GuShiio.com The industry’s attitude towards celebrity tokens has gradually turned antipathy.
Compiled and compiled: Deep Trend TechFlow
Host:
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Haseeb Qureshi, Managing Partner, Dragonfly
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Robert Leshner, CEO and co-founder of Superstate
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Tarun Chitra, Managing Partner, Robot Ventures
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Tom Schmidt, General Partner, Dragonfly
Podcast source: Unchained
Original title: Crypto Circus Never Ends: Hacks, Grifts, and Kanye ‘s Coin?
Broadcast date: February 24, 2025
Summary of key points
Discussions in this issue include:
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Bybit hacking incident:
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Bybit suffered the largest cryptocurrency hack in history, losing US$1.5 billion, suspected to have been committed by North Korea’s Lazarus Group.
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Hackers took advantage of loopholes in multi-signature technology to quickly transfer funds to the Ethereum network.
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Bybit’s CEO responded quickly, promising to meet user redemption needs and receiving bridging loan support from Binance and Bitget.
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Libra scandal:
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Libra Meme, backed by Argentine President Javier Milei, has plunged 95% amid insider trading and market manipulation scandals.
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Expose the operating routines behind the issuance of Meme coins, including KOL private placement and robot sniping.
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Celebrity token controversy:
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Kanye West originally planned to launch the YZY token, but postponed it due to timing sensitivity.
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Celebrity tokens have been frequently hacked. For example, Dave Portnoy was accused of running away from the Greed and Greed 2 projects, and the direct sell-off caused heavy losses to investors.
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The industry’s attitude towards celebrity tokens has gradually turned antipathy.
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Meme Market recession:
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Recently, Meme market sentiment has been sluggish, and retail investors have gradually realized the nature of its zero-sum game.
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Haseeb Consider Meme’s cycle to be over.
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Improved regulatory environment:
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The U.S. SEC announced that it would withdraw its lawsuit against Coinbase and restructure its crypto division to focus on combating digital fraud.
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Hester Peirce proposed regulatory policies to cooperate with the industry, sending a positive signal.
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The new head of the CFTC nominates Brian Quintenz or promotes a more friendly regulatory framework for cryptocurrencies.
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Infrastructure construction and ecological stability
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The Solana and Ethereum ecosystems have not been affected by the Meme downturn, with developers focusing on infrastructure and application innovation.
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The developer conference at Solana showed that there are still long-term builders in the market.
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The largest cryptocurrency hacking incident in history
Haseeb：
Last week, we just experienced the largest cryptocurrency hacking incident in history. Bybit cold wallet was hacked and lost US$1.5 billion.
Bybit said they were attacked while moving funds from cold wallets to hot wallets. This operation is a regular transfer of funds carried out by the exchange to meet the withdrawal needs of users. Although Bybit uses multi-signature technology and relies on the multi-signature system provided by Ledger, when signing a transaction, the transaction content displayed on the front end is inconsistent with the actual transaction content seen on the signer’s device.
This attack method is very similar to previous hacking incidents against Rexerx and Radiant Capital, so there is widespread suspicion in the industry that this incident may be related to the Lazarus Group. Lazarus Group is a hacking group linked to the North Korean government that has been involved in multiple large-scale cryptocurrency thefts, including the Axie Infinity hack a few years ago.
Bybit’s countermeasures and industry response
Haseeb：
Bybit CEO Ben officially confirmed the hacking incident on Twitter and saidThe company has enough balance sheet to cover this loss and can fully meet the redemption needs of all users.。He broadcast a live broadcast about 30 minutes after announcing the hacking incident, the first time he has responded publicly so quickly under similar circumstances.
In the live broadcast, he told everyone:
About six hours after the hacking incident, outflows had stabilized, and the market seemed to feel relatively comfortable with Bybit’s situation. In addition, we have seen many people stand up in support of Bybit, including CZ and some other exchange leaders. Many people compare this incident to FTX, but the difference is that Bybit was able to satisfy redemption requests this time.
