Molly White's Citation Needed - Issue 65 – World Liberty Fiasco

Episode Date: September 6, 2024

Even the most pro-Trump crypto faithful think Trump’s new crypto scheme is a terrible idea. Also, an FTX crypto executive earns some benefit of the doubt, a lawsuit accuses “Pharma Bro” Martin Shkreli of disrespecting the Wu-Tang Clan, and there's a hamburglary.Originally published on September 6, 2024.

I'm Molly White, and you're listening to the audio feed for the Citation Needed Newsletter. You can see the text version of the newsletter online at citation needed. news. Issue 65. World Liberty Fiasco. Even the most pro-Trump crypto-faithful think Trump's new crypto scheme is a terrible idea. This issue was originally published on September 6, 2024. Leading presidential candidate Donald Trump is partnering with the form of former head of the pickup artist advice website, Date Hotter Girls, to launch a, quote, high-yield crypto investments plat.

You bolt awake in the mountains of Carthage. You are not online. It is 217 BC. You are the general Hannibal, and you have changed your mind. The future cannot come to pass. Rome must burn. Believe it or not, that's only the tip of the iceberg for this week's issue, which also features an FTX crypto executive earning some benefit of the doubt, a loss of the moment.

accusing so-called Farma Bro Martin Schrelli of disrespecting the Wu-Tang Clan and a hamburglery. Strap in. In the courts, FTX. After he was sentenced in May to seven and a half years in prison for his role in the various illicit activities at FTX, former executive Ryan Salem returned to Twitter with a vengeance, where he's claimed that prosecutors lied throughout the FTX trial and illegally coerced witnesses and defendants. He's argued repeatedly that the charges to which he pleaded guilty are bogus, and then he was only acting at his lawyers and bankers' advice

when he engaged in the activities later charged by the government to be campaign finance violations and operation of an unlicensed money transmitting business. Then, on August 21, Salem filed a petition in which he and his lawyers claim that prosecutors had made verbal promises to him and his previous legal team that they would end an ongoing investigation into Salem's partner, Michelle Bond, in exchange for his guilty plea. Bond was being investigated for separate but related campaign finance violations pertaining to her unsuccessful campaign for a seat in the House of Representatives in New York's

District 1 in 2022. She and Salem at the time were being represented by the same legal team. According to Salem, prosecutors said that they could not put the promise in writing, but that Salem had opted to take. take the plea because of this unwritten promise. The investigation against Bond continued anyway, and so Salem filed this petition, which asks either that the court enforced the verbal promise and require prosecutors to end the investigation, or that they vacate his conviction. The day after Salem filed his petition, the Department of Justice unsealed an indictment against

Bond, charging her with conspiring to cause and causing unlawful campaign contributions. She and Salem had allegedly, and among other things, arranged a sham consulting deal in which FtX paid $400,000 to her for her campaign in exchange for no actual work. The government responded to Salem's filing, describing it as a, quote, shameless and self-serving attempt to renege on his guilty plea in the aftermath of his sentencing. They claimed that the only promises they made to Salem and or his then-legal team involved the conclusion of the investigation as it pertained to him. not the investigation into his partner, and that they had explicitly restated this to his attorneys

in a follow-up meeting. They also pointed to Salem's plea agreement and plea allocution, where Salem had affirmed that he was not making his plea based on anything outside of the written plea agreement, and answered no, when asked, quote, has anyone made any promises other than whatever is set forth in the plea agreement that induced you to plead guilty? Further, they claimed that Salem and his previous attorneys were aware of the ongoing investigation into bond, at least as early as April 15th of this year, but that Salem was only now bringing it up with the court because he's unhappy with a sentence that was ultimately imposed against him, which is five times as long as the maximum of 18 months he'd argued for in his sentencing memorandum.

