2023.42 - Mixing

IMHO
The Financial Crimes Enforcement Network (FINCEN) is proposing new regulation aimed at destroying your financial privacy. To save us from terrorism, of course.
JUST IN: 🇺🇸 US Senator Elizabeth Warren sends letter to White House claiming crypto is a national security threat being used to fund terrorism.
— Watcher.Guru (@WatcherGuru) October 18, 2023
But, she forgot to include the punchline:
The Biden administration poured hundreds of millions into Gaza—which is controlled by Hamas.
— Senator Ted Cruz (@SenTedCruz) October 21, 2023
They had to exempt themselves from American anti-terrorism laws to do it.
Their political agenda was so important they were willing to risk money going to terrorists. pic.twitter.com/l9WoXL5OPo
In classic government style, they pervert language in an attempt to fool the citizens, remember the "Financial Responsibility Act"? —the one that allowed them to suspend the debt ceiling and amass $500 billion in debt in record time?— kind of like that.
This time they are leaning on the word "mixing". They want financial institutions, casinos, value-added service providers, all regulated entities, to report all mixing transactions.
I'll summarize below but I do recommend you read the article, it's well worth it:
Everyone should read @brian_trollz's article on the new FinCEN rules. We have 90 days to respond. They want every transaction tracked.
— Margot Paez / jyn urso (@jyn_urso) October 21, 2023
"FinCEN Proposes Insane Special Measures"https://t.co/gLWFAUGjrY
Mixing is defined to include:
- “Pooling or aggregating funds from multiple persons, wallets, addresses, or accounts”.
- “Using programmatic or algorithmic code to coordinate, manage, or manipulate the structure of a transaction”
- “Splitting [funds] for transmittal and transmitting the [funds] through a series of independent transactions”.
- “Creating and using single-use wallets, addresses, or accounts, and sending [funds] through such wallets, addresses, or accounts through a series of independent transactions”
- “Exchanging between types of [cryptocurrencies] or other digitals assets”
- “Facilitating user-initiated delays in transactional activity”
Most multi-sigs and lightning channels would qualify for several of these points, arguably all and any Bitcoin transactions would fall under point 2. If you are using standard security best-practices (like not reusing addresses) then that's two strikes for you. Extra penalties if you shitcoin.
The info to be reported includes:
- The amount of cryptocurrency transferred, in native units and USD value at the time.
- The cryptocurrency involved.
- The mixer protocol/service/etc. used, if known.
- Any addresses associated with the mixer used.
- Any addresses associated with the user who mixed.
- The TXID of the relevant transaction.
- The date of transaction.
- Any IP addresses associated with the transaction.
- A “narrative” explaining context, the transaction itself, what the institution did, etc.
- User’s full name.
- User’s date of birth.
- User’s full address.
- User’s email address.
- User’s IRS Taxpayer Identification Number (TIN) or foreign equivalent.
The proposal is, if you'll allow a technical term, absolute bullshit and should be resisted. There is a 90 day period for comments.
The link to comment on the measures is below:
— Lyn Alden (@LynAldenContact) October 21, 2023
@SSCBryce has helpfully come up with a template to get you started:
Here’s a start: https://t.co/2neMSi4QQj
— Shadowy Super-coder⚡⛏ (@SSCBryce) October 21, 2023

Bitcoin News
Assets
Taproot Assets —the protocol formerly known as Taro— has just launched.
It will allow the issuance, management and exploration of assets (tokens, stablecoins, NFTs, etc.) on Bitcoin's Mainnet (and soon on Layer 2). Made possible thanks to Taproot, it will have a minimal footprint on Bitcoin's chain and the flexibility to allow users to ignore it completely or selectively —maybe you're interested in stablecoins but not NFTs, you'll be able to ignore NFTs.
At its core, Taproot Assets taps into the security and stability of the bitcoin network and the speed, scalability, and low fees of Lightning.
Benefiting from Taproot's privacy and scalability features, the assets will be issued on Bitcoin's mainnet and it will be possible to deposit them into Lightning channels for instant transactions
Announcing the first mainnet release of Taproot Assets 🥕, a protocol for assets on #bitcoin and Lightning.
