Michael Novogratz, founder and CEO of crypto investment firm Galaxy Digital, is — surprise, surprise — bullish on Bitcoin.

The crypto billionaire told Bloomberg TV Tuesday that he believes Bitcoin’s price could hit $100,000 by year’s end.

“If we take up to $73,000 in the next week or so, we’re gonna end the year at $100,000, somewhere around there, or even higher,” he said.

Novogratz cited regulatory changes in the U.S government. Specifically, he referenced the Securities and Exchange Commission’s approval of Ethereum exchange-traded funds; bipartisan support in Congress for FIT121, the legislation that would provide a clearer regulatory framework for digital assets; and congressional support for the revocation of SAB 121, accounting guidance from the SEC that many in crypto oppose.

The repeal of SAB 121 passed both the House of Representatives and the Senate, but President Joe Biden vetoed the measure on Friday.

“We’re getting the regulatory clarity, and even though it’s not perfect, we’ve got enough that people now realise [that] this is coming,” Novogratz said in reference to a broader governmental acceptance of crypto.

Bitcoin’s resurgence

Novogratz’s optimism for Bitcoin comes amid a recent resurgence in the cryptocurrency’s price, which has buoyed the broader crypto market.

In mid-March, Bitcoin reached an all-time high of more than $73,000, and the total market capitalization of all cryptocurrencies approached $2.8 trillion, according to CoinGecko.

By early May, however, crypto fervour waned, and the largest cryptocurrency by market capitalization hovered near $56,000, bringing down the total market value of all cryptocurrencies with it.

Now, Bitcoin is approaching $71,000, and the total market capitalization for all cryptocurrencies has jumped to $2.67 trillion from an early May low of $2.33 trillion.

“If you bought Bitcoin and held it like most Bitcoiners do, you’re in the money,” Novogratz said.

Ryan Salame, who was one of FTX’s head honchos before it imploded, is posting through it.

The former co-CEO of the bankrupt crypto exchange’s Bahamas subsidiary has posted on X every day since a federal judge sentenced him in late May to seven and a half years in prison.

“Are we at the point in the crypto cycle where lenders let you borrow billions against a ham sandwich or not yet?” he wrote Sunday.

Four lawyers told DL News that the former FTX executive’s decision to take to social media since his sentencing is “unusual.” However, the legal risks for Salame’s public commentary are less than those he would have faced if he took to X prior to his sentencing, they added.

Salame pleaded guilty in September 2023 to a campaign-finance violation and the unlicensed operation of a money-transmitting business. He is one of four key lieutenants of Sam Bankman-Fried, the co-founder and former CEO of FTX, to plead guilty after the collapse of FTX in November 2022.

Bankman-Fried was sentenced to 25 years in prison in late March. Caroline Ellison, Nishad Singh, and Gary Wang all await sentencing.

Neither Salame nor his lawyers immediately responded to a request for comment from DL News.

‘Not in the defendants’ interest’

Salame’s recent emergence on X will likely have fewer legal consequences than if he had sounded off before his sentencing, according to Daniel Silva, an attorney at the law firm of Buchalter and a former Department of Justice prosecutor.

If the government found anything Salame said on X especially objectionable, prosecutors would have to move to dismiss his conviction, strike his sentence, submit another pending indictment, and proceed with discovery and potentially trial.

“I’m not sure why they would want to do that,” Silva told DL News.

However, Will Thomas, a law professor at the University of Michigan, said speaking publicly after a sentence isn’t without potential consequences.

“An annoyed judge might pull a defendant back into court to explain how their post-plea statements fit with their in-court representations, which is ... uncomfortable,” Thomas wrote in an email to DL News. “It is even possible for a judge to rescind a guilty plea, which ultimately is not in the defendants’ interest.”

Salame has avoided talking about his sentence on X, but he has posted twice about his case. In both instances, he implicitly invoked an advice-of-counsel defence and laid blame at the feet of former lawyers.

“Sucks that if I had just sold off my pile of crypto like I was going to instead of listening to multiple lawyers and borrowing from Alameda against it instead, I likely wouldn’t be going to prison for seven and half years,” he wrote, referring to Alameda Research, a crypto trading firm founded by Bankman-Fried

‘What good can come of this?’

Regardless of the risks, all the lawyers DL News spoke with said that Salame’s public commentary isn’t the norm for most criminal defendants.

“I would always advise clients not to do that,” said Elisha Kobre, an attorney at Bradley Arant Boult Cummings and a former DOJ prosecutor.

Silva agreed. “What good can come of this?” he said, adding later: “Maybe he’s trying to entice someone to pay him for his story.”

In a Monday post on X, Salame did say that he was reaching out to publishers for a memoir he had written since FTX collapsed, but he said he didn’t want money: “I’ll be keeping 0$ of the proceeds once it hits print.”

The European Union’s elections start on Thursday. For crypto, that means key lawmakers may lose their seats in the new 720-member parliament, and the policy agenda for the sector will go into a period of flux.

While crypto has emerged as an issue in the US presidential election, it’s remained a sleeper topic in the European campaign.

Still for the last five years, the EU has methodically addressed the challenges of crypto assets by adopting a comprehensive regime known as MiCA. At the same time, European leaders have also set up a small but symbolic body to oversee the rollout of blockchain infrastructure.

A delicate balance

But how a new Parliament picks up where the last one left off remains an unknowable question until the dust clears after this weekend. Crypto experts are watching closely to see how lawmakers approach the delicate balance between regulation and innovation.

“There seems to be a recognition that whilst regulation is important and can be enabling, it can also go too far and be seen as a blocker,” Mark Foster, EU policy lead at the Crypto Council for Innovation, told DL News.

The crypto industry will be looking out for who fills several key roles in the new Parliament.

For example, the Parliament’s Committee on Economic and Monetary Affairs has played a crucial role in amending and shaping crypto legislation over the last five years.

It’s shaped MiCA, which stands for the Markets in Crypto-Assets regulation, as well as rules to prevent money laundering.

Each parliamentary committee has a chair who coordinates the work within the groups of several dozen lawmakers focused on specific sectors.

The chairs also have a subtle influential role during the so-called trilogue negotiations, the final and most meticulous segment of law drafting shared between the EU institutions.

The Committees on Civil Liberties, Justice and Home Affairs, and on Internal Market and Consumer Protection have had impact on crypto legislation.

Parliament’s groupings

Other key jobs are the coordinators of the Parliament’s parties spanning across the political spectrum.

Coordinators allocate legislative reports within the group, deciding who gets to lead negotiations on a bill.

While experts expect to see a swing to the far right in the upcoming elections, the centrist-right European People’s Party remains taking up the biggest chunk in the polls.

The left-wing Socialist and Democrats group, whose MEPs have historically posed challenges to crypto industry advocates, come second in size.

Pending bills

There are a few pending draft laws that were not completed ahead of the elections. These bills will need a rapporteur, or an appointed lead negotiator in the Parliament.

The digital euro, a controversial bid to set up a European Central Bank-run digital currency, will also need a new parliamentary leader should German MEP Stefan Berger not return to complete the process.

