Ever wonder why our paychecks typically come twice a month or bi-weekly, in some cases weekly? In the 19th century it was common for workers to be paid monthly, at the end of a season – or in the case of seamen, at the end of a voyage when profits were divided. Labor historian Nelson Lichtenstein traces the modern pay cycle to World War II, when the U.S. Congress passed the Revenue Act of 1942 to increase revenue to fund the war effort and introduce the country’s first tax withholding system.

Given the complexities of calculating pay rates, tax, healthcare and other deductions, as well as managing a company’s human resources and payroll functions, it’s not surprising that most employers balance that effort with their employees’ need for prompt payment (if you think about it, waiting for a paycheck is effectively granting your employer a 0%-interest loan).

But in a fast moving, technology-intensive Web3 context, this all seems quite anachronistic. And startups like Superfluid are showing that it is, allowing payments that flow continuously across the economy at the speed of the internet. Superfluid’s asset streaming protocol enables DAOs and crypto-native businesses to stream not only salaries and other payments but also subscriptions, token vesting and rewards to recipients every second.

“Superfluid fundamentally changes the velocity of money and gives everyone the ability to automate money over time, allowing us to rebuild various financial relationships in more people-empowering ways,” Vijay Michalik, Head of Product at Superfluid, told Modern Consensus. “It’s a novel mechanism that fundamentally can’t be built outside of Web3.”

Payroll on autopilot

Superfluid simplifies and automates payroll management, reducing the cognitive effort traditionally associated with monthly administrative tasks. In just a few steps, users can set up autopilot payroll, ensuring a continuous stream of tokens to contributors without the need for constant manual interventions. An entire year’s payroll can be automated in a matter of minutes, with the ability to update it at any time. And with the ability to pay multiple wallets in a single transaction, Superfluid minimizes gas fees, making it a cost-effective solution.

Superfluid does this by employing what it calls Constant Flow Agreements (CFAs), which are smart contracts defining the terms of the payment stream. CFAs specify the rate at which tokens flow from one party to another, and the entire system operates in terms of “stream units,” representing a quantified flow of tokens per second. These streaming payments occur in real-time, eliminating the need for recipients to wait for specific intervals, a departure from traditional periodic settlement methods. Superfluid’s design also offers flexibility, allowing developers to create streams that are composable, so users can split and forward incoming streams effectively transferring funds as they receive them allowing recipients to compound in real-time, without having to wait until the end of the month

Streaming subscription payments

Superfluid Subscriptions offer a range of benefits to Web3 companies seeking a streamlined and efficient solution for crypto-native checkouts and automated recurring transactions. This free, open-source, and self-hosted software toolkit provides a seamless Web3 subscription experience by utilizing programmable money streams. With Superfluid Subscriptions, customer payments are effortlessly processed in a single transaction, eliminating the need for repetitive gas fees and ensuring a disruption-free payment flow.

Noteworthy is the toolkit’s flexibility and cost-effectiveness. Being open-source and non-custodial, Superfluid Subscriptions incur zero fees, allowing companies to implement a highly customizable Web3 subscriptions checkout tailored to their brand. The toolkit supports any ERC-20 token and is compatible across various networks, including Polygon, Optimism, Arbitrum, Avalanche, BNB Chain, Gnosis Chain, and Celo. This versatility enables companies to accept payments in their preferred stablecoin or utility token, with ongoing plans to expand to more networks in the future.

Custom vesting schedules

Superfluid provides projects with the capability to effortlessly establish and share customized vesting schedules through a user-friendly interface. One of the distinctive features of Superfluid’s streamlined vesting mechanism is its liquid nature, ensuring that tokens are accessible in the sender’s wallet before the vesting process commences. This liquidity affords users flexibility, allowing them to generate yield in decentralized finance (DeFi) or utilize the tokens for various purposes until they undergo the vesting process.

Superfluid’s Vesting solution goes beyond simplicity and liquidity; it is designed to seamlessly integrate with the Web3 ecosystem. The composable nature of Superfluid’s vesting enables the automatic transfer of vested tokens to DeFi products, facilitating activities such as liquidity provision, staking, or yield farming. This integration adds a layer of flexibility to token management, aligning Superfluid’s vesting solution with the broader landscape of decentralized applications and protocols in the Web3 space.

“Airstreaming” token airdrops

Superfluid’s Airstreams feature offers advantages in mitigating the inherent risks associated with traditional airdrops, particularly those reliant on snapshots. By opting for a streaming approach over time, Airstreams effectively reduce the likelihood of bulk sales triggering sudden price drops, providing a more stable and controlled distribution of tokens. This approach minimizes the volatility typically associated with snapshot-based airdrops in traditional settings.

Airstreams contribute to sustained user engagement by providing organizations with a tool to design incentives that foster continuous user participation and activation. This capability allows organizations to tailor rewards for both present and future user behaviors, thereby promoting ongoing contributions to the success of their products. The flexibility of Airstreams is underscored by its configurable and adaptable rules, empowering organizations to align the logic of their Airstreams with the evolving needs of their products. This includes the ability to reward various behaviors over time and maintain the airdrop as an open-ended initiative, enhancing its effectiveness in meeting the dynamic requirements of the organization and its user community.

