CFTC Probes Jump's Crypto Involvement

MSTR Buys $786M in BTC | Certik & DJT Drama Continues

Marco Manoppo & Karon Pangestu
June 22, 2024

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Good Morning.

My alts bag are horrendously down bad. Anyway, I’m in KL for the Solana Summit right now and the builder energy is enigmatic. Bullish for crypto even if the price action is bad in the short term.

In Today's Email:

What Matters: CFTC probes Jump 🕵️
Founders Highlight: Cho, Lee & Tan of Sanctum 👾
Deal Flows: MSTR acquired 11,931 BTC 🤝

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Narratives: Alts are rekt; pack your bags.

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WHAT MATTERS

CFTC Investigates Jump Crypto

Jump Crypto

State of play: According to a recent report from Fortune Crypto, the Commodity Futures Trading Commission (CFTC) is investigating Chicago-based Jump's crypto trading and investment activities.

The report said the investigation does not imply wrongdoing, and it is unclear if the regulator is considering charges against Jump.
Jump Crypto is recognized for its algorithmic trading expertise and as a leading market maker and investor in the crypto space.
Jump has scaled back its crypto efforts, spinning off two major projects (Wormhole and partnership with Robinhood) and withdrawing from the spot Bitcoin ETF race.

Why it Matters: The CFTC's probe into Jump’s crypto operations is the latest federal investigation into a crypto company. However, it's unclear if any charges against the firm are being considered.

For builders and investors: The second-order effect of this action towards Jump-affiliated tokens and entities in the markets remains to be seen. Stay cautious.

BUILDER-INVESTOR HIGHLIGHT

Jesse Cho, FP Lee & Jaye Tan of Sanctum

Left to Right: Jesse Cho, FP Lee & Jaye Tan

Intro: Jesse Cho, FP Lee, and Jaye Tan are the Co-Founders of Sanctum (formerly known as Socean), an algorithmic liquid staking protocol built on the Solana blockchain

Previous background: Prior to Sanctum, Cho was the Software Lead at Bluebox, a provider of smart driving assistant technology, while Tan was an Associate Editor for the Singapore Journal of Legal Studies.

Tan studied law at the National University of Singapore.
Cho studied computer science at the University of Washington.
There is no information on FP Lee except that he studied at the University of Oxford.

The big idea: Cho, Lee, and Tan, through Sanctum, aim to increase decentralization on the Solana network while enabling others to create LSTs.

Real-time means MegaETH is capable of processing transactions as soon as they arrive and publishing the resulting updates in real-time.

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INSIGHTS

DJT & Kraken-CertiK Drama

Blockworks

State of play: The new DJT token, linked to Donald Trump and rumored to be spearheaded by his son Barron, created a buzz when it was featured in a Pirate Wires tweet.

Despite existing since March, DJT's value surged following the Pirate Wires tweet.
DJT briefly surpassed the MAGA meme coin, reaching a market cap of $470M.
Speculation around DJT's legitimacy increased trading before the token's value plummeted after revelations that Martin Shkreli was behind it.
LookOnChain and ZachXBT suggest three whales sold $4.6M worth of DJT the day after the Pirate Wires’ tweet.
These whales had initially bought 121.6M of DJT for about $450,000, netting over 900% in profits.
Most of these tokens were purchased before the DJT rumor surfaced on June 18.

Another drama is brewing on the other side of crypto space. Kraken is accusing CertiK of stealing ~$3M by exploiting a bug that allows users to fake their account balance on the exchange.

Kraken's CSO stated that they requested a detailed account of CertiK's activities, a proof of concept for the on-chain activity, and the return of withdrawn funds, but CertiK refused to return the funds.
CertiK asserts it never refused to return the funds, contrary to Percoco's claim of "extortion," but states the amount "differs from what Kraken demanded."
Coinbase director Conor Grogan noted that CertiK utilized Tornado Cash for certain transactions.
CertiK has disclosed the transaction history of its process over a five-day period.

In turn, we requested a full account of their activities, a proof of concept used to create the on-chain activity, and to arrange the return of the funds that they had withdrawn. This is common practice for any Bug Bounty program. These security researchers refused.
— Nick Percoco (@c7five)
12:25 PM • Jun 19, 2024

DEAL FLOWS

MSTR Acquires 11,931 Bitcoins for $786M

Deal flows slowed down a bit this week, we saw $60M+ in deals 💼

MicroStrategy announced that it acquired an additional 11,931 bitcoins for about ~$786M using proceeds from convertible notes & excess cash, averaging $65,883 each, from April 27 to June 19.

MSTR now holds 226,331 BTC bought at an average price of $36,798/BTC, worth ~$14.9B.
MSTR acquired 9,245 BTC for ~$623M and two smaller buys in March, bringing its total holdings to over 1% of the entire 21M bitcoin supply.
MSTR’s price rose 2.4% to $1,505 in Thursday's pre-market trading.

Deal flows in the past week:

Farworld Labs, $3M Pre-Seed Round
Elys, $2.5M Seed Round
Zeek, $3M Seed Round
Wasabi, $3M Seed Round
Sonic, $12M Series A Round
Particle Network, $15M Series A
Bondex, $4M Private Round
Renzo, $17M Private Round
Rango, Undisclosed $ Private Round
Router Protocol, Undisclosed $ Strategic Round
Bondex, $6.5M Public Token Sale

QUICK BITES

US spot bitcoin ETFs shed $140M.
3iq to launch Solana ETP in Canada.
BitFlyer targets FTX Japan for acquisition.
Immunefi surpasses $100M bug bounty payouts.
Germany starts selling its billions of seized Bitcoin.
Consensys asks IRS to delay new crypto reporting rules.
Australia’s largest stock exchange lists its first spot bitcoin ETF.
Trump scores Bitcoin donations worth $2M from Winklevoss twins.
Standard Chartered to launch spot trading desk for BTC and ETH.
Binance ordered to pay a $2.25M fine by India’s financial watchdog.
LayerZero asks eligible users to pay 10 cents per ZRO to claim airdrop.

NOTEWORTHY READS

Mason Nystrom’s read on tokenized marketplaces.
Protos’s read on Justin Sun’s empire may be on the verge of collapse.
Jon Charbonneau’s read on Optimizing State Machine Replication (SMR).

Wow it’s onchain!
— John Wang (@j0hnwang)
7:03 PM • Jun 20, 2024

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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.