Social platform Reddit is close to breaching 10 million holders of its collectible avatars, or “Reddit NFTs,” nearly 11 months after its launch in July 2022.
According to Dune Analytics, there are currently a total of 9,909,465 million Reddit collectible avatar holders. Around 7.7 million of these are identified as single collective avatar holders, or those that do not have multiple wallets.
Reddit Collectible Avatars – Source: Reddit
Reddit launched a collectible avatar marketplace on the Ethereum scaling network Polygon in July 2022. NFTs in the customizable collection have been designed by independent artists and Reddit content creators.
Avatar holders surged following the collection’s launch but reached a plateau at around 3 million in November. However, there has been a big growth spurt in 2023 with the number of wallets tripling over the past six months.
Since the beginning of 2023, the number of Reddit avatar holders has increased by 80%. The Reddit Collectible Avatars market capitalization is $38.4 million and there are 13.7 million NFT avatars in the collection.
Furthermore, there have been 303,033 total sales with a cumulative sales volume of $32.6 million, according to the data.
On May 28, Redditor “ContextMelodic4212” congratulated the platform on the achievement but commented that bot activity may be responsible for some of that growth.
“Actually there are some issues here and there with Avatars getting scooped or botted by some, it’s far from being perfect. However, I can’t think of a better use case for this technology!”
Recently on May 26, Reddit announced support for gaming giant Ubisoft’s Rabbids NFT collection. Redditors can claim the free Rabbids NFT avatars for their profiles on the platform, and they are being scooped up fast.
Rabbids originated as a spin-off video game from the Rayman video game series, 2006’s Rayman Raving Rabbids. Ubisoft was the first major video game publisher to release in-game NFT items in December 2021. It launched the Rabbids NFT avatar collection for the Metaverse game The Sandbox in February.
Singapore investment firm Temasek Holdings has reduced compensation for the execs responsible for the firm’s investment into the now-defunct crypto exchange FTX.
Temasek was once the second-largest outside investor of FTX, with 7 million shares, according to Forbes. The firm however was forced to answer for its investment play after the exchange collapsed.
According to a May 29 report from Bloomberg, Temasek has now concluded its internal review of the $275 million investment loss incurred from FTX, which it initiated shortly after the exchange collapsed in November 2022.
While the findings revealed that there was “no misconduct” internally, it was reported that both its investment team and senior management took “collective accountability,” and had their compensation reduced.
The $275 million FTX investment which is now written off, was said to be 0.09% of Temasek portfolio value of more than $293 billion, at the time of collapse.
Temasek has stood by its claims that it conducted an extensive due diligence process into FTX before making its investment.
In a seperate May 29 Bloomberg statement, Temasek’s chairman, Lim Boon Heng, said that “there was fraudulent conduct intentionally hidden from investors, including Temasek,” suggesting that it has had a major impact on the firm:
“We are disappointed with the outcome of our investment, and the negative impact on our reputation.”
Singapore’s Deputy Prime Minister Lawrence Wong previously reiterated similar words at a parliament meeting in November 2022, just days after FTX collapsed.
“What happened with FTX, therefore, has caused not only financial loss to Temasek but also reputational damage” Wong said.
Temasek stated that when it conducted its due diligence, it reviewed FTX’s financial statements, assessed regulatory risks with crypto market financial service providers, and sought legal advice over nine months from Feb. to Oct 2021.
It was added that the firm also engaged with people with firsthand knowledge of FTX, including employees, other investors, and industry participants.
5/ Some of the following #FTX‘s institutional investors have said they will be writing down their FTX investments to $0:
In more recent news, Temasek denied rumours that it had invested $10 million into Array, the developer of the algorithmic currency system based on smart contracts and artificial intelligence.
In a short statement on May 2, the firm addressed the circulating news articles and tweets regarding Temasek’s investment, dismissing them by stating “this news is incorrect.”
An Ether (ETH) wallet that has been inactive since Ethereum’s ICO (Initial Coin Offering) in 2015, has suddenly awoken after eight years of dormancy, moving a total of 8,000 ETH in just two minutes.
The wallet received the 8,000 ETH after participating in Ethereum’s ICO (Initial Coin Offering) in 2015 and remained inactive until May 27. On that day, its owner began with a cautionary transfer of 1 ETH to a new wallet. One minute later they transferred the remaining 7,999 ETH to the new wallet address.
At the time of writing, the ETH stash is worth approximately $14.7 million.
This transaction was first noticed by blockchain analytics service Lookonchain, which informed its 219,000 Twitter followers of the transfer.
An Ethereum ICO participant who has been dormant for 8 years woke up today.
In the comments section of the post, there was some community speculation around the reason for the transfer. One commenter suggested that the owner had just been released from prison, while another made a humorous remark that they were transferring funds from an old Ledger — a pointed comment about the company’s controversial new Recover upgrade.
At the time, the 8,000 ETH was purchased at a price of just $0.31 per token, which places the initial investment amount at around $2,500.
At today’s prices of $1,917, this marks a staggering 590,000% gain for the owner.
This isn’t the only ICO-era Ether wallet to re-awaken in recent months. On April 24, another wallet which received 2,365 ETH ($4.5 million) made its first transaction in nearly 8 years, after the owner transferred just 2,360 ETH to a new wallet address.
On March 5, another ETH wallet transferred 10,226 ETH ($19.6 million) out to new wallet address after remaining dormant for five years.
The new wallet address is also one with little in the way of any significant transaction history. The only other ETH transaction recorded in the new wallet is a 207 ETH ($380,000) incoming transaction that was made just a few minutes prior to the most recent transfer. Notably, the additional 207 ETH were sent from another wallet that remained completely inactive since June 12, 2017.
Interestingly, the new wallet also contains $46 worth of a memecoin called Gensler (GENSLR), and just $0.24 worth of a dragon-inspired token called Dejitaru Tsuka (TSUKA), according to data from Web3 wallet tracker DeBank.
Total allocation of token holdings in the owner’s new wallet. Source: DeBank.
The Ethereum ICO occurred in two primary stages. The first stage was the pre-sale, and between July 22 and Sept. 2, 2014 the sale of Ethereum tokens to new investors raised $18 million. The going exchange rate for the pre-sale was 1 BTC — for 2,000 ETH. The second stage was the official launch of the Ethereum blockchain which occurred on July 30, 2015. This meant that some investors waited more than a year to be able to redeem and use their ETH.
Dormant wallets with vast sums of crypto can awaken for a variety of reasons. Sometimes dormant wallets reawaken because they’ve been hacked. Other times, it’s simply because the owner may have forgotten about it and upon its re-discovery, have decided that it’s possibly a good time to sell.
In late 2024, citizens of the United States will take to the voting booths to elect their next president — a four-year term that could have a vast impact on the next crypto bull run.
