August 31, 2022 / Unchained Daily / Laura Shin
Daily Bits✍️✍️✍️
- Tether denied a WSJ report that claimed the issuer might have problems with its balance sheet.
- El Salvador’s Bitcoin bond was delayed until later this year.
- OptiFi, a Solana protocol, locked up $661,000 by accidentally shutting itself down.
- After being arrested, the CEO of collapsed Turkish crypto exchange Thodex will be extradited from Albania.
- Crypto lender Hodlnaut was granted creditor protection to organize its restructure.
- Crypto exchange crypto.com (disclosure: a sponsor of Unchained) sued a woman after sending her $10.5 million by mistake.
Today in Crypto Adoption…
- Itaú Bank was picked by Brazil’s central bank to advance on a DeFi liquidity pool project.
- Australia launched a research program to benefit from digital asset opportunities.
The $$$ Corner…
- Animoca announced a $100 million funding deal led by Singapore state investor Temasek.
- a16z led a $50 million funding round for NFT organization Proof.
- Top executives from trading firms Genesis and Galaxy are seeking to build a new $500 million crypto fund.
- Reddit co-founder Alexis Ohanian’s VC firm is planning a $177 million crypto fund.
- Xterio, a blockchain gaming platform, raised $40 million in a SAFT sale.
- Clockwork, a Solana automation network, closed a $4 million round.
What Do You Meme?
What’s Poppin’?
Authorities Want to Stop Crypto Frauds
Authorities are concerned about DeFi vulnerabilities and customer protection.
Yesterday, the FBI issued a public service announcement in which it warned users about investing in DeFi platforms.
The FBI stated that “cyber criminals are increasingly exploiting vulnerabilities in decentralized finance (DeFi) platforms to steal cryptocurrency, causing investors to lose money.”
The admonition comes after the Treasury Department’s Office of Foreign Assets control sanctioned Tornado Cash, which was frequently used to launder the proceeds of DeFi hacks. For instance, Tornado Cash was used to launder the funds from the $600 million Ronin bridge hack by North Korean hackers.
The agency cited a report from Chainalysis, a blockchain analytics company, which described how cyber criminals stole $1.3 billion in crypto during the first quarter of 2022.
The FBI is recommending investors to DYOR (do your own research), as they outlined a few suggestions, such as researching the DeFi protocol, ensuring an audit has been conducted, and being aware of the potential risks.
The bureau is also advising DeFi platforms to introduce “rigorous testing of code” and to implement incident response plans.
On a related note, Rep. Raja Krishnamoorthi sent a series of letters to regulatory agencies and the largest crypto exchanges in the United States “requesting information about the steps they are taking to combat cryptocurrency-related fraud and scams and additional actions that are needed to protect Americans.”
Krishnamoorthi is the head of the Subcommittee on Economic and Consumer Policy within the House of Representatives’ Oversight Committee. “I am concerned about the growth of fraud and consumer abuse linked to cryptocurrencies,” he wrote.
The lack of regulation and the uncertainty it causes hang over the crypto industry. Yesterday, CoinDesk reported that Sam Bankman-Fried, CEO and founder of FTX, visited the White House in May with regulatory concerns, though the details of the meeting were not revealed.
Recommended Reads
- Ignas on Maker’s Endgame plan
- Ishan B on the bull case for FRAX
- Pantera Capital on the recession, the Fed and Ethereum
On The Pod…
Andrew Hinkes, partner at K&L Gates and adjunct professor at NYU, and Martin Koeppelman, cofounder of Gnosis, talk about the sanctions on Tornado Cash, how they will impact Ethereum on the base layer, and the likelihood of having two chains. Show highlights:
- the legal meaning of the OFAC sanctions on Tornado Cash and why it is causing complications
- how legislation is built for the fiat world, and how in DeFi and crypto there’s no clarity
- whether a proof of work chain or a proof of stake chain would be more censorship resistant
- whether laws apply to validators in a PoS chain
- the different entities involved in Proof of Stake
- how a user-activated soft fork works and the conditions in which a fork could happen
- whether social slashing is enforceable considering it is not in the protocol
- the likelihood of Ethereum becoming a permissioned system
- the role of Flashbots’ relay code and what it means for Ethereum’s censorship resistance
- how DeFi’s exposure to US-based institutions can affect the likelihood of the chain complying with sanctions
- why US-based companies will choose a conservative path, considering the lack of guidance
- the importance of educating the regulators
- how cash and crypto are the only remaining private payment methods
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
