Issue 102 – The public will pay

Issue 102 – The public will pay

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After investing or committing to invest $223 million into the Trump family’s crypto ventures, Justin Sun has walked away from his SEC fraud case with a $10 million slap on the wrist and no admission of wrongdoing. The settlement comes from a Trump SEC that has spent the last year systematically dropping enforcement actions against the president’s benefactors. It’s also created a potential legal mess: by fining Sun under securities laws, the SEC has effectively declared that the tokens described in the lawsuit are securities, which would suggest every US exchange currently listing them is operating as an unregistered securities exchange. This is the same argument the SEC made against Coinbase, Binance, Kraken, and many other crypto firms in cases it has now abandoned, raising the question of how the agency plans to explain why some tokens are securities and others aren’t when they all look remarkably similar.

Trump’s memecoin grift has hit new lows — both in price and defensibility. He’s announced a second event for top $TRUMP holders, and this time the leaderboard conveniently obscures wallet addresses. It’s likely an attempt to thwart the kind of blockchain analysis I performed last time, which revealed that 73% of that event’s attendees (and 92% of its VIPs) were likely foreign nationals and raised concerns among Congressmembers about foreign emoluments violations. Fear not, I still was able to identify most of the VIP wallets for this event, which reveals the same pattern.

There’s a lot more to cover in this newsletter, from a DOJ investigation into Iran-linked transactions on Binance and a lawsuit from Binance against the newspaper that originally reported on it, to the crypto super PACs’ $10 million in spending against an Illinois Senate candidate who they’ve deemed “strongly against crypto” solely because she mentioned the millions of dollars the industry has been spending on attack ads targeting her.

In regulators

Justin Sun

The SEC has settled its case against shady crypto entrepreneur Justin Sun with a $10 million slap on the wrist and no admission of wrongdoing.¹ The case, filed in March 2023, alleged that Sun and his companies — Tron, the BitTorrent Foundation, and Rainberry^a — engaged in unregistered sales of securities: Tron’s TRX and BitTorrent’s BTT. It also alleges that Sun and his companies committed fraud by wash trading TRX tokens to artificially inflate their price and trading volume. Additionally, Sun allegedly hired celebrities like Soulja Boy and Lindsay Lohan to promote his tokens without disclosing the paid partnerships — then told a direct lie to investors when he posted, “If any celebrities are being paid to promote TRON, we require them to disclose.”² Lohan and some of the other celebrities quickly settled their portion of the lawsuit.

On November 25, 2024, weeks after Donald Trump was declared winner of the 2024 presidential election, Sun announced a $30 million investment into the president’s family’s World Liberty Financial cryptocurrency project [I71], which the family had unveiled two months previously [I65]. The project was struggling even after Trump’s election win. Its highly publicized sale of 63 billion $WLFI tokens had been quietly reduced to 35 billion, then again to 20 billion. When Sun poured in his $30 million, he more than doubled World Liberty’s sales — the project had sold only $20 million worth of tokens in its first month. Sun was named an adviser to the project, earning him close access to the Trump family.

On January 19, 2025, Sun announced he’d increased his total investment in World Liberty to $75 million. A little over a month later, the SEC and Sun jointly requested the case be stayed pending “potential resolution” [I78]. In April, Sun topped the leaderboard of $TRUMP holdings with his $37.7 million stash,^3b earning a VIP invite to the celebratory dinner. In July, Sun announced his intention to purchase another $100 million of the $TRUMP token, and in September he pledged $10 million each for more $WLFI and shares of Alt5 Sigma, the Trump family-involved $WLFI treasury company. Now, after Sun has committed to supporting the Trump family’s crypto empire to the tune of $223 million, the SEC has ended the case against him.

While the nominal $10 million fine is likely just a face-saving penalty to avoid blowback for letting one of Trump’s biggest and shadiest benefactors off the hook completely, it may also complicate the legal landscape. The fine is levied under the Securities Act of 1933, which would only apply if the SEC believes Sun’s TRX and/or BTT tokens were being offered as securities. This would suggest that any exchange operating in the US and offering either token — Kraken, Gemini, and many others at the moment — may be operating as an unregistered securities exchange. And the TRX and BTT tokens are similar to quite a few other major crypto tokens, meaning it would be interesting to see the SEC try to thread the needle explaining how those tokens are securities while others are not. Indeed, the SEC’s original argument as to why TRX and BTT qualify as securities is largely identical to the arguments in now-dropped cases against companies like Coinbase, Binance, and Kraken, which originally claimed that popular tokens like Binance’s BNB token, Solana’s SOL token, and Cardano’s ADA token were also securities.

