Binance founder Changpeng Zhao has reported to a low-security federal prison in Lompoc, California, to begin his four-month sentence for money-laundering violations, according to CNBC.

Zhao’s defence team at Latham & Watkins law firm confirmed to CNBC that the former Binance CEO is now in custody.

The Lompoc low-security prison holds about 1,300 inmates and is made up of four main housing units, two of which are dormitory style. All inmates are required to participate in various work or education assignments. The prison also operates a farm.

Prosecutors had sought a three-year sentence for Zhou, but he received a much lighter term after submitting a letter of apology to Judge Richard Jones, reading in part: “I apologise for my poor decision and take full responsibility for my actions. In hindsight, I should have focused on Binance’s compliance changes from the beginning, but I didn’t.”

Born in China, Zhao and his family moved to Canada when he was 12. As a teenager he worked at a gas station and for two years as a cook at McDonald’s, where he said he made $4.50 Canadian dollars an hour, DL News reported.

He studied computer science at Montreal’s McGill University and spent four years with Bloomberg in New York, where he developed software for futures traders.

Zhao, now 47, co-founded Binance in 2017, and within five months of its launch, it was the world’s top crypto exchange.

Last November, Zhao struck a deal with prosecutors. He agreed to step down from his position as CEO, plead guilty to violating the Bank Secrecy Act, and pay a $50 million fine.

His former company, Binance, agreed to pay $4.3 billion in fines and to share information about its anti-money-laundering efforts with a court-appointed compliance monitor for five years.

Coinbase argued in a brief filed with the US Court of Appeals for the Third Circuit that the Securities and Exchange Commission is trying to crush the crypto industry in a “Catch-22″ conundrum.

The SEC demands that digital asset firms come into compliance with securities laws, but has refused to clarify the rules for the compliance it demands, the major US crypto exchange argued in the 36-page filing.

Coinbase claims that the SEC’s policy of “scorched-earth litigation” against companies for their failure to satisfy its demands amounts to an attempt to destroy the industry.

“This pattern of conduct is a purposeful effort to destroy an industry by demanding the impossible and prosecuting companies that fail to achieve it,” the filing says.

It concluded that “the court must order the SEC to commence rule-making.”

Coinbase’s Chief Legal Officer Paul Grewal echoed the argument in a post on X: “The SEC is bent on choking the digital asset industry, and is refusing to provide the necessary rules the industry has requested in order to tighten the squeeze.”

The filing challenges a previous SEC denial of a rule-making petition.

The House of Representatives last month passed a landmark crypto bill, FIT21, that would clarify definitions for crypto assets and divide responsibility between the SEC and the Commodity Futures Trading Commission, but it will likely be bogged down in the Senate as the November election approaches.

The SEC sued Coinbase about a year ago, alleging it was acting as an unregistered national securities exchange, broker, and clearing agency, as well as failing to register the offer and sale of its crypto asset staking-as-a-service program.

Coinbase has denied the allegations.

Crypto market movers

Bitcoin is up 0.19% today at $67,714.10.

Ethereum is up 0.48% today at $3,793.16.

What we are reading

Firms that handle $10tn a day in trades just dove into the tokenisation game — DL News

Crypto ‘re-staking’ platforms boom as traders chase bigger returns — Reuters

Hong Kong Says 11 Crypto Exchanges Are Closer to Getting Permits — Bloomberg

Stablecoin issuer Tether Holdings acquired a $100 million stake in US-listed Bitcoin miner Bitdeer Technologies, with an option to buy another $50 million in shares within 12 months after closing.

The private placement closed on May 30, according to a Bitdeer news release.

“We regard Bitdeer as one of the strongest vertically integrated operators in the Bitcoin mining industry, differentiated by its cutting-edge technologies, and a robust R&D organisation,” said Paolo Ardoino, CEO of Tether.

He added: “Bitdeer’s proven track record and world-class management team are perfectly aligned with Tether’s long-term strategic vision.”

Bitdeer said it intends to use the net proceeds from the sale to fund its data center expansion, ASIC-based mining rig development and for working capital and other general corporate purposes.

“With Tether’s support, we are poised to accelerate our growth and continue our leadership in sustainable and efficient Bitcoin mining,” said Linghui Kong, chief business officer of Bitdeer.

Bitdeer’s founder and CEO is Chinese crypto billionaire Jihan Wu, who in 2013 co-founded Bitmain, which has become the world’s biggest computer chip company for Bitcoin mining.

Headquartered in Singapore, Bitdeer has deployed data centers in the US, Norway, and Bhutan.

Japanese crypto exchange DMM Bitcoin lost 4,502.9 Bitcoin worth about $308 million in what it called an “unauthorised leak,” according to crypto security company Elliptic.

Elliptic said if hacking were to be confirmed as the cause it would amount to the eighth-biggest crypto theft in history.

DMM said it was investigating and had taken measures to prevent further outflows.

The company also said it had implemented restrictions on some services for additional safety, including crypto withdrawal processing.

It added that all Bitcoin deposits were guaranteed.

“Please rest assured that we will procure the equivalent amount of BTC leaked with support from our group companies and guarantee the full amount of the entire amount of Bitcoin deposited by our customers,” the company said in a blog post that was written in Japanese and machine translated.

Elliptic said if confirmed, it would be the biggest hack since November 2022, when now-bankrupt crypto exchange FTX suffered a $477 million exploit.

The security company added that its investigative tools had determined the Bitcoin from DMM had been split and sent to new wallets.

According to a crime report by blockchain analysis company Chainalysis, about $1.7 billion in crypto was stolen last year, down from $3.7 billion in 2022.

US President Joe Biden on Friday afternoon vetoed a House Joint Resolution that would have abolished the Securities and Exchange Commission’s Staff Accounting Bulletin 121, which critics say makes it difficult for crypto companies to work with banks.

The Republican-led resolution had passed through both houses of Congress with bipartisan support and had been endorsed by Wall Street.

“This reversal of the considered judgement of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices,” Biden said in a statement released by the White House.

He added: “My administration will not support measures that jeopardise the well-being of consumers and investors. Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation.”

The SEC published SAB 121 in March 2022. It advises any entity safeguarding crypto assets on behalf of others to put them on its balance sheet as if it owned them, DL News reported earlier.

