ApeCoin’s (APE) market valuation could grow by nearly 250% in the second quarter of 2022 as it breaks out of a widely-tracked, classic technical pattern.
APE price “bull pennant” breakout underway
On April 13, APE’s price broke above the upper trendline of what appears to be a “bull pennant” chart pattern.
Bull pennants appear when the price consolidates inside a triangle-like structure following a strong uptrend. Many traditional analysts consider them as continuation patterns, for they typically result in the price breaking out in the direction of its previous trend.
As a rule, traders estimate a bull pennant’s upside target by measuring the size of the previous uptrend, called “flagpole,” and adding it to the breakout point. Applying the same to ApeCoin’s ongoing breakout move shows its potential for its potential for massive upside.
Therefore, if the bull pennant structure pans out as intended, APE could rise to nearly $40 in Q2/2022.
Robinhood listing?
The bullish setup for ApeCoin appears as it rebounds by nearly 17% to over $12.50 in two days, amid speculations that Robinhood, a popular retail brokerage firm, would list APE on its trading platform.
The rumors picked up momentum after Robinhood added Shiba Inu (SHIB), a Dogecoin-inspired meme cryptocurrency, alongside three other altcoins — Polygon (MATIC), Solana (SOL), and Compound (COMP) — for trading this Tuesday, leading to intraday gains across each asset.
The next crypto to be listed on Robinhood is going to be $APE.
However, Robinhood did not confirm any plans to integrate ApeCoin into its services, hinting that APE’s price gains since Tuesday might have resulted from mere speculation. Additionally, its breakout move out of the bull pennant accompanied lower volumes, suggesting a lack of upside conviction in the market.
As a result, ApeCoin’s potential to invalidate its bull pennant setup cannot be ruled out as long as it breaks above a sequence of resistance levels, as shown in the chart below, with a steady rise in volumes.
For instance, APE now eyes $13 as its next upside target while holding $11.50 as its interim support. Nonetheless, a break below the said price floor could have ApeCoin eye $10.25 as its next downside target.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Cryptocurrencies are well-known for being volatile assets, which means that experienced traders have plenty of opportunities in the space. Investors can expect to be taken on a wild ride if they plan on holding for a long time.
Stablecoins, a class of cryptocurrencies that offers investors price stability pegged to the value of fiat currencies, offer investors a safe haven when market turbulence hits but may represent missed opportunities over time.
Speaking to Cointelegraph, several experts have stated that retail investors should approach cryptocurrencies with a “pay yourself first” attitude and that an allocation of up to 5% in crypto should be relatively “safe” while allowing for “marginal return.”
Stablecoins are entirely different: No “marginal return” can be expected from simply holding an asset tied to the value of the United States dollar, although yields can reach double-digit annual percentage rates (APRs) using decentralized finance (DeFi) protocols. These protocols, however, lead to higher risk.
Different stablecoins, different risks
Not all stablecoins are created equal. The largest stablecoins on the market — USD Coin (USDC), Tether (USDT) and Binance USD (BUSD) — are backed 1:1 by cash or assets with similar value by centralized companies. This means that for every token in circulation, there’s a dollar in cash, cash equivalents or bonds in custody.
For example, other stablecoins like Dai (DAI) and TerraUSD (UST) rely on different mechanisms. DAI is crypto-collateralized and ensures it can maintain its peg by being overcollateralized. It includes economic mechanisms that incentivize supply and demand to drive its price to $1.
UST, on the other hand, is a non-collateralized algorithmic stablecoin. An underlying asset doesn’t back it, as it works through algorithmic expansion and supply contraction to maintain its peg. Terra, the blockchain behind UST, has notably been building up reserves for the stablecoin. So far, it has already purchased nearly 40,000 BTC worth over $1.6 billion and over $200 million in Avalanche (AVAX).
Marissa Kim, general partner at Abra Capital Management — the asset management arm of crypto investment firm Abra — told Cointelegraph that the firm views “USDC and other U.S.-regulated stablecoins as safe as keeping reserves in a bank account,” as these are “required to prove on a regular basis that they are fully collateralized.”
To Kim, decentralized stablecoins like DAI and UST may “pose other risks,” as volatile markets could see DAI lose its peg to USD. She added its governance “is by the MakerDAO community, and nobody knows who holds and governs this protocol and where voting power may be concentrated.”
Speaking to Cointelegraph, Adam O’Neill, chief marketing officer at cryptocurrency trading platform Bitrue, said that the “role of USDC and USDT” in the cryptocurrency space is “synonymous to the role of the U.S. dollar in the traditional financial ecosystem.”
