Unchained - Bitcoin Ordinal NFTs Are Hot and Getting Hotter. What's the Hype About? - Ep. 462

Episode Date: March 3, 2023

Muneeb Ali, co-creator of Stacks, discusses the Bitcoin trend that has everyone – or at least, many Bitcoiners – buzzing: Bitcoin ordinals. Ali explains why it is that they’ve taken up block space, pushed Bitcoin fees higher, and caused controversy in the community. Plus, he explains why the phenomenon has generated excitement about Stacks. Show highlights: how Ordinals technology works to enable NFTs in the Bitcoin blockchain the difference between NFTs in smart contracts platforms like Ethereum vs. NFTs in Bitcoin the way in which the Taproot upgrade allowed Ordinals technology to exist what security measures to take in order to protect one’s Bitcoin NFTs why the Bitcoin maxi community reacted negatively to Ordinals  why Stacks jumped so much in price after the release of Ordinals what Muneeb thinks is the significance of Yuga Labs launching NFTs on Bitcoin Thank you to our sponsors! Crypto.com Railgun DAO  Guest Muneeb Ali, co-creator of Stacks Twitter Previous appearance on Unchained: Blockstack On Getting Independence From Google, Facebook And Amazon Links Unchained: BAYC Creator Yuga Labs to Launch Bitcoin Ordinal NFTs Decrypt: What Are Ordinals? A Beginner's Guide to Bitcoin NFTs Dune: Ordinals - Inscriptions on Bitcoin Episodes about Bitcoin mentioned in the show:  Does Maximalism Help or Hurt Bitcoin? Lyn Alden and Udi Wertheimer Debate Eric Wall and Udi Wertheimer on Why Bitcoin Maximalism Is ‘Like a Shitcoin Community’ Is Bitcoin Doomed to Fail? Eric Wall and Justin Bons Face Off Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchained, your 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 the senior editor, Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the March 3rd, 2023 episode of Unchained. Franching out from Just Being a podcast, Unchained has launched a new website, complete with more breaking crypto news, educational articles for those just getting started, guides and videos. Check it out at UnchainedCrypto.com to find answers to all your crypto questions. 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. Ever wanted to use defy without being tracked?

Railgun is a leading defy privacy solution on Ethereum, BSC, Arbitrum, and Polygon. Shield your funds and use them privately in your favorite Defy apps, while Railgun's cutting edge zero knowledge system encrypts your data from public view. Yes, that includes dextrating. Visitrail.org or use the Railway app at Railway.xy. Today's guest is Mani Bali, co-creator of Stacks. Welcome, Mani.

Great to be here. Nice to have you back. So the last couple months, NFTs in Bitcoin, aka Bitcoin Ordinals, have really taken off. And they're consuming large amounts of block space. For instance, up to 70% at times. There's been more than a quarter million created.

And they've been the source of $1.4 million in fees on the Bitcoin blockchain. They've even stirred some controversy. But first, before we dive into all that, let's make sure everybody listening just is on the same page. What are ordinals and how do they work? Yeah. So I think NFTs on Bitcoin. are not something new.

Actually, NFTs started on the Bitcoin blockchain with the counterparty back in 2015 era or so. The more popular series that came out at that time was the rare pepets. I think people might be more familiar with the rare pepets than counterparty, the protocol through which they were minted. And so I think in many ways, what we have seen is that since the launch of Ethereum,

like really when Ethereum started taking off in 2017, and then other chains that came around, a lot of the activity around defy or NFTs sort of like shifted to Ethereum and other chains. And I think Bitcoin, because it's sort of like very simple at the base layer and it's optimized for just being money, we haven't seen a lot of these use cases on the Bitcoin blockchain.

That doesn't mean they're not possible, right? Like they're entirely possible. And Ornals has sort of like revived the interest in Bitcoin NFTs. So I sort of look at them as in a way, kind of like counterparty 2.0, right? Like there has been a big gap in the middle. And ordinal theory itself is very, very fascinating. What it sort of says is that usually we think of Bitcoin and also the smallest unit of Bitcoin called the Satoshi as fungible. Right. So it doesn't matter like which Bitcoin you have or which Satoshi you have.

