Crypto Weekly 13/06/2022 by Cryptoweekly

HIDDEN GEMS

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CRYPTO Page 40

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BITCOIN TO BE MILLIONS

VIDEO OF THE WEEK

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WHAT ABOUT EOS? Page 21

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CRYPTO & SECURITY

MIXERS, REGS & TECH

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PROOF OF STAKE OR WORK?

MOVE TO EARN

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METAVERSE RISK & POSSIBILITY

SMALLER NFT`S SUFFER

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DEFI & PONZI SCHEMES Page 42

DIGITAL DOLLAR & BANKS

WARTIME CRYPTO USE

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SHITCOIN TRIBULATION Page 15

CORRUPTION BTC MINING IN TEXAS Page 16

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CONTENTS $2 cryptoweeklymag.com June 2022 | Volume 30

'Millions' of Dollars are Expected to be Worth a Single Bitcoin, According to the Largest Investor in Bitcoin

Regulations About Crypto Mixers are Falling Behind Technology

Investors Turn to Gold-backed Cryptos after Bitcoin Crash

MoneyGram CEO Sees a Future in Stablecoin Payments

Crypto Crash Destroying Smaller NFTs, Expert Says

A Fed Digital Dollar will Put Banks Out of Business, says Wall Street

The Crypto Crash Unleashes Shitcoin Tribulation

Cryptocurrency In Texas: Why Bitcoin Mining Is Taking Off In The Lone Star State

Is EOS Still a Viable Project?

Crypto Must Evolve More More Secure Systems Experts Say

What is Better-Proof of Work or Proof of Stake?

"Metaverse" Called a Game With Real Risks and Possibilities

What Backs USD Tether's Value and How Does it Work?

Isn`t this Metverse Thing a Bit Far Out?

"Metaverse" Called a Game With Real Risks and Possibilities

Insider Trading Prosecution in 'Insane' NFT Case

Corruption at the top of Crypto?

Both Ukraine and Russia have Used Crypto, but the Value for Russia in Wartime is Unclear

CRYPTOWEEKLY CEO | Nathan Hill

LETTER FROM

THE EDITOR

nathan@cryptoweeklymag.com Publisher | Colin Woolley colin@cryptoweeklymag.com Editor | Robert Stone

Welcome to Crypto Weekly

editor@cryptoweeklymag.com Editorial | Anthony Burton editorial@cryptoweeklymag.com Features | Thomas Stokes tom@cryptoweeklymag.com Advertising | Philip Greenwood philip@cryptoweeklymag.com Design | Dilin Divan dilin@cryptoweeklymag.com

Hello, and a warm welcome to the 30th issue of Crypto Weekly. Crypto Weekly is the brainchild of the guys at CMC, and I am Rob Stone, Editor, and I hope to bring you an informative read on everything crypto, every week of the year. Crypto Weekly Magazine is published by the Crypto Marketing Company 71-75 Shelton Street, Covent Garden, London, United Kingdom, WC2H 9JQ

There’s no single story everyone in the crypto space is going to tell you about what they think the point of crypto is. There are a lot of opinions! But maybe the most succinct answer is that the hope is crypto will do for money what the Internet did for communication. It’s a way to send cash and value and scarcity across a computer network and, importantly, to try to do so without any intermediaries or oversight of a government. “The point of cryptocurrency is to give people who, for whatever reason, can’t trust or access the thirdparty financial system, an option.” As usual, a lot of stuff has happened in the last week because the music never stops in the crypto sphere and the time keeps rolling on. I hope you all enjoy what we have brought together for you this week. Please let us know your thoughts, and if you would like to see something featured, please do get in touch.

Editor@CryptoWeeklyMag.com editor@cryptoweeklymag.com

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'Millions' of Dollars are Expected to be Worth a Single Bitcoin, According to the Largest Investor in Bitcoin

“Bitcoin will be worth millions someday,” and the current crypto decline doesn't change his opinion that Bitcoin is "the apex asset." According to regulatory disclosures this past December, MicroStrategy holds 122,478 Bitcoins on its balance sheet. According to MicroStrategy CEO Michael Saylor, a single Bitcoin will be worth millions one day. Furthermore, he stated that he would not sell Bitcoin in the future for a profit. "We will buy Bitcoin and hold Bitcoins. There is no price target. I expect that we will get Bitcoin forever at the local top. And I expect Bitcoin to go into the millions over time," Saylor said. For years, Saylor has been an ardent proponent of Bitcoin (BTC), ensuring that his company puts its money where its mouth

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is. According to MicroStrategy's regulatory filings in December 2021, the company owns 122,478 Bitcoins, making it the most significant corporate owner of Bitcoin not affiliated with a cryptocurrency exchange. MicroStrategy owns more Bitcoin than Tesla, the next closest corporate investor, reportedly holding 38,300 Bitcoins in its corporate treasury. During the video interview, Saylor explained that Bitcoin is the future of money, and Lightning is the future of payments. When combined with Lightning Network, which enables thousands of transactions simultaneously on a global scale, Saylor believes Bitcoin will be a premier method of financial exchange. “To make payments at high speed, you will need a base layer that's ethically, economically, and technically sound, and that's what Bitcoin is.”

Regulation is coming to crypto. Although Bitcoin is currently trading at a 50% discount to its peak price of $69,000 last November, Saylor says he isn't worried. He claims that Bitcoin will eventually benefit from this latest crypto winter, triggered by the collapse of Terra (LUNA) and TerraUSD (UST), which serves as a hard-knocks lesson to investors and a wake-up call for regulators. "I expect an entire generation of crypto people to understand why Bitcoin is superior," he says. There will also be many regulators who will speed up their regulation of stablecoins and securities-crypto tokens. "Bitcoin will win this entire exercise," he said. According to CoinMarketCap, at the time of writing, Bitcoin was trading up 3.24% at $30,304.18 per coin.

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Regulations About Crypto Mixers are Falling Behind Technology Robert Stone

here may be more changes coming, but participants in the industry are used to moving fast. Wasabi Wallet's followers are not pleased with its plans to block crypto mixing, which money launderers use to hide their activities. Using CoinJoins, dealers can combine their transactions into a virtual cocktail shaker. However, once the coins have been decanted, there is no way to trace them back to their original sources, according to some, yet others say it just makes things more difficult. The Binance Exchange has stated it was able to follow the stolen assets of a token put through Tornado Cash, one of the most popular mixers, to find that the North Koreans did it. Depending on the number of parties in the mix, some software charges a staggered fee. Libertarians and criminals alike are attracted to it because of this. Regulators are less enthusiastic. Anonymity to many is what crypto should be about, with untraceable currencies and not regulated by governments. It has called for the regulation of decentralized crypto mixers by the UK's National Crime Agency. In response to the war in Ukraine, other watchdogs are banding together to close up loopholes for evading sanctions imposed on Russia. Industry and watchdogs will continue to push and pull.

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Crypto firms are opposed to compromising privacy. Coinbase highlighted Bitcoin's immunity to country-specific sanctions in an early investor presentation. (It has since shifted its stance.) In 2017, it reduced the US tax authorities' demand for half a million account holders' financial records to 14,000. Though it continued to complain about an action, it was viewed as "unjustified and intrusive." Criminals take advantage of those same freedoms as well. It has been estimated

that 15% of all cryptocurrency proceeds were routed through mixers last year, according to Liptic, which analyses cryptocurrency transactions. According to a Europol report, 30 percent of Wasabi's transactions originated from the dark web during three weeks. Total transactions were 30 times higher than average. Change is coming. Although industry participants are accustomed to moving fast, they have access to a wide range of open source technology and plenty of capital. Regulators must keep up.

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Investors Turn to Gold-backed Cryptos after Bitcoin Crash Robert Stone gold stocks could gain 10X in the next three years. Wall Street gold estimates for 2022 are bullish as well. Goldman Sachs analysts have increased their forecasts for gold prices, predicting that the metal will reach $2,300-$2,400 per ounce, up from $1950 previously. A Commerzbank analyst, Daniel Briesemann, told a publication: "Gold is still in great demand as a safe haven, as evidenced by persistently high ETF inflows." Gold is a fully fungible asset as well as an internationally recognized store of value, making it an ideal token.

Gold-backed cryptos are seen as a possible ray of hope after the tragic losses as an alternative to traditional safehaven assets. Despite Bitcoin's disappointment, gold-backed cryptos sparkle. The recent geopolitical tensions and crypto sell-offs caused Bitcoin (BTC) to become extremely fragile, falling below $28,000 and causing stock prices to plummet. Market cap-wise, the world's largest crypto struggles to surpass $30,000. Because of this, investors are hesitant to re-enter the crypto market despite its higher returns in the past. Many investors prefer to avoid taking any risks by investing in stablecoins that are backed by real commodities like gold. Gainesville Coins chief market analyst Everett Millman says, "One of the main concerns that people new to cryptocurrency have is that it isn't backed by anything. All it does is appear on a screen. Thus, attaching or linking them to a real-world commodity

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makes sense.” As an example, Paxos Gold (PAXG), a digital token backed by gold, offers its investors not only the tokens but also the gold itself, which is stored by the parent company. Tether Gold (XAUt) provides investors direct access to physical gold prices, as well as ETFs and other traditional financial instruments. Other gold-backed cryptocurrencies have also developed over the years, such as DigixGlobal (DGX), Meld Gold by Algorand (ALGO), DIGau and GoldCoin (GLC).

Should these cryptocurrencies be considered? In comparison to fiat-pegged stablecoins, gold has been proven to be a more stable and safer option for crypto enthusiasts who wish to invest in a hedge against inflation. According to experts like Timothy Ord, president and editor of The Ord Oracle,

While they are commodity-derived products, they aren't immune to risks. Their redemption process isn't always smooth. Additionally, investors aren't always aware they possess direct ownership over the gold they are pegged to. However, this could differ for certain tokens that allow physical redemption. Furthermore, gold-pegged digital currencies have the issue of storing a large supply of physical gold. Investors should therefore check the location of the gold before investing, as if the value of gold decreases, the value of the tokens may decrease, Though this is not an issue with DIGau. The value is stable. If the value of the gold backing the token goes down the amount of gold backing the token increases. To maintain the stability of digital tokens and build investor trust, it is essential that crypto developers, investors, and thirdparty holders of gold are transparent. Although gold-backed coins are still a small component of the pegged cryptocurrency market, USD-backed stablecoins remain a more important part of the ecosystem. With the current crypto turmoil and geopolitical tensions, gold-backed cryptos might change the order.

