DOJ Counters Tornado Cash Founder's Dismissal Motion

The Breakdown First Five - Monday, April 29, 2024

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. JPY Trading like an Altcoin

The Japanese yen detonated on Friday, slumping by 3%. The move came after the BOJ held super-loose policy steady in the face of tightening Fed expectations. Monday’s trading was volatile, featuring another crash before a 2.5% rally on the back of assumed BOJ intervention. The Yen is a key funding currency deeply integrated across global markets, so this volatility risks breaking something. Or perhaps something has already broken. 

4. DTCC Collateral Limits

Panic gripped Bitcoiners on Friday after news broke that the DTCC would no longer accept Bitcoin ETFs as good collateral. While the headline looked scary, it was quickly apparent that no one knew exactly what this meant. Turns out that only massive institutions deal directly with the DTCC and this policy shift should have no meaningful impact on trading and liquidity. Leverage is still available at individual brokerages according to their risk tolerance.

3. Mining Solo

A solo miner won a block reward, making it just the 282nd Bitcoin block claimed by a reclusive miner. Unlike previous solo blocks, this miner had a relatively large hashrate of 120 PH/S, around 0.2% of the overall network hash rate. This suggests the miner is a relatively large operation rather than an individual. It could be the case that this miner has switched from pooled mining to go solo after the halving reduced profitability.

2. Phoenix Wallet Backs Out of US

After the FBI warning that unlicensed money transmitters are being investigated, Phoenix wallet has blocked service to US customers. The non-custodial lightning wallet believed it was operating within FinCEN guidance and didn’t need to seek a license. The arrest of Samourai founders has made that position much more tenuous and Phoenix has decided the US is no longer worth the risk. Other self hosted wallets are standing firm. 

1. DOJ Pushback on Tornado Cash

The DOJ has filed a 111-page response to Roman Storm’s motion to dismiss. Prosecutors argued that the Tornado Cash founder did much more than just write code. They claim he benefited from fees taken by the protocol, which they state is enough to make Tornado Cash subject to money transmitter licensing and compliance requirements. The case is shaping up to be the most important crypto lawsuit of the year, lighting a fire under lobbyists.