Molly White's Citation Needed - Issue 47 – Residual garbage

Episode Date: December 27, 2023

All my "absolute top tier apes" gone, anti-rug-pull rug pulls, and an update on this newsletter. Originally published on December 26, 2023.

I'm Molly White, and you're listening to the audio feed of the citation-needed newsletter. You can see the text version of the newsletter online at newsletter.mollywhite.net. Issue 47. Residual Garbage. All my absolute top-tier apes gone, anti-rug-pulls, and an update on this newsletter. This issue was originally recorded on December 26, 2023. wishing the happiest of holidays, solstice, and impending new year to all of you lovely folks. Here's hoping that none of you endured any bitcoinsers trying to follow Cointelegraph's advice on orange-pilling you over the holiday table. My holiday was lovely, and I'm sure you'll be happy to hear that Atlas was absolutely

smothered in both gifts and affection this year. Some of you may have already been made aware of substact. incredibly disappointing reply to the sub-stalkers against Nazis open letter I signed and shared recently. The TLDR was pretty much, we think our Nazis are actually quite good for our business, and so we're keeping them, thank you very much. And oh, by the way, it's the people who support deplatforming Nazis who are the real Nazis here. It is sub-stacks right as a private company to decide who they do and do not want to platform, and they seem to have made a firm choice here. It's also my right, as a writer on their platform, to decide that I don't particularly want to hang out at a Nazi bar, or, as Pope had put it, a Nazi-tolerant banquet hall.

Nor do I want the money I bring in for Substack to go towards hosting swastika and blazon newsletters, spreading racist and hateful garbage. When I decided to begin writing here, I was optimistic that Substack had learned from its past failures when it came to who was invited to the platform and who was asked. to leave, and I now know that that optimism was misplaced. It's also your right as a reader on their platform to decide that you don't want 10% of the money you pay to subscribe to each of the many wonderful writers here to go towards the same. Some of you have already made that choice, as I can see from the notes that come in along with unsubscription notifications. All of this to say, I'm going to be migrating citation needed away from substack,

The important part here is there should be no action needed from anyone, free or paid subscribers alike, if you wish to continue with your current subscription. For paid subscribers, because you subscribe to me with a cut going to substack, rather than to substack who then pays me, the subscriptions can remain even as I swap out the publishing stack. The only things that should change on your end are the email from which you receive the newsletters, and for paid subscribers, the description on your credit card statement, which was previously Molly White Substack or M. White Sub, and will now be Molly White Newsletter or M. White News. I don't want to make any firm promises on how quickly I will be able to make this change,

since I'm still ironing out the details and some key pieces are dependent on other people. But to give you a general idea of what to expect, I'm hoping to have it done by the new year or within the first week of it. I will shout from the rooftops once it's done via my various social media channels. I'll try to send one last note through the Substack platform to let you know what email address will be sending the newsletter next so you can fish it from your spam folders if need be. And I will try to send an email to those who have unsubscribed citing Substacks content moderation decisions in case you wish to join me in my new home. Although it's a huge bummer to have to spend my time doing this migration, instead of on the research and writing and other various projects I have in the works, I am actually pretty excited for some non-Nazi related changes and opportunities that will also be coming as a result of this, Silver Linings.

I will give more details about my new destination and setup soon, and I also plan to publish a breakdown of how I did the migration, since I know there are many people currently publishing on Substack who are looking to pull the eject lever, but are trying to figure out how and where to go. Speaking of the folks who are still publishing here, I would urge you to give them some grace. Migrating is tougher than it probably sounds, particularly for less technical folks, in some cases it's also likely to be an expensive undertaking. For some, myself included, this has become our primary source of income, which makes moving a pretty harrowing undertaking

with a lot of uncertainties that could directly impact our livelihoods. For example, and to be a little vulnerable for a moment, substack is quite good at bringing in new readers through its network effects, and I am frankly very nervous about losing that. For me, choice is still crystal clear, but I do understand why some may not make the same decision. Thanks in advance for your patience as I'm working on this. I'm hoping it will be a smooth transition, but I apologize if there are any bumps in the road. I figured I should give you all a heads up about what I'm doing just in case there are bumps, and also because I feel the need to explain why I've been a little quiet lately as I've been focusing on this. As always, you can leave a

comment or contact me directly if you have any questions or if something seems to be. wrong. Now, on to the usual topics. Tis the season for year-end reports, and the ones in the crypto industry are looking pretty bleak. In particular, crypto venture capital funding plummeted 68% compared to 2022, with a mere $10.7 billion invested into crypto projects this year. Some reports are also coming out on crypto hacks, including ones trumpeting that hacks are down compared to last year. However, this seems to be primarily driven by the fact that the assets that are being stolen are simply worth less than they used to be, because the total number of hacks are roughly the same as the year before. TRM Labs puts the total amount of money stolen this year at $1.7 billion.

