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Issue 45 – I'm the director now

Rising bitcoin prices bring echoes of the crypto mania from years past, and an ambitious hacker decides to manifest a new job for themselves.

Issue 45 – I'm the director now
Issue 45 – I'm the director now

Exciting news! For those of you who enjoy listening to the audio versions of these newsletters and would like to be able to do so from your podcasting app of choice, I've put together a podcast feed. It'll have exactly the same recordings that I attach to each newsletter post, so those of you who like listening from Substack won't miss anything if you don't use the feed.

I'm also working on some exciting video stuff, so if that's something that interests you, make sure to subscribe to my channel over on YouTube so you don't miss it. I'll also put links in the newsletters, of course. As a part of my experimentation in the video world, I'm also on TikTok now. If you don't like TikTok, fear not, I'll try to crosspost videos to YouTube where reasonable. If you don't like video in general, that's fine too — this is all in addition to my writing, not in place of it.

One last quick plug: after a bunch of requests, Web3 is Going Just Great is now crossposting to Instagram and Threads in addition to its usual Twitter, Mastodon, and BlueSky. In the age of a million social networks, I just try to meet people where they are.

Crypto has enjoyed some more gains in recent days, with bitcoin recently breaking the $40,000 mark. Hold on to your butts, because mainstream financial news outlets are already uncritically republishing claims by crypto executives celebrating a "bull run". In fact, CNBC seemed so eager to talk up the price movement that they even published a headline falsely suggesting that those same executives had predicted a $100,000 price in 2024.1 In reality, those predictions were coming from two different groups that also had reasons to try to pump crypto prices: a crypto firm and a bank that owns a crypto firm.

Nayib Bukele, the bitcoin-loving temporarily-not-president of El Salvador, has been taking a Twitter victory lap as he claims his massive expenditure of the country's money on bitcoin is now finally profitable. He also promised that he would hodl, instead of — oh, I don't know — using some of those profits for the good of the country and its people. The claimed profitability is, of course, impossible to verify, as he has not published any wallet addresses he's used or any accounting of the purchases beyond occasional tweets. However, it seems that the graph he included along with his announcement tweet — which is from a website that estimates El Salvador's holdings based on Bukele's various public statements — actually had a bug that caused it to erroneously show that the country was in the black when in fact the investments are still somewhat negative overall. Now I have to wonder how much Bukele even knows about his own country's crypto holdings, if he's relying on the same rough estimates used by outsiders with no transparency into the country's spending.

NayibTracker.com, which tries to estimate El Salvador's bitcoin holdings based on public statements by Bukele

In the courts

Do Kwon, of Terra/Luna fame, will be extradited after he completes his four-month prison sentence in Montenegro for document forgery. The courts there still need to figure out which country has priority in extradition: the United States or South Korea. Kwon apparently told the court that he was willing to be extradited to South Korea, suggesting he might prefer that over the US.2

Charging Richard Heart, the founder of the Hex crypto scheme, was one thing [Issue 35]. Finding him has been another. The SEC has apparently been on the hunt for Heart since their July lawsuit, and they've yet to be able to serve him.3 Heart has always been cagey about his whereabouts, but is believed to be somewhere in Finland. Meanwhile, Heart's been gloating in the third person on Twitter about charges against other crypto founders: "The list of people in jail or bankrupt that didn't like Richard Heart or the things he founded is really long."4

Tweet by  Richard Heart @RichardHeartWin The list of people in jail or bankrupt that didn't like Richard Heart or the things he founded is really long. I guess real #cryptocurrency where you know 12 words and are the network yourself was right, and they were wrong. CZ, SBF, Mashinsky, Suz Zhu, Do Kwon. Upgrade your view

The guys who pulled off the first [W3IGG] of three hacks this year against Platypus Finance have escaped criminal charges by arguing they are "whitehat" hackers who were only trying to safeguard funds that were endangered by a bug they discovered, and that they planned to return the $9 million they took — hopefully for a 10% "bounty". A Parisian court has acquitted them, although the court did note that Platypus could go after the hackers civilly.5

More sports teams are regretting doing deals with crypto companies. Atletico Madrid is apparently gearing up to sue the WhaleFin crypto exchange for not forking over the €40 million ($44 million) they owe in sponsorship payments. WhaleFin had previously canceled a sponsorship deal with the Chelsea Football Club in December 2022, reportedly because of financial difficulties.6

