Crypto’s Middle Innings - Tornado Cash, Pudgy Penguins & California Dreamin’
Is blockchain in the 2nd, 4th or the 7th inning? Either way, the memes are real and the government’s getting efficient.
Good morning, good evening and good afternoon wherever you’re listening in the world. Thursday. It’s June 17. This is Kyle, back for one more day this week to fill in for Matt. He will be back tomorrow. Lots of listener questions and comments to get to. So laissez les bon temps rouler. Let the good times roll. Vamos.
Let’s hit some listener comments first.
Will from Spotify thinks the Pudgy Penguins situation is hilarious. Let me distill this further: I don’t really hate the Penguins. I hate the sheepish behavior behind the PFPs. Like all props to Luca Netz for the revival of the project. If you look back, the projet was almost dead and came back. It’s an amazing story of resilience. Shit you can buy them in Walmarts now.
Another thing on the Pudgy Penguin situation. Go look at this fucking buff ass penguin they posted with writing in chinese saying “chuggby penguin.” like what is going on?
And those vending machines? They’re industrializing and going to make a shit ton of these like shit Beanie Baby NFTs? Where are they going to put these machines? At the fucking malls no one is visiting? Gimme a fucking break.
In other news for $PENGU holders - The deployer wallet has transferred 1.5 billion tokens to exchanges. Could they be bringing more liquidity into the market?
Cheers again, Maddie C from Spotify. Laura Shinn is a renowned crypto journalist. She’s been on the beat for years: has books, testimonials, and a long-running podcast called Unchained. She does well, but with everyone, you don’t have to agree or love all they do.
I also see your comment there for Matt about Brave New World. Check out Huxley’s foreward in the revisited version from the 1950s, he adds some peculiar new thoughts and observations that come post-war. Fun stuff.
Finally, we’ve got a baseball analogy from Jason on Spotify. As a big baseball fan myself as well - Shoutout SF Giants - I think I have the chops to chime in.
It’s an interesting analogy here. I think you could fit this through a few different lens. I get your perspective here on the 2nd inning. We still feel very early. But are we early in the terms of cryptography and web in general? Where does that fit with AI?
I’ve heard some smart people say that blockchains’s end-game is the verification layer of AI. Would that put blockchain more in, say the 7th inning? We’ve seen several cycles here ahd are potentially reaching the end game of legislation. Once things reach full legal status, does that not reach a time when its out of the wild west and more into regulated markets?
I want to think we’re more in the 4th or 5th inning. Like bottom 4 or Top 5. Still early, but we’ve matured into the middle game. You could maybe say we’re in the bottom of the 3rd. But I feel we’re past that 2nd inning.
At this point, globally, we have legislation, we have nation-states holding crypto on their treasuries. We have ETFs. We have Nasdaq listed companies pushing for treasuries around digital assets, and more.
What we don’t have is mainstream blockchain exposure outside of the financial world. There’s a growing world of DePIN but that’s not really got it’s feet under it. It’s very much still in an exploration step.
Let’s give you some headlines for July 17.
US House clears procedural step for key crypto bills, floor vote expected Thursday
Bills are like sausages right?
The U.S. House of Representatives has passed the procedural vote on three major cryptocurrency bills, setting the stage for the GENIUS Act, Clarity Act, and the Anti-CBDC bill to receive a floor vote potentially on Thursday.
The vote is expected today.
Coinbase unveils Base App, rebrands wallet as all-in-one social and trading platform
If you were a user, you should have noticed that the wallet went obsolete over the last few weeks. Now they’re merging further with their name brand chain, BASE.
Roman Storm, developer of Tornado Cash, is finally in the courtroom this week as where Gov’t prosecturors are looking to prove his motives in helping criminal activity.
The government also focused much of its opening statement on who used Tornado Cash, specifically North Korean state-sponsored hackers, the Lazarus Group. The Treasury Department’s Office of Foreign Assets Control (OFAC) alleges this group used Tornado Cash to launder roughly $455 million of the $620 Axie Infinity/Ronin Bridge hack in March 2022.
Reporting from Casey Wagner in Blockworks, says that prosecutors and the defense team painted vastly different pictures of Tornado Cash developer Roman Storm’s motives and role during the second day of his criminal trial in Manhattan.
Just this week, former CoinDesk reporter Danny Nelson has claimed a Telegram chat he created with Storm has been misinterpreted by the government, alleging that the government is using journalists’ questions in the chat as questions posed by Storm himself.
DL News reportes more witnesses who testified. They claim it included Viet Anh Ho, the chief technology officer at Axie Infinity developer Sky Mavis, and 23-year-old Andre Llacuna, one of the people behind a $1.1 million NFT scam.
I also was challenged on Twitter yesterday, around the idea of whether crypto is free speech. I’m a firm believer in inertia and lucidity, where I feel both those are manifested in the Tornado Cash case, and instances of free speech. I understand that in a civil society, there can be areas where the freedoms of energy in the concept of that inertia and lucidity can be infringed - freedom of speech being one of them. Not all speech if allowed - like less than 10 forms are allowed. Some of those are even up for debate. But I understand there are lines. Bottom line is the government should spend more resources capturing real criminals than fucking around with this.
California Governor Newsom signed an executive order forming a new tech innovation group in the Golden State.
Governor Gavin Newsom launched the California Breakthrough Project, a new initiative that connects state agencies with top tech leaders—including execs from Ripple, Coinbase, Snap, and others—to improve government efficiency, engagement, and services. The initiative builds on California’s existing tech-forward governance strategies by implementing modern tools like generative AI, data modeling, and deliberative democracy platforms. Newsom also signed a new executive order requiring every state agency to adopt streamlined practices in hiring, procurement, and service delivery. The state will launch an Innovation Fellows Program and expand use of its Engaged California platform to tap worker ideas and improve public-facing operations. The initiative underscores California’s leadership in AI, innovation, and digital governance, while reinforcing safeguards for privacy and civil liberties.
And let’s end the show answering another comment from Spotify this week. Lemonhead has asked for a brief 101 on Liquidity and Staking Pools. This actually came up on a conference call I was on this week: What is Lido? And what is EigenLayer?
I’m going to do my best to sum this up very quickly, while sharing some resources. First, I always recommend the YouTube Channel Finematics. Like I mentioned ultrasound money yesterday and they have a great video on the EIP-1559 which powers that burning mechanism. They also have a great video on Liqudity pools and it goes like this:
ELI5 (Explain Like I'm 5): Imagine a magic jar full of a bunch of different candy. M&Ms, Skittles, Chocolate, Gummy Bears, etc. In this jar, people can put in chocolate and get out gummy bears, or whatever. The more candy in the jar, the easier it is to trade. The folks who put candy in the jar get a little treat every time someone makes a swap. That magic jar? That’s a liquidity pool. Instead of candy, it holds crypto. So basically, if you have money you can let sit somewhere, and let it be “used” like a washing machine to balance markets, you’ll get a little cut for doing that.
Rapid Fire Little Bitz to End Here
Talos token launch fumbles out the gate. Empyreal team botches the Abri/Eth limit mechanism
That’s different than the Citi-backed crypto infrastructure firm Talos acquires Coin Metrics in deal worth over $100 million
The exchange Upbit Faces Record $131B Fine in South Korea. Over 9.5M KYC violations detected, facing a possible fine: $100K per case
CoreDAO introduces first revenue - sharing model for stablecoin issuers and devs.
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