They don’t have to do this with traditional assets such as stocks.

Custodians must hold capital reserves to offset risky on-balance sheet items so they can fund their positions in case of default. That’s expensive: The capital they’re forced to hold in reserve could be leveraged for revenue.

SAB 121 isn’t clear on how much banks would have to hold against crypto assets, or whether the SEC would even enforce it — it’s not a rule, so much as it is high-level guidance.

Uncertainty

Still, the uncertainty has reportedly deterred a number of big firms — including BNY Mellon, State Street, and Nasdaq — from entering this business.

Wall Street banking and policy institutions had lobbied the administration in favour of the resolution with a letter, saying: “Precluding regulated banking organisations from effectively providing digital asset safeguarding services at scale harms investors, customers, and ultimately the financial system.”

Still, the White House news release on the veto went on to say that the administration is “eager to work with the Congress to ensure a comprehensive and balanced regulatory framework for digital assets.”

Crypto market movers

Bitcoin is down 1.05% today at $67,576.25.

Ethereum is up 1.03% today at $3,783.16.

What we are reading

U.S. Sen. Wyden: House ‘Right’ to Pursue Crypto Bill, Late in Session for More Progress — CoinDesk

‘Trump will never be president again’: Scaramucci and crypto industry react to guilty verdict — DL News

Donald Trump’s latest appeal to pro-crypto voters includes asking Elon Musk for policy tips — Fortune

The Uniswap Foundation on Friday delayed a highly anticipated vote that was expected to take the world’s largest decentralised exchange one step closer to activating its so-called “fee switch.”

The Uniswap token, UNI, dropped more than 2% after the foundation said it would delay the vote, continuing a decline that began early Friday. UNI was down more than 7% from its intraday peak Friday at $11.04.

“Over the last week, a stakeholder raised a new issue relating to this work that requires additional diligence on our end to fully vet,” Erin Koen, the foundation’s governance lead, wrote Friday in the Uniswap DAO governance forum.

“We will keep the community apprised of any material changes and will update you all once we feel more certain about future time frames,” he said.

Koen didn’t name the stakeholder or the issue they raised and didn’t immediately respond to DL News’ request for comment.

The Uniswap DAO, the cooperative that governs Uniswap, has debated activating the fee switch for years.

Earlier proposals have failed to advance, largely because offears they would run afoul of US securities laws.

The latest proposal was authored by the Uniswap Foundation, a nonprofit tasked with supporting the Uniswap exchange. The fee switch would divert a portion of the exchange’s revenue to certain UNI investors.

It passed a non-binding “temperature check” vote earlier this year. A binding, blockchain-based vote was set to begin Friday.

Dan Robinson, a general partner at crypto venture-capital firm Paradigm, accused the Uniswap Foundation of caving to pressure from another, unnamed venture-capital firm.

“It’s disappointing to see a large VC try to bully the token governance process and delay community proposals at the last minute in order to advance their own pet projects,” he wrote on X.

Robinson didn’t elaborate in his post and didn’t immediately return DL News’ request for comment.

Uniswap Foundation CEO Devin Walsh declined to comment when contacted by DL News.

Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email him at aleks@dlnews.com.

Brian Pak is CEO & co-founder of ChainLight, a blockchain security firm that specialises in smart contract audits and on-chain monitoring.

The words zero knowledge, once relegated to academic papers and cryptography forums, have roared into the mainstream.

ZK technology lets a party, such as a blockchain protocol, prove to another party that something is true, like a person’s age, while keeping that information completely confidential.

ZK cryptography is finding success in scaling top smart contract network Ethereum. More than a dozen ZK-based networks, commonly called ZK rollups, run on top of Ethereum, with a combined $4 billion worth of deposits.

But despite the hype, there’s a big problem. The lack of knowledge about ZK is a ticking time bomb.

Most crypto developers still know very little about this complex topic.

And as more developers start to experiment with ZK technology, it’s creating major security risks, and even preventing the technology from meeting its true potential.

At the same time, ZK technology promises to revolutionise the crypto industry, so getting developers and the broader community of users up to speed is imperative.

ZK devs are ‘out of their depth’

In 2022, Ethereum co-founder Vitalik Buterin pointed out security risks of ZK rollups, such as bugs in the circuit constraint code.

These codes are critical in ZK rollups as they define and enforce rules for the cryptographic proofs ensuring transaction validity.

Bugs in these codes can lead to severe security vulnerabilities, such as incorrect proofs or unauthorised fund access.

Since Buterin’s warning, developers have identified several more vulnerabilities in projects using ZK technology.

In November, ChainLight discovered a bug within ZK Sync Era’s ZK-circuits which could have allowed a hacker to steal $1.9 billion.

Also in 2018, a Zcash cryptographer discovered a vulnerability in the zero-knowledge proofs underlying the protocol. If left unpatched, the bug could have allowed an attacker to create fake Zcash tokens without being detected.

Vulnerabilities like this are a sad indictment on a new form of technology that is clearly not understood by enough people.

Many developers writing the code and security professionals who have to sign off on the security of it are simply out of their depth.

And it’s not surprising — anyone will tell you that a PhD level of understanding in mathematics is required to grok the security aspects of ZK technology.

This means the number of people qualified to audit ZK code is limited, as are the resources necessary to train them.

And a lack of experts to properly audit ZK code is not the only issue.

ZK rollups, such as zkSync Era and StarkNet, are developed in-house and, as a result, peer review processes are not nearly as thorough as the standards seen in academia.

I’ll be staying sceptical of ZK technology security until the peer review process is more standardised.

ZK isn’t achieving its potential

The lack of understanding of ZK technology is also hindering it from meeting its full potential.

This is due to a lack of confidence in the technology leading builders to choose more familiar frameworks.

For example, one of the major benefits touted of ZK rollups is instant finality.

This means that as soon as the proof of a block is verified on the Ethereum mainnet, the results are final. This notably allows instant asset withdrawals and also improves security.

Optimistic rollups, the main rival to ZK rollups, require a seven-day waiting period to withdraw assets.

There’s a growing consensus that ZK rollups are the superior solution to scale Ethereum over and above Optimistic rollups.

Some go as far as describing them as the “holy grail” of scaling solutions.

