The Web3 Rewind

A handful of the most interesting and current stories in the blockchain/web3 world not published on DeCential this past week in case you missed them

Hello and welcome back to the Web3 Rewind! Per usual with the industry, lots has happened this past week so without further adieu, let’s dive into this week’s news. On a program note, we’ll be taking a short break over the holidays but will be back in 2023. We hope you have a wonderful and peaceful end of the year.

The Latest

One…two… eight strikes, you’re out!

Samuel Bankman-Fried, “...a/k/a ‘SBF,’ the defendant, and others known and unknown…,” were charged with 8 counts ranging from wire fraud, wire fraud conspiracy, commodities and securities fraud conspiracy, money laundering, defrauding the United States and violating campaign finance laws. The charges rained down from the US District Court for the Southern District of New York. Additionally, in a “parallel action” the SEC charged SBF with “orchestrating a scheme to defraud equity investors in…FTX….” The charges came lockstep with his arrest by the Bahamian Police on Monday Dec. 12.

Needless to say, what had appeared as an oddly passive response from regulators that were privy to FTX’s collapse, in turn revealed that law enforcement and regulators were watching and waiting to act in unison. In last week’s newsletter we noted our surprise that SBF was still walking free, and furthermore note that we feel this is a more than appropriate response to what SBF has perpetrated.

The impact of these charges is immense to say the least. While other financial fraudsters have gotten their 15 minutes in the news cycle, SBF will go down in infamy as what has been a climactic end to the month-long saga of FTX’s implosion.

SBF’s 18 page draft testimony was leaked to Forbes and in it, there is a revelation into his thinking. At a high level, his statement smacks of “too little too late.” SBF also spreads the blame by noting that Jon Ray, FTX’s CEO in bankruptcy, is not concerned with “making all customers whole,” referring to FTX’s pausing of withdrawals. He also targets Binance’s CZ as instigating rumors about SBF’s hand in the implosion of Three Arrows Capital (3AC), as well as perpetrating other “false claims” about SBF’s role in the greater crypto ecosystem.

SBF has changed his tune from the carefree approach that he took over the course of last week’s in-person interviews. As other regulatory bodies also prepare to file additional charges against him, it now seems clear that everyone wants their pound of flesh. He deserves a fair trial where the facts will come out. But it seems almost a sure bet that he will end up serving time for the fraud he orchestrated.

The demise of SBF is not yet over, but if this sordid affair has taught us anything it’s that there will likely be more to come. — Parker Dresdow, DeCential Media

The next shoe to drop? dept.

In the midst of a bloody season for Centralized Exchanges (CEXs), Binance is showing signs of great internal bleeding. Per Reuters’ reporting, $1.9 billion in various cryptocurrencies has been withdrawn from the exchange. Binance CEO, Changpeng Zhao, appears to be calm, tweeting, “FUD [Fear Uncertainty Doubt] brought "stress test", which in turn helps to build the credibility for exchanges that [pass] the test…” 

With FTX’s contagion still raging about, whether this was “FUD” and whether Binance will pass the test remains to be seen. Reuters also notes that Binance is still under pressure from the community to be more transparent about performance, in combination with regulatory pressure from the US DOJ as they look for violations of anti-money laundering laws, amongst other financial violations. — PD

Quick Bits

Avalanche’s Core Wallet Goes Mobile With Android Launch

• Thanks to new innovations by Avalanche’s development company, Ava Labs, Avalanche users can now access their wallet through the company’s flagship non-custodial multichain Core Mobile release. This new feature aims to be a one-stop shop for users by connecting “DeFi, NFT, and gaming ecosystems across the Avalanche, Bitcoin, and Ethereum networks, as well as other EVM-compatible blockchains.”

• Until now, Avalanche users have had to turn to competitive products to move their assets onto the network, but with Core Mobile, users will have “maximum control.” Avalanche expects the mobile app to be available om iOS in 2023, but for now the product is only accessible to Android users.

The Block CEO resigns after failure to disclose loans from Bankman-Fried’s Alameda

• At this point, it’s feeling redundant to say “another one bites the dust” as shockwaves of what is now the massive eruption of SBF and FTX continue, but alas, here we are. Michael McCaffrey, CEO of The Block has resigned after failing to disclose a series of loans from Alameda Research to, well, anyone.

• It appears that McCaffrey received three loans, collectively totaling $43 million, that were used to finance everything from daily operations, buyouts, and personal real estate in the Bahamas. Alongside the news, The Block’s CRO Bobby Moran has been named the new CEO.

US Bankruptcy Judge orders Celsius to return $50M to users

• Following their bankruptcy filing in July, Celsius has been delivered the verdict: return $50 million of cryptocurrency to users (amazingly, still a relatively small portion compared to the billions still owed, as The Crypto Times noted).

• US Bankruptcy Judge Martin Glenn said, “I want this case to move forward, I want creditors to recover as much as they possibly can as soon as they possibly can.” There are still some questions surrounding the legal treatment of coins in interest-bearing accounts and other funds requested by Celsius to continue business operations, but if this ruling indicates anything, then Celsius better be ready to keep the payouts coming.

Do Kwon asks if Genesis had provided $1B for SBF to attack UST

• How’s this for a consiracy theory? Do Kwon, whose location is still unknown, has asked whether or not there was a coordinated effort between Genesis Trading and Alameda Research to perform a “peg attack.” Per Do Kwon’s musings, he believes it is possible that Genesis acquired $1 billion in UST from the Luna Foundation Guard, then gave the funds to Alameda. Cryptoslate reports that his theory says Alameda also shorted BTC in order to hamper the Luna Foundation’s ability to bounce back from the peg attack.

• Cryptoslate also notes that there are ongoing federal investigations into whether or not there was indeed manipulation from either FTX or Alameda. Given SBF’s arrest, more news will undoubtedly emerge.

Good documentaries dept.

The latest documentary by Peter McCormack tackles how inflation is a hidden tax that can destroy wealth. It was directed by our own Neil Berkeley, so please go check it out.

Latest Podcast

Lights Camera Crypto with Julie Pacino

On this week’s episode of Lights Camera Crypto, Filmmaker/photographer Julie Pacino discusses growing up in a creative household, finding her own inspiration and carving an artistic path. She also talks about how her family's support has aided her creative pursuits and led her to discover NFTs as an amazing way to build community around her art.

You can download and subscribe to Lights Camera Crypto here on Apple podcasts or Spotify.

Good Podcasts Outside DeCential

Can ChatGPT Make This Podcast?

This week’s Hard Fork podcast explores ChatGPT, the A.I. chatbot from OpenAI, which is suddenly everywhere. Who should decide how it’s built? What could go wrong? And what could go right?

And last but not least

Nigeria bans ATM cash withdrawals over $225 a week to force use of CBDC

In a truly dystopian move, Nigeria has begun limiting the amount of cash individuals and businesses can withdraw from banks to $225 (100,000 nairas) per week, according to Cointelegraph.

The move is supposedly a push towards forcing the use of the government's Central Bank Digital Currency (CBDC), but given this approach, the move is more indicative of the government looking to exert its power over the people and the economy at large. Nigeria's central bank has acknowledged that 85 percent of all physical currency is currently held outside of banks and will be reissuing new notes to push their “cash-less” narrative.

Cointelegraph also points out that India may be rolling out its own CBDC later this month. — PD

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.