Also in the sports/crypto overlap, headlines in major news outlets announced a $1 billion class action lawsuit against football star Cristiano Ronaldo for promoting Binance, with the plaintiffs saying it's his fault they lost money in crypto after signing up to trade on the exchange. It seems unlikely to me that they'd succeed on that point, which is sort of like suing someone advertising a casino because you decided to gamble there and then lost all your money.7 Other class action lawsuits have also been filed against two promoters of FTX: Mercedes' Formula 1 racing team and Major League Baseball. These are from the same group of plaintiffs suing people like Shaquille O'Neal and Tom Brady.8 I normally don't talk much about class action lawsuits until they actually go somewhere, since many of them aren't particularly fruitful, but these have gotten some press coverage.

In bankruptcies

There's been a hiccup in the plan to restart Celsius as "NewCo". NewCo was initially going to mine bitcoin, stake ether, and distribute shares of the new company to Celsius creditors, but the SEC has so far been unwilling to sign off on it. Celsius tried to pivot to a new plan, which would involve only bitcoin mining, but the judge has expressed concern that this is substantially different from the deal creditors approved back in November. There will be a hearing on it in December, and it's possible that it will go back to creditors for another vote. If this falls through, Celsius will be liquidated.9

Genesis and Gemini are still at each other's throats, and Genesis has now sued Gemini to try to claw back $689 million in "preferential transfers" in the form of loans called back by Gemini in the three months leading up to Genesis' bankruptcy.10

A judge has okayed a $1.65 billion settlement payment by Voyager to the Federal Trade Commission (FTC),11 which it owes as a result of an October 2023 lawsuit from the FTC over repeated claims that Voyager accounts were FDIC-insured [I41].

In governments and regulators

A federal judge in Utah has demanded the SEC try to convince him not to sanction them in an ongoing case by the regulator against a crypto company called Debt Box. According to the judge, the agency made several representations while arguing for a temporary restraining order that were "false or misleading", such as that the company had closed tens of bank accounts in recent days as part of an attempt to move assets out of reach of US authorities. However, Debt Box was able to demonstrate that this statement was false, and that some accounts had been closed long ago, or by banks rather than by Debt Box.12 Other crypto firms battling the SEC have already leapt on this order: Terraform Labs and Do Kwon have argued that it ought to be considered alongside their arguments that the SEC has been misleading,13 which are a part of a motion for summary judgment currently being considered in that case. You'd think they might wait for actual sanctions to come down, but I guess they're on a deadline.

Coinbase has warned customers that they were subpoenaed by the Commodity Futures Trading Commission (CFTC), which is apparently investigating the Dubai-based Bybit cryptocurrency exchange. The warnings weren't sent to all Coinbase customers, and may have been targeted specifically to Coinbase users who also used Bybit. Bybit claims not to serve US-based customers, but its halfhearted geoblocks seem to be fairly trivially circumvented.14

The Financial Stability Board (FSB), an international group that watches over the global financial system and monitors threats to its stability, has released a report on cryptocurrency firms or groups of firms that perform a variety of different functions (think the FTX group and its many legal entities, which included the FTX cryptocurrency exchange and the Alameda Research trading firm). The report mostly concluded that more research was needed, but included a rather scathing line: "Available evidence suggests that the threat to global financial stability and to the real economy from the failure of an MCI is limited at present." Emphasis mine.15

The US Treasury has sanctioned Sinbad for tumbling hundreds of millions of dollars in cryptocurrency for the North Korean Lazarus Group.16 Sinbad was really just a reincarnation of the Blender cryptocurrency mixer, sanctioned by the Treasury in May 2022 for the same reason [W3IGG]. Although the feds seized the Sinbad domain, there's already a mirror online. Let the mole-whacking continue.

Image announcing "This service has been seized as a part of a coordinated law-enforcement action between the Federal Bureau of Investigation, the Financial Intelligence and Investigation Service (FIOD), and the National Bureau of Investigation taken against the Sinbad.io cryptocurrency mixing service."
A seizure notice now appears on Sinbad's former website.

