Unchained - Adam Cochran on Why Crypto Prices Will Be Down Bad for the Next Six Months - Ep. 427

Episode Date: December 2, 2022

Adam Cochran, partner at Cinneamhain Ventures, talks about the collapses suffered during this year, their impacts on big traditional finance players, and what’s coming in the crypto markets in the near future.  Show highlights: whether Sam Bankman-Fried lied during his interview at the Deal Book Summit why SBF kept the number of FTX's engineers at such a low number why Adam is optimistic about Genesis and DCG what options Genesis have to raise liquidity the significance of a potential meltdown of DCG in the crypto industry why Adam is worried about Grayscale Bitcoin Trust (GBTC) what lessons can be learned from this crypto winter Adam's prognosis for crypto lending and for the crypto markets in general the impact of the bankruptcy of BlockFi and all the other centralized lenders Take Unchained's 2022 survey!   Unchained is doing its annual survey. Tell us how you think we’re doing and how we could improve, whether it be on the podcast, in the newsletter, or in our premium offering. Looking forward to hearing your thoughts!  Thank you to our sponsors!Crypto.com Adam: Twitter Thread on community buyout Previous Unchained episodes: Why 3AC’s Collapse Could Spell the Start of a Crypto Credit Crunch Episode Links BlockFi:  Unchained: Crypto Lender BlockFi Files for Bankruptcy as FTX’s Contagion Effects Continue Decrypt: FTX, Alameda Owe BlockFi More Than $1 Billion: Court Hearing Genesis: Bloomberg: Genesis Creditors Seek Options to Keep Crypto Brokerage Out of Bankruptcy Semafor: Online news site CoinDesk attracts suitors amid crypto crash Unchained:  Genesis Warns of Bankruptcy If Funding Plans Fail: Report On-chain Analysts ID 432 GBTC Addresses After Grayscale Says No to Proof-of-Reserves WSJ: Crypto Lender Genesis Asks Binance and Apollo for Cash Decrypt: Digital Currency Group Says No Imminent Threat Despite Owing Genesis $575M The Block: DCG CEO Barry Silbert updates shareholders, says company will emerge 'stronger' Previous coverage of Unchained on Genesis: Why Genesis Could Very Well Be Insolvent, Not Just Illiquid ‘The Last Big Whale’: Why the Crypto Contagion of 2022 Eventually Hit Genesis FTX: Unchained: FTX Bankruptcy Overseer Says Company’s Collapse Is Worst He’s Ever Seen Previous coverage of Unchained on FTX: Jesse Powell and Kevin Zhou on How FTX and Alameda Lost $10 Billion Is the Collapse of Crypto Lending Over, or Is It Just Starting? Did the Bahamian Government Direct SBF and Gary Wang to Hack FTX? The Chopping Block: Why Lenders Didn’t Liquidate Alameda When It Was Underwater  Erik Voorhees and Cobie on Why FTX Loaned Out Customers’ Assets The Chopping Block: FTX: The Biggest Collapse in the History of Crypto? Sam Bankman-Fried on How to Prevent the Next Terra and 3AC Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey everyone, just a quick note before we begin. Unchained is doing its annual survey. Head to surveymonkey.com slash R slash Unchained 2020 to tell us how you think we're doing and how we could improve, whether it be on the podcast, in the newsletter, or in our premium offering. Looking forward to hearing your thoughts. Again, the link is surveymonkey.com slash R slash unchained 2022. And you can also check the show notes for the link. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians.

I started covering crypto seven years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the December 2nd, 2020 episode of Unchained. Unchained Daily and Unchained Premium, which includes new perks, are now on Substack. Go to UnchainedCripto.com to subscribe.

With the Crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code, Laura, link in the description. Today's guest is Adam Cochran, partner at Sinapain Ventures. Welcome, Adam. Thanks for having me, Laura. Just a heads up, everyone, that due to some issues with our schedules, we ended up recording this on Wednesday evening, rather than Thursday. So if any big news breaks tomorrow or for you yesterday, then I'll have to cover that during the recap rather than during. this interview. Adam, not that long ago, you and I finished watching or watching the tweets

about the deal book interview with Sam Bankman-Fried, former CEO of FTX. What did you think? I mean, I thought it was one of the greatest works of fiction since Game of Thrones. It was this complex narrative of bullshit and lies that either Sam has convinced himself of or, you know, is trying to put forward to play this media game. And I'm glad to see that finally the media seems to be stepping up with some hard-hitting questions rather than bizarre fluff pieces. And when you say you felt that he lied, were there any particular moments that struck you as qualifying for that kind of label?

