Issue 100 – Freedom of all kinds is worth fighting for

Once again it feels profoundly weird to sit here and write about cryptocurrency as the United States is faced with escalating state-sponsored violence and terror.

This time it’s masked ICE agents terrorizing communities, executing people in the streets like Silverio Villegas González, Renée Good, Keith Porter, and Alex Pretti. They’re killing people in detention centers — people like Geraldo Lunas Campos, choked to death by a guard, or dozens more through denial of medical care or under suspicious circumstances. They’re terrorizing whole communities, forcing people to decide whether it’s safe to go to work or to send their kids to school.¹ They’re kidnapping kids.² And they’re threatening protesters, saying they’ll enter their information into a “nice little database” to classify them as domestic terrorists,³ following them home,⁴ and threatening to “erase” them.⁵

But it is also in no small part thanks to the cryptocurrency industry — and the rest of the technoligarchs — that we find ourselves with this administration, and with members of Congress who either wholeheartedly support its abuses or are too craven to do anything meaningful to stop them.

For years, crypto executives have touted cryptocurrency’s supposed anti-authoritarian and humanitarian credentials — whether to fend off regulators or convince the public that crypto has viable use cases beyond speculation. The technology is necessary and good, they claim, because it could support dissidents living under authoritarian regimes, help persecuted groups escape their oppressors, shield people from surveillance, or somehow inherently protect citizens from government overreach. Many of them spent years posting piously about the importance of due process and protection from abuses of power, or shared quotes from Martin Luther King Jr. and Frederick Douglass about freedom.

We will hold governments accountable if we see bad activity, to protect your rights. Coinbase CEO Brian Armstrong, May 2025

I stand for human rights and believe that evil prevails when good men do nothing. Kraken founder and chairman Jesse Powell, February 2022

It's also hard to believe how some people want to make justice a political issue. It’s a human rights and dignity issue. Gemini co-founder and president Tyler Winklevoss, June 2020

It’s interesting to see who is standing up in favor of unlimited, unaccountable, un-appeal-able, unconstitutional power wielded by unelected bureaucrats and rogue politicians. Andreessen Horowitz general partner Marc Andreessen, December 2024

Freedom of all kinds is worth fighting for - economic, speech, due process, etc. Coinbase CEO Brian Armstrong, May 2025

And yet now these voices are silent on the authoritarianism unfolding before us. Where are their defenses of the Constitution when the president claims Pretti’s lawful gun ownership justified his killing,⁶ or when ICE leaders tell subordinates to enter homes without warrants?⁷ Where are their warnings about surveillance states now that ICE is photographing protesters for their “domestic terrorist” lists and Palantir is contracted by the government to build databases of people living in the US they can target for raids?⁸ In 2022, they were incensed when Canadian authorities froze bank accounts belonging to truckers protesting vaccine mandates (and delighted for the opportunity to promote crypto as an alternative funding mechanism) — but now, when ICE agents murder bystanders and invent pretexts that footage shows are false, where is the righteous outcry against state violence towards those exercising their right to protest?

The answer, of course, is that they never actually cared about these principles at all. Anyone who believed they did was dangerously naive. These were marketing slogans and talking points, deployed when convenient to ward off regulation and burnish crypto’s reputation, discarded the moment they might conflict with business interests. The atrocities of Trump’s regime have clearly done nothing to lose crypto’s support: Coinbase, Ripple, and Andreessen Horowitz have each contributed another roughly $25 million apiece to the political machine that installed Trump and bought Congress.⁹ Gemini’s Winklevoss twins and Kraken have contributed at least $22 million and $2 million, respectively, to new pro-crypto super PACs and dark money groups that are even more explicitly Trump-aligned [I91, 93].^a

