Oct. 6, 2023

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Welcome to The Node! This is Daniel Kuhn here to take you through the latest in crypto news and why it matters.

In today's news: Backed is now tokenizing BlackRock's U.S. Treasury ETF. THORSwap going into "maintenance" mode. And JPMorgan says Ethereum has centralized since the Merge.

The takeaway: Highlights from the first week of SBF's trial.

Backed at It

Switzerland-based tokenization firm Backed Finance has expanded its blockchain-based short-term U.S. Treasury offering to Coinbase's Base blockchain. The so-called bIB01 token is tokenized version of BlackRock's government bond-based exchange-traded fund (ETF), which offers a 5.25% annual yield to investors. The offering is not available in the U.S. This marks the first real-world asset token issued on Coinbase's L2, which offers a "low-cost, developer-friendly way to build on-chain," Backed said.

It could take six weeks for prosecutors to make their case against Sam Bankman-Fried. But only three days were needed for the judge overseeing his trial to lose patience with the former crypto chief's defense team.

Judge Lewis Kaplan was visibly and audibly disgruntled and mightily displeased with Mark Cohen & Co. on Thursday. On multiple occasions the white-haired federal judge chastised the defense attorneys for asking imprecise and repetitive questions of government witnesses. During one especially aggravating cross-examination he called the attorneys over for a sidebar slap-down.

"I've given you a lot of latitude, but" the repetitive questioning "needs to be curbed," the 78 year-old judge told defense attorney Chris Everdell as he probed Adam Yedidia, a former friend and employee of Sam and now a witness for the prosecution...

Looking for more in-depth reporting on the SBF trial? Subscribe to "The SBF Trial" newsletter pop-up, written by CoinDesk reporters and editors on the ground in court.

THOR Throw Down

THORSwap exchange said on Friday it would shift into "maintenance" mode after a series of illicitly-linked funds were passed through the platform in the past several days, including several transactions sent by the still unidentified "FTX Exploiter" wallet that drained funds from Sam Bankman-Fried's FTX exchange in the days following its bankruptcy last year. The hacker has been swapping ETH for Threshold Network's wrapped bitcoin. "This action was taken to swiftly curtail any further potential illicit activity," Thor devs said, adding they are working on finding "a more permanent and robust solution."

Centralized Risks

JPMorgan analyst Nikolaos Panigirtzoglou said Ethereum has become more centralized since "the Merge" and Shanghai upgrades. Further, the increase in staking has reduced the appeal of ether from "a yield perspective," the report said, also raising ETH concentration risks at decentralized liquid staking platform Lido, the most popular means by which to validate Ethereum. A "concentrated number of liquidity providers or node operators could act as a single point of failure" and the "rehypothecation" of staked ETH across DeFi could "result in a cascade of liquidations."

The Takeaway: What's to Know?

The first few days of Sam Bankman-Fried's trial have not been going in his favor, general consensus seems to suggest. Prosecutors for the U.S. Department of Justice (DOJ) are establishing the case that the FTX founder was deeply involved in a long-term scheme to defraud customers and investors, throwing a wrench in the fallen crypto mogul's legal defense that, while nominally in charge, he was oblivious to the rot taking shape at his exchange FTX and hedge fund Alameda Research.

Bankman-Fried always faced an uphill battle in this much-watched trial. Published documents and allegations made by FTX's current leadership, under the direction of Enron's bankruptcy lead John Jay Ray III, as well as SBF's ill-conceived "apology tour" following shortly after FTX closed shop have tainted public perception of the once beloved crypto savant. "SBF is going to be the victim of his own success," Renato Mariotti, partner at Bryan Cave Leighton Paisner LLP who is watching the case, said on CoinDesk TV.

And his "tough, tough, tough case" doesn't seem to be made any easier in the courtroom by defense attorneys with Cohen & Gresser. It's been widely reported that District Judge Lewis Kaplan has appeared visibly annoyed by Bankman-Fried's high-paid lawyers. Some on-lookers said during some attempts at cross-examination, "80%" of defense attorney Chris Everdell's questions were shot down. In fact, prosecutors' objection to misleading questions became so routine, Judge Kaplan at times sustained an objection before it was offered.

But it's early days yet, in a trial that could last six weeks. It's still unknown whether Bankman-Fried, sporting a new haircut, will testify. Mariotti, along with a seeming majority of lawyers, said that would be a gamble at best and like disastrous. Gary Wang, FTX co-founder and longtime friend to SBF, already admitted to committing fraud on the stand, referencing the "special privileges" offered to trading shop Alameda on FTX. While a ex-FTX developer Adam Yedidia said he quit in November 2022 after learning of the scheme to "defraud" customers, a strong point that was stricken from the record.

Here is a roundup of CoinDesk coverage — pulling out the major highlights and details — of the trial so far, and events happening outside the courtroom like revelations from Michael Lewis' confounding biography of Bankman-Fried.

Read the full article online.

– D.K.

@danielgkuhn

How Bhutan Became a Carbon-Neutral Hub For Crypto Mining

Bitdeer's new 100 MW facility is the first phase of the company's Bhutan project for the small, mountainous nation.

The Kingdom of Bhutan, nestled in the foothills of the Himalayas, recently became home to a massive new 100 MW crypto mining data center. And yet few know about it. Indeed, many of us know little about this mysterious Himalayan Kingdom.

Bhutan might not seem like an ideal place for a crypto mining data center. It has a lot of mountainous terrain, when data centers normally lay on flatter ground. For why Bhutan is now home for a massive crypto mining center, we must go back to 2005. Continue reading

**This is sponsored content by Bitdeer

Off-Chain Signals

Here Are the Top Playmakers in Congress Shaping Crypto Law – Unchained
The Judge Is So Fed Up With Sam Bankman-Fried's Lawyers – Slate
Review: Michael Lewis's Going Infinite – Molly White
Binance doesn't know how much BNB it has – Protos
Can AI Save Crypto Investors? — The Information
Bitcoin Rises. Crypto Traders Are Ignoring Spiking Bond Yields. – Barron's

Centralized Intelligence

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