Unchained - Tornado Cash Sanctioned. Did the Government Overstep Its Bounds? - Ep. 384

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained, you're a 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 meteor reporter to cover cryptocurrency full-time. This is the August 12th, 2022 episode of Unchained. Want to join the Unchained team? I'm hiring for an Evergreen editor. If you're an SEO whiz with a love of blockchain and blockchain in crypto plus strong editorial experience, send your resume and writing samples to hello at Unchainedpodcast.com with a subject line, Evergreen Editor application. One inch is a top decks aggregator that finds the best rates across multiple networks. Why use a single

Starting point is 00:00:48 decks when you can use them all? Get one inch on your phone now or swap on one inch.io. 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 Jerry Brito, executive director of Coin Center. Welcome, Jerry. Hi. Thanks for having me. This week, the crypto world was a buzz with the news that the Treasury Department prohibited all Americans from using the privacy service tornado cash, which is a crypto mixer. Can you explain what this means and why it is that the Office of Foreign Assets Control levied the Sanctuary. against Tornado Cash?

Starting point is 00:01:32 As you say, Tornado Cash is a mixing service. But embedded in that, I think, is a bit of confusion. So let's take a step back and first talk, if you don't mind, about Blender.io. So Blender.io is also a mixing service that was designated and added to the SDN list, just like Tornado Cash, a few months ago in May. And when that was done, there was an area peep from anybody in the crypto community. And why was that? It's because Blender.io is a centralized mixing service, meaning that it is a company, whether it's incorporated or not, is essentially a company with persons, who provide a service where you send them your Bitcoin. And lots of people do. They mix the bitcoins together and then they send them back to you. But in so doing, they take custody of the Bitcoin. They have control over the service. They can choose to provide the service. or not, they can choose to provide a service to some people and not others.

Starting point is 00:02:33 They can choose to register with FinCENSET as a money transmitter, et cetera. And so when you add a service, a company, and related Bitcoin addresses to the SDN list, the way that OFAC did, you know, that's just the typical sanctions action that's taken because, in the case of blunder.io, North Korean hackers and other ransomware operators, or so had been using Blender.io. So far, so good. When you move forward to TornadoCash, OFAC essentially, in the way that it

Starting point is 00:03:07 has talked about this in the press and its press release, and in the way that it's done its designation in its SDN list update notice, it's identical to the Blender.io designation, but the thing at issue here, tornado cache, is completely different. So it's true that Tornado Cash is, you know, there is a Tornado Cash

Starting point is 00:03:29 entity that is a group of persons. Because, for example, one of the things that is added to the SDN list is the website, tornado. And so clearly there is a person or group of persons who own that website and can control it and run it and decide whatever goes on it, et cetera. And there is a Dow that controls aspects of some of the smart contracts in particular, how they relate to the interface of the web interface of tornado cash. So there certainly is a tornado cache entity. But in addition to that, there is a tornado cash application that is a series of smart contracts

Starting point is 00:04:08 that are deployed on the Ethereum network that are not owned by anybody, that are not controlled by anybody, because you can verifiably see that there is no way for anybody to update those smart contracts or change them in any way. What OPEC has done here is conflate these two. things, the tornado cash entity and a tornado cache application all into one designation. And as a result of that, the obligation on all Americans is to do, to have no interaction with any of the listed addresses and with that with anything related to the tornado cash entity. That's what it means. Unfortunately, I think OFAC might have a receptance authority in doing that. Okay. So essentially it sounds.

Starting point is 00:04:57 like before it wasn't even thought possible that the government could sanction a smart contract, but that's effectively what happened here. And it's unclear whether or not the government maybe even realized what it did because initially the Secretary of State Anthony Blinken tweeted that Tornadocash was sponsored by North Korea.

