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.

The Latest

The fallout is still raining down and as the “FTX contagion” continues to spread. It appears that those who were showing symptoms were in more dire straits than initially thought - and Sam Bankman-Fried’s callousness indicates his belief that he is well-insulated from repercussions. All the evidence we could need to prove this point is SBF’s appearance at events such as the New York Times’ Deal Book Summit in New York City and an appearance on Good Morning America. It’s no secret that the Times’ 170 year preservation can be attributed to having ingratiated itself with powerful connections. This may account for the strange, almost fawning, coverage SBF has received in the Times, as well as the Wall Street Journal. The wall of silence coming from U.S. politicians potentially also points to the reality that despite party lines influence can always be bought. As such, SBF’s general indifference comes across as a weak façade. Moreover, it’s becoming clear that he also provided special access and backdoors into FTX to several organizations, so that while everyone else was banned from withdrawals and had their funds at risk, these organizations did not.

As the “contagion” continues to spread, some organizations are positioning themselves to be better insulated from future liquidity crunches as proof of reserves is now the name of the game. While the regulators are still focused on taking reactionary measures, it is yet to be seen if preventative measures, like proof of reserves, will become not just novelties but necessities. So now we watch for those taking the medicine (proof of reserves) and others, like Genesis and BlockFi, who are beginning to look bed ridden or hospitalized on life support (aka, bankrupt). — Parker Dresdow, DeCential Media

It’s about time dept.

The carnage of the FTX crash and another one bites the dust. BlockFi has filed for Chapter 11, noting its liquidity crisis can be attributed to it’s “exposure to FTX via loans to Alameda…as well as cryptocurrencies held on FTX's platform that became trapped there…[listing] assets and liabilities as being between $1 billion and $10 billion,” according to Reuters.

Alongside the bankruptcy, BlockFi also sued a holding company for SBF in an attempt to recover the promised collateral of Robinhood shares to the tune of around $619 million. BlockFi has sold off assets and amassed $256.5 million as it begins forming a plan to pay off creditors. As the bankruptcy hearings proceed, BlockFi has indicated that it will lay off over 60 percent of its headcount of around 300 employees, according to Reuters. — PD

Quick Bits

Binance launches proof-of-reserves system for BTC holdings

• Sensing the changing landscape and consumer sentiment following the FTX crash - and ripple effects since - Binance has taken a new step forward to provide greater assurance to its users. Thanks to a new page on their website, Binance users can now review the company’s proof-of-reserves system, which allows users to verify their funds.

• Binance claims to have “enough Bitcoins in its own wallets to cover 101 percent of [users’] funds,” which TechCrunch noted, is estimated at roughly “$9.5 billion at today’s exchange rate.” The company is also using a Merkle tree for user assets and says they plan to provide similar information for additional cryptocurrencies soon.

Grayscale cites security concerns for withholding on-chain proof of reserves

• As an alternative to Binance, is Grayscale, which has refused to provide details when it comes to proof-of-reserves, despite consumer pressure for assurances. The company claims that the current panic brought on by market turmoil does not justify the potential security risk associated with sharing the details of wallet addresses.

• However, in a minor attempt to appease the mob, Grayscale did release a co-signed letter with Coinbase’s CFO Alesia Haas and Custody CEO Aaron Schnarch - where its underlying investment products are stored - that “reaffirmed the ‘assets are secure,’ that each product has its ‘own on-chain addresses’ and the crypto always belongs ‘to the applicable Grayscale product’.”
  

Genesis fails to raise funds as FTX contagion weighs on DCG-owned company

• But wait, there’s more! Crypto brokerage company Genesis is reportedly facing bankruptcy after struggling to raise funds and is now seeking a rumored “$1 billion cash injection,” according to Cryptoslate. It’s worth noting that the company is owned by parent company Digital Currency Group and “​​makes up a large percentage of its holdings alongside Grayscale”...are you starting to see a pattern?

• Representatives of the company are claiming that they have no plans to file for bankruptcy and are having “constructive conversations with creditors.” However, it’s impossible not to be weary of those statements when you consider they also received over “$1 billion in FTT tokens over the past three months,” according to Cryptoslate.

Kraken Cuts 30% of Workforce Amid Crypto Winter

• Kraken will be the latest crypto exchange to be affected by this crypto winter as it announced a 30 percent (1,100 people) slash to its total headcount, per CoinDesk reporting.

• Kraken had previously indicated an interest in expanding its headcount over the summer as other crypto firms were undertaking similar cuts. CoinDesk also noted that Coinbase and Unchained Capital cut 60 and 600 positions, respectively.

Latest Podcast

The DeCent People Podcast With Stephen Laddin Introducing Lights Camera Crypto

In the latest DeCent People podcast, we sit down with DeCential Media’s own Stephen Laddin. Stephen first headed to Los Angeles from the east coast to start a career in writing and music production. After a short stint at CAA, where he discovered being an agent wasn't for him, he began interviewing comics and landed a gig with High Times magazine. He's been a podcast host on DeCent People and we're very pleased to announce that his new show, Lights Camera Crypto, will debut shortly. LCC is all about where web3 meets entertainment, film, and TV, and you can find it anywhere you find DeCent People.

You can download and subscribe to the podcast here on Spotify, Apple Podcasts or Amazon Music and Audible.

Good Podcasts Outside DeCential

In this episode from Bankless, Pennsylvania Senator Pat Toomey talks about the state of crypto regulation in Washington, how politicians are dealing with the FTX blow up and what new laws may be passed to regulate stable coins and other parts of the digital asset market. It’s refreshing to hear a U.S. Senator who is knowledgeable and candid about the advantages and challenges facing the crypto world.

And last but not least

List of Democrats, Republicans Staying Silent On FTX Donations Grows

The web of ties to SBF continues to grow and become more sticky and complicated. Over $71 million worth of donations to Democratic and Republican causes can be attributed to SBF through Alameda Research, FTX US, and FTX, Blockworks reports.

Most of the donations were made to both individuals and organizations that were supportive of the advancement and adoption of cryptocurrency, as well as the Crypto Innovation PAC during this year’s midterms. Blockworks reported reaching out to beneficiaries of these donations, and while multiple candidates have said they’ll be donating the funds, a majority still have yet to speak up. — 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.