ECB president Christine Lagarde was tricked into speaking openly about their plans for controlling via money in a video call with a fake Zelensky. Lots of progress on the central bank digital currency (CBDC) front in the EU, UK and US. All of it inevitably bad for privacy and freedom. Some rants below. Crypto lobbying has surged by 922% in six years. Speaking of which, the downfall of FTX (and the $74 million SBF donated to politicians) has led to a less than friendly crypto regime in the US. And the usual hacks and single supposedly joke tweets affecting meme-coin markets.
CBDC will be used for ‘control,’ ECB president admits in vid chat with fake Zelensky
ECB President Christine Lagarde has admitted that a digital euro will be used to control payments. Thinking she was speaking with Ukraine President Volodymyr Zelensky, she said she’s “personally convinced that we have to move ahead” with the digital euro to avoid depending on “unfriendly countries’ currency” or a currency by a “private corporate entity like Facebook or like Google.” When “Zelensky” pointed out the obvious, that “the problem is they [European protestors] don’t want to be controlled” by a central bank digital currency, Lagarde admitted that “there will be control, you’re right. You’re completely right,” but said it would be a “limited amount of control”, adding “for very small amounts, anything that is around 300, 400 euros, we could have a mechanism where there is zero control. But that could be dangerous.” Turns out she’d been pranked with a fake Zelensky, a fact which made the video, which is well worth watching, go even more viral. Needless to say anyone who wishes to avoid a totalitarian level of government control hasn’t exactly loved her ideas about control over people and payments. Meanwhile, the ECB’s investigation into a digital euro, launched in July 2021 is going full stream ahead…
Bank of England Building Its CBDC Team
If one central bank digital currency isn’t bad enough, here’s the UK one. The Bank of England is hiring to build out a 30-strong team for its “digital pound”, with its website listing job openings including “digital pound solutions architect” and “digital pound security architect.” The BoE and the UK Treasury are exploring the feasibility of an official digital currency by 2030. It’s nicknamed “Britcoin”. They said in a consultation paper, “At this stage, we judge it likely that the digital pound will be needed in the future.” It’s been pointed that out that central bank controlled digital currencies could curb the power of Big Tech, major card networks, and payment networks in consumer payments. Scarily, they can and will also curb the power of the individual. One of the biggest risks CBDCs bring is programability, or the ability to set rules to payments. It’s not exactly like one can expect the government to vote for individual freedom over governmental control.
CBDCs debate in the US- “CBDCs will lead to absolute government control”, report
CBDC work is also advancing in the US, where the debate over the issuance one is intensifying. Concerns are being raised about the immense power it could grant governments and the potential for abuse. While CBDC proponents argue it could advance financial inclusion and improve payment efficiency, more realistic critics point to the downside risks of misuse and the possibility of a CBDC being used for pervasive financial surveillance. The potential for centralised control over commerce and individual financial transactions could – and inevitably, will- undermine individual rights. Alternatives to CBDCs, such as decentralised finance (DeFi) protocols and postal banks, can achieve many of the benefits without the risks, such as total state control. Instances of governments using the current financial system to exert control, such as in China and Canada, which have shown how easily governments can block transfers and payments at their whims, illustrate some of the many potential dangers of a CBDC-based system.
Texas lawmakers propose a gold-backed state digital currency
Texas lawmakers have introduced bills proposing the creation of a state-based digital currency backed by gold, despite objections against central bank digital currencies by several US lawmakers. The digital currency, according to the bills, would be backed by a fractional equivalent amount of physical gold. The bill says “The trustee shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold”. It also stated that a fee may be established “at any rate necessary” to cover the costs of administering this chapter. The legislation, which has not yet been passed or voted on, would take effect on September 1, 2023 if approved. This comes amid concerns that CBDCs will grant governments too much power and potentially undermine financial privacy..
Crypto Lobbying Expenditures Surge 922% in Six Years – $25 Million so far admitted to
Cryptocurrency companies have upped their lobbying game, by 922% in the past six years, according to a study by Money Mongers. (Known) crypto lobbying contributions hit nearly $26 million in 2022, with Coinbase, the Blockchain Association and Robinhood spending the most, respectively $3.30 million, $1.9 million, and $1.84 million. Half of the total crypto lobbying spending in the last six years happened in 2022 alone. Coinbase’s lobbying expenditure went up 4137%, Binance.US’s 500%, and FTX.US’s by 1340%. But all this lobbying doesn’t guarantee success, as skepticism about the crypto industry’s impact on the financial world continues to throw a wrench in the works. We’re not exactly at a place of crypto-friendly legislation yet.