Sun’s investments in the Trump family ventures appear to have bought him more than just an escape from SEC enforcement. For years, Sun appeared to avoid visiting the US out of fear of arrest — even foregoing a $28 million suborbital spaceflight with Blue Origin he’d purchased in 2021, which would have required travel to Texas. But in May, he posted a clip of himself in front of the Hollywood sign [I84]. From there, he traveled to the memecoin dinner at Trump’s Virginia golf club, where he enjoyed a VIP reception with the president and a private tour of the White House [I85]. In June, he announced that Tron would be going public in the US, with the help of a small investment bank called Dominari Securities — which had added Eric and Donald Trump Jr. to its board a few months earlier [I86]. And in August, Sun finally enjoyed his belated space tourism trip.

After the SEC announced it had dropped the case, Senator Elizabeth Warren (D-MA) blasted the SEC as “a lap dog for Trump’s billionaire buddies,” and urged legislators to require anti-corruption measures in crypto bills.⁴

Bank regulators

The Kraken cryptocurrency exchange has become the first cryptocurrency firm to gain access to a Federal Reserve master account, which will give them access to the Fedwire intrabank payments system. Their “limited purpose” account is similar to the “skinny” master accounts proposed for crypto firms by the Federal Reserve Board last year [I95], which would grant holders access to the Fed’s payment rails but not other banking tools (like the discount window lending program, which serves as an emergency backstop against bank runs).⁵ However, the proposed “skinny” account program has not yet been implemented — and banking lobbyist groups like the Bank Policy Institute have expressed their “deep[] concern” that the Federal Reserve Bank of Kansas City would approve an account like this when there is no formal policy in place. They added, “This action ignores public comment that the Federal Reserve sought on this framework, and it was issued with no transparency into the process for approval or the risk mitigants that have been imposed to address the very significant risks it raises.”⁶ The Bank Policy Institute represents some of America’s largest banks, including JP Morgan, Goldman Sachs, and Citigroup.⁷

These banks are also uneasy with the recent raft of preliminary approvals from the Office of the Comptroller of the Currency for national trust bank charters to crypto firms like Circle, Ripple, Paxos, Stripe’s Bridge, and Crypto.com. The Guardian has reported that the BPI is considering suing the OCC over their decision to move forward with these approvals.⁷ The BPI had challenged these applications prior to their approval, writing that “endorsing this pathway and allowing firms to choose a lighter regulatory touch while offering bank-like products could blur the statutory boundary of what it means to be a ‘bank,’ heighten systemic risk and undermine the credibility of the national banking charter itself.” Their concerns were echoed by other banking groups representing state or community banks. Some crypto executives have lashed out at the banking groups’ resistance, with Coinbase’s Paul Grewal writing that the banking groups that had objected to his company’s charter application were engaging in “protectionism” [I96].

Kraken’s bid for a master account is likely to be followed by another influx of crypto firms looking to repeat their success. Other crypto companies like Circle, Anchorage Digital, and Custodia Bank had already tried and failed to obtain master accounts, and Custodia Bank had even appealed their rejection all the way up to the Tenth Circuit. Just a few months ago, that court issued a 2–1 opinion that Federal Reserve Banks have the discretion to deny requests from eligible entities, and that Custodia was “attempt[ing] to impair the Fed’s ability to safeguard our nation’s financial system” by insisting that any chartered depository institution is entitled to a master account [I96]. A motion for rehearing was just denied on March 13.⁸

Crypto mixers

The Treasury Department has issued a report noting that cryptocurrency mixers have lawful and legitimate privacy uses on blockchains that otherwise create a public and indefinite record of all transactions. Tornado Cash is probably the best known crypto mixer these days, but there are numerous services like it, which “mix” pools of assets from numerous customers into one pool, making it more challenging to trace funds coming out the other end.