Other legislation for payment services and financial data will also need a new MEP to take lead.

The Payment Services Regulation will be important in determining whether issuers of fiat-backed stablecoins, or e-money tokens, will need to comply with more onerous measures than the ones proposed within MiCA.

And, the new composition of lawmakers in the committees could redraft the work done by the last mandate to their own liking.

DeFi versus tokenisation

The European Commission is due to report on progress in decentralised finance and NFTs, and assess any risks the ecosystems may pose to consumers and markets.

The MiCA framework largely excludes these two features of the crypto industry, and focuses on service providers. Instead, the Commission will decide based on its findings whether extra legislation is needed.

The DeFi and NFT reports, which will include insights from European financial markets and banking regulators, are due in December.

But potential policy action on DeFi may be thwarted by another trend eating up the industry: tokenisation.

“If we’ve got huge banks and market infrastructures going into tokenising securities, debt instruments and deposits, that will need to have the right framework around it,” Foster said.

Europe’s crypto legislation

MiCA, which covers stablecoin issuers plus licensing requirements for crypto firms to safeguard markets and consumers, will go live in stages starting from the end of June.

Financial institutions, including crypto service providers, will also need to comply with beefed up IT security requirements from 2025 under the Digital Operational Resilience Act.

A DLT Pilot project was another pod in the European Commission’s Digital Finance Package. It was designed for market participants to experiment with tokenised financial instruments, but has not had much success.

In addition, Europe produced crypto-focused anti-money laundering rules to collect data on senders and receivers of transactions under the Transfer of Funds Regulation.

Plus, a separate Anti-Money Laundering Regulation also swept in crypto services as entities required to comply with the EU’s updated regime for the private sector.

Now, top officials are calling for a slow down in regulation and a chance for the tech and financial sector to implement the firehose of new laws spewed at them.

Blockchain, not crypto

“What we’ll see over the course of the next five years, the term of this legislative cycle, will be a focus more on DLT and the underlying technology,” Foster said.

That could cover decentralised, digital identity and wallets, or revamping financial market infrastructure with features like instant settlement to wipe out intermediaries.

And, these lawmakers will need to approve the next heads of the European Commission, Europe’s executive arm.

EU budget

The next European Commission leaders will be nominated by EU member states, and then elected by the European Parliament. This process will take place after the summer.

The new European Commission president, a job that could well remain with incumbent Ursula von der Leyen, and Commissioners leading the financial and technology sectors will be responsible for any new legislation that may impact crypto or blockchain.

The Commission also has an important role in allocating the EU’s budget towards its long-term goals on digitalisation or sustainability.

That includes projects like the blockchain infrastructure designed to underlie European administrations, dubbed Europeum.

It also includes other initiatives to update internet infrastructures and digitising services or businesses.

“This is an important ingredient to enable citizens to be able to use web 3 and crypto products and services,” Foster said.

Inbar Preiss is a Brussels-based regulation correspondent. Contact her at inbar@dlnews.com.

Crypto is the newest battleground in the US presidential election.

Presumptive Republican presidential nominee Donald Trump jumped into the fray last month by accepting crypto donations while vowing to protect self-custody rights for crypto owners.

But there are reasons beyond attempting to win the votes of crypto investors.

“Many Republicans recognize the strategic advantages of a private-sector US dollar stablecoin,” Pranav Kanade, a portfolio manager at Van Eck’s Digital Assets Alpha Fund, told DL News.

Central to the Republicans’ support of stablecoins, Kanade said, is the demand they provide for US Treasury bonds.

With the US government running a $1.7 trillion deficit, it must find buyers for its debt. In recent years, stablecoin issuers have become some of the largest buyers of US government debt.

Passing clear regulation around stablecoins would increase their use, and thus increase demand for US Treasuries.

“This becomes increasingly vital as traditional government buyers of US debt, like China, become more hesitant,” Kanade said.

Since 2021, China’s US debt holdings have shrunk 30% as it chooses not to replace maturing Treasury bonds with new ones.

Treasury bonds are debt issued by the US government. Investors buy bonds with dollars then receive their money back, plus interest, when the bond matures. Bonds are broadly viewed as the safest investment assets.

Stablecoin issuers love bonds

Stablecoins are crypto assets designed to track the value of another asset, usually currencies like the US dollar or the euro.

The most popular stablecoins, Tether’s USDT and Circle’s USDC, are backed by dollars and dollar-equivalent assets. This means investors can redeem these stablecoins for dollars at a one-to-one ratio.

Stablecoin issuers love to buy US Treasury bonds to back their stablecoins because they are considered dollar-equivalent assets, and they earn a yield, currently around 5.1% on short-dated bonds.

Tether’s USDT, the biggest US dollar stablecoin with $112 billion in circulation, is 66% backed by US Treasuries.

Stablecoin issuers, fueled by the demand for stablecoins overseas, can help boost demand for US government debt, Kanade said. He predicted that with proper regulation, the stablecoin sector could grow from roughly $160 billion to “several trillion dollars.”

In an August research report, wealth management firm Bernstein said it expected the stablecoin market to grow to $2.8 trillion in the next five years.

Crypto becomes bipartisan?

It’s not just Republicans who see the potential of crypto. According to Kanade, Trump’s recent comments are catalysing a bipartisan dialogue.

Kanade said he sees Democrats in the House who voted for the pro-crypto bill known as FIT 21, as well as senators including New York’s Kirsten Gillibrand “acknowledging this potential.”

But there are still signs of hesitation.

On May 31, President Joe Biden vetoed a House Joint Resolution that would have abolished a bill that critics say makes it difficult for crypto companies to work with banks.

Still, “it’s important to look at the bigger picture,” Kanade said.

“The tide is clearly shifting towards bipartisan support for crypto.”

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

Nine months after the Hong Kong crypto exchange JPEX disappeared with an estimated $200 million in customer deposits, investors are firing back.

On Tuesday, two individuals in Hong Kong filed a civil suit against the mysterious company and six affiliated enterprises. They also sued Felix Chiu, the owner of an over-the-counter crypto trading shop called Coingaroo that peddled crypto on JPEX.

The lawsuit, which seeks restitution of more than US$700,000, pulls back the curtain on the alleged inner workings of one of Hong Kong’s most closely watched crypto cases.

Tron wallets

While the owners of JPEX have yet to be identified, the anonymous holders of three Tron wallets linked to the exchange were also sued, and will be served court papers using tokenized documents.

“This case will really test the judiciary’s capability in handling cases in the web3 space,” said Joshua Chu, the lawyer and technology specialist representing the plaintiffs.

JPEX could not be reached for comment. Chiu did not immediately respond to a request for comments left with Coingaroo.

The case offers an in-depth look at how JPEX operated and allegedly swindled Hongkongers.

Influencers peddling crypto

Since 2021, JPEX has promoted itself in Hong Kong through billboards and social media influencers.

Many of those influencers, including Joseph Lam, Henry Choi and Clement Chan, are among the over 70 people arrested during the police investigation into JPEX.

