SBF Trial Starts Tuesday

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Good Morning,

The SBF trial is starting soon. Michael Lewis, the famous writer behind The Big Short, did an interview promoting his upcoming book on SBF. Let’s just say his assessment is way off the mark it almost looked like a puff piece.

What. A. Joke.

In Today's Email:

• What Matters: SBF trial starts, Su Zhu arrested 🍿

• Products: MetaSchool, dev education 💻

• Charts: Friend Tech, ApeCoin 📈

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WHAT MATTERS

SBF Trial Starts Tuesday, 3AC’s Su Zhu Arrested

State of play: The long-anticipated criminal trial of Sam Bankman-Fried, the founder of the now-defunct FTX, is set to start on Tuesday. The trial will ascertain his guilt or innocence on seven charges of fraud and conspiracy.

• SBF was arrested in December 2022 in the Bahamas and extradited to the US. After posting a $250M bail bond, he was under house arrest.

• His house arrest was revoked following accusations of intimidating former Alameda CEO Caroline Ellison by leaking her private diary.

• FTX co-founder Gary Wang and Caroline Ellison pled guilty to federal charges related to FTX's collapse in December 2022.

• Gary Wang and Caroline Ellison plan to cooperate with prosecutors and serve as key witnesses in the trial.

• SBF could face up to 115 years in jail if convicted on all counts.

Elsewhere, 3AC co-founder Su Zhu was arrested in Singapore while attempting to leave, following a court-issued committal order against him.

• Kyle Davies, 3AC co-founder, also has a similar committal order against him, but his location is currently unknown.

• The committal order issued in Singapore resulted in a four-month imprisonment sentence for Zhu.

• The Monetary Authority of Singapore (MAS) has banned Zhu and Davies from engaging in regulated investment activities for nine years.

What’s next: As FTX’s ending will start to unravel on Tuesday, the focus turns to the fate of affected investors, creditors, and the billions in crypto assets entangled in legal proceedings.

• FTX bankruptcy claim has been soaring in value as the current management recovered ~$7.3B out of the missing $10B.

Our take: SBF is an incredibly well-connected individual with the American institutions and establishment. He deserves to be punished similar to Bernie Madoff.

• Su Zhu, on the other hand, is a failed hedge fund manager who went gambling with borrowed money.

• If 3AC falsely claimed the value of its books to borrow capital, that might be solid ground for a legal case, but we predict his outcome would be more similar to the founder of Long Term Capital Management (LTCM).

For builders and investors: Never underestimate the importance of sound corporate governance.

• Investors tend to forego this during a mania, such as giving themselves a ludicrous salary rate.

• We’re seeing this pattern even with web2 startups, with Sequoia India & SEA auditing its portfolio companies in the region.

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

PRODUCTS OF THE WEEK

Metaschool, The Platform for Dev Education in Web3

A great starting point for anyone interested in learning more about Web3. Metaschool, a platform for developer education in Web3, helps developers learn Web3 by building actual decentralized applications.

• Metaschool has tens of courses across 13 different blockchains.

• Since its launch in February 2022, Metaschool has cultivated a global community of 140K developers.

• Most of the Metaschool’s courses are free.

Other cool products:

• Vektor AI, a powerful DeFi engine with the intuitiveness of AI

• Cointrail, a crypto portfolio tracking tool

• WeInvest, a non-custodial decentralized trading built for Web2

• DataCrypto Analytics, a crypto trading tools

• Versiobit, a cloud storage with blockchain-backed audit-proof versioning

CHARTS OF THE WEEK

Is Trading Keys on Friend Tech Profitable?

Credit to An Ape’s Prologue for the original post.

State of play: Friend Tech has gained 270K users and $48M TVL, becoming the third most profitable crypto protocol with $30M in trading fees.

Much of its activity is speculative, driven by anticipated airdrops.

• Users boost volume through farming, but the Bonding Curve Pricing Mechanism complicates profitable exits, requiring a 22% price increase for breakeven.

• As key prices rise, marginal users find it harder to exit without losses as the required inflow of ETH into their keys increases quadratically.

• Despite challenges, users continue trading, hoping airdrops will cover losses, while the protocol and creators consistently profit from fees.

Our take: Unlike the typical airdrop mechanisms, participating in these SocialFi just for the airdrops might be like participating in a game of musical chairs.

• Assess your risk accordingly as the bonding curve introduces an entirely different type of risk.

How API-297 & AIP-304 Affected BAYC’s Price

Credit to An Ape’s Prologue for the original post.

State of play: ApeCoin DAO recently approved proposals API-297 and AIP-304, aimed at enhancing its intangible value through different approaches.

• While AIP-304 led to a temporary 20% increase in BAYCs' floor price in July, AIP-297 had a negligible impact.

• AIP-297 had minimal impact on the floor price as the proposed sweep size, utilizing 50.75% of its 750k $APE grant for only 8 BAYCs, wasn't substantial enough to warrant front-running.

• After the ApeCoin DAO passed AIP-297 and AIP-304 on Sep 21, floor prices dropped 30% from July’s peak.

Our take: We’ll be seeing more moves from NFTs to enhance their values, either through similar forms of buyback program or expanding to tangible products like Pudgy Penguins.

QUICK BITES

• SBF considered paying Trump $5 billion not to run for office.

• 3AC Su Zhu arrested in Singapore, sentenced to 4 months in prison.

• Ex-SoftBank Exec sets up a new stablecoin.

• Coinbase granted the full license in Singapore.

• Vitalik Buterin contemplates Ethereum staking changes.

• Galaxy, Invesco team up for Ethereum ETF push.

• Do Kwon admits to faking Terra trading volume.

• BlockFi to move forward with Chapter 11 plan.

• Google Cloud is now a Polygon validator.

• VanEck to donate 10% of Ethereum ETF profits to core contributors.

NOTEWORTHY READS & MEME

• Our Network’s read on stablecoins mega issue.

• Kerman Kohli’s read on crypto’s biggest use case: permissionless identity.

• Vitalik Buterin’s read on Ethereum enshrining more things in the protocol.

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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.