Unchained - How Crypto Markets Are Reacting Post-Selloff, With Election/Fed Uncertainty Ahead - Ep. 685

Episode Date: August 9, 2024

After the unwinding of the Japan carry trade, the weak jobs report, and Jump’s dumping of ETH slammed crypto prices earlier this week, Jason Pagoulatos, head of markets at Delphi Digital, gives his insights on where prices are headed. He explains why he thinks Ethereum has underperformed so far in 2024, how the ETH ETFs might impact the price as outflows from Grayscale’s ETHE dwindle, and how the election, moves by the Fed, and the adoption of Bitcoin ETFs by Morgan Stanley advisors will affect BTC.  Show highlights: 00:00 Intro 01:34 Why the markets have rebounded since the weekend selloff 04:11 The role of Jump in the ETH selloff and why ETH has been underperforming so much this year 14:18 Whether Grayscale’s ETHE slowing down the outflows will reverse the trend for ETH 17:53 Why Jason believes that investment advisors will continue to push bitcoin to their clients 20:18 How the macroeconomic environment is affecting crypto prices now and the impact in the near future Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! iTrustCapital Polkadot Token 2049 Guest Jason Pagoulatos, head of markets at Delphi Digital Learn more about your ad choices. Visit megaphone.fm/adchoices

It seems pretty obvious to us that, like, that Solana versus ETH had more narrative shots on goal. And Bitcoin versus ETH, it was just a much more clean investment, you know, thesis. So like if I'm looking at it from that perspective, it's like I go Bitcoin and then I go further on the risk curve and maybe take Salana. And then I just kind of forego Eith for the time being. Hi, everyone. Welcome to Unchained. You're NoHeap Resource for All Things Crypto. I'm your host, Laura Shin. author of The Cryptopians. I started covering crypto nine years ago and as a senior editor of Forbes was the first mainstreamed

major meter to cover cryptocurrency full-time. This is the August 9th, 2024 episode of Unchained. Get ready for the world's largest crypto event, token 2049 Singapore, from September 18th to 19th. Join over 300 speakers and 20,000 attendees. Visit token 2049.com for 15% off with Code Unchained. With I trust capital, you can buy and sell crypto in a tax advantage retirement account. Enjoy significant tax advantages, 24-7 access, and the industry's lowest fees. Pocod is the original and leading layer zero blockchain with over 2,000-plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at Pogo dot network slash ecosystem slash community.

Today's guest is Jason Pagalatus, head of markets at Delphi Digital. Welcome, Jason. Hi, thanks for having me. Excited to be here. This past weekend, and on Monday, it looks like Armageddon in the markets, set off by a massive sell-off in Japan. However, the markets have rebounded pretty quickly, not all the way, but, you know, mostly. Why do you think that is?

Well, I think there's a couple things, right? For once, like this sell-off in crypto markets wasn't our fault, right? Like go back to 2022 or something like that, we had a ton of, you know, pretty big liquidation events, pretty big volatility events. And most of them were self-inflicted wounds, right? Like F-TX, Genesis, like all of these things, right? 3-AC. They were all like kind of crypto-native events that just kind of decimated our industry in like

a number of ways, right? And then when you look at, you know, the most recent sell-off in risk assets, right, it was, as you pointed out, more so to do with macro factors or traditional kind of finance factors. Most notably, the carry trade unwind or at least the start of the unwind of the Japanese yen carry trade. So the fact that it wasn't our fault, it wasn't like anything specific to crypto causing the selloff. It was more of just like a correlations to one risk off, derisking, de leveraging, kind of move across all risk assets in global markets, kind of like allows crypto markets to rebound a bit a bit quicker right there's no real crypto native risk overhang here it's just kind of like I said that correlations to one at

risk off and I think there's something to be said for the fact that our markets like actually trade 24-7 whereas traditional markets don't so you saw like the start of this sell off and like you know a pretty big sizable like portion of this move start over the weekend when a lot of these more traditional markets were closed. And I think that's like when you look at it like at a high level, it's actually like a good thing, right? Like if you want to sell an asset and you have crypto, you can sell it whenever you want. Like that liquidity, you know, factors like in my opinion of a very good feature of our markets, but it also kind of has these, you know, a bit unfortunate things. Whereas like, you know, when all asset markets are closed and everybody's kind of, you know,

expecting a pretty horrible day in markets on Monday, they go and they sell the first thing they can. And a lot of times it's like those super risky assets, which crypto falls in into that bucket of, right? So you had that sell off, but it allows us to rebound. And I think we've seen a pretty good rebound, although I'm not quite sure we're out of the woods just yet, right? I think we kind of have to wait a little bit to see on that front. But so far, so good. I do like the reaction we've seen out of the lows at like, you know, $49.50K for Bitcoin. Yeah, I did want to ask you, though, about something that was.