The Treasury has also been issuing thinly veiled warnings to Tether via remarks by Deputy Treasury Secretary Wally Adeyemo at a blockchain conference.17

I am increasingly concerned about things like dollar-based stablecoins that aren't based here in the United States, but give people the privilege and the ability to use the dollar outside of our jurisdiction… We cannot allow dollar-backed stablecoin providers outside the United States to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform

This seems… rather pointed. Tether, the largest issuer of dollar-based stablecoins, is owned by the Hong Kong-based iFinex, and Tether Holdings Limited is registered in the British Virgin Islands. Tether has also been widely named in recent reports about cryptocurrency being used to finance terrorist groups including Hamas and its ally Palestinian Islamic Jihad.

In Binance

The now former CEO of Binance, CZ, is stuck in the United States until a judge reviews whether he ought to be allowed to return to his home in Dubai before his February 23 sentencing hearing.18 The requirement that he stay in the US was not originally a part of his bond conditions, but the Justice Department appealed that decision,19 arguing that CZ is a flight risk with few ties to the US. CZ has argued back that if he was a flight risk, he wouldn't have voluntarily appeared in the US to enter a guilty plea in the first place.

Bloomberg has reported that attendees of a fancy dinner hosted by Binance at a conference in Singapore in September got advance notice of the more than $4 billion settlement between the company and US criminal and regulatory authorities.20

The Philippines Securities and Exchange Commission has warned citizens that it may shut Binance down in the country, where it has been operating without a license. Furthermore, its promotion of crypto trading on social media could come with criminal consequences under Philippines law, and the regulator has ordered Google and Meta to stop showing Binance ads within the Philippines.21 Binance seems to be following its usual "ask forgiveness, not permission" strategy, and has promised to come into compliance in the jurisdiction.

Elsewhere in crypto

A new Ethereum layer 2 network called Blast has recently emerged on the scene, but many people in crypto have questioned if it might be a pyramid scheme.22 Its pseudonymous founder is known for creating the successful Blur NFT marketplace, and it's backed by the well-known crypto investment fund Paradigm, but the way it's onboarding new users without allowing them to withdraw funds and its promises of unsustainable "exponential" yield have many eyebrows (quite reasonably) raised. Even Paradigm seems to be hedging, with a statement from a general partner disavowing Blast's recent announcement and launch strategy. "We don't endorse these kinds of tactics," wrote Dan Robinson on Twitter.23

OpenSea, the once-monopolistic NFT platform, is doing so poorly that Tiger Global marked down their stake in the company by 94%. Another VC firm, Coatue, marked their OpenSea investment down by a comparable 90%. OpenSea's $23 million Series A and $100 million Series B funding rounds were both led by Andreessen Horowitz. Tiger Global also marked down their investment in Bored Ape Yacht Club by 69%. As it happens, Andreessen Horowitz also led the $450 million seed round for Yuga Labs, the company behind Bored Apes. The Bloomberg piece about Tiger Global's woes also mentioned that they had marked down by 45% an investment in a non-crypto firm, the AI-flavored Superhuman email app. Any guesses who led Superhuman's $33 million Series B in 2019?

The Web3 is Going Just Great recap

There were 10 entries between November 22 and December 3, averaging 0.8 entries per day. $193.45 million was added to the grift counter.

Woes at Huobi


Huobi (now known as HTX, technically), and its related Heco Chain protocol were hacked for a combined $115 million. This was confirmed by Justin Sun, who claims to be only an "advisor" to HTX, but who is widely recognized to be its owner. This is yet another blow to Sun, whose Poloniex exchange was hacked for $120 million not even a month ago.

The large losses by Sun-affiliated companies has some speculating that Sun is making off with the money before he… I don't know, disappears or fakes his death or something. He's recently taken to publishing weird, uncanny valley videos of himself talking about artificial intelligence in which he resembles and sounds more like an animatronic doll than a human being, which doesn't exactly help that particular rumor.

Blink twice if you need help. Wait, no, too many blinks!

Kyberswap hack


The KyberSwap decentralized exchange was hacked for crypto assets worth around $54.7 million, though Kyber was later able to recover around $4.7 million from front-running bot operators.

Since the theft, they've been communicating with the hacker, offering a 10% "bounty" if they return the funds. The attacker, apparently trolling, responded with a lengthy list of "demands" from Kyber which included "complete executive control" over KyberSwap and the "surrender of all … assets". In exchange, they promised that the company's executives "will be bought out of the company at a fair valuation" and "wished well in your future endeavors".

Never a dull moment in crypto.