Immutable X’s co-founder Robbie Ferguson described ZK rollups as “by far the easiest way to scale high-throughput transactions.”

But, in reality, most developers are still not using the technology for its true potential because they’re simply not comfortable with using some of its unique features due to the complexity.

For example, none of the existing ZK rollups actually have the advertised instant finality.

The coding is so technical that developers might be scared of making a mistake, leading them to instead choose not to implement instant finality.

Instead, protocols have a so-called execution delay, where there is a roughly one-day window to detect an exploit and revert the changes before they are finalised.

With this, the security of ZK rollups comes with a major compromise, and forgoes one of its most significant benefits.

Only improving the understanding of ZK technology will allow builders to maximise its potential without compromising on security.

Security by design

Across the whole of web3 — not just in the ZK sphere — projects don’t take audits seriously enough.

Many projects view audits merely as stamps of approval to make themselves look reputable, rather than the rigorous exercises in security they should be.

There are several cases where known bugs have crept into new DeFi protocols, costing investors millions.

For example, several protocols that forked lending protocol Compound v2′s code, such as Hundred Finance and Onyx Protocol, did so blindly, and failed to account for known attack vectors in the code.

Instead, developers should strive to build protocols that are secure by design, meaning that they’re built in a way that first and foremost protects against attacks.

Building by design starts with staying up to date with threats in the ecosystem.

If a project lacks the resources for thorough auditing, it still needs to keep up with the hacks that happen to other projects so that they don’t fall victim themselves.

While failing to build protocols that are secure by design would be a problem for any project, it is particularly detrimental in the case of ZK technology.

For example, let’s take a look at existing ZKEVMs — ZK rollups that perfectly replicate Ethereum’s operating system.

Many ZKEVMs rely on manually defined circuits, which require human involvement and use young, untested libraries.

The likelihood that developers will make errors in this environment is high, leaving ZK rollups more vulnerable to the risk of attacks.

With investors piling into ZK rollups, incentivised by potential token airdrops, they become lucrative targets for the next major crypto heist.

Solutions

Implementing security at the very beginning of the development cycle and on an ongoing basis — such as through bug bounties — can help fix this.

There is no question that ZK technology is a game changer for Ethereum, and constant development is fundamental to scaling the blockchain.

However, the solutions offered by ZK rollups are matched by their potential to cause problems with security.

Startups must first be honest about whether they are using ZK technology because it is necessary or because they are jumping on the bandwagon.

If they’re certain that they are the former, then they must be aware of the risks and building with security by design is absolutely fundamental.

Ryan Salame, a former executive at bankrupt crypto exchange FTX who pleaded guilty in September to violating campaign finance law and operating an unlicensed money transmitting business, was sentenced to prison Tuesday.

While Salame’s legal team asked for a term of no more than 18 months, prosecutors requested between five and seven years. Judge Lewis Kaplan, who also presided over the trial of former FTX CEO Sam Bankman-Fried, sentenced Salame to seven and a half years.

Still, Salame’s actual time in prison may be less than five and a half years, according to Michael Yaeger and Elisha Kobre, attorneys and former prosecutors for the Department of Justice.

All convicts can receive up to a 15% reduction in sentence for good behaviour, they told DL News. Kaplan also recommended that Salame be considered for RDAP, or Residential Drug Abuse Program, a substance abuse treatment initiative run by the Bureau of Prisons.

“Inmates who qualify for that drug treatment program can receive, in some situations, up to a one-year sentence reduction,” Yaeger said.

According to his lawyers’ sentencing submission, Salame struggled with substance abuse from the age of 15. “Ryan drank to excess on a daily basis,” they wrote, referring to the period during which he was employed at FTX and Alameda Research. “Ryan also habitually abused drugs.”

Salame is the first of Bankman-Fried’s four lieutenants, all of whom have pleaded guilty, to be sentenced after the ex-CEO was sentenced in late March to 25 years behind bars. Caroline Ellison, Gary Wang, and Nishad Singh still await sentencing.

Salame did not respond to a request for comment on X. His lawyers also did not immediately respond when contacted by email.

tough to see two great men convicted this week

— Ryan Salame (@rsalame7926) May 30, 2024

Salame, however, hasn’t been quiet since Kaplan handed down his sentence. After the hearing, he went on X, where he hadn’t posted for a year and a half, and he’s posted every day since, even commenting on the conviction of former President Donald Trump: “[T]ough to see two great men convicted this week.”

He was referring to Trump — and himself.

Donald Trump’s guilty verdict sent shockwaves through the $65 billion memecoin market, launching tokens linked to him and President Joe Biden on a rollercoaster ride of volatility.

After a jury of 12 found Trump guilty of all 34 felony counts in his hush-money trial on Thursday, the largest memecoin linked to Biden plummeted.

Jeo Boden, a buzzy Solana-based memecoin worth nearly $200 million, dropped 7%, according to CoinGecko.

Investors backing Trump-themed coins fared better, with MAGA — a reference to the Trump campaign slogan “Make America great again” — and Doland Tremp surging 13% and 11%, respectively, over the same period.

MAGA and Doland Tremp have total market values of $670 million and $112 million.

The day’s volatility hasn’t been without its oddities, either. Super Trump seems to be an outlier after falling about 20%, and an anti-Biden memecoin called Joe Biden Has Perished is up 102% on the day.

The price moves highlight two growing trends: the ongoing memecoin frenzy and the growing politicisation of crypto.

Memecoin frenzy

Joke currencies are big business.

They generated over $6.5 billion in trades over the past 24 hours alone and command a total market value of $65.5 billion.

The sector faces criticism for being purely speculative — denunciations echoing the scepticism of crypto critics in general.

Even so, memecoins, named after presidents or celebrities, hold sway among crypto retail investors for their low cost and alluring potential for massive earnings.

“Memecoins seem to be one of the last remaining opportunities in crypto for a normal person to go from zero to respectable [net worth] in a short period of time,” Jordan Fish, a crypto influencer better known as Cobie, wrote on X.

Given how illiquid many memecoins are, though, they are just as likely to crash to zero overnight.

Crypto in politics

Still, political joke coins are playing a huge part in the frenzy.

Ryan McMillin, chief investment officer at crypto fund manager Merkle Tree Capital, recently told DL News he expects the niche to catapult Solana — the blockchain many memecoins are traded on — to new $400 record highs in the coming months.