Many. But like, let's break it down at the highest levels. We all know Sam's a smart guy from his background, from his work. and from everything we've seen of him in this space. He is also somebody who likes control and was involved in absolutely everything that he did to a level where he became a blocker in those things. There is no way from the data that we know on chain that it is mathematically possible to blow a $10 billion hole into FDX

in a legal and legitimate way based on the assets that were there at the time. And I can't fathom for a second that someone has smart and detailed and constantly in control of his domain as Sam would be entirely oblivious to that. That is the clever positioning of, you know, a son of Stanford law professors who realizes that negligence is a much lesser crime than fraud. So are you implying? Because a lot has been made, and even in this interview, a lot has been made about how it's not the greatest legal strategy for him to be talking as much as he has been. I don't know if you, listened also to the interviews he did with Tiffany Fong, the Celsius creditor who sort of somehow

through DMing with him, got him to do a couple phone calls with her. But Andrew Ross-Sorkin asked him this during the interview, something like, what do your lawyers think of you doing these interviews or some question like that? So is that what you're implying that somehow this is like a strategy, what meant to throw people off? Yeah, look, I'm, I'm, I have two minds of it. And while I'm, you know, well read on the law as a hobby, I'm not a lawyer and I am not based in the U.S. So my understanding of these intricacies is probably off a little bit. A lawyer is always going to tell you you never want to admit fault when you're under investigation, right? That is their legal strategy. It's shut up and let us do our job. I think if you were to realize you're in this position where you are absolutely cooked, there's no way you're getting out of this. The code and the blockchain are a immutable smoking gun for what you did. then there is this idea that if you go out there and you push this, I'm just an oblivious kid. I didn't know. We grew too big.

We grew too fast. Oopsie. Maybe you can bring this back into the realm of negligence, which is not going to be the same as having had a specific malice intent to steal client funds. And so there's part of me that thinks that this just has to be a legal strategy that he's come up with because he believes himself to be a real. a really smart person across all these domains and able to handle this. Because the only other option is that he was truly oblivious to all this and that's stupid about a 10, you know, 20, 30 billion dollar empire. And that just doesn't reconcile with anything that we've learned about him in this industry

for the past three, four years. Yeah. I mean, something I think that has stuck with me is how small the staff was. And so, you know, when you're not delegating a number of those duties, duties out, then it does call into question how much you yourself have your hands in those items, right? Like, you know, the fact that there was no CFO is kind of something a number of people have called out. So it would indicate that if there's not a CFO, then it's probably someone like him, if not him, exactly, who's tasked with, you know, kind of keeping the books in order.

Yeah. And I mean, you know, we hear this thing again and again where they bragged about having only 12 engineers and even them they were segmented and only small parts of them ever got to see the full breadth of code. They never scaled up that engineering team as far as we know, despite the challenges that they've had with the site latency that crypto Twitter completely rags them on. And to put that into comparison, I worked at a crypto exchange in Canada in 2013 that served the Canadian market and was many orders of magnitude smaller than FTX ever was. was we had more than 12 employees, right? This was a tiny operation back then, and we had more than 12 people.

So at some point, it became this conscious decision of exclusion. And I'm hard pressed to find another legitimate reason as to why, rather than not wanting to expand the circle of the scheme. Right. And just to make clear, I think FTCS recently had a few hundred employees, maybe somewhere in the 300 range, but you're talking about the engineers. Yeah, exactly. Just the engineering staff. I think most of their staff have it ended up being on customer support, operations, compliance, things like that. But they were always bragging about a really small engineering team that didn't make sense to a lot of other operators in this space. So let's also now talk about some of the big ripple effects from all of this, I guess, drama and this big collapse. Obviously, this week we did see Block FI filed for bankruptcy. That was.

