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Crypto industry heavyweights clash over intellectual honesty of Bitcoin maximalism

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Crypto industry heavyweights clash over intellectual honesty of Bitcoin maximalism

Crypto industry heavyweights clash over intellectual honesty of Bitcoin maximalism Samuel Wan · 2 hours ago · 3 min read

Cory Klippsten bashed blockchain technology leading to a counter response from Charles Hoskinson. The spat rehashed debate on Bitcoin maximalism with Max Keiser, among others, weighing in on the matter.

3 min read

Updated: July 27, 2022 at 7:04 pm

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Cover art/illustration via CryptoSlate

Input Output CEO Charles Hoskinson responded to a recent Cory Klippsten interview by calling the Swan Bitcoin CEO “an idiot.”

Hoskinson took exception to Klippsten calling blockchain a “marketing scam.” Specifically, Klippsten said blockchain is “a slow and expensive database,” but its only use case of merit is “as part of the system designed for Bitcoin.”

Since the Terra scandal and subsequent industry-wide deleveraging that followed, Bitcoin maxis have grown more vocal in condemning everything that isn’t Bitcoin. While some have labeled this mindset as “toxic,” On-Chain Analyst Jimmy Song said maxis “were not toxic enough,” resulting in the loss of billions over recent events.

Bitcoin Maximalists were not toxic enough. This is why people lost billions on Luna, Celsius, 3AC and more.

— Jimmy Song (송재준) (@jimmysong) July 26, 2022

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Klippsten tears down blockchain

During the interview, Klippsten denied the narrative that blockchain technology is revolutionizing the internet to foster greater utility.

He dispelled the idea that blockchain is cutting-edge tech, saying it dates from the 80s and isn’t faster or cheaper than competing technologies. However, the only exception to this, insofar as offering a degree of value, is the blockchain system that underpins the Bitcoin network.

“Blockchain has been around for 40 years; any use case that people have tried to apply to it, it’s just a slow, expensive database.”

Supporting this view, the Swan Bitcoin CEO gave several examples, including an account of Fidelity’s research into blockchain technology, which ended in “50 proofs of concepts” being abandoned due to lack of utility.

Responding to Klippsten, Hoskinson countered that blockchain is “a recognized class of technology” with several real-world use cases from voting to supply chain. He then launched a personal attack on Klippsten by questioning his capacity to understand the concept.

He is an idiot. It’s a recognized class of technology that solves real problems from voting to supply chain. Just because he’s incapable of understanding why doesn’t change reality anymore than not understanding radiation doesn’t make it not exist

— Charles Hoskinson (@IOHK_Charles) July 26, 2022

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Maximalism is not toxic maximalism

Recent events were a wake-up call for the entire industry. Russell Starr, the CEO of crypto Exchange Traded Products (ETP) firm Valour, wrote by email that a factor in the losses was a lack of maturity and inadequate due diligence on the part of investors.

To that end, Bitcoin maxis argue everything that is not self-custody BTC is “degen finance” and should therefore be avoided for prudence reasons. Ethereum co-founder Vitalik Buterin rationalized this view by saying, “a healthy dose of intolerance is in fact necessary” to counter the “grifter cryptocurrencies.”

However, others say discounting non-BTC protocols entirely is a narrow approach. Speaking on the Unchained Podcast recently, Shapeshift CEO Erik Voorhees said he felt embarrassed by the toxic maximalism he encountered at his first conference – the Bitcoin 2021 conference.

In setting the scene, Voorhees distinguished maximalism from toxic maximalism, saying the latter refers to people who act like “*ssholes [to those] that don’t think like we do about Bitcoin.”

During the conference, Voorhees said he witnessed numerous examples of behavior that does not represent the Bitcoin community he comes from, which he characterized as one of openness, decentralization, innovation, compassion over monetary economics, and a belief in BTC offering greater egalitarianism.

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If anything, Voorhees pointed out that toxic maximalists should recognize the banking system as the enemy and not other protocols on a blanket basis.

“If there is an enemy, it is central banks and banking and fiat currency. Not the Dogecoin community, not the Ethereum community.”

Were the Bitcoin maxis right all along?

Reaching out to Max Keiser for his comments, the host of the MAX & STACY REPORT Podcast argued that “Bitcoin acts like a truth serum,” implying that those who seek truth only consider BTC.