One of the plaintiffs, Wing-yan Chan, attended some of Lam’s seminars and was a member of his private Telegram and WhatsApp messaging groups.

The documents claim Lam “repeatedly advocated for the credibility, stability and profitability of JPEX” and that Lam and other promoters gave away referral codes to attract users to the platform.

Chan alleged that Lam’s seminars, posts, and messages led her to believe JPEX was a licensed, genuine, and secure cryptocurrency exchange.

JPEX claimed that investments would be safe and profitable, guaranteeing an annual return of at least 19% on its native token, JPC, according to the lawsuit.

Chan alleged that Lam’s seminars, posts, and messages led her to believe JPEX was a licensed, genuine, and secure cryptocurrency exchange.

Lam did not immediately respond to requests for comment.

By the time the Securities and Futures Commission issued a warning against JPEX on September 13, 2023, Chan had deposited almost US$248,000 into JPEX.

The following day, JPEX increased charges for withdrawing money. Withdrawals were fixed at an amount of 1,000 USDT, or around $1,000, per transaction, with a 999 USDT charge. (USDT is the dollar-backed stablecoin issued by Tether.)

Transferred without consent

Using a blockchain explorer app, the plaintiffs found that even though the transactions and balances showed up on their JPEX accounts, nearly all of their money had been transferred without their consent.

The funds passed through two of the wallets named in the suit and then moved on to several others. Both of those wallets now contain only a few dollars in tokens, while the third named wallet has no recorded transactions, court papers said.

JPEX kept up the charade for two more months, the lawsuit said. It launched a “stakeholder dividends program” before announcing on November 11 that its trading system was undergoing optimisation and reconfiguration.

It never reopened, and users could not withdraw any assets.

Setting a precedent

Chu, the plaintiffs’ lawyer, said the case could produce “precedent-setting developments” in how Hong Kong gets to grips with litigating in cases involving cryptocurrency and blockchain technology.

He is encouraging more victims to come forward and is concerned that some have been told they should wait until criminal proceedings have concluded.

“A lot of people are getting incorrect advice,” he said.

Got a story about crypto scams in Hong Kong? Contact callan@dlnews.com.

Polygon Labs announced another acquisition today, adding the tech firm Toposware’s 11-person team, intellectual property, and tech stack to its ranks.

In all, Polygon Labs has splashed $1 billion in zero-knowledge technology investments.

Zero-knowledge technology is a type of cryptographic proof system that can confirm the validity of blockchain transactions without revealing all of their details. It’s one of the ways to achieve scalability for layer 2 blockchains ― an area of interest for Polygon Labs and its family of networks.

The Toposware deal marks the third zero-knowledge technology-based team assimilated into Polygon Labs ― the company previously acquired Hermez and Mir in 2021.

Zero-knowledge technology competes against another piece of technology called optimistic rollups, but prominent blockchain figures such as Ethereum Vitalik Buterin favour ZK as the better solution because it is faster and cheaper.

“ZK is easier, not only from a development perspective but for users and user experience too,” a Polygon spokesperson told DL News.

Zero-knowledge scaling

The Toposware acquisition isn’t just a bet on zero-knowledge cryptography. It’s also a bet on scaling and allowing all blockchains to interact with one another.

That’s because an internet-sized blockchain ecosystem would likely require multiple chains, introducing another problem, fragmentation ― where information is siloed in different networks, and it isn’t trivial to migrate data across these chains.

Polygon Labs says it’s working towards interoperability ― what the industry calls networks that can interact with one another ― for ZK-based chains.

Part of this effort is to make it possible for any blockchain using the Ethereum Virtual Machine to become a layer 2 blockchain that uses zero-knowledge technology.

ZK-based technology isn’t easily compatible with EVM networks, which are popular among blockchain developers.

EVM blockchains are similar to Ethereum in that they run on the Ethereum Virtual Machine and use the same smart contract logic.

For an EVM chain to become a ZK-based network and connect to Ethereum, it requires a Type 1 Prover ― which convinces a blockchain that a transaction is valid.

Toposware and Polygon Labs have been developing such a Prover.

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.

The Securities and Exchange Commission sent cryptocurrencies soaring last month when it approved spot Ethereum exchange traded funds.

While it’s not yet clear when everyday investors can buy them, options traders, bettors and analysts offer clues.

Traders poured nearly $240 million into bets that Ethereum will reach an all-time high of $5,000 before the June 28 expiry.

“This positioning is being driven by traders front-running the launch of spot ETH ETFs,” Jake Ostrovskis, OTC Trader at Wintermute, told DL News.

In total, option traders have placed some $3.6 billion trades that expire on June 28, signalling a surge in traders buying calls — or bullish bets — that Ethereum will exceed $4,000.

A bet on blockchain-betting site Polymarket puts the odds at 60% that spot Ethereum ETFs will start to trade before July 4.

Bloomberg Intelligence analyst Eric Balchunas says an end of June launch is a “legit possibility,” but that investors should expect a launch around July 4.

Elsewhere, JPMorgan analysts suggest that spot Ethereum ETFs will start to trade around July and August ahead of the US election as crypto becomes a political issue.

“The general market consensus is that these ETFs will be launched sooner rather than later,” Jamie Sly, communications manager at crypto data firm CCData, told DL News.

Ethereum has surged some 30% since its May low to $3,763 on the back of the regulatory nod for spot Ethereum ETFs.

While the SEC has not yet approved the sale of the ETFs, market watchers expect the ETF launch to catapult the cryptocurrency past its November 2021 record of $4,878.

Jacob Joseph, research analyst at cryptocurrency data firm CCData, told DL News that spot Ethereum ETFs will likely see inflows of $3.9 billion within the first 100 days.

Kaiko analyst Adam McCarthy cautioned that a comparison with the launch of ETFs in Hong Kong paint a less optimistic outcome. Those “didn’t see much demand, and have had mixed days with several net outflow days already.”

Crypto market movers

Bitcoin is down 0.4% over the past 24 hours to trade at $68,940.

Ethereum is down 1.4% to $3,763.

What we are reading

Ethereum to $5,000? Nine experts on how the ETF approval will impact prices — DL News.

Thailand Approves First Spot Bitcoin ETF, Joining Global Trend — Milk Road

455,000 Tokens Launched on Solana in May: Report — Unchained.

Judge Orders SEC To Pay $1.8 Million In Legal Fees, Dismisses Case Against Debt Box — Milk Road.

Why Congress is about to take an interest in tokenisation’s $16tn promise — DL News.

Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.

In the realm of digital assets, the path from project initiation to market maturity can be challenging for any builder. Founded in 2018, Acheron Trading is trusted by more than 400 issuers to bring their assets to market. Acheron Trading has emerged as a reliable guide in an ever-changing landscape, offering the expertise and stability needed to navigate the complexities of liquidity management with precision.

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As a Principal and Designated MM, Acheron Trading ensures the smooth operation of digital asset markets by maintaining liquidity and promoting fair price discovery. The firm’s symbiotic strategies are grounded in a deep understanding of market structure, gained through academic ties with Princeton and Cornell, and institutional experience at Goldman Sachs, PwC, and Macquarie Group.

