Criminal at Bitcoin 2024, BTC Strategic Reserve Bill, and more: Hodler’s Digest, July 28 – Aug. 3

Senator Lummis introduces the Bitcoin Strategic Reserve Bill, the convicted Bitfinex hacker appears at Bitcoin 2024, and other news.

by Editorial Staff 10 min August 3, 2024

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Top Five Stories of the Week

Sen. Lummis introduces Bitcoin Strategic Reserve bill in Senate

On July 31, Senator Cynthia Lummis officially introduced the Bitcoin Strategic Reserve bill, which would direct the United States government to start a reserve fund for the scarce decentralized asset. More specifically, the bill would establish a “decentralized network of secure Bitcoin vaults” under the control of the United States Treasury. 

The bill also directs lawmakers and bureaucrats to enact strict cybersecurity parameters and other physical security measures to ensure that Bitcoin funds are not stolen. Additionally, the bill laid out a goal of accumulating 1 million Bitcoin over time, or roughly 5% of Bitcoin’s total supply, using existing U.S. Treasury funds to acquire the Bitcoin in amounts that mirror the U.S. Treasury’s gold allocation.

Lummis’ bill also reaffirmed the right to self-custody in the United States. It seeks to protect this right, which has come under fire from certain U.S. lawmakers.

Bitfinex hacker Heather Morgan spotted at Bitcoin Conference 2024

Heather Morgan — a self-styled social engineer and flamboyant rapper also known by her alter ego “Razzlekhan” — made headlines after being arrested for and subsequently pleading guilty to one of the most audacious cyber heists in history: the 2016 Bitfinex hack resulting in the theft of 120,000 Bitcoin, worth $4.5 billion at the time of her arrest.

Contrary to popular belief that she was behind bars, Morgan reportedly appeared at the Bitcoin 2024 conference in Nashville, sparking curiosity and controversy among attendees. 

When Morgan pleaded guilty on Aug. 3, 2023, she knew she could face up to five years in prison and receive a fine of $250,000. Since then, she’s been awaiting sentencing, scheduled for Nov. 8, 2024.

Jameson Lopp, a Bitcoin developer and co-founder of Bitcoin custody firm Casa, found her presence extremely suspicious. He advised Bitcoin event organizers to regard her as a threat actor and deny her entry.

Lopp’s concerns highlight the broader unease within the crypto community regarding Morgan’s intentions and the potential risks she might pose at these gatherings. He told Cointelegraph that he believes there could be two explanations for her attendance at these events.

A “charitable explanation would be that she’s seeking consulting gigs in order to pay the $250,000 fine she owes to the government,” according to Lopp. She has reportedly introduced herself as a “Web3 adviser” at Bitcoin conferences.

However, Lopp said an “adversarial explanation” would be that she’s “seeking to reduce her sentence by collecting intel on behalf of the government.”

4 suspects forced a Bitcoiner to transfer BTC before killing him, police say

Police have arrested four suspects for allegedly kidnapping and murdering an unidentified 29-year-old foreign national Bitcoiner in Kyiv, Ukraine, after stealing $170,000 worth of Bitcoin from him.

The four suspects — all male and aged between 24 and 29 — reportedly premeditated the attack, launching their assault around midnight on July 29, Kyiv Police said. Residents contacted police after hearing screams and several people beating and forcing a man into a car.

Police said the victim was taken to an abandoned building where he was forced to transfer approximately 7 million Ukrainian hryvnias worth of Bitcoin (around 2.55 BTC), before the assailants strangled the man to death and buried his body in a forest.

Kyiv Police also allege the four men changed the appearance and number plates of the car used to try to conceal the crime. The suspects then converted the Bitcoin into stacks of United States dollars and euros before being found and detained by Kyiv Police.

Trump’s Bitcoin sneakers are already on eBay for $2,500

Listings for pairs of Donald Trump’s limited-edition orange Bitcoin-themed sneakers have already made their way onto eBay, with scalpers hoping to sell their spot in the pre-order queue for as much as $2,500. 

At the time of writing, there were 12 listings on eBay for the Bitcoin orange-colored high-tops. Prices start as low as $700 via a live auction but range as high as $2,500 with a “or best offer” condition. One offer jokingly set a price of $69,999.

However, there’s no telling if the sellers will keep their word or if the listings are legitimate.

Most of the listings promise to ship the footwear to their buyer once they receive it, which is expected between September and November. Most of the sellers appear to have high ratings, though more than one has been accused of being a “scam” in the buyer feedback section.

Trump’s Bitcoin-themed footwear went live for pre-order on the official Trump Sneakers website on July 31, with a limited edition run of 1,000 for the orange high-top shoes. They sold out within three hours of launch.

Notably, the website said five pairs of the limited edition shoes would be randomly signed by Trump — meaning that Trump sneakerheads would have a 1 in 200 chance of receiving a signed pair.

Judge grants ex-FTX exec’s request to postpone reporting to prison

A federal judge has granted a motion filed by lawyers representing former FTX Digital Markets co-CEO Ryan Salame to delay reporting to prison until Oct. 13.

In a July 30 filing by the United States District Court for the Southern District of New York, Judge Lewis Kaplan approved a motion allowing Salame to push back his self-surrender date by 45 days as part of his sentence of 7.5 years in prison. Salame’s legal team requested the delay due to medical complications from a dog biting the former FTX executive’s face on June 29 while he was visiting a friend’s home.

The July 26 motion by Salame’s legal team redacted medical information related to his injuries but claimed that a German Shepherd “mauled” him and he would require treatment and surgery before reporting to prison. He was initially going to report to prison on Aug. 29, roughly three months after being sentenced.

