The price of Bitcoin is now around $49,000, down from an all-time-high of nearly $69,000 a month ago. So much for “store of value.”
As for the top stablecoins, which have become the lifeblood of the crypto industry, there are now 77 billion tethers in circulation and 41 billion USDC in circulation. To offer some perspective, at the beginning of 2021, there were only 21 billion tethers and 4 billion USDC in existence. It’s understandable why regulators are getting nervous.
I apologize to my followers. I haven’t been writing as much in recent months, mainly due to goings-on in my personal life and not having a permanent residence since COVID struck. All that is changing. I’m hoping to find the time and the focus to get back into it again, so this newsletter is as much an effort to bring myself up to speed — as you.
Here’s what happened in the past week.
Another crypto hearing
Crypto execs went to Capitol Hill to defend crypto on Dec. 8. The House Financial Services Committee, led by Rep. Maxine Waters (D. Calif.), called the hearing — titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States”— to explore how the government should reign in the industry.
Crypto doesn’t want to be reigned in, so throughout the hearing, six crypto bigwigs pushed the same, tired propaganda: the world needs stablecoins, W3 (the new pump term for crypto as a way to make it look innovative and avoid regulations) is a real thing, and crypto will bank the unbanked. You can listen to the hearing here and on Youtube. The NYT did a nice job covering the highlights.
During the hearing, Brian Brooks, a former top banking regulator under Trump who now heads bitcoin miner Bitfury, basically gave it away that the market is controlled by a few big actors — not nebulous market forces. (Financial Times)
Craig Wright loses $100 million
Despite claims that he is the inventor of bitcoin, Craig Wright (who critics call “Fake Satoshi”) has never been able to prove it. Since 2018, Wright has been entangled in a lawsuit with the brother of his ex-friend over 1.1 million bitcoin mined in the early days of bitcoin by the real Satoshi. That trial, which should really be part of a Netflix series, has finally come to an end.
A Florida federal jury ruled that Wright does not owe half of 1.1 million bitcoins to the family of David Kleiman. Wright says he feels “completely vindicated.” However, the jury did find Wright liable for conversion (the illegal taking of property, in this case intellectual property), and ordered him to pay $100 million in compensatory damages to the joint venture between the two men. Since Wright has bragged that his family is one of the richest in the world, this should be no problem for him. (Gizmodo)
Kickstarter goes blockchain
Crowdfunding platform Kickstarter is switching to the blockchain, much to the horror of its user base.
Kickstarter, which launched in 2009, never realized the kind of big money its investors fantasized about, and the company has been treading water in recent years. In 2020, during the economic downturn, Kickstarter laid off 40% of its workforce. (Bloomberg)
Gizmodo writes: “How this will actually work, beyond Kickstarter being able to yell ‘blockchain’ like a spell to summon investors or maybe getting a cut of every project that runs on the resulting protocol, is unclear.”
Neo-Nazis win big on bitcoin
Bitcoin’s surge was a boon for white supremacists. The Southern Poverty Law Center identified 600 crypto addresses used by white supremacists and far-right extremists, including many high-profile personalities, who profited by soliciting donations in bitcoin. (NBC News)
Credit cards and payment platforms, such PayPal and Stripe, have cracked down on right-wing extremists, making crypto an easier route for fundraising.
“The estimated tens of millions of dollars’ worth of value extreme far-right figures generated represents a sum that would almost certainly be unavailable to them without cryptocurrency, and it gave them a chance to live comfortable lives while promoting hate and authoritarianism,” SPLC said in its report.
Gerald Cotten’s widow wrote a book
Jennifer Robertson, the widow of Gerald Cotten, the deceased CEO of failed Canadian crypto exchange Quadriga, has a book coming out. “Bitcoin Widow: Love, Betrayal and the Missing Millions,” tells the story of a young woman who simply fell in love with the wrong guy.
Robertson has claimed in court documents that she knew nothing of her husband’s illicit activities, despite the fact that Cotten was funneling Quadriga customers’ money into her real estate business, so she could buy millions of dollars worth of property. She also waited a month to tell unsuspecting Quadriga customers, who kept sending their funds to Quadriga, that Cotten was dead.
Published by HarperCollins, the book comes out in mid-January. You can pre-order it on Amazon.
AWS outage
How decentralized is decentralized finance? Answer: Not very. An outage at Amazon Web Services’ key US-East-1 cloud region illustrated the point when it knocked out customers globally, including Alexa, Ring, Disney Plus, and countless others, on Dec. 6. (Data Center Dynamics; Vice)
The outage also brought hours-long operational disruptions to decentralized exchange dYdX and centralized exchanges Binance US and Coinbase. Dydx, which runs on smart contracts on the Ethereum blockchain, is the fourth largest DeFi exchange by volume, according to Coinmarketcap.
“Unfortunately, there are still some parts of the exchange that rely on centralized services (AWS in this case). We are deeply committed to fully decentralizing and this remains one of our top priorities as we continue to iterate on the protocol. We apologize for this outage,” dydx tweeted.
WhatsApp enables Novi
Messaging service WhatsApp is piloting Novi in the US, allowing a select group of individuals to send and receive money within a WhatsApp chat without paying fees.
Novi is Facebook’s (now Meta’s) digital wallet. The Novi wallet can only handle stablecoins, so it won’t be sending actual dollars. And it won’t be sending Diem, formerly Libra, Facebook’s long-planned cryptocurrency, either. Instead, it will be sending the Pax dollar stablecoin (USDP). (Novi announcement; Techcrunch)
A few other things . . .
Crypto has a giant PR machine that comes in the form of several media outlets — owned and paid for by actual crypto companies — who spin out continual propaganda. In the case of Coindesk, it is owned by Digital Currency Group, a seed investor in over a hundred crypto firms.
Anyway, Coindesk finally said the quiet bit aloud on Twitter: “Yes, it’s a Ponzi scheme but who cares?”
Keanu Reeve’s laugh in response to NFTs on the Verge is priceless.
Amy Castor 