Tag: NFTs

Amy and David answer your questions on crypto! (Part 1)

  • By Amy Castor and David Gerard

Crypto is still hungover from New Year’s and there’s no news. So we asked readers what they were curious about in crypto. [Twitter; Bluesky]

Keep your questions coming for part 2, some time or other!

Sending us money will definitely help — here’s Amy’s Patreon, and here’s David’s.

Q: I keep wondering what’s keeping the circus alive, given that the retail dollars are practically gone, and the last remaining on/off-ramps are all but down the drain. [Tomalak on Bluesky]

The circus is fed by dollars — real and fake — and its product is hopium, the unfaltering belief that number will always go up. The hopium runs on narratives, such as the current story that a bitcoin ETF will result in a magical influx of fresh dollars.

In crypto, the retail dollars have largely gone home — but too many people have large piles of crypto accounted as dollars to let the number go down. So they deploy fake dollars to keep the crypto flowing.

There are currently 93 billion dubiously-backed tethers sloshing around the crypto markets. We expect that to go over 100 billion as we get closer to the bitcoin mining reward halving in April.

The circus is advertised by the crypto media, which functions as PR outlets for the space. The CoinDesk live-wire feed on any given day is about half hopium, for instance. There are no respectable media outlets in a crypto winter.

(Except us, of course. Subscribe today!) 

Q: Why can’t or wouldn’t the average investor make money in crypto? We criticize it, and rightfully so, but why should the person looking to make a profit care? [King Schultz on Twitter]

There is no source of dollars other than fresh retail investors. Old investors can only be paid out with money from new investors.

Crypto isn’t technically a Ponzi scheme — it just works like one. So investing in crypto will always be a slightly negative-sum game.

Functionally, crypto is a single unified casino, run by a very small number of people, with no regulation. Binance is the tables, Coinbase is the cashier window. The flow of cash is from retail suckers to very few rich guys at the top.

There are many, many complicated mechanisms in the middle, and they’re fascinating to look at and describe and watch in action. But the complex mechanisms don’t change what’s happening here — money flows from lots of suckers to a few scammers.

Some people make money in crypto, just like some people make money in Las Vegas — but gambling in Vegas isn’t an investment scheme either. And the house always wins.

You can make money in crypto if you’re a better shark than all the other sharks in the shark pool, who built the pool. It can be done! Good luck!

Q: be interested in reading about money laundering [Broseph on Bluesky]

Money laundering is when you try to turn the proceeds of crime into money that doesn’t appear to be the proceeds of crime. Laundering money is also a specific crime in itself.

With money going electronic, it’s harder to obscure the origins of ill-gotten gains and avoid unwanted attention from banks and the authorities. Many crooks have attempted to launder money by using crypto as the obfuscatory step.

Bitfinex money mule Reggie Fowler set up a global network of bank accounts. He told the banks the accounts were for real estate transactions. He was sentenced to six years in prison.

Heather “Razzlekhan” Morgan and Ilya Lichtenstein tried laundering the bitcoins from the Bitfinex hack through the Alphabay darknet market. This would have completely covered their trail! Except that the police had pwned Alphabay by then, and Lichtenstein’s transactions were all right there for the cops to track him. Whoops.

We also highly recommend Dan Davies’s fabulous book on fraud, Lying for Money.

Q: Not so much baffled but curious as to how law enforcement can and does identify people using blockchain. Also, do some coins not have a public blockchain? [Bob Morris on Twitter]

Cryptocurrencies run on publicly available blockchains. In theory, you can trace the history of every transaction on a blockchain right back to when it started.

The hard part for authorities is linking someone’s real-world identity to a specific blockchain address. Achieving this was the key to busting Heather Morgan and Ilya Lichtenstein, for instance. The hardest part for crooks is cashing out successfully without being busted.

The trail can be difficult to trace, especially if the crook has put effort into obfuscation — e.g., running transactions through a mixer such as Tornado Cash. But specialists can get good at tracing blockchain transactions and several companies sell this as a service.