Starting point is 00:05:16 That's inaccurate. So that even sort of calls into question maybe what the understanding of the facts were. I mean, the tweet was deleted and an accurate one was issued an hour later, so maybe not, but it's not totally clear. Just to understand a little bit more about tornado cash, though, so the proceeds of many recent hacks have flowed through there,

Starting point is 00:05:37 from Ronan, from crypto.com, from Harmony, Nomad. But in general, what percentage of activity on tornado cash do you think is illicit? So from what I've seen reported from chain analysis and other chain analytic firms that do this kind of analysis, it seems that about 30% of the funds that have flowed through tornado cash can be attributed to crimes of some kind or another. Now, that doesn't mean that the other 70% is all completely legal. We don't know, but it seems like the vast majority seems to be people using it either just to protect your own personal privacy or as part of a defy application or it's just part of good operational security, et cetera. Yeah, yeah.

Starting point is 00:06:23 And I think a lot of everyday people, myself included, can relate to wanting to have privacy for certain financial transactions, if not most of them. So CoinCenter published a blog post that differentiated this sanction from the other sanctions, as you just described. And you were kind of implicitly criticizing OFAC if I was sort of reading between the lines here. Can you explain more about your position on that? Yeah. So, and this is something that, you know, just to note, we will be putting out a more detailed legal analysis shortly, if not tomorrow, then Monday. And so, you know, our understanding has been evolving. But essentially, I think OFAC made a mistake here for several reasons, right?

Starting point is 00:07:11 So one reason, I think, is that they may have overstep their authority, as I was just saying. So, number one, OFAC is authorized by statute. executive order in its own regulations. It's authorized to designate persons and entities, and add them to the SDN list. And what an entity is is defined in their regulations. And then once you've designated a certain person or entity, their property is blocked or frozen. Without going to too much detail, because we'll do that in our sense of analysis, It may be the case, and I think it's a very good case, that these immutable smart contracts that make up the tornado cash application are not an entity, right?

Starting point is 00:07:59 So they're not subject, they can't be added properly to the SDN list. And to the extent you say, well, they're not an entity, but they're the property of the tornado cash entity, because there are people who make up a tornado cash entity. I'm not sure that makes any sense either. because these smart contracts are written such a way where nobody can control them or transfer them. So in no way really are they anybody's property. So number one, it may be that the OFAC overseps its authority when it designated those smart contracts. So that's one critique.

Starting point is 00:08:38 The other critique, I would say, is goes to the process. What is the decision process like to add somebody to the. SDN list. Well, it's kind of unclear. This is not a public process. This is not a public process where there is public input that's taken. And that's understandable because if there was, you know, if there wasn't notice posted that we're considering adding Alpha Bank to the SDN list, while the Alpha Bank would immediately remove all its funds out of the U.S. before it would become final. So it's just, you know, they just do it. The problem here is that when you do that, when you do that, You want to make sure that you're not adding Americans to the SDN list.

Starting point is 00:09:19 You're not allowed to add Americans. You're only allowed to add non-U.S. persons to the SDN list. In this case, I'm not sure they're adding an American because, again, I don't think you're adding a person to the list. But certainly a lot of Americans are affected by this, right? And they're affected in two ways. One, a lot of Americans, I think, have funds that are now trapped in the Trinato Cash application and smart contract, where now to retrieve those funds,

Starting point is 00:09:46 funds would be a violation of sanctions law. So they're affected in that way. And number two, all Americans are affected because essentially their liberty has been curtailed, right? As an American, I can no longer use this privacy tool. And that is a curtailment of my liberty that has happened without any due process, without any, you know, public process at all, without any way for me to appeal. And when OFAC, I think, has encountered those kinds of situations in the past. So say, for example, they want to designate a rogue bank of some kind in Panama or Russia, where many Americans might have accounts at that bank. Innocent Americans have accounts at those banks. But OFAC wants to say that the bank is sanctioned, that you can't do business with