O’Neill added that investors should use stablecoins “as a go-to hedge when trading and storing their assets.” He added:
“The security outlook of stablecoin should not be compared, as both the centralized and decentralized versions are secure in themselves. However, it is not uncommon to find hackers exploit the frailty in protocols built to offer products bothering both classes of stablecoin tokens.”
To O’Neill, how much investors should allocate to stablecoins is a decision that is up to them and depends on their investment goals. Kent Barton, tokenomics lead at ShapeShift DAO, told Cointelegraph that while every stablecoin has its own risk profile, there are a few things investors should keep in mind.
For one, centralized stablecoins like USDC and USDT can be easily converted back into USD, but the entities behind these coins could “potentially blacklist certain addresses, for instance, in response to demands from legal entities.” Barton added that while there are long-standing concerns regarding USDT’s backing, it has maintained its peg so far:
“USDT has the advantage of being time-tested: It’s the stablecoin that’s been around the longest. It has deep liquidity across centralized exchanges and many DeFi platforms.”
Decentralized stablecoins like DAI and USDT, Barton said, are more transparent because of the nature of the blockchains they are built on. Still, there are other risks out there, including volatile markets threatening DAI’s over-collateralization.
To Olexandr Lutskevych, founder and CEO of crypto exchange CEX.io, the security of each stablecoin depends on how security is defined. In terms of code, technical audits should cover the risks of more susceptible stablecoins, while in terms of reliability of moving funds from A to B, most have been known to fit the purpose.
As for stablecoins’ ability to maintain their peg against the dollar, Lutskevych said how that peg is maintained should be the main focus on investors’ minds.
Stablecoin DeFi yields: Too good to be true?
While merely holding stablecoins ensures cryptocurrency investors aren’t dealing with the market’s volatility, it also means they aren’t really making any type of return unless they put their stablecoins to work.
There are several options when it comes to stablecoins such as lending them out on centralized exchanges or blue-chip decentralized finance protocols lead to relatively small yields — often below 5% — that are relatively safe. Moving to riskier protocols, or employing complex strategies to boost yield, could lead to higher returns and imply more risk.
For example, it’s possible to find yields above 30% for Waves’ Neutrino USD (USDN) stablecoin, which has recently broken its peg and fallen below $0.80 before starting to recover.
When asked whether investors should lend their stablecoins or add them to decentralized exchanges’ (DEXs’) liquidity pools to earn yield, ShapeShift DAO’s Kent Barton pointed out that DeFi protocols bring in smart contract risks to the equation, which need to be considered.
One-month USDN/USDT chart showing when the token broke its peg. Source: TradingView
To Barton, protocols that have been around for “more than a few months and have a track record of protecting billions of dollars in value are fairly secure.” However, there’s “no guarantee of future security and stability.” Protocols with higher rewards, he said, tend to be riskier.
Lutskevych suggested investors should first understand exactly what they’re putting their money into:
“Just because it is DeFi, the investment principles do not change. And, one of the foundational investment principles is: Before proposing any strategy, you should thoroughly understand one’s risk preferences and individual circumstances.”
To Lutskevych, investors’ capital, time horizon, goals and risk tolerance should also be weighed when considering staying put or moving stablecoins to earn yield.
To O’Neill, it is “generally advisable that stablecoins should be deployed to harness yields from lending platforms,” although investors should also “be ready to jump at any investment opportunity.”
Stablecoins, partly thanks to the DeFi space, offer investors a plethora of opportunities across a wide number of blockchains. Using them outside of centralized exchanges may require some specific knowledge, without which investors may end up losing their funds by, for example, sending them to the wrong type of address.
Risk tolerance and sophistication
Speaking to Cointelegraph, Carlos Gonzalez Campo, research analyst at investment product issuer 21Shares, said that stablecoins provide investors with access to a “global network of value transfer similar to how the internet gave rise to a global and open network for information.”
Campos stated that February’s Consumer Price Index (CPI) data in the United States revealed a 7.9% year-over-year rise, meaning people are losing their purchasing power at a rate that hasn’t been seen in four decades.
What investors do with their stablecoins, the analyst said, depends on their risk aversion and level of sophistication as the “user experience is still lacking today” in DeFi platforms that let users earn passively on their holdings. Campos added:
“The clearest example is seed phrases, which are impractical and probably won’t achieve mass adoption. That is why leaders in the industry such as Vitalik Buterin have emphasized the need for wide adoption of social recovery wallets, which instead of relying on seed phrases, rely on guardians.”
