The SBF Star Witness

Dear Bankless Nation,

After a full-court press on the SBF trial last week, we're back to our regularly scheduled programming, showcasing news from all across crypto. But we do still need to kick things off with one bit of SBF trial drama...

For our weekly recap, we dig into:

1. Caroline takes to the stand
2. Trader Joe sued by Trader Joe's
3. Stars Arena to relaunch
4. Intangibly backed: USDR depegs
5. J.P. Morgan moving onchain

- Bankless team

📅 Weekly Recap

1. Caroline takes to the stand

The SBF Trial's star witness, Alameda CEO Caroline Ellison, lit up the stands this week, claiming Sam had directed her to take "billions of dollars from FTX customers and [use] it for investments."

Ellison testified that Alameda ultimately took some $14 billion in FTX customer funds. She also shared details on a $150 million bribe offered to Chinese officials to release funds trapped in the country. Ellison said she considered resigning several times

Real legal analysts and armchair Twitter hot-takers have not been overly bullish on SBF's legal team, which has largely struggled to push back on witnesses like Ellison due to Judge Kaplan's tendency to shut down these lines of questioning.

2. Trader Joe sued by Trader Joe's

The grocery store chain beloved by millennials is going after the DeFi platform beloved by degens.

Trader Joe's, the grocer, has sued Trader Joe, the DeFi platform, for trademark infringement, once again trying to shut down the platform after it was unsuccessful in its efforts to do so in a United Nations court last year.

Trader Joe might face a bit of a challenge this time after a pseudonymous co-founder of the project claims that the project was indeed named after the grocer. “With no name for the DEX yet, [we] just named it Trader Joe, after the supermarket,” cryptofish wrote, according to Decrypt.

3. Stars Arena to relaunch

On Friday, Stars Arena, a friend.tech fork on Avalanche that saw its rise to stardom truncated late last week after a catastrophic $2.9M hack drained nearly all of its TVL, announced that “The Arena” will reopen on Sunday, with trading set to resume shortly thereafter.

With the team able to negotiate for the return of 90% of the stolen AVAX and secure bridge funding from a group of private investors to make up the 35k AVAX shortfall, users exposed to the hack will fortuitously be made whole.

Prior to the hack, users on crypto Twitter had expressed concerns that the Stars Arena contract was unverified and unaudited, but such red flags did not stop notable figures within the AVAX community, including Ava Labs founder Emin Gün Sirer, from publicly supporting the project.

Thankfully, this time around, Stars Arena has pledged to address these concerns and will follow proper security procedures by auditing their smart contract and open-sourcing its code.

4. Intangibly backed: USDR depegs

Tangible, a real-world asset tokenization project on Polygon that claims to let users “choose a better money” (i.e., one that comes with baked-in yield), showcased the limitations of its design on Wednesday morning.

Roughly $12M USDR were redeemed for DAI, zapping the project of its liquid reserves and forcing the project to burn its proof-of-liquidity holdings, leaving USDR only 91.4% collateralized. Concerningly, 85% of the backing comes from illiquid real estate holdings, and the remainder is largely reserved by the TNGBL token.

While the Tangible team maintains they’re focused on making users whole and only anticipates “a minimal gap in USDR collateralization,” with the stablecoin trading at a 50% discount to par, the market seems to doubt these claims…

In lieu of stablecoin holdings to process redemptions, Tangible will be transforming the 190 real estate assets that reserve USDR into fungible “basket tokens” that represent claims to the underlying properties. In the (likely) event that there is a lack of demand for the baskets, Tangible will be forced to liquidate the properties, a slower path to liquidity for USDR bag HODLers.

5. J.P. Morgan moving onchain

J.P. Morgan announced on Wednesday that it had carried out the first blockchain-based collateral settlement for its clients.

Utilizing J.P. Morgan’s Onyx blockchain bank’s Tokenized Collateral Network (TCN), BlackRock, America’s largest asset manager, was able to tokenize shares of one of its money market funds and transfer them to Barclays, a major British banking outfit, to serve as the collateral for an OTC derivatives transaction between the two groups.

TCN is a major upgrade for the legacy financial system and promises to dramatically reduce the friction of meeting margin calls by unlocking the ability to use trad assets (i.e., shares of money market funds) as collateral while remaining invested, somewhat akin to an institutional version of stETH. Enhanced collateral mobility eliminates the need for market moves and helps to reduce cost and settlement timelines.

📺 Bankless Weekly Roll-Up

Other news:

• Tether Promotes Paolo Ardoino to CEO
• Crypto VC Funding Is Way Down—But How Bad Is It?
• BarnBridge DAO votes to comply with SEC order
• Alameda Trader Was Phished for $100 Million
• SBF wrote that Binance leaked balance sheet to CoinDesk
• Trezor Launches New Hardware Wallets
• Bored Bitcoin Analysts Point to McRib Meme for Bullish Return