A cloak of invisibility means ultimate privacy and ultimate secrecy.

Invisibility cloaks reentered the public imaginary when Harry Potter was gifted one in the 90s.

Maybe the most fantastical aspect of those books is that a pubescent wizard had access to an invisibility cloak and only used it to move the plot along.

But here in crypto, we’re getting access to our own, digital cloak of invisibility.

Will the privacy afforded by crypto usher in a magical era for individual privacy? Or does this level of secrecy spell doom for us all?

The Only Real Hacker Repellant

There’s still time to enter our Trezor Wallet giveaway!

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To participate, all you have to do is refer a friend to Coffee & Crypto and you’ll be automatically entered for a chance to win one of five Trezor Model One Cold Wallets!

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We wish we were you. They won’t let staff enter the raffle.

Espresso Shots

☕️ SEC Asked Coinbase to Delist Every Crypto But BTC 🪙 ❌

Before the SEC hit Coinbase with a lawsuit, it implored the exchange to stop trading every single crypto… except Bitcoin.

“They came back to us, and they said [. . .] we believe every asset other than bitcoin is a security,” said Coinbase CEO Brian Armstrong in a report by The Financial Times. “And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than Bitcoin.”

This action was a clear indicator that the SEC feels comfortable exerting its authority over the broader industry.

But this big, ridiculous ask left Armstrong with only one option.

“We really didn’t have a choice at that point, delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US,” said Armstrong. “It kind of made it an easy choice . . . let’s go to court and find out what the court says.”

Thank goodness they went to court. Gensler’s next demand of Coinbase was going to be that they delist every hairstyle except bald.

☕️ Curve Hacked For $24 Million 🌈 💻

The smart contract platform Curve lost several DeFi projects roughly $24 million in a hack exploiting a vulnerability in the platform’s liquidity pool, according to a report from Decrypt.

JPEG’d, an NFT lending protocol, took the biggest hit, losing $11 million in the hack. Other notable victims were the DAOS Alchemix and Metronome, which lost $13.6 million and $1.6 million respectively.

Curve traced the vulnerability back to the programming language, Vyper.

Our hearts go out to the victims of this hack, but the real shame here is that the hackers drained Curve’s liquidity pool and didn’t use it to hit a single skate trick.

☕️ Richard Heart Charged by SEC 👨 ⚖

Richard Heart, the man behind crypto project Hex, was charged by the SEC for conducting unregistered securities offerings totaling more than $1 billion.

This is one of those special times that we’re kind of rooting for the SEC. The top-hat-wearing Heart constructed a cult of personality at Hex, with the focus on getting rich rather than any actual crypto utility.

Apparently, Richard Heart rubbed the SEC the wrong way as well. In its complaint, the SEC explicitly mentions Heart’s promises of 38% staking returns and his claim that Hex "was built to be the highest appreciating asset that has ever existed in the history of man."

We wish Heart all the best of luck while he manages both this lawsuit from the SEC and otherworldly attacks from the Magician’s Guild for stealing valor.

Spilling the Beans

Bitcoin’s Invisibility Cloak 🪄 🧙‍♀️

One of crypto’s greatest promises is anonymity.

And anonymity is certainly a double-sided sword. On one hand, it keeps the government off your back and promises individual liberty. On the other hand, secrecy is a foundational tool for criminals and bad actors.

Crypto’s under constant fire for the space’s efforts to preserve anonymity. And yes, that can anonymity can be a serious problem when it's used as a protective shield by North Korean hackers or Mexican Cartels.

But for the average, noncriminal user, crypto’s privacy is essential. And crypto is moving ever forward in its quest for user privacy.

Because though many will assert that crypto is anonymous, it’s actually pseudonymous. Though your identity is hidden, the movements and transactions of your crypto wallet are public and transparent.

And this could be a serious impediment to the mass adoption of crypto by the public. As one editorial from Fortune put it:

“Consider for example using crypto in your payroll. Employees would be able to see the employer’s account balance and the paycheck of their team members. If you use crypto to pay, your local coffee shop could access information on how much you make and where you shopped yesterday.”

And those potential data leaks and lapses in privacy are a major obstacle to crypto’s success.

But new tools are emerging all the time to increase user privacy and maintain crypto’s integrity.

For example, there’s CryptoMixer. It’s a tool that mixes users' Bitcoin with other users’ coins to make blockchain transactions secure and untraceable.

CryptoMixer is ideal for new Bitcoin owners and miners who are looking for privacy assurances.

This is not to mention privacy coins such as Monero and Zcash which contain zero-knowledge functionality that boosts anonymity.

And we can’t forget our good friends at Trezor, bringing new levels of security to cold wallet tech.

But how will crypto walk the tightrope between privacy and compliance?

We don’t have all the answers. Crypto’s on a privacy trajectory into uncharted territory. More regulation in crypto should mean more security, but the situation is a Catch-22.

Consider the recent wave of Bitcoin ETF applications, the area that the SEC had found the earliest, largest issues with was the “surveillance-sharing” portions of the applications.

This is the manner through which exchanges hold other exchanges accountable for their financial movements.

How is crypto supposed to become more transparent and simultaneously afford users more privacy?

Crypto’s government-compliant invisibility cloak is still under wraps. But as the space grows and matures, we’re sure that a tenuous compromise can be struck, one that semi-satisfies both the private investor and Big Brother.

We know it’s only a matter of time before crypto fulfills its promise to keep you out of the government's eye and into the restricted section of the library, maybe even the prefects’ bathroom.

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☕️ Our Take:

Meme of the Day

And, of course, it rugged...

Crypto 101

BALD Token: This memecoin was launched this week and had a massive run on Monday.

BALD at one point held $32 million worth of Ethereum before dropping a precipitous 90%.

This isn’t an uncommon trajectory for a memecoin, but imagine our surprise when we were trying to write a “Gary Gensler is bald” joke and found BALD token trending in crypto news.

The Last Sip

If crypto’s going to have an invisibility cloak, it’s only a matter of time before it obtains other, more powerful magical artifacts.

The Resurrection Token: If crypto had a token that would let us bring someone dead back to life, we’d use it on Ruja Ignatovia, the “Crypto Queen” whose body was reportedly chopped up and thrown in the Ionian Sea. We’d like to ask her about the last couple hours on that drug lord’s yacht.

The Elder Wei: The smallest denomination of Ethereum may be the most powerful wand.

The Digital Pound: This dorky, British crypto development is actually real and coming to a foggy, cobblestone street near you. It should be much easier to convert than digital galleons or digital knuts.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.