More from Crypto collapse: FTX’s fall is one piece of a long, cold, contagious crypto winter
That’s the statement from Brian Armstrong to the Financial Times, about the company’s choices that led to a lawsuit from the US Securities and Exchange Commission.
We really didn’t have a choice at that point, delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US.
Armstrong claims the regulators asked Coinbase to delist basically all the over 200 tokens it trades, before the lawsuit was filed that points at 13 of them.
A lawsuit filed Thursday by FTX against its former leaders showed Sam Bankman-Fried’s younger brother messaging someone at the FTX Foundation charity about buying the Pacific island nation of Nauru, as reported by Bloomberg.
[it would be used] for “some event where 50%-99.99% of people die [to] ensure that most EAs [effective altruists] survive” and to develop “sensible regulation around human genetic enhancement, and build a lab there.” The memo further noted that “probably there are other things it’s useful to do with a sovereign country, too.”
This would be news to the nation’s roughly 12,000 existing inhabitants. Also, at 213 feet elevation, it’s vulnerable to rising seas, and damage from phosphate mining has rendered most of its land uninhabitable.
Remember the “Crocodile of Wall Street,” aka Razzlekhan, aka Heather Morgan? She and her husband were arrested in 2022 on charges of trying to launder billions of dollars worth of Bitcoin stolen in the 2016 hack of Bitfinex. She’s also a rapper, among many other things.
Now Reuters reports she and her husband have reached a plea deal with prosecutors and are set to have a hearing on August 3rd.
Does this inspire confidence?
The company told employees that it would stop offering certain benefits, effective June 19, including mobile-phone reimbursement, fitness reimbursement and work-from-home expenses, among other items, according to former employees and a message from Binance’s internal messenger viewed by The Wall Street Journal.
According to a report from The New York Times, Taylor Swift’s team signed a deal with FTX that could’ve paid up to $100 million following months of deliberation, contrary to a previous report that she didn’t.
The thing is, the deal didn’t actually go through. Sources tell the NYT that FTX founder Sam Bankman-Fried canceled the deal last minute, leaving Swift’s team feeling frustrated. Talk about dodging a bullet.
[The New York Times]
The suit alleges Friedberg enabled Sam Bankman-Fried and others to misappropriate billions in customer funds leading up to the catastrophic collapse of the company late last year, according to Bloomberg. The fall of FTX was just one part of the ongoing crypto winter.
The suit lays out the allegations:
Friedberg and others facilitated the routing of billions of dollars in purported profits of the FTX Group to the FTX Insiders, and their families, friends, and other acquaintances through purported personal ‘loans,’ bonuses, ‘investments,’ and all other means of transfer, including real estate purchases and hundreds of millions of dollars in charitable and political contributions.
According to our survey results, as much as people are sure AI technology is going to have a significant impact on society, most of them don’t feel that way about non-fungible tokens.
Yep, it uses ChatGPT. It only raised $5 million of the $10 million it wanted earlier this year so it seems like I’m not the only who’s a little skeptical of this.
The Block cites a source who claims to know the people behind recent phishing attacks with “NFT drainers” targeting high-value accounts. According to OpenSea employee “Plum,” it’s high school kids who “all play Roblox for the most part. So they’ll buy the coolest gear for their Roblox avatar, video games, skins and things like that.”
And they’re not even old enough to check out everything Roblox has to offer!
In most normal markets, market making and prop trading are done by independent companies. One of the reasons the SEC is mad at Binance is that they allege Binance’s entities may have manipulated crypto markets.
Also:
One of the people with direct knowledge about the teams said that Crypto.com executives gave other, external trading houses “absolutely dramatic sworn statements that Crypto.com was in no way involved in trading”, while another said that employees were asked to “say there is no internal market maker type operation.”
In response to questions from the Financial Times, Crypto.com said that employees had not been asked to lie to other market participants.
[FinancialTimes]
...but for passport shenanigans, not Terra / Luna. He’s been found guilty of forgery by a Montenegro court. The time he’s served since being arrested in March will count toward the sentence.
