In this week’s edition of The Context, the SBF trial is in full swing, and Blackbird takes flight. Here are the top stories and how they were covered, along with YAP Global’s take:
[Ellison v. Bankman-Fried]
Caroline Ellison, the former CEO of SBF-funded trading firm Alameda Research, testified against Sam Bankman-Fried at his fraud trial.
What Journalists Said 🧑💻:
The prosecution’s “star witness” ⭐ said that Bankman-Fried directed her to use FTX customer funds to repay Alameda Research lenders, chronicled Nikhilesh De, Sam Kessler, and Helene Braun (CoinDesk). By June 2022, Alameda had “borrowed 77% of the $13 billion of customer U.S. dollar deposits into FTX, according to an internal FTX spreadsheet introduced by prosecutors and authenticated by Ellison.”
Why do such a thing if she knew it was wrong? Bankman-Fried and Ellison met when they were both with Jane Street Capital and started an on-and-off dating relationship when he was her boss, detailed Bob Van Voris, Yueqi Yang, and Ava Benny-Morrison (Bloomberg). “The personal dynamic, which they largely tried to keep secret from other employees, complicated their professional relationship.”
Don’t turn that dial. Ellison signed a plea deal last year, agreeing to cooperate with prosecutors in exchange for a reduced sentence. She won’t get any breaks from SBF’s defense team during cross-examination. “His attorneys appear likely to paint Ellison as a scorned lover and an incompetent businesswoman,” opined Victoria Bekiempis, Nick Robins-Early, and Blake Montgomery (The Guardian).
PR Perspective:
Two weeks in and virtually every media publication, spanning both crypto and mainstream spheres, are closely reporting on the trial, with many journalists flying to New York to cover it. Observing the reckoning of crypto’s biggest fraud is serving as a cathartic exercise for the entire industry, offering hope that once this chapter concludes, everyone can collectively turn the page and move beyond the prolonged saga.
[Blackbird Flies With Funding 💸]
Blackbird, 🦅 a blockchain-based loyalty platform for diners founded by Eater co-founder Ben Leventhal, raised $24 million in a series A funding round led by a16z crypto.
What Journalists Said 🧑💻:
“Like all rewards programs, Blackbird is designed to entice customers into becoming regulars,” wrote Julia Moskin (The New York Times). “It arrives amid a sweeping post-Covid self-evaluation by independent restaurants about how to survive high labor costs, new price plateaus and the relentless march of national chains.” And after piloting in NYC in April, the cash infusion will help it expand to SF and LA. 🧑✈️
Blackbird relies on gathering behavioral data and sharing it with restaurants so they can “learn their personal preferences, including when they last dined out, their preferred seating and their likes and dislikes,” detailed Kyle Wiggers (TechCrunch). 🍽️ Diners also earn a native token, FLY, which they can redeem for rewards such as off-menu dishes.
The Times and other mainstream outlets are interested in Blackbird because of Leventhal’s pedigree, suggested Lyllah Ledesma (CoinDesk), but this is definitely a Web3 project. Members receive NFTs on the Base blockchain when they sign in to a restaurant, and the decentralized platform is designed to prevent loyalty lock-in 🔒 so that users have multiple options. But, she warns, “a number of companies have attempted rewards-based systems via NFTs and struggled to maintain consistent usage.”
Why It Matters ⁉️:
According to Messari, crypto fundraising reached a nearly three-year low in the third quarter of this year. 📉 An above-average raise for a crypto project to start off Q4 is a signal that venture capital firms are still ready to invest in projects that can move the needle.
[FCA-okay? 👌]
Over the weekend, new rules by the U.K.’s Financial Conduct Authority (FCA) went into effect. 🇬🇧 Crypto firms must now be registered with the regulator or receive official approval for any marketing, similar to other “high-risk investments” in the country.
What Journalists Said🧑💻:
Right off the bat, 🏏 crypto exchanges Huobi and KuCoin were publicly warned about not having the requisite approvals as the UK tries to “move fast in naming and shaming crypto firms that fall foul of expanded rules,” wrote Suvashree Ghosh and Emily Nicolle (Bloomberg). They weren’t alone; almost 150 cryptoasset service providers made the naughty list on Day One.
A few big firms publicly signaled they would comply, among them Binance’s British partner, competitor OKX, and payment provider Moonpay, reported Helen Partz (Cointelegraph). To comply with the new rules, Binance says it will stop using gift cards and referral bonuses, while OKX “reduced its token offering to around 40 assets and adopted eye-catching risk warnings on its interface.” 👁️ The FCA has since blocked Binance’s partner from approving its marketing on its behalf, reported Elizabeth Howcroft and Huw Jones (Reuters).
While nobody likes misleading ads, crypto advocates in the U.K. think the new rules could drive Web3 investment away from the country—despite public commitments by Rishi Sunak’s government to “turn the U.K. into a crypto hub.” Luckily, there’s still time for crypto firms to adjust; firms can apply for a three-month delay, assuming they’re “otherwise compliant,” said Jack Schickler (CoinDesk).
Why It Matters:
With crypto’s regulatory status in the U.S. unclear, firms have been looking elsewhere for growth. Many believe the UK could be a hotspot, with a16z crypto even opening a London office, but regulators and legislators are sending mixed messages.
[Tweet of the week]
Credit: @DominicMadori
[DeFi Definitions]
A segment exploring one particular aspect of DeFi.
This week: “Total Value Locked (TVL)” by Iris Au.
TVL is a common measure used to evaluate the value of digital assets in DeFi protocols, including all assets that are locked in its smart contract for staking, lending, and yield farming. This ratio is calculated by multiplying the total value of all assets or tokens deposited and multiplying it by the current price of each asset.
A higher TVL signifies that there is an increase in user rewards, and asset deposits, and the protocol is growing while gaining more credibility; while a lower TVL signifies lower yields, lower rewards, and less stability from its money circulation.
There are a wide range of reasons why TVL is one of the most popular metrics in DeFi. A way for DeFi users to assess the market, TVL gauges if an asset is overvalued or undervalued. For founders and analysts, TVL serves as an indicator of a protocol’s success while predicting potential trends in the space. Moreover, it is a great way to determine the overall health and adoption of the DeFi ecosystem.
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, Sam O'Donohoe, Ewan Brewster, Damian Alvarez, Andrew Wickerson, Tiffany Mac Sherry, Becky Corbel and Delon Chan. 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 P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.