Many of these executives have long made it clear that authoritarianism isn’t just collateral damage in their pursuit of business-boosting deregulation, but a desirable outcome. Marc Andreessen, an outspoken Trump supporter, adviser, and recruiter,¹⁰ published a 2023 manifesto on “techno-optimism” that explicitly cited as one of its “patron saints” Filippo Tommaso Marinetti — co-author of the Fascist Manifesto that formed the platform for Mussolini. Coinbase and Andreessen Horowitz alum Balaji Srinivasan has promulgated the idea of the “network state”, an autocratic proposal to create tech-governed city-states free from democratic oversight.¹¹ Current Coinbase CEO Brian Armstrong, Andreessen, and the Winklevoss twins have all expressed support for the concept.¹² And the Winklevosses have even funded a proposed network state called Praxis, whose CEO rather overtly embraces fascism.¹³

In crime

Something funky’s been happening with the US Marshals’ pile of seized crypto — the crypto they’re tasked with hanging on to as cases wind through the courts.^b In March 2024, almost $25 million was inexplicably removed from a Marshals-controlled wallet containing funds connected to the 2016 Bitfinex hack. In October 2024, crypto sleuth zachxbt noticed that $20 million of the Marshals’ crypto assets had apparently been stolen, with the thief laundering the funds through various exchanges [W3IGG]. The next day, $19.3 million of those funds were mysteriously returned.

Now, zachxbt has linked the stolen government funds — as well as stolen assets belonging to other victims — to a man named John Daghita. According to zachxbt, Daghita was previously known only as “Lick” online, and was active in Telegram chat rooms where crypto thieves boasted about their wealth. When another thief taunted Lick for “only having $6 mil”, Lick evidently decided the only way to defend his honor was to go on a screenshare call to show proof of ownership by transferring funds between wallets. In doing so, he exposed several wallet addresses, and zachxbt was able to trace some of the crypto back to the US government wallet addresses.¹⁴¹⁵

Shockingly, Daghita’s father is reportedly Dean Daghita, the owner of an IT company called Command Services & Support (CMDSS). In November 2024, CMDSS began a contract with the US Marshals to provide management services for their seized crypto assets.¹⁶ The contract is still active. While Coinbase has since July 2024 managed what the Marshals call their “class 1” crypto assets^c — the most popular cryptocurrencies like bitcoin, ether, and Tether — CMDSS was chosen to manage the “class 2” through “class 4” cryptocurrencies.^d

While it could be that the younger Daghita gained privileged information or access to the Marshals’ crypto wallets through his father, it’s not clear how that would have enabled thefts in the months prior to the contract award. I am hopeful that a FOIA request I filed with the Marshals earlier this week will shed some light on that. It’s also curious that many of the assets Lick siphoned from government wallets fall into the “class 1” category, which CMDSS is not involved in managing. The Marshals have declined to comment on the matter, citing ongoing investigations.¹⁷

The incident has renewed concerns about the US government’s ability to prudently manage crypto. In 2022, a Department of Justice Inspector General report identified “challenges” in the Marshals’ crypto custody practices, including “lack of comprehensive inventory management” and “inadequate, incomplete, and conflicting policies and procedures”.¹⁸ Last year, the Marshals struggled to provide even an estimate of how much crypto they held. An IT contractor who was passed over for a contract with the Marshals explained to CoinDesk, “As far as I’m aware, the USMS is currently managing this with individual keystrokes in an Excel spreadsheet. ... They’re one bad day away from a billion-dollar mistake.”¹⁹ Later in 2024, the Marshals disclosed in response to a FOIA request that they held around 28,988 BTC (more than $2.5 billion at today’s prices), though they did not provide an accounting of their other tokens.²⁰

After zachxbt’s allegations, a wallet linked to the thefts launched a “John Daghita” token, with the ticker $LICK, on the pump.fun memecoin launchpad. I couldn’t help but laugh when I read reporting from Cointelegraph that “The deployer of LICK held 40% of the total supply at launch, according to blockchain data visualization platform Bubblemaps, a level of concentration often viewed as a red flag in early-stage token launches.”²¹ I’m not sure the degree of concentration is really the primary red flag here.

