A tweet gone wrong

When the FBI sleuths crypto Twitter

January 06, 2023

And we’re back! It’s only been two weeks, but we sure missed being in your inbox. Markets might still be bearish, but we can’t wait to unpack all of the juicy crypto headlines we’re sure this year will bring. Let’s get straight to it!

Today: Justice for DeFi, good news on the tax front, and a FUD-quenching report about Binance.

—Angelina

Picking Out DeFi’s Bad Apples Mangoes

Important life lessons we should all remember: 1) you can get 50-cent refills at Starbucks and 2) bragging about your crypto exploits on Twitter could get you arrested in Puerto Rico—just like the infamous Mango Markets exploiter was last week.

Here’s what happened:

  • In October, Avraham Eisenberg drained Mango Markets of $110 million worth of crypto, pushing the decentralized trading platform to the brink of insolvency.

  • He then took to Twitter for what he considered to be a victory lap, calling it a “highly profitable trading strategy.”

  • But unfortunately for Eisenberg, FBI agents were among the degens riled by his boasting Tweets. He now faces charges of commodities fraud and commodities manipulation in the U.S., according to a court filing.

Why does this matter for DeFi? Two reasons:

1) This potentially makes Eisenberg the first person in the U.S. to face charges for manipulating a decentralized trading platform.

  • Because DeFi is such a nascent field, many jurisdictions simply lack a clear legal structure concerning crime in the space—which makes laws rare and criminal punishment for violating them even rarer.

  • What’s more, DeFi protocols provide plenty of obfuscation paths for bad actors since they’re not run by singular entities.

2) In law, precedents are super important—the outcome of Eisenberg’s case will have an overarching impact on DeFi cases down the line.

Bottom line: Eisenberg’s arrest is good news for DeFi because it shows that regulators are paying more attention to punishing crypto’s bad apples, even if the regulatory landscape is unclear at best. It’s also a message to hackers that the days of unscathed exploiting of decentralized finance protocols might just be over.

Did Someone Say Less Taxes?

Any procrastinators out there know how much April 14 can suck—filing your taxes has to top the list of dullest grown-up tasks. But…what if…we just didn’t have to do the worst part of adulting?

The UK is testing the waters—let me explain.

The UK made life for crypto hodlers a bit easier last week when Rishi Sunak’s government enforced a tax exemption for foreign investors buying crypto through local financial entities. This means that foreign investors won't be forced to pay UK taxes just for hiring UK-based brokers or investment managers for their crypto assets.

Big picture: The move is part of Sunak’s effort to transform the UK into a global crypto hub. The new prime minister’s plans include creating a safe regulatory environment for crypto and allowing stablecoins to be used as a means of payment.

Moving forward: The UK has seen better days, economically speaking—the wide-ranging effects of Brexit, global inflation, and political turmoil have hit the country hard. But those challenges can become opportunities to restructure and build something new. Incentives such as tax breaks are a great way to attract foreign investors and the capital they bring…especially during times like this, when the regulators of established crypto hubs like Singapore are growing more wary after 2022’s blowups.

Binance Unlikely to Fail

Binance is “solvent, liquid, and stable,” according to a recent research report from global asset manager Bernstein.

But…Binance has some challenges. Two of the most meaningful, per Bernstein?

  1. Moving Binance’s offshore holding company in the Caymans onshore, even at the cost of short-term business

  2. Facing growing competition from decentralized exchanges as traders seek refuge in DeFi protocols following FTX’s collapse

Why it matters: This is reassuring news amid growing FUD about the legal battles and solvency situation of the world’s largest crypto exchange. Binance accounts for 75% of the global crypto trading market, so good news for Binace is good news for crypto.

In other news:

  • SBF pleaded not guilty to criminal charges at his arraignment on Tuesday. He faces trial in October.

  • What crypto winter? NFT sales in 2022 nearly matched those of 2021’s bull run.

  • Coinbase has to pay $100 million for its insufficient anti-money laundering practices.

  • Indonesia’s government plans on launching a crypto exchange this year.

  • Core Scientific will shut down its mining rigs tied to its largest client, Celsius Mining.

Crypto Job Board

And that’s what you need on your radar today in crypto. What are your predictions for crypto in 2023? Shoot us a reply. See you back here on Tuesday!