This journey begins with pre-market construction, a phase where careful planning and preparation set the stage for success. As a trusted advisor, Acheron Trading offers insights and strategies to guide projects through exchange targeting and launch planning, helping clients make informed decisions.

During the primary listing phase, the team plays a crucial role in seamlessly bringing the asset to market. Targeted liquidity provision by the firm to centralised exchanges (CEXs) and their decentralised counterparts (DEXs) maintains uptime and market efficiency, mitigating price volatility and supporting orderly price discovery.

As projects progress into the price discovery and expansion phase, Acheron Trading adapts to dynamic market conditions, adjusting strategies to meet evolving demands. By embracing innovation, Acheron Trading helps clients expand their reach and tap into new liquidity pools, driving growth in the digital asset market.

Cyclical growth amid an end to inflation marks the culmination of Acheron Trading’s partnership with its clients. As projects achieve stability and maturity, the team provides unwavering support, guiding clients through market dynamics post-launch.

While clients experience a white glove service firsthand, the journey to establishing trust in the MM sector is not without its challenges. Some MMs prioritize profits over minimising price volatility, shorting tokens and engaging in manipulation. This leads to negative perceptions of MMs within the digital assets industry and beyond.

Acheron’s technology facilitates real-time analysis of market data, dynamically adjusting trading strategies to optimise liquidity provision and mitigate risks across diverse market conditions.

Acheron combats this issue by exemplifyng transparent and ethical behavior, offering real-time access to liquidity performance indicators, clear, flexible contracts, and educational resources with real-world utility. The firm continues to take a stand for transparency in the industry – a significant and much-needed challenge to prevailing norms. This approach directly benefits all clients, as they gain access to a portal showing live KPIs including real-time liquidity metrics across all DEXs and CEXs, enhancing visibility and fostering trust.

Cutting-edge technology helps Acheron to minimise human intervention and enable scalable profits unhindered by staffing constraints. Acheron’s technology facilitates real-time analysis of market data, dynamically adjusting trading strategies to optimise liquidity provision and mitigate risks across diverse market conditions.

Acheron Trading acts as a beacon of stability and expertise in the digital asset landscape. With its commitment to transparency and excellence, the firm empowers clients to navigate the market with confidence. Despite the challenges and negative perceptions of MMs in the space, Acheron Trading remains steadfast in its mission to promote transparency and integrity in this sector, for a healthy and sustainable economy beneficial to all.

Click here to read more about how the firm is doing things better.

A version of this article appeared in our The Decentralised newsletter on June 4. Sign up here.

GM, Tim here.

Here’s what caught my DeFi-eye recently:

Layer 2 Linea pauses after $7 million Velocore exploit.

Vitalik Buterin reflects on Ethereum’s early days.

Uniswap gets called out after delaying fee-switch vote.

Linea pauses blockchain

Layer 2 network Linea paused transactions for an hour on Sunday after a protocol on the chain — Velocore — suffered a $7 million exploit.

In an X thread, Linea said it halted the blockchain to protect users.

Linea's team made a decision to halt block production by pausing the sequencer and censor attacker addresses to protect the users and builders in our ecosystem. Like other L2s, we are still in the "training wheels" phase of existence, giving us safeguards to use.

— Linea (@LineaBuild) June 2, 2024

Linea’s actions likely prevented further losses from the exploit.

But the decision throws into question the industry’s founding principles: Immutability and user control.

Linea users, who have bridged almost $1.2 billion to the chain, couldn’t do anything with their assets while the blockchain was paused.

The network paused and censored the attacker’s wallet because it’s still centrally controlled by its creator, Consensys.

Bitcoin and Ethereum, are decentralised, and need a consensus of over 50% of their respective networks to do what Linea did.

The incident comes amid Linea’s Surge campaign, which rewards users with points for bridging assets to the layer 2.

Vitalik reflects on Ethereum

Ethereum co-founder Vitalik Buterin shared a list of things he would have done differently if he could go back to the blockchain’s 2014 inception.

Many things on Buterin’s list were technical changes to make developers’ lives easier.

But one had a much broader impact: Speeding up Ethereum’s switch away from the energy-intensive Proof of Work validation mechanism.

“We could have saved a huge amount of trees if we had a much simpler Proof of Stake in 2018,” Buterin said.

Buterin lamented that it took until 2022 to move to Proof of Stake, suggesting a “crappier” switch earlier in the blockchain’s life would’ve been better.

The Cambridge Centre for Alternative Finance estimates that Ethereum’s switch from Proof of Work to Proof of Stake reduced the network’s energy consumption by 99.9%.

If the change had come in 2018 as Buterin suggested, it could’ve saved over 80 terawatt-hours of electricity — about the yearly energy usage of Croatia.

Uniswap called out

A last-minute decision to delay Uniswap’s fee-switch vote ruffled feathers in the DeFi community.

“Over the last week, a stakeholder raised a new issue relating to this work that requires additional diligence on our end to fully vet,” Erin Koen, the Uniswap Foundation’s governance lead, wrote Friday in the Uniswap DAO governance forum.

Koen didn’t elaborate on the issue or the required diligence.

That didn’t stop Dan Robinson, a general partner at crypto venture firm Paradigm, accusing the Uniswap Foundation of caving to pressure from another, unnamed VC.

“It’s disappointing to see a large VC try to bully the token governance process and delay community proposals at the last minute in order to advance their own pet projects,” he wrote on X.

Robinson didn’t elaborate in his post and didn’t immediately return DL News’ request for comment.

Uniswap’s fee-switch vote is a long time coming.

The vote, which if successful would allow for a portion of the Uniswap protocol’s revenue to be awarded to UNI token holders, passed a non-binding “temperature check” vote earlier this year.

A binding, blockchain-based vote was set to begin Friday before it was postponed.

Uniswap Foundation CEO Devin Walsh declined to comment when contacted by DL News.

Data of the week

Uniswap’s fee-switch vote could provide a steady stream of income for UNI token holders, if it passes.

DefiLlama data shows the top decentralised exchange took in almost $1.8 million in fees in 24 hours. That’s some $649.7 million annually.

This week in DeFi governanceVOTE: Arbitrum DAO supports improvement proposal for Account Abstraction walletsPROPOSAL: Stargate Foundation amends LayerZero token allocation processVOTE: Aave to adjust interest rate curve for weETH on Arbitrum and BasePost of the week

Pseudonymous crypto game studio founder Loopify sums up the current state of blockchain gaming with the timeless gold rush and shovels analogy.

blockchain gaming chains and games pic.twitter.com/N5PruOKLFO

— Loopify 🧙‍♂️ (@Loopifyyy) June 2, 2024

What we’re watching

Thank you to everyone who reached out following our post, offering ideas, support, and feedback.

As a result of these conversations, we decided to drop all trademark applications for the term “ZK”.

These discussions came down to one important fact: it would be impossible to…

— Matter Labs (∎, ∆) (@the_matter_labs) June 2, 2024

Matter Labs, the company behind Ethereum layer 2 zkSync, dropped its trademark applications for the term “ZK” after backlash from the crypto community.