So the Ordinal theory gives a new lens to how you look at the blockchain data. And you can actually sort these Satoshis in a sequence. And the idea is that some of them might be more rare than others. Like, for example, what if a Satoshi that came out right after a halving block, right? Halving happens only every four years. So it might have a special meaning to somebody and it is different from other supposci. So once you can start sequencing or sort of like separating Satoshis from each other, that's one part of the ordinary.

And the second part is that you can use this. them. So now, you know, you are saying like, hey, this Satoshi is unique. I can use that to inscribe something on the blockchain. And inscribing is basically putting some data on the chain and you own that data through the ownership of the Satoshi. And that's how people, basically, the first obvious thing people try inscribing are the usual NFTs, the monkey pictures, the other fun stuff that you all love out there. And seeing that on the Bitcoin blockchain is sort of like as revived the interest in building on Bitcoin in a major way. Yeah.

One thing that fascinated me was that in order to create these, essentially the protocol puts a serial number on every Satoshi, which is just kind of a remarkable and a really fascinating idea. So can you just talk a little bit about that and how that works? because obviously I think people have a certain conception of how NFT should work from Ethereum, but on Bitcoin, it's very different. Yes. So I think digging a little bit deeper into how the Bitcoin blockchain works versus Ethereum,

they're very different models. Bitcoin uses this UTXO model where effectively how you prove to somebody that you have Bitcoin is that there's a sequence of transactions where you receive these unspent outputs. And so there's a log of like exactly what UTXO was going from one address to the other. In Ethereum, it's an account-based model. So your account basically gets credited. So there's no tracking of actual unique ETH happening as a log in the chain. So these are different models and people would argue that in many ways the account model is more efficient.

Like it's easier to program with smart contracts. and so on. But the UTXO model has like this unique feature that you can actually track like even individual Sothoci's all the way back to their genesis. And I think I really like the analogy we use that it's like putting a sequence number. If you look at even backnotes, they do have a sequence number on it, even though people think of, you know, dollars as fungible. I don't care about a particular $5 bill, but there might be certain bills that have some meaning to you. Maybe the first ever $20 bill you got at your internship and you still have it, say, or framed in your house. I think a similar thing is happening with ordinal theory, that it's giving these sequence

numbers, the serial numbers to Sothoches. And you can come up with your own serial numbers if you want, right? Like this ordinal theory is like one view or one lens on it. But because I think it's like social consensus, if enough people start following this particular version of looking at the serial numbers, then that, becomes the dominant format. And right now, just given the interest level, an amount of, like, builders kind of like coming in and building all sorts of services and wallet support, for Ardenals, it seems like, you know, this is the one that might actually take off.

Yeah. And just for listeners who don't know, UTXO, it's unspent transaction output, and one other thing that I found fascinating is that these NFTs in a way sort of like work the way that a lot of people who don't know the technicals of NFTs think they should work, meaning that the actual quote-unquote underlying image or, you know, whatever the NFT is based on, is actually placed on the Bitcoin blockchain. Whereas in Ethereum, there's like an external pointer to the location elsewhere and that can cause a whole host of issues. So how is it that the Bitcoin blockchain is able to host all this data? Yes. And I think that's actually a big difference and a huge selling point. for a lot of artists, right?

Like imagine that you're Beeple and you're creating something really unique. And on Bitcoin, you can literally store the image on the Bitcoin blockchain. And now it's almost like indestructible, right? Like you know that as long as Bitcoin is around, this thing is going to be around. And I think that's very powerful.

