|March 16, 2023||View Online|
Transaction mixing service ChipMixer is put in the ground after processing hundreds of millions in illegal transactions, ETH unstaking is coming soon, and crypto may need saving from the banks.
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ChipMixer Launders Over $700M in Illegal Transactions
Mixers like Tornado Cash and ChipMixer have been all the fuss lately, with governments coming down and coming down HARD on the service providers.
What's a mixer?
You can think of it as a tool for adding anonymity to your crypto transactions.
Although it may sound sketchy, there are some reasonable circumstances where someone may want to use a mixer, for example:
That list went sour fast.
As it appears, the centralized mixing operation ChipMixer was mixing all sorts of transactions for their customers, regardless of the law. Europol and other police agencies announced on Wednesday that ChipMixer had been shut down after laundering over $700M in illegal funds.
According to the Department of Justice, ChipMixer's customer list was quite prolific, including North Korean hackers and Russian spies.
Go big or go home, I guess?
The mixing business model is quite simple, users pay for anonymity, and the mixer takes a percentage of the transaction as a fee. Since ChipMixer has processed over $3B in transactions, the AaaS (Anonymity as a Service) model seems good.
Until it doesn't.
Minh Quốc Nguyễn, 49, of Hanoi, Vietnam, has been operating the mixing service since 2017 and is currently being charged while his domains have been taken down and over $50M of ChipMixers funds seized.
Some people in the industry are happy about the takedown, given that ChipMixer was used by the Lazarus Group, North Korea's most successful hacking collective, who may have been responsible for the $540M Axie Infinity hack.
However, the $700M in illegal funds will not be reclaimed.
ETH Unstaking is Coming
Since the launch of the beacon chain on December 1st, 2020 - Ethereum users have been staking their ETH in the network, helping secure the blockchain.
How generous of them!
While a few may be staking out of the goodness of their hearts, many do it for another reason - to earn a yield on their staked ETH.
Thanks to the Ethereum devs building the Shanghai update, which is expected to take place around March 28th, 2023, these stakers will finally have the option to unstake from the network!
Freedom at last.
Well, freedom in waves. Many Ethereum stakers don't stake themselves directly but instead stake with a 3rd party like Coinbase or Lido given a 32ETH capital requirement to get started.
So people with 32ETH can withdraw after Shanghai; what about everyone else?
Coinbase has committed to processing ETH unstaking requests within 24 hours after the upgrade. At the end of the day, "the Ethereum protocol controls the unstaking process, and we're simply the conduit," mentioned Coinbase on Twitter.
Lido, who controls up to 75% of the liquid staking market, has had difficulty guaranteeing such prompt withdrawals. Tuesday, they took to Twitter explaining that a 4-week testnet run will need to happen first, and then with a 2-week buffer, they expect to be ready for mid-May.
Although this may seem like a massive delay, we should give some slack to the Lido team, as running operations on a decentralized system can be a much more scrutinous task.
Although the withdrawal time seems extremely important, there is no reason to believe Ethereum stakers will rush to remove their ETH from the network.
And from a price perspective, we're hoping they don't.
Circle CEO Speaks Out Against the Banks
After this weekend's USDC depegging and bank drama, Circle CEO Jeremy Allaire has spoken out on the issue with a bold stance!
"Everybody's talking about how we need to save the banks from crypto and right now we're trying to save crypto from the banks," said Allaire during an interview with the hosts of the Bankless podcast.
This sentence will be played on repeat as crypto users fall asleep to the wonderful tune of the statement.
We're not the problem.
He goes on to discuss how banks will need to be much more conscious of how they manage the deposits of crypto companies. As we know, crypto can be volatile, with swings in any direction and changing liquidity.
The banks serve the customer rather than the other way around.
He is moving the $3.3B Circle previously held at SVB to BNY Mellon, hoping that along with the rest of the $40B in Circle deposits, the funds are stored and invested responsibly.
Wishing for the traditional system to take crypto seriously is on every year's bingo card. We hope Allaire can act as one of many messengers for the industry going forward.
As always, Coinsprout wishes you pegged stables and liquid banking for the rest of your days.
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