Starting point is 00:10:30 the bank. Well, all of the innocent Americans who have accounts at that bank are essentially going to have their money frozen. When that happens, OFAC, I think in the past has done and certainly should do a collateral damage impact analysis, right? Before they announce a sanction, they should realize how many innocent individuals, American and non-American, are going to be affected by this, and how are we going to deal with that fact? Was that done here? Was there a collateral damage impact analysis done here? What steps did they take? Because it seems they've taken none, because, number one, we really need some answer from them about what do people who today have funds trapped there, how are they supposed to get them out? And number two, a completely

Starting point is 00:11:17 foreseeable event with this sanctioning, with as soon as I heard that this had happened, it occurred to me, and I'm sure it occurred to hundreds of people who know anything about crypto, is, okay, they've sanctioned these smart contracts so that it is now, you know, a crime, potentially to send funds to the smart contract or to receive funds from a smart contract. So, of course, what's going to happen is, well, the smart contract is going to continue to run. So somebody is going to use it to send funds to Americans. And then by virtue of having received funds, and this is not a check, this is an Ethereum transaction, you can't reject it. You can't decide to not cash it.

Starting point is 00:11:58 Are you now technically, so this completely foreseeable thing, which happened, right? So Jimmy Fallon, Shaquille O'Neal, lots of prominent people whose addresses are known had this dusting happen where they were sent funds. Well, what do they do now? Right? So these are kind of the foreseeable consequences for completeness in Americans. You think OFAC should have preemptively tried to address before they did this. So in a moment, we're going to talk a little bit more about a number of these issues that you just raised. But first, a quick word for the sponsors who make this show possible.

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Starting point is 00:13:27 Do you want to avoid that hassle? Swap on one inch, a top dex aggregator built to get you better rates than any single decks. Enjoy unlimited liquidity across multiple networks and top. top level security. Get one inch on your phone now or swap on one inch.io. Back to my conversation with Jerry. So as you pointed out for a number of reasons, it may be that either this action was not constitutional or it wasn't done in a way that's even either practicable or, you know, or is also overreach. So in the past, actually not that long ago, I think, was like two or three months ago, you announced that you were going to

Starting point is 00:14:12 sue the government over another similar statute that you felt, I think was on constitutional, the 60-50 I provision in the, and it was in the infrastructure about last year. If at this point you determine something similar for this act, then, you know, what could happen? Would that also be on the plate? Or what are some of the other options? Yeah. So I think we're still very much at the preliminary stage of trying to understand what exactly are the legal implications of this action. Was there actually an overreach of their authority? Are there constitutional questions here? And if so, who the right parties would be to bring a claim? So we're still at that stage, but I wouldn't rule out that Coin Center or somebody with Coin Center's help could litigate this.

Starting point is 00:14:59 And indeed, that might be what happens. I think the first thing that has to happen is we have to try to exhaust all of our administrative options for relief. So number one, you know, individuals who have funds trapped at the Trinido Cash Mart contract can apply for a license from OFAC to remove those funds. And you can also potentially get what's called a general license from OFAC. That is basically a license for any American who have. as funds trapped there to remove them. So, yeah, those are things we have, we and many other people who are affected by this

Starting point is 00:15:46 have to explore. And so in the case for people with USCC, then they would just show that to circle and then get their funds un-blacklisted via or unfrozen or whatever it's called in circle? Yeah, so that's interesting because there's an extra layer here, right? Because some people just have ETH.

Starting point is 00:16:06 that they deposited there, and they just want to get their ETH back. But if they could do that today, they've got the keys, they could just go get it. But if they did that, they'd be breaking the law. So they need to get this license from OFAC in order to do it legally. But then there are people who have USDC there. And the thing there is, even if they got this license from OFAC, they really couldn't get the USDA back because Circle. has blocked those USDA from moving. So you're right. They would have to go to Circle and say,

Starting point is 00:16:42 this is who I am, that was mine, here's a license. Circle might want to get a license for itself or be part of a general license. So it's very complicated, and it needs to be sorted out. So that's one aspect of it. The other kind of administrative relief that we would want to exhaust is there is a process by which you can have a listed entity delisted. So, For example, let's say that you were listed by mistake because somebody with a similar name was intended to be on a list and you were put on, or maybe you've changed your behavior so that you're no longer doing as a company. You're no longer doing the bad thing that got you on a list you want to get out.

