Welcome back to Chain Reaction.
Last week, we looked at a crossover episode for meme investing. This week, we’re talking about Musk dumping tokens while holding onto others.
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A weekly dispatch from the desk of TechCrunch crypto editor Lucas Matney:
Elon Musk shared that Tesla sold some Bitcoin this week. Well, to be fair they sold an awful lot of Bitcoin… tens of thousands of coins.
And while Tesla’s announcement last year that they were buying Bitcoin sent prices to the moon, the disclosure Wednesday that they sold 75% of their Bitcoin reserves in Q2 didn’t drastically impact the crypto market which has been on a tear this week with BTC prices pumping and Ethereum shooting even higher (though still wildly below prices from a couple months ago).
At the end of the day, Tesla was one of the top corporate holders of Bitcoin and Elon Musk was, for a while at least, the currency’s top billionaire hype-man. His stock in crypto circles seems to be falling, crypto Twitter was broadly upset by the announcement with some noting that crypto holders should join those shorting the electric car maker’s stock.
Hidden inside this disclosure that the company had offloaded nearly $1 billion worth of Bitcoin was a small admission from Musk that Tesla was holding onto Dogecoin and had not sold any of it. What was unclear from this statement is how much Dogecoin Tesla actually owns. Musk has written on Twitter that he owns it, and Tesla has accepted Dogecoin payments for merchandise on its site for months, but they haven’t disclosed any buys of the cryptocurrency.
I tried to do some napkin math on how much Dogecoin the company may hold this week:
The company disclosed that it currently owns $218 million worth of digital assets after selling $963 million worth of Bitcoin. The bulk of that $218 million is likely its remaining Bitcoin.
Tesla reportedly had around 42,000 Bitcoin heading into the second quarter, so after selling 75% of them, it should have had around 10,500 at the end of the quarter. Now, to determine exactly how much of that total holding is Bitcoin, we’d have to know exactly when the snapshot was taken. It was assumedly taken sometime the last day of June when fiscal Q2 ended, so 1 Bitcoin would have been trading for between $18,750 and $20,300 throughout the day, which at 10,500 coins would mean that around $197 million to $213 million of its total “digital assets” would be in Bitcoin.
Ultimately, Musk’s assertion that Tesla was holding onto its Dogecoin was probably more about keeping in the good graces of that Twitter community that anything else, especially during a time when his Twitter dealings have taken some digs at his popularity among retail investors.
the latest pod
Chain Reaction has recapped plenty of negative news in the past month as token prices took a beating and web3 companies suffered as a result. The pain is far from over, but crypto prices did see a fairly substantial recovery this past week, with ETH up 45% week-over-week. Lucas and Anita talked about what might have driven the uptick, though they also had to talk through the much more unfortunate news of layoffs at OpenSea.
Both co-hosts were hard at work this past week on two separate feature articles that relate to current crypto news, so they unpacked those on the show. Anita talked about her piece on intensifying competition between crypto exchanges for the U.S. market (and which is most likely to win), while Lucas shared his thoughts on Yuga Labs’ highly hyped Otherside metaverse video game as one of its very first players.
follow the money
Where startup money is moving in the crypto world:
- Cryptography developer tools startup Sunscreen raised $4.65 million in seed funding led by Polychain.
- Optic, an AI-based NFT authenticator, raised $11 million in a seed round led by Kleiner Perkins and Pantera.
- Zebedee raised $35 million in a Series B round led by Kingsway Capital to develop Bitcoin-based game payments.
- Blockchain cybersecurity startup Halborn raised a $90 million Series A led by Summit Partners.
- UnCaged Studios raised $24 million from investors including Griffin Gaming Partners and 6th Man Ventures to build crypto games.
- NFT brand loyalty platform Hang banked $16 million in new Series A funding led by crypto venture firm Paradigm.
- Peer-to-peer wallet messaging app Lines raised a $4 million seed round from investors including Elad Gil and Scalar Capital.
- Crypto corporate treasury company Meow closed a $22 Million Series A led by Tiger Global.
- Data infrastructure provider Empiric Network raised $7 million for its seed round from investors including Variant and Alameda Research.