Got a tip about DeFi? Reach out at tim@dlnews.com.

The Commodities Futures Trading Commission has named Mo Shaikh, co-founder and CEO of Aptos Labs, to its subcommittee on digital assets.

The Digital Assets Markets Subcommittee lies underneath the Global Markets Advisory Committee. Established in 1998, the GMAC consists of who’s who of financial executives, including higher-ups from Citadel, Goldman Sachs, and HSBC.

Industry representatives on the larger committee and the subcommittee advise the CFTC on rulemaking that affects international trade and business, according to the agency.

Others on the 34-person digital assets subcommittee include executives from BlackRock, Polygon Labs, Uniswap Labs, and BNY Mellon. Shaikh had to submit a written application to be considered for the advisory group, he told DL News.

Shaikh’s appointment is a further sign of legitimacy for Aptos, a layer 1 blockchain that launched in October 2022.

The network was developed by former employees of Facebook parent Meta Platforms. Shaikh and co-founder Avery Ching worked on Facebook’s blockchain project, Diem, which was scuttled in February 2022.

“Not only do we represent L1s, but we also represent a lot of the projects in the Web3 space — and [are] happy to be a voice for them along the way.” Shaikh said.

Shaikh’s company supports the development of the Aptos blockchain.

Meta, Aptos, and $350 million

Aptos uses Move, the programming language originally designed for Diem, to support a blockchain network that aims to process transactions more quickly than Ethereum.

Aptos Labs has raised $350 million in funding from blue-chip venture capitalists, including Andreessen Horowitz and Jump Crypto, according to Crunchbase. One of its most recent funding rounds in September 2022 pegged its valuation at more than $4 billion, per Bloomberg.

In his interview with DL News, Shaikh repeatedly touted Aptos’ speed. Creators of Sui, another blockchain whose technology comes from Diem, also touted their network’s ability to process many more transactions per second than blockchains like Ethereum.

Ethereum shot up over 30% to $3,800 in May after US approval of exchange-traded funds.

Market watchers now eye a new all-time high of plus $5,000 as early as June.

As the dust settles, the market is left wondering what’s next for Ethereum.

Here’s what the experts are saying.

Galaxy’s Mike Novogratz

A “widespread” pivot in Washington caused the SEC to change its Ethereum ETF game, said Galaxy Digital CEO Mike Novogratz.

If the SEC’s change of heart was politically motivated, “that’s a seismic shift,” Novogratz said.

“If that’s what actually happened, prices are going to be much higher than here.”

Since he made the comments, however, President Joe Biden has followed through on his threat to veto a bipartisan-backed pro-crypto bill.

FRNT Financial’s Brickell

Bitcoin and Ethereum will reach all-time highs by the end of June, according to David Brickell, head of international distribution at FRNT Financial.

Spot Ethereum ETFs approvals, a more positive outlook on the economy, and a smattering of crypto-friendly votes on Capitol Hill signal that the world’s two leading cryptocurrencies will enjoy strong tailwinds over the next few weeks, he said.

“Wouldn’t be surprised to see $80,000 and $5,000″ for Bitcoin and Ethereum, respectively, Brickell told DL News.

CCData’s Jacob Joseph

Not only did Jacob Joseph, research analyst at cryptocurrency data firm CCData, expect Ethereum to hit a new record, but he also told DL News that investors will pour $3.9 billion into US spot Ethereum ETFs within the first 100 days of their launch.

He extrapolated the sum from the performance of the 10 spot Bitcoin ETFs’ first 100 days.

Even so, he cautioned that Ethereum might face challenges due to outflows from the Grayscale Ethereum Trust, which could prove a drag on market sentiment.

The Grayscale Bitcoin Trust has had over $17.7 billion in outflows since its January launch, according to BitMEX research.

The money has predominantly flowed to funds with lower fees.

OKX’s Lennix Lai

Lennix Lai, crypto exchange OKX’s global chief commercial officer, told DL News that spot Ethereum ETF will trigger a new wave of institutional investor demand.

He said they’ll likely pour $500 million into Ethereum ETFs during their first week.

“It’s probably just as, if not more, important as the Bitcoin ETF approval,” he said.

TzTok-Chad

The growing sense of industry optimism has urged traders to pour some $3.4 billion into buying calls — or bullish bets — that Ethereum will exceed $4,000 by June 28.

The positioning in the derivatives indicates many traders are even targeting prices above $5,000, TzTok-Chad, the pseudonymous founder of decentralised options exchange Stryke, told DL News.

Yet, he warned that the path to the new record is not straightforward and to expect some volatility.

Consensys’ Joe Lubin

Expect a “floodgate” of demand for Ether, which will likely lead to a supply crunch and drive prices higher, says Joe Lubin, co-founder of Ethereum and founder of crypto infrastructure firm Consensys.

Institutions that have already gained exposure to Bitcoin ETFs “will most likely want to diversify into that second approved ETF,” Lubin told DL News.

“There’s going to be a pretty large amount of natural, pent-up pressure to purchase Ether” via ETFs, he said.

He warned that there will be less supply to accommodate that demand than when the spot Bitcoin ETFs were approved in January.

Bernstein

Don’t expect Ethereum ETF flows to hit those seen in Bitcoin funds.

That’s according to Gautam Chhugani and Mahika Sapra, analysts at research firm Bernstein.

In a June 3 report, they said ETFs represent an opportunity to leverage “pent-up demand from the same participants as the Bitcoin ETF, maybe with a lower allocation for ETH.”

“And given ETH’s supply situation (staking, smart contracts, HODL data), ETH should see positive price action upon the ETF launch (expected next few days/sometime this month),” Chhugani and Sapra said.

Kaiko’s Adam McCarthy

Options traders who have “crowded around” bullish options are now looking at gains, said Adam McCarthy, an analyst at Kaiko.

Even so, he cautioned that “Hong Kong ETFs didn’t see much demand and have had mixed days with several net outflow days already. No staking is a big factor too, and likely impacts demand further.”

He suggested watching Grayscale’s $9 billion ETHE product, “if it suffers large outflows, that would be significant for prices.”

Eric Johansson is DL News’ News Editor. Got a tip? Email him at eric@dlnews.com.

Investors will pour $3.9 billion into US spot Ethereum exchange-traded funds within the first 100 days of their launch.

That’s according to Jacob Joseph, research analyst at cryptocurrency data firm CCData.

“Drawing parallels from the netflows of spot Bitcoin ETFs in the US during their initial 100 days, we estimate a potential inflow of $3.9 billion for the US spot Ethereum ETFs,” he told DL News.

Joseph added that ETFs will make the world’s second-largest cryptocurrency more attractive to institutional investors and push Ethereum to a new all-time high.

The comments come after Ethereum soared 23% since May 20 to $3,830 on the back of optimism around the Securities and Exchange Commission greenlighting the first step of the approval process.

After hearing whispers that the SEC would engage with applicants, Bloomberg Intelligence analyst Eric Balchunas changed his odds for an approval from 25% to 75%.

