals of decentralization and censorship-resistance. Chris Giancarlo said, “Wow, what a episode!” Jake Chervinsky tweeted, “This might be the most important crypto podcast of 2019 (even though crypto is barely discussed).” Alex van de Sande said, “This is such an important interview.” And someone with the handle @AlexBoogie wrote, “Jawdropped and without words after listening to this…”
Also, don’t forget that Unchained now has a merchandise shop! We’ve got a few t-shirts, a couple of hats, a mug and stickers. We’ve now got rabbit versions of the mug, some decals and Bitcoin Maxi and Ethereum Maxi versions of the crypto rabbit. Be sure to check it out, and order today to receive by Christmas!
As for this week’s news, there was a lot in the vein of scams, hacks, regulation and law enforcement, plus some inklings of what the future might hold.
This Week’s Crypto News…
MakerDAO Flaw Allows Attacker to Turn $20 Million Into $340 Million in 15 Seconds
Micah Zoltu of Coinmonks wrote a how-to that begins, “Anyone with ~40,000 MKR (about 20,000,000 USD) can steal all of the collateral in Maker DAO, both DAI and SAI, along with a good chunk of assets from Compound, Uniswap, and other Maker integrated systems (over 340,000,000 USD).” After the publication of this blog post, the MakerDAO Foundation moved up a plan to address this vulnerability.
Understanding Bitcoin Bubbles: Looking at Last On-Chain Movement
I missed this last week, but Coinmetrics came out with a fascinating look at what they’re calling cost basis but defining it as the last time a coin moved on-chain. It serves as a decent proxy for understanding how Bitcoin bubbles work, when the cycle might hits its peaks and lows, and when investors capitulate. If you were interested in the discussion with Larry, you’ll enjoy this analysis.
Telegram Advisor in UK Sought by SEC
CoinDesk reported that the SEC, in its effort to stop the launch of Telegram’s crypto network, TON, has asked the High Court of England and Wales for testimony and documents from John Hyman, Telegram’s former chief investment advisor. A filing by the SEC with the U.S. District Court of the Southern District of New York last Friday revealed some of Telegram’s fundraising strategy during its $1.7 billion token pre-sale. The documents quote Hyman as saying in one email that Telegram “decided for regulatory reasons that we will never do any form of direct public offering, … the public will be able to buy grams once network is working … not from Telegram directly.” Also, even though TON investors were prohibited from reselling their allocations, there was an active secondary market, and Hyman regularly asked about it. In one email, he wrote, “Hi Stan have you seen any grey market gram activity if so at what prices.” Also, someone named Jared Leto makes an appearance in the story …
ZK Sync: Decentralized, High-Throughput, Censorship-Resistant, Privacy-Preserving With Instant Finality?
Matter Labs generated some buzz with a post about ZK Sync, which it has been working on for the past year following a grant from the Ethereum Foundation. They claim that they can provide subsecond confirmation on the main chain, not on layer 2, and that with such technology, online stores shipping physical goods can confirm the purchase to a user and also get full confirmation before having to ship the item. They also claim that it is censorship-resistant and denial-of-service-resistant. Eric Wall of Arcane Crypto said, “This construct here is phenomenal. From what I can tell, it is what sidechains were supposed to be, but better: offchain, trust-minimized, scalable, final.” We’ll keep tabs to see where this goes.
BitClub Is Alleged to Be a $722 Million Ponzi Scheme
It sounds like a mining pool. But federal prosecutors are calling it a Ponzi Scheme. They claim BitClub invited investors to send cash, which the company would then use to buy Bitcoin mining equipment, and proceeds from that would be split amongst the investors. Customers also could receive rewards for recruiting new people.
Wired reports, “Internal messages between the conspirators give the impression of growing glee at the ease of taking advantage of investors, referring to ‘building this whole model on the backs of idiots.’ The men allegedly described their victims as ‘dumb’ investors and ‘sheep.’ Matthew Brent Goettsche, Jobadiah Sinclair Weeks, and Silviu Catalin Balaci are accused of conspiracy to commit wire fraud, which can carry a sentence of up to 20 years, and conspiracy to offer and sell unregistered securities, which allows five. A fourth defendant, Joseph Frank Abel, faces only the securities charge.”
LedgerX Cofounders Put on Leave
Bitcoin derivatives firm LedgerX has placed CEO Paul Chou and president and chief risk officer Juthica Chou on leave. Larry E. Thompson, former vice-chair of the Depository Trust & Clearing Corporation (DTCC), will act as interim CEO. Last summer, the company announced the launch of physically settled Bitcoin futures but did not have proper licensing from the Commodities Futures Trading Commission. In September, Paul Chou then sent out a series of tweets such as, “if we find out that there is something behind this close to 1 year delay of a trivial issue that is anything but a sense of uncomfortableness with a tweet, as opposed to a substantive deficiency is the legal standard of what we applied for, then we will hold the @CFTC responsible.”
China Likely to Launch DCEP Pilot in Shenzhen and Suzhou Soon
Chinese financial news publication Caijing reported China will launch its digital yuan in Shenzhen and Suzhou, most likely in a pilot at the end of 2019 and in a larger pilot in 2020. It will also reportedly have a transaction per second speed of 220,000, as opposed to 40,000 for Paypal and 1,000 for Libra.
Square and Square Crypto Have a Cypherpunk Week
Wednesday morning, Twitter CEO Jack Dorsey tweeted that the company is funding open source work on a decentralized standard for social media, saying, “The goal is for Twitter to ultimately be a client of this standard.” Definitely curious to see if this uses some sort of blockchain element for identity or time stamping.
A few hours later, Square Crypto, which is basically the Bitcoin version of Jack’s social media goal, announced that ZmnSCPxj would receive a grant. “ZmnSCPxj has been a part-time contributor to Lightning and C-Lightning for two years. With this grant, he’ll be able to leave behind his day job of 14 years and go full-time on Lightning and bitcoin. This is the first financial support he’s received for his bitcoin work.” In case you’re wondering how this anonymous Bitcoin developer’s handle is spelled, it’s ZmnSCPxj. And, as Square Crypto says, “We don’t actually know where ZmnSCPxj lives, apart from somewhere in the GMT+8 timezone, which includes China, Brunei, Hong Kong, Macau, Taiwan, the Philippines, Malaysia, and Singapore. That’s it. That’s all he told us and that’s all we know.”