— Lightning Labs⚡️🍠 (@lightning) October 18, 2023
With this release, developers can issue financial assets on-chain in a scalable manner. 💱
Today marks a new era of multi-asset bitcoin. 🌅https://t.co/2cNvZSvv8v
Bear in mind, stablecoins —whether you like them or not— are already huge and global demand for them is unlikely to slow down soon.
At $120 billion in total mkt cap today, stablecoins are currently the 16th largest "sovereign holder" of US treasuries -- which is wild considering the state of the crypto market.
— Will Clemente (@WClementeIII) October 17, 2023
As demand for stablecoins grows, they will soon become too large for the US govt to let fail. pic.twitter.com/DOGSyu2egj
It will be exciting to see Taproot Assets evolve, my respects for the team!
Mining USA
Most Bitcoin miners are currently designed and produced in China, Jack Dorsey's Block would like to buck that trend. They just revealed a new Hashboard prototype as oart of their upcoming Mining Development Kit.
They are aiming to provide mining solutions based on open-source code and custom silicon. The current hashboard has intel chips but Block claims they already has a design for a high-performing ASIC. This is requires a strong "lift" but Block may just be able to pull it off.
It would be healthy to have more than one region pushing the envelope on mining.
Inside look at @Jack Dorsey's new circuit board for their #bitcoin mining computers.
— Documenting ₿itcoin 📄 (@DocumentingBTC) October 17, 2023
The open-source 'hashboard' uses 100x Intel Blockscale 1000 Series ASICs in a gridlike array and is designed to allow easy use of aftermarket components.
Expected to launch next year. pic.twitter.com/JPn32wFTGq
Exposed
A few months back, Ripple executive Chris Larsen funded a Greenpeace campaign which tried to gaslight people with Bitcoin energy FUD.
The short version goes something like: Bitcoin wastes obscene amounts of energy, changing a few lines of code would fix this by switching to Proof-of-Stake instead of Proof-of-Work.
It was complete BS from day one, but it' especially damning that they never took the time to explore Bitcoiner's rebuttals. Troy Cross does a great job of explaining what they'd have found if the sold-out hypocrytes had bothered to look:
.@greenpeaceusa has shown no interest in actually changing bitcoin's code. Else, they would have hired someone to explore the technical options. (They haven't.)
— Troy Cross (@thetrocro) October 16, 2023
They would have worked with environmentalists within the bitcoin community to engender support for such a change, so…
If you'd like to learn mor about some of the other real-life positive effects Bitcoin miners have had, hhis great post by Marty Bent talks about some of his personal experiences at one of the leading edges of mining:
Had an epiphany on the mining stage during my panel with @thetrocro, @TheGuySwann and @hhornblower95 that I tried to articulate on the go and want to articulate it here.
— Marty Bent (@MartyBent) May 22, 2023
It is very ironic that politicians and central bankers refer to bitcoin mining as wasteful.
Bugs
A bug was discovered in Lightning. Long story short, if you open channels with a hostile party they may be able to steal your funds. The full extent of the issue seems as difficult to explain / describe as it is to pull off.
No need to panic, but it should be acknowledged there seems to be no easy fix . Mononaut explains:
This attack isn't easy. Pulling it off involves:
- opening two channels with the victim.
- routing a payment through them.
- successfully replacement-cycling the victim's htlc-timeouts for Δ blocks.
- without the victim discovering the htlc-preimage transaction.
If you want to dive in to the details, his thread will be useful:
How does a lightning replacement cycling attack work?
— mononaut (@mononautical) October 21, 2023
There's a lot of discussion about this newly discovered vulnerability on the mailing lists, but the actual mechanism is a bit hard to follow.
So here's an illustrated primer...
🧵 1/n pic.twitter.com/mvvS8bEc5f

"Crypto" News
The jokes often write themselves
SBF
The trial keeps on giving.
