Dispatch #117: The Noose Is Tightening Around SBF

Dec 10, 2022 3 min read

Dispatch

In this patch of your weekly Dispatch:

Disgraced SBF is under growing pressure
Staking programs launches: Nexo, ApeCoin, Chainlink
Bitcoin dominance is lower than expected

The Big Idea

Pressure (& Federal Prosecution) Mounts on SBF

One day, someday, the crypto industry will have moved long past Sam Bankman-Fried, and the initials SBF will stand as little more than a historical footnote and cautionary tale. Unfortunately, that day is not here yet and the fallout of Sam’s alleged fraud it led to continues to dominate the crypto news cycle.

This week started normally enough – you know, about a dozen interviews with various Twitter space hosts. Where it got interesting was when Congresswoman Maxine Waters asked Sam to appear at a Congressional Hearing on December 13, specifically citing his clear willingness to speak. Sam declined, and CNBC reported that Waters had said she was unwilling to subpoena him, sparking outrage. Going further, the Senate Finance Committee requested Sam’s presence at their hearing on December 14, making clear that if he didn’t come voluntarily, a subpoena would follow. SBF confirmed on Friday that he was willing to testify before Congress.

Then on Thursday, the New York Times reported that federal prosecutors were investigating whether SBF and Alameda orchestrated trades in a way that led to the collapse of TerraUSD and Luna.

Also this week, Democrat Congressman Ritchie Torres sent a scathing letter to SEC Chairman Gary Gensler asking why he had focused on wrist slaps for Kim Kardashian instead of looking deeper into FTX. That latter lawsuit against Kim K, however, has now been dropped, so it might be a sign of how the tables are turning.

The Latest In…

Mining

Regular Dispatch readers know that mining has had a rough go of it, with high difficulty and significant hashrate (i.e. significant competition) combining with depressed prices. Add regulatory concerns to the list. A European Central Bank board member said this week that cryptos that rely on energy-intensive mining should be banned. Meanwhile in Texas, Bloomberg writes that a once thriving (and subsidized) mining sector is showing signs of decay, with some of the leading miners going bust. This feels like an inevitable consolidation period.

The Latest In…

Staking

Staking has been a key theme of crypto discourse recently. This week, even despite all the chaos, two major projects AND yours truly showed there was still demand for staking opportunities.

Chainlink started offering a limited amount of staking and saw more than $50M staked within the first 30 minutes.
Bored Apes also saw $30M of staking of the APE currency in its first day - and that’s without the US where it wasn’t available.
Nexo launched ETH ‘Smart Staking’ – as with everything else on our platform, we’ve made ETH staking feel smooth and familiar – so all it takes for you to start validating the network is to swap your ETH for NETH (Nexo Staked Ethereum) and you’re ready to earn rewards.*

All in all – staking showing some bullish signs of life!

The Week’s Most Interesting Data Story

Why Isn’t Bitcoin Dominance Going Up?

One of the consistent historical truths of the crypto industry is that when the bear market rears its ugly head, money flows out of riskier coins and Bitcoin makes up a bigger % of the industry. In other words, Bitcoin Dominance goes up. In 2022, however, we’ve seen none of that. For most of the 2018-2019 bear market, for example, BTC dominance ranged between 50% and 70%. Right now it’s at 40%. What gives? There isn’t a consensus right now. Some think it reflects people straight up leaving the market. But others point to continued speculation as the answer. What’s your best answer?