Like that thing instantly clicks with a lot of people. That Bitcoin's block space is precious. It's very durable. As soon as you put something out there, it's probably the most indestructible media on the planet in a way. And I think that is attracting a lot of people to this. And I, this is, this is a big difference in terms of like technically how this works. So Bitcoin has basically had two, you know, upgrades in the last five plus years. Bitcoin usually have like a very careful, slow approach to doing any upgrades. The first one

was Segwit and the most recent one is Taproot. And they're both sort of, sort of like aimed at making more efficient use of the Bitcoin in block space, right? So think of them as like they compress the transaction data a lot and they make more efficient use of the blockchain. Taproot had some other aspects as well. Like it makes certain, you can write a little bit more advanced scripts. It's nowhere close to having a full execution environment, like most devs are used to in Ethereum or Solana and so on.

But you can write a little bit more advanced scripts using Taproot. That data is like off-chain usually until you reveal it. And then that's good for privacy. And ordinals are sort of like a byproduct of taproot in a way that they are using the taproot transaction format and addresses to basically put more data on chain. So it's a very clever use of taproot. And the interesting thing is that Taproot went live like last year. And frankly, nobody was using it.

If you look at Taproot adoption, it was like less than 1% on the network. And suddenly with Ordinals, as soon as people wanted to use these NFU, T's and want to inscribe them, the Taproot adoption actually exploited on the network. And there was so much demand. Users are asking for support from wallets. They're asking for support for all of these things. And we actually started seeing wallets integrating TapRub because now there's real kind of like user demand out there.

I love it. One thing also, though, that anybody who's interested in buying B should know is that because of what you mentioned about how Bitcoin has this different model. and it's not this account model, you have to be very careful about how you store your Bitcoin ordinals because explain what could happen if you're not. Yes. So the way to think about this is,

Satoshi is the smallest unit of a Bitcoin, but it's actually very, very small, right? Like there are 100 million Satoshes in a Bitcoin. And usually what wallets do is that when you're forming a transaction, they would just combine Satoshi's from various UTXOs, And some of them might be used to pay minor fees. Some of them might go to a change address or so on. Like, wallets don't really care which the Satoshi you're using.

But now, let's say you have a valuable NFT that is owned by a single Satoshi. You want to be careful that that one is not the one that the wallet just sends as mining fee for a transaction. So these wallets are not really designed with this use case in mind, but they're already new wallets. So two examples, one is X-Words. and the other is the hero wallet. Their web wallets, experts, has a mobile app as well. And they are actually explicitly designed for Arnold's, and they make sure that you are not going to spend that precious Sitochi

that had the NFD on it. And they treat it like you would expect it to be treated. Great. So in a moment we're going to talk about some of the reaction to all this activity on Bitcoin. But first, a quick word from the sponsors who make this show. possible. Ever wanted to use defy without being tracked? Railgun is the leading defy privacy solution on Ethereum. It's available on BSC, Arbitrum, and Polygon 2. Shield your funds and use

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shittsues live by their own untamed primal code of not giving a single Shih Tzu. But Jamal shopped on Amazon and bought dog treats, chew toys, and 32 ounces of carpet cleaner. Hey, Jamal, you've been promoted to PAC Leader. Save the everyday with deals from Amazon. Back to my conversation with Meneb. So interestingly, at first, when all this activity around ordnals started happening, some Bitcoin maximalists were criticizing it saying that, you know,

miners should censor the crap referring to ordinals. some people even called ordnals an attack on Bitcoin. Why do you think that some parts of the Bitcoin community saw ordinals that way? Yeah, so that is not surprising to me at all, right? Like, basically the way I look at the Bitcoin culture is that when I started in 2013 until around 2016 or so, I think the culture was actually much more open. There were more intellectually curious people around. There were more builders around.

There were experiments happening. I was building protocols directly on Bitcoin. out one back in the day. And that's where counterparty started. NFT started on Bitcoin. Even early ICOs happened using colored coins. This is all like pre-Etherium stuff. And I think 2017 is a very remarkable year in the history of our industry.

