One of Sam Bankman-Fried’s (SBF) largest venture capital bets, Modulo Capital, was founded by three former Jane Street employees – the proprietary trading firm where SBF worked before founding Alameda Research, CoinDesk disclosed. In addition to $400 million in financing, the secretive firm Modulo had an office in the same Bahamas building as FTX. Meanwhile, FTX is attempting to recoup the payments SBF made to politicians, startups and a host of charitable efforts, and said it would pursue the matter in court if not returned voluntarily.
Open or Closed?
Bankrupt crypto lender BlockFi has asked a U.S. court to let customers withdraw digital assets from their wallets on the platform. The company stated it has “no legal or equitable interest” in customer funds that were frozen a month before it filed for Chapter 11 bankruptcy protection on Nov. 28. Separately, bitcoin mining firm Greenidge Generation came to an agreement with its lender NYDIG about restructuring $74.7 million of debt, though a bankruptcy is still on the cards. Meanwhile, Kazakhstan, one of the world’s largest bitcoin mining hubs, approved a bill to introduce corporate tax for bitcoin miners as well as restrictions for the industry’s energy consumption.
Addresses Awake
More than 100 BTC (~$1.7 million) tied to the defunct Canadian crypto exchange QuadrigaCX were transferred out of cold wallets thought to be beyond anyone’s control over the weekend. The company’s bankruptcy trustee, EY, reportedly did not initiate the transfers. Three years ago, EY made an errant transaction to Quadriga-operated cold wallets – losing control of the assets because the only person who could access the funds, Gerald Cotten, was presumably dead. Now, blockchain sleuth zachxbt tweeted that nearly 70 BTC appear to have gone to coin mixing service Wasabi. At the time of its collapse, Quadriga was believed to have owed thousands of customers nearly $200 million in various cryptocurrencies.
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“When it comes to [Binance’s] financials, it is still very much a black box.”
– Nansen analyst Andrew Thurman, on CoinDesk TV’s “First Mover”
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Senator Elizabeth Warren (Drew Angerer/Getty Images)
On Wednesday, Sen. Elizabeth Warren (D-Mass.) introduced the “Digital Asset Anti-Money Laundering Act,” which would impose sweeping surveillance and registration requirements on almost all participants in blockchain networks – including software developers, miners and wallet creators. The bill would also effectively ban privacy-enhancing technologies in blockchain networks. The bill is a disaster for digital privacy and civil liberties.
That’s because the bill would require almost all participants in blockchain networks to register as money service businesses, including not only miners and wallet creators but also software developers. Miners, validators, nodes, both custodial and self-hosted cryptocurrency wallet providers and, as a catch-all, any “independent network participants” who have “control over network protocols,” would be captured by Warren’s expansive language.
In addition to registering, nearly all blockchain service providers would need to develop and maintain complicated anti-money laundering programs, collect the personal information of every person who uses their software and automatically file reports with the government about users’ transactions over a certain amount (regardless of whether those transactions are suspicious).
In short, the bill would grind the entire blockchain ecosystem in the U.S. to a halt. It would chill the ability of software developers to work on these technologies and prevent Americans from interacting with permissionless blockchains. It is simply too onerous for individual network participants like developers and miners to comply with the rules for money service businesses.
In fact, compliance is not only onerous but in many cases impossible. Bitcoin miners have no way of knowing the identity of the users whose transactions they are facilitating, and developers of open-source software have no way of knowing the identities of those who ultimately use their software. This is by design. The precise reason that blockchain technology is important, from a civil liberties perspective, is that it imports the privacy of cash into the online world. This new bill seeks to flip the entire purpose of blockchain on its head: turning it into a permissioned technology in which all users are surveilled by centralized gatekeepers.
– Marta Belcher, president and chair of the Filecoin Foundation, head of policy at Protocol Labs and special counsel to the Electronic Frontier Foundation
When discussing the optimization of blockchains, many will look to improve on the three pillars of blockchain technology: security, scalability and decentralization. While improvements to these blockchain fundamentals may improve the capabilities of the network, it falls short of making improvements for its users.
While Ethereum recently moved to proof-of-stake (PoS) to work on its fundamentals, NEAR protocol has already set itself on a strong foundation, 10 years ahead of Ethereum’s roadmap. Continue here.
*This is sponsored content from NEAR.
Off-Chain Signals
Genesis failure would land owner with $350mn payout to financier Todd Boehly (FT – paywalled)
The Biggest Story in Crypto in 2022: Contagion—From Terra to FTX (Decrypt)
