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Sarah from Layer3
September 26, 2022

CFTC bailed out crypto this week and most people don’t really know it. Crypto policy folks were so desperate to avoid GG we fawned over another regulator. The CFTC DAO enforcement language shows bad policy should be fought not settled upon.

— Ryan Selkis, Founder of Messari, on CFTC's enforcement action against OokiDAO

GM! It's been another exciting week in web3. Welcome to your Monday digest, and here's what we'll cover:

  • U.S. CFTC brings its first-ever DAO enforcement action against OokiDAO

  • Wintermute hacked for 160m+ in its DeFi Operations

  • OpenSea launches NFT trades on Arbitrum

  • Layer3 Alpha: Our new landing page just soft-launched 👀

Your Web3 Briefing 📝

An analysis of what you missed in web3 over the past week

CFTC Imposes $250,000 Penalty Against bZeroX Founders and Charges Successor Ooki DAO

The U.S. Commodity Futures Trading Commission (CFTC), in its first-ever enforcement action against a DAO, has imposed a $250,000 penalty against the founders of bZeroX, a DeFi protocol for tokenized margin trading and lending.

In a simultaneous suit, the CFTC also filed an enforcement action against OokiDAO, the DAO successor to bZeroX.

CFTC's acting director stated that the enforcement was part of the CFTC’s broader efforts to protect U.S. customers in a rapidly evolving decentralized finance environment. “Margined, leveraged, or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations."

As expected, Crypto Twitter also had plenty to say about the matter. More importantly, some pointed out that the enforcement would also hold DAO token voters liable based on their participation in governance voting.

It'll be fascinating to watch how these regulatory structures in the U.S. eventually play out—will the CFTC become the primary enforcer for all DAO-related actions in the future? And to what extent is it ethical to hold token holders for their governance decisions?

An interesting dynamic between the CFTC and major crypto stakeholders playing out here, especially in light of Caroline Pham's attendance at Messari's Mainnet Conference just last week...

Sarah's Recommended Reads: Rekt on the $160m Wintermute Hack

Welcome to Sarah's Recommended Reads! Here, I'll be summarizing well-written articles or threads by web3 thinkers and builders you should know about.

Up today is Rekt's article on the Wintermute hack. If you're non-technical like me and want to understand the technical basics of the hack, this is a short and sweet read for all the details you want to know.

(Note: I just discovered Rekt recently and I'm loving their articles. If you want to get deep into DeFi without spending too much time going down endless rabbit holes, I highly recommend them).

But back to Wintermute: The hack was due to a weakness in Profanity, which is a tool used for generating vanity addresses. What are vanity addresses? Through this Profanity vulnerability, Wintermute's hot wallet became compromised, allowing the hacker to drain the vault.

What else you should know

What we've been BUIDLing 🏗️

We just soft-launched our brand new landing page!

In preparation for a MAJOR announcement tomorrow, we just soft-launched our new landing page, complete with 6 brand new Quests for users to begin their web3 journey.

Take a look and let us know what you think:

🛣️ Stay up to speed on what we're building: Take a look at our roadmap to see what we've been cooking at Layer3, and a preview of what’s to come.

🚢 And if you want to help decide what we ship next: You can submit a feature request here and vote on your favorites! Some top community requests have already made it onto our roadmap.

Proof of Discovery Week #3: jokedao and Women in Web3

Our Proof of Discovery 4-week digital conference with some of the best and brightest in web3 is still ongoing!

Every week, we’ll drop new protocols, companies, or thinkers that you should absolutely know about in crypto. During that week, you’ll be able to engage in these communities through a combination of interactive experiences (Bounties, Quests, Contests) and events.

This week, we're featuring jokedao: a bottom-up gamified governance platform for web3 projects. Take part in our first jokedao contest and vote for the next protocol, platform, or dapp to be featured on Layer3!

Also, tune into our Women in Web3 Spaces on Thursday to join some amazing thinkers to discuss topics like crypto-economic freedom, gender equality, and more.

Thanks for reading!

Join our Discord and follow us on Twitter to stay up-to-date on the latest Bounties, communities, and more!

That's all for this week! Until next time, frens.

Cheers,

Sarah at Layer3

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