- Web3 security auditor Secure3 raised a $5 million seed round led by Mirana Ventures.
the week in web3
A weekly window into the thoughts of web3 reporter Anita Ramaswamy:
More than a few times recently, I’ve heard people in crypto say a bear market will separate the good companies from the bad ones. Former SEC Chairman Jay Clayton put it more directly at Bloomberg’s crypto summit on Tuesday, saying regulators should make responding to the “garbage” going on in web3 their first priority.
Clayton invoked the 2017 ICO boom when describing the aforementioned garbage, a time during which all sorts of rampant scammery and securities fraud was unfolding within crypto. I couldn’t help but wonder … has crypto made any material progress since then in improving its reputation as a refuge for miscreants?
For U.S. lawmakers, the answer seems to be “yes,” perhaps because they are loathe to stifle what’s proven to be a substantially large industry worth millions (or billions in a strong market) of dollars. So despite their sluggishness, they are finally coming around. Specifically, U.S. Senators Cynthia Lummis and Kirsten Gillibrand proposed a bipartisan crypto bill last month that has been on everyone’s lips. The pair made an appearance at the Bloomberg summit to share updates on the bill’s status since it was introduced. Gillibrand shared that while certain provisions look set to move forward, the entirety of the legislation is likely to be deferred to next year.
Still, there are two provisions in the bill Gillibrand predicted could garner consensus much sooner than the rest. The first is a set of rules for banks looking to issue stablecoins – it’s understandable that those are an area of particular concern for lawmakers after the Terra fiasco. The second is the portion of the bill that would make the CFTC the key regulatory authority overseeing crypto, which she said is currently being finalized in committee. Congress will be able to vote on that provision by the end of the year, she noted.
While U.S. lawmakers and regulators alike will probably always drag their feet in cracking down on crypto because they don’t want to be seen as stifling innovation, the new bill seems to be moving right along, faster than many expected. It’s not exactly a sudden 0 to 100 shift, but it’s very possible the U.S. is on the brink of a faster and more furious regulatory response than most in web3 could imagine just a few months ago when the markets were in better straits.
Here’s some of this week’s crypto analysis available on our subscription service TC+ from senior reporter Jacquelyn Melinek:
Regulators should address crypto ‘garbage’ first, former SEC Chairman Clayton says
As the crypto industry continues to grow, regulators across the world are looking for operational and legal frameworks to guide their actions to more effectively monitor the industry. While there’s a “tremendous number of responsible players in the industry” there are also irresponsible ones, former U.S. SEC chairman Jay Clayton said during the Bloomberg Crypto Summit conference on Tuesday. “And regulators have to respond to the garbage first. That’s the job.”
NFTs have the potential to become media companies, Rarible co-founder says
As NFTs work to retain mainstream attention, one founder predicts the digital asset sector will pivot in a new direction. “I think NFT collections will evolve as media companies [into something] like Disney,” Alex Salnikov, co-founder and head of product at NFT marketplace Rarible, said to TechCrunch. In recent months, major “blue-chip” NFT projects like Bored Ape Yacht Club (BAYC) and Doodles propelled their collections beyond just images and into different sectors, which may be the beginning of what’s in store for NFT expansion into the mainstream, Salnikov said.
Some venture investors are doubling down on crypto despite an unknown recovery timeline
The crypto markets might be red all over, but that isn’t stopping many venture capitalists from investing in the space. People who entered the crypto market briefly — aka tourists — are “already going home,” Craig Burel, partner at crypto-focused firm Reciprocal Ventures, joked to TechCrunch. But a number of VC firms are looking at the space as a huge opportunity, even though there might not be measurable traction for a number of years.
MetaMask co-founder sees a developer-led future for its crypto wallet
Six years ago, MetaMask was founded and today it’s the largest non-custodial crypto wallet. But that wasn’t always the plan, co-founder Dan Finlay told TechCrunch. “We thought it was going to be a quick in-and-out thing. Aaron thought we’d be working on it for a few weeks; I thought it would be a few months. It became clear pretty quickly that wasn’t the case.” Now, the team is testing out a hands-off approach to be “less opinionated” and get out of users’ way.
