It seems like there are always people butting heads in the crypto world, and this week was no different. Cryptocurrency mixer Tornado Cash was hit with sanctions by the U.S. and Binance and WazirX disagree over whether or not the Indian exchange was acquired (two years after the deal allegedly closed). A lot is still up in the air (maybe due to a certain Tornado protocol?) So let's get into it.
Hello and welcome back to the Chain Reaction podcast, where we unpack and explain the latest crypto news, drama and trends, breaking it down block by block for the crypto curious. This week, Jacquelyn and Anita dove into Tornado Cash, Coinbase’s not-so-hot second-quarter earnings, and the Binance and WazirX deal-or-no-deal drama. (Lucas is on vacation and we hope he’s enjoying time away from the typical crypto craziness).
The Office of Foreign Asset Control (OFAC), a watchdog within the U.S. Treasury that enforces sanctions violations, confirmed sanctions against Tornado Cash on Monday, immediately prohibiting American citizens and businesses from using the service. The cryptocurrency mixer has laundered anywhere between $1.5 billion to over $7 billion worth of digital assets since its inception in 2019, according to differing reports by crypto analytics platform Elliptic and the U.S. Treasury, respectively.
Tornado isn’t the only cryptocurrency mixer that has faced regulators head on – others like Helix and Blender.io have also been sanctioned for similar services, hinting that this may be a sign of the times for this type of crypto business.
Separately, we dove into Coinbase’s lower-than-expected second-quarter earnings that came out on Tuesday. The largest cryptocurrency in the U.S. reported a net revenue decline of about 60% from $2.033 billion in the first quarter to $802.6 million in the second quarter. In general, crypto trading activity has slowed down across all exchanges globally, which in turn has impacted their main revenue streams of transaction fees. Coinbase also noted its core retail customers are trading less and looking toward non-investing activities and holding onto their assets instead of selling. In a similar sense, Coinbase is looking into new offerings like staking to (hopefully) build up its revenue in the future.
Lastly, we discussed the public Twitter interaction between Changpeng Zhao, founder and CEO of Binance, and Nischal Shetty, co-founder of WazirX. Binance, the world’s largest crypto exchange by trading volume, said on Friday it doesn’t own India-based platform WazirX despite both companies disclosing the acquisition in 2019. This is the latest move that has baffled industry players, including the Indian firm that insists the purchase did take place.
Make sure to tune in on Tuesday next week for an interview with web3 investor Li Jin, the co-founder and general partner of Variant.