March 16th, 2022
What’s Happening Now
The top stories shaping the crypto economy.
Crypto’s Effect on Sanctions
U.K. Crime Agency Wants to Regulate Crypto Transaction Mixers [Bloomberg]
Regulators are spinning up a narrative around the use of crypto to evade sanctions. Many have said that crypto is unlikely to be used as a way to dodge sanctions for a number of reasons:
Crypto markets are too small relative to the flows required to evade sanctions in a meaningful way.
Regulation already exists at the end-points.
I.e. the UK’s Unexplained Wealth Order.
“An unexplained wealth order (UWO) is a type of court order issued by a British court to compel the target to reveal the sources of their unexplained wealth.” [Wikipedia]
Many of the largest centralized exchanges are already regulated.
Using Crypto Tech to Promote Sanctions Compliance [Coinbase Blog]
The $20 Million LUNA Bet
Terraform Labs CEO Do Kwon seals $10 million bet over LUNA price [The Block]
Do Kwon, Terraform Labs CEO, and crypto personality GCR (Gigantic Rebirth), bet a total of over $20M (up from the $10M mentioned in the article above) on the future price of LUNA in 12 months time.
The funds were sent to Cobie, a long-time crypto twitter investor, to escrow. Funds can be viewed at the wallet address below (link is to Etherscan):
Mixers Come Under Fire
‘Mixers’ like Tornado Cash and Wasabi Wallet are tools that use smart contracts to obscure the connection between the sender and the receiver of a transaction. This enables privacy on public blockchains.
Regulators view this as a money laundering vector for criminals and sanction evaders. This is the essence of the struggle between privacy-eroding state actors and privacy-enhancing crypto entities.
Privacy won’t be given up easily:
Crypto Mixer Tornado Cash Doesn’t Plan to Comply With Sanctions [Bloomberg]
“We don’t have more access to it than any other users” of the protocol, Roman Semenov, one of three founders of Tornado Cash said in an interview from Thailand. “There’s not much we can do.”
Why crypto is unlikely to be useful for sanctions-dodgers [Economist]