Norway returned almost $6 million in stolen crypto from the $620 million hack of the online game “Axie Infinity” in 2022, according to a post on X by Sky Mavis, the blockchain company behind the game.

Sky Mavis thanked the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime for freezing, recovering and returning $5.7 million in stolen assets.

It also expressed gratitude to the FBI in the US for its “tireless effort to track down and recover these assets.”

When the “Axie Infinity” launched in 2020, it pioneered the concept of play-to-earn, an idea that people could earn money playing video games, DL News has reported.

For those in developing countries, playing the game could earn them more than local minimum wages. It attracted millions of players, some of whom made their livings from the game. At its height, the game became a cultural phenomenon.

Then in early 2022, the game’s tokens lost most of their value amid a larger crypto collapse, the number of daily players dwindled, and the chain it was built on, called Ronin, was hacked by North Koreans in one of the biggest cyber-heists ever.

Recovered assets

“About 15% of recovered assets will be used to cover costs and expenses incurred by those involved in the recovery efforts,” including blockchain forensic firm Chainalysis, lawyers and accountants, Sky Mavis wrote in the post.

The remaining 85% of recovered funds will be deposited into the “Axie Infinity” treasury.

The company added as a reminder that about $40 million in separate assets have been frozen by the law enforcement authorities, though the timing of their recovery is uncertain.

Binance, the world’s biggest crypto exchange, said in a post on X that it had reached 200 million global users, despite a leadership change, paying a record fine to US regulators, and other more recent issues.

At the end of 2023, the exchange said it had added 40 million users to bring its total to 170 million, which means that it has gained about 30 million in the first half of this year. “Your support is the heartbeat of our journey to 1 billion users,” the celebratory post said.

“In 2023, reaching settlements with U.S. regulators, we took responsibility for our past conduct and opened a new chapter in Binance’s history. ... The scrutiny has helped create the comprehensive compliance program we have today,” the company said in a year-end blog post.

In November, Binance pleaded guilty to anti-money laundering violations, unlicensed money transmitting, and sanctions violations and paid $4.3 billion in fines and restitution. It was one of the largest payments the Justice Department had ever received from a corporation, Attorney General Merrick Garland said at the time.

DL News reported that founder Changpeng Zhao struck a deal with prosecutors. He agreed to step down from his position as CEO, plead guilty to violating the Bank Secrecy Act, and pay a $50 million fine. He is now serving a four-month sentence at a low-security prison in California.

Zhao’s successor, CEO Richard Teng, pledged a new era of compliance was dawning for the exchange, but he has had to deal with lingering problems.

In March, officials in the Philippines blocked Binance after the exchange failed to obtain a licence following months of warnings.

Then Nigeria’s anti-corruption agency charged Binance with money laundering and tax evasion, charging two Binance executives with the same allegations and even imprisoning one.

Still, the value of funds that Binance holds on behalf of its users exceeded $100 billion in March, according to a company blog post.

Crypto market movers

Bitcoin is down 0.26% today at $67,331.87.

Ethereum is down 0.42% today at $3,688.62.

What we are reading

Iggy Azalea is cashing in on crypto, as her ‘memecoin’ makes $194 million in one week — Fortune

I signed up for Binance, Coinbase, and Kraken in Hong Kong — why this shouldn’t have happened — DL News

Robinhood crypto head says Bitstamp will help lure wealthy investors — DL News

Bitcoin miner Core Scientific rejected an all-cash buyout offer of more than $1 billion from cloud computing company CoreWeave, saying in a news release that the offer significantly undervalued it.

Core Scientific, one of the biggest owners and operators of high-powered digital infrastructure for Bitcoin mining and hosting services in North America, said it had received an unsolicited non-binding proposal from CoreWeave to acquire all of its outstanding shares on a fully diluted basis for $5.75 per share in cash.

This unsolicited proposal immediately followed Core Scientific and CoreWeave entering into a separate series of 12-year contracts for Core Scientific to provide about 200 MW of infrastructure to host CoreWeave’s high-performance computing services.

Core Scientific’s board consulted with independent advisers in reviewing CoreWeave’s proposal and evaluating the company’s growth prospects and near- and long-term value creation potential.

Shareholder interests

It determined that the proposal significantly undervalued Core Scientific and was not in the best interests of its shareholders.

Core Scientific emerged from Chapter 11 bankruptcy earlier this year.

The US Attorney’s Office for the Southern District of New York said in a statement it has charged three UK nationals in connection with a 2021 rug-pull scam involving a collection of 10,000 NFTs called ‘Evolved Apes.’

Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan, all 23, were charged with wire fraud and money laundering, according to the statement. Each count carries a maximum prison sentence of 20 years.

According to the indictment, the three executed a type of scam commonly known as a “rug pull,” where developers advertise a digital project, collect funds from purchasers, then abandon the project and keep the funds — in this case, 798 Ethereum worth about $2.7 million at the time.

US Attorney Damian Williams said that “the defendants ran a scam to drive up the price of digital artwork through false promises about developing a video game. They allegedly took investor funds, never developed the game, and pocketed the proceeds.”

Williams added: “Digital art may be new, but old rules still apply: Making false promises for money is illegal. As we allege, thousands of people believed these false promises and were tricked into buying these NFTs, including here in the Southern District of New York.”

The statement alleged that the three had laundered the misappropriated funds through multiple cryptocurrency transactions to their own personal accounts.

DL News reported earlier that last year, rug pulls and related scams totalled about $760 million, according to data from blockchain security firm Quantstamp

Donald Trump said he would be a “crypto president,” while criticising Democrats’ regulation of the industry during an exclusive San Francisco fundraiser that netted him $12 million, Reuters reported, citing three sources who were present.

Venture capitalists David Sacks and Chamath Palihapitiya hosted the event at Sacks’ home in the ritzy Pacific Heights neighbourhood, the report said.

“He said he would be the crypto president,” Trevor Traina, a tech executive and former Trump ambassador to Austria, told Reuters.

San Francisco may be a bastion of political liberalism, but many local venture capitalists and crypto investors are backing Trump, citing excessive regulation under the administration of President Joe Biden, according to the report.

Crypto has emerged as a hot-button election issue as the industry has amassed an $85 million warchest to sway voters before the November election, DL News has reported.

Republican National Committeewoman Harmeet Dhillon told Reuters that Trump had offered no specific policy proposals for the crypto industry.

Dhillon added that Coinbase execs, Tyler and Cameron Winklevoss, and other crypto leaders attended the event.

Biden’s White House has said it wants to work with Congress on a regulatory framework for crypto.

Spokesperson Robyn Patterson told Reuters in a statement that the Biden administration supports crypto innovation as well as protection against the “risks associated with new technologies.”

Crypto market movers

Bitcoin is down 2.58% today at $69,411.91.

Ethereum is down 3.40% today at $3,692.41.

What we are reading

Wife of Binance exec ‘expected a lot more’ from US as husband languishes in Nigerian prison — DL News

Bitcoin falls below US$70,000 after US jobs data and ECB rate cut — Forkast News

I watched hackers drain $45,000 from my wallets — what I did wrong and what crypto must get right — DL News

On the eve of an early morning flight to Nigeria’s capital, Abuja, Binance executive Tigran Gambaryan had a choice to make.

A small carry-on or a large suitcase?