Participation of North Korean hacker organizations and follow-up to the incident
Haseeb：
This incident can be confirmed to be related to North Korea, which also means that we cannot foresee what will happen next. It is unlikely that North Korea will transfer assets directly to a centralized exchange. These stolen assets are still stored on the Ethereum network and there has been no further transfer. Apparently, this is because North Korea knows that the assets are closely tracked around the world, and the funds are too large for effective money laundering operations through privacy protocols such as Tornado Cash.
These assets originally existed in the form of mETH and stETH, namely the pledge of Ethereum (stETH) and other related assets provided by Lido. However, they quickly exchanged all these assets for Ethereum through the DeFi platform. I suspect this is because Ethereum is the most liquid asset and the least likely to be frozen. If you hold certain small currencies, you may face the risk of asset freezing due to governance issues, but this possibility is almost non-existent for Ethereum.
Although this is the largest hacking incident in dollar terms in cryptocurrency history, no one has proposed solving it through methods such as a hard fork.From these hacking incidents, we can find a patternWhen the stolen amount is very large, it becomes more difficult to escape。Ironically, if you stole $20 million or $30 million, it might be easier to hide; but if you stole a billion dollars, where will the money end up? Who can help you deal with it?
Robert：
I also don’t know how they will deal with these huge amounts of hacker income. I believe there are some online analysts who have been tracking these events for years, but I suspect they may end up trying to swap these funds for commodities like Russian oil.
Tarun：
I remember Richard Heart was sued by an agency. He was the largest DAI holder because he received a large amount of Ethereum from Pulse Chain, but because he was blacklisted by many exchanges, he converted all of these Ethereum into DAI. I wonder if we will see something similar this time, which will be a good test to see if attackers will trust decentralized stablecoins.
Haseeb：
I don’t think they’re going to transfer all the money at once. Richard Heart’s operation is a slow process, not a one-time process.
Robert：
This ultimately depends on hackers ‘risk tolerance and tolerance for financial fluctuations. Richard Heart traded Ethereum because he needed stablecoins to pay for dollar expenditures.
Haseeb：
If I were North Korea, I would think about how to use the money and try to move it to places like Russia.
Robert：
They have tried to bridge some assets to Bitcoin, but now there are not many decentralized ways to move from Ethereum to Bitcoin.
Haseeb：
If these assets are secured through multiple signatures, if someone discovers that their protocols are being used to process $1 billion worth of Ethereum, many people may choose to proactively report the funds, believing they should be confiscated and handed over to law enforcement through a governance structure. In this case, few people would support North Korea.
Tarun：
We may see some very crazy on-chain operations because they have no choice. What makes me interesting is the situation of Thorchain. In the past, many hackers used Thorchain to borrow money or bridge to Bitcoin, but now that third-party chain verifiers have withdrawn, it has become impractical to transfer large amounts of money through it. Today’s Bitcoin cross-chain bridge technology is more imperfect than ever, which could put them in trouble.
Robert：
I imagine this as ancient pirates burying gold nuggets. They buried the gold somewhere, drew a treasure map, and then came back to look for it thirty years later. North Korea may regard these stolen cryptocurrencies as treasure and use them again at some point in the future.
Haseeb：
This is an interesting assumption. Maybe they will come up with some kind of agreement, such as a 10% reward for those who return assets. But I don’t know how to launder these stolen assets. As an isolated country, North Korea makes any form of agreement negotiation very difficult, which is a very bad situation for customers and Bybit. While I believe Bybit’s finances are sound enough, it will be a big problem if they can’t raise enough Ethereum to meet redemption needs.
Many people speculated that Ben mentioned in the live broadcast whether Bybit would satisfy all redemption requests by purchasing Ethereum. Currently, they have secured a bridging loan through Biget and Binance, a positive sign in sharp contrast to the FTX collapse.But assuming that no one is willing to do business with North Korea and no agreement is possible, Bybit may indeed need to buy Ethereum on the market. If this is the case, this may be a positive for Ethereum prices, as it will bring in approximately US$1.5 billion in net purchase demand, and market liquidity will naturally increase.