When those rumours proved to be true, people like Galaxy Digital CEO Mike Novogratz suggested that the regulator’s about-face suggested a warming up to crypto in Washington.

Whatever the reason, the pivot unleashed a wave of optimism among market watchers.

Joe Lubin, co-founder of Ethereum and founder of crypto infrastructure firm Consensys, told DL News to expect a “floodgate” of demand for Ether, which would lead to a supply crunch and drive prices higher.

Institutions that have already gained exposure to Bitcoin ETFs “will most likely want to diversify into that second approved ETF,” Lubin said.

Elsewhere, Lennix Lai, OKX’s global chief commercial officer, told DL News that institutional investors will pour $500 million into Ethereum ETFs in their first week of trading.

Even as CCData’s Joseph shared the bullishness, he cautioned that “Ethereum might face challenges due to outflows from the Grayscale Ethereum Trust, similar to the market behaviour observed after the approval of spot Bitcoin ETFs.”

Following the launch of 10 spot Bitcoin ETFs in January, the Grayscale Bitcoin Trust experienced over $17.7 billion in outflows, according to BitMEX research.

“With nearly $11.1 billion currently under management in the Grayscale Ethereum Trust, we could see similar outflows from this ETF upon approval, influencing market sentiment,” Joseph said.

“Overall, this effect is likely to be short-lived, as the demand for other ETF products is capable of absorbing the selling pressure over time, as observed with the spot Bitcoin ETFs.”

He told DL News that the US SEC’s recent ETF nod could be fully approved and trading “within the next couple of months.”

Crypto market movers

Bitcoin is up 1.6% over the past 24 hours to trade at $69,050.

Ethereum is down 0.5% to 3,770.

What we are reading

Deepfake of Singapore leader hawking crypto shows rise of AI-powered fraud — DL News.

Semler Scientific Adopts Bitcoin As Primary Reserve, Buys $40M In BTC — Milk Road

Consensys’ Linea Briefly Halts Block Production After $6.8 Million Velocore DEX Exploit — Unchained.

Judge Orders SEC To Pay $1.8 Million In Legal Fees, Dismisses Case Against Debt Box — Milk Road

Japanese exchange DMM Bitcoin suffers ‘unauthorised leak’ of more than $300m — DL News.

Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.

A version of this story appeared in our The Guidance newsletter on June 3. Sign up here.

BlackRock CEO Larry Fink, investment-banking giants, and now Congress are waking up to the potential $16 trillion tokenisation industry.

The House of Representatives’ Subcommittee on Digital Assets, Financial Technology and Inclusion will convene on Wednesday to discuss the potential of tokenisation of “real-world” assets.

I’ve been talking to Wall Street and its tech providers for a decade, and I’ve never been convinced they have found applications for blockchain that work at scale outside their walled gardens.

I must admit, though, that there’s a lot of tokenisation momentum lately in influential quarters.

Just this past week, for example:

The US’s clearing house — the Depository Trust & Clearing Corp. — along with two European Union counterparts, published a blueprint for tokenisation standards. My story here.

The International Swaps and Derivatives Association published guidance on the legal treatment of tokenised collateral. Tokenisation could unlock $19 trillion in dormant collateral, as Inbar Preiss and I wrote.

Securities and Exchange Commissioner Hester Peirce responded to a UK tokenisation proposal, outlining her idea of a cross-border sandbox.

Now, why is Congress getting involved?

Tokenisation involves instruments that are already securities or commodities, and so one might assume we could sidestep the “are they securities or aren’t they?” debate that dogs cryptocurrencies like Bitcoin and Ethereum.

A memo released ahead of the hearing suggests there are areas of legal uncertainty, however.

The hearing could result in the SEC and the Commodity Futures Trading Commission jointly considering whether new rules are necessary to facilitate tokenisation.

Some industry insiders, though, say no new rules are needed.

I don’t think anything’s missing in the law.’

Aaron Kaplan

Prometheum co-CEO Aaron Kaplan ruffled feathers when he told Congress last year that the US securities laws were adequate to govern crypto assets.

Kaplan’s is the first company to obtain a special SEC licence that allows it to custody crypto, and it recently soft-launched custody services for Ether with unnamed clients.

“I don’t think anything’s missing in the law,” Kaplan told me ahead of the hearing.

“What’s missing is the market infrastructure that is licensed under securities laws and allows for the public trading, clearing, settlement, and custody of digital assets,” he said.

“That’s why Prometheum was created.”

Securitize has also registered for certain licences with the SEC to replicate securities market structure for tokenised assets.

I chronicled that process here.

It paid off — Securitize is now the transfer agent for BlackRock’s $456.3 million tokenised securities fund BUIDL.

Securitize’s founder and CEO Carlos Domingo, incidentally, is one of the witnesses scheduled for Wednesday’s hearing, along with the DTCC’s Nadine Chakar and outspoken crypto sceptic Hilary Allen, a professor at American University’s law school.

So it should be a good debate.

Want to debate tokenisation with me? Reach out to joanna@dlnews.com.

TrueFi, a credit protocol, is teaming up with risk managers Cicada Markets to bring what’s been a cornerstone of traditional finance — borrowing more with less — to crypto.

Undercollateralised lending is a fraught business, marred by catastrophic failures over the past few years.

The multi-billion-dollar collapse of centralised lenders Celsius, BlockFi and Genesis sent ripples across the industry, defining the crypto winter of 2022 and 2023. Decentralised lenders have had their fair share of carnage, too. Recent attempts at unbacked lending on DeFi protocols like Goldfinch have resulted in millions of dollars worth of defaults.

Despite previous catastrophic failures, TrueFi and Cicada are giving it another shot.

After all, it’s a massive opportunity.

A 2023 report from Allied Market Research predicts the global market for unsecured business loans across all industries will hit $12.5 trillion by 2031.

“The negative stigma is largely one that comes from a lack of education on the topic,” Ryan Rodenbaugh, CEO and co-founder of Wallfacer Labs, the company behind TrueFi, told DL News.

To be sure, lending exists in the crypto industry, but the majority of loans demand borrowers to put up more collateral than they can borrow. In the permissionless world of DeFi, it’s the only way to minimise the risk that your counterparty won’t run off with the money.

For uncollateralised lending, the only assurance of reimbursement is the trustworthiness and track record of the borrower.

It all hinges on a firm’s ability to accurately assess risk. In this case, that means TrueFi and Cicada.

“Given loans are issued based on onchain and offchain balance sheets, there has be a centralised underwriter who has to analyse all of this data and issue an opinion,” Ashwath Balakrishnan, head of Delphi Creative, told DL News.

Taking things slow

The two companies will provide lines of credit to crypto-native trading firms, a demographic notoriously unable to take out loans from traditional banks that can’t bear the risk.

But for an industry with a disastrous history of under-collateralised lending, attracting business is a challenge. When DL News asked how they’ll differentiate themselves from previous catastrophes, Rodenbaugh said by taking things slow.

“Risk-managed and slow-growth underwriting works well,” he said, referring to the process by which entities calculate and take on the financial risk of loans.

