Welcome to The Wise Guy,
Where we take cryptocurrency seriously, but we also know how to have a good time.
That’s why we’ve curated the crème de la crème from not one, not two, but FIVE newsletters.
MilkRoad, Defiant, Messari, Bankless, and CoinDesk Node.
Defiant’s Top Story
LayerZero Deploys stETH Bridge Without Approval From Lido Governance
LayerZero, a blockchain platform, has faced backlash for launching a bridge that facilitates the transfer of stETH (a tokenized version of ETH) to other chains without obtaining approval from the Lido DAO. Many members of the Lido community are outraged by this deployment.
Telecom Giant Vodafone’s Digital Asset Division Becomes Chainlink Node Operator
Vodafone’s Digital Asset Broker, a subsidiary of the telecom giant, has joined Chainlink as a node operator. The company recently completed a proof of concept in partnership with Chainlink and Sumitomo Corporation, exploring the efficiency of data transfers using Chainlink’s technology.
LUSD Supply Shrinks As Redemption Woes Continue
The supply of the LUSD stablecoin, issued by Liquity, has decreased by 25% since early August. This decline is mainly due to redemptions, with arbitrage bots taking advantage of spreads between LUSD and sDAI. Researchers believe this trend has accelerated recently.
Arbitrum’s Orbit Is Ready For Mainnet Deployment
Arbitrum, an Ethereum scaling solution, has launched Orbit, a tech stack that enables developers to build customized chains using Arbitrum’s Layer 2 infrastructure. This move follows similar deployments by rival scaling teams Optimism and ZkSync.
Polygon Launches MATIC To POL Token Migrations
Polygon, a popular blockchain platform, has initiated migrations from the MATIC token to its newly launched POL token. The POL token will serve as the foundation for Polygon’s upcoming revamped staking layer, which will support restaking.
Bloomberg’s SBF Documentary Falls Short
Bloomberg recently released a documentary titled “RUIN: Money, Ego and Deception at FTX,” which examines the downfall of Sam Bankman-Fried. While the documentary showcases high production value and an intriguing story, it fails to deeply investigate the fraud committed by Bankman-Fried and includes interviews from unreliable sources.
Market Overview
- Bitcoin (BTC) is currently valued at $33,847, marking a 2.71% increase in the last 24 hours.
- Ethereum (ETH) is currently priced at $1,785, with a 1.12% increase in the past 24 hours.
- S&P 500 stands at $4,187, experiencing a decrease of 1.43% in the last 24 hours.Gold is priced at $1,984, showing a 0.46% increase in the past 24 hours.
- Arch WEB3, a crypto index, has gained 0.87 points, with a 0.43% increase.
- The Arch WEB3 index is composed of three sectors: FINANCE, INFRA, and CONSUMER. FINANCE has experienced a decrease of 1.66%, while INFRA has seen an increase of 3.24%, and CONSUMER has risen by 0.6%.
Messari’s Desk
House and Senate Hold Hearings on Terrorist Financing
On Wednesday and Thursday, two House Financial Services subcommittees and the full Senate Banking Committee held hearings to examine how money moves to Hamas, Hezbollah, and other terrorist groups.
The hearings were not crypto-centric, instead primarily focusing on Iran and sanction policies. Witnesses generally agreed that crypto is a small part of terrorism funding overall, but its use may be growing.
Legislative Proposals
Most of the legislation discussed was focused on strengthening sanctions against Iran. However, a few crypto-related policy proposals were discussed.
Senators Cynthia Lummis (R-WY) and Bill Hagerty (R-TN) argued for passing clear rules in the U.S. to bring more crypto onshore and subject intermediaries to anti-money laundering measures. Senators Jack Reed (D-RI) and Mark Warner (D-VA) promoted their CANSEE Act, which would require certain DeFi developers and investors to ensure compliance with sanction rules and the Bank Secrecy Act.
Senators Elizabeth Warren (D-MA), Raphael Warnock (D-GA), and John Fetterman (D-PA) pushed for the Digital Asset Anti-Money Laundering Act (DAAMLA), which would subject various crypto entities to the Bank Secrecy Act.
Mixers/NDAA Amendment
Privacy-enhancing services like mixers were a point of concern. Rep. Sean Casten (D-IL) asked about the national security threat posed by mixers, and the response was affirmative. Senator Lummis highlighted her NDAA amendment, which would require Treasury to assess and issue recommendations on the use of crypto mixers to facilitate illicit transactions.
Speaker of the House Mike Johnson/Crypto Implications
The House elected Rep. Mike Johnson (R-LA) as Speaker of the House, outlining a tentative blueprint for the House floor.
The priority list includes passing individual appropriations bills, the NDAA, FAA reauthorization, and the farm bill. The Financial Services and General Government Appropriations bill includes a provision that would prohibit the Department of the Treasury from establishing a U.S. central bank digital currency (CDBC) or discontinuing cash as legal tender. Passing crypto legislation this year may require attaching it to a funding bill or the NDAA.
PROOF Act
Senators Thom Tillis (R-NC) and John Hickenlooper (D-CO) introduced the PROOF Act, which would require exchanges to submit to Proof-of-Reserve attestations and prohibit the commingling of funds. Exchanges would need to obtain verification from independent auditing firms and hold customer assets in a manner that minimizes risk. Violations of the PROOF Act would result in civil penalties.
Looking Ahead
House Financial Services Capital Markets Subcommittee will hold a hearing on examining the SEC’s agenda and its consequences for U.S. capital markets.
Senator Gillibrand remains optimistic about passing bipartisan stablecoin legislation, with expectations for it to be included in the final NDAA later this year or early next year.
