🇨🇳❌🇺🇸🔽📉 China's U.S. Treasury holdings have fallen to their lowest level in 15 years

busy week in legal / regulatory for crypto. check out this list of headlines since monday:

📌 DOJ arrests Samourai Wallet founders

📌 FBI publishes warning against using non-MSB crypto

📌 Warren sends letter re: crypto & CSAM

📌 DOJ files opposition to Tornado Cash MTD

📌 Phoenix Wallet announces exit from US

📌 zkSNACKS (Wasabi) announces exit from US

📌 Blockchain Assoc. sues SEC over “dealer” definition

📌 Consensys says received Wells Notice, sues SEC

📌 DTCC puts 100% haircut on crypto-linked securities (doesn’t affect brokerage margin)

📌 Two SEC lawyers involved in DebtBox case resign after sanctions by federal court

📌 SEC delays decision on BTC ETF options

📌 PA bank put into FDIC receivership

📌 Custodia files appeal in case denying it a master account at Fed

📌 New UK crypto-seizure rules take effect

📌 EU parliament adopts new AML rules that include crypto

📌 DOJ seeks 3+ year prison term for Binance’s CZ

📌 Tether will freeze wallets that evade sanctions against Venezuela

📌 SEC seeks $5.3bn fine from Terraform Labs & Do Kwon

📌 Ripple seeks $10m penalty, says SEC’s $1.95bn fine is too much

https://twitter.com/intangiblecoins/status/1784235523931787364

🇺🇸❌💰 They won't stop with "mixers," they're coming for self-custody too ‼️

While this government response is not yet enshrined in law or precedent, it paints a much clearer picture of how the state views not only the place of privacy tools, but even that of self-custodial wallet providers moving forward.

Let's walk step-by-step through this response from the DOJ together and see why in a thread.

🔴FinCEN's guidance is worthless

While we have spent so much time wondering how the FinCEN guidance from 2019 on VASPs, mixers, and wallet providers should be viewed, the government didn't mince words

All that worrying was pointless, as even the government considers it useless in a court of law. Much of my previous writing hinged on that FinCEN guidance being somewhat authorative, but clearly the government doesn't view their own guidance as valuable.

🔴Client-side private keys don't matter

Potentially the most shocking piece of the entire response is that the DOJ views any wallet that could possibly be made to log or transmit private keys should be treated as custodial, even if it does not do these things.

The Tornado Cash web UI was open source, and as such anyone could verify that it did not store or transmit secret notes to the developers. But even open-source verifiability isn't enough in the eyes of the DOJ.

🔴Custodial vs self-custodial doesn't matter, legally

The DOJ also makes it crystal clear that a service does not have to be custodial in any way to be considered a money transmitter, and thus required to implement KYC/AML, register with FinCEN, etc.

If this definition of a money transmitter holds up in court, it would be trivial for the DOJ to then argue that any of the following are money transmitting businesses:

- Wallet developers who host node infrastructure
- Publicly accessible and widely used nodes
- Block explorers that allow transaction publishing via hex etc.
- Lightning routing nodes
- LSPs
- etc.

This would extend the MSB laws to encompass practically everything in the cryptocurrency space outside of a user who runs their own node (although even that could still be considered money transmission for the wallet dev by this insane definition). If no control is required for money transmission, than anything that makes it easier to use Bitcoin could fall into this overbroad definition.

🔴Any and all means

The DOJ also makes it explicitly clear that they consider anyone who helps someone transfer value, even without giving up custody, as a money transmitter under the "any and all means" working in Section 1960.

If illicit money flows through a tool, even if never touched in any way by a service provider, they are required to implement KYC/AML etc.

🔴Direct profit from transactions is not required to be an MSB

An often discussed aspect of Bitcoin mixers or privacy tools is that a fee for their usage is directly paid in the transaction where privacy is gained. But Tornado Cash did not operate this way, and no direct fee was paid by a user in their transaction to the Tornado Cash founders.

But the DOJ makes it clear here that direct profit from transactions is not a requirement for being considered a money transmitter.

🔴Positive: publishing code is still considered protected

In one of the few bright spots, the DOJ makes it clear that the issue for Tornado Cash was not publishing the smart contracts, but rather building a profitable business around them.

