Billions, Money Laundering, YC, and Rappers
GM, This is the Milk Road. We help you get a little smarter about crypto every day.
In Today's Email:
๐ The Bitfinex Robbery
๐ฎ 104 Punks Put Up For Sale
๐ $10B Crypto Startup
The Bitfinex Robbery
This is a crazy story.
I donโt even know where to start.
Let me lay out the 3 big pieces:
Billions of dollars (one of the biggest robberies ever)
Money laundering
The most cringey rapper Iโve ever heard
Hereโs the story in 8 bullet points:
1. In 2016, a big crypto exchange got hacked (Bitfinex) for 120k BTC (~$70M at the time)
2. The hack caused the Bitcoin price to crash 40% in a week.
3. But the hackers couldnโt just cash out, because bitcoin is a public ledger. So everyone could see the coins moving, and no exchange would let them cash out without telling the cops.
4. So most of the bitcoin just sat in a wallet for years, or shuffled very small transactions to try and โlaunderโ the money.
P.S. if you have 90 seconds, Ozark (a hit Netflix TV show)does a great job explaining how money laundering works in this video.
5. All of a sudden last week (5.5 years after the hack), the coins started to move in bigger quantities. It got picked up by the Whale Alert twitter handle, which tracks every move that significant wallets make.
6. The Department of Justice was tracking the coins through a web of transactions, and saw they were moving to a wallet owned by Ilya โDutchโ Lichtenstein & his wife Heather Morgan.
7. This week, the cops raided Ilya's apartment in NYC, and found a bag of burner phones, $40K in cash, and folders on their computers called โFake personasโ, โPassport Ideasโ, and โNickelback Greatest Hitsโ (ok, made that last one up)
8. They had tried to launder the money via Walmart Gift Cards, Playstation in-game purchases, Uber credits, etc.
OKโฆ now this is where sh*t really starts to get weird.
The couple that held the goods did not look like your typical criminals.
The guy (Ilya) was a YC founder, who did a few startups. I have friends who know him, and hereโs what they texted me:
"He seemed so normal"
โHe was honestly just like dorky and quiet. A sweet guy who maybe watched too much tv.โ
โSeemed like a standard engineer founder tbh.โ
โI didnโt get any laundering billions of dollars vibesโ
The wife thoughโฆ sheโs just openly weird.
Iโm talking, on a scale of 1-to-Kanye, sheโs level 12 strange. She is a terrible, awful, no good, very bad, mega-cringe rapper with songs on Spotify. She calls herself the "Crocodile of Wall Street" and "RazzlEkhan"
Hereโs a few screenshots from her Youtube channel before they were taken down. (doesnโt look like a criminal mastermind.. Then againโฆmaybe its all part of her plan.. )
So aside from being wildly entertaining and being the plot of a future Netflix showโฆhereโs what this means for Bitcoin:
Kills the Mainstream Narrative that Bitcoin is for criminals. The Deputy Attorney said today in a statement: โTodayโs arrests show that cryptocurrency is not a safe haven for criminals.โ
Supply shock? Bitfinex said it will use up to 80% of any bitcoin recovered to buy & burn their LEO token (up 56% today on this news), and will do it in a controlled sale over time so that it doesnโt shock the market with huge sell pressure
Oh and the best part? They posted this pic on IG the day before the big hack. What a perfect caption:
Alright, what else we got. Letโs do some quick hits below.
104 Cryptopunks Are For Sale
Sothebyโs announced they are auctioning off 104 Cryptopunks in an auction for $20-$30M. This batch was bought for $7M back in July.
Normally – you get a discount when buying in bulk.
But for collectibles, you normally pay a bit of a premium because itโs hard to acquire a batch of the collectible at once.
Flashback – Ben sent me a message a year ago saying โMr. Beast's wallet just bought a bunch of Cryptopunks, maybe we should too hahaโ.
I ignored him because it sounded like a waste of time (f*ck me). And missed out on a $3m+ win.
Hereโs a video explaining how Gary Vee had a โsecret callโ where he convinced Logan Paul, Mr.Beast and a few other wealthy people to all buy into Cryptopunks. Pretty cool to hear these behind-the-scenes stories.
$10B Crypto Startup
Yesterday, we talked about Polygon raising at a $4b+ valuation.
Today, Alchemy announced that they raised at a $10B valuation!
Alchemy makes it easier for developers to build on the blockchain. Most apps you see donโt actually interact with the blockchain directly.
They use things like Alchemy or Infura to build on the blockchain.
Whenever thereโs a new technology wave, I look for the developer tools (like Stripe, Twilio, etc.) to invest in, because they are the best bets.
Web3 is a big wave, so Iโm hunting down key tools for the web3 industry and investing in them.
Okay, now I'm off to go find the best memes about Ilya and Razzlekhan. Hit reply if you've got a good one and we'll share tomorrow!
– Shaan "Beatboxer" Puri and Ben "gimme all the memes" Levy
What'd you think of today's email?
^That was me all day yesterday following along to the Bitfinex story