Casey Wagner

As risk-off sentiment continues to dominate cryptocurrency trading patterns, investors are putting more money into what they hope is a safe haven: <a href="https://blockworks.co/news/the-investors-guide-to-stablecoins">stablecoins</a>. Stablecoin trading volume has been on the rise since news of FTX’s collapse broke and fears of contagion rocked the industry.  



Daily stablecoin trading volume surpassed $200 billion on Nov. 5, when concerns about FTX’s liquidity spiked, and on Nov. 8, <a href="https://blockworks.co/news/binance-triggers-liquidity-crisis-then-acquires-bankman-frieds-ftx-crypto-exchange" target="_blank" rel="noreferrer noopener">when it looked like Binance might buy FTX</a>, according to data from CoinGecko. Stablecoins USDT and BUSD led the volumes as the deal collapsed and <a href="https://blockworks.co/news/5-highlights-ftx-bankruptcy" target="_blank" rel="noreferrer noopener">FTX headed for bankruptcy</a>.



But of the two, BUSD volume is the one surging, according to Galaxy Digital, in a <a href="https://www.galaxy.com/research/insights/stablecoins-post-ftx-alameda-collapse/" target="_blank" rel="noreferrer noopener">report</a> published Friday.



“Historically, USDT has been the dominant leader in stablecoin trading volume as it is the underlying currency to quote trading pairs at several large exchanges,” Charles Yu, research associate at Galaxy Digital, wrote. “The large increase in BUSD trading volume could be due to Binance’s <a href="https://blockworks.co/news/binance-to-rename-all-stablecoin-holdings-to-busd" target="_blank" rel="noreferrer noopener">decision to consolidate its order books</a> and convert user balances in several stablecoins (incl. USDC, USDP, &amp; TUSD) to BUSD as of September 29th.”&nbsp;



As investors continue to fear for security and liquidity, traders have moved funds off of centralized exchanges, Yu noted.&nbsp;&nbsp;



“According to Nansen data, FTX and FTX US collectively hold $78m in stablecoins on Ethereum, down [about] 40% since November 6,” Yu said. “Binance is the largest holder of stablecoins on Ethereum with [roughly $25 billion], about 10x the balance of its closest CEX competitor (OKX) and over 80x the balance of Coinbase.”



As the liquidity crisis continues, some exchanges have temporarily suspended deposits or withdrawals of USDC and USDT issued on the Solana blockchain, including <a href="https://decrypt.co/114028/crypto-suspends-usdc-usdt-solana" target="_blank" rel="noreferrer noopener">Crypto.com</a>, <a href="https://www.okx.com/support/hc/en-us/articles/10663808896909-Delisting-of-USDC-Solana-and-USDT-Solana-token-networks" target="_blank" rel="noreferrer noopener">OKX</a> and <a href="https://decrypt.co/114934/binance-temporarily-suspends-deposits-usdc-usdt-solana" target="_blank" rel="noreferrer noopener">Binance</a>, which has since reopened deposits for USDT.&nbsp;



Circle, the company behind USDC, reported that it had miscalculated its financial projections in a Nov. 14 <a href="https://d18rn0p25nwr6d.cloudfront.net/CIK-0001876042/7cd4d644-9847-4931-bb98-61514624e796.pdf" target="_blank" rel="noreferrer noopener">SEC filing</a>. Circle’s issuance dropped $3 billion, the company said, a drop that can be attributed to Binance’s USDC to BUSD auto-conversions and FTX’s implosion.



“Stablecoins issued by crypto exchanges, major existing global payments companies and banks, and decentralized algorithmic tokens, are likely to increase competitive pressure on Circle stablecoins, and could slow our growth, or cause significant declines, negatively impacting the financial outlook of the company,” the filing read.&nbsp;



At least one positive takeaway from this recent turmoil is that stablecoin systems have proven to be functional as issuers continue to process redemptions in an orderly fashion and any depeggings have been slight and temporary, Yu noted.&nbsp;



“In May, we saw massive outflows from USDT to USDC from peg risk,” Dan Smith, research analyst at Blockworks, said. “We see the same thing again more recently, on a much smaller scale, but this time BUSD is getting some of the love.”