Privacy coins like Monero and ZCash try to obfuscate the traceability of transactions on the blockchain itself. But users often give themselves away by other channels — e.g., transaction volumes elsewhere that coincidentally correspond to amounts of Monero sent to a darknet market.

Even if you can protect yourself cryptographically, one error can leave your backside hanging out — and crypto users are really bad at operational security.

Q: nfts aren’t really relevant these days but I’ve never been clear on what ‘mint events’ are and how they relate to the icos. Are users generating new nfts paid for by using the coins they previously bought? [Robert Kambic on Bluesky]

Initial coin offerings (ICOs) were huge in 2017 and 2018 — but the SEC came down hard on them because they were pretty much all unregistered offerings of penny stocks.

Since that time, crypto has tried to come up with other ideas for doing unregistered offerings while making them look at least a little less illegal. There were SAFTs, airdrops, and now NFT mint events. These are all about creating fresh tokens out of thin air and promoting them as an investment in a common enterprise that will make a profit from the efforts of others.

A “mint event” is when you buy into an NFT collection early — when it first mints — hoping the value will increase astronomically over time.

But these are not securities, no, no, no. Yuga Labs wasn’t selling you shares in a company — they were selling you ape cartoons! You weren’t getting dividends, you were getting Mutant Apes, dog NFTs, and ApeCoins! You’re not investing in a speculative startup, you’re buying art!

The SEC has so far sued one NFT company, Impact Theory, after it raised $30 million through NFT sales. The SEC said the NFTs were promoted as investment contracts and not registered. [Complaint, PDF]

We didn’t say too much about NFTs in our 2024 predictions, but we expect that the SEC will go after more NFT projects this year, as they clear their backlog of violators.

Q. I’d like a definitive explanation on the amount of apes you can feed with a single slurp juice. [Etienne Beureux on Twitter]

Slurp juices were popularized in a tweet about Astro Apes, a Bored Apes knockoff, which also featured tokens called “slurp juices” that you could apply to your Astro Ape tokens to generate more Astro Ape tokens and get rich for free.

The tweet was posted on May 4, 2022 — just a few days before Terra-Luna exploded and popped the 2021-2022 crypto bubble.

Also, the guy who tweeted about slurp juices is a neo-Nazi. Welcome to crypto. [BuzzFeed News]

Q: I’ve often wondered why new languages like Solidity were necessary for smart contracts. [David John Smailes on Twitter]

The Ethereum team originally just wanted to use JavaScript, but it didn’t quite do what they needed in terms of functionality and data types — so they created Solidity, a new language based on JavaScript.

A blockchain is an extremely harsh programming environment. It’s hard or impossible to modify your code once deployed — you must get it right the first time. It’s about money, so every attacker will be going after your code.

In situations where programming errors have drastic consequences, you usually try to make it harder to shoot yourself in the foot — functional programming languages, formal methods, mathematical verification of the code, not using a full computer language (avoid Turing completeness), and so on.

Solidity ignores all of that — and the world’s most mediocre JavaScript programmers moved sideways to write the world’s most mediocre smart contracts and cause everyone to lose all their money, repeatedly. Smart contracts are best modeled as a piñata, where you whack it in the right spot and a pile of crypto falls out.

Other blockchains saw Ethereum-based projects making a ton of money (or crypto) and wanted that for themselves — so they tend to just use the Ethereum Virtual Machine so they can run buggy Solidity code too.

There are other, somewhat better, smart contract languages — but Solidity is overwhelmingly the language of choice, which keeps the comedy gold flowing nicely.

Q. Miner extracted value? [Cathal Mooney on Twitter]

Miners — or now validators — supposedly make money from block rewards and transaction fees.

There is a third way for validators to make money. Smart contract execution depends on the order of transactions within a block. Since the validator controls what transactions they can put in a block and how they order those transactions, they can front run the traders — the validator sees an unprocessed transaction, creates their own transaction ahead of that one and takes some or all of the advantage that the trader saw.