Abra Capital Management’s Marissa Kim seemingly echoed Campos’ thoughts, as she said bugs and other exploits are possible in DeFi protocols which often pay higher yields in the protocol’s native tokens. They are “often highly volatile and may not be very liquid.”
To Marissa, some investors may be willing to take on the added risk, although others will be “more concerned with principal preservation.”
Whichever strategy investors choose to employ, it’s clear that stablecoins are a major part of the cryptocurrency ecosystem. More risk-averse investors may find they only trust the most transparent centralized stablecoins that offer limited opportunities, while more venturous investors may prefer higher yields and higher risk.
Over time, stablecoins’ influence in the cryptocurrency space is only set to keep growing, so it’s important that investors understand what they are dealing with and the risks involved with the stablecoins they choose to HODL and what they choose to do with them.
The views and opinions expressed here do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Decentralized finance (DeFi) wallet and browser extension MetaMask formed a new strategic partnership with three major crypto custodians; Gnosis Safe, Hex Trust, GK8, and Parfin.
MetaMask Institutional (MMI), the institutional version of the popular Ethereum wallet MetaMask, announced on Wednesday that the new integration will provide decentralized autonomous organizations (DAOs) with key management tools to participate in DeFi activities.
DAOs are organizations controlled by computer code and have no top-down authority, and they’ve been gaining popularity as a fundraising mechanism and administration tool for cryptocurrency projects.
According to the announcement, MMI provides institutions with access to DeFi and Web3 while meeting their compliance needs. Custodians, or custodial wallets, are services that store private keys and facilitate transaction approval and signing. They are crucial to organizations in securely obtaining and securing crypto assets.
Cointelegraph reached out to Harriet Browning, Europe, the Middle East and Africa business lead at Consensys. She told Cointelegraph:
“It’s enabling crypto needed funds, exchanges, traditional institutions, enterprise, DAOs, a whole host of different user profiles, enabling them to engage on a secure, well-managed risk-managed framework.”
The distinction between MetaMask Institutional and the company’s primary browser and wallet plugin is how assets are managed. Browning explained that assets held in MetaMask’s primary product are non-custodial, while assets managed through MMI are custodial. She noted:
“For retail user security, we’ve taken the hardware wallet and replaced it with a custodial institution. It’s essential that assets are secured by the institution.”
John Ennis, the safe ecosystem lead for Gnosis, said, “DAOs and crypto institutions want the gold standard of Defi integration, whilst still maintaining the industry’s security standard when it comes to safeguarding digital assets from operational and security risks.”
MetaMask has been actively expanding its offerings this year. In late March, the firm rolled out an integration with Apple Pay and a series of payment updates, including the ability to buy crypto through the application with debit or credit cards.
Cronos has partnered with the blockchain intelligence firm Chainalysis to enable real-time transaction monitoring tools for the Cronos (CRO) token and all CRC-20 tokens running on the Cronos network, according to an announcement shared with Cointelegraph on Wednesday.
The new compliance integration aims to enable institutions, cryptocurrency exchanges and digital asset funds to track transactions of CRC-20 tokens, allowing users to trace large volumes of activity and identify high-risk transactions. The partnership specifically allows institutions and exchanges to focus on the most urgent issues and properly report suspicious activity.
The integration is yet another milestone in the development and institutional adoption of the Cronos blockchain and digital assets deployed on Cronos. “Application builders and service providers will have access to the most advanced tools and services. The Chainalysis data platform is one of these essential foundations,” Cronos’ managing director Ken Timsit said.
As previously reported, Cronos mainnet launched in November 2021, aiming to provide greater interoperability between the Cosmos and Ethereum Virtual Machine (EVM) ecosystems. Designed to support decentralized finance (DeFi), nonfungible tokens (NFT) and GameFi applications, Cronos has amassed more than 450,000 DeFi and NFT users, inking partnerships with about 200 firms and institutions so far.
Launched in 2016, Crypto.com is one of the world’s largest cryptocurrency exchanges, with daily trading volumes averaging at $3.3 billion at the time of writing, according to data from CoinGecko.
In March 2021, Crypto.com launched its own decentralized open-source blockchain, the Crypto.org Chain, alongside its native token, Crypto.org Coin (CRO). Just about three months after launching Cronos mainnet, Crypto.org rebranded the Crypto.org Coin to the Cronos token in February 2022.
Cronos’ new compliance partner, Chainalysis, is one of the world’s largest crypto and blockchain intelligence firms, known for cooperation with major government agencies and financial institutions in the United States and worldwide.
Last month, Chainalysis partnered with the American financial services organization Cross River to ensure safe cryptocurrency trading and compliance amid the institution expanding its crypto services. The firm previously collaborated with platforms like the crypto-friendly trading app Robinhood and provided its compliance tools to the CryptoKitties game creator Dapper Labs.