Hot on the heels of the Treasury’s report, prosecutors nevertheless asked the judge overseeing the criminal case against Tornado Cash developer Roman Storm to schedule an October trial so they can take a second swing at the two criminal charges on which a jury was unable to reach a verdict in August [I90]. Though the original case, filed in 2023, is a holdover from the Biden administration, Trump’s DOJ has soldiered on with it despite at least stated opposition from some of the same crypto benefactors who are calling the shots when it comes to other parts of his crypto strategy.

In Congress

Binance

Binance responded to Senator Blumenthal’s (D-CT) inquiry about allegedly allowing transfers to Iran-linked accounts [I101], bashing the Wall Street Journal, New York Times, and Fortune reporting upon which it was based as “demonstrably false, unsupported by credible evidence, and defamatory in several material respects”. They claimed that the accounts named in the reporting had had only “indirect exposure to wallet addresses with potential ties to Iran”, and that they had removed the customers in August 2025 and January 2026 after completing an internal investigation based on reports from law enforcement.⁹ Binance seems to be leaning heavily on the claim that the illicit funds were not transferred directly to Iranian entities, though to my reading, the reporting does not make specific claims about whether the funds were transferred directly or routed via intermediary wallets first.

On March 11, the Journal revealed that the Justice Department has opened a probe into Iran’s use of Binance to evade sanctions, though the “Journal couldn’t determine whether the Justice Department is investigating Binance itself for potential misconduct, or solely the customers on its platform.”¹⁰ A group of Democratic Senators — Van Hollen (MD), Warren (MA), and Gallego (AZ) — seem to have interpreted it that way, though, issuing a press release referring to the Journal article as “a report that the U.S. Department of Justice is investigating whether digital asset firm Binance has violated U.S. sanctions laws” and pledging to ensure that the DOJ “conducts a serious investigation into Binance and holds the company accountable for any wrongdoing.”¹¹ While Van Hollen and Warren are frequent crypto industry challengers, Gallego is among the Senate candidates most heavily funded by crypto interests in 2024 — though Binance was not among his backers.

The same day as the DOJ investigation was revealed, Binance filed a defamation lawsuit against the Wall Street Journal, where they refute some of the claims in the article and accuse the newspaper of publishing sensationalized articles for clicks. Two of the 28 pages are devoted solely to bashing the Journal for writing too many negative stories about Binance, and not writing enough about the company’s “success in its compliance regime”.¹²

Clarity Act

The Clarity Act crypto market structure bill remains stalled in the Senate, and public predictions about when it might pass are growing more pessimistic. Particularly as the war on Iran has absorbed more of lawmakers’ time, and midterm campaigning is now well underway, hopes of its passage this session seem to be diminishing. Senate Majority Leader John Thune (R-SD) says he still hopes it will pass “soon”, but likely not before April.¹³ This seems wildly optimistic to me, given that even if the bank lobby and crypto lobby resolve their deadlock on stablecoin rewards [I99], there will still be tough partisan negotiations over issues including ethics provisions, compliance exemptions for defi tools, and demands to fill more of the empty seats at the SEC and CFTC. And as practically each week seems to bring more headlines about crypto crime and the Trump family’s crypto-related corruption, Democrats may be growing less and less likely to agree to compromises.

And the bank–crypto lobby stalemate doesn’t seem much closer to resolution. JPMorgan CEO Jamie Dimon recently commented in an interview, “If you want to be a bank, become a bank” — that is: also agree to the onerous banking regulatory regime. He added, “It can’t be: You have these people doing one thing without any regulation, and these people doing another. If you do that, the public will pay. It will get bad.”

But Trump is hoping he can strongarm banks into dropping their objections to the bill, posting on his social media platform that “we are not going to allow [banks] to undermine our powerful Crypto Agenda”.

This post came shortly after Trump met with Coinbase CEO Brian Armstrong, who was responsible for halting the bill in the Senate in the first place [I99].¹⁴ Now it seems he is pulling puppet strings in the White House, as well as in Congress. Almost 20% of Coinbase’s revenue came from stablecoins in 2025 via their partnership with Circle, and that figure has been rapidly growing.¹⁵

Trump may have introduced yet another hurdle a week later, when he proclaimed that he would refuse to sign any legislation until Congress passes the “SAVE America Act”: a bill that would shrink both voting and trans rights.¹⁶ That said, with the Clarity Act high on his list of agenda items, I would be surprised if he kept that promise if it landed on his desk.