pretty much expected. What do you think is the significance of the bankruptcy of BlockFi? I mean, you know, BlockFi was on the ropes in a way that we kind of expected this was going to happen, right? The FTX lifeline was at best questionable, right? The deal was not good for them in any capacity. I think with BlockFi and Voyager, we once again see small retail users who don't understand Defy, get screwed over. And we see large conservative investors who wanted to get exposure to this space get absolutely destroyed. You know, Canadian pension funds in Ontario and Quebec invested in FTX, Voyager, BlockFi and Celsius, because regulators here told them that holding tokens and doing on-chain defy was too risky to put a teacher's pension fund in. And that was, you know,

for bankruptcies back to back. Those investors are gone for the next decade. There's no way we are getting them back. No teachers union in the world is going to keep in place the investors who want to take that gamble again, not happening. And we've also scored a lot of retail investors who only had a few hundred dollars to put into this space to begin with. And the pain from that will leave a bad taste in their mouth. We've done irreparable brand damage to this space in two key sectors. And it's going to take us ages to ever try and rebuild even a fraction of that. Yeah, I definitely agree here, you know, because a lot of these people were, I think, ones who probably didn't fully understand the products. One bit of news that's sort of been hovering and hasn't reached

a conclusion is that Genesis, the crypto lender, which is a subsidiary of DCG, is having financial difficulty due to the fact that it had made a $2.3 billion loan to 3AC. This was obviously months ago, you know, due to, I guess, the continued fallout and, and, and, and, you know, other events, Genesis may have to file for bankruptcy. It might even pull DCG down with it. And it was curious how likely it was that you thought Genesis would actually have to file. I think the moment that we saw some statements from them, I became worried about both Genesis and actually digital currency group at large. I don't think that contagion is done yet. I would not be surprised if we see them move to sell some major assets from their books to kind of mitigate this damage and

hopefully short it up enough. But we saw this kind of progressive rollout of them saying how much damage there was from, hey, we had no exposure to, oh, there's a gap here. And then we finally got numbers around it. I think they took a very hard hit in a hard environment. And I would not be surprised if they have to sell down a lot of their venture book or key assets, whether that's their stake in Luna or foundry or something like CoinDesk. I could see them liquidating to try and get the capital to survive this. Oh, wow. Okay.

So it seems like you are then pretty optimistic. So do you feel that there's a worry for DCG as well? I don't know. I think they have to be able to shore up the cash. And when I run the numbers of kind of what valuation of assets, I would give them looking outwards. I'm hard pressed for them to find enough cash if they do have to fill that billion dollar hole.

Just because so many things are illiquid right now, so much of their venture portfolio would be hard to sell. A lot of the liquid assets that they hold are very thin market books. So they're not going to get really good execution right now. They can probably come out swing. I think the worst case scenario is they liquidate almost everything else and sell a bunch of equity in the parent company in order to maintain gray scale because that's really the golden goose. Oh, wow. Okay. So in a moment, we're going to talk about what some of those moves might be. But first, a quick word from the sponsors who make this show possible. The scorebed app here with trusted stats and real-time sports news.

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Back to my conversation with Adam. So as you mentioned, you feel like there are certain things that DCG slash Genesis could do to keep both of them afloat. I don't know if you saw. Apparently a number of people are bidding for CoinDesk. There was a report by Semaphore that there was an offer of $300 million for that media company, but that was rejected as being too low. So when you talk about some of the different options on the table, do you see that as a way, a path forward for DCG? Yeah. And I think part of the challenge, obviously, looking from the outside, we don't have the clear picture on the status of assets on their book, as well as, you know, how much debt is really there because they were originally trying to raise a billion.

and then they kind of walk that back down to 500 million. If we're actually at that 500 million level, if they sell something like a coin desk, if they sell some of their venture book on a secondary market, they can probably plug a $500 million hole not comfortably. They don't want to do it. It's for selling for sure, but they can plug that hole to maintain grayscale.

