Molly White's Citation Needed - Issue 69 – Nice

Episode Date: November 2, 2024

Coinbase threatens me that continuing to report on their activities would be “.... unwise”. Also, election spending hits a fever pitch, with several new crypto PACs coming out of the woodwork. Originally published on November 2, 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 69. Nice. Coinbase threatens me that continuing to report on their activities would be unwise. Also, election spending hits a fever pitch with several new crypto packs coming out of the woodwork. This issue was originally published on November 2nd, 20th. My previous issue about facing legal threats as an independent writer was apparently well-timed, as Coinbase is the latest entry on the list of entities threatening me with legal action over my factual reporting.

In this issue, more on that, and the latest developments in the crypto-lobbying efforts as the U.S. election swiftly approaches. Also, a few of you have requested March specific to the citation-needed newsletter so you can show your support. I've heard your calls and added a few new items to the store that you can check out. That's at store.mollywhite.net. In the courts. Former FTX head of engineering, Nishad Singh, has become the fourth of the five FTX defendants to be sentenced. A cooperator generally viewed as less central to the fraud than Sam Bankman-Fried, or Bankman-Freed second-in-command, Caroline Ellison,

Singh is the first of the bunch to receive a non-custodial sentence. He will spend three years on supervised release. Singh and Ryan Salem were the two defendants with the least severe charges, which heavily underscores the benefits of cooperation when it comes to sentencing. Salem, who pleaded guilty but did not cooperate or agreed to testify against his former boss, has just begun his seven-and-a-half-year prison term. Singh will not see the inside of a prison cell. Salem claims he was not even offered the opportunity to cooperate,

although he has insinuated that he might have been had he agreed to lie, something he also claims the other cooperators chose to do. The last defendant to be sentenced, Gary Wong, is likely breathing somewhat of a sigh of relief after seeing Singh's sentence. However, it's possible Wong may still end up with some prison time as a result of his wire fraud charge, which carries a hefty or maximum sentence than Singh's securities fraud and campaign finance charge. We will find out the outcome on November 20.

The government is still working on negotiating the return of some political donations made either by Sam Bankman-Fried or by Singh on Bankman-Freet's behalf to various left-leaning political action committees including the Senate Majority Pack, Emily's List slash Women Vote, Future Forward Pack, and GMI PAC. Each individual pack received donations of around $1 million to $2 million. $Jarrett Dunn, the ex-employee who allegedly stole $2 million from the pump. Dot Fun meme coin launchpad and then bragged about it on Twitter, has moved to withdraw his guilty plea in his UK court case. This was against the recommendations of his lawyers, who withdrew their legal representation following his decision. Dunn has remained active on Twitter throughout the process, tweeting about other crypto project he's been developing, and posting screenshots of conversations.

with Chat GPT, in which he seems to be workshopping his own legal defense. Said defense appears to revolve around the argument that anyone could have hacked Pump. Fun, and he just happened to be the one to do it. Eric Counsel Jr., a 25-year-old allegedly responsible for compromising the SEC's Twitter account and tweeting that the Bitcoin ETPs had been approved a day before the decision was actually announced, has pleaded not guilty to conspiracy to commit aggravated identity theft, and access device fraud. After perpetrating the SIM swap attack by impersonating the person whose phone number was linked to the SEC's Twitter account,

purchasing a replacement SIM card, and then resetting the password to the Twitter account, counsel was paid an undisclosed amount in Bitcoin. Counsel then pulled the classic innocent person move, Googling things like, quote, What are the signs that you were under investigation by law enforcement or the FBI, even if you have not been constantly? contacted by them, and, quote, how can I know for sure if I am being investigated by the FBI? And, quote, what are some signs that the FBI is after you?

