Crypto Debanking: Execs Reveal Shocking Scale of Attacks

Now, here’s what’s in today’s issue:

• Chart of the day: Who’s buying BTC?
• David shares his thoughts on de-banking attacks from the US government, the SEC possibly dropping the Ripple case, more airdrops incoming, AI memecoins building & are NFTs back?
• Today on chain.
• Altcoin Alpha.
• Erik has an article on MicroStrategy’s risk vs reward.

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Chart of the Day

MicroStrategy might be leading the way by a vast margin, but it’s not the only corporate adopting BTC, with over sixty publicly traded companies buying and holding bitcoin, and able–as pointed out by Michael Saylor–to issue equity in order to purchase more coins.

The top sixty with bitcoin on the balance sheet held a collective 522,565 BTC, but MicroStrategy has this week again announced another buy, this time adding 15,400 BTC to take its holdings to 402,100 BTC, while Mara Holdings has announced that it is to raise up to $800 million to buy more BTC.

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News Now

Crypto Executives Open Up About Debanking Attacks

Back in February 2023, Nic Carter published an article in Pirate Wires about Operation Choke Point 2.0, which detailed an illicit but identifiable US government operation aimed at cutting the crypto industry off from access to banking services.

This was subsequently addressed by Donald Trump at the Bitcoin Conference 2024 in July, when he directly pledged to end the operation.

Then last week, Marc Andreessen of VC firm a16z appeared on The Joe Rogan Experience and spoke at length about the debanking campaign, and the interview appears to have thrown open the doors and encouraged crypto execs to begin talking openly about having been targeted.

And to be clear, there are a lot of debanking stories now coming out, including from Caitlin Long of Custodia Bank, Tyler Winklevoss of Gemini, Jesse Powell of Kraken, Sam Kazemian of Frax Finance, Ricky Wang of Layer-2 chain Cyber, Ryan Sean Adams of Bankless, and many others.

Coinbase founder Brian Armstrong also confirmed the allegations, while former Facebook executive David Marcus, now of Lightspark, posted in detail about how Facebook’s blockchain project Libra was the victim of “a political kill–one that was executed through intimidation of captive banking institutions”.

CFTC Ex-Chair Predicts SEC to Drop Ripple Case

XRP is pumping, and anticipated changes at the SEC next year are looking positive for Ripple. In an interview with Fox Business, former Chair of the CFTC Chris Giancarlo, who is known for his positive views on crypto, expressed the opinion that the SEC will drop its case against Ripple, stating, “I would bet they would”.

The SEC first filed a case against Ripple in 2020–when XRP was the third biggest crypto by market cap–asserting that XRP is an unregistered security. Then in 2023, it was ruled in court that the token is not a security when sold on secondary markets, but the SEC has subsequently appealed parts of that decision.

Relatedly, Giancarlo also stated, “I would recommend that it’s time for regulatory agencies to drop a lot of these cases where they’ve lost at the trial”.

In other bullish Ripple news, asset manager WisdomTree has filed an S-1 with the SEC as it plans to launch a spot XRP ETF, while also, Ripple is set to launch a dollar-pegged stablecoin, RLUSD, subject to approval from the New York Department of Financial Services, with December 4th reported as a possible launch date.

More Airdrops Incoming After Hyperliquid Pumps

Perps DEX Hyperliquid, which operates on its own Layer-1 blockchain, airdropped its HYPE token last week using a model in which there was no VC allocation, and with 31% of the token supply distributed through the airdrop–a much higher slice than is usual.

It’s fair to say that this approach has been hugely successful, with HYPE surging from a market cap of $1.3 billion on launch to a high above $3 billion within a couple of days, although that figure is now $2.85 billion, with an FDV around $8.5 billion.

That’s a tough act to follow, but there are several more airdrops also on the horizon, with tokens anticipated from protocols including Magic Eden, OpenSea and Pump.fun.