The focus on memecoins comes as crypto becomes increasingly politicised ahead of the November election.

Recently, the House of Representatives voted in favour of a sweeping crypto bill known as the FIT21 Act, which, if passed in the Senate, would clarify which agencies are responsible for regulating which types of cryptocurrencies.

In parallel, the Securities and Exchange Commission approved spot Ethereum exchange-traded funds.

Trump and Biden have both latched on to the momentum.

Earlier in May, Trump embraced the industry in his strongest terms yet during an event at the Mar-a-Lago.

“If you’re in favour of crypto you’d better vote for Trump,” he said, adding that his campaign would start accepting donations in crypto.

The comments highlighted an evolution of his stance. He famously dismissed Bitcoin as “a scam against the dollar” in 2021.

Comparatively, Biden has adopted a more anti-crypto stance, having threatened to veto a pro-crypto bill that would repeal a controversial SEC policy, and to raise Bitcoin miners’ taxes.

Naturally, many in crypto community prefer Trump to Biden, 45% to 43%, according to a recent poll by investment firm Paradigm.

Ryan Selkis, CEO of crypto market intelligence firm Messari and a vocal Trump supporter, paints a second Biden term as a future involving mass seizures of crypto assets.

Eric Johansson is DL News’ News Editor. Got at tip? Email him at eric@dlnews.com.

Crypto X reacted to the news of former US President Donald Trump’s conviction with a mix of outrage and humour.

Trump was found guilty on 34 felony charges relating to hush money paid to porn star Stormy Daniels.

Messari CEO and co-founder Ryan Selkis tweeted, “Buy guns. Buy Bitcoin. Move to a red state. The US Constitution has fallen.”

Former FTX executive Ryan Salame posted, “Tough to see two great men convicted this week.”

tough to see two great men convicted this week

— Ryan Salame (@rsalame7926) May 30, 2024

Salame was presumably also referring to himself — he was sentenced this week on fraud charges.

On the other hand, crypto venture capitalist Adam Cochran — known among the crypto X community for his viral threads — posted that Trump is “a literal criminal.”

“A twice impeached, convicted felon, found guilty by a jury of his peers on 34 criminal counts,” is running for president, Cochran wrote, adding that Trump has also been found civilly liable for defamation, sexual assault and battery.

“But you’re worried the other guy [incumbent Joe Biden] is old?”

Hush money

There’s no evidence that Trump’s conviction threatens the US Constitution.

He was found guilty in a Manhattan court of falsifying business records.

He did so to cover up a $130,000 payment to Daniels to ensure she didn’t go public before the 2016 presidential election about a sexual encounter they had in 2006 when he was already married to current wife Melania Trump.

“Trump will never be president again,” financier Anthony Scaramucci posted on Thursday.

Trump will never be President again.

— Anthony Scaramucci (@Scaramucci) May 30, 2024

Scaramucci has been critical of Trump since he was fired from his job as White House Communications director in 2017.

However, experts say Trump is unlikely to go to prison. And the conviction doesn’t prevent him from running for president again.

Nor will it likely erode support among his base, who are undeterred by his laundry list of other alleged crimes and civil violations, his close ties to America’s enemies, or his sleazy comments about women.

The only impact it might have, is galvanizing his base for turn out.

But they are already always perma-galvanized.

It will put off the quiet moderates who could have voted for him, and many independents.

They just don’t tend to be as loud on Twitter.

— Adam Cochran (adamscochran.eth) (@adamscochran) May 30, 2024

Trump himself contends he’s the victim of a politically motivated witch hunt.

Crypto ally Republican Senator Cynthia Lummis — who has previously posted images of herself with laser eyes — on Thursday repeated this line, calling the trial a “biased political persecution.”

This hasn’t been a trial; this has been a biased political persecution from the start. pic.twitter.com/53TGMEhD3K

— Senator Cynthia Lummis (@SenLummis) May 30, 2024

Support from crypto

As Trump campaigns for president, he can seemingly count on support from crypto industry leaders.

He’s taken pains lately to position himself as a crypto-friendly candidate, potentially swayed by the industry’s well-funded political lobby.

Selkis, who has lobbied hard for the industry, has been spotted at Mar-A-Lago, Trump’s resort town home in Florida.

Biden has apparently come to a similar realisation, with his administration reportedly cautiously engaging the industry.

Still, it might be too late for Biden, who has embraced some powerful crypto-sceptics — including Securities and Exchange Commission Chair Gary Gensler, and crypto arch-nemesis Senator Elizabeth Warren.

I guess I'm getting a new t-shirt pic.twitter.com/XuO6NduBoh

— Charles Hoskinson (@IOHK_Charles) May 30, 2024

Questioned commitment

While many in crypto rejoice in Trump’s volte face, some are sceptical that he’s really committed to the industry.

Cochran alluded in his post to Trump’s history of lying.

“Imagine thinking he’ll keep his commitments to you when he lies and cheats at everything,” he wrote.

Trump had not shown much interest in crypto in the past, and called Bitcoin a scam in 2021.

He and Melania have both issued lines of non-fungible tokens, commonly known as NFTs.

Reach out to the author at joanna@dlnews.com.

Ethereum Classic — a 2016 fork from the main Ethereum blockchain — just completed its third halving, reducing the tokens paid out to miners on the network by around 20%.

The reduction on the $4.4 billion blockchain occurred at block 20,000,001, or 12:00 am London time on May 31.

Miners now earn 2.048 ETC for every successful block they mine, compared to 2.56 ETC previously.

Investors often see the reduction in a token’s supply as a positive — the token should increase in value if the supply decreases while demand stays the same.

Such events can be double-edged swords, as they also impact the profitability of miners.

“Mining revenue will decrease if price remains at the same level,” Red Luo, a content manager at crypto mining pool operator F2pool, told DL News.

Ethereum Classic’s ETC token trades at around $29.70, down 5.8% over the past week.

Miners usually turn off their machines when they are no longer profitable, hurting the network’s decentralisation.

F2pool runs the biggest Ethereum Classic mining pool, with over 44% of the network’s known hashrate.

Can miners stay profitable?

Some Ethereum Classic miners subsist on thin margins.