Starting point is 00:17:21 There is a process by which one can petition. It's a formal petition process to have something delisted. Fortunately, the regulations that provide for the petitioning process only provide for the listed person to be the one who can't petition to be delisted. But our argument here is that the listed entity is not a person. So how can we do that? So have we already exhausted our administrative relief avenues or not? So we have to navigate that. And then once we've done that, ultimately, you know, we might want to go to court. And then the questionnaire is, well, who goes to court. Is it, you know, can CoinCenter just get to court as somebody who wants to use Tornado Cash in the future and feels that they are

Starting point is 00:18:09 unlawfully being denied access to it because this thing should not be on the SDS list? Or, you know, CoinCenter in the past has received donations through Tornado Cash. Is it, you know, does that give us standing? But also, you know, we could have co-plaintiffs or plaintiffs that we help who have funds there, you know, our developers, et cetera, et cetera. And then, you know, what are the claims? Is it limited only to OFAC overreaching his authority? Or do we also think about, well, are there constitutional issues here? Does this government action have chilling effects on speech that are sort of separate? It's a bit of a stretched claim, but it's possible. So, as you mentioned, there are those celebs or really even anyone with a .eath name, yeah, who were sent, you know, for, you know,

Starting point is 00:19:02 some fraction of E.1, I think, is what I saw on Twitter? For those people, what do you recommend they do? So I am not a sanctions lawyer, and I'm certainly not your lawyer or anybody's lawyer. So don't take this legal advice. I would say, number one, if you're worried about this, you might want to contact the lawyer. But I think what the lawyer might tell you is that you should notify OFAC about this fact, right? And I think if you go look up the OFAC regs, I think it's the case that it's spelled out as an obligation of Americans who discover that they have. And typically this.

Starting point is 00:19:42 So the way OFAC works, really we're talking here about, OFAC applies to all Americans, every individual. But really, most everyday Americans going about their business don't have to think about who's on the SDL and who's not. it's going to be big banks and corporations who have a lot of dealings internationally. We have to worry about this. And so what will often happen is that you have a bank that does hundreds of thousands of transactions a day. And then they discover that, oh, my God, yesterday we let a transaction through with somebody on the SDN list. And it was totally a mistake. We've caught it.

Starting point is 00:20:21 But there's strict liability here, right? There's no compliance here. And so what the OFAC regs, I believe, say is you've got 10 days after, since when you discover this thing, to notify OFAC. And at that point, OFAC will work with you to say, you know, this is what you have to do to mitigate it or do nothing or it's okay. Don't worry about it or whatever. So if you want to be extra careful, you might want to do that. You might want to seek legal help to do that. But that seems kind of crazy.

Starting point is 00:20:49 anybody with a, with a known.eath address or just a regular Ethereum address that's known is now hostage to anybody who could just, you know, do this to them. Yeah, I was thinking that this person who trolled the celebs and the dot-eath people this way, they just created a bunch of paperwork for them. Yeah, but it's interesting. You know, one way of things to look at this is to say that this person was trolling, and that might be their motivation, but this person might be just, trying to, and I get it, this is not very polite to the people who they're doing this to,

Starting point is 00:21:24 but this person, I'm guessing, might also be just be trying to highlight, put a spotlight on the absurdity of what OVMEC has done here. So what do you think would happen if someone forked the code and just deployed a copycat version of these smart contracts to a new address? It's a very good question. So it's interesting. You would think that if you did this, this would be something completely different. And so it wouldn't be subject to the sanctions. And people could use that until OFAC added that thing, that address, to the list. And indeed, I was looking at a statement that a Treasury official gave to the Financial Times yesterday,

