Ethereum Goes Parabolic 🔥

Plus: The Rise of Crypto Treasuries

In this week’s edition of The Context, we look at Do Kwon’s guilty plea, the Trump family’s latest crypto maneuver, and Ethereum’s sudden rise.

[Guilty treasures?🪙]

Terra Labs founder Do Kwon pleaded guilty to conspiracy and wire fraud charges in the U.S. in exchange for a reduced sentence of 12 years in prison and the forfeiture of $19 million.

What Media Said 🧑‍💻:

• The Wall Street Journal: “TerraUSD was a so-called algorithmic stablecoin designed to maintain a price of $1, although it wasn’t backed by dollars or Treasury bills like conventional stablecoins. Instead, if TerraUSD fell below its peg, traders were motivated to swap it for sister token Luna, a process designed to lift the stablecoin’s price back to $1.”

• DLNews: The problem was that the system didn’t work and, according to prosecutors, “Kwon had to intervene in an ostensibly self-regulating ecosystem to ‘create the illusion” it was functional.” When Terra’s $40 billion token imploded, it “set off a series of billion-dollar failures in 2022 that culminated in the bankruptcy of FTX.”

• CoinDesk: The guilty plea is an about-face for Kwon, who “repeatedly and publicly cheered on UST, criticizing detractors or anyone who questioned the token's stability,” including CoinDesk. “‘Have fun staying poor,’ he tweeted at one user on X in 2021.”

PR Perspective 🔎:

This is a rare bit of bad press for stablecoins, which have been constantly in the news the past few months thanks to the passage of the GENIUS Act and myriad announcements about major stablecoin projects. But the media coverage about Do Kwon’s guilty plea emphasized that Terra was a different type of stablecoin because it wasn’t backed by real-world assets like dollars or Treasuries—which are required under the GENIUS Act.

[What’s the WLFI password?🔒]

A crypto business backed by the Trump family, World Liberty Financial, is using a publicly traded company, ALT5 Sigma Corp., to create a treasury company that buys the WLFI token. ALT5 Sigma is selling 100 million shares and using the profits to buy $1.5 billion worth of WLFI.

What Media Said 🧑‍💻:

• WIRED: Call it “Wall Street Gymnastics.” While ALT5 is ostensibly a crypto payments company, the move will turn its “stock into a sort of proxy for the WLFI coin, allowing investors to bet on the asset without the hassle and risk that comes with holding a crypto coin themselves.” Critics say retail investors can get hurt while World Liberty gets to increase its market cap.

• Bloomberg: “The Trumps are linked to an increasing number of companies entwining cryptocurrencies with public markets.” Trump Media is trying to sell BTC exchange-traded funds, Eric Trump has a Bitcoin mining company that is going public, and this deal “echoes a June arrangement where an obscure publicly traded toymaker said it would begin stockpiling Tron, a cryptocurrency created by World Liberty Financial adviser Justin Sun.”

• The New York Times: It also follows the playbook popularized by Michael Saylor, CEO of tech company Strategy (formerly MicroStrategy). Years ago, he started turning the company’s treasury into a “Bitcoin stockpile.” Now its stock price has “soared in sync with the price of Bitcoin.”

• [For more on these companies raising billions to buy crypto, see The Wall Street Journal’s July 25 profile.]

PR Perspective 🔎:

Stories about the Trump family’s crypto ventures, especially those in mainstream publications, typically mention concerns about conflicts of interest. This news is no exception, but outlets have also focused on showing readers that these types of crypto treasuries are increasingly popular because digital asset prices are ballooning.

[Bulls on parade 🐂]

The price of Ether went above $4,700 for the first time since 2021 as it flirted with its all-time high of $4,878.

What Media Said 🧑‍💻:

• The Block: It’s now had a bigger percentage gain this year than Bitcoin, which is no slouch. The reason: “added demand from digital asset treasury companies (DATs) stockpiling ETH and rising inflows for exchange-traded funds like BlackRock’s ETHA fund.” In other words: institutions, not individual investors are pushing the price up.

• Cointelegraph: “The ETH rally is fueled by companies increasing their holdings in the last 30 days.” [See previous section.] BitMine Immersion Technologies (backed by Peter Thiel’s Founders Fund), for instance, now holds over 833,000 ETH—4x what it did a month ago. And the top 10 ETH-holding companies now have more than $11 billion in their treasuries.

• Fortune: Looking for other reasons? Let’s not forget President Trump’s pair of “crypto-friendly executive orders” from last week. He 1) ordered regulators to “reevaluate their guidance” on whether crypto could go into 401(k) retirement plans, reinstating an order President Biden had nixed, and 2) warned banks not to “debank” customers involved in crypto.

PR Perspective 🔎:

We saw a lot of articles comparing Ethereum’s surge to Bitcoin, a good angle because it creates conflict while pulling in another keyword and a larger group of readers. But readers click on price stories because they want to know why. Journalists look to proximate factors and note any salient correlations.

[Tweet of The Week]

Credit: @ProofofIntern

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The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).

The team: Founder Samantha Yap and consulting editor Jeff Benson, Andrew Wickerson, Nathalie Larrea, Meghna Dembla, Samvidha Sharma, William Knight, Taylor Handler, Trisha Goswami and Shajar Qureshi. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.

This newsletter is prepared by YAP Global, an international PR Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.