Prosecutors continued, quote, such behavior is of a peace with Salem's other post-sentencing conduct, which has demonstrated a complete lack of remorse and utter contempt for the justice system. They then cited a handful of his tweets, which read, I often contemplate how they pressured Nishad into lying about how he viewed his campaign finance contributions. I have some ideas, but I'll likely never know the full extent. And Nishad, if you're reading this, how did they get you to plead guilty to campaign finance violations when I know you had internal and external legal teams, political consultants, and accountants all involved specifically to ensure it was legal? And, well, the biggest is, I know for a fact, Nishad didn't think he was committing campaign finance fraud,

and yet he pled guilty to it. And when Nishad finally admits he lied to the government to save himself, will I be compensated? And if you want to know how fucked up our justice system is, watch how little time Nishad and Caroline get after lying to save themselves. On August 29, Salem's new lawyer submitted a letter stating, quote, we write to inform the court and the government that Mr. Salem hereby withdraws without prejudice his petition, and explaining that he was doing so, so that Bond could argue the issue in her own case. Now, I'm not an expert here,

but I'm pretty sure the decision on whether an issue is withdrawn, and whether it's withdrawn with or without prejudice, is ultimately up to the judge, and that lawyers typically request that this happens, rather than trying to inform the judge that it already has. This seemed to me like a good way to rub the judge the wrong way, and Judge Kaplan's order issued later that, that very same day seemed to confirm they'd succeeded. Quote, notwithstanding defendants purported

withdrawal without prejudice of his petition, wrote Judge Kaplan, the parties would need to file the papers as originally ordered, and Salem would need to appear for the originally scheduled argument under threat of remand. The government then filed their full response, reiterating their earlier descriptions of conversations between the prosecution team and Salem's then legal team, and also raising some procedural objections to the petition. This time they attached copies of contemporaneous notes that, assuming they are accurate summaries of the conversations, seemed to support their assertions that they were extremely clear to Salem's former attorneys, that Salem's plea would not impact the status of Bond's investigation.

However, other notes put some doubt in my mind as to whether Salem's lawyers actually heard what they were saying, and whether those lawyers properly communicated this to him. One email chain shows his legal team expressing surprise this spring over ongoing investigation into Bond, as though they didn't recall the earlier conversation. One email from Salem's lawyers to the Bond prosecution team reads, Sheb, thank you for the introduction. We are surprised to hear from you given our course of dealing with the FTX prosecution team, which led us to believe that this matter was not going to be pursued. Another reply in the email chain reads, on another note, to answer the question posed in your

earlier in time email, we have reviewed our notes and they do not reflect the statement that you recounted to us on our prior call, nor do they reflect the statement that you made below about a disposition with Mr. Salem not resolving the investigation of Ms. Bond's conduct. And to be clear, these were not budget-bin amateur hour lawyers. At the time, he was being represented by two ex-DOJ lawyers working for the White Shoe law firm Mayor Brown. They were Jason Linder and Gina Parlovichio. It seems to me that there are three possibilities here. One, Salem is falsely claiming that prosecutors improperly induced him to plead guilty, and the promises about Bond never happened. Two, Salem's former team of Big Shot lawyers royally screwed up by leading Salem to believe that

Bond's investigation would be terminated if he pleaded guilty, even though the government had expressly told them it would not. And three, some of the most powerful prosecutors in the country did, in fact, make these verbal promises to Salem, but simultaneously laid a paper trail reflecting the exact opposite, and are now lying about it under penalty of perjury. The prosecutor's argument currently lies somewhere between options one and two. They maintain that such a promise was never made, and argue that the petition should be denied outright, suggesting option one. However, their inclusion of the emails from Parlovecchio, and their request that if Kaplan does hold a hearing that he also examined Salem's attorney-client

communications, tips things into option two territory somewhat. It's not clear to me yet which of options two or three Salem is going to argue. Given the emails from Parleveccio, it definitely seems like it might be appropriate to dig into those attorney-client communications to get the other side of the story. That prosecutors suggested doing so perhaps makes option three less likely, given that you would think the very same prosecutors involved in such a corrupt and premeditated cover-up might not exactly be keen on bringing to light the other side of the story, particularly from such qualified lawyers. but perhaps they're playing 3D chess. Who really knows what's happening at this stage? But that email from his former lawyer

definitely makes me more inclined to give him some benefit of the doubt. Elsewhere in FTX News, Michael Lewis has been going on a press tour again, as Going Infinite is released as a paperback. In an op-ed for the Washington Post, he continues to argue that Bankman-Fried was, quote, maybe the fastest creator of wealth in recorded history, and that Bankman-Freed doesn't have, quote,

