CZ Walks Free, Caroline Ellison Sentenced to Prison, and More: Hodler’s Digest, Sept. 22 – 28

Weekly Highlights

Binance Founder CZ Released from Federal Prison

Changpeng “CZ” Zhao, the founder and former CEO of Binance, exited a federal prison in the United States on September 27, where he had served a four-month sentence for violations related to Anti-Money Laundering (AML) policies. This information was confirmed by a representative from the U.S. Federal Bureau of Prisons.

In November, CZ pleaded guilty to federal charges concerning inadequate AML controls at Binance, which is globally recognized as the largest cryptocurrency exchange by daily trading volume. He subsequently resigned from his position as CEO.

With a reported net worth of around $60 billion, CZ is noted as the wealthiest individual to have served time in a U.S. prison.

Caroline Ellison Receives Two-Year Prison Sentence

Former CEO of Alameda Research, Caroline Ellison, was sentenced to two years in a minimum-security prison on September 24 for her involvement in the collapse of FTX.

Presiding Judge Lewis Kaplan, in a New York federal court, also ordered Ellison to forfeit approximately $11 billion that she had earned through FTX.

“You’re a very strong person, Ms. Ellison, in some ways, but not inviolable. Mr. Bankman-Fried had your kryptonite. […] You were vulnerable and you were exploited,” Judge Kaplan stated during the ruling.

Ellison expressed her fear of harassment from the crypto community, which she alleged has made her reluctant to venture out in public. She cooperated substantially with the prosecution in the case against her former colleague, Sam Bankman-Fried, earning her a recommendation for leniency.

Crypto CEO Charged for Alleged Bribery and Fraud

Adam Iza, the head of the crypto trading platform Zort, faces charges related to cryptocurrency fraud, bribery, and corruption involving law enforcement. Federal prosecutors have stated that he amassed wealth through shell corporations and luxurious expenditures while failing to report substantial income.

Reportedly, Iza paid three deputies from the Los Angeles County Sheriff’s Department to misuse police data and unlawfully execute search warrants. He is accused of attempting to pressure an alleged victim into relinquishing a laptop that contained cryptocurrency.

Cardano Founder Criticizes Ethereum’s Governance

Charles Hoskinson, the founder of Cardano, argued that Ethereum operates like a “dictatorship” and emphasized Cardano’s governance framework as a solution that sidesteps both tyranny and chaos in blockchain governance.

During a discussion at Token2049 in Singapore, Hoskinson criticized Ethereum’s reliance on its co-founder, Vitalik Buterin, for guidance. He claimed that a balanced approach, like that employed by Cardano’s governance model, could achieve effective and decentralized decision-making.

Kamala Harris Addresses Cryptocurrency for the First Time

U.S. Vice President Kamala Harris made her first remarks regarding cryptocurrency during her campaign for the presidential election. At a Manhattan fundraiser, she announced plans to stimulate investment in technologies including AI and digital assets.

Harris emphasized the intention to foster an innovative environment while ensuring consumer protection and a transparent regulatory framework.

Market Update

This week, Bitcoin (BTC) is priced at $66,048, while Ether (ETH) stands at $2,685 and XRP is valued at $0.59. The overall cryptocurrency market capitalization is approximately $2.33 trillion, as reported by various sources.

Among the top 100 cryptocurrencies, the greatest gainers of the week include:

• Shiba Inu (SHIB): 48.96%
• Wormhole (W): 34.82%
• Bonk (BONK): 33.02%

The top three cryptocurrencies experiencing the largest losses this week are:

• Monero (XMR): 8.27%
• Nervos Network (CKB): 1.09%
• TRON (TRX): 2.18%

Notable Quotations

“You’re a very strong person, Ms. Ellison, in some ways, but not inviolable. Mr. Bankman-Fried had your Kryptonite. […] You were vulnerable and you were exploited.”

Lewis Kaplan, Judge of the U.S. District Court for New York

“Where does this idea of embracing layer 2s or rollups come from? Was it some random Ethereum engineer — or was it Vitalik Buterin writing a blog post about it, talking about it, and advocating for it?”

Charles Hoskinson, Founder of Cardano

“The government’s desire to decapitate the domestic crypto industry through covert rulemaking aimed at crypto-focused banks both initiated and worsened the banking crisis of 2023, the largest since the great financial crisis in 2008.”

Nic Carter, Partner at Castle Island Ventures

Foreseeable Trends

Odds of Ethereum Not Achieving New All-Time High by 2025

Despite a 15% surge in Ether’s price over the last two weeks, the cryptocurrency has faced challenges maintaining its upward trajectory, remaining within a consolidation range of $2,600 to $2,700. The market cap for Ether currently stands at $316 billion.

Following a recent announcement from the U.S. Securities and Exchange Commission (SEC) regarding a delay in approving options trading for spot Ethereum ETFs, the betting odds on a new all-time high for Ether by 2024 have shifted. Currently, 85% of bettors believe Ether will not achieve this milestone, compared to 71% just a week prior.

Legal Developments

Swan Bitcoin Sues Former Employees Over Stolen Software

Swan Bitcoin has initiated legal proceedings against several former employees from its mining division, alleging that they absconded with proprietary software and established a competing mining firm known as Proton.

Tornado Cash Co-Founder to Face Trial

Roman Storm, a co-founder of Tornado Cash, will go to trial following a judge’s decision to deny his motion to dismiss federal charges against him. Storm, along with another co-founder, has been charged with various conspiracy offenses related to money laundering and operating an unlicensed money-transmitting business.

SEC Chair Gensler Addresses Changes to Exchange Definition

Gary Gensler, chair of the SEC, outlined ongoing efforts to modify the definition of “exchange” and alternative trading systems at a recent conference. These proposed changes have raised concerns in the crypto community, as they could have implications for digital asset transactions.