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June 15, 2018

It’s a dazzling afternoon by the water in lower Manhattan—the Hudson River is glistening in the sun, the yachts are glinting in the marina—and yet one light outshines it all: Anthony Di Iorio’s shoes.

The cofounder of Ethereum has the whitest white sneakers I’ve ever seen, so scuff-less and out-of-the-box smudge-less that my first question is just how? We are outside, after all. Wearing a solid navy blue baseball cap, tinted-blue hexagonal aviators and an equally white hoodie when we met this past Tuesday, Di Iorio explains: The secret is a travel shoe cleaning kit—plus a bottomless collection of white sneakers, permitting him to switch out for a new pair every month.

An ancient Mexican clock hangs on his necklace—a gift from EOS cofounder Brock Pierce. Surrounded by a small entourage that includes a bodyguard in a suit and coiled earpiece, Di Iorio, whose cryptocurrency fortune is estimated at as much as $1 billion, looks so much like a celebrity that a couple of tourists approach me after our lunch. Who was that guy I was interviewing—was he famous? they wanted to know. Not wishing to dox Di Iorio or his whereabouts to strangers, I simply replied, “Oh, he’s in the cryptocurrency industry.”

Just saying the words felt like a throwback to another time, another day when cryptocurrency prices weren’t plunging, when people weren’t talking about Bitcoin exchange hacks, mining scams and app store bans. The following day, the Bitcoin price fell to its lowest point all year, $6,261.

And then it occurred to me: This weekend marks six months since Bitcoin hit $20,000 on December 17, 2017; we’ve now slid nearly 70% of the way back down. Even the memory of that exuberant run-up got a face full of cold water this week when the New York Times published the findings of a new study that attributed 50% of Bitcoin’s rise last year to market manipulation.

Not that Di Iorio, founder and CEO of blockchain company Decentral (which makes the Jaxx cryptocurrency wallet) is fazed. Nor does he have any shame in telling a reporter that he purposely pays little attention to news, though he observes that there’s been “a lot more negative sentiment in the media” this year, largely to do with regulatory threats to crack down on cryptocurrencies.

Di Iorio had spent part of last week on Capitol Hill, meeting with roomfuls of regulatory officials and lawmakers, trying to ease them away from black-and-white definitions for categorizing cryptocurrencies, and coaxing them to see things through his vision of the future. “To recognize the potential of this technology is going to be bigger than the Internet,” says Di Iorio. “Nothing’s going to stop it. The cat’s out of the bag.”

Indeed, the U.S. Securities and Exchange Commission seemed to rely partly on the cat-out-of-the-bag argument Thursday when it announced that it had ruled Ethereum out as a security, saving the cryptocurrency from a catastrophic regulated fate that Marc Andreessen himself sought to prevent. Despite the resemblance between Ether’s original token sale to a securities offering, “the present state of Ether, the Ethereum network and its decentralized structure” make it virtually impossible to put it back in the bag, the SEC acknowledged: “As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful.”

If Di Iorio had any indication about the SEC’s plans, he didn’t let on—other than to take notice of a clue the night before: Coinbase had announced it would add Ethereum Classic, forked out of the Ethereum blockchain, to its cryptocurrency exchange. Coinbase, which has been careful not to list any cryptocurrencies that might be a security, would likely only add Ethereum Classic if it was sure Ethereum and its kin had officially escaped the label.

Meanwhile, New York regulators also awarded their sixth-ever BitLicense to Xapo, the second such license issued in the span of a month—a new record pace for the agency, whose molasses-like approval pipeline I wrote about in my last installment of this newsletter. My prediction then that more BitLicense approvals are on their way down the pike now seems to be coming to fruition.

And though it may be June, I can almost hear the jingle bells ringing again, harking back to the holiday season ’17 rally. I remembered the mug I’d ordered on Amazon on impulse while shopping for a birthday gift for a friend earlier this year (naturally, I went with the Bitcoin money clip). It makes me happy every time I open the cabinet. “I’m dreaming of a crypto Christmas,” the mug says.

After all, for people like Di Iorio who bought into crypto before six months ago, it’s still been a holly, jolly, most wonderful year.

SAY HELLO

We’d love to hear from you. You can send feedback and tips to ledger@fortune.com, find us on Twitter @FortuneLedger or email/DM me directly at the contact info below, or on Telegram and Reddit @callmevx. At the moment, I’m particularly interested in investors’ physical security strategies (bodyguards, code names, etc.).