As we noted two days ago in Will Congress Finally Do Its Job?, the operator of the world’s largest cryptocurrency exchange, Binance,  pleaded guilty and agreed to pay $4.3 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act, failure to register as a money transmitting business, and the International Emergency Economic Powers Act. Additionally, Binance’s founder and CEO, Changpeng “CZ” Zhao also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program, resigned as CEO of Binance and personally paid a $50 million fine to the Commodity Futures Trade Commission (CFTC) for “intentionally sabotaging and subverting Binance’s superficial compliance controls, including controls designed to restrict the participation of U.S. persons”.

As part of that agreement, Magistrate Judge Brian A. Tsuchida tentatively permitted CZ to return to the United Arab Emirates pending sentencing based on his $175 million appearance bond (though as a practical matter, it was secured by two guarantors with cash pledges totalling $350,000 plus a third guarantor with real property located in Los Angeles valued at more than $5 million, while CZ wired $15 million, which is being held in his Seattle-based attorney’s trust account). However, Judge Tsuchida gave the government until 5:00 p.m. today to seek review of the release order.

Prosecutors filed on November 24 a reply arguing that CZ is a flight risk and should thus remain in the U.S. until sentencing on February 23, 2024:

In the vast majority of cases, a multi-billionaire defendant who has pleaded guilty, faces possible prison time, and lives in a country that does not extradite its citizens to the United States would be detained. But this is an unusual case. Changpeng Zhao has voluntarily appeared in the U.S. to face justice. At the bond hearing, the United States took that into account and made an exceptional recommendation: that Mr. Zhao be allowed to remain free until his sentencing. The United States did not make that recommendation because it believed that Mr. Zhao presented no flight risk. Rather, the United States believed that Mr. Zhao presented a flight risk that could be managed by requiring him to remain in the U.S. and preventing him from returning to the safe haven of the UAE until sentencing. This is a reasonable restriction given that, if Mr. Zhao is allowed to return to the UAE and then fails to appear, he may never answer for his crime.

They added that CZ “has no ties to the U.S.”, given that his family lives in the UAE and is wealth is held there and elsewhere outside the U.S. and that since he obtained UAE citizenship by invitation “should Mr. Zhao decide not to return to the United States to face an uncertain sentence, there is no reason to believe that the UAE would hand him over”.

Today, Judge Richard A. Jones of the U.S. District Court for the Western District of Washington issued a stay, writing, “Having considered the briefing, and the files and pleadings herein, the Court determines it will review the decision of Magistrate Judge Brian A. Tsuchida permitting Defendant to return to the United Arab Emirates pending sentencing pursuant to the conditions of his appearance bond.”

The defense motion filed on November 24 made the follow points in arguing for permitting CZ to travel to the UAE and return for the February sentencing:

• “Judge Tsuchida found that Mr. Zhao presents no risk of flight, even while residing in the UAE”
• “Agreeing to pay collectively billions of dollars to multiple U.S. government agencies, his intent is to resolve this case and it would be illogical to take all of these material steps without the intent to appear for sentencing”
• Having founded the world’s largest crypto platform by volume “makes evasion of the U.S. justice system impossible. He has pleaded guilty to a crime which—though serious, as Mr. Zhao has acknowledged—has nothing to do with violence or fraud; there are no victims and there will be no restitution”

But that last point is disputed by the Securities Exchange Commission, which filed 13 charges against Binance and CZ in June, stating:

Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law. As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied. They attempted to evade U.S. securities laws by announcing sham controls that they disregarded behind the scenes so that they could keep high-value U.S. customers on their platforms.

There has been evidence of this for years, including all the way back in 2020 when crypto journalist Micheal del Castillo obtained a Binance presentation outlining a plan to pretend to be compliant while inviting large customers to go around the controls:

The leaked Tai Chi document, a slideshow believed to have been seen by senior Binance executives, is a strategic plan to execute a bait and switch. While the then-unnamed entity set up operations in the United States to distract regulators with feigned interest in compliance, measures would be put in place to move revenue in the form of licensing fees and more to the parent company, Binance. All the while, potential customers would be taught how to evade geographic restrictions while technological work-arounds were put in place.

And the Wall Street Journal reported today that, “The Securities and Exchange Commission is still looking for evidence that Binance and its founder Changpeng Zhao may have a backdoor to control assets stored on the Binance.US platform” – as did FTX at the direction of  Sam Bankman-Fried, who was convicted earlier this month after a headline-making trial resulting in only four hours of jury deliberation.

As for how CZ is taking all this, he tweeted on Thanksgiving that he’s been reading Ryan Holiday and people are noting that his “mental strength and stoicity is just crazy nuts”.

Here’s a thought exercise: what is the most impactful thing you could make in just 10 days? Thirty years before creating the crypto-enabled  Brave browser in 2015, Brendan Eich was a young developer at Netscape, the company Marc Andreessen co-founded with fellow entrepreneur and computer scientist Jim Clark after coding the first web browser as a student at the University of Illinois. Eich was charged with creating a working prototype of a new computer scripting language in a week in order to compete with Microsoft.

