SEC dismisses Coinbase lawsuit, ByBit hack and more - The Daily Gwei Refuel #828 - Ethereum Updates

Transcript

hello everyone welcome to another episode of Del refuel W up the latest news in etherum system I'm your host and says 24th of February 2025 all right everyone let's get into it so some big news over the weekend and I wanted to start with the Positive news uh for this episode because there is a bit of dram as well as I'm sure you all know about the by beat hack by now but the positive news is that the SEC has withdrawn their lawsuit against coinbase and openc as far as I know those are the only two that have been withdrawn so far but that obviously is sending a strong signal to everyone that those cases that were brought forward from the SEC towards these crypto companies in the US under the Democrats are going to be withdrawn and I think you know I've been talking

about this for a little while on the refu I I think I said back when this lawsuit first went ahead this would take years to kind of fight out in the courts if it wasn't uh eventually dismissed if Powers changed right if the Republicans uh got in and and got the presidency well that's exactly what happened and now the SEC is headed up by a pro crypto chairman uh it is obviously way more Pro crypto overall I think that they would have purged a lot of the anti crypto people out of there and that means that the case against coinbase which was baseless honestly the the lawsuit against coinbase from the SEC as Brian Armstrong says here the SEC was wrong on the law uh this case has been just fully dismissed with prejudice as well which I believe is legal speak for basically

saying that the same case cannot be brought against coinbase again uh at least at the federal level from from my understanding someone someone who understands US law better than I do um Can can comment on that and correct me if I'm wrong there but this is a huge win for all of crypto I think not just from the regulatory side of things but also from the side of uh basically us-based crypto businesses not having to Fear The Wrath of the SEC I don't think they've had to fear it since Trump won and since Gary gendler was obviously removed uh you know January 20th was his last day there but it's only been a month since then right so if you really look at how fast it's already moved and how much of a 180 the SEC has done in regards to its approach to crypto it

really bodess well for the foreseeable foreseeable future and I think a lot of people seem to miss this when looking at crypto I know the markets are just like whatever right now they're not great obviously depending on what assets you're in uh especially if you're in like memecoins and you bought into the mcoin Super Cycle uh thesis you're probably not doing uh too well but obviously like the overall Market is just not great right it's it's obviously um got a lot of people feeling down about things people kind of questioning is this it you know are we in another bare Market sort of thing and you guys know my opinion on the market generally with regards to the Cycles I just think that the Cycles are generally over as we know them the fouryear cycle is over people can disagree with me but I feel

like the evidence keeps just piling up as time goes on there but I think that's why people aren't realizing just how big of a news this is and aren't aren't talking about this more because obviously when it was announced by Brian Armstrong here on Twitter people were talking about it but then like a day later no one was really talking about it no one's really talking about how this is positive for the the whole ecosystem how it's going to pay kind of dividends going forward and how it means that us-based crypto companies especially don't have to worry as long as they're doing legit things you know I think that there's this kind of I guess uh void right now where both the good kind of actors and the Bad actors are just doing whatever but I think or or at least doing I mean not whatever but like the

Bad actors are doing bad things the good actors are doing good things and they're being treated at least seems to be being treated similarly by by the The Regulators but I think that's going to change going forward I saw that the SEC wants to set up a crypto task force to go after the actual Bad actors so I'm hoping that actually um something comes of that because it's all well and good that the good actors aren't gone after by the SEC or aren't sued by the SEC for basically existing and being honest actors but if the Bad actors also aren't kind of prosecuted and aren't held liable for all of the scamming that they do then it it's kind of just as bad I think so I'm glad that the SEC is looking at you know setting up a crypto task force making sure that they go

after the actual scammers the actual grifters and not the legitimate companies in crypto because there is just so many scams guys like there's so many bad people in crypto there's so many people taking advantage of others uh there's just so much grifting going on we need to put a stop to it because I think that it's it actually is very long-term detrimental to the ecosystem and we're seeing this play out with mean coins right now but mcoins aren't the only thing there's so much scamming going on everywhere that if it's just allowed to rain free if it's really quote unquote crime season then that is extremely extractive it's net negative it's zero sum and it doesn't push the space forward at all it actively hurts the space so I hope that we see these scammers kind of brought to Justice here and I know that the whole kind of idea

