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Issue 60 – Raging in favor of the machine

The crypto industry jumps on the Trump train.

Issue 60 – Raging in favor of the machine
Issue 60 – Raging in favor of the machine
Listen to a voiceover of this post, download the recording for later, or subscribe to the feed in your podcast app.

I am back stateside after a quick jaunt to Switzerland for the This Next Thing conference, where I was honored to speak as Anil Dash’sreciprocal pair”. We both spoke about the technology industry’s growing resistance to criticism, and I tried to end on an optimistic note by highlighting the opportunity I truly believe exists for those who want to build technology that serves people, not the other way around. I’ll share the recording if/when I’m able!

In the meantime, here are some photos of beautiful Pontresina, Switzerland.a

They don’t make mountains this big where I come from, so I spent most of the time there staring upwards, trying to shake the feeling that someone had stood up a gigantic two-dimensional movie backdrop just beyond the hills.

This was the first conference I’ve attended in a while where something massive didn’t happen while I was away, after FTX exploded while I was at Web Summit in 2022 [I9], and Silicon Valley Bank melted down while I was at SXSW in 2023 [I22]. Apparently I am losing my touch as a sort of human EMP weapon that gets fired off in the general direction of the fintech industry whenever I attend a conference. Shame.

In the courts

Terraform Labs and Do Kwon have reached a $4.5 billion settlement with the SEC, with Kwon personally on the hook for $200 million of it and Terraform responsible for the rest. The SEC will see very little, if any, of this fine, though: Terraform Labs claimed to have around $150 million in assets when they filed for bankruptcy, and that’s going to go to creditors before it goes to fines. Kwon will be banned from trading securities in the US, though that’s among the least of his worries as he faces criminal trials in both the US and South Korea [W3IGG].

Other court filings in that case have revealed that Montenegrin Prime Minister Milojko Spajić had personally invested $75,000 in Terraform Labs’ LUNA tokens in April 2018,1 leading to questions over whether Do Kwon perhaps fled to Montenegro for this reason. Spajić, a former banker, had invested prior to his appointment as prime minister. According to the local independent Montenegrin newspaper Vijesti, his holdings at one point had grown to almost $90 million.2 Kwon is still in Montenegro, as ever [I23, 28, 30, 31, 44, 45, 46, 51, 56], awaiting extradition.

Gemini has been forced by the New York Attorney General to return $50 million to customers of its failed “Earn” program [W3IGG], and are prohibited from offering crypto lending in New York state.3 This amount is on top of the $2 billion settlement the NYAG and the bankrupt Genesis platform reached in mid-May, which will go toward Genesis’ creditors.4 Gemini Earn customers are among the Genesis creditors, as the two firms partnered on the program. Thanks to the two settlements, the NYAG has said that Gemini’s defrauded investors will be fully reimbursed on an “in-kind coin-for-coin basis”.

Nigeria has dropped the tax evasion charges they had originally brought against Binance executives Tigran Gambaryan and Nadeem Anjarwalla, though the country is still pursuing the company on that basis [I5254, 56]. Gambaryan and Anjarwalla still face money laundering charges.5 Meanwhile, a high court in the country has dismissed a human rights lawsuit brought by Anjarwalla over his detention, due to lack of legal representation.6 Anjarwalla had escaped his Nigerian captors in March, but was detained in Kenya in April, and is awaiting extradition back to Nigeria [I56]. Gambaryan has also filed a human rights case, which is ongoing. Meanwhile, Gambaryan has been diagnosed with malaria and pneumonia after collapsing during a court hearing. His lawyers and family have expressed concern that he is not receiving adequate medical care, and have pled with the US government to do more to secure his freedom.7 Two US Representatives, French Hill (R-AR) and Chrissy Houlahan (D-PA), have since visited Gambaryan in prison, and urged the US embassy in Nigeria to advocate for his release.8

