Tuesday, August 4, 2020

PPP bad actors / INX $117m IPO 🏦 / More Russia crypto bans 🇷🇺

Crypto exchange INX files Form F-1 with the SEC seeking approval for a $117m IPO.
                                                           
Posted by at

INX IPO Redux

Ripple's sales, Bitcoin futures' all-time high and more
To view this email as a web page, go here.
August 4, 2020
By Daniel Kuhn
If you were forwarded this newsletter and would like to receive it, sign up here. 

TOP SHELF

China's Bitcoin miners are in a rut, Ripple shows signs of sales growth and INX scaled down its IPO vision. Here's the story:

Flooded Market
China’s severe flooding, the worst in decades, hasn’t overwhelmingly impacted the Bitcoin mining industry – but it’s still a difficult rainy season. Johnson Xu, chief analyst at Beijing-based research startup TokenInsight, said most mining facilities have chosen spots outside of flood plains. However, factors like Bitcoin’s increased hashrate, lower price and the oversupply of Bitcoin miners in the region have led to a daily revenue drop of 70% compared to last year. China’s bitcoin miner operations account for 65% of the global multi-billion dollar industry. 

XRP Report
Ripple said it sold $32.55 million of its XRP cryptocurrency during Q2 2020, a 1,760% jump over Q1’s sales figures and the first signs of XRP sales growth in nearly a year. According to its most recent quarterly report, over-the-counter (OTC) XRP sales surged, spurred in part by liquidity-providing integrations with telco Swisscom Blockchain, swap execution facility Zero Hash and the crypto bank Sygnum. Average daily volume slumped to 196 million from Q1’s 322 million. Ripple’s programmatic sales program – made directly to exchanges – is still on pause. 

Back Backed
Litecoin creator Charlie Lee and Blockstream CEO Adam Back participated in a $3.1 million private security token offering (STO) for the online strategy game “Infinite Fleet.” The game is ​developed by Pixelmatic, founded by Samson Mow, who is also CSO at Bitcoin infrastructure firm Blockstream. Announced Friday, the round was broken into two parts, with $2.75 million raised via Simple Agreements for Future Tokens (SAFTs) and $250,000 raised through the investment platform BnkToTheFuture.

Yuan Over Yon?
Digital currency should replace fiat in China's financial systems, according to a former vice president at Bank of China, one of the nation's four biggest state-owned commercial banks. The executive, Yongli Wang, said over WeChat that wide use of digital currencies would encourage monetary reform, bolster liquidity and place limits on excessive cash issuance. Wang, now a director of the Haixia Blockchain Research Institute, also said limiting digital currency as a replacement for cash could impact its market competitiveness. China is in the process of developing and testing a digital yuan through its Digital Currency Electronic Payment (DC/EP) system.

SegWit Sleuths
NetWalker ransomware, which last week triggered cybersecurity flash warnings from the Federal Bureau of Investigation (FBI), has extorted $25 million in bitcoin from its corporate and governmental victims during the months of the pandemic, according to a report by McAfee and CipherTrace. NetWalker is a “ransomware-as-a-service” that gains its access through COVID-19 phishing emails, steals internal documents and demands a payout. Approximately 2,795 bitcoins have been transferred to NetWalker wallet addresses beginning March 1, with evidence showing hackers are swapping this extorted payout into cold storage and SegWit addresses, possibly to reduce fees. 
 

QUICK BITES

  • Bison Trails hires ex-Goldman Sachs VP as legal head
  • Electric Capital raises $110 million for second fund, eyeing DeFi and layer 1s (The Block)
  • Coin Center CEO Jerry Brito  builds anonymous forum for free speech (Decrypt)
  • Bitfinex offers “up to” $400 million reward for bitcoins stolen during 2016 exchange hack (The Block)


AT STAKE


Cryptocurrency and security token exchange INX has scaled down its initial IPO ask – but is still pursuing the largest offering (within the digital assets industry) to date. 

According to an updated F-1 Form (the SEC’s prospectus form for foreign issuers), the Gibraltar-based firm is looking to raise a maximum of $117 million. If successful, that would be $27 million more than mining giant Canaan made when it went public in 2019, CoinDesk’s Paddy Baker reports. 

While the bid is reduced, and the date pushed back (originally slated for Q2 2020), the expected raise is still something of a novelty.

Initial public offerings are rare in the industry, but becoming more common. Silvergate Bank and Argo Mining, among others, led the way with others soon to follow. Both Coinbase and Diginex are expected to appear on Nasdaq – through unconventional channels. 
 
INX’s plan is also unconventional, with the raise being led through a token sale. The firm will offer 130 million INX tokens at $0.90 each, with investors able to purchase INX tokens with USDC, bitcoin and ether – under certain restrictions – as well as the U.S. dollar. The token is used to pay transaction fees on the platform.