Though polls are set to open on Nov. 5, 2024, dozens of U.S. politicians have already signaled an intention to contest President Joe Biden for the country’s top position.
The current Biden administration appears to have been taking an increasingly anti-crypto stance. Meanwhile, former president Donald Trump is again bidding for the job — setting the stage for a rematch. Others are seeking to carry the Democrat and Republican presidential nominations.
‘No fundamental value’: Joe Biden — Democrat
The current president of the United States, Joe Biden, kicked off his re-election bid on April 25, and is at the moment, the likely favorite for the Democrat’s presidential nominee.
Biden’s attitude toward crypto is possibly best summarized by his 2023 Economic Report of the President which included a section on crypto for the first time since it began in 1950.
The section aimed to debunk the “Perceived Appeal of Crypto Assets.” It argued crypto doesn’t deliver on “touted” benefits and claimed “many of them have no fundamental value.”
The former president turned NFT salesman Trump threw in his non-consecutive re-election bid on Nov. 15, 2022. According to current polling, he’s the favored Republican nominee.
Trump has said crypto “may be fake” and is “a disaster waiting to happen.” He’s also said Bitcoin (BTC) “just seems like a scam” and didn’t like it “because it is another currency competing against the dollar.”
In July 2019 as president, Trump tweeted he was “not a fan of Bitcoin and other cryptocurrencies” claiming their value was “based on thin air.”
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
During his presidency, Trump targeted crypto use in financial crimes and purportedly told his Treasury Secretary Steven Mnuchin to “go after Bitcoin” in a conversation on trade sanctions against China. “Cryptocurrencies” were mentioned in his 2021 budget proposal but only for explaining their use in crimes.
He did, however, mull a capital gains tax cut which could have been favorable to crypto users. Trump administration officials did once tout distributed ledger technology (DLT) as a tech that could benefit government operations and bolster the country’s cybersecurity defenses.
‘Every right to do Bitcoin’: Ron DeSantis — Republican
Ron DeSantis said he would “protect” Bitcoin in his May 24 presidential bid announcement on Twitter. Polls taken before the Florida governor’s announcement have him second favorite to Trump.
During his Twitter Space campaign kick-off, DeSantis said “You have every right to do Bitcoin” and would “protect the ability to do things like Bitcoin.”
He called out Congress, claiming it “never addressed” crypto and said regulators had made it so “that people can not operate in that space.”
Will you require any presidential candidate to support your right to #Bitcoin before they can earn your vote?
His 2022–2023 budget proposal for the state of Florida proposed the government allows businesses to pay state fees with cryptocurrencies.
DeSantis is probably better known as an anti-central bank digital currency (CBDC) figure.
He passed laws in Florida prohibiting the use of a federal CBDC as money and banned the use of foreign CBDCs. He’s also rallied against the Federal Reserve’s FedNow 24/7 instant payments system, claiming it’s a CBDC precursor.
‘Bitcoin should not be regulated as a security’: Vivek Ramaswamy — Republican
Pharmaceutical firm founder Vivek Ramaswamy has also signaled a pro-crypto stance but is considered a long shot for the Republican nomination.
In mid-May, Ramaswamy tweeted “Bitcoin should not be regulated as a security.” At the Bitcoin 2023 conference, he announced he would accept campaign donations in Bitcoin.
“Bitcoin is finite in its quantity, there is no issuer. It should never have been treated as a security under the current securities laws,” he said.
‘A major innovation engine’: Robert F. Kennedy Jr. — Democrat
Robert F. Kennedy Jr is seen as unlikely to be put forward by the Democrats for president — but he has signaled pro-crypto stances.
Earlier in May he said “crypto technologies are a major innovation engine” and called Bitcoin a “symbol of democracy and freedom” in a speech at the Bitcoin 2023 conference.
He is accepting BTC for campaign donations and was the first presidential candidate to ever do so, beating Ramaswamy by a few days.
Cryptocurrencies, led by bitcoin, along with other crypto technologies are a major innovation engine. It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea.
— Robert F. Kennedy Jr (@RobertKennedyJr) May 3, 2023
Kennedy called Biden’s proposed 30% crypto miner energy tax “a bad idea” and opposes CBDCs as they “vastly magnify the government’s power.” He opposes the Fed’s FedNow system for a similar reason.
The others
The third favorite declared Republican candidate Nikki Haley hasn’t publicly addressed her views on crypto.
Democratic nominee Marianne Willamson hasn’t either but has implied disappointment at the Canadian government blocking crypto wallets during the trucker protests in 2022.
Republican Senator Tim Scott is also a bidder and similarly has no stated crypto policies. He did, however, have plans to develop a crypto “bipartisan regulatory framework.”
He’s been critical of the securities regulator’s handling of FTX and questioned if they’ve been “asleep at the wheel.”
Cointelegraph contacted the campaigns of Haley, Williamson and Scott to clarify their positions on crypto but did not receive a response.
With its historic Merge event in September, Ethereum has become a proof-of-stake blockchain. The mechanism now used to confirm transactions relies on validators staking their Ether (ETH). Ethereum’s March upgrade, codenamed Shanghai, finally enabled stakers to withdraw their locked Ether.
The Ethereum ecosystem’s “investment themes” have included a) decentralized finance (DeFi) b) stablecoins c) Bitcoin (via wrapped versions of BTC) and d) non-fungible tokens (NFTs). With the upgrade, the network also began providing fixed-income assets.
There are currently several ways people make money on or using Ethereum. Broadly, they can be grouped into “investment themes,” including: a) decentralized finance (DeFi); b) stablecoins; c) Bitcoin (BTC) (via wrapped versions of BTC); and d) nonfungible tokens (NFTs). Following Shanghai, the network began to offer fixed-income assets.
Risk-free rate
Yield is one of the core pillars of traditional finance (TradFi). A rise or fall in yield leads to an increase or decrease in the perceived risk of other financial assets. Thus, movements in the benchmark rate set by the United States Federal Reserve provide the rationale behind investment decisions, in general.
Accordingly, compliance professionals use trends in the risk-free rate to detect irrational movement of funds in capital markets, as such fund flows might be attempts to launder money. The reasoning here is that launderers of illicit funds do not actively chase financial gains like regular investors, as the sole purpose of money laundering is to obfuscate the trail of dirty money.
With Ethereum’s staking yield denoting the “risk-free rate” of the crypto ecosystem, the Shanghai upgrade may have enhanced the state of crypto forensics.
TradFi forensics focuses on activity — crypto forensics focuses on entities
Financial crime risk in TradFi is managed using automatic systems that alert institutions to probable illicit use of financial assets. While data scientists design and deploy models to raise red flags over suspicious transactions, investigation teams still must assess resultant leads and evaluate if Suspicious Activity Reports (SARs) need to be filed.
