🥛 CZ gets a little too EZ

GM. This is Milk Road. We’re the 12-3-30 treadmill grind of crypto.

We help you work smarter, not harder.

Here’s what we’ve got for you today:

• Trouble in paradise for Binance?
• Samuel gave an ex-gf’s hedge fund $400M
• Super Mario 🤝 Bitcoin
• Shanghai Upgrade, here we come

Binance is back on the hot seat. A few weeks ago, the largest crypto exchange admitted to mismanaging its stablecoins reserves, resulting in $1b+ in missing collateral.

Now, Bloomberg is reporting that Binance held customers' assets and collateral for company tokens together, in the same damn wallet. Here’s everything you need to know:

• Binance admits it stored customer funds in the same wallet with collateral for B-Tokens
• B-Tokens = Binance’s version of ETH, USDC, and other crypto that can be used on Binance’s blockchain (BNB Smart Chain). In total, there are 95 B-Tokens issued by Binance and each one is supposed to be backed by 1:1 reserves of the currencies they are based on
• Binance says it was a mistake and management of wallets “has not always been perfect”. They hit us with Kevin Hart’s, “See, what had happened was.. the way my bank account is set up..”

Why this matters: There are two words that send shivers down investors’ spines… Commingling funds. 

And right now, crypto exchanges are commingling like 9th-graders on the dance floor at homecoming. First FTX, now Binance… 

Not only is mixing funds completely against Binance’s own guidelines on their website, but it also makes it hard to know if Binance actually has enough reserves to back up their B-tokens. 

*sigh*

Crypto exchanges could learn a little lesson the Milk Man was taught as a young carton at Bible Youth Camp:

Crypto is like sneaker drop season - there’s something new everyday. 

New products, new features, new blockchains, new CEOs. 

That creates an issue. There’s so much shit to build and not enough time to build it. 

This is why we are introducing Etherspot BUIDLer. 

The BUIDLer is a react component that lets you add any of these features to your dApp, web3 game, and wallet: 

• Web2 onboarding for Web3: onboard your web2 users through social logins, create counter-factual wallets and enable easy recovery. No seed phrases are required to secure wallets.
• Multi-Chain Experience: users can control their wallets on any chain from any endpoint providing a seamless multi-chain experience. Keep connected to Polygon while executing one-click actions on Optimism. 
• Meta-Transactions: allow users to pay for gas with ANY token on any chain. Currently, we support DAI, USDC, USDT and BUSD as a gas token. Etherspot SDK can support any token on any chain that has liquidity.

Plus it lets you sponsor transactions for web3 apps, batch multiple transactions into one digital signature, and allows users to buy and sell crypto without KYC on your dapp. 

You can implement the BUIDLer Component with just two lines of code. You don’t need an integration key and it supports over 14 EVM chains.

Start building the crypto app of your dreams today. 

Add BUIDLer to your project today

Ding ding ding! A new player has entered the FTX ring.

And it’s another ex-girlfriend of Samuel Bankman-Fried’s.

Xiaoyun Zhang (codename: Lily) was co-running a hedge fund called Modulo.

“Who?!??” said the Milkman. Same; no one has heard of this group.

But the Bahamian hedge fund was suuuuuper tight with FTX and got one of Samuel’s single biggest investments: $400M. 👀

Here are the highlights, according to The New York Times:

• Modulo operated out of the same Bahamian compound that Samuel/FTX did
• Zhang previously had a romantic sitch with Samuel
• She and the other Modulo cofounder (Duncan Rheingans-Yoo, who’s ~2 years out of college, just…btw) used to work with Samuel at the same Wall Street firm, Jane Street
• Samuel even hired Rheingans-Yoo’s older brother from the firm to work at FTX Foundation, his charitable unit
• FTX gave funds to Modulo in Q3 and Q4 2022, including $300M right before the exchange went boom

Except…that wasn’t really Samuel’s money to give (not like that’s stopped him before, clearly.)

The Feds are investigating FTX’s ties to Modulo and think that the $400M is made up of customer holdings.

Meaning, congrats FTX users! Your moolah helped fund a hedge fund more obscure than Milk Man’s college indie band: Lactose Weekend

Prosecutors are eyeing Modulo as one of its primary sources of clawback repayment for customers. There aren’t any charges against the company right now, but the founders did hire an ex-director of the Commodity Futures Trading Commission as their defense lawyer. Casual.

And let this sink in: Samuel gave the millions to Modulo while Alameda was losing money. Floundering. Literally drowning and gasping for help. 

Priorities.

There’s two things the Milk Man loves: 

1/ Super Mario (on the OG Nintendo, of course)

2/ Bitcoin

Which is why he damn near fainted from excitement when he saw Christian Moss remix the two together like T-Pain on “I’m N Luv”. 

Moss is a crypto game developer and co-founder of Zebedee, a company that makes play-to-earn crypto games. They’ve remade popular games like Chess, but with a twist: you get paid in Bitcoin for playing. 

Now he wanted to see if he could do the same thing, but with a hacked up copy of Super Mario 3 on his Nintendo Entertainment System (NES). 

And it worked! He successfully upgraded his Nintendo and was able to win 10 satoshis each time he collected one of Mario's tokens in the game. 

Just in case you get too excited, 10 satoshis = ~0.0000001 BTC or $0.0022. So, don’t plan on retiring from the winnings but still pretty cool. 

Here’s the demo of how it works:

Hey Christian, let me know where the Milk Man can send his Nintendo to get upgraded. 

Testing…is this thing on? Ethereum developers successfully deployed the first major test before the March Shanghai Upgrade, which will allow validators to begin unstaking ETH.

Et tu, Gemini? The crypto exchange run by the Winklevoss twins is laying off 10% of its workforce because of “unprecedented fraud,” “bad actors,” and the market downturn.

Just metaverse it. Nike’s Web3 project, .SWOOSH, launches this week for community members to co-create virtual shoes and jerseys with the company’s designers.

Bankrupt bonuses? Blockfi, the fallen crypto platform, asked the court to approve employee bonuses because too many are getting attractive offers elsewhere.

🤣🤣

That's a wrap for today. Stay thirsty & see ya tomorrow! If you want more, be sure to follow our Twitter (@MilkRoadDaily)

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.