“He was like, ‘I don’t need a bigger suitcase, right?” Yuki Gambaryan, his wife, recalled in an interview Thursday. “‘Because I’m gonna be there only for two days.’”

That was in February. Now, more than three months later, Gambaryan is still in Nigeria and enduring an ordeal neither he, his family, friends, or colleagues could ever have imagined.

As he languishes in prison on what his lawyer says are bogus money-laundering charges, Yuki is frustrated Washington hasn’t done more to help her husband. A former investigative agent for the Internal Revenue Service, Tigran is Binance’s head of financial crime compliance.

“I am shocked at how long it took for us to get to this point,” she told DL News in an exclusive video interview. “It feels like the US government just got to the starting line now, which should have happened a long time ago.”

On Tigran’s second day in Nigeria, officials seized his passport and installed him in a “guest house” where he was kept under guard. On his fourth day, they obtained a court’s permission to keep him there for two weeks.

About four weeks later, officials took Tigran’s phone, and the government’s anti-corruption ministry and tax agency charged him with facilitating money laundering and tax evasion.

‘I didn’t get up to say goodbye or wish him a safe tri. And I regret it. Every single day.’

Yuki Gambaryan

They moved him to a detention facility in the basement of a government building.

After six weeks in Nigeria, Tigran was transferred to a medium-security prison that incarcerated Boko Haram and Islamic State terrorists.

Hostage taking

In the ensuing weeks, he would be denied bail and, potentially suffering from malaria, faint on the first day of his trial in May.

Tigran’s Nigerian attorney has called his arrest “state-sanctioned hostage taking.”

Even though a judge ordered prison officials to transfer Tigran to a hospital, Yuki told DL News he has been denied care. His trial was postponed until June 20.

In the meantime, Tigran has missed his son’s fifth birthday and pre-kindergarten graduation. He turned 40 in prison. On Saturday, he and Yuki, a 37-year-old translator of Japanese, would have celebrated their 15th wedding anniversary.

“All he did was go into a meeting — that’s all he did,” she said in disbelief. “And now he’s sitting in prison. … That just cannot be happening.”

An urgent trip

The ordeal began in February when Tigran and his colleague Nadeem Anjarwalla, Binance’s Kenya-based regional manager, flew to Abuja to meet with Nigerian officials.

After Nigeria’s currency, the naira, collapsed at the beginning of the year, the government was pointing the finger at Binance.

They said the crypto exchange, which was operating without a licence in Africa’s most populous nation, was facilitating manipulation of the currency as well as illicit financial transactions. Binance denies the allegations.

It fell to Gambaryan and Anjarwalla to assuage the Nigerians’ anger. And the situation was urgent.

“Usually when he travels internationally, it starts to get organised maybe two weeks, three weeks prior, but that was not the case,” Yuki said. “It just came up out of nowhere.”

She expressed her concerns. But Tigran was calm. In any case, he had no choice but to go, he told Yuki.

Around 4 am on the day of his flight, she heard him walking around their Atlanta-area home making last minute preparations.

“I didn’t get up to say goodbye or wish him a safe trip, which I usually do,” she said, her voice breaking. “But I just didn’t do it, because it was just so early in the morning. And I regret it. Every single day.”

‘That’s the sacrifice he made for the country, for the government. So I expected a lot more.’

Yuki Gambaryan

When he arrived in Abuja on February 25, he texted Yuki to let her know he’d checked into his hotel.

She wouldn’t hear from or about him for another 30 hours. When she got a call from a family friend who also works at Binance, she was calm. He told her Tigran had been detained.

“When I actually heard it, I basically felt, like, ‘OK, I saw that coming,” she said.

She kept her composure until February 27. Then she received a call from the US embassy in Nigeria and an official there confirmed his arrest.

“That’s when I started freaking out in earnest,” she said.

‘Coercion tactic’

Yuki began reaching out to her state and congressional representatives and government officials.

Her efforts have borne fruit: On Wednesday, Rich McCormick, the Republican who represents the Gambaryans’ Georgia House district, and 15 of his colleagues implored the White House to help get Tigran released.

“Mr. Gambaryan’s detainment has been marked by excessive and harsh treatment,” they wrote in a letter to President Joe Biden and other officials.

“It is crucial to emphasise that the charges against Mr. Gambaryan are baseless and constitute a coercion tactic by the Nigerian government to extort his employer, Binance.”

US lawmakers want the Biden Administration to send a special envoy to Nigeria to negotiate his release. More than a hundred former federal prosecutors and agents echoed that demand in their own letter to Secretary of State Antony Blinken.

Yuki said she was very grateful for the lawmakers’ letter, but added that she expected a swifter response from the US government, especially given Tigran’s tenure at the IRS.

During his 10-year employment at the agency, Tigran was involved in some of the government’s most high-profile investigations and often worked well past midnight, Yuki said.

He would spend as much as half the year travelling for work, leaving Yuki to raise their two kids.

“That’s the sacrifice he made for the country, for the government,” she said. “So I expected a lot more.”

Working around-the-clock

As for Binance, the company insists he had no decision-making authority at the company and has urged the Nigerian government to understand holding him is unfair.

Binance has told Yuki it’s working around-the-clock to bring him home.

“They keep telling me there is this huge group of people within the company who have been working on this case day and night,” she said. “If that’s true, how is it possible that he’s not home yet? It’s been three months.”

‘Inconsolable’

In the days immediately after his arrest, Tigran was detained in a government-owned residence where he was provided freshly made smoothies each morning and allowed to use his phone, DL News previously reported.

Two weeks after Anjarwalla’s stunning, Hollywood-esque escape from Nigerian custody on March 22, however, Tigran was transferred to the notorious Kuje Prison.

Since then, Yuki has received updates from Binance and Tigran’s attorneys in Nigeria, but she has only spoken to him twice: last week and the week prior. Each call lasted about two minutes, and was monitored by a prison guard.

“We just basically asked each other how are you doing, how are you, physically? I miss you, I love you, stay strong,” she said.

“He sounded fine. He always sounds fine. That’s what he does for the sake of me, so I don’t have to worry about him.”

But his tenor masked the fact he’d fallen gravely ill. In addition to a chest infection, a spokesperson for Yuki told DL News he appears to have contracted malaria, a potentially deadly, mosquito-borne infection common in West Africa.

“We have yet to see a single test result, however he had all the symptoms,” the spokesperson said. Normally fit, Tigran has looked gaunt and stressed in his court appearances.

Tigran’s mother, who ‘basically raised him all by herself,’ is ‘inconsolable,’ Yuki said.

After his courtroom collapse on May 23, a judge ordered that officials take him to a hospital to receive treatment.

It doesn’t appear they have complied — after about three hours and “some tests,” he was sent back to Kuje, according to Yuki. Nigerian officials have not shared the results of those tests with her.

Tigran’s mother, who “basically raised him all by herself,” is “inconsolable,” Yuki said. “I don’t even know how to describe her state.”

Something’s wrong

She has yet to tell their children that Tigran has been arrested.

Accustomed to their father’s frequent travelling, their five-year-old son is none the wiser, she said. But their 10-year-old daughter is more circumspect.

“She can tell something’s wrong,” Yuki said.

When her daughter first asked why Tigran had been gone so long, Yuki said, vaguely, that he was dealing with “things.” A few days later, her daughter asked, “what exactly are those things that he has to deal with?”

“I told her the company he works for is having an issue with another country,” Yuki said. “And it’s taking a long time to resolve it.”