Two men were charged with operating the Empire Market darkweb marketplace, which prosecutors say processed more than $430 million in transactions by people purchasing drugs, hacking and counterfeiting services, and other illicit goods and services. Law enforcement seized $75 million in cryptocurrency, as well as cash and precious metals. The two face up to life in prison.9

Ripple CEO Brad Garlinghouse will go to trial in a civil lawsuit from a customer who alleges he violated California securities laws made misleading statements when he said in a 2017 interview that he was “very, very long” on XRP despite having reportedly sold millions of the tokens that year.10 Garlinghouse has claimed that the plaintiff didn’t buy XRP from Ripple, can’t say if he heard the interview before purchasing the tokens, and only owned a few hundred XRP (which currently trade for around $0.50 each). “This was a clear example of the trolls that unsuccessfully tried to take advantage of the US legal system and distort statements to seek 100’s of millions in class action settlements,” said Garlinghouse on Twitter.11 Four other class action complaints in the case against Garlinghouse were dismissed.

In bankruptcies

FTX customers are continuing their fight to get their bankruptcy claims paid out in crypto rather than in US dollars. The FTX Customer Ad-Hoc Committee is urging the court to reject the bankruptcy plan or, if it goes to a vote, for creditors to vote against it. Ad-Hoc Committee member Sunil Kavuri said of the proposed plan: “You can’t just say, oh, it’s stolen, and it’s gone. I mean, that’s not how the law works. … You can’t be like, ‘We don’t have it, ... so we’re just going to give you back the price at which we stole your coins, and we’re going to keep that extra profit for ourselves, ... using it to pay themselves and also pay ... Alameda lenders and also government fines.’”12

Many FTX customers feel similarly to Kavuri, and have been particularly annoyed at claims from the FTX bankruptcy estate — widely repeated in the media — that FTX creditors are getting their “money back plus interest”. However, other creditors are satisfied with the proposed plan, hoping to get some assets returned to them sooner than later. “I still fail to understand how you want them to return 1:1 cryptos when they simply didn't have them. There is no money to return 1:1 crypto, there wasn't even 1% of BTC deposits in BTC,” wrote one person on Twitter.13 Another agreed, “Yeah I'm gonna be so angry if the deal falls through and we get nothing because these guys are trying to get money that doesn't exist.”14

In governments and regulators

Many Ethereum folks were delighted by announcement from Consensys that the SEC had informed them that the agency had completed an investigation into whether sales of ETH might themselves be securities transactions, and that they would not be bringing charges against Consensys over this issue. This investigation had prompted a lawsuit from Consensys against the SEC in April [I57, 59], which is still ongoing. Despite the news about the ETH investigation, it seems likely that the SEC is still planning to bring action against Consensys pertaining to their popular MetaMask wallet software, and Consensys’ lawsuit is going on the offensive.

Though some have interpreted this as a decree by the SEC that ETH is not a security, full stop, that seems a bit of a broad interpretation of a decision by the SEC not to pursue an enforcement action specifically against Consensys’ sales of ETH. Some lawyers interviewed by The Block noted that they could still bring a case against other ETH issuers, and also raised the possibility that the agency only decided against pursuing the case because they didn’t want to take on the litigation risk.15

Elsewhere, Consensys has joined the blockchain lobbying group Chamber of Digital Commerce in urging the IRS to change their proposed digital asset reporting form, which Consensys says “would single-handedly destroy U.S. companies that publish blockchain user interfaces like self-custody wallets” due to onerous reporting requirements.16 The Chamber of Digital Commerce focused more heavily on concerns that the form requests too much information, including transaction IDs and asset addresses, which they say is overly broad if there is no suspicion of criminal activity.17

After the excitement over the House’s passage of FIT21 wore off [I58, 59], some industry players are beginning to oppose the bill’s passage in the Senate, realizing it may not be as friendly to them as the oversimplified discourse around it had made it seem. For one, the bill may increase the SEC’s ability to determine whether a crypto token is a security, by delegating to it the decision over whether a token is sufficiently decentralized. But also, even if a token is deemed to meet that threshold, it would placed under the CFTC’s jurisdiction in a way that’s somewhat unusual for commodities, and might increase the compliance burden on companies offering those assets. Finally, the bill may introduce challenges for decentralized finance products, which don’t meet the regulated status or do the reporting required by the CFTC.18

