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1. Big victory in Tornado Cash case as judge says OFAC exceeded authority

This is another big win not only for the crypto space but for those who believe in innovation or even privacy. 

This all started when the U.S. Treasury put smart contract addresses (linked to privacy mixer Tornado Cash) on the OFAC sanctions list. 

But the appeals court panel said that while the Treasury has the power to take action against “property,” Tornado Cash’s immutable smart contracts were not property under the International Emergency Economic Powers Act (IEEPA) as they can not be controlled or owned. 

I have talked about this case multiple times in previous issues of my newsletter and I agree with the appeals court. 

Whilst we all want to stop bad actors from not only using mixers but also operating in the crypto space, adding smart contracts to an OFAC list sets a very dangerous precedent and in practice has no impact as criminals can still use that smart contract (it cannot “be taken down”) and as a user you can receive assets that have touched that smart contract with no fault of your own. 

I have said multiple times that this is such a fundamental matter that it will need to go to the Supreme Court. Now let’s see if that happens. 

2. Court determines DAO members can be held liable under partnership laws.

I am surprised that this judgement from last week in California is not getting more attention. 

This means that for any DAO, the actions of any DAO member can hold other DAO members liable. 

This is a good example of the laws and regulations not being able to quickly adapt to innovations in the digital assets space. Holding DAO member liable for the actions of others, especially when they don’t know who they really are, sets a dangerous precedent. 

Two things to watch. First, if DAOs will start setting up more in jurisdictions that provide clarity (like RAKDAO in RAS Al Khaimah in the UAE that not only recognizes them as a legal entity but also provides a framework). Second, if this will slow the VC investments in DAOs as players like a16z, Paradigm or Drangonfly are names in this Lido judgement. 

But this is a judgement that needs to be appealed and I would hope will be overturned in appeal. 

[NEWSLETTER CONTINUES BELOW]

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3. Memecoins (and the circus around) are getting out of control

To put things in context, over 3 million meme coins have been launched on pump.fun alone since the start of the year. 

99% of those meme coins are worthless. 

Pump.fun basically enables anyone to launch their own meme coin. But putting all the market manipulation or pumps and dumps aside, things started getting out of control when users started doing stupidities on their live stream feature, from bestiality to threatening to commit suicide. 

Pump.fun did the right thing by stopping their live stream feature. But this meme coin circus may unfortunately give the industry a bad name in the same way that the ICO stupidities gave the industry a bad name in 2017.  

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Excited to announce the launch of my new kids’ book!

The first interactive children's book on the future of money and digital assets!

Available on Amazon (https://a.co/d/1xp9wEc) or follow Henri and Hodler on social for more ways to learn:

Instagram - https://bit.ly/4gzWc3W

X - https://bit.ly/47BzZyh 

Facebook - https://bit.ly/3Zbuxi6 

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4. Crypto friendly tradfi firm Cantor Fitzgerald to work with Tether to enable dollar lending collateralised by Bitcoin. 

This is an interesting development. 

It’s important to understand that  is a shortage of dollars (stable coins) in the crypto ecosystem thus why crypto firms are happy to often pay 8-10% even to retail customers, double the rate compared to tradfi. At the same time, yield options on Bitcoin are limited so using it as collateral could make sense especially as many in the crypto space don’t want to sell their Bitcoin. 

But what could be interesting here is that it’s going to act as another wake up call to other tradfi firms. Cantor is indeed making millions by selling and custodying treasuries for Tether. And now will be able to generate more revenues with this lending programs. 

The main question you should expect other MDs of other large banks argue with their leadership and risk team is “If Cantor is doing this, why can’t we also do this. Especially in this post-Trump era”. 

And the truth is that there are not many excuses left. 

5. UK Crypto Ownership Grows

UK FCA report states that 12% of UK adults now own crypto, up from 10% in previous findings.

The average value of crypto held by people has also increased over the same period, from £1,595 to £1,842. 

This is important in the context that the UK intends to issue its crypto regulations early next year. 

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My Latest Podcast Episode

Writing a Crypto Book for Kids?

What are some of the benefits of teaching kids about crypto?

What are some ways to make learning about complex topics engaging for kids?

Michael Dotsikas, co-author of my children's book Decoding Crypto with Henri & Hodler, joins to discuss the journey in creating our illustrated A-Z  guide to crypto for kids, sharing the challenges of explaining complex crypto topics in a fun and engaging way, the importance of teaching young learners about the future of money, and our experience working with illustrator Billy Martin, lead guitarist of multi-platinum-selling rock band Good Charlotte, who created the amazing characters in our book.

This is a must-listen for parents, educators, and anyone interested in teaching the next generation about crypto!

You can order your copy of the book here.

Catch the full episode on your preferred platform:

YouTube: https://bit.ly/4f1CFYV

Spotify: https://spoti.fi/47ZCF8F

Apple Podcast: https://apple.co/3PM4eKh 

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Henri Arslanian

*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only, and none of its content should be construed as investment or financial advice of any kind.

Who is Henri?

Henri Arslanian is the co-founder and managing partner of Nine Blocks Capital Management, an institutional-grade hedge fund focused exclusively on digital assets, with a market-neutral crypto fund focused on generating alpha from inefficiencies in crypto markets using relative value, arbitrage, and quantitative strategies.

Henri was previously a partner and global crypto leader at PwC. In that role, he advised many of the world’s leading crypto exchanges, investors, financial institutions, and tech firms on their crypto initiatives and numerous governments, regulators, and central banks on crypto regulatory and policy matters.

With over 500,000 LinkedIn followers, Henri is a TEDx and global keynote speaker, a best-selling published author, and is regularly featured in global media, including Bloomberg, CNBC, CNN, BBC, The Wall Street Journal, The Economist, and the Financial Times.

Henri was named by LinkedIn as one of the global Top Voices in Finance and is the host of the CryptoCapsules™ social media video series as well as The Future of Money podcast and newsletter.