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MoneyGram CEO Sees a Future in Stablecoin Payments

igital currency adoption is being expanded by one of the most extensive money-transfer services in the US. In partnership with the Stellar blockchain, MoneyGram International Inc. plans to offer a service that will let users transfer stablecoins and quickly convert them to the conventional currency. According to MoneyGram Chief Executive Officer Alex

Holmes, crypto and fiat are not compatible today. "We aim to serve as a bridge between crypto and fiat currencies." The popularity of money transfers in emerging markets means stablecoins, digital assets tied to a currency or commodity like the US dollar, are coming under increased scrutiny. “Users can cash out their USDC

holdings through MoneyGram once the service is fully launched,” Holmes said. In this month's market turmoil, the collapse of the TerraUSD stablecoin has cast a negative light on these types of digital assets. Although Terra is different from USDC, which is backed by dollar-equivalent assets held in reserve, the meltdown of Terra has raised concerns that it might also lose its peg. USDT, the world's largest stablecoin issued by Tether Holdings Ltd., briefly lost its peg to the dollar. Regulatory agencies have raised concerns about the riskiness of USDT's reserves, which include commercial paper, a type of shortterm debt. On Thursday, Tether released a token pegged to the Mexican peso. “Currency depreciation is unlikely to occur with USDC, the stablecoin used by MoneyGram in its partnership with Stellar, since safe liquid assets fully back it,” says Dante Disparte, Circle's chief strategy officer and head of global policy. In a recent interview, he said, "We don't take the dollars and put them in reserves and then lend them out. The reserves consist solely of US Treasury bonds and cash."

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The World Today is Changing The El Salvadoran government launched its own Bitcoin wallet last year, called Chivo, and gave its users a $30 bonus. “MoneyGram is in discussions with some of those companies about possible partnerships so it can further compete in the digital wallet space for Bitcoin and other currencies,” Holmes said. According to Holmes, if a country like El Salvador is going to make Bitcoin seamless with US dollars in-country, there should be a way for consumers to send Bitcoin to El Salvador or to send dollars and then convert them to Bitcoin. "If that's the direction in which the world is heading, let's participate in that journey and help make it a success."

Crypto Market Optimism Moreover, the Terra debacle deepened a downturn in the broader crypto market. More than 20% of the price of Bitcoin, the most popular digital currency, has fallen this month. Holmes said digital currencies are still a good investment. Cryptocurrency is "clearly here to stay," and it will remain so for a long time despite recent selloffs and volatility, he said. "It is important to adopt it and bring it into the mainstream." MoneyGram's new Stellar service could also help spread crypto use in emerging markets. World Bank reports that remittances to lowand middle-income countries reached $589 billion last year and are expected to rise this year. Remittances are responsible for more than 20% of the gross domestic product in countries like El Salvador, which made Bitcoin legal tender last year.

Over $100 billion in remittances go abroad every year in the US, and MoneyGram was accused by New York state and the Consumer Financial Protection Bureau of delaying international transfers and not disclosing prices. Holmes said MoneyGram fees for sending money to El Salvador range from 0.5-2.5% of transaction value, below the World Bank's target of 3%. Holmes said the costs of acquiring and transferring Bitcoin through custodial wallets and exchanges and converting it to dollars on the receiving end could be higher than those of traditional remittance networks. “In my view of the world from the remittance side, I think Mr. Bukele's comments were misplaced," Holmes said. "I think it was marketing hype for the potential of crypto."

Jed McCaleb founded Ripple Labs Inc., which MoneyGram worked with before joining Stellar. In March 2021, MoneyGram and Ripple ended their partnership after the Securities and Exchange Commission filed a lawsuit against Ripple alleging that the company offered securities unregistered. A nonprofit organization that manages Stellar's blockchain and private equity firm Advent International expressed interest in taking over MoneyGram in July. A pilot program for crypto remittances was released in November after partnering with Stellar in October. Meta Platforms Inc. has also begun exploring new remittance channels, and last year they launched a digital wallet called Novi in Guatemala and the United States. Paxos Trust Company is the issuer of the Pax Dollar stablecoin.

In a written response, Denelle Dixon, CEO of the Stellar Development Foundation, said that, “Billions of cash-dependent people worldwide could benefit from the utility of digital assets and blockchains. The answer is what we're building with this partnership - a way to help them transition from cash to crypto." Nayib Bukele, president of El Salvador, criticized remittance companies for charging excessive fees and said using Bitcoin would save the country $400 million a year on money sent home by nationals abroad.

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Crypto Crash Destroying Smaller NFTs, Expert Says T

he NFT sales are declining this year, but smaller, lesser-known NFTs are getting crushed, while more prominent brand names are holding their own. “In this market with NFTs, all of the small projects that do not have an obvious roadmap or a clear direction are obliterated," said Gannon Breslin, founder, and CEO of The Drop. “We see consolidation around the well-known big brand names, like Bored Ape Yacht Club, Doodles, etc." When a large NFT is put on sale in the market, Breslin said there is also a "bathtub effect" since investors are selling NFT positions to free up cash for the new NFT. "It's true," he said, "but it's not as bad as it looks because some floors are still standing."

York City, to see if the appetite for NFTs increases. Breslin said he believed the actual value of NFTs would come from their use as membership clubs or passes. The NFT holders of the Bored Ape Yacht Club could attend a special three-day event called Ape Fest at NFT NYC, as an example. He said this is the real benefit of delivering projects to NFT holders. “You're seeing restaurants made out of Bored Apes and stuff like that. Bored and Hungry is in California." Even as major players like U.S. crypto exchange Coinbase enter the fray, Breslin

said NFT marketplace OpenSea remains the market leader. Coinbase launched its NFT marketplace this spring, and cryptocurrency exchange Binance has an NFT marketplace too.

In New York City's Lower Manhattan, U.S., on March 1, 2022, a sign saying "NFT FOR SALE HERE" is seen outside a small storefront hosting Neon's first in-person non-fungible token vending machine. Breslin pointed out that the recent Moonbirds project dropped by nearly 50%. "That is a large drop, but it is not zero," Breslin said. "It was amazing to see this rise in NFTs. It's not a complete drop-off, but people seem a little anxious." Breslin is watching upcoming NFT events, such as VeeCon, Ape Fest, and NFT New

June 2022 | Volume 30

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A Fed Digital Dollar will Put Banks Out of Business, says Wall Street

ccording to letters sent to the Federal Reserve on Friday, Wall Street bankers claim that launching a digital dollar for the Federal Reserve could threaten the foundations of banking. A report exploring the future of a U.S. central bank digital currency (CBDC) has been sent to the Federal Reserve for comments. A government-run digital dollar could have profound effects on the financial sector and stablecoins issued by cryptocurrency firms. "Currently, research shows that a CBDC would seriously disrupt the financial system, causing significant harm to consumers and businesses," said Greg Baer. He oversees one of Wall Street's lobbying arms in Washington, the Bank Policy Institute.

According to them, a plan must be supported by Congress and the administration. As a result, the ABA letter says, bank funding costs would increase "dramatically." Michael Barr - President Biden's pick for Federal Reserve vice chairman for supervision echoed that sentiment in his confirmation hearing last week. On Monday, Biden appointees officially took over the Fed board with several new board members sworn in. While a U.S. digital dollar has frequently come up in congressional hearings and debates over legislation, no bill has yet found

traction that would encourage the Fed to set it in motion. The early negotiations over a CBDC often include its potential effect on stablecoins, and Fed Chair Jerome Powell has said he expects private stablecoins could coexist with a digital dollar. The BPI letter states that "one of the most frequently cited reasons for a CBDC is that it would increase financial inclusion, yet as we discuss further below, we are unaware of any substantiated use case for CBDC that would benefit low- and moderate-income people."

According to another Washington-based banking group, the American Bankers Association, a digital dollar would mean that "deposits, accounting for 71% of bank funding, may be transferred to the Federal Reserve." Fed officials have been hesitant to introduce a digital dollar, keeping a neutral stance.

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The Crypto Crash Unleashes Shitcoin Tribulation

rypto industry analysts have compared the current state of the market to the early years of the Internet, with more than 19,000 virtual currencies in existence. However, most of these coins will crash, according to industry players. Several industry insiders recently in the news said thousands of digital tokens may collapse over the next few years while the total number of blockchains in existence will also decline precipitously. Besides all of the cryptocurrencies in existence, there are dozens of blockchain platforms. Several of these different cryptocurrencies are built on blockchain platforms, such as Ethereum. Web3 Foundation CEO Bernard Perez remarked last week. He added, "At the beginning of the Internet, there were many dot-com companies, and many of them were scams and of no value. Today, we have many valuable and legitimate companies." According to Ripple CEO Brad Garlinghouse, there will be thousands of cryptocurrencies in the future. But are we really going to need that many currencies? "The fiat world might have 180 currencies," Garlinghouse commented. The Internet has a name for most of these: shitcoins.

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If all of this sounds a bit strange, it's because the coins are half legitimate and half not. Dogecoin was once known as a joke. Then came Elon Musk. Doge now has a value of about $40 billion. It does seem to be a bit far-fetched, it's designed to be. The entire premise of shit coins is to play on people's anxieties by inflating every aspect of the coin in question. They are purposely created illusions. In addition to creating a sense of FOMO, the coins also offer a promise of extreme wealth. The sheer amount of coins they offer is one example. Compared to traditional cryptocurrencies, the number of coins available in the market is capped. Shit coins take the opposite approach, allowing the algorithm to create as many coins as it can. As pressure continues to mount on the crypto market, the comments from the industry are of concern. Bitcoin is down more than 50% from the all-time high it hit in November, while many other digital tokens have also plunged. A further pessimism was added last week when Guggenheim Chief Investment Officer Scott Minerd said most crypto is junk, but bitcoin and ethereum will likely survive.

A few individuals have recently been charged with digital asset fraud and insider trading but the entire shitcoin market is so big it's too much for regulators to watch. The profits for the owners can be huge, so I don't see criminals ever stopping until there are safeguards in place to protect the public. I liken the thousands of shitcoins out there to penny stocks. Penny stocks are essentially smaller public companies that trade for less than $5 per share. The major difference is that shitcoins are often created without any sort of business plan. Thus, their nickname. Imagine the entire Internet as a stage and every social platform and messaging app at the disposal of actors who want to boost the value of a specific coin so they can make money and then run off with the proceeds before everyone realizes they have been conned. The state of the crypto industry today, or it was. Cash is not so abundantly flowing with the ongoing crash mentality. People are catching on and becoming warier. Shitcoins are catching hell in this market, so do your research and don't let them fool you.

