Japan's Largest Bank to Issue Stablecoin

The biggest crypto news and ideas of the day

Feb. 7, 2022

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Welcome to The Node.

In today's newsletter: ENS community voted to remove project leader. North Korea stole more than $50M in crypto in 2020. And Mitsubishi UFJ will issue a yen-pegged stablecoin.

Questions? Feedback? We'd love to hear from you – simply reply to this email.

–Daniel Kuhn

Today's must-reads

Top Shelf

SPEECH ISSUES: The Ethereum Name Service (ENS) community has voted to remove key project leader and token holder Brantly Millegan after a tweet he posted in 2016 recently resurfaced, in which he disparaged gay and trans identities and criticized abortion. Millegan, a Catholic, will also be removed from his position as director of operations at the DAO's corresponding legal entity True Names Ltd. Separately, on Friday, Coinbase published a blog with "guidelines" for removing content, saying it prefers to advocate for free speech.

RISING ROUNDS: Polygon, a secondary scaling tool for the Ethereum blockchain, raised $450 million to fund Web 3's take on Amazon Web Services. The round, the project's first major financing round since it was founded in 2017, included funding from 40 venture capital firms, among them SoftBank, Michael Novogratz's Galaxy Digital and Tiger Global Management. Meanwhile, pledging to launch its private, programmable Aleo blockchain network "later this year," crypto startup Aleo Systems raised $200 million in a funding round that was backed by SoftBank among other big VC firms.

STABILITY, PLEASE: The trust banking arm of Mitsubishi UFJ, Japan's largest bank by assets, is set to issue a stablecoin as a means of payment to enable instant settlement of securities transactions. The stablecoin, pegged to the Japanese yen, will speed up a process that now takes days. Meanwhile, investment in blockchain and cryptocurrency last year exceeded the total for the three previous years combined, according to a report by KPMG. The Big Four accounting firm's latest biannual "Pulse of Fintech" report finds that investment in crypto and blockchain surged to $30 billion in 2021, compared with $8.2 billion in 2018.

MONEY LAUNDERING: North Korea stole more than $50 million between 2020 and mid-2021 from at least three cryptocurrency exchanges in North America, Europe and Asia to fund its missile development program, according to the United Nations. Chainalysis recently estimated the hermit kingdom is behind $400 million in missing crypto. Meanwhile, the U.S. Department of the Treasury warned that NFTs may become a tool for money laundering in the high-value art market in a 40-page study published Friday. Finally, DeFi infrastructure company Meter had $4.4 million stolen in a hack.

CONCERNING BITCOIN? The U.S. Securities and Exchange Commission (SEC) has expressed concerns about how Grayscale will head off share manipulation in its proposal to convert its Grayscale Bitcoin Trust (GBTC) into a bitcoin spot exchange-traded fund (ETF), according to a notice Friday. The regulator flagged concerns about the liquidity and transparency of bitcoin markets. Grayscale and CoinDesk are both owned by Digital Currency Group. Separately, Tesla recorded a $101 million impairment losses from changes in the value of their bitcoin holdings in 2021.

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What others are writing...

Off-Chain Signals

Instagram Bans Popular Mark Cuban-Backed @NFT Account Amid Controversy (Decrypt)
Craft Superfood Chain Everbowl™ Announces Moving to the Bitcoin Standard (Yahoo)
The best of minds, the worst of minds: are we mentally ready for the metaverse? (Shots)
The Digital Economy Canon - Section 5: 15 Must Read Web3 Essays (Forefront)
Three potential paths for the price of bitcoin (Moneyness)
Crypto firm Wirex launches in the US, almost a year later than planned (The Block)
Jump Crypto Replaces Over $320M of Wormhole Wrapped ETH in DeFi Bailout (The Defiant)
They Made Millions on Luna, Solana and Polygon: Crypto's Boom Beyond Bitcoin (NYT)
The 'Bitcoin Family' immigrates to Portugal for its 0% tax on cryptocurrencies (CNBC)

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Putting the news in perspective

The Takeaway

Of Course, It's OK to Out the BAYC Founders

This past Friday, BuzzFeed News' Katie Notopoulos published a story revealing the identities of "Gordon Goner" and "Gargamel" – the two pseudonymous founders of Yuga Labs, the company behind the Bored Ape Yacht Club NFT project.

"Gordon Goner" is Wylie Aronow, a 35-year-old from Florida, and "Gargamel" is Greg Solano, a 32-year-old writer. Buzzfeed made the discovery by going through public business records; Yuga Labs is incorporated in Delaware, with an address tied to Solano.