An interesting point of contrast between forensics for TradFi and crypto is that the latter focuses more on the criminal entity than the activity itself. In other words, investigators analyze networks of crypto wallets to identify transfers of criminal assets.
Money laundering occurs in three stages: a) Placement: proceeds of crime enter the financial system; b) Layering: complex movement of funds to obscure the audit trail and sever the link with the original crime; and c) Integration: criminal proceeds are now fully absorbed into the legal economy and can be used for any purpose.
For crypto assets, it is convenient to design solutions to detect the placement of illicit assets. This is because most laundered money originates from crypto-native crimes such as ransomware attacks, DeFi bridge hacks, smart contract exploits and phishing schemes. In all such offenses, a perpetrator’s wallet addresses are readily available. Consequently, once a crime has been committed, relevant wallets are monitored to analyze asset flows.
In contrast, forensic experts working for, say, a bank do not have any visibility into the offense — such as human or drug trafficking, cybercrime or terrorism — when criminal proceeds are being injected into a bank’s ecosystem. This makes detection extremely difficult. Hence, most Anti-Money Laundering (AML) solutions are designed to identify layering.
Ethereum’s staking rewards make it easier to detect unusual activity
To design solutions to detect layering, it is imperative to think like criminals, who craft complex flows of funds to obfuscate the money trail. The time-tested approach to exposing such activity is to spot the irrational movement of assets. This is because money laundering does not have the goal of generating profit.
With Ether’s post-Shanghai staking yields providing benchmark interest rates for crypto, we can formulate baseline risk-reward structures. Armed with this, investigators can systematically spot financial behavior running counter-intuitive to trends in the benchmark rate.
To illustrate, there might be a pattern where an address or a group of addresses that points toward an entity that consistently takes on high risk while earning below the risk-free rate. A situation like that would almost certainly be investigated at a bank.
Case in point, such a transaction surveillance architecture can be used to detect the wash trading of NFTs. Here, multiple market participants collude to carry out numerous NFT trades with the goal of layering criminal assets or manipulating prices. Since earning profits is not the intention behind the vast bulk of these transactions, such activity will raise a red flag.
Similarly, in a situation where proceeds of terrorism are being layered via DeFi protocols, detection of irrational asset movements can provide substantial leads to investigators, even without knowledge of the actual crime.
Financial crime and DeFi
Traditional capital markets are often used to covertly move funds to circumvent sanctions and finance terrorist activity. Analogously, DeFi ecosystems present an attractive target for financial crime due to the ability to move vast sums of assets between jurisdictions using blockchain.
Further, there has been a significant shift in activity from centralized exchanges to decentralized exchanges due to recent fiascos like the collapse of FTX. This increase in DeFi volumes has made it easier for illegal flows to remain obscure.
Even more compelling is the introduction of better compliance controls by centralized crypto service providers – often mandated by regulators – which are likely driving criminals to seek out new channels for money laundering.
Consequently, illicit flows to DeFi could originate from an expanded set of crimes. This paradigm shift in crypto markets will require forensics teams to increase their capabilities of investigating complex fund flows across diverse protocols without prior knowledge of the source of criminal assets.
Accordingly, compliance efforts need to pivot around the discovery of layering typologies. In fact, with the rapid progress in blockchain interoperability, systematic surveillance to detect criminal transfers has become even more crucial.
Our ability to detect suspicious activity in crypto is less than ideal, partly due to crypto’s extreme price volatility. The volatility renders static risk thresholds ineffective and can enable money laundering to go undetected. In this sense, if and when Ethereum sets a benchmark rate, it will provide a means of establishing baseline rationality for fund flows and thus spotting outliers.
Debanjan Chatterjee has more than 17 years of experience analyzing trends in financial crime using data science, including more than 13 years at HSBC. He holds a master’s in economics from India’s Delhi School of Economics.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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The market dominance of stablecoins pegged to the United States dollar has undergone some changes over the past year. While most of them are in a downward trend, Tether (USDT) has climbed back to its all-time high, data from CoinGecko shows.
In the past 12 months, Circle’s USD Coin (USDC) has seen its market share decline from 34.88% to 23.05% at the time of writing. Market participation of Binance USD (BUSD) plunged from 11.68% to 4.18% in the same period, while Dai (DAI) held its participation rate at 3.66%, down from 4.05% in May 2022.
Tether’s USDT is moving in a contrasting trend. The stablecoin market dominance currently sits at 65.89% from 47.04% one year ago. Its market capitalization soared to $83.1 billion, while the USDC market cap dropped to $29 billion from its $55 billion peak.
In a recent interview with Bloomberg, Circle CEO Jeremy Allaire blamed the crypto crackdown by the United States regulators for the stablecoin’s declining market capitalization. The current environment in the United States appears to be beneficial for Tether.
USD Stablecoins by Market Dominance. Source: CoinGecko.
The U.S. banking crisis led to USDC depegging in March as reserves worth $3.3 billion were stuck at Silicon Valley Bank, one of three crypto-friendly banks shut down by regulators. Despite Circle’s assurances, the market quickly responded to the news, causing USDC to depeg from the dollar.
With the growing connection between the crypto space and traditional finance, stablecoins have become increasingly popular. A report released recently by the European Systemic Risk Board highlighted the need for more transparency in the digital assets market, specifically for stablecoin reserves.
Tether has been heavily criticized for lacking transparency over the past years. Owned by Hong Kong-based iFinex, the crypto firm was fined $18.5 million in 2021 by the New York Attorney General’s Office for allegedly misrepresenting the fiat backing for its reserves. As part of the settlement, the stablecoin issuer was also required to provide greater financial transparency.
Tether’s leadership has fought back against the negative allegations on Twitter. Additionally, the company is seeking to reduce its exposure to the banking system following the collapse of Silicon Valley Bank. Its latest audit report shows Tether pulled over $4.5 billion out of banks in the first quarter of 2023, leading to a “substantial reduction” in counterparty risk amid the ongoing global economic uncertainty.
The company also boosted its U.S. Treasury bills to a new high of over $53 billion, or 64% of its reserves. Combined with other assets, USDT is now backed by 85% cash, cash equivalents and short-term deposits, according to the report.
A similar move has been made by Circle. The stablecoin operator reportedly adjusted its reserves to mitigate risk in the face of macroeconomic uncertainty, and no longer holds Treasuries maturing beyond early June.
NFT royalties make art and digital content a sustainable source of income for creators. As payments could typically be programmatic, there could be multiple creators who could benefit from this model.
From a principle and economic standpoint, NFT royalties offer a number of advantages to the ecosystem. It is challenging to track the subsequent purchases of artwork in the Web2 creative sectors of music, art and graphic design. On top of that, contracts drafted between creative professionals and marquee studios or corporations are often one-sided and heavily against the creator of the work.