With a 20% reduction in rewards, small miners, or those in areas with more expensive electricity, may stop mining because it’s no longer profitable.

The reduction could also hurt large miners running older, less-efficient mining machines.

Still, according to Luo, the impact should be minimal.

“We find that most popular machines can operate profitably even after the reward reduction,” Luo said, adding that the reduced rewards should not significantly impact the network’s hashrate.

The hashrate is the number of hashes — or guesses — per second of all mining machines trying to solve equations and process blocks on a blockchain network.

A higher hashrate means more computing power is required to process transactions.

This makes that blockchain more secure because it would take more miners — and cost more in energy and time — to attack the network.

How Ethereum Classic works

Ethereum Classic is a Proof of Work blockchain. It split from the main Ethereum network after the DAO hack in 2016.

Like Bitcoin, Ethereum Classic requires miners running powerful computers to solve complex equations, which, when solved, allow them to add blocks of transactions to the blockchain.

In return, successful miners receive token rewards.

Solving these equations is difficult. Many miners choose to team up in so-called mining pools and split the rewards if one of them solves an equation.

Although Ethereum Classic is programmed to reduce token rewards by 20%, many in the community still refer to it as a “halving,” because it resembles Bitcoin’s halvings.

Bitcoin halvings cut the rewards paid to miners in half about every four years.

Ethereum Classic halvings occur every five million blocks, or about every two years.

Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.

In the last 24 hours, a crypto wallet identified as belonging to Donald Trump saw nearly $500,000 in new deposits across a slew of different tokens, including Ethereum.

The wallet movements come after a 12-person jury in New York yesterday found Trump guilty of 34 charges of falsifying business records.

He may face a jail sentence and attempt to overturn the verdict on appeal.

According to analytics platform Arkham Intelligence, the former president now holds more than $12 million in cryptocurrencies. The platform tied the wallet to Trump via his financial statements from August 2023.

His largest token holding is in the eponymously named TRUMP memecoin.

On May 24, Trump’s wallet held about $9 million worth of crypto.

The verdict has galvanised supporters, who view the trial as political persecution aimed at weakening his chances of beating President Joe Biden.

Trump cemented his support of crypto earlier this month and said that his campaign will accept crypto donations.

Crypto market movers

Bitcoin is up 0.2% in the last 24 hours to $67,902.

Ethereum has also risen 0.2% over the same period to about $3,742.

What we’re reading

Is Bitcoin on balance sheets the new trend? Wall Street experts weigh in — DL News

Judge Orders SEC To Pay $1.8 Million In Legal Fees, Dismisses Case Against Debt Box — Milk Road

Crypto Tax Loss Harvesting — Milk Road

Wall Street’s DeFi land grab means less anonymity, more ID checks — DL News

Liam Kelly is a DeFi Correspondent at DL News. Got a tip? Email at liam@dlnews.com.

After a jury issued Donald Trump with a guilty verdict on 34 felony counts in his hush-money trial, crypto punters placed bets on whether or not he’ll be in jail before the November election.

A bet on blockchain-based betting site Polymarket — called “Trump in jail before election day?” — now has almost $897,000 on the line.

The odds?

Bettors say there’s a 17% chance that the presumptive Republican presidential nominee will end up in the slammer before November 5.

That’s a slight decline from earlier in May when bettors put the odds at 25%.

What is Polymarket?

Polymarket is a prediction market.

It enables people to place binary bets on just about anything — from whether or not singer Kate Perry will launch a memecoin to if 2024 will be the warmest year on record.

The idea is that experts from around the internet can put that expertise to use, be it the approval of a crypto fund or whether lost submarines will be found.

Polymarket bettors have a track record in cases like this.

They accurately predicted the length of Changpeng Zhao’s prison sentence after the Binance co-founder pleaded guilty to violating US money laundering laws, as well as the verdict in the criminal trial against FTX founder Sam Bankman-Fried.

In the hush-money case, Polymarket bettors had put the odds of a guilty verdict at 78%.

What is the hush-money trial?

Prosecutors accused Trump of falsifying business records in connection with hush-money payments made to retired porn star Stormy Daniels.

According to Daniels, she and Trump had an affair in 2006. Trump has denied that.

In the days before the 2016 election, Michael Cohen, then one of Trump’s attorneys, allegedly paid Daniels $130,000 to buy her silence.

Trump, in turn, repaid Cohen.

That’s where his legal troubles start: According to prosecutors, Trump deliberately — and illegally — labelled the payments as “legal expenses” in an effort to conceal his motives.

Trump faces probation or up to four years in prison, according to the New York Times.

However, he will likely not go to prison until his appeals are exhausted, Axios noted.

Eric Johansson is DL News’ News Editor. Got a tip? Email him at eric@dlnews.com.

Ethereum’s much-debated “rollup-centric road map” was the right call, but comes with its own set of pitfalls, according to the blockchain’s co-founder, Vitalik Buterin.

Ethereum has ambitions of serving as a “world computer” — the rails on which a new set of leaderless, user-owned businesses and organisations will run.

But the blockchain is slow and expensive.

In their quest to build a blockchain that can serve billions of users reliably and affordably , Ethereum’s team of developers decided the blockchain should expand through many complementary blockchains rather than through improvements to Ethereum itself.

Doubling down on these complementary blockchain s— called layer 2s or rollups, in crypto-speak — was the right call, Buterin argued in his influential blog last week.

“This is powerful, and enables a lot of creativity and independent innovation,” he wrote.

The rollup model has created a diverse community that is still united by a shared set of values, he said.

“Layer 2s allow subcultures to emerge that are armed with substantial resources, and a feedback loop that forces them to learn and adapt in order to be effective in the real world,” Buterin wrote.

“In general, every Ethereum layer 2 has a unique ‘soul’: some combination of Ethereum’s culture, together with its own particular twist.”

But this happy status quo shouldn’t be taken for granted, he said.

Coordination is difficult, with little incentive for competing layer 2 blockchains to collaborate, according to Buterin.

Danger of “monoculture”

Layer 2 blockchains and their communities could “start acting like separate universes, with little cross-pollination between them,” he wrote.

Alternatively, some layer 2 blockchains might come to dominate, snuffing out Ethereum’s pluralistic ethos for a “monoculture.”