Jen Wieczner
@jenwieczner
jen.wieczner@fortune.com
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THE LEDGER'S LATEST

Ripple's XRP Isn't Making Western Union's Payments Cheaper, CEO Says by Jen Wieczner and Lucinda Shen

The SEC's Big Cryptocurrency Speech: 5 Things to Know by Jeff John Roberts

Why Ex-Wall Streeter Michael Novogratz Is Investing in a Cryptocurrency Startup by Polina Marinova

Stellar Lumens Cryptocurrency Approved for Trading in New York for the First Time by Jen Wieczner

Wells Fargo Is the Latest Bank to Bar Consumers From Buying Bitcoin While Using Its Credit Cards by Lucinda Shen

William Shatner Promotes Solar-Powered Cryptocoin Mining by Glenn Fleishman

Bitcoin's Latest Price Crash May Be Over. But There's Still Reason to Worry by David Meyer

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DECENTRALIZED NEWS

To the moon... The founder of Tron Cryptocurrency just bought BitTorrent. The CFTC's lawsuit against My Big Coin could backfire. Banks' blockchain budgets are up 67%. Forget Westworld: Welcome to Decentraland. Fake Uber drivers who stole Ethereum at gunpoint finally got busted. Steve Bannon is bullish on Bitcoin and maybe 'Deplorables Coin.' San Francisco Uber drivers are still hodling Bitcoin. The Hong Kong crypto-mining market is hot and getting hotter. Could this be the Bitcoin bottom? World Cup fans can pay with Bitcoin.

....Rekt: A $40 million altcoin hack cost the cryptocurrency market $42 billion. A group of 37 countries wants international rules for cryptocurrency exchanges. Overstock customers are accusing it of Bitcoin theft via Coinbase. Monero is the target of 84% of crypto-mining malware. Ripple CEO thinks "Bitcoin is really controlled by China"—and that banks aren't ready for blockchain yet. Hackers hid secret Monero mining code in images. Infighting at EOS. $10 million in crypto went missing after a Brooklyn blockchain startup's event.

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BALANCING THE LEDGER

☝Click to view the show.

Rachel Mayer, senior product manager at Circle and head of Circle Invest, stopped by Balancing The Ledger to explain why the cryptocurrency exchange had already operated under the assumption that Ethereum was not a security, how to diversify your Bitcoin holdings, and how crypto has been a beacon of light amid the struggles in her native Venezuela.

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BUBBLE-O-METER

The University of Texas study published this week alleging Bitcoin market manipulation concluded that Tether, a so-called stablecoin pegged to the U.S. dollar, was responsible for 64% of the boom in top cryptocurrencies over a yearlong period through this March.

Interestingly, the study's authors also defined Tether as a "cryptocurrency that accounts for more transaction volume than U.S. dollars," but did not cite numbers backing up that claim. CryptoCompare, however, was able to help verify:

Bitcoin Trade Volume by Top Currencies (past 24 hours):

  • Japanese yen: 61.7%
  • Tether (USDT): 17.3%
  • U.S. dollars: 13.4%

Call it a flippening of sorts?

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MEMES AND MUMBLES

When Donald Trump met with Kim Jong-Un in Singapore earlier this week, there was an unofficial ambassador on-hand to mediate if necessary—all thanks to PotCoin. The cannabis-focused cryptocurrency, which originated in Canada, put onetime basketball star (and Korean dictator buddy) Dennis Rodman on a plane to Sentosa decked out in PotCoin swag, and the photos alone were enough to make you feel a little high.

Even CNN's Jake Tapper could barely keep it together when Rodman broke down crying on live TV, prompting one nuclear disarmament lobbyist to advise, "Go home, 2018. You're drunk." Meanwhile George Wallace, the comedian, suggested it was a good time to smoke something else:

Others remembered that the historic North Korea summit already had a coin of its own—a physical one that for a brief moment last month became a rare commodity. Some people pictured the commemorative token as what Steve Bannon meant by a "deplorables coin."

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FOMO NO MO'

Don't miss out: Marco Santori, the lawyer (and now Blockchain's chief legal officer) best known as the inventor of the SAFT—a legal mechanism designed to help initial coin offerings avoid registering as securities by fashioning themselves as a "utility token"—posted a celebratory 42-tweet hot take following the SEC's decision yesterday that Ethereum is not a security. The two-part thread covers a lot of ground, but helps read between the lines of the SEC's comments. Here are some highlights:

The Ether token, according to SEC, is not a security. The Ethereum Foundation's sale of Ether, on the other hand, almost certainly was a security...How can something at the same time be both a security and not be a security?! That's because SEC, and many lawyers in private practice (me included) distinguish between the token itself and the sale of the token....Each token is a unique and beautiful snowflake so there's no way to say a SAFT was legal or illegal. Every transaction is different...a token can evolve from a security at the time of offering to a nonsecurity....It looks like most pre-functional tokens are securities in the eyes of SEC, but mere functionality isn't enough either. It's just one indicator of non-security status....The degree of risk of security status is directly proportional to the difference between a) all of the promises made by the issuer in the whitepaper, website, banner ads, etc. and b) all of the things actually working today.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.

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