This is why when I commit crimes, I immediately go home and Google things like, quote, someone stole my laptop and hacked the government, or, quote, how to prove I am being framed for a crime I didn't do. An interesting new case has been filed by blockchain gaming company Fracture Labs against trading firm and market maker Jump Crypto, alleging that Jump defrauded Fracture and manipulated the markets for its Dio token. Fracture has described a pump and dump scheme allegedly perpetrated by Jump in concert with the Justin Sun-affiliated cryptocurrency exchange HTX, formerly Hwobe. Amusingly, much of the complaint seems to come down to allegations that Jump Crypto did not do

the market manipulation they had promised to do, when they advised Fracture that they would, quote, maintain the pricing parameters that were required as part of a listing agreement. Instead, Fracture claims, Jump and HTX hired online influencers to pump the DO token price, then profited millions of dollars when they dumped the token and caused its price to crash from almost $1 to less than half a cent. The suit is still very early. It was filed on October 15 and Jump has yet to respond, but it's an interesting compliment to the recent action from U.S. law enforcement and regulations, implicating market makers got bit, My Trade, ZMQuants, and CLS Global in providing, quote, on-demand market manipulation. The practice has long been an open secret in the crypto world, to the point

that some in the industry occasionally seem to forget that it's illegal, but now it seems that some companies may face more scrutiny for this activity. Speaking of those charges against the market makers, the founder of My Trade quickly entered a guilty plea. Liu Zhao, who, who founded and operated my trade, reportedly told a client that their service was to locate, quote, other buyers from the community people you don't know about or don't care about, because, quote, we have to make the other buyers lose money in order to make profit. As a part of his plea, Zhao agreed to stop providing a service that used wash trading bots to falsified cryptocurrency trading volume for token creators, bots that were wash trading millions of dollars a day for around

60 different cryptocurrencies. He also faces up to five years in prison and potential fines and is scheduled to be sentenced in February. As for Gottbit, the Department of Justice filed a superseding indictment to add charges against the company's founder and CEO, Alexei Andrianin. They allege that Gottbit earned tens of millions of dollars in proceeds from their wash trading. If convicted on the wire fraud charge, Andrianin faces up to 20 years in prison. Chirog Tomar, who created a fake replica of the Coinbase Pro website beginning in June 2021 and used it to drain victim's Coinbase accounts, has been sentenced to five years in prison after pleading guilty to wire fraud conspiracy earlier this year. He successfully defrauded hundreds of people of more

than $20 million in total, which he spent on luxury vehicles and trips. Although he's an Indian citizen, he was arrested by U.S. authorities in December 23 after he flew into Atlanta. It's been a bad few days for creators of knock-off board apes. The creator of the Undead Apes Society, Solana-based NFT project, who was indicted in January after rug-pulling a spinoff project in April 2022, was found guilty on wire fraud conspiracy and money laundering charges. A co-defendant had already pleaded guilty to the same charges earlier this year. Meanwhile, the creator of Mutant Ape Planet, who was charged in January 2023 for the 2.9,

million rugpole has been ordered to forfeit $1.4 million and pay an additional $15,000 fine. The month he spent in jail while awaiting trial was deemed sufficient by the judge, though prosecutors had sought a three-year prison term. Craig Wright, whose claims of being Satoshi Nakamoto were definitively rejected earlier this year when he lost a court case aimed at stopping him from continually trying to sue Bitcoin developers, is once again trying to sue Bitcoin developers. His latest lawsuit, which he filed without legal representation against Bitcoin core developers and Jack Dorsey's FinTech Company block, seeks 911 million pounds, equivalent to $1.18 billion U.S.

dollars, in damages. He argues that this is the difference in market cap between Bitcoin and his fork of the project called Bitcoin SV, which he insists is the real Bitcoin. The judge in the earlier Kopa v. Wright case had placed an injunction preventing Wright from bringing any new lawsuits based on his claim that he is Satoshi Nakamoto. This newest lawsuit was almost immediately placed on hold pending a hearing in the Copa case to determine if Wright is in contempt of court. The right has argued his newest lawsuit is not predicated on claims that he is Satoshi. Copa wants to force the now Singapore-based right

to attend the contempt hearing in person in the United Kingdom, but Wright has argued that his autism, Christmas plans, and the likelihood of jet lag should prevent such a thing. The former CEO of the Australian cryptocurrency exchange Mine Digital has been charged with fraud over allegations that he stole the equivalent of $1.5 million dollars from a customer who gave him the money to purchase Bitcoin. Instead, the money went to paying the company's debts and other purposes. It might have bought the CEO a little bit of time, but mine digital collapse two months later in September 2022, and creditors are reportedly owed around $16 million. In bankruptcies. The FTX estate has been pursuing legal action against various firms still hanging on to crypto assets that FTX