The term “Miner Extractable Value” was coined in the paper “Flash Boys 2.0: Frontrunning in Decentralized Exchanges, Miner Extractable Value, and Consensus Instability” in 2020. [IEEE Xplore]

Front-running is largely illegal in real finance. But since the Ethereum Foundation couldn’t stop their validators from front-running their users, they decided to claim it was a feature, which they have renamed “maximal extractable value.” [Ethereum Foundation]

Q: What do you think will eventually happen to all the Satoshi Nakamoto Bitcoin wallets? [Steve Alarm on Twitter]

Quite likely nothing. We suspect the keys, and thus the million bitcoins, are simply lost. Nobody has heard anything verifiably from Satoshi since April 13, 2011, when he sent a final email to bitcoin developer Mike Hearn. [Plan99]

If the Satoshi coins ever did move, there would be a lot of headlines. But we don’t think the crypto trading market would be affected much — the market is so thin, there are multiple large holders who could crash the market any time they felt like it, and the market is already largely fake. We think everyone will just pretend nothing happened and everything is fine.

Q. Did Do Kwon actually sell all his BTC to prop up Luna? [Saku Kamiyūbetsu on Twitter]

Terra (UST) was an algorithmic dollar stablecoin and luna was its free-floating twin. Terraform Labs ran the Anchor Protocol, which promised 20% interest on staked UST. At peak, there were 18 billion UST in circulation.

It turned out there was money to be made in crashing UST — so in May 2022, someone did. There is a strong rumor (and DOJ investigations) that it was Alameda. Other parties who collapsed because of Terra-Luna left the gaping hole in Alameda that eventually killed FTX. If Alameda fired the first shot directly into their own leg, that would be extremely crypto, as well as extremely funny.

UST was crashing, so Terraform Labs tried to prop up Terra-Luna. The bitcoins came from the Luna Foundation Guard, which promised to deploy $1.5 billion worth of bitcoin to defend UST. This didn’t work. [Twitter, archive]

We haven’t found a smoking gun that Luna actually spent the bitcoins on buying up UST or luna. In 2023, the SEC charged Terraform Labs and Do Kwon and said that Kwon and Terraform took over 10,000 BTC out of Luna Foundation Guard in May 2022 and converted at least $100 million into cash.

Q: I’m baffled at the lack of interest from crypto critics that the DoJ will not be pursuing additional charges against SBF. Specifically, the charges that could make some politicians very uncomfortable. [Amer Icon on Twitter]

The issue was specifically whether to further prosecute Sam Bankman-Fried. The prosecution letter to the judge quite clearly explains their reasons why a second case wouldn’t do anything useful in this regard. [Letter, PDF]

The evidence that Sam was the guy who made these bribes was presented in the case that just concluded and will be considered when he’s sentenced in March — they don’t need a second trial to nail those facts down.

Hypothetical other evidence that might have come to light about other parties wasn’t a factor in considering what to do about Sam Bankman-Fried. It’s quite reasonable to want to get those guys, but you will probably need a more direct method than a side factor in an additional case against a guy who is already likely going to jail forever.

Q. snarkier memes would be worthy [Chris Doerfler on Twitter]

“Esto no puede ser tan estúpido, debes estar explicándolo mal.”

We did a follow-up on this story. Part 2, though not labeled as such, is here!

Image: Amy Landers and Dear David reading today’s Web 3 Is Going Just Great

Posted on by Amy Castor 2

The early history of NFTs, part 4 — Game sprites on the blockchain: CryptoPunks

CryptoPunks was one of the earliest crypto collectibles on the Ethereum blockchain, following Curio Cards by six weeks. 

The launch on June 9, 2017, didn’t go as smoothly as planned. A horrible bug in the code meant buyers could take the seller’s Punk — and their money back too!

Larva Labs, the firm behind the project, was able to fix the problem, but it came back to haunt them years later in the form of V1 Punks. 

This is an early draft for our book, which David just posted over on his blog. [David Gerard]

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Podcast: I was interviewed by Alan Keane for ‘Artist’s Well.’ We talked about NFTs

Earlier this week, I was interviewed by artist Alan Keane for a podcast. He edited the recording and posted it on Youtube today. Keane runs a weekly arts program via Zoom in Ireland. He has a large following of professional artists.

