A flat week with crypto market cap just under 3trn and BTC in a narrow range around 85k, ETH slightly below 2k. Major out performers were CRO +38% WoW after SEC suit against crypto.com got pulled and Trump Media talking about a partnership for ETFs. Doge also did well +8% with Dogecoin Foundation buying 10mm DOGE tokens, DYDX first buyback helped a bit +5%. In the news we had OFAC now removing TornadoCash, Interactive Broker expanded offering of tokens available, Fidelity and World Liberty Finance eying stablecoins, more M&A and capraising rumors. The Microstrategy playbook being further adopted and some drama around Hyperliquid and their reaction to a malicious exploit. Enjoy reading!
Bat Tai Chi — btc21@mail.com
I’ve been writing extensively about the TornadoCash incident and the ramifications. If you wana read up pls see ABC 12 Aug 2022; ABC 19 Aug 2022; ABC 28 Aug 2022; ABC 17 Sep 2022; ABC 18 Aug 2023; ABC 8 Sep 2023; ABC 26 Jan 2024. Now we had a court in Nov last year ruling that the sanctions were overstepping OFACs authority and could not be imposed by then (see ABC 29 Nov 2024). Then last week just after I had hit send of the weekly we got the green light from Treasury removing the smart contracts from the sanction list. They even overdid it a bit with not just removing Tornado.cash smart contract but a total of over 100 ETH addresses from the sanction list. Note though if you’d like to use tornado.cash again now the main frontend is still compromised so recommend directly hitting the smart contract. This is obviously not a nod from Treasury to allow mixers like Tornado Cash but an acknowledgement that they have overstepped powers and we need congress to formulate clear rules. With the recent Bybit hack (see ABC 28 Feb) the question around responsibility to stop malicious actors from using permissionless DeFi resurfaced again as a hot topic. And although Tornado Cash has not been heavily used by Lazarus group in the recent hack it’s more because of the insignificance of TVL they only got 350mm now and so it was quicker to use other protocols to move the stolen ETH into BTC. In the past Tornado Cash was a favorite tool and could reemerge now again. Then there’s the personal faith of the core Devs that is still up in the air despite the contracts already being removed from the sanction list. And finally it’s worth noting that other platforms like Railgun have emerged and being used by OGs like Vitalik for onchain privacy.
Hype Drama
So Hyperliquid the leading Perp Dex has faced some intense drama this week, getting heat and hit from all sides. It’s all related to the handling of a likely market manipulation around the trading of a tiny 20mm market cap token called JELLY. But even though the token is small it caused big waves. Let’s first explain the facts what had happened and then go into some speculation between motives responses and critiques. Here’s a good detailed timeline from Arkham. I’ll do a smiley warp for you here a trader opened a levered short position, tanked the market — withdrew some profit and then 1h later token spiked 500% leading to bad debt that had to be taken over by the liquidation engine and ultimately HLP vaults(i.e. users). Hype team obviously classified this as a malicious attack and went to set the liquidation price to something that was much lower than market price effectively turning the profit of the attacker into a loss. This obviously raised eyebrows from users on the ‘decentralized’ nature of the protocol and how the delisting price can be set so arbitrarily. Now supporters also rushed to them and defending the action calling it setting a precedent for malicious attackers, however call me a romanticizing cypherpunk i’d much rather have robust liquidation engine and risk toolings to prevent such situations than a manual intervention. ZachXBT also critiqued that they intervened now but not with previous hacks where malicious actors were laundering through the platform. ZachXBT also showed that wallets causing the attack were funded from Binance, leaving some to speculate that there was some coordinated effort. Especially because as the attack was happening major exchanges listed Jelly perps further deepening the theory.
Crypto Capital Markets Update
We all know institutions are warming up to the sector with regulatory overhang now being priced out in the US. This week we learned about Kraken trying to tap debt markets ahead of a rumored IPO early next year. They obviously don’t need that much for organic operational growth but are looking down the M&A route, they just announced the acquisition NinjaTrader for 1.5bn. And they are not the only one thinking about inorganic growth with another headline suggesting Coinbase is eying at Deribit. Then we have the Microstrategy playbook of BTC on corporate balance sheets now put to practise by Gamestop board approved BTC purchases and even comes out with a 1.3bn CB issuance to potentially fund the acquisitions. French Company The Blockchain Group also bought >500btc. And over in Hong Kong HK Asia Holdings (HKEX: 1723), soon to be renamed Moon Inc also started buying.
They [SEC] used every tool available to attempt to stifle us, restricting access to banking, auditors, investors, and beyond. It was a calculated attempt to put an end to the industry. The fact that we not only persevered but became stronger is a testament to our vision and the community supporting it. Onwards!
Crypto.com CEO, Kris Marszalek
We see it as a way to protect our balance sheet, and we see it as a way to diversify, our treasury with an eye on how the rest of the world is moving
HK Asia Holdings (HKEX: 1723) CEO, John Riggins
I was just told that @eBay is aware of this [his KYC taking weeks], but is choosing to not do anything about it. First time I have felt discriminated against since going free. Gee, maybe I should start my own ecommerce website. What’ll I call it…?
Ross Ulbricht