Cronos, the Ethereum-compatible blockchain network backed by the major global cryptocurrency exchange Crypto.com, is moving to ensure compliance with a new partnership.
The company behind the Firefox internet browser Mozilla is attempting to appease its environmentally-conscious community by accepting only Proof-of-Stake (PoS) crypto donations.
The company initially halted all crypto donations in January, but has now opened them back up after a review period to assess community sentiments and to conduct research on crypto energy usage.
An update to our policy on accepting cryptocurrency donations.
Mozilla announced in a blog that after a review, it was changing its donations policies to come in line with its “climate commitments”. It said that: “Mozilla will no longer accept ‘Proof-of-Work’ cryptocurrencies, which are more energy intensive.
“Proof-of-Work cryptocurrencies can significantly increase our GHG [greenhouse gas] footprint due to their energy intensive nature.”
The company also said that the move was made based on its self-imposed Jan. 2021 climate commitments which aim for it to “significantly reduce our greenhouse gas footprint year over year” until it becomes carbon-neutral.
“Mozilla’s decision not to accept Proof-of-Work donations ensures that our fundraising activities remain aligned with our emissions commitment.”
By rejecting all non-PoS crypto, Mozilla is blocking both Bitcoin (BTC), the largest cryptocurrency by market cap, and Ether (ETH) — at least until the Merge occurs in the coming months and that blockchain adopts PoS.
Mozilla stated that it would release a list of accepted cryptocurrencies by the end of Q2, 2022. Some native coins from the most popular PoS chains include BNB Chain (BNB), Solana (SOL), and Avalanche (AVAX).
Among the mosvocal detractors of Mozilla’s new crypto donations policy was Mozilla’s own founder, Jamie Zawinski. He tweeted on Jan. 4 that those at Mozilla who are complicit with accepting Bitcoin “should be witheringly ashamed” to partner with the “planet-incinerating ponzi grifters.” Zawinski stopped working at Mozilla in 1999.
Director of Digital Strategy at American investment firm VanEck Gabor Gurbacs had harsh criticism for Mozilla’s decision to block Bitcoin donations. In an Apr 12 tweet, he called the move “misguided and virtue signaling in nature,” adding that “Bitcoin is one of the greenest industries out there.”
While Bitcoin annually consumes about 204.5 Terawatt hours (TWh) of energy according to data from blockchain researchers at Digiconomist, the actual effect on the climate is much more contested. Proponents contest that miners that secure the network are helping to strengthen energy grids and improve carbon efficiency while operations themselves are increasingly switching to renewable energy.
As reported by Cointelegraph last month, flexible data centers can be used for Bitcoin mining. Flexible data centers can switch between self-generated green energy and tapping into the public grid to reduce the overall environmental impact and stress on the public energy grid.
Crypto storage company Blockstream and Jack Dorsey’s Bitcoin development firm Block Inc announced on Apr 8 that they would work with Elon Musk’s Tesla to build a solar-powered BTC mining facility in Texas, the new hotbed of clean energy mining operations.
Ether (ETH) lost the critical $3,000 psychological support level on April 11 after a 16% weekly negative performance. Bulls were definitively caught by surprise as $104 million in leveraged long futures got liquidated on April 11. Ether’s downturn also followed a decline in the total value locked (TVL) in Ethereum smart contracts.
Ethereum network TVL in ETH. Source: Defi Llama
The metric peaked at 40.6 million Ether on Jan. 27, and has since dropped by 22%. This indicator could partially explain why Ether could not withstand the adversity brought by Bitcoin’s (BTC) 13% weekly negative move.
However, the leading altcoin has catalysts of its own because Ethereum developers implemented the network’s first-ever “shadow fork” on April 11. The testnet update created an area for developers to stress-test their assumptions around the network’s complex shift to proof-of-stake.
More importantly, one needs to analyze how professional traders are positioning themselves and there’s no better gauge than derivatives markets.
The futures premium is back to bearish levels
To understand whether the current bearish trend reflects top traders’ sentiment, one should analyze Ether’s futures contracts premium, also known as a “basis.” Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.
A trader can gauge the market sentiment by measuring the expense gap between futures and the regular spot market. A neutral market should present a 5% to 12% annualized premium (basis) as sellers request more money to withhold settlement longer.
The above chart shows that Ether’s futures premium stood above the 5% neutral threshold between March 25 and April 6, but later weakened to 3%. This level is typically associated with fear or pessimism because futures market traders are reluctant to open leveraged long (buy) positions.