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Cryptocurrency In Texas: Why Bitcoin Mining Is Taking Off In The Lone Star State Find out why Texas is rapidly becoming the “Bitcoin mining capital” of the U.S. By Ryan Dusek and Cooper Ligon

By nature, Bitcoin mining is energy-intensive and relies on cheap energy to turn a profit. Bitcoin miners have started to flock to Texas because of the current “goldilocks” situation for cryptocurrency mining for three main reasons:

as a solution to other related issues, such as taking advantage of untapped energy, including natural gas (such as surplus gas or associated gas) that would otherwise be flared or vented because of limited infrastructure to transport it to a destination.

The State’s energy infrastructure allows for access to cheap power from its deregulated power market;

It’s no secret that for years oil and gas companies have struggled to solve the problem of flaring, not only in Texas but across the U.S. Unlike oil, which can be transported by truck or rail, natural gas requires pipeline infrastructure to deliver it to market. If a driller has no means of transporting its gas, either economically or because there isn’t available pipeline infrastructure to do so, they flare (or burn) it, and the environmental implications of doing so are substantial.

Its growing energy source mix from renewables, particularly wind energy; and

Its supportive policy and backing by policymakers.

Bitcoin Mining: Leaning On Texas’s Energy Infrastructure While Bitcoin mining has been criticized for being energy-intensive, Texas Governor Greg Abbott, among others, views Bitcoin mining

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Instead, cryptocurrency miners can tap into this surplus gas, whether it’s flared gas or

bad netbacks, and divert it to generators, which then can convert the gas into electricity and use it to power their sophisticated supercomputers and servers. According to Argus Media, “Companies see a double benefit – reducing the negative impacts of gas flaring and cutting their carbon footprint.” According to research from Crusoe Energy Systems, one of the largest Bitcoin miners in the U.S., the process reduces the CO2 equivalent emissions by about 63% compared to flaring. This opportunity to repurpose otherwise stranded energy and monetize it has not only been attractive to Bitcoin miners, but also to oil and gas companies to increase returns on their production while also complying with Environmental, Social, and Governance (ESG) initiatives—more specifically the “E” component for reducing their carbon footprint.

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Regardless of the energy source for the Bitcoin miner, be it the gas that would otherwise be flared or energy sourced by renewables, the Bitcoin miner essentially behaves like a power plant by purchasing power at an agreed fixed price and owning the ability to sell the power back to the grid. In contrast to Abbott’s position that cryptocurrency mining provides financial incentives to build power infrastructure and produce more energy, his opponents argue that doing so would also trigger greater demand and stress on an already unstable power grid. Abbott’s position, however, relies on the belief that if a severe weather event occurred, such as Winter Storm Uri in February 2021, which resulted in substantial surges in power demand, miners would be forced to pause operations when ordered to do so. In other words, miners would halt their operations and return the power to the grid when demand surges. This concept is not only supported by basic humanitarian principles, morals, or ethics that power should be redirected to save human lives but also supported by the dynamic of the

(Source: IEA)

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market itself. In the event of demand for power surges—as it did during Winter Storm Uri—spot power prices increase (sometimes dramatically) and therefore the miner would be financially incentivized to sell power back to the grid as opposed to consuming it. For miners, the benefits are not exclusive to their ability to source cheap power but also the flexibility and optionality to return that power to the grid. For Texas, particularly ERCOT, the state’s power regulator, the ability for miners to “turn off” during peak demand prevents the need to turn on less efficient peak demand power plants, allowing ERCOT to stabilize the grid more effectively.

‘Clean’ Bitcoin? Growing Energy Source Mix From Renewables According to the Texas Blockchain Council, there are at least 27 mining operations in the state with more on the way. This growth is not only attributable to the points discussed above but also to the larger crack-down on cryptocurrency mining abroad particularly in China, pushing many to flee to the U.S. It’s important to note that China is heavily dependent on “dirtier” energy sources such as coal, which produces roughly twice as much CO2 emissions as natural gas. Meanwhile, Texas is home to “cleaner” sources such as natural gas and wind. Moreover, within the U.S., Texas is a leader

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NEWS Crypto Weekly

(Source: ERCOT Fact Sheet, May 2022)

(Source: EIA)

in the nation’s wind-powered electricity generation, comprising approximately 26% of the nation’s total net wind generation. Altogether these factors have incentivized and attracted Bitcoin miners to Texas with the Lone Star State becoming the fourthhighest hash rate (the measure of how much power is being supplied to the Bitcoin network) of any state, at approximately 14%.

The firm is uniquely positioned to assist clients with their ESG initiatives and the energy transition. Find out why our experts have a wealth of experience in systems, derivatives, valuation, transaction advisory, and tax advisory to help guide you through this rapidly changing new era.

Bitcoin Miners Call Texas Home— For Now

Ryan Dusek is a Director in the Commodity Risk Advisory Group at Opportune LLP. His industry experience includes commodity trading, risk management, supply chain optimization, and derivative valuation. He is an expert in developing financial models to quantify complex/uncertain issues and deliver real-world solutions. He has extensive experience in the pricing, hedging, and portfolio management of the natural gas markets. Ryan has led all

From Rockdale, Texas, home to the two biggest Bitcoin mining companies in the world, to the first city in the U.S. to mine Bitcoin, to Fort Worth, Texas, ‘the Lone Star State’ is welcoming the Bitcoin mining industry with open arms! Opportune LLP, also headquartered in Texas, has been a leader in the renewable space for years.

June 2022 | Volume 30

About The Experts

aspects of commercial deal structuring and pricing for wholesale natural gas trading and origination. He has over 15 years of experience in the energy industry. Ryan has an MBA from the University of Texas at San Antonio where he specialized in Finance. Cooper Ligon is a Consultant in Opportune LLP’s Process & Technology practice based in Houston. He graduated from Texas A&M University with a BBA in Supply Chain Management and a minor in Entrepreneurship. His time at Opportune has primarily involved front-office forward curve building and energy trading and risk management (ETRM) analysis and selection. Before joining Opportune and during his collegiate studies, Cooper served as a distribution intern at Enterprise Products and a supply chain management intern at CEVA Logistics.

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Kiyosaki Says, "Time to Get Rich" A

mong a broader cryptocurrency crash, Bitcoin has fallen more than one-third for 2022, which means now may be the right time to buy, according to a financial expert. Robert Kiyosaki, the author of Rich Dad Poor Dad, said in a tweet on May 12 that, "Bitcoin crashing" is "great news." He added: “I have previously stated that I am waiting for Bitcoin to crash to $20,000. Once that happens, I will wait for the bottom, which may be $17,000. I will then back up the truck. A crash is the best time to make money." Despite Bitcoin's volatility this week, Kiyosaki didn't back down from his comments. In a tweet, he said, "I remain bullish on Bitcoin's future." Kiyosaki, a contrarian with a reputation for making broad and searing pronouncements, says he remains bullish on Bitcoin because the Federal Reserve and Treasury Department are corrupt, although he didn't elaborate on how that relates to Bitcoin. This is apparent as Kiyosaki urges investors to buy an asset that has fallen 56% from its November high.

However, Kiyosaki does not specify when to buy other than to wait for the bottom. However, considering the volatility of the price, he speculated that the price would sink below $10,000, which is the lowest Bitcoin has been since 2017. Almost all Bitcoin investors have lost money this year. Bitcoin

is already down roughly one-quarter of its value, if you purchased it a month ago when some analysts predicted it would bottom out at $41,000. Because of this, many financial experts advise you to treat Bitcoin as a longterm investment and be prepared to ride out its extreme ups and downs.

Britain Proposes a Safety Net Against Failing Stablecoins The ministry said that despite its initial commitment to regulate certain stablecoins, recent incidents in the crypto-asset markets have underscored the significance of effective regulation to ensure consumer protection, market integrity, and financial stability. If a bank, insurer, or mainstream payment company goes under, their deposit accounts, policies, or services must be able to be transferred quickly to another provider to prevent panic and contagion.

he British finance ministry plans to change existing rules on Tuesday to prepare for any unstable coin collapses, such as TerraUSD this month. In response to the fast growth of crypto markets and their cross-border nature, regulators are trying to keep up with fast-moving developments.

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Many cryptocurrency markets are based on stablecoins, which are digital tokens linked to traditional assets. Stablecoins are seen as having a more prominent role in payments than cryptocurrencies. TerraUSD, a popular stablecoin, collapsed in a little-regulated sector, causing central

bank concerns. According to a Ministry of Finance consultation paper, a systemic digital settlement asset firm's failure might affect financial stability and consumer protection. "The continuity of services essential to the operation of the economy and an individual's access to their funds and assets might be involved." Even as the ministry continues to review the need for bespoke rules for winding down failed stablecoins, it emphasized the need to adapt existing regulations for dealing with payment firm failures. In the report, the Bank of England proposed amending the Financial Market Infrastructure Special Administration Regime, which would allow it to ensure stablecoin payment services are maintained during a crisis.

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FEATURE

Crypto Weekly

Is EOS Still a

Viable Project? EOS, launched in 2018, was one of the first cryptocurrencies to take on Ethereum. Seeing the problems of Ethereum and finding a solution, it was one of the earliest chains. EOS now ranks 29th in TVL. EOS did not break out during the DeFi Summer of 2020 or the GameFi wave of 2021. Among its few notable successes is hosting Upland, which has a large user base. Why did EOS fall by the wayside, and could its connection to Upland make it a leading ecosystem again?

How does EOS work? Earlier this year, Block.one launched EOS, which stands for Enterprise Operation

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System, to create an ecosystem that avoids the most common Ethereum fees and platform congestion problems. The new consensus model for EOS relies on parallel chains, led by BitShares and Steem founder Daniel Larimer, alongside a team of experienced players. The idea of EOS seemed great at first, but we now see that Ethereum still leads the way, followed by over a dozen new chains that are splitting the market. EOS can process thousands of transactions per second, while Ethereum can process only 40. As opposed to 'renting' computer capacity as in the Ethereum POW model, $EOS holders own

the network. There is no doubt that EOS has not been delivered. EOS's poor performance can be attributed to several factors, including a lack of developers, issues with governance, and a liquidity mining project that diverted users' money after only 13 hours online, dampening trust. Analyzing the data from the DeFi and GameFi projects using Footprint Analytics will help us understand what went wrong.