This imbalance in economic relationships is what the Web3 model seeks to correct. In Web3, any piece of work that gets minted as an NFT can be tracked through subsequent purchases recorded on the blockchain. The creator can thus programmatically stay on top of the chain of transactions and earn royalties at every point.
Furthermore, the creator can go to an NFT marketplace and list and sell their NFTs without the marketplace directly claiming royalty on the purchase. NFTs are instrumental because one can create an economy around creators, which hasn’t necessarily been the strong suit of Web2 business models. For many NFT collections, royalties were a great mechanism for funding their operational costs.
NFT royalties can also curb the dangerous practice of wash trading. By creating multiple accounts or wallets, a market participant can buy an NFT or any digital asset they want to artificially inflate the price of. Often, their wallets are used to just buy an NFT from each other to create the perception of demand and pump up the price of the NFT.
For unattentive spectators, this activity can seem like high demand for the NFT. However, that is not the case. Enforcing royalties will make sure that for each transaction between the wash traders’ wallets, there is a price to be paid. Therefore, the cost of keeping the price high increases very quickly, making it hard for the wash trader to continue.
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As more institutions explore digital assets, the need for on-chain analytics platforms has never been higher.
Compliance experts, investigators and regulators employ these blockchain analytical tools to better understand the patterns and entities in cryptocurrency transactions.
To learn more about the tools and how they fit into broader cryptocurrency adoption, Cointelegraph sat down with Tom Robinson, the co-founder and chief scientist at analytics firm Elliptic; and Eray Akartuna, a senior cryptocurrency threat analyst at Elliptic.
Cointelegraph: What are the typical use cases you see for on-chain analytics for institutional clients?
Tom Robinson: Anti-Money Laundering (AML) and sanctions compliance for crypto exchanges and other businesses handling crypto assets: Our crypto transaction and wallet screening tools help businesses remain compliant with regulations and to reduce fraud.
Due diligence on crypto businesses: Our Discovery product provides risk profiles of exchanges and other crypto services based on analysis of their blockchain transactions. This is used by crypto businesses and financial institutions to gain insights into the businesses they are transacting with.
Investigating crypto transactions: Investigator — our blockchain investigations software — allows graphical exploration of crypto wallets and the transactions between them. Law enforcement investigators use this to “follow the money” and link criminal activity to individuals. It is also used by crypto businesses to investigate potential illicit activity by their customers.
CT: How is Anti-Money Laundering in crypto different from mainstream AML within banks for fiat?
TR: The main difference is that most crypto transactions are visible on the blockchain. This makes it much easier to identify whether funds have originated from criminal activity by tracing them using blockchain analytics tools.
CT: Do you see a role for artificial intelligence (AI) and machine learning to play within on-chain analytics? Particularly within fraud prevention and AML?
Eray Akartuna: Yes, we already use machine learning within our blockchain analytics products. However, it’s very important to ensure the accuracy of these techniques through extensive testing.
There are certain aspects of blockchain transactions where we can use machine learning to understand or identify certain patterns. Patterns seen on the Bitcoin blockchain may not necessarily be the same as patterns on the Ethereum blockchain; they work in slightly different ways. I would point out the use of heuristics.
There are certain aspects of the blockchain transactions where we have common spend that will help us know whether the addresses are owned by a single entity or not — if I want to identify illicit activities and illicit actors on a blockchain — and identify their wallet addresses.
For instance, the North Korean cyber hackers were using a programmatic way of laundering. The hack was conducted in 2018, where they used about 113 wallets to disassociate funds from the original theft in an automated fashion. We could programmatically analyze the timestamps of those individual transactions to understand exactly how this automated software works.
If we are analyzing dark web markets or terrorist entities, etc., using heuristics can help us identify if a wallet address has been associated with a certain illicit entity. We can then use those heuristics to understand what other wallet addresses may also belong to or be associated with that entity.
We’ve got a risk score which fits into predictive analysis. When we look at the incoming and outcoming transactions to a cluster of wallets, we can see ultimately where they ended up. Entities identified as belonging to an exchange, a terrorist group or a dark market can be spotted when they are transacting with particular entities that we’re focusing on.
Let’s say about 50% of that crypto has gone to a certain dark web market; we can actually use that to provide a risk score of how risky the wallet is. The risk score is then used by exchanges and banks to decide if they want to do business with these wallet holders or not.
CT: What are the most complex problems you are solving at Elliptic? Why are they complex, and why is it important to solve them?
TR: The most complex and important problem we have solved recently is how to identify proceeds of crime in crypto, even when they have been laundered cross-asset and cross-chain. Criminals now move their proceeds between assets, using decentralized exchanges; and between blockchains, using cross-chain bridges.
We developed holistic screening as a way of automatically tracing crypto funds between assets and blockchains. This unique capability is now absolutely essential; otherwise, money launderers will exploit businesses’ lack of visibility into their activity.
CT: How do you see banks adopting digital assets and with that on-chain analytics? What has the uptake been so far?
EA: We are seeing slow but steady adoption, but compliance is top of mind for banks. Blockchain analytics is seen as an essential part of the puzzle and a way to assuage the concerns of regulators.
If institutions want to get involved in the decentralized finance (DeFi) space and plan to invest clients’ funds, they need to know whether the liquidity pool that they are investing in is credible and has the right risk profile. If the liquidity pool has illicit funds going in and out of it, there is a compliance issue there. That is a key use case for institutions who are looking to get involved in DeFi.
The other use case is where some challenger banks like Revolut are allowing their customers to hold and trade cryptocurrencies. These banks will need compliance and AML capabilities before offering these products to customers.
CT: Have you had any interactions with regulators that would affect how you would serve the financial services industry, and what are the key areas of interest from a regulatory perspective?
TR: We have a constant dialogue with regulators around the world, many of whom use our products. It’s important that they understand how our blockchain analytics solutions function so that they can have confidence in the compliance programs run by the exchanges and banks that use our products.
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The governance tokenholders of Tornado Cash will soon regain control over the protocol’s operations, thanks to an unexpected proposal put forward by the attacker. This development allows the community to regain authority and steer the protocol toward recovery and improved security measures.
On May 26, the proposal to restore control to the original governance tokenholders of Tornado Cash passed successfully. A total of 517,000 token votes favored the proposal, with none opposing it. This resolution brings a swift conclusion to a governance takeover that, fortunately, did not impact the protocol itself, but did lead to the theft of specific governance tokens.
A screenshot showing the voting results. Source: Tornado Cash
By successfully orchestrating a takeover of the protocol’s governance system, the attacker maneuvered a malicious proposal that granted them 1.2 million votes. Leveraging this significant voting power, they passed additional proposals, ultimately seizing control over previously vested governance tokens. Their tactics allowed them to manipulate the governance structure, resulting in a transfer of authority in their favor.