Dominari Securities

The House Select Committee on China opened an investigation into the Trump-linked Dominari Securities and two other American firms they allege underwrote IPOs of Chinese companies that “ultimately defrauded Americans through ‘ramp-and-dump’ stock schemes.” They note that 11 of Dominari’s 29 Chinese IPOs “subsequently crashed in patterns consistent with manipulation.” The letter is signed by both Democratic Ranking Member Ro Khanna (CA) and Republican Chairman John Moolenaar (MI).

Among Dominari’s Chinese IPO projects is the June 2025 deal to take Justin Sun’s Tron public via a reverse merger with a theme park merchandise company called SRM Entertainment [I85] — though it’s not one of the stocks mentioned by name in the Congressmembers’ letter. The combined company’s share price spiked on the announcement, but have declined by more than 85% since then. Eric Trump and Donald Trump Jr. both joined the board and acquired stakes in Dominari Securities, a small investment firm which is headquartered in the Trump Tower, on February 11.¹⁷

Trump business interests

As his memecoin hit new all-time-lows, down 96% from its peak shortly after its launch, Trump has announced a second memecoin event in hopes of spurring more interest.

Like the first, the guest list will be determined by who holds the most $TRUMP tokens, with the top 297 holders invited to a conference and “gala luncheon” at Mar-a-Lago. Of those, the top 29 will enjoy a private reception with the president, front-row seats to the conference, and “an exclusive Special VIP Talk on Mar-a-Lago’s History” (be still my heart). The President is scheduled to keynote, and “18 Global Superstars” — as yet unannounced — will also speak.

For the first event, while attendees could choose a nickname to appear on the leaderboard, their wallet addresses were also publicly visible and helpfully linked to a blockchain explorer. On the new site, wallet addresses are truncated to only the first and last groups of characters.

This may be an attempt to thwart the kind of blockchain analysis performed by myself and others last time around, when I exposed that 23 of the 25 VIP attendees and 73% of all attendees were likely foreign nationals. This analysis was later cited by House Judiciary Committee Ranking Member Jamie Raskin in a letter expressing concerns about illegal foreign emoluments.¹⁸

Their obfuscation notwithstanding, I was still able to identify 27 of the 29 wallets currently in the VIP portion of the leaderboard. The top wallet, currently identified only by the nickname “小 x”, transferred 2.2 million $TRUMP from Binance after the event was announced, which cost them about $7 million (assuming they just purchased the tokens and were not already holding them on the exchange). Of the 27 VIP wallets I identified, 22 (81%) are most likely not US residents.^c 48% did not hold $TRUMP prior to the announcement, suggesting either that they purchased the token in hopes of attending, or they’re hoping to profit from a price increase as people buy the memecoins to secure a spot. Ten (37%) were on the attendee list at the previous event, though all but two missed out on a VIP spot. It looks like our friend Justin Sun will be back for another visit, as he currently sits at position #6 with his stash of 1.4 million $TRUMP.

The website for this event also includes some new fine print, such as “Guests cannot be currently in litigation with the US Government” and “No foreign Government Officials are allowed to attend”. “No attendees will be granted a private meeting with the president” is repeated several times, including in tiny text below a large headline reading, “FOR THE TOP 29 QUALIFYING VIPS, YOU ARE INVITED to a VIP Reception with YOUR FAVORITE PRESIDENT”. There are also some additional rules around holding the $TRUMP tokens, likely to avoid the embarrassing spectacle from the first event, where the top holders quickly sold off tokens in the period between the guest list being finalized and the event. Now, VIPs who sell $TRUMP after qualifying but before the event are warned they may forfeit their VIP bonuses.

The Robinhood exchange has also earned prominent mentions on the page as the “preferred platform” — ousting the Moonshot memecoin exchange (now owned by Jupiter) from last time. Robinhood’s $2 million in contributions to Trump’s inauguration fund is probably purely coincidental.

In elections and political influence

The three states with the earliest primaries — Texas, North Carolina, and Arkansas — have given the crypto industry its first preliminary victories in a handful of races backed by its super PACs.

With the exception of the Texas District 18 Democratic primary, the crypto PACs followed their usual playbook of backing people who were already highly likely to win anyway, allowing them to boast about their tremendous results. Their performance in Texas’s District 18 is somewhat mixed: while Menefee led opponent Al Green in votes, he did not manage to reach the 50% threshold required to secure the Democratic nomination [I101].

