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Crypto

From the erratic ups and downs in bitcoin and ethereum value, to the explosion in initial coin offerings, and the unstoppable demand for mining-ready GPUs, cryptocurrency has become an inescapable story. It's also become increasingly difficult to make sense of — as the industry expands, new currencies sprout up, and companies form overnight. Check here for the complete coverage of bitcoin, ethereum, litecoin, monero, Venezuela's petro, cryptocurrencies at large, and the ways that ICOs and the underlying blockchain technology are helping shape a burgeoning industry and giving life to a new wave of startups and entrepreneurs.

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An update on the FTX bankruptcy plan, via an interview with an FTX creditor.

Tiffany Fong, who’s been heavily involved with the FTX storyline, interviewed FTX creditor Louis D’Origny about the FTX bankruptcy plan. If you want to look at the Chapter 11 plan for yourself, it’s here.


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The scam behind wrong number and romance scams.

The New York Times published an investigative piece on the slave labor behind some of those innocuous-seeming crypto scam texts and calls.

The story focuses on one person who escaped from a compound where he was where he was forced to carry out intricate online romance scams involving crypto. The money earned from these scams is then laundered through other countries, including the US.

A word of warning: This story has descriptions of torture and captivity.


The Solana Saga crypto phone’s surprising sellout and other Web3 updates:

Crypto wallet company Ledger’s Connect Kit software was compromised to insert a wallet drainer. Ledger’s CEO blamed a phishing attack on an ex-employee without explaining how their account still had access.

Even though the Solana Saga crypto phone flopped, selling only 2,500 units, it suddenly sold out in the US on Thursday. The Block reports each phone comes with 30 million “bonk” tokens. Their price has spiked to $0.000028 each, which adds up to more than the phone’s $599 price — assuming you can get the phone and sell them in time.

And Web3 is Going Just Great points out that a blockchain-linked online chess platform, The Immortal Game, has dropped NFT and play-to-earn features after finding out “that by offering large amounts of cash with no limit barrier to entry, we encouraged heavy cheating on the platform and degraded the user experience for our legitimate player base.”


Worldcoin is bringing its eyeball-scanning tech to Reddit, Discord, and... Minecraft?

The Sam Altman-backed crypto project announced the rollout of World ID 2.0, which can apparently use your eyeball scan to verify your identity when signing into an account or applying for online verification status. Worldcoin says the update should make it “easier to distinguish between bots and verified humans online.”


Image: Worldcoin
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The guy who designed Sam Bankman-Fried’s defense says that SBF was “at the very top of the list as the worst person I’ve ever seen do a cross examination.”

David Mills, the Stanford Law prof who also defended ‘80s bond villain Michael Milken, flew to the Bahamas in his own jet when Bankman-Fried was first jailed. His friendship with Bankman-Fried’s parents may not survive the case.


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Binance founder Changpeng Zhao can’t leave the US while awaiting sentencing.

A judge ruled on Thursday that Zhao — who resides in the United Arab Emirates — must stay in the US ahead of his February 2024 trial, citing his “enormous wealth and property abroad” as well as a lack of ties to the US.

Zhao stepped down as CEO of Binance in November and pleaded guilty to breaking anti-money-laundering laws after a months-long investigation from the US government.


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Bitzlato crypto exchange co-founder pleads guilty to unlicensed money transmitting.

Anatoly Legkodymov, aka Anatolii Legkodymov, Gandalf, and Tolik, was arrested in Miami earlier this year. The feds said his crypto exchange advertised its lack of ID requirements for users and processed more than $700 million over the years for ransomware gangs and other criminals as a counterparty for Hydra Market, a Russian dark web site they shut down last year.

He now faces a maximum penalty of five years in prison, and his guilty plea comes a week after another Russian man,  Vladimir Dunaev, pleaded guilty to helping develop the Trickbot malware.


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“Ever since I was a kid, I’ve always wanted to be a criminal.”

Netflix has released a trailer for its new crypto documentary, Bitconned, about the rise and fall of Centra Tech, a scam that was part of the wave of initial coin offerings in 2017. The blowback from the scheme caught DJ Khaled and Floyd Mayweather, who had promoted it — they were fined by the SEC. Ray Trapani, one of the co-founders, appears to be a key narrator of the Netflix documentary.


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Nerd alert!

Here’s a fun profile of Gary Gensler, the head of the Securities and Exchange Commission, with a lot of details on his approach to enforcement (“Though you might think otherwise, I don’t spend the majority of my time on crypto,” he says). Don’t worry, there’s even an explanation of his genuinely weird social media antics.


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Feds seize crypto mixer tied to the North Korean hackers who robbed Axie Infinity.

CoinDesk and TechCrunch report U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) action against Sinbad.io, calling it a money laundering tool used by the “Lazarus” state-sponsored hackers used to move a “significant” portion of the $620 million in crypto stolen from Axie Infinity last year.