The D.C. Circuit Court of Appeals has directed the SEC to review Grayscale’s spot Bitcoin ETP application, and Grayscale filed for registering shares of Grayscale Bitcoin Trust, a necessary step for GBTC to convert to an ETF.
Bankless’ Desk
This Week in Numbers
Crypto market cap: $1.26 trillion (+11.5% WoW, +51.3% YTD)
Bitcoin (BTC) price: $34,118 (+14.6% WoW, +105.9% YTD)
Ethereum (ETH) price: $1,787 (+10.9% WoW, +48.8% YTD)
DeFi market cap: $70.08 billion (+8.7% WoW, +22.8% YTD)
NFT market volume: $693K (+12.6% WoW, -37.4% YTD)
The Bulls are Back
The crypto markets experienced a significant boost this week, fueled by rumors of the approval of a Bitcoin spot ETF. This news has sparked bullish sentiment and speculation about the beginning of a new crypto bull run.
Weekly Recap
Bitcoin blasts back: Bitcoin’s price surge rejuvenated the crypto market, with BTC briefly surpassing $35k before a minor retreat. Other cryptocurrencies like $LINK, $SOL, and $APT also saw significant price rebounds. The surge was likely influenced by speculation surrounding the impending approval of a Bitcoin spot ETF.
SBF has something to say: Sam Bankman-Fried, the founder of FTX, testified in his own court case, defending himself against allegations of fraud. While his testimony to the judge and jury seemed favorable, he faces critical cross-examination by prosecutors on Monday.
WSJ report raises ruckus: A Wall Street Journal report claiming that crypto was financing terrorism raised concerns among policymakers in Washington. However, the report was later challenged by Elliptic, a blockchain analytics firm, which clarified that there was no evidence to support the assertion. Bankless regular Nic Carter advocated for a retraction, and while the story remains, the WSJ issued a correction.
Rough week in DC for crypto: The issue of crypto-financed terrorism was prominently discussed in Washington, as lawmakers urged the Justice Department to conclude its investigation into Hamas’s alleged use of Binance and Tether. While the prevalence of such financing has been exaggerated, it is not the first time Binance’s involvement with Hamas has been raised.
Bored Apes beats down copycat: Yuga Labs, the creator of Bored Ape Yacht Club (BAYC), won a lawsuit against a copycat project that had appropriated BAYC’s art and made defamatory claims. Yuga Labs was awarded over $1.5 million in damages and gained control over the infringing assets.
MilkRoad SBF
In the highly-anticipated testimony of Sam Bankman-Fried, also known as fkSBF, things didn’t exactly go as expected. Instead of a full-on testimony, it turned out to be a mock hearing without a jury present. Here’s a summary of what happened:
1. The jury was sent home early
The judge made the decision to hear the defense’s arguments first to determine what would be admissible in open court. This suggests that the judge wanted to filter out any irrelevant or unsubstantial information before presenting it to the jury.
2. fkSBF performed well during his lawyer’s questions but struggled during the mock cross-examination
During court testimonies, the initial questioning is often designed to set up the witness in a positive light, similar to impressing your girlfriend’s father during a meeting. In fkSBF’s case, the focus was on the “advice of counsel,” which refers to the guidance received from FTX’s former lawyer, Dan Friedberg. The intention was to shift any blame onto Dan by emphasizing his involvement in various aspects of FTX’s operations.
However, when it came to the cross-examination by the prosecution, fkSBF’s responses became less clear and evasive. He either provided long-winded answers to yes/no questions or simply claimed not to recall certain details. This weakened his credibility and made his defense less effective.
3. fkSBF’s own lawyer snapped at him
During the cross-examination, the prosecution asked fkSBF whether he believed he should embezzle customer assets, leading his lawyer to object to the question. However, fkSBF disregarded his lawyer’s objection and answered the question anyway, stating that he did not believe he should do that. This unexpected response drew attention and potentially harmed his defense.
After about 2.5 hours of questioning, the judge concluded the session, stating that he had heard enough. He would rule on the admissibility of arguments in front of the jury, setting the stage for a dramatic courtroom scene.
CoinDesk’s Best Story
CZ’s Wealth Falls Amidst Binance Revenue Decline
Binance founder Changpeng “CZ” Zhao has experienced a significant drop in wealth due to a decline in revenue at the world’s largest cryptocurrency exchange. According to the Bloomberg Billionaires Index, CZ’s wealth has shrunk by an estimated $11.9 billion, with his net worth projected to reach $17.2 billion.
CZ’s peak net worth was recorded at $96 billion in January 2022. The Bloomberg Billionaires Index calculates Binance’s revenue based on trading data from the spot and derivatives markets, referencing platforms like CoinGecko and CCData.
Increased Open Interest in Bitcoin and Ether Options
The notional open interest of active bitcoin and ether options contracts on Deribit, a top cryptocurrency exchange, has soared to $20.64 billion. This figure closely resembles the peak recorded in November 2021 when bitcoin was trading above $66,000. The current open interest surpasses the levels seen during that period, indicating heightened activity in the options market. With such significant engagement, investors and market makers participating in options trading will wield greater influence in determining the spot market price.
Gemini Sues Genesis Global for $1.2 Billion
Cryptocurrency exchange Gemini has filed a lawsuit against Genesis Global, its former business partner in the Gemini Earn product, seeking control of 60 million shares of the Grayscale Bitcoin Trust (GBTC) pledged as collateral. Gemini aims to use these shares to satisfy the claims of every Earn customer who had their funds locked up when Genesis froze withdrawals in the past year.
Twice weekly crypto goodness, coming your way! Catch us every Monday, Tuesday and Friday. And hey, don’t forget to check us out on Wednesdays for all the latest AI news – because why limit yourself to just one kind of intelligence?