He succeeded, and what is now known as JavaScript is the most popular programming language, used by 68% of developers according to a survey by Stack Overflow, as it makes possible the interactivity and dynamic features of approximately 98% of the world’s websites. Released the same year as the Ethereum blockchain, Eich’s vision for the Brave browser was perhaps equally ambitious: to create a browser that prioritizes user privacy and delivers a faster, more efficient browsing experience. As Modern Consensus wrote in a 2018 story, This browser will pay you in crypto:

“Most ad revenue systems are somewhat hostile to both users and advertisers. You—the consumer—have an ad between you and the content you’re downloading on your data plan. Meanwhile, the website publisher has little incentive to prove you’re actually consuming the ad they sold on your behalf. Now Eich has delivered a new platform that users runs on the ether-based Basic Attention Token (BAT) to improve the ad experience for users, advertisers, and publishers.”

This proactive stance against intrusive ads and trackers was designed to block unwanted content by default, resulting in faster page load times and a cleaner online experience for users, and it resonated with people increasingly concerned about privacy and the intrusive nature of online advertising. The BAT token serves multiple roles, including being the reward mechanism in Brave’s rewards program, enabling users to support content creators by contributing BAT tokens, acting as a medium of exchange for privacy-preserving advertising, compensating users for viewing Brave Ads, and being stored in the integrated cryptocurrency wallet for user management and distribution to content creators.

Enhancing Sign-in With Ethereum

Brave’s version 1.60 release last week introduces two features that enhance the security and user experience of signing messages with the wallet: Sign-In With Ethereum (SIWE) gets a significant overhaul and the redesigned signing experience is expanded to CoW Swap orders.

Available in basic form since the initial Brave launch, SIWE shifts the role of authentication away from large centralized identity providers and into the hands of the individual by taking problematic traditional login methods such as username and password or via Web2 platform like Google or Facebook – and replacing it with wallet-based sign-in functionality. This also allows one’s wallet login to be stamped with the “indelible ink” of an Ethereum wallet address of one’s choosing. Now, in addition to displaying prompts as human-readable plaintext messages without any validation by the wallet, Brave has improved the safety of signing into third-party apps and services by helping prevent phishing attacks. Brave notes, “This is particularly important for SIWE, since the sign-in action is basically producing a signature for a message, which is susceptible to spoofing by a motivated attacker.”

Additional security for CoW Swap trade orders

One of the many successful crypto tools descended from the original Gnosis project incubated by ConsenSys, CoW Swap introduced a novel approach to on-chain asset trading using the “coincidence of wants” (thus CoW) concept rooted in economics and the barter system. Built on the CoW Protocol, this trading interface employs batch auctions for price discovery. Users express off-chain intents through signed messages, enabling a gasless experience. However, the challenge lies in the security risks associated with blindly signing off-chain messages, as highlighted by a December 2022 scam that exploited a gasless Seaport message to steal NFTs worth over 852 ETH.

To address security concerns and improve user experience, hacker teams from Brave and CoW Swap collaborated on a solution at DappCon 2023. They developed a message parser for CoW orders, ensuring users can easily comprehend order details, such as formatted amounts, token symbols, and logos, before approving signing requests. The parser is specifically tied to the type hash of CoW Swap’s order struct, enhancing security by preventing its use on non-CoW messages. Additionally, the teams implemented calldata parsers for on-chain transactions within the swapping process, enhancing transparency and user confidence in signing requests involving native assets like ETH or XDAI.

On the 15th anniversary of Satoshi Nakamoto publishing the Bitcoin white paper, Modern Consensus has gathered a selection of tributes – a mix of the poignant, the thought provoking and since Securities and Exchange Commission Chair Gensler felt the need to get in on the act, the clownish.

Bitcoin Magazine

One of the very first publications devoted to Bitcoin, it was co-founded in 2012 by a 17-year-old Vitalik Buterin, whose father had piqued his interest in the young technology the year before and who went on to invent Ethereum, announcing it in his own white paper in November 2013. In a feature published today entitled “The Reformation of Money: Bitcoin’s Whitepaper and Its Parallels to Martin Luther”, author Robert Hall sets the stage by writing:

It was 15 years ago today that one of the most important documents ever written was released to the world. The importance of this document is akin to Martin Luther, who published his 95 Theses in Wittenberg, Germany, on October 31, 1517.

Satoshi Nakamoto must have been a student of history because there is little chance this was a coincidence and Satoshi must have understood the significance of publishing the Whitepaper on this day. The parallels between the Whitepaper and the 95 Theses simply can’t be ignored.

The article is definitely worth a read, both for the history lesson and the salient points Hall makes about Bitcoin’s importance, including these:

“Given absolute power over the lives of others, even the most pious and well-meaning among us will become corrupt… The only thing that we as humans can do is to mitigate this urge as much as possible.”

“Bitcoin binds this innate temptation towards corruption in an unbreakable chain of positive incentives, decentralization, transparency, and hard-capped supply, enabled by the ingenious difficulty adjustment and backed by the world’s energy.”

“We have the opportunity to remake the world with better money that works for everyone and not just the elite. This is a social experiment that has never been tried in human history and is one that we can ill afford not to try.”

Lyn Alden

Founder of her own “fundamental investing with a global macro overlay” firm, Lyn Alden Investment Strategy, Alden argues that it’s important to understand monetary history in order to better gauge the potential market size of new technologies like blockchain. Her commemorative tweet today makes an important point about Satoshi’s methodology in initially communicating what was to become the blockchain revolution:

Nakamoto released the project’s major breakthrough/invention details to the world, and gathered input, before he released the actual open-source client that people used to bootstrap the network.