This follows sanctions against other mixing services like Blender.io and Tornado Cash.

OFAC:

Lazarus Group has operated for more than ten years and is believed to have stolen over $2 billion worth of digital assets... the DPRK has resorted to using illicit tactics, such as heists perpetrated by the Lazarus Group, to generate revenue for its unlawful weapons of mass destruction and ballistic missile programs. 


Screenshot of the seizure notice posted to Sinbad.io by the FBI and other agencies.
Image: Screenshot of Sinbad.io
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Binance’s CEO will have to stay in the US, for now.

Last week, Changpeng Zhao agreed to step down as CEO of the massive cryptocurrency exchange Binance — part of a plea deal with the DOJ for breaking anti-money-laundering laws.

However, one remaining disagreement has been where he will spend his time while awaiting sentencing for the felony charges. Despite agreeing to a $175 million bond, prosecutors consider him a flight risk and wanted to keep him in the US. That question isn’t fully answered, but Reuters reports a judge ruled CZ is staying the US for now while the court considers it, instead of being allowed to return to the UAE.


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Coinbase CEO figures it’s time to stop looking for crypto criminals now that Binance has pleaded guilty.

What if we really have already found every criminal who runs a cryptocurrency exchange?

Now that Binance reached a $4 billion settlement with the DOJ and ditched its CEO Changpeng Zhao, Coinbase head Brian Armstrong said to CNBC in an interview, “The enforcement action against Binance, that’s allowing us to kind of turn the page on that and hopefully close that chapter of history.”

Coinbase is also being sued by the SEC for allegedly selling unregistered securities, by the way.


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A Montenegro judge agrees to extradite collapsed crypto founder Do Kwon.

But now the question is: to where? Kwon faces charges in both the US and South Korea in connection with the collapse of the Terra stablecoin and its sister token Luna.

Kwon was arrested in Montenegro in June and spent four months in prison for attempting to use a fake passport. Federal prosecutors in the US filed additional charges against Kwon following his arrest, accusing him of wire fraud, commodities fraud, securities fraud, and more.

A Montenegrin Justice Minister must now decide whether to extradite Kwon to the US or South Korea.


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Bankrupt crypto lender Genesis is suing Gemini to recover $689 million.

In a lawsuit filed on Tuesday, Genesis alleges Gemini, a crypto exchange owned by the Winklevoss twins, made “significant withdrawals” before Genesis filed for bankruptcy, contributing to a “run on the bank.”

This comes after Gemini sued Genesis owner Digital Currency Group (DCG) in July, claiming it engaged in fraud through the high-yield Earn program they partnered on. When not waging legal battles against each other, Gemini, Genesis, and DCG must deal with the lawsuit New York’s Attorney General filed against all three of them.


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The SEC is suing Kraken.

Another one of the world’s largest cryptocurrency exchanges joins Coinbase and Binance in facing charges of operating as an unregistered securities exchange, as well as accusations (PDF) of commingling customers' crypto assets and cash with its own and even allegedly paying expenses directly from bank accounts that held customer cash.

Kraken agreed to pay a $30 million fine in a settlement when it ended its crypto staking program in the US earlier this year; we’ll see if this case ends up costing it more.


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What could possibly go wrong, again?

Following a jury's conviction of former FTX boss Sam Bankman-Fried on fraud charges, the Wall Street Journal reports that several former FTX employees, including former general counsel Can Sun, are involved in launching a new cryptocurrency exchange based on Dubai.

Sun and Ferrante said they wanted to use the lessons they learned from FTX’s failure to protect user funds. Backpack Exchange, the name under which Trek Labs will do business, will use Backpack’s technology to allow users to hold funds in their own “self-custody” crypto wallets that the exchange itself wouldn’t be able to unilaterally access, they said.


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“$8 billion is a lot of money.”

With this stage of Sam Bankman-Fried’s big crypto fraud trial over after the jury found the former FTX boss guilty, The Verge reporter Elizabeth Lopatto joined the Crypto Critics’ Corner podcast to discuss everything that went on in the courtroom.

Along with hosts Bennett Tomlin and Cas Piancey, they discuss not only the trial’s final moments but also what’s next for SBF.


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“Around $114 million” stolen from Poloniex.

“We are currently investigating the Poloniex hack incident,” confirmed infamous hype man Justin Sun in a tweet. As we reported last year, Sun purchased “Polo” because of its gray-area approach to know-your-customer rules. Somewhat ironically, he is now offering a “white hat bounty” to the hacker.


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Guess what revolutionary new blockchain tech Ubisoft has cooking.

Seriously, you’ll have to guess; this press release is completely inscrutable.

Its previous NFT work didn’t go so well.


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ApeFest NFT event eye and skin injuries likely caused by UV lights.