Long-to-short data confirms worsening conditions
The top traders’ long-to-short net ratio excludes externalities that might have impacted the longer-term futures instruments. By analyzing these whale positions on the spot, perpetual and futures contracts, one can better understand whether professionals effectively become bearish.
Exchanges’ top traders Ether long-to-short ratio. Source: Coinglass
Firstly, one should note the methodological discrepancies between different exchanges, so the absolute figures have lesser importance. Yet, since April 5, there has been a considerable decline in the long-to-short ratio of every major derivatives exchange.
Data signals that whales have been increasing their bearish bets over the past week. For instance, the Binance whales held a 1.05 long-to-short ratio on April 5, but gradually reduced it to 0.88. Furthermore, the OKX top traders moved from a 2.11 favoring longs to the current 1.35.
From the perspective of the metrics discussed above, there might not be an indicator pointing to extreme bearishness but the futures basis rate and the top traders’ long-to-short ratio worsened over the past week.
Furthermore, the TVL in Ethereum smart contracts signals a decline in use. The constant delays in the proof-of-stake migration could be pulling investors’ attention away and driving decentralized finance (DeFi), gaming, and nonfungible (NFT) projects to competing networks. In turn, traders have been focusing their attention on more promising altcoins and consequently diminishing the demand for Ether.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Shiba Inu (SHIB) prices soared on April 12 upon its debut on Robinhood, a U.S.-based commission-free trading platform.
SHIB price climbed by more than 35% to 0.00003, its highest level in almost two months, before paring some gains. Nonetheless, SHIB was still on track to log its best daily performance since Feb. 6 when it rallied by nearly 27%.
SHIB/USD daily price chart. Source: TradingView
Strong crypto revenues precede SHIB’s listing
Robinhood emerged as a go-to avenue for everyday investors since the pandemic’s start in March 2020. Last year, the retail brokerage added 10 million funded accounts to its platform, with more than half of the new sign-ups coming from first-time investors.
Still, it reported a net loss of $423 million in its fourth-quarter earnings of 2021, noting that its main source of revenue (payments for order flow) made $263 million compared to $267 million in the same quarter of the previous year.
Meanwhile, revenues from cryptocurrency trading surged over 300% in the same period, putting Robinhood on course to introduce more crypto-related services in 2022, including a wallet and the addition of more altcoins and meme tokens to its brokerage platform.
David Gokhstein, the founder of Gokhshtein Media, said the addition of SHIB to Robinhood is “a great thing” for the crypto space, noting that the cryptocurrency could help drive more users to other top coins like Bitcoin (BTC) and Ether (ETH).
With the $SHIB listing on Robinhood, I’m watching the other meme tokens To see if they move.
The events that led up to Shiba Inu’s massive intraday rally also include a period of strong accumulation, data from IntoTheBlock shows.
The analytics platform noted the address holding SHIB for more than a year increased their balance in the past 30 days. As a result, these “hodlers” now has control over 2.82% of the net SHIB supply in circulation.
Diamond Hands win$SHIB Hodlers remain unfazed and accumulated during the past weeks and it’s paying off with today’s Robinhood announcement
Notably, SHIB has been consolidating inside a so-called symmetrical triangle since late December 2021. It formed the pattern after falling by nearly 70% decline from its October 2021 high of $0.00008894.
As a general technical trading rule, SHIB should now break below its triangle to resume its bearish trend.
If SHIB falls below the triangle’s lower trendline, its next downside target comes to be at length equal to the maximum distance between the pattern’s upper and lower trendline, when measured from the breakout point.
This bearish scenario puts the target for Shiba Inu below $0.00001200, down over 50% from today’s price.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Ethereum developer Virgil Griffith took a plea deal after breaking sanctions against North Korea and was formally sentenced earlier today— the final chapter in a two-year journey as bizarre as it is shocking.
Journalist Ethan Lou, author of Once a Bitcoin Miner, attended the infamous event in North Korea at which Griffith spoke. He was asked to submit a statement for Griffith’s sentencing, although that statement was ultimately not filed with the court. Here he tells the inside story of what happened.
Pyongyang, April 18, 2019
Virgil Griffith had been on North Korean soil for only a few hours when he casually told fellow travelers and their local guides that his trip was unsanctioned. Unique in the world, the United States bans its citizens from going to North Korea without explicit permission.
Griffith, an American in Singapore working for the Ethereum Foundation, had sought such permission unsuccessfully, he recounted at the round dinner table at Pyongyang’s riverside Pothonggang Hotel. Griffith had made his case the best he could on why he should go to that Pyongyang cryptocurrency conference in 2019 but was denied. And so, he decided to go anyway, he told people at the table.