you know, something that was crypto-specific, which is jumps selling on Sunday. So it appears they have staked 11,500 ETH worth about $28 million. They also appear to have moved $46 million in ETH to centralized exchanges over the last few days. But if you look back over the previous 10 days, and actually this is from a news report a few days ago, so even longer, probably two weeks, the amount of ETH they've moved to exchanges is almost $300 million. So what do you think is going on there. Right. So I don't believe we've seen anything like any official, you know, statement or anything from jump on this. So what I'm about to say is completely like my speculation, right? So obviously when any entity, right, moves a ton of, you know, some spot asset to an exchange, like there's really

only one reason why they're doing that and it's most likely to sell, right? So when you see a ton of, I think you quoted $300 million moved, right? I think when you see, when you see that, like I think that kind of explains the underperformance or the yeah the underperformance of ETH relative to you know like Bitcoin or Solana over the last over that time frame so like I remember looking at the sell-off this weekend right and at one point ETH was down like 17% in four minutes and Bitcoin you know five or six Solana seven or eight and I was like obviously like Heath is not this much bad like this much worse than Salana and Bitcoin so there has to be a reason and And then you like attribute it to jump selling.

I think it makes a lot of sense, right? The reason as to they're selling, it's anybody's guess, right? I think there's been a lot of rumors about them, you know, maybe exiting the the crypto market in some way, shape, or form. Is that like their entire market making business? Like what does that mean for a couple other things, right? Like I'm not entirely sure what's going on with jump, but I think it's fair to say that a lot of the weight or like, you know,

the excess pressure on ETH, over the weekend can probably be attributed to that. And the way I look at it, right, is like if they were like, you know, if they were planning on, you know, selling ETH at some point to like move out of the market or just do whatever with, right? And then they see this Japanese situation on winding on Thursday, Friday last week. They're not going to wait until Monday to start selling their ETH. They're going to sell it over the weekend at the best price before traditional markets start

imploding, right? A lot of times when you get these, you know, volatility events at the saying is like, he who sells first sells best a lot of the time. Yeah, there's a couple of things here because, so obviously, as we just discussed, ether dropped more than Bitcoin and Saul this weekend. But then in the rebound, it also didn't go up as much. And there's been a lot of chatter on X. I'm proud of myself for calling it X-Wa.

Yeah, I still can. I still can't. But people, you know, have been talking about the fact that there's this mismatch between the news for Ethereum. and then the price section. So this is just like a smattering of the positive news for Ethereum this year. But, you know, obviously the launch of the Ether ETHER ETS, the closing of the Ethereum 2.0 investigation, the launch of Black Rocks Biddle Fund on Ethereum, the DENCUN upgrade.

There's just been a lot of like positive developments on Ethereum this year. So why is it that you think ETH continues to underperform? Yeah. So this is something that we actually wrote about in our year ahead for 2024, so published in December of 2023, and we kind of had like two key themes that we were like looking for with respect to majors. One, we thought like ETHBTC would continue to underperform for the majority of the year. And this was before like the ETH ETF was like, you know, expected this year. I think most people up until we got that 180 surprise turnaround,

expected the ETH ETF to probably come maybe later this year, but most likely at some point in 2025. And then we got, you know, the whole Gary Gensler 180 regulatory shift, right? So we had that thesis and like that theme. And I think like I'll get into that in a second. The second theme we had was that we thought sole Heath would also continue to outperform for the majority of the year. So effectively that means we think Heath would be like the worst performing major, I guess you could say, between BTC, ETH, Seoul for the majority of 2024 and so forth. It's kind of played out. And so our reasoning for like the BTC underperformance with Ethereum is that I think just like you're going to hear this from like a lot of

