Offchain: The Last Domino

Offchain: The Last Domino

CZ is gone and with him the last remnants of crypto’s gluttonous age. Now we can finally build again.

I’m not going to pretend I wasn’t surprised by the sudden fall of CZ, the once-untouchable overlord of crypto, but it did have an air of inevitability to it.

Zhao was the last man standing, the final and greatest of the bull market god-kings. SBF is in prison, Do Kwon is being extradited, Arthur Hayes is a convicted felon. For a while it seemed impossible that CZ, so measured and tactical, would share their fate, but crypto loves a cycle and this one could only possibly end with a complete clearing of the board.

They weren’t the only players in the last cycle, obviously, but they were the ones that spun the narratives, around whom the blocks and dollars danced, their authority and power making a mockery of the decentralisation that was supposed to be the whole point.

And now their era is done. So what comes next?


There’s no escape

CZ’s downfall is a cautionary tale about crypto’s limits and the power of the entrenched order. While SBF courted invulnerability by stashing his empire in everyone’s favourite sun-drenched tax-haven, the Bahamas, CZ went one step further, making Binance, a financial operator that even now does around US$50 billion in trades each day, entirely stateless.

It was a provocation to the authorities, but one in keeping with the crypto ethos. Regulate your own banks and two-cent crypto operations if you want, but we’re in international waters out here, baby. I’m gonna eat a pangolin while hitting 100x leverage on a $10 mil shitcoin.

Yeah, sure, but the US DOJ has evidence that you willingly facilitated terrorist money laundering so unless you fancy spending the rest of your life in a cosy bolthole in one of the lesser ‘stans, it’s time to put your best suit on and make yourself pretty for the judge.

The first shoots

It’s hard not to read hidden meaning into the fact that SBF and CZ’s fall from grace has coincided with the first signs of bullish momentum in more than two years.

The total stablecoin value is increasing for the first time since January 2022 – including a couple of US$1bn Tether mints, just like the good ol’ days. Money has been flowing into crypto for two straight months now, the longest period of sustained inflows since the peak of the bull market. Bloomberg’s ETF analyst gives the Bitcoin ETF a 90% chance of success, unlocking tens of billions in new investment and a legitimate path to US$100k.

So maybe those on the sidelines have just been waiting for the cowboys to get chased out of town. Or maybe the cowboys never actually mattered as much as we all thought they did.

Emerging from the ruins

Although, there is still one of those bull market god-kings left: Brian Armstrong, the CEO of Coinbase. Where the others chose speed and disruption and nose-thumbing, Armstrong chose legitimacy. Where the others preached revolution, Armstrong preaches a steady transfer of power. He works with regulators, auditors and bankers to prove crypto can operate adjacent to, rather than in place of traditional finance.

Armstrong has been ahead of his time by being cautious, prudent and vaguely compliant. There are plenty who maligned him for it, but the company he founded has been around since May 2012 and shows no signs of collapse any time soon.

And now, with a Bitcoin ETF all but a certainty, Coinbase is primed to feast on crypto’s entrance into mainstream finance. Their model will be the one mimicked by other players looking to capitalise on the coming rush.

To be clear, this is, in general, a good thing. Crypto’s fever dream of an entirely decentralised financial system has never been anything more than libertarian fanfic for the extremely online set. The consequences of such laissez-faire financial markets have been made all too clear over the last two years and now the culprits are being forcibly ejected from the system.

Obviously the crypto space is still filled with shady actors, dodgy exchanges and men with too much confidence in their own abilities. But our chance now is to face the next cycle without the baggage of the industry leaders who took that as their MO. So, what will we do with the opportunity?

Luke from CoinJar

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