At least three senior officials have departed embattled crypto exchange Binance this week as the company prepares to defend itself on multiple fronts, Fortune reported on Thursday. Binance General Counsel Han Ng, Chief Strategy Officer Patrick Hillmann, and Senior Vice President for Compliance Steven Christie are among those that have resigned, a source familiar with the matter told Fortune. Their departure follows Senior Director of Investigations Matthew Price’s recent decision to part ways with the exchange.
Yet Another Lawsuit
Crypto trust firm Gemini sued Digital Currency Group on Friday, alleging the industry conglomerate and its founder Barry Silbert committed “fraud” through DCG subsidiary Genesis, which held funds for Gemini tied to the latter company’s Earn program. The lawsuit is intended to recover Gemini’s funds from DCG, a filing made to the New York County Supreme Court said. Gemini entered into a partnership with Genesis which allowed its customers to earn up to 7.4% in annual percentage yield. Gemini sent its customers’ funds to Genesis, which in turn loaned them out to companies like the now-defunct Three Arrows Capital. (Note: Like Genesis, CoinDesk is a subsidiary of DCG.)
Exploit Number 130 Million
Cross-chain router Multichain developers have confirmed an exploit that impacted $130 million in user-supplied tokens and cautioned users against using its service, as per Friday tweets. Developers said Friday that the team “is currently investigating.” The team added, “it is recommended that all users suspend the use of Multichain services and revoke all contract approvals related to Multichain. The Multichain service stopped currently, and all bridge transactions will be stuck on the source chains. There is no confirmed resume time.”
The Takeaway: Threads is Libra and Meta All Over Again
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It has been clear for many years now that Mark Zuckerberg, founder and leader of the biggest platforms in Web 2.0, wishes he was spending more time building in the crypto world. Now he’s at it again with Threads, Meta’s new Twitter-like social media app.
Zuck’s third bite at the crypto-adjacent apple might go better than the first two, if only because it’s far less ambitious – like most of Facebook’s successes, Threads is a copy of an existing product. While it’s not integrated yet, Instagram CEO Adam Mosseri says Threads will eventually use the same ActivityPub protocol as the open-source Mastodon system. ActivityPub is a protocol standard under the very mainstream W3C body which offers, among other things, a form of the “data portability” digital activists have long asked of social media services.
The most direct influence on Threads’ backend design may well be BlueSky, Jack Dorsey’s experimental Twitter competitor, which is building its own answer to the ActivityPub protocol, AT Protocol. Dorsey himself was certainly influenced by the push for decentralized social media in the crypto world, going all the way back to the tokenized Steemit circa 2016.
There’s also the recent popularity of Nostr, a competing decentralized social media standard, among Bitcoin types – including Dorsey. And there is (was?) also DeSo, formerly BitClout, a blockchain-backed and tokenized system that has never seen meaningful adoption.
Decentralization isn’t everything
But the idea that Threads is “decentralized” could easily be oversold. For one thing, decentralization on the back-end doesn’t seem like it’s going to stop Meta from doing its very favorite thing: gathering data about users of the front-end Threads app. According to its App Store disclosures, the Threads app gathers the full spectrum of user data, which Meta needs to execute on its targeted-ad business model.
(It’s also revealing that Threads is not launching in Europe yet, likely because European privacy standards are much higher than ours.)
This combination of a decentralized back-end and a data-gathering app out front is an exact parallel to the setup Meta (then Facebook) was pursuing with Libra. Facebook touted the Libra protocol as decentralized – a claim that was itself questionable at best. But most users would have been funneled to a wallet that gathered data just as intensely as Facebook.com.
It’s also unclear exactly how “portable” Threads user data will be in practical terms. Critics have often described Mastodon, another platform that uses the ActivityPub protocol, as extremely clunky and non-intuitive, with moving from one server to another a particular challenge. It would be in Meta’s hands, it seems, to build tools that would make it easy for users to leave Threads, but that doesn’t seem in its financial best interest. And Meta, a publicly traded company, doesn’t do things that aren’t in its financial best interest.
It also seems highly unlikely that Threads will become a new home for the discussions and personalities that make up “crypto Twitter.” For one thing, hostility to Meta runs extremely deep in crypto circles, largely thanks to its longstanding indifference to privacy. Because it benefits from spillover from Instagram, one canny analysis also argued that Threads’ audience demographic is “hot and dumb.” Within the digital asset industry, that would leave Dr. Craig Wright a very lonely poster.
Elon Musk: accidental decentralization hero?
None of this would be happening without Elon Musk. Musk’s catastrophic takeover of Twitter, which by one metric has destroyed roughly $30 billion worth of that platform’s enterprise value, has finally convinced the world what crypto types have been warning for years: that any user-generated media platform with a single point of control (or in Elon’s case, failure) is bad for users over the long term.
Full disclosure, I’m experiencing this tragedy personally. After more than a decade on Twitter, I finally really started doing numbers over the last couple of years, only to get rug-pulled by Musk. The drumbeat of bad decisions has been ceaseless, from the bizarrely counterproductive rethink of verification to the hostile abuse of trustworthy news sources to the blocking of certain external links.
Musk’s decisions have led to a noticeable exodus of users, notoriously culminating in a view limit imposed last week. The view limit has since been seemingly relaxed, but its announcement became a breaking point for many users. We don’t know the numbers quite yet, but the past week has been a flurry of pre-emptive sad goodbyes and people debating which alternative platform to flee too.
It seems Meta smelled blood in the water and chose its moment to strike. An unnamed Meta executive told employees that “‘We’ve been hearing from creators and public figures who are interested in having a platform that is sanely run,’” according to The Verge. New York Times reporter Mike Isaac has cited internal sources claiming that the launch of Threads was accelerated to capitalize on Musk’s view limit debacle.
Plenty of wags (including me) have joked that Musk’s mismanagement represents a glorious opportunity for obsessive tweeters to throw off the shackles of digital addiction and go touch some grass. If Twitter’s downfall drives home the importance of truly public and decentralized digital infrastructure, that will be an even bigger benefit.
Meta, the Death Star of social media, is by no means the right champion to take that vision to the finish line, but we don’t need them to be. Libra wound up hugely legitimizing crypto technology even as it failed. By the same token, Threads using a decentralized backend is a gargantuan endorsement of the idea, and a major boost to the broader ActivityPub ecosystem, even if most of Threads’ users wind up not caring in the slightest.
