Investor Group Nears $125 Million Deal for CoinDesk (WSJ)
A syndicate of investors is in the final stages of sealing a deal for cryptocurrency-focused media company CoinDesk. The investor group is led by Matthew Roszak of Tally Capital, a private investment firm focused on crypto and blockchain-based technologies, and Peter Vessenes of Capital6, a venture-capital firm and family office, people familiar with the matter said. The transaction would have an enterprise value of about $125 million. CoinDesk’s parent company, Digital Currency Group or DCG, is expected to retain a stake in the media, events, data and indexes business as part of the deal, which is expected to be finalized in the next few weeks. CoinDesk’s current management is expected to stay in place, they said.
Jailed Crypto Tycoon Do Kwon’s Company Appoints New CEO (WSJ)
Terraform Labs has named a new chief executive officer to run the crypto company while its co-founder Do Kwon faces fraud charges stemming from the $40 billion collapse of the TerraUSD and Luna cryptocurrencies. The interim CEO is Chris Amani, who was previously the company’s chief operating officer and chief financial officer, Terraform Labs told The Wall Street Journal. Terraform Labs is trying to show that it is business as usual while the company’s former CEO is jailed in the Balkan country of Montenegro. Both the U.S. and Kwon’s native South Korea are seeking his extradition.
House Republicans Push for New Crypto Rules After Ripple Decision (Bloomberg)
Key Republican members of the US House of Representatives formally unveiled a bill to establish rules for oversight of crypto markets in the wake of a recent court ruling that is viewed by some observers as favorable for the sector. The legislation, previewed as a draft in June, would make clear when and how crypto firms should register with the Securities and Exchange Commission or the Commodity Futures Trading Commission, which would gain new powers to directly oversee trading in certain tokens. The bill would also provide a pathway for digital assets that start as securities to eventually be regulated as commodities. The test for when an asset is a commodity would largely depend on whether the blockchain network it’s affiliated with is sufficiently decentralized.
Sequoia Shakes Up VC Team, Sheds Two Crypto Investors (Bloomberg)
Sequoia Capital, one of the world’s most prominent venture capital firms, now looks very different than it did just a year ago – following a turbulent period of market upheaval, a breakup and at least five investor departures. Longtime partner Michael Moritz is leaving the venture firm to focus on Sequoia Heritage, a wealth management business he helped start, Sequoia said Wednesday. Another senior partner, Mike Vernal, is also leaving, along with Michelle Fradin, one of the firm’s investors behind FTX, and partners Kais Khimji and Daniel Chen.
FTX Leadership Seeks Return of Over $1B in Cash, Stocks From Former Executives (CoinDesk)
The estate for bankrupt crypto exchange FTX is looking to recover over $1 billion in cash and shares from founder Sam Bankman-Fried and other executives it alleges were fraudulently transferred to themselves. The new lawsuit, filed Thursday, alleges that the defendants used their close control over the FTX Group's businesses and systems to perpetrate what it calls a massive fraud between February 2020 and November 2022, squandering FTX’s assets on luxury homes, political and "charitable" contributions, and various investments.
Coinbase to Wind Down Lending Program Over Coming Months (CoinDesk)
Coinbase Borrow, a program that allowed customers to receive fiat loans of up to $1 million against as much as 30% of their bitcoin (BTC) holdings, will be shutting down over the coming months as the company focuses its resources on products that “customers care about most,” a spokesperson told CoinDesk Thursday. Customers who hold loans through the program will have until November 20, 2023 to pay back any outstanding loan balances.
UK Financial Regulator Launching Permanent Digital Sandbox (The Block)
The UK's Financial Conduct Authority is launching a permanent version of its Digital Sandbox for firms to test products at an early stage of development. The FCA's experimental environment is open to innovative concepts for the banking, investment, lending, payments, insurance and pensions sectors. Regulators will be introduced to each innovation at an early stage to observe ongoing technical testing. "Following two successful pilots, our digital sandbox will be made available permanently on 1 August 2023, opening up the platform to an even broader range of innovative businesses, start-ups and data providers," the regulator announced Thursday.