A couple of things happened. One was the civil war internally with Bitcoin, the block size wars. And over there, the argument was that, hey, block size is very, very precious, only use it for money, keep the block size. size small because it's good for decentralization, which I actually agree with. You should keep the block size small. And a lot of the builders sort of like went to Ethereum, not only because it was easier to program there, it had a full execution and environment, a full programming language, but also the culture. Like it embraces experimentation, it sort of like encourages it and so on.

So for the last four or five years, the shift in Bitcoin community has been that a lot of actually non-technical people, very few of them are technical. They're mostly like, you know, Twitter influencers or podcasters. who don't really understand technology that well, don't really even use Bitcoin. Their voices became more magnified in the Bitcoin community. And they're usually sort of like naysayers, right? Like they're saying all of these use cases don't make any sense.

Money is the only use case. So by default, I think their reaction to anything new is sort of like rejected. And I think Bitcoin is still, there is a smaller camp, but it's growing a lot. And that's the camp of Bitcoin builders. And they're very different. They actually use Bitcoin. They treat it as an open source project and a technology, not a religion. And those folks are always kind of like much more forward thinking, excited about any experimentation and use and so on.

So I think one really interesting thing that's happening is that the sort of like the Maximus Religious Camp obviously came out and was opposed to this use. But if you look at the arguments, it sort of like don't make sense because over here, ordinals are resulting in higher fee markets, which is good for Bitcoin mining. It's actually really good for long-term security of Bitcoin. One of the biggest criticisms is, you know, in the next 10 to 15 years, when the coin-based rewards the newly minted Bitcoin, it goes down a lot. What's going to happen to the Bitcoin security? And this is the first real data point where we have seen is sustainable sort of a use case that is actually giving more revenue to miners. And if this takes off or there are better trading markets that start taking off, other use cases

that start taking off, then you have a more clear shot at sustaining the type of fee market that, let's say, Ethereum has, which can be enough to sustain the security budget of Bitcoin. In some ways, like, Arnold's are not just interesting from a technology perspective, but even from Bitcoin culture perspective, the spotlight has actually shifted to the builders' community. Like, their Twitter spaces are getting a larger audience, right? Like, they're having more of a say in the Bitcoin community, and I think that's a very, very healthy chain generally in Bitcoin. Yeah, and I would say that this is also almost like the next development after over the last

maybe like eight or nine months, there started to be a lot of pushback against the Maxis. And I've covered this on the show, I think twice, once with Eric Wall and Udi Wertheimer, once with Udi and Lynn Alden. And then also there was a discussion about Bitcoin security between Eric Wall and Justin Bonds. So people should check those out because it's definitely been a developing story for quite a while. And I feel like for a while, the maxis were very dominant and people were unwilling to speak out against them. And then after a while, suddenly growing numbers of people were willing to speak out against them.

And now suddenly, again, we're seeing, like you said, more creativity and sort of more, yeah, kind of tech-oriented people coming back to Bitcoin. Yeah, I think there are two, two quick things about that, right? So one, I completely agree that I think there's more people are speaking out and there's strength in numbers, right? So as soon as there is an alternate community that has a voice and that has more influence, more people feel comfortable. So the silent sort of like majority that was sort of like letting these people do their thing, now they have, now they have a place that they can sort of like belong to and be like, Yeah, no, I'm actually agree with your views versus. So I think that alternate camp that I'm calling Bitcoin builders or Bitcoin rationalist,

whatever name you want to give them, it's actually growing. And I think the second really important point is that Bitcoin is very hard to change. And whenever somebody comes, like, for example, one of the Bitcoin code of Jeremy Rubin, who was working on some new features for Bitcoin L1. And over there, if there is strong opposition, it's actually a problem. because then it looks like there isn't enough support for this proposal to go through. Ordinals are different. They're using something that's already live.