The former FTX executive returned to the social media platform X after roughly two years following his May sentencing hearing. On the day of the alleged dog attack, he suggested that a surgeon who didn’t hold his political views would be more likely to intentionally harm him while treating the wound.

Winners and Losers

At the end of the week, Bitcoin ( BTC ) is at $62,083, Ether ( ETH ) at $3,038 and XRP at $0.56. The total market cap is at $2.21 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are AAVE (AAVE) at 14.02%, Bitcoin Cash (BCH) at 4.14% and Kaspa (KAS) at 2.45%.

The top three altcoin losers of the week are dogwifhat (WIF) at 35.25%, Render (RENDER) at 27.10% and Bittensor (TAO) at 24.54%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis. 

Most Memorable Quotations

“The general premise is that if criminals are less aware of you, they are less likely to target you.”

Jameson Lopp , co-founder of Casa

“There is no reason to think SEC has decided SOL is a non-security,”

Jake Chervinsky , chief legal officer at Variant

“As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve.”

Cynthia Lummis , United States senator

“Politicians are embracing crypto because Americans are embracing crypto.”

Matt Hougan , chief investment officer at Bitwise Asset Management

“Tone deaf anyone??? Moving Silk Road BTC two days after Trumps pledge to not move them is just dumb!!!!”

Mike Novogratz , CEO of Galaxy Digital

“The SEC’s approach threatens the livelihoods of artists and creators that are simply experimenting with a novel, fast-growing technology or have chosen it as their preferred medium.”

David L. Patron, attorney at Phelps Dunbar

Prediction of the Week

Ethereum ETFs could reach $10B AUM in first year: Sygnum Bank

Spot Ether exchange-traded funds could amass as much as $10 billion in assets under management within their first year of trading.

Katalin Tischhauser, head of investment research at Sygnum Bank and a former executive at Goldman Sachs, told Cointelegraph in an interview that the projections are based on her forecast for spot Bitcoin ETFs. She predicted that Bitcoin ETF inflows would be in the $30 billion to $50 billion range for the first 12 months of trading, and Ethereum products would follow.

“Ethereum’s lesser name recognition is likely to mean slower adoption,” she said, before adding:

With Ethereum’s market capitalization a third of Bitcoin’s, we expect the relative inflows to be in the 15-35% range versus Bitcoin, with a resulting forecast of $5 to $10 billion in the first year.”

The researcher said that there were significant advantages to ETFs for traditional investors because they are mostly not set up to trade, settle, and risk-manage direct crypto investments:

A familiar regulated product such as ETFs makes Ether easily accessible to investors who are interested in simple investment exposure.”

FUD of the Week

SEC likely still believes SOL is a security, say crypto execs

The United States Securities and Exchange Commission hasn’t necessarily let Solana off the hook as a security despite retracting its request for a court to decide on the matter as part of its Binance lawsuit on July 30.

“There is no reason to think SEC has decided SOL is a non-security,” said Jake Chervinsky, chief legal officer at crypto-focused venture capital firm Variant Fund, in a July 30 post on X.

Chervinsky’s post refers to the latest response from the SEC, seeking to amend its complaint regarding the “Third Party Crypto Asset Securities,” essentially telling the court it is no longer asking to determine whether the tokens listed in the lawsuit are securities or not.

While Chervinsky didn’t expand on what that “litigation tactic” may be, he highlighted that the SEC still refers to the same tokens as securities in other crypto exchange lawsuits, including its one with Coinbase.

In separate posts, Miles Jennings, general counsel and head of decentralization at a16z Crypto, and Justin Slaughter, policy director at Paradigm, appeared to agree.

Slaughter argued that many are “overreading this filing” and that it doesn’t mean the SEC has decided that Solana and other tokens are not securities.

Jennings explained that Judge Amy Berman Jackson had set such a high bar to establish the Howey test in the Binance case that it wasn’t worth the SEC’s time and effort to prove these tokens were securities.

SEC Charges BitClout founder Nader Al-Naji with fraud

On July 30, the United States Securities and Exchange Commission (SEC), alongside the U.S. Attorney’s Office for the Southern District of New York, announced charges against BitClout founder Nader Al-Naji.

The SEC’s complaint alleged the BitClout founder sold $257 million in unregistered securities through BitClout’s native token, BTCLT, and defrauded investors by misusing a portion of those funds. The SEC also named Decentralized Social (DeSo), a newer project from Al-Naji, in the complaint and a corresponding press release.

More specifically, the complaint accused Al-Naji of spending $7 million in customer funds on luxury items like leasing a Beverly Hills mansion and giving generous cash gifts to family members despite promising investors that funds would not be used as compensation for any BitClout team members.

The SEC complaint claimed that Al-Naji also mischaracterized the core inner workings of the BitClout project. According to the securities regulator, the BitClout founder misled investors and legal firms by claiming the project was decentralized, with no governing company controlling It, yet was running the project behind the scenes.

Crypto sleuth investigates suspect in Sydney Sweeney’s hack

A few weeks after American actress Sydney Sweeney suffered a major cryptocurrency-related hack on X, some new details on the attack and the alleged hacker have surfaced.

ZachXBT, a pseudonymous, independent on-chain sleuth, took to X on July 30 to post his investigation into the recent hack of Sydney Sweeney’s X account and the alleged connection of convicted hacker Gurvinder Bhangu to the incident.

The X account of the actress was hacked on July 2, 2024, with the attacker promoting a Solana-based token, SWEENEY, in a pump-and-dump scheme. 

According to findings by ZachXBT, Bhangu was one of the people behind the hack.

Bhangu, also referred to as “Gurv” in the post by ZachXBT, is described as a convicted hacker who has served time in the United Kingdom for hacking into Instagram accounts and blackmailing users.

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Editorial Staff

Cointelegraph Magazine writers and reporters contributed to this article.