says belong to them. They recently settled a lawsuit with the By-Bit cryptocurrency exchange, with By-Bit agreeing to return $175 million in assets held on the platform and buy back FTCS's bit tokens for around $53 million. The original lawsuit sought to recover assets priced at around $327 million at the time of FTCS collapse, but that were priced at around $1 billion at the time the suit was filed. They've also filed suit against another crypto exchange, Q-Coin. FTX's lawyers claim that Q-Coin has, quote, without justification. refused to turn over the assets and seeks the return of the funds as well as potential damages. QCoin has disputed FTX's version of events, claiming that they had repeatedly tried to contact FTCS to

discuss the frozen funds. In Governments and Regulators. The SEC has filed yet another Wells notice, this time against the immutable blockchain gaming infrastructure company. As usual, the news comes from immutable themselves and is filled with the industry's typical accusations, that the SEC is, quote, targeting some of the largest and most reputable actors in the space, instead of providing, quote, clear guidelines for compliance. Somewhat unusually, Immutable tries to connect the Wells notice to the U.S. election,

writing, quote, it does not take an astute observer to connect the timing, without providing any indication as to why they think the timing would be related at all. In Elections and Political Influence. With only days until the U.S. election, things have reached a fever pitch. Even with very little time left to spend it, firms and executives in or connected to the cryptocurrency industry have been pouring even more money into races they've already spent over $100 million to influence. Ripple CEO Chris Larson, who I mentioned last issue has been supporting the Harris and

previously Biden campaign and other Democrats for years, dropped a whopping 10,000 million dollars more on the Harris supporting future forward pack in the last days of September. Although he is the only individual out of the 31 I follow at Follow the Crypto, who has contributed specifically to back Harris, his total contributions of almost $12.6 million outspend the combined $10.6 million from the nine people who've contributed dedicated support to Trump. However, despite its CEO's spending, Ripple still seems to be trying to play both sides. Corporate contributions have gone in equal amounts to both the progressive protect progress and conservative defend American jobs crypto super PACs, and Ripple chief legal

officer Stuart Alderati has spent $300,000 of his own to back Trump. Mark Andreessen contributed another $2 million to Trump's campaign on October 7, bringing his total Trump spending this cycle to $5.35 million. This contribution came on the same day his Andreessen Horowitz co-founder Ben Horowitz sort of followed through on his earlier backpedal, in which he'd promised to make a, quote, significant donation to Harris. Horowitz did indeed donate an additional $2.5 million after that promise, but it went to Black Pack, a left-leaning Superpack that focuses on engaging Black voters. Although Blackpack does support Harris, it also supports. a list of candidates down the ballot, and it's not clear if Horowitz's money will be earmarked for

Harris or used more broadly. Ironically, one of the other candidates supported by Blackpack is Ohio Senator Sherrod Brown, who has been facing off against Republican opponent Bernie Marino. Marino has been backed by $40 million in spending from the cryptocurrency industry super PACs, packs which Horowitz has personally supported to the tune of $23.5 million. dollars. Horowitz and his wife have also both maxed out their individual contributions to Marino. Coinbase. The other major recent contribution came from Coinbase, with CEO Brian Armstrong announcing on Twitter that the company had dumped another $25 million into the Fair Shake Cryptofocus Superpack, on top of the $46.5 million they'd previously provided.

Coinbase still holds an active contract with the U.S. Marshals, and as I reported this summer, federal contractors are prohibited from contributing to political entities, including super PACs. Despite being the subject of our complaint with the FEC pertaining to their $25 million contribution to Fairshake in May, which was also within the prohibited time period, Coinbase has brazenly doubled this amount with a second contribution. While they've not, at least that I've seen, argued that they were unaware of this campaign finance prohibition, which would already be unlikely given clear warnings on Fairshake's website that contributions by federal contractors are prohibited, this newest contribution seems to definitively remove that potential line of argument for them.