In years prior, token sales were largely unregistered ICOs – which led to a slew of problems still being meted out. Chief among them, the debate over whether token holders have rights over a company or protocol. 

While INX holders won’t be equity holders, they will receive a share of the firm’s profits. Further, in the advent of a liquidation, token holders will be paid ahead of shareholders. 

While going public isn’t an option for the majority of crypto firms, this arrangement shows a new path forward for crypto’s integration with the larger financial system. The ability to use cryptographically secure tokens to confer benefits to stakeholders, while also providing benefit to the platform. 

INX's executive managing director, Alan Silbert, is the brother of Barry Silbert, the founder and CEO of Digital Currency Group, CoinDesk’s parent company.

As the filing shows, INX plans to use the IPO funds to build its digital platform. 

MARKET INTEL

Institutional Interest
Open interest, or open positions, in Bitcoin futures listed on major exchanges reached a new lifetime high of $5.6 billion on Saturday, surpassing the previous record of $5.36 billion in February, according to data source Skew. “The rise in open interest represents an accumulation of long positions by institutional traders,” said Matthew Dibb, COO of Stack. Open interest in futures on the Chicago Mercantile Exchange (CME) jumped to a record high of $828 million on Monday, surging 127% over the past 2.5 weeks alongside bitcoin's quick rise from $9,100 to $11,100.

Ethereum 2.0: How It Work and Why It Matters
CoinDesk Research's 22-page report covers the long-awaited Ethereum 2.0, from its technology and development road map to potential market impact as the foundational upgrade to the world's largest smart contract platform. Ethereum developers present commentary about the benefits and risks this new technology may bring. Download the free report.

OPINION

Taking the Economy Back From Economists
Zephyr Teachout, a law professor at Fordham University in New York, is best known for her attempts to enter New York politics as a progressive advocate. She recently published, “BREAK ‘EM UP: Recovering Our Freedom from Big Ag, Big Tech, and Big Money,” about the monopolization of American industry and the antitrust actions being pursued. What follows is an abridged conversation with Teachout and CoinDesk privacy reporter Ben Powers. Read the full Q&A here. 

How do monopolistic companies create parallel government structures? 
  • There are clearly forms of private government that are smuggled inside our current public government and growing in power. If you ask somebody who is an Amazon seller what judicial system they care about, they care a lot about Amazon’s system and their own mechanisms for delisting sellers. These companies have their own intellectual property regime, their own punishment regime, and that is as important if not more so than the public one if you are caught within the web of one of these private, growing governments. 
You bring up decentralization a lot in the book. How might cryptocurrencies play a role in that?  
  • I think of these systems as incredibly important, but it all depends on what the governance mechanism is. When Amazon recently applied for a patent to use blockchain technology, which would basically require every seller to keep a ledger of where all their supplies come from, then basically the technology itself isn’t doing a lot of decentralization. The technology is in service of a centralized power. There is no such thing as no-governance regimes. When I talk to crypto advocates, they’ll often frame it as if it is a world with no governance. But there is never an absence of governance. In the end, someone controls supply. Technology itself can’t do quite as much work as I think some of the advocates think. But again, let’s have that discussion, because I think there’s just unbelievably powerful ways in which it can be used for the good. 
You talk about developing a “f–k-off” economy. What do you mean by that?
  • I’m trying to take the economy back from the economists. They’ve been acting like priests for 40 years and telling us that we, as mere residents of this society, have no business messing with economic terms like monopoly or antitrust, and we should just trust their assessments of efficiency. When you take the economy back for people and not economists, then things like wages matter again.

PODCAST CORNER

Open Source
Just because you’re not bullish doesn’t mean you can’t respect Bitcoin. CoinDesk’s Leigh Cuen sits down with  Nadia Eghbal, author of the upcoming book “Working in Public,” about open-source software projects. 

WHO WON #CRYPTOTWITTER

Blockchain Bites
A newsletter from CoinDesk
See previous editions

Copyright © 2020 CoinDesk, All rights reserved. 

Our mailing address is: 
250 Park Avenue South New York, NY, 10003, US 

Want to change how you receive these emails?
You can update your preferences here.
Posted by at

Monday, August 3, 2020

Hedge Fund Down

Banana bets and the Twitter hacker's bitcoin fortune
To view this email as a web page, go here.
Aug. 3, 2020
By Daniel Kuhn
If you were forwarded this newsletter and would like to receive it, sign up here. 