of different people, right? But the BTC narrative or whatever, whatever you want to say, like the BTC theme, the BTC narrative is so much easier to digest for the vast majority of people than the ETH ETF or like than the ETH narrative, right? With Bitcoin, it's kind of simple, right? It's like you have probably the purest bet on monetary debasement. So like if you expect, you know, central banks to continue debasing their native currencies like the U.S. dollar, Japanese, you know, Chinese, Chinese, want, all of these things, right? If you expect continue currency debasement from central banks, Bitcoin is the most obvious and the most pure expression to kind of play that trade. It also kind of has that like digital gold narrative that, you know, some Tradfai guys like Paul Tudor Jones, Stanley Drunken Miller,

right, that they're all talking about. And it's also like the leading asset or the leading asset in a brand new asset class that is mostly uncorrelated with other ones, right, which is something that you don't often see. And the last time we had a new asset class created is hundreds of years ago, right? Equities, bonds, all these things are, they're not new. They're all ancient things at this point. Right. So you have a coalescing of these factors and it's just like very easy to understand it digest, scarce supply, blah, blah, proof of work. Oh, I put all this work in. I get this much out. But like, it's just very easy to understand, right? And then we get this ETF at the start of the year when a lot of the macro conversation is shifting towards like,

you know, fiscal irresponsibility of the U.S. government. Everybody's talking about the $35 trillion debt issue. When you look at unfunded liabilities, the issue is significantly worse, right? You have inflation picking up or you had inflation picking up last year for the first time in decades, right? So like all of these factors coalesce into people being like, oh, wait, we actually have a way to kind of express this like disdain for the, you know, macro environment that we've been left by the people running things for the last 20 to 30 years. So it's just very easy for people to get behind it. Boomers, young people, everybody can just understand it.

And then when you look at ETH, for crypto natives, it's probably pretty easy, right? Like, defy, right? You know, it's kind of like the base pair for collateral and speculating on chain, TVL, all that type of stuff. But when you go and try to like convince like a normal person or talk to a normal person about it, it's it's a bit less clear. It's a bit more like nebulous into like, oh, is it like the oil? Like what is the analogy for it?

It's not quite clear. And then when you go and start like looking at, okay, like say I do want eth exposure, like what's the best way to get that eth exposure? I'm still waiting for a good answer for that, right? Do I buy one of the, you know, layer two tokens? Do I just buy ETH? Do I go further out on the risk curve and buy like an ETH beam coin like Pepe or something? Right?

Like there's just so many different options and ways to it. express your eth ecosystem or EVM thesis through so many different tokens, different layer two tokens, liquidity fragmentation across all of these things. It just makes the investment thesis more muddied and just like less clear and less easy to articulate, whereas when you look at something like Solana, it's pretty obvious, right? There's no real layer two's. It's just like, okay, I'm going to buy the native token Solana. And then I might go look for an interesting, you know, interesting fundamental project on Salana or maybe I just go straight over to the meme coins like bong or dog with hat or something right like it's just very obvious and like the the flow of capital is clear

and then when you bring into the like mix like you know transaction costs be like user experience when I talk to a couple of my normie friends who I still try to get to buy crypto right they them using eth last cycle to them using Salana this cycle is night and day like I don't even have to talk to them they're they just kind of like get it it's easy it's cheap They're having fun with it, whereas they would have to spend, you know, magnitudes more to transact on, like, base layer, eth. And if I don't want them to have to have to explain, oh, you have to go use this bridge and do this. It's just not very clear. So it seems pretty, pretty obvious to us that, like, that Solana versus Eth had more narrative shots on goal.

And Bitcoin versus Eith, it was just a much more clean investment, you know, thesis. So, like, if I'm looking at it from that perspective, it's like I go Bitcoin and then I go further on the risk curve and maybe take Salana. and then I just kind of forego ETH for the time being. Wow. Yeah, that's a really incisive analysis. So in a moment, we're going to talk a little bit more about Ether and then zoom out again to macro. But first, a quick word from the sponsors who make this show possible. Join 20,000 attendees for the world's largest crypto event.