The CFTC is reportedly investigating Jump Crypto, the Chicago-based trading firm that seems to pop up a lot in the vicinity of other shady business, like propping up the Terra token while Do Kwon claimed it was “self-healing” [I27], or “counter-hacking” a hacker in a way that rubbed much of the crypto world the wrong way. According to Fortune, who cite “a person familiar with the matter”, the CFTC is looking into the firm’s trading and investments.19 Days after the news of the investigation broke, Jump Crypto's president Kanav Kariya announced he had left the company.20 How's that for timing?

Binance has been fined $2.2 million in India for serving residents without adhering to the country’s anti-money laundering rules.21 Noticing a pattern? This penalty, however, is a minuscule 0.05% of the $4.3 billion fine the company earned in the United States.

A report on encryption out of the EU has highlighted concerns with layer-2 blockchains, cryptocurrency mixers, and privacycoins, all of which make it more challenging for law enforcement to trace on-chain activities.22 Personally, I think the more noteworthy takeaway is that the group that prepared the report has no such issue with regular old layer-1 blockchains (e.g. Bitcoin or Ethereum), because in many ways they are a dream come true for law enforcement.

Switzerland has shut down FlowBank, a neo-bank that was partially owned by the CoinShares cryptocurrency asset management firm. FlowBank had also offered customers exposure to various crypto-based exchange-traded products, and had partnered with Binance to custody some customers’ funds. Now, however, the Swiss financial regulator FINMA has closed up the bank, announcing: “This measure became necessary as the bank no longer has the minimum capital required for its business operations. There are also fears that the bank is over-indebted.” FINMA had begun the first of what would become multiple enforcement actions against FlowBank as far back as October 2021, and installed a monitor in June 2023. Throughout that period, FINMA identified “serious malpractice,” including poor bookkeeping and financial reporting, failures in reporting to FINMA, and failure to perform money laundering due diligence. In June 2024, after FINMA received FlowBank’s financial statements for the previous year, they discovered that the firm’s “financial situation is much worse than the bank originally reported”. FINMA determined that there was no possibility of restructuring, and so have appointed a liquidator to wind up the company and complete bankruptcy proceedings.23

A ban on using cryptocurrency for online gambling has come into effect in Australia. The same ban also prohibits gamblers from using credit cards, and is aimed at preventing people from gambling with money they do not have.24

In elections and political influence

FEC filings for May show that cryptocurrency companies have poured another $85 million into the Fairshake super PAC. Coinbase, Ripple, and Andreessen Horowitz each dumped another $25 million apiece into the committee, and Jump Crypto pitched in another $10 million. May’s donations alone amount to 50% of funds the committee has raised this cycle, totaling to $177 million and putting them at a neck and neck #2 placeb on the list of super PACs by total receipts.c They’re holding on to most of it, with $100 million still sitting in their war chest, waiting to be deployed.

However, they have certainly not been shy about spending in various Congressional primaries. In addition to the whopping $10 million they poured into opposing Katie Porter’s primary candidacy in the California Senate race [I5152, 53], they’ve also just deployed $2 million to oppose incumbent Jamaal Bowman in what is becoming an incredibly heated New York House Democratic primary race against George Latimer.25 Fairshake hasn’t quite reached the same degree of anti-Bowman spending as AIPAC’s United Democracy PAC, which has spent more than $9.8 million to oppose him and about $4.75 million to support Latimer, but they’re certainly pitching in a substantial amount.