the character of a thief. He also continues to repeat misleading claims that FTCS creditors will receive all of their assets back and then some. Lewis even asks questions like, If he knew he'd orchestrated a giant fraud, why had he devoted so much time and energy to persuading U.S. financial regulators to regulate him? A truly bizarre question coming from someone with a long history of writing about financial crime. If you haven't already, you can read my review of his book in this newsletter. Everything else. The arrest of Telegram CEO Pavel Duraov in France has stirred up the cryptocurrency world. Many crypto projects heavily rely on Telegram for messaging, and Telegram also has an associated blockchain and integrates crypto projects such as hamster

combat into its app. Much of the crypto world and those outside of it have vociferously denounced the arrest as an attack on private messaging. Putting aside the fact that it's incredibly erroneous to describe Telegram as a private messaging app in the same vein as Signal or other properly end-to-end encrypted messengers, it's also not at all clear at this stage exactly why D'Urov was arrested, and France has remained pretty tight-lipped about the details. I share some of the very serious concerns over the arrest, but with so little information available about what D'Rov was specifically alleged to have done, I think it's too early to say conclusively, as many are doing, that the arrest was just done.

or unjust or unjust. Binance executive Tigran Gambarian is still in custody in Nigeria, and according to his lawyers and his family, his health is continuing to decline. Gambarian was diagnosed with malaria and pneumonia after collapsing during a court hearing in June, and a recent video shows him pleading for help from a Nigerian prison guard after reportedly being denied a wheelchair needed for complications from a herniated disc. Binance's new CEO, Richard Tang, issued a statement on August 27th, urging the U.S. government to, quote,

exert political pressure to secure Tegrin's release on humanitarian grounds. Meanwhile, a hearing on an application for bail for medical conditions has just been postponed to October 9. Sean Haynes, the former CEO of the Kansas Heartland Tri-State Bank, has been sentenced to more than 24 years in prison after sinking $47.1 million of the bank's funds into a pig-butchering scam and ultimately causing the bank to collapse. While the FDIC stepped in to protect customers' deposits, equity investors in the bank lost $9 million altogether. And these weren't necessarily big-wig investors. One community member interviewed by

NBC News explained that, quote, there were people who lost 70, 80 percent of their retirement, and that he knew of a community member who could no longer retire, and one who was having trouble affording her 93-year-old mother's nursing home as a result of the losses. Haynes also took money from a local church, a local investment club, and his daughter's college savings to buy cryptocurrency. After those running the scheme told him they needed more money to, quote, unlock the returns on his investments, a common tactic with these scams. A judge has granted a preliminary injunction, ordering Farma Bro Martin Schrelli to forfeit any digital copies he made of the Wu-Tang Clan one-of-a-kind once upon a time in Shaolin.

In 2018, Schrelli was forced to forfeit the album, along with other assets, to fulfill the forfeiture order resulting from his securities fraud conviction. The art-collecting Pleaserdow later purchased it from the federal government at auction for $4.75 million. Pleaser Dow sued Schrelly in June of this year, after they found him live-streaming the album on Twitter spaces and promising to share copies. They've alleged that although the album was supposed to be one of a kind, Schrelli made digital copies that he has since released or plans to release

in contravention of the legal agreements attached to the album. This lawsuit is amusing to me, when considered in the context of the claims we used to hear a lot out of the crypto world around how blockchains could solve promises around digital uniqueness. If only the Wu-Tang clan had released it as an NFT, the case would still be right where it is now in the courts. My favorite part of the lawsuit thus far is that Pleaserdao has now formally argued in front of the court that Schrelli disrespected the Wu-Tang clan. Elon Musk and Tesla have won their motion to dismiss with prejudice a class-action lawsuit by plaintiffs who allege he is responsible for their losses after they purchased Dogecoin, after he promoted it on social media and elsewhere.