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FTX Fraud Pushed Traders Into Stablecoins: Galaxy

Michael Bodley

Interest in tokenized real estate is spreading. All the way to south Texas.&nbsp;



In the latest <a href="https://blockworks.co/news/tokenized-home-nets-thousands">indicator of the once-niche sector’s spread</a>, startup Homebase has closed out the tokenization of its first single-family rental property, the company told Blockworks exclusively.&nbsp;



The McAllen, TX, single-family home was valued at $235,000. Homebase drummed up $246,800 in about two weeks by tokenizing the residence on Solana (<a href="https://blockworks.co/price/sol">SOL</a>) via a smart contract tied to an NFT created for the purpose: “Homebase 1 [<a href="https://explorer.solana.com/address/9dKvUmegQGtW5uNXGr1XH3ud7wtAk1V87xmqSzC57cDj">The Cardinal</a>].”&nbsp;



The total amount <a href="https://explorer.solana.com/address/9dKvUmegQGtW5uNXGr1XH3ud7wtAk1V87xmqSzC57cDj">raised</a> includes $11,800 set aside to “to account for maintenance and other issues,” a spokesperson said in a statement.



Homebase, according to Domingo Valadez, the company’s chief executive and one of three co-founders, spent seven months getting just the legal and compliance details of its real estate offering ready for market.&nbsp;



The overall effort took a year and involved the regulatory and fiat side of things: filing the SEC paperwork to market security tokens to both retail and accredited investors.&nbsp;



Of the 38 participating investors, 30 were non-accredited, according to the filing. The minimum investment for the sale reported to the SEC was $500.&nbsp;



Homebase spent some time weighing the benefits and drawbacks of various blockchains to host the NFTs and smart contracts. Homebase eventually settled on Solana. The startup supports USDC to allow users to buy tokenized property slices “in one click,” the statement said. 



Homebase considered the Ethereum ecosystem, he said, but was put off in part by concerns over ether (<a href="https://blockworks.co/price/eth">ETH</a>) gas fees that were rising.&nbsp;



Polygon (<a href="https://blockworks.co/price/matic">MATIC</a>) was also in contention, according to Valadez, but blockchain bridges that Homebase would have had to employ resulted in funds disappearing for like “15 minutes,” which would have been “especially scary” for investors new to the sector.&nbsp;



<h2>Fractionalizing real estate mints potential</h2>



Valadez, originally from south Texas himself, spent about five years working for Google before leaving to start up Homebase with two additional co-founders in early 2022.&nbsp;



Living in the pricey Bay Area, Valadez realized something: He “still couldn’t afford anything in the Bay Area after working at Google for five years.”&nbsp;



In spite of working tech hours and earning a tech salary, Valadez said buying a property at the time was out of the question. The US housing market has <a href="https://www.bankrate.com/real-estate/is-the-housing-market-about-to-crash/">slowed</a> in recent months, with some analysts eyeing an even more dramatic drop in residential and commercial property prices on the horizon.&nbsp;



A <a href="https://blockworks.co/news/tokenized-real-estate-crypto">number of tokenized real estate initiatives</a> have started to take shape, including Homebase’s first foray into the competitive market. Those maneuvers come as the Federal Reserve has flashed some indicators that it plans to raise interest rates in a more gradual fashion moving forward.



The Fed’s <a href="https://blockworks.co/news/federal-reserve-interest-rate-25-bps-march">March rate hike clocked in at a 0.25%</a> increase, which appeared to have been largely already priced in by both traditional and digital assets markets.&nbsp;



But the Bay Area and other municipal US hotspots remain stubbornly out of reach in terms of price for most, according to Valadez.&nbsp;



The median February Bay Area home went for a whopping $1,050,000, according to real estate data provider Norada.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Why we chose to bring real estate on-chain on Solana, a 🧵👇&mdash; Homebase🏠 (@HomebaseDAO) <a href="https://twitter.com/HomebaseDAO/status/1608604206625132544?ref_src=twsrc%5Etfw">December 29, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Read more: <a href="https://blockworks.co/news/real-estate-investing-guide">The Crypto Native’s Guide to Real Estate Investing</a>&nbsp;



Homebase thinks it can provide a viable alternative — even with real estate prices where they are, by tapping Solana and ensuring compliance with related SEC regulations.&nbsp;



The end goal is to create a product that makes money and helps homeowners, as well as investors, in the process, Valadez said.&nbsp;



<h2>The mechanics of NFT real estate</h2>



Homebase essentially captures a spread on the transaction. The startup put in a small amount of its own capital, which Valadez said was designed to ensure an alignment of financial interest.&nbsp;



“Tokenization in real estate is a means of crowdfunding,” he said. “We see the value in a decentralized future. We see some of the issues in the current financial structures…How do we give more power to individuals when they truly have ownership around their assets?”