Joël Lightbound

Liberal Party member Joël Lightbound tweeted a clip of a speech he gave to the Canadian Parliament where he quotes Twitter founder Jack Dorsey calling the Bitcoin white paper “one of the most seminal works of Computer Science in the last 30 years” and making these  points:

In the words of SEC Chairman Gary Gensler, Satoshi’s innovation potential to spur change is worth pursuing to lower economic rents and promote economic inclusion.

Over the last decade we’ve seen Bitcoin empower the underbanked, as well as those living in oppressive regimes.

Women, who use Bitcoin all over the world to evade unjust restrictions on their financial freedoms.

It’s also helped thousands of families avoid the tragedy of currency debasement.

I’m advocating for everyone to study it, progressives in particular because Bitcoin was born in the midst of the Great Financial Crisis as an alternative to big banks’ greed and the system that never failed to bail them out.

Nic Carter

Yesterday Modern Consensus highlighted Nic’s efforts as part of an avalanche of rebuttals to an egregious, dangerous and still uncorrected misrepresentation by the Wall Street Journal regarding crypto and Hamas, and his Bitcoin tweet today harks back to a thoughtful piece he wrote three years ago. It’s worth quoting at length for speaking to the broader misunderstanding of crypto and the role of the press:

Bitcoin has often confused people. It’s perhaps one of the most misunderstood phenomena of the last decade. If you lack sufficient ideological and historical context, you most likely consider it a complete boondoggle or a bizarre, unnecessary waste of computing power and effort. This is the default position. Most people in the West rarely give any thought to monetary policy or banking — why should they? Their currencies depreciate at a slow, barely perceptible rate. Their bank arrangements work fairly well, and they don’t find themselves frozen out of the financial system too often.

Of course, this isn’t the reality for the majority of the world’s population, who suffer under inflationary regimes, or politicized and untrustworthy banking systems. But the views of American coastal elites are far overrepresented in the discourse, so the press is replete with confused assessments of this purportedly useless monetary scheme. But understanding the purpose of Bitcoin is itself a shibboleth. If you don’t get it, it’s probably not meant for you.

Eric Wall 

Among other things, Eric is the creator of an experimental NFT that tokenizes a personal consulting service based on his experience as a crypto analyst and investor. Too difficult for me to try to explain in a sentence, but check it out here. Eric’s commemoration today enunciates even more aspects of Bitcoin’s unique properties not just as a concept and technology, but as an all-too-rare occurrence where a crazily powerful and meaningful idea takes root and becomes a global phenomenon.

Our world doesn’t seem like a place where an email on a cryptographic mailing list can really make a dent on this world. No matter how cool of an idea you may have for some distributed system, it’s never going to be the type of thing that could ever really become talked about in the mainstream. Let alone become a new asset, listed on the same finance pages as oil, stocks or gold.

In 2008, human kind did not seem like the kind of place that would embrace an idea like Bitcoin. The modern world wasn’t some ancient Greece where philosophical ideas were exchanged and listened to—we were already on a fast-track toward idiocracy by then.

But Bitcoin really did become that idea. It’s one of those rare, once in a generation type of things where the good guys win, the good idea wins. What happened 15 years ago with Bitcoin is the kind of stuff for history books. The journey it has taken from a pdf to where it is today is one of the most insane things to ever have occurred in our lives.

Pete Rizzo

Editor at Bitcoin Magazine, Editor-at-Large at Kraken and a contributor to Forbes, I give Pete a pass for calling himself on his website “the definitive writer on Bitcoin and crypto” because a) the “archival research” he does on Bitcoin’s history is important and b) he writes about the people and events that most impacted its development – something that is far too rare in journalism generally and especially the coverage of crypto. Today Pete published an article in Forbes highlighting these salient points:

1. The White Paper is Only 9 Pages
2. No One Knows Who Wrote the White Paper
3. The White Paper was widely critiqued when released
4. Bitcoin Only Appears Twice in the White Paper
5. Satoshi Wrote Code Before He Wrote the White Paper
6. The White Paper Doesn’t Include the Word Blockchain or Cryptocurrency
7. The Most Common Word in the White Paper is Block
8. 10 People Are Cited in the Bitcoin White Paper
9. Parts of the White Paper Are No Longer Being Worked on by Developers
10. The White Paper Is Hosted on Many Websites Around the World
11. The White Paper Was Embedded on Every Mac Computer, But Was Later Removed
12. Twitter Creator Jack Dorsey Once Called the White Paper ‘Poetry’
13. Kraken Put the White Paper on an F1 Racer
14. The White Paper Has Been Cited Over 4,000 Times

Documenting ₿itcoin

I only stumbled on this Twitter account today after typing “Bitcoin 15” in the site’s search box, but the short video in Documenting ₿itcoin’s tweet today deserves at least a view or two for featuring Austrian-British economist and political philosopher F.A. Hayek musing that, “I don’t believe that we should ever have a good money again… All we can do, is by some sly, roundabout way, introduce something they can’t stop”, followed by a scrolling list of cryptographic innovations set to the theme music for “2001: A Space Odyssey”.

Extra points for the account’s pinned tweet, “Explaining #bitcoin at $100 to an empty room”, which features the inimitable educator Andreas M. Antonopoulos doing just that in 2013, apparently his first-ever of hundreds of talks on Bitcoin, Ethereum and crypto.

