ROLLUP: AI Threatens Crypto Security | Tom Lee Stops Buying ETH | Ethereum L2s Shut Down | Zcash ETFs

Justin Drake warned that advances in AI mathematics could threaten cryptography on a timetable separate from quantum computing, arguing that ECDSA private-key cryptography might be broken within months rather than years using hardware such as a large GPU cluster. The hosts said Bitcoin with exposed public keys, Ethereum externally owned accounts that have sent transactions, and Solana addresses could be vulnerable if ECDSA breaks; they estimated at least 25% of Bitcoin was in the exposed-public-key category. Drake urged a controlled migration to fresh addresses whose public keys are hidden behind a hash, starting with large holders, but cautioned against panic or rushed transfers.

The warning drew significant skepticism. Coinbase’s head of cryptography argued that AI solving difficult mathematical theorems does not establish that cryptographic problems are breakable; the hosts also noted OpenAI had reported solving 377 mathematical problems, none involving cryptography. Donkrat and Mert warned that “bunker mode” or hurried fund movements could cause harm, and Mert said Drake was a capable mathematician and cryptographer but had a weak record on timelines. Speakers also raised the possibility that AI could identify wallet owners by finding patterns across doxing data, while stressing that this is a risk, not an established outcome. Ethereum’s roadmap addresses much of the discussed attack vector, but a relevant change may not arrive until around 2029 or 2030.

Tom Lee said Bitmine would stop buying ETH for now after nearing its stated 5% supply target, which he described as a hard cap. The company had accumulated about 6 million ETH in a little over a year, mostly during a bear market, and was roughly 98% of the way to its target, with about 100,000 ETH remaining. The hosts said staking rewards could push its holdings above 5%, potentially requiring sales. Lee continued to suggest ETH could rise 25-fold from about $2,500 to roughly $65,000, while saying Bitmine would direct capital toward shareholder buybacks, MAVEN staking infrastructure, and investments outside ETH. The hosts cited $643 million in cash and a $13.6 billion valuation; Lex Node suggested the threshold might relate to public-company disclosure rules.

Several Ethereum-related projects announced shutdowns or possible departures. Blast said maintenance costs exceeded revenue and it saw no credible path to economic sustainability; it had peaked at $2.3 billion in TVL. Users can withdraw through its interface until October 26, after which the Layer 1 bridge contract will remain available. Abstract also announced a wind-down after almost three years, and Pudgy Penguins’ consumer-focused L2 is shutting down after failing to find product-market fit. A speaker said these cases reinforced the view that a consumer-crypto chain is not a sustainable standalone model. StarkNet, meanwhile, said it is considering becoming an L1 by 2027 to pursue quantum resistance. One speaker called that a valid reason to leave Ethereum, while also pointing to possible token-price incentives or the end of the L2 premium; as an L1, StarkNet would need to issue and inflate Stark to fund its own security. Another speaker suspected the plan could be an empty threat.

Zcash was presented as quantum secure, with the qualification that it could still be vulnerable if AI or superintelligence can break cryptography. The hosts were bullish despite ZEC falling about 13% on the week, and Grayscale’s Zcash ETF had reached $1 billion in assets under management against a cited $21 billion Zcash market capitalization. The Winklevoss twins filed for a Zcash ETF using the ticker WINK; David said he preferred spot Zcash and was buying despite the weak weekly performance. Speakers also discussed the possibility that AI could expose patterns in funds later withdrawn from privacy-focused assets, leading one host, recalling Zuko’s argument, to suggest that privacy might require holding value in Zcash without intending to withdraw it.

Privacy remained a broader concern as FinCEN withdrew two proposed digital-asset rules from 2020, covering transfers to unhosted wallets and mixers. The wallet proposal would have required exchanges to verify unhosted-wallet identities for withdrawals above $3,000 and report transfer details above $10,000; a speaker said the mixer proposal could have made assets that had touched mixers unusable at exchanges and banks. Speakers cautioned that withdrawing the proposals would not prevent AI from enabling wallet identification. In the market, Bitcoin was down about 3% on the week to $82,300 and ETH was down 6% to $2,500. The hosts cited 10-year and 30-year Treasury yields of 5.3% and 5.7%, respectively, and oil above $100 per barrel as sources of jitters, while disagreeing over whether high rates would draw cash into equities or intensify debt concerns and the debasement trade. Robinhood said it had made its first crypto treasury purchase, adding $25 million of Bitcoin to its balance sheet.