But even that more than $1.5 million the Fairshake network has dumped into the District 18 race pales in comparison to the spending underway in primaries coming up tomorrow in Illinois.

Illinois Senate

The Fairshake network has spent a total of $10.3 million in the Illinois Senate Democratic primary. The vast majority — nearly $10 million — is going to oppose Juliana Stratton, with $285,000 backing Robin Kelly. They’ve also tossed $30,000 behind frontrunner Raja Krishnamoorthi — though it’s 0.2% of the PACs’ spending in the race.

Kelly is polling in a distant third place and holds only a C rating from Stand With Crypto — the Coinbase-backed crypto advocacy group that assigns letter grades to politicians based on their crypto positions, from A (strongly supportive) to F (strongly opposed). This makes the nominal support for her campaign look more like an effort to split the vote and provide cover for Stratton’s main opponent, the A-rated Raja Krishnamoorthi.^d By backing Kelly, the crypto PACs can help insulate Krishnamoorthi from the ongoing criticism that he’s the crypto- and MAGA-backed candidate — even though he is the only candidate in the race to have received direct support from crypto industry donors, including executives at Andreessen Horowitz, Coinbase, and Solana Labs, totaling just over $25,000. Kelly and her campaign did not respond to a request for comment about the crypto PAC support.

The Illinois Senate race strongly echoes the industry’s anti-Katie Porter spending in her 2024 California Senate campaign [I51, 52, 53]. While Porter had not been outspoken against crypto, her endorsement from and close association with Senator Elizabeth Warren was enough to summon $10 million in opposition spending. Stratton is also endorsed by Warren, and by Illinois Governor J.B. Pritzker, whose decision to sign state-level crypto consumer protection bills branded him an enemy to the industry. Stand With Crypto had no data on Stratton’s crypto stance until she posted a tweet noting the huge industry spending,¹⁹ which promptly earned her an F rating for the audacity of noting that they were attacking her.²⁰

Fairshake is now trying to turn Stratton’s accusations that Krishnamoorthi is accepting MAGA money back around on her, running an ad claiming that “Stratton’s massive super PAC” is funded by an ICE contractor and that she took campaign contributions from MAGA donors.

The first claim is a blatant falsehood, as it cites reporting about contributions from ICE contractor CoreCivic to the Democratic Lieutenant Governors Association PAC, which is backing Stratton but is by no stretch “her” super PAC. The DLGA had also previously said it would donate CoreCivic’s contributions to the National Immigration Law Center — a promise that is noted in the report the ad cites.²¹

As for the allegations that Stratton accepted campaign contributions from “MAGA donors”, the ad cites a newsletter post that is itself skeptical of the donor list, which was opposition research by Krishnamoorthi’s campaign²² and which claimed that Stratton had accepted $40,000 in contributions from twelve donors who also donated to Trump-endorsed or MAGA candidates. The newsletter author notes, “The list includes a solidly Democratic Statehouse lobbyist who’s made a couple of Republican contributions. Color me unconvinced. Another Stratton contributor on the list, Jason Marquis, has contributed to Illinois US Reps. Eric Sorensen, Nikki Budzinski and Brad Schneider. Ope.”²³

The Fairshake network is spending $10 million — of a pool of over $100 million which is both coming from MAGA donors and going directly towards supporting MAGA candidates — to attack a candidate for $40,000 in dubiously tainted donations. But this is another place where Fairshake’s anti-Stratton campaign shares similarities with their anti-Porter one: in that election, the network spent millions on ads attacking Porter for accepting three contributions totaling $3,400 from three executives in the pharmaceutical, oil, and banking industries [I51].

Illinois House

The Fairshake network is also spending in two Illinois House districts to oppose candidates who voted in the state legislature for the same bills that made Pritzker a target of the crypto industry. The heaviest spending is in District 7, where the PAC is now up to $2.5 million in opposition spending against La Shawn Ford [I101]. This opposition spending dwarfs all other spending in the race, including the amount raised by fundraising frontrunner Jason Friedman.