Tom： I noticed that the community spoke highly of Ben’s communication style. He quickly and directly conveyed information to the public through live broadcasts, which is very rare in the industry. Instead of using those vague official terms, he clearly told everyone that“We have no problem, we will solve the problem, and that’s it.& rdquo; This transparency is impressive.
Haseeb：
It does. If you compare this incident with FTX, Bybit’s handling of it is exemplary, and FTX’s live broadcast was a complete farce.
Robert：
The fundamental difference is that FTX was a malicious participant who carried out large-scale fraud, which was why they were short of funds, while Bybit was a trusted victim who was hacked.
Haseeb：
I completely agree. Usually in hacking incidents, we will see that the victim’s first reaction is to obfuscate and not directly face the problem, allowing the information to spread through various channels. Bybit responded quickly within just 30 minutes after the incident, clearly explaining what happened, and proactively communicating with customers to ensure that everyone understood the situation.
This should become standard practice for every company when it encounters a hacker attack. First of all, we must control the rhythm of communication. Of course, the scale of this hacking incident is indeed unprecedented, but compared to Bybit’s balance sheet, this loss is not devastating. Today’s crypto market is much larger than it used to be, and although this was the largest hacking incident in history, the losses only accounted for a few percentage points of Bybit’s total assets.
Tom：
After the FTX incident, Bybit launched a reserve proof system, allowing users to check in real time whether their assets are included in reserves, which greatly enhances transparency. No fraud was involved in this incident, so users don’t have to worry about major gaps in their balance sheets.
Haseeb：
I actually hope to find some evidence that this is an insider attack. Because if it is an insider attack, the possibility of recovering assets is greater. Fortunately, however, the industry’s foundation is solid enough to survive this crisis and ensure that the interests of all customers are not affected.
Hayden Davis Libra scandal
Haseeb：
Another big news is a coin called Libra. The project has the support of Argentina’s new president, Javier Milei, who is himself a controversial figure. The incident has been called the biggest insider trading scandal since the FTX crash. So what happened to Libra?
Javier Milei publicly promoted the Libra token through a tweet. It all happened very suddenly, with almost no warning. Subsequently, the market value of the Meme coin quickly soared to US$4 billion, but fell by 95% in a short period of time. During the crash, Milei deleted his tweets. At the same time, there are reports that insiders sold tokens while the market was crazy, and it is estimated that they made nearly US$200 million through this wave of operations. As the incident progressed, more confusing details gradually surfaced.
The controversy surrounding the project throughout the incident is confusing.What is Milei’s main position? What does the Argentine government think about this?Later, we learned that Milei himself did not directly profit from the Meme coin, but was launched by a private Argentine company. They claimed that it was for the benefit of the Argentine people or community, but the entire process was very opaque.
The central figure in the incident was a white male named Hayden Davis. After returning to Argentina, he became a businessman focused on Meme. He is more like a coordinator than a project initiator or direct promoter. In an interview, he mentioned that launching a Meme involves multiple roles, and that his main role is to bring parties together. He emphasized that he does not directly operate funds or own these assets.
In Argentina’s crypto circles, Hayden Davis is considered an insider. In leaked private information, he boasted of paying money to Milei’s sister Karina Milei. Karina is a prominent figure in Argentine politics. Hayden even tweeted about his influence on Javier Milei, claiming:“I control that guy. I send money to his sister and he will sign anything I say.& rdquo;
Hayden controls more than $100 million in funds withdrawn from internal wallets. He then gave a series of interviews in an attempt to explain the entire operation. In a live Twitter broadcast, he directly admitted that he had sniped during the Libra crash, that is, manipulated the market through robot trading. His statement was: I don’t know where the money really belongs. I think it could belong to Argentina, or the KIP Protocol company that launched the project. I don’t know whose money it belongs to and I don’t want it. You tell me what to do with the money, and if you don’t tell me, I’ll throw it back on the market.