With reporting by Osato Avan-Nomayo in Lagos.

Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email him at aleks@dlnews.com.

Almost a dozen firms are competing to launch spot Ethereum exchange-traded funds. But crypto heavyweight ARK Invest isn’t one of them.

“ARK believes in its transformative potential and the long-term value of the Ethereum blockchain, but, at this time, ARK will not be moving forward with an Ethereum ETF,” an ARK spokesperson told DL News.

ARK Invest issued a spot Bitcoin ETF in January alongside 21Shares, a firm that specialises in launching crypto investment products. And the two firms seemed ready for another round, filing for an Ethereum ETF jointly.

No surprise there: The massive success of the Bitcoin ETFs suggests Ethereum ETFs could quickly accumulate billions of dollars in assets with even a fraction of the demand.

But a recent filing showed that ARK has dropped out of the partnership and that 21Shares will pursue a spot Ethereum ETF on its own.

Expensive products

There are a couple reasons why ARK may have changed its mind.

For one, launching an ETF is expensive — and in the case of the spot Bitcoin and Ethereum ETFs, the fees are so low that issuers don’t always make a profit.

“Although Bitcoin ETFs have done well in terms of assets, the issuers face profitability challenges due to fee compression and the relatively high costs of the crypto-related fund service providers,” Will Cai, managing director of indices of Kaiko, a crypto research firm, told DL News.

ARK and 21Shares’ Bitcoin ETF is one of the most successful funds out of the 10 that launched in January. Coming in third behind BlackRock and Fidelity, it has vacuumed up almost $3.5 billion in assets in five months — an impressive performance by normal ETF standards.

Even so, with fees at 0.21%, it may be hard for ARK and 21Shares to break even on the product. They still must pay their Bitcoin custodian — in this case, Coinbase — as well as administrative fees, their cash custodian, and other things like transfer agents.

“This could well put pressure on the terms of the partnership when there isn’t much profit to go around,” Cai said.

Waiting for staking

There’s also the possibility that ARK is waiting for the Securities and Exchange Commission to greenlight spot Ethereum ETFs that also provide staking services.

“We will continue evaluating efficient ways to provide our investors with exposure to this innovative technology in a way that unlocks its full benefits,” the ARK spokesperson told DL News.

In their current design, the ETFs will provide pure exposure only to Ether’s price, without the roughly 3% yield that investors can earn by staking their Ether.

In other words, not only will investors have to pay a fee to ETF issuers for the exposure to Ether, they will be missing out on opportunities to grow their holdings in Ether terms.

“There’s one massive idiosyncratic factor with ETH that will affect demand and that’s staking,” Adam Morgan McCarthy, a Kaiko analyst, told DL News.

“Even paying 0.20% fees without the staking element seems like a nonstarter to me,” he added.

Tom Carreras is a markets correspondent at DL News. Got a tip about ARK or Ethereum ETFs? Reach out at tcarreras@dlnews.com

President Joe Biden’s veto of a bill that would scrap an obscure piece of accounting guidance barely made headlines outside crypto circles.

But on Wall Street, experts say, Biden’s move halts momentum on an industry that could dwarf the crypto sector: the $16 trillion opportunity to tokenise assets like stocks and bonds.

The bill would have repealed a piece of Securities and Exchange Commission guidance called SAB 121, which critics say makes safeguarding large amounts of crypto — a business known as custody — financially impossible for big banks.

That matters for cryptocurrencies like Bitcoin, especially as Wall Street is seizing on crypto to win new customers.

But it also matters for Wall Street’s tokenisation efforts.

SEC Chair Gary Gensler “is holding back tokenisation technology with SAB 121,” North Carolina Democrat Wiley Nickel told Congress this week during a hearing convened by the House’s digital assets subcommittee.

“He’s putting President Biden in a very difficult position on this issue.”

Election issue

Nickel’s comments come as crypto emerges as a hot-button election issue.

The industry has amassed a $85 million warchest to sway voters before November’s election.

The industry is attracting increasingly bipartisan support — the bill to repeal SAB 121, for instance, passed both chambers of the House.

SAB 121

SAB 121 is an oddly obscure topic to rally politicians.

It’s a short piece of accounting guidance put out by SEC staff in 2021 notifying firms they should record crypto assets as liabilities on their balance sheets.

The issue is that big banks must hold capital against risky on-balance sheet items. Essentially, SAB 121 makes it prohibitively expensive for custody banks like BNY Mellon or JPMorgan to hold crypto.

Crypto backers see Biden’s unwillingness to budge on this issue as an indicator of his administration’s lingering hostility toward the industry.

Risk profile

The issue is that SAB 121 is so vague, its definition of crypto asset could encompass digital versions of traditional securities purely because they’re recorded on blockchain ledgers, Lilya Tessler, a partner at law firm Sidley Austin, said during the hearing.

If Wall Street’s custodians won’t hold tokenised securities, that’s a problem for their issuers, which must have somewhere to store the underlying asset.

Tessler said that regulated securities don’t change their risk profile merely because they’re recorded on a blockchain.

“A tokenised stock or a bond is still a stock or a bond, whether it’s on a traditional ledger or a blockchain ledger,” she said.

New risks

Sceptics, however, warn that tokenisation does present new risks.

Hilary Allen, a professor at American University Washington College of Law, said during the hearing that tokenisation is increasingly done on public blockchains, which present security, scalability, and governance concerns.

They “suffer from inescapable inefficiencies and operational fragilities that make them unsuitable as supporting infrastructure for real-world assets,” she said.

Reach out to the author at joanna@dlnews.com.

After calling a crypto market lull in April and May, BitMEX co-founder Arthur Hayes says now is the time for new crypto projects to launch their tokens.

In his latest essay about how economic conditions will affect the crypto market, Hayes recounted how many portfolio projects of his venture firm recently asked him whether they should launch tokens.

His answer? A resounding yes.

“The trend is clear,” Hayes said, pointing to interest rate cuts from the Bank of Canada and the European Central Bank. “Central banks at the margin are starting easing cycles.”

Interest rate cuts make borrowing cheaper, which tends to drive investors toward riskier assets.

When optimistic investors send crypto prices higher, projects rush to launch tokens to capitalise on the favourable market conditions.

Hayes’ family office runs a crypto venture firm called Maelstrom Capital. The firm lists a portfolio of over 20 crypto startups.

While some of these companies have already launched tokens, others, such as Elixir, have not, despite running a months-long points campaign — often a signal that a crypto project is planning to launch a token.

Investors tire of tokens

There are reasons projects may still want to hold off on launching their tokens.

DeFi users have pushed back against projects that employ what many call predatory “low float high FDV” token structures that benefit early venture investors.

Fully diluted valuation — or FDV — refers to the total value of a token’s supply, including those locked or yet to be distributed, and not just those that are circulating.

As a result, many new tokens have plummeted on launch, signalling a lack of investor demand.

A macroeconomic shift

Still, investor fatigue could be quickly forgotten with a swift change in economic conditions.

Hayes pointed to recent rate cuts from The Bank of Canada and The European Central Bank as an indication that macroeconomic conditions are shifting faster than he anticipated.

“I thought the fireworks would start in August,” he said.

Hayes, however, held off on predicting an immediate rate cut from the Federal Reserve.

Still, the likelihood of rate cuts in the US jumped.