So even if people are making noise, it makes actually no difference because this thing is already live on the chain. It's already part of consensus. And there's no way they can revert that change. So I think the dynamics were actually very different this time around. If this was just a proposal and a lot of maxis were making noise and trying to push back, I do think that they would have had some influence on it. But this was just a completely different thing where Tapu was already live and they just couldn't do it. Yeah, and I should add actually that the creator is somebody named Casey Rodamore.

And he even tweeted, make Bitcoin fun again in all caps. So, you know, it just goes to show like we were saying. It's kind of drawing more of the tech type people. The price of stacks has jumped in the last couple of weeks. And obviously that's your project. and it appears to be due to this interest in ordnals. So can you explain how it is that stacks could be affected by ordinals? Yeah, so I think a quick, kind of like clarification.

There are stacks is a very decentralized ecosystem. So it's a Bitcoin layer started in 2017. I'm a co-creator of it. The main Edmunds live in early 2021. But we've been extremely careful about both from, you know, how the token offering was conducted. It was the first ever SEC qualified offering. And then the flip side of that is that we have been extremely careful about decent

language. So it's a little bit like the original company that was doing the R&D was dismantled, and people went off and did kind of like their own thing. So this thing has a life of its own. Like I usually don't pay that much attention to the markets, but I have a theory about, you know, why the project might be getting more attention. And I think it's basically, if you look at a Bitcoin layer that is bringing more, you know, smart contracts, full execution environments, it was attracting a bunch of like intellectually curious people who wanted to build around Bitcoin and experiment with things. But the Bitcoin L1 chain actually doesn't have, it doesn't have that much usage at all. Right. Blocks were empty. So the, it was a little bit like this was a nice

to have. Like, hey, here's a Bitcoin layer. Some people think of it as an L2, although they're technical, you know, definitions that I don't want to get into right now. So it was, it was a little bit like, okay, it's nice to have. Like, you know, if I want to experiment with Bitcoin, I can play with a Bitcoin player. But suddenly, if the Bitcoin block space is getting full and a transaction fees are going up and there's no path to scalability, suddenly the L2s or side chains become much more relevant. They suddenly become more like a medicine to a pinpoint that people have versus just a nice-to-have

thing that developers are sort of like playing around. That's sort of like my view, my theory, on why people would be more interested in it right now. And then even if you look at Ethereum, the L2 market is pretty mature there, right? Like $40, $50 billion, depending on how you measure it, $25 billion might be public already. The rest might be private. And on the Bitcoin side, it's basically nothing much, right? Like Stax is one of the very few projects that is building a Bitcoin layer. And I think people can sort of see that if Ethereum is going to scale in layers, like we all know it's going to be roll-ups or fraud proofs,

like most of the user activity is actually going to happen in L2s. So the same can be applied to Bitcoin as well, that Bitcoin has $500 billion in capital, mostly just sitting there. So it's a little bit of a more of a blue ocean in my view where there aren't a lot of layers. There is a lot of capital that's just sitting passively. I think the one thing that ordinals have done is that they've given people a real data point. Look, there can be user interest and developer interests and investor interest directly in building of Bitcoin.

And I think that data point was very, very important for people to feel confident that, I want to spend my time and effort building in the Bitcoin ecosystem. And one other sign that people are definitely going to be very interested in all of this is that Yucalabs is now going to be launching a new NFT collection on ordnals called 12fold. Any reaction to kind of the biggest NFT company choosing to experiment with ordnals? No, it's great. And I don't think they'll be the only ones, right? I think D-Gods from one of the top projects from Solana,

they already came to Audenols. Ugo Labs made the announcement. I think they maybe went live already. And I think others are coming, right? To me, it's a no-brainer because just given the limited space on Bitcoin and the property that whatever you publish there is indestructible, there's literally the NFTs on-chain. Other chains don't have that.

