Markets are in turmoil. Many people will look at their portfolios and wonder why they have lost more than 50% of their net worth. For once, the answer is not FUD from China, Europe or the SEC.
Direct attacks on our values have triggered fear, uncertainty and doubt among institutional and retail investors.
We are under attack
We are currently under attack from traditional businesses and organisations on the entire crypto industry. This is likely because crypto has become a real existential threat to traditional financial systems.
People are no longer speculating that crypto will take over. Millions of people are now on the path to a new world order that is based on blockchain, and it’s not all good news for anyone.
Many are seeing significant losses in their portfolios as a result of the financial crisis. Bitcoin is now down 60% from its high point, Ethereum is down 30% in a single week, LUNA has fallen 99.9%, and UST remains well below its dollar peg of $0.16.
Tether USD, the world’s largest stablecoin has also shown signs of vulnerability, losing its peg on central exchanges. People selling is the reason for this. But, the catalyst was, according to me, a coordinated attack against crypto.
Traditional finance, governments, business leaders, and others outside the web3 space are afraid of the disruption blockchain could bring. They want to stop us from falling.
It is more than a theory that crypto is under attack. Many public organizations, including the World Economic Forum and the International Monetary Fund, Greenpeace and an unknown number, have launched an attack against the entire cryptocurrency ecosystem.
It is difficult to say if these attacks were coordinated or if they are serving a common purpose, but it has created a perfect storm.
Greenpeace launched a media campaign last month that was supported by the WEF. It targeted people who are not part of the crypto community. “Clean up Bitcoin” is a campaign to get Bitcoin to change its consensus mechanism and make it proof of stake.
Why? It’s wasteful and uses too much energy. Its absurd slogan is:
“You know Bitcoin fuels climate crisis. But did you know that a software code update could fix it?”
Initial statements suggest that Bitcoin is responsible in the climate crisis. At least 58% of Bitcoin’s energy comes from renewable sources. According to some reports, it could be as high as 76%. It is also moving rapidly towards renewable energy.
Swan Bitcoin’s Bitcoin Analyst Sam Callahan told us exclusively by email that he thinks the campaign is “naive” at its premise. Callahan stressed that Bitcoin’s code can’t be changed; it must be approved by the network.
A move to prove stake would be considered “negative for the system’s health.” He also pointed out that anyone could propose a BIP, or Bitcoin Improvement Proposal.
They have instead “decided not to introduce a BIP but to start a misinformation campaign.”
In a final statement, Callahan declared;
“If you change the proof of stake code, you will lose all the characteristics that make Bitcoin unique.”
Members of the US Congress
Recently, a group of US Senators petitioned the EPA to claim:
“Cryptocurrency facilities in the country pollute communities and make a large contribution to greenhouse gas emissions.”
This group seems to not know the difference between energy generation and computing power. The same electricity is required for Bitcoin farming as any other server farm. These are essentially banks of computers with specialized functions.
Regulation of Bitcoin miners would be a precedent that could have devastating consequences for companies like Amazon, Google, or Microsoft. John Warren, CEO at GEM Mining, told us:
It is important to realize that electricity is generated and consumed by bitcoin mining operations according to market dynamics. The electricity available on the open marketplace is not generated by miners. Instead, they purchase it. A growing proportion of electricity comes from renewable sources, such as solar and wind.
World Economic Forum
The WEF’s slogan “You won’t own anything, but you’ll be happy” has been debunked. In 2017, the WEF famously tweeted that:
“Bitcoin will consume more power in 2020 than the rest of the world.”
It was not possible, considering that the global energy consumption in 2018 was approximately 23,000TWh and that Bitcoin will use around 144TWh per year in 2022. Only 60TWh of that comes from non-renewable resources.
It is important that you remember that energy consumption is not directly related to carbon emissions. This means that Bitcoin contributes approximately 0.07% to global carbon emissions, or 23 megatons, out of 31,500 megatons.
Many Bitcoin mining companies use carbon credits to offset their emissions. 2022 will see 1.1TWh of natural Gas wasted by flaring alone. Bitcoin, however, is the most efficient monetary system worldwide.
Bitcoin is a cryptocurrency that allows you to put 1KWh into and get 0.000007017BTC (roughly $0.21). Flaring adds approximately 400 megatons of carbon dioxide to the atmosphere each year. To heat an office building for half the government treasury employees and all other aspects involved in minting fiat currencies, it takes 10KWh. This is compared to traditional monetary systems.
Members of the WEF might cite articles or programs that they have written about the potential uses of blockchain technology. One thing they always refer to is the introduction and operation of Central Bank Digital Currencies.
CBDCs could take all the advantages of blockchain for government control, but also remove all the benefits for the average citizen. The relationship between stablecoins, CBDS and other digital currencies was examined in a WEF report. It also details:
“Existing private Blockchain projects could help in the Facilitation of Cross-Border Wholesale Interbank CBDC Payments and Transactions Examples include the utility settlement currency (USC), and the XRP digital assets.
It is important to know that Chris Larsen, Ripple (XRP), co-founder, is a member the Agenda Committee for The WEF. He has publicly disclosed that he donated $5 Million to the “change code” campaign.
According to Nick Dimondi, BitBoy Crypto
“Ripple, part TradFi, is the darling central banks.”
This report refers to a speech made by Lael Brainard, Federal Reserves, that stated that the existence and stability of Bitcoin and other digital currencies means that there must be a new digital currency that protects sovereign currencies.
“The introduction and subsequent emergence stablecoins and Bitcoin have raised fundamental questions about legal, regulatory and financial stability and the role currency plays in society. This has increased the demand for CBDCs in order to preserve the sovereign currency as the foundation of the nation’s payment systems.