Gary Gensler

And now for something completely different, we’ll leave the realm of world-changing ideas to drop in on SEC Chair Gensler’s flying circus, aka regulation by enforcement action (albeit in the absence of Congressional action). Gensler took the opportunity to attempt a lame joke in reference to his claim that nearly all crypto tokens are securities, tweeting: “If Satoshi Nakamoto went as Satoshi Nakamoto for Halloween, would we be able to tell? Happy 15th anniversary to Satoshi’s famous white paper that started crypto. Any crypto companies that are tricking investors should start treating them to compliance with the securities laws.” Twitter user @PharaohX33 invoked The Simpson’s evil Mr. Burns in their apt reply.

On October 10th, the Wall Street Journal ran a story with the headline, “Hamas Militants Behind Israel Attack Raised Millions in Crypto. Digital currency transactions highlight how U.S. and Israel have struggled to sever the access of Hamas, Palestinian Islamic Jihad and Hezbollah to foreign funding.” The story stated: “Digital-currency wallets that Israeli authorities linked to the PIJ received as much as $93 million in crypto between August 2021 and June this year, analysis by leading crypto researcher Elliptic showed.” It also cited research by crypto analytics firm BitOK suggesting that Hamas received $41 million.

Ten days later the paper followed up with “Why Hamas Uses Crypto to Raise Money”, essentially a rehash citing the same two sources plus such unilluminating sentences as, “Much of the world’s illicit finance activity happens through the traditional banking system, as well as cash. But crypto has become an important means of funding sanctioned entities and laundering money because crypto users can instantaneously move value around the world by using what are known as digital wallets.”

But by then 105 U.S. lawmakers had signed a letter to President Biden and the Under Secretary for Terrorism and Financial Intelligence about cryptocurrencies allegedly undermining national security, citing the Journal’s story and combining the two figures: “between August 2021 and this past June, the two groups raised over $130 million in crypto”.

And on October 18th Senators Elizabeth Warren, a Massachusetts Democrat, and Kansas Republican Roger Marshall took to the Journal’s op-ed page with “Cryptocurrency Feeds Hamas’s Terrorism”, citing the $130 million figure, adding without evidence, “the publicly reported numbers are likely a small percentage of the actual total” and concluding with the charge that, “In short, the crypto industry is profiting from financing terrorism and rogue nations.”

Aside from the error of taking two estimates and adding them together without regard to how much of it was duplicative, the idea of the crypto industry profiting from terrorism would be laughable did it not have such severe ramifications for public policy. The senators are co-sponsors of the Digital Asset Anti-Money Laundering Act and asserted that the legislation is required for “cutting off Hamas and other terrorist groups from vital financing”, which former senior counsel at the House Financial Services Committee J.W. Verret called in a letter to the Journal, “a Trojan Horse promising stronger national security that would in fact be a gift to adversarial foreign governments”.

Naturally, the skeptics and blockchain sleuths on Crypto Twitter were all over this slander, pointing out flaws and asking the researchers cited for clarification. Sure enough, Elliptic posted a lengthy blog post on October 25th to set the record straight, stating up front in bullets:

There is no evidence to support the assertion that Hamas has received significant volumes of crypto donations.

A full understanding of blockchain analysis and the context of any analysis is needed when using these insights to draw conclusions.

Elliptic has engaged with the Wall Street Journal to correct misinterpretations of the level of crypto fundraising by Hamas.

In addition, we have been in discussions with the office of Senator Warren to ensure that the relevant parties have a proper appreciation of the complexities and nuances of analyzing these wallets.

Elliptic added that Hamas began soliciting Bitcoin donations in 2019 and saw a peak in May 2021 before suspending its public-facing crypto fundraising in April 2023 citing “concern about the safety of donors and to spare them any harm.” The company explained how the Journal had misinterpreted their analysis of wallets seized by Israel’s National Bureau for Counter Terror Financing: “As we made clear in our research, in no way does this mean that PIJ had ‘raised’ all of these funds or that they even all belonged to PIJ. It is not known what proportion of the funds received by those wallets are directly attributable to PIJ or other terrorist groups.”

Nic Carter, a general partner at Castle Island Ventures, has been particularly dogged in not only pulling apart the Journal’s claims and calling for them to correct the record, but even going as far as to issue bounties of $500 in bitcoin for the “21 best open source analyses of the facts surrounding the WSJ/Warren letter”, 14 of which he’s already selected and shared (other people have subsequently donated, raising the bounty payouts). In contrast to the newspaper and many in Congress, he emphasizes the use of blockchain analysis tools and reporting techniques: “Focus on knowable ground truths. Your reporting can focus on debunking a specific detail of the story, creating an independent, more fact-based account of the events, creating a data visualization, or simply creating a meme or graphic depicting the events or the WSJs reporting.”

Nic’s also shared efforts by some in Congress to focus on the facts, such as Senator Bill Hagerty, Republican from Tennessee saying in a Senate Banking Committee hearing on October 26th, “When it comes to regulating crypto, we need a scalpel, not a sledgehammer.” 

Crypto compliance and investigation software firm Chainalysis also posted a Twitter thread addressing misconceptions and “overstated metrics and flawed analyses of terrorist groups’ use of cryptocurrency”.