During the interview, he also explained in detail the operating mechanism of Meme, revealing inside stories that many people had never known before. He mentioned thatmost large Meme Before launch, most of the tokens would be sold to KOL and other institutional investors at prices below the market price through private transactions.For example, projects like Melania, Libra, and even TRUMP claimed to have been privately held for as much as $500 million at an internal meeting in Washington, D.C.
Information about these private placement transactions is often circulated among insiders, but it can also be leaked to others who are not involved in the transaction. These people used this information to profit from sniping when the token was officially launched.
The meaning of sniper attack needs to be explained here. Sniping refers to the fact that when tokens are first launched, some robots can quickly buy tokens before ordinary investors react, thereby pushing up the price. This is because they know in advance that the token is about to go online. When retail investors start pouring in to buy, humans ‘reaction speed is much slower than machines, and these snipers will take the opportunity to sell tokens at high prices and profit from them. Since Meme coins are usually issued at a low market value and there is no auction or initial price clearing mechanism, this operation has become very common.
According to Hayden Davis, how can you make money if you don’t sniper your own tokens? Do you think there is any other way? quo; He feels that all teams involved in the token supply chain believe thatThe only way to make money is to become an internal controller。These teams hope that Meme’s popularity will last for a year or two, but the reality is that almost all Meme’s life cycle will not exceed a few days.There is a widespread cynicism in these circles that the entire crypto industry is nothing more than a zero-sum game。In order to prevent retail investors from being attacked by the outside, they believe that the best way is for the team to attack the tokens first. In this way, they can use the proceeds from sniper attacks to protect the stability of the token and buy back the token after completing the sniper attack.
On the day of the incident, Argentina’s stock market fell more than 5%. Currently, the opposition party has filed formal charges against Javier Milei.The incident, known as cryptogate, was a major political and financial scandal.I think this has caused serious damage to Argentina’s reputation both internationally and domestically.
Robert：
I have seen clips of Hayden’s interviews, which are simply outrageous. Every clip of him is more ridiculous than the previous one. He actually publicly said on the show that crime is good.
Haseeb：
He is a typical encryption boy with no moral values at all.
Robert：
Do you remember the contrast between rationality and madness we discussed about nine months ago? Hayden may be one of the craziest people in the history of the crypto industry.
Tom：
I agree, I think Hayden seems very ignorant when he speaks. I went skiing last week and met some Argentines who were very excited about it. Because in their view, this could be a situation similar to TRUMP. They thought it was a huge opportunity. When they saw Milei promoting this project, they probably thought, oh, this is our TRUMP moment, but it turned into a huge scandal.In fact, it’s a bit like if you go to a casino and lose money, who can you blame? The rule of the casino is to be confident about winning or losing.
Haseeb：
This statement is too vivid. Such a ridiculous Meme could trigger such a big chain reaction and even impact the entire country. The impact of this scandal has also spread to the entire crypto industry. It turned out that the team behind Kelsier Ventures was not only responsible for the Libra token, but also for Melania. They also conducted sniper operations when Melania was launched, which was actually a routine they used repeatedly.
Updates on Meteora and Solana ecosystems
Haseeb：
The interesting thing about this story is that it also affects some people in the Solana ecosystem. Meteora is the launch platform for TRUMP and Melania. Recently, Meteora has attracted attention because of some investigations, and it seems that there is controversy among some people associated with the platform.
Robert: I saw on Twitter that someone dug up some of Ben’s history and said he had violated securities laws many times in the past. Is this true?
Tarun：
I’m not sure if these allegations are true. Ben is one of the co-founders of Meteora, which was originally part of Jupiter. I actually knew Ben before the rise of the crypto industry, when he was running a startup in the insurance space. I also interviewed him in 2012. He has not been involved in the encryption field before 2021. Meteora has been around for some time, but it has not found a suitable market positioning. Later, with the collapse of FTX, Jupiter began to rise rapidly as it became the main platform for trading Solana tokens. At the time, except for FTX, most exchanges did not support the trading of SPL tokens. Meteora gradually evolved into a platform focused on early project launches.