Starting point is 00:22:04 where they said that the purpose of doing this was to basically stamp out the use of this technology by going after tornado cash in any reconstituted version of it. So that's interesting. They're not going after a particular entity. They're going after a class of technology, at least the way this statement put it. So, you know, I think there's a good argument to be made that this thing is separate. But you can imagine Treasury saying, well, look, we are sanctioning tornado cash. That's a broad thing. And if you're just, you know, redeploying the exact same code, we consider that part of the designation. Now, I think that designation is overbroad because they're designating. things that aren't people, but they're doing it. And so if they think that's proper, they could

Starting point is 00:22:52 consider any redeployment of the same code to be part of the designation. So we don't know. I guess is the ultimate answer. And do you find that this action maybe signals the beginning of some kind of war on privacy in blockchain technology? Like should privacy coin builders and users be on they'll look out for things like that to happen in the future? So potentially, but I don't think, but I'm not sure this signals the beginning of a war on crypto in the sense that I don't think this is part of a master plan for which this is the first step

Starting point is 00:23:33 and there are many other steps already in the works that will be dulled out. I don't think that's the case. I think this is OFAC and Treasury dealing with a specific thing, which is North Korea sanctions, and they wanted to send a message about that. At the same time, however, I think what's increasingly happening, now that crypto is over 10 years old, we're finally getting to the stage where regulators and law enforcement have for over a decade been easy for them to go to intermediaries, to block transactions, to carry out their purposes. And increasingly,

Starting point is 00:24:13 as this technology has matured and the vision of decentralized all the things is becoming more and more real, they're coming to the conclusion that when they go to say, okay, well, normally we would go, here's a mixer, let's block it, they realize, oh, wait a minute, there's nothing here. There's a automated process here. And I think at that point, they're applying the same thing. They're applying the same traditional rules that they would apply to. to a centralized entity to decentralized entities, and that's giving us these crazy results.

Starting point is 00:24:50 You see the same thing with the SEC, their recent rulemaking that's ongoing about redefining or reinterpreting the definition of what an exchange is under the Securities Act, where basically they're saying that potentially smart contracts on the Ethereum network are an exchange. That makes no sense, but they're applying those rules anyway.

Starting point is 00:25:13 Okay. All right. Well, we will have to see what happens because in general, I feel covering this space that, yeah, there's a lot of uncertainty in how these old rules apply in this new world. So thank you for keeping us posted on the latest. And I'll probably have somebody back from Coin Center in the future to tell us all about the next development. But yes, thank you so much for coming on the show. Thanks for having me. Don't forget, next up is the weekly news recap. Stick around for this week in crypto. this short break. Join over 10 million people using crypto.com, the easiest place to buy, earn, and spend over 150 cryptocurrencies.

Starting point is 00:25:53 Spend your crypto anywhere using the crypto.com visa card. Get up to 8% cash back instantly, plus 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 with the code Laura. Link in the description. Thanks for tuning in to this week's news recap. Coinbase reports a major net loss. The largest US crypto exchange Coinbase released its second quarter earnings report

Starting point is 00:26:27 and revealed a net loss of $1.1 billion. Even though the loss was higher than expected, analysts had estimated it would be $546 million, CFO Alicia Haas explained that much of it was caused by non-cash impairments, meaning the crypto on Coinbase's balance sheet. Due to accounting rules, its value was measured at the lowest point reached in the quarter. Excluding those non-cash impairments, our net loss would have been $647 million, she said in the earnings call. Coinbase named three reasons for the 30% decline in trading volume against the last quarter. First, U.S. retail customers were less active.

Starting point is 00:27:09 Second, a large amount of volume took place at offshore exchanges. Lastly, Coinbase had no exposure to the trading volumes related to the collapses or bankruptcies of Luna, Three Arrow's Capital, Celsius, and Voyager. Despite being in the red, the Coinbase team seems confident that the situation will be reversed. Down markets are not as bad as they seem. Down markets are builder's markets. If we continue to focus on building the right products and services, we will emerge stronger than before, the company said in the shareholder letter.