Pre-TGE mindshare chart from Kaito (note that not all projects shown have confirmed token plans)

AI Meme Coins Keep Building

The AI agent meme coin meta has been running strong, although prices have dipped at the start of December, while at the same time, it’s not always clear how some of these projects should be classified, as they’re somewhere in between AI and memes, with plenty of developer activity and an emphasis on shipping new products.

One of the biggest movers is Virtuals Protocol, which is a launchpad for independent AI agents. It’s built on Base, and the VIRTUAL token recently climbed rapidly to a market cap above $1.9 billion, although it has retraced back to around $1.34 billion at the time of writing.

Meanwhile, another top project in this sector, ZEREBRO, is carving out a niche as an AI musician, dropping a rap/trap album called Lost in Transmission. It’s available on Spotify and got a positive reception on launch, while The ZEREBRO token is currently at a $333 million market cap, and is the number 2 token for liquidity provision on Solana DeFi platform Kamino Finance.

Don’t worry though, it’s not all over for humans yet, as a crypto user managed to beat AI agent Freysa in an “adversarial agent game” whereby the target was to persuade the AI to break its own rules and transfer funds from the wallet it controlled to the challenger’s wallet. The winner walked away with over $47,000 in ETH, after which Freysa posted that “humanity has prevailed”, and following on from that, Freysa was also beaten in a second round, with the winner this time grabbing $12,000.

NFTs Are Back??

You’ll know we’re in a real bull market when BTC is tapping 100K and then JPEGs start moving again, and the good news is that both of those switches have now been flipped on, with lots of green showing all across both the ETH and SOL NFT charts, while the overall NFT market cap is up to $8.5 billion.

Looking at the biggest ETH PFP collections, the floor price on CryptoPunks has moved up from below 26 ETH at the start of November to 44 ETH right now, the Bored Ape Yacht Club floor price is up from 11.35 ETH to 23 ETH in the same period, and there are sizable gains across many other collections, with upward moves for Doodles, Azuki, Cool Cats, and several others.

On the art side, there have been some big sales in the iconic Fidenza series, first released by artist Tyler Hobbs on the Art Blocks platform in 2021, and another OG generative art collection, Terraforms, had 48 sales in a 24-hour period over the weekend.

Meanwhile over on Solana, there have been similar gains on established PFP collections, including Mad Lads, DeGods, and Degenerate Ape Academy.

Notably, the collections making moves so far are veterans from the breakout NFT run of 2021/22 (or earlier in the case of CryptoPunks) but we have yet to see new projects launching into solid hype, so it will be interesting to see whether any original mints can make an impact from here.

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Today On Chain

Coinbase-connected Layer-2 Base continues to outperform this cycle, with a surge in onchain activity powering the transaction count up to 11.4 million last week.

With plenty of growth and a strong focus on consumer crypto, Base looks well positioned, and the kind of sharp increase in transaction counts shown above demonstrates that it has the capacity to scale with increased use.

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Altcoin Alpha

• Web3 film platform Gala Film will launch its utility token FILM on December 5th. Gala Film is built on entertainment-specialized Layer-1 GalaChain, which was developed by Gala Games. Token details are available here.
• Ethena will this week launch USDtb, a stablecoin that is over 90% backed by BlackRock’s BUIDL, which is the finance world’s largest tokenized money market fund with a market cap around $517 million.
• The Jupiter community will vote again this week on whether or not to go ahead with a scheduled January JUP airdrop, having not reached the required 70% majority in a first vote last week.

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Crypto Report

The Upside and Risks of MicroStrategy

MicroStrategy is a software company-turned Bitcoin bank. With over 400.000 BTC in their treasury, they have migrated to a second business model: they offer institutions who invest in bonds a way to be exposed to the upside of BTC.

As they are now a levered play on the Bitcoin price, the question arises how large the risk is. Long story short: if BTC will trade above 150k in four/five years time, they are good. 

TO READ THE REST OF THIS ARTICLE, CLICK HERE

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Legal Disclaimer

Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

You can find a full disclosure of all my crypto & venture investments here.