In a surprising turn of events, just a few hours after the hack, the attacker unexpectedly contacted the Tornado Cash community, presenting a proposal purportedly aimed at restoring governance control. This unexpected gesture surprised many, raising curiosity and prompting further scrutiny of the attacker’s intentions and motivations.
As reported by Martin Lee, a data journalist from the crypto analytics site Nansen, the attacker managed to steal 483,000 Tornado Cash (TORN) tokens. Subsequently, they conducted a series of swaps, converting the majority of the stolen tokens into 485 Ether (ETH), worth approximately $890,000. This strategic maneuver left them with 39,000 TORN, valued at around $160,000. To obfuscate the origin of the funds, a portion of the ETH was cleverly routed through Tornado Cash, adding an additional layer of anonymity to the transaction.
Tornado Cash, the Ethereum blockchain-based crypto mixing service, was embroiled in controversy when it was officially sanctioned by the United States Treasury in August 2022. The sanctions stemmed from allegations that the protocol had been used for money laundering.
Adding to the growing number of decentralized finance (DeFi) protocol hacks in the crypto industry, Jimbos Protocol is the latest to suffer an attack resulting in a significant loss of funds.
According to blockchain security firm PeckShield, Jimbos Protocol — the liquidity protocol of the Arbitrum system — was hacked on the morning of May 28. The attack resulted in the loss of 4,000 Ether (ETH), worth approximately $7.5 million at the time.
Specifically, the attacker took advantage of the lack of slippage control on liquidity conversions. The protocol’s liquidity is invested in a price range that doesn’t need to be equal, creating a loophole where attackers can reverse swap orders for their own gain.
Although launched less than 20 days ago, Jimbos Protocol aimed to address liquidity and volatile token prices through a new testing approach. However, the protocol’s mechanism was not adequately developed, leading to a logical vulnerability creating favorable conditions for attackers. As a consequence, the price of the underlying token, Jimbo (JIMBO), has plummeted by 40%.
According to PeckShield’s findings, the attackers extracted 4,090 ETH from the Arbitrum network. Subsequently, they utilized the Stargate bridge and the Celer Network to transfer approximately 4,048 ETH from the Ethereum network.
Hacking incidents in DeFi protocols is not a novel phenomenon. While reports indicate a significant decline in the number of attacks compared with previous years, the community continues to be exposed to numerous exploits.
Despite efforts to enhance security measures, the DeFi ecosystem grapples with the persistent challenge of safeguarding against potential vulnerabilities and unauthorized access. An example is the recent flash loan attack on the 0VIX protocol, resulting in a substantial loss of nearly $2 million.
Another recent noteworthy occurrence involved the hijacking of Tornado Cash, a prominent privacy-focused protocol. Unknown attackers successfully compromised the system and extracted significant quantities of Tornado Cash (TORN) tokens, leading to substantial financial losses.
Adding to the existing number of protocol hacks in the crypto industry, Jimbos Protocol has not escaped the sights of the attackers as it has suffered an attack resulting in a loss of a large amount of funds.
According to PeckShield, a blockchain security unit, Jimbos Protocol, the liquidity protocol of the Arbitrum system, was hacked on the morning of May 28. The attack resulted in the loss of 4,000 ETH, equivalent to approximately $7.5 million.
Specifically, the attacker took advantage of the lack of slippage control of liquidity conversions. The protocol’s liquidity is invested in a price range that doesn’t need to be equal, creating a loophole where attackers can reverse swap orders for their own gain.
Despite being launched less than 20 days ago, the Jimbos Protocol aimed to address liquidity and volatile token prices through a new testing approach. However, it appears that the protocol’s mechanism was not adequately developed, leading to a logical vulnerability that created favorable conditions for attackers. As a consequence, the price of the underlying token, JIMBO, has plummeted by 40% and shows little sign of recovery.
According to PeckShield’s findings, the attackers managed to extract a significant amount of 4,090 ETH from the Arbitrum network. Subsequently, they utilized the bridge called Stargate and the Celer Network to transfer and collect a substantial sum of approximately 4,048 ETH from the Ethereum network.
The occurrence of hacking incidents targeting decentralized finance (DeFi) protocols is not a novel phenomenon within the cryptocurrency market. While there have been reports indicating a significant decline in the number of such attacks when compared to previous years, the community has still been exposed to numerous instances of exploitation in recent times.
Despite efforts to enhance security measures, the DeFi ecosystem continues to grapple with the persistent challenge of safeguarding against potential vulnerabilities and unauthorized access. An example lies in the flash loan attack the 0VIX protocol fell victim to, resulting in a substantial loss of nearly $2 million.
Another noteworthy occurrence involved the hijacking of Tornado Cash, a prominent privacy-focused protocol. Unknown attackers successfully compromised the system and extracted significant quantities of TORN tokens, leading to substantial financial losses.
Beijing, the capital city of China, has reportedly unveiled a white paper with the objective of fostering innovation and advancing the web3 industry.
The Zhongguancun Forum witnessed the release of the “Web3 Innovation and Development White Paper (2023)” by the Beijing Municipal Science & Technology Commission, also known as the Administrative Commission of Zhongguancun Science Park. According to the local news outlet, The Paper, the document recognizes web3 technology as an “inevitable trend for future Internet industry development.”
With the goal of establishing Beijing as a prominent global innovation hub for the digital economy, the commission plans to allocate a minimum of $14 million (100 million yuan) annually until 2025. Yang Hongfu, the director of the Zhongguancun Chaoyang Park management committee, revealed this during the forum, highlighting that Zhongguancun is commonly recognized as China’s Silicon Valley.
According to reports, the white paper emphasizes Beijing’s intention to enhance policy support and expedite technological advancements in order to foster the growth of the web3 industry.
Binance CEO Changpeng Zhaofinds the timing of the white paper release “noteworthy” as he highlights that Hong Kong’s cryptocurrency regulations are set to commence on June 1.
Last week, the Securities and Futures Commission of Hong Kong unveiled a new rulebook for the cryptocurrency industry, announcing that retail investors will be able to engage in crypto trading starting from June 1, coinciding with the implementation of a new licensing framework for crypto platforms.
While the United States is currently undergoing a regulatory crackdown on cryptocurrencies, Hong Kong’s efforts to attract crypto companies coincide with this development. In contrast, China had banned the use of cryptocurrencies in 2021. However, with the release of the web3 white paper, it seems that China is showing signs of opening up to the industry in certain capacities.
On May 23, a segment on cryptocurrencies was aired by China Central Television (CCTV), prominently featuring the Bitcoin logo and a Bitcoin ATM in Hong Kong. Binance’s Zhao noted the significance of this coverage, as it historically correlated with market upswings. The segment also highlighted NFTs but has since been removed.
