Trolls, Memes, and Money: 👹 Wall Street Bets Meets Crypto 🤑
Weekly News Recap: 🏛️ Terraform Labs settles with SEC, 🔗 ETH ETFs approval expected by summer, 💼 Paxos cuts workforce, 🎉 ZKsync unveils airdrop, and more!
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Are Memecoins the Next Evolution of Wall Street Bets?
Nathaniel Popper just published his latest book, “The Trolls of Wall Street,” covering the Wall Street Bets phenomenon. Funnily enough, his book comes at a time when there are striking similarities with the current memecoin mania in crypto.
In this episode, Popper explores the rise of online investing communities like Wall Street Bets and their reflection on broader societal changes, particularly among young men.
He also touches on the parallels between the trolling culture of these communities and the rise of figures like Donald Trump, and delves into the hidden dangers and psychological influences of memes in modern investing.
Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Overcast, Podcast Addict, Pocket Casts, Castbox, Amazon Music, or on your favorite podcast platform. Or watch it on YouTube.
Weekly News Recap
Terraform Labs Settles SEC Fraud Case for $4.47 Billion
Terraform Labs, the entity behind the collapsed Terra/Luna ecosystem, will pay $4.47 billion to settle a lawsuit with the US Securities and Exchange Commission (SEC) following the 2022 collapse of Terra/Luna, which resulted in a $40 billion loss for investors. This settlement follows an April trial where Terraform and founder Do Kwon were found liable for fraud.
The settlement includes $3.59 billion plus interest in disgorgement and a $420 million penalty for Terraform. Kwon will pay $204.3 million, covering disgorgement, interest, and penalties, and must transfer these funds to Terraform’s bankruptcy estate for investor distribution. He is also barred from serving as an officer or director of any public company.
The SEC initially sought a $5.3 billion fine. The settlement mandates that Terraform wind down its business and implement a Chapter 11 liquidation plan, replacing its directors and appointing a trustee.
“The entry of this judgment would ensure the maximal return of funds to harmed investors,” the SEC stated.
Chair Gensler Says Ether ETFs to Be Fully Approved by Summer
On Thursday, SEC Chair Gary Gensler informed senators that the final approval for Ethereum spot ETFs should be completed by summer's end. During a Senate Appropriations Committee hearing, Gensler mentioned that while initial approvals are in place, the final registration details are being finalized at the staff level.
Gensler reiterated his stance on the crypto industry's non-compliance and declined to classify ETH as a commodity. Meanwhile, CFTC Chair Rostin Behnam affirmed that ETH is a commodity, highlighting ongoing regulatory ambiguities between the SEC and CFTC regarding digital assets.
Paxos Cuts Workforce Despite Strong Financial Position
Stablecoin issuer Paxos has laid off approximately 20% of its workforce, totaling 65 employees, despite having over $500 million on its balance sheet. CEO Charles 'Chad' Cascarilla stated that this decision aims to better position the company for future opportunities in tokenization and stablecoins.
"We shared a difficult decision to reduce our employee headcount by ~20%," Cascarilla wrote in an internal email obtained by The Block. Paxos confirmed the email's contents, noting affected employees will receive 13 weeks of severance pay and other support.
The layoffs bring Paxos' headcount to between 200-300 employees. Paxos was valued at $2.4 billion after a $300 million Series D funding round in 2021.
PleasrDAO Sues Martin Shkreli Over Wu-Tang Clan Album
PleasrDAO has sued Martin Shkreli, claiming he illegally shared a one-of-a-kind Wu-Tang Clan album after forfeiting his rights to it. Shkreli originally bought "Once Upon a Time in Shaolin" for $2 million in 2015, but lost it during a $7.4 million asset forfeiture following his 2017 securities fraud conviction.
PleasrDAO purchased exclusive rights to the album in 2021 for $4 million and paid an additional $750,000 in 2024. Despite this, Shkreli has allegedly continued to distribute the album, including hosting a livestream on X Spaces. PleasrDAO's lawsuit accuses Shkreli of causing significant monetary and irreparable harm.
A court has granted PleasrDAO a temporary restraining order, barring Shkreli from streaming or distributing the album.
Shkreli doesn’t seem very preoccupied about the lawsuit. He posted on X, “these super nerds are suing me 🤣🤣🤣🤣 the least crypto ethos, whitest, least culturally relevant dorks.” Later, he added: “ the guy running pleasrdao is a megalomaniacal name dropping lawyer who thinks hes important. he bosses waiters around, looks down on others, he's not a man of the people by any means.
ZKsync Unveils Massive Airdrop
ZKsync has announced an airdrop of 3.6 billion ZK tokens, distributing 17.5% of its total token supply to 695,232 wallets. The majority, 89%, will go tousers of ZKsync, a Layer 2 rollup on Ethereum, while the remaining 11% will be allocated to contributors. The airdrop is set to launch on Monday, with tokens immediately liquid, and is currently valued at approximately $1.4 billion, making it one of the largest airdrops ever.
Crypto projects typically allocate approximately 10% of their token supply for their users. However, despite ZKSync’s comparatively generous distribution, it has sparked controversy. Critics argue that the airdrop's criteria facilitated Sybil attacks, in which users manipulate eligibility with multiple wallets. Adam Cochran from Synthetix wrote on X that this “was not a well planned airdrop from a sybil perspective,” and added that real users could easily miss the criteria while farmers hit them effortlessly.