Instead, Coinbase's only rebuttal to our complaint has been to claim that, despite that pesky federal contract of theirs, they somehow aren't a federal contractor. due to a detail in how the contract is funded. Because the contract is being paid out of the pool of seized cryptocurrencies and other assets, known as the Department of Justice asset forfeiture fund, they have argued they do not fall within the definition of federal contractor used by the FEC because they are not paid with, quote, funds appropriated by the Congress, an argument that lawyers at public citizen have plainly described as, quote, incorrect,

and one that we rebutted on August 5 in our subject, supplemental filing, which reads, quote, as the Supreme Court has recently explained, quote, an appropriation is simply a law that authorizes expenditures from a specific source of public money for designated purposes. Under this definition, Congress's enactment of 28 U.S.C. Section 524C1, creating the assets forfeiture fund and authorizing the Attorney General to make expenditures from that fund for specific purposes was an appropriation. Indeed, over the past five decades, both courts and the Department of Justice have considered the statutory creation of the fund to be an appropriation.

The Congressional Research Service has similarly described the statute as, quote, a permanent appropriation. Coinbase's only communications with me since the FEC complaint have been public, made via a handful of tweets from Chief Legal Officer Paul Graywall. In them, he outlined his argument, while also insinuating that I am intentionally spreading, quote, misinformation, on behalf of my shadowy backers. While Graywall has come up with this rather creative legal theory under which he argues Coinbase's contributions were not prohibited, he has not identified any factual errors in my reporting. As far as I'm aware, neither he nor anyone else from Coinbase have commented on our position since we made the supplemental filing on August 5th, except to repeat the claim in a tweet, without adding any further support for it, that the funds with which they're being paid are not

congressionally appropriated. Despite that, Graywall retweeted my recent post highlighting Coinbase's contribution and its apparent violation of this prohibition with a threat, writing, quote, once again with feeling, repeating misrepresentations of facts after previously being put on notice is dot, dot, dot, dot, dot, unwise. And for the record, Graywall is not some total hack with no legal background, but is in fact an ex-magistrate judge, who has somehow now found himself reduced to issuing impotent threats on Twitter for Coinbase. I assume the position pays pretty well, but I can't imagine any salary at which I would be willing to post with a straight face that it would be, dot, dot, dot, unwise, for a writer to continue to report on my company.

Lest you think Greywall is simply a loose canon, perhaps sent off the rails by knowledge of Coinbase's poor earnings that would be reported the next day, Coinbase Communications team member Jacqueline Sales also reshared the threat, adding, quote, say it louder for the people in the back. Some Coinbase supporters have found themselves in the awkward position of trying to defend one of the largest cryptocurrency companies that, on one hand, claims to support individual freedoms and fight back on behalf of the little guy against powerful institutions, but on the other hand, threatens independent writers with baseless lawsuits. Ironically, several have accused me, but not Coinbase, of lawfare.

Others have pretended that his tweet somehow isn't a legal threat. However, many, even within the crypto world, responded to his tweet to criticize both Greywall and Coinbase for this clear attempt to silence me. Stand with Crypto. Coinbase's AstroTurfed Lobbying Group, Stand With Crypto, has been hard at work getting out the vote for their preferred candidates, both the ones they've formally endorsed and the ones they've conspicuously left off their list in order to avoid the risk of appearing to back losers. Despite leaving Bernie Marino off their endorsements list, stand with Crypto

through a private benefit concert in Akron, Ohio, that was nonetheless free to attend for anyone willing to fork over their contact information and download the Coinbase app. Headlining the show was the once popular band The Black Keys. self-described, quote, pretty liberal motherfuckers, who once made fun of, quote, right-clicking NFTs, and now found themselves playing a show to benefit a staunchly conservative candidate whose election could turn the Senate over to a Republican majority. Likely, they chose to take this gig for the paycheck, despite all that, after they were forced to cancel every concert on their planned tour this summer due to poor ticket sales.