Neil Wilson, chief analyst at Markets.com, said weaker-than-expected US economic data sent the odds of a rate cut in September to 70%.

The reaction was swift.

On June 4, US spot Bitcoin exchange-traded funds saw the largest one-day investment since March 12.

The battle for the yen

Hayes previously outlined why he believes a weakening Japanese yen will send crypto prices higher.

To help prop up the yen’s value, the Fed could create new dollars and swap them for yen with the Bank of Japan. This would allow Japan’s Ministry of Finance to buy up yen on foreign exchange markets, increasing its value.

Hayes argues this so-called money printing is good for risk assets — including crypto.

Hayes pointed to another way to narrow the gap between the yen’s value and those of other currencies.

Interest rates in Japan are much lower than in the US and Europe. This devalues the yen as traders sell it for other currencies with higher interest rates.

To combat the yen selling, central banks with high interest rates could lower them to make this trade less appealing.

However, lowering interest rates also risks stoking another wave of inflation.

Hayes’ bets

Hayes said he’ll divulge his strategy in due course.

“It is time to deploy it again on conviction shitcoins,” he wrote. “Of course, I’ll tell readers what those are after I have purchased them.”

“But suffice it to say, the crypto bull is reawakening and is about to gore the hides of profligate central bankers.”

Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.

As European voters head to the polls across the continent, the crypto industry sent a clear message to European Union officials: Grow the sector. Keep momentum.

Some 373 million voters will cast ballots over the weekend in countries including Germany, France, and Spain for new leaders who will represent them in the European Parliament for the next five years.

The crypto industry has seized on the shifting political winds, laying out a roadmap in a manifesto that leaders say will sharpen incoming officials’ priorities.

The manifesto, signed by four trade associations, claims that the EU is fast losing ground to America and Asia in the race to host new digital economies.

The roadmap will be a “source of inspiration for the next policy cycle,” Joachim Schwerin, an economist at the European Commission who helps develop policy on Europe’s digital markets, told DL News.

Next five years

Schwerin said a stronger partnership between the public and private sectors is key.

“The next five years will be years of co-learning, advanced infrastructure and use-case development, and more meaningful moves towards interoperability based on industry-led standards.”

Unlike its US counterparts, EU regulators have provided the crypto industry with a set of regulations that they can operate within.

But the European industry faces a new battle: global financial hubs are competing for a growing army of crypto users.

Their manifesto suggests that blockchain technology could underlie systems for global trade transparency and cybersecurity, as well as push forward a potential $16 trillion tokenised economy.

The web3 industry is expected to increase from about $1 billion to almost $60 billion by 2028, according to a French industry report laying more policy recommendations published in May.

European competitiveness on trial

The industry requests come as European bigwigs warn against a decline in the bloc’s market competitiveness, already considered a laggard in the global race.

“In an era where technology increasingly dominates, Europe grapples with the challenge of keeping pace with swift global advancements,” Enrico Letta, Former Italian Prime Minister wrote in an April report.

He said the continent has failed in nurturing a strong ecosystem for the tech industry, and should prioritise mobilising private capital.

Letta is not alone commenting on Europe’s lethargic markets.

The EU makes up 11% of global equity market capitalisation, with the US at 45%, according to a report from the European Securities and Markets Authority.

“Greater commitment is needed to create a genuine single market for EU capital,” regulators wrote.

Mammoth task

“The EU has undertaken a mammoth task over the last five-year policy cycle to put legislation in place for the blockchain and digital asset industry, exploiting a state of regulatory infighting across the Atlantic to arrive in pole position,” said Erwin Voloder, head of policy and the European Blockchain Association.

This association published an additional open letter in April focused on blockchain infrastructures.

“We would hope to see a sharper focus on digital identity and blockchain for the real economy,” said Erwin Voloder, head of policy and the European Blockchain Association.

This trend is already emerging, as the EU passed digital identity legislation this year. And, as a win for blockchain advocates, the text includes a line about using zero-knowledge cryptography.

Voloder is among the trade association leaders who have sent hundreds of lawmakers their visions for the next mandate.

Over the past months, crypto organisations published a series of manifestos and open letters directed at the next EU administration.

While the US is taking strides towards establishing a regulation for crypto assets, major players have been embroiled in lawsuits over the grey zone of legal definitions of crypto assets.

MiCA first

Meanwhile the European industry is inching towards the implementation of the Markets in Crypto-Assets rulebook.

The regulation was a first globally, designed especially for crypto service providers and issuers. The rules come into force from the end of June.

MiCA came alongside other laws countering money laundering and tightening financial service rules that implicate crypto firms.

But for now, when it comes to blockchain and crypto, the European Commission has its work cut out.

The European Commission will publish reports on developments in the realm of DeFi, NFTs and crypto lending by the end of the year. These are the instructions noted in the MiCA rulebook.

“The manifestos and wish lists cover these three issues, but also go beyond them,” an EU Commission official, who has seen some of the industry reports, told DL News.

“Experience with MiCA implementation and market developments will be determining factors on what — if anything — we may propose.”

Top crypto exchanges are continuing to service customers in Hong Kong despite a ban on unlicensed platforms that took effect on May 31.

I should know. I live in Hong Kong and to test which crypto exchanges were changing their onboarding processes for residents, I tried to open accounts at the top 10 global platforms over the last week.

I succeeded at Binance, Coinbase, and Kraken even though official records show none of them have applied for a licence, let alone obtained one.

New regime

Regulators are hoping the new licence regime will curb runaway crypto crime in the city.

Investors are losing hundreds of millions of dollars worth of deposits to online exchanges that disappear without a trace and to a raft of exotic schemes ranging from romance scams to fake crypto lawyers promising to recover stolen assets.

In 2023, crypto crime cases jumped 46% over the prior year, according to the Securities and Futures Commission, or SFC, which watchdogs the markets.

And that doesn’t include more than 6,200 complaints made against JPEX, the exchange that vanished last fall with an estimated $200 million in client deposits, according to police officials.

‘Several, including ByBit, OKX, Mexc, and KuCoin, blocked me from signing up.’

The SFC says its licensing regime will let investors select reputable crypto exchanges from a roster it maintains on its website.

To qualify, exchanges needed to apply by February 29. Those that didn’t were given until May 31 to wind down their services. Companies that have applied for licences are allowed to continue operating until the SFC decides whether to approve their applications.

The SFC’s list does not show Binance, Coinbase, or Kraken.

Kraken declined to comment for this article. Coinbase did not respond to a request for comment.

Binance did reply. “Binance is a global platform and does not actively market to the public of Hong Kong or operate in Hong Kong,” a spokesperson told DL News.

A representative from the SFC also declined to comment.

Those that complied

Some platforms have complied with Hong Kong’s new rules. HashKey Exchange secured a licence. So has OSL.

Other exchanges have opted to pull up stakes.

OKX and Bybit, which until recently were applying for licensing in Hong Kong, have wound down their services and withdrawn their petitions. So, too, did Gate.io (as Gate.HK), HTX, and HKVAEX, a Binance-linked company.

Several, including ByBit, OKX, Mexc, and KuCoin, blocked me from signing up. To do so, they track IP addresses, disallow Hong Kong phone numbers for verification, or reject Hong Kong addresses when asked to provide proof of addresses.

Binance’s stark warning

I assumed Binance wouldn’t work.

For starters, the website itself had previously been inaccessible in Hong Kong. I used to need a VPN to access it.

