Google Reports Record Profits Amid Record-High Stock Prices

by ghaliamohrem, Wednesday, 31 January 2024 (3 weeks ago)
Google Reports Record Profits Amid Record-High Stock Prices

Like it or not, investors in the Aragon network token a cryptocurrency were told on November 2 that they were being paid out of their money. The tokens were issued by the Aragon Association, a non-profit organization headquartered in Zug, Switzerland.

The Aragon Association provides software that enables 7,500 DAOs manage an astounding $25 billion in crypto assets.

Aragon has launched its own DAO with the grandiose but unrealistic ambition of constructing an online court system to adjudicate disputes; token holders, known as ANT, would be allowed to participate as jurors.

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However, the recent disclosure that investors were being paid out of their cash has prompted worries about the financial health of the Aragon network.

This surprise statement has led to a large reduction in the value of the Aragon network token, prompting concern among token holders. Many are now doubting the authenticity and honesty of the Aragon Association, as they continue to cope with the consequences of this disturbing revelation.

Venture entrepreneur Tim Draper, who is sympathetic to cryptocurrencies, was attracted by the notion, and in February 2020, his organization, Draper Associates, purchased tokens worth $1 million.

Tim Draper tweeted at the time that this new form of governing from Aragon was “very exciting,” but the business did not reply to a query for comment on this piece.

ANT holders will not participate, even if they still do.

As a forerunner for decentralized finance, the Aragon Association did something incredibly central: it opted to put its assets outside the reach of corporate activists. Now they’re being booted to the curb.

Arca Investments, a hedge fund, was part of a group that intended to tie the $123 million market value of ANT—a token that was trading at just over $3 at the time and $2 just two months earlier—to the nearly $200 million in assets that Aragon held in early May.

Arca did not react to a request for comment made via its website. This move by Arca Investments has sparked worries and suspicions regarding the rationale underlying their actions.

It appears counterintuitive that a hedge fund, which normally aims to maximize profits, would wish to separate the assets of a successful decentralized financial enterprise.

The lack of reaction from Arca Investments just adds to the uncertainty and suspicion regarding their role in this case. It remains to be seen how this scenario will evolve and what influence it will have on the Aragon Association and the decentralized financial community as a whole.

The organization provided a purchase of 0.0025376 ether, or roughly $5.76, and holders had 12 months, until November of this year, to cash out.

They were terrified that investors may someday control more than 50% of the votes. The transaction will see at least $11 million and maybe much more go to a successor not-for-profit entity founded by Aragon. Aragon did not answer to queries seeking comment.

There may possibly be more to the narrative.

The organization provided a purchase of 0.0025376 ether, or roughly $5.76, and holders had 12 months, until November of this year, to cash out.

They were terrified that investors may someday control more than 50% of the votes. The transaction will see at least $11 million and maybe much more go to a successor not-for-profit entity founded by Aragon. Aragon did not answer to queries seeking comment.

Disgruntled ANT holders managed to gain possession of $300,000 in the DAO and have used it to employ a legal business to maybe fight Aragon’s proposal.

Decentralization is a means to a goal, not the destination itself.

Anthony Leutenegger, CEO of Aragon X

If all of this looks to be the height of the 1980 corporate raider attitude on Wall Street, that’s because it is. Aragon’s experience indicates that decentralization of finance and administration.

Where choices are made by large numbers of people instead of a few of big organizations, can be nothing more than a utopian pipe dream.

The emergence of corporate raiders in the 1980s demonstrated the power and influence that a tiny number of people might hold over the financial system. Aragon’s experience serves as a cautionary tale, showing the possible downsides of decentralization.

It shows that depending on the collective decision-making of the masses may not be as successful or efficient as previously imagined, and possibly the concentration of power in the hands of a few may have its virtues.

Decentralization is “what you have to do if you are in crypto to attract new investors and get more legitimacy,” says Camila Russo, owner of the decentralized finance-focused blog The Defiant.

Much of the bitcoin sector effectively duplicates what already exists in conventional banking, but with an attractive high-tech twist.

Founded in 2016, the Aragon Association was supposed to be a “token-governed digital jurisdiction,” according to its white paper, a type of constitution for crypto firms.

It intended to establish a “decentralized court” to resolve user disputes beyond what is written into smart contracts, the self-executing agreements that are the cornerstone of decentralized finance.

Clients for its management software included Lido, the biggest crypto-staking firm, and metaverse supplier Decentraland.

However, the Aragon Association met tremendous challenges in fulfilling its aim. One of the significant difficulties was the lack of general acceptance and understanding of decentralized governance systems.

Many crypto organizations were wary to adopt the theory, preferring to rely exclusively on smart contracts for dispute resolution.

