The Dark Side of Crypto 🎭

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How’s that saying go again?

You never really know someone until [things] start to hit the fan – and that’s exactly what we’re seeing happen with crypto right now. It’s kind of like when you first start dating someone and you’re in the honeymoon stage. Then a few months roll around and you start getting to know them on a deeper level, both in a good and not-so-good way. Like every relationship, there comes a time where you’re faced with some pretty intense situations and that’s where the true character of the person is revealed. At that point, it’s up to you to decide whether you’re sticking around or not – whether the pros outweigh the cons, and whether you fundamentally share the same value system.

In a way, this parallels what’s happening with crypto based on current events. Before we dive into two major events happening as we speak though, we want to acknowledge what we’ve been preaching since the start of this newsletter: at its core, crypto has the ability to decentralize finance, make it more accessible, provide transparency, promote financial inclusion, and ultimately drive financial innovation. However, there are bad actors everywhere, and in this post we’re going to talk about two situations, SBF’s FTX trial and how crypto is being used to fund Hamas, that have us like…

We believe in sharing the good, the bad, and the ugly so that you can make informed decisions on how you engage in this space. Now let’s get into what’s happening.

SBF’s ex-lover, Caroline Ellison, takes the stand in the on-going FTX trial 🧑‍⚖️

A couple of months ago we checked in on crypto’s favorite villain, Sam Bankman-Fried (SBF), to update you all on what’s happening with the FTX trial. Well, let’s just say things are continuing to unravel and this time Caroline Ellison, former Alameda Research CEO (and SBF’s ex-girlfriend 🥲), is at the helm.

Last week, she testified that she felt a sense of relief as the cryptocurrency empire began to crumble. This was because the collapse meant an end to the need for deception. She highlighted the role of CoinDesk's report, which exposed the company's misrepresentations by revealing a balance sheet sent to lenders by Alameda. This balance sheet had been deliberately manipulated to present a more favorable yet inaccurate financial picture than the company's actual state, ultimately contributing to its downfall.

Ellison also revealed that Bankman-Fried had instructed her to utilize customer funds from FTX to repay Alameda's lenders, even though the associated risks were clear. Her disclosure of an unrelated incident involving bribery attempts with Chinese officials showed just how deep SBF’s trust for her ran.

As we mentioned earlier, there are always bad actors in any industry. In SBF’s case with FTX, he got caught up in his own mess, caused the demise of a formerly prominent crypto company, and increased most people’s trust in crypto as an industry. But that’s not all that’s happened over the past week…

Crypto plays a role in raging conflicts in the Middle East 😢

Almost two weeks ago, Hamas, the Palestinian militant group that has ruled the Gaza Strip since 2007, launched a series of unprecedented attacks on Israel. In response, Israel has consistently retaliated with airstrikes and, in some instances, sent troops into Gaza during conflicts.

Sadly, this conflict is far from new. For nearly three quarters of a century, several wars have taken place between the groups, with thousands of rockets fired at Israel and other deadly attacks, primarily carried out by Hamas or other militant groups under its umbrella. However, over recent years, a particular technology has enabled Hamas to finance and organize their operations. That technology is cryptocurrency.

According to crypto analytics software, BitOK, crypto addresses that were linked to Hamas and seized by Israeli authorities had received nearly $41M cryptocurrency between 2020 and 2023. This is in addition to the $94M of crypto funds allegedly held by the Palestinian Islamic Jihad, a militant partner of Hamas. But, it's a bit tricky to trace these particular cryptocurrency transactions because each donation is often done with “one-time-use” crypto addresses, and the money is converted from crypto to cash without a trace through underground money exchanges.

These recent attacks remind us of the challenges linked to these new technologies. While cryptocurrencies have their perks, like making it easy to move money across borders and staying anonymous, they’re also appealing to groups like Hamas and others because it's not closely regulated or controlled by any government, making it harder to know who's really behind it and keeping massive money moves out of the public eye.

5 steps forwards and 10 steps back - crypto has a long way to go 🗺️

It's pretty clear that the crypto world continues to be both intriguing and controversial. Caroline’s revelations shed light on a cryptocurrency empire's inner workings and the implications of a crumbling house of cards. Meanwhile, recent events involving Hamas and Israel remind us of the challenges posed by emerging, decentralized financial tools. While cryptocurrencies offer convenience and privacy, their unregulated nature makes them even more complicated. As technology continues to innovate and evolve, we need to work together to find a balance between harnessing the potential of cryptocurrencies while making sure they aren’t misused in a way that promotes violence and instability.

In these challenging times, our thoughts and prayers extend to all those enduring the enduring conflicts in Israel and Palestine. We recognize the immense pain, suffering, and loss that these conflicts bring to individuals and communities on both sides, and we anxiously hope for a peaceful future ♥️

Company Spotlight: Anthropic 💫

Most of you may be familiar with OpenAI, the company that created ChatGPT, but Anthropic is another newer trailblazer in the AI space that’s making some waves. Anthropic is a groundbreaking AI startup founded in 2021 by Dario Amodei and his sister Daniela, both former members of OpenAI, alongside other ex-OpenAI colleagues.

With a strong commitment to the principles of effective altruism, Anthropic operates as a public-benefit corporation, focusing on the development of general AI systems and large language models for the benefit of society. The company has experienced rapid growth and secured substantial funding from tech giants like Google, Salesforce, and Amazon, positioning itself as a strong competitor in the AI industry, with the potential to revolutionize various sectors while emphasizing trustworthiness and ethical use of AI.

Jobs in Web3: Bag Talk 💰

Check out some roles that we recently came across! Also, don’t be a stranger - let us know what types of roles / companies you’re looking for - let’s secure the bag y’all!

• Sales Operations at Anthropic

• Investment Manager, (AI Sector) at Samsung Research

• Chief of Staff at Braintrust

• Deputy Chief of Staff at Worldcoin

• VP, Corporate and International Operations at Circle

What’s Happening in the News 🗞️

Here’s what has caught our attention over the past two weeks:

• How stablecoins are accelerating dollarization in the Global South—and why financial inclusion needs Web3 solutions

• Web3 could change the business model of creative work 

• Microsoft's Next Act: Betting On AI To Regain Tech Leadership