This is a bit different from my number, which has surpassed $9.5 billion, although notably mine does include losses attributable to bankruptcies and collapse. rather than just hacks. In the courts. Courts in the British Virgin Islands have issued a worldwide order to freeze $1.1 billion in assets belonging to Kyle Davies and Suu, the two co-founders of Three Arrow's Capital. The liquidator is working to handle more than $3 billion in outstanding claims against Three Arrows, and Davies and Zhu have been less than cooperative throughout.

authorities in Bulgaria have dropped charges against the founders of NXO. At the time the charges were filed, NXO made quite a lot of noise about how they were politically motivated and unfounded. At least one of those things seems to have turned out to be true. Two issues ago, I wrote about how a judge in the SEC versus Debt Box case was considering sanctioning SEC attorneys for false statements they made in the process of securing an ex parte temporary restraining order against the company. In response, the SEC's legal team submitted a document apologizing, and admitting that one of them had, quote, made a representation that, unbeknownst to him at the time, was inaccurate, and then

that they had failed to correct the error when they learned of it later on. It still remains to be seen whether the judge will issue any sanctions, but Debtbox has submitted a filing asking that they be allowed to make their case. arguing for sanctions, as they have been, quote, most directly and adversely affected by the actions of the SEC. Sam Bankman-Fried requested his sentencing and related deadlines be delayed until after his possible second trial has concluded. Judge Kaplan denied the request on the basis that he should have made that objection at the time the sentencing date was scheduled. As a result, Bankman-Freid's pre-sentencing interview took place as originally scheduled. on December 21. Pre-sentencing interviews tend to be incredibly detailed, and the officer would

have probed topics related to Bankman-Freed's charges, but would have also asked about topics, including his family background, finances, physical and mental health, and really any other facet of his life. This interview helps to inform the pre-sentence report, which will then be presented to Judge Kaplan to consider as he determines Bankman-Freed's eventual sentence. In bankruptcies. Underscoring just how brutal bankruptcy proceedings can be for creditors who have money stuck in a business that's gone under, it seems that some Mount Gawks creditors are just now beginning to receive repayments of whatever's left of their money. The Mount Gawks Bitcoin Exchange filed for bankruptcy in early 2014 after being hacked,

meaning it's been just about 10 years between the bankruptcy and anyone getting any money. money back. However, many creditors are still waiting, as it seems to be only those who have opted for fiat rather than crypto-denominated repayments via PayPal who are beginning to receive their repayments. Many, in fact, seem to have received double payments and were then asked to return the extra funds. These reports are coming from people who received payments rather than via any official announcement from the bankruptcy team, so it's not entirely clear how the repayment plan will progress from here. However, the current deadline for repayments to be completed is October 24.

Meanwhile, FTX is racking up eye-popping legal bills. Documents filed in its bankruptcy proceedings have revealed that estimated fees pertaining to the bankruptcy have reached $1.45 billion. In Governments and Regulators. The SEC has denied Coinbase's July 20,000. 2022 petition demanding they create bespoke, read, friendly, regulation for the cryptocurrency industry. In previous issues like 26 and 27, I've also written about Coinbase's mandamus petition, which asked the judge to force the SEC to reply more quickly.

In a statement accompanying the most recent decision, SEC Chairman Gary Gensler repeated his position that, quote, existing laws and regulations already apply to the crypto security markets. Coinbase announced that same day that they would be appealing the decision to the Third Circuit. A crypto-focused federal super PAC called Fair Shake has been created and has so far received $78 million in the fourth quarter of 2023 from groups and individuals including Coinbase and its CEO Brian Armstrong, Andresen Horowitz, Cracken, Jump Crypto, Paradigm, Paradime, Ripple, and the Winklevoss twins. It's already spent at least $1.2 million of that on television ads,

supporting pro-Crypto House candidates. Many of the ads don't actually mention crypto, instead making veiled statements that the candidates wish to, quote, attract the jobs of the future, and, quote, build the next generation of the internet. Here I thought they'd ditched the whole next generation of the internet thing, along with the Web3 buzzword, but I guess, guess they're running out of ways to say crypto without saying crypto. Just a thought, if your advertisement only works, if viewers don't know what's actually being advertised to them,

maybe you should reconsider whether you should be advertising that thing. Elsewhere in crypto. It's been a rough few weeks for Ethereum Layer 2 networks. Arbitrum suffered a more than one hour-long outage on December 15, apparently due to a quote significant surge in network traffic caused by inscriptions, a format for NFTs that originated with the Bitcoin Ordinals project. Then, on December 25th, ZKSink went down for five hours due to a bug that triggered an automated safety protocol and required engineers to investigate and bring the service back online. Solana has been struggling to sell what, by all accounts, appears to be a pretty shitty cell phone that claims. to be, quote, purpose-built to power Web 3. No one really wanted one until people discover that they