Additionally, regulatory uncertainties surrounding bitcoin and digital nations presented legal challenges for the business. Despite these challenges, the Aragon Association continues to develop and modify its services, seeking to revolutionize the way conflicts are mediated within the crypto sphere.

The organization collected $25 million via the sale of the ANT token in May 2017, followed by a manifesto that said it would produce free, open-source technology to facilitate the administration of DAOs as part of its “fight for freedom.”

But it wasn’t until January 2023 that the Aragon DAO was formed, with the goal that it become the organization’s governing body and curator of its finances, including the profits of the ANT sale, which were still held by the association.

Throughout that year, the intention was to steadily migrate the assets to the DAO

Says a person acquainted with the inner workings of the organization. There was demand both inside and internationally to be a DAO-building tool for DAOs.

Ironically, the developer of voting mechanisms for decentralized groups understood that total decentralization was not always efficient.

We’re so fixated on this one avenue of trying to decentralize, says Anthony Leutenegger, CEO of Aragon X, a new organization made up of the DAO’s development team. Decentralization is a means to an objective, not the destination itself.

Leutenegger said Aragon X will be turning into a conventional Switzerland-based not-for-profit entity in November, when the redemption period for the ANT tokens expires.

The company’s argument for driving out the ANT holders was that Swiss law mandated it. Describing the activists as “a coordinated group, the organization said in a May 9 blog post.

Evidence implies that their activity is geared at extracting value from Aragon for financial advantage. The Aragon Treasury was designed with the express goal of assisting builders improve decentralized governance infrastructure.

The intention was to make ANT a utility token under Swiss regulations

With the claimed objective of “providing holders of the token permissionless, trustless, and censorship-resistant decentralized governance participation in working towards the mission of the Aragon project.

Turn the social purpose into a profit-making organization, Aragon believes, and that might “result in regulatory enforcement actions.

Aragon highlights the necessity of keeping the social objective of the initiative rather than converting it into a profit-making corporation. The project thinks that if profit becomes the major goal, it might weaken the key objectives of permissionless, trustless, and censorship-resistant governance.

In doing so, Aragon advises that regulatory enforcement measures may be launched against the initiative, possibly delaying its development and hurting its capacity to fulfill its purpose.

For its part, Arca noted in an open letter that although Aragon’s ambitions are ambitious and noble,in order to unleash future utility and governance value, there must be acknowledgment of the financial value or risk dissolution.

It recommended that Aragon acquire ANT tokens to push up their price, akin to a stock buyout in the equity market.

Arca wound in securing the repurchase it needed but found the conditions “bittersweet.”

The contract offers $11 million to construct a new not-for-profit that would take over the DAO’s original objective, but if any ANT is not tendered by November, it becomes worthless, and Aragon obtains the cash.

Arca reckoned in a November statement on its website that 25–35 percent of the old tokens would not be redeemed, leaving $43.5 million to $61.4 million in assets for the new firm. Over half of the ANT tokens, or 17.4 million, have been handed in thus far, according to figures from DuneAnalytics.

The dustup with Arca happened shortly after the Aragon Association submitted the first assets to the Aragon DAO, totaling $300,000.

Remaining ANT holders elected to retain Patagon Management, an investment business with a track record of litigation against DAO founding teams, and provided it $300,000 with the intention of initiating discussions with or legal action against Aragon.

ANT tokens stolen from the DAO were being taken at the direct expense of investors with no legal basis,Patagon, which did not react to requests for comment, wrote on X. It is, in our opinion, a papered-over, beautified theft.

Decentralization has been the driving force for hundreds of organizations and engineers since the creation of bitcoin, the first cryptocurrency, in 2008.

Satoshi Nakamoto, its mystery creator, whose identity is questioned, envisioned a peer-to-peer payment system that would depend on cryptographic proofs to ensure transactions, removing middlemen like banks and brokers.

That notion gave rise to a new sector, with cryptocurrencies today valued over $1.7 trillion, that depend on distributed ledgers to trade, monitor, and establish ownership of assets, encompassing anything from tangible assets like precious metals and real estate to digital money itself.

Companies like JPMorgan, Samsung, and Tencent employ the underlying blockchain technology in supply-chain management, data security, and digital identity verification.

As recently as 2021 and 2022, at the apex of crypto’s second bull run, venture-capital investors put nearly $50 billion into the blockchain-based economy, according to PitchBook.

Now, one has to evaluate how these corporations came up with so much debt in the first place, and the apparent explanation would be fantastic profitability.

Parties agreeing to conduct transactions openly and transparently on the blockchain, as opposed to backroom deals by opaque, human, potentially-conflicted financial actors, is the vision we should be striving for, rather than clinging on to inefficient centralized financial systems.