Several of them had been asking him about NFTs, so he found me on the internet, and roped me into an interview. I explained what an NFT is — basically a crypto token on a blockchain that points to an image on a website somewhere. It doesn’t contain any actual art, and if the link pointing to the JPEG goes bad, the NFT becomes worthless.

In other words, NFTs are nothing more than a gimmick to get artists to feed their hard-earned cash into the crypto ecosystem, and more often than not, they get nothing in return.

I also tried to capture the importance that fungible tokens play in helping NFT promoters cash out on NFTs. This was, of course, just a few days before Bored Ape Yacht Club announced their Apecoin, which I wrote about yesterday on my blog.

The volume on my end is a little low in this interview, so I may need to adjust my microphone next time. I’m open to ideas and suggestions!

If you like my work, consider supporting my writing by subscribing to my Patreon account for as little as $5 a month, or more! Every little bit helps.

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News: I’m writing a book, people are minting NFTs for the lulz, Chuck Tingle calls NFTs a ‘scoundrel plot’

I’m working on a book on NFTs and how they became the tulip mania of crypto. As of now, the plan is to self-publish on Amazon, hopefully before the bubble explodes like this dead whale.

I’ve finished the outline—which I’ll continue to update in coming weeks—and I’m playing with ideas for a catchy title. 

If you have thoughts for a title, send them to me! I need as many ideas as possible. Only one rule: it has to be SEO-friendly, so we need the words “NFT” and “art” in there somewhere. Also, I can add a long subtitle stuffed with keywords, too. Here are a few thoughts:

NFTs: The art of the steal

NFTs: When crypto bros entered the world of high art

Since I’m working on a book about NFTs, I won’t be talking about much else for the next few months. Hence, this newsletter is mostly about NFTs. (I promise I’ll return to talking about Tether when this book is finished.)

My goal: 500 high-quality book words a day, starting today. 

Here the news:

BitClout’s content creator tokens are NFTish

I was going to write a big section here on BitClout, the social-media-on-a-blockchain experiment, because I initially thought the project’s creator coins were NFTs, but they’re not really. They are similar to NFTs due to their artificial scarcity and being a way to trade influence. But they are fungible tokens, and it turns out they are HYIPish.

If you want more details on BitClout, I wrote everything up in a separate blog post. Also, note that at least one BitClout investor, Social Capital CEO Chamath Palihapitiya, is building a big portfolio of NFTs.

NFTs don’t convey ownership, case in point

NFTs don’t convey ownership of a digital art piece in any form, shape or fashion. You can create an NFT of a piece of art even if you are not the creator. You can also create multiple NFTs of the same digital art. 

Where this really becomes a problem is when you mint an NFT, auction it off for an absurd amount of money, and then someone claiming to be the rightful owner of the underlying art steps forward. 

This is what happened when an NFT for a virtual house sold on SuperRare for $500,000 worth of ETH. Now the artist and the visualizer—who worked together on the Mars House—have locked horns over the copyright.

Mateo Sanz Pedemonte, a 3D modeler who created the virtual abode for artist Krista Kim, calls the project “a fraud.”

“Krista Kim never owned this project fully,” he said. “I have created the project with my own hands, combined with her direction. I do possess the full intellectual property.” (Dezeen)

People are minting NFTs for the lulz

People are minting NFTs and selling them as a joke. 

A New York Times writer minted a column as an NFT and sold it on Foundation to demonstrate the insane amounts of money people are willing to pay for these things. A bidder going by @3fmusic bought the piece for 350 ETH, worth $560,000. (NYT)

Recently, John Cleese put up an NFT of a drawing of the Brooklyn Bridge on OpenSea. The highest bid is now $35,000 by JeffBezosForeskin.

“The world has gone terminally insane,” Cleese told VanityFair, adding that “This all reminds me of Henry David Thoreau, when he said, ‘Our inventions are wont to be pretty toys, which distract our attention from serious things. They are but improved means to an unimproved end.’”

Author Chuck Tingle put off by NFTs

Chuck Tingle, a self-published writer whose focus is satirical gay porn, looked at the NFT phenomenon and was appalled. He proposed doing a “tingler” as a single reproduction with an NFT, but when he read up on NFTs, he summed up his horrified thoughts in an ebook the same day—now available on Amazon for $2.99.