Callaghan contributed to our interview;
“The WEF’s agenda against Bitcoin is less about the environment and crime and more about the fact that Bitcoin can not be controlled by any institution, group or individual,”
“The freedom and power that Bitcoin grants to the people is threatening the WEF, which is why we are hearing more anti-Bitcoin rhetoric from the WEF in the recent months.”
This sentiment seems to be shared by the crypto community in general. Nick Dimondi also spoke to us via email.
The World Economic Forum is afraid of Bitcoin and is trying to stop its spread.
“The WEF was called to the microphone for spreading lies about GMOs, Nuclear Power. However, the members of The World Economic Forum view themselves as globalist royalty. They create all the narratives and rules and label anyone who isn’t in their orbit as “regressive” and worse. Their plans for world order are being disrupted by Bitcoin. They plan to regulate its use or make Bitcoin useless.
International Monetary Fund
I’m already exceeding the word count limits that we normally use, so I’ll keep it short. Sam has already written an excellent piece about this topic. The IMF also supported the idea of moving Bitcoin to proof-of-stake. Argentina was made anti-crypto when they placed a $45B loan obligation. In a CoinDesk piece last years, David Z Morris stated:
“The IMF does not function as a neutral aid organization. It is the economic arm of a large power structure. This structure often hides behind the language of reform ….. Even though the threat to that power is not immediate, crypto does.
I believe organizations like the IMF saw the rapid rise in crypto over the past 2 years and decided that they would do something about it. “Sovereign currencies” are at risk from the recent explosion in decentralized stablecoins like UST.
Although I don’t know if I should be talking about UST in the past tense or not, I chose not to. I prefer to endure. I believe that decentralization can be shared power between all people, not just a few wealthy white men (writing as a moderately well-off white man). ).
Many rumors have circulated about the origin of the coordinated attack on UST, which began over the weekend. Blackrock, Citadel, and others have denied involvement in the massive block sale of TerraUSD.
We know that Curve Finance saw a lot of sales over the weekend. This event set off a ripple effect throughout the entire cryptocurrency ecosystem. Brickken CEO and Co-Founder Edwin Mata explained:
The problem grew when the selling pressure started and UST began to be bought at a discount since it was depegged from USD. The UST was used to mint $Luna, which created a gap between the Luna token (UST) and the stablecoin UST. This allowed traders to use ust for minting luna and then selling off luna.
Twitter thread explains exactly how much was done in the UST fiasco. It details how 100K Bitcoin were used to manipulate UST’s price to create shorting opportunities. Gemini denies that it made the 100k BTC loan for an institution counter-party in the shorting LUNA.
Important to remember that none of these activities are illegal as far as I know. It is simply a way to take advantage of an organization who has missed a loop in its system. Edson Ayllon (product manager at dHEDGE) described Terra’s problem as follows:
“An example of an algorithm that doesn’t consider the worst-case scenario.”
How to make >800 million dollars in crypto attack the once-third largest stablecoin, Soros style.
Janet Yellen is not the only one talking about the $UST Attack right now. No one is talking about the amount of money that the attacker made or how brilliant it was. Lets dig in
— Onchain Wizard (@OnChainWizard) May 10, 2022
Onchain Wizard is not without its doubts and does have some speculation. However, the general thread of tweets describes the sequence of events and the amount of capital required. This action could have netted someone $850 million in profits, but it also had a knock-on impact on the entire cryptocurrency market. Iconium CEO Fabio Pezzoti told us:
According to the rumours, Do Kwon is looking for investors to help him put together a billion dollars. He will do this by selling $LUNA at a discount via OTC deals that have a two year vesting.
Since then, LUNA plunged to $0.01 and may never recover.
Other stablecoins also experienced volatility after the sell-off. USDT dropped almost 5% on Binance, while USDC was even more volatile on some exchanges. These liquidity problems were caused by a huge increase in daily volume on Binance and Kraken.
USDT appears to have been re-pegged at the time this article was written. However, the arguments against stablecoins will continue to be valid forever. From a layperson’s perspective, USDT and UST both lost their pegs.
I anticipate Janett Yellen will make direct reference to Tether before the Treasury Committee. Bob Reid, Everest’s CEO, stated in an email interview that he said:
“Since trading fiat was invented, the human race voted for rules to govern activities that protect the ecosystem and all participants. Then, a snake oil salesman appears and claims that the rules don’t apply to him. It is obvious that the OCC and CFTC will apply existing laws to newer technologies like stablecoins… Most central banks won’t allow a large volume of non-USD fiat stablecoins to tradeable on international exchanges.
The long-lasting consequences of the media storm and economic attacks against crypto will be severe. Expect to see tighter regulation. Not necessarily to protect small investors, but to protect those who are invested in traditional markets.
Due to the ‘obvious risk’ of stablecoins, CBDCs are on the rise. Derek Lim, from Bybit, told us.
“Governments and regulators will, and should, take an interest in this situation. In several reports, the U.S. regulators highlighted the concern that a stablecoin banking crisis could lead to financial instability. This incident has demonstrated that a bank panic on the third-largest stablecoin market cap has no spillover effect on S&P 500 or beyond.
But I for one will not give in. After this week of chaos, the crypto community must unite and continue to build upon whatever world is left.
This will cause a significant drop in confidence, which could make it more difficult to onboard new crypto-savvy people. But if you truly believe we can replace the current system then nothing has changed. It’s true, I can tell you that someone with a lot money believes it.
This week was counterintuitive and I believe it has been one of the best for crypto. You must not let people bring you down by making so much effort.
It will use more power in 2030 than the world today, if it is not already.
Op-Ed: CryptoSlate is under attack