This Week in the Metaverse: Tornado Cash banned in US, and lots more
Things are moving fast in the metaverse, and in the wider world of web3 as a whole. Depending on who you ask, this futuristic, blockchain-based space is either the next big thing for marketing – and for almost everything else – or an overhyped fad. Here’s what you need to know from this past week:
The US Department of the Treasury has sanctioned crypto mixing service Tornado Cash / Adobe Stock
US Treasury sanctions ‘notorious’ crypto mixing service Tornado Cash
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced on Monday that it had sanctioned Tornado Cash, a crypto mixing service, “which has been used to launder more than $7bn worth of virtual currency since its creation in 2019,” the Department alleged in a press release. Included in that sum, the press release claims, is more than $455m that was stolen by a North Korea-backed hacking organization called the Lazarus Group – “the largest known virtual currency heist to date,” according to the Department.
US citizens are now banned from using Tornado Cash as a result of Monday’s sanctioning.
“Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,” Brian E Nelson, undersecretary of the Treasury for Terrorism and Financial Intelligence, said in the press release. “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.”
‘Cryptocurrency mixers,’ also known as ‘cryptocurrency tumblers,’ are services that shuffle crypto assets to obscure their digital footprints (which would normally be recorded on the blockchain), thereby making it more difficult for anyone to track where those assets came from and where they’re headed. (If that sounds a whole lot like money laundering, that’s because it basically is – though someone could hypothetically claim that they’re mixing their crypto assets in an effort to protect their financial privacy.) Another crypto mixer, Blender.io, was sanctioned back in May.
The sanctioning of Blender.io and Tornado Cash seems to be part of a broader government crackdown in the US against the crypto industry that has been escalating in recent weeks. Earlier this month, for example, the New York State Department of Financial Services fined Robinhood Crypto $30m for “significant violations of the Department’s anti-money laundering and cybersecurity regulations,” NYDFS Adrienne Harris said in a press release.
Watchdog group warns more than a dozen celebrities about promoting NFTs online
Truth in Advertising (TINA.org) has sent letters to 17 celebrities, including Eva Longoria, Tom Brady, DJ Khaled and Paris Hilton, reminding them that it’s a violation of the Federal Trade Commission’s guidelines to promote NFTs on social media without disclosing “a material connection” – in other words, without making it clear that they’re earning money from the promotion.
On its website, TINA.org wrote earlier this week that “celebrities who promote NFTs generally aren’t helping improve the financial literacy of their fans and followers. And while some of these celebrities are able to take risks due to their massive wealth, many vulnerable consumers don’t have that luxury. Which is why it is crucial that consumers conduct their own independent research if they are considering purchasing these risky digital assets.”
Mark Cuban calls buying real estate in the metaverse ‘the dumbest shit ever’
Mark Cuban has made his position on virtual real estate crystal clear. In a recent conversation with Altcoin Daily, a YouTube channel that’s focused on crypto, the billionaire entrepreneur, Shark Tank star and crypto investor said that buying land in the metaverse is “the dumbest shit ever.”
In the physical world, the value of real estate is driven up largely by scarcity. That principle doesn’t apply in the same way inside the metaverse, since scarcity can’t be artificially built into a virtual world. As a result, virtual real estate may not appreciate as it tends to in the physical world.
Cuban also noted in his conversation with Altcoin Daily that it’s too soon to say with certainty how the metaverse will evolve over time: “It won’t be just one size fits all,” he said. “There’ll be a lot of different applications, and a lot of ways of defining the metaverse. But right now it’s more talk than anything.” Ethereum founder Vitalik Buterin recently tweeted similar thoughts.
Coinbase reports $1.1bn loss for Q2
It’s been a rough few months for crypto, and Coinbase – the world’s largest crypto exchange company – has been hit hard. Earlier this week, the company reported a net loss of $1.094bn in the second quarter of 2022, compared to a profit of roughly $1.6bn in the same quarter last year.
Coinbase also recently became the focus of a probe from the Securities and Exchange Commission (SEC), which is investigating whether or not the company has been illegally allowing US customers to buy and sell unregistered securities.
But it hasn’t been all bad news lately for Coinbase: it recently inked a deal with financial management firm BlackRock (BLK), which caused its share prices to spike earlier this week.
Paris Hilton says she will start building in The Sandbox
Paris Hilton announced this week that she plans to bring her company, 11:11 Media, into The Sandbox. She aims to build a virtual landscape in which visitors can buy NFTs and attend “social and community events such as rooftop parties and glamorous social experiences in her virtual Malibu mansion,” per CNBC.
A number of other prominent celebrities and brands – including Snoop Dogg, Adidas and Playboy – have already launched their own activations in The Sandbox.
This won’t be the first party that Hilton has thrown in the metaverse; she launched ‘Paris Hilton World’ in Roblox last year. She’s also claimed that her nickname is ‘Queen of the Metaverse.’
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