His Name Was Changpeng Zhao

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Good Morning.

Bitcoin broke below $60,000 as Binance’s CZ got sentenced to four months in prison. For now, it seems that the bull market party is being put on pause. We’ll have to reassess what sustained higher inflation means, macro-wise; as well as how the Binance’s situation will impact long-tail crypto assets’ liquidity.

P.S. Love him or hate him, thank you for all your contribution, CZ!

In Today's Email:

• What Matters: CZ’s 4-month sentence ⛓️ 

• Case Study: EIGEN airdrop  🪂 

• Governance & Features: Karak’s USDe restaking 🔁

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WHAT MATTERS

CZ Gets Four Months in Prison

State of play: Changpeng Zhao, former CEO of Binance, was sentenced to four months in prison on Tuesday for violating US AML laws.

• The sentence is less than the three years sought by prosecutors and below the 1.5-year federal guideline maximum.

• US Attorney Tessa Gorman told reporters "This was an epic day….we’re pleased with the result.”

• Judge Richard Jones criticized CZ for prioritizing Binance's growth and profitability over compliance with US laws.

• Before sentencing, CZ apologized to the judge, acknowledging his failure to implement an adequate AML program.

• Binance agreed to a $4.32B penalty, while CZ paid a $50M criminal fine and an additional $50M to the CFTC.

• Zhao will voluntarily surrender to serve his sentence, likely at a detention center near Seattle-Tacoma International Airport.

Here's the timeline of Binance and CZ's legal battle in the US:

• Feb 2018: DOJ began investigating Binance.

• Feb 2022: The SEC started an investigation into Binance Holdings & Binance US.

• March 2023: SEC & CFTC charged Binance & CZ with multiple violations.

• May 2023: DOJ opened an investigation into potential sanctions violations.

• June 2023: The SEC sued Binance & CZ.

• July 2023: Leadership issues began to surface at Binance.

• September 2023: Binance US reduced staff, and its CEO resigned.

• November 2023: Binance & CZ were indicted.

Why it matters: CZ is the most powerful man in crypto and Binance is the largest centralized exchange.

For builders and investors: This marks the end of an era for offshore centralized exchanges.

• There will be second-order effects, primarily one that revolves around altcoin liquidities, but that deserves a completely separate post.

CASE STUDY

Backlash Over EigenLayer Airdrop Restrictions

State of play: The whitepaper for the highly anticipated EigenLayer $EIGEN airdrop was released on April 29th, sparking significant excitement and substantial criticism.

• The launch plan allocates 45% of the initial 1.67B token supply to the community, with one-third of this via an airdrop.

• The airdrop will occur over several seasons, starting with the first season distributing 5% of the supply in two phases.

• More than 10,000 withdrawals have been initiated on EigenLayer since the release of the $EIGEN whitepaper.

Concerns were raised about the upcoming EIGEN airdrop, notably regarding the initial non-transferability of the token and the exclusion of users from a long list of countries.

• EigenLayer stated that the token would be non-transferable for "months" post-launch to allow for decentralization and to build community consensus on its utility and governance.

• The airdrop also excluded a long list of countries, including the United States and Canada, as well as blocking VPN users.

• The exclusion led to complaints about the inconsistency of allowing platform use but excluding these users from the airdrop.

There was confusion about whether Pendle users were eligible for the Season 1 airdrop of EigenLayer. Initially, it seemed that those who participated indirectly through Pendle were excluded.

• However, the Eigen Foundation later clarified that Pendle users would indeed receive a portion of the 10% allocated in Phase 2 of Season 1, which consists of 5% of the total token supply.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

FTX Completes 2nd Round of Solana Sales

The FTX estate is finalizing another sale of locked Solana tokens, following a larger batch sold in March, with successful bids ranging from $95 to $110 per token, according to sources at The Block.

• The estate is auctioning off 1.8M SOL valued at $232M over the past few weeks.

• Galaxy Trading is seeking additional investment in these locked SOLs.

• This round requires at least $5M in commitment from investors.

• Pantera Capital acquired more locked Solana in the latest auction.

• All the locked Solana tokens are subject to a 4-year vesting schedule.

• The next auction for locked SOL tokens will begin on May 1, according to Figure Markets CEO Mike Cagney.

• FTX conducted a larger sale in March, selling locked SOLs at $64 each.

FEATURES & GOVERNANCE UPDATE

Karak Introduces USDe Restaking

Karak just introduced USDe restaking. USDe holders can restake USDe and earn Karak XP and 20x Ethena Sats up to 100M of USDe all on top of USDe native staking rewards

• The unstaking period on Karak takes 14 days.

• Karak is a universal restaking layer backed by Mubadala, Coinbase Ventures, Nima Capital, Pantera, DCG, and others.

• Karak enables users to repurpose their staked assets to extend Ethereum as well as other trust networks' security to other applications.

Other notable feature updates:

• DODOchain testnet goes live.

• Ankr launched Neura public testnet.

• TreasureDAO launched Ruby testnet.

• Tether partnered with Ton Foundation.

• Magic Eden launched a new platform for Bitcoin Runes.

• Curvance launched a private testnet for whitelisted addresses.

• Parallel Network launched the alpha version of its cross-chain bridge.

QUICK BITES

• Roger Ver indicted for tax fraud.

• BlackRock's BUIDL hits $375M AUM.

• CZ sentenced to four months in prison.

• MicroStrategy holds 1% of BTC’s circulating supply.

• Lazarus laundered $200M+ in hacked crypto funds.

• Renzo airdrops REZ token, debuts at $289M market cap.

• Uniswap enables crypto purchases via Robinhood Connect.

• April recorded the lowest crypto losses from hacks and scams.

• US spot bitcoin ETF outflows continue with $51.5M more exiting.

• Paradigm’s Special Counsel has left the crypto-focused VC firm.

• McHenry accuses Gensler of misleading Congress about Ethereum.

• Australia's top exchange is expected to approve Spot Bitcoin ETFs.

• Hong Kong’s crypto ETFs saw $11M in volume on the first trading day.

• a16z purchases $90M worth of Optimism’s OP token.

NOTEWORTHY READS & MEME

• Our Network’s read on Aptos mega issue.

• nilFoundation’s read on zkSharding for Ethereum.

• Poorguard’s read on conflict strategy management.

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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.