In regulators

Both the SEC and the CFTC are showing signs of anxiety that the current pro-crypto regulatory capture could quickly evaporate. The two agencies have repeatedly emphasized “future-proofing” their deregulatory efforts: making them resilient against future regulators who might seek to reverse their changes. Newly appointed CFTC Chairman Michael Selig published a whole op-ed in the Washington Post, which waxes poetic about a coming “golden age” for American financial markets thanks to President Trump. The op-ed also announces his “Future-Proof” initiative, which he characterized on Twitter as a strategy to “Future-Proof [the CFTC] against rogue regulators”.²² Throughout the op-ed and his Twitter thread, he makes it clear that by “rogue regulators” he means those who seek to enforce longstanding financial regulations against crypto firms. In the Biden administration, he writes, regulators “subject[ed] novel products such as digital assets and perpetual futures to legacy rules” — something he hopes to avoid ever happening again by “codif[ying policy] through notice-and-comment rulemaking”.²³

SEC Chair Paul Atkins has made similar comments, telling attendees at a December Blockchain Association Policy Summit that “What is really important to me is that we future-proof what we’re doing. Whatever happens down the road, we don’t have the pendulum swinging the other way and then having a lot of our efforts washed away.”²⁴ Atkins has pushed Congress to write new laws, such as the current market structure bill, codifying crypto-friendly policy to avoid the “risk that a future Commission could reverse course”.²⁵

SEC

The SEC has dismissed with prejudice its case against the Winklevoss twins’ Gemini cryptocurrency exchange. Filed in January 2023, the agency alleged that the company had violated securities laws with its Earn program, in which Gemini partnered with the Genesis crypto lender to offer Gemini customers up to 7.4% APY on assets they loaned through Genesis. When Genesis suffered major losses on loans to Three Arrows Capital [W3IGG] and Babel Finance [W3IGG], the company went under, and around $900 million in Gemini customers’ assets were suddenly locked up in bankruptcy proceedings [I17, 18, 42]. Now, the SEC has evidently decided no harm, no foul, stating: “In light of ... the 100 percent in-kind return of Gemini Earn investors’ crypto assets through the Genesis Bankruptcy and the settlements noted above, and in the exercise of its discretion, the Commission believes the dismissal of the claims against Defendant is appropriate.”²⁶

While “but we gave the money back” isn’t normally a successful defense (just ask Sam Bankman-Fried), contributing around $4.4 million to Trump’s campaign,²⁷ donating an undisclosed amount to Trump’s ballroom project,²⁸ spending $1 million to be among the first members of the Trump family-run Executive Branch club,²⁹ investing in Donald Trump Jr.’s American Bitcoin venture,³⁰ and committing $22 million to political projects backing pro-Trump crypto advocates in the midterms seems to have gone a long way. The SEC case was paused back in April [I81], and, as I wrote then, “it’s widely understood that these [pauses] mark the end of SEC scrutiny for these companies.” Two months later, as the Winklevoss twins stood behind Trump in the Oval Office as he signed the GENIUS Act stablecoin bill, Trump remarked about the crypto industry: “I got you guys out of so much trouble”. Thanking the Winklevosses specifically, he added: “They’ve got plenty of cash, and it’s great that you’re on our side.” [I89]

The dismissal of the Gemini Earn enforcement action adds to a long list of crypto-focused cases and investigations that the SEC has paused, dismissed, or otherwise ended. That list also includes: Aave [I99], Binance [I85], Coinbase [I78], ConsenSys [I78], Crypto.com [I81], Cumberland DRW [I79], Dragonchain,³¹ Gemini (a separate investigation) [I78], Hex [I82], Immutable [I80], Kraken [I79], Ondo Finance [I98], OpenSea [I78], PayPal [I83], Ripple [I80], Robinhood [I78], Tron [I78], Uniswap [I78], Yuga Labs [I79], and the ZCash Foundation [I99].

The SEC has also issued more guidance around tokenized securities.³² It echoes past, less formal statements from agency commissioners, such as Hester Peirce’s July 2025 statement that “Tokenized securities are still securities.” [I88] In the new statement, they reiterate that “The format in which a security is issued or the methods by which holders are recorded (e.g., onchain vs. offchain) does not affect application of the federal securities laws.”