Projects Based on DeFi on EOS With a total TVL of about $160 million, EOS' DeFi ecosystem ranks pretty low among the major chains. The chain does not support any popular protocols, such as Curve or Uniswap. While three DEX projects are deployed on both WAX and EOS chains,

June 2022 | Volume 30

FEATURE Crypto Weekly

pNetwork is a bridge that spans both chains. The chain's most significant project, EOS REX, has a TVL of only $68 million. Lending and DEX projects still dominate EOS. REX leads the way with four lending projects. Although REX isn't competitive with other DeFi projects in terms of interest rates, it has no advantage over platforms such as Aave and Compound, which are already well known in the market. Token prices on EOS are lower, and smaller projects have poorer liquidity and pool depth, which results in frequent and dramatic price fluctuations. Often, over-collateralized lending projects like Compound are liquidated when their prices fluctuate significantly. This is why lending projects have a difficult time in the EOS ecosystem. According to Footprint Analytics, prices for native EOS projects are generally low. The highest DMD price is less than $10 as of May 19, and all other EOS projects fall below $2. DEX's most popular projects are DeFiBox and Pay Cash. In addition to being a DEX platform, DeFiBox aggregates stablecoins and stakes to lend money. Despite this, EOS protocols mainly involve swapping or staking EOS tokens with tokens from other

June 2022 | Volume 30

protocols on EOS, and the DEX platform's activity is quite limited without a popular project.

GameFi is Popular Among EOS Projects According to Footprint Analytics, EOS has the sixth-highest average number of gaming users, whereas Ethereum is ranked 14th. EOS has achieved such a result mainly because of the Upland property NFT trading game, which accounts for 94.78 percent of its users. UPX users buy properties in their favorite cities, and cities like San Francisco and Manhattan are currently all sold out. Upland users purchase properties and collect rent every three hours at a fixed 14.7% APR. With the upcoming NFT-toUSD program, users may have the option of selling their properties for a substantial income. The program allows users to exchange NFTs directly for dollars. By logging into the game every day, players will receive 500 UPX for free. Furthermore, every city has different collection tasks, and the purchased properties will have additional bonus income if they match the tasks. Upland has become a top project on

EOS and GameFi in general due to this ease of play. While it is ranked 5th in the GameFi user ranking from Footprint Analytics, it is far behind leaders like Splinterlands and Alien Worlds.

Synopsis Due to its zero fees and fast transaction speed, EOS was launched with an advantage over DeFi but has fallen far behind. As important as the underlying technology is, the ecosystem of a chain and wooing developers is equally as important. However, EOS has a chance at survival if it can expand beyond its single successful title, Upland.

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FEATURE

Crypto Weekly

Crypto Must Evolve More More Secure Systems Experts Say T

he financial press continues to cover cryptocurrency in great detail, but not all of it is positive. Cryptocurrency theft reports are increasing in frequency. Cryptocurrency and blockchain technology should be valued for their privacy and security, so this issue needs to be addressed. GOBankingRates surveyed in April 2022 among 1,037 U.S. consumers. 77% of respondents said they didn't invest in crypto due to a lack of regulation, and 26% did not trust its security. Cryptocurrency will need to become more secure if it ever becomes a complement to, or outright replacement for, fiat currency. Industry experts offer some suggestions on how to accomplish this.

Increased Regulation Regulating crypto networks will be necessary, even if many crypto enthusiasts are opposed to it, to make crypto networks more secure for both owners and investors. It remains something of a ‘Wild West’ when it comes to regulation or oversight, regardless of cryptocurrency's gains over the past few years. "Regulations will be implemented, stabilizing the market even further. This benefits investors, so it is a good thing."

Cold Storage Cryptocurrency investors and owners are crucial in securing this digital asset. During freezing, crypto can be stored. Cold storage wallets require a private key, while hot wallets are accessible online. When

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using cold storage, "the only way to move funds is if you have the private key, which is why securing private keys is crucial," said Parker Lewis, head of business development at Bitcoin custody and loan company Unchained Capital. Brandon Hoffman, Netenrich's chief information security officer, agrees. “Cold storage involves printing your private key and removing all records of it." Authentication with More than One factor Crypto.com's $35 million hack in January 2022 demonstrated that it could also improve security by using multi-factor authentication. The YubiKey is a USB authentication device Coinbase's Chief Security Officer, Philip Martin, calls "the gold standard" of two-factor authentication.

More Secure Protocols are Needed Bitcoin transactions are all publicly accessible. However, they are hard to get. Although Bitcoin purports to be anonymous and secure, its transactions are recorded in a public ledger called the blockchain. Although the details of the transactions and users are kept private, they are all publicly accessible.

CNBC contributor James Ledbetter, the editor of the fintech newsletter FIN, believes that Bitcoin is not inherently unsafe. “The problem is the complacency of users. Users are managing Bitcoin poorly."

"Cryptocurrency Investing for Dummies" author Kiana Danial explains: "Security and privacy are two separate topics. To download the Bitcoin blockchain, you'd need a supercomputer. A typical Joe can't look into the Bitcoin blockchain and see what's going on."

The Federal Trade Commission reports that cryptocurrency scams are rising, primarily through "emails claiming to be blackmail attempts, online chain-referral schemes, or bogus investment and business schemes."

But Bitcoin transactions may not be as private and secure as some believe. Many new cryptocurrencies have developed protocols that are aimed at ensuring total privacy. The market could become more secure if these characteristics become the norm.

How to Avoid Scams

June 2022 | Volume 30

FEATURE Crypto Weekly

What is Better-Proof of Work or Proof of Stake? Robert Stone

he crypto world is in the middle of a battle. The Bitcoin currency of the internet, mined through proof of work, is considered by some to be the only actual blockchain currency. As opposed to proof of work by a community, proof of stake is seen as more environmentally friendly. Founder of Strike, a lightning network payment platform that powers El Salvador's use of Bitcoin, Jack Mallers is an ardent proponent of proof of work. Following Sam Bankman-Fried's criticism of Bitcoin as a payment system, he spoke with Insider. Digital assets are facing significant challenges based on these competing ideas. Crypto's environmental concerns have become too significant to ignore. Rostin Behnam, Chairman of the Commodity

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Futures Trading Commission, and crypto billionaire Chris Larsen think the industry must abandon the economically inefficient proof of work model in favor of proof of stake if it is to survive. Mallers, however, disagrees. He said, "Bitcoin's proof of work creates an innovative, inclusive, and iterative method of digitally transmitting value."

Crisis of Verification How blocks on a blockchain are verified is at the center of the proof-of-work and proof-of-stake drama. A computer creates a new block as proof of work by solving complex mathematical problems. Proof of stake involves miners, known as validators, adding new blocks to a blockchain. An owner of a proof-of-stake network stakes a large amount of their cryptocurrency and

receives newly mined cryptocurrency to validate new blocks. Proof of stake technology is more environmentally friendly than proof of work due to its significantly lower carbon footprint. Mining new Bitcoin requires significantly more computational power due to the decentralized nature of proofof-work. Tesla CEO, Elon Musk, for example, sees this as wasteful even if he is an enthusiastic supporter of crypto. The CEO of FTX, billionaire Sam BankmanFried, recently made headlines saying that, “Bitcoin isn't a payment network because proof of work is "expensive and environmentally destructive." According to Bankman-Fried, proof of stake networks are most efficient, lightweight, and less energy-consuming.

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Price of Creation Bill Mallers' final argument in favor of proof of work is that Bitcoin derives its value from the high economic and environmental costs associated with its creation. "Something must be created for it to have value. If creating money were free, there would be a lot of it. It would be hyperinflated, it would be politicized, and it would have no value because it is scarce, predictable, and hard to produce," he said. Additionally, he noted that Bitcoin's high environmental costs ought to be considered in context. Bitcoin miners deliberately find "abundant, low-cost energy," and this poses an environmental risk to Bitcoin that is far greater than its actual cost. Even though Mallers' company, Strike, is one of the largest Bitcoin payment processors globally, he disagreed with Bankman-Fried's assessment of Bitcoin's viability as a payment platform. He called it either "severely incompetent or maliciously misleading." Taking advantage of Bitcoin's lightning network actively, Strike has partnerships with companies such as Shopify and countries such as El Salvador. Bitcoin's proof of work network, according to Mallers, is the "only true type of blockchain."

However, they disagree on this, limiting Bitcoin's ability to be used as a payments platform. Bill Mallers believes that protocols that operate on top of Bitcoin's original codebase - called "layer two solutions" can make Bitcoin a viable digital currency. As proof that Bitcoin allows value to be transferred in milliseconds, he specifically pointed to the lightning network, a layer two protocol that Strike uses.

True Decentralization According to Mallers, "one of the major benefits of proof of work is decentralization." Mallers added that proof-of-stake validation was so far removed from the ethos of decentralized blockchain technology that it should be treated as a security similar to Tesla or Apple stock. Mallers went as far as to suggest that proof of stake does not solve any of the same "real-world problems" of decentralizing wealth creation that Satoshi envisioned.

The Lightning Network has Increased the Speed of Transactions Bankman-Fried's claim that Bitcoin's base layer is not a fast payment method was accepted. According to him, layer 1 of Bitcoin's blockchain is not optimized for speed or payments, but instead aims to be a digital instrument that is accessible to the world, similar to gold.

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June 2022 | Volume 30

FEATURE Crypto Weekly

"Metaverse" Called a Game With Real Risks and Possibilities

new world is being created now. As described in Ernest Cline's seminal novel Ready Player One, a grandiose virtual reality offers people an escape from a reality marred by social, economic, and political strife. The digital currency here is more stable than fiat, and players can take on any identity. The Metaverse will one day make us wonder how we ever managed without it, much like the Internet already does. Essentially, the Metaverse consolidates the digital aspects of our lives. Social media, video games, messaging, e-commerce, and even our banking will all come together as a comprehensive, personalized experience.

