October 13, 2022

The biggest crypto news and ideas of the day

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Hello and welcome to The Node. This is Daniel Kuhn and Xinyi Luo, here to take you through the latest in crypto news and why it matters. In today's newsletter:

Top Shelf: U.S. judge allows crypto advocates to join Ooki defense against CFTC, Coin Center sues the U.S. Treasury Dept. over Tornado Cash sanctions and ETH is now deflationary for the first time since the Merge.
The Takeaway: Why crypto should care about JPMorgan terminating its relationship with rapper Kanye West.

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– D.K.

Today's must-reads

Top Shelf

US Judge Allows Crypto Advocates to Join Ooki Defense Against CFTC: A federal judge ruled that two groups of crypto advocates could argue the Commodity Futures Trading Commission (CFTC) should not be able to serve Ooki DAO members through a website help bot. A California judge recently ruled the unorthodox method of serving Ooki's pseudonymous members was aboveboard.

The CFTC sued Ooki DAO last month, alleging the decentralized organization offered illegal leveraged and margin trading products, as had its predecessor company bZeroX, which was also sued.
The case could set a troubling precedent for crypto, as the CFTC argues that voting members of DAOs are individually liable for collective illicit activity.

Crypto Think Tank Coin Center Sues US Treasury Over Tornado Cash Sanctions: The Washington D.C.-based crypto lobby Coin Center sued the U.S. Treasury Department for wrongfully blockchain access to crypto mixer Tornado Cash. The group said these sweeping sanctions harmed Americans and their ability to transact privately using the Ethereum network.

Separately, digital assets bank Custodia Bank is suing the Kansas City Federal Reserve Board of Governors for allegedly showing "favoritism" by allowing BNY Mellon (BK) to engage in crypto custody but not granting Custodia a Fed master account. The bank, formerly known as Avanti, said it has waited 19 months for such approval.

ETH Becomes Deflationary for First Time Since the Merge: The Ethereum blockchain is now burning more ETH, its native cryptocurrency, than is being minted for the first time since the Merge, crypto exchange Coinbase said. The change comes after the surprising success of a new token project called XEN, which caused a surge of transactions and the network's deflationary mechanism to kick in.

– D.K. and Xinyi Luo

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Putting the news into perspective

The Takeaway

JPMorgan Closed Kanye's Account. Yes, There's a Crypto Angle

JPMorgan Chase, the biggest U.S. bank by assets, is cutting ties with rapper Kanye West. This comes after West shared anti-Semitic conspiracy theories in a series of social media ramblings in recent weeks, and his appearance on FOX's "Tucker Carlson Tonight," at times the most watched infotainment/evening news program in the U.S. "Financial censorship" not only proves crypto's point, but pushes us towards a world where people are more individualistic and self-reliant, D.K. argues. Read the article here.

Overheard on CoinDesk TV...

Sound Bites

"There are parts of the crypto industry that don't know what they want to be when they grow up."

— Michael J. Hsu, acting comptroller of the currency, on CoinDesk TV's "First Mover"

The news in a sentence

Headlines

Crypto Exchange Uniswap Labs Raises $165M in Polychain Capital-Led Round | Police Complaints in This Indian District Are Going on the Polygon Blockchain | China's CBDC Transactions Reach $14B as Uptake Slows: Report | October Becomes Worst Month for Crypto Hacks With 2 Weeks to Go | Crypto Custodian Cooper Raises $196M in Series C Funding Round | This Native American Tribe Leader Is Bringing Salmon Restoration to the Metaverse

IDEAS Week is a series of features and interviews previewing CoinDesk's newest event taking place Oct. 18-19 in New York City: Investing in Digital Enterprises and Assets Summit – I.D.E.A.S., which brings together leaders in traditional finance to meet and learn directly from blockchain, Web3 and digital assets founders and developers. Read IDEAS Week here.

What others are writing

Off-Chain Signals

Ethereum Merge 'Sets Precedent for Further Change': StarkWare President Ben-Sasson (Decrypt)
Crypto Hackers Set for Record Year After Looting Over $3 Billion (Bloomberg - paywalled)
Ark Invest COO: Wealth Managers Should Be 'Massive Target' for Crypto Space (Blockworks)

SocialGood App - Handing Out $100s: The Ambition of a Shop-to-Earn App's Founder*

How is the SocialGood App able to offer 100% back to shoppers? Why would they offer such a high reward rate when they could easily offer lower cashback percentages like their competitors? Is there any economic rationale for this business model?

To answer these questions, we spoke with Soichiro Takaoka, the founder and CEO of the company that runs the SocialGood App, SocialGood Foundation Inc.

Read the full interview here

*This is sponsored content from SocialGood.

The Chaser...