Here’s how, in Valadez’s estimation:



<ul>
<li>The Solana tokenization of the McAllen single-family property went live in early March, generating enough demand that a mix of retail and accredited investors filled the Solana order book at the $1,200 average check size in under two weeks.</li>



<li>There was no lien or mortgage on the property, meaning Homebase didn’t have to work around outstanding debt on the transaction. The owner, as a result, held onto 80% of their equity in the property. Homebase took on a 1% interest, and the remaining 19% now belongs to investors in the tokenized offering.&nbsp;</li>



<li>Of that approximately 19%, half was raised in fiat and the remainder was processed by USDC. A total of 38 investors participated, and a spokesperson said the “majority were first-time real estate investors and new to Web3.”</li>



<li>The process resulted in 15 of the 28 backers creating their first Solana wallet, per the company.</li>
</ul>



Homebase started the process by agreeing to exclusive terms with the rental property’s owner. The startup then spun up an SPV (special purpose vehicle) to market the tokenized equity sale.&nbsp;



Investors are required to hold on to their NFTs representing their equity interests for at least one year. The process is verified on-chain.&nbsp;



Backers can then freely buy and sell their Solana NFTs on the open market, and underlying smart contracts tie those transactions to their corresponding equity stakes in the home.&nbsp;



Homebase’s “operating agreements say that non-fungible tokens represent ownership of that SPV,” Valadez said, adding that that way “you don’t have to get a lawyer involved.”&nbsp;



“The way we’re marketing this on the demand side is keep all of your assets on-chain and get to invest in rental properties that are truly able to accrue in value,” he said. “On the homeowner&#8217;s side, it’s an additional option you have when it comes to liquidity — especially in today’s environment, when interest rates are like 6%…[You now have] an additional potential stake to get equity out.”



Homebase’s second tokenized offering is already in the works.



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Real Estate Investors Buy Solana NFT Home for $246,800

Bessie Liu

The exploiter of DeFi lending protocol Euler Finance has sent a series of messages through the blockchain, apologizing for stealing funds and promising to return all stolen money.&nbsp;



Euler <a href="https://blockworks.co/news/euler-suffers-200m-exploit">suffered a $200 million exploit</a> earlier this month in which a hacker used a series of flash loans to trick Euler’s smart contract into believing it had fewer collateral tokens than debt tokens.&nbsp;



Now, the hacker — who goes by “Jacob” — seems to have had a change of heart.



“Jacob here. I don&#8217;t think what I say will help me in any way but I still want to say it. I fucked up. I didn&#8217;t want to, but I messed with others&#8217; money, others&#8217; jobs, others&#8217; lives,” the hacker <a href="https://etherscan.io/tx/0xedd8102ca037abaeb75ce6a1afe951d2953258392d891ff23510276993a5437c">said</a> in an encoded blockchain message, asking for forgiveness.



In its initial recovery efforts, Euler Foundation launched a <a href="https://blockworks.co/news/euler-bounty-defi-flash-loan-attack">$1 million reward bounty</a> to incentivize the arrest of the attacker.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">euler just sent an on-chain message to the hacker <a href="https://t.co/0wKIW51NjM">pic.twitter.com/0wKIW51NjM</a>&mdash; 0xngmi (llamazip arc) (@0xngmi) <a href="https://twitter.com/0xngmi/status/1635769041909342208?ref_src=twsrc%5Etfw">March 14, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Threats to the culprit came in from multiple angles, as an address associated with the Ronin bridge hacker — believed to be based in North Korea — attempted to trick the Euler hacker into sending over their private key information through a phishing scam.



The Euler team then sent an <a href="https://etherscan.io/tx/0x054409f252ac293a0ed34108b25e5906476817c5489bd3e98a5d3e1ee0825020">on-chain message</a> to the Euler hacker, warning them of the probable phishing attempt and again urged the return of the stolen assets, noting “the simplest way out here is to return funds.”



