Celebrities, digital assets, and everyday goods
Ladies and gentlemen, like a toxic ex, I’m back after a short hiatus (except hopefully, you’re happy to see me).
Ladies and gentlemen, like a toxic ex, I’m back after a short hiatus (except hopefully, you’re happy to see me). As summer in the northern hemisphere comes to a close, news from the decentralized finance world continues to come in red hot. The digital asset markets continue to be punished by hurricane-level headwinds, and the traditional equities markets are not doing much better. It is no wonder that sheer carelessness, pessimism, and ever changing opinions continue to puzzle and intrigue me. Thanks to my brilliant writing, they’ll intrigue you as well.
The Highlights
Move over XBOX & PlayStation Nerds…Zilliqa is here
Gaming is seemingly ramping up to get a whole lot more complicated; the Layer-1 blockchain company Zilliqa is launching their own Web3 (which apparently is not the same as Web3.0, go figure) hardware console and adjacent gaming hub. Now, the prototype unveiling had all the hallmarks of the self-congratulatory and pretentious tech culture, complete with a soullessly sleek design complete with plug-in ports for all sorts of cables. However, it was glaringly apparent during the reveal that the full technical specifications were still to remain a closely guarded secret.
The main draw here seems to be the company’s “user-friendliness”, Web3 capabilities that “hide the complexity of Web3 from the end-user”. Essentially, everyone is smart enough to use this console, presumably (hopefully). The necessarily nerdy and dedicated team over at Zilliqa spent half a year on R&D, design, and the testing phase. The end goal here, dear reader, seems to be integrating the more complex aspects of Web3 into a gaming experience that even your Minecraft obsessed little cousin would understand (or Roblox…I don’t know what the kids play nowadays). Along with the player ability to earn Zilliqa (ZIL) tokens via “skill-to-earn'' game objectives (these tokens being like other crypto coins), the company believes eventually the console will “pay for itself”...yeah, ok.
The Jamie Dimon v. Crypto saga continues
Jamie Dimon, the crypto industry’s apparent sworn enemy, continued to rail against digital asset tokens at a congressional testimony a few weeks ago. His criticisms can honestly be defined as inflammatory and quite hyperbolic calling such tokens “decentralized Ponzi schemes” (honestly, he may not be wrong about a lot of tokens). The JP Morgan’s main gripe with the sector (if you can call the egregiously speculative space a “sector”) seems to be the use of various tokens in criminal and morally reprehensible activity (ransomware attacks, sex trafficking, and pretty much anything that reads like the rap sheet of a Mafia movie bad guy).
Mr. Dimon’s ardent opposition softens a bit when it comes to stablecoins. As you know (if you read my newsletter…which I know you do), stablecoins are pegged to the value of a fiat currency (typically backed by material assets or cash). More rare, you have stable coins that have a value controlled by algorithms. He argued that stablecoins would not be a major issue if they are “properly regulated”, adding that DeFi has intrinsic value as long as the blockchain and associated tokens have tangible use cases.
Over the years, the JPMorgan boss has moved from complete and unfettered hatred for digital assets (calling Bitcoin in 2014, “a terrible store of value” and that digital asset tokens “can be replicated over and over”) to a sort of frigid ambivalence. As time ebbed on and the landscape and sentiment around digital assets has changed, Dimon softened a bit and in 2019, even oversaw JPMorgan’s launch of its own USD pegged stablecoin. Will this be the greatest ever enemies-to-lovers story between Mr. Dimon and digital assets? Only time will tell.
Kimmy K has to fork over some big M’s
Everyone’s favorite and first choice of digital asset experts, yes you guessed it, Kim Kardashian, seems to have landed herself in a bit of hot water with Uncle Sam’s regulators.
In June of last year, the pop culture icon hopped on Instagram and posted an advert for EthereumMax, along with other celebrities. The post in question was a gentle prompt (if you call all an all caps caption, a gentle prompt) for her followers (yes, including you most likely) to purchase EMAX, a digital asset token being offered by EthereumMax. This post included a link to the company’s website where users would be instructed on how to buy said tokens.
Where is the issue you ask? Well, it seems Kimmy K failed to report that the company paid her $250,000 (via a middleman) to publish the post. This failure to report (a mistake akin to something an intern at a mid tier accounting firm would do) was a violation of federal securities law. The SEC hit the superstar with a $1,000,000 penalty, as well as paying back the money she was paid plus interest. All in all, a punishment softer than a slap on the wrist.
Money laundering, oil, and somehow…USDT?
In a story that reads like a dramatically over budget FBI action movie, the US Department of Justice has come down on an alleged crime syndicate for sanction violations. These violations are said to have occurred via the use of shell companies and digital assets to launder the profits of Venezuelan oil sales, which would then be subsequently used to purchase equipment for the Russian military. I know, it sounds like a Nicolas Cage movie.
Two people have been arrested in connection to this alleged offense, and five others have been indicted. The trading scheme, outlined in the complaint, involves Petroleos de Venezuela S.A. (PDVSA) (the government owned oil company sanctioned by the Trump administration), Nord-Deutsche Industrieanlagenbau GmbH (a commodity trading company out of Hamburg, operated by Russian nationals).
This seemed to be the awkward marriage between two entities who had no one else at the dance that wanted to dance with them. How sad. The oil company was simply looking for a buyer of their product that has been (and is still) locked out of most global markets. The commodity traders, for their part in this gargantuan cluster, were trying to source military parts to support the Russian war effort.
One of the violations (the one we are most concerned with today), states that a transaction was made that involved 500,000 barrels of Venezuelan oil sold by PDVSA via USDT, the stablecoin tethered to the USD. There was also evidence of a $3 million transaction between the two entities involving an unknown digital asset.
Funny enough, this is not the first time that the South American nation has been involved in digital asset treachery (according to the US Department of Justice). El Petro, the government backed digital token, sought to function as an international stablecoin pegged on a barrel of oil. It was promptly sanctioned by good ol’ Uncle Sam (which incidentally, was the first time the U.S. sanctions were aimed at a digital asset). Even in digital assets, crime doesn’t pay.
Final Word
See, I told you…the digital asset world is both puzzling and intriguing, with a lot of moving parts. If you take anything away from this issue, let it be this; seemingly, these assets are infiltrating our daily lives, pop culture, etc. Now, this essentially means you better get comfortable with the ride because we all are going to be getting on. With that, I leave you with the same message as always.
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