While it is somewhat satisfying to see Musk dragged a court in the way he is so fond of doing to others, the dismissal was probably the right call, as his statements like this one were pretty clearly not serious claims that reasonable investors might rely upon. One of the claims cited in the lawsuit is a tweet by Elon Musk, which states, it's inevitable, and shows an image with a cloud of sand with a Shiba Inu face emerging from it, overtaking a city, with the cloud labeled Dogecoin standard, and the city's labeled global financial system. Other portions of the case, such as claims that Musk pumped and dumped or insider traded the token, were also thrown out, not least because plaintiffs couldn't convincingly

establish he actually owns any. Hyeongsu, Hugo Lee, the CEO of the South Korean Haru Invest Yield platform, was stabbed in the neck while in court for the alleged $826 million fraud. Lee survived the attack, and the attacker was arrested. This is not the first time a person alleged to have stolen or otherwise lost customer funds has been met with violence in the crypto world. In June 2023, a Canadian alleged crypto fraudster was kidnapped and beaten by angry investors, including an inspector in his bankruptcy proceedings. A suspect in a different South Korean alleged fraud, this one a $12.1 million dollar crypto mining scheme, was arrested along with 13 others. The reported leader had undergone significant facial restructuring surgery to change his appearance. Miami Heat Star Jimmy Butler will pay $300,000 to settle allegations in a class action lawsuit

that he illegally promoted the sale of unregistered securities offered through Binance. Ben Bitboy Armstrong will also settle for $40,000, which is the amount he was paid for his promotion. Both maintain that they could win their respective cases, but opted to settle in. instead. Authorities seized the dollar value of Bitcoin stolen in March 2020 by home invaders who threatened their victims with a machete and also stole a car and other valuables. The 23.5 Bitcoins were worth around $144,000 at the time of the theft in March 2020, and that amount was seized in cash from a man who received the stolen goods. However, those Bitcoins would be worth around $1.3 million at today's prices.

Various news outlets have also reported on how the attackers beat one of the victims with a personalized Toblerone chocolate bar, which they then used to threaten her with a throat-slitting gesture. If I'm ever robbed at Machete Point, please do not, under any circumstances, also report the part where I was clubbed with my novelty chocolate bar. In bankruptcies. Celsius has reported that they have repaid more than $2.5 billion to creditors, amounting to around 93% of the monetary amount of eligible claims. Around 121,000 creditors have yet to claim their payouts, although around 64,000 of them are owed less than $100,

and another $41,000 are owed less than $1,000. Indian cryptocurrency exchange Wazir-X is currently seeking bankruptcy protection after its $230 million hack in July. They have said it is, quote, extremely unlikely that we can make people whole, and estimated 55 to 57% recoveries in best-case scenarios. Fellow Indian cryptocurrency exchange coin switch has threatened to sue them over $9.6 million in assets trapped on the platform. Wazir-X is also facing the threat of an asset freeze order in a separate lawsuit alleging

mismanagement or fraud by the company. In Governments and Regulators. The CEO of the major NFT trading platform OpenC has claimed that the SEC sent them a well's notice, threatening imminent enforcement action. OpenC has helped to rile up the crypto world by insinuating that the SEC is aiming to classify all NFTs as securities. But as with the telegram case I mentioned earlier, people seem to be jumping to very strong conclusions without a clear indication of what the SEC is actually planning to do. I would be pretty surprised to see a case against OpenC claiming every single NFT they offer is an unregistered security and suspect we will eventually see a much more bog-standard lawsuit against the platform along the lines of the SEC's lawsuits against Coinbase and Binance,

which instead allege that several specific assets are unregistered securities. Most people, even in the crypto world, will readily acknowledge that there are undeniably NFTs that are blatantly offered as securities. projects that explicitly promise holders a cut of future proceeds from the NFT creator's efforts, for example. But despite that, people are still hopping on the outrage bandwagon about this one. Again, as with Telegram, it is certainly possible that the SEC is taking a huge swing here and is actually planning to argue that all NFTs are unregistered securities, but at this stage, we just don't know. The SEC charged the defunct crypto-focused trading firm Galwa Capital with failing to comply with custody requirements, and Galwa has settled for $225,000, which will go to its clients.

The firm shut down in February 2023 after disclosing that they had lost half of their funds about $40 million on FTX. Shortly after, they sold their claim on FTCs for $0.16 on the dollar, which is significantly less than what they might have received had they waited enough. other two years. The SEC has also charged the ABRA crypto lender with securities violations, and they, too, have already settled. The civil penalties have not yet been announced. In January 2024, ABRA settled claims from the Texas State Securities Board by agreeing to refund customers. As a part of the complaint, the TSSB had alleged that ABRA was, quote, insolvent or nearly insolvent and had been making misleading statements. In June 2024, Abra settled with 24. Abra settled with 24. state regulatory agencies agreeing to refund up to $82.1 million to its U.S. customers.

