Why Twitter anons are sending crypto to celebrities – TechCrunch

Welcome back to chain reaction.

Last week we talked about a hack that gave the word “trustless” a new, ironic meaning. This week we’re going to look at one of the most divisive aspects of crypto – privacy.

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All confused

A weekly window into the mind of a veteran crypto reporter Anita Ramaswamy:

Tornado Cash was the talk of the town in crypto circles this week. The US government’s Office of Foreign Asset Control (OFAC), a watchdog within the Treasury Department, imposed sanctions on the cryptocurrency mixer for its role in aiding money laundering. Hackers backed by North Korea have used the Tornado Cash platform, among others, to mask stolen cryptos linked to some of the most notorious hacks in web3 to date, including last week’s Nomad heist and the play-to-play hack. Earn video game Axie Infinity earlier this year.

But in imposing sanctions, OFAC essentially used a sledgehammer to crack a nut. The agency’s official statement on the matter states that the platform has facilitated $7 billion worth of money laundering — which happens to be the total value of crypto assets sent via Tornado Cash since its inception in 2019. Meanwhile, blockchain analytics provider Elliptic says only about $1.5 billion in Tornado funds is actually linked to crime, including ransomware attacks and fraud. The rest, Elliptic argues, could “include legitimate uses of blenders like Tornado, such as to maintain financial privacy.”

So what are some of these legitimate uses? An example came from Ethereum co-founder Vitalik Buterin, who confessed on twitter that he used the service to securely send donations to Ukraine without the knowledge of the Russian government.

However, OFAC’s dictum does not distinguish between criminal and legitimate use cases. As a result, many law-abiding crypto users are likely to suffer. Two major crypto infrastructure providers, Alchemy and Infura, blocked access to their API from all wallets using Tornado Cash. According to data from Dune Analytics, Circle has reportedly frozen around $75,000 worth of its USDC stablecoins linked to Tornado via a shared wallet.

Of course, internet hoaxes have also mixed in, as is common in the crypto world. Some sent crypto via Tornado Cash to well-known celebrity wallets such as Jimmy Fallon and Shaquille O’Neal in order to troll them by banning their wallets under sanctions rules.

OFAC’s dogged crackdown seems like a botched approach, raising more questions than it solves when it comes to enforcement. Only time will tell how the latter plays out, but in the meantime, the crypto community is understandably quite upset.

the latest pod

This week on Chain Reaction, Jaquelyn and anita the show ran while Lucas was on vacation. Jacquelyn just came from an exciting conversation Friday night with Vitalik himself, so she shared some of his comments on where the crypto journey is headed.

We then dived into the news that Tornado Cash was sanctioned in the US, Coinbase’s disappointing Q2 earnings and dispute between Binance and India’s largest crypto exchange WazirX over a transaction that allegedly happened (or did) two and a half years ago?

Be sure to listen to keep up with the latest tea in crypto, and tune in next Tuesday to see Anita and Lucas talk to Li Jin, a Web3 investor focused on the creator economy concentrated at Variant Fund.

Subscribe to Chain Reaction Apple, Spotify or your alternative podcast platform of choice to keep up with us each week.

follow the money

Where startup funds are moving in the crypto world:

  1. Jump Crypto led Injective’s $40 million round to support the expansion of DeFi applications.
  2. Pinata raised $21.5 million in a newly announced Series A and seed round from investors including Greylock and Pantera.
  3. CreatorDAO, a decentralized content creator platform, raised $20 million in a round led by a16z and Initialized Capital, which included celebrities Paris Hilton and Liam Payne.
  4. Blockchain gaming company Lysto raised $12 million in a round led by Hashed, Square Peg and Beenext.
  5. Unstoppable Finance snagged $12.8 million for its DeFi wallet in a round led by Lightspeed.
  6. Kurtosis, a crypto-focused developer tools system, raised $20 million in a Series A round led by Coatue.
  7. Blockchain payments platform Ansible Labs has raised a $7 million seed round led by Archetype.
  8. Zero-knowledge crypto startup RISC Zero has raised $12 million in a seed round led by Bain Capital Crypto.
  9. raised $4.5 million from investors including OpenSea for its NFT mining platform.
  10. Cashmere raised $3 million at a $30 million valuation from investors including Coinbase Ventures to build a Solana wallet for businesses.

TC+ analysis

Here is some of this week’s crypto analysis, available on our Senior Reporter TC+ subscription service Jaquelyn Melinek:

5 takeaways from Coinbase’s disappointing Q2 results

Coinbase, which was once extremely profitable thanks to a surge in crypto-related trading activity following its direct listing in 2021, is now working to contain expenses, weather the ongoing “winter” in its market, and stick to earlier full-year profitability targets. What follows are five insights from Coinbase’s report that caught the eye of TC’s Alex Wilhelm and Ram Iyer.

As Telegram grows, so does crypto traders’ reliance on the app

The crypto community has relied on social media sites like Twitter or messaging apps like Discord and Telegram to interact. However, some say that Telegram is the ultimate hub for communication and information – a must-have place to be in the crypto community. “Telegram usage is the bedrock of the crypto community,” the Telegram Channel Unfolded founder, who goes by the username Nakamotocat, told TechCrunch. “Projects have come and gone, players have risen and fallen, but much of the discourse between different projects and market participants takes place on Telegram, and that remains a constant.”

The Ethereum co-founder sees a diminishing role as the blockchain becomes increasingly decentralized

As the Layer 1 blockchain Ethereum continues to focus on a roadmap to greater decentralization, its co-founder Vitalik Buterin believes that moment may come sooner than expected. Looking ahead, Buterin believes the next decade will be pivotal for crypto. “I generally think that over the next 10 years, crypto needs to transform into something that isn’t based on promises of being useful in the future, but is actually useful.”

The Solana co-founder says NFTs have “50 different use cases” that could integrate millions this year

It feels like yesterday that the NFT boom caught the attention of the crypto community and made waves even outside of the Web3 world. But about a year later, the NFT hype has died down a bit. But that’s not stopping some in the crypto world from remaining bullish on non-fungible tokens. “I think within NFTs it’s just scratching the surface,” Solana co-founder Raj Gokal told TechCrunch. “I think NFTs have 50 different use cases that seem lumped together. I think we expect the majority of [crypto] Projects using NFTs.”

Thank you for reading! And—again—to get this in your inbox every Thursday, you can sign up for TechCrunch’s newsletter page. Why Twitter anons are sending crypto to celebrities – TechCrunch

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