“Whether due to shared human biases or shared economic incentives (or too strong of a unified Ethereum culture), everyone ends up looking in similar places for what applications to build and perhaps even what technical choices to make,” he wrote.

Buterin suggested layer 2 blockchains coordinate by subsidising the development of shared infrastructure

“There is a lot of value in trying to expand on these ideas, and keep working to make the best of Ethereum’s unique advantage as a pluralistic ecosystem.”

Layer 2s booming

Layer 2 blockchains have boomed in recent years.

According to crypto research site L2BEAT, almost 100 layer 2s are active or in development.

Existing layer 2 blockchains have processed almost twice as many transactions as Ethereum itself over the past year, according to data collected by Jack Gorman, a data scientist at venture capital firm Variant Fund.

Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email him at aleks@dlnews.com.

Wall Street is wading into crypto. And that will probably mean the end of DeFi as we know it.

“A lot of institutions are actually fascinated by DeFi,” Vertex co-founder Darius Tabai told DL News. “The problem is that DeFi is still in Wild West mode.”

DeFi enables anyone, anywhere to perform complex financial transactions — for example, taking a loan out on Ethereum through the lending protocol MakerDAO — without needing to submit identification.

And because these protocols are lines of code rather than companies with an office, there’s no one to send that identification to anyway.

That’s a big problem on Wall Street, where firms are legally obligated to assess counterparty risk — knowing who’s on the other side of the transaction.

A former global head of metals trading at Merrill Lynch and Credit Suisse, Tabai said that most institutions wouldn’t be able to use protocols that don’t require identification.

The solution?

“It’s been clear to people for a while that there will be a next generation of DeFi platforms that are permissioned in some way or other,” he said.

Hybrid models

Crypto projects generally belong to one of two categories: centralised or decentralised.

Centralised platforms, like Binance or Circle, are run like companies and require identity checks.

But decentralised protocols, like Uniswap or Tornado Cash, are open-source software programs steered by their communities — at least in theory — that anyone can use without providing information about themselves.

These two categories will likely converge into one hybrid that takes advantage of the security provided by blockchain technology while retaining the efficiency and identity checks of centralised models, Tabai said.

Case in point: Vertex, a perpetuals exchange that he co-founded, executes trades offchain, like a centralised firm, but records all transactions onchain, like a decentralised protocol.

And while it doesn’t yet have KYC, or know-your-customer checks, the team uses third-party monitoring services like Chainanalysis to flag high-risk wallet addresses.

Vertex isn’t the only protocol organising itself that way.

Cube.exchange, a trading platform launched in December, has already implemented KYC checks. But users can track where their funds are in real time — just like when they use a decentralised platform.

Cube’s hybrid design prevents the team from misappropriating customer funds, or hackers from syphoning them away. These issues have plagued crypto since Mt. Gox’s demise in 2014, and they came back to the fore when FTX collapsed in 2022.

“Hybrid models solve for a number of the problems that have provided easy fodder for critics, and offer a far superior experience to both centralised and decentralised exchanges,” Cube co-founder and CEO Bartosz Lipiński told DL News.

Evolution

For Tabai, this model is only going to become more widespread.

“Some of the standards from TradFi will start to move into crypto,” he said. That includes KYC checks, which Tabai said weren’t ubiquitous even five years ago.

“Now, all centralised exchanges do these checks,” Tabai said. “It makes sense that at some level, DeFi will probably do the same.”

Lipiński, meanwhile, said that “many” decentralised exchanges already perform identification checks to comply with anti-money-laundering rules.

And that might be enough for Wall Street to begin using these platforms once the regulatory uncertainty around crypto lifts, he said.

“It’s not a new idea,” Tabai said. “It’s just an idea that’s being refreshed.”

Tom Carreras is a markets correspondent for DL News. Got a tip about Wall Street and DeFi? Reach out at tcarreras@dlnews.com

As presumptive Republican presidential nominee Donald Trump awaits a verdict in his hush-money trial, a handful of crypto bettors have made up their mind.

Polymarket’s “Trump found guilty in hush money case?″ market now has $115,000 on the line, with bettors putting the odds of a guilty verdict at 78%.

That’s actually declined since the trial began in April, when bettors on Polymarket put the odds that Trump would be found guilty at 83%.

Polymarket creates betting markets with simple, binary options, such as “ETH above $2,000 on June 30?”

Bettors buy shares whose price reflects an outcome’s odds at the time of purchase. In the case of the Trump trial, bettors could buy “yes” shares for $0.78 Thursday. Those shares would be worth $1 if they were right — in other words, if Trump is found guilty — and nothing if they were wrong.

Closing arguments in Trump’s case began Tuesday, and jurors began their deliberations on Wednesday.

Prosecutors have accused the former president of falsifying business records in connection with hush-money payments made to retired porn star Stormy Daniels.

According to Daniels, she and Trump had an affair in 2006. Trump has denied the allegation.

In the days before the 2016 election that brought Trump to the White House, Michael Cohen, then one of Trump’s attorneys, paid Daniels $130,000 to buy her silence.

Trump, in turn, repaid Cohen. That’s where his legal troubles start: According to prosecutors, Trump deliberately — and illegally — labeled the payments as “legal expenses” in an effort to conceal the hush-money payments.

Trump faces 34 felony counts in the case. If convicted, Trump faces probation or up to four years in prison, according to the New York Times.

Crypto market movers

Bitcoin is up 2.1% in the last 24 hours to $68,700.

Ethereum has risen 1% over the same period to about $3,780.

What we’re reading

Vitalik Buterin’s $112,000 Tornado Cash donation is just one part of his fight for crypto privacy — DL News.

The Best Solana Wallets Of 2024 — Milk Road.

Ethereum ETFs Likely Protect Ether From the SEC. But What About Staked ETH? — Unchained.

Crypto Tax Loss Harvesting — Milk Road.

Is Bitcoin on balance sheets the new trend? Wall Street experts weigh in — DL News.

Aleks Gilbert is a DeFi correspondent at DL News. Got a tip? Reach out at aleks@dlnews.com.

Vitalik Buterin, the co-founder and primary architect of Ethereum, donated 30 Ether, or more than $112,000, on Thursday to support the legal defence for Alexey Pertsev and Roman Storm, the developers behind the crypto mixer Tornado Cash.