Unlike Pump.Fun, the Meteora platform allows project issuers to manage and control the pool of funds and liquidity. This design does make sniper operations easier to some extent. However, I think Ben’s situation is more like a founder being kicked out of the board than an ordinary developer being fired. If you look at this as a case of corporate governance, getting founders kicked out often involves more complex power struggles.
Meme’s recession trend
Haseeb：
I think this story cast a shadow on the entire Meme. After the Libra incident, the launch of TRUMP and Melania gave people a bad impression of Meme coins. After these incidents, people seem to realize the nature of Meme promoters revealed by Hayden in interviews and how these large-scale Meme coin releases are detrimental to retail investors. The change has changed the atmosphere in the crypto world, raising doubts about how Meme coins work, and making it less certain that retail investors can continue to participate in the so-called casino.
Robert: EveryoneIt was once thought that the Meme game could be won, but now that the truth comes out, everyone sees the ugly truth behind it and realizes that this is a fully controlled game. They are victims and cannot win at all.
Haseeb：In absolute terms, Pump.Fun’s trading volume is still strong, but overall, market volatility has declined. Now the mood has completely turned to disgust against Meme. People used to say that technology coins and wind coins were actually Meme. Now this view seems to have lost its effectiveness, and people are beginning to realize the need to rebuild the real project.
Tarun：
I think this shows that Meme, which has less control, seems to be able to survive, while Meme, which requires a lot of liquidity management, faces more challenges. As a result, we see no significant drop in trading volume for Pump.Fun.
Robert：
I think this is a turning point. Meme coins have attracted a lot of money, and now that Meme coins are less attractive, these funds will flow to other verticals in the crypto space.
Tom：
I agree with Tarun.People love fair and transparent games, and when they feel they can no longer profit from them, the market naturally collapses.As with previous ICO and NFT craze, if people no longer feel excited and think there is no opportunity, then the entire market will be affected.
Haseeb：
Indeed, the difference between Pump.Fun and some managed releases is interesting. Libra can be said to be a celebrity coin. Although this is not the case in form, in fact, its relationship with Milei makes it a celebrity coin.
Controversy and hypocrisy in celebrity token projects
Haseeb：
I think what is certain is that this celebrity token craze has passed, or has cooled down rapidly. Recently I heard that Kanye West seems to be planning to launch one Meme, also known as celebrity tokens, but he seemed to realize that now was not a good time to launch them.
I heard he originally planned to launch it on Monday, but later postponed it to Friday. The team is said to be discussing whether it is too close to the Milei incident, and apparently they are adjusting it in part based on the news cycle. What makes me laugh is that this new token is called YZY Token.
What’s even more outrageous is that Yeezy’s CFO accidentally leaked the plan to CoinDesk. He sent an email using Yeezy’s official email address detailing the token’s plan and requesting CoinDesk to keep it confidential, but CoinDesk refused the request and directly released the report.
Regarding token economics, 70% of the tokens will be held by Kanye himself, 10% will be used for liquidity, and 20% will be used for investors, and now this 20% has been sold to investors.
Robert：
Just a few days ago, he tweeted that celebrity coins were exploitation of the community and worthless. Within a few days, it was announced that he was going to issue his own tokens. This behavior was really hypocritical.
Haseeb：
As an industry, we must unite not to support this token. As long as no one buys it, we can end this phenomenon once and for all.
Robert：
The problem is that once tokens are released, they are snapped up, then some people sell them, and only a few people end up making a profit.
Haseeb：
We have seen similar cases, such as Dave Portnoy, who launched a token called Greed, held 35% of the supply, and then sold it all in one go, causing the price to plummet.