The Black Keys themselves, from the stage, referred to the event as the, quote, weirdest gig we've ever played, perhaps referring to the fact that their staging was set up backwards, with the band facing around 250 attendees standing with them on the stage, but leaving the large orchestra seating area empty, and the roughly 250 people in the balcony area left to stare at scaffolding for the lights and the performers' backs. This bizarre choice was likely related to the fact that only around 500 people bothered to show up for a free concert in a venue that seats five times as many people. After more than 30 minutes of opening remarks extolling the virtues of crypto, during which one attendee joked they'd been tricked into attending a timeshare presentation,

and another loudly asked the speaker, quote, why should we vote for crypto and was ignored, the Black Keys launched into a set that wasn't much longer. In between songs, irritated concert goers who had been relegated to the balcony shouted at the band members to turn around, or at least turn off the light so they could see. Meanwhile, after regularly encouraging crowds to quote videotape and tape record anything I say, Marino's campaign has been accused of using audio jammers to try to thwart those trying to ask questions of the Senate hopeful, such as, quote, do you have any other opinions on women over 50 you would like to share? This is a reference to Marino's comments earlier this year,

that suburban women are single-issue voters for candidates you support abortion rights, and that that's, quote, a little crazy, by the way, especially for women that are like past 50. I'm thinking to myself, I don't think that's an issue for you. Physically bearing children is certainly not an issue for Marino either, but that somehow didn't stop him from expressing his own vehement opinion in an interview last year that it's, quote, insane, that, quote, as a father of two daughters, if one of them became pregnant as a result of a rape,

they could get an abortion without first obtaining his consent. Marino's daughters are around 30 years old. Other crypto packs. A new super pack called the Bitcoin Voter Pack has cropped up to fund almost $75,000 in ads and text messaging campaigns for Donald Trump and Senate candidates Ted Cruz, a Republican from Texas, and Dave McCormick, a Republican from Pennsylvania. Its sole reported source of funding thus far is $65,000 from the Bitcoin Voter Project, which is supposedly a 501c4, although I wasn't able to find a group with that name in the IRS database.

The organization was created by three executives from the Bitcoin mining companies, Marathon Digital, Riot, and CleanSpark. They've put out a few ads, including one in Pennsylvania urging voters to vote for Trump and McCormick. It features Trump's comments about, quote, ensuring that the future of Bitcoin and crypto will be made in America, and promises the industry will create jobs. for Pennsylvanians, despite Bitcoin mines not typically employing very many people. Another ad aired in Texas threatens that, quote, America's financial freedom is under attack and shows Cruz arguing that Texas should be, quote, the oasis on planet Earth for Bitcoin and

crypto. Another group, the Bitcoin Freedom Pack, has emerged to dump $350,000 into the Texas Senate race to back Cruz against his Democratic opponent, who has also been friendly towards crypto. Recent contributions from these two packs seem to betray nervousness around the closeness of that race, which has tightened in some polls to even or extremely close odds. The Bitcoin Freedom Pax website puts their strategy bluntly. Quote, we believe the only way to protect Bitcoin is to beat Democrats in the House and Senate this November, so we can block White House regulations and remove anti-Bitcoin senators such as Elizabeth Warren and Sherrod Brown, from their powerful positions on the hill.

A joint fundraising committee called Republicans for a pro-crypto Senate majority was created and then disbanded almost as quickly, registering with the FEC on August 26 and then filing a termination report on October 30th. The group listed as beneficiaries of its fundraising various packs for the Republican senatorial candidates Sam Brown of Nevada, Bernie Marino of Ohio, Mike Rogers of Michigan, Dave McCormick of Pennsylvania, as well as the National Republican Senatorial Committee. The group brought in a total of $208,000 over its short lifespan, bringing in about half of that just from Coinbase executives, including CEO Brian Armstrong, who contributed $23,300, President Emily Choi, who contributed $20,000,

Vice President Kara Campbell, who contributed $13,200, and Chief Policy Officer Faryer-Shur, Shurzad, who contributed $13,200. Other notable contributions, all in the amount of $13,200, came from multi-coin capital co-founder to Sharjane, Paxo CEO Charles Cascarilla, Han Ventures Catherine Hahn, formerly of Coinbase, Anthony Scaramucci, venture capitalist Mike Dutus, and Zachary Whitkoff, of both the Whitkoff Group and Trump's World Liberty Financial Crypto Project. Another 13,000 $2,200 contribution came from Toby Scammell, a man who served prison time and was fined as a result of both criminal and civil insider trading cases in 2014, and then who was fined $26 million by the

