Welcome back to Chain reaction.
Last week we talked about a hack that gave a new, ironic meaning to the word “trustless.” This week we’re going to take a look at one of the most polarizing aspects of crypto: privacy.
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all mixed up
A weekly peek into the mind of senior crypto reporter Anita Ramaswamy:
Tornado Cash was the talk of the town in crypto circles this week. The US government’s Office of Foreign Asset Control (OFAC), a watchdog within the Treasury, has imposed sanctions on the cryptocurrency mixer for its role in helping to facilitate money laundering. North Korea-backed hackers have used the Tornado Cash platform, among other things, to mask stolen crypto associated with some of the most notable hacks in web3 to date, including last week’s Nomad heist and the play hack. -to-earn video game Axie Infinity earlier this year.
But in imposing sanctions, OFAC essentially used a sledgehammer to crack a nut. The agency’s official notice on the subject stated that the platform had facilitated $7 billion in money laundering – which happens to be the total value of crypto assets sent through Tornado Cash since it was founded in 2019. Meanwhile, blockchain analytics provider Elliptic says only ~$1.5 billion in funds on Tornado are actually linked to crime, including ransomware attacks and fraud. The rest, Elliptic argues, could consist of “legitimate use of mixers like Tornado, to preserve financial privacy, for example.”
So what are some of those legitimate uses? One example came from Ethereum co-founder Vitalik Buterin, who confessed: on Twitter that he used the service to send donations to help Ukraine safely without the Russian government’s knowledge.
However, the OFAC dictum makes no distinction between criminal and legitimate use cases. As a result, many law-abiding crypto users are likely to suffer. Two major crypto infrastructure providers, Alchemy and Infura, blocked access to their API for wallets using Tornado Cash. Circle reportedly froze $75,000 worth of USDC stablecoins connected to Tornado via a shared wallet, according to Dune Analytics data.
Of course internet pranksters joined in, as is usually the case in the crypto world. Some have sent crypto via Tornado Cash to well-known wallets owned by celebrities such as Jimmy Fallon and Shaquille O’Neal in an attempt to troll them by having their wallets banned under sanctions rules.
OFAC’s crackdown comes across as a botched approach that raises more questions than it solves when it comes to enforcement. Only time will tell how the latter plays out, but in the meantime, the crypto community is understandably quite upset.
the latest pod
This week on Chain Reaction, Jacquelyn and Anita ran the show while Lucas was on vacation. Jacquelyn came from an exciting Friday night conversation with Vitalik herself, so she shared some of his comments on where crypto is headed.
We then dived into the news that Tornado Cash was being sanctioned in the US, Coinbase’s disappointing second-quarter earnings and the feud between Binance and India’s largest crypto exchange, WazirX, over a transaction that supposedly happened two and a half years ago (or was it)?
Be sure to listen to it to stay up to date on the latest teas in crypto and tune in next Tuesday for Anita and Lucas’ conversation with Li Jin, a web3 investor focused on the creative economy at Variant Fund.
Follow the money
Where seed money moves in the crypto world:
- Jump Crypto led Injective’s $40 million round to expand DeFi applications.
- Pinata has raised $21.5 million in a newly announced Series A and seed round from investors including Greylock and Pantera.
- MakerDAOa decentralized platform for content creators, has raised $20 million in an a16z and Initialized Capital-led round with the participation of celebrities such as Paris Hilton and Liam Payne.
- Blockchain gaming company Lysto has raised $12 million in a round led by Hashed, Square Peg and Beenext.
- Unstoppable Finance got $12.8 million in a round led by Lightspeed for his DeFi wallet.
- Kurtosisa crypto-focused developer tool system, raised $20 million in a Series A round led by Coatue.
- Blockchain Payment Platform Ansible Labs has raised a $7 million seed round led by Archetype.
- Zero-knowledge cryptography startup RISC Zero scooped $12 million in a seed round led by Bain Capital Crypto.
- fair.xyz received $4.5 million from investors, including OpenSea, for its NFT coin platform.
- Cashmere has raised $3 million against a $30 million valuation from investors, including Coinbase Ventures, to build a Solana wallet for enterprises.
Here’s some of this week’s crypto analysis available on our senior reporter’s subscription service TC+ Jacquelyn Melinek:
5 takeaways from Coinbase’s disappointing Q2 results
Coinbase, once wildly profitable in the wake of its immediate listing in 2021 thanks to a run in crypto-related trading activity, is now working to contain costs and braving the lingering “winter” in its market and sticking to previous profitability targets for the full year. year . What follows are five takeaways from Coinbase’s report that stood out to TC’s Alex Wilhelm and Ram Iyer.
As Telegram grows, so does crypto traders’ reliance on the app
The crypto community has relied on social media sites like Twitter or messaging apps like Discord and Telegram to communicate. But some say that Telegram is the ultimate hub for communication and information – a necessary place to be in the crypto community. “Using telegram is the foundation of the crypto community,” the founder of the Telegram channel, which uses the username nakamotocat, told londonbusinessblog.com. “Projects have come and gone, players have risen and fallen, but much of the discourse between different projects and market participants is on Telegram, and it remains a constant.”
Ethereum Co-Founder Sees Role Decreasing as Blockchain Becomes More Decentralized
As the layer-1 blockchain Ethereum continues to focus on a roadmap to greater decentralization, co-founder Vitalik Buterin thinks that moment may come sooner than expected. Also looking to the future, Buterin thinks the next decade will be crucial for crypto. “I think crypto should generally transform in the next 10 years into something that is not based on promises to be useful in the future, but is actually useful.”
Solana Co-Founder Says NFTs Have ’50 Different Use Cases’ That Could Have Millions On Board This Year
It feels like yesterday that the NFT boom caught the attention of the crypto community and caused a stir even outside of the web3 world. But about a year later, the NFT hype has faded a bit. But that doesn’t stop some in the crypto world from remaining optimistic about non-fungible tokens. “I think within NFTs, everything just comes to the surface,” Raj Gokal, co-founder of Solana, told londonbusinessblog.com. “I think NFTs have 50 different use cases that seem to be rolled into one. I think we expect the majority of the [crypto] projects to use NFTs.”
Thank you for reading! And – again – to get this in your inbox every Thursday, subscribe to londonbusinessblog.com’s newsletter page.