Starting point is 00:27:40 Coinbase, highlighting its strong financial position, believes it has ample liquidity to fund its business through a prolonged, stressed market environment. Shares of Coinbase dropped 5% after the release of the report. However, only a day after that, the Consumer Price Index report came out to save the day. The market reaction to the inflation numbers spurred coin to rise as much as 7.37% on Wednesday. Ethereum is closer to the merge than ever. Ethereum test net, Gorley, was successfully integrated with the beacon chain. This means that it switched from a proof of work to proof-of-stake consensus mechanism,

Starting point is 00:28:21 and it marks another huge milestone for the merge. Ethereum has essentially passed the final test before the merge, as Gorley was the last test net that needed to switch to proof of stake. Over the past few months, Ethereum developers had also successfully integrated other testes like Sepolia and Robson into the beacon chain. With the goryly merge test done, Ethereum should perform the full merge on Mainnet next month, likely on September 15th or 16th,

Starting point is 00:28:50 according to a call among Ethereum developers. After the favorable outcome of the goarly merge, Lido and Ethereum staking platform, saw its token LDO jump 18%. LDO is trading at around $2.70 cents and has a market cap of $800 million. When and if the merge occurs, some analysts, such as Kevin Zhou of Galwa Capital, are weighing the possibility of an Ethereum proof-of-work fork. Some exchanges, including Poloniacs, Bitmex, and MexC have confirmed they would list an Ethereum

Starting point is 00:29:25 Proof-of-Work token. However, Circle, the company behind Stablecoin USTC announced it will solely support the Ethereum proof of stake chain post-merge. In addition, Binance claimed it would be supporting the merge, but did not rule out supporting an ETH proof-of-work coin. In case of newly forked tokens, we will evaluate and consider support for distribution and withdrawal, the exchange said. Inflation goes under and markets soar. July's CPI came in lower than expected, causing crypto prices to rocket.

Starting point is 00:29:58 Analysts were estimating 8.7% inflation year-over-year and 0.2% monthly inflation. But the National Bureau of Statistics reported 8.5% and 0% respectively. The reaction of the market was positive for all assets, including cryptocurrencies. BTC and ETH, the two largest cryptos by market cap, increased more than 7% and 12% respectively. In addition, the total crypto market capitalization expanded by $100 billion, going from $1.1 trillion to $1.2 trillion. This was positive for the markets because it signals to the federal or that the economy is cooling down, making it unnecessary to raise interest rates.

Starting point is 00:30:38 When interest rates are lower, money is cheaper, and there is more capital to allocate and to risk on assets like cryptocurrencies. However, there is no consensus among investors on whether inflation has peaked or whether the Fed will slow down quantitative tightening. Bloomberg columnist Mohamed Al-Aryan said, the Fed has had a couple of really good data reports, which suggests to them that they can continue doing what they're doing, because the underlying strength of the economy is still significant. Still, there are others who are more positive. With CPI, confirmed to have peaked, Fed Pivot is next. Additionally, for ETH, Gourley Merge is later tonight,

Starting point is 00:31:16 and main net date will be set tomorrow. The stage is set for a move to roughly 2K region by end of week, wrote Howell Press, founder of North Rock Digital. BlackRock offers direct Bitcoin exposure. Investment manager BlackRock launched a private trust that will be focused solely on Bitcoin. The trust will be offered to institutional clients in the United States and is the first product provided by BlackRock that gives direct exposure to Bitcoin. Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities, wrote the company on its website. Last week, Coinbase announced a partnership with BlackRock

Starting point is 00:32:01 to offer crypto investments to its institutional clients through Coinbase Prime. Block Rock is the world's largest asset manager with $10 trillion in assets under management. These two moves show the company's interest in the sector, and also hint that institutions may finally be coming. Could Maker Dow dump its USDC? Maker Co-founder Roon Christensen proposed that Maker Dow sell its USDC reserves, which would cause the stable coin die to depeg from the US dollar. He floated this idea on the Dow's Discord channel due to the sanctions imposed by the U.S. Treasury on tornado cash.