TOP SHELF

Another crypto hedge fund is winding down, Huobi launched a new unit to invest in DeFi and the Twitter hacker is reportedly a bitcoin millionaire. Here's the story:

Fund Down
Neural Capital, a crypto hedge fund, has closed, having lost half its money since launching in 2017. Three people familiar with the matter said the fund’s crypto-assets were liquidated in December and the fund is in the process of refunding leftover money to investors, a process taking longer than expected. At its height, Neural Capital managed over $13 million from over 40 investors, including Greylock partner Joshua Elman and Expa partner Hooman Radfar. It joins several funds founded in 2017 that have announced closures in 2020, including Adaptive Capital, Prime Factor Capital and Tetras Capital.

Banana Fund
U.S. prosecutors are seeking to return $6.5 million in bitcoin to victims of the “Banana.Fund” crowdfunding project, which the government described in court papers as a Ponzi scheme. In a forfeiture suit against the cryptocurrency account storing the funds, prosecutors allege Banana.Fund’s unnamed administrator admitted to investors his project had flopped, promised to return $1.7 million to them and then failed to do so. The operator then pivoted to a laundering and refund scheme that ultimately resulted in the U.S. Secret Service’s (USSS) seizure of 482 bitcoin (BTC) and 1,721,868 tether (USDT), court documents show

Twitter Hacker
The 17-year-old thought to be behind the recent Twitter hack reportedly owns more than $3 million worth of bitcoin. The alleged hacker, Graham Ivan Clark, stands accused of 17 counts of communications fraud, 11 counts of fraudulent use of personal information, one count of breaking into an electronic device and another for organized fraud. His bail was set at $725,000. Federal officials are also charging Nima Fazeli and Mason John Sheppard with aiding in the “intentional access of a protected computer” and conspiracy to commit wire fraud and money laundering, according to criminal complaints published Friday.

DeFi Lab
Crypto exchange operator Huobi Group is forming a new fund to invest tens of millions of dollars of its own capital in the decentralized finance (DeFi) space. Huobi Group said in an announcement Monday it has launched a new business unit called Huobi DeFi Labs to manage the fund. The group will focus on research, investment and incubation of DeFi-related projects, and has brought on former banker Sharlyn Wu to lead the initiative.

Hacker Effects
A Spanish cryptocurrency payments app and card issuer has admitted it won’t be able immediately to repay users affected by Friday’s $1.4 million hack and has offered a compromise instead. Madrid-based 2gether said Sunday it hadn't been able to find the funds to reimburse all users the €1.2 million stolen by hackers – 26.79% of the firm's total funds – on Friday evening. The firm has offered to reimburse investors in native 2GT tokens at the issuance price of just under $0.06. "We can assure you, with a great deal of chagrin, that if we could face this theft with our own funds, we would," the announcement reads.

MARKET INTEL

Tokenized BTC
The supply of tokenized bitcoin (BTC) grew more than 70% in July. More than 20,000 BTC (~$225 million) are now tokenized using Ethereum-based protocols. Wrapped Bitcoin (WBTC) represents over 76% of the total tokenized bitcoin supply with over 15,500 BTC tokenized. The total supply grew by roughly $96 million in July, following June’s record growth.

Dex Volume
July trading volume on decentralized exchanges set its second consecutive record high, rising 174% from June, according to data from Dune Analytics. Aggregate trading volume on decentralized exchanges reached $4,32 billion in July, up from $1.52 billion in June. 41% of July’s volume came from Uniswap, on which traders speculate on assets ranging from “a better Bitcoin” to a coin named after fried chicken.

OPINION

Value Judgements
Crypto is inherently disruptive. In this week’s Crypto Long & Short newsletter, CoinDesk’s Galen Moore asks whether decentralization – and its attendant change making – creates or destroys value within the crypto space. “The “Robinhood Effect” may represent a threat to crypto from stocks, which also seem to now trade unencumbered by fundamentals, via onramps that broaden access,” he writes. 

DeFi Defines Ethereum
DeFi Dad, an organizing member of the Ethereal Summit and Sessions and DeFi super user, thinks Etheruem has found a narrative it can latch onto. “Five years ago, you could argue Ethereum was attempting to do too much. Even two to three years ago, that was still a valid hypothesis, with stagnant adoption,” he writes. 

PODCAST CORNER

Bitcoin, Sex and Feminism
Chaturbate is among the few traditional porn sites that has integrated crypto in a meaningful way. COO Shirely Lara joins CoinDesk’s Leigh Cuen for an in-depth discussion about bitcoin, sex and feminism.

WHO WON #CRYPTOTWITTER

Blockchain Bites
A newsletter from CoinDesk
See previous editions

Copyright © 2020 CoinDesk, All rights reserved. 

Our mailing address is: 
250 Park Avenue South New York, NY, 10003, US 

Want to change how you receive these emails?
You can update your preferences here.
Posted by at
Subscribe to: Posts (Atom)