He then launched Greed 2. After Greed’s collapse, the market value of the new token reached US$20 million, but soon collapsed again and he sold it again, saying on Twitter Spaces thatThis process is a lesson for followers,Meme It was just pure exploitation, and it also criticized those who traded as being lazy and just wanted to make quick money rather than looking for real jobs.
Tarun: This is actually fin dom, which is more obvious than we discussed before.
Haseeb：
I recently expressed similar comments on Twitter, and I think Meme the cycle is over。I mentioned on the show that it’s like a casino where each slot machine is owned by a different person, and this model is simply unsustainable and each slot machine owner will do everything possible to extract profits from the players.
Regulatory developments and the future of the cryptocurrency industry
Haseeb：
The recent negative news has made me feel very tired. People are tired of Memes that have no real value and are starting to look to projects with more potential, which may be one of the reasons why the cryptocurrency market rebounded last week. However, today’s market has fallen, which has also had a certain impact on cryptocurrencies. Despite this,Good news from regulators。
We have been saying that this year could be the year when the regulatory environment for cryptocurrencies reverses, and now there is finally substantial progress. The biggest news this morning is thatThe U.S. Securities and Exchange Commission (SEC) is withdrawing its lawsuit against Coinbase.This is undoubtedly a major positive for the entire industry and shows that the changes we expect are happening.
The SEC previously sued Coinbase on allegations that it acted as an unregistered securities broker and exchange and allegedly promoted trading in unregistered securities. However, these charges are now being dropped, and we may also see other similar cases filed by the SEC being dropped. There had been speculation that the case might be resolved by narrowing the scope or reaching a settlement, but the complete withdrawal of the case was clearly a more positive signal. This shows that the SEC is beginning to support the development of benign participants and is willing to work with them to jointly create a healthy digital asset ecosystem.
In addition, we also see Brian Quintenz nominated as the new head of the U.S. Commodity Futures Trading Commission (CFTC). The CFTC may become the main regulator of cryptocurrencies in the future. Quintenz was the head of crypto policy at A16Z Crypto. Over the past four years, he has been working against excessive administrative regulation. This is undoubtedly an exciting day and a sign that the crypto industry may usher in more positive changes in the future.
Robert：
First, the SEC reorganized its crypto division, which was originally targeted at benign players, and transformed it into a team focused on combating digital fraud. This means the SEC will focus more on cracking down on real wrongdoing rather than continuing to chase companies that follow the rules. This is a change the industry has been waiting for over the past four years.
Second, SEC Commissioner Hester Peirce issued a statement detailing the changes they hope to promote.I hope to cooperate with the policy team in the encryption industry to promote the healthy development of the entire industry. The document covers multiple areas such as broker-dealer rules, custody rules, trading rules, and safe harbor rules.They expressed their hope to engage in dialogue with the industry to jointly formulate effective policies. This constructive attitude contrasts sharply with the rigid stance of a few weeks ago.
Haseeb：
I hope that in this context, we can see more favorable policies introduced so that benign participants like Coinbase will no longer be subject to unnecessary attacks. At the same time, regulators can also devote more resources to cracking down on real wrongdoing. In the past, we got into Meme’s quagmire largely because under Gary Gensler, regulators spent all their time and resources using case law to crack down on the largest market participants, while ignoring regulation of public wrongdoing.
Tarun：
I attended a Solana developer conference this week,Participants hardly talked about Meme of things. This shows that some people in the ecosystem are still focused on the development of infrastructure and applications, and they don’t care much about short-term fluctuations in the market. I think any successful ecosystem needs such builders.
Haseeb：
Currently, the sentiment in the infrastructure field is relatively stable. We have not seen a large-scale capital outflow from Solana, nor have we found a significant difference in the transaction volume on DEX between Ethereum and Solana. The volatility of the two is relatively consistent.
Tom：
I think this situation may be like when the last Meme was launched, and no one is willing to pay for it. This depressed market sentiment may put others off. But if Yeezy is really the last celebrity coin, I can accept it.
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