The cyber security unit of the Hong Kong Police Force have launched CyberDefender, a new metaverse platform designed to educate the public of the potential dangers associated with Web3 and the metaverse.
According to a May 27 statement, the Cyber Security and Technology Crime Bureau (CSTCB) of the Hong Kong Police Force unveiled a new metaverse platform, CyberDefender, in an effort to prepare its citizens for the “challenges ahead in the digital age” with a focus on technology crime prevention.
“Exploring the Metaverse” event in the CyberDefender metaverse on May 27. Source: Government of the Hong Kong Special Administrative Region.
An online event was held on the same day as it launched, “Exploring the Metaverse,” spanning across three virtual venues, with the aim of discussing crime prevention strategies within the metaverse.
During the event, chief inspector of CSTCB, Mr Ip Cheuk-yu emphasized the importance of exercising caution in the metaverse, urging attendees to apply the same level of vigilance they practise while using the internet. He stated:
“All crimes in the cyberspace could also happen in the metaverse, such as investment frauds, unauthorized access to systems, theft and sexual offenses.”
He further explained that decentralization could potentially raise the risk of asset theft.
“The decentralized nature of virtual assets in Web3 may also increase the likelihood of cyber criminals targeting end point devices, virtual asset wallets and smart contracts” he noted.
“Exploring the Metaverse” event in the CyberDefender metaverse on May 27. Source: Government of the Hong Kong Special Administrative Region.
The CyberDefender educational initiatives appear to be focused on “the younger generation”, with the statement noting:
Police will continue to organize public educational initiatives on different themes through the “CyberDefender Metaverse” platform, raise the awareness among teenagers regarding the latest advancements in information technology, potential pitfalls and the importance of preventing technology crimes.
According to the statement, The Hong Kong Police Force received 663 reports involving virtual assets during Q1 2023, with a total loss of $570 million – a 75% increase compared to Q1 2022.
This comes after it was reported on May 22, that Nanjing, the capital city of China’s eastern Jiangsu province, launched the China Metaverse Technology and Application Innovation Platform to advance metaverse research and development across the country.
The innovaiton platform is being led by the Nanjing University of Information Science and Technology (NUIST).
Amid growing concerns of a potential default in early June, the United States president Joe Biden and Republican Kevin McCarthy have reportedly reached an “agreement in principle” to raise the federal government’s $31.4 trillion debt ceiling.
According to a May 28 report from Reuters citing “two sources familiar with the negiotations,” the “tentative” deal was reached after a 90-minute phone call between Biden and McCarthy on May 27.
“The White House and negotiators for House Republicans have reached an agreement in principle to avert a debt default,” the sources stated.
However, one source reported that there are still a few components of the deal to be finalized, stating:
“But, I’m not sure it’s completely settled. Might be one or two small things they need to finish. But close enough to move forward.”
It was reported that the deal would prevent an “economically destabalizing default.” It was emphasized that the deal must be passed through Congress before the Treasury “runs short of money” – which it was recently warned would occur on June 5 if the debt ceiling is not raised.
“The exact details of the deal were not immediately available” it was added.
This is a developing story, and further information will be added as it becomes available.
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Binance suspends deposits for bridged tokens, seeks clarity from Multichain team
Crypto exchange Binance suspended deposits for 10 bridged tokens following days of uncertainty surrounding the Multichain protocol. Transactions on the cross-chain protocol have been delayed over multiple bridges in the past few days, with little information from Multichain’s team about the ongoing issues. In a tweet from May 24, Multichain said that some cross-chain routes were unavailable “due to force majeure,” noting that the time for service restoration was unclear. Binance was not the only company to take steps amid the unexplained downtime — the Fantom Foundation removed 449,740 MULTI ($2.4 million) from liquidity on SushiSwap. The MULTI token plunged during the week. On Twitter, rumors circulated that Multichain’s team had been arrested by the Chinese police, with $1.5 billion of smart contract funds under authorities’ control.
FTX 2.0 launching soon? Court filing shows a reboot plan in the works
Bankrupt crypto exchange FTX’s revival plans could soon become reality. According to court filing documents, FTX’s new management had a series of meetings with creditors and debtors in the past month, reviewing plans for restarting the exchange and finalizing the material required for its rebooting as FTX 2.0. The documents also suggest FTX could soon enter into a bidding process. Previous reports pointed out that a reboot could come as early as 2024, as the exchange has already recovered over $7 billion in assets.
Sam Altman’s Worldcoin secures $115M for decentralized ID
The bear market didn’t stop Worldcoin from raising $115 million this week in a Series C round led by Blockchain Capital. Funds will be used to support its decentralized World ID and recently released gas-free crypto wallet, World App. The project was co-founded by OpenAI CEO Sam Altman and built by Tools for Humanity developers to address issues emerging from the exponential complexity of artificial intelligence, such as proving personhood. Worldcoin’s token, WLD, is not available in the United States and some other countries.
Fahrenheit wins bid to acquire assets of crypto lender Celsius
Crypto consortium Fahrenheit won the bidding war for insolvent crypto lender Celsius Network. The bid incorporates Celsius assets previously valued at nearly $2 billion, including institutional loan portfolio, staked cryptocurrencies, mining unit, alternative assets, and over $450 million in liquid cryptocurrency. Behind the consortium are the venture capital firm Arrington Capital and crypto miner US Bitcoin Corp. While Celsius and its creditors have accepted the bid, regulatory approval is still required to complete the acquisition. Celsius filed for bankruptcy protection in July 2022, contributing to a prolonged “crypto winter” in the industry.
Earlier this week, the crypto community celebrated the 13th anniversary of the first Bitcoin transaction when developer Laszlo Hanyecz made the first documented purchase of a good with BTC. The exchange involved 10,000 BTC — worth $41 at the time — and two pizzas from a local restaurant in Florida. The milestone turned into an annual celebration for the crypto space, with community members reminiscing on how far the industry has come since the transaction. Over a decade on, the pioneer cryptocurrency network faces a new wave of disruption thanks to the advent of Ordinals, highlighting the need for developers and capital to build layer-2 solutions.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $26,737, Ether (ETH) at $1,831 and XRP at $0.46. The total market cap is at $1.12 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Render Token (RNDR) at 16.86%, Kava (KAVA) at 10.71% and Huobi Token (HT) at 9.44%.
The top three altcoin losers of the week are GMX (GMX) at -13.35%, Sui (SUI) at -12.38% and Fantom (FTM) -11.00%.
“[Bitcoin is] so decent. There is no marketing department, there is no foundation, there’s no incentive. That’s why it is grassroots decentralized and most decentralized driven.”