could make a profit off the airdrops that came with the phone, particularly the dog-inspired bonk meme coin that has enjoyed a price surge in the last two months. Once people realized they could buy a $600 phone to end up with around $3,000 in various tokens and perks, the phone sold out. I guess even a bad phone can sell out if you pay people $2,400 to take it off your hands, but it's a bummer that 20,000 phones will themselves probably head straight to the landfill. The eyeball-scanning orb startup Worldcoin has stopped scanning eyeballs in India, Brazil, and France. This is all according to plan, they claim, stating for the first time that the rollouts there were intended to be only for a limited time. I'm sure they just forgot to mention that earlier, and this has nothing to do with the

regulatory challenges they've been facing. The Web 3 is going just great recap. There were nine entries between December 15 and December 26, averaging 0.8 entries per day. 60.23 million dollars was added to the Grift Counter. Residual Garbage Attackers compromised old smart contracts from the NFT trader, a peer-to-peer NFT trading application, allowing them to drain pricey NFTs from various wallets. At least 37 bored apes, 18 mutant apes, and other NFTs from collections like V-Friends and World of Women were stolen. Altogether, the NFTs were estimated to be worth $3 million, although NFT prices are notoriously tough to estimate, particularly when considering

that stolen NFTs can be more challenging to. to resell. The theft was worsened by an apparent mistake by the NFT trader developers, who had included the pauseable module in the smart contract, but then forgot to actually write a function that would have paused its operation as intended. This meant that the platform developers were helpless to stop the attack, at least until some community members came up with a clever way to stop the trading and suggested it to NFT traders' team. Ultimately, one of the attackers turned out to be a copycat and self-described trash picker who was willing to negotiate. In what most people, myself included, initially assumed was an attempt to scam victims even further.

However, this exploiter did ultimately return 36 bored apes and 18 mutant apes after one of the Yuga Labs co-founders agreed to pay a $120,000 or $260,000 bounty. An anti-rug-pull bot rug-poles The Megabot Project promised traders an AI trading bot that would earn its users, quote, up to 30% monthly. Besides that, it promised that the bot would trade while, quote, sidestepping potential risks such as honeypots, rugs, and slow rugs. Quote, no one will be able to rug you anymore, its website boasted. Or at least that's what the website boasted before it. it went offline, along with the project's social media accounts, as the project itself rug pulled. Altogether, around $742,000 was stolen, mostly on the Salana Network.

Everything else. Barry Silbert has resigned from the Grayscale Board. Telcoin was exploited for $1.25 million. Tether minted itself a $1 billion Christmas present. The defunct Barn Bridge reached a $1.7 million settlement with the SEC. Credo has dumped its CEO and raised emergency financing after burning through its original funding. A new wallet-drainer has stolen almost $60 million in nine months, and the Aurory Bridge was hacked for over $1 million.

In the News The LA Times linked my most recent newsletter in their piece, 2020 was the year of comeuppance for billionaires, culture warriors, crypto, and corporate managements. They described me as a technopolis debunker, which I will be putting on my business cards going forward. I also spoke to Business Insider about the strong overlap between the crypto and effective accelerationist communities and ideologies for their recent piece titled The Crypto Bros Are Coming for AI, which is about the widespread crypto pivot to AI. I also did an interview for the German Technology magazine, CT.

It's paywalled and in German, but I'm sharing it anyway in case that's not a barrier to someone out there. Worth a read. The New York Times ran a story about a wealthy 23-year-old college student who bought a cryptocurrency mine in Texas with Tether, affording him anonymity and protection from scrutiny from the authorities in either country, at least until he tried to bilk local contractors and his ownership came out in court. I thought the New York Times seemed a little overly focused on the fact that he's Chinese, and it seems to me like the real concern should be the general lack of scrutiny afforded by these kinds of deals. Anyway, the article is titled, This NYU student owns a $6 million crypto mine.

His secret is out. The MIT Technology Review also has a really interesting piece. titled How 2023 marked the death of anonymity online in China. It's about real name policies, mandatory location sharing, and other measures imposed on Chinese internet users. It's thoughtfully written and gives a lot of food for thought when it comes to considering the pros and cons of online anonymity and what happens to the web and the people on it when that option is no longer available. That's all for now, folks. Until next time, this has been Molly White.

Thanks for listening to this issue of the citation needed newsletter. To learn how to support my work, visit mollywhite.net slash support. If you would like to read the text versions of these episodes, sign up to receive the newsletter in your email, or support my work on a recurring basis, go to newsletter.mollywhite.net.