Since then, things have taken a positive turn. On Saturday, the Euler attacker returned <a href="https://etherscan.io/tx/0xb0308ee113c541e7c6f4623e833417524d68fd6267d23f43d9041f583c14343f">51,000</a> ETH (about $88 million) to a wallet under the Euler team’s control, and more recently an additional <a href="https://etherscan.io/address/0xb66cd966670d962c227b3eaba30a872dbfb995db">four transactions</a> of 7,800 <a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a> and $30 million in the <a href="https://blockworks.co/price/dai" target="_blank" rel="noreferrer noopener">DAI</a> stablecoin has been returned to a wallet labelled Euler multisig 2, alongside a pledge to make good on all of it. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Currently, the hacker holds: $18.35M of ETH &#8211; 8K ETH in the Main Caller address &#8211; 2.5K ETH in the Tornado Cash address $13.1M of DAI &#8211; $12M in the Euler Tertiary account &#8211; $1.1M held across Child 1 and 2 They have returned 85K ETH and 30M DAI. That is $177M, 86% of the total. <a href="https://t.co/RuUEZIuZFK">pic.twitter.com/RuUEZIuZFK</a>&mdash; Arkham (@ArkhamIntel) <a href="https://twitter.com/ArkhamIntel/status/1640773421666824195?ref_src=twsrc%5Etfw">March 28, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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“The rest of the money will be returned ASAP. I only look after my safety, and that is the reason for the delay. I&#8217;m sorry for any misunderstanding,” Jacob <a href="https://twitter.com/fewture/status/1640594111144292353/photo/1">wrote</a> in a separate on-chain message.



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Euler Exploiter Says ‘Sorry,’ Returns Stolen $177M

Ben Strack

Crypto investment firm Paradigm is urging the courts not to embrace what it argues the SEC is pushing for — that crypto tokens are essentially temporary securities.



The argument came in an amicus brief — insight filed by an entity who is not a party in a legal case — in the SEC’s case against Ishan Wahi.&nbsp;



US authorities <a href="https://www.justice.gov/usao-sdny/pr/three-charged-first-ever-cryptocurrency-insider-trading-tipping-scheme">charged</a> Wahi, a former product manager at Coinbase, with wire fraud last July as part of an alleged scheme to commit crypto-related insider trading. He <a href="https://www.justice.gov/usao-sdny/pr/former-coinbase-insider-pleads-guilty-first-ever-cryptocurrency-insider-trading-case">pleaded</a> guilty to two counts of wire fraud conspiracy in Manhattan federal court last month.&nbsp;



But the SEC’s case against Wahi is ongoing. Judge Tana Lin, of the US district court for the western district of Washington, allowed Paradigm’s amicus brief to be filed on Monday, Paradigm crypto counsel Rodrigo Seira said in a tweet.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today, Judge Tana Lin officially granted <a href="https://twitter.com/paradigm?ref_src=twsrc%5Etfw">@paradigm</a> leave to file our amicus brief in the SEC&#39;s case against Ishan Wahi Our brief rejects the SEC&#39;s expansive and unsupported application of securities laws to crypto secondary markets <a href="https://t.co/OWxiajwuxZ">pic.twitter.com/OWxiajwuxZ</a>&mdash; Rodrigo (@RSSH273) <a href="https://twitter.com/RSSH273/status/1640405640907751424?ref_src=twsrc%5Etfw">March 27, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The US securities regulator alleges that Wahi offered inside information to his brother, Nakhil Wahi, and Sameer Ramani, who then allegedly traded based on that knowledge. This included trading in at least nine crypto assets, according to the SEC — assets the regulator is calling securities.&nbsp;



<h2>Temporary securities?</h2>



Paradigm says in the brief the SEC is incorrectly arguing that because the crypto tokens were sold as transactions defined as investment contracts, the tokens themselves became investment contracts — deemed as a type of security per the Securities Exchange Act of 1934.&nbsp;



The nine tokens would not be considered securities “without considering extrinsic factors,” according to the brief.&nbsp;



“The SEC asks the court to accept the novel idea that these tokens are securities for only so long as they are deemed to “embody” an ongoing investment scheme…making them effectively temporary securities,” Paradigm states.



Accepting this “embodiment theory,” as Paradigm calls it, could have “sweeping and unintended effects” on the crypto industry, the company added.&nbsp;&nbsp;&nbsp;



“Essentially, the SEC seems to suggest that market participants should simply assume that&#8230;virtually all crypto assets are securities until the SEC tells them otherwise, a power not granted to the SEC by the Congress,” Paradigm said.



The SEC did not immediately return a request for comment.&nbsp;



<h2>Securities or not?</h2>



Though Paradigm calls the SEC’s latest argument “a novel idea,” the broader argument of whether crypto tokens are securities is not new.