The title of the book is: “Not Pounded By My Book ‘Pounded In The Butt By My Non-Fungible Tingler That Is Literally This NFT’ Because Of The Current Catastrophic Environmental And Ethical Impact.”

David Gerard wrote up a review of the book. Of course, he had to explain who Tingle is first, because not everybody knows. I sure didn’t, but Tingle is apparently quite popular.

As for Tingle, he thinks NFTs are a “scoundrel plot,” where promoters are “taking money from buds of less means.”

In a separate tweet, he suggested, “instead of trying to support art by buying digital plaques with your name on it that has no meaning or actual connection to the art JUST SUPPORT ARTISTS BY BUYING THEIR ART. NFTs are good example of trying to fix problem that already has had very easy solution for 1000s of years.”

Other newsworthy bits

NFTs are so big and bubblish they’re even featured in an SNL skit. This is a funny skit but sadly it only serves to promote more of the NFT nonsense.

Edmund Schuster, an associate professor of corporate law at the London School of Economics, debated Andrew Steinhold, partner of NFT fund Sfermion. The motion for the debate: “NFTs are dumb.” (The Blockchain Debate)

In a separate debate, David Gerard took on Josh Petty, CEO of startup Twetch. Petty has been experimenting with NFTs for limited edition Twetch hats, which you can buy with BSV tokens. “A crypto token has no intrinsic value,” Gerard argued. “It is a race to the bottom for these things.” (Coingeek)

As I’ve stated, NFTs are simply pointers. And if the thing it points to moves, there’s always a chance down the line that your NFT could point to “ERROR 404!” for the rest of its life.

Verge reporter Jacob Kastrenakes makes a similar point: “NFTs are fundamentally built on trust—trust that a seller won’t screw you over, trust that these tokens magically have value—and that holds true even at the deepest level of the system.”

Is FinCEN aiming for NFTs? FinCEN issued a blue box notice to let art and antiquities traders know they will be held to the same reporting standards as financial institutions. This means that they will have to submit suspicious activity reports, or SARs, for antiquities trade. The question is: Will NFTs be categorized as art? (FinCEN notice, OCCRP)

Do NFT buyers even care about art? Computer scientist Jorge Stolfi thinks not. “If you make an NFT out of your work, its market will be restricted to a few million crypto believers worldwide. And they are mostly not the type of person who appreciates art. The billions who do not care for crypto will not be able to buy it.”

Finally, if you are tired of watching NFTs sell for millions of dollars in crypto and want to see some real art, here’s your chance. The Louvre just put its entire collection online for free.

If you enjoy my work, please support my writing by becoming a patron. I need all the support I can get!

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News: Metakovan unmasks himself, FATF goes after DeFi and NFTs, Coinbase pays CFTC $6.5M over wash trades

I’ve been traveling around the U.S., visiting friends on the East and West Coasts and in between, and this is my first newsletter since the end of February.

This week has been a busy one, full of interviews and talking to reporters about nonfungible tokens. Who knew NFTs would become the next tulip mania? I’ve gained nearly a thousand more Twitter followers and several more patrons, which is wonderful because I can certainly use the support.

Peanut exploring a stream in Texas

As I write, Bitcoin is above $57,700, after reaching an all-time-high of $61,742 on March 13. Meanwhile, there are now 39.6 billion tethers in circulation—that’s 4.5 billion new tethers in the last three weeks, all helping to prop up the BTC price.

In my last newsletter, I said I didn’t think BTC would ever see $57,000 again. I was wrong, but I also didn’t expect Tether to keep blatantly printing billions more tethers—each one representing a dollar on an offshore exchange—after the NYAG settlement. It just shows this nonsense can go on a lot longer than any of us imagined.

Some quick updates—at the end of February, I did an all-day film interview for another QuadrigaCX documentary. I can’t tell you any more than this, unfortunately, but yes, more documentaries. (Still waiting for someone to do a Tether documentary and an NFT documentary, but we know those are coming.)