In a Twitter update on May 25, Philip Swift, creator of data resource LookIntoBitcoin and co-founder of trading suite DecenTrader, eyed a BTC price breakout still in progress. “A lot of panic in the market today,” Swift summarized.
BTC/USD is currently testing the mettle of key moving averages against a backdrop of traders’ downside targets extending to $25,000 and below, Cointelegraph reported. Even Swift believes that Bitcoin could still return to as low as $20,000 in the coming months, despite remaining bullish on higher timeframes.
“Zooming out, bitcoin is actually performing well and as expected for this stage of cycle. A clear BTC breakout above Realized Price,” he added, referring to the aggregate price at which the BTC supply last moved. It currently sits at just above $20,000, according to LookIntoBitcoin.
FUD of the Week
DeFi protocol WDZD Swap exploited for $1.1M: CertiK
DeFi protocol WDZD Swap was recently exploited for $1.1 million worth of Binance-Pegged Ether. According to a report from blockchain security firm CertiK, a known exploiter labeled “Fake_Phishing750” by BSCScan created the contract that later drained the tokens from the protocol. Once the malicious contract was created, the attacker used it to perform nine transactions that drained the funds from the Swap LP contract where the ETH had been deposited. Fake_Phishing750 was responsible for an attack on another protocol called “Swap X,” CertiK stated.
ETH can be both a security and a commodity, former CFTC commissioner says
Ethereum’s native token, Ether, may be both a commodity and a security, the former commissioner of the United States Commodities Futures Trading Commission, Dan Berkovitz, has claimed. The CFTC regulates futures and swaps on commodities, while the SEC solely regulates securities. However, if something is a commodity in the eyes of the CFTC as well as a security under the SEC’s definition, it’s entirely possible for both regulatory bodies to have jurisdiction over it.
Binance denies fund mismanagement allegations, calls it ‘conspiracy theory’
Binance denied allegations of mismanagement of customers’ funds, in response to a Reuters report claiming the crypto exchange commingled customer’s funds with company revenue. As per Reuters’s sources, Binance allegedly blended billions of dollars of corporate revenue and customer funds between 2020 and 2021, with the majority of commingling taking place on accounts held at now-bankrupt Silvergate Bank. On Twitter, Binance chief of communication Patrick Hillmann called the report “1000 words of conspiracy theories.”
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Rumors suggesting that Grand Theft Auto 6 will incorporate cryptocurrencies surface every once in a while, fueling expectations that the highly awaited game may incorporate digital assets as rewards for players, nonfungible tokens (NFTs) as in-game goods, or even as part of the storyline’s humor.
The most recent speculations in the crypto community emerged last week on Twitter, but so far, there’s no indication that Rockstar Games, publisher of the Grand Theft Auto franchise, plans to jump into Web3. Cointelegraph looked at the latest rumors and facts about the possibility of an upcoming crypto GTA.
Play-to-Earn is no longer seen as an efficient business model
Play-to-earn (P2E) games allow users to earn cryptocurrencies by playing games. The business model, however, has been deemed as unsustainable, despite the excitement over blockchain-based games.
“It’s a model that is not sustainable at all,” said Chase Freo, CEO of gaming platform OP Games during a panel at the event, giving the example of Axie Infinity’s shift in some of its flagship titles.
During the panel discussion, Paul Flanagan, the head of business development at CM Games, an Estonian mobile game developer, voiced his opinion on the core issue surrounding P2E models. He described them as “zero-sum” and highlighted their resemblance to Ponzi schemes. Flanagan mentioned that while branding sponsorship could potentially serve as a viable revenue source, its effectiveness in practice remains to be seen.
According to Statista, Grand Theft Auto 5 has sold over 180 million units worldwide since 2015, making it one of the most successful game titles ever released. Based on estimates on the revenue of Rockstar’s parent company Take-Two Interactive, over $8 billion has been generated by the franchise over the last decade. Considering these figures, Grand Theft Auto has been a profitable title so far. Shifting to a P2E model would be a risky venture for Rockstar.
Lifetime unit sales generated by Grand Theft Auto 5 worldwide as of May 2023. Source: Take-Two Interactive, Statista.
Rockstar’s NFT ban
Last November, Rockstar updated its website to make clear that fan-operated servers for Grand Theft Auto 5 could no longer utilize crypto assets, specifically NFTs.
A fan-operated server allows modifications to a PC game and interaction between players. As for Grand Theft Auto, some servers implemented NFTs to give players ownership of in-game goods, such as cars and weapons. Rockstar’s ban was a setback to fans hoping for NFTs in the franchise.
Lastly, the franchise is known for its humorous style. Many crypto enthusiasts believe that the next Grand Theft Auto could include crypto elements in its narrative, which would justify the years of rumors about the game taking a crypto approach.
Cointelegraph reached out to Rockstar regarding the rumors, but did not receive an immediate response. As of now, the company has neither denied nor confirmed GTA6’s crypto status. The title is expected to be released in 2024.
After five years out of the Japanese market, crypto exchange Binance has begun the process of establishing a new and fully regulated subsidiary in the country. The move follows the acquisition of the regulated crypto exchange Sakura Exchange Bitcoin (SEBC) in November 2022.
As part of the deal, SEBC will cease its current services by May 31 and reopen as Binance Japan in the coming weeks. Users of the exchange’s global platform in the country will have to register with the new entity. The migration will be available after August 1, 2023, and will include a new identity verification process (KYC) to comply with local requirements.
Any remaining funds on the SEBC exchange will be automatically converted to Japanese yen and transferred to users’ bank accounts beginning in June, Binance previously disclosed.
With a narrowing regulatory landscape, the exchange’s strategy for expanding its global reach has been to acquire local regulated entities. Binance made a similar move in Singapore in 2021, in Malaysia in 2022, and in Thailand most recently. In Japan, it shut down operations in 2018, after failing to obtain an independent license from local regulators.
According to a notice on its website, the exchange will not provide derivative services in Japan. Binance’s global version will not accept new derivative accounts from users in the country.
Additionally, residents in Japan using the global platform will not be able to increase or open new options positions after June 9. Pending orders will be canceled, and existing positions must be closed before June 23, said the exchange. Binance Leveraged Tokens will not be available for trade or subscription.
“In the future, we plan to continue to enrich our service offerings in Japan and will work closely with regulators to possibly provide derivatives services in a fully compliant manner,” the company wrote.
Japan was one of the first nations to introduce crypto regulations. The local laws contributed to the speedy recovery of funds in February at FTX Japan, a subsidiary of the now-bankrupted crypto exchange FTX. Japan’s regulations requires crypto exchanges to separate client funds from other assets.
Another centralized exchange (CEX) bites the dust, with Hotbit announcing it will close operations due to adverse business conditions. As is common among CEX collapses in recent months, the crypto firm mentioned FTX, the ongoing banking system crisis, and even a probe, as reasons for its cash flow problems.
