Weekly Roundup 07/24/26 (BTC Security Consortium, Genesis' Terra trade, DAT departures, Farewell to BitMEX, Network State drama) (EP.731)

The Bitcoin Security Consortium, whose members include Coinbase, BlackRock, Fidelity, Block, and Galaxy, has collectively committed $15 million toward quantum research and Bitcoin security. Nick Carter framed the initiative as a response to a tragedy of the commons problem in which everyone benefits from Bitcoin security work but few fund it, and noted the consortium was structured so each member makes its own financial decisions rather than pooling governance. Galaxy separately announced a Bitcoin Quantum Readiness Initiative offering up to $5 million in developer grants for post-quantum solutions alongside its own advisory council and research program. Carter and Walsh noted that post-quantum readiness affects the entire stack including the protocol, front-end interfaces, and physical hardware, and that in some IoT devices and satellites the cryptography is burned into hardware and cannot be upgraded.

A Ribbit Capital investment memo written in June 2022, from a period when Ribbit held a $278 million position in DCG representing 3.42 percent of the business, describes Genesis taking a $38.8 million net loss liquidating $300 million of UST exposure. The UST exposure originated with a spot OTC trade with LFG on April 20, 2022, in which Genesis sold $1 billion of Bitcoin to LFG over four tranches. Genesis had $300 million of UST remaining on May 9 when UST began depegging and sold it at 96 cents on the dollar, but the memo supports the view that Genesis's liquidation of UST into Tether caused the Terra depeg rather than an external attacker. Genesis had also extended $2.4 billion of open term loans to Three Arrows Capital that were insufficiently collateralized, and that loss was described as materially worse than the Luna trade loss.

Jack Mallers has resigned as CEO of 21 Capital to focus full time on his payments company Strike. 21 Capital is the second largest Bitcoin DAT with over 43,000 Bitcoin, and a contemplated related party transaction for Strike or XSI to acquire Strike is off the table. Separately, Strategy sold $263.5 million of at-the-money common equity and is not deploying the proceeds into Bitcoin.

BitMEX has wound down, ending its operation as a cryptocurrency derivatives exchange. The hosts credited BitMEX with inventing the perpetual swap and originating the delta neutral synthetic dollar concept, describing the perpetual swap as the first financial instrument invented in crypto to be exported to traditional finance, alongside the AMM pioneered by Bancor and then Uniswap.

The Network State project in Forest City, Malaysia was raided by immigration authorities, though no evidence of illegal individuals was found. The shutdown followed a social media storm over the alleged presence of Israeli dual citizens, as Israelis are not permitted to visit or obtain a visa in Malaysia. Balaji is reportedly moving the project to Kazakhstan, where Jews are permitted to visit.

The CLARITY Act compromise language would ban presidents and federally elected officials from launching coins or profiting from digital assets they issue, includes a sunset provision in 2029, would not apply to already-issued tokens but would require divestment or placement in a blind trust, and Senate Majority Leader John Thune said he does not think it can pass before the August recess. Polymarket odds of the CLARITY Act passing in 2025 stand at 37 percent. The SEC settled a lawsuit with Coinbase over a Freedom of Information Act request related to Operation Chokepoint 2.0, agreeing to pay Coinbase $150,000 and admitting to wiping out a full year of Gary Gensler's text messages sought as evidence. SEC Commissioner Hester Peirce separately warned that crypto vaults and on-chain lending strategies can fall under securities law when a curator exercises discretion over deposits, cautioning builders that arguing around securities rules for managed vaults will lead to a painful outcome as real world assets get tokenized into such structures.

Movement Labs, an Ethereum layer two network built on the Move programming language, filed for Chapter 11 bankruptcy following a market-making deal that dumped tokens and the ouster of a co-founder. Augustus, a stablecoin-native bank, raised $180 million from Tiger Global, QED, and others. Digital Asset, the company behind the Canton network, raised $10 million from Standard Chartered Ventures and Shinhan Financial Group. Notabene, a stablecoin payments and compliance software company, received a strategic investment from Ripple.

Nick Carter argued that frontier AI labs may not have as defensible a moat as commonly assumed and that the fat model thesis may not hold. He observed that Anthropic appears to be moving toward monetizing scientific discoveries such as drug discovery rather than pure inference revenue, while OpenAI is verticalizing more aggressively by moving to own infrastructure and manufacture tokens.