Wrote Dan Morehead, founder and managing partner of blockchain-focused hedge fund Pantera Capital, in a July 2022 letter, contending that decentralized finance, or DeFi, offered better protections to investors than centrally managed companies.

At approximately the same time, however, crypto brokerage Voyager and digital-loan startup Celsius filed for bankruptcy over the decrease in bitcoin values that damaged their business models.

Morehead considers the failures to be a strength of DeFi

In the case of Celsius, for example, the business was forced by smart contracts to pay down loans to lenders to preserve collateral—but an opposing view would be that inflexible automated agreements that do not allow for changing conditions are no way to run an industry.

Now, one has to evaluate how these firms got up with more debt than they could manage in the first place, and the apparent explanation would be huge revenues.

In the period when banks and their newfangled neobank competitors provided 4-5% interest on high-yield savings accounts, DeFi lenders paid as much as 20%.

But a string of breaches and crises in both DeFi and the wider firm

Culminating in the fall of Sam Bankman-Fried’s FTX in November 2023, scared investors.

The amount of bitcoin held in DeFi projects today sits at $54.7 billion—below that of a mid-sized regional bank—compared with a high of approximately $179 billion in November 2021, according to data aggregation by DeFi Llama.

While the reduction may be mostly attributable to the collapse in cryptocurrency values, it is also the case that higher interest rates on low-risk assets such as Treasury bonds as governments withdraw pandemic-related help from their markets are lowering the attraction of DeFi.

A basic difficulty is that the decentralization plan looks better in theory than in practice. One risk is that blockchain initiatives may be hijacked if a single corporation or a group of partners owns more than 50% of the processing power or authority to approve network transactions.

In this scenario, called as a 51 percent assault, bad actors may prevent new transactions or reverse settled ones, or they may transfer the same tokens to numerous recipients, which would undoubtedly be deadly to the whole blockchain.

Another issue is the concentration of power among a few affluent persons or corporations.

If a small group possesses a considerable quantity of tokens or has a strong influence over decision-making, it might lead to centralization of power and undermine the decentralized character of the blockchain.

This might result in unfair practices, restricting innovation, and discouraging engagement from smaller parties. Therefore, keeping a genuinely decentralized network demands ongoing monitoring and steps to avoid such concentration of power.

Aragon hinted that something similar happened when it moved its initial batch of ANT tokens to the DAO, noting in its May 9 blog post that it had undergone a “coordinated social engineering and 51% attack.”

This is not precisely the same as such an assault on a blockchain since DAOs are designed to manage their token holders, but Aragon’s choice to take things into its own hands to meet what it perceives as legal obligations highlights how real-world considerations may restrict pure decentralization.

​​Full decentralization in DeFi is illusory

Said experts at the Bank for International Settlements (BIS) in a 2021 analysis of the sector. DeFi platforms have an element of centralization, which typically revolves around holders of ‘governance tokens’ (often platform developers) who vote on proposals, not unlike corporate shareholders.

Decisions on important DeFi activities, he argues, often do not pass without backing from its founders and financial backers. Andre Cronje, inventor of Yearn.Finance, a yield farming robo-advisor, told Forbes in 2022.

As much as there is talk of decentralization, unless it is back-channeled, there will be no approval.

That year, researchers from the University of Luxembourg undertook a study on tokenized voting at nine significant DeFi projects and determined that rights “are heavily concentrated” and their exercise “is quite low.

Unlike voting for traditional stocks, there is no responsibility to tell token holders of upcoming votes, and for users who maintain their DeFi tokens on exchanges like Coinbase, there isn’t even a mechanism to enable voting.

DeFi has evolved in a much more centralized way than expected

says The Defiant’s Russo. “You see this centralization in governance (usually a small team making most of the decisions) and in the distribution of token ownership—most tokens are owned by teams and a few VCs.

Then there’s sort of a technological centralization, like the introduction of backdoors in smart contracts.

This consolidation in governance and token ownership raises worries about the possibility for manipulation and control by a select few. It violates the basic ideas of decentralization that blockchain technology was based upon.

Furthermore, the inclusion of backdoors in smart contracts not only affects the security and trustworthiness of the system but also concerns the integrity of the whole blockchain ecosystem.

It is vital for the blockchain community to overcome these concerns and strive for complete decentralization in order to unleash the full potential of this revolutionary technology.

But this theater of decentralization is not necessary

She adds. I believe everyone can realize that there’s a trend towards this decentralization ideal” and that “you can’t be entirely decentralized from the outset.

I would just encourage all of these protocols to be more honest about their degree of centralization. There’s a method to expand in a more transparent manner.

Lawmakers and regulators are adding to DeFi’s woes.