Also, fellow nocoiner David Gerard and I got a full viewing of the upcoming CBC Quadriga documentary. It was over a year ago that we met in Vancouver to film this. However, it feels like the Quadriga story is still unfinished, and will be until we know for certain that’s Gerald Cotten’s body buried in Halifax.

Here is the news. 

Metakovan reveals himself

The art world was beside itself on March 11 when a person going by “Metakovan” bought an NFT by Beeple for $69.3 million in ETH—making it the third most expensive* ever sold by a living artist, behind Jeff Koons’s “Rabbit” and David Hockney’s “Portrait of an Artist (Pool with Two Figures)”—if you can get past the fact that it was paid for with magic beans.

In a blog post that went viral, I revealed that Metakovan was Vignesh Sundaresan, an Indian crypto entrepreneur who ran Coins-e, a shady, now-defunct Canadian crypto exchange. My post got 20,000 hits the first day. 

Four days later, Sundaresan admitted he was Metakovan in a blog post on the Metapurse website. Metapurse is his crypto investment fund.

We already know who you are. The question is, why were you using a pseudonym in the first place?

He claims that it wasn’t a pseudonym, just an “exosuit.” He did it, he says, because he wanted to prove to the world that people of color can buy high-art, too. He then delved into a rags-to-riches story about how he made it big in crypto. (This is a common bitcoiner fairytale: buy crypto, and you, too, can become fabulously wealthy.)

In an online auction, I’m not sure a pseudonym proves anything. But it does look like maybe you were trying to hide or distract from something, like the questionable past projects you’ve been involved with?

Also, if Metakovan wanted to make a point about social justice, why did he buy an NFT representing a collage full of angry, racist, misogynistic images? That makes no sense.

Art critic Ben Davis spent an entire day digging through Beeple’s magnum opus—a collection of 5,000 images. His findings, written up in an article for Artnet News, aren’t pretty. In one example, Hilary Clinton with a set of gold teeth and the caption: “Senator Clinton’s last-ditch effort to reach black voters.”

That just tells me Metakovan could care less about the art. He only cares that he gets publicity and can make money off the NFT by packaging and reselling it—in the form of B20 tokens—to retail suckers.

If you are wondering where Metakovan got all that ETH to buy the Beeple NFT—he claims he was an early investor in the Ethereum ICO. Anyone who bought into that ICO and hodled, could easily be a millionaire today.

But remember, Metakovan and business partner Twobadour (aka Anand Venkateswaran) also raised 50,000 ETH in an early 2018 ICO for their Lendroid project. LST (stands for Lendroid Support Token) is a dead shitcoin that never got listed on any exchange.

NFTs are garbage

Since I wrote my Metakovan blog post, I’ve been getting pushback from artists who want to believe that NFTs bring value to the art world. They don’t want to hear that NFTs are a scam. It’s sad to see artists getting sucked into the crypto cesspool. 

I wrote another post last week where I explain why NFTs are worthless—and how they have opened the door to fraud and money laundering. The only real value of NFTs is speculative—i.e., what the next sucker is willing to pay you for them. 

Artists want to believe that NFTs are an avenue for them to get paid for their work, but in truth, NFTs are simply pointers, expensive URLs on the blockchain. And if the object they point to moves or disappears, those URLs will forever point to nothing.

Some NFTs contain a hash of the artwork they represent. But as computer scientist Jorge Stolfi explains: Copies of a physical work of art are clearly distinct from the original. They are not the same atoms that the artist himself put on the canvas. In contrast, copies of a digital file are exactly the same bits. There is no ‘original’ of a digital file.

In other words, any copy of a digital artwork will have exactly the same hash, so putting the hash on the blockchain is useless.

FATF takes aim at DeFi/NFTs

The Financial Action Task Force, a global anti-money laundering watchdog, released an update of its Draft Guidance on a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers.

Decentralized exchanges, the platforms behind decentralized finance (DeFi) apps, are now considered virtual asset service providers—or VASPs.

The DeFi app, or smart contract, is not a VASP, but the owners and operators of the DEX are, which means they are obligated to ensure these platforms meet the same anti-money laundering requirements as other financial institutions.