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The New Reality: GameFi, NFTs & the Metaverse, 2D web spaces will become 3D web spaces that are interactive, immersive, and social, through a vast system of interconnected networks. By assembling together to play, shop, talk, and search together, you'll be able to observe others engaging with the same content simultaneously instead of scrolling through web pages. There is an opportunity for the Metaverse to be a more productive and socially redeemed internet. It is also incredibly game-like, and it offers real economic opportunities to developers who know how to build inhabitable worlds—also known as game developers.

Communities will form in the virtual world, and as communities form, the actual platform, or virtual world, will become an invisible infrastructure layer, similar to how websites are now hosted on AWS or Google Cloud. Users will pick a metaverse platform based on ease of use, technical capability, and content quality. Content producers who master the production of metaverse content or developers who create tools that simplify the creation and distribution of metaverse content for mainstream users will attract the most users and build the most valuable platforms. Content (events, shows, esports) will attract users, but social connections fostered

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Crypto Weekly

through shared gaming experiences will keep them coming Cultural norms compel many people to hide their real identities in their physical environment. This development will allow them to flourish and showcase their individuality online. Perceived physical disabilities won't restrict participation, and a lack of common language won't limit communication. Removing physical barriers will create a positive feedback loop that will propel the entire Metaverse. We will always see communities as innovation centers in our shared digital spaces. If you are personally fulfilled in the Metaverse, it will be selffulfilling. As the Internet has consumed our free time, the Metaverse will become our primary form of procrastination. Occasionally, we will sneak a few moments here and there, but we will also settle in for longer stretches when our schedule allows (or perhaps not, to the detriment of our real lives and obligations). We may find the Metaverse to be more mundane than we anticipated. Metaverses are likelier to look like the real world than

sci-fi or futuristic and dystopian versions. Therefore, we can observe that those who already engage in the Metaverse (on platforms like IMVU, High Rise Second Life, and Fortnite) buy clothing similar to streetwear and construct houses similar to their real-world counterparts. Metaverses offer futuristic versions of reality, but it may be that our minds prefer a world that is mainly similar to the one we know. The Metaverse may be where we all live our best lives, but we may recognize it as our own.

Multiculturalism in the Metaverse will lead to a strong sense of community. Everyone will find the Metaverse appealing. The Metaverse crosses all borders and cultures. Playing games, producing music, socializing, or watching people will be possible in the Metaverse. In the Metaverse, there is a place for everyone, so it will serve as both a locus of culture and an economic engine for generations to come. Any brand can find its way to its target audience and enhance its digital identity, regardless of its size.

Creating and building brands within the Metaverse offers a unique opportunity because they have the potential to become more successful and rival global brands in the future. Among the most well-known brands in the Metaverse are Bored Ape Yacht Club, RTFKT, Genies, and Zed Run. Our point is that you may not be familiar with some of these brands. A new wave of doing business is being ushered in by the Metaverse and Web 3. These brands may be new, but they're already prevalent worldwide and have cultlike fan bases. In some ways, the Web 3 community views large corporate brands as counterproductive to the crypto ethos, which emphasizes community, evangelism, and profit-sharing. The Metaverse, however, has its own brand of quality and authenticity. It's time to do things differently. The central premise of cryptocurrency is that economics should serve people, not the other way around. Metaverse-native brands are likely to become the most valuable. As part of its metaverse strategy, Nike (NKE) acquired digital sneaker company RTFKT. Alternatively, one of the world's largest brands didn't enter the Metaverse with its existing brand but acquired a young metaverse-native firm to gain exposure to this next-generation internet.

A Game at its Root Video games are probably something we'll all do together in the Metaverse. The primary activity will bring us there the first time and then keep us coming back. A version of this future has already arrived in some ways. Globally, children have been immersed in the Internet for the last decade. Children

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NFT FEATURE Crypto Weekly

spend most of their time playing games, interacting with friends, creating small businesses, and buying and selling items. Socialization has become a primary function of video games in particular. Technology is very different for the "metaverse generation" (children today up to 18 years old) than for millennials. Meta's (FB) Facebook is for the senior set. However, TikTok does not seem as interactive as it should be. Watching Netflix (NFLX) with your parents is something you do when you want to spend time with them. YouTube has replaced scheduled television programming with short-form, always-on content developed by the community. Young people today consume technology in the same way as their parents, but differently. There will be a set of metaverse video games in the coming years that will not be just afterthoughts or mini-games but the primary resistance. Games may resemble something else entirely. There won't be every game a first-person shooter like Fortnite or Valorant. Sometimes we'll play old-school arcade games like Super Mario Brothers or Pac-Man. In other cases, we will procrastinate by playing mindless games such as Candy Crush or building virtual worlds such as Second Life or the Sims. In the Metaverse, we will play video games of very high quality, often developed by top game studios, and they will keep us coming back for more. The games may also be built on the blockchain. The development of

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blockchain-enabled games and blockchain games is in its infancy today - few titles have been developed, and blockchain infrastructure is still under development. Additionally, video game developers are likely to be the primary designers of the Metaverse because, at its core, it is a video game. Since video games are highly complex, the person writing the code must think in 3D. Video game developers are typically among the best computer science and education program graduates. Turning a door knob opens a door in the Metaverse. It is not simply a 3D architectural model; it is a world of cause and effect, and few coders outside of gaming studios are familiar with it.

Socialization has become a primary function of video games in particular. Technology is very different for the "metaverse generation" (children today up to 18 years old) than for millennials. These developers are unlikely to appear in coding schools quickly like HTML developers, so there will be an increased demand for game developers from remote locations and emerging markets, presenting new opportunities for those who can learn game development. The Metaverse is evolving rapidly in some ways, and at the same time, it feels almost glacial in other ways. The robust and highly customizable video game worlds take a long time to develop and test appropriately in this new environment. We anticipate that new players will emerge in the field and that the Metaverse we have all hoped for will develop and come forward much more rapidly than previous innovations in technology. Metaverse land and crypto are just some of the ways future tech enthusiasts can invest in the next digital frontier. Your virtual backyard could have a higher property value than the green grass outside your real-life back door in a virtual reality world.

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June 2022 | Volume 30

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What Backs USD Tether's Value and How Does it Work? Robert Stone

June 2022 | Volume 30

mong the most popular and widely used stablecoins on the crypto market is Tether (USDT). iFinex Inc., founded in Hong Kong in 2012 and registered in the British Virgin Islands, is the parent company of Tether and Bitfinex. Since 2014, Tether has issued a digital currency backed by dollars, called Realcoin, to facilitate the transfer of fiat currencies over the Bitcoin network. That year, Realcoin was renamed Tether. (Tether refers to the company that issues the token, whereas tether, or USDT, refers to the token.) Since then, Tether has expanded to several blockchains, launched several tokens, and gained considerable attention. The USDT tokens outstanding at the end of May 2022 had a market capitalization of $73 billion, making it the third-largest cryptocurrency.

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Other stablecoins issued by Tether include:

Tether peso (MXNT) : tied to the Mexican peso

Tether yuan (CNHT): Based on the offshore Chinese yuan

Tether gold (AUXT): Linked to gold's price

Tether euro (EURT): Pegged to the euro

It does not have its own blockchain. USDT can be transacted on, and across, some of the larger blockchain platforms instead. There is no mining or decentralization of USDT. To adjust supply to user demand, the company, Tether, issues (mints) and destroys (burns) USDT tokens.

What gives USDT its value? To ensure the exchange ratio to the currency (or asset) to which their prices are anchored, Tether claims the value of its stablecoins is always 100% backed by assets in its reserve. To the same extent that a casino must have enough cash in its vault to cover every chip in play, the USDT reserve serves as a guarantee that everyone can convert USDT into fiat if they wish.

What is Tether's USDT? Tether's cryptocurrencies are stablecoins, meaning they are pegged, or anchored, to a less volatile asset. Cryptocurrencies and stablecoins provide a crucial link between the real and virtual worlds. The idea behind stablecoins is to protect crypto holders from price volatility by tying their prices to a stable asset like a central bank's fiat currency, like the U.S. dollar, which makes them wellsuited for trades and transactions across blockchains. A stablecoin pegged to gold is also issued by Tether. Pegged to the U.S. dollar, USDT is the most popular stablecoin, with 73 billion tokens in circulation.

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On its website, Tether provides a quarterly attestation - which is not the same as an audit - detailing its reserves by asset class, and it updates the total value of its assets daily. In the crypto world, the authenticity and transparency of the reserve have been questioned periodically. In early 2021, Tether began publishing its asset reports, but does not specify which assets it holds. An independent auditor has not verified the attestation.

How USDT Differs from Other Stablecoins Stablecoins used to be dominated by Tether's USDT, but now there are many options. Differences include the entity issuing the token, the collateral backing its value, and

the manner in which their prices are pegged to fiat currencies. USDT uses an IOU (I Owe You) model. The issuer guarantees that you can redeem your investment at any time at a one-to-one exchange rate because a central entity backs the value of the stablecoin with assets.

USDT vs. Algorithmic Stablecoins With an algorithmic stablecoin such as Tron's USDD or Waves's USDN, the exchange rate is kept constant with trading incentives and automatic minting and burning of tokens with the help of a twin token to absorb volatility. In USDT, this is not the case, because Tether, not an algorithm, decides when to mint or burn tokens based on demand.

USDT vs. DAI MakerDAO's stablecoin, DAI, is also backed by assets in a reserve, but the reserve holds more assets than DAI's total value and merely holds Ether and USDC. In addition, MakerDAO lacks a central governing body - leadership is distributed among holders of the MakerDAO governance token, as opposed to Tether's centralized operation.

How you can buy and hold USDT? A cryptocurrency exchange is the easiest place for investors to purchase and sell Tether's stablecoins. Most crypto exchanges accept USDT as a payment option for traders. Due to USDT's stablecoin status, it can be stored in either a hot or cold crypto wallet. Tether offers USDT and other Tether stablecoins directly to large crypto holders such as institutional investors and crypto exchanges. Cash can be deposited to purchase stablecoins, and the virtual coins may be redeemed by returning them at the 1:1 exchange rate that Tether promises. On crypto exchanges, USDT's price may fluctuate from time to time for average investors. In May 2022, when one of the most notable stablecoins, Terra's UST, crashed, other stablecoin prices wobbled on exchanges and USDT fell to as low as 97 cents as people panicked and pulled their money out. The price has recently risen to just under a dollar.