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Did you know you can buy and sell crypto with tax benefits in an individual retirement account or IRA? I trust capital makes this possible. What does this mean? When you buy crypto outside an IRA, like on an exchange, you face taxes on gains. But in a Roth IRA, gains would be tax-free. I-Trust Capital also has the lowest fees in the industry and 24-7 accessibility. Start now and maximize your retirement savings with I-Trust Capital. Back to my conversation with Jason. So I did also want to ask, though, because, you know, despite the broader narrative around Ether, the ETFs now are live.

And we've seen about $2.2 billion in outflows from ETHE, the vast majority of that in the first few days. So I wondered now that this massive sell-off is at least slowing down, if not over, do you expect the launch of the Ether ETFs to kind of change that narrative for Ether? I think they will go. I think they will definitely help. I'm just not sure that it will be enough to make ETH outperform Bitcoin or Solana or do it in any meaningful way that would warrant me or somebody that has a similar view as me to take money out of Bitcoin or Salana and rotate it into ETH, right? Because the way I look at it is the allocation to ETH has to come from somewhere assuming somebody is not sitting on 50% cash. So in order to allocate to ETH, you have to kind of cut your exposure to, in my opinion, either Bitcoin or something like Solana.

And while I think the ETH ETH ETF is probably the only thing going for ETH at the moment, given all the, you know, like infighting and things I'm seeing on Twitter around the scaling solutions, our layer two is actually, you know, good for ETH, all this stuff, right? Which wasn't even a debate a year ago. And it's now kind of like causing a ruckus within the, you know, the core ETH community. So while I do think these ETHs will be very good on like a, you know, a meaningful time horizon, six, like maybe a year plus, right? Like these products are very important to, to catalyze a passive stream of investment flows

to our asset class, right? So thinking that like these ETFs are going to be like bearish on any meaningful time horizon, I think is kind of naive. But I'm not sure that the ETH ETF flows will be as meaningful for ETH in the short term as the Bitcoin ETF flows were for Bitcoin in the short term, if that makes sense. And because of that, like I'm not sure like the risk. reward is there to rotate out of BTCE, right? The thing I look for the most when trading or not even trading, just like, you know, investing during a bull market and looking for times to allocate is like

when you get these massive selloffs in our markets, like which asset classes or which assets are the strongest bouncers or the, you know, the fastest horse out of the lows, right? I don't often like to try to predict what the market is going to do. I think it's much easier to just let the market tell you what it's going to do. And this is one of those times where the market kind of tells you which assets it likes the most and which assets it doesn't like the most. And when you look at the returns off the lows, I think our head of research setters has like a really good like Excel chart that he'll tweet out frequently on Twitter. And when you look at the returns off the lows, Ethan is underperforming Bitcoin and Seoul. And it's kind of like the story that you've been seeing for the last

eight to 12 months. And instead of, like, in my opinion, instead of trying to predict the bottom in ETH, BTC or sole ETH, right, why don't you just kind of let the market show you when the bid is is there for ETH and then kind of just go in, right? That's kind of my perspective. I think it'll be important to see like what the actual flows are over the course of the next couple of weeks, right? Do they come in at like the expected like 10 to 20% of BTC flows or does it come in and kind of like level off below that, right? I think that will be important as well to kind of catalyze any kind of, you know, bid for ETH. Okay. And then I do want to also ask you about just like a new development in the Bitcoin ETS, which is now that Morgan Stanley financial advisors can offer Ibit, as well as the

Fidelity Wise Origin Bitcoin Fund. It's only to certain clients, but, you know, they're the high net worth clients. So how do you expect that to affect the price of Bitcoin? Yeah. So this is a great point that you brought up, right? And it kind of goes back to what I was saying, like, on any meaningful time horizon, these ETFs will be very good for our asset class and our industry. And this is one of the reasons, right, TradFi moves quite slow when you take everything into consideration, especially like when you compare it to how quick things move in crypto. These ETS were launched, you know, eight months ago at this point, which is like no time at all in TradFi. It takes eight months for TradFi investors to meet with their private bankers, draft up some new investment mandates

that allows them to get allocations to this new asset class, right? They might want to run some, you know, risk analysis with their private bankers. I used to work at JP Morgan private banks. I kind of know exactly how long these processes take to set up meetings with your clients, figure out if they're interested in these things, what their appetite is, go back, draft them some docs, send those docs over. Those docs might take a month or a half to get signed before they get sent back to you. Before everything gets processed, you're six to eight months down the line after this product has already launched, right? So I think Morgan Stanley isn't going to be the first, you know, investment advisor to be like, oh, like, we're now like going to push our, you know, our bankers to push these products, right? Because it takes some time for more conservative firms or just, you know, just more conservative investors in general to warm up to products and figure out exactly what role they want these products to play in their investment portfolio.