FTC earlier this year for deceiving customers who were trying to obtain PPP loans. He lists his profession in the FEC report as retired. Another contribution came from Ryan Selkis, best known for his Trumpy meltdown earlier this year that saw him ousted from the Masari blockchain analytics company you'd founded. He lists his job title as founder of Nuco. Of the money raised by this committee, Bernie Marino and Mike Rogers both received a bit over $50,000. Dave McCormick received around $43,000, Sam Brown received around $38,000, and the NRC received

less than $1,000. The remaining $16,000 or so went to operating expenses. World Liberty Financial and Donald Trump. When I published the last recap issue, Trump's World Liberty Financial token had only been live for about a day, and had only sold about 807 million or 4% of the 20 billion tokens they'd been hoping to offload on accredited rubs during the public sale. Even that 20 billion had been massively reduced from the 63 billion, then 35 billion that they'd originally planned to offer. That early in, I was a little hesitant. to confidently describe the project as a flop.

Now, two weeks in, I'm happy to. A full week after the sale began, the number of tokens sold had crept up to only around 936 million, or 4.7% of the target. Now, two weeks in, we've hit 975 million, or 4.9%. It's been a hot minute since I've had to calculate a logarithmic regression, but if my math is right, at this rate, Trump should hit his 20 billion token.

milestone at some point in around a bazillion years. However, rather than wait that long, the project has changed its plans. An October 30 filing with the SEC indicates that the project now, quote, only plans to sell tokens up to $30 million in the offering before terminating sale. Though it's a major reduction from the $300 million target originally planned, it's still a far cry from the $2.7 million in sales they've reported thus far. This is a bummer for Trump, who, according to the project's quote gold paper, only begins to receive payouts after World Liberty Financial establishes a reserve consisting of the project's first $30 million in revenue. Meanwhile, the project is reportedly considering launching a stable coin.

This is highly amusing to me, given Trump's forceful opposition to central bank digital currencies. When asked earlier this year about the possibility of the Federal Reserve creating a digital currency, which, despite conservative talking points it has never proposed doing, Trump said that a, quote, digital dollar would be, quote, very dangerous. He said that digital dollars would be, quote, a dangerous threat to freedom, potentially allowing the government to, quote, take your money and you wouldn't even know it was gone. Later at the Bitcoin 2024 conference, Trump pledged, quote, there will never be a CBDC while I'm president of the United States.

Forget it. But a digital dollar controlled by and for the financial benefit of him, just show him where to sign. A crypto-twitter regular claims to have identified the Bitcoin wallet linked to the novelty physical Bitcoin presented as a gift to Donald Trump at that same Bitcoin 2024 conference. If it is indeed the same one, those who believe Trump is a true believer, Bitcoin hoddler,

are likely to be disappointed. Within a couple months, he sold it off on the Gemini crypto exchange. The trader, who has poured more than $30 million into bets on polymarket, favoring Donald Trump to win the election, has done an interview with the Wall Street Journal, using the pseudonym Teo, and claiming to be a Frenchman with, quote, absolutely no political agenda,

whose, quote, intent is just making money. The journal was careful to note they could not confirm all of Teo's claims, including that he is only betting his own money, nor could they rule out links between Teo and political organizations or Trump associates. Rather unbelievably, he claims that he chose to bet tens of millions of dollars simply because he thought pollsters were underestimating support for Trump. He has also placed bets that Trump will win the popular vote, a highly unlikely proposition. If Trump loses the election, Teo stands to lose the tens of millions he's which he's said is the majority of his liquid assets. While some polymarket betters favoring Trump

have been exiting their positions, or at least hedging their bets as the election draws nearer, causing his so-called odds on the platform to slump from previous highs of around 67%. This is not an option for Teo, who holds around 40% of the contracts on Trump to win and would likely crash the markets if he tried to sell. This report of a French whale underscores a point that is, bizarrely, not often prominently mentioned in discussions of polymarket as a platform that could be akin to or even more reliable than traditional polling data. That is, Americans are not permitted to trade on the platform.