June 2022 | Volume 30

FEATURE Crypto Weekly

Isn`t this Metverse Thing a Bit Far Out? Robert Stone

ave you been frustrated by the high prices of homes and worried about the housing bubble? If that were the case, consider a lovely piece of real estate that sells for only $2,648 at writing. It's an idyllic plot of land called "Parcel 15,-41," but it exists only in the digital Metaverse of Decentraland. The homeowner association is waived, the neighbors are quiet, and you may even be eligible for financing. In 2021, metaverse real estate will surpass $500 million in value, or at least it has for much of the bull run in crypto. (We don't know where it goes now.) On The Sandbox, someone spent $450,000 to buy land next to Snoop Dogg's virtual land. Metaverse real estate company Tokens.com spent over $2 million on virtual land. There's even a metaverse mortgage.

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Who buys land in the Metaverse? Crypto has a whiff of absurdity about it, of course. "Digital real estate," however, can seem particularly bizarre to those who aren't familiar with the concept. In a nutshell: People believe the price of metaverse land will rise. Thus far, this has proven to be a good bet for many. Scarcity is one of the reasons for this. In Decentraland, there are only 90,601 parcels, just as Bitcoin's (BTC) total supply is capped at 21 million. "Land will continue to appreciate if millions of people gather there,” says Dan Reitzik, CEO of the metaverse real estate company Terrazero, which now has 30 employees. The benefit of purchasing virtual real estate is that you can actually do things with it,

unlike buying many cryptocurrencies. All of these activities can help you earn passive income. You can build games on it, display ads on it, host a virtual concert with Kendrick Lamar, display non-fungible tokens (NFT) on it, or rent it out to others who need it. This is something I've written about before. Brands like Adidas, Clinique, and Fidelity are all trying to "enter the Metaverse." Dan Reitzik's company helped make it happen. As a part of the recent Super Bowl halftime show, Miller Lite opened a virtual bar in Decentraland. Up to 50,000 avatars visited over the day, says Reitzik, who notes that Miller's average interaction in the bar lasted 23 minutes. According to Reitzik, when brands want to set up virtual shops to interact with customers, they must own or rent land.

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FEATURE Crypto Weekly

You can boost the value of virtual land if you put in the time and effort to renovate a fixerupper, just like in the real world. "Building on top of that asset can increase its value," says Janine Yorio, CEO of Everyrealm, a metaverse real estate company. “This kind of development keeps happening repeatedly,” says De Cata. "In Vegas City, there are 5,000 parcels," he says, "and they've been able to host the Australian Open." Perhaps this intrigues you. Maybe you want to invest. If you can't afford any metaverse land, but you would like a mortgage, then you might be able to get one.

The Metaverse has mortgages available. Terrazero, run by Dan Reitzik, first introduced a “metaverse mortgage.” This led to a flurry of mainstream headlines, such as Curbed's "Now you can get a mortgage in the Metaverse." As reckless as the idea sounded. You can risk part of your assets on a high-return bet, but you can't buy virtual land with money you don't have. Especially after the Terra

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meltdown, it is not hard to imagine a highly leveraged system of metaverse mortgages sinking the crypto economy, as happened in 2008. "We didn't launch our metaverse mortgages to get speculation going," says Reitzik. One of the first mortgages was given to a young entrepreneur who planned to deploy advertising boards on four plots of land. Purchasing the parcel on behalf of the client, Terrazero then held the NFT (land is simply an NFT) and granted the development rights to the parcel. Terrazero looked at the business proposal and decided it was a viable one. "He can build what he wants, make money and pay us back," Terrazero explained

the process. "Once the bank pays us off, it is his property," said Reitzik. Terrazero received "thousands of inquiries" as soon as the mortgage news broke. Among the suggestions, most were for raw speculation. Reitzik ignored all of them. "The Metaverse doesn't need another 2008." In addition to mortgages, metaverse real estate comes with some sneaky risks you won't find in the real world. The first is platform risk. At the very least, in the real world, if you're contemplating a real estate purchase, at least you know that the plot of land will

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Crypto Weekly

“This kind of development keeps happening repeatedly,” says De Cata. "In Vegas City, there are 5,000 parcels," he says, "and they've been able to host the Australian Open."

exist in five or ten years. Maybe the fringey neighborhood in Queens, N.Y., doesn't appreciate as you had hoped, but it will exist. It's not just pixels you're betting on in Decentraland. Decentraland will still be relevant in the future, you're betting. How will Decentraland fare if it goes the way of MySpace, or if a new metaverse emerges that makes both of these obsolete? You're not just betting on pixels in Decentraland. It's a bet on the future relevance of Decentraland. Nevertheless, what if Decentraland goes the way of MySpace and all the energy flows to The Sandbox? Wouldn't it be great if another metaverse replaced both of these? When I think of Yorio's investment assessment of early-stage startups, I think of a venture capitalist. Yorio's company invests in a portfolio of 27 metaverses and is tracking "a couple hundred," including virtual worlds that have yet to launch. "We look at the team," she says. She asks: "How do they attract users to a platform?" Other questions she asks: Have they built similar products before? Is their idea unique? What are their video game mechanics like?

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Then, there's the matter of teleportation, which isn't something you consider when you buy a Nashville condo. In Decentraland, as with other metaverses (each is different), you can simply punch in coordinates and teleport to a location. This changes the real estate rules of thumb. "Location doesn't matter as much as what you build on it," says Yorio.

Reitzik concurs. "Location isn't nearly as important as in the real world. The most important thing is traffic and engagement." Companies like Terrazero and Everyrealm don't just acquire land and hope it appreciates; they develop it to attract more people. Yorio says his company focuses on investing and being involved in helping the community instead of just being a landfill. "In that sense, it is just like real estate." According to Reitzik, "in the real world, I can put 20,000 people in Rogers Arena [in Vancouver] to watch a Drake concert. In the Metaverse, I can put 20 million people there." Imagine how much a virtual world's scalability could generate money, and

commerce rests on the assumption people care about the Metaverse. This, in turn, represents a bet on the future growth of cryptocurrency. If the Metaverse fails, it doesn't matter how great your "land" is. If the housing market tanked, you have four walls and a roof to protect you from the elements. You end up with a sad collection of pixels if you spend all your money on Parcel 148, -35, and the market tanks.

Are metaverse businesses crazy? I ask that of Decentraland's de Cata. "I believe it is okay not to understand different communities," says de Cata. He admits that it's not for everyone and that "even digital ownership sounds so far from what most people think." However, a decentralized metaverse is built on the ethos that users will own the content they create. The Metaverse is similar in many ways to other social platforms people use, such as Twitter, Facebook, and Instagram. If you're going to do it, go all the way. Considering we will all spend more time in the Metaverse, shouldn't the land belong to the users instead of Big Tech?

June 2022 | Volume 30

FEATURE Crypto Weekly

Insider Trading Prosecution in 'Insane' NFT Case

Insider Trading Prosecution in 'Insane' NFT Case Robert Stone

June 2022 | Volume 30

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FEATURE Crypto Weekly

Following Chastain's charges of wire fraud and money laundering last week, crypto Twitter and Discord have been anticipating what might come next. While there is a lot of fear in the air, the aftermath of this novel case might be positive for crypto. NFT could enter a new phase of maturity due to this development. According to Nic Carter, co-founder of blockchain data aggregator Coinmetrics, “It should be evident that confidential information should not be exploited for financial gain. Many federal officials are getting serious about following up their tough talk from a year ago with action.”

Misleading and False Information This case follows the guilty plea of Arthur Hayes, the co-founder of BitMEX, the cryptocurrency derivatives pioneer, for violating the Bank Secrecy Act by "willfully" failing to conduct anti-money laundering checks for the platform's clients. On June 2, the CFTC charged Gemini Trust Co., the crypto concern controlled by the Winklevoss brothers, for making "false or misleading statements" during the launch of a Bitcoin futures product. An email sent to media outlets promises that Gemini will defend itself.

federal grand jury indicted Nat Chastain on charges of insider trading in NFTs sold on the OpenSea exchange. It is no surprise that many in the crypto world are freaking out. Loopify, a Web3 builder with 196,000 followers on Twitter, said, "They'll come for other people next. It's starting." NFT media company founder Roberto Nickson was also shocked by the news. He tweeted, "Insane." “There will be no more games from the U.S. government. Suddenly, the market has lost its freewheeling feel." “I hope I don't become one of those influencers now who openly promote rug pulls for pennies," tweeted, Web3 developer, Bender.

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Following Terra's collapse, U.S. Treasury Secretary Janet Yellen said it was "urgent" to regulate stablecoins. It is now the first case of its kind in the NFT space. Former OpenSea head of product, Chastain, is accused of buying NFTs he knew the marketplace would sell on its homepage using insider information.

Value Would Soar As alleged in the indictment, he pocketed approximately 20 ETH ($40,000 at the time) after they were showcased on the leading platform in the booming market, which was handed over to U.S. prosecutors in Manhattan. The maximum sentence for each charge facing Chastain, a resident of New York City, is 20 years. A growing trend in financial crime is the rise in crypto and digital payment crimes,

such as insider trading and fraud. According to the DOJ, Chastain used anonymous OpenSea accounts and Ethereum addresses to conceal the fraud proceeds' nature, location, source, ownership, and control. After hearing about Chastain's alleged conduct, OpenSea launched an internal investigation, as Chastain's lawyer, David Miller, told Reuters, "We are confident he will be exonerated once all the facts are known." Insider trading charges are usually brought against hedge fund traders, not executives dealing in Bored Ape Yacht Club imagery. Brady Perry, an attorney specializing in regulatory and government investigations, explained that although this is an "insider trading" case, NFTs are still not securities. If they were, then the Security Exchange Commission (SEC) or CTFC would have been involved in Chastain's case. While there has been much discussion about regulating crypto products, Perry explained that no single regulatory body oversees them. The rise in crypto and digital payment crimes, including insider trading and fraud, has been a growing trend in financial crime. The main reason is the lack of clarity on the regulatory structure. Coupling the new technology with the traditional financial crime methods and the entry of retail customers looking for the latest trends is a recipe for nefarious conduct. After invading every industry ranging from luxury fashion to environmental protection, the NFT market has stayed up despite the growing bear market. But, there are problems in the NFT industry. A volatile and complex space, regulators have only begun to try to make safe for the public. Having clear rules makes it easier for entrepreneurs to build. For the time being, crypto remains a wild and unpredictable frontier.