The SEC alleged in 2020 that Ripple Labs and two of its executives raised more than $1.3 billion in 2013 through the sale of crypto token XRP as part of what it deems to be an unregistered security offering. <a href="https://blockworks.co/news/sec-ripple-xrp-case-trial">That case is ongoing</a>.



The regulator <a href="https://blockworks.co/news/bitcoin-and-ether-are-commodities-says-cftc-in-binance-lawsuit">served Coinbase with a Wells notice</a> last week about alleged securities violations, though the exchange has <a href="https://www.coinbase.com/blog/coinbase-does-not-list-securities-end-of-story">argued</a> the digital assets it lists are not securities.&nbsp;



Industry participants have told Blockworks that US regulators are jockeying for position in regulating the crypto industry in the absence of comprehensive regulation.The CFTC <a href="https://blockworks.co/news/bitcoin-and-ether-are-commodities-says-cftc-in-binance-lawsuit">called bitcoin, ether and litecoin commodities</a> in a lawsuit brought Monday against Binance and its CEO.



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Paradigm: SEC’s Temporary Securities Theory Could Have ‘Unintended Effects’

Federico Ast

Online organizations are becoming a normal setting for a large part of our social and economic interactions. And just like in the offline world, disagreements are now cropping up in these online spaces.&nbsp;



Web3 is no exception: We have recently witnessed disputes in communities such as <a href="https://www.coindesk.com/business/2022/07/06/is-makerdao-becoming-a-company-run-by-politics/">MakerDAO</a>, <a href="https://medium.com/@ClementLesaege/making-sense-of-recent-drama-in-proof-of-humanity-ccf3082eb0fa">Proof of Humanity</a> and <a href="https://decrypt.co/es/124083/defi-llama-drama-resolved-no-token?amp=1">DefiLlama</a>.



Those conflicts were of political nature and involved deep disagreements between different factions within the projects. Members disagreed on matters ranging from resource allocation (how funds and other assets should be assigned), community norms (how members are expected to treat each other) and legal issues (how to manage compliance requirements).



These recent public community governance dramas have put a spotlight on the fact that we are still learning how to govern decentralized organizations. As such conflicts are more likely to become commonplace, decentralized communities need to start experimenting with how to resolve them.



The problems of DAO governance need to be dealt with by people that understand the value of a humanistic, big-picture approach, who realize that there is ultimately nothing new under the sun. If you look all the way back to the days of ancient Athens, philosophers have been trying to understand how to create environments where humans can collaborate effectively and thrive — and DAOs are no different.



<h2>How to agree to disagree</h2>



What do the philosophers of ancient Athenian democracy and the founding fathers of the United States have in common? A big concern about factionalism as the main threat to a working democracy.



When factions win, citizens turn their focus away from the common good and toward the particular interests of their clan or party.



In the book How Democracies Die, Steven Levitsky argues that a key reason for the success of American democracy was the development of a number of informal norms on how disagreements had to be handled and how one was expected to treat political adversaries. A civilized way to agree to disagree.



Efforts should be taken in DAO communities to develop norms of civility, open debate and mutual respect. While this is easier said than done, the way in which a community recruits and educates their new members can play an important role.



<h2>Who’s in charge?</h2>



Many DAO disputes arise from poorly designed governance systems leaving ambiguity on how decisions should be made and who should make them.



Should every member be allowed to vote on every issue, or only experts get the votes? Who counts as a “community member” anyway? Should the DAO work on a 1 token/1 vote system or 1 person/1 vote system?



For example, the failure of Proof of Humanity DAO was attributed to a lack of clear decision rights, according to an <a href="https://drive.google.com/file/d/1l_faHo8WAr-T4MzagCcLyfvIA7xRlUD5/view">ethnographic research paper</a> published by BlockchainGov.



We are already witnessing the rise of constitution-building processes for DAOs. Clarifying the way in which the governance system works (who gets to decide about what and how) will be an important avenue for conflict prevention in the future.



<h2>Bring on the third parties</h2>



After a conflict starts, it’s typically too late to agree on a dispute resolution method —&nbsp;especially in a decentralized organization that owes its existence to a set of rules. DAO governance rules should have an explicitly stated structure for resolving all disputes from the get-go.



DAOs can take an example from the oil and gas or construction industries and make use of a neutral evaluation process: a non-binding mediation or conciliation facilitated by a trusted third party.