At some point it came back but the homepage bears a stark warning: “The products and services on this website are not intended for individuals in Hong Kong. Nothing on this website is intended to be construed as a solicitation of any individual in Hong Kong.”

After filling in some details, including my Hong Kong phone number, address and uploading a photo of my ID card, I was happily buying Ether, no problem.

Binance did make an effort to try and get licensed in Hong Kong through a local company, HKVAEX, which is a separate exchange.

HKVAEX withdrew its licence application in April and told users to take their money off the platform.

Coinbase’s fuzziness

Coinbase was invited to apply for a licence in June last year by Hong Kong legislator Johnny Ng. At the time, a Coinbase spokesperson told CoinDesk that it was “dedicated to partnering with high-bar regulators.”

The company did not take Ng up on his offer. Its website doesn’t appear to take different jurisdictions into account.

When I try to open an account, I’m told Coinbase is collecting information about me to “comply with regulations” and that it’s “legally required” to ask for certain information.

By whom? Which nation’s regulations is Coinbase referring to?

This is not specified. Hmmm. Coinbase has not applied for a licence in Hong Kong and is not regulated here, the SFC’s list shows.

Nevertheless, the fine print in its legal and privacy disclosures specifically states that the agreement on its website applies to “customers who reside in Singapore and selected countries (Hong Kong and the Philippines).”

In any event, Coinbase’s know-your-customer process approved my application. For some reason, the only method of depositing fiat currency into the account was via an old fashioned bank transfer.

So I duly paid to send my cash from my Hong Kong account to Singapore. Then I bought my ETH.

“Doesn’t it feel good to own a piece of the future?” said the purchase confirmation email from the company that only accepted deposits via bank transfer.

Kraken’s handy articles

Like Coinbase, Kraken’s website also said it needed to collect certain information due to legal requirements.

A link beneath this message told me I could “learn more.” But the link took me to a blog page that had nothing to do with regulation and instead featured articles entitled “What is Bitcoin?” and “What is blockchain?”

Its terms of service make no mention of Hong Kong. I went through the process and bought some Ether.

Then I sat for a moment as a stark realisation hit me — I was now going to have to do all this again in reverse to withdraw the funds.

I decided to have a cup of tea instead.

Callan Quinn is DL News’ Hong Kong-based Asia Correspondent. Get in touch at callan@dlnews.com.

At midday on May 13, there was $45,000 worth of tokens in my MetaMask crypto wallets.

One hour later, it was all gone.

Sitting at my desk in my home in Lagos, Nigeria, I stared blankly at my computer screen, struggling to register the impact of what had happened.

On multiple open browser tabs on my computer, I could see several outgoing crypto transactions from my wallet to unfamiliar addresses.

I was confused.

I looked at the timestamps displayed on several of the transactions, and I knew I could not have initiated them.

That’s because I had been busy working on a different computer for three hours.

My shock soon gave way to dismay as I realised I’d somehow been hacked. But how?

Pain and guilt

I’ve been a crypto reporter for seven years, and in that time I’ve covered many cases of token owners losing their funds to hackers.

Now, the same thing had just happened to me.

I felt pangs of pain and guilt as I remembered that the bulk of the funds belonged not to me but to my family.

They began amassing these crypto tokens — Ether, Tether’s USDT stablecoin, and Jasmy, an altcoin — in 2020 after the Covid-19 lockdowns sparked economic volatility.

As the resident expert in the family, it had fallen to me to take care of their assets, to keep them safe. I was their crypto custodian and my record was unblemished.

Until now.

As painful as the theft was, it was nothing compared to the anguish I felt as I informed my family about what had happened.

The grief I saw etched on their faces reminded me of my late father’s passing in 2017. My ordeal casts the transparency of public blockchains in a different light.

In a few computer strokes, I can see my stolen crypto in someone else’s wallet, and yet I can’t recover my assets. It is a macabre reminder of my ordeal.

The reality is that a similar fate has befallen many crypto users ranging from professionals to novices.

‘It’s easy to lose your crypto if you make a mistake. In my case, it all started with a game.’

Billionaire Mark Cuban lost $870,000 to a hacker last year after he said he downloaded a MetaMask wallet “with some shit in it.”

In 2023, crypto investors lost $1.7 billion to thieves, according to Chainalysis, the blockchain forensics company.

It’s easy to lose your crypto if you make a mistake such as downloading tainted software that exposes your wallet details.

Sometimes, you can lose your funds if a watchful hacker poisons your wallet address by creating a fake wallet that closely matches the victim’s.

In my case, it all started with a game.

Keylogger

I had promised to help a younger relative of mine download a game called “Dave The Driver.”

He grew impatient and tried to do it himself. The problem was he used the computer with the browser wallet that held my family’s crypto assets.

He downloaded a version of the game embedded with malware and it immediately infected my laptop.

The malware probably installed a keylogger — a programme that records keystrokes — and exposed my MetaMask wallet details, which allowed the hacker to syphon out the crypto.

Many online wallets, including MetaMask, don’t use proven safeguards to prevent theft, such as fraud alerts and two-factor authentication.

If this was an account at my bank, I’d would have received a fraud alert as soon as the first transaction was initiated.

The bank would have paused the transaction and given me enough time to confirm whether I had indeed initiated the fund transfer.

Virtually no such preventive features exist for crypto wallets.

Staked funds safe

Indeed, the one warning I received from from a centralised exchange where I held some tokens. The hacker was apparently trying to access my assets and the exchange asked them for a two-factor authentication code.

That attempt was unsuccessful and I managed to hold on to those assets, but it was a small amount. Still, here was a situation where two-factor authentication, or 2FA, worked nicely.

The hacker also tried to steal funds from other wallets I used that had staked crypto but they were unsuccessful.

‘Unless the hacker forgets, I’d be in a race with the thief to secure those staked assets in a new wallet.’

That’s because blockchains like Cosmos typically require users to wait 14 to 21 days to withdraw staked assets after they are unstaked.

The hacker initiated the unstaking process, but was unable to transfer the tokens to their wallet. I’ve since restaked those crypto tokens, but that hardly solves the problem.

(Staking is a process of permitting your tokens to be used in validating transactions on a blockchain network.)

Unless the hacker forgets about my assets, I’ll be in a race with the thief to secure those staked assets in a new wallet when they become available for withdrawal, but that’s a problem for another day.

As for the immediate fallout, I am grateful my family didn’t blame me or my young relative for exposing their assets.

Reflecting on the stories I had written about similar cases, I realised I hadn’t given much thought to the families of people who’d lost crypto funds to hackers.

My focus had been on explaining how the hacks happened, where the funds went and possible recovery efforts.

I can see the assets

What was especially frustrating was the fact I can still see my stolen assets three weeks after the crime.

The bulk of the stolen crypto sits in the two addresses belonging to the hacker. They can be seen here and here.

In any event, I contacted a blockchain security firm to try to block the hacker from being able to trade the stolen crypto for cash via a centralised exchange.

They told me it would cost $2,000 for them to try and block the hacker’s wallet addresses.

Recovering stolen crypto is usually a long process that involves law enforcement action and the cooperation of crypto exchanges.

My family members decided it was better to absorb the loss.

They were not enthused at the prospect of spending more money in pursuit of the hacker when the chances of recovery were slim to none.

Better safeguards needed

I’ve had time to reflect on what happened, and there are lessons to be learned from my experience.

