Welcome back to Chain Reaction.
Last week, we talked about a hack that gave new, ironic meaning to the word “trustless.” This week, we’ll get into one of the most polarizing aspects of crypto — privacy.
If someone forwarded you this message, you can subscribe on TechCrunch’s newsletter page.
all mixed up
A weekly window into the thoughts of senior crypto reporter Anita Ramaswamy:
Tornado Cash has been the talk of the town this week in crypto circles. The U.S. government’s Office of Foreign Asset Control (OFAC), a watchdog within the Treasury, leveled sanctions against the cryptocurrency mixer for its role in helping facilitate money laundering. North Korean-backed hackers, among others, have used the Tornado Cash platform to mask stolen crypto associated with some of the highest-profile hacks in web3 to date, including last week’s Nomad heist and the hack of play-to-earn video game Axie Infinity earlier this year.
But in imposing sanctions, OFAC was essentially using a sledgehammer to crack a nut. The agency’s official notice on the topic said that the platform had facilitated $7 billion worth of money laundering — which happens to be the total value of crypto assets that have been sent through Tornado Cash since it was created in 2019. Meanwhile, blockchain analytics provider Elliptic says only ~$1.5 billion of funds on Tornado are actually linked to crime, including ransomware attacks and fraud. The rest, Elliptic argues, could include “legitimate uses of mixers such as Tornado, such as to preserve financial privacy.”
So what are some of those legitimate uses? One example came from Ethereum co-founder Vitalik Buterin, who confessed on Twitter that he has used the service to send donations to aid Ukraine securely without the knowledge of the Russian government.
The OFAC’s dictum does not differentiate between criminal and legitimate use cases, though. As a result, many law-abiding crypto users are likely suffering. Two major crypto infrastructure providers, Alchemy and Infura, blocked access to their API from any wallets that used Tornado Cash. Circle has reportedly frozen ~$75,000 worth of its USDC stablecoins that were connected to Tornado through a shared wallet, according to Dune Analytics data.
Of course, internet pranksters got in on the fun, as is usually the case in the crypto world. Some have been sending crypto through Tornado Cash to known wallets held by celebrities such as Jimmy Fallon and Shaquille O’Neal in an attempt to troll them by getting their wallets banned under the sanction rules.
OFAC’s heavy-handed action comes across as a bungled approach that raises more questions than it resolves when it comes to enforcement. Only time will tell how the latter plays out, but in the meantime, the crypto community is, understandably, pretty upset.
the latest pod
This week on Chain Reaction, Jacquelyn and Anita ran the show while Lucas was on vacation. Jacquelyn was coming off of an exciting Friday night call with Vitalik himself, so she shared some of his comments on where crypto is headed.
We then dove into the news of Tornado Cash getting sanctioned in the U.S., Coinbase’s disappointing second-quarter earnings and the beef between Binance and India’s largest crypto exchange, WazirX, over a transaction that supposedly took place two and a half years ago (or did it)?
Be sure to give it a listen to get up to speed on the latest tea in crypto and tune in next Tuesday for Anita and Lucas’s conversation with Li Jin, a web3 investor focused on the creator economy at Variant Fund.
Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week.
follow the money
Where startup money is moving in the crypto world:
- Jump Crypto led Injective‘s $40 million round to help expand DeFi applications.
- Pinata raised $21.5 millon in a newly announced Series A and seed round from investors, including Greylock and Pantera.
- CreatorDAO, a decentralized platform for content creators, raised $20 million in an a16z and Initialized Capital-led round with participation from celebrities including Paris Hilton and Liam Payne.
- Blockchain gaming company Lysto raised $12 million in a round led by Hashed, Square Peg and Beenext.
- Unstoppable Finance snagged $12.8 million in a round led by Lightspeed for its DeFi wallet.
- Kurtosis, a crypto-focused developer tool system, brought in $20 million in a Series A round led by Coatue.
- Blockchain payments platform Ansible Labs raised a $7 million seed round led by Archetype.
- Zero-knowledge cryptography startup RISC Zero scooped up $12 million in a seed round led by Bain Capital Crypto.
- Fair.xyz landed $4.5 million from investors including OpenSea for its NFT minting platform.
- Cashmere raised $3 million at a $30 million valuation from investors including Coinbase Ventures to build a Solana enterprise wallet.
TC+ analysis
Here’s some of this week’s crypto analysis available on our subscription service TC+ from senior reporter Jacquelyn Melinek:
5 takeaways from Coinbase’s disappointing Q2 results
Coinbase, once hugely profitable in the wake of its 2021 direct listing thanks to a run in crypto-related trading activities, is now working to limit costs and brave the ongoing “winter” in its market and stick to prior profitability targets for the full year. What follows are five takeaways from Coinbase’s report that stood out to TC’s Alex Wilhelm and Ram Iyer.
As Telegram grows in size, so does crypto traders’ dependence on the app
The crypto community has relied on social media sites like Twitter or messaging apps like Discord and Telegram to interact. But some say Telegram is the ultimate hub for communication and information — an imperative place to be in the crypto community. “Telegram usage is the bedrock of the crypto community,” the founder of Telegram channel unfolded, who goes by the username nakamotocat, said to TechCrunch. “Projects have come and go, players have risen and fallen, but much of the discourse between various projects and market participants resides on Telegram, and that remains a constant.”
Ethereum co-founder sees role diminishing as blockchain becomes increasingly decentralized
As the layer-1 blockchain Ethereum continues to focus on a road map toward greater decentralization, its co-founder, Vitalik Buterin, thinks that moment might come sooner than expected. Also looking to the future, Buterin thinks the next decade will be pivotal for crypto. “I think in general, the next 10 years, crypto has to transform into something that is not based on promises of being useful in the future but is actually useful.”
Solana co-founder says NFTs have ‘50 different use cases’ that can onboard millions this year
It feels like yesterday that the NFT boom captured the attention of the crypto community, making waves even outside the web3 world. But a year or so down the line, the NFT hype has somewhat died down. But that isn’t stopping some in the crypto world from staying optimistic about non-fungible tokens. “I think within NFTs, everything is just really scratching the surface,” Raj Gokal, co-founder of Solana, told TechCrunch. “I think NFTs have 50 different use cases that seem to be lumped into one. I think we expect the majority of the [crypto] projects to make use of NFTs.”
Thanks for reading! And — again — to get this in your inbox every Thursday, you can subscribe on TechCrunch’s newsletter page.
from https://ift.tt/VJCwIBy
via Technews
No comments:
Post a Comment