He expanded by saying the truth effect eventually shines a light on those doing “crooked things,” giving Celsius CEO Alex Mashinsky as an example. It should be noted that Mashinsky is not under civil or criminal investigation for his part in the company filing for Chapter 11 bankruptcy.

In any case, Keiser predicted a mass SEC crackdown on the basis that all altcoins are unregistered securities. If this scenario plays out, the altcoin investment case would be severely hindered.

“As I’ve warned since the dawn of ICO’s, these are securities and the SEC will crackdown on everything that’s not Bitcoin.”

Posted In: Bitcoin, People

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Mati Greenspan

Mati Greenspan joins WUBITS as senior adviser

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Mati Greenspan joins WUBITS as senior adviser

Mati Greenspan joins WUBITS as senior adviser Oluwapelumi Adejumo · 4 hours ago · 1 min read

Greenspan would advise the web3 social platform on how it can accelerate its user adoption and emerging market trends.

1 min read

Updated: August 11, 2022 at 6:22 pm

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Cover art/illustration via CryptoSlate

Mati Greenspan has joined WUBITS as a senior adviser, according to a press statement.

Greenspan would advise the web3 social platform on how it can accelerate its user adoption and emerging market trends.

A top executive at WUBITS, Albert Mashadev, said Greenspan’s addition to the team would help the team “to accelerate the growth of SoFi (social finance) using Web3 and WUBIT’s innovative crypto content monetization models.”

Speaking on his appointment, Greenspan said:

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“Web3 is going to completely change the way we interact online. One of the greatest hallmarks of the old internet that most urgently needs an overhaul is social media … WUBITS have an outstanding vision allowing people to own and monetize their valuable content in a revolutionary way.”

Meanwhile, David Mavashev, a co-founder of the web3 social media platform, added that the social media platform is not susceptible to political censorship like web2 social media platforms like YouTube. Instead, WUBITS is focused on “helping content publishers to capitalize and monetize their thoughts, ideas, and opinions directly from any interested party without dependency on advertisements.”

Greenspan is the founder and CEO of Quantum Economics, a leading firm for research and advisory in the crypto space, and a licensed money manager in the European Union.  He is also one of the authors of  “The Complete Guide to Fintech Investing.”

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Crime

US vows to ‘aggressively pursue’ crypto mixers following Tornado Cash sanctions

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US vows to ‘aggressively pursue’ crypto mixers following Tornado Cash sanctions

US vows to ‘aggressively pursue’ crypto mixers following Tornado Cash sanctions Samuel Wan · 11 hours ago · 2 min read

U.S. Secretary of State Anthony Blinken said the government will continue clampdowns against crypto mixers that are laundering money for criminals.

2 min read

Updated: August 9, 2022 at 2:34 pm

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Cover art/illustration via CryptoSlate

U.S. Secretary of State Anthony Blinken warned that the administration would continue to “aggressively pursue” crypto mixers suspected of laundering illicit funds.

We’ll continue to aggressively pursue actions against currency mixers laundering virtual currency for criminals. Today, @USTreasury sanctioned virtual currency mixer Tornado Cash, which has been used to launder money for a U.S.-sanctioned DPRK state-sponsored cyber hacking group.

— Secretary Antony Blinken (@SecBlinken) August 8, 2022

The comments came as the U.S. Treasury enacted sanctions against Tornado Cash over allegations it had washed over $7 billion worth of cryptocurrencies since 2019. A press release stated that Tornado Cash had repeatedly failed to implement “effective controls” to stop money laundering by criminals.

As a whole, the crypto community responded negatively to the sanctions, with many voicing concerns over hypocrisy and governmental overreach – particularly as the platform is a neutral tool that runs autonomously.

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Vice Writer and self-described cyber historian Lorenzo Franceschi-Bicchierai summed up the argument by saying code is an expression of free speech and so cannot be illegal, let alone sanctioned.

With that, thoughts turn to Secretary Blinken’s statement and whether his words effectively spell the end for crypto mixers and personal freedoms in the U.S.

Is this the end of crypto mixers?

In justifying sanctions against Tornado Cash, the U.S. Treasury said the platform had repeatedly failed to implement controls to stop criminals from money laundering on the platform. However, crypto mixers do not operate Know Your Customer (KYC) controls by their inherent nature.