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Uber to sunset free loyalty program in favor of subscription membership
Ride-hailing giant Uber is shutting down its free loyalty program, Uber Rewards, so it can focus on its subscription-based Uber One membership.
Uber first launched the rewards program in 2018 as a sort of frequent flyer scheme that allowed riders to earn points for every dollar spent on rides or Uber Eats deliveries. Those points could then be used to get discounts on future rides or deliveries. In November 2021, Uber began introducing Uber One, which, for $9.99 per month or $99.99 annually, allows members perks like 5% off certain rides or delivery orders and unlimited $0 delivery fees on food orders of over $15 and grocery orders of over $30.
In an email sent to customers that was picked up by The Verge, Uber said users can still earn points via the legacy rewards program until the end of August, and that they can redeem those points until October 31. Uber Rewards will officially shut down on November 1, 2022, according to an update posted by the company.
The Uber Rewards program allowed users to earn 1x point for every Uber Pool dollar spent, 2x for every UberX dollar spent and 3x for every $1 spent on Premium. The number of points accumulated would put members into different castes of loyalty, from Blue to Gold to Platinum to Diamond, the latter of which comes with benefits like access to highly rated drivers, free delivery on three Uber Eats orders, access to better customer service and free upgrades.
While phone support will continue for Diamond users, now the only way to get additional perks with Uber will be to shell out for a subscription. Existing Rewards members will get a free one-month subscription to Uber One, but then will be charged for access. If you’re someone who orders Uber Eats more than twice a month, you can easily break even with the Uber One subscription, but plenty of users might not see the money saving benefits in the switch.
Uber did not respond immediately for clarity as to why it is shutting down the Rewards program in favor of the Uber One membership. Perhaps the company did not see the returns and user loyalty that it would have expected from the program and thinks a subscription offering will provide better returns.
Twilio gets hacked, teens ditch Facebook, and SpaceX takes South Korea to the moon
Is Facebook for old people? If you’ve got a teenager around the house, you’ve probably heard them say as much. The most read story this week is on a Pew study that suggests this generation of teens has largely abandoned the platform in favor of Instagram/YouTube/TikTok/etc.; whereas in 2014 around 71% of teens used Facebook, the study says in 2022 that number has dropped down to 32%.
Mark Cuban sued over crypto platform promotion: “A group of Voyager Digital customers filed a class-action suit in Florida federal court against Cuban, as well as the basketball team he owns, the Dallas Mavericks,” writes Anita, “alleging their promotion of the crypto platform resulted in more than 3.5 million investors losing $5 billion collectively.”
A troubling layoff trend: While tech layoffs might, maybe, hopefully be showing signs of slowing, Natasha M points out a troubling trend: some companies are announcing layoffs only to announce another round of layoffs just weeks or months later.
SpaceX launches South Korea’s first moon mission: South Korea has launched its first-ever lunar mission — a lunar orbiter “launched atop a SpaceX Falcon 9 rocket” ahead of plans to land on the surface some time in 2030.
Twilio gets hacked: While it’s unclear exactly what data was taken, Twilio says the data of at least 125 customers was accessed after some of its employees were tricked “into handing over their corporate login credentials” by an intense SMS phishing attack.
Amazon’s bizarre new show: Think “America’s Funniest Home Videos,” but made up of user-submitted footage from Ring security cameras. By now most people probably realize their every step is recorded on a security camera or three — but doesn’t embracing it as Entertainment™ like this feel kind of…icky?
Haus hits hard times: Haus, a company that ships specialized low-alcohol drinks direct to consumers, is looking for a buyer after a major investor backed out of its Series A. The challenge? Investor diligence for an alcohol company can take months, and Haus just doesn’t “have the cash to support continued operations at this time.”
How clean is the air you breathe every day? Aclima co-founder Davida Herzl wants everyone to be able to answer that question, and sat down with Jordan and Darrell on this week’s Found podcast to explain her mission. Meanwhile on Chain Reaction, Jacquelyn and Anita explain the U.S. gov’s crackdown of the cryptocurrency mixer Tornado Cash, and the Equity crew spent Wednesday’s show discussing whether the turbulent market conditions of late will mean we see fewer early-stage endeavors in the months ahead.