about blockchains is that they should be permissionless but they are permissionless that's why these scammers can do this but the thing is is that the scammers still exist in the real world you still have to abide by the law of the the land you still can't just go around scamming everyone and defrauding everyone the permissionless nature of these systems is not meant for that it's meant for the fact that you should be able to transact and do Financial applications and do really whatever you want in terms of like building whatever you want on chain interacting with whatever you want as long as you're not uh doing things that are considered scammy or doing things like fraud or grifting or whatever as long as you're just doing things um you know to as like a positive to to better yourself and to better those around you then that is the

whole kind of spirit of permissionless permissionless uh at least that's my uh my view on it there but yeah as I said huge win here from coinbase and openc of course as well they their lawsuit got withdrawn which was great to see I guess that's why they're comfortable doing a token now they probably knew about this a little while ago and they're okay well it's time to do our token because we can actually do it without uh uh facing the Wrath of the SEC sort of thing and I think with coinbase's case being withdrawn as well here I think the chances of bass having a token have gone up pretty dramatically as well I think that you know I've been saying this for a while that bass would eventually have a token I I still think they are going to have a token I think their chances

just went up I before I said it was like a 50/50 I think now I think it's like a 75% chance that they have a token not sure when maybe this year maybe next year don't know on timing it's always a bit funny to to think about timing of things because it's always either later than you think or earlier than you think I remember when I thought that uh the optimism would be the last L2 to actually do a token and they ended up being the first one to do a token so yeah it's kind of hard to to to I guess gauge these things and see what what um happens when but I do think the Bas is eventually going to have a token especially now that the there's a much friendlier SEC where they're not going to get sued for just doing a token

basically uh you know if they're doing it to defraud people and scam people sure go after them but if they're doing it as part of their decentralization of the base Network wanting to get the community involved that sort of honest building should not be prosecuted it should be actively encouraged and it should be helped along as much as possible as well especially for these us-based companies since the US government should have a huge vested interest in making sure that us-based companies do well if not the best in each of their fields here but you can go give Brian Armstrong's tweet about this a read it is a bit long but it gives more context about all of this I'll link that in the YouTube description below for you to do so all right so I think the biggest piece of news over the weekend besides the the

coinbase thing was the buy bit hack now for those of you who don't know what this was about $1.5 billion worth of eth was stolen from bybit which is a centralized exchange it was not a bug in the ethereum protocol or an ethereum smart contract that allowed this eth to be stolen it was basically a very sophisticated attack uh that was conducted by North Korea by the Lazarus group in North Korea and essentially what they did is they got malwe onto the uh devices of the signers of of the multisig of the addresses that byit uses they were able to get the signers to sign something that moved the funds off of uh bybit into sorry out of the bybit cold wallet addresses into the hot

wallet addresses and then onto the attackers address uh there so this I believe is the largest centralized exchange hack in history from what I know and I'm talking hack not like collapse obviously FTX is the largest collapse but this is the largest hack um and it happened uh not from an exploit or anything it from as I said a very sophisticated uh kind of attack from a nation state group uh North Korea is obviously very known for doing this they don't answer to anyone because who's going to prosecute them right they're already sanctioned to hell and they're already the enemy of Every Other Nation out there so basically they don't care about doing the most illegal things and that's what they do to do this right there's no recourse here for them uh in terms of uh in terms of what I mean they've already got all these sanctions

on them what are you going to do sanction them again you can't right so they know that they're basically I wouldn't say Untouchable is the right word but they know that there's no repercussions to this so they're just going to keep doing it and they got away with a lot guys and of course there was a lot of concern trolling as well over the weekend from especially from Bitcoin maximalist but also from a lot of salana people too which was very disappointing to see but not unexpected that ethereum should roll back the chain in order to return the stolen eth to bybit now this is not possible for like so many different reasons and Tim biker actually shared a really great tweet going through why this is isn't actually possible why this doesn't make sense whether it's a roll back or something called an regular State transition or a

regular State change it's just unworkable in in in today's environment tldr is because that you can't just do a I guess like surgical recovery of the funds even as part of an regular State transition because so everything's so intertwined now and Tim gives a lot of examples in his tweet here so go read that I'll link in the YouTube description below but it's so intertwined that it doesn't even work so we're not even talking about the fact that like if there is appetite to do it or not which there isn't there is zero appetite for this anyone pushing the narrative that ethereum was even considering rolling back the chain to save these funds was uh just setting a false narrative yard there was no consideration from anyone in the ethereum community no ethereum leaders no one I saw this from no one except