Other chains also don't carry that premium that the Bitcoin blockchain does. Everybody knows that Bitcoin has. has the highest chance of survival. Like they will be here 20 years from now or 30 years from now. So if you're putting your NFD right there, the thing is precious, that makes a lot of sense. And so my theory is that we might see a world where a lot of the high value or quote-unquote luxury NFTs

might actually end up on Bitcoin. And then the long tail might be on other chains, might be on Bitcoin layers, right? So these layers can work very seamlessly with Bitcoin. You can even do trading between these two. And we're seeing some of that already, right? So there's a marketplace called Gamma. It was operating on the stacks layer, and they're very quickly integrated Ardenotes.

But for a user, it's a very seamless switch that, okay, right now I'm looking at a Bitcoin L1 NFT, now I'm looking at a Bitcoin layer, their NFT, and I understand that maybe at the layer, the gas fees are lower. There can be larger mints, like 10,000, 20,000 mints. But on the L1, it's more limited. Maybe things are more pricey, just because the limited blocks base on Bitcoin. Yeah, I agree for kind of the cool factor. I think the NFTs on Bitcoin will be very valuable.

All right, well, this has been such a fascinating discussion. There's probably like so much more we could have gone into, but we'll have to save that for another time. Meneath, thank you so much. It was great to have you back. And yeah, thanks for coming on Unchained. Great. No, always always ready to talk to you. Don't forget.

Next up is the weekly news recap. Stick around for this week in crypto after this short break. Join over 50 million people using Crypto.com, one of the easiest places to buy, earn, and spend over 250 cryptocurrencies. Spend your crypto anywhere using the Crypto.com visa card. Get up to 5% cash back instantly. Plus, 100% rebates for your Netflix and Spotify subscriptions and zero annual fees. Download the Crypto.com app now and get $25 with the code Laura. Link in the description.

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for more details. Thanks for tuning into this week's news recap. Silvergate misses 10K-2020 report. On Wednesday, cryptocurrency-friendly bank Silvergate announced it would delay the filing of its annual report. It said that it is reviewing its financial controls and viability following the collapse of FTX. Silvergate confirmed that it sold additional debt securities in January and February, and that loss is related to its securities portfolio, among other factors. could impair its ability to operate as a going concern.

The fact that Silvergate has been so intertwined with crypto companies has raised concerns among the crypto community. Adam Cochran, partner at Sinemayne Ventures, tweeted, Silvergate's death spiral is going to be rough for crypto. The bank's shares fell by over 50% following the news, reaching all-time lows of $6.91. In addition, J.P. Morgan downgraded Silvergate's rating from neutral to underweight and removed its $14 per share target. Only hours after the company disclosed they were not filing its 10K form,

Coinbase announced that it had stopped using Silvergate to handle dollar payments for its prime customers, citing an, quote, abundance of caution. Instead, the exchange has shifted to signature bank. Coinbase said that it has had only minimal exposure to Silvergate. While the exchange did not disclose the reason behind the switch, it may have been driven by a desire to avoid any potential fallout if Silvergate. Gate goes under. Following Coinbase's move, many other companies, including Circle, Paxos, crypto.com, which Disclosure is a sponsor of Unchained, BitStamp, Sebo Digital Markets and Gemini,

also decided to stop doing business with Silvergate. FtX's former Director of Engineering faces fraud charges. Former FtX Director of Engineering, Nishad Singh, was charged with fraud by both the U.S. Securities and Exchange Commission and the Commoddity Futures Trading Commission, after entering a guilty plea in federal court. The charges allege that Singh conspired to defraud FTC's investors and users. The CFTC claimed that Singh created features in FTC's code that allowed Alameda research to gain an unfair advantage on the exchange, including an unlimited line of credit and exemption from the exchange's auto-liquidation function.

Singh also allegedly moved Alameda's $8 billion in liabilities to a fake customer account on FTCS's systems, effectively hiding Alameda's negative balance. The SEC's complaint adds that Singh falsely characterized $50 million transferred from another entity as revenue. Singh allegedly withdrew hundreds of millions of dollars for personal use from FTX, despite knowing about the commingled funds between Alameda and FTX. In light of his charges, Singh has decided to collaborate with prosecutors investigating former CEO Sam Bankman-Fried. In related news, SBF's lawyers asked for more time to negotiate his bail terms and find a technical expert to educate the court on his use of a VPN.