As usual, a Fairshake advertisement opposing Bowman makes no mention of cryptocurrencies, blockchains, or technology at all, and instead centers on claims that Bowman “put a cop killer up on a middle school’s wall of honor”, and “spent his career pushing dangerous conspiracy theories, praising a known antisemite who claimed Jews were responsible for 9/11”.d

Outside of PAC-land, even more crypto folks are jumping on the Trump train. Ark Invest’s Cathie Wood has said she’s voting for Trump. Recounting how she explained this decision to her (grown) children, she said in an interview: “As I’ve said to them, ‘Look, I am going to vote for the person who's going to do the best job for our economy.’” She went on, “I am a voter when it comes to economics, and on that basis, Trump” — you know, the candidate just convicted on 34 counts of falsifying business records.26

Gemini founders Cameron and Tyler Winklevoss, who’ve also put $5 million into Fairshake and smaller amounts into other committees and campaigns, each triumphantly announced they’d donated $1 million in Bitcoin to Donald Trump and would be voting for him. In an extremely long tweet, Tyler wrote that he would be voting for Trump solely because of his perceived pro-crypto attitude, and made no mention of any of Trump’s other political activities or promises. He also effusively praised capitalism, and condemned the Biden administration and the SEC’s stance on crypto.27

The river twins apparently didn’t bother to look up campaign contribution limits, because the Trump campaign was forced to refund each brother the roughly $150,000 they’d contributed above the $844,600 cap.28 You might think they’d have someone look into such things, especially after another prominent crypto figure just earned more than seven years in prison for campaign finance violations [I59].

Tyler and Cameron Winklevoss on stage. One of them is wearing a Rage Against the Machine t-shirt.
Hey guys, quick question: What do you think “the machine” is?

The Winklevosses are about the only ones donating crypto to Trump, though. Despite the splashy announcement in May that his campaign would begin accepting cryptocurrency donations, besides the Winklevosses, a little less than $60,000 has been donated via that route thus far — though some more may have been sent directly via Coinbase and can’t be traced publicly.29 I’ve discovered that while cryptocurrency advocates like to promise that accepting cryptocurrency will enable a flood of donations from people who would not otherwise donate, this doesn’t tend to actually be true once the pathway is open. This was certainly the case when advocates pushed the Wikimedia Foundation to open a cryptocurrency donations channel, but in FY 2020–2021, back when they still accepted crypto donations, they amounted to only about 0.08% of their annual revenue.30

Biden also recently announced that his campaign would be accepting donations in cryptocurrency. The crypto world mostly reacted to this with eye-rolling, broadly seeming to believe that any softening towards crypto that this might signal is just lip service to try to help his campaign. That that was not the reaction to Trump’s announcement, despite his also unfriendly stance towards the industry prior to this campaign, suggests to me that — despite their claims — perhaps there is more to the crypto industry’s broad Trump support than him just being the “pro-crypto” candidate.

Meanwhile, Coinbase CEO Brian Armstrong is rubbing elbows in Congress — much as Sam Bankman-Fried was doing this time two years ago.

I drew a comparison between the two on Twitter and was immediately met with some outraged replies of “It’s different because Brian Armstrong isn’t a criminal!” which makes me wonder if these people think that Bankman-Fried strolled into Congress to try to influence policy only after it was revealed he’d stolen billions of dollars in customer funds. Some also tried to argue that it’s different because Bankman-Fried was only there to try to push for regulations that would benefit his business, which again makes me wonder why they think Armstrong is there.

The Web3 is Going Just Great recap

There were 12 entries between June 7 and June 23, averaging 0.82 entries per day. $108.51 million was added to the grift counter.

UwU Lend gets hacked, then gets hacked again

[link, link]

Defi lending protocol UwU Lend (yes, really) was hacked for around $20 million on June 10. The project was created by by Michael Patryn, aka Omar Dhanani, aka "0xSifu" — a co-founder of the ill-fated QuadrigaCX exchange and ex-con. He also pseudonymously ran the defi cryptocurrency project Wonderland until his identity was revealed [W3IGG] after the project suffered a meltdown [W3IGG].

The UwU Lend project paused while they investigated the theft, then re-enabled transactions on June 12 after claiming to have identified and resolved the vulnerability. The project was then immediately hacked again for an additional $3.7 million by the same attacker. Great work, team!

