NYAG: $3B DCG Lawsuit

Frax Layer 2 | BTC $75K Option Flows

Marco Manoppo & Karon Pangestu
February 12, 2024

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Good Morning.

The crypto markets are up. Options flow (more on that below) indicate a bullish sentiment as we get closer to the halving in April. ETH is also rallying thanks to the upcoming spot ETH ETFs and the ongoing restaking mania.

Follow me on Farcaster!

In Today's Email:

What Matters: NYAG: $3B DCG fraud case 👩🏽‍⚖️
Products: Frax’s L2 ⛓️
Charts: Option Flows & Farcaster’s DAU 📈

Narratives: All eyes are on Jupiter’s WEN memecoin and JUP airdrop.

We are now publishing airdrop alphas on our telegram!

TOGETHER WITH

Aevo

Aevo is an options and perps DEX built by traders for traders.

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a slick UIUX in DeFi and a large selection of tokens
pre-launch tokens perps allowing you to trade tokens such as BLAST and JUP earlier.
a yield-generating stablecoin that earns 4.75% APY

Essentially, you can store your stablecoin on Aevo, and receive 4.75% APY while it serves as collateral for your trade purposes. What’s there to lose?

Remember Ribbon Finance? It was one of the largest airdrops in DeFi, ever.

Well, it’s the same team behind the scenes and they have rebranded from Ribbon Finance and will be doing an airdrop soon!

Use the link below to support us and save on fees when you use Aevo.

WHAT MATTERS

NYAG Triples Alleged Fraud Size in DCG Case

AP News - New York Attorney General Letitia James

State of play: NYAG Letitia James expanded the fraud lawsuit against DCG from $1B to over $3B, citing more defrauded investors linked to the Gemini Earn program.

The NYAG's expanded lawsuit against DCG now includes losses beyond Gemini Earn, as further complaints revealed other investors directly defrauded by affiliate Genesis.
Following further investigation, the amended complaint reveals over 230,000 investors were defrauded out of more than $3B, with DCG and Genesis accused of concealing $1.1B in losses.
Genesis Global Holdco, a DCG subsidiary, filed for bankruptcy in January 2022 and reached a settlement with the NYAG, as stated in a Thursday court filing.

What’s next: DCG spokesperson said the complaint is baseless and that they will contest the claims aggressively, maintaining that DCG and Barry Silbert have always acted lawfully and with integrity, and anticipate full vindication.

Our take:

For builders and investors: Although it has been a while since the DCG-3AC case, it’s important to remember that related parties transactions between sister companies and excessive rehypothecation will almost always lead to a bad outcome.

Builders and founders need to be careful about this same mechanism implemented as Ethereum restaking becomes more popular.

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 👇

PRODUCTS OF THE WEEK

Frax Finance Layer 2 Network

It’s time for the Fraxtal launch thread! The most important & consequential release since the dawn of Frax itself in 2020. Fraxtal testnet & mainnet are here for select launch partners! Frax.com will be the hub of Fraxtal documentation, L2 bridge UI, & other… twitter.com/i/web/status/1…
— Frax Finance ¤⛓️¤ (@fraxfinance)
12:22 AM • Feb 8, 2024

Frax Finance launched its Ethereum L2 network, Fraxtal, last week.

Fraxtal is an Ethereum-compatible optimistic rollup using the OP Stack aiming to serve as a DeFi-focused dApps platform.

Fraxtal will be part of Optimism's Superchain ecosystem, including Coinbase-supported Base.
Fraxtal's launch is limited to partners like Safe, Chainlink oracles, and bridges Axelar and LayerZero.
General user access to the chain is anticipated in the coming days.

This move by Frax aligns with a thesis that Marco wrote in 2022. An argument that is becoming more and more relevant as time goes by:

“User experience is one of the biggest bottlenecks in crypto. If we can’t even easily onboard young educated individuals, how can we expect crypto to reach mainstream adoption? ….. It makes perfect sense for dApps to vertically integrate, stacking on top of one another to create an ecosystem that focuses on user experience.”

Other cool products:

Gainium, a crypto trading tool.
Quicktick, a realtime crypto analytics tool.
SolanaFM, a user-focused Solana blockchain explorer.
Works, an AI-driven Web3 work platform and talent network.
Stateless, a trust-minimized verifiability protocol and middleware.

CHARTS OF THE WEEK

Bitcoin Option Flows

Credit to Deribit Insights for the original tweet.

State of play: Fast money buying of February $48,000-$50,000 calls was made as ETF data exerted a positive influence on the market.

A substantial premium was paid for a series of call options for April, June, September, and December with strike prices between $65,000-$75,000, indicating a bullish sentiment.
The selling of 430x June $40,000 Calls suggests that a large position was being closed or adjusted.

Our take: The current derivatives flow indicate a bullish sentiment going to the halving. Expect more upside in the short-term.

Farcaster’s DAU Surged 400%

@pixelhack - Dune Dashboard

State of play: Farcaster's daily active users jumped 400% after its app Warpcast debuted Frames for in-app external engagement.

Farcaster's daily users rose from 5,000 to 24,700 in a week after Warpcast added Frames.
New daily "casts" on the network soared to over 2M by Feb. 3, marking a 1,000% rise from 200K on Jan. 28.
Frames enable users to interact with NFTs, transactions, blogs, and surveys in-app without signing transactions or exiting.
Frame is powered by Farcasters EdDSA authentication system, meaning there is “no wallet drain risk” for transactions made via a frame.
Warpcast experienced temporary "degraded activity" on Feb. 4 due to a spike in Farcaster network usage.

Our take: Frames provide users with new ways to interact with web3 applications that weren’t previously possible in web2 apps like Instagram.

QUICK BITES

Pendle hits $1B+ in TVL.
EigenLayer hits $6B+ in TVL.
Fireblocks reduces headcount by 3%.
CoinDesk replaces CEO in restructuring.
Genesis moves to settle lawsuit brought by NY.
Ethereum NFT volume approaching yearly high.
FTX files to sell subsidiary to CoinList for $500,000.
Ethereum Validator signals renewed interest in staking.
Metaco's CEO and Head of Product departed the firm.
NYAG triples estimated size of alleged fraud in DCG case.
Yuga Labs faces more backlash for high gas fees in NFT minting.
Ethiopia entices Chinese mining companies thanks to cheap electricity.

NOTEWORTHY READS & MEME

Arthur Hayes’ read on crypto points.
Shoal’s read on perpetual pre-launch futures.
0xElle’s read on crypto social and commerce.

gmeow
— CL (@CL207)
6:50 AM • Feb 12, 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.