Coinbase to suspend trading of BUSD. Coinbase has decided to halt trading of Binance USD or BUSD due to the stablecoin not meeting the exchange's listing standards. The suspension is set to take effect from March 13th. While users will still be able to withdraw BUSD, trading will be suspended across all Coinbase platforms, including Coinbase Prime and Coinbase Pro. The move comes after the New York State Department of Financial Services ordered Paxos to stop minting BUSD, and the SEC launched an investigation into Paxos over the stablecoin offering. It also comes months after Binance decided to delist USDC, a stable coin operated by Coinbase in a consortium with Circle.

While other exchanges like Cracken are being scrutinized, Brian Armstrong, CEO of Coin. Base stated that the interests of his exchange align with those of the SEC and that the company has maintained a positive relationship with the agency, including meetings with its chair, Gary Gensler. That's quite a turnaround from September 2021 when Armstrong called the agency's actions, quote, really sketchy. This week, Coinbase also revealed poll results showing that 20% of Americans own crypto and that 80% of Americans, quote, think the global financial system unfairly favors powerful interests. Binance denies allegations from Forbes. Forbes reported that Binance moved $1.8 billion in collateral backing its customers' stable coins to other

undisclosed uses without informing them. A significant majority of these customer funds, $1.1 billion, was reportedly transferred to Cumberland, the crypto-trading arm of John Wilson's DRW. Other recipients allegedly included Alameda Research, Amber Group, and Tron Founder, Justin Sun. According to blockchain data, the disbursement consisted entirely of USDC. Binance denied the report, arguing that the transfers were related to internal wallet management and not a misuse of customer collateral. Binance Chief Strategy Officer Patrick Hillman told for us that there was no co-mingling of user assets. The Wall Street Journal reports that three U.S. senators, Elizabeth Warren, Chris Van Hollen, and Roger Marshall, sent a bipartisan

and letter to Binance CEO Cheng Peng Zhao asking for details on the crypto exchanges' money laundering controls. The senators accused Binance of being, quote, a hotbed of illegal financial activity and requested information on the company's balance sheets, internal procedures, and any communication about alleged efforts by Zhao to limit compliance. The letter also claimed that Binance and its affiliates have, quote, purposefully evaded regulators, moved assets to criminals and sanctions evaders, and hidden basic financial information from its customers and the public. SEC issued subpoenas for Robin Hood. In its latest SEC filing, popular trading platform Robin Hood revealed that it was subpoenaed

by the agency regarding its supported cryptocurrencies, custody of crypto assets, and platform operations. Robin Hood is worried that if the regulator fails to properly classify cryptocurrencies, it could be subject to fines and other enforcement actions. The subpoenas come as U.S. regulators continue to scrutinize the crypto industry, particularly with regard to its compliance with securities laws. The SEC, which in recent weeks has been quite active, is reportedly increasing its focus on cracking down on crypto firms by expanding its digital assets enforcement team. DCG loses more than $1 billion. Digital Currency Group incurred a loss of $1.1 billion in the past year as a result of declining crypto values,

and the reorganization of its lending platform, Genesis. In Q4 of 2022, DCG generated $143 million in revenue, but incurred $24 million in losses. Its equity valuation stood at $2.2 billion, or a price of $27.39 per share. Consistent with the 75% to 85%, sector-wide decline in equity values over the same period. Salana suffers major outage. Over the weekend, the Salon, the Salon Slana blockchain experienced a nearly 20-hour outage due to a bug in a new version of its code. Validators downgraded to a previous version of the network and coordinated a synchronized chain restart, but the first attempt was abandoned. After the second attempted restart, Solana was back online around 8.30 p.m. Eastern Time on Saturday.

