News: Tether sued, ether is a commodity, proof of work is still awful, IRS releases incomprehensible guidance

Bitfinex and Tether are being sued in a class action for having used tethers to manipulate the price of Bitcoin. The suit — 95 pages, but a fairly straightforward read that’s well worth your time — includes a history of Tether’s manipulations that is basically what people like me have been shouting from the rooftops for the past couple of years. It also draws heavily on material from the New York Attorney General’s investigation into Tether.

Legally, Preston Byrne thinks there’s enough here not to be thrown out immediately — “From my review of the pleadings, it seems to me that the plaintiffs’ claims are backed by a sufficient factual basis that they will survive a 12(b)(6) motion to dismiss” — and it’s likely to proceed to discovery. The laywers are Roche Freedman LLP, who recently beat Craig Wright like a gong. Here’s the docket.

CZ from Binance told people they could buy cryptos using Alipay. Alipay tweeted that this will get you shut down immediately.

Though it appears that “some large Asian exchanges (won’t be specific) have dedicated unfreezing teams.” CZ responded “somethings are better left unsaid. Recommend no more news like these, for the sake of the people, our industry (and your business)” — which conspicuously doesn’t in any way deny that this happens.

Jennifer Robertson, the widow of QuadrigaCX’s allegedly-dead founder Gerry Cotten, wiill cough up $9 million for the pitifully small pool of money to return to investors. She’s turning over everything except $162,700 in personal assets



If you’re going to do crimes, don’t do them on a permanent immutable public ledger of all transactions — and especially, don’t do crimes reprehensible enough that everyone gets together to come after you. The US Department of Justice, working with Korean Authorities, has busted a darknet child porn site that used Bitcoin. Chainalysis did a lot of the heavy lifting.

CFTC Chairman Heath Tarber said on stage that he thinks ether, the currency of the Ethereum blockchain, is a commodity — which concurs with the SEC’s William Hinman last year. Preston Byrne suggests you don’t try an Ethereum-like launch in 2019, though — it’s very unlikely to slide past a second time.

The SEC has rejected Bitwise’s latest proposal for a Bitcoin exchange-traded fund (ETF). The rejection letter is 112 pages long, and it’s a most enjoyable read — a searing indictment of Bitcoin’s pathologically terrible market structure.

The IRS has released tax guidance on cryptocurrency forks and airdrops — which is fairly clear if all your crypto is on an exchange, and not in any way clear if you hold it yourself. Does the release of Bitcoin Cash mean you need to account for it on your 2017 return? Does the release of Bitcoin Super Diamond Gold Notascamcoin Plus mean you need to account for it on your 2017 return? Approximately everyone has asked the IRS to clarify this point.

In the UK, the Financial Conduct Authority is taking a tougher line on cryptos — they have 87 active ongoing enquiries at present, compared with 50 at this time last year.



Big investors have been suckered into pouring $50 million into a Bitcoin mining startup in Texas, because hash rates will never go up, and they’ll definitely get their money back. Peter Thiel, of all people, really should have known better.

Tim Swanson: Have PoW blockchains become less resource intensive? (SPOILER: hahaha no.)

Cryptodamages: Monetary value estimates of the air pollution and human health impacts of cryptocurrency mining — a new peer-reviewed paper in Energy Review & Social Science on the externalised costs to others of mining. “Results indicate that in 2018, each $1 of Bitcoin value created was responsible for $0.49 in health and climate damages in the US and $0.37 in China … in December 2018, our results illustrate a case (for Bitcoin) where the health and climate change ‘cryptodamages’ roughly match each $1 of coin value created.”

Alex de Vries (Digiconomist): Bitcoin’s inescapable, inconvenient truth: Bitcoin has a dirty secret, and the community is rapidly running out of excuses for it.


It’s been overtaken by events — the SEC suing Telegram — but the Telegram Open Network was apparently ready to launch by the end of this month.

Foreign Exchange Giant CLS Admits: No, We Don’t Need a Blockchain for That. “Is that because of blockchain? No, I don’t think, hand on heart, I can say that … It was a technologist’s view of how markets function with very little understanding of those kinds of entities and how they operate.”

The Bundesbank in Germany is experimenting with blockchains! How is it going? “We have discovered that modern versions of blockchain are more than capable of handling the volumes of transactions currently settled in our conventional systems. However, they are somewhat more resource-intensive and a fair bit slower.”

Hyperledger Blockchain Group Weighs Changes to Fix Election Issues — though the key problem is that nobody cares except IBM, and they don’t care so much either except for appearances.

Seven signs of over-hyped Fintech, by Martin Walker. “Criticism or even just questions are dismissed by referring to adoption/hype cycles that show you are going through a period of negativity before ultimate success.” Top image is a Bitcoin logo.

Also from Martin: Challenges in Adopting a Common Domain Model for Securities Finance — especially “blockchain.”

This is a review of just one “blockchain” book, but I’m not exaggerating when I say it describes the vast majority. I’ll edit out the name, because you’ve read too many of this book too. The reviewer recommends my book and David Golumbia’s book (US, UK) instead:

Whether or not blockchain is in fact “the next everything” is probably best left to our future robotic overlords. __’s __, the book attached to this philosophically vacuous title, is — to this human reader, at least — a dreary casserole of logical fallacies, outlandish claims, and unsummarizable discourse. Equal parts techno-solutionist propaganda piece, indoctrination gospel for the next big tech revolution, and self-help pamphlet for data survival after the extinction event, __ comes leveraged in an untestable future tense, loaded with aspirational bullet-pointery, modal verbs (could, should, would, might), and abundant dead space padding out every third page. It reads like The Onion sending-up a tech influencer drunk on memes, Crypto, and cyberlibertarianism, served with a chaser of Death-by-PowerPoint.



Looking back at the Beanie Baby bubble — dot-com era Bitcoins.

“Decentralised” crypto and blockchain ventures are so decentralised that they run almost entirely on centralised cloud providers.

More Libra — the detailed synopsis of precisely how Facebook and Libra screwed the pooch, step by step.



I bet you didn’t know that I’m Satoshi Nakamoto, in cahoots with Jimmy Wales from Wikipedia. And that I’m also Gwern Branwen. And Paul Crowley — not a Bitcoin guy, but he did introduce me to LessWrong. In fact, after reading this, you still won’t. I wonder if this is anything to do with this idiot from last January.

World Federation of Exchanges Ask UK Regulators Not to Ban Crypto Derivatives — with quotes from me. And I spoke to Decrypt about the SEC v. Telegram.




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2 Comments on “News: Tether sued, ether is a commodity, proof of work is still awful, IRS releases incomprehensible guidance”

  1. Well, I tried to read that medium article. Pretty sure my brain shrank three sizes in the process of trying to follow the impressive conclusion jumping.

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