Martin Shkreli claims credit for Trump-themed memecoin, implicates Barron Trump in its creation


After being identified by blockchain sleuth zachxbt as the creator of a memecoin called $DJT, Martin Shkreli admitted his involvement and came out with his own claims that he had collaborated with Barron Trump to create the token, and with Andrew Tate to pump its price. However, fellow felon and memecoin pumper Roger Stone [W3IGG] subsequently crawled out of the woodwork to claim that neither Barron nor Donald Trump was involved with $DJT. Who's to say.

For those not familiar with Shkreli, he’s also been called "Pharma Bro" for shamelessly hiking the price of an anti-malaria drug by 56× in 2015, before spending years in federal prison for financial fraud. This wasn’t Shkreli's first foray into the blockchain world, after he launched a "web3 drug discovery platform" (despite being banned from the pharmaceutical and securities industries) [W3IGG], and then later dubiously claimed to have been hacked for over $450,000 after his computer was infected by a trojan after he torrented a porn video [W3IGG].

If it’s true that he’s behind the token, this seems like it could spell legal trouble for him, given both the aforementioned securities industry ban and terms of his parole that prohibit him from “engaging in self-employment which involves access to client's assets, investments, or money, or solicitation of assets, investments, or money”.31

Everything else

  • Farcana token plummets 60% amid murky explanations [link]
  • Victim loses $11 million to permit phishing [link]
  • Sportsbet.io likely hacked for $3.5 million [link]
  • "Read-only" CoinStats crypto application enables wallet breaches [link]
  • 50 Cent claims his accounts were compromised to promote a memecoin [link]
  • BtcTurk exploited for at least $55 million [link]
  • CertiK and Kraken accuse each other of misconduct over bug report and $3 million "testing" [link]
  • Holograph exploited for more than $1.2 million [link]
  • Phishing scammers impersonate Andreessen Horowitz employee to drain crypto wallets [link]
  • Loopring's "most secure" wallet hacked for at least $5 million [link]

Worth a read

Ludicity. "I Will Fucking Piledrive You If You Mention AI Again".

If you're really sick of hearing people promise that generative artificial intelligence is the next big thing that will solve every problem a techbro can think of, you will enjoy this rage-fueled piece by Ludicity. Despite the fury, they've actually got a pretty similar take on LLMs to me: they can be kinda useful, but have spawned a hype cycle that far outstrips their capabilities.

Cory Doctorow. "Neither the devil you know nor the devil you don't".

Cory Doctorow has written a thoughtful, though perhaps controversial, piece warning against trying to use copyright law as a cudgel by which to achieve fairer outcomes when it comes to artificial intelligence. “Here's a rule of thumb for tech policy prescriptions. Any time you find yourself, as a worker, rooting for the same policy as your boss, you should check and make sure you're on the right side of history.”

In the news

CoinDesk. "Mass Adoption Would Ruin Crypto. Keep It a Niche".

Daniel Kuhn over at CoinDesk wanted to know if I thought the crypto industry would be better off if it remained small and niche. I told him, in so many words, “Oh, honey, that ship sailed long ago,” before Blackrock and Fidelity started offering bitcoin ETPs, and before Sam Bankman-Fried and Brian Armstrong adopted the habit of cozying up with politicians.

Al Jazeera. "Wikipedia war: Fierce row erupts over Israel’s deadly Nuseirat assault".

Every once in a while a mainstream news outlet tries to cover the nitty gritty of how editing disputes, naming conflicts, and breaking news works out over on Wikipedia, and this time it was Al Jazeera. I did my best to explain it to them, although I think some of the more important bits didn't really make it into this article. They're working on another one, so hopefully some of it will be incorporated there.

Back in January 2021, I did a Twitter thread about the process of editing the article on the January 6 attack as it was happening, which you might find interesting if this piques your interest.

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

– Molly White

Social share image is from the AV Club.