"I don't always bribe politicians, but when I do, I do it with YOUR money"
—SBF, probably
JUST IN: FTX co-founder admits Sam Bankman-Fried used millions of stolen customer funds to donate to US politicians.
— Watcher.Guru (@WatcherGuru) October 16, 2023
Eric Wall summarizes it well:
…it’s just overwhelmingy clear that this is turbo giga ultra fraud of the highest order from literally day 1, there was never even an attempt to run this business honestly, it’s all just laughable, shocking and sad how bad it was.
to those who haven’t followed the sbf trial, the summary is basically this:
— Eric Wall, reportedly (@ercwl) October 19, 2023
while it was pretty clear when ftx collapsed that sbf and others had knowingly commingled customer funds, it wasn’t clear when this had started and how much of it just ”kinda happened”
following this…
Speaking of FTX / Alameda / SBF, it needs to be said given their egregious mismanagement and fraud, that them being one of Tether's few and largest direct customers raises some eyebrows.
So Alameda minted 36b USDT, and only ever redeemed ~4b USDT, a net figure of 30b+ USDT.
— Dylan LeClair 🟠 (@DylanLeClair_) October 19, 2023
So did Alameda wire Tether $30b+ USD? If so, with what money? One possible "good" explanation is that they were a bank mule for other actors.
Alternative explanations are... not great.
1/4 pic.twitter.com/62AOeJTP9w
So far, Tether has absorbed every bullet fired in its direction and I'm neither a fan nor a hater, but we would be remiss not to point out this is odd.
There have always been (and always will be) people claiming Tether will blow up. They've been wrong so far, but I would not bet on them being wrong forever. When it comes to Tether I watch from the sidelines.
🚨Ω🚨
— ⚯ M Cryptadamus ⚯ | @cryptadamist@universeodon.com (@Cryptadamist) September 20, 2023
"#Tether is going to blow up. It is going to be devastating and it's guaranteed to happen eventually."
- David Bailey (CEO, Bitcoin Magazine)
Also check the incredible pause at 1:30... pic.twitter.com/QIAq5rAj0G
Stuck
If you had USD on Binance USA well, you kind of no longer do.
.@BinanceUS updated its terms of use to reflect that users can no longer withdraw $USD directly from the platform, effective immediately. @iamsandali reports.https://t.co/chiBOaasX9
— CoinDesk (@CoinDesk) October 17, 2023
Floppening
"The Flippening" —the expectation that ETH would overtake Bitcoin after it switched to Proof of Stake— hasn't quite come to pass yet. Any day now though…
NEW: ETH/BTC continues to plumb new lows for the year. Currently sitting at .055 👀 pic.twitter.com/ib0FBiHS3X
— Bitcoin News (@BitcoinNewsCom) October 18, 2023
Speaking of Ethereum, co-founder Joe Lubin is a douche bag (and yes, we all knew)
Ethereum co-founder Joe Lubin is a scammer....who knew? https://t.co/b7DZ6mljdl pic.twitter.com/JhzRRNFBXt
— Pledditor (@Pledditor) October 20, 2023
Pour one out for DCG
This is a long thread that goes into some of NY Attorney General's comments around Barry Silbert's Digital Currency Group.
TLDR: They are f*cked and will likely be forced to spinoff their Grayscale fund.
The complaint against them are civil in nature but apparently criminal laws were broken, so it may not out of the question that Silbert and SBF could wind up bunkmates.
2/ The Enron fraud involved the use of off-balance sheet special purpose entities (SPEs) to hide debt and inflate profits.
— Ram Ahluwalia, Lumida (@ramahluwalia) October 22, 2023
Enron executives engaged in self-dealing transactions.
The NYAG alleges DCG did both of these...and more.

Fiat News
Deterioration
China's economy is showing signs of stress / deterioration. A global recession seems imminent, but no country wants to be first so they're doing their best to pretend everything's fine.
China’s central bank injected $100.2 BILLION into their lending market on Friday.
— The Kobeissi Letter (@KobeissiLetter) October 22, 2023
On Monday, China made the largest injection on record of one-year policy loans on Monday.
