$1.3B From 3AC Founders

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Good Morning,

The total crypto market cap remains above $1.2T. Paradigm VC spoke up about their rebranding move, Azuki NFT floor price crashed after an unsuccessful new collection release, while Bitcoin Cash (BCH) is the best-performing token in the past 7d.

Please stop supporting Roger Ver’s lifestyle.

In Today's Email:

• What Matters: 3AC liquidators seek $1.3B 💰

• Case Study: BTC ETF approval chance 🤔

• Governance & Features: Neon EVM release 🖥️

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WHAT MATTERS

3AC Liquidators Seek $1.3B from Founders

State of play: Partners at 3AC liquidator, Teneo, claimed that Su Zhu and Kyle Davies allegedly incurred the $1.3B debt despite the company's insolvency prior to its collapse. The liquidators are attempting to recover the debt.

• 3AC's reported debt to creditors amounted to $3.5B, the liquidators’ claim makes the founders potentially liable for over a third of that total.

• The fund incurred significant losses due to the collapse of the Terra ecosystem.

• 3AC's collapse contributed to last year's crypto winter, resulting in subsequent failures of other crypto firms, including BlockFi and Voyager Digital Ltd, among others.

3AC shocked the crypto community by returning as a VC and helped the launch of OPNX Exchange, a platform for trading claims against bankrupt crypto entities.

Why it matters: If the liquidators' claims are true, Zhu and Davies are required to pay the $1.3B debt.

• Skepticism about their future involvement in the crypto space will be stronger, hindering their potential return as VC.

For builders and investors: Reputation and credibility matter. Once they’re broken, it’s extremely tough to get them back.

CASE STUDY

The Odds of Spot Bitcoin ETF’s Approval

State of play: Eric Balchunas, a Senior ETF Analyst for Bloomberg, argues that spot Bitcoin ETF has a 50% chance of getting approved this year.

The main concern is that Coinbase is the exchange that BlackRock plans to use for the ETF.

• Coinbase has a relatively small market share, accounting for ~6.3% of the monthly exchange volume in the cryptocurrency market.

• Binance has the biggest market share, with ~50% of the monthly exchange volume.

• Coinbase is also not regulated yet. If an exchange is not adequately regulated, it could raise concerns.

Another reason why spot Bitcoin ETF has a 50% chance of getting approved is the high chance of Grayscale winning the case against the SEC.

• The SEC might approve BlackRock's ETF as a way to save face.

• Eric Balchunas assumes that the SEC could favor BlackRock, which is considered a trusted and established TradFi company, over Grayscale.

• In the last rejection for spot ETF in March, Commissioner Peirce and Uyeda posted their statement of disapproval.

Our take: Regardless of the outcome, the race to a spot-based crypto asset ETF, specifically BTC, seems likely to come to an end sometime this year.

• If either Grayscale wins or BlackRock’s filing got approved, it will mark a signal for other product sponsors to launch their spot-based ETPs.

Take a peek at our new referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

SUI Dumps

SUI is accused of intentionally misrepresenting emissions to cover suspicious supply increases.

• SUI’s team is dumping rewards from locked and non-circulating staked SUI onto Binance.

• SUI foundation has nearly 3B of non-circulating and locked SUI staked (6x more than the entire circulating supply)

• The continuous staking emissions amount to ~33M additional SUI emitted per month.

• SUI is diluted by ~20% a month, higher than the inflation rate of the hyperinflated Venezuelan Bolivar.

• On May 31, The SUI Foundation sent 2.5M of SUI rewards to 0x209f which ultimately end up at Binance.

FEATURES & GOVERNANCE UPDATE

Neon EVM Closed Beta

Neon Labs launched a closed Neon EVM beta version, Neon EVMβ. It is an Ethereum Virtual Machine (EVM) on Solana that enables dApp developers to use Ethereum tooling to scale and get access to liquidity on Solana’s mainnet.

• The EVM helps breach the gap between Ethereum and Solana.

• All Neon EVM transactions are settled to Solana’s L1 and require payment in $SOL.

• The Neon EVM ecosystem includes DAO, oracles, indexers, wallets, multi-sigs, bridges, explorers, and more.

Why it matters: Neon EVM allows Ethereum developers to enjoy Solana’s low fees and high transaction speeds, as well as parallel transaction execution capabilities.

Other notable feature updates:

• BNB Chain released opBNB testnet.

• Ghast goes live on Arbitrum.

• Texture goes live on Solana.

• Velodrome V2 goes live.

• Camelot AMM V3 goes live.

• Magpie Bridge goes live.

• Option Scalps V2 goes live.

• Arpa goes live on Ethereum.

• EDX goes live.

QUICK BITES

• 3AC liquidators seek $1.3B from the fund’s founders.

• EU finalizes controversial smart contract rules.

• Judge denies motion to dismiss most charges against SBF.

• Sui Foundation denies selling staking rewards.

• Grayscale’s GBTC discount dips to 30%.

• Democrat asks Gensler, and Yellen for thoughts on the crypto bill.

• Japanese crypto issuers won't pay taxes on unrealized gains.

• Coinbase provides crypto miner Hut 8 with a $50M credit facility.

• FTX debtors release the second report.

• EU reaches deal on capital requirements for banks holding crypto.

• Nevada regulator files petition to place Prime Trust in receivership.

• KuCoin introduces mandatory KYC for all users.

MEME & NOTEWORTHY READS

• Politico’s read China’s move to control the blockchain.

• Consensys’ read on crypto-web3 global survey.

• Anthony Lee Zhang’s read on AMM and Loss-Versus-Rebalancing.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.