So yeah, I absolutely think you'll see this trend continue. You'll see more and more firms probably announce that they're actively pushing these products or things like that. And I think probably the end goal here is like to see something like Bitcoin command like a similar allocation in a portfolio to say like something like what gold does. So like if gold is like a two to three or five percent, you know, base allocation in like a standard investment portfolio, right? Maybe Bitcoin can take a couple of those percentage points and be that, like, you know, that standard, you know, staple part of a portfolio, which would then garner passive flows in perpetuity for the most part. This is kind of why my base case is I don't think we just V bottom out of the liquidation event we just had, right? Generally, it takes some time, just from a technical perspective, it takes some time for the market's kind of like, you know, rebuild its positioning, rebuild its market structure after some. a violent move in one direction. On top of that, you just pointed out some very, very, very,

like, great points. So the initial, like, the initial sell-off actually started before the Japanese carry trade on wind when we did get those those weak job numbers for July, right? Because that kind of sparked fears of recession, is the Fed, you know, is the Fed behind the ball once again, like they always are, right? And we started to see a sell-off prior to the Japanese carry trade online because of that. So you kind of had those two factors coming in at the same time, which is like, oh, crap. But then to your point, we did get some better jobless numbers today, I believe. So I just think there is a lot of trepidation and uncertainty over the situation right now. I think you have central banks closely monitoring bond yields and the volatility and spreads occurring within those.

Because if there's one thing we know, right, it's that central banks and the Fed really don't like huge amounts of volatility in the Treasury market. And those markets need to run very smoothly. They need to be liquid. They are like, you know, it's the plumbing for the global financial system. And we're starting to see those spreads start to blow out. Volatility increase in fixed income instruments. when you look at Bank of America's Move Index. So there's like a lot of trepidation around like, is something about to break? Like usually when you see a huge unwind and something like that, it kind of takes some people with them. You start to see bodies float to the surface a couple days later after people blow up.

Right. So I think it's like, you know, the very normal fears of like, oh, like maybe things aren't as good as we thought they were a couple weeks ago. The market kind of needs to reprice that in. Obviously, situations in the Middle East can escalate at any time, is obviously like a black swan type of risk at the market is, you know, I would assume trying to price in, but that's quite difficult as well. So there are very, very much things to be, you know, cautious of in the short to medium term. The election will obviously be huge specifically for crypto, right, given the two distinct differences in the way both parties view the industry

or have historically viewed the industry. So I do think there's a lot of uncertainty. And I think a lot of that is why I expect markets to kind of go sideways between like, I don't know, like 52 and a half to like, I don't know, where we are now pretty much, just kind of go sideways. Go up a bit, come down, go sideways until we kind of get some clarity on the situation with like the Japan trade, the macro situation. I think the market is screaming at Powell right now telling him, hey, you need to cut, given the fact that for the September meeting, the market's pricing in, obviously a 100% chance of any rate cut.

And right now they're pricing in more of a chance of a 50 basis point rate cut than 25, which is probably not going to happen. So, you know, what if an inflation print comes in hot and the market's like, oh, crap, like maybe they don't cut 50 basis points. So I do think there's a lot of short term like cautiousness to be aware of with respect to price action. But I do think the general sense is all of this kind of chaos or volatility in markets kind of only pulls forward the timeline for when central banks act in a way that eases global liquidity

conditions and makes the risk asset environment much better. All right. Well, we'll have to see how it all plays out. Thank you so much for explaining all of this on Unchained. Thanks for having me. Had a great time. Don't forget. Next up is the weekly news recap.