While it's hard to know how many Americans are circumventing polymarket's weak enforcement of this restriction, many of the trades on the platform come from people who will not be voting in the election, but are instead watching it from afar. While non-Americans are, of course, perfectly capable of providing high-quality analysis of the American elections, trades on polymarket are not akin to polls of American voters. Furthermore, two separate investigations by blockchain research firms have both found evidence of significant wash trading on polymarkets' election markets. An investigation by chaos labs estimated that one-third of trades on the platform's presidential election market were wash trades, while the investigation by Inca Digital said that

wash trading was a, quote, significant portion of the volume in the presidential election market. Researchers also found that Polly Market had been vastly overstating the volume in their markets by conflating a traded share, which may sell from anywhere from one cent to one dollar, with $1 of volume. At the time of the report on October 30th, Pollymarket was reporting $2.7 billion dollars in trading volume on the presidential election market, when in reality only $1.75 billion in transactions had occurred. At the time of writing, Polly Market shows $1.99 billion in volume on the presidential market, suggesting they may have updated their figures since the report. Elsewhere in crypto. A bunch of cryptocurrency companies have just done rounds of major layoffs

in very quick succession. Metamask developer consensus announced on October 29 that they had laid off 20% of their total team, which is likely somewhere in the ballpark of 150 people. They blamed the move on the SEC, because of course they did. Later that same day, decentralized exchange DUI-DX announced that it had laid off 35% of its, quote, core team, though it's not clear how big that team was to begin with. The next day, cryptocurrency exchange Cracken announced layoffs, with the New York Times reporting the cuts affected around 15% of its employees, or around 400 people. Both DYDX and Cracken blamed the layoffs on needing to have more builders and fewer managers.

Crackin's layoffs included the company's chief operating and chief technical officers, and venture capitalist Argent Sethi was appointed as a new co-CEO alongside existing CEO David Ripley. Two years ago, Cracken laid off 1,100 people, at the time around 30,000. 30% of its employees, and around the same time, its founder and then CEO Jesse Powell stepped down after internal turmoil and an investigation into sanctions evasion. However, he remained on as chairman. As YouTube mega influencer Mr. Beast is facing scandal after scandal pertaining to allegations of mistreatment and sexual harassment at his company, deceiving his fans and rigging contests and other such things, now a group of crypto researchers have alleged that he's also been involved

in massive crypto pump and dump schemes. It's not clear if regulatory or law enforcement investigators have picked up the allegations, and the crypto sleuth's website outlining their research ends only with, quote, advice for Mr. Beast, like, quote, stop using metamask swaps. They charge 0.875% fees. Geez, Mr. Beast, if you're going to insider trade, at least do it somewhere with low fees. Trends move quickly, but game development doesn't. Despite the record low popularity of NFTs, Ubisoft's many clumsy attempts over the last few years to force NFTs on their customers have finally culminated in a launch trailer for an NFT game called Champions Tactics, Grimoria Chronicles, although the trailer makes no mention of the NFTs.

Ubisoft seems almost embarrassed by the launch, putting practically no marketing behind it. The Blue Sky Social Network, which I quite like, has raised a $15 million funding round led by blockchain capital. Some other participants in the funding round are also crypto-focused investment companies or have crypto funds. In the announcement, Blue Sky goes to great links to try to distance themselves from that whole blockchain thing, which I think really highlights just how toxic even a faint whiff of blockchain has become to normal people who just want a normal social network.

