#89 Turning the Page
Your weekly dose of crypto context and opportunities.
The excitement around the expected ETF approval (anticipated in January 2024) is still pulling the crypto scene like a locomotive. But, beyond the optimistic talk about the future, we might as well take a moment to appreciate the things we're leaving behind.
The indisputable news of the week is the Binance case. The centralized exchange received a massive $4 billion fine, and its CEO, Changpeng Zhao (CZ), is stepping down and paying a hefty fine.
The news broke just a week or two after another disgraced mogul met his fate. SBF's verdict, found guilty of all charges, has many parallels and significant differences. CZ has insisted that the fine has no relationship with customer fund misuse or appropriation.. His offense, however, was playing hide and seek with U.S. regulators while providing services to Americans and some shady international actors.
At the same time, we have the latest developments with Do Kwon, the head honcho at Terra, the ecosystem that signaled the beginning of crypto's nosedive in 2023.
Some other headline-worthy news this week also has names attached to them: Javier Milei, the new president in Argentina, and Sam Altman, the record-breaking entrepreneur who last week experienced a Steve Jobs lap (was fired and rehired by his company) in record time.
1. Binance | A new chapter for the #1 exchange
Last week, the U.S. Department of Justice slapped one of the heftiest fines ever imposed on a financial organization on Binance. $4 billion for consistently bypassing controls and red lines for years. Binance's founder, CZ, has also been fined and removed from leadership. According to his farewell tweet, he'll now have "more time to look into DeFi."
A chapter is closing. Binance had tried to leave behind a rebellious past where it took advantage of operating on the fringes of legality. In its final years, it had started a determined journey toward the Bright Side of the force. But it was too late.
Some believe that Binance won't survive. The controls and scrutiny it will face may erode its competitive edge, which had always been its ability to move faster and more aggressively than its competitors, thanks to a daring spirit. Others think the fine is a clean slate, marking the beginning of a new game. Only time will tell.
For now, the fine was met with some relief from the industry, demonstrating that the crypto space is much more prepared to be a mature and respectable sector than many people seem to believe.
2. Do Kwon | Extradition to where?
Do Kwon is the founder of the defunct Terraform Labs and the spiritual leader of the Terra/Luna cult that spectacularly blew up in 2022, turning over $40 billion in value locked to ashes.
Kwon belongs to the generation of irresponsible crypto managers that’s sunsetting these days, together with Sam Bankman-Fried and Binance’s CZ. He was arrested early this year in Montenegro and accused of forging his papers. Now, the country has decided to proceed with the trial and then extradite him, although they still have to decide whether they’ll approve the American or the South Korean request.
Another one bites the dust.
3. Milei | The outsider turned president
Argentina was always the first country to come to mind when someone explains how the First World is often blind to the true advantages of a decentralized financial system. Blockchain technology emancipates money from the control of irresponsible governments and financial institutions, who are often too worried about perpetuating their position. This concern is widespread worldwide but shines with the light of a thousand suns in Argentina. The country has suffered from crippling inflation for decades. Last week, they elected Javier Milei to end with that. Milei is a hardcore liberal and an outsider with little respect for old-school politicians. He has expressed his deep respect for the individualism and freedom expressed through cryptocurrency and his disdain for institutions like central banks (he plans to close Argentina’s).
Some could say that Argentina is the next large-scale experiment for the new vision of the economy that justifies the existence of cryptocurrencies. Unfortunately, Argentina is not a lab rat, and Milei’s liberal ideas coexist with some other delirious ones and emanate from an angry and populist personality we are, unfortunately, getting used to seeing take power.
4. Altman | The better Sam goes for a walk
Sam Altman took a walk around the block. He was fired from OpenAI’s board and readmitted just a few days later after the backlash from investors and employees forced the board to take their decision back.
Altman was allegedly cut off because of differences in vision. OpenAI, the flagship startup leading the world into the future, is, according to many, kinda dangerous, and Altman seemed a little too reckless to his peers. Others prefer a different pace.
With Altman’s return comes the reinvigoration of the AI narrative in the markets, including crypto. Many projects and tokens embody this trend, which we’ve discussed in this newsletter. AI and crypto have a fertile overlapping ground in areas such as decentralized storage, distributed computing, and AI-to-AI payments.
If you want a place to start, check this tweet out, for example,
5. Kraken | The SEC vs centralized exchanges, chapter 3
The US Securities and Exchange Commission was Binance’s sworn enemy before the Department of Justice dropped by. Before Janet Yellen and her crew started their crusade, the SEC had already had some skirmishes, brandishing their trademark “regulation by enforcement” style.
If you don’t remember what that looks like, we had another example last week. The SEC is now after Kraken, another leading centralized exchange. The Regulators accuse Kraken of virtually the same deeds as they did on Binance and Coinbase. Especially Coinbase. Just take a look at the wording.
Kraken’s response echoes crypto’s cries:
The allegation is hollow; there is no such thing as an exchange, broker-dealer, or clearing agency for investment contracts. The SEC is demanding compliance with a regime that doesn’t exist (Kraken Blog)