Nasdaq Halts Plan for Crypto Custody Service Due to U.S. Regulatory Conditions (CoinDesk)
Nasdaq (NDAQ) is dropping its plans for a crypto custody service, which was slated to go live in the second quarter of this year, CEO Adena Friedman said in an earnings call on Wednesday. In September 2022, the operator of the Nasdaq stock exchange had said that it was putting together the infrastructure and regulatory approval needed for a crypto custody service. The firm had applied to the New York Department of Financial Services (NYDFS) for a limited-purpose trust company, which would oversee the custody business. Now Nasdaq has opted to halt these plans and its effort to pursue the necessary license "considering the shifting business and regulatory environment in the U.S.," Friedman said.
Gensler Wants Fresh $109 Million to Help SEC Rein In ‘Wild West’ of Crypto (The Block)
Securities and Exchange Commission Chair Gary Gensler called crypto markets “the Wild West” while asking senators for an additional $109 million for his agency’s enforcement budget. The additional funding, if granted by Congress, would bring the SEC's enforcement budget up to $1.4 billion. The SEC brought more than 750 enforcement actions across the markets it regulates in the 2022 federal fiscal year, which runs from October to the end of September. That was a nine percent uptick from the same period of time the year before, and the actions resulted in $6.4 billion in fines and disgorgements.
Lummis, Gillibrand Revamp US Crypto Bill With Juiced-Up Consumer Protection (Bloomberg)
The Senate’s bipartisan duo, Cynthia Lummis and Kirsten Gillibrand, unveiled their latest effort to regulate the US crypto industry, placing greater emphasis on consumer protection following a string of high-profile company failures last year. Lummis, a Republican from Wyoming, and Gillibrand, a Democrat from New York, first introduced their bill last June. At the time, the popular crypto stablecoin, TerraUSD, had already collapsed but the vast majority of the eventual 2022 turmoil, culminating with the implosion of trading giant FTX, was still to come.
Venture-Capital Firms to be Held Liable for DeFi Sanctions Violations Under New US Bill (Bloomberg)
A new bipartisan Senate bill would hold venture-capital firms and other large investors accountable in some cases for sanctions violations occurring on decentralized finance, or DeFi, platforms. The legislation, aimed at preventing criminals from using DeFi for money-laundering and sanctions evasion, is co-sponsored by two Democrats — Jack Reed of Rhode Island and Mark Warner of Virginia — and two Republicans — Mike Rounds of South Dakota and Mitt Romney of Utah.
Societe Generale’s Digital Asset Unit Gets First French Crypto License (The Block)
Societe Generale has become the first company to receive a digital asset service provider (DASP) license in France. French regulator Autorité des Marchés Financiers (AMF) gave SocGen's crypto asset division, called Societe Generale-Forge, a DASP license on July 18. The license allows Forge to operate digital asset custody, sell and purchase digital assets for legal tender and trade digital assets. Forge CEO Jean-Marc Stenger said in a statement the license “confirms our pioneering role in the crypto assets ecosystem." Stenger added that it will enable Forge to meet demand from institutional clients for digital assets.
Coinbase CEO Brian Armstrong Set to Meet With House Democrats (Bloomberg)
Coinbase Inc. Chief Executive Officer Brian Armstrong will meet with House Democrats behind closed doors Wednesday morning, according to Democratic aides familiar with the plans. Armstrong will speak privately with lawmakers from the New Democrat Coalition about digital-asset legislation and related issues including tax, national security, privacy and climate. The meeting comes as Coinbase, one of the largest cryptocurrency exchanges in the world, faces a lawsuit by the Securities and Exchange Commission.
U.S. Secret Service Seizes Funds From Bahamian Bank Deltec Amid Fraud Investigation (CoinDesk)
U.S. authorities seized funds belonging to Deltec, a Bahamian bank that serves crypto firms, in June amid an investigation into international money laundering, wire and bank fraud, federal documents show. The documents, unsealed in federal court on Monday, reveal the Secret Service executed several seizure warrants to confiscate funds from the bank’s U.S. accounts amid their investigation into “international criminal money laundering syndicates operating cryptocurrency investment and other wire fraud scams.” The seizures were authorized on June 12 and 23.
