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Long Reads Sunday - Issue #44

Something old (Tether FUD) and something new (shifting bullishness) this week... Tether FUD is back.
Long Reads Sunday - Issue #44
By Nathaniel Whittemore • Issue #44 • View online
Something old (Tether FUD) and something new (shifting bullishness) this week…
Tether FUD is back. This time it’s in the form of the New York Attorney General going after Bitfinex for fraud - accusing them of covering $850m in losses with funds from Tether.
There’s a lot to unpack. This thread highlights the key points from the full NYAG document, while this article gives the backstory of Crypto Capital, the banking/payment processing partner that Tether says the $850m is stuck with.
For some, this shows how invested US regulators are in moving crypto to fiat-based trading that they can regulate. Some argue that the whole thing reeks of a double standard for crypto companies versus other financial firms. Others argue that it’s simply insider baseball that is interesting but not ultimately relevant in the development of the industry.
This latter perspective is part of a larger bullishness that seems to be seeping into the market. Many noticed TD Ameritrade, E*Trade and Samsung all nudging into crypto, and this thread summing up the perspective of leading analysts and operators suggests that many thing the bottom is in.
Interesting times ahead. Thanks as always and happy long reads.

Crypto Bobby on Tether.
Crypto Bobby on Tether.
Long Reads Sunday #44. We’ve got the latest Tether FUD hot off the presses, investor accreditation debates, Ethereum competition, and some bullish news in what is undeniably a shifting market sentiment. Buckle up, it’s Long Reads time!
2/ Let’s start with the the back and forth never-ending saga that is Tether. The latest is that the New York Attorney General accused Bitfinex of covering $850m in loses with funds from Tether’s account. Full document:
3/ In this mini thread @krugermacro extracts a number of the key points about how Bitfinex, Tether iFinex, and Crypto Capital are all related to one another and to the missing moola.
4/ Tether, of course, responded, saving that the NYAG’S filings were “written in bad faith and riddled with false assertions…” Their claim is that Crypto Capital told them the funds were “seized and safeguarded.”
5/ “Wait, WTF is Crypto Capital?” @davidzmorris breaks down the role of banking and payment company Crypto Capital, a Zug-based firm at the center of the story and which has been called “Crypto’s Black Swan”
6/ One person who has been paying attention to the windy Tether story for some time is @hasufl. In this 2 minute LRS Takeaway video, he breaks down the news and argues that this shows the clear interest from US authorities in bringing crypto trading into their regulatory regime. 
7/ A16Z’S @katie_haun also frames the news in terms of what it suggests about US regulators. For her, a takeaway is that even when a company is domiciled elsewhere that won’t immunize it against regulatory action if it serves US customers.
8/ @CaitlinLong_ meanwhile points out a double standard in how regulators act with regard to crypto firms as compared to traditional financial firms, and calls on exchanges to hold themselves to a higher standard around solvency
9/ Solvency and proof of reserves is a growing topic of conversation, thanks in large part to folks like @nic__carter who are putting it front and center. If you haven’t yet, revisit his recent essay on the topic.
10/ At the end of the day, USDT has an important role in the crypto markets. That, plus the fact that the Tether FUD narrative has been ongoing for years makes it understandable that this made news. Still, I tend to agree with @APompliano here: 
11/ Alright, so what was happening in other parts of the market? Well if you really want to know what was happening, like, everywhere, check out @ResearchCircle’s Q1 retrospective, here in handy Tweetstorm summary
12/ Circle’s @riabhutoria shares some of the Q1 report highlights in this LRS Takeaway. Interesting themes: 1) Rise of DeFi loans, w/ $18m in @TheRealBlockFi deposits & @Dharma_HQ facilitating $6m in loans; 2) Increase in traditional VC into crypto, incl $63m to crypto data companies. 
13/ Speaking of overviews, I published my latest Narrative Watch, highlighting 1. The Return of Token Sales 2. Ethereum Competition 3. Who Cares About Governance? 4. Fair Launches vs. Dev Incentives 5. Fund Consolidation
14/ Exemplifying both the Ethereum Competition and Governance narrative, @AragonProject released the results of its latest vote, including a proposal from @ameensol to “Keep Aragon focused on Ethereum, not Polkadot.”
15/ For an interesting counter point on Ethereum competition, check out this essay from @hrdwrknvrstps arguing that there isn’t actually an “Ethereum Killer”
16/ One project that *has* been labeled by some as a potential threat to Ethereum is Binance Chain. @tonysheng writes a guest piece on @breakermag arguing that Binance Chain is extremely use-case focused vs. ethos focus and overall, a huge development for the industry
17/ @ImranKhan and @MohammedFFouda also discussed @Binance_DEX and @Binance chain in their latest @TokenDaily piece, looking at it from the standpoint of both the risks as well as some potential solutions.
18/ In this LRS Takeaway, @ImranKhan sums up the three key risks for Binance Chain/Binance DEX: 1. Early control of chain might make tokens more likely to be labeled securities 2. Composability and systemic risk 3. Counter party issues
19/ Over in the realm of mass adoption, there were a few big pieces of news this week. The first was that @TDAmeritrade is quietly testing BTC and LTC trading with a not-yet live offering.
20/ Another adoption story us that, as first reported by @nathanielpopper, E*Trade is purportedly getting ready to offer crypto trading on its platform. For those keeping track, TD Ameritrade has 11m+ clients/users wit E*Trade representing another 5m+
21/ A third piece of bullish news from the broad adoption standpoint came in the form of reports that Samsung is developing an Ethereum-based blockchain and considering a Samsung Coin.
22/ If all of this suggests a shifting mood in the markets, well - it looks like a fair number of people to agree. @Woonomic sums up the opinion of a number of analysts and operators on whether the bottom is in.
23/ To the extent that the bottom *is* in, it’s worth revisiting what happened in the last bull market and contextualizing where we are in the development of the industry. @nic__carter argues that we’re roughly in 1997 in internet terms based on # of users worldwide
24/ Speaking of revisiting history, @MerschMax_ takes a journey through the history of web native business models to speculate on which business models might come next
25/ @hosseeb meanwhile reframes crypto in the context of financial unbundling and explains why the fact that all payments are final has profound implications for the financial applications that will be built.
26/ Staking is an increasingly important domain for crypto folks, with both PoS chains coming online and many staking services putting crypto assets to work. @bendavenport writes an interesting piece on the tax implications
27/ And of course, Ethereum-based DeFi isn’t the only place where interesting crypto financial applications are emerging. @CremeDeLaCrypto outlines the emerging Bitcoin stack here.
28/ Lastly, for fun, let’s leave on a question: do accredited investor laws need to change? Many have argued that part of the ICO boom was pent up risk demand from retail investors blocked out by accreditation. @RyanSAdams kicked off a conversation
29/ Then again, maybe the reality would be worse than what we have now. That’s the (at least for Crypto Twitter) contrarian opinion of @arjunblj. What do you think?
30/ And there we have it, another LRS in the books. Let me know what I missed and thanks as always for reading. Sign up to get LRS via email here:

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Nathaniel Whittemore

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