The Bored Ape Yacht Club has concluded its investigation into what caused at least 15 convention attendees to suffer eye pain, vision problems, and sunburnt skin during ApeFest 2023, determining that UV-A emitting lights were likely behind the injuries.

A similar situation was reported in 2017 after specialist lights used for disinfection were incorrectly installed during a Hypebeast event.


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Here are the three companies in the running to buy what’s left of FTX.

Bullish, a crypto exchange led by former New York Stock Exchange president Tom Farley, is just one of the companies that could potentially relaunch the fallen exchange, The WSJ reports.

Fintech startup Figure Technologies is also in the running, as is the crypto venture capital firm Proof Group, which was one of the companies that bought up Celsius’ assets after it went bankrupt. We could find out FTX’s winning bidder as soon as December, according to the WSJ.


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The Verge
Ask us anything: Liz Lopatto and CoinDesk’s Danny Nelson answer your questions about the Sam Bankman-Fried trial at 4PM New York time.

We’ve got the goss on early wake-ups, lawyer fashion, courtroom sketches, and other pressing matters. Go ahead and leave a question here if you’ve got one... [Arnold voice] I’ll be back.


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That defense amounted to SBF saying, “I’m innocent because my customers were dumb enough to believe me.”

Kevin Dugan’s overview really sums it up: stripped of the affectations, we discovered there wasn’t much to Sam Bankman-Fried at all.


The Real SBF Stood Up

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‘OpenSea 2.0’ starts with mass layoffs as the NFT balloon deflates.

CEO Devin Finzer says OpenSea is “shifting to a smaller team with a direct connection to users.” Decrypt reports about 50 percent of employees are impacted. When it laid off 20 percent of its employees last year, around 230 people remained.

This chart shows OpenSea activity peaked with over 50,000 active wallets (around the time it was valued at $13 billion) and $140 million in daily volume, which has dropped to fewer than 8,000 active wallets and $2.3 million in volume.


A line graph from the site DappRadar showing how the active wallets, volume, and transactions on OpenSea peaked at the end of 2021 and have shrunk to almost nothing now in comparison.
Data on OpenSea active wallets, volume, and transactions since January 2021.
Image: DappRadar

Sam Bankman-Fried gambled on a trial and his parents lost

Over five weeks, the FTX founder’s parents watched from the galleys — deluded, humiliated, and finally, defeated.

FTX founder Sam Bankman-Fried is guilty of fraud

The trial could have huge implications for the crypto industry. Stay up to date as The Verge covers the trial from the Manhattan court.

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The jury in the Sam Bankman-Fried / FTX fraud trial has reached a verdict.

The jury only started deliberating a few hours ago, but after all of the testimony and evidence, they notified court officials they reached a verdict, as former FTX CEO Sam Bankman-Fried faces seven charges, including wire fraud. We’ll have their decision here as soon as it is available.

According to a report from CNBC, the media will see it in about 10 minutes.


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Jurors have begun deliberating Bankman-Fried’s fate.

The 12-person jury will decide whether Bankman-Fried is guilty of seven criminal charges, including two counts of wire fraud. If convicted, Bankman-Fried faces over 100 years in prison.

The Verge’s Elizabeth Lopatto has been tracking the case from the courtroom, and from what she’s seen so far, it doesn’t look like Bankman-Fried’s defense has brought too many convincing arguments to the table:

The closing arguments made clear was how lopsided the case was. Bankman-Fried’s defense appears to be that he is a nice boy who would never do anything to hurt anyone on purpose... Bankman-Fried is right to be frightened. He brought excuses. The prosecution brought receipts.


Closing time for Sam Bankman-Fried

Mistakes aren’t illegal, but fraud is — and Bankman-Fried’s lawyers never made his defense land.

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“...getting caught in a lie by a judge is very bad.”

That’s what experienced litigator Mitchell Epner wrote about this incident during the cross-examination of Sam Bankman-Fried. Elizabeth Lopatto’s summary of SBF’s final day of testimony captures it as part of being “vivisected” on the stand.

It was not until Judge Lewis Kaplan intervened to ask if Bankman-Fried had ever been told by Yedidia about that money, in words or in substance, that Bankman-Fried admitted he’d been told.

Trying to worm his way past tough questions by answering a slightly different question doesn’t seem to work as well for SBF in court as it did with investors and interviewers.


Sam Bankman-Fried didn’t ask where the $8 billion went

His employees told him he ‘should stop asking questions because it was distracting.’

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The Verge
The defense rests.

Sam Bankman-Fried’s lawyers are done calling witnesses in the big FTX fraud case over the cryptocurrency exchange’s collapse last year. The lawyers are likely preparing to make their closing arguments, and Elizabeth Lopatto will have more reports from the courtroom later today, following last night’s story on all the things SBF conveniently doesn’t remember.