What lies behind the paywall? A lot of really good stuff! Here’s what TechCrunch+ subscribers were reading most this week…
Building an MVP when you can’t code: Got a great idea but can’t code? You can still get the ball rolling. Magnus Grimeland, founder of the early-stage VC firm Antler, lays out some of the key principles to keep in mind.
Are SaaS valuations staging a recovery?: “…the good news for software startup founders,” writes Alex, “is that the period when the deck was being increasingly stacked against them may now be behind us.”
VCs and AI-powered investment tools: Do VCs want AI-powered tools to help them figure out where to put their money? Kyle Wiggers takes a look at the concept, and why not all VCs are on board with it.
After the FBI raid at Mar-a-Lago, online threats quickly turn into real-world violence
Threats of violence reached a fever pitch — reminiscent of the days leading up to the Capitol attack — following the news that the FBI raided Trump’s Florida beach club to retrieve classified documents the former president may have unlawfully taken there.
After Trump himself confirmed Monday’s raid at Mar-a-Lago, pro-Trump pundits and politicians rallied around declarations of “war,” and Trump’s ever-fervent supporters called for everything from dismantling the federal law enforcement agency to committing acts of violence against its agents. The situation escalated from there in record time, with online rhetoric boiling over quickly into real-world violence.
By Thursday, an armed man identified as Ricky Shiffer attempted to force his way into an FBI office in Cincinnati, Ohio, brandishing a rifle before fleeing. Law enforcement pursued Shiffer and he was fatally shot during the ensuing standoff with police.
Analysts with the Institute for Strategic Dialogue (ISD), a nonprofit that researches extremism and disinformation, found evidence that Shiffer was driven to commit violence by “conspiratorial beliefs related to former President Trump and the 2020 election…interest in killing federal law enforcement, and the recent search warrant executed at Mar-a-Lago earlier this week.” He was also reportedly present at the January 6 attack — another echo between this week’s escalating online threats and the tensions that culminated in political violence at the Capitol that day.
Shiffer appears to have been active on both Twitter and Truth Social, the platform from Trump’s media company that hosts the former president and his supporters. As Thursday’s attack unfolded, Shiffer appeared to post to Truth Social about how his plan to infiltrate the FBI office by breaking through a ballistic glass barrier with a nail gun had gone awry. “Well, I thought I had a way through bullet proof glass, and I didn’t,” the account posted Thursday morning. “If you don’t hear from me, it is true I tried attacking the F.B.I., and it’ll mean either I was taken off the internet, the F.B.I. got me, or they sent the regular cops…”
In posts on Truth Social, the account implored others to “be ready to kill the enemy” and “kill the FBI on sight” in light of Monday’s raid at Mar-a-Lago. It also urged followers to heed a “call to arms” to arm themselves and prepare for combat. “If you know of any protests or attacks, please post here,” the account declared earlier this week.
By Friday, that account was removed from the platform and a search of Shiffer’s name mostly surfaced content denouncing his actions. “Why did you censor #rickyshiffer‘s profile? So much for #truth and #transparency,” one Truth Social user posted on Friday. Still, online conspiracies around the week’s events remain in wide circulation on Truth Social and elsewhere, blaming antifa for the attack on the Ohio FBI office, accusing the agency of planting documents at Mar-a-Lago and sowing unfounded fears that well-armed IRS agents will descend on Americans in light of Friday’s House passage of the Inflation Reduction Act.
“‘Violence against law enforcement is not the answer no matter what anybody is upset about or who they’re upset with,’ FBI director Christopher Wray said in light of emerging threats of violence this week. Trump appointed Wray to the role in 2017 after infamously ousting former FBI director James Comey.”
Friday is also the five-year anniversary of the Unite the Right rally, which saw white nationalists clad in Nazi imagery marching openly through the streets of Charlottesville, Virginia. The ensuing events left 32-year-old protester Heather Heyer dead and sent political shockwaves through a nation that had largely grown complacent about the simmering threat of white supremacist violence.
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