GM, frens! Ambire here with our weekly newsletter. Today we’re talking about SBF’s trial, Web3 On Fire’s latest podcast episode, SafeMoon founders being arrested, Elon Musk FUDing NFTs on latest Joe Rogan podcast episode, CME / Binance flippening and SEC going after PayPal’s stablecoins.

Let’s get down to it:

SBF found guilty

SBF's trial continues to captivate the crypto industry as it progresses through its second week. The cross-examination of Sam Bankman-Fried, the CEO of FTX and defendant in the case, has been a rollercoaster ride of "I don't know," deferrals, and seemingly contradictory statements.

Beyond its impact on the industry, the trial itself has been a fascinating display of legal tactics and maneuvering. Danielle Sassoon, Assistant United States Attorney, has been relentless in her questioning of Bankman-Fried, often catching him in contradictions or using evidence to challenge his answers.

SBF said "I'm not sure" more than 150 times during Monday's cross-examination, leaving many wondering if this will be enough to cast reasonable doubt over the government's case.

He also admitted he never knew how Alameda's trading algorithms, asset valuations, investment strategies, or even crypto in general worked during his testimony. Yet, it didn’t save the poor dude.

After a trial lasting over a month, the jury reached a decision in less than four hours, finding Bankman-Fried guilty on all seven charges.

These charges include wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. Sentencing is scheduled for March 28th of next year. Sam is facing decades in prison.

Web3 on Fire: DAO Building with Native Collaborative Tools

In the 10th episode of the Web3 on Fire Podcast, host Rob Edwards engages in a deep and insightful discussion with Kush Agarwal, the co-founder of Samudai. As they navigate the intricacies of decentralized autonomous organizations (DAOs), Kush’s insights and experiences in the Web3 domain take center stage.

Listen to this week’s episode now:

People behind SafeMoon get arrested

SafeMoon is something every 2021 degen knows (and cries over missing).

The classic crypto story of a dream team with a revolutionary idea, a token that goes from zero to 9 billion dollars in just a few months, and a rug pull that leaves investors' lives ruined.

Now though, the people behind SafeMoon were charged with conspiracy to commit securities fraud, wire fraud, and money laundering by the US Attorney's Office for the Eastern District of New York. Two of the three founders/executives, Braden John Karony and Thomas Smith, were arrested while the third one, Kyle Nagy remains at large.

But what exactly happened? According to prosecutors, the trio diverted millions of dollars from SafeMoon's liquidity pools for personal use, including luxury purchases like a custom Porsche sports car and real estate.

In addition to facing criminal charges, they also face civil charges from the SEC for offering unregistered securities and failing to deliver promised profits.

The SEC has classified SafeMoon as a "crypto asset security" and expressed concerns regarding the absence of transparency and accountability in DeFi (isn't that the whole point?).

A lot of people in the crypto community are shaking their heads right now, saying "I told you so" and "we saw this coming" while others are still hoping this would bring the coin some notoriety, and as result, value. And of course, there are those who just can't let go and continue to hold on to their SFM tokens with the hope that one day they'll be worth something again.

But what does this mean for the broader crypto industry? Probably means that it's time for the shady founders to clean up their acts. The times of easy money and speculative investments are slowly coming to an end, and narcs are taking notice.

Elon Musks blasts NFTs (again)

Elon Musk has been a devout proponent of crypto, but it seems like one thing he hates with passion - NFTs. While appearing on Joe Rogan Experience podcast, Musk called out the idea that many NFTs are not fully stored on-chain. This statement has caused quite a stir in the NFT community as it questions the authenticity and security of these digital assets.

So the thing is, some of the actual pictures that represent your NFTs are hosted on IPFS hosting services, or some other server outside of the blockchain. In simpler terms, the link to your JPEG is what gets stored on the blockchain and not the actual picture itself.

IPFS stands for InterPlanetary File System, which is a decentralized storage network that allows users to store and retrieve data without relying on a central server. Store it for a long time, but not forever.