Abra had begun winding down operations in the United States in mid-20203 after facing multiple state regulatory actions. Mango Markets, the Salana-based decentralized exchange, perhaps best known for being the target of a $116 million theft by Abraham Eisenberg, is now looking to settle securities law violations by paying around $225,000, destroying its holdings of the Mango token, and working to make those tokens unavailable for trading elsewhere. Because Mango Markets is run by a Dow, they had to vote on it. The proposal passed nearly unopposed, though it would have been interesting to see what would have happened if it hadn't. The SEC's case against Cracken has survived a motion to dismiss. As crypto firms so like to do, Cracken's chief legal officer tried

to paint this as a huge victory for Cracken, seizing upon a portion of the judge's ruling to claim that he had, quote, ruled as a matter of law that none of the tokens trading on Cracken are securities. This, of course, completely misrepresents the opinion, where the judge notes that the SEC isn't even arguing that the tokens are themselves securities, but rather that the tokens were offered as investment contracts. In actual fact, the opinion concludes that, quote, the SEC has plausibly allege that at least some of the cryptocurrency transactions that Cracken facilitates on its network constitute investment contracts and therefore securities, and are accordingly subject to securities laws. Cracken was also just found to have violated securities laws in Australia, which it blames on unclear

regulations. Also in Australia, the Australian federal police say that Australians have lost around $122 million to cryptocurrency scams over the last 12 months. That's almost half of the total losses to investment scams in the country. They also noted that around 60% of victims were under the age of 50, despite the common perception that financial scams mainly affect seniors. In the U.S., the FBI has issued warnings about, quote, aggressive targeting by North Korea of various companies in the cryptocurrency sector. The scammers often aim to socially engineer employees of cryptocurrency companies into running malicious code on company computers.

They often try to convince targets to install non-standard video conferencing software or to run code as a part of supposed job interview. The FBI has advised employees of cryptocurrency companies to, among other things, not use company computers to interview for jobs elsewhere, which is probably just good advice regardless of where you work. in elections and political influence. What better time to launch a transparently grifty, quote, high-yield cryptocurrency business than two months before your presidential election. Donald Trump, and especially his sons, have been teasing an upcoming cryptocurrency project that seems to be rapidly shapeshifting.

First, they were all teasing something called the Defiant Ons, a play on decentralized finance, or defy, with the hashtag B Defiant and tweets warning people to, to not, quote, get left behind. Then, Eric Trump said something about the project involving, quote, digital real estate, though it was unclear if he was speaking metaphorically or was actually referring to the metaverse land fad that more or less came and went. He did immediately follow up this statement by saying, quote, it's equitable, it's collateral anyone can get access to and do so instantly,

leaving me to wonder if anyone in the Trump family has ever set foot near an average person trying to buy a house these days. Now, the Flim Flam family is all talking about World Liberty Financial, with a website promising access to, quote, high-yield crypto investments, a statement that should immediately set off alarm bells in anyone's head. The project hasn't even launched yet, and it's off to a bumpy start. First, Donald Trump Jr. had to issue a statement to try to stop people from buying up all the fake tokens purporting to be associated with their murky project. Then, Twitter accounts for Lara and Tiffany Trump were both compromised and used to send tweets announcing a supposed token launch. Quote, this is a scam, tweeted Eric, himself retweeting the tweet from his wife's account containing

the scam token address. Now, CoinDesk has gotten hold of a white paper for the supposed World Liberty Financial, which they note appears to be a clone of Doe Finance, a crypto lending platform that was hacked for around $2 million just a month and a half ago. That hack was not a sophisticated one, and instead exploited sloppiness on behalf of the development team. The four people who built Doe are all listed as members of the World Liberty Financial team, as are Trump's sons, including 18-year-old Baron, who they list as a, quote, defy visionary. Zachary Folkman, a Doe finance creator who is now listed as the head of operations for World Liberty Finance,

previously ran a pickup artist advice platform called Date Hottor Girls. You should really just read the piece by CoinDesk. They did some really great reporting here. The project is making even the Trumpiest people in crypto-nerves. Nick Carter, a crypto venture capitalist and outspoken Trump supporter, tweeted, Is there something that we, as crypto-Twitter, can collectively do to stop the launch of World Liberty Coin? I think it genuinely damages Trump's electoral prospects, especially if it gets hacked. It'll be the juiciest defy target ever, and it's forked from a protocol that itself was hacked.