June 2022 | Volume 30

FEATURE Crypto Weekly

corruption at the top of Crypto? W

hen tokens become well-known and start to do well, they may become a target for one of the biggest crypto scams. This is where a fake token is created to take advantage of all the unsuspecting investors and siphon them away from real crypto projects. Crypto Marketing Company Coin, also known as CMC Coin, with its ticker CMCC, was listed on CoinMarketCap on Dec. 19, 2021, during a record-breaking launch. $CMCC gained back-to-back listings on popular token tracking websites, CoinMarketCap and Coin Gecko. Receiving instant approval from both platforms in under two hours of applying. Yet several weeks ago, due to a fraudulent company hoping to steal the success of CMCC, CoinMarketCap removed CMCC's listing. Mistaking the real company for that of the scam coin using CMCC's ticker symbol. Since then, CMCC (Crypto Marketing Company) has worked with Coin Market Cap representatives to get $CMCC relisted. Being

June 2022 | Volume 30

not researched properly to differentiate the real coins to the scam ones, which is a fundamental mistake.

removed from a site held in such prestigious acclaim may be harmful to any project, so it was a priority. And yet they’ve faced nothing but incompetence and extortion. A supposed official representative of CoinMarketCap off the record elicited a bribe of 20,000 dollars from one the CMCC founders to get CMCC immediately relisted on the CoinMarketCap site. We’re sure this tactic may work on some but not us! CoinMarketCap has refused to recognize its own error in removing a reputable company from listing and will not fix the problem, without financial inducement. They have

Instead, they’ve decided to take the easy option of just manually removing any CMCC token that they could find. With no regard for the effect, it could have on the project, or valuable investors who have supported the company. The Coin Market Cap rep who instigated the bribe was clearly unaware that this act could be considered a criminal offence, much less a civil one. An internal source at Coin Market Cap has now supplied CMCC with a list of names in senior management positions that not only accept but actively encourage the payment of bribes. One source informed us that these payments are often made initially by 3rd party agents from anything between $30,000 and $70,000 dollars’ worth of Monero, for a bulk

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Crypto Weekly

acceptance of what can be large numbers of fast listings. Monero makes the payments much harder to track. These agents then add their share of the profits and resell the fast listing process to individual crypto projects. On their website, CoinMarketCap states that they do not accept payments for fast listings. They say: “its mission is to make crypto discoverable and efficient globally by empowering retail users with unbiased, high quality and accurate information for drawing their own informed conclusions.” We can safely assume that based on the current CMCC issues, this statement is completely incorrect. If their staff and management team accept these payments as a representative or employee, the company is equally at fault by not ensuring there are correct processes in place to stop this from happening. The action of staff accepting bribes shows clearly how many scam projects ultimately can get listed to the detriment of investors who trust the CoinMarketCap brand. This has a negative effect on the investments of people who are looking to invest in genuine companies. Fraudulent coins are more likely to accept these bribe offers from officials of CoinMarketCap, because the business running costs are not a concern to them. But genuine businesses need to budget effectively to ensure long-term viability. Is

it right that their staff's lack of competence can affect genuine projects with real growth potential?

Twitter). They posted on their news channel (@bitboynews) to advise their followers to be wary of the fraudulent project.

What have Crypto Marketing Company done to try and resolve the issue?

The Crypto Marketing Company (CMC) now owns and publishes the largest globally distributed cryptocurrency magazine in the world, available in stores such as Walmart, W.H. Smith's, Barnes and Noble, Woolworths and Tescos. The intention behind the magazine is to educate the world about the crypto industry but also to hold certain websites and media outlets accountable for their actions. CMCC are a fully doxed team and consider it their duty to the public to protect their crypto investments where possible.

Both the CEO and holders of Crypto Marketing Company made several comments on the Coin Market Cap website to advise people that the scam token was indeed nothing to do with the real CMCC Coin. The Crypto Marketing Company team decided to check the fake project's website that was being mentioned under their comments section and soon realized that it was most certainly fraudsters. They have also reached out to the team at BitBoy Crypto (a trusted and wellknown crypto influencer on YouTube and

The CMCC team say “Even though we recognize and respect CoinMarketCap’s right to remove projects for any reason, it becomes a very grey area when you add financial gain for their staff members into the mix.” CoinMarketCap was purchased by Binance in April 2020. Binance is one of the most trusted companies and a leading crypto exchange globally, we would therefore imagine they would be very concerned to know that one of their sister companies is operating in this way. We would ask that Coin Market Cap act in a responsible manner as per their mission statement and relist CMCC, contract address 0xfa134985a4d9D10DBf2d7d Cf811055aA25d0807C (BSC) with immediate effect. If you or your project has been negatively affected by the actions of CoinMarketCap. Please inbox us with the details on twitter @cryptomagz Robert Stone | CMC Editorial Staff

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June 2022 | Volume 30

HIDDEN GEMS Crypto Weekly

PROJECT 1

atsnft.io

Apes Together Strong (ATSNFT)

atsnft

When the initial design of our Ape was being drawn, many important long-term variables were considered. The main goal of this collection was to create something different from what has been depicted in other Ape collections. As this collection was inspired by the movie “Planet of the Apes,” our Ape is extremely detailed for a 2D collection, it is front-facing, and will be the King of the Apes; we are not a copy-cat collection. Beyond that, involving our community has always been a top priority and from the beginning, we have had a dedicated channel that our community can use to collaborate with the artist. We have taken suggestions and illustrated the best ideas into the collection. We continue to work on progressing and refining our ultra apes, our traits, and our backgrounds to make it the best possible artwork for our community. Let it be

PROJECT 2

estatex.eu

known that our artwork is created with a 300DPI, which allows for it to be printed without degrading the quality. This will be important if you want to print your unique Ape, especially with the ownership utility arriving post-mint.

Creating an Organic, Cohesive Community-Phase 2 The strength of the community is the single most important aspect of an NFT collection. It allows for a family atmosphere, where everyone will win. WAGMI. As our collection is inspired by the “Planet of the Apes,” we plan to use our community to help our end goal: to take over. Exclusive invitations were given out to form our base community, and bringing in users that have an aligned vision of our future will continue.

EstateX

estatexofficial

EstateX enables the tokenization of real estate through new and highly advanced blockchain solutions. With this, anyone can get into real estate with as little as $100. Using these solutions, EstateX is able to trade real estate security tokens on their secondary market 24/7 without financial, or country, barriers. The advantage of fractional ownership is that it removes entry barriers and lowers entry and exit costs. Previously, non-accredited individuals could not participate in the real estate market due to restrictions and limitations. By using smart contracts, blockchain offers safe, secure, and transparent transactions that are not controlled by humans, preventing human error and wasting time. It is now possible to buy a fraction of a property and enjoy

June 2022 | Volume 30

atsnft

estatexeu

perpetual returns, without the need to maintain the property. We all know that the old-fashioned system is in need of an update. And that update seems to be coming; EstateX offers good, realistic solutions to open up this market. Although it seems that the big players and banks don’t like to see this system change, it’s a matter of adapting or giving up for these parties. Blockchain, which is going to be as big as the rise of the Internet, will bring about this revolution. EstateX is acting smartly and is one of the first parties to offer a new way of investing. The only question that arises isn’t or but when will the big banks, real estate parties and investors join the queue behind EstateX

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CLICK HERE

www.estatex.eu www.estatex.eu

BEGINNERS GUIDE Crypto Weekly

Crypto Ponzi Schemes are Flooding DeFi Robert Stone

s e em

h c iS

z n Po I

n recent years, Ponzi schemes have been using decentralized finance (DeFi) infrastructure to defraud their victims. The article examines DeFi's ecosystem and how fraudsters take advantage of it to steal from crypto newbies. DeFi refers to financial infrastructure and services provided over public blockchains using smart contracts. These blockchains allow developers to build decentralized applications (dApps) on Ethereum, Binance Chain, Cardano, and Solana. While there are numerous uses for dApps, the majority are financial. The development of DeFi has advanced to the point where token creation templates exist, allowing anyone to create a token within minutes without any programming

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experience or knowledge. A Pandora's box opens in which token creators can create excellent dApps, while malicious people can create malicious ones, including the infamous Ponzi scheme.

investors and are named after Italian con artist Charles Ponzi. Investors' funds are not necessarily invested, but they are promised high returns in a short period, which in many cases exceed traditional yields.

The Ponzi scheme is illegal in practice. Nevertheless, some blockchains are decentralized, and no single jurisdiction is responsible for enforcing compliance with local laws. The operational oversight of some centralized blockchains is lacking. Ponzi schemes can then be set up on these chains by fraudsters. Blockchains that facilitate the development and deployment of dApps do not require a know-your-customer (KYC) procedure. People can therefore build them incognito. In the DeFi space, how do Ponzi schemes work? Ponzi schemes pay existing investors with money collected from new

Ponzi schemes collapse quickly if they do not attract new investors. Many investors withdrawing funds can also result in the Ponzi schemers closing their operations because they cannot honor the debt. In other cases, authorities may raid Ponzi scheme offices, and when the illegal nature of the scheme is discovered, the scheme collapses. Eddy Alexandre, CEO of EminiFX, was the most recent victim of a Ponzi scheme in which he promised investors a weekly return of 5%. The FBI arrested him last week

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FEATURE Crypto Weekly

drives the price down. The ecosystem must experience a substantial increase in new investors to offset the increasing supply for you to sell your staked tokens for a profit after a year. It is similar to other Ponzi schemes because it relies on new investors to maintain its value. However, not all people agree that they are similar.

for allegedly defrauding his clients for more than $59 million. The monies would be invested in crypto and forex using a "RoboAdvisor Assisted Account" system. Before investing in such a product, be aware of scams and perform due diligence. Ponzi schemes in the DeFi space may use a different method to defraud their victims. Sometimes, DeFi Ponzi scammers will sell tokens to unsuspecting buyers while promising high stake rewards. Ideally, it would help if you offered the next 100x ZRX +2.5% moonshot (a token sold at a low price with the promise that its value will increase

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100 times) or promised high stake rewards for new token holders. The most appealing features of DeFi ecosystems are stake rewards and yield farming. Because DeFi ecosystems rely on staked tokens for consensus, DeFi users will deposit and lock their tokens for a significant percentage yield. It is possible to accumulate ten x more tokens in a year if you stake on a DeFi platform that pays 1000 percent (yes, these platforms can pay that much). Since most participants are staking, staking rewards result in token inflation, which

Often, prices of DeFi protocols with high staking rewards collapse if they cannot draw new investors and burn excess supply. Fraudsters who sell tokens for Bitcoin, Ethereum, Binance Coin, or other supposedly valuable tokens make the most profit. The con artists sell their clients assets that they can inflate for assets they cannot, promise high returns, and flood the market with tokens they cannot inflate once the DeFi protocol is launched. On the other hand, yield farming relies on the community to provide liquidity for participants to buy newly minted tokens through a decentralized exchange. Essentially, yield farmers buy a pair of assets for the same dollar amount. The first half goes to the newly minted token and the second half to a counter token/coin like Ethereum or USDT.