Contracts in these industries usually involve long-term commitments between parties over large amounts of money. If a conflict arises (an economic shock unexpectedly sends the price of oil skyrocketing!) parties need a neutral way to resolve the issue while at the same time avoiding any damage to their business relationship.



If the non-binding agreement fails, then the conflict could potentially escalate to a binding instance, a mechanism similar to a “<a href="https://blog.kleros.io/kleros-a-decentralized-supreme-court-for-daos/">Supreme Court of the DAO</a>” which would have the right to make an authoritative decision.



This process should certainly have clear guidelines (how to start the mediation, the type of evidence that would be acceptable), impartial arbitrators, transparency and an enforcement mechanism.



<h2>A forking procedure (when DAOs get divorced)</h2>



Sometimes disagreements between the different factions go so deep that the only option is divorce. When this happens, a number of decisions will have to be made about how to split the right to use the brand and how to divide the treasury and other assets.



Most sovereign states don’t recognize the right to self-determination through secession in their Constitution. But this isn’t <a href="https://en.wikipedia.org/wiki/Secession#Rights_to_secession">without precedent</a>. For example, <a href="https://en.wikipedia.org/wiki/Withdrawal_from_the_European_Union#Procedure">article 50 of the Treaty of the European Union</a> gives the right to withdraw from the EU, which was used by the UK for Brexit. For DAOs, it&#8217;s way easier, as the majority don&#8217;t have a physical territory. If a DAO has a predefined forking procedure from the get go, then this can avoid lots of conflict about the terms for the split (similarly to how prenup agreements can avoid messy divorces).



A DAO constitution should have some guidelines on how to conduct the forking process in case it happens and to give all parties in the conflict clear expectations about the outcome.



<h2>Humans over machines</h2>



Ultimately, putting aside the technical sophistication of blockchains, DAOs are made up of humans who have emotions, passions and fears. Creating good governance systems for DAOs must be more about dealing with the “mental software” of humans rather than the “computer software” of machines.&nbsp;



Topics such as power, inclusion, opportunism and loyalty have been recurrent throughout history. Even if DAOs are novel forms of human organization due to their structure, we can always remember the words of Winston Churchill, “Study history, study history. In history lies all the secrets of statecraft.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Federico Ast graduated in economics and philosophy from the University of Buenos Aires and holds a PhD in management from IAE Business School. He is founder and president at Kleros, a legaltech company using game theory and blockchain technology in arbitration. As a pioneer in the field of decentralized justice, he has lectured in universities such as Stanford, Oxford and Columbia and in international organizations such as the United Nations.</div>


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Made by Humans but Governed by Code?

John Lee Quigley

A multi-signature wallet is one of the advanced security tools available to cryptocurrency users. Yet, many investors do not use them because they do not understand how multi-signature, or multisig, wallets work.



There is also a false narrative that multi-signature wallets eliminate all security risks associated with holding cryptocurrency. Although multisig wallets provide remarkable security, some high-profile breaches, such as <a href="https://blockworks.co/news/sky-mavis-ronin-network-bridge-exploited-for-over-600m">Ronin Network&#8217;s $625 million hack</a>, have come from <a href="https://blockworks.co/news/nomad-token-bridge-raided-for-190m-in-frenzied-free-for-all">compromised multisig wallets</a>, where the private keys were stored improperly.



Read on to learn what a multisig wallet is and why they are considered a must-have for storing digital assets in a corporate setup, as well as the available types of multisig wallets and the advantages and disadvantages of adopting these solutions.



<h1>What is a multi-signature wallet?</h1>



A multi-signature wallet is a cryptocurrency wallet that requires multiple signatures — instead of just one — to execute each transaction. The signatures are associated with different cryptographic private keys, while a defined threshold of keys must sign a transaction to validate it.



The workflow of a multisig wallet is the same irrespective of the number of signers. Any parties to a multisig wallet can initiate a transaction signed with their private key. However, the transaction is displayed as pending until other parties sign it.&nbsp;



Multisig wallets may implement an N-of-N setup where all signatories must validate a transaction before. The similar example is a 2-of-2 method where two parties must validate a transaction for it to be considered valid.&nbsp;



Alternatively, an N-of-M setting requires a specific subset of signers to approve a transaction. Using a 3-of-4 wallet as an example, three out of four signers must validate the transaction for it to be executed.&nbsp;



In either case, it is essential to distribute multisig private key access among distinct entities. A multisig setup where a single entity holds multiple private keys and stores them in a single location is essentially the same as a single-key wallet. The ideal scenario is giving access to entities in a way that a single security breach does not lead to the loss of two or more keys.