It's also an obvious target for the SEC. At best, it's an unnecessary distraction, and at worst, it's a huge embarrassment and a source of additional legal trouble. So are we signing a petition or what? Commenting on the hack of the two Trump family Twitter accounts, Carter added, quote, can't secure Twitter accounts, but I'm sure they'll be able to protect an already hacked Defi protocol from hacks. All I can say is that if he launches this before the election and it gets hacked, it's a strong contender for the biggest cluster fuck in the history of Web3 is going just great. Elsewhere in Trump World, Trump has been diversifying his cryptogrifts by also launching a fourth,

fourth run of his $99 Trump card NFTs, which have a whole complex scheme where if you buy 5, 9, 15, 50, 75, or 250 NFTs, you get various combinations of perks, including Trump's hideous gold sneakers, scraps of the suit he wore, during his debate with Joe Biden, and opportunities to have dinner or cocktails with Trump, events which, according to the fine print, could be canceled and replaced with NFTs for any reason. It's already been nine days, and he's only sold 28,161 out of the 360,000 cards available, which are distributed among only 1,454 holders. On the other side of the aisle, Coinbase's chief financial officer seemed to spill the beans,

when Fortune reported that she claimed at a finance conference that Harris is, quote, accepting crypto donations. She's using Coinbase Commerce now to accept crypto for her own campaign. Later, reports clarified that it is actually the Future Forward Pack, a Harris supporting super PAC that is independent from her campaign that plans to accept crypto donations. And Fortune updated its headline from, quote, Coinbase CFO says Kamala Harris is using firm to accept crypto donations, to, quote, Coinbase CFO reveals Kamala Harris SuperPack will accept crypto donations. Cryptopacks.

The crypto super PACs have broken their previous record for largest expenditure on a single candidate, making their promised $12 million contribution to support Republican Bernie Moreno in his general election in Ohio against incumbent Democratic Senator Sherrod Brown. Brown chairs the Senate Committee on Banking, Housing, and Urban Affairs, and is seen as a powerful opponent of the crypto index. industry, although he has in the past expressed some tentative support for a stablecoin bill that was favored by the industry. This race really exemplifies the attitude of the crypto industry, which has been install pro-crypto

candidates and damn the ramifications. Oosting Brown could well flip the Senate to a Republican majority, which would have enormous consequences. But hey, I guess it's all worth it as long as the crypto industry gets to sell their tokens with impunity. Elsewhere in crypto. Uyushif has claimed that, quote, Binance has seized all funds from all Palestinians as per the request of the IDF.

They refuse to return the funds. All appeals denied. Binance has denied this, stating that, quote, only a limited number of user accounts linked to illicit funds were blocked from transacting. I normally try to avoid writing about rumors when I don't know what's actually going on, but this one has spread more than I expected. I want to emphasize that no one involved here is a trustworthy source.

Yusuf is a historically volatile character prone to exaggerated claims, and he operates a competing service that he promoted in the very same tweet where he made allegations against Binance. Binance routinely makes statements denying factual allegations, and Israel routinely claims that innocent Palestinians are involved in terrorism. The latest dystopian self-sovereign identity concept has emerged, and instead of eyeball scanning, we're all supposed to get tattoos now. Can't wait.