Polychain Raises $200 Million for Fourth Crypto VC Fund, Shakes Up Staff (Fortune)
Polychain Capital, one of the most prominent venture capital firms in the crypto space, has raised around $200 million in the 'first close' of its fourth fund, according to a person familiar with the matter, while letting go three members of its research team amid new investing priorities. It still plans to raise around $400 million total for the fourth fund. The raise is a bullish sign for the industry, suggesting ongoing interest in the sector despite a 'Crypto Winter' that has seen venture funding evaporate for both startups and VC firms.
VC Firm CoinFund Raises $158 Million to Back Crypto Startups (Bloomberg)
Global venture capital investments in crypto startups has fallen for five consecutive quarters data show, but some venture capitalists are still betting millions on blockchain. VC firm CoinFund has raised $158 million to back early-stage crypto startups, the firm plans to announce Tuesday. The new fund is larger than the one CoinFund initially set out to raise, said Chief Executive Officer Jake Brukhman. The New York-based firm had initially aimed for $125 million, but received more interest than expected, he said.
Ex-FTX Chief Operating Officer Constance Wang Emerges at Sino Global (Bloomberg)
Zhe “Constance” Wang, who served in several executive-level roles at Sam Bankman-Fried’s FTX before the collapse of the digital-asset exchange, has joined crypto venture capital firm Sino Global Capital. Wang leads the gaming team at Sino Global, according to Matthew Graham, a Beijing-based investor who founded Sino Global in 2015 and had previously worked at China Bridge Capital.
G20 Body Sets Out Recommendations for Regulating Crypto-Assets and Stablecoins (The Block)
The Financial Stability Board finalized its recommendations for regulating global cryptocurrency activities. The international body that advises G20 nations on global finance made two sets of recommendations. The first set advised on appropriate regulation, supervision, and oversight of crypto asset activities and markets. The second set was specifically aimed at global stablecoin arrangements.
Gnosis Lets Crypto Users Make Everyday Purchases From Wallets With Visa (CoinDesk)
Gnosis, a sidechain to Ethereum, says a pair of new product offerings could let consumers with crypto wallets pay for online purchases using stablecoins and Visa’s payment system. Gnosis announced Monday it is releasing Gnosis Pay and Gnosis Card, the first decentralized payment network integrating with a traditional payment processor and the first Visa-certified consumer debit card directly connected to an on-chain self-custodial wallet, according to a Gnosis press release.
Compound’s Outstanding Debt on Ethereum Hits $1 Billion (The Block)
Decentralized lending protocol Compound's outstanding debt on Ethereum surpassed $1 billion-- the highest it has been in a year, according to The Block's data dashboard. The increase in outstanding debt represents a shift in the crypto market, which was hammered by a credit crisis in 2022. Across the board lenders from BlockFi to Celsius declared bankruptcy, resulting in a gap in crypto's market structure. On July 14, outstanding debt stood at $1.07 billion.
Celo Proposes to Ditch Own Standalone Blockchain for Layer-2 Network on Ethereum (CoinDesk)
CLabs, the developer behind the Celo blockchain, is proposing to transition from an independent layer-1 blockchain to an Ethereum layer-2 solution. The team announced the proposed move over the weekend in a Twitter thread, saying it followed "months of research and initial discussions with Celo and Ethereum community members." "An indicative on-chain governance proposal (or 'temperature check) will be released for the community to vote on as early as Saturday, July 22," according to the thread.
Chainlink Launches Cross-Chain Protocol to Bridge Blockchains With Traditional Capital Markets (Decrypt)
Dominant data oracle Chainlink launched its Cross-Chain Interoperability Protocol (CCIP) on its Mainnet today. The early access phase supports Avalanche, Ethereum, Optimism and Polygon (MATIC) networks, with CCIP also adopted by DeFi lending protocols Aave and Synthetix. Chainlink says the same security model that powers price oracles—which are designed to be flash-loan attack resistant and able to withstand other commonly known threats—is behind the protocol.