Starting point is 00:32:37 The sanctions prompted Circle to freeze USDC in the blacklisted wallets. The sanctions are a lot more serious than I first thought, he said. At the moment, Dye is backed 60% by USDC, according to DyeStats.com. If the Dow decided to abandon USDC, it is most likely that Dye will lose its peg with the dollar. The idea received harsh criticisms from industry leaders. Ethereum creator Vitalik Buterin considers it a risky and terrible idea, as he worries about the systemic risks that a major drawdown in ETH prices could cause. Robert Leshner, founder of compound finance, was not keen on the proposition either.

Starting point is 00:33:16 Converting die into a price elastic asset will ruin it. Full stop, he tweeted. Progressive senators ask OCC to rescind rules allowing banks to engage with crypto. A group of Democratic senators, including Elizabeth Warren and Bernie Sanders, wrote an open letter to the Office of the Controller of the Currency, requesting more restrictions on banks engaging with crypto. In light of recent turmoil in the crypto market, we are concerned that the OCC's actions on crypto may have exposed the banking system to unnecessary risk

Starting point is 00:33:47 and asked that you withdraw existing interpretive letters that have permitted banks to engage in certain crypto-related activities. The senators pointed out that in light of the Terra Loonical, and the bankruptcies of Celsius and Voyager, it is clear that stronger protections are necessary to mitigate crypto's risks to the financial system and consumers. In other regulation news, the Securities and Exchange Commission and Commodities Futures Trading Commission made a joint proposal to require hedge funds to disclose cryptocurrency exposure. This will help protect investors and maintain fair, orderly, and efficient markets, said SEC Chairman Gary Gensler.

Starting point is 00:34:24 On a related note, the United Nations Development Arm also, warned developing countries against crypto. It recommended introducing regulations on crypto usage due to the risks of tax collection, monetary policy, and financial stability. Defy Protocol Curve gets hacked. Curve, a decentralized exchange for stablecoins, suffered an attack worth more than $500,000. The exploit was quite simple. The domain name service DNS, which basically translate a domain like unchainedpodcast.com, to an IP address, got hijacked. The hacker's strategy was to modify the IP address translated by the DNS for Curve.5. Within an hour, Curve announced that it had been able to revert the issue and recommended

Starting point is 00:35:09 users revoke all contracts approved on Curve in the previous hours. After establishing that no one is safe from front-end attacks, the Curve team suggested that moving to Ethereum name service, the crypto equivalent of DNS might be a good solution to this problem. Time for fun bits. It's been a while since we've heard from Dave Portnoy, who might be known to the world as the founder of Barstall Sports, but is known to the crypto community as Paperhands Portnoy for buying $1 million worth of Bitcoin at a price of $11,500, but then selling just weeks later. He's back in the news now because he's being sued over Safe Moon. Also, someone came to his door announcing that he was suing him, and that part isn't necessarily funny. Portnoy bought $40,000 of Safe Moon last year, calling it his favorite shit coin. But now it's down almost 90% and he's getting sued by people who accuse him of pumping the coin.

Starting point is 00:36:09 He tweeted, I'm only guy who loses all his money in Safe Moon and gets sued for it, he added. All right, well, thanks for tuning into this episode. Don't miss Unchained Daily Newsletter of the Biggest News in Crypto every weekday morning. Visit Unchained Podcast.com to subscribe. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Matt Pilchard, Juan Romanovich, Pamajimdar, Shashonk, and CLK transcription. Thanks for listening.

Unchained - Tornado Cash Sanctioned. Did the Government Overstep Its Bounds? - Ep. 384

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