While I'm not personally rushing to jump ship over this funding announcement, I do think it is concerning. Venture investors are not philanthropists, and blue sky's path to profitability is unclear. Despite their promises in their announcement, quote, not to hyper-financialize the social experience through tokens, crypto-trading, NFTs, etc., one wonders if that will hold up once their VCs come knocking at the door looking for returns on their investments, particularly now that their new board member, blockchain capital partner Kynjal Shah, will have a say in the future of the platform. The Golden State Warriors NBA team have adopted Coinbase as a new sponsor, after their previous sponsorship from FTX didn't work out so well. Is there a team sponsorship

curse, or is that just a stadium thing? The Web 3 is going just great recap. There were seven entries between October 16 and November 2nd, averaging 0.4 entries per day. $73.42 million was added to the grift counter. Hack the USA. It appears that someone managed to hack a wallet controlled by the U.S. government, which was holding assets seized in connection to the 2016 BitFanex hack. More than $20 million was emptied from the wallet. Then the thief quickly began sending some of the funds to various exchanges,

activity that helped to distinguish the transactions as likely theft, rather than the government moving crypto assets around as they sometimes do. Curiously, within a day of the hack, the attacker returned around $19.3 million to the original wallet. One wonders if perhaps they suddenly realized that the juicy wallet that they had targeted was owned by a rather menacing adversary. There are a lot of open questions around this incident, including who controlled the wallet on behalf, half of the government. As I mentioned earlier in this issue, the U.S. Marshals have turned over at least some of their custody and asset management responsibilities to Coinbase. However,

some of the stolen funds were withdrawn from the Defy borrowing and lending platform AVE, and it's not clear if Coinbase is responsible for managing assets parked in defy protocols like this. Then there's the question of why the U.S. Marshals have assets on platforms like Avey at all. While many people use these platforms, to earn yield on their crypto holdings, it's a bizarre choice for the U.S. government to do so, particularly given the U.S. regulators' scrutiny of crypto lending services. Everything else. A supply chain attack stemming from a JavaScript animation library resulted in losses for users of 1-inch and other platforms.

The M2 cryptocurrency exchange was hacked for $13.7 million. The Sharpay meme coin rug pulled for $3.4 million. The blockchain company Forte acquired game studios, demanded secrecy, and then shut them down. The tapioca Dow was exploited for most of its assets, over $4 million, and Radiant Capital was exploited again, this time for at least $50 million. Worth a read. Corey Docterow provided his perspective on Blue Sky, including on their recent funding round, in an article titled Blue Sky and Insidification. I particularly like his point. Quote, plenty of people have commented that now that a VC is holding Blue Sky's purse strings,

incitification will surely follow. Doubly so because the VC is called blockchain capital, which at this point might as well be grifty scam caveat mTOR capital. But I don't agree with this at all. It's not outside capital that leads to incitification. It's leverage that incitifies a service. Corey is a fellow posseer, and major inspirations. to me when I adopted the practice, and has opted not to use Blue Sky because he has vowed to,

quote, never again devote my energies to building up an audience on a platform whose management can sever my relationship to that audience at will. Personally, I've gone the route of using the platforms that interest me, even the insidification prone ones like Blue Sky and threads, but hedging my bets by plugging them into my posse system where they can just as trivially be unplugged. Maznik, who I also deeply admire, and who has recently been a promising addition to Blue Sky's board, provided a response to some of Corey's points. In my opinion, telling someone to just host their personal data server is not a terribly feasible proposition at this point in time, but I hope to see it rapidly become so, at which point I'd expect people like Corey to be more amenable to

trying the platform. 4-04 Media published a piece titled The Billionaire is the Threat, not the solution. I love this piece by Jason Kobler about how billionaires buying media outlets won't, as one such billionaire contends, protect journalism. He also gives a nod to my recent piece on Just Go Independent, which is lovely of him. In the news, Mark Cuban, whose crypto bags are oh so heavy, says that crypto is waiting for its Instagram moment, the moment when a crypto app comes along that's so compelling that even Grandma has to make a crypto wallet to use it. I point out the slight issue that compelling apps don't tend to require crypto wallets. We also talk about election stuff a bit.

This article is published in ink and it's titled, Mark Cuban says crypto is waiting for its Instagram moment, but hasn't its mainstream arrival already come and gone? TechCrunch wrote about my run-in with the DMCA scammer that I described last issue in a piece titled Prominent Crypto Critic says someone offered bribes to take down a blog post. That's all for now, folks. Until next time, this is Ben, 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 citation-needed.news.