And I mean, I think they bought a coin desk for something like $600,000 back when they originally bought it. So great ROI on that individual asset, just not necessarily the time that you want to be selling it. I saw that Bloomberg reported that creditors of Genesis are working with restructuring lawyers to try to come up with options to keep the firm out of bankruptcy. What do you think of that? Do you think that is something smart for them to do? And if so, you know, what do you think might happen there? Yeah, I mean, I think whenever possible debtors and creditors want to move towards a restructuring agreement that they can all agree.

on rather than going through the lengthy and arduous process of a Chapter 11 bankruptcy, which is just going to pull far more of the resources out in lawyer fees and court fees and filings and make it take years, right? Like, people are still waiting on their Mount Cox repayments. So who knows how many, you know, decades from now someone's going to get something out of FTX. I think wherever possible a restructuring is good. It just really depends on the specific nature of that whole, how much debtors are owed,

and what they're willing to wait on, right? If this was happening in the bull market and Greyscale was still bringing in amazing fees and these people were flush with their own cash, maybe they say, yeah, you know what, I'm fine to wait for five years for some debt equity to roll over and pay me back in Grayscale. But in this environment where cash is tighter, where this market is feeling a squeeze, where the larger economic picture could be moving into a downturn, people are probably going to be a little more focused on getting cash in hand as soon as possible or extracting a pound of flesh that's way more valuable elsewhere.

So that could lead to a much messier and pricier situation for Genesis. Even though you are optimistic for DCG, because it is such a stalwart of the industry and has really been a pioneer, you know, being so early in the space, I was curious, if that goes under, what do you think the significance would be for the industry? I think we'd be sad because, you know, Barry is a icon. in this space and has continued to be here from early on and take some really outsized bets in unexpected areas and champion projects that often didn't get another look from a lot of large funding opportunities in this space. And so I would hate to see them go under in that respect.

But I don't know that their ripple effect will be nearly as much as what we could still see playing out with FTX. I think there's actually a lot more contagion out there that's kind of being hidden behind the veil right now. And the only thing I really worry about with DCG is gray scale. And if that gets forced into liquidation or sold to a new holder that restructures kind of the trust agreements, we could see a lot of force selling. We could see a lot of change and stance on regulation and their relationship with regulators. And I do worry that some anti-crypto regulators will use this just as more cannon fodder against

the space. Oh, yeah. Wow. Yeah. I mean, I imagine at this point, one of their priorities would be to keep gray scale intact. Yeah, I hadn't thought of that, but you're right, that that would be a huge negative impact for the industry. And earlier when you talked about how you feel there's more contingent, what are you looking for?

What are you, you know, keeping an eye on? So I think part of the challenge is when we look at something like three arrows capital, which was somewhere between three to five billion in the hole. And a lot of it was liquid holdings that really liquidated quickly on chain. We all saw the market that morning and we knew something that happened and it took us days to know what it was. Even in that case, it took about a month before we hit the new low prices because contagion unravels slowly. And I think what a lot of people in this space who haven't worked in traditional finance or corporate America on the kind of the business development or mergers and acquisition side fail to understand is that these large corporate entities unravel very, very slowly. we're talking about a hole here somewhere between $10 and $30 plus billion because we know Alameda blew a $10 billion hole in FDX.

We have no idea how many times Alameda pledged that same $10 billion as collateral for other money. That's still a black box for us. That's many multiple times bigger than 3A. And a lot of this has been held by private corporations who have come out and said, hey, we had no critical exposure to that because they don't have any obligation to tell us how bad things are, and they'll quietly downsize so awesome things, do some layoffs, do some restructuring, and try and barter their debt across different books and investment structures for a while to come. But it will pull liquidity out of this system. It will create them selling downward pressure at an opportune times, and it will

unravel incredibly slowly. I wouldn't be surprised if we continue to see contagion impacts of forced selling for the next six months, but just an incredibly dry market liquidity, both on VCs and market makers. I think one thing that most retail consumers fail to realize right now is that nearly every exchange used to offer credit to market makers where they could trade on that credit. And as long as they settled the balance with the exchange over the next few days or with their OTC desk, that was fine. That's gone away. Most exchanges, most OTC desks are requiring pre-funding for nearly all of them. clients right now. And that takes so much credit and so much liquidity out of the space. And the

impact of that just causes increased volatility in every direction and leaves us so prone to other systematic events. And so first of all, what would you say then is kind of the prognosis for crypto lending in the short term the next like, let's say, year or two? Poor. You know, I think at the end of the day, we have, we, crypto lending has a existed in this weird space where it is not as rigorous and analytical as the centralized lending system. And the kind of centralized lenders in this space are obviously not as transparent and robust as the decentralized platforms. I think compound and Ave and things like that, great. They will continue to thrive because they were the ones that got paid back. They were the

