China adds legal teeth to its crypto ban

Plus, Coinbase and Block report earnings

Inside.com Part of   Network February 25, 2022

Chinese courts can now throw you in jail if you raise money through the public sale of cryptocurrency. China has had a ban on crypto-based fundraising since 2017, but this new amendment adds serious legal implications. Sentencing breakdown according to Article 192 of the criminal law: Article 192 describes the funding traunches in a very vague manner using descriptors like quite big, enormous, and especially enormous. The Block reports that 100,000 yuan ($16,000) is considered to be a "large amount" while 500,000 yuan ($79,000) is "enormous." There is no definition available as to what constitutes "especially enormous." Assuming a "large amount" and a "quite big amount" are the same thing, then if you are found to have raised over 100,000 yuan ($16,000) through the sale of cryptocurrency in China, you will be sentenced to between 1-5 years in prison. If the amount raised is "enormous," aka above 500,000 yuan ($79,000), the sentencing is 5-10 years. An "especially enormous" amount, although currently undefined, will net the convicted 10+ years in a Chinese prison. Why this matters: This new amendment will add some legal teeth to the Chinese ban on crypto.

Coinbase announced its earnings report this week. The top U.S. exchange beat analyst expectations in regard to revenue but warned investors of the volatility of its business and urged them to play the long game. Coinbase also predicted its retail monthly transaction users (MTUs) and total trading volume would decline in Q1 due to decreased crypto volatility and market capitalization. Q4 2021 stats: $2.5B in revenue $840M in income 11.4 million active users Trading volume is up 8X YoY The company also has: $7.1B in cash $1B in crypto A market cap of ~$37B  Coinbase user holdings breakdown: 40% Bitcoin 25% Etherium 31% Altcoins 4% Fiat

Jack Dorsey's Block saw its stock jump 40% on positive earnings. The company saw crypto trading as a huge revenue driver last quarter. The difference between Block's and Coinbase's respective approaches to crypto is that while Coinbase allows the trading of 50+ cryptocurrencies, Block only focuses on one: Bitcoin. Block saw $1.96B worth of Bitcoin sales volume in Q4 and $10B in all of 2021. The firm had $46M in gross profits in Q4 and $218M in all of 2021 off of its 2% fees.

Funding Friday Total funding this week across Web3 - $460M Amber Group ($200M) — Amber Group is a blockchain services company with products spanning investing, financing, trading, and payments. Temasek, Sequoia Capital, Pantera Capital, Tiger Global Management, Tru Arrow Partners, and Coinbase Ventures all participated. Cabin ($2.5M) — Cabin is a decentralized online and IRL community for creators. The round included participation from angel investors Balaji Srinivasan, Trevor McFedries, Sky Minert, See Eun Ha, Joshua Lapidus, Gordon Gould, Spencer Graham, Ben Lakoff, Zach Anderson, Tracheopteryx, David Phelps, Clay Coffman, David Rodriguez, JJ Zhang, Abhishek Punia, Marc Weinstein, Artia Moghbel, Kunal Tandon, Stew Bradley, Justin Alanis, Scott Moore, Sahil Lavingia, Reuben Bramanathan, Kevin Henrikson, Yalor Mewn, Brad Lichota, Harsh Patel, Jonathan Wasserstrum, Ian Lee, Gabriel Haines, and John Paller. Aligned ($34M) — Aligned is a blockchain infrastucture company looking to become the AWS of web3. GSR, Altium Capital, Calvary Fund, and a number of private investors made up the round. 33 other companies also announced funding rounds last week.

Web3 Tweet: Matthew Graham on unlocking value from sub-DAOs.

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Trevor Grant is an entrepreneur, investor, and writer based out of Chicago, Illinois. His primary area of interest is web3 venture capital, social tokens, and infrastructure. Other pursuits include screenwriting, yoga, and traveling. He holds a BS in biomedical engineering.   Connect with him on Twitter @trevorisonline Editor Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford.

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