The new platform is not their first foray into lending. TrueFi already runs a small, uncollateralised lending market on Ethereum worth nearly $24 million.

The pair also underwrote uncollaterialised loans on DeFi lender Maple Finance, a venture not without its own failures.

Lenders on Maple took a big hit in December 2022 when borrower Orthogonal Trading defaulted on eight loans totalling $36 million.

Months prior, crypto hedge fund Invictus Capital and crypto investment firm Blockwater Technologies failed to repay loans on TrueFi totalling $4.4 million.

But Rodenbaugh said the TrueFi platform, which has in its lifetime lent $1.7 billion across over 150 loans, has a default rate of less than 1%. Similarly, Cicada Markets, which has underwritten over $850 million in loans since 2021, has a 1.2% default rate.

“Both protocols had losses, as you would expect in any form of credit, but neither of our protocols suffered the catastrophic losses seen by firms like BlockFi, Genesis, Celsius, etc,” Rodenbaugh said.

TrueFi and Cicada’s default rates are comparable to those in traditional financial markets. According to the Federal Reserve Bank of St. Louis, the average delinquency rate on business loans across all commercial banks was 1.13% in the first quarter of 2024.

“No standardisation means there’s no way to confirm for sure data is legit.”

Ashwath Balakrishnan, head of Delphi Creative

Sefton Kincaid, founder of Cicada Markets, told DL News the low default rates were because the pair were highly selective in who they loaned to and a strict due diligence process.

He said the pair examined the performance track records of potential borrowers across multiple trading cycles before agreeing to underwrite loans.

Still, that might not be enough. Compared to traditional markets, there’s little to no standardisation in how crypto firms are assessed for underwriting.

“No standardisation means there’s no way to confirm for sure data is legit,” Balakrishnan told DL News. “You as a lender must trust that the underwriter is doing their job properly.”

Deploying on Arbitrum

The pair have built their new lending market on Ethereum layer 2 Arbitrum.

Rodenbaugh said TrueFi and Cicada chose Arbitrum over other blockchains because it’s the Ethereum layer 2 with the most deposits and also the farthest along in terms of decentralisation.

The network’s foundation also agreed to provide an ARB token grant to encourage interest, but it has not disclosed publicly how big the grant will be.

The question now is whether TrueFi and Cicada can attract enough high-quality borrowers.

Cicada’s Kincaid said his firm identified over 20 borrowers — mostly trading firms — looking to take out lines of credit worth over $300 million at 13 to 15% interest.

If the pair courted all these borrowers, it would make the new protocol the fourth-largest real-world asset DeFi protocol as tracked by DefiLlama.

Tim Craig and Liam Kelly are DeFi Correspondents at DL News. Got a tip? Email them at tim@dlnews.com and liam@dlnews.com.

Lee Hsein Loong might have ended his 20-year tenure as prime minister of Singapore in May, but he is not pivoting to promoting crypto.

Investors may have thought otherwise last week when an ad popped up on social media featuring videos of Lee hawking crypto investments with guaranteed returns for an outfit called Quantum AI.

Lee said the videos were deepfakes that layered bogus audio over video of a speech he made earlier this year.

“This is extremely worrying: people watching the video may be fooled into thinking that I really said those words,” Lee said in a Facebook post on June 2. “The video is not real!”

10-fold surge

The episode punctuates mounting concerns the cryptocurrency sector is vulnerable to fraud powered by artificial intelligence and deepfakes.

A whopping 88% of deepfake cases occurred in the cryptocurrency industry in 2023, according to a report from Sumsub, a verification company.

Global deepfake incidents surged 10-fold between 2022 and 2023, with North America and the Asia-Pacific region topping the list.

Scammers often use public figures such as Elon Musk or Taiwan’s former president Tsai Ying-wen to promote dodgy investments.

Lee has long been a target for fake cryptocurrency scams.

In 2022, the Singapore police warned against a rise in fake articles suggesting Lee endorsed investments in cryptocurrencies. The articles were used as clickbait to lure people to investment platforms.

Third time

It’s the third time in the past year Lee has put out a warning against scammers impersonating him. The problem is that it’s becoming increasingly difficult to separate real from fake.

“AI and deepfake technology are becoming better by the day,” Lee said.

Even as China and South Korea try to ban deepfakes, law enforcement authorities are scrambling to develop and deploy technology to identify them.

The group using Lee’s image, Quantum AI, also impersonated Musk earlier this year to imply that he is involved in the project.

Hong Kong alert

Last month, Hong Kong’s Securities and Futures Commission, issued an alert against the platform. Quantum AI could not be reached for comment.

Meanwhile, Lee urges investors to use caution as deepfakes proliferate. “Please remember, if something sounds too good to be true, do proceed with caution,” Lee said.

“If you see or receive scam ads of me or any other Singapore public office holder promoting an investment product, please do not believe them.”

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

Crypto founders are already preparing for the next downturn.

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

“All of them are coming to me saying, ‘I’m getting ready for the next drop in 18 months, and I want to capitalise on the current move,’” Chun said.

“I have never had so many founders and executive teams saying we have to make something happen within 18 to 24 months.”

The fear is justified. The brutal crypto downturn in 2022 caught many companies unaware.

Crypto companies like Bitcoin miner Core Scientific and exchange Voyager had to declare bankruptcy, not to mention the spectacular blowups caused by fraud, like FTX.

Even so, savvy startups can leverage the current bull run to their advantage by tapping into Wall Street’s interest in crypto as well as venture capitalists’ renewed interest in the sector.

Be prepared

Chun said crypto firms were preparing differently, depending on their profiles.

“Most times they’re looking for a strategic partner — a company from traditional finance that has a similar vision,” Chun said. “They can be there as a commercial partner, or eventually acquire the crypto firm altogether.”

Naturally, the companies that raised significant capital in 2020 or 2021 don’t think the same way as those that didn’t — like recent startups.

The former often seek to generate enough revenue for private equity to buy them out. One way to do that is to establish a global presence, since the industry is still mostly fragmented on a regional basis.

Firms can also elect to expand their suites of products and services.

“Institutional customers don’t want to work with five different groups for custody, tokenisation, offramping funds — they need all-encompassing comprehensive services,” Chun said. “There aren’t that many that can do all of that.”

The recent startups, Chun said, have one or two excellent products and are run by believers in the long-term potential of the industry — but being a founder is gruelling work, so they’re open to being acquired.

Learning from 2021

Between Wall Street’s entry into the space through spot Bitcoin exchange-traded funds, and increased adoption, the prospects of well-run crypto companies have never looked better, Chun said.

It’s a different feeling from the excesses of 2020 and 2021 when VCs’ fear of missing out “led to unrealistic valuations, which in turn led to poor operating discipline,” Chun said

Companies acted like the abundance of capital would last forever.

“People were spending money on ridiculous things — like $150,000 on a party at a conference, for a pre-revenue company,” Chun said.

But firms that survived the downturn had “much higher” operating discipline, Chun said.

Some are even generating revenue.

Liquid restaking

Even if this bull market is healthier than the last one, concerns still remain.