Today, presented by Watercraft AI. Stick around for this week in crypto after this short break. Pocod is the original and largest layers of your research. a blockchain with over 2000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Upgrading the infrastructure with eight times higher transaction throughput and twice as fast block times, tailored core time for the needs of every protocol, trustless bridges to multiple chains, and revise tokenomics with a token burn to reduce inflation.

Perfect for GameFi and Defi to build, grow, and scale. Get your Web3 ideas to market fast. Think big, build bigger, with Pocon. Pocodot. Join the community at Pocodot.network slash ecosystem slash community. Welcome to this week's Crypto Roundup. In today's recap, we cover Ripple's $125 million fine, FtX's $12.7 billion creditor payout, lawmakers pushing for an election betting ban, Ethereum's compliance with sanctions, a major Ronan bridge hack, a Trump meme coin crash, Genesis's restructuring, and Franklin Templeton's fund expansion. Thanks for tuning into the

weekly news recap. Let's begin. Ripple fined $125 million amid legal battle with SEC. Ripple has been fined $125 million in its ongoing litigation with the U.S. Securities and Exchange Commission, which accused Ripple of raising $1.3 billion through the sale of its token XRP, alleging XRP was an unregistered security. Judge Annalisa Torres ruled that while Ripple's institutional sales violated securities laws, its programmatic sales did not. Following the news, XRP was up more than 20 percent. The court's

decision granted in part and denied in part the SEC's motion for remedies, imposing a fine significantly lower than the SEC's proposed $2 billion. Ripple CEO Brad Garlinghouse praised the ruling, seeing it as a victory for Ripple and the broader crypto industry. Additionally, Judge Torres issued an injunction preventing Ripple from future securities law violations. The SEC is expected to appeal the ruling, emphasizing the seriousness of Ripple's violations. FTX creditors to receive $12.7 billion from CFTC settlement. A U.S. District Judge has approved a settlement between FTX, Alameda Research, and the Commodity Futures Trading Commission, resulting in $12.7 billion being distributed to FTX creditors.

The agreement, approved by Judge Peter Castell, concludes a 20-month lawsuit by the CFTC. FTCX and Alameda will pay $8.7 billion in restitution and $4 billion in disgorgement. Notably, the CFTC did not seek additional civil penalties, allowing the entire sum to go to creditors, primarily retail investors. Additionally, the settlement permanently bans FTX and Alameda from trading digital assets and operating as market makers or custodians. This follows FTCS's earlier agreement to pay $885 million to the IRS resolving another dispute. creditors have until August 16th to choose their preferred payment method.

Lawmakers push for ban on election betting. SEC battles Coinbase over-discovery requests. On Monday, Senator Elizabeth Warren, alongside several Democratic lawmakers, urged the CFTC to finalize a proposed rule that would ban event contracts that allow bets on political outcomes. In a letter to CFTC chair, Rosten Benham, the lawmakers argued that such bets undermine the integrity, of the democratic process by turning political decisions into financial calculations.

They expressed concern that allowing substantial financial wagers on elections could erode public trust, especially if wealthy individuals and political insiders exploit non-public information for financial gain. The CFTC had voted in May to propose this rule, which also seeks to prohibit betting on other sensitive events such as terrorist acts and war. Meanwhile, the legal battle between the SEC and Coinbase has intensified. The SEC has criticized Coinbase's broad discovery requests as part of its defense against allegations that it operated as an unregistered securities broker. Coinbase is seeking extensive internal communications from the SEC, including personal

communications from SEC Chair Gary Gensler, to argue that the SEC's regulatory stance on digital assets has been inconsistent. The SEC's lawyers continue to be. that these requests are overly broad and irrelevant to the case, aiming to put the regulator itself on trial. Despite a judge ruling that some requests are inappropriate, Coinbase continues to seek documents to demonstrate the SEC's varying interpretations of securities laws as they apply to digital assets. In related news, the digital assets industry's fair shake pack claimed another victory, as its spending helped defeat Repron Corey Bush in the Missouri primary, marking the third win this week against candidates supported by Senator Elizabeth Warren.