This comes after China unexpectedly implemented their biggest rate cut since 2020.
China also cut rates… pic.twitter.com/RorfaiQXCv
But then again, the same could be said for the US
Current situation:
— The Kobeissi Letter (@KobeissiLetter) October 20, 2023
1. Stocks falling like a recession is coming
2. Home prices rising like there's no recession
3. Bonds falling like the Fed is raising rates
4. Gold rising like the Fed is cutting rates
5. Oil prices rising like a major war is coming
6. Tech stocks rising…
Weak Bonds and Strong Delusions
The bond market is, ahem …unwell.
"In terms of total returns, this is the biggest bond market rout in 150 years. Last year was in fact US bond investors’ worst year since 1871, with a total return of minus 15.7%, even worse than the annus horribilis of 2009. For 2023, the year-to-date return has been almost minus…
— Mohamed A. El-Erian (@elerianm) October 14, 2023
This would be a problem on any given day, but it's now a bit of an existential issue because the government needs to unload an ungodly amount of bonds over the course of the next few months,
Given diminished appetite from international markets, one group which has stepped up as a big client have been leveraged hedge funds. But they're making the government nervous.
Levered hedge funds have been one of biggest marginal buyers of USTs in recent months as part of the relative value basis trade.
— Luke Gromen (@LukeGromen) October 19, 2023
Last month, "a senior exec at one of the world's largest HF's" told FT "If hedge funds stopped buying USTs, I don't know who would buy them." 👇😳 https://t.co/3M1wP6pbYD pic.twitter.com/NoVfEQJysL
My guess is they want to wean themselves a bit from them. You see, the problem is in the word "leveraged", apparently these funds use leverage levels that would make even the boldest shitcoin casino blush (up to 500x apparently) making these funds very vulnerable to volatility.
Bond volatility, as measured by the MOVE index is on the rise. Consensus is, at 140 volatility is too high. At 150 The Fed has lost control of the market.
MOVE index creeping back higher. pic.twitter.com/l0Tpzsn33X
— Neil Sethi (@neilksethi) October 22, 2023
Another source of funds have come from "coaxing" some of the funds stashed away in Reverse Repo facilities to buy debt (short-term T-bills apparently).
This is kind of like the Strategic Petroleum Reserve, they can use it to manipulate the market, until they run out.
At the pace of what it did during May-October 2023, the reverse repo facility would be drained by April 2024.
— Lyn Alden (@LynAlednContact) October 22, 2023
If it keeps the recent acceleration from August-October 2023, then it would be drained within January 2024. pic.twitter.com/UjnlH65XtG
In classic "Masters of the Universe" mode, The Fed is pretending it can shrink its Balance Sheet (offload some of its debt) while all of this is going on.
🔴 FED'S WALLER: WE CAN RUN OUR BALANCE SHEET DOWN A TOTAL OF $2 TLN TO $2.5 TLN AND KEEP RESERVES AMPLE.
— Breaking Market News (@financialjuice) October 18, 2023
Reminds me of that delusional old lady who thinks the US can afford two wars. I wonder what price the bond market will demand for such largesse?
Janet Yellen: America can certainly afford two wars, US Treasury secretary sayshttps://t.co/2UVwUDTZuW
— Cernovich (@Cernovich) October 16, 2023
I wouldn't be so cocky, the unusual divergence between Gold price and TLT (long-term bond ETF) suggests the market thinks "flight-to-safety" means Gold, not bonds.
This is a U.S. debt Crisis ❤️🔥$Gold is being chosen over $TLT as the Safe Haven asset.
