Bitcoin Holiday Sale!
Bitcoin Prices Plummet Just in Time for the Holidays
Bitcoin prices plummeted below $50k entering this week, and although briefly rebounded, slid back below $50k by the end of the week.
Speculation about what spurred the price action filled the media. Some said the Omicron variant of the Coronavirus has scared traders into selling off risky assets in their portfolios, especially as we near the end of the year. Others said that the re-nomination of Federal Reserve Chair Jerome Powell has many traders on edge. Then there were the crypto hearings this week that suggested crypto legislation will not be leaning in a desirable way anytime soon.
Meanwhile, those who have been in the Bitcoin game a long time have seen swings like this countless times, and it seems like a natural correction after a large run up. Perhaps we should consider it a nice discount just in time for the holidays?
Time will tell whether this is the start of a long bear market, or whether things are about to spring in the other direction. But as the Fed doesn’t seem to be stopping printing money any time soon, it may be helpful to zoom out at a time like this.
DOJ Launches Crypto Task Force
The DOJ has launched a new task force that will put crypto mixers and exchanges under the microscope.
In the name of national security and specifically to combat corruption, the Biden Administration released a 38 page document earlier this week detailing a five-pillar strategy. Pillar 3 zones in on crypto:
PILLAR THREE: Holding Corrupt Actors Accountable
DOJ [Deparment of Justice] will utilize a newly established task force, the National Cryptocurrency Enforcement Team, to focus specifically on complex investigations and prosecutions of criminal misuses of cryptocurrency.
Subpoena power has also been broadened to include financial records maintained abroad and new disclosure requirements.
Additionally, the DOJ announced support and incentives for whistleblowers who share information that leads to the seizure of illicit proceeds. If only they showed the same support for all whistleblowers.
While the publicized reason for establishing the task force is to deter money laundering and criminal activity, some consider it a pretext for increase government access to private citizens’ personal financial records.
That’s Not How Privacy Works, Apple!
Apple has loosened its stance on just how iron-clad consumer privacy is. In a major privacy campaign earlier this year, Apple released an update that required apps to ask permission before tracking user data, and this was immediately met with hostility from companies like Facebook who rely on tracking for their business model. Now in an apparent backslide, Apple is allowing for a much looser interpretation of their rules: companies will be allowed to collect and share data from iPhone users, as long as the companies ‘pledge’ to anonymize any personally identifiable data and sort users instead into ‘cohorts’.
Let’s reiterate.
Companies will ‘pledge’ that they won’t look at the personally identifiable data, only the anonymized data. And users will have no way of knowing how these companies are actually handling the data behind the scenes.
While Apple markets their primary focus as being on the end user and their privacy, it’s clear from this move that they have other major factors to consider. Cory Munchbach, COO of customer data platform BlueConic, observed that “Apple can’t put themselves in a situation where they are basically gutting their top-performing apps from a user-consumption perspective. … That would ultimately hurt iOS”.
So instead of pushing the privacy envelope forward for consumers regarding their data, Apple is allowing companies like Facebook to continue to dictate the terms. Perhaps it’s time to rethink which apps you allow on your devices?
Two Wins, One Verdict
The craziness of the Kleiman vs Wright trial came to a close this week, when a jury in Miami found Craig Wright not liable for breaching any business relationship with the late Dave Kleiman.
Wright, who claims to have created Bitcoin under the pseudonym Satoshi Nakamoto, was being sued by the Kleiman estate for wrongfully taking bitcoin-related assets from the W&K company. After a lengthy battle, the jury found that, although Wright did not have an official business partnership with Kleiman and was not liable for breach of contract, he was still guilty of conversion: the act of “taking someone else’s idea for your own and changing the value, attributes, or usability of the ‘converted’ goods”.
The Kleiman team said in an official statement:
“We are immensely gratified that our client, W&K Information Defense Research LLC, has won $100,000,000 reflecting that Craig Wright wrongfully took bitcoin-related assets from W&K. Many years ago, Craig Wright told the Kleiman family that he and Dave Kleiman developed revolutionary Bitcoin based intellectual property.”