At the same time, Buterin is helping develop a new crypto mixer that will provide users with an anonymising tool for crypto transactions.

But the new Ethereum-based platform will differ from Tornado Cash in one major way — it is being designed to be compliant with anti-money laundering laws.

Volatile period

Buterin’s twin moves mark a volatile period for crypto privacy. In May, Pertsev was sentenced to more than five years in prison after being convicted by a Dutch court in a $2.2 billion money laundering case.

In September, Roman Storm, another Tornado Cash dev, will be tried on similar charges in US court. Privacy advocates have rallied to Storm’s defence. In the meantime, Pertsev has filed an appeal to the judges’ verdict.

What’s next for Tornado Cash devs?

Their cases have transfixed the blockchain and open-source communities, which fear that developers will be held liable if their code is misused by third parties.

The Pertsev conviction also threw the future of smart contracts used in anonymising platforms into jeopardy.

The Dutch court ruled that Pertsev was responsible for the parties using Tornado Cash’s technology even though smart contracts are designed to run autonomously.

Coinbase, the Blockchain Association, and additional trade associations have submitted so-called “friend-of-the-court” briefs supporting Storm.

Matter Labs, the developer group behind layer 2 network ZKSync, donated $100,000 to the developers’ legal defence. The Uniswap DAO is currently mulling giving as much as $1.5 million in UNI tokens.

According to the decentralised funding platform Juicebox, the onchain legal defence fund has already attracted $2.2 million in donations.

Privacy and Blackrock

For his part, Buterin and other researchers, including Ameen Soleimani, outlined a unique mechanism for users to maintain their privacy without offering criminals squeaky-clean crypto, according to a 2023 paper.

The technology is called Privacy Pools and lets users opt out of mixing funds with potentially ill-gotten funds.

Soleimani is already implementing the idea in his project 0xbow.

It is designed to show that DeFi’s cypherpunk ethos is alive and well even as the sector attracts mounting interest from Wall Street powerhouses such as BlackRock and Fidelity.

Inbar Preiss and Liam Kelly are Europe-based correspondents for DL News. Got a tip? Email them at inbar@dlnews.com and liam@dlnews.com.

Revolut, the UK fintech firm, aims to top up its talent pool with 12 new hires as it pushes to expand its crypto business.

The neobank, which is valued at $26 billion, serves 40 million customers.

Revolut, which as an early crypto adopter among fintechs, is seeking to partner with more crypto walets such as MetaMask, a company spokesperson told DL News.

Revolut isn’t the only digital payments platform hiring for crypto roles. PayPal, the global payments processor, advertises 22 crypto-related roles. And Stripe and Robinhood, the discount trading platform, each have four open positions each, while Checkout.com has one.

The companies did not return requests for comment.

Their hiring efforts are testament to the industry’s renewed optimism amid regulatory approval of both Bitcoin and spot Ethereum exchange-traded funds this year

Not only are the biggest crypto exchanges hiring over 1,200 new roles, but industry watchers expect Bitcoin to break its March record, and venture capital investments to skyrocket.

“We are in a bull market like we’ve never experienced before — there’s going to be so much work for us from a recruiting perspective,” Sam Wellalage, founder at crypto recruitment firm WorkInCrypto.Global, recently told DL News.

Fintech competition

Revolut faces competition from other firms muscling into the sector.

Johann Kerbrat, the general manager of Robinhood’s crypto arm, has told DL News it wants to be “the on-ramp to the crypto world.”

Robinhood’s crypto push will catapult its market cap to about $26 billion in 2025, up from $18 billion today, analysts at research firm Bernstein estimate.

Elsewhere, Stripe will resume crypto payments this summer, and PayPal has recently added its own stablecoin to its mix of crypto services.

Revolut’s crypto push

Revolut has made crypto a key part of its business model since it first launched crypto trading across Europe in 2017.

During the 2021 bull run, crypto contributed between 30% and 35% to Revolut’s £39.8 million profit, CEO Nikolay Storonsky told Bloomberg TV in 2022.

Those tailwinds ceased in 2022 when Revolut went back in the red, revealing a £25 million loss in 2022.

In March, the neobank unveiled Revolut Ramp, which allows users to buy and deposit crypto directly into MetaMask wallets.

Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.

As Bitcoin’s price swells and inflation and global conflict weigh on the economy, one company is looking at assets other than the dollar to preserve its wealth.

On Tuesday, med tech stock Semler Scientific revealed that it had used some $40 million of its cash reserves to buy 581 Bitcoin.

“Our Bitcoin treasury strategy and purchase of Bitcoin underscore our belief that Bitcoin is a reliable store of value and a compelling investment,” the firm said in a press release.

“It has unique characteristics as a scarce and finite asset that can serve as a reasonable inflation hedge and safe haven amid global instability.”

Semler’s stock jumped 24% the day of the announcement then rose another 11% the day after. Bitcoin fans also celebrated the investment, and are watching to see if other companies will follow suit.

But Semler’s investment is unusual.

“I would be surprised if this establishes a trend,” a Wall Street healthcare analyst, who declined to be named citing company media policy, told DL News.

“If anybody of size did that, they would get sued for breach of fiduciary duty because that is hardly conservative treasury management for a healthcare company.”

Protecting purchasing power

Only a handful of companies have disclosed investments in Bitcoin or other crypto assets.

MicroStrategy is the biggest corporate Bitcoin holder, with around $15 billion worth of the cryptocurrency on its books.

Tesla holds $725 million worth, while a recent regulatory filing for Reddit said the firm had invested an “immaterial” amount of its excess cash reserves in Bitcoin and Ether.

Besides MicroStrategy, the amount of crypto as a proportion of these companies’ overall wealth pales in comparison to Semler Scientific. Its $40 million Bitcoin investment accounts for almost 18% of its $227 million market capitalisation.

“Fiat currencies are looking less stable,” Juan Leon, a crypto research analyst at Bitwise Asset Management, told DL News. “Companies are beginning to look for alternative assets to currencies and bonds in order to protect their purchasing power.”

For companies with spare cash, US Treasury bonds are usually the go-to asset. That’s because they earn a yield, currently around 5.2% on short-dated bonds, and are widely viewed as the safest investment in the market.

