Is SBF's Freedom at Risk? 🥶
Weekly News Recap: 📄Gag order for SBF, 🗺️ Worldoin's token launch, 💪 Binance vs. CFTC, 🤝 Razzlekhan duo reaches plea deal, and more!
Congress is taking up three separate pieces of legislation concerning crypto, drawing out both parties' opinions on digital assets in front of the cameras. Will the status quo, under Bidan appointee SEC Chairman Gary Gensler, continue to be the norm Democratic lawmakers push for, or will more progressive members of the party find common ground with their Republican colleagues?
On this episode of Unchained, we are joined by Democratic New York representative Ritchie Torres to understand how younger members of the party view crypto, regulation by enforcement and the future of digital assets in Washington DC. Torres decries Gensler’s unorthodox methods, while calling on bipartisan solutions to protect retail investors.
Weekly News Recap
Legal Heat on SBF: Prosecutors Call for Jail, Judge Issues Gag Order
This week, Sam Bankman-Fried, founder of FTX, found himself under increasing legal pressure. The U.S. Department of Justice (DOJ) is seeking his detention, alleging multiple attempts to tamper with witnesses. Assistant U.S. Attorney Danielle Sassoon stated in court, "It is the government's view that no set of release conditions can secure the safety of the community."
Bankman-Fried, who is currently under house arrest, is also facing a gag order issued by Judge Lewis Kaplan of the Southern District of New York. The order prohibits him from discussing his case publicly, with the exception of "assertions of innocence." The judge warned Bankman-Fried to take matters seriously, signing off on the interim gag order at least until he has had a chance to review written submissions on whether the FTX founder's bail should be revoked entirely.
The legal proceedings stem from allegations that Bankman-Fried leaked the private diary of a former colleague, Caroline Ellison, to the media. His trial is set to begin in October on various charges, including securities and wire fraud. If convicted, Bankman-Fried faces over 100 years in prison.
Worldcoin Launches Amid Controversy
This week, Worldcoin, a project cofounded by OpenAI CEO Sam Altman, launched its native WLD token on the Optimism Mainnet, marking a significant milestone for the project. The Worldcoin Protocol, which uses specialized hardware called "Orbs" to scan users' irises as proof of personhood, has been met with mixed reactions. The launch also saw the expansion of the World ID system and the World App to over 80 countries, with plans to increase this number to 120.
However, the project's reliance on biometric data has sparked controversy. In a blog post, Ethereum creator, Vitalik Buterin, raised concerns about the potential for privacy leaks, accessibility, and centralization issues associated with the use of biometric data. He questioned the security of the Orb and the potential for misuse by authoritarian governments.
On this week’s episode of The Chopping Block, Tarun Chitra wondered if the new token was a precipitated move to raise cash, and whether the token is a new ‘Sam coin,’ referring to projects backed by Sam Bankman Fried that commonly had a tiny circulating supply and an inflated fully diluted value.
Despite these criticisms, Worldcoin continues to push forward with its ambitious plans. Tiago Sada, head of product, engineering, and design at Tools for Humanity, described the launch as a "massive leap for the entire project." The Worldcoin Foundation aims to increase economic participation while focusing on privacy and decentralization.
Wordlcoin airdropped its token WLD to many early adopters, worth around $50, a not-so-low amount, especially in emerging economies.
Binance Seeks Dismissal of CFTC Charges
Binance, the world's largest crypto exchange, along with its CEO Changpeng Zhao and former Chief Compliance Officer Samuel Lim, announced their intent to request that charges brought by the U.S. Commodity Futures Trading Commission (CFTC) be dismissed. The charges, filed in March, accused Binance of violating trading and derivatives regulations, including facilitating commodity derivatives transactions for U.S. individuals since July 2019.
Binance's legal team is seeking permission to submit a 50-page brief, citing the complexity of the CFTC's 73-page complaint.
Also this week, Binance retracted its application for a license from the German regulator BaFin, citing significant changes in the global market and regulatory landscape.
In addition, Binance listed the new stablecoin First Digital USD (FDUSD), temporarily offering no trading fees for certain FDUSD pairs.
Crypto's Infamous Duo in Bitfinex Laundering Case Strikes Plea Deal
Ilya “Dutch” Lichtenstein and Heather “Razzlekhan” Morgan, the infamous couple arrested for laundering $4.5 billion in stolen Bitcoin, reached plea deals with federal prosecutors. In hearings scheduled for August 3, the duo is set to plead guilty to two counts of money laundering and one of conspiracy to defraud the United States.