First, keep your computers that hold valuable crypto wallets away from little kids!

On a more serious note, crypto wallets need better safeguards.

If broad-based crypto adoption is the goal, then safely storing these digital assets needs to become simpler, especially for those who prefer self-custody.

Self-custody comes with the expectation that the user is responsible for keeping their assets safe.

But users need more help ― perhaps in the form of real-time alerts and two-factor authentication.

There are smart contract solutions like Safe’s multi-signature wallet where more than one signer is required to complete a transaction.

While multi-sig wallets help improve security, the individual signers must protect their keys ― again, with self-custody, the onus is on the user to ensure the security of the wallet.

Multi-sig to the rescue?

Assuming I’d set up a multi-sig arrangement with the compromised wallets, the hacker would have still been able to steal the funds. They would have used each compromised address to sign the transactions needed to move the funds.

That process would have been slower, but they’d have gotten away with my family money.

However, it’s poor practice to set up a multi-sig controlled by one entity.

Ideally, each signer would have been a different family member whose wallets were on separate devices.

And that’s what we’ve done.

Some may point to the mistake of keeping the funds in an online wallet that is prone to hacking. Or say the tokens should have been safely ensconced in an offline wallet, such as the type offered by hardware wallet makers.

That was the plan, albeit I’d been slow to make the move.

And now I’ve been hit with a $45,000 lesson for my lethargy.

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.

Crypto projects that have airdropped tokens to users will hear from the authorities sooner or later.

That’s according to Elliot Chun, partner at Architect Partners, a firm that advises crypto companies on financing strategies.

“Regulators will revisit how some of these token airdrops happened,” he told DL News. “You’re going to get a knock on the door.”

Glacial pace

New crypto projects often reward early users of their protocols with tokens. These rewards — called airdrops — can be worth a few cents to tens of thousands of dollars.

“Some of the highest-profile projects” will catch law enforcement’s attention, Chun said.

“The only reason regulators aren’t going for some of the smaller projects is because they’re too small,” he added. “But if they could, they would.”

At issue is the possibility that insiders may have improperly benefited from the airdrop. For example, knowing which requirements to fulfil in order to get the maximum allocation.

“How many of the ICO-era projects have had the knock?” Chun said, referring to a period in 2017 and 2018 when companies would raise funds by issuing new coins to fund their development, sales known as initial coin offerings, or ICOs

Many of those firms were subsequently sued by the Securities and Exchange Commission — and at times were investigated by the Federal Bureau of Investigation.

The only reason airdrop issuers haven’t heard from regulators yet, Chun said, is because they move at a glacial pace.

“The regulators are so slow — they’re only just getting to Ethereum now,” he said, referring to the SEC’s investigation into the Ethereum Foundation.

And Uniswap, one of the first protocols to airdrop tokens, just received a Wells Notice from the SEC in April.

“Uniswap launched in 2018 and airdropped in 2020. So regulators are operating with a four-to-five-year lag,” Chun said.

Crypto market movers:

Bitcoin is up 0.21% at $71,085.62

Ethereum down 0.95% at $3,811.43

What we are reading:

Solana project with $1bn in deposits aims to reward ‘true believers’ with its airdrop — DL News

Kraken Considers Pre-IPO Funding Round Amid Crypto Market Rally — Milk Road

How the U.S. Government Can Protect the Dollar Through Stablecoins — Unchained

European Central Bank Cuts Key Interest Rates By 0.25% — Milk Road

Ex-FTX exec to join boss Sam Bankman-Fried in prison. Who is Ryan Salame? — DL News

Tom Carreras is a markets correspondent at DL News. Got a tip about airdrops? Reach out at tcarreras@dlnews.com

Robinhood, the publicly traded fintech company that lets users buy and sell stocks and crypto, announced on Thursday that it planned to purchase crypto exchange Bitstamp for about $200 million.

Best known for its role in the memestock craze of 2021, Robinhood has catered to retail investors in crypto, or small-time traders.

Now, it hopes to attract hedge funds, banks, and other trading heavyweights, according to Johann Kerbrat, general manager for Robinhood Crypto.

“We are adding, for the first time, a trusted business with established relationships,” he told DL News, in reference to Bitstamp and its existing service for wealthy traders. He added: “It makes a ton of sense for Robinhood to get into this space.”

Robinhood’s push to expand to a broader set of customers comes amid crypto’s reemergence as a substantial source of cash.

The company’s crypto transaction revenue jumped from $43 million in the fourth quarter to $126 million in the first three months of 2024.

Its fees from crypto trading in the first quarter neared a record, second to only the $233 million it earned in mid-2021.

The deal also comes amid a letter from the US Securities and Exchange Commission last month, warning that Robinhood is the target of potential litigation over its crypto business.

Potential expansion to Asia

Kerbrat not only touched on Bitstamp’s connections to institutional traders but also its international reach.

The crypto exchange says it has over 50 active licences globally, including in Asia.

Robinhood has expanded its crypto trading arm into Europe. When asked if its planned acquisition of Bitstamp meant Asia was up next, Kerbrat wouldn’t say.

“The goal is to keep pushing on the international side,” he said. “And absolutely, Asia is an attractive market.”

If FTX fraudster Sam Bankman-Fried was your prototypical high school nerd, his lieutenant Ryan Salame was the jock.

The onetime executive at crypto exchange FTX was handsome, liked to party, and was popular — so much so that he courted politicians across the US, even Florida governor Ron DeSantis, according to Michael Lewis in his book “Going Infinite.”

Salame’s relationships with politicians, however, landed him in hot water.

In late May, after Bankman-Fried was sentenced to 25 years in prison for fraud, the former co-CEO of FTX’s Bahamas subsidiary was sentenced to seven and a half years behind bars for violating campaign finance law and operating an unlicensed money-transmitting business.

Lewis called Salame a “freedom-loving, tax-loathing Republican.”

Who is he and what was his role at the now-bankrupt crypto exchange FTX?

From the Berkshires to the Bahamas

Salame went to high school in Great Barrington, a town nestled in the Berkshires, a rural highland in western Massachusetts, according to The Berkshire Eagle.

After receiving his undergraduate degree at the University of Massachusetts, Amherst, he did a two-year stint at Ernst & Young before he set off to work in Hong Kong for Circle, one of the largest firms in crypto, per his LinkedIn.

At that time, in 2019, Bankman-Fried was also in Hong Kong running Alameda Research, a crypto hedge fund.

The two met, and Salame, whom Lewis described as “a walking advertisement for worldly pleasure,” eventually left Circle to work for Bankman-Fried.

When Salame joined Alameda, the hedge fund was a hodgepodge of nerds.

“Ryan was less a grown-up than the highest expression of a new species, the crypto bro, that Sam sensed he needed on hand,” wrote Lewis. “He hired Ryan without being totally sure what Ryan would do.”

That same year, Bankman-Fried founded FTX, and, in October 2021, Salame became the co-CEO of FTX Digital, the name of the exchange’s Bahamas entity, according to the Department of Justice’s initial indictment of Salame.

Straw donations

During his tenure at FTX, Salame was often responsible for Bankman-Fried’s cheque book.

When Bankman-Fried decided to move FTX from Hong Kong to the Bahamas, he sent Salame to snap up property for the company and its employees.

Salame’s purchases eventually amounted to between $250 and $300 million in real estate and included $153 million in condos at a luxury resort called Albany, wrote Lewis.