Thanks Sam! How FTX Led to World’s Worst Crypto Policy
Speaking of lobbying/ giving money to politicians… The recent crackdown on crypto exchanges including Kraken, Coinbase, Paxos and Binance as well as other crypto platforms following the rapid collapse of FTX in November has raised concerns about the impact on the blockchain and digital asset industries in the US. The Biden administration’s actions and lawmakers from both parties have been described as a reaction to FTX founder Sam Bankman-Fried’s financial influence, which left politicians (beneficiaries of over $74 million in political donations from FTX) in an embarrassing position. A concern now is the loss of US influence on the direction of digital assets. The technology can be built, and can serve, anywhere, and developers know perfectly well they can easily choose to base in other countries with a more welcoming stance. This hostile environment may drive innovation away from the US, with some already considering it too risky to continue operating within the country. The “war on crypto” could pose a significant risk to the US’s economic and technological leadership. The technology itself could possibly impose a self-correcting force on the political system to avoid the worst outcomes. We’ll see.
New Court Filing Shows FTX Kept Crypto Wallet Keys On AWS
Bankrupt crypto exchange FTX stored private keys to customers’ wallets on Amazon Web Services (AWS), according to a recent report by current CEO, John J. Ray III, who seems to be enjoying spending his very well-paid time writing about how bad its former management was. The exchange, which spectacularly collapsed within 10 days in November 2022, is having all its extensive mismanagement aired in court documents, revealing mismanagement of funds (basically commingling and/or theft according to numerous sources) and other less than ideal business practices that have resulted in lots of people losing lots of money, cumulatively billions. Storing private keys on AWS is one of the surest ways to increase the already high likelihood of hacks and breaches. It’s really not a safe way to store private keys. Despite this, FTX executives were said to be well-versed in “alternative facts” when asked about implementing cold storage and reportedly ‘made up lies when asked how far it had implemented cold storage.’
Binance US Struggles to Find Banking Partner
The US branch of Binance is struggling to find a banking partner after the collapse of Signature Bank and Silvergate Bank. Since both its former banking partners failed suddenly last month (helped by regulators), Binance US has not been able to secure direct banking services despite trying at multiple lenders. For now, it’s slowing down deposit and withdrawal services for customers and is facing deposit and withdrawal issues as it transitions to new banking and payment service providers. Binance US is currently using Prime Trust LLC, a crypto services and fintech firm, (not a bank) for storing its users’ US dollars. That’s maybe fine for now, but to continue, it needs a bank. It’s is facing significant regulatory backlash in the US, including a lawsuit from the CFTC and possible investigations by the SEC and the Justice Department. It’s also lost its partnership with Paxos and its stablecoin BUSD. Meanwhile, the whole industry is struggling to find new banking partners since it seemed the main banks serving crypto companies were strategically closed to stop them from doing so.
Decentralised exchange dYdX ’winding down‘ of services for Canadian users
Cryptocurrency derivatives exchange dYdX is exiting the Canadian market, restricting user accounts over the next days. It will halt onboarding new Canadian users, and on April 14, will shift existing Canadian users to “close-only mode,” allowing them to withdraw funds. dYdX blamed regulatory conditions, stating, “We hope that the regulatory climate in Canada will change over time to allow us to resume services in the country.” This decision follows the Canadian Securities Administrators’ announcement of additional registration requirements for crypto exchanges, which prohibit platforms from permitting Canadian clients to trade certain crypto assets. In September 2022, dYdX (rightly) faced criticism for a promotion offering a $25 deposit bonus for identity confirmation using a live webcam image. The exchange later ended the program citing “overwhelming demand” rather than privacy concerns.
Sushi DEX Approval Contract Exploited For $3.3M, 100 Eth so far recovered
A bug in a smart contract on DeFi protocol SushiSwap led to $3.3 million in losses on April 9th. The approval function in Sushi’s Router Processor 2 contract was affected, causing the losses within a few hours. The attack exploited a vulnerability which is used for trade routing on the SushiSwap exchange. Lead developer Jared Grey said they are working on a retrieval plan to secure the stolen funds and compensate affected users. SushiSwap has since recovered 100 Eth worth approximately $186,000 from a hacker’s drained wallet, thanks to blockchain security firm Blocksec, by intercepting a transaction from prominent user @0xsifu’s wallet to the hacker’s wallet. Much of the missing $3.3 million is also thought to come from Oxsifu, amongst others. Where this starts to get interesting, is that convicted fraudster and co-founder of the Quadriga exchange scam Michael Patryn resurfaced going by the username Oxsifu. This will be one to watch the crypto analytics unravel on….