— Brian (@brian_zarb) October 20, 2023
Watching the US lose its Sovereignty in real-time is definitely a story we will be telling our Kids. #Gold #Silver #Bitcoin pic.twitter.com/ekaE9cdUPk
All the while, Americans who can no longer afford rent are settling for parking spaces
Dozens of parking lots have opened across the U.S. for working people who can afford a car but not rent. “It was a case of one bill too many,” said a woman who earns over $72,000 a year as a social worker in Washington State and sleeps in her car. https://t.co/V1arfiSdlJ
— The New York Times (@nytimes) October 23, 2023
Dollar-Me-Not
In small but symbolically significant steps, some countries keep making efforts to fund alternatives to the USD
“Three-year bonds worth 3.5 billion yuan, or about $479 million, were issued with a 3.5% interest rate, which Egyptian officials said was lower than dollar-denominated bonds would have carried.”https://t.co/ojTLVKjOlz pic.twitter.com/TTJVblbtjM
— Matthew Pines (@matthew_pines) October 18, 2023
Hiccups
Last week it was Japanese Banks, this week it was the London Stock Exchange. Odd.
SOMETHING BIG JUST WENT WRONG IN THE LONDON STOCK EXCHANGE
— GURGAVIN (@gurgavin) October 19, 2023
TRADING IN MOST STOCKS
IS HALTED IN LONDON https://t.co/eVadEMJZe2
Real Estate
This could be problematic. Why would you buy an investment property if you caoud get the same return from buying US Debt?
JUST IN: The 10-year note yield is now officially above the median cap rate for the first time since 2008, according to Reventure Consulting.
— The Kobeissi Letter (@KobeissiLetter) October 17, 2023
In simple terms, the return on an investment property is now BELOW the 10-year note yield.
It should be no surprise that investor… pic.twitter.com/ZX7d4JC9Ib
Oh, that's right. You wouldn't.
🚨BREAKING: Goldman Sachs has marked down or impaired office holdings down by 50%.
— Genevieve Roch-Decter, CFA (@GRDecter) October 17, 2023
The CFO Denis Coleman just said this on their Q3 earnings call.
Probably nothing. pic.twitter.com/Gkxl3M5RhH
No Chips For You
Can the US starve China of chips to gain a foothold in the AI wars?
Apparently Chinese companies had $5 billion worth of orders with Nvidia for GPU chips. How will China retaliate?
JUST IN : US RESTRICTS SALE OF NEW NVIDIA CHIPS TO CHINA
— GURGAVIN (@gurgavin) October 17, 2023
THESE NEW CHIPS WERE SPECIALLY MADE BY NVIDIA TO BYPASS US SANCTIONS $NVDA pic.twitter.com/UHsLcZvHyt
Argetina
The money printer got stuck
Argentinian money supply is up 1.5 million percent since 1990.
— Swordfishvegetable (@Swordfishv44183) October 17, 2023
This is what an inflationary debt spiral looks like. pic.twitter.com/agohxG3vRY
Their money needs strong medicine and brash, outspoken Javier Milei is ready for some serious monetary triage. This week we'll find out if he is Argentina's new president.
Viva la libertad, carajo!
🇦🇷 🗳️With the polls closed in Argentina, what happens next? #Bitcoin
— Swan (@Swan) October 22, 2023
To win the election, pro-Bitcoin candidate Javier Milei needs to obtain 45% of the vote or a 10% gap ahead of the second candidate.
If Milei can’t secure the victory outright, there will be a runoff… pic.twitter.com/RJgY2vG667

Dystopian News
Kaput
More Bankruptcies pouring in. We'll be sad to see you go…
Good Morning Everyone! Rite Aid has filed for bankruptcy with $4 billion debt load and soaring interest costs.
— Genevieve Roch-Decter, CFA (@GRDecter) October 16, 2023
After years of cheap debt – some of America’s best-known brands are going bankrupt.
Bed Bath & Beyond, VICE, Party City, Pyrex, etc
Companies are filing for… pic.twitter.com/4dN4nKHRu9

Price News
BTC Surfing
Bitcoin's price jumped clearing the Bedrock ($27k) and Water ($28k) levels. It is now in the middle of dry Sand, which stretches up to $33.6k

Dip Fishing
As Bitcoin's price jumped it cleared through the $29k and $30k but didn't manage to break through $31k, we will see if holds above. It would not be surprising to see it fall back to $28k

Calm Chart
October is now positively green and seems likely to remain that way unless we get a nasty surprise.

