Gary, Hold Your Horses!

What's Wrong with Ethereum?

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Does anyone even remember FTX? And does anyone at all recall that Gary Gensler used to communicate with FTX’s founder, Sam Banks-Fried, now in jail for fraud? To remind us, there is, thankfully, the Internet. Like this blurb, from Coinpedia, among many other venues:

"In a recent video by Thinking Crypto, hosted by Tony Edward, concerns are raised regarding Gensler’s interactions with FTX officials and Sam Bankman-Fried, amidst rumors of a special broker-dealer license granted to the entrepreneur. The video suggests that Gensler’s actions may have had indirect implications on the crypto market."

Sooo, fast forward to today and Gary Gensler is rushing through his latest crypto pet project, Ethereum ETF. He is even getting “testy” with random journalists questioning his choices. According to Fortune:

"Securities and Exchange Commission Chairman Gary Gensler betrayed impatience upon fielding questions from reporters about crypto, including his agency’s handling of applications to launch Ethereum ETFs. In speaking with journalist Annmarie Hordern at the Bloomberg Invest event in New York on Tuesday, Gensler accused his interviewer of going after “clicks” after she asked him several questions related to crypto policy."

How about some extra due diligence?

What do we mean? Well, just look into some really weird things going on with Ethereum accounts, a.k.a., wallets. How many Ethereum wallets do you think have been registered by anyone? Well, you can go to to answer this question, right? Wrong. Most of the wallets on Etherscan come out as legitimate wallets with no transactions. No big deal. But check this out yourself:

All Ethereum wallets have the same structure to their name: a 40-character long hexadecimal string, i.e., a string prefaced by 0x followed by a combination of exactly 40 numbers [0,...9] and the first six letters [a,...f]. Construct any such string and you got yourself an Ethereum address. Now, go to, the Ethereum “transparency engine” and enter in the address you just created. What did you get? Most likely, you got a screen that says this wallet has no transactions. Okay. Now, try another name. And then another. And then one more. Got any transactions yet? No? Well, you are not alone. According to a recent study (ahem, mine), Ethereum wallets with any transactions are extremely hard to find if just probed randomly.

So, you may say, what’s the big deal? The wallets are just allocated sequentially. Well, try that: the first wallet is naturally 0x000…000. Oh, everyone knows this is Vitalik’s special pet wallet, nothing to see here. Now, try 0x000…0001, 0x000…0002 and so forth. The first 10 or so wallets check out. As you get closer to 0x000…0100, more and more wallets no longer have ever been used to transact. And if you go farther into the woods (we tried 1,000,000 random wallet names), there is nothing. Zilch. Nada.

Okay, you may say, still not a big deal. I opened an Ethereum wallet and have never traded. There are just many people like me. Sure. There are. And Ethereum has 16^40 possible wallet names, which comes out to A LOT more than all human population on Earth cubed. But get this, there is a wallet 0xfffff.fff. Clearly non-random. And transacting. As my study shows, things only get hairier from here.

Yes, mine is just one research piece in the sea of other researchers who are regularly wined and dined by the crypto industry.

I won’t spoil the not-so-pretty details. Read them by yourself. But, dear Mr. Gensler, maybe it’s time for extra due diligence this time around?

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