Bitcoin maximalists and salana people you know Raj one of Sal's Sal's Founders actually said this as well tweeted this out that was ridiculous I was like dude like come on you know this is just this is really stupid honly especially coming from someone who people give legitimacy to it's not just some from Rand some random Bitcoin Maxi or some random person on Twitter it's the founder of one of the founders of salana that was uh really really disappointing to see but as I said not surprised there but yeah as I as I as I said like it's not workable to do this here um and I think that when you look at what happened in the past with the Dow like everyone always references the Dow it's like oh the Dow we we did it the Dow we did a roll back it's like no no no we didn't

do a roll back the chain was not rolled back during the Dow what happened with the Dow and why it was a relatively unique situation as well is that one it happened way earlier on in ethereum's life there was no defi there was no intermingling ethereum was Tiny in 2016 right so it was much easier to do back then it was also a much larger percentage of the supply of the total supply of eth I believe the the percentage that was stolen from bybit was like 0.5% or something I think the Dow was like 15 20% uh so it was a way bigger percentage of the supply uh back then and as I said the ecosystem was smaller and it wasn't a roll back roll back it was an regular State transition what this means is that the uh Network I mean I guess like the core devs were

able to surgically give the eth back or at least take the eth away from the attacker and give it back to its rightful owners especially because the eth was also Frozen for a month so the the attacker got the eth transferred into this other address but they would weren't going to be able to access it for a month so essentially they gave the core developers time to do this so this isn't the the case with the buy bit hack because the funds were immediately available they could be bridged everywhere they could be put into different def protocols so on and so forth right so that wouldn't work here even in a regular State transition a roll back 100% wouldn't work ethereum is completely different to Bitcoin in that sense as well because bitcoin's actually had a roll back in the past too very early on in its life in 2010 it had a

bug in in the client software a lot of people don't know about this but this is a well-known bug where a lot of Bitcoin was uh was minted but then the chain was rolled back in order to fix this bug uh back uh really early on as I said in 2010 now if you wanted to do a roll back on ethereum today it's just not possible like it doesn't work CU what a roll back is and why it's different to in a regular State transition is that you can imagine that if you wanted to uh essentially maybe I'm thinking of an analogy on the spot here but let's just say that you have a city there's 100 buildings in the city and one of those buildings randomly blows up and you're like okay we want to reverse that like that's really bad people died like

we want to reverse that so let's say you had the magical ability to reverse time for just that one building so you reverse time building's no longer blown up and and you fig what was going to blow it up and away you go the 100 buildings are back right it's all well and good but if you were to do a a chain roll back that it's very different because let's just say that building blew up and then like a week goes past and you're like okay well we've got the fix in we want to fix that building but we have to basically rewind time for a week everything like not just for the building but for the whole city all 100 buildings in the city everything that happened in the city everything that happened in with within that City contacting other cities and within like

people going in and out of that City and so on and so forth that would all have to be undone like a week's worth would have to be undone as I've said plenty of times completely unworkable doesn't work in reality doesn't work logically it's just not something that is ever on the table in with these sorts of things especially if it's something like ethereum which is an expressive blockchain here so that's the technical reasons why it's not possible the social reasons is that like there's not ever going to be a bailout or a roll back or a a regular State transition for something like this the only time that it would possibly ever be entertained would be if there was a critical bug at the protocol level let's say for example there was a bug that allowed infinite minting of eth that would obviously get

fixed right and no one would be against that getting fixed because it's a protocol bug it's not like we're bailing out some some uh you know some person for doing for getting hacked or for accidentally sending their e to the wrong address so on and so forth right we are basically fixing the chain at a protocol level exploit but let's say that it happens at the contract level because the protocol level stuff is is pretty obvious that we're going to fix that but let's just say on the contract level well it depends right people were saying well what if the wrapped eth contract was drained it's like well it actually can't be because there's no admin functions on it so it's actually impossible it's not it's not it's not me just saying it's impossible because there's no bugs in it it doesn't matter if there is there's no bug that could do