Ethereum complies with tornado cash sanctions, NYFED report fines. A new report from the Federal Reserve Bank of New York indicates that Ethereum entities such as block builders and validators have largely adhered to sanctions imposed on tornado cash. Despite some ongoing activity, the majority of block validators have complied with the U.S. Treasury Department's restrictions. The sanctions, initiated by the Office of Foreign Assets Control in August 2022, targeted tornado cash due to its use in illicit activities like money laundering. The report highlights that while the total transaction volume involving tornado cash has decreased significantly, some transactions continue, suggesting only partial compliance. Notably, the report found that block validators directly downstream of transactions tend to comply with sanctions, particularly after a court rule,

in favor of OFAC in August 2023. However, nodes further removed from the transaction origin are less likely to cooperate. The paper emphasizes that sanctions have led to a sharp decline in Tornado Cash's transaction volume and user diversity, although the service remains viable as a privacy tool. Ronan Bridge paused and restarted after $11.8 million white hat hack. Ronan, a prominent crypto bridging service, was paused on Tuesday after a white hat hack drained $11.8 million worth of tokens. The breach involved 4,000 ETH, worth $9.8 million, as well as $2 million in USDC. The Ronan network quickly paused the bridge approximately 40 minutes after detecting the exploit. The Ronan team confirmed that the bridge, which secures over $850 million in assets,

remain safe. The exploit was attributed to an issue introduced during a bridge upgrade. The team is now working on a solution and plans to conduct intensive audits before deploying a new upgrade. Negotiations with the White Hat hackers led to the return of the stolen funds. The hackers will receive a $500,000 bounty for their actions. Ronan co-founder Alexander Larson reassured users that their funds are secure and any shortfalls will be redeposited when the bridge reopens. This instance, The incident follows a significant hack in 2022 when Ronan lost over $600 million. Also, blockchain protocol Nexera suffered a $1.8 million exploit, causing its NXRA token to tumble 40%, with the attacker linked to recent compromised private key incidents, including the OKX Dex hack.

Trump-related meme coin crashes 90% an alleged rug pull by developer. The controversial Donald J. Trump, DJT, meme coin. plummeted by nearly 90% after a developer-linked wallet sold off $2 million worth of tokens. The transaction saw 2 billion DJT tokens, constituting 2% of the total supply dumped in one go, causing the token's market cap to drop from $55 million to $2 million in mere minutes. Former pharmaceutical executive Martin Scrailey, who had claimed involvement with the token, blamed Trump's son, Baron Trump for the sell-off, suggesting that the younger Trump had carried out a rugpole.

Despite earlier speculation fueled by social media, neither Donald Trump nor Barron were officially linked to the coin. The meme coin launched in June, initially surged by 400% on rumors that the former president would endorse the coin. Genesis completes restructuring, begins $4 billion distribution. Genesis Global has finalized its restructuring and started distributing $4 billion in assets to creditors,

after declaring bankruptcy in January 2023. Creditors are expected to recover an average of 64% of their cryptocurrency holdings. Bitcoin creditors will get back 51%, Ethereum creditors 65%, and Solana creditors, 29%. Stablecoin and USD creditors will be fully reimbursed. The company, which owed $3 billion to its top 50 creditors, including Gemini and Vannock, has also set up a $70 million litigation fund to pursue claims against third parties, such as its parent company, Digital Currency Group.

Further recoveries may occur based on ongoing claims and litigation outcomes. Franklin Templeton expands tokenized money market fund to Arbitrum. Franklin Templeton, a $1.5 trillion asset manager, has expanded its on-chain U.S. government money market fund, FobXX, to the Arbitrum blockchain. a layer two network on Ethereum. Previously available on Stellar and Polygon, this marks the third blockchain on which the $420 million fund's shares

can be traded. The expansion to Arbitrum aims to integrate decentralized finance with traditional finance, offering new opportunities for institutional investors. The fund launched in 2021 was the first to use a public blockchain

for recording transactions and ownership. And that's all. Thanks so much for joining. joining us today. If you enjoyed this recap, go to UnchainedCrypto.substack.com, that is Unchained Crypto.com, and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin, with help from Matt Pilchard, Juan Aronovich, Megan Gavis, Pam Majumdar, and Margaret Korea. The weekly recap was written by Juan Aronovich and edited by Nelson Wang. Thanks for listening.

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