The decision was only a ripple of the $179 Billion the estate was asking for in collected damages, but the team seemed to be satisfied, nonetheless.
Oddly enough, Wright expressed his own satisfaction at the verdict saying “I feel remarkably happy and vindicated. … I am not a fraud, and I never have been.”
It’s no surprise that the jury was unable to prove the existence of any Kleiman and Wright business partnership, given all the contradictory statements Wright has made about ownership of the company. We’ll leave the following here as food for thought:
On April 2, 2013, Wright signed a contract, representing that Dave Kleiman is 100% owner of W&K, which was filed before the Supreme Court of New South Wales. ECF No. [83-5], at 1.
On or about July and August of 2013, Wright filed a sworn affidavit in the Supreme Court of New South Wales declaring that he and Dave Kleiman each owned 50% of W&K. ECF No. [83-4], at 4.
On April 16, 2018, in a sworn affidavit Wright stated that he has “never been a member of W&K.” ECF No. [12-2], at ¶ 12.
On June 28, 2019, during his deposition Wright testified under oath that he has “no idea” who the owners of W&K were, and unequivocally stated that he was not an owner of W&K. See ECF No. [242-1], at (233:12-14) (“Q: Who owned W&K in reality? A. Not me.”) and (233:22-23) (“Q. You have no idea who owns W&K? A. I do not know that.”).
In his 2019 motion to dismiss the charges of this case, Wright argues that three additional parties may be members of W&K.
As Judge Bloom herself quoted about the case back in 2019,
“Oh! What a tangled web we weave when first we practice to deceive.”
Sir Walter Scott, Marmion (1808).
“Comprehensive, Not Contentious”
The US House Financial Services Committee held a hearing on Wednesday in Washington DC, where 6 top executives in the crypto industry were asked to make statements. Led by Rep. Maxine Waters (D., Calif.), the hearing was an exploratory and informative session where lawmakers were able to ask questions of the top crypto leaders in an effort to gain a better understanding of cryptocurrency assets and how they fit into a regulatory framework. High ranking leaders from Coinbase, Stellar, Paxos and Bitfury were among those questioned.
“When you look at the number of people who are underbanked or unbanked, both in the United States and globally, it’s indicative of a system that does not work for everyone,” CEO of FTX Sam Bankman-Fried said in a compelling statement.
Rep. Ritchie Torres (D. NY) inquired about the potential for crypto to be used by immigrants to send money home via crypto instead of wire transfers like Moneygram.
Some other interactions were more heated. Rep. Brad Sherman (D., Calif.) and Coinbase CFO Alesia Haas exchanged a few swipes over the amount of Coinbase’s transaction fees.
Brian Brooks, formerly a top federal banking regulator and current Bitfury CEO, asked why crypto innovation and services were being driven offshore. He also questioned securities enforcement without allowing registration, and treating stablecoin issuers as banks but not granting them bank charters. It was reminiscent of Wyoming Senator Cynthia Lummis (R)’s op-ed last week, where she pointed out that the Fed is actually breaking the law by failing to act on banking charter applications from Wyoming’s new crypto banks (SPDIs).
Rep. Patrick McHenry (R., NC) echoed the criticism of current crypto regulations:
“That fear of the unknown and the move to regulate before understanding will only stifle American ingenuity and put us at a competitive disadvantage”.
The outcome of the hearing is unclear, but many presume it was yet more posturing about control, from politicians trying to impress their constituents. All parties ultimately left with minimal cuts and bruises.
“I think it went really, really well,” Circle Chief Executive Jeremy Allaire said. “It was very comprehensive, not contentious.”
Quick Bytes:
The auction for Ross Ulbricht’s NFT collection came to a close this week, with the winning bid going to the FreeRossDAO for 1446 ETH (currently almost $5 million). The DAO had raised a total of 2837.262 ETH (currently over $11 million).
Absolutely sensational.
Ross tweeted this:
Meanwhile the opposite emotions arose when it was announced this week that the British High Court accepted the U.S. request to extradite Julian Assange. This is a dark day for freedom of the press. The rise in authoritarianism that silences journalists should worry everyone.
Highly recommend Glenn Greenwald’s substack for a rundown of the Assange situation.
By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.