Ten31 Timestamp 805,172
While all eyes were on Jackson Hole this week – where updates from Fed Chairman Jerome Powell were fairly minimal – a more obscure but highly noteworthy regulatory headline hit the wire: the Department of Justice filed money laundering charges against two developers of Tornado Cash, an open source, non-custodial cryptocurrency anonymizing service intended to enhance user privacy. While the facts of the case are still coming to light and the Tornado Cash service has no link to bitcoin, we encourage all readers to take a close look at the claims made by the indictment – many of which appear to run counter to established regulatory guidance – and the negative implications that successful convictions in this case could have for open source software distribution in general.
Portfolio Company Spotlight
Samourai Wallet offers a suite of tools to allow users to manage and spend bitcoin with an extremely high degree of privacy. The company’s flagship wallet app natively integrates Whirlpool, Samourai’s non-custodial CoinJoin implementation, and a host of other features – including PayNyms, Stonewall, and Stealth Mode – to smoothly facilitate anonymity-enhancing transactions that mitigate blockchain surveillance by potentially malicious actors. Samourai's tools can also be integrated into other applications through APIs and licensing.
Selected Portfolio News
Fold launched Card Boosts, which offer users automatic additional awards at a variety of merchants when shopping with the Fold card:
Zaprite announced several product updates, including the ability to connect to Unchained vaults and Strike accounts, options for new checkout experiences, and subscription plans:
River added support for on-chain transactions through its River Lightning Services platform:
Media
The latest episode of the Money Matters podcast, featuring Barstool Sports founder Dave Portnoy and hosted by Strike founder Jack Mallers, was released this week.
Unchained’s solid growth throughout 2023 was profiled in Bitcoin Magazine.
StatMuse released its latest monthly Muse Letter, recapping highlights from the month.
Ten31 Advisor Parker Lewis launched a crowdfunding campaign for his upcoming book Gradually, Then Suddenly.
Market Updates
At this year’s Jackson Hole conference – where macro analysts breathlessly awaited the latest pronouncement from a single bureaucrat to determine the near-term direction of global economic activity – Federal Reserve Chairman Jerome Powell indicated the Fed would “proceed carefully” but that further rate hikes could be warranted.
The US rates complex continued to push higher for much of the week, with the 3 month bill hitting highs not seen since January 2001 and the 10-year continuing to make new post-2008 highs.
Several popular streaming services raised their pricing this week, pushing the average cost of streaming platforms up 25%Y/Y. On an unrelated note, several mainstream pundits softly endorsed the idea of increasing the Fed’s inflation target from 2% to 3%.
Earnings updates for large consumer brands Macy’s and Dick’s Sporting Goods both pointed to softening trends among US consumers, driving 25%+ declines in both stocks.
US payroll data for the year through March were revised down by over 300,000 jobs.
Oman announced it would direct $1.1 billion of funding to privately owned bitcoin mining facilities, a notable counterpoint to Kuwait’s recent ban on bitcoin payments and mining.
Regulatory Update
The US Department of Justice indicted two developers behind the Tornado Cash mixer (a non-custodial tool using smart contracts on Ethereum to anonymize cryptocurrency transactions) on charges of facilitating more than $1 billion of “money laundering.”
Concerningly, the indictments appear to deviate from FinCEN guidance regarding what constitutes “money transmission” and could set a precedent for criminalizing virtually any kind of software publication.
The US Treasury Department released a new tax reporting proposal exempting miners from controversial reporting requirements proposed in 2021’s infrastructure bill. Some “decentralized exchanges” would still face new reporting requirements.
Noteworthy
Core Lightning, the lightning network implementation maintained by Blockstream, integrated Splicing, a promising new feature that can help significantly improve lightning’s UX and reliability.
Developer Super Testnet released Zaplocker, a non-custodial server providing lightning addresses (static text strings for lightning payments that read like email addresses) without requiring users to run a node.
Travel
Minneapolis Bitcoin Meetup, August 30
TABConf, September 6-9
Nashville Bit Devs and Meetup, September 12-13
Global Bitcoin Summit @ Bitcoin Park, September 14-16
Utah Portfolio Company Retreat, October
Nostrville @ Bitcoin Park, November 8-10