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Welcome to The Node. This is Daniel Kuhn, here to take you through the latest in crypto news and why it matters. In today’s newsletter:  

This week, Consensus Magazine investigates innovative crypto projects and protocols and the developers laying the foundation for the future of money.

Named Entities

Coinbase fourth-quarter results beat expectations, with revenue topping $605 million – 5% higher than analyst estimates and up 5% from $590 million in Q3. JPMorgan said the dominant U.S. crypto exchange is poised for healthy growth as subscriptions and services like staking grew 34% quarter over quarter. However, Coinbase’s core revenue stream from transaction volume fell 12% in the same period. Elsewhere, major Australian NFT player Immutable is cutting 11% of its workforce. CEO James Ferguson said the company’s $280 million cash holdings will give it four years of runway. In other NFT news, the founder of Blur – a breakout non-fungible token exchange that has surpassed OpenSea following a token airdrop – has decided to doxx himself. Finally, the Klaytn Foundation, which develops a blockchain of the same name, has proposed burning 73% of its KLAY token reserve to buoy prices and incentivize building. The project’s Governance Council will soon vote on the tokenomics plan.

Expanding Webs

Google Cloud said it will deploy nodes on Tezos, allowing its corporate customers to validate the network. This integration marks Google's latest blockchain integration following the introduction of a node-hosting service for Ethereum projects in October and shortly after becoming a validator on Solana. On Tuesday, Arbitrum, a layer 2 scaling system and fourth-largest blockchain in terms of value, surpassed Ethereum in daily transactions. Arbitum transactions jumped from 159,919 daily transactions on Jan. 1 to over 1,103,398 at press time, as it became the top Ethereum rollup. This comes as decentralized computer storage systems such as Filecoin and Storj are reportedly seeing increased use. Native tokens for FIL,STORJ and siacoin have climbed in aggregate 16% this week, outperforming bitcoin. Last, Hong Kong’s government will earmark $6.4 million to fund a local Web3 industry, according to its 2023-2024 budget published Wednesday, and launch a virtual asset task force following a proposal to regulate crypto. 

Frankly, Mr. Fried

Sam Bankman-Fried's attorneys are arguing a Voyager Digital subpoena intended for SBF but given to his mother, Barbara Fried, is “procedurally deficient” because it must be personally delivered to the named individual. It also places an undue burden on him to produce court documents. This is part of an ongoing investigation into FTX’s attempted bailout of Voyager. Meanwhile, the U.S. Federal Trade Commission has accused Voyager of deceptive marketing. In a filing Wednesday the federal regulator cautioned against a planned deal for Binance US to acquire Voyager assets, which might interfere with possible litigation of the crypto broker’s “false pretenses and false representations.” Elsewhere in the wake of SBF, his favorite blockchain, Solana, is shuttering storefronts in New York City and Miami. Solana Spaces, a popup startup that educates walk-ins, will close its brick-and-mortar locations after finding operations “proved too burdensome” and the potential for growth was “too small.”

"Digital asset are certainly here to stay." 

– Pastel Network co-founder Anthony Georgiades, on CoinDesk TV's "First Mover" 

The Takeaway: Most Wanted

New documents suggest that infamous crypto scammer Ruja Ignatova, co-founder of the OneCoin fraud and one of the FBI’s 10 Most Wanted, was murdered by a notorious drug lord as long ago as 2018. OneCoin, a Ponzi scheme that never launched a blockchain, ran from 2014 to roughly 2017, and allegedly fleeced victims of around $4 billion. Though inconclusive, the new evidence would be consistent with prior hints that Ignatova and her fake crypto were entangled with organized crime. The story could also be a dire premonition of the danger facing other crypto scammers who may have dallied with high-level thugs – a group possibly including some of the most recognizable crypto-fraudsters of 2022.

According to the Bureau for Investigative Reporting and Data, there's evidence that sugests Ignatova was murdered in 2018 on orders from Christophoros Amanatidis-Taki, a notorious Bulgarian drug lord usually referred to simply as “Taki.” BIRD also claims the documents implicate the head of Bulgaria’s national homicide investigators, one Mikhail Naumov. According to those statements, Taki ordered Ignatova’s murder, which allegedly occurred in November 2018 on a yacht in the Ionian Sea. According to the statements, Ignatova’s body was dismembered and thrown into the ocean. 

Ignatova has not been seen in public for more than five years, and intense speculation has swirled around her disappearance, including the possibility that she may have changed her appearance. Speculation flared again recently when a London apartment owned by Ignatova went on sale, but the BBC reports that sale was conducted by German prosecutors who had apparently seized the property, not by Ignatova. The new evidence is tentative and partial, but BIRD is a seemingly reputable investigative organization focused on corruption in Eastern Europe, Russia and the Balkans. It is an affiliate of the respected International Consortium for Investigative Journalism.

The crypto-mafia connection

Prior to BIRD’s findings, the BBC’s Jamie Bartlett had assembled a variety of hints that Ignatova and OneCoin were either a front for organized crime or had become entangled with mobsters. Such a relationship could have seemed mutually beneficial for a time. Taki’s apparent influence over high-level police officials in Ignatova’s native Bulgaria could have sounded like a path to safety for the so-called Cryptoqueen. And a crypto pyramid scheme, which included vast, opaque and entirely off-chain accounting, would have been an incredibly useful channel for both laundering illicit funds and generating its own profits.

This would not be the first time a high-profile crypto scam was linked to organized crime and official corruption. In CoinDesk’s new “Crypto Crooks” podcast, for instance, there is significant evidence that the infamous BitConnect scheme was linked to corrupt officials in India. But the main nexus of crypto and organized crime has long appeared to be in Eastern Europe, Russia and the Balkans – hotbeds too for traditional banking fraud. Meanwhile, there have been rumors of dark connections to more recent high-profile frauds – particularly those whose founders have fled to far-flung, non-extradition countries to evade prosecution in jurisdictions with strong rule of law. 

It is particularly suggestive that Terra founder Do Kwon, a South Korean national, has allegedly made the unlikely flight to Serbia, which shares a long border with Bulgaria. Recent U.S. Security and Exchange Commission charges have clearly established the fraudulent intent of the Terra project, and claim that Kwon has cashed out huge amounts of bitcoin after the scheme’s collapse. We already know that many of the con men and hucksters who stole vast sums in 2022 were fundamentally very dumb people with little concept of risk management. That certainly could have led to entanglements with the kind of people who are willing to dismember your dead body and literally throw you to the sharks. Time, as it has in the case of Ruja Ignatova, will tell.

– David Z. Morris

@davidzmorris

david.morris@coindesk.com

Techno Babble

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