Optimism Finally Implements 'Fault Proofs'
Optimism, one of Ethereum's top Layer 2 blockchains, has introduced its long-awaited "fault proofs" to enhance security and reliability. This update addresses a key missing feature, allowing the network to prevent inaccurate transaction data and enabling a decentralized withdrawal mechanism.
Arbitrum, a main competitor to Optimism, is also progressing toward full decentralization with its BOLD proposal, which aims to enhance security and allow permissionless validation. Arbitrum already has fault proofs in place, but they were not permisionless. With this move, BOLD would put Arbitrum in the same stage of decentralization as Optimism.
Solana Foundation Removes Validators Amid Controversy Over MEV
The Solana Foundation has taken action against validators engaging in sandwich attacks by removing them from its Delegation Program, which subsidizes these operators. A sandwich attack is an MEV (maximal extractable value) tactic where a transaction is manipulated for profit. This decision aims to protect retail users from such abuses.
The Jito Foundation is considering a similar approach. Jito is a Solana-based liquid staking protocol, and has the highest TVL in the network. A proposal by Jito Foundation contributor Andrew Thurman suggests empowering a group to blacklist validators participating in harmful activities like private mempools. Approximately 10% of validators in the Jito Stake Pool have been identified as engaging in these activities.
While Solana’s efforts to combat MEV are seen as protective, critics argue it centralizes power by picking winners and losers among validators. Some community members fear this will undermine the decentralization Solana strives for. Conversely, supporters believe these measures promote network integrity and validator accountability.
UwU Lend Hack Leads to $19 Million Loss, Sifu Offers Bounty
Decentralized finance (DeFi) protocol UwU Lend, founded by Michael Patryn, also known as "0xSifu," suffered a $19 million exploit due to a flash loan attack. Patryn, co-founder of the failed crypto exchange QuadrigaCX and former treasurer of Wonderland DAO under the alias Sifu, was ousted after being doxxed by blockchain investigator ZachXBT in January 2022; soon after, he allegedly transferred funds to Tornado Cash, which he claimed were his own but some speculated belonged to the community.
The attack involved manipulating the price of the stablecoin USDe through an improperly designed Oracle, causing significant losses.
Blockchain security firms Cyvers and Arkham highlighted the scale of the hack, initially estimating losses around $14 million, and later updated to $19.3 million.
In response, Patryn has offered a 20% bounty to the hacker for returning 80% of the stolen funds.
On Thursday morning, the platform suffered a second hack, losing $3.7 million via flash loans, despite claiming the vulnerability was fixed after the exploit on Monday.
MicroStrategy Proposes $500M Debt Sale to Increase Bitcoin Holdings
On Thursday, MicroStrategy announced plans to offer $500 million in convertible senior notes to acquire more Bitcoin and fund other corporate activities. MicroStrategy began accumulating Bitcoin in 2020, adopting it as a reserve asset, and already holds 214,400 BTC, valued at over $14 billion.
The notes, due in 2032, will be unsecured and pay interest semi-annually starting December 15, 2024. The offering, aimed at qualified institutional buyers, is subject to market conditions with no guaranteed terms.
Curve Finance Founder Liquidated Amid CRV Price Drop
Michael Egorov, founder of Curve Finance, faced significant liquidations as the CRV token price plummeted by 25% in 24 hours. Egorov’s on-chain loan positions, totaling $140 million in CRV, were collateralized across multiple DeFi platforms, including Inverse, UwU Lend, and Fraxlend.
The steep decline in CRV value triggered liquidations, with Egorov’s positions on UwU Lend seeing additional liquidations worth over $5 million.
Ergorov posted on X: “ [the] Size of my positions was too large for markets to handle and caused 10M of bad debt. Only CRV market on http://lend.curve.fi (where the position was the biggest) was affected. I have already repaid 93%, and I intend to repay the rest very shortly. It will help users not to suffer from this situation.”
Trump Pledges to be 'Crypto President' at Fundraiser
At a San Francisco fundraiser, Donald Trump declared his intention to be a "crypto president" while criticizing Democratic regulations on the industry. The event, hosted by venture capitalists David Sacks and Chamath Palihapitiya, raised $12 million for his campaign.
Tech executive Trevor Traina confirmed Trump's promise to champion cryptocurrency, though no specific policies were detailed. The fundraiser saw attendance from notable crypto figures, including Coinbase executives and the Winklevoss twins.
Meanwhile, following Trump's lead, President Joe Biden's re-election campaign is reportedly discussing accepting crypto donations via Coinbase Commerce.
Friend.tech to Migrate From Base to Friendchain
Friend.tech, a decentralized social media platform, announced its plan to migrate from Coinbase's Layer 2 network Base to its own blockchain, named Friendchain. Partnering with crypto infrastructure platform Conduit, Friend.tech will use its native FRIEND token as the gas token on the new network.
The announcement caused a significant but short-lived spike in FRIEND’s price, which rose by over 60% before falling back to around $0.70. Some users questioned the necessity and benefits of this move, with concerns about potentially higher gas costs.
Jesse Pollak, creator of Base, expressed his support for the transition despite feeling disappointed.
Paradigm Raises $850 Million for New Crypto Investment Fund
Paradigm, a web3 venture capital firm, has raised $850 million for its third investment fund focused on crypto. This follows their April discussions with investors about raising the same amount. Established in 2018, Paradigm previously launched a $2.5 billion venture fund in 2021. The firm has recently led significant fundraising rounds for crypto startups, including $55 million for Succinct Labs and $18 million for Privy.