South Korean Crypto Exchange Gdac Hacked for Nearly $13M
It wouldn’t be a crypto newsletter without a report of a crypto exchange hack. So here’s your crypto exchange hack this week. South Korean crypto exchange Gdac lost nearly $13 million, or 23% of its total custodial assets. Hackers transferred the crypto from the exchange’s hot wallet to an unidentified wallet. The exchange has alerted the authorities and says it is working to recover the funds…
Terra’s Do Kwon converted illicit funds from LUNA to Bitcoin
South Korean prosecutors have identified $314.2 million in illicit assets connected to Terraform Labs co-founder Do Kwon and his associates. Kwon reportedly converted most of the illicit funds into Bitcoin using overseas crypto exchanges, making them almost impossible to recover and no longer under the jurisdiction of South Korean authorities. Investigations revealed that Kwon siphoned nearly $100 million worth of Bitcoin from Terra after its collapse. Other reports accuse Kwon of siphoning off $80 million a month before the collapse of the Terra ecosystem. South Korean authorities have requested Binance to halt any withdrawal request associated with Kwon, and Binance confirmed its cooperation with prosecutors. Terra, which experienced a $40 billion collapse in May 2022, was later found to be a case of fraud with Kwon at the centre. Despite an arrest warrant and an Interpol red notice, Kwon evaded arrest until March 23 when caught in Montenegro.
Bitcoin Korea Premium Index Turns Red, Decline Incoming?
The Bitcoin Korea Premium Index, which measures the difference between Bitcoin prices on South Korean exchanges and foreign platforms, has recently declined into negative values, a trend that could lead to a drawdown in the cryptocurrency’s price. Positive index values indicate higher buying pressure from South Korean investors, while negative values suggest increased selling pressure. The index has been positive during the rally that began in January, but its recent decline into negative territory implies that buying pressure has decreased, possibly flipping into selling pressure. Historically, when the index has shown strong negative values, the Bitcoin price has experienced a decline shortly after.
North Korean Hackers Have Stolen Over 1$ Billion In Crypto So Far
North Korean hackers have reportedly stolen an estimated $630 million to over $1 billion from the crypto industry, doubling the amount stolen in 2021, according to a US Security Council annual report. The report highlighted that these hackers employ advanced techniques and strategies to exploit loopholes in the crypto market. The report stated ‘The country used increasingly sophisticated cybertechniques both to gain access to digital networks involved in cyberfinance and to steal information of potential value, including its weapons programs.’
1st Nuclear-Powered Bitcoin Mine In U.S. Reports 9,000 Facilities Energized In Q1
America’s first nuclear-powered Bitcoin mine, Nautilus, seems to be doing well for itself. The Nautilus mining center, a joint venture between TeraWulf and Cumulus Data, a subsidiary of Talen Energy, was designed to be a green data center running on nuclear power. By January 2023, its shell was completed, powered by a 2.5 GW nuclear power station. The facility has so far used over 91% zero-carbon energy to power around 9,200 miners, contributing to owner and operator TeraWulf’s average operating hash rate of 3 EH/s for the month, a 50% increase compared to February. Not quite sure how anyone can describe nuclear as green, but anyhow. Bitcoin mining has gone nuclear.
Dogecoin Jumps 5% After Burger King Hints At BiteCoin’. Yes, this actually happened.
And in another bit of ridiculous crypto news that shows that markets are basically a joke and as manipulable as you like, Burger King UK tweeted “brb I’m making BiteCoin”, and separately tweeted that it wanted an “office doge”. Because it’s crypto, two joke tweets is enough to shift markets and caused the memecoin to rise by nearly 1.0% in 24 hours and 4.5% in seven days. Fans seem to hope Burger King will start accepting their preferred digital currencies. Twitter had a bigger effect on Doge’s price. When it temporarily replaced its blue bird with a doge dog, Doge’s value jumped by 35% in just a week. This, when Elon Musk is facing a $258 BILLION lawsuit for allegedly inflating the price of Doge by tweets.