The couple, dubbed "Bitcoin's Bonnie and Clyde," will also forfeit the nearly 119,754 bitcoins obtained from Bitfinex, the crypto exchange from which the money was stolen in August 2016. According to a source familiar with the matter, both defendants cooperated with authorities. The couple have given the government new wallet addresses holding more stolen funds and other information that has allowed the government to recover additional assets.
From the beginning, this case sparked widespread interest due to the couple's eccentric online personas and the eye-popping amount laundered.
Federal Reserve Increases Federal Funds Rate by 25 Basis Points
The Federal Open Market Committee (FOMC) under Fed Chairman Jerome Powell has raised the top line interest rate by 0.25%, or 25 basis points, to between 5.25-5.5%, as announced Wednesday.
The rate raise brings the Federal Fund rate to the highest in 22 years. Markets expect at least one more rate adjustment this year, while this month’s rate increase was “fully priced in” according to CME FedWatch tool.
Bitcoin’s price reacted relatively flatly to the news, settling below $30,000 heading into the weekend.
Andreessen Horowitz Sells MKR Token Following Governance Dispute
Prominent venture capital firm Andreessen Horowitz (a16z) has likely begun unloading Maker (MKR) tokens onto the open market, according to blockchain analytics. Twitter user “Ouroboros Capital” noted daily outflows of $1.5 million worth of MKR tokens to Coinbase from a16z’s wallets, indicating the VCs intention to sell the asset. MKR is currently trading hands at around $1,150, according to data analytics firm Messari.
The outflows follow a governance overhaul proposed by MakerDAO founder Rune Christensen entitled “The End Game Plan.” The proposal–opposed by a16z–suggests the creation of so-called “SubDAOs” to spur further decentralization of the underlying protocol. MakerDAO itself is the largest asset-backed issuer of a decentralized stablecoin, with some $4.2 billion in circulation, according to Messari.
Arkham Intel Exchange Awards First Bounty
Arkham Intel Exchange, the recently launched platform which has drawn criticism for its “dox-to-earn” program, awarded its first bounty to two blockchain sleuths who identified wallets connected to Terraform Labs and its founder, Do Kwon. The bounty, worth around $5,000, was paid out in nearly 9,500 ARKM tokens to an anonymous user and a pseudonymous Twitter user known as ErgoBTC.
The bounty was awarded for information that contradicts Terra's public statement of holding only one Luna Foundation Guard wallet. ErgoBTC's research suggests that there may be more wallets associated with Terra and Kwon.
The information obtained through the bounty will be released to the public 90 days after approval, shedding more light on the operations of Terraform Labs.
DOJ Granted Extension in Mashinsky Case
This week, the U.S. Department of Justice (DOJ) was granted an extension by Judge John Koeltl to produce evidence in its case against Alex Mashinsky, the former CEO of crypto lender Celsius. The DOJ now has until October 3 to present initial information and evidence against Mashinsky, who was arrested on July 13 on charges of securities fraud, commodities fraud, wire fraud, and conspiracy to manipulate the price of CEL, Celsius' token.
The DOJ attorneys are set to process a wealth of documents, including Celsius’ corporate records and communications, which include more than 1,000 videos of Mashinsky’s hour-long “ask-me-anything” sessions.
Mashinsky, who has pleaded not guilty to all charges, has been released on bail, secured by a $40 million bond. Under the terms of his bail agreement, Mashinsky will be restricted from traveling and will not be able to open any new bank or crypto accounts.
Quantstamp Settles With SEC Over $28 Million ICO
This week, blockchain security firm Quantstamp agreed to settle charges brought by the U.S. Securities and Exchange Commission (SEC) over its unregistered initial coin offering (ICO) that raised $28 million in 2017. The SEC's order stated that Quantstamp led investors to expect that the value of their QSP tokens would increase with the success of the firm, a violation of federal securities laws. Quantstamp, without admitting or denying the SEC's findings, agreed to a cease-and-desist order and to pay a total settlement amount of approximately $3.4 million.
Crypto Hack Roundup
Alphapo, a crypto payments processor, suffered a significant loss estimated at $60 million. The stolen assets were identified on both the Tron and Bitcoin networks. The on-chain patterns associated with this breach align closely with operations previously linked to Lazarus, a North Korean hacking group. Additional hacks occurred on Conic Finance and Era Lend, the largest lending protocol on Ethereum Layer2 protocol zkSync.
In a daring move, Yearn Finance, a decentralized platform that uses automated smart contracts to help investors maximize their yield, invited the crypto community to try and steal the funds inside its V3 Vault.
FUN BITS 😁
Elon Musk is serious about rebranding Twitter, I mean X. Let’s hear Ginny Hogan weigh in on Elon’s latest stunt:
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