Also facing a tough time is wallet provider Ledger. The company decided to postpone its controversial recovery service amid community backlash. Security reputation is critical for a crypto wallet provider, but Ledger’s dilemma may be beyond a public relations crisis. The recovery service was also a path toward subscription services, which could generate recurring revenue for the wallet provider. The feature is now postponed until most of its code is open-sourced, said Ledger.
In challenging times, there are also opportunities for others. Honk Kong is advancing its plans to become a crypto hub, with over 150 crypto firms waiting for approval to operate as virtual assets trading platforms in the city.
This week’s Crypto Biz explores Hotbit’s closure, Hong Kong’s licensing of crypto firms, Bitstamp’s acquisition by Ripple and Ledger’s branding crisis.
Hotbit exchange halts operations, urges users to withdraw funds
Crypto exchange Hotbit is winding down operations, urging users to withdraw funds by June 21. According to an announcement, Hotbit’s operations have deteriorated since an investigation of a former team member took place in August 2022. Authorities believe a former management employee was involved in a project that violated criminal laws. The probe forced the exchange to halt business for weeks. Hotbit’s cash flow was also impacted by the FTX collapse and the banking crisis — incidents that resulted in a continuous outflow of funds from centralized exchanges, said the firm. The announcement was followed by phishing links pretending to be the official Hotbit website on Google.
Ledger key recovery service paused amid backlash, will open-source code
Ledger’s public relations nightmare took a new turn this week, leading the company to pause its recovery service tool amid ongoing community backlash. Disclosed on May 16, the Ledger Recover feature would allow users that lost their private seed phrase to get it back via an optional function. Earlier in the week, Ledger’s CEO Pascal Gauthier confirmed that private seed phrases of users using the service could, in theory, be handed over to governments if they were to be subpoenaed. In response to concerns, the firm is accelerating efforts to open-source most of its codebase, including core components of its operating system and Ledger Recover, which is postponed until after this process is completed.
Ledger Recover will be launched as soon as the source code is auditable. We believe in these amendments to the project and will continue to build the industry together.
— Pascal Gauthier @Ledger (@_pgauthier) May 23, 2023
Hong Kong to open crypto exchange access for retail users, but there’s a catch
Hong Kong has taken another step toward building its reputation as a crypto hub. Earlier this week, its Securities and Futures Commission announced that virtual assets trading platforms would soon be licensed to serve retail investors. Compliance guidelines will include asset custody safety requirements, cybersecurity standards and segregation of client assets. Further measures to protect investors may involve enhanced token due diligence and regular disclosures. The legal framework was approved by local legislators in December 2022, seeking to give cryptocurrency exchanges the same market recognition as traditional financial institutions. Providing regulatory clarity for crypto firms has been part of Hong Kong’s strategy in attracting businesses and positioning itself as a Web3 city.
Ripple acquires Pantera’s stake in Bitstamp
Digital payment network Ripple took a minority stake in the crypto exchange Bitstamp in the first quarter of 2023. Galaxy Digital advised on the deal, according to a transcript of Galaxy’s shareholder conference call on May 9. Ripple acquired shares previously owned by Pantera Capital, a United States-based digital asset investment firm. It is unclear how much Ripple paid for the acquisition or how the deal was structured. Founded in 2011, Bitstamp was one of the first crypto exchanges to offer digital assets transactions. Based in Luxembourg, the company serves clients in over 100 countries.
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The use of phygital NFTs, which are NFTs that are paired with physical items, is a growing trend among fashion brands that are looking to create a unique shopping experience.
Many fashion brands that use this strategy provide limited-edition NFTs that are virtual versions of physical items, such as NFT sneakers and jackets. The NFTs, which are bundled with physical products, enable customers to possess and wear the actual item while having a digital version of the item on the blockchain.
Among prominent phygital NFT events that have successfully demonstrated their desirability, Dolce & Gabbana’s Collezione Genesi auction sale of phygital NFTs in 2021 stands out. The sale of the nine-piece NFT collection set a fashion phygital NFT record after it was sold for approximately $6 million in Ether (ETH). It proved that there was substantial demand for phygital NFTs.
Since then, numerous prominent fashion enterprises have jumped on the phygital NFT bandwagon. One of them is Givenchy. In November 2022, the French fashion company launched a limited edition collection of phygital NFTs in collaboration with Bstroy, a streetwear brand. The unique collection included jeans, T-shirts, hoodies, bags and footwear.
In January 2023, L’Oréal Group’s Yves Saint Laurent Beauté fashion brand also joined the trend alongside luxury fashion brands such as Prada. One major reason why fashion brands are embracing the phygital NFT strategy is to offer a unique value proposition to customers who seek exclusivity.
An added benefit of using phygital NFTs is that they help counter the proliferation of counterfeit goods. This is because NFTs serve as proof-of-ownership, a factor that validates the authenticity of their corresponding physical items.
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Stargate, the LayerZero cross-chain bridge protocol, has responded to the recent “force majeure” incident impacting Multichain and the stability concerns surrounding anyUSDC, Fantom’s main USDC asset.
To address these concerns and safeguard the ecosystem, Stargate has introduced a comprehensive proposal and initiated a single-choice voting system for risk mitigation and ecosystem integrity. The voting period for the proposal began at 3:47 AM on May 27, 2023, and will end at 3:47 AM on May 30, 2023.
As part of the proposal, the initial step involves ceasing STG emissions on the Fantom pools. This action by Stargate intends to temporarily suspend emissions and mitigate potential disruptions arising from the uncertainties associated with Multichain. Emission is the speed at which new coins are created and released.
So far, a total of 1.7 million verified members of the Stargate community have voted in favor of the proposal. This figure shows that about 96.55% of the community is in line with the proposal.
Screenshot showing the number of votes for the proposal.
Subsequently, Stargate intends to isolate the Fantom pools from all other pools in the network, ensuring the prevention of any possible contamination or negative impacts on the broader Stargate ecosystem. At present, the deposited liquidity provider (LP) in this pool amounts to approximately $11.4 million. The Fantom pools are effectively segregated from other pools within the Stargate network.
In order to enhance ecosystem protection and address potential concerns related to anyUSDC on Fantom, the proposal recommends the removal and unwinding of anyUSDC POL through Multichain. Additionally, Stargate proposes exploring alternative bridging options for Fantom users, such as potentially utilizing Hydra.
On May 25, Binance declared a temporary halt on deposits for bridged tokens associated with Multichain. In conjunction with the technical measures, Stargate acknowledges the significance of facilitating a seamless transition for its liquidity providers. The proposal highlights the importance of whitelisting current LPs, allowing them to redeem their LP on alternative chains.