This amusing story also was the subject of my first ever TikTok video, if that's up your alley:


#KyberSwap was hacked for $50 million and then the hacker demanded complete control #Kyber #crypto #cryptocurrency #cryptonews #cryptok #cryptoscams #web3isgoinggreat #w3igg #greenscreen

♬ original sound - Molly White

Everything else

  • Users of the Safe Wallet lose cumulative $2 million to address poisoning [link]
  • Florence Finance loses $1.45 million to address poisoning [link]
  • DraftKings was secretly paid to run a Polygon network validator [link]
  • Crypto media outlet Forkast goes bust [link]
  • BitStable decides to burn most tokens after public sale goes wrong [link]
  • SoFi neobank ditches crypto [link]
  • Hounax crypto scam steals $19 million [link]
  • Bitcoiner spends $3 million on transaction fee [link]

In the news

Big Technology Podcast. "Silicon Valley's Effective Altruist vs. Accelerationist Religious War" (Video podcast)

I joined host Alex Kantrowitz and fellow guests and Deepa Seetharaman to talk about the effective altruist/effective accelerationist groups and their approaches to the development of artificial intelligence (which I wrote about recently, if you missed it). It was a really great conversation with really knowledgeable and thoughtful folks.

Worth a read

Emily Gorcenski. "Making God".

If you really want to do a deep dive into the ideologies that have congealed around the artificial intelligence space recently, Emily Gorcenski's recent blog post is an excellent read that ties in a lot of historical context and discusses the strong religious component.

Emily M. Bender on Mastodon.

Continuing in the theme of Emilys writing about AI, linguistics professor and AI ethics powerhouse Emily M. Bender did a really great thread on Mastodon about media coverage of AI and how poor reporting contributes to the hype and marketing coming out of these companies.

The Markup. "Meet the Vietnamese Grandmother Fighting Misinformation One YouTube Video at a Time".

After noticing a lot of pro-Trump content by Vietnamese YouTubers translating right-wing news outlets, this awesome woman started translating English language media stories for Vietnamese speakers in the United States to help ensure there was access to a broader range of viewpoints. I love stories like this, about individuals chipping away at big problems by volunteering their time to help make information available to others.

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

– Molly White


  1. "Crypto execs say the bull run is underway and could lead to $100,000 bitcoin in 2024", CNBC

  2. "Do Kwon granted extradition, but to US or South Korea?", Protos.

  3. Status report filed on November 21, 2023. Document #10 in SEC v. Schueler.

  4. Tweet by Richard Heart.

  5. "Duo Behind $9M Platypus Exploit Acquitted by Paris Court: Report", CoinDesk.

  6. "WhaleFin sued by Atletico Madrid over unpaid $44M sponsorship", Protos.

  7. "Cristiano Ronaldo faces $1bn lawsuit over Binance ads", BBC.

  8. "FTX users name Mercedes F1 team and MLB in new promo lawsuits", CoinTelegraph.

  9. "Celsius faces hurdle as judge hints at new vote for Bitcoin mining shift", CoinTelegraph.

  10. Adversary complaint filed on November 21, 2023. Document #968 in In re: Genesis Global Holdco, LLC.

  11. "Judge signs off on $1.65B settlement between Voyager Digital and FTC", CoinTelegraph.

  12. Order to show cause filed on November 30, 2023. Document #215 in SEC v. Digital Licensing Inc.

  13. Notice of supplemental authority filed on December 4, 2023. Document #137 in SEC v. Terraform Labs Pte Ltd.

  14. "Coinbase warns customers about subpoena in apparent CFTC Bybit probe", CoinTelegraph.

  15. "The Financial Stability Implications of Multifunction Crypto-asset Intermediaries", Financial Stability Board.

  16. "Treasury Sanctions Mixer Used by the DPRK to Launder Stolen Virtual Currency", U.S. Department of the Treasury.

  17. "U.S. Treasury's Wally Adeyemo calls for more authority to go after bad actors in crypto", The Block.

  18. Order filed on November 27, 2023. Document #42 in US v. Zhao.

  19. Response filed on November 23, 2023. Document #38 in US v. Zhao.

  20. "Binance's VIP Traders Got Sneak Peek of Record US Crypto Penalty", Bloomberg.

  21. "Philippines Security Regulator Warns Binance Is Operating Without a License", CoinDesk.

  22. "Ethereum Layer 2 Blast Has Crypto Users Split on Its Impact", CoinDesk.

  23. Tweet by Dan Robinson.

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