#233—Post-FTX

And a must-watch on crypto regulations

Nov 21, 2022

Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out last week’s report here.

This week:

Now what?
Greg’s media commentary on FTX
SBF v. Erik Voorhees on crypto regulations
1. Greg: “This should be mandatory reading/viewing for our ecosystem.”
Ecosystem updates
Stuff happens

1. Now what?

The story of SBF and FTX has officially come to a close. As is often the case when the tide rolls out with the arrival of crypto winter, and the free money stops flowing, crypto’s reputation has taken a knock.

As more details have emerged, SBF has turned out to be quite the fraud, revealing himself to be more Keyser Soze, as Greg called him last week, than crypto messiah. But we should also recognize that this was fundamentally not a story about crypto. This was a scam as old as time.

Sure, crypto was his tool, but SBF had loftier, grander ambitions. He wanted FTX to be the trading platform for all assets, everything, a vision that ultimately seduced a lot of people (including us!). In that context, crypto, for SBF, was just a stepping stone.

Here’s Greg, speaking with Anna Tong at the SF Standard:

“Somebody starts with a little hole in their balance sheet and they’re basically good guys, then they need to take more risk to cover up the hole and then the hole is bigger and bigger and before you know it you’re in Elizabeth Holmes territory and you’ve blown past Lehman [Brothers] and Bernie Madoff. And now you’re looking like the greatest Ponzi scheme in history,” he said. “You may not have intended to do that, but the road to hell is paved with good intentions.”

Then, there’s the aftershocks.

There’s the contagion:

There’s the scrutiny:

There’s the reflection and analysis:

And for crypto influence, there’s the humbling. Here’s Axios:

The debacle at bankrupt crypto exchange FTX threw a pall over The Blockchain Association's first policy summit in D.C., Wednesday, and that conflagration is complicating hopes that the industry could finally achieve clear updates to laws and rules in the U.S.
Why it matters: "Crypto's reputation in Washington has been damaged," the association's executive director, Kristin Smith, said during remarks at the event, while urging members to stay the course.
The big picture: Crises can be motivating for elected leaders, but they also might not want to do anything that appears to legitimize cryptocurrency right now.
What they're saying: Speakers on stage tried to make the case that a path forward from D.C. would be forthcoming, while acknowledging that FTX has clouded the conversation.

2. Greg’s media commentary on FTX:

3. WATCH: SBF v. Erik Voorhees on crypto regulations

Greg: “This should be mandatory reading/viewing for our ecosystem.”

Jun: “If you can stomach watching SBF.”

And here’s Erik’s original rebuttal to SBF’s regulations blog post. On the value of rules:

Rules are important, and rules in society can occur at a variety of levels and through a variety of means. A family has rules. A friendship has rules. An HOA has rules, as does the HR department of a business. Contract rules govern all manner of human interaction. “Standards” generally mean voluntarily-adopted rules within an organization or industry. These are noble, for they are not achieved through coercion and violence, but through consent and market forces. Standards are everywhere around you, from the shape of a USB connector to the barcodes on a book cover.
I am all for industry standards! Crypto could benefit from some.

On blacklists:

The concept of blacklists is interesting, and in certain cases I not only support them, but have participated and contributed to them.
ShapeShift, for example, worked with several other leading exchanges & wallets starting back in 2016 to identify and blacklist what we considered to be illicit funds. If an exchange was hacked, for example, we’d do some blockchain forensics and block not only the direct recipient address of the stolen funds, but ancillary addresses. We worked with these other companies (who were technically competitors) to protect users.
Importantly, we implemented blacklists voluntarily at the layer of our own applications. We did not seek to change protocol or legal rules to prohibit transactions at the blockchain layer.

Disclaimer: Hard Yaka is an early investor in ShapeShift (Erik’s company) and has a small, token investment in FTX via an SPV.

4. Ecosystem updates

Linqto Professional:

Linqto, a leading global private markets investment platform, today announced Linqto Professional, providing a wide range of accredited investors with access to some of the world's most sought-after, privately held companies and tech unicorns. With a focus on engaging associations, professional communities, and affinity groups, Linqto Professional grants members the ability to benefit from exclusive investments opportunities, research insights, and discounted pricing due to their collective purchasing power.
"Linqto Professional is providing timely, unique wealth-building alternatives when retirement savings, financial security, and stock market crashes are significant concerns for more people than ever—even the affluent," says Will Petruski, Vice President of Sales at Linqto. "Linqto Professional tailors private market investment solutions for our client groups, providing democratized access to the same high-quality investment tools and asset classes used by the largest institutional investors in the world, including pension funds and endowments."
Previously, this asset class had been accessible only to the largest institutional and ultra-high net worth investors at extremely prohibitive entry points for the typical accredited investor.

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