Pocodot founder and Web3 coiner Gavin Wood announced the idea at a Web3 conference and says he hopes the project will launch later this year. I haven't been able to find any examples of the algorithmically generated unique designs, which must be tattooed in the same, also as yet undisclosed, place on a person's body, but it seems to me that in order to be a globally unique, be resilient to typical age-related tattoo degradation, and C, color limited enough to be recognized, across skin tones, they would likely need to be quite large. Just ask anyone who got a barcode

tattoo in the 90s how those are holding up. The project team also hasn't explained how they will handle a scenario in which a person already has a tattoo in the designated location. The saving grace is that, at least so far, the project hasn't announced any WorldCoyne-esque plans to foist these upon every member of the global population, so hopefully this is the last time I have to think about it. A new paper in the geopolitics journal studied a humanitarian blockchain pilot project called Cash for Work, concluding that it, quote, relied on forms of ignorance, confusion, illusion, disappearance, and misdirection. The author writes, quote, the organization's experimental adoption of a blockchain database system benefits some stakeholders, innovators, private partners,

more than others, local aid workers, and refugees. The conjuring of the pilot is what, justifies the adoption of blockchain, even though a simple database would have sufficed. The former CEO of the notoriously ill-fated early crypto exchange Mount Gox is, you guessed it, launching a new crypto exchange. He plans to lure in former Mount Gox users by offering them discounts. Three executives have jumped ship from the crypto-friendly Evolve Bank and Trust, which is always a good sign. The Web 3 is going just great recap. There were 11 entries between August. August 18 and September 5th, averaging 0.6 entries per day. $163.47 million were added to the Grift Counter.

Hamburgled Hackers compromised the McDonald's Instagram account, which bafflingly has more than 5 million followers, as well as a Twitter account belonging to a McDonald's marketing director. Together, they announced a meme coin called Grimmis, which they immediately dumped for $700,000 after people bought in. Then the hackers, who claimed to be part of an Indian hacking crew, changed the Instagram account's bio to boast about the hall,

writing, thank you for the $700,000 in Solana. The stunt was perhaps somewhat more believable than some others, because McDonald's had previously dipped a toe into the crypto world, with its McRib-themed NFT project from December 2021. The company had also joked about a grimace coin back in January 2022 in a Twitter reply to Elon Musk. Big fish. One crypto wallet was fished for $55 million in the Dye Stablecoin after its operator signed a malicious transaction that reassigned ownership of the tokens to another person. They seemed to realize the mistake several hours later, returning to attempt to withdraw the tokens, only to have the transaction fail because of the previous ownership transfer.

Everything else. The SEC charged Galois Capital and Galois settled, a, quote, peripheral Aave smart content. was hacked for $56,000. The Bitcoin mining company Rhodium Enterprises filed for bankruptcy. Brothers were charged by the SEC for a $60 million crypto bot Ponzi scheme. The ABRA crypto lender was charged with securities violations and settled. Users suffered losses after Polygon's discord was hacked. The former CEO of the Heartland Tri-State Bank was sentenced to more than 24 years in prison after putting bank funds into a crypto scheme, and the FutureNet founder was arrested for alleged crypto fraud. Worth a read.

Mike Masnick wrote up a characteristically good summary of the recent Second Circuit ruling denying the Internet Archive's appeal of an earlier court ruling that had found the Archives' book lending program was not fair use. He's been covering it more or less since the beginning, so you can also go back through TechDirt's previous coverage to get the full history. This article is titled, Second Circuit says libraries disincentivized authors to write books by lending them for free. I'm genuinely heartbroken about this. Wired also had a shorter and less in the weeds piece about it, if that's more your thing. The Bloomberg editorial board wrote an op-ed titled Harris and Trump shouldn't pander to the crypto crowd, urging Kamala Harris, if elected, to quote,

work with Congress and regulators to ensure that the rules applied to cryptocurrencies are consistent. with existing laws on fraud, money laundering, and sanctions enforcement. If the technology is as innovative and useful as its advocates assert, then playing by the rules shouldn't be a problem. No amount of campaign cash should lead candidates to think otherwise. This entirely reasonable statement, of course, horrified the crypto press to the point that CoinDesk decided they had to publish not one, but two, rebuttals. In the news, I chatted again with Paris Marx on Tech Won't Save Us about the

crypto industry's election spending, and why it's been so substantial, even though to many, it feels like crypto is a thing of the past. The episode is titled, Crypto is spending millions to sway the U.S. election. Wired mentioned the FEC complaint about Coinbase in their article about the industry's political spending. Still no updates on that, by the way. Wired's article is titled Crypto's shiny new political machine. 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'd 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 citationneeded. News.