The guidance draws several important distinctions. First, between “issuer-sponsored tokenized securities” — on-chain stocks issued or otherwise authorized by the underlying company — and “third party–sponsored tokenized securities” — on-chain stocks unaffiliated with the underlying company. For third-party tokens, the SEC further distinguishes between two types: “custodial” versions, where each token represents an indirect interest in an underlying share held by the issuer, and
“synthetic” versions, which the SEC warns are “not an obligation of the issuer of the referenced security and confer[] no rights or benefits from the issuer of the referenced security.” This synthetic category is particularly problematic, as illustrated by Robinhood’s July offering of “OpenAI tokens”, which they said represent shares in the private company. OpenAI quickly warned that “These ‘OpenAI tokens’ are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval—we did not approve any transfer. Please be careful.” [I88]

This guidance comes as the New York Stock Exchange has announced it plans to develop a platform for tokenized stock trading.³³ While the announcement was met with excitement from the crypto world, Columbia professor Omid Malekan warned that the announcement “reads like vaporware and yet another corporate fantasy masquerading as innovation.” He points out that the announcement lacks even the most basic details, and that they caveat the whole plan as “subject to regulatory approvals”.³⁴ This would certainly not be the first time a major firm announced plans to blockchainify some portion of their business and then either never followed through or quietly shut it down later on. As David Gerard wrote in Attack of the 50 Foot Blockchain:³⁵

[Crypto media outlets] write articles about things that have not happened yet and probably won’t. “Talking about” becomes “considering doing,” becomes “will do,” becomes “is doing.” Even if a given blockchain trial does in fact happen, later failure is not documented.

CFTC

The CFTC Office of the Inspector General has published its annual report identifying “management and performance challenges”.¹⁸ After getting over my initial shock that there were any Inspectors General left in the US government, I was interested to see that the pending crypto market structure bill is listed as challenge #1. The OIG writes, “Anticipated passage of legislation expanding CFTC jurisdiction and authority related to cryptocurrency and other digital assets may present a significant management challenge. CFTC may be required to implement new registrant categories, complete necessary rulemakings, and implement mandated cooperative regulatory efforts. Challenges include obtaining additional qualified staff, developing institutional knowledge and expertise, launching and maintaining necessary additional data systems and analytics, and management of additional budgetary resources.”

The recommendation to hire additional qualified staff seems unlikely to materialize, given that the same report notes the CFTC reduced its workforce by 22% in the prior year. And at his confirmation hearing, CFTC Chair Selig repeatedly dodged questions from lawmakers pressing him to acknowledge that the CFTC needs more staff and resources to take on oversight of crypto and prediction markets. This chronic understaffing is, of course, precisely why the crypto industry has fought so hard to make the CFTC their primary regulator rather than the better-resourced SEC — they’re banking on the agency lacking the capacity to meaningfully enforce whatever rules are put in place.

OCC

The Office of the Comptroller of the Currency has responded to Senator Warren’s request that they delay the review of the Trump family’s World Liberty Financial crypto company’s application for a bank charter “until President Trump divests from WLF and eliminates all financial conflicts of interest involving himself or his family and the company.” [I99] Comptroller of the Currency Jonathan Gould, a former blockchain executive nominated by Trump and confirmed by the Senate last July [I88], wrote:³⁶

Congress has made clear that the OCC has a duty to act on the applications it receives in a timely manner. The OCC intends to act consistent with this duty rather than your demand. ... After decades of decline in the number of de novo charters, it is vital the OCC return to normal order. This means adhering to the law and reviewing all applications, including applications to establish national banks, in an apolitical, nonpartisan and objective manner, supporting both innovative and traditional approaches to the very old business of banking.

In Congress

The Senate Agriculture Committee quickly voted to advance its version of crypto market structure legislation to the full Senate. The vote split along party lines, with all 12 Republicans voting in support and 11 Democrats voting against. While all committee Democrats ultimately voted against advancing the bill, pro-crypto Democrats Adam Schiff (D-CA) and Cory Booker (D-NJ) both spoke positively of crypto, with Booker gushing about “extraordinary humanity-changing breakthroughs that could give Americans a financial system that is faster, cheaper, and more inclusive”.³⁷ No amendments from Democrats were approved, including ones that would have prohibited elected officials and their family members from profiting from crypto, that would require the CFTC to appoint at least four commissioners,^e or that would prohibit bailouts of digital asset issuers.