Many blockchains integrate functionality that enables users to implement multi-signature wallets. Cryptocurrency exchanges and custodians also implement multisig wallets and store associated private keys in diverse locations to protect client assets.



<h2>Why use a multisig wallet?</h2>



When used properly, a multisig wallet offers extra security by eliminating the single point of failure risk associated with having one private key. It makes it difficult for hackers to steal funds from a wallet, because they must have the different keys to complete any action.



A multisig feature is especially desirable in a corporate or organizational structure. For instance, a decentralized autonomous organization (DAO) may distribute its multisig wallet key access among distinct ecosystem projects actively contributing to its development. These members must approve new smart contract upgrades or fund transfers for purposes approved by the <a href="https://blockworks.co/news/the-investors-guide-to-daos">DAO</a>. Keyholders must be selected carefully, mindful of the possibility of collusion.



Some security-conscious investors may choose to adopt a multisig wallet as an extra layer of security to <a href="https://blockworks.co/news/cold-wallets-secure-crypto-custody">cold wallets</a>. Such implementation means that users must complete several steps to authorize transfers and may choose to extend responsibility to a trusted third party, such as a family member or an attorney.



<h2>Types of multi-signature wallets</h2>



<ul>
<li>1-of-2 signatures: A 1-of-2 setup is one of the most basic forms of multisig storage. The user binds two private keys to a single wallet, allowing anyone holding either key to approve transactions. This setup is ideal for a small business where either of two founders can transfer funds and trust is established through contractual and personal relations. A 1-of-2 setup is also a useful personal backup solution, as users can recover funds even if they lose one private key.</li>
</ul>



<ul>
<li>2-of-3 signatures: This multisig wallet requires two out of three registered signers to complete a transaction. It is useful for escrow transactions and also implemented by cryptocurrency custodians as an additional security measure.&nbsp;In the latter use case, the company may hold two of the keys with one securely stored offline and the other held online to make the signing process easier. The third key is delegated to a trusted blockchain security company, which may be required if the crypto custodian loses one of its keys.</li>
</ul>



<ul>
<li>3-of-5 signatures: This is a more robust multisig setup that requires three out of five signatures to validate transactions. It is useful for a corporate structure where several decision makers must approve transfers. As long as over 50% of the parties consent to the decision, then they can approve fund transfers. As with other forms of multi-signature setups, delegating signatures to entities in diverse geographical locations could improve security.</li>
</ul>



<ul>
<li>Hosted vs. unhosted: A hosted multisig wallet is one created with a third-party platform such as Coinbase Custody or BitGo. These entities secure cryptocurrencies using institutional-grade solutions, while giving clients access to multi-signature functionality. Thus, clients register approved signatories and define signature thresholds for fund transfers. An unhosted multisig wallet (also known as self-hosted wallet, or <a href="https://blockworks.co/news/warren-unveils-new-crypto-bill">simply a wallet</a>) is one where the individual or organization holds the private keys, instead of using a trusted third-party. The setup process for unhosted wallets is usually more complex as users require security-optimized infrastructure and best practices. However, the user enjoys greater convenience and eliminates the counterparty risk associated with third-parties.</li>
</ul>



<h2>Advantages of multisig wallets</h2>



Multi-signature wallets offer several unique benefits to users. They also serve specific use cases that are generally considered out of reach for single-key wallets.&nbsp;



<h4>Increased security</h4>



Multisig wallets are synonymous with increased security and peace of mind. This is especially important given the growing security concerns in the cryptocurrency space and the irreversibility of blockchain transactions. With a multisig wallet, users can rest assured that the odds of a hacker acquiring all associated private keys are low.



A multisig wallet also provides a backup option. As long as the setup does not require all signatures to validate transactions, users can easily recover their wallets if one or more private keys goes missing. New signatures can also be added to further distribute ownership and improve security.



<h4>Escrow transactions</h4>



Multi-signature wallets are ideal for escrowed transactions. They guarantee that each party will fulfill their obligations once the agreed terms are met. Using the example of a 2-of-3 multisig, the buyer could deposit funds in a wallet with a promise to release the funds to the seller as soon as the purchased goods are received and deemed satisfactory.&nbsp;



The seller also holds a key alongside a trusted third party used as the final signatory to the multisig contract. Both buyer and seller could sign to confirm the trade as soon as the conditions are met. However, the third party could release the funds to either buyer or seller if the other party breaches the contract terms.