ones that users are still whole and they were still afloat because you can't cheat a blockchain. opaque centralized lenders who got into this game trying to lend like big banks without the expertise and depth of book of big banks, those are the ones who got burned and they're going away. And that had an outsized impact on pension funds and investment funds who wanted to operate with these more traditional players. And so I think we've really scorned ourselves in the relationships we were building outside of the industry. So I think lending to that sector could be gone for years. And then earlier you kind of talked about how you felt that there would be like low liquidity in the system in general. So what do you expect the crypto markets to look like for the next year or so? I think in part it depends on kind of where this messy global macro continues to go. Maybe we pull out this Powell's soft landing by the skin of our teeth and the economy recovers. And we are back to this jubilant up only economy. And that would be nothing but good for us. and the technological advances we've made during that time.

I'm not as optimistic about that. And I think the reality is we will see increased volatility and increased arbitrage in this space. What really stood out to me is the wrapped Bitcoin issues the other day, where wrapped Bitcoin's prices were off of the index by a couple of percentage points. And it took almost a half hour before market makers closed that arbitrage gap, even though the assets are as far as everyone, can tell equal to equal. And that is just a symptom of this underlying disease of contagion that is there that we don't fully see the picture of because when market makers have such low liquidity

and such low credit and they're waiting on transfers, they can't fill those opportunities quick. You know, a 4% gap between Bitcoin prices would not have existed two months ago. Now we can see that. And I think that's a lot scarier than people give it credit for because if you have another Black Swan event or even a small event, we lose another big exchange or some regulation comes down the pipeline, we don't have anybody to absorb the selling. The buyers of last resort are all on the ropes or out of the game entirely. And so I think we're in a delicate position where those who are still deploying capital need to do so very selectively. And projects in this space need to really focus on the technological

milestones that get them to real profitable user adoption over this coming cycle because we don't know when this ends and we don't know that it can't get worse. We can hope. We can hope this is that plateau. But we are on a, we're on a bit of a nice edge here and we have to be very careful where we're walking. So you alluded to regulators, but I just wanted to ask more generally at this point, What would you say are some of the lessons that you feel the industry could learn based on what's happened these last, well, I guess it's the last few weeks, really, but you could even stretch it back a few months. I think the core lesson is the importance of criticism. We make this mistake time and time again in this industry. We place someone on a pedestal. We make them invaluable. We make it a crime to ask them questions to the point that we will harass and send death threats to people who are making that critique. And what happens is that those people who always want to put up that wall and be infallible end up being the ones who are the villains of the space.

They become these main characters and we find out it's all smoke and mirrors. Part of the value of the blockchain is the transparency. And we should welcome critique and criticism because that allows us to make our projects stronger. We want to have stakeholders in this space who are willing to make mistakes, learn from them, explain them in the open. get involved and iterate to make this space stronger. And if we keep on putting people on pedestals, we are only ever going to be disappointed. All right. Well, Adam, this has been a great discussion. Thank you so much for sharing your insights on Unchained. Thank you very much, Laura. Pleasure to be here. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this

short break. Local news is in decline across Canada. And this is bad news for for all of us. With less local news, noise, rumors, and misinformation fill the void, and it gets harder to separate truth from fiction. That's why CBC News is putting more journalists in more places across Canada, reporting on the ground from where you live, telling the stories that matter to all of us, because local news is big news. Choose news, not noise. CBC News. Thanks for tuning in to this week's news recap. Sam Bankman-Fried tries to win over the public. As we just discussed on the show, former FTCX CEO Sam Bankman-Fried

didn't interview with Andrew Ross Sorkin at the New York Times Deal Book Summit. But he was also in a number of other places this week. In response to a question of whether the funds from FTCS were sent to Alameda, his trading firm, which was led by Caroline Ellison, he said that he screwed up and that he, didn't knowingly commingle funds. Additionally, he said that he didn't intend to commit fraud. As was noted on the Chopping Block live stream show on Wednesday, which will be released on the podcast tomorrow, whether Bankman Freed knew what was going on or not is very important because

that could determine whether he will face criminal or civil charges. Many on crypto-twinter Twitter did not believe a word of Bankman Freed's comments. Vinnie Lingam, General Partner at multi-coin capital said the SBF legal strategy is to attempt to characterize fraud as incompetence in order to stay out of jail. David Marcus, co-founder and CEO at LightSpark, said he was speechless at the level of reality distortion field at play here. However, SPF got at least one supporter, CEO of Pershing Square and billionaire Bill Ackman, tweeted, he believes SBF is telling the truth, which promptly got ratioed and to which SBF responded that he deeply appreciates it. Also this week, in an audio interview with Celsius creditor Tiffany Fong,

