Axios Crypto

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GM! The Dutch delivered a verdict on Tornado Cash.

🚨 Situational awareness: The U.S. House is expected to vote on major crypto bills next week: HR 4763 and HR 5403.

Today's newsletter is 692 words, a 2½-minute read.

1 big thing: 🌪️ Tornado Cash developer gets 64 months

Illustration: Aïda Amer/Axios

Alexey Pertsev, the Russian national arrested in the Netherlands for developing Tornado Cash, a privacy application on Ethereum, has been sentenced to 64 months in prison.

Why it matters: The judgment is likely to make other software developers reluctant to work on privacy-preserving technology in the future.

What they're saying: "Tornado Cash in its nature and functioning is a tool intended for criminals," one of the three judges said from the bench, per DL News.

Catch up quick: Tornado Cash is an application on Ethereum that allows many users to mix up their transactions. Users deposit assets into a smart contract and withdraw them later to a new address.

  • Tornado Cash makes it nearly impossible to link the deposits to the withdrawals.
  • Notable cybercriminals, such as the Lazarus Group, have been known to use Tornado Cash to cover their tracks after stealing large amounts of crypto assets from projects hosted on Ethereum.
  • In August 2022, the service fell under sanction by the U.S. government.

Friction point: The blockchain industry has rallied to the cause of Tornado Cash, though with little effect.

As an immutable smart contract on Ethereum, Tornado Cash remains live, with over $400 million worth of deposits.

What's next: Pertsev has 14 days to file an appeal.

  • Arrested in 2022, he went to jail from the courtroom. The eight months he has served will be deducted from his sentence.
  • Roman Storm, a fellow developer on the application, detained in the United States since his arrest in 2023, is set for trial in the U.S. in September.

What we're watching: Developers have been working on a new idea for "privacy pools," a concept designed to comply with financial regulations.

2. Charted: ⛽️ Pumping revenue

The line chart shows the daily revenue of from March 1 to May 12, 2024, with a significant increase in revenue starting from mid-March and maintaining a high level throughout the period.
Data: DefiLlama; Chart: Axios Visuals is the meme factory on Solana.

  • The team that made it is making lots of money, as the chart above shows: $18 million in less than a year, as of yesterday.
  • It should have a million-dollar day any time now.

Why it matters: The ability to generate thousands of new meme tokens at very low cost, in the hopes that one of them really grabs the public, has been the killer use case on the Solana blockchain this year.

Worth your time: Listen to two of the most successful meme coin traders explain why they believe these tokens work.

By the numbers: Solana's SOL is up 15% since the launch of Pump. There are those who think it will go much higher.

What we're watching: BODEN and TREMP.

3. 🤖 Worth your time:

Illustration: Aïda Amer/Axios

A few months ago, we wrote that the blockchain industry was throwing down in a battle over open-source AI versus closed.

Why it matters: It's a fight between people who want free expression and those who want safe expression.

The latest: Erik Voorhees, founder of the ShapeShift exchange, and a cypherpunk from way back, has launched a consumer app for AI built on the open-source Nous AI.

  • The app, called Venice, says it doesn't store your questions.
  • The inference computers responding to requests don't know who is sending them.
  • It also doesn't censor answers.

What they're saying: Voorhees wrote a detailed essay about the new app connecting the separation of church and state to the separation of the state and artificial intelligence.

  • "Every person who has used the leading AI apps has observed the weird, creepy, paternalistic censorship, and it's getting worse.  Are you interacting with AI, or with a multi-billion dollar bias simulator?" he writes.

4. 🏃 Catch up quick

📢 The paid shilling of coins and tokens has a new name and a new look. (CoinDesk)

🌧 Airdrop farms have claimed over $350 million worth of EigenLayer's EIGEN token since it began Friday. (Unchained)

🐸 Roaring Kitty is back, and meme coins are popping. (Decrypt)

5. 🗳️ Culture hash: Crypto's partisanship

Screenshots: @nic_carter and @ErikVoorhees (social media)

An op-ed Friday in Blockworks called it foolish for anyone to throw their vote away for crypto, and it kicked off a big conversation on social media.

  • Two industry scions, Nic Carter (investor) and Erik Voorhees (entrepreneur from way back, (see his latest in 3️⃣)) weighed in thoughtfully on how partisan the technology is (h/t Fortune).

Flashback: Whatever it is, its proponents are spending mega money on this election.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.