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FEATURE Crypto Weekly

An automated market maker (AMM) platform (often referred to as a decentralized exchange) adds the new liquidity to a pool. This pool automatically distributes transaction fees to liquidity providers (yield farmers). Tokens such as Ethereum or USDT can be automatically converted for the newly minted token for new participants of this pool. Or fraudsters may charge high transaction fees to earn high yields from yield farms, and future growth is heavily dependent on a significant increase in new users. Tokens of the newly minted yield farm will be used to grant rewards. Fraudsters frequently exploit this automated liquidity as the DeFi Ponzi scheme expands by exchanging newly minted tokens for the counter coin/token, thus driving the price down to zero or close. Yield farmers and stakers become stuck holding billions of worthless tokens in DeFi Ponzi schemes. Investors can gain value and utility from several DeFi protocols. Some organizations plan periodic token burns to prevent fraud through audit certifications to reduce inflation. When investing in DeFi as a new crypto trader, you must ensure the token you purchase doesn't rely on the growth of new users, which is reminiscent of Ponzi schemes. Additionally, if high returns promised by DeFi protocols don't result from value creation, but from new investors, the correlation with Ponzi schemes will increase. The founding brothers of the Africrypt Ponzi scheme in South Africa allegedly stole $3.6 billion in what is considered the largest DeFi heist in history. Two brothers claimed they had an AI-driven trading system earning above-market returns before defrauding more than a quarter-million customers and claiming they had been hacked.

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June 2022 | Volume 30

Crypto Weekly

of the

week

NFT

How to Properly Size Your Trades Update by James Sides James Sides is an experienced and well-respected trader who has been a friend of Crypto Weekly`s Editor for many years. He has a free-to-enter Facebook group if you would like to learn more from him called Crypto Common Sense.

June 2022 | Volume 30

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FEATURE Crypto Weekly

Both Ukraine and Russia have Used Crypto, but the Value for Russia in Wartime is Unclear C

ryptocurrency activists are calling for mobilization in support of the Ukrainian people. An IT professional from Kyiv raised $400,000 in cryptocurrency donations for the Ukrainian army. Additionally, there is concern that Russia could use crypto to circumvent Western sanctions. During President Vladimir Putin's invasion of Ukraine, two economies that have led the way in adopting digital money are relying on it to gain an edge in the geopolitical showdown. As part of the first major conflict of the crypto era, both sides have access to a tool that allows them to move billions of dollars quickly across borders. Crypto analytics firm Elliptic co-founder and chief scientist James Robinson said, "Since there

June 2022 | Volume 30

is no central authority that can impose morality on its users, crypto can be used to crowdfund the Ukrainian army or help Russia evade sanctions." "Nobody can stop it from being used in either scenario." However, it remains to be seen how much it will influence the war. A few hundred thousand dollars may not seem like much to an army that received $650 million in weapons from the United States last year and is still severely outnumbered. Russian crypto activity has historically lagged behind the number of transactions processed by its traditional financial institutions. Chainalysis, a blockchain data company, reported that Russians collected

about $400 million in cryptocurrency from ransomware attacks last year, 74 percent of the worldwide revenue. The sums still represent only a tiny fraction of the $46 billion in foreign exchange transactions that the TSA estimates Russian financial institutions handle daily. Former Assistant Secretary of the Treasury Juan Zarate said, "The problem is that crypto as part of the Russian financial system is immature, making it hard to circumvent sanctions." "If this were happening five years from now, there might be a different story. But that's not the case right now." Crypto is deeply ingrained in both sides. According to Chainalysis, Ukraine is the

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Crypto Weekly

fourth largest cryptocurrency adopter globally and the top European adopter in Europe. Crypto was legalized in September after years of obscurity, and the Ministry of Digital Transformation has released video ads to recruit tech start-ups that may use crypto. Shortly after Russia launched an attack Thursday, a host of Western crypto activists called for donations supporting Ukraine. As Messari founder Ryan Selkis tweeted, "One of the best things, we can do as an industry is finding ways to support the Ukrainian people and their resistance." Economic sanctions will attempt to slow the advance of Putin's tanks. Activists are digitally convening to decide their next steps. Cain headed the crypto investment group that tried to buy the Constitution and asked followers to "rally to save lives in Ukraine. I'd love to jam and share ideas. Ping me if you're interested," he told The Washington Post. Sam Bankman-Fried, CEO of FTX, said, "Each Ukrainian on FTX just got $25." He did not immediately provide more information. According to Elliptic, since the beginning of the conflict, Vitaliy Deynega, an IT worker in Kyiv, has raised $400,000 in cryptocurrencies for medical and military supplies for the Ukrainian military. Fundraising for global causes is not new, but crypto makes it easier to transfer funds, which are not subject to the same obstacles as traditional bank transfers. Chainalysis says that Russia has become a hub for illicit crypto activity, including ransomware attacks and cryptocurrency-based money laundering. According to Chainalysis, cryptocurrency businesses in Moscow City, the Russian capital's financial district, have amassed $700 million of digital assets from criminal entities over the last three years. This suggests that an alternative to sanctions might be possible. However, it is unclear whether it will be necessary. Several of Russia's most prominent businesses do not face the need to resort to a dark web of crypto payments for the time being because the sanctions announced by the Biden administration are primarily focused on banks and do not cover energy payments. Even if they did, crypto

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would not be as inviting as it might seem. "Until you can buy a hamburger down the street, you can't do much with the money," said Nick Furneaux, managing director of the U.K.-based investigative firm CSITech and author of Investigating Cryptocurrencies. After the invasion of Ukraine, Russian cyberattacks may become more sophisticated, and U.S. authorities have demonstrated increasing sophistication in tracking and seizing illicit crypto funds. This development could deter Russian interests by looking for ways to evade new sanctions. This month, the Justice Department announced that $3.6 billion in Bitcoin had been seized after the Bitfinex crypto exchange was allegedly hacked in 2016. In a ransomware attack last summer that resulted in fuel shortages on the East Coast, Eastern European cybercriminals received $2.3 million worth of Bitcoin from the Justice Department. Marshall Billingslea, who served as assistant secretary of the Treasury Department during the Trump administration, said, “The oligarchs already have so many wellheeled accountants and complicit bankers worldwide that they don't need to go that route. As long as they invest in sound sanctions advisers, they are warned that some of these blockchain currencies, such as Bitcoin, are not nearly as opaque as they

might think." The Biden administration has pushed the crypto industry to take action in blocking and reporting sanctioned entities. The Treasury Department published guidance in October reminding crypto firms that blunders may result in "enforcement actions and adverse effects on the reputation and business of a company." Alexander Shokhin, the Russian Union of Industrialists and Entrepreneurs leader, called on Russian President Vladimir Putin to "impose effective regulation on digital financial assets and cryptocurrencies." Coinbase, the biggest U.S.-based crypto exchange, said it is taking several steps in response to the crisis in Ukraine, most notably restricting IP addresses in areas sanctioned and collaborating with intelligence analysts to monitor "threat actors and their networks," the company spokesperson said in an emailed statement. "Amid this rapidly evolving conflict, we remain vigilant to ensure that we are meeting our obligations." Elliptic's Robinson, however, has noted creative uses of crypto by countries under sanctions. He said Iran has been able to repurpose its oil reserves to mine energyintensive crypto, potentially salvaging billions of dollars. "Cryptocurrency mining is a way for Russia to monetize its oil and gas reserves even if it cannot export them physically," Robinson said.

June 2022 | Volume 30

FEATURE Crypto Weekly

Metagood Uses NFTs to Promote Common Good

Robert Stone

s part of a historic crypto transaction, Danny Yang was part of the team that simultaneously minted 10,000 non-fungible tokens (NFT). Even though the project, OnChainMonkey, mirrors the format of many so-called "profile picture" NFT series before it, including the widely popular Bored Apes series, it represented a significant technical achievement. Yang said it also serves a social purpose. NFTs with monkey themes were minted for charity in a single blockchain transaction, which reduced fees. Consequently, other charities interested in crypto could do so in a cost-effective manner. Yang said that we have technologies that can solve problems. "We really can align people." Yang, a Harvard graduate and Stanford PhD in computer science, worked in cryptography for a while before moving to NFTs. He says he helped build one of Taiwan's largest crypto exchanges. As part of the Consensus Festival in Austin, Texas, the company will now participate in the inaugural Web 3 Pitch Fest, hosted by Extreme Tech Challenge and CoinDesk. In particular, he mentioned climate change and COVID-19. He declared, "Our big vision is to solve some of these exponential problems that are facing us. At first, these

June 2022 | Volume 30

problems are small, but they quickly become global in scale.” Metagood is a for-profit company, even though it focuses on philanthropy. Yang believes these sometimes-contradictory goals can be achieved with crypto, since the technology opens up investment opportunities to everyone and facilitates the creation of digital communities.

evacuated. Metagood, which has now been around for a year and has 15 employees, may be able to define what "community" means. In addition to Charlie Lee and Sebastien Borget, co-founders of influential NFT projects The Sandbox and Axie Infinity, and Jeffrey (Jiho) Zirlin, a crypto expert, award-winning artist, and social impact practitioner, the company has an extensive network of crypto experts.

OnChainMonkey had a high percentage of profitable trades, making it one of the most profitable collections of NFTs. Through its Metagood Giving Fund, the startup contributes a portion of its revenue to a number of charities.

A kite surfer, venture capitalist, and environmentalist, Bill Tai chairs the board. In addition to Tai, other wellknown figures include actor Owen Wilson, Woody Harrelson, and Mark Zuckerberg's sister Randi.

Donations have been made to UNICEF and other United Nations causes, humanitarian aid has been given to Ukraine, and a famous Afghan refugee, Sharbat Gula, was

They will be focusing on Metagood's upcoming Karma NFT mint and its decentralized autonomous organization this month.