that from from my understanding of the rap eth contract there are no admin functions there's no way that that could actually happen in that contract but you could just say well okay what if there was a contract that held 20 30% of all of of all eth and that was hacked and then North Korea or whoever it is stole that eth could would we roll back or doing a regular State transition for that probably much more likely than the bybit scenario for example but as I said it is just so hard to do it's so it doesn't make sense to do it and and it affects so many different parties it would be it would be catastrophic let's just put it that way that's another reason why we don't want to have too much eth in single contracts especially staking contracts and reaking contracts right because um there's probably not

going to be a bailout because it doesn't actually work the bailout or the the um the fixing of the of the hack or the reversing of the hack would actually maybe do more damage than the hack would do like and that's saying something considering that if it's like a 20% of all e Supply being being drained or something like that but even in that scenario it'd be very hard to even offload 20% of of all eat even for North Korea they're having they're going to have a hard time offloading what they stole they're eventually probably going to do it because they've got different Connections in different places but yeah it's just like a whole different ball game there so that's the technical side and the social side of things as I said there was never any entertainment of doing a roll back or Fork that was

concerned trolling at the at the kind of like social sphere from Bitcoin Maximus from salana people now ansar had a really great tweet Thread about this because I think the social side is very important here where he said make no mistake what we are seeing is a coordinated attack attack trying to undermine ethereum's credible neutrality mind you not in reality but in perception those with high context know how silly this is but low context observers get the impression a roll back was on the cards coin Des reported on this because Arthur Hayes put out a tweet that basically said oh you know ethereum should roll back so coin Des reported on it saying that Arthur Hayes called for it and it's like so Arthur Hayes is no one in ethereum like he I mean he's the founder of bitmax he's a Trader he's a VC now he's got a fund

he's he's he's basically no one in ethereum and also like anyone could call for this it's not like he said that and the C devs and the E Community were like yeah well we should do a roll back no no one said that right so so coindesk did that and then Raj as I said one of the salana founders tweeted Out roll back ethereum there's precedent for this what a ridiculous tweet right absolutely just gross uh honestly I replied to him saying that he should delete his account because I was just honestly very upset like I can handle this from like the Bitcoin maximalists from random people on Twitter uh because most people think that they're a joke already like no one's really taking them seriously except their own little click right and they're the own little cult there but but Raj and an atoli and like the salana

people they're still taken seriously by a lot of this ecosystem I don't think they should be because they just Gaslight and lie all the time honestly the gloves are off at this point I don't care if um people are going to say that I'm just coping over salana I'm not I'm calling out the people here not because they're involved in salana I'm calling them out for what they are and how they act they act terribly like they just Gaslight they lie they say like this really just annoying right it just really Stokes the fires of misinformation and and confusion here but Anar you know continued his tweet thread basically with the same theme here and then I quote tweeted him and saying it's not a conspiracy to say uh that ethereum is under constant attack from pretty much every corner of crypto and that's because this is where the

incentives lead bitcoiners don't want ethereum on the same P pedestal as Bitcoin that's why they fighted the eth ETF so hard that's why they always try to discredit ethereum um no matter what happens there right and they definitely don't want to see eth being a competitor money or story value to BTC and other layer ones want to beat ethereum at its own game and all of their supporters are very incentivized to always compare their favorite L1 to the biggest fish especially in terms of valuations this all results in an enormous amount of Lies misinformation gaslighting and fud that honest people have to work over time to address and correct I've been doing this since at least 2018 guys addressing and correcting all of this fud it is absolutely exhausting and I can tell you from firstand experience

that unfortunately the travels way faster and way further than the truth does I don't know why this is the case I'm sure there's been studies done on this I'm sure there is a scientific uh term for this but it's true it's true in crypto it's true outside of crypto for some reason most people believe the like just at face value I don't understand why I can understand it for maybe people who didn't grow up with technology or like uh like older folks who just basically believe everything they read on the internet but for people who grew up with it for people who know that there's a lot of misinformation and lies on the internet for them to just believe everything they read is ridiculous to me it it it feels like there almost needs to be starting from the earliest days that a child goes to