But in recent years, Treasuries have, at points, earned a negative real yield in dollars. That means that the dollar’s inflation outsripped the yield bonds pay out, reducing the purchasing power of dollars invested in bonds.

‘Intrinsically scarce assets’

With a shaky outlook for the dollar, more companies could start looking at alternative investments to avoid losing out.

“I expect a transition from abundant assets to intrinsically scarce assets,” including debt, central bank balance sheets and currencies, Jeroen Blokland, founder of Blokland Smart Multi-Asset Fund, told DL News.

“Anyone seeking to balance the risks will look at assets like gold and Bitcoin.”

But Bitcoin’s volatility raises questions around companies holding large amounts of it on their balance sheets. A sharp decline could spell ruin.

Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.

Debra Nita is a senior crypto public relations strategist at YAP Global.

The media machine remains obscure to most people who consume its products.

Investigative reporting aside, the news embargo is a lesser-known process that generates many stories we read daily.

Robert Holloway’s recent piece, “An embargo is an agreement, not a crypto PR hype tactic,” reignited a heated debate around challenges with embargoes in crypto.

Embargoes are press releases written about an organisation’s developments that are shared with the media before a fixed publication date.

These documents aim to help crypto media professionals accurately report on the industry’s fast-paced and complex technological evolution.

Necessity

The piece sparked the exchange of horror stories about embargoed announcements gone wrong amongst journalists and public relations professionals in the Association of Cryptocurrency Journalists & Researchers (AJCR), the Crypto Communications Collective (CCC), and other groups.

The necessity of embargoes was called into question.

However, removing embargoes would do more harm than good in practice. Embargoes continue to help journalists report accurately about a complex world.

This is especially true given the zeitgeist of shrinking newsrooms that add more pressure on existing journalists.

Until the response to “I work in the blockchain industry” is no longer met with “blockchain is interesting, but I have no idea what it means” by outsiders, embargoes have a well-deserved space in effective crypto journalism.

Embargoes help journalists write newsworthy stories

Imagine a world without embargoes: It’s dark.

A journalist receives a press release, invests time in discussions with founders, and crafts a compelling story with editorial input.

They’re ready to hit ‘publish’, but realise the story was posted by a competitive outlet hours ago, and circulated on X.

The story is deemed old news, and the potential impact of their efforts is diminished.

This only needs to happen a few times before a journalist’s job turns into rewriting press releases. Articles could start to lack the research or fact-checking required due to the pressure of timeliness.

Taking away an intrinsically useful process like embargoes would lead to the deterioration of crypto journalism’s quality.

And thus, the quality of wider conversations.

It is notable that only one crypto publication makes Wikipedia’s list of reliable news sources. Even then, the outlet qualifies merely as “generally unreliable.”

It’s a telltale sign of how crypto journalism is perceived.

A common objection is that many news embargoes do not contain newsworthy stories. However, is the embargo process the problem, or poorly prepared press releases?

Journalists continue to retain the authority to determine what is newsworthy and are never obliged to comply with the demands of PRs.

If an embargoed press release does not check the boxes of newsworthiness, the journalist can and should reject the story.

What is newsworthy is also context-specific.

What may seem like an incremental technological development to one journalist who writes for end users may interest another journalist whose readers are tech founders or traders who place a premium on nuance.

That said, a crucial element of success here is skilled PR professionals who can craft compelling press releases and consistently dedicate effort to understand who they pitch.

Better policing

Embargoes need to be better policed.

An embargo is an agreement, as Robert Holloway pointed out.

All agreements are relationship-based. When two parties engage in a deal, both ascertain who they’re dealing with, asking themselves whether they can trust the other to deliver on commitments.

Bad embargo practices ruin the news reporting “game” for everyone.

On one side, journalists who want to write compelling, accurate and timely stories; and PRs who want high-quality articles published about their clients who develop important technologies.

The solution shouldn’t be to change the rules, but instead change the players who get to play the game.

Experienced PRs are needed to represent projects and collaborate with journalists, acting as the bridge between complex technology and quality journalism.

Some PRs intentionally abuse embargoes — communicating different timelines to different publications, resulting in some publications being scooped by a competitor.

At other times, embargoes are broken by journalists who are at best careless, and at worst irresponsible.

In some ways, these problems are understandable.

Crypto is a new industry. Challenges with embargoes are part of the growing pain. We should build the best practices around embargoes in this emerging space, rather than try to get rid of them.

Better policing would involve PRs advising clients more regularly to use alternative formats like “media alerts” without fixed dates rather than embargoes for developments that may not contain enough newsworthy elements. This requires skillful handling of clients but is crucial to continuing positive long-term relationships with the media.

Journalists already instinctively do their own policing, often ignoring their inbox, and instead dealing with preferred collaborators over direct messages.

What could help is setting clearer expectations with PRs.

Since embargoes enable longer timelines, they could request fresh perspectives or angles tailored to their writing style and audience, instead of blanket pitches they often receive.

To create more transparency, they could ask for more embargo information – such as who else the pitch has been offered to.

Not just a PR tactic

One final objection worth discussing: embargoes put journalists on a leash.

In other words, the claim is that journalists are participating in a PR’s marketing tactics under their conditions.

Embargoes do not undermine journalistic integrity as newsworthy stories under embargo can still be written accurately, objectively, and independently.

Using a promotional strategy is also not intrinsically wrong.

Both media and PRs are incentivised to see a story reach the greatest number of readers. It’s a marketing tactic, not dissimilar to how outlets build the most eye-grabbing headlines and stories to win over readers.

The media have goals for brand building, traffic volume, and revenue generation, so why can’t PR?

A PR’s client receives greater recognition as a result of wide coverage. Equally, a story “marketed” by multiple publications makes it more valuable than if it was only covered by one outlet. It creates network effects, reaches greater audiences, and increases advertising opportunities.

The bigger picture?

More business growth could create more opportunities for better crypto journalism.

Whether we like it or not, embargoes are a must-have for effectively covering the complex and often chaotic crypto industry.

News embargoes aid reporters in remaining organised, and accurately assessing the nuances of a story. They set the table for better reporting, even when both sides of the aisle game them.

Instead of debating the need for embargoes, we should focus on building out more effective embargo practices and holding people accountable to them to continue elevating journalism in crypto.