SBF dismissed the rumors of a back door, which he allegedly used to move funds from FTX to Alameda without triggering any alerts. He also addressed the value of FTT, the token of FTCS, saying that it was more legit than most tokens. In a later interview with ABC News's George Stephanopoulos on Good Morning America, Bankman Fried claimed again that he knew nothing about the improper use of FTCS's funds and said that he didn't even try to do risk management. However, talking with New York Magazine's Jen Vietchner, SBF said he wishes he hadn't bailed out the industry and he avoided the question of how the customer's funds were lost. BlockFi sues FTX.

Apart from filing for bankruptcy, BlockFi is also suing Sam Bankven-Fried over Robin Hood shares that FDX pledged his collateral. Bankingfinfried held about 7.6% of Robin Hood Class A common stock. According to BlockFi's first-day court bankruptcy hearing, FTCS and Alameda research owe over $1 billion to BlockFi. With Alameda owing $671 million on a now-defaulted loan, an FDX owing $355 million in frozen funds. Apple decides that users of Coinbase wallet shall not transfer NFTs. Tech Giant Apple valued at $2.36 trillion blocked the latest version of Coinbase wallet until a feature that allows users to send entities over iOS is disabled. The decision has to do with Apple's policy of charging a fee of 30% for every transaction going under a mobile application in its operating system iOS.

According to Coinbase, Apple wants to collect 30% of the gas fees required to send. to NFTs. Coinbase was openly critical of Apple's decision. The company wrote, this is akin to Apple trying to take a cut of fees for every email that gets sent over open internet protocols. Apple has introduced new policies to protect their profits at the expense of consumer investment in NFTs and developer innovation across the crypto ecosystem. Authorities have their eyes on FTX. The implosion of FTX keeps resonating with authorities in Washington at the New York Times Deal Book Summit, U.S. Treasury Secretary Janet Ellen, called it the Lehman moment for crypto. In addition, during a Senate Banking Committee hearing,

Senator Elizabeth Warren, called FTX not much more than a handful of magic beans. Meanwhile, during the first Senate hearing on FDX, CFTC chair, Rosten Benham, kept pushing for his agency to have more power to regulate the crypto industry. He said, to prevent this from happening again, we must be provided appropriate authority by Congress. As was previously announced, legislators and regulators are probing the collapse of FTCX. The House Financial Services Committee announced that it will hold its first FTCS hearing on December 13th, hoping you to get clearer answers about the mismanagement of the company. Additionally, in a speech on Sunday, the Bahamas Attorney General Ryan Pinder said that regulators

in the country are also investigating Sam Begman-Fried and FTCS. Genesis is being investigated by regulators. According to Barron's, Genesis is being investigated by the Alabama Securities Commission in other states. Regulators are reportedly studying how crypto firms are connected to each other, the connection between Genesis and retail investors, and the possibility that Genesis violated securities laws. One of the most pressing issues of DCG and Genesis is Grayskill's Bitcoin Trust, or GPTC.

Many were worried that amidst the liquidity crisis, was going to dump its GBT on the market. Ryan Selkis, founder of Masari, brought some calm for GBT shareholders, saying that it's not possible for DCG and Genesis to sell GPTC because of certain market rules that don't allow them to do so. South Korean authorities seek an arrest warrant for Terraform Labs co-founder Daniel Shin. Janhap, a South Korean news agency, reported that the Seoul Southern District Prosecutor's Office is seeking an arrest warrant for TerraForum Lab's co-founder Daniel Shin.