SEC’s Strategy for Regulating Crypto Stumbles in Ripple Case (WSJ)
The Securities and Exchange Commission thought it had a way to regulate crypto—a 77-year-old Supreme Court test that created a catchall definition for obscure securities. The SEC applied the so-called Howey test to go after crypto startups that issued tokens, exchanges that traded them, and even parties that pool investors’ coins and lend them out. The test became the linchpin of the SEC’s strategy to regulate cryptocurrencies, even though the laws the agency enforces are decades older than the internet. That strategy backfired on the SEC this past week when U.S. District Judge Analisa Torres decided the test doesn’t cover more than $1.4 billion in sales of a token known as XRP. Whether the tokens are securities depends on how they are sold, she said.
Crypto Altcoins Outperform as Ripple Court Ruling Spurs FOMO (Bloomberg)
Smaller, lesser-known digital tokens such as Solana and Avalanche outperformed Bitcoin this week after a federal court decision in a case involving Ripple Labs Inc. fuels a “fear of missing out” impulse among cryptocurrency proponents. An index comprising the bottom half of the top 100 tokens by market value climbed around 7.3%, even after many tokens pared large gains on Friday. Bitcoin, which accounts for about half the $1.25 trillion crypto market’s value, slipped less than 1% to around $30,200, though it reached a high for the year Thursday.
Crypto Distress Prompts Fir Tree, a Hedge Fund, to Seek Profit From Turmoil (CoinDesk)
Fir Tree Partners, a New York-based hedge fund, is launching a new fund focused on distressed crypto assets, an attempt to cash in on the intense turmoil the industry has experienced in the past year or so. The Fir Tree Digital Asset Opportunities Fund will launch Aug. 1, according to an email seen by CoinDesk. “Fir Tree is at its best when we identify opportunities that are mispriced, dislocated or complex. Rarely do we encounter situations that are all three, but that is precisely what we are seeing in digital assets right now,” Fir Tree wrote.
Biggest DeFi Lender Aave Set to Launch Decentralized Stablecoin (Bloomberg)
Aave, a peer-to-peer crypto lender, is jumping into the increasingly crowded stablecoin industry. Aave’s lending platform cuts out traditional intermediaries like banks and operates on blockchains including Ethereum, where it sets interest rates based on supply and demand. Stablecoins, which are typically pegged at a value of $1, are popular on such platforms. Aave’s new stablecoin, GHO, will be backed by assets supported on Aave, and coded to always be worth exactly $1 on Aave’s network, according to the lender. The offering is the latest in a flurry of efforts to create less volatile cryptocurrencies without having to rely on a centralized issuer.
BlackRock’s Larry Fink Says Crypto Will Transcend Any One Currency (The Block)
BlackRock CEO Larry Fink sang crypto's praise again on Friday, just a week after he highlighted the role of bitcoin as a kind of "digitizing gold." "It's an international asset," he said in an interview with CNBC, referring to crypto on broad terms. "It has a differentiating value versus other asset classes, but more importantly, because it's so international, it's going to transcend any one currency." "If you just look at the value of our dollar, how it depreciated the past two months and how much it appreciated over the last five years, a international crypto product can really transcend that," he continued. "And that's why we believe there's great opportunities. And that's why were seeing more and more interest. And that interest is broad-based, worldwide."
Coinbase to Pause Staking in California, New Jersey, South Carolina and Wisconsin (CoinDesk)
Crypto exchange Coinbase is pausing its retail staking service in California, New Jersey, South Carolina and Wisconsin after those states said they would require changes to those services while its proceedings against such staking services move forward. Crypto staked before the orders were issued will remain unaffected. The SEC filed a lawsuit against Coinbase last month classifying its staking service, as well as several of the tokens it lists, as securities. That same day, securities agencies in ten states started their own proceedings against Coinbase.