  1. Well, mostly. The photo of the town was taken from the train between Zurich and Pontresina.

  2. Fairshake was at #1 for a minute there, but has since been bumped down to #2 by the Make American Great Again super PAC, which as of writing has out-raised them by less than $1 million.

  3. They are number one when looking at just super PACs. When you include all PACs, they come in at #9 as of writing. This is a little confusing, because the super PAC list does not include hybrid PACs, which like super PACs can make unlimited independent expenditures, but which unlike super PACs can also contribute limited amounts directly to campaigns and candidate committees.

  4. Both claims refer to a 2014 student project at the middle school where Bowman then served as principal. Students created a “Wall of Honor” to recognize various Black and Latino historical figures, and included Black Liberation Army members Assata Shakur and Mutulu Shakur, and former Georgia Representative Cynthia McKinney. Bowman described the group of people on the wall, which also included people such as Martin Luther King, Jr., Barack Obama, and Malcolm X, in a video as “tremendous figures”.


  1. Declaration of Avron Elbaum, filed on April 19, 2024. Document #233 in SEC v. Terraform Labs.

  2. Montenegro Premier Personally Invested in Kwon’s Crypto Holdings”, Bloomberg.

  3. Attorney General James Recovers $50 Million from Crypto Firm Gemini for Defrauded Investors”, New York State Attorney General.

  4. Attorney General James Secures Settlement Worth $2 Billion from Crypto Firm Genesis Global Capital for Defrauded Victims”, New York State Attorney General.

  5. Nigeria Drops Tax Charges Against Binance Execs”, Decrypt.

  6. Nigerian court dismisses escaped Binance exec’s human rights suit”, DL News.

  7. Jailed Binance exec in Nigeria is struck by malaria amid anguished pleas from his lawyers and family”, DL News.

  8. U.S. lawmakers urge embassy in Nigeria to seek humanitarian release of Binance executive”, Reuters.

  9. Owners of ‘Empire Market’ Charged in Chicago With Operating $430 Million Dark Web Marketplace”, U.S. Attorney's Office, Northern District of Illinois.

  10. Order granting in part and denying in part motion for summary judgment, filed on June 20, 2024. Document 419 in In re: Ripple Labs, Inc. Litigation.

  11. Tweet by Brad Garlinghouse.

  12. Customers protest exchange bankruptcy plan: ‘We never gave FTX our coins!’”, Cointelegraph.

  13. Tweet by sgd1739985.

  14. Tweet by thesmellynoodle.

  15. SEC closed the book on its Ethereum 2.0 investigation, but legal questions remain”, The Block.

  16. Consensys asks IRS to delay new crypto reporting rules, citing lack of clarity”, The Block.

  17. Blockchain advocacy group raises privacy concerns over IRS crypto tax form”, Cointelegraph.

  18. Crypto cheered FIT21 — here’s why the industry is now ready to fight over details in the bill”, DL News.

  19. The CFTC is probing Jump Crypto, previously one of the sector’s biggest players”, Fortune.

  20. Jump Crypto President Kanav Kariya departs firm”, The Block.

  21. Binance Fined $2.2M by India’s Financial Intelligence Unit”, CoinDesk.

  22. First Report on Encryption” by the EU Innovation Hub for Internal Security.

  23. FINMA opens bankruptcy proceedings against FlowBank SA”, Swiss Financial Market Supervisory Authority FINMA.

  24. Credit cards, crypto banned for online gambling”, The Canberra Times.

  25. AIPAC Unleashes a Record $14.5 Million Bid to Defeat a Critic of Israel”, The New York Times.

  26. Ark Invest CEO Cathie Wood says she plans to vote for Trump for US economy”, The Block.

  27. Tweet by Tyler Winklevoss.

  28. Winklevoss Twins Refunded After Trump Crypto Gift Exceeded Limit”, Bloomberg.

  29. “No one’s donating their crypto to Donald Trump”, DL News.

  30. Comment by JBrungs (WMF) at Talk:Fundraising/2020-21 Report.

  31. Sentencing document filed March 9, 2018. Document #565 in US v. Shkreli.

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