SBF vs. CZ

Gm, everyone. Do you know what 50,676 Bitcoin looks like? Okay, it just looks like numbers on a screen, but that’s how much the U.S. Justice Department seized in a conviction tied to the 2012 Silk Road web fraud. Part of it was held “on a single-board computer that was submerged under blankets in a popcorn tin stored in a bathroom closet...”

…Anyway, today: Binance cuts ties, European lawmakers drag their feet, and crypto comes for your cellphone. Let’s dive in (popcorn tins optional).

—Angelina & Vincent

Binance Is O-U-T on S-B-F

For a moment there, it seemed as though we were in for smooth sailing during Q4 after a year of turbulent waters. But this wouldn’t be crypto if there wasn’t another storm brewing on the horizon—accompanied by a fair share of Twitter drama.

The storm in question: Binance CEO Changpeng Zhao (CZ) is severing ties with FTX founder Sam Bankman-Fried (SBF).

Here’s what happened:

CZ Tweeted on Sunday that Binance is liquidating its holdings of 23 million FTT (the native token of rival exchange FTX). Binance will sell $500 million worth of FTT over the next few months.

In a follow-up Tweet, CZ threw shade at SBF for lobbying against other crypto industry players behind their backs. He also implied that SBF’s crypto empire is about to come crashing down.

Ok, but why? It wasn't a shot at FTX as a Binance competitor, according to CZ. Instead, it was CZ's means of voicing concern re: the future of SBF’s enterprises.

• SBF is the CEO of both FTX and Alameda Research, FTX’s struggling venture arm. Both are influential forces in the crypto world.

• But CZ cited “recent revelations” about Alameda as the motivation for Binance's exit.

CZ’s referencing a recent report by Dirty Bubble Media accusing Alameda of insolvency, arguing that it relies on the same flywheel scheme that destroyed the Celsius Network in June.

Big picture: While SBF is accusing CZ of attacking his exchange with rumors, crypto Twitter is worried that Alameda’s potential insolvency could cause a death spiral of liquidations—triggering the next big catastrophe for crypto.

If the value of FTT drops too much due to panic selling, Alameda lenders are going to come knocking on FTX’s door for reimbursement. If FTX doesn’t have enough funds… let’s not think about that.

Looking ahead: Thousands of FTX customers have already withdrawn millions from the exchange. It’s too early to say whether FTX will really go bankrupt—according to FTX, all funds are safe (for now). But FTX appeared Tuesday morning to have stopped processing withdrawal requests, according to on-chain data.

—Angelina

European Lawmakers Take Their Time

European Union lawmakers gave themselves an extension on their crypto homework last week. The European Parliament is delaying its vote on the Markets in Crypto Assets (MiCA) regulation until February, according to CoinDesk.

Why the delay? EU lawmakers felt that the text of the legislation was too complicated to hold a vote in December as planned. The details of the proposed legislation?

• If passed, the MiCA legislation would outline reserve requirements for stablecoins with the intention of avoiding another Terra-style collapse.

• The law also requires crypto companies to seek authorization from national regulators before serving EU citizens.

Bottom line: Educating lawmakers who represent dozens of countries that speak 24 different languages is difficult—but not impossible. While this would be the largest crypto regulatory package to date, we think it will pass and take effect next year.

If passed, the law will affect just about all crypto companies in one way or another, but especially stablecoin issuers—MiCA will make it tougher for them to operate in the EU (at the same time as it makes those issuers more financially sound).

The (literal) zoom out: Regulatory murkiness isn’t slowing European crypto developments down. On Monday, crypto exchange Gemini announced that it would expand into five more EU states, adding to the seven it’s already in.

—Vincent

Spend Too Much Time on Your Phone?

We do too. Luckily, scrolling crypto Twitter while waiting in line at Starbucks could top up our wallets next year.

Solana Labs is partnering with Helium to offer Helium Mobile on Solana’s upcoming Saga smartphone, the two companies announced this weekend. Helium Mobile, the first crypto-based wireless carrier, pairs Helium’s decentralized 5G coverage with T-Mobile’s U.S.-wide cell service.

Why it’s cool: Talk about real-world web3 integration that’s actually useful. In addition to driving usage to the Helium Network, the partnership also rewards users with crypto for simply using their cell service.

FWIW, price tag for a Saga phone: $1,000.

—Angelina

In other news:

• The Twitter exodus has sent half a million new users to the decentralized Mastodon platform.

• Beeple is bringing 3D NFTs to Solana.

• MakerDAO now generates half of its revenue from real-world assets like short term bond ETFs.

• WTFcrypto is a newsletter for anyone who’s ever been confused about crypto. They teach over 2,500 readers about crypto in a way that finally makes sense using analogies and pictures. Stop falling behind in crypto by signing up now.

• Bitcoin miner Iris Energy is looking at a default on a $103 million worth of equipment loans.

• OpenSea will allow NFT creators to blacklist marketplaces that do not pay royalties.

And that’s what you need on your radar today in crypto. Reply and let us know if you’re trying out Mastodon or sticking to Twitter. See you Friday!