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- The Daily Blurt - January 10
The Daily Blurt - January 10
Tornado Cash sanctions, Former FTX engineer meets with prosecutors, Mark Cuban faces deposition for Ponzi scheme, PayProtocol suspension, and Nepal tightens cryptocurrency crackdown with new ISP ban.

Tornado Cash mixer's decentralization makes it difficult to shut down despite money laundering sanctions
The Office of Foreign Assets Control (OFAC) imposed sanctions on decentralized cryptocurrency mixer Tornado Cash in August 2022, due to its alleged involvement in money laundering. A report by blockchain analytics firm Chainalysis showed that the sanctions had some effect, causing a 68% drop in total inflows to the mixer in the 30 days following the sanctions. However, Tornado Cash's decentralized, smart-contract-based platform makes it more difficult to shut down than a centralized service. Despite the removal of its front-end website, its smart contracts can still run indefinitely, allowing it to still technically be used at any time. OFAC amended the sanctions in November to further crack down on the platform for malicious cyber activities supporting North Korea's weapons of mass destruction program. Illicit use of Tornado Cash was primarily related to cryptocurrency hacks and scams, with 34% of all inflows attributed to these sources.
Polygon's scalability solution attracts Starbucks, Nubank, Mastercard and Uniswap to support Layer 2 ecosystem
Polygon, also known as Matic, has formed partnerships with several major companies, including Starbucks, Nubank, and Mastercard, to support the growth of its Layer 2 ecosystem. The company also formed a partnership with decentralized exchange Uniswap, which is expected to see significant growth in 2023. The partnership between Polygon and Uniswap aims to increase efficiency and attract more traders to the Uniswap platform, by utilizing Polygon's scalability solution for Ethereum, and its involvement in areas such as rollup. Additionally, the low fees on Polygon has led to more services and growth in the total value locked (TVL) on the Uniswap platform. This partnership can bring the DeFi closer to the ideal world without bank ties by creating a more attractive DeFi platform with better scalability and security options.
Former FTX engineer meets with prosecutors in ongoing investigation of crypto exchange
According to recent reports, Nishad Singh, the former engineering chief at FTX, has met with federal prosecutors to cut a deal in the ongoing investigation of the crypto exchange. Singh attended a proffer session with the United States Attorney's office for the Southern District of New York last week. The prosecutors are particularly interested in Singh's insight regarding FTX's political donations, as one of the charges against FTX founder Sam Bankman-Fried is campaign finance law violations. Singh himself has made significant political donations over the years, and his cooperation and information could lead to him entering a plea deal if his information is deemed valuable.

He is the third former FTX and Alameda Research executive, following Gary Wang and Caroline Ellison, to reach an agreement with federal prosecutors. U.S. Attorney Damian Williams issued a warning in December 2022 to those who participated in misconduct at FTX and Alameda to "come see us before we come to see you." The United States Securities and Exchange Commission (SEC) is also investigating Singh for potentially having a role in defrauding FTX investors and users. A recent filing in November 2022 revealed that Alameda loaned $543 million to Singh, one of three related-party loans given by the trading firm which also included an amount of $1 billion to Bankman-Fried and $55 billion to the FTX Digital Markets co-CEO, Ryan Salame.
Mark Cuban faces deposition in defense against Ponzi scheme lawsuit
Mark Cuban, the owner of the Dallas Mavericks, will be deposed next month as a defense against a proposed class-action lawsuit that claims he promoted a Ponzi scheme through now-bankrupted crypto lender Voyager Digital. In a court order, U.S. Magistrate Judge Lisette M. Reid denied Cuban's request to split the deposition into two sessions and ordered that his full deposition would be taken on February 2 in Dallas, Texas. Additionally, two Dallas Mavericks employees will also be deposed before February 23. Furthermore, the Judge indicated that three plaintiffs behind the lawsuit, Pierce Robertson, Rachel Gold and Sanford Gold, will be deposed before the end of this month.
PayProtocol ordered to halt services by South Korean financial authorities
South Korean issuer of payments-focused cryptocurrency Paycoin (PCI), PayProtocol will reapply for a local license to continue its business, after being ordered to suspend its services by the Financial Intelligence Unit (FIU). Paycoin, which was developed under Danal Fintech Corp, is one of the most used payment tokens in South Korea since its launch in 2019, and can be used for commercial trade at Pizza Hut, Burger King, 7-Eleven, and Park Seung Chol Hair-Studio. However, on January 6, 2023, the FIU rejected Danal-backed PayProtocol’s application to register as a provider of crypto trading services, citing that the project did not have a banking partner as required by local laws. In order for a crypto business to offer fiat-to-crypto transaction services, it must secure a partnership with a local bank to provide real-name withdrawal and deposit accounts and assist in the prevention of money laundering. PayProtocol registered itself as a digital asset wallet provider last year, but the financial authorities requested that it register as a crypto trading platform, interpreting Paycoin transactions as an indirect exchange of crypto and fiat.
Nepal tightens cryptocurrency crackdown with new ISP ban
In a recent move, the authorities in Nepal have taken steps to further block any cryptocurrency related activities in the country. On January 8th, Nepal's Telecommunications Authority issued a notification to all internet service providers (ISPs) instructing them to prevent the operation and management of crypto-related websites, apps, or online networks. This move is not the first time the country has clamped down on crypto activities, with the central bank having banned all cryptocurrency trading and mining back in September 2021.
The latest notification also threatens legal action against ISPs and email service providers if any crypto-related activities are found to be taking place on their platforms. The notice highlighted that virtual currency transactions which are illegal in Nepal "are increasing in recent days." Despite the ban, Nepal has reportedly ranked 16th on Chainalysis's 2022 Global Crypto Adoption Index, ahead of countries such as the United Kingdom and Indonesia. According to a report by the Library of Congress, Nepal is one of only nine countries, including China and Algeria, to have instituted a complete ban on cryptocurrency.