Getting back to Musk on the podcast, he pointed out that if the company hosting the image goes out of business, the NFT would essentially become valueless as there won't be any picture to link it to. This is a valid concern and has been a common criticism of NFTs since their boom in 2021, so he might have a point, however, he is not entirely correct.

There are some NFT projects on the Ethereum network that do store their artwork directly on the blockchain. These include popular pixel art projects like CryptoPunks and Moonbirds. Art Blocks, for instance, is a generative art platform that stores the artwork itself on-chain using the artist's algorithms. BTC Ordinals are fully stored on-chain as well, with no external servers involved. Therefore, it is not entirely accurate to dismiss all NFTs as not being fully on-chain.

Another problem is Elon's misunderstanding of the fundamentals. NFTs themselves aren't supposed to be artwork, they are proof of ownership and authenticity. They serve as a digital certificate of ownership for any type of asset, whether it's a digital artwork, an in-game item or even a physical object, like a house. Or a boat.

This is why NFTs have gained popularity in the art world, as they allow artists to securely prove the authenticity of their work and receive compensation for their digital creations.

But hey, we can't possibly expect some tech mogul to just understand the tech behind crypto, right? ... oh, wait.

An institutionalized exchange is about to overtake Binance

The Chicago Mercantile Exchange (CME) is quickly gaining ground in the world of Bitcoin futures trading, currently sitting just behind Binance in terms of notional open interest.

As of October 30th, the CME's open interest hit $3.58 billion, pushing it up two positions from the previous week and surpassing Bybit and OKX. It now stands just a few million away from Binance's $3.9 billion in open interest.

Why is it worth any attention, though?

CME is a fully regulated derivatives exchange platform, not a typical crypto CEX like Binance. This means that it already adheres to strict compliance and regulatory standards, which is a significant factor for institutional investors looking to enter the cryptocurrency market.

Since BTC is the world's leading crypto, the rest of the industry is set to benefit from this. CME's rising open interest not only helped the exchange climb to second place but also saw its cash-settled futures contracts exceed 100,000 BTC in volume.

The future of crypto is looking bright, and the interest of traders in the Bitcoin futures market reflects that. The CME has attained 25% of the Bitcoin futures market share, with a majority chunk of investment coming via standard futures contracts.

This indicates a significant influx of institutional interest as BTC had a double digit pump recently, reaching a new one-year high above $35,000.

SEC goes after PayPal over stablecoins

The US Securities and Exchange Commission (SEC) has issued a subpoena to PayPal regarding its stablecoin, PYUSD. We previously talked about PayPal's entry into the world of crypto with the launch of PYUSD, a stablecoin backed by US dollar deposits and other cash equivalents. This move was seen as groundbreaking in the traditional finance sector, as PayPal became the first major company to launch its own stablecoin for payments and transfers.

However, this latest development shows that even pioneering companies like PayPal cannot escape scrutiny from regulatory bodies. This is especially true in the crypto world, where regulations are still uncertain and constantly getting more twisted.

PayPal's journey into crypto has been met with several roadblocks, including restrictions from the United Kingdom's Financial Conduct Authority (FCA). These restrictions prevent PayPal from expanding its crypto offerings and operating an automated process for exchanging crypto assets without prior approval from the FCA. The SEC's subpoena only adds to the challenges that PayPal must navigate.

Paxos, the issuer of PYUSD, has committed to publishing a monthly reserve report for the stablecoin starting from September 2023 but whether this will be enough to satisfy the SEC remains to be seen.

Other worthy reads

Thor Hartvigsen’s November watchlist:

Highlights from the Tether report by Jay:

A good thread on Chainlink:

The fun page

That's all for now, frens.

We'll see you next week. And remember, the market conditions are temporary, but our commitment to building a better DeFi is here to stay. Thanks for joining us, and we look forward to seeing you back next week. Cheers!

Yours, The 🔥 Team

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