An image submitted by prosecutors in a New York court shows Virgil Griffith explaining cryptocurrency in North Korea in April 2019. The words “No Sanctions!” are highlighted in a detail box. Source: U.S. Department of Justice
Up and at them
Four days later, in a building shaped like an atom, Griffith told a crowd of North Koreans how they could harness blockchain in negotiations with the United States. At the time, bilateral talks had been bogged down by the question of which measure should be unwound first: the United States’ economic sanctions or North Korea’s nuclear program.
Griffith said both could happen simultaneously through a smart contract tied to a North Korean missile.
“If all the news reports say that sanctions on North Korea have been lifted, the missile will deactivate.”
Then, when explaining how smart contracts work, Griffith used the idea to “shave my cat” as an example. His presentations were mostly speculative, farfetched and based on publicly available information. It’s unclear how serious he was — he certainly had not taken the U.S. government’s opposition to his trip seriously.
Unsanctioned
Griffith believed in being forthright, even if it was uncomfortable. Almost immediately after returning to Singapore, Griffith went to the local U.S. embassy to talk about the trip with a special agent. Perhaps, in some way, he thought he was doing his government a favor by telling them all about the cloistered kingdom. Griffith did not expect that meeting to ripple throughout the U.S. government, but Special Agent Brandon Cavanaugh of the Federal Bureau of Investigation’s counterintelligence unit in New York was soon brought into the fold, and then the circle grew to three lawyers from the Justice Department plus Treasury Department attorneys. On Thanksgiving of 2019, Griffith was arrested in Los Angeles.
Accused of helping North Korea bypass sanctions by teaching it about blockchain, Griffith ultimately accepted a plea deal for 63 months in prison and was sentenced in April 2022.
It was the final chapter in a two-year journey as confusing as it was shocking — the story of how an adventuresome utopian and his North Korean trip had come to disturb the merciless forces of geopolitics and national security.
Griffith, through his lawyers, did not respond to an interview request, but documents filed with the court paint a vivid picture of the days following the trip and the decisions and moves made then — a crucial, illuminating period during which FBI agents as much went after Griffith as he fell into their lap.
“Day 6. At the conference. From inside the building looking out. This monument here is of a pen and then there’s an atom on top, symbolizing science and writing and stuff.” Source: Ethan Lou on Twitter
Internet Man of Mystery
Griffith was born in Birmingham, Alabama in 1983. He has unruly hair that would later make the North Korean restaurant servers describe his head as “big.” In 2008, a little before Bitcoin first came into the world, Griffith, a hacker, was profiled by The New York Times Magazine and dubbed the “Internet Man of Mystery.”
He once suspended his doctorate studies to participate in the reality show King of the Nerds. He was also taken to court after planning to publicly unveil security flaws in campus identity cards, a matter later privately settled. In Griffith’s words, he is someone who likes to poke the proverbial bear. He once told his parents, “I regularly roll grenades into the room, and someone needs to really jump on it.” A friend described him as viewing life as a video game.
In May 2019, about a month after Griffith met the State Department agent in Singapore, the FBI reached out. Griffith was visiting friends in Puerto Rico, a U.S. territory that had become a bit of a crypto hub, where he had rented a small apartment. The FBI told Griffith it wanted a meeting.
Griffith agreed immediately. He had little sense of any danger to himself. He did not hire a lawyer and traveled to New York at his own expense. Among the FBI employees he would meet was Special Agent Cavanaugh.
“Day 4. We went up some really high tower. Virgil called North Korea a ‘Wes Anderson movie.’ I thought that was very clever.” Source: Ethan Lou on Twitter
Plead the Fifth
Griffith showed the agents photographs of himself in North Korea and provided to the FBI propaganda he had taken home as souvenirs, including newspapers and other literature. Visually, Pyongyang had been eye-opening for Griffith, with the pastel colors of its apartment buildings evoking, in his view, a Wes Anderson movie.
North Korea’s insular culture fascinated Griffith so much that he got a tailored Mao-style suit. Much of the country’s literature was also unintentionally funny. One newspaper headline Griffith saw in North Korea read, unironically, “Institute for women set up under the care of great men.” A coffee-table book he brought back used the Comic Sans font. Griffith treasured his North Korean souvenirs to such an extent that he sent them to the nonprofit Internet Archive to be digitized.
However, what the government saw in the material Griffith brought from North Korea was starkly different. Michael Krouse, a Justice Department lawyer and former U.S. Marine, would later take note of Griffith’s Mao suit and, together with his colleagues, observe that Griffith dressed in a “North Korean military-style uniform.”