The insistence by Republican Ag Committee members on advancing the bill without Democratic support could be a hurdle in the full Senate, where it will require at least seven Democrats to vote in support.

This is a separate bill from the one under consideration in the Senate Banking Committee, where a markup hearing was canceled earlier this month following Coinbase intervention [I99]. That has still not been rescheduled, and is likely to be delayed further as that Committee follows Trump’s call to pivot to focus on housing affordability issues.³⁸

The House Oversight Democrats have released a staff report titled “Professionalized corruption: How Donald Trump is abusing power and accepting digital kickbacks from foreign and criminal interests to cash in on the presidency like never before”. The 30-page report explains how Trump has used cryptocurrency to enrich himself to the tune of at least $2.25 billion, or as much as $9.7 billion when including paper wealth from his $TRUMP memecoin and other ventures. It also cites my writing on the Trump family’s USD1 stablecoin, and the mechanism by which he profits from it. Along with the written report, they’ve also published a webpage with a Web3 is Going Great-style Trump Family Digital Grift counter.

In the White House

ProPublica’s reporting on Todd Blanche’s crypto conflicts of interest [I99] has triggered a letter from six Senators, who write, “Your actions may be a violation of 18 U.S.C. § 208(a). At the very least, you had a glaring conflict of interest and should have recused yourself.”³⁹ The legal watchdog Campaign Legal Center has separately cited ProPublica’s reporting in a complaint requesting an investigation by the Department of Justice Inspector General.⁴⁰

In elections and political influence

Although most of the pro-crypto super PACs are waiting until the January 31 filing deadline to disclose their 2025 fundraising details, Fairshake is previewing its disclosure with a press blitz publicizing their $193 million war chest for the midterms.⁴¹ That they can brandish this figure right around when Senators are deciding how to vote on crypto market structure legislation is, from their perspective, fortunate timing.

While most other pro-crypto super PACs have yet to submit their disclosures, public statements from the Fellowship PAC, Digital Freedom Fund, and other new crypto super PACs put the industry’s midterm fundraising total at a minimum of $315 million. To put that in perspective: in 2024, the crypto industry’s $133 million in spending surpassed traditional lobbying juggernauts like Big Oil and Big Pharma, making it one of the largest corporate political forces in America. Now they’ve amassed more than double that.

The crypto industry’s “educational nonprofit”, the American Innovation Project [I91, 98], has launched a program to fund Congressional staff positions for members on the House Financial Services and Agriculture Committees — committees responsible for crypto oversight — after they go through weeks of “training” on “emerging technologies like crypto, AI, biotech, and defense tech”. The program will target young, impressionable eager to learn college graduates.⁴²

Outside the US

The United Kingdom’s Advertising Standards Authority has banned Coinbase’s August 2025 ad campaign. The campaign included a musical theater–style video portraying the UK as destroyed by inflation, strikes, and unemployment, ending with the text “If everything’s fine, don’t change anything” alongside the Coinbase logo. Print ads placed in subway and train stations echoed this messaging with headlines like “Home ownership out of reach,” “real wages stuck in 2008,” and “eggs now out of budget.” The ASA determined the ads risk “presenting complex, high-risk financial products as an easy or obvious response” to serious financial concerns while downplaying crypto’s risks.⁴³

The Web3 is Going Just Great recap

There were four entries between January 17 and 29. $23.83 million was added to the grift counter.

• Aperture Finance users lose at least $3.4 million [link]
• $13.43 million stolen from Matcha Meta users in SwapNet exploit [link]
• Thief of millions in seized U.S.-controlled crypto alleged to be government crypto contractor's son [link]
• Saga halts blockchain after $7 million theft [link]

Worth a read

In the news

That's all for now, folks. Until next time,

– Molly White