(My reading of this may be too generous, but at least they distinguish between code creation + publishing vs running a profitable business)

https://twitter.com/sethforprivacy/status/1784298349522292980

🔴Conclusion: the DOJ wants to be able to make it drastically harder to use cryptocurrency

It seems clear to me in reading through this that the DOJ seeks to widen the net on what can be considered an MSB, allowing them to apply the subsequent regulations (and potential prosecution) to apply to anyone who makes it easier to use cryptocurrency, especially if any level of privacy is involved.

The biggest practical takeaway I have is that the only true protection against this is:

1️⃣ Create privacy tools that operate purely as a part of the core protocol, and do not rely on any central entity, website, or fee collection.
2️⃣ Get everyone and their sister to start running their own nodes at home.

👤🗯🇺🇸 — 🇷🇺 Russian channel Tsargrad TV on Telegram:

"How to show the world that everyone is tired of the USA? Master class from C

First, US Secretary of State Antony Blinken was greeted at the Chinese airport without a red carpet. Then everything also didn’t go very well.

Here, for example, is a video of Chinese President Xi Jinping waiting for Blinken.

“When will this one leave?”

— the Chinese leader asked his assistant.

"Tonight",

— the representative of the protocol service answered him.

It's funny, isn't it? Let's not forget that this is China. Such “leaks” don’t just end up on the Internet."

🔗 Source

‼️💵💸🕯📈 Yen collapsing more against US Dollar,reaching 160 YEN per USD for the first time since 1990!

🔝🚫🇺🇦👾 — 🇺🇦 Ukrainian channel Ukraine NOW on Telegram:

"❗️Telegram blocked a number of important Ukrainian chatbots

"Today, the management of the Telegram platform unreasonably blocked a number of official bots that opposed Russia's military aggression against Ukraine, including the "Main Intelligence Bot". This happened in violation of the rules and public statements that the Telegram management publicly declared," reports the Main Directorate intelligence of the Ministry of Defense of Ukraine.

In addition to the main intelligence bot, the Enemy, the SBU chatbot, chatbots of other channels that had a large audience are not working.

The intelligence officers warn that the enemy is currently creating bots with similar names and urge not to send any personal data to them until the official announcements regarding the restoration of the bots."

🔗 Source:

🇪🇺📉 Wake up Europe, the digital age is bypassing you. You have no Google , Amazon, Meta, Apple. You arrogantly called SpaceX a fanciful dream and it wiped out the European Space Agency. You have no Nvidia and your response to AI has been to regulate before you have anything domestic to regulate. Your car industry is about to be wiped out by the Chinese. Your biggest economy shut down nuclear out of spite and with fraud. Your capital markets have no liquidity and your startups are drowning in bureaucracy. Your border is being attacked by Russia and your defence spending will have to triple just to be where it was with US subsidy given that part of the former Soviet Union and the Eastern bloc is now part of the EU. Your economy has slumped from the world’s largest to way behind the US. Your pensions are paid by three times less people and cost five times as much as people live longer. Your infrastructure is a model for the world but is configured for rail over self drive. Your electricity grid needs half a trillion of investment to cope with planned capacity and replacements, for the switch to renewables, within a decade. There are bright spots such as pharma and your healthcare system is a model for what civilisation looks like it. But to afford it, you need to completely transform from the industrial to digital age, to reform your institutions and rout the sclerotic bureaucratic system.

https://twitter.com/daveg/status/1784835703743881256

🇦🇷💰🔼 — Under the government of libertarian president Javier Milei, the peso, Argentina's national currency, experienced a significant increase of 25% against the dollar in the parallel market over the past three months, making it the best-performing currency among the 148 monitored in the first quarter of 2024.

➡️ The peso's recovery, which is beginning to show concrete signs of stabilization, is attributed by the American agency Bloomberg to Milei's efforts, who has only been in office for four months, to reduce public spending and control Argentine inflation.

➡️ The agency cited that renewed Argentine confidence in the peso, along with the cessation of money issuance by the central bank to finance public spending, contributed to the stabilization of the national currency.

Source 🖇

📖👁💫🖼️ Webb captures iconic Horsehead Nebula in unprecedented detail

https://www.esa.int/Science_Exploration/Space_Science/Webb/Webb_captures_iconic_Horsehead_Nebula_in_unprecedented_detail