Tornado Cash co-founder Roman Semenov explained that the platform is decentralized and autonomous, meaning it operates without third-party control. To that end, it has no corporate office or staff, and the user interface is lifted from an Ethereum Name Service domain.

Nonetheless, the U.S. Treasury stated that crypto “mixers that assist criminals are a threat to U.S. national security.” And that it will continue monitoring mixer activity with a view to clamping down on illicit financial risks.

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“[The] Treasury will continue to investigate the use of mixers for illicit purposes and use its authorities to respond to illicit financing risks in the virtual currency ecosystem.”

The crypto community responds

Over five hundred replies were posted to Secretary Blinken’s tweet, the majority of which condemned the actions of the Treasury.

For example, one Twitter user called out the hypocrisy of sanctioning Tornado Cash when HSBC Bank paid a fine $1.9 billion fine on charges of money laundering. The incident happened approaching ten years ago. However, this does not detract from lawmakers treating banks favorably.

FatManTerra waded into the discussion by correcting Secretary Blinken on his designation of Lazarus and Tornado Cash as connected entities. He stated the hacking group had merely used the mixer platform.

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Culture

Erik Voorhees urges MakerDAO community to exit USDC positions after Tornado Cash sanctions

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Erik Voorhees urges MakerDAO community to exit USDC positions after Tornado Cash sanctions

Erik Voorhees urges MakerDAO community to exit USDC positions after Tornado Cash sanctions Samuel Wan · 41 mins ago · 2 min read

Shapeshift CEO Erik Vorhees urged the MakerDAO community to unwind USDC collateral and move it to a stablecoin more “resistant” to censorship.

2 min read

Updated: August 9, 2022 at 9:55 am

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Cover art/illustration via CryptoSlate

Shapeshift CEO and founder Erik Voorhees recommended the MakerDAO community take precautionary measures after the U.S. Treasury sanctioned Tornado Cash.

Specifically, Voorhees advised MakerDAO users to remove their USDC collateral and convert the funds into another stablecoin. But he stopped short of advocating a more censorship-resistant choice.

Dear @MakerDAO $DAI community… you should start unwinding your USDC collateral immediately, converting it into stables that are more censorship resistant.

You have some time to do it, but you need to get started.

— Erik Voorhees (@ErikVoorhees) August 8, 2022

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On August 8, the U.S. Treasury issued a press release stating crypto mixer Tornado Cash was sanctioned due to its role in laundering illicit crypto funds worth over $7 billion since 2019. Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson said:

“Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.”

The incident has given rise to discussion on governmental overreach and alternatives to centralized stablecoins.

The end of Tornado Cash

The Tornado Cash website is offline, its developers have been booted from GitHub, and Circle has blacklisted USDC addresses owned by the organization following the sanctions.

Several months prior, Circle CEO Jeremy Allaire dismissed claims that the company could freeze USDC accounts for whatever reason as FUD. He further countered by implying that entities operating within the law have nothing to fear.

Coin Center issued a statement on the matter, saying sanctions against a tool, rather than a person or entity with agency, is a blow for people who wish to maintain their privacy, “including for otherwise entirely legal and personal reasons.”

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“It appears, instead, to be the sanctioning of a tool that is neutral in character and that can be put to good or bad uses like any other technology.”

The point has been widely supported by members of the crypto community, who view the sanctions as an attack against personal sovereignty.

Big Brother is watching

The founder of Bankless, Ryan Adams, chimed in by calling the actions of the U.S. Treasury “the opening shot of big brother’s assault on crypto.”

In a later tweet, Adams also posed the question, where will this end? Suggesting Uniswap could be next, then Ethereum — further insinuating a tiptoe to totalitarianism.

“If software isn’t safe, then speech isn’t.”

In response to USDC censorship, a researcher at NEAR Protocol DeFi platform Proximity, @resdegen, proposed the development of a new decentralized stablecoin free from governmental directives.

Resdegen considers Reflexer’s Rai and Liquidity’s LUSD 100% decentralized, but both are collateralized, which is disadvantageous scalability-wise. Resdegen suggested developing a new project which would be algorithmically pegged using BTC or ETH derivatives contracts.

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6/ There are some truly decentralized solutions such as $RAI or $LUSD as their collateral is just $ETH

I highly recommend reading about them (Vitalik is a big supporter of RAI)

However, being collateralized stablecoins means that their scalability depends on ETH market cap

— Res ®️ (@resdegen) August 8, 2022

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