This is a clear aim at DeFi founders, investors and VC firms. 

The FATF adds that NFTs that can be converted or exchanged for fiat currency or other virtual assets remain in scope.

In their analysis of the new guidance, blockchain analytics firm CipherTrace said that NFTs that can facilitate money laundering and terrorism financing are “virtual assets” as viewed by the FATF.

As I wrote in my NFT explainer piece, NFTs open the door to money laundering—big money coming from mysterious people to buy outrageously overpriced NFTs with cryptocurrency—so its no surprise that the FATF has NFTs on its radar.

Charlie Lee, the mystery Coinbase wash trader?

Coinbase settled with the CFTC for $6.5 million over claims that between January 2015 and September 2018 the exchange “recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets.” 

The CFTC also claims a former Coinbase employee was wash trading LTC/BTC pairs on Coinbase’s GDAX platform between August and September 2016. (GDAX, meant for professional traders, was later renamed Coinbase Pro.) Wash trades are illegal because they make it look like there’s a lot of trade volume when there’s not. (Verge, CFTC press release and order)

The order doesn’t mention who the employee is but we know that Charlie Lee, the founder of litecoin, was working as an engineer at Coinbase at the time—and it looks very much like he got caught with his hand in the cookie jar. 

LTC wasn’t worth more than a few dollars even after it got listed on GDAX in August 2016. The price really took off when litecoin was listed on Coinbase’s retail exchange—called simply “Coinbase”—in May 2017.

Lee left a month later to focus on his litecoin project and then dumped his LTC at the top of the market in December 2017, when LTC saw highs of $360. That was during that last crypto bubble.

Lee got a lot of flak for that. Ironically, he later claimed that he sold because “holding LTC made it a situation where I may do something to pump the value short term. but is bad for the long term success of Litecoin.”

Bizarrely, LTC has never seen the highs in the 2021 bubble that it did in 2017. It’s only at $200 now.

Whistleblower Bitfinexed suspected Lee of wash trading all along. He wrote up his suspicions in a blog post in 2018, which is well worth the read now.

If Coinbase—the leading crypto exchange in the U.S.—allowed a former employee to wash trade up to 99% of the daily volume of a shitcoin, you can bet this is standard practice on all crypto exchanges. 

Coinbase has delayed its public listing to April, according to Bloomberg. Its latest valuation is $68 billion.

Other newsworthy bits

Photographer/writer Andy Day says NFTs are a pyramid scheme. “To many, it’s a means of overthrowing the existing regime; when you look a little closer, you realize that it’s just an extreme manifestation of neoliberalism.” (Fstoppers)

If you still think NFTs are the greatest thing since sliced bread, Monty Python’s John Cleese has a bridge to sell you, specifically a drawing of the Brooklyn Bridge as an NFT. You can buy it on OpenSea. The highest bid so far is for $35,671. (Previously the top bid was $50,000.) (Decrypt)

Not a month goes by where we don’t hear of another DeFi rug pull. TurtleDex, a DeFi app running on the Binance Smart Chain, drained $2.5 million in crypto from liquidity pools on Ape Swap and Pancake Swap. (Who comes up with these names?) The owners immediately deleted TurtleDex’s telegram, the official website, and the Twitter page. (Decrypt)

USDC, the stablecoin issued by CENTRE, a project backed by Circle and Coinbase, has surpassed 10 billion. (The Block)

BofA published a report called “Bitcoin’s Dirty Little Secrets,” wherein analysts said there is no good reason to own bitcoin “unless you see prices going up.” David Gerard reviews the report in full on his blog.

First Trust Advisors and hedge fund SkyBridge Capital, led by former White House communications director Anthony Scaramucci, are pushing for a bitcoin ETF in the U.S. The prospectus for the “First Trust SkyBridge Bitcoin ETF Trust” was published on Friday. While a bitcoin ETF opened in February in Canada, U.S. regulators have repeatedly rejected attempts to introduce them, citing concerns about market manipulation.  (The Block)

Want to flush all your money away? Toilet paper company Charmin has an NFT.

*Update on March 22 — Third most expensive, not first.

Posted on by Amy Castor 2