school a a a a a a kind of like Mantra taught to them basically saying that you shouldn't trust everything that you read on the internet you shouldn't address most of what you read on the internet sort of like we tell our you know tell kids about stranger danger or to walk both uh sorry to um to look both ways before you cross the street it's almost like we have to start very young and just drill that into people from when they're very young that they shouldn't trust what they read on the internet 99% of it is because it's just so bad at this point guys like as I said as someone on the front lines here someone who is exposed to this every day it's very bad and as you guys know I've been trying to fight this for a long time I'm someone who tries to stick to the truth

but unfortunately the the crap spreads way faster than the truth truth does but hey I'm going to keep fighting for the truth there but you can go give ansgar's tweet thread a read and Tim Boo's tweet a read I'll link it in the YouTube description below for you to do so all right so fabar here put together an ethereum Foundation appreciation post which I thought was really great because I've been arguing in the daily grade Discord channel that the ethereum foundation has done a lot of really great stuff over the last few months and they don't get credit for this and I think partly because they suck at marketing themselves but also because everyone's blaming the EF for the eth price action which I think is Off the Mark as well but I just wanted to kind of go through each of these points on on

this list here um and and and see how they're actually addressing problems because it's all well and good for like the EF willever to do things but like just doing things is different to doing things that are actually required impactful necessary and I think pretty much everything on this list is is necessary and very impactful so the first thing is that they launched the open intense framework to tackle train fra chain fragmentation with 30 plus ecosystem collaborators I talked about this on the on the other day on the refuel this is spearheaded by the efr they're tackling the real issue of train chain fragmentation the real issue of interoperability between the different l2s so that's a huge thing there they put 50,000 eth into defi which is huge because it basically as I explained the other day signals to the ecosystem that

the EF trusts their treasury in defi they want to be using it they want to be part of the of the chain they want to be using the chain obviously that they're building here and be being more public about it they published a transparency report on the EF treasury uh that was really great to see didn't get nearly enough attention as all the fud around that did but they published that I haven't seen a full transparency report from many foundations in crypto I don't even know of any others that have done that um just the ethereum foundation so far uh vitalic published a blog post highlighting the short-term L1 scaling needs obviously we want to scale the L1 up uh more than we did with the gas limit increase they announced significant leadership changes at the eum foundation not the changes that that some people wanted with like Danny Ryan

as head of the EF but they announced a bunch of people going into new leadership roles and I believe there's more changes still coming we did the 36 million gas liit increase which was advocated for people as part of the EF we've got a hard Fork date for pectra test Net's forking actually in like less than 12 hours from when I'm recording this um and then so on and so forth I mean you can read the rest here there's so there's so many on this list I'll link it in the YouTube description below I I just realized I'm already at 22 minutes so maybe I I shouldn't go through all of them here but yeah just wanted to give a shout out to the EF there they've done a lot of phenomenal work over just the last few months and I'm sure they're going to keep doing

this uh into the years from here all right so we have a new website where you can monitor an ethereum slot so as you guys know in E the ethereum chain or I guess like the way the ethereum blockchain works is that every 12 seconds there is a slot that's made up of I guess like three core components a block the attestations and the aggregation of the attestation signatures here and then a slot is published on the network and then we move on to the next slot now this tool comes from the eth pounder Ops Team at the ethereum foundation it is using the data that's collected by that sidecar software that I talked about the other day so essentially it doesn't cover the whole network it only covers what uh the data that's being fed to them by people running this software on their own

machines that they're running validators on so that's why people some people commented and said oh it doesn't look like there's that many validators you can see on on the on the map here the the the spread here it's like yes because it covers a very small percentage of the total validator set the total note operator set so don't look at this and think that it's exhaustive it definitely isn't but it is still a very cool tool it's a very cool new dashboard uh to to monitor the ethereum network here and I actually got an old tablet that I don't use anymore loaded this up on it and put it in the case of my solo staking machine so now I have this permanently up there as a display with my solar Staker machine there just a nice little dashboard to have there so I I I was excited um to to