In June, a U.S. judge granted a default judgment in favor of the Commodity Futures Trading Commission (CFTC) against the decentralized collective Ooki DAO, ruling that it was a person under the law and was therefore liable for illegally operating a trading platform and unlawfully acting as a futures dealer.

The organization was convicted to pay $643,542 and shut itself down.

The creators formed the Ooki DAO with an evasive purpose and with the deliberate intention of running an illicit trading platform without legal accountability,said Ian McGinley, the CFTC’s enforcement director.

This verdict should serve as a wake-up message to anybody who feels they can bypass the law by adopting a DAO structure, trying to shelter themselves from law enforcement, and ultimately putting the public at danger.

The Ooki DAO’s activities undercut the concepts of openness and accountability that are fundamental for a fair and regulated financial sector.

By acting beyond the confines of the law, they not only damage the integrity of the trading platform but also risk the safety of the public’s assets.

This enforcement action sends a clear message that authorities will not tolerate such criminal actions and will take appropriate steps to safeguard investors and preserve the integrity of the financial system.

None of the DAO members have commented on the summons nor attended court, and the founders of predecessor business bZeroX—identified in a default ruling as Tom Bean and Kyle Kistner—have not addressed a request for comment.

Multiple friend-of-the-court petitions lodged on Ooki’s behalf stated that DAOs should not be recognized as a separate entity.

The reason why the amicus effort was so important is that if a DAO member steps up and says, Hey, I’m a member of the DAO, I want to defend this,they’re putting themselves in the crosshairs, says Gabriel Shapiro, a lawyer who was engaged in producing one of the papers in support of Ooki.

More crucially, he says, 100% of DeFi would be illegal under the CFTC’s reasoning. Why? Well, pretty much everything in DeFi includes margin, finance, or leverage.”

If DAOs were not recognized as different entities, it would expose individual members to significant legal risks and responsibilities.

By standing out and supporting Ooki, these members would be placing themselves in the sights of regulatory investigation. Furthermore, if the court were to adopt the CFTC’s logic.

It may essentially deem the whole decentralized finance (DeFi) business unlawful, since most DeFi protocols involve features of margin, financing, or leverage.

This emphasizes the relevance of the amicus effort in defending the future of DAOs and the larger DeFi ecosystem.

Beyond DAOs, authorities have also gone after open-source software like crypto mixer Tornado Cash, which allows users to disguise digital transactions. In August 2022, the U.S.

Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned the corporation, stating that it has been used to launder more than $7 billion worth of virtual money since its formation in 2019, including $455 million allegedly stolen by North Korean hackers.

A few days later, Dutch authorities apprehended one of the purported founders of Tornado, Alexey Pertsev, on money laundering accusations. He remains in the Netherlands, where his trial is slated for March.

The following year, U.S. officials convicted two other Tornado developers

Roman Semenov and Roman Storm. While Semenov remains at large and thought to be in Dubai, according to blockchain analytics firm Elliptic, Storm is under house arrest at his Washington home, Coindesk has reported. His trial is planned for September.

On January 22, Storm released a video on X in which he requested money that would assist pay his and Pertsev’s defense.

My legal team and I are going to put forth a strong defense at trial, not just for my family’s sake but for the future of software developers and financial privacy,continued Storm.

The campaign named “Open Source Is Not a Crime” has already raised more than $500,000. Storm and Semenov have not addressed queries for comment.

Here too, the industry pushed back.

OFAC’s action sets a dangerous new precedent that drastically exceeds their authority and jeopardizes law-abiding Americans’ right to privacy.

Said Marisa Coppel, senior counsel at the non-profit Blockchain Association, in a statement accompanying the organization’s second amicus brief in support of Tornado Cash.

OFAC must see Tornado Cash for what it is: a tool that can be used by anyone. Rather than punishing a technology with a real purpose, OFAC should maintain focused on the criminal actors that misuse such technologies.

Despite the internal challenges and political criticism, decentralized systems remain popular in the bitcoin sector.

Decentralization has been more of a means to an end—what can you do as a developer developing on these new platforms that you couldn’t have done before?

asks Austin Green, creator of blockchain governance platform Llama. After all, the only way to arrive at the ideal organizational structures is to test a lot of different things and observe what works and what doesn’t.

Will Papper, inventor of Syndicate

An infrastructure supplier for blockchain-based internet applications, says, “Looking at it over a very long-term timescale, the decentralized tech will always be less efficient and less usable than its centralized counterparts.

At the end of the day, preserving data on one system that is trusted, like the database, will always be more efficient than storing it on 10,000 nodes that are widely scattered.

But if we harness the advantages of this, we will get to the point where I believe the negatives become less obvious and the upsides become much more prominent. ​​If we do include some protections, like the capacity to not increase prices overnight, then we’ve produced a better society.

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