The Protocol: How Winklevii Taught Dad BTC, Wild Flight to Singapore

Forget the Federal Reserve. The Bitcoin and crypto project news flow is ample (and fascinating) enough to keep us busy. We've got the rundown plus $80M of

CoinDesk’s Protocol newsletter unpacks the tech behind crypto, one block at a time. This week:

Former President Donald Trump's much-anticipated announcement of a new crypto company, World Liberty Financial, did not disappoint. At least, it didn't disappoint traders on the Polymarket prediction-betting site who had wagered that the project would announce plans to launch a token. The project's team – the Republican candidate's sons Don Jr. and Eric spoke during the X Spaces discussion – was unequivocal that there would be a token, with the ticker WLFI. After a two-hour-plus session that included lots of yuks and crosstalk, however, it was less clear what the company will actually do. The most definitive account came from CoinDesk reporters including Sam Kessler got his hands on a draft white paper revealing that World Liberty Financial might closely reveal a DeFi project called Dough Finance that failed to gain traction and was hacked for $2 million. Both Zak Folkman and Chase Herro, who were responsible for Dough, confirmed their involvement in World Liberty Financial via their appearance on the X Spaces. The lead moderator of the session, Rug Radio's Farokh Sarmad, expressed astonishment that the elder Trump even showed up – given a schedule packed with rallies, debates, stump speeches, golf and an attempted assassination in Florida the previous day. Politico Morning Money called out the "risks Trump is taking by embracing a business venture his sons are launching less than 50 days before the election." Eric Trump said on the session that decentralized finance needed to be easier to use for regular people, noting the extreme difficulties he encountered when "looping Ethereum on Aave," the biggest DeFi lending platform. There wasn't much discussion of the risks of hacks, exploits and single points of failure that serve as the starting point for a lot of foundational conversations about blockchain-project architecture. Eithan Raviv, CEO of Israeli crypto-recovery firm Lionsgate Network, emailed The Protocol to say that "the major security concerns with this project include a lack of transparency, unclear asset protections and heightened cyber risks due to the high-profile individual involved."

Ethereum co-founder Vitalik Buterin wrote on X that he will avoid any mentions of those projects that aren't decentralized enough. To merit any ink, they have to at least meet a decentralization threshold known as "Stage 1," under a hierarchy he laid out years ago in a blog post. “Starting next year, I plan to only publicly mention (in blogs, talks, etc) L2s that are stage 1+,” Buterin wrote. “It doesn't matter if I invested, or if you're my friend; stage 1 or bust.”

The U.S. Securities and Exchange Commission (SEC) has filed suit against three individuals and five companies for allegedly operating pig butchering scams – a type of confidence-enabled investment scam in which fraudsters befriend victims over text-based social media apps, gain their trust and convince them to invest large amounts of money in fictitious crypto platforms before stealing their funds and disappearing. Separately, the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) announced sanctions against one of Cambodia’s wealthiest businessmen for allegedly playing a role in serious human rights abuses – including human trafficking and torture – tied to a pig butchering scam operation headquartered in the Southeast Asian country.

Bhutan, a Himalayan nation with fewer than 1 million people, has accumulated over $780 million in bitcoin, {BTC} "Unlike most governments, Bhutan’s BTC does not come from law enforcement asset seizures, but from Bitcoin mining operations, which have ramped up dramatically since early 2023," according to Arkham, a blockchain-analysis platform.

Howard Winklevoss, father of the famous crypto twins, is donating $4 million in bitcoin {BTC} in a first-of-its-kind donation to Grove City College, where he developed an interest for sound money and the Austrian school of economics that also later influenced Satoshi. Winklevoss told CoinDesk that he first learned about the principle of sound money at Grove City College while studying under Hans Sennholz, a free-market, Austrian-School economist and professor who had studied under Ludwig von Mises.

It's only been six months since Ethereum, the dominant smart-contract blockchain, had its last major upgrade. But there are so many developer priorities for what to tackle next that there's a growing realization they can't all happen at once.

So now, Ethereum developers are considering dividing the highly anticipated Pectra upgrade into two parts.

Pectra was on track to be Ethereum’s biggest hard fork to date. (A hard fork, in this case, is the technical blockchain term for the software upgrade.) But some developers argue that the entire package of new features has become unwieldy, and they have expressed a desire to