So has this avalanche of rebuttals, corrections and education motivated the Wall Street Journal to note their errors and correct the record? Dream on. The reporters have left the discredited $93 million and $41 million figures, sensationalist headline and lack of context, tossing in at the bottom a word salad rivaling the maddening cirumlocutions we’ve heard from Sam Bankman-Fried on the stand the last few days.

Political philosopher Hannah Arendt’s 1963 book Eichmann in Jerusalem: A Report on the Banality of Evil became a classic in part by introducing the concept in noted its subtitle. She argued that the full context of Eichmann’s actions in helping organize and carry out the Holocaust weren’t fully elucidated by his trial, which thus obscured, “the lesson that this long course in human wickedness had taught us—the lesson of the fearsome, word-and-thought-defying banality of evil”.

Not to say that what FTX founder Sam Bankman-Fried is currently on trial for rises to the level of evil, but I’ve been struck over and over by the banality and seemingly utter disregard for the impact his hubris and incompetence had on the many victims of not just FTX’s collapse (more than 1 million creditors), but the 130 affiliated entities also forced to declare bankruptcy. The former high-flying boy genius has pleaded not guilty and took the stand today in a highly unusual hail mary by his defense, after weeks of punishing testimony by his former friends/colleagues/roommates Gary Wang, Nishad Singh and Caroline Ellison, each of whom pleaded guilty to fraud, money laundering and conspiracy charges.

Take for example Government exhibit 1621, which illustrates an exchange three of the four executives had November 6, 2022 via a Signal chat group that someone brazenly – yet also presciently – named “Wirefraud”. (See our cover image and this example to the left; The New York Times has posted the full exhibit here.)

That was the day that Changpeng Zhao (known as “CZ”, a moniker even shorter than Bankman-Fried’s 3-letter one), the founder and CEO of FTX rival exchange Binance tweeted, “As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.”

FTT being the bullshit token Bankman-Fried and FTX had created ostensibly as a kind of loyalty program – it allowed customers to make discounted trades, earn increased commissions on referrals, and they could use it as collateral; the company website described it as “the backbone of the FTX ecosystem” – but which they used to inflate the value of FTX and Alameda Research as companies (40% of the assets on Alameda’s balance sheet as of June 30, 2022 were FTT tokens; $292 million in locked FTT being listed among its liabilities).

So the withdrawals that Nishad Singh (FTX co-founder and director of engineering) notes are coming in so fast that the company can’t process them fast enough – even in the case of wallets that contain enough funds to do so – were the result of FTX customers trying to get out while they could. That is, before news of Binance preparing to liquidate tanked the price. (For his part, CZ knew that was most likely to happen, thus weakening or taking out his rival – notwithstanding his follow-up tweet, “We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.” Reuters detailed earlier in 2022 how Binance “drove its explosive growth while maintaining weak anti-money laundering controls and withholding information from regulators”, and this June the US Securities and Exchange Commission filed 13 charges against the company for operating unregistered financial entities, misrepresenting trading controls and selling unregistered  securities.)

Caroline Ellison testified on October 10th that she was “in sort of a constant state of dread” by June 2022, because she and Bankman-Fried had lied for years, misleading lenders and creating phony financial documents – in contrast to the detailed spreadsheets she’d kept of what Alameda owed various lenders and how the companies were using customer deposits for a variety of company purposes, including venture capital investments, political donations and paying celebrity endorser/enablers more per hour than they’d ever made in their lives.

So to see graphic evidence that her response to the flood of panicked withdrawals that would bring down FTX and Alameda in a matter of days, leaving customers locked out and shellshocked, was “thx”, then “(:” and finally a banal, “don’t think I have anything in particular?” is maddening.

And Bankman-Fried – lauded by venture capitalists, journalists and speculators for being so boldly insouciant as to play video games during pitch meetings and interviews – appears unable to summon the effort to type the three whole letters he corrects with a laconic “oof”. Before going on to wonder how CZ will react and then finally posting the tweet they are crafting he muses, “maybe something like ‘we can meet a ton [of withdrawals] but it’s already getting large’? idk”

IDK indeed.

We’ll give the last word to Ms. Arendt (while adding that Modern Consensus has more to report on this topic in the coming weeks): “it was difficult indeed not to suspect that he was a clown. And since this suspicion would have been fatal to the entire enterprise [his trial], and was also rather hard to sustain in view of the sufferings he and his like had caused to millions of people, his worst clowneries were hardly noticed and almost never reported”.

As Sam Bankman-Fried, disgraced founder of crypto exchange FTX, sits in a jail cell in Brooklyn’s notorious Metropolitan Detention Center awaiting the start of his trial on Tuesday for seven counts of fraud and conspiracy, funds that were stolen from FTX in a hack hours after the firm filed for Chapter 11 bankruptcy last November have moved for the first time in more than 9 months.

Not only was the FTX collapse already one of the most stunning debacles in the long history of financial disasters, the siphoning of $600 million in funds from the company’s  crypto wallets added insult to injury and led to speculation that company insiders were absconding with funds. Self-described “rug pull survivor” turned crypto sleuth ZachXBT tweeted Ethereum, Solana and Binance chain addresses involved, noting, “Multiple former FTX employees confirmed to me they do not recognize these transfers.”