District 2’s Robert Peters, another Warren-endorsed candidate, has been on the receiving end of $817,000 in opposition spending from crypto PACs. In that race, the crypto PACs and AI PACs — which share leadership — are teaming up, with crypto handling the opposition spending and AI supporting Jesse Jackson Jr. with $1.4 million.

New spending has dropped into District 8, where the Fairshake network has spent $557,000 to support Melissa Bean, who was already leading a crowded Democratic primary to replace incumbent Democrat Raja Krishnamoorthi, who stepped aside to run for Senate. As is standard with the Fairshake network’s advertisements, there’s no mention of crypto whatsoever in the ad, which instead touts Bean’s history of voting in support of the Affordable Care Act and her endorsement from Nancy Pelosi. There’s also crypto–AI coordination here, with the AI PAC network contributing another $1.1 million to boost Bean.

In prediction markets

Prediction markets have not covered themselves in glory as the US and its allies kick off a war in Iran. Kalshi has had to reimburse trading fees to customers who hoped their bets on “Ali Khamenei out as Supreme Leader” would pay out in the event of his death, which would have unequivocally made the wager an assassination market. While Kalshi does state in their fine print that markets like this have carveouts for death to avoid being classed as assassination markets, the lack of clarity on the main betting page and Kalshi’s enthusiastic social media promotion of this specific event contract left many customers angry.²⁴ Over on Polymarket, the offshore prediction market that the CFTC is in the process of welcoming back to the country, there were no such barriers to traders’ fun. One trader named “Magamyman” made half a million bucks on the bet and other markets related to US and Israeli military strikes on the country, and placed his $87,000 in wagers over an hour before news of military action became public.²⁵

That trader and a cluster of brand new users who netted a combined $1 million betting on US strikes against the country²⁶ have only increased scrutiny from lawmakers concerned about the prospect of insider trading by those with access to government secrets. Senator Chris Murphy (D-CT) vowed to introduce legislation to restrict prediction markets, issuing a statement that he believed it was “very likely — probable even” that people close to Trump who had advance notice of the strikes profited from placing bets. Expressing fears that such markets would increase corruption risk and result in “people inside the Situation Room who are making decisions not based on what’s good for national security, not on whether or not we should send our young men and women overseas to die, but based on whether or not they make money off of war.”²⁷

Separately, California’s Democratic Representative Mike Levin and Senator Adam Schiff have introduced the “Death Bets Act”, the name of which alone sums up the absolute dystopia we’re living in at the current moment. While the CFTC already states that regulated prediction markets shall not list a market that “involves, relates to, or references terrorism, assassination, war, gaming ...”, the lawmakers seem to feel the CFTC has not been fulfilling its regulatory authority. The bill would explicitly amend the Commodities Exchange Act to prohibit (rather than grant the CFTC the authority to prohibit) terrorism, assassination, and war markets, as well as markets involving or “correlating closely to” a person’s death.²⁸

Further controversy around objectionable bets emerged when The Lever’s David Sirota and other commentators highlighted an open prediction market on Polymarket that allowed bettors to wager money on whether a nuclear weapon would detonate by specific dates. The market attracted about $650,000 in trading volume before Polymarket pulled it down. Polymarket, which like Kalshi does not allow users to directly create markets themselves and is responsible for choosing which markets to list, had even promoted the contract on social media with a post that claimed “22% chance a nuclear weapon is detonated this year.”^29e

But hey, fear not: the death-and-destruction betting platform Polymarket has teamed up with the panopticon-for-hire Palantir in a cursed partnership they promise will ensure fairness in the sports prediction markets Polymarket is bringing to the US.³⁰ So that’s a relief.

In crime

A month and a half after blockchain sleuth zachxbt identified the thief of tens of millions of dollars in crypto from the US Marshals Service as John Daghita, the son of a government contractor responsible for custodying some of the Marshals’ crypto stash [I100], French authorities snapped him up on behalf of the FBI in Saint Martin. A Twitter post from the not-always-reliable FBI Director Kash Patel identified Daghita himself as a government contractor, rather than the son of one, and alleged he was responsible for stealing $46 million of the Marshals’ stash of seized crypto.³¹ I’m not sure if this was an error, or if the younger Daghita had actually taken a job with his dad.

