FTX lawyers have said that ex-CEO Sam Bankman-Fried’s mother and brother are not cooperating with the probe into the collapsed crypto exchange, in court filing Wednesday. The attorneys, which are inquiring into who received potentially stolen funds from FTX, said Barbara Fried “has ignored the requests altogether” and “have not received meaningful engagement or any response from [former chief engineer Nishad] Singh or Mr. Gabriel Bankman-Fried,” Sam’s brother. Meanwhile, publicly-traded crypto miner Argo Blockchain is facing a class-action lawsuit over alleged misleading statements made during its U.S. unit’s initial public offering. This includes failing to disclose its significant capital constraints, electricity costs and network difficulties – potentially overstating its business viability. Finally, in an unanticipated legal maneuver, Sen. Ted Cruz (R-TX) has proposed requiring vendors on Capitol Hill to accept crypto as payment.
Across Chains
Bitcoin is having its best start to the year since 2013 – jumping 40% in January. “Traditional and crypto-focused hedge funds, corporates and traditional asset managers have been buying,” Coinbase Institutional’s head of research wrote. Meanwhile, Polygon’s MATIC is up 48% since Dec. 31 amid a spike in daily transactions, brand announcements and anticipation of its next-gen ZK-based tech. The Ethereum scaling tool is now the second largest chain in terms of daily active users. Gains Network, a decentralized derivatives exchange launched first on Polygon, has seen $1.5 billion in trading volume in a month since being deployed on Arbitrum. Finally, the much-anticipated Cardano-based stablecoin, djed, is expected to launch on 40 Cardano-based apps next week while developers behind Floki Inu, the Shiba Inu-themed memecoin, have proposed burning $55 million in FLOKI tokens and other plans to become a packleader in DeFi.
A Raid, A Rejection
The offices of Bithumb were raided on Thursday as part of an investigation into price manipulation of a coin listed on the South Korean crypto exchange. The coin involved wasn’t identified. The raid took place at a time when Bithumb – which is one of only five crypto exchanges allowed to operate in Korea following a 2021 crackdown – is also being probed by South Korea’s tax authorities. Meanwhile, battered crypto bank Silvergate has suspended dividends paid on its preferred stock, as it looks to preserve capital. Finally, the U.S. Securities and Exchange Commission has rejected Ark Investment Management and 21Shares’s jointly filed spot bitcoin exchange-traded fund (ETF) application – for the second time.
Navigating Web3 right now is no walk in the park. As the world continues to feel the effects of an economic slowdown and a swelling of prices from inflation, Web3 is experiencing a contraction in participants and venture capital. This can be disheartening for those looking to invest in crypto projects, as many are struggling to secure sufficient funding or seeing slower monthly Web3 developer activity than in 2020 or 2021.
Despite this adversity, there remains considerable potential both now and in the future.Continue reading.
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Sound Bites: Privacy Focus
“It’s a technology that needs to continue to evolve. And we haven’t seen that in previous iterations of blockchains.”
– Aptos Labs CEO Mohammad Shaikh, discussing the opportunity for emerging layer 1 chains, on CoinDesK TV’s “First Mover.”
The Takeaway: Crypto Characters
“Why isn’t this a TV show already?!” This is a common question on Capitol Hill when it comes to crypto policy. Considering the zany characters (in politics and crypto), bombastic lines of questioning at congressional hearings, gaffes which turn into meme tokens and constant media frenzy – crypto is a policy realm unlike any other. The topics are complex, the news cycle is relentless, and the challenges to solve are daunting, which is why crypto policy is not for the faint of heart. The stakes for the industry couldn’t be higher, and “Congress and Crypto: Season 4” is shaping up as the most consequential yet. In describing this show, it’s helpful to break down the previous seasons.
Season 1 (2016-2018) takes place in WeWork offices and stars lobbyists at CoinCenter and the Blockchain Association. For a relatively new industry, these two organizations have been around the longest. The handful of tech and privacy-focused policy wonks spend their days strategizing how to break down the complex topic of cryptocurrency to members of Congress who are double their age and the Capitol Hill staffers who are half it.
Season 2 (2019-2021) takes place on the heels of the announcement of Facebook’s Libra project and ends with the infamous “infrastructure fight” episode. During the climax, the industry rallies together to attempt to defeat a crypto tax provision tucked into President Joe Biden’s hallmark legislation, the bipartisan infrastructure bill. The cast of characters grows into an ensemble, and each crypto faction splinters the ecosystem further.
Season 3 (2022) brings a new set of major players, and none is more important than Sam Bankman-Fried – a personality so large that he’s known only by his initials, SBF. He paints himself as the savior of the crypto industry and aggressively positions himself in front of Congress and regulators in every corner of Washington, D.C. In the end, however, SBF turns out not to be crypto’s white knight but the season’s villain. The collapse of his FTX crypto exchange and ensuing contagion wipes out several companies, and leaves one-third of all U.S. policymakers frustrated and embarrassed for having taken donations from an alleged fraudster.
Season 4 (2023) is shaping up to be the most memorable yet, with drama in both the speaker’s race and crypto policy. The industry is at its lowest point in the show’s history as the damage done by FTX’s collapse continues to reverberate. Relationships are tarnished, skeptics are more emboldened than ever and, in some cases, crypto is seen as politically toxic. Divided control of Congress provides opportunities for the industry, but it will take dedicated negotiations, education and political power to move anything. Fortunately, these are familiar challenges for the industry; every step in crypto policy is a brutal, bruising slog, but that is also what makes the back and forth so fun to watch.
This season will include new characters including former Treasury employee Rep. French Hill (R–Ark.) and Rhodes scholar Rep. Jim Himes (D–Conn.). These members, and several others, are seen as some of the sharpest minds in Congress, their backgrounds in traditional finance. While they approached crypto in seasons 1 and 2 with pronounced skepticism, they have gravitated toward issues that blend the two realms, such as stablecoin regulation.
Rep. Patrick McHenry (R–N.C.), now chair of the House Financial Services Committee, has expressed interest in market structure legislation and parameters around stablecoin issuers. Dealing with those two issues may garner a hefty amount of support from both sides of the aisle. In the other corner stands Sen. Sherrord Brown (D–Ohio), McHenry’s crypto polar opposite. While it’s difficult to see either protagonist finding common ground on sound crypto policy, many of the promising bills introduced in the 117th Congress were bipartisan.
Season 4 will also see the departure of many characters in Washington. Cabinet secretaries will depart, companies will shed their lobbyists, organizations will falter in the bear market and policymakers will pivot to other more pressing concerns as the year progresses. Regardless of those comings and goings, crypto is here for good. While the craziness of the day-to-day news is what makes this sector attractive, crypto has also proven to be resilient as an industry, and its main characters relentless.
Consensus is the world’s largest, longest-running and most influential gathering of the crypto, blockchain and Web3 communities. Join us April 26-28 in Austin, Texas, to learn, grow and build alongside innovators, brands, creators, investors and more. Use code NODE15 for 15% off your pass. Learn more and register.
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