We'd already known a little about the founders: In interviews with Rolling Stone, CoinDesk and The New York Times, they'd shared details about their backgrounds (both men had backgrounds in writing, for example) and their path to creating the Bored Apes.

But for some of the biggest crypto influencers and investors, Buzzfeed's revelation was a bridge too far.

The influencer "Cobie," formerly known as "Crypto Cobain," called Notopoulos a "whore for clicks."

"They're literally cartoon apes," wrote the investor Mike Solana, apparently trying to downplay the importance of the subject matter. "There was absolutely no reason to dox these guys. The heroic language being used by journalists to describe this story as if it were some kind of massive scoop in the public's interest is disgusting."

Outside of crypto, the word "dox" (usually defined as "publicizing someone's private information") specifically connotes harassment; within the space, its meaning is slightly more complicated. Founders will sometimes make a point of doxxing themselves as a show of faith, attempting to convince investors they won't just run off with their money (this is significantly easier when no one knows who you are).

There's a strong culture of anonymity, in crypto, which stems from its "cypherpunk" history.

It's weird, to the uninitiated. Traditional finance reporters pivoting to crypto in the past year have consistently balked at the idea of allowing subjects (not just sources) to remain pseudonymous in stories when it wasn't absolutely necessary. And it's part of why, in the public imagination, bitcoin and other cryptocurrencies have remained so closely associated with misuse and criminality. Why stay anonymous if you have nothing to hide?

Of course, there are plenty of good reasons to stay anonymous even if you have nothing to hide. The premise of crypto is that maybe, if you feel like it, you should be able to send money without handing over your personal details to a bank.

But the Bored Ape Yacht Club founders aren't just anyone. The Bored Apes have dominated the discourse around NFTs for months, both in and out of the crypto space. At this point, they're de facto brand ambassadors for crypto collectibles.

The Financial Times recently reported that Andreessen Horowitz, a powerful venture capital firm with billions already invested in crypto, is in talks to buy a major stake in Yuga Labs – financing that would value the company at around $5 billion.

To me, the identity of these two founders is unambiguously a story in and of itself. The BuzzFeed article didn't do a whole lot with the identities of these two men; Notoupolos admitted they hadn't done anything wrong, really. But ultimately, Aronow and Solano are at the helm of a business that's potentially worth billions of dollars. Apes have flooded the market and saturated the culture. Why shouldn't a journalist go looking for more details?

It's also worth noting that Notopoulos didn't come by this information nefariously or unjustly; she found it online, in publicly available business records.

Some reporters have taken the view that doxxing is unnecessary, period, unless the person in question has done something wrong.

There's often a real danger in outing subjects, particularly ones who stand to face personal danger if their identity is revealed (think: subjects living in Russia, who might be thrown in jail). No reasonable reporter wants to ruin anyone's life for the sake of a story. And "burning" vulnerable sources has long been considered a cardinal sin.

In a piece for CoinDesk in 2020, Marc Hochstein (my boss and the site's head of editorial ethics) wrote that "if you're going to reveal someone's personal information without their consent, you better have a damn good reason to do it."

Larry Cermak, a crypto researcher who said he disagrees with BuzzFeed News' decision to out the BAYC founders, suggested on Twitter that it would be similarly wrong to dox Satoshi Nakamoto, the famously pseudonymous inventor of Bitcoin.

Again, I have to disagree. Satoshi Nakamoto is inarguably one of the most important people in the history of 21st century finance, and journalists have been trying to out him for years. His stash of bitcoin (now worth tens of billions of dollars) gives him significant control over the markets; he could tank it all in minutes, if he sold. The influence of that stake can't be overstated. The revelation of Nakamoto's true identity would be an industry-shaking bombshell about one of the richest and most powerful people in this ecosystem.

Nakamoto's identity still hasn't been revealed, mostly because he was incredibly careful about covering his tracks. His personal bitcoin remains untouched. And because he hasn't cashed out, there's no real paper trail.

The BAYC founders, on the other hand, incorporated their company in Delaware using a personal address. They weren't cypherpunks when they created Yuga Labs, they were writers and lay crypto enthusiasts, which is to say they hid themselves more sloppily.

They're within their rights to remain pseudonymous, but reporters are within their rights to out them, too.

Reporting on the rich and powerful shouldn't be controversial, from an ethics perspective. It's just journalism.

–Will Gottsegen