do this here but I think this is great this is um something that is going to inform a lot of research and development on ethereum as well the data that's being fed into this because it essentially gives us data around timing of things and and latency and how quickly or not quickly the network is building blocks uh aggregating attestation so on and so forth and we're going to be able to compare the data pre and post Petra too because as you guys know in Petra we have the max e EB EIP coming which allows us to greatly reduce the number of validators on the network while still keeping the same amount of security because it's just the validators not the node operators so essentially the node operators uh and the and the eth at stake is going to say stay the same but we're going to

consolidate this down so if you're running 10 validators today with 328th total 32 per validator after Max EB goes live you'll be able to run all 300 have all 320 eth on just one validator and you'll still provide the same amount of security to the network but the network now has 90% less validator uh validators on it sorry you you your validator reduction is 90% less so the network now has Ness validators on it which I mean helps in a very small way but if enough people do it it helps in a really big way and allows us to keep scaling up the the network and allows us to scale things like the gas limit and adding more blobs here adding more blobs here so if you want to check this out you can uh check the dashboard out I'll link it in the YouTube description below for you

to do so all right so nixo has started publishing a uh elore Dev Roundup for each month now so this is the Feb 2025 Roundup you can read this blog post I'll link it in the YouTube description below but essentially if you don't want to keep up with the all call devs call every week and you just want to uh you know keep up to date every month instead this is uh something for you and basically just a summary of what was discussed in the the allore devs calls over the last month and it's quite short which is nice very easily dig digestable it's got a lot of links here that you can click through and if you want to go and read more about it you can but I just wanted to shout this out because I know that a lot of people find it hard to keep up with

cev related things especially uh in the today's day and age where things are moving faster and faster so huge kudos to nixo for putting this together and I can't wait to read U March's update here all right so I spoke before about that open intense framework uh that I covered on last week's refuel about how uh a lot of ecosystem partners are trying to make it so that you can have just seamless interoperability between different l2s and seamless bridging between different l2s and evi here who is the co-founder of xiron put tweeted out saying that he had a chance to test the open intense framework from the ethereum foundation it took less than 5 Seconds to bridge 10 usdc from base to arbitrum it's a huge step towards a multi-chain future so you

can already see that this is in action here across two different l2s and two different l2s as part of different ecosystems too because it's not just based in op mainnet it's based in arbitrum two completely different L2 ecosystem now speaking of the open intense framework Stacy here put together a really great tweet thread explaining exactly what this is like your five and then 25 so I explained a bit about this last week about what an intent is how it works in the background but Stacy did an even deeper dive here they usually go check out I'll link it in the YouTube description below uh cuz it's a really great thread and it's not very long it's like five or six tweets long and you can learn more about intent here so I'll link that for you to go check out all right last up here

farcaster now has a wallet so Dan Moro here the founder of farter put out a tweet saying that there is no complicated setup with this wallet 100% reliable mobile transactions and no app switching required so essentially this wallet is built right into the warp Cast app it's ready to go as soon as you are uh and it has a very uh familiar and simple interface in order to do things like sending assets across different uh to different people across chains and also swapping assets uh on here as well so swapping usdc for eth and other tokens there now this is I think very welcome because of the fact that warcast and farcaster generally has a lot of tokens on it especially things like uh they do um uh nfts and they do like meme coins they do tipping stuff like that so

it's great that there's a wallet there that's ready for people to just get and get up and running with because you can imagine there's people that sign up to farcaster without uh being exposed to crypto at all you know if if farcaster wants go wants to go beyond crypto people and wants to basically become a Twitter a real Twitter Twitter alternative then they have to go outside of the crypto bubble and to Reg everyday non- crypto people but at at the same time you want to bring those people into crypto as well so a better way to do that than to get them signed up and then have have a wallet for them waiting for them in directly in app and they need to switch to another app uh and they can just get started with crypto straight away so really great thing here from

farcaster from warcast you can go check that out for yourself if you have the warcast app it should already be there for you uh there but I think on that note that's going to be it for today's episode so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't yet give it a thumbs up sub scatch newsletter join the Discord Channel and I'll catch you all on Wednesday thanks everyone