Solana has experienced a series of outages in the past. While critics argue that the platform's frequent disruptions reflect a lack of stability and robustness, advocates defend the blockchain's fast-moving development strategy. Voyager and Binance U.S. get one step closer to a deal. According to bankruptcy administration company, Stredo, 97% of bankrupt crypto lender Voyager Digital's account holder claims customers, approved its proposed restructuring plan for Binance U.S. to acquire the firm's assets for $1.02 billion.

The deal between the companies has been previously questioned by the SEC and the CFDC, with the SEC wanting to stop it because the WV. Voyager token may be an unregistered security, to which U.S. bankruptcy court judge Michael Wiles said it was, quote, kind of a weird objection. He said the SEC was asking Voyager to prove a negative with little guidance from the regulator on how to do so. Quote, I get the feeling that this objection has been made as a kind of cover so you can say later that we'll see we raised these issues, he said. Voyager has also agreed to set aside $445 million after being sued by Alameda research for loan repayment, with both parties agreeing to participate in non-binding mediation to resolve

remaining disputes. Furthermore, a crypto-analytic firm, Arkham Intelligence, noted that Voyager transferred $154.4 million worth of USDC from Coinbase to its Voyager 1 Ethereum wallet, and that it appears to have been selling off assets at a rate of $100 million per week. Blockchain Wallet Tracker Look on Chain also revealed that Voyager has tried. transferred assets to Coinbase almost daily since February 14th, with nearly $100 million worth of USDC received by Voyager from Coinbase between February 24th and February 26th. Cracken cuts ties with signature. Crypto Exchange Cracken is ending its relationship with crypto-focused bank signature bank for dollar transactions for non-corporate clients,

according to an email sent to customers. The deposits will end on March 15th, while withdrawals will be stopped on March 30th. The news comes weeks after the exchange founded by Jesse Powell settled with the SEC for providing staking services. Shanghai upgrade is around the corner. In a week full of excitement around Ethereum due to one of its main yearly events, ETH Denver, developers continued toiling towards the network's next big step. The network reached another milestone with the Shanghai Capella upgrade, which will enable full withdrawals of staked ether, as developers upgraded the Sepolia TestNet to Chapella. Developers have also set March 14th as the date to test the upgrade on the girly testnet, which will be the last step before going to Mainnet. Moreover, the blockchain enabled easier recovery of crypto in the event of lost private keys through the activation of account abstraction, implemented through a secure smart contract called EntryPoint, formerly known as ERC 4337. time for fun biz the fdx drama is certainly the gift that keeps on giving this week jenny hogan unchained social media

manager gives us her take on nashad's cooperation with prosecutors charges against ftx are literally like netflix there is so much content i cannot keep up this week nashad sing an ftx founder and former director of engineering pleaded guilty and agreed to cooperate with prosecutors investigating sbac Honestly, so inspiring to me when men agree to cooperate. Like, I once had a boyfriend who once did dishes one time. Singh pleaded guilty to securities fraud, commodities fraud, wire fraud. Okay, honestly, maybe it would be faster if I listed the types of fraud he didn't commit. He's also charged with participating in an effort to artificially inflate FTX's revenue.

Artificial inflation. You guys got the wrong AI, but you're very close. Singh's lawyers have said that Nishad is deeply sorry for his role in this and has accepted responsibility for his actions. Okay, I had no idea that all it took for men to apologize was to hire a very expensive lawyer. Singh lost people to know that he wasn't always a bad guy. He was once a Facebook engineer

who was very involved in the effective altruist movement. But I guess maybe before that he wasn't a bad guy. Thanks so much for joining us today. To learn more about Bitcoin Ordinals, Manive, and Stacks. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with up from Anthony Yun, Mark Murdoch, Matt Pilchard, Zach Seward, Juan Oranavich, Sam Shreiram, Ginny Hogan, Ben Munster, Jeff Benson, Leandro Camino, Pima Jimdar, Shashonk, NCLK transcription.

Thanks for listening.