For Special Agent Cavanaugh, the gist of his takeaway from that May meeting was that Griffith knew that going to North Korea to teach blockchain was illegal but did so anyway, intended to do so again, and wanted to make a symbolic cryptocurrency transfer between North and South Korea. Cavanaugh was not going to let that go.
The North Korean suit was not a good look, either in a fashion sense or in court. Source: U.S. Department of Justice
Better get a lawyer, son
On Nov. 12, Griffith was on a business trip in Northern California. The FBI reached out again, and Griffith and Cavanaugh once more found themselves in the same room, this time at the FBI’s San Francisco field office. Griffith had gotten a little spooked from his last meeting, but he again did not hire a lawyer. And this time, Griffith also gave the FBI permission to search his phone.
Griffith’s decisions may seem baffling. Before one of those FBI meetings, he talked about it with his friend Eric Corley, an editor for a hacker magazine, for whom he once wrote. In his recollections, Corley said he tried to dissuade Griffith from going: “I kept warning him it was a trap.”
But Griffith “insisted” on going to the FBI and “telling the truth” without a lawyer, Corley said. The presentation Griffith had given in North Korea amounted to no more than publicly available information, he thought. He did not believe he had done anything wrong. Shortly after that meeting, Griffith “was convinced they totally got where he was coming from,” Corley said. He called Griffith’s sentiment “ironic.”
Day 3. We took a look at where the conference was held. This is the very room in which Virgil Griffith spoke to the North Koreans. We, eight foreigners, would be seated around that circular table. They called us a “delegation.” 20/15 pic.twitter.com/T94mxrldKA
North Korea, accused of rampant human rights violations and pursuing nuclear weapons against the international order, has long been under a blanket of economic sanctions, often led by the United States. Those sanctions punish North Korea economically by barring it from international trade, which the U.S. is able to do because it effectively controls the global financial infrastructure. Cryptocurrency is theoretically a way for North Korea to get around that. After all, the country has already been accused of hacking and stealing hundreds of millions of dollars in cryptocurrency. Griffith’s visit had set off all manner of red flags within the U.S. government.
After Griffith’s San Francisco meeting with the FBI, Justice Department officials in New York worked hard to build a case against him. It was not without its challenges, and the matter came to a head a little after midday on Nov. 18. Another Justice Department lawyer, Kyle Wirshba — a Harvard Law School graduate with a gentle voice — learned that the Department of the Treasury had issues with the case. The department’s Office of Foreign Assets Control said it was “a gray area” because it might not be illegal if Griffith’s presentation in North Korea was general information and not tailored for the audience.
Did the Justice Department know the specific nature of Griffith’s presentation? That information became urgent and vital. If the matter went to trial, a Treasury Department expert would need to testify to support the charges. That afternoon, Wirshba posed that question to the FBI’s Special Agent Cavanaugh. He also wrote to his fellow lawyer Krouse, telling him about another government official: “So, of course, the deputy chief has problems.”
COUNTDOWN TO SENTENCING: Virgil Griffith Pled Guilty To North Korea Sanctions Violation Conspiracy, Now Asks For 24 Months While US Probation Recommends 63 Months; Vitalik Buterin Urges Mercy – Inner City Press story: https://t.co/JF5hUuZJ0bpic.twitter.com/o5PKFaBO63
Around this time, the Justice Department faced another issue: The gravity of the matter had finally dawned on Griffith. He knew that he had told the FBI that North Korean attendees left the conference with a better understanding of cryptocurrency than when they arrived, that he had acknowledged that his talk amounted to a “non-zero tech transfer,” and that Cavanaugh, perhaps, did not really believe him when he said he only talked about publicly available information. Around this time, Griffith hired a lawyer.
So, if Griffith were no longer going to cooperate with the authorities, perhaps he would run? The FBI deemed Griffith a flight risk and needed to arrest him quickly. The bureau told Griffith not to leave the country, but Griffith was under no obligation to comply. And without the Treasury Department’s support, there was no justification to detain him. The case no longer appeared so easy.
On Nov. 18, the same day that Wirshba learned of the Treasury Department’s concerns, a busy afternoon unfolded at the Justice Department. By 8:00 pm, it had bugged a lawyer from the Treasury’s Office of Foreign Assets Control too many times. In an email to his colleagues that night, Cavanaugh said: “DOJ asked us to hang on reaching out to the OFAC. Apparently, one or more people have already reached out […] and he’s becoming frustrated. Just wanted you to be aware of the sensitivity.”
