$14.5 Billion Bitcoin Theft Revealed

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Hi! In today’s edition:

• 🕵️ $14.5B bitcoin theft tied to Chinese mining pool

• 💸 Trump PAC receives $45M from crypto donors

• ⚙️ CurveDAO may halt L2 deployments

• 📈 Bitcoin recovers from weekend slump

• 🧵 Coinbase’s Base strategy faces scrutiny

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Arkham Uncovers $14.5 Billion in Bitcoin Stolen From Chinese Mining Pool in 2020

A massive bitcoin theft, described as possibly the largest in history, was just uncovered by blockchain analytics firm Arkham Intelligence. 

According to Arkham, 127,426 BTC, now valued at around $14.5 billion, was quietly stolen from the Chinese mining pool LuBian in December 2020.

Arkham’s analysis found that LuBian was first hacked on December 28, 2020 for over 90% of their BTC, then again on December 29 for $6 million worth of BTC and USDT. Two days later, LuBian reportedly moved their remaining funds, worth around $1.38 billion of BTC, to recovery wallets.

“Neither LuBian nor the hacker have publicly acknowledged the hack,” said Arkham.

“It appears that LuBian was using an algorithm to generate its private keys that was susceptible to brute-force attacks. This may have been the vulnerability exploited by the hackers.”

Jim Bianco joins Laura live today at 12:00 ET to discuss crypto treasuries, stablecoins, regulation, the economy and crypto, and more. 

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Crypto Donors Sent $45 Million to Trump’s Super PAC: Report

Donald Trump's flagship super PAC, MAGA Inc., has received a surge of donations from the crypto sector, according to a report from the New York Times.

Crypto interests alone accounted for $45 million of MAGA Inc.’s total fundraising, which gathered $177 million in the first half of the year alone.

High-profile donors include an affiliate of Crypto.com, which gave $10 million, Blockchain.com, which donated $5 million, and Gemini co-founders Cameron and Tyler Winklevoss, who donated $4 million through their company and personally.

Still, there is a fair amount of internal skepticism in the crypto community about whether these funds will translate into effective legislative outcomes.

Sources from both the Trump administration and the crypto industry told Wired that crypto donors are becoming impatient with their return on investment.

One main point of contention from the administration is crypto firms like Coinbase cozying up to Democrats. 

“If [Democrats] take power again, you’re not getting shit,” a senior administration official told Wired, adding “all of your bets are wasted.”

CurveDAO Member Proposes Cutting L2 Deployments

CurveDAO member phil_00Llama has proposed that Curve Finance should halt all future deployments to new Ethereum layer 2 networks. 

The reasoning is based primarily on the low economic returns and significant developer time required to maintain these deployments.

According to phil_00Llama, L2 deployments collectively generate only about $1,500 per day in revenue – just a fraction compared to the main Ethereum network, where Curve earns around $28,000 daily.

The proposal recommends halting new L2 deployments, suggesting that developers should instead focus on enhancing Ethereum-centric products like expanding the use of Curve’s interest-bearing stablecoin scrvUSD.

The proposed move is part of a larger trend among DeFi protocols. As noted by DeFi analyst Ignas, protocols like Aave have also reconsidered the profitability and strategic value of operating on numerous L2s, including Linea and zkSync.

“We reached an L2 saturation point,” said Ignas.

Bitcoin Recovers From Choppy Weekend Trade

Bitcoin rallied past $114,984 late on Sunday after dropping to a three-week low of $112,080 earlier in the day.

The leading digital asset’s move to the downside over the weekend began on Friday, which saw bitcoin fall 2% as the Coinbase Premium – a measure of U.S. institutional interest – flipped negative after two months in positive territory.

Bitcoin’s late recovery Sunday evening was enough to trigger $107 million worth of short liquidations over the last 24 hours, according to data from CoinGlass. 

“Using over 5x leverage means you're exponentially more likely to get liquidated within 24 hours,” noted CryptoQuant CEO Ki Young Ju on X.

“Bitcoin moved more than 2% on most days (82%) this month. If you play 50x Russian roulette every day, the chance of surviving a week is only 0.000612%.”

By Not Staying Chain-Agnostic With Base, Could Coinbase Make a Wrong Bet?

Coinbase’s Q2 earnings report Thursday encapsulated the opportunities and challenges that the company faces as it attempts to move aggressively to create an onchain economy — and profit from it.

Its Q2 earnings disappointed, with the $5.14 earnings per share being short of analysts’ expectations. But the $1.4 billion in net income was driven primarily by unrealized gains in its investment in Circle, which IPOed in June, and in its crypto holdings, namely Bitcoin, which reached a new all-time high — and given that the company has similar investments, it could see such boosts in income in future quarters as well.

The company has been a major driving force in building the crypto industry, but it, along with the greater sector, is at an inflection point. So far, growth has largely been fueled by speculative trading, but as is apparent from both business and regulatory headlines that include household names like JPMorgan, Shopify, Schwab, Robinhood, and others, the next phase is about adoption and usage.

As Coinbase makes its push toward this onchain future, could its decision to tie its flagship app to a single blockchain limit its upside at the very moment the industry is fragmenting and evolving fastest?

• 🔧 Lido cut 15% of its workforce across three internal groups to control spending and stay financially viable long-term, despite its strong position in the crypto staking sector.

• 🎭 Coinbase stirred up a storm in the UK with a cheeky musical ad mocking the country’s economic woes, sparking a fierce online split between crypto backers and critics.

• 🛡️ The DeFi Education Fund and top crypto firms urged U.S. lawmakers to regulate decentralized finance with tech-neutral rules and protect builders from being treated like centralized companies.

• 🗿 The vandalized statue of Bitcoin’s anonymous creator Satoshi Nakamoto, thrown into Lake Lugano during Swiss National Day celebrations, was recovered in pieces by city workers and remains a powerful symbol for the global crypto community.

• 🇬🇧 The UK reversed its 5-year ban on crypto-linked exchange-traded notes for retail investors, allowing them to resume trading these products from October 8, citing a more mature and better-understood market.

• 💰 Metaplanet announced plans to raise $3.7 billion—roughly 75% of its current market value—via preferred shares to supercharge its bold goal of owning 210,000 bitcoin by 2027.

• 🧊 Subzero Labs emerged from stealth with $20 million in funding led by Pantera Capital to build a developer-friendly blockchain called Rialo aimed at making decentralized apps feel as fast and easy as traditional web platforms.

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