DeFi Death and Taxes

Plus Pepe intrigue

Author

Nathaniel Whittemore
August 28, 2023

The Breakdown First Five - Monday August 28 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. 4 Million Pages

The DOJ has produced an additional 4 million pages of discovery documents related to SBF’s criminal indictment. The sheer volume of documents and Sam’s lack of access to the internet while locked up make it impossible for him to exercise his “right to participate in his own defense” according to defense lawyers. They object to the discovery schedule and continue to push for Sam’s release pending trial. DOJ have been ordered to respond to concerns.

4. Binance Cuts Russian Banks

Binance has removed five sanctioned Russian banks from their P2P platform after receiving criticism in the press. The exchange claimed that it “aims to diligently comply with the global sanctions rules” but up until last weekend Russian users could cash out using sanctioned banks. They claimed the change was just part of regular updates to “ensure compliance”. OKX and Bybit have also now removed the sanctioned Russian banks.

3. ‘Bad Actors’ Stole PEPE

The PEPE team have broken their silence to accuse “bad actors led by big egos and greed” of stealing over $15M worth of the memecoin last week. Mysterious transactions drained the funds from the team’s multisig wallet before authorizations were removed. The remaining team funds will be burned according to whoever is left in charge. Researchers at SingularityDAO warn that whales still hold over 25% of supply.

2. OnlyETH

OnlyFans parent company Fenix International has disclosed heavy bags of Ethereum. The company invested around $20M into ETH sometime in 2022 according to accounting filings. The firm reported a $8.46M impairment loss, implying that they held through last year’s drawdown. The adult website reported $1.1B in sales and pre-tax profits of $525M for last year, making their ETH purchase a small diversification bet.

1. DeFi Death By Taxes

The US Treasury has published sweeping crypto tax reporting proposal rules. The rulemaking would require exchanges, most DeFi protocols and some custodial wallets to KYC customers and report their transactions to the IRS. The rules are so broad they might even require etherscan to report users’ trades made via the platform. Industry figures believe this rulemaking is not only unworkable but would lead to the end of DeFi for US customers.

Thanks for reading -NLW