Don’t skip town
Depending on your perspective, the Justice Department either thought too little or too much of Griffith. As he was based in Singapore, he had not made arrangements to be in the United States beyond that business trip to Northern California. He also knew unequivocally by then that the law was after him. But Griffith complied with the FBI’s request that he not leave the country.
He stayed with friends in Los Angeles and also decided to spend Thanksgiving with his parents and sister’s family in Baltimore. He told the authorities of those travel plans and sent his itinerary through his lawyer to ensure they knew where he was and that he was not trying to run away.
Griffith still believed in doing the right thing and that it was important to have demonstrated that he tried to follow the rules. He believed in the integrity of the justice system, that everyone gets what they deserve and that the innocent have nothing to fear. A question would arise in the coming days: Was Griffith some sort of scheming mastermind? A traitor bent on undermining his own country? The days following North Korea show that the answer is complicated.
Virgil Griffith is paying heavily for his mistakes.
Despite all the damning accusations against him, Griffith had a certain honesty — a naivety perhaps reinforced by his involvement in the cryptocurrency space, where the law was lax and the only moral compass people had to guide them was their own. Deep in that world, Griffith had simply been too far removed from the wider world with its own values and rules, agendas, intricacies and rigidity.
Two days after that frantic day on Nov. 18, following another flurry of emails and a conference call, the Justice Department prevailed. The prosecutor, Wirshba, had gone to bat with the Office of Foreign Assets Control during the call, and in the view of his colleague Krouse, that conversation went well — “thanks to Kyle’s advocacy.” The OFAC said that, if requested at trial, it would provide a witness to testify that Griffith had broken the law.
The FBI has disclosed that agents from other investigations accessed Twitter, Facebook data in Virgil Griffith/North Korea crypto case because *default setting* in Palantir is to allow all FBI agents access to everything from all cases. That’s quite amazing. pic.twitter.com/DP7Kq3NGce
About a week later, on Thanksgiving morning, Griffith was arrested while boarding a flight from Los Angeles to Baltimore, based on a formal complaint from Special Agent Cavanaugh in New York — sworn just one day after Wirshba resolved the Treasury Department’s concerns. The complaint was eight pages and more than 2,000 words, but where it discussed the facts of what happened in North Korea, it contained not even a single piece of information from sources other than Griffith. It was just the man’s own words over the past seven months that had been weaponized against him.
From there, a new chapter in Griffith’s life began. Even when he was later released on bail for a period, he had to abide by strict conditions. Griffith was eventually held in New York’s infamous Metropolitan Detention Center, an unpleasant preview of the future that loomed for him. At that moment at the airport on Thanksgiving of 2019, when the law took him away under the dull and steely sky, Griffith had just experienced his last day of freedom, though he did not yet know it.
Lou writes about the North Korea affair in-depth in his new book,Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West. Check out Magazine’s Journeys in Blockchain profile of him below.
“The Market Report” with Cointelegraph is live right now. On this week’s show, Cointelegraph’s resident experts discuss the worst mistakes you should avoid making in crypto.
But first, market expert Marcel Pechman carefully examines the Bitcoin (BTC) and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down.
Next up: the main event. Join Cointelegraph analysts Benton Yaun, Jordan Finneseth and Sam Bourgi as they talk about the worst crypto mistakes to avoid making in 2022. First up, we have Bourgi, who thinks investors should avoid “analysis paralysis.” In other words, don’t overanalyze. Make decisions based on firm conviction. Don’t just look at the price of a coin or token you’re interested in; look into its market capitalization, tokenomics, community size, etc. Lastly, he suggests not trading too much, as hodling always beats trading.
Yuan is next with his three mistakes to avoid. First, he thinks you should take profits you’ve already made and avoid “moon boy fever” instead of waiting for your positions to go higher. Second, understand market cycles. And lastly, he explains how to spot and avoid decentralized finance (DeFi) rug pulls.
In the third spot, we’ve got Finneseth, who explains the three mistakes he thinks you should avoid making, starting with hodl culture turning into token attachment. Take your profits before you miss the chance and have to wait, sometimes multiple years, before getting another opportunity. In other words, don’t get too attached to a particular coin or token, as nothing keeps going up forever. Next, he suggests you set your sell targets before you buy a coin so that you’re already prepared and have profit goals in mind. His last suggestion is to be mindful of the latest major trends and learn to play them to your advantage. But be careful: Fast-moving trends tend to flame out just as quickly as they ignite.
After the showdown, we’ve got insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market. The analysts use Cointelegraph Markets Pro to identify two altcoins that stood out this week: Zilliqa (ZIL) and Parsiq (PRQ).
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