Meanwhile, Salame was also funnelling millions of dollars from Bankman-Fried’s coffers into political campaigns in the US, according to the DOJ.

In what is commonly known as a straw donor scheme, or when a wealthy donor has others donate to candidates on their behalf, Salame and other co-conspirators made over 300 contributions on behalf of Bankman-Fried to politicians across the country.

These were worth tens of millions of dollars, said the government in its indictment of Salame.

Bankman-Fried wanted to appear politically neutral as well as avoid contribution limits, so Salame became the Republican face of Bankman-Fried’s political donation scheme, claimed the DOJ.

For example, Salame sent money to Elise Stefanik, Steven Palazzo, and Diana Harsbarger, all of whom were running as Republicans for the House of Representatives, per data from the Federal Elections Commission.

He even donated money to the campaign of Michelle Bond, a Republican congressional candidate in New York whom Salame was dating and with whom he now has a child, according to his sentencing submission.

The collapse of FTX and a guilty plea

As FTX collapsed, Salame was watching NFL superstar Tom Brady play in Florida, according to Lewis.

After the end of the game, Salame did not go back to the Bahamas, and he remained publicly quiet, even as Bankman-Fried lieutenants, Caroline Ellison, Gary Wang, and Nishad Singh all struck plea deals with the US government.

In April 2023, however, the New York Times reported that the FBI had raided Salame’s home in Maryland, and, in September, Salame pleaded guilty to one violation of campaign finance law and one charge of unlawfully operating an unlicensed money-transmitting business.

Last month, Salame was the first of Bankman-Fried’s co-conspirators to be sentenced to prison.

Although a federal judge passed down a seven-and-a-half-year prison term — even more than what prosecutors asked for — he may only serve five or so years, according to former DOJ prosecutors.

After he received his sentence, Salame is now back on social media and said he wants to tell his side of the story.

During the past year I dedicated a significant amount of my time to writing a complete memoir of my time at ftx and alameda. I'll be keeping 0$ of the proceeds once it hits print. Waiting on publishers at this point but hope to get it done and out asap.

— Ryan Salame (@rsalame7926) June 3, 2024

“During the past year I dedicated a significant amount of my time to writing a complete memoir of my time at FTX and Alameda,” he wrote on Monday.

“I’ll be keeping $0 of the proceeds once it hits print. Waiting on publishers at this point but hope to get it done and out ASAP.”

Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.

Mountain Protocol has bagged $8 million in a funding round led by Multicoin Capital.

The venture is part of a wave of stablecoin issuers — like Paxos and Angle — who are muscling in on big issuers’ turf by sharing the yield of US treasuries with customers.

“Today, Circle and Tether are keeping all of that,” Mountain co-founder Martin Carrica told DL News, referring to the 5% yield on US Treasuries. “Our thesis is, let’s give that back to the holder.”

The market is getting crowded. PayPal, Ripple, Aave, Curve, and Ethena are just some of the organisations to announce or launch stablecoins over the past year.

No wonder: Last year Bernstein predicted that the $161 billion market would balloon to almost $3 trillion by 2028.

Sharing yield

Amid high interest rates, stablecoins backed by US Treasuries have become a cash cow for issuers.

As of Wednesday, the yield on three-, six- and 12-month US Treasuries was just above 5%.

Mountain’s USDM and similar stablecoins are attempting to lure users by sharing the yield they earn on the US Treasuries.

Carrica likened USDM to a high-yield savings account.

However, breaking through the dominance of Tether and Circle — who have a combined market value approaching $150 billion and unmatched liquidity, a feature that appeals to high-volume traders — is a challenge.

After Coinbase Ventures and Castle Island backed Mountain’s $4 million September seed round, Mountain has struggled to maintain early momentum.

While Ethereum layer 2 blockchain Manta using USDM in a rewards campaign fuelled the stablecoin’s growth to a total value of $154 million in March, it’s since fallen to $49 million.

‘It sounds sketchy’

Bermuda-registered Mountain won’t offer its USDM to US users until the country passes stablecoin legislation — which is unlikely to happen in 2024 due to the election and political squabbling on Capitol Hill.

This has been an obstacle when negotiating partnerships or deals with vendors, Carrica said.

“They’re like, ‘okay, why are you not working in the US? It sounds sketchy,’” he said. “It’s less of a pure regulatory issue, and it’s more of a perception issue.”

Carrica said Mountain’s real opportunity is not in the US, but in cross-border payments and countries with unstable currencies, like his native Argentina.

The company will use the new cash injection to boost hiring and bring USDM to an additional 15 blockchains, including Solana and Cosmos.

As of Wednesday, USDM could be issued and redeemed on Ethereum, Polygon, and a trio of layer 2 blockchains: Arbitrum. Optimism, and Base.

Mountain also plans to make it easier to redeem USDM for other stablecoins on a one-to-one basis and for businesses to use USDM.

Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email him at aleks@dlnews.com.

The Solana community is praising liquid staking protocol Sanctum after it revealed details for its token launch and promised to ditch the predatory tactics that have marred other launches.

Sanctum said it will airdrop 10% of its tokens to early users, set aside another 30% for its community, and sell 8% through a public onchain sale.

“Projects in the past started with so little and launched with crazy inflated FDVs,” Sanctum co-founder FP Lee in an X Spaces stream outlining the launch. “We don’t want that. We want to start low and go up.”

Lee was referring to fully diluted valuation, — or FDV — the total value of a token’s supply, including those locked or yet to be distributed, and not just those that are circulating.

Sanctum also said it previously sold 13% of its token to investors, a relatively small amount compared to other projects, and reserved 25% for team members.

“It’s well done, and well-balanced between team, investors, and community,” Kasper Vandeloock, CEO of crypto trading firm Musca Capital and advisor to several DeFi projects, told DL News.

“It signals they are here for the long term, and launching a token is not them trying to find exit liquidity.”

Defi users have pushed back against projects employing what many call predatory “low float high FDV” token structures that benefit early venture investors.

Sanctum lets users stake SOL tokens and receive placeholder tokens in return, which can be used in DeFi.

It differs from other liquid staking protocols by grouping more than 32 different liquid staking tokens into a single pool of liquidity, giving traders better prices when swapping between them.

Sanctum has just over $1 billion in deposits, according to DefiLlama data.

Sanctum’s CLOUD token

Sanctum’s CLOUD token will let holders govern the protocol, similarly to a decentralised autonomous organisation — or DAO.

But it will also have other uses, like as a collateral token that prospective partners would need to stake.

Sanctum’s token plans are largely inspired by decentralised exchange aggregator Jupiter, said Yash Agarwal, a researcher at Superteam, a group that helps Solana ecosystem projects.

Jupiter allocated 40% of its token to its community through airdrops, and only a small amount to VCs.

“It’s also unique compared to other Solana projects, which typically have 10% to 15% in airdrops and 20% to 40% allocated to predatory VCs, launching at astronomical high FDVs,” Agarwal told DL News.

Sanctum will use Jupiter’s launchpad to conduct its token sale.

Several Solana projects have chosen to launch tokens through the launchpad as an alternative to launching through crypto exchanges.

“Centralised exchanges almost always ask for large listing fees: 1%, 3%, 10% of total supply,” FP Lee said in his X post announcing Sanctum’s CLOUD token. “I would much rather those tokens go to the Sanctum community.”