Chun cited the hype around EigenLayer and other restaking protocols — which allow investors to secure the Ethereum blockchain and other protocols, like oracles and bridges, with the same stack of Ether.

“The concept of liquid restaking is essentially internal crypto native revenues being put on top of another to the point where nobody even understands how to unravel this stuff,” Chun said. “That’s dangerous.”

Coinbase researchers voiced similar concerns in an April report.

Eigenlayer did not immediately respond to a request for comment.

These projects are getting tons of capital from VCs because they generate quick, eye-popping returns, Chun said.

Investors who allocate capital to projects will tend to jump ship immediately after their token allocation is unlocked, Chun said — similar to venture funds selling their shares immediately after a company goes public.

While companies will take three to seven years to go public, crypto projects can airdrop their coins within months.

“VCs can go back to their liquidity providers and say we got 80% returns on this within a year — and they look like geniuses,” Chun said.

Memecoins

Private investment is also warping markets on a larger scale, Chun said.

Original crypto investors could leverage their understanding of the technology to get an edge in the past, but that’s changed.

Everyone has access to the same information, and can execute on that information at the same speed.

So how do professional investors get an advantage?

“Their edge is only from getting early access to projects,” Chun said. “Either the seed or equity rounds, with token distributions that normal people don’t have access to.”

That could explain why retail traders turn to memecoins that don’t have billions in tokens ready to unlock, levelling the playing field.

“Retailers actually have the ability to prove again that they can get more returns from something that doesn’t have a venture fund — or a founder,” Chun said. “I can’t blame them for trying.”

Still, Chun said memecoins not looking to advance the space will ultimately be their downfall.

“The market will play itself out.”

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

Binance founder Changpeng Zhao has reported to a low-security federal prison in Lompoc, California, to begin his four-month sentence for money-laundering violations, according to CNBC.

Zhao’s defence team at Latham & Watkins law firm confirmed to CNBC that the former Binance CEO is now in custody.

The Lompoc low-security prison holds about 1,300 inmates and is made up of four main housing units, two of which are dormitory style. All inmates are required to participate in various work or education assignments. The prison also operates a farm.

Prosecutors had sought a three-year sentence for Zhou, but he received a much lighter term after submitting a letter of apology to Judge Richard Jones, reading in part: “I apologise for my poor decision and take full responsibility for my actions. In hindsight, I should have focused on Binance’s compliance changes from the beginning, but I didn’t.”

Born in China, Zhao and his family moved to Canada when he was 12. As a teenager he worked at a gas station and for two years as a cook at McDonald’s, where he said he made $4.50 Canadian dollars an hour, DL News reported.

He studied computer science at Montreal’s McGill University and spent four years with Bloomberg in New York, where he developed software for futures traders.

Zhao, now 47, co-founded Binance in 2017, and within five months of its launch, it was the world’s top crypto exchange.

Last November, 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.

His former company, Binance, agreed to pay $4.3 billion in fines and to share information about its anti-money-laundering efforts with a court-appointed compliance monitor for five years.

Coinbase argued in a brief filed with the US Court of Appeals for the Third Circuit that the Securities and Exchange Commission is trying to crush the crypto industry in a “Catch-22″ conundrum.

The SEC demands that digital asset firms come into compliance with securities laws, but has refused to clarify the rules for the compliance it demands, the major US crypto exchange argued in the 36-page filing.

Coinbase claims that the SEC’s policy of “scorched-earth litigation” against companies for their failure to satisfy its demands amounts to an attempt to destroy the industry.

“This pattern of conduct is a purposeful effort to destroy an industry by demanding the impossible and prosecuting companies that fail to achieve it,” the filing says.

It concluded that “the court must order the SEC to commence rule-making.”

Coinbase’s Chief Legal Officer Paul Grewal echoed the argument in a post on X: “The SEC is bent on choking the digital asset industry, and is refusing to provide the necessary rules the industry has requested in order to tighten the squeeze.”

The filing challenges a previous SEC denial of a rule-making petition.

The House of Representatives last month passed a landmark crypto bill, FIT21, that would clarify definitions for crypto assets and divide responsibility between the SEC and the Commodity Futures Trading Commission, but it will likely be bogged down in the Senate as the November election approaches.

The SEC sued Coinbase about a year ago, alleging it was acting as an unregistered national securities exchange, broker, and clearing agency, as well as failing to register the offer and sale of its crypto asset staking-as-a-service program.

Coinbase has denied the allegations.

Crypto market movers

Bitcoin is up 0.19% today at $67,714.10.

Ethereum is up 0.48% today at $3,793.16.

What we are reading

Firms that handle $10tn a day in trades just dove into the tokenisation game — DL News

Crypto ‘re-staking’ platforms boom as traders chase bigger returns — Reuters

Hong Kong Says 11 Crypto Exchanges Are Closer to Getting Permits — Bloomberg

Stablecoin issuer Tether Holdings acquired a $100 million stake in US-listed Bitcoin miner Bitdeer Technologies, with an option to buy another $50 million in shares within 12 months after closing.

The private placement closed on May 30, according to a Bitdeer news release.

“We regard Bitdeer as one of the strongest vertically integrated operators in the Bitcoin mining industry, differentiated by its cutting-edge technologies, and a robust R&D organisation,” said Paolo Ardoino, CEO of Tether.

He added: “Bitdeer’s proven track record and world-class management team are perfectly aligned with Tether’s long-term strategic vision.”

Bitdeer said it intends to use the net proceeds from the sale to fund its data center expansion, ASIC-based mining rig development and for working capital and other general corporate purposes.

“With Tether’s support, we are poised to accelerate our growth and continue our leadership in sustainable and efficient Bitcoin mining,” said Linghui Kong, chief business officer of Bitdeer.

Bitdeer’s founder and CEO is Chinese crypto billionaire Jihan Wu, who in 2013 co-founded Bitmain, which has become the world’s biggest computer chip company for Bitcoin mining.

Headquartered in Singapore, Bitdeer has deployed data centers in the US, Norway, and Bhutan.

Japanese crypto exchange DMM Bitcoin lost 4,502.9 Bitcoin worth about $308 million in what it called an “unauthorised leak,” according to crypto security company Elliptic.

Elliptic said if hacking were to be confirmed as the cause it would amount to the eighth-biggest crypto theft in history.

DMM said it was investigating and had taken measures to prevent further outflows.

The company also said it had implemented restrictions on some services for additional safety, including crypto withdrawal processing.

It added that all Bitcoin deposits were guaranteed.

“Please rest assured that we will procure the equivalent amount of BTC leaked with support from our group companies and guarantee the full amount of the entire amount of Bitcoin deposited by our customers,” the company said in a blog post that was written in Japanese and machine translated.

Elliptic said if confirmed, it would be the biggest hack since November 2022, when now-bankrupt crypto exchange FTX suffered a $477 million exploit.

The security company added that its investigative tools had determined the Bitcoin from DMM had been split and sent to new wallets.

According to a crime report by blockchain analysis company Chainalysis, about $1.7 billion in crypto was stolen last year, down from $3.7 billion in 2022.