While FTX’s then general counsel Ryne Miller acknowledged the hack and warned customers not to attempt to use FTX sites, only after the exploit did they start moving assets out of company wallets and into cold storage. “Following the Chapter 11 bankruptcy filings – FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage,” Miller said. “Process was expedited this evening – to mitigate damage upon observing unauthorized transactions.”

Fast forward through 10 months of post-collapse FTX drama–including not only the inability of Bankman-Fried to refrain from speaking to the press but also his passing on to the New York Times private documents belonging to Alameda Research’s CEO (his former girlfriend), who pleaded guilty only weeks after the bankruptcy and is now a cooperating witness for the prosecution, along with FTX’s co-founder and head of engineering. Now the hacker who stole the crypto from FTX wallets has started moving the funds for the first time since last December. On Saturday, blockchain analytics service Spot On Chain and others following the hacker addresses noted that one of those had moved 2,500 ETH ($4.2 million at the time) to two new addresses.

The next day Spot On Chain reported that a total of 22,500 ETH had moved from exploiter addresses in 24 hours. They show 12,250 ETH moving from 2 addresses (0x3e9 and 0x7F3) to Thorchain, which is a decentralized protocol that allows users to add or swap liquidity across chains. Rather than “wrapping” assets (which involves sending a cryptoasset, such as Bitcoin, to a custodian who holds it and creates a version of it on another chain, as BitGo does by minting WBTC tokens on Ethereum), Thorchain uses an automated market maker mechanism where liquidity providers deposit tokens and then Thorchain’s RUNE token is paired with two tokens in succession to execute a user’s desired swap from one to the other. Spot On Chain also shows 7,750 ETH transferred to Railgun, a smart contract system that enables zero-knowledge privacy for any on-chain applications. Railgun’s site explains that “All transferring, swapping, lending, borrowing, and interactions with dApps increases the variations of interactions in RAILGUN and decreases the chances that withdrawals can be linked to deposits.”

An additional 2,500 ETH has been swapped by the hacker for 153 tBTC (and subsequently redeemed for Bitcoin) using MetaMask’s in-wallet swap functionality that compares prices on various decentralized exchanges and provides the best price (for an 0.875% fee). tBTC is similar to wrapped Bitcoin but rather than sending one’s BTC to custody firm BitGo, nodes running a protocol created by Threshold Network mint the ERC-20 token via a decentralized process using threshold cryptography. But all these transfers are with just a fraction of the hacked funds, as the FTX exploiter entity still holds 163,246 ETH ($280 million) across 14 addresses, according to Spot On Chain.

Examining the addresses used and their complete history, one can see not only the activity of the hacker moving funds but anyone else who interacted with those addresses. This being the wacky world of crypto, perhaps it’s not surprising to see that from the day ETH was first transferred into the 0x3e9 address on November 21, 2022 until the ETH starting to move out September 30, 2023 there were 18 additional transfers to the address–ranging from 1 wei to 0.0004 ETH ($0.64) from addresses with ENS names like umbrellauni.eth, couldyoupleasesendmesome.eth and hacker-dont-give-up.eth. And yes, the hacker included those tips when transferring the ETH out, leaving only 0.00005 of ETH dust remaining.

So has all this on-chain sleuthing gotten us any closer to identifying the hacker? Bloomberg cited anonymous sources in reporting last December that the Justice Department was investigating the hack, so presumably they are following the recent activity closely. One also wonders whether Bankman-Fried’s trial will elicit any relevant information, particularly considering that he told YouTuber Tiffany Wong in a November 29 interview that he had, “narrowed it down to like eight people. I don’t know which one it was. I have a pretty decent sense. Either it was an ex-employee or someone installed malware on an ex-employee’s computer. I don’t know for sure which one it is because access is totally shut down right now, because it would be dangerous to allow people to query data.”

Let’s hope that the ease of querying data on blockchains ultimately proves dangerous to criminals of various stripes.

In our ongoing series exploring the increasing intersections of blockchain and AI, we’ve highlighted both novel approaches to combining the two exponential technologies in sectors like healthcare that impact everyone, as well as how blockchain can ensure both privacy and transparency. The latter is particularly important given the risks posed by AI — its potential to eliminate millions of jobs, including those previously deemed more immune to technology, the acceleration of deep fakes that threaten our increasingly slippery hold on what is true, the reduction in the ability of humans to control weapons of mass destruction and more. (And as evidence that these are collective concerns, when you type “biggest risks of” in Google search, its top suggestion to complete the thought is “risks of AI”.)

And for an industry characteristically overoptimistic about the ability of technology to fix every problem (including those it creates), it’s notable that we’ve recently seen leaders in AI call for tighter regulation because of their concerns over its potential to create or exacerbate catastrophes that are global in scale — and in some cases irrevocable: “A.I. Poses ‘Risk of Extinction,’ Industry Leaders Warn“.  It’s concerning, however, that these warnings are deemed too little, far too late by some, including Eliezer Yudkowsky, a leader in the field for 22 years who has called for all AI efforts to be shut down immediately — in part because Elon Musk and others brazenly passed up the opportunity years ago to make a good-faith effort to align on safeguards for AI when they would have had a better chance of succeeding. Yudlowsky is a decision theorist who leads research at the Berkeley, CA-based Machine Intelligence Research Institute.