Remember when we talked about how the SEC has showed up on a horse, guns blazing, to regulate crypto? Here’s a nice report on how they’re also coming for the VC firms that poured money into crypto with a new rule change:
Legal executives at venture firm Andreessen Horowitz wrote that “absent a suitable self-custodial exception, the proposed Rule would effectively ban RIAs from holding and transacting in crypto assets for clients,” while Paradigm wrote that the rule could result in an effective “shadow ban” of crypto.
a16z could be particularly hard-hit by this change.
[The Information]
Bloomberg has some details on the stablecoin. Highlights include: a “sizeable loan” to the Celsius Network, extensive third party loans, and its banking network which, whew buddy. Tether made loans to parties such as Bitfinex — and lent $5.1 billion at one point, a significant amount of Tether!
I wonder how much Tether has cleaned up their act! Perhaps the team will release recent details to — ahahahahaha just kidding. Let’s see what else comes out.
Hot on the heels of the SEC regulatory crackdown on crypto, Blackrock has filed paperwork for a Bitcoin ETF, with Coinbase custodying. The SEC has never approved a spot Bitcoin ETF, and is embroiled in a lawsuit with Grayscale about rejecting their attempt at a Bitcoin ETF. (A ruling in that case is expected later this year.)
A brief guide to the politics behind the Binance and Coinbase SEC cases.
Before the Binance and Coinbase cases, the big crypto v SEC case was Ripple. Anyway they’ve released some EMAILS around a speech given in 2018 by William Hinman, which suggests that perhaps Ethereum is not a security, and looooooooooool:
“As written, the language remains vague as to whether ETH is a security. If you want to make an affirmative statement that it is not a security, the language could be stronger (i.e., just say it). If you don’t want to take an affirmative stance, we suggest using language similar to what you used for Bitcoin re. the disclosure regime to make it more consistent,” wrote former SEC Director of Trading and Markets Brett Redfearn on June 12, 2018.
Redfearn left comments in a proposed draft of the speech further emphasizing that point, saying parts of it “appear likely to create more confusion about the status of ETH.”
Ripple has a perspective, of course.
That’s not all. There may be some hiccups for the SEC:
She also expressed skepticism about the S.E.C.’s use of its enforcement powers to regulate the crypto world, calling it “inefficient and cumbersome.”
[The New York Times]
That was said by our EIC Nilay Patel on an episode of the podcast Decoder last year about decentralized autonomous organizations.
Now, a lawsuit won by the Commodity Futures Trading Commission (CFTC) against something called Ooki DAO establishes that these crypto-era decentralized finance (DeFi) orgs can be held liable for breaking the law.
CFTC Division of Enforcement Director Ian McGinley:
The founders created the Ooki DAO with an evasive purpose, and with the explicit goal of operating an illegal trading platform without legal accountability.
This decision should serve as a wake-up call to anyone who believes they can circumvent the law by adopting a DAO structure, intending to insulate themselves from law enforcement and ultimately putting the public at risk.
Did you know: Kyle Davies and Su Zhu are surfing and painting still lifes? Also, apparently Davies is thinking about AI. If you are curious about what Davies and Zhu are up to now, the answer is: having a nice time.
If you are more interested in the details of the Three Arrows Capital business and bankruptcy, you might check out a YouTuber instead: Hugh Hendry, whose interviews of Davies get into the guts of the firm.
[The New York Times]
Previously: “FTX is fine. Assets are fine.” - Sam Bankman-Fried. “All funds are safe.” - Alex Mashinsky, Stay SAFU out there!
The Bloomberg columnist, beloved by Verge staffers, has filed a banger, folks. He begins with a little victory lap and gets funnier from there:
“A decent rule of thumb,” I wrote in March, “is that all cryptocurrency exchanges are doing crimes, and if you’re lucky your exchange is doing only process crimes.”
[Bloomberg.com]