However, Lee said, Sanctum is giving a comparable amount — 1% of the token supply — to LFG, the organisation that runs the launchpad.

Additionally, CLOUD’s initially circulating supply, while bigger than many recent airdrops, is still low.

Top decentralised exchange Uniswap airdropped 60% of its UNI token to early users in 2020, while the Ethereum Name Service airdropped 25% of its ENS token in 2022.

‘True believers’

Sanctum also said it wants to improve on previous airdrops by separating airdrop farmers from “true believers.”

Sanctum’s Lee said he wants to keep details of the project plans secret to avoid giving a head start to those trying to game the system.

He did, however, say that Sanctum could delay airdrop claims, or reward recipients who choose to delay their claim with more tokens.

Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.

Investors are pouring back into markets — Bitcoin included — as central bank policies ignite a wave of enthusiasm for riskier assets.

The European Central Bank became the latest to cut rates today after Canada cut yesterday.

Now, market watchers expecting the Fed to follow suit.

Neil Wilson, chief analyst at Markets.com, said that economic data this week has been weaker than expected and sent the odds of a rate cut in September to 70%.

That euphoria bled into crypto markets.

On Tuesday, CoinShares found that US spot Bitcoin exchange-traded funds saw the largest one-day investment since March 12.

“It is becoming evident that the US economy is getting weaker, this has ramped up expectations for an interest rate cut to be earlier than expected,” James Butterfill, head of research at CoinShares, told DL News.

According to CoinShares data, Fidelity’s Bitcoin ETF saw the most inflows this week, posting $456 million in investment.

Investors bought $274 million in BlackRock’s iShares Bitcoin Trust and $149 million in the Ark 21Shares Bitcoin ETF.

Crypto market movers:

Bitcoin is up 0.5% over the past 24 hours to $71,266.

Ethereum is up 1% to $3,800.

What we are reading:

Robinhood to acquire Bitstamp exchange for $200m in aim to become ‘on-ramp to the crypto world’ — DL News

Tether and CoinGecko warn of crypto phishing attacks and fake token launches — Milk Road

Q&A with Robinhood crypto general manager: Why the crypto giant went to the EU — Unchained

Judge orders SEC to pay $1.8 million in legal fees, dismisses case against Debt Box — Milk Road

Why Railgun project co-founder talked to the feds — and what’s next for crypto privacy — DL News

Liam Kelly is a Berlin-based DL News’ correspondent. Contact him at liam@dlnews.com.

Forward Research has acquired crypto-based YouTube competitor Odysee, a move expected to bring its seven million users to Arweave and breathe new life into the controversial effort to create a social media platform beyond the reach of government censors — and content moderators.

“We stepped in to save it from going offline,” Sam Williams, the founder of the Arweave blockchain and CEO at Forward Research, a venture firm supporting Arweave, told DL News.

When US regulators forced the closure of LBRY, they almost killed Odysee in the process.

“This has been a very long-term project for us,” Williams said. “It would have been a terrible end just to disappear from the internet like that.”

Williams declined to detail the terms of the acquisition.

Odysee is far larger than other crypto alternatives to social media giants like Farcaster and Bluesky.

“The goal is to topple the monopolies that currently exist in social media. We haven’t won until it replaces Twitter.”

Sam Williams, founder of Arweave and CEO at Forward Research

“They actually have a user base that doesn’t really care about crypto. They came to Odysee because they wanted something that maintained their rights, guaranteed their right to speech and to discuss with one another,” Williams said.

Arweave is one of several blockchains focused on data storage. While Ethereum can store the metadata or links to large files, such as videos, Arweave can host such data entirely onchain.

Welcome to the ‘permaweb’

Williams calls the Arweave ecosystem the “permaweb,” due to its ability to permanently store any content uploaded by its users.

That made Odysee a natural fit for Arweave, he said.

“This is one of the things that really caught our eye about it,” he said. “This is a system that is imbued with crypto values, if you will, and has attracted a mainstream audience. And now the job is just to grow that.”

Odysee has attracted scrutiny for its lax content moderation policy. However, crypto users and free-speech proponents see it as a solution to the growing power that major corporations have over online speech.

“Every time you attempt to speak at distance in the world, you have to use some company service,” Williams said, “unless you use something like Arweave.”

Williams likened Arweave to a content “data lake” that is “shared across every single application.”

TikTok had to slowly build its user base — a long and expensive process for an upstart taking on billion-dollar incumbents. A developer on Arweave could create an interface that would draw from the same pool of content as other Arweave-based social media applications and differentiate itself by choosing what to surface.

Last year, the blockchain introduced its “Universal Data License,” allowing users to set the terms of use for any content they upload.

Williams hopes this opportunity to better monetise content will draw creators and, in turn, users.

“The goal is to topple the monopolies that currently exist in social media. We haven’t won until it replaces Twitter.”

Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email him at aleks@dlnews.com.

Robinhood is acquiring one of the industry’s oldest crypto exchanges Bitstamp, expanding the stock-trading app’s crypto footprint.

The acquisition is worth approximately $200 million, according to Robinhood’s announcement. The deal is expected to close in 2025.

“Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers to Robinhood,” said Johan Kerbrat, general manager of Robinhood Crypto, in the announcement.

Robinhood’s acquisition highlights how a slew of fintech companies — such as Revout, Stripe, and PayPal — are making crypto a cornerstone of their business.

However, the fintech has also found itself in the Securities and Exchange Commission’s crosshairs because of its crypto services.

Robinhood’s crypto push

Robinhood is betting big on crypto.

Kerbrat has told DL News it wants to be “the on-ramp to the crypto world.”

DL News recently revealed that the stock-trading app is recruiting for its crypto team on the back of launching a crypto trading service in the European Union, and expanding its crypto wallet with an Arbitrum add-on.

The efforts are paying off.

Before the Bitstamp acquisition hit the wire, research firm Bernstein estimated that Robinhood’s crypto push would catapult its market cap to about $26 billion in 2025, up from almost $19 billion today.

The company’s crypto arm drove its growth in the last quarter of 2023, with its cryptocurrency revenue surging to $43 million of the company’s total $200 million in transaction-based revenue.

For 2023 as a whole, cryptocurrencies made up for 17% of the company’s $785 million in transaction-based revenue.

The new acquisition fits into this drive.

What is Bitstamp?

Bitstamp markets itself as one of the world’s oldest crypto exchanges, having been founded in 2011.

Today, it serves users in Asia, the US, Europe, and the UK. It also already offers services like lending and staking, which are key components of crypto markets after buying and selling tokens.

The exchange posted more than $232 billion in trading volume in the last day, according to CoinGecko.

The SEC

The announcement comes as the SEC has made Robinhood a target due to its crypto business.

In a May 8-K filing, Robinhood revealed that the SEC had contacted the firm to notify them of its recommendation to file an enforcement action.

The markets watchdog said that Robinhood was offering unregistered securities by letting users buy and sell various cryptocurrencies, a line of reasoning found in its actions against Coinbase and Consensys.

“We firmly believe that the assets listed on our platform are not securities,” Dan Gallagher, Robinhood’s chief legal officer, said at the time.

Robinhood and Bistamp did not immediately respond to DL News’ request for comment.

Liam Kelly is a DeFi Correspondent at DL News. Eric Johansson is DL News’ News Editor. Got a tip? Email them at liam@dlnews.com and eric@dlnews.com.