As if these risks aren’t enough, how about adding a crypto element into the mix to spice things up further? Surely given crypto’s ongoing negative image — gleefully fueled by such influential figures as US Senator Elizabeth Warren, she of the “shadowy super coders” histrionics — no one who claims to admire the positive values of cryptocurrency and blockchain would think it wise to offer up a project with Big Brother elements as the answer to the deepfakes and nightmares AI is accelerating. But alas, Sam Altman, the CEO of OpenAI (creator of ChatGPT) believes that Worldcoin, the crypto project he also founded, “could drastically increase economic opportunity, scale a reliable solution for distinguishing humans from AI online while preserving privacy, enable global democratic processes, and eventually show a potential path to AI-funded UBI” (the last acronym there referring to “universal basic income”, the concept of providing all citizens a guaranteed income, without a work requirement or means test).  

The backlash against this idea and the way the company has gone about pursuing it — paying people in Africa, Latin America and Southeast Asia $50 in WLD tokens to allow one of Worldcoin’s custom designed metallic “orbs” (see one staring you down in the photo to the left) to scan their eyeball’s iris as the biometric basis of a supposedly unique ID, paying local officials to look the other way and other shenanigans — was swift and vociferous. In an April 2022 article entitled “Deception, exploited workers, and cash handouts: How Worldcoin recruited its first half a million test users”, MIT Technology Review interviewed 35 people in 6 countries who “either worked for or on behalf of Worldcoin, had been scanned, or were unsuccessfully recruited to participate” and “found that the company’s representatives used deceptive marketing practices, collected more personal data than it acknowledged, and failed to obtain meaningful informed consent”.

That deceptive marketing included enticing villagers in Indonesia with the promise of a “social assistance giveaway” and collecting emails and phone numbers (the company insists that only a hash of the iris’ image is saved, not the image itself or any other information connecting the data to the person who agreed to the scan: “No personal information required. We don’t want your name, email, passport, or a selfie,” Worldcoin’s website proclaims). And the compensation of $50 worth of crypto? Until Worldcoin’s ERC-20 token WLD debuted on July 24, 2023 participants who didn’t receive payment in local currency or Bitcoin were promised an indeterminate number future tokens. The WLD token traded as high as $3.58 on launch day according to CoinMarketCap, dropped to a low of $0.97 on September 13th and is trading for $1.55 at the time of publication.

In May 2023 TechCrunch reported that, “Hackers have installed password-stealing malware on the devices of multiple Worldcoin Orb operators, giving them full access to the Worldcoin operator dashboard.” So much for privacy, security and social goods.

With this context in mind, I was both surprised to see Worldcoin as a key sponsor of ETHGlobal’s myriad 2023 events and eager to hear how they would frame the controversy around the project in their primetime talk at ETHGlobal in New York on Friday, titled “Global Proof of Personhood with World ID”. At this point you may be able to guess how much of the company’s background the presenter addressed. Answer: zero. His approximately 15-slide presentation launched right into Worldcoin’s purported values (“For every human. Privacy-first. Owned by everyone”), walked through the various options the company explored for unique identification methods (online accounts, KYC, web of trust and social graph analysis) before settling on the iris scans (“Authenticating a user via FaceID as the rightful owner of a phone is very different from verifying billions of people as unique,” Worldcoin’s website explains), and then spent most of the time on how the hackers at the event could build cool stuff with the company’s World ID, software developer kit and API.

Plus how much the devs can win if their project is one the the 7 winners or takes home cash as part of the $3,000 prize pool “distributed equally among all qualifying submissions”: $20,000 in total prize money. Those generous amounts — 7 other ETH NYC sponsors are awarding as much, while 38 others offer total prizes ranging from $5,000 (the Ethereum Foundation, Unlock Protocol and Sunscreen) to $16,000 (zero-knowledge rollup Scroll) — is pocket change for Worldcoin, which initially raised $100 million in March 2022 at a $3 billion valuation and this May another $115 million in their Series C round led by Blockchain Capital and joined by a16z, Bain Capital Crypto and Distributed Global.

So how did conference and hackathon attendees react to Worldcoin’s presentation and booth? The 20-minute presentation had attendance similar to others that day, and while the booth didn’t garner the kind of attention that sponsors like Filecoin and Metamask did (having established brands and kickass swag certainly helps), it did get some action and those manning the booth reported that approximately 30 attendees had signed up at the event in the first day and a half (they declined to speak on the record, however, deferring to Worldcoin’s press manager; Modern Consensus has contacted the company for comment and will publish their response if we receive one).

Nico Marotta, an environmental design professor attending ETH NYC told Modern Consensus after seeing the presentation, “I eagerly try out new technologies, especially interesting ones in the crypto & NFT space. And I’m generally open to providing PII [personally identifiable information] if the product seems like it may be beneficial. But the idea of Worldcoin’s retinal scan was very alarming from day one.”

We will see how people in the blockchain community and beyond continue to react to both Worldcoin’s product and their mission to “become the world’s largest identity and financial network” (isn’t the current state of financial surveillance terrifying enough?). But given their journey to signing up the 2,317,380 “unique humans on Worldcoin” the website’s ticker currently counts, one can only hope they don’t end up doing the kind of damage Altman’s OpenAI is charged with: “OpenAI Is Now Everything It Promised Not to Be: Corporate, Closed-Source, and For-Profit”.