Dispatch #102: Tether Challenges OFAC Censorship

Aug 26, 2022•3 min read

In this patch of your weekly Dispatch:

  • Tether says no blacklisting until law enforcement requests it
  • YouTuber on YouTuber violence
  • In the Nexoverse: The Merge & the AMA

The Big Idea

Tether vs. OFAC?

In the wake of the announcement that the US Treasury Department’s Office of Foreign Asset control was sanctioning Tornado Cash (TC), many protocols and projects quickly moved to blacklist Tornado. Among these:

  • Circle froze TC-associated addresses,
  • Github suspended TC accounts,
  • Top Ethereum miner Ethermine halted processing of any blocks that contained TC txs.

The latter’s move marked the first time censorship had happened at the protocol level.

One project that did not race to blacklist Tornado-related addresses was Tether. This week, they reaffirmed that decision. In a statement, they argued that “OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on OFAC’s SDN List” and said that no law enforcement had asked them to do as such. In fact, they argued that a premature rush to do so could be damaging not only to the industry but to the law enforcement process.

Historically, challenging the OFAC hasn’t been a particularly great strategy. But is there a chance that Tether is right to turn against the tide? Only time will tell.

The Latest In…

Crypto YouTuber Showdowns

Controversial crypto YouTuber Ben Armstrong decided recently to sue another YouTuber, Atozy, for defamation. Late last year, Atozy published a video accusing Armstrong, aka BitBoy, of scamming his fans and saying that the SEC would be coming after him. Apparently, BitBoy didn’t realize the federal suit would become public, because boy howdy, when it did it, was textbook Streisand Effect.

While the original video had a respectable but ultimately limited 180K views, videos created about the suit – mostly negative towards BitBoy – have racked up millions of views this week alone. Atozy also raised ~$200K in crypto donations. Within days, BitBoy backed off and dropped the suit. And that, kids, is how not to defend one’s reputation.

The Latest In…

NFTs

You’ve probably noticed NFTs have been quiet around here recently, but this week has seen some interesting developments:

  • A Solana collection (DeGods) briefly had the highest volume of any NFT.
  • Crypto Punks re-flippened Bored Apes to claim the highest floor price among NFT collections.
  • This despite the fact that M&Ms is printing candy with Apes on them now.
  • Pudgy Penguins continue to crank, with a floor price up 69% this month.
  • Sports NFTs are heating up with new collections from Tom Brady and Atletico Madrid.

The Latest In…

The Nexoverse

Tanned and ready for fall-time action, the Nexo team has been busy preparing for the Merge, among so many other exciting developments:

  • As the Ethereum Merge draws near, check out our position (tl;dr we’re super excited about PoS and looking at the logistics of supporting a PoW fork). Our Co-founder Antoni told CNBC he expects ETH to outperform BTC. 😎Do you agree, maxis?
  • When Nexo Pro? Can’t reveal yet but it’s worth checking out the topical AMA session with our VP of Product Development Yasen Yankov to hear about our upcoming product’s inner workings.
  • Speaking of the Nexo product kitchen, the first #PeopleFundamentals interview with our Product Owner Elitsa Taskova makes for a fun and relatable weekend read.

The Week’s Most Interesting Data Story

In Case It Wasn’t Clear, This Is a Painful Bear Market

You’ll have to forgive us for this one. You’re living through the bear market, so you know how painful it is. But we just want you to make sure you know, you’re not alone. When it comes to long-term Bitcoin holders, only about 4.4% of trading days (193 out of 4421) have seen greater Bitcoin-denominated losses. The only upshot is that this sort of pain tends to be an inevitable part of each bear cycle, so perhaps we’re near a bottom.

Hot Topics

What the Community Is Discussing

Cheers, Jim.

It really does feel different to the last bear market. In a good way.

Some men just want to see the world burn.

What to Watch for Next Week:

  • Will Tether’s request for law enforcement be answered?
  • Will markets continue their quiet in the last week of the summer?
  • Will the Fed keep up its insistence that there are more rate hikes to come?