Terraform Labs is the entity behind the Terra blockchain, which collapsed in May, along with its native tokens, Luna, and UST. Shin, who's no relation of mine, is being accused of allegedly taking illegal profits of around $105 million through sales of Luna before Terra collapsed. In addition, the prosecutor's office issued warrants for three other Terraform Labs investors and four engineers. The news comes after a prior request to arrest Doe Kwan, co-founder of the company. Wrapped tokens caused confusion amongst some crypto people. Crypto Twitter is where everything happens and it can be a great source of information, but this week it certainly went the other direction. Many influencers such as Eric Wall, Anthony Sassano, and Bantag

started messing around and saying that Weth, the wrapped token of ether, was going to DPEG and that it was insolvent. This isn't possible since this is a smart contract. And barring a hack, it's easy to see at all times that the Weth contract is fully backed. While they meant it as a joke, there were many who misunderstood the message leading to widespread confusion. Since Weth is such an important backbone of decentralized financial applications, fear spread throughout people who didn't catch the joke. On a related note, Kiko, a company that provides data and reports to institutions, published a blog post saying that

Raft assets were under scrutiny, highlighting WVTC's discounted Bitcoin of negative 1.5% days ago. DFI protocols respond to market conditions. While many centralized companies are suffering from their own mismanagement, decentralized entities have been taking a different approach to go through the current crisis. According to the block, volume on decentralized exchanges soared in November, increasing by 93% from the previous month. For instance, the community of DFI Protocol Avey, which has the total value locked worth $3.9 billion, decided to freeze 17 tokens on his platform that had low liquidity.

The intention, according to the past proposal put forth by risk management firm, Gontlet, is to reduce the risks of the protocol. Moreover, after a governance proposal put forth also by Gontlet, compound finance established a max borrow cap on 10 coins on this platform, meaning it restricted the maximum amount that can be borrowed on those tokens. Gauntlets Paul Yale wrote, seeing how borrow caps can avoid high-risk attack vectors while sacrificing the capital efficiency and allowing for a threshold of organic borrow

demand. On a related note, the community of MakerDow passed a proposal to increase the savings rate for its stable coin die from 0.01% to 1%, a 100x increase. And speaking of decentralized entities, major DeFi protocol uniswap launched an NFT aggregator on its platform. Users can now trade NFTs across major marketplaces like OpenC, X2Y2, pseudoswap, Loverlapse, and looks rare on the Uniswap platform. With the launch, Uniswap also announced it was air-dropping $5 million to early users of Jeannie, the NFT aggregator platform that Uniswap acquired five months ago. Solana Dex serum becomes defunct.

The blockchain that appears to have suffered the most from FtX's meltdown was Solana. Serum, a decentralized exchange built on Solana, backed by Sam Bankman-Fried, so that its main net program has become defunct. The project depended on FTC's design transactions and modify the code. However, community leaders are working on forking the project, so that it can serve. The initiative is led by a developer named Max Mingo. Three training pairs of SRM, the native tokening the exchange, or delisted from crypto exchange finance. SRM is down at 90% from its all-time highs and is trading at 23 cents.

Massive layoffs keep hitting the industry. Market conditions have been tough, both inside and outside the crypto industry. This week, Crypto Exchange Cracken disclosure, a former sponsor, laid off 30% of its employees. Jesse Powell, co-fronted and CEO and recent Unchained guest said the decision was taken in order to adapt to current market conditions. CoinTesk estimates that over 26,000 people lost their jobs in the industry during the course of 2021. However, 11,000 of that total corresponds to meta. Time for Fun Bits. Gabriel Haynes wants to find SBF. Gabriel Haynes, who was on last week's Unchained Black Friday, 2022 edition, has taken on the task of hunting down Sam Bankin-Fried in the Bahamas.

During this week, he has been posting hilarious videos of his journey in the Caribbean. He shared some footage of his training for Normandy and a video of him doing push-ups as they increase investigation effectiveness, according to Gabriel. He even has challenged SVF to a duel. Thanks so much for joining us today. To learn more about Adam, the bankruptcy of BlockFi, and the situation with DCG and Genesis, check of the show notes for this episode. Every other week, Unchained hosts the Shopping Block,

with Crypto Insiders Hasib Koreshi, Tom Schmidt, Robert Lichner, and Tarun Chitra. Catch the latest episode on YouTube and on all podcast platforms. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Mark Murdoch, Matt Pilchard, Warner Rinovich, Sam Shri-Rom, Pamajimdar, Shashonk, NCLK transcription. Thanks for listening.