The government has submitted a blistering request for the judge to reject Sam Bankman-Fried’s pro se motion for a new trial [I101]. They start by arguing that the new witnesses Bankman-Fried believes would present a new side of the story are hardly “newly discovered”, but were known to his defense team, which opted not to call them as witnesses or compel their testimony. As for Bankman-Fried’s ongoing claims that FTX was illiquid, not insolvent, they point out that this defense was already rejected by the jury, and that by Bankman-Fried’s logic, “‘Lehman Brothers was not insolvent, just illiquid’—after all, the underlying assets in those mortgage-backed securities have long since recovered in value”. Finally, they reject Bankman-Fried’s “political victimhood” argument — though oddly they seem to be responding to a narrative Bankman-Fried has been pushing on Twitter and in the press rather than anything included in his motion for a new trial. They point out that Bankman-Fried had written down his “cynical, pre-planned strategy” — which included “Go on Tucker Carlsen [sic], come out as a republican” [Sentencing] — and “he is now moving through his list”. They note: “Rule 33 does not provide for new trials whenever it would be [a] public relations boon to have one.”³²

Nevin Shetty, the former CFO of the Fabric e-commerce platform, has been sentenced to two years in prison for stealing $35 million from his company and transferring it to his crypto side business, where he put it all into risky defi strategies and lost everything when Terra collapsed in 2022 [I97].³³

In the White House

Trump has officially nominated Kevin Warsh to replace Jerome Powell as chair of the Federal Reserve when his term expires in May.^f Warsh, a former member of the Federal Reserve Board under Bush and Obama, is strongly pro-bitcoin, and credits Marc Andreessen with introducing him to it.³⁴ Trump has been blunt in acknowledging that he’s looking to install a loyalist at the Fed, an independent agency that must be firewalled from political influence. At Davos, Trump remarked, “Problem is, [Fed nominees] change once they get the job. They get the job, and all of a sudden, ‘Let’s raise rates a little bit.’ I call them, ‘Sir, we’d rather not talk about this.’ It’s amazing how people change once they have the job.”³⁵

Outside the US

South Korea

After its $44 billion SNAFU last month [W3IGG], Korean financial regulators have hit Bithumb with a six-month partial suspension for anti-money laundering failures. The company’s senior executives will also reportedly face disciplinary action.³⁶ This is hardly Bithumb’s first brush with the law: in 2023, several executives were charged with embezzlement and fraudulent transactions after illicit activity was uncovered during a tax evasion investigation [W3IGG].

But Korean authorities themselves aren’t having a much better time of things than the country’s exchanges. After almost $5 million in seized crypto was stolen from tax officials when they posted a photo of a crypto wallet seed phrase on social media, the thief returned it [W3IGG]. But because they returned it to the vulnerable wallet, the money was promptly stolen a second time [W3IGG].³⁷

United Kingdom

Some British politicians and the crypto industry seem to be trying to replicate the current crypto-tainted American political atmosphere over in the UK. Thailand-based dual citizen Christopher Harborne, a Bitfinex shareholder who in 2024 sued the Wall Street Journal over an article about Tether’s shady efforts to get bank accounts [I54], contributed another £3 million ($4 million) to the far-right Reform Party, more than doubling the party’s total fundraising for the quarter in a single contribution. Along with a contribution last August [I98], he’s poured £12 million ($15.9 million) into the party, which is hoping to elect Nigel Farage.³⁸

Farage has been courting crypto interests in a rather Trumpian way, opening the party up to crypto-denominated donations last May and declaring himself crypto’s “champion” with promises to establish a bitcoin reserve in October [I95]. Now he’s following the Trump family playbook again with an investment into Stack BTC, a bitcoin treasury firm run by Kwasi Kwarteng.³⁹ Kwarteng is best known for managing to crash the value of the pound to historic lows during his whopping 38 days as Chancellor of the Exchequer.

The Web3 is Going Just Great recap

There were six entries between February 26 and March 13. $77.09 million was added to the grift counter.

• Crypto stolen from Korean authorities after they post wallet seed phrase [link]
• Returned crypto stolen again from Korean authorities [link]
• Solv Protocol exploited for $2.7 million [link]
• Thief pilfers NFTs priced at $230,000 from Gondi [link]
• $26.9 million erroneously liquidated on Aave after Chaos Labs oracle bug [link]
• Trader loses almost $50 million in Aave swap gone wrong [link]

Worth a read

In the news

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

– Molly White