<h4>Two-factor authentication (2FA)</h4>



Multi-signature wallets provide a form of two-factor authentication (2FA) because eligible signers must validate any pending transaction before approval. Users can easily halt any malicious actor that gains unauthorized access to an associated key and revoke their access. This security feature is further strengthened by keeping the private keys in multiple locations or with different individuals.&nbsp;



<h4>Cooperation between multiple parties</h4>



A multisig wallet is perfect for an organizational setup where two or more parties must consent to make business decisions. This is especially helpful in an era where an increasing number of strangers meet online to pursue common objectives, such as a DAO.&nbsp;



A multisig wallet checkmates power abuse, gives parties a sense of responsibility and ensures no one can transfer funds without requisite approval. This feature also doubles as voting rights, because signing a transaction represents approval of the business decision.



<h2>Disadvantages of multisig wallets</h2>



The security provided by multisig wallets come at the cost of convenience. This trade-off makes multisig wallets less ideal for certain scenarios.



<h4>Transaction speed</h4>



Users give up speed for security when they choose to use a multisig wallet. It could take anywhere from a few hours to days to execute a transaction from a multisig wallet, with factors such as the number of signatories and geographical boundaries limiting their usage. These limitations make multisig wallets less convenient for emergencies or routine payments.



<h4>Technical knowledge</h4>



Users require more than basic security knowledge and practices to adopt multisig wallets. The setup process may require consulting a third-party wallet provider, installing specific software, or purchasing dedicated equipment such as multiple hardware wallets and safe boxes. These requirements are relatively complex for the average crypto investor and are one of the key factors impeding the adoption of multi-signature wallets.



<h4>Fund recovery and custodian</h4>



Compared to single-key storage, it takes considerably longer and requires more coordination to recover funds stored in a multisig wallet. Further, N-of-N setups fail to provide a backup or recovery solution for rare situations where one of the signers is unavailable.



Meanwhile, entities that choose the relatively easier multisig wallet hosted with a third-party custodian expose themselves to counterparty risk. A security breach at the third-party custodian could have far reaching consequences.



<h2>Should I use multisig?</h2>



Multi-signature wallets are an excellent way to protect your digital assets. However, they are not perfect. You should only use a multisig wallet if you understand cryptocurrencies and consider yourself knowledgeable with advanced operations security (OpSec). That said, multisig users enjoy a greater sense of security and immunity from most basic risks associated with storing cryptocurrencies.&nbsp;



<h2>Multisignature wallets: A secure standard for crypto storage</h2>



A multisig wallet eliminates the single-point of failure risk faced by most cryptocurrency investors. Both individual and corporate investors can adopt different multisig setups depending on their specific needs.&nbsp;



Readers considering multi-signature wallets will find it helpful to study their advantages and disadvantages. That way, they can make research-driven decisions on the best options to provide the highest level of security for their digital assets.



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What Are Multisig Wallets?

Shalini Nagarajan

The UK appears to have scrapped plans to launch an NFT, a move earlier championed by Prime Minister Rishi Sunak.



Economic Secretary Andrew Griffith said Monday that the Royal Mint’s decision to back away from NFTs was made in consultation with the UK Treasury. The proposal will go under review, he added.&nbsp;



He was responding to a written <a href="https://questions-statements.parliament.uk/written-questions/detail/2023-03-09/162176#">question</a> from conservative politician Harriett Baldwin, who enquired about whether the NFT is still under consideration by the UK’s chief finance minister.



Baldwin, chair of the Treasury Select Committee, guessed that the Treasury’s decision was motivated by insufficient evidence showing the value of NFTs, the <a href="https://www.bbc.com/news/uk-politics-65094297">BBC</a> reported.



&#8220;We have not yet seen a lot of evidence that our constituents should be putting their money in these speculative tokens unless they are prepared to lose all their money,” she said. &#8220;So perhaps that is why the Royal Mint has made this decision in conjunction with the Treasury.&#8221;



The UK’s plans for an NFT first came up when Sunak served as Chancellor of the Exchequer. In April last year, the UK Treasury said Sunak asked the institution to create an NFT by the summer. “This decision shows the forward-looking approach we are determined to take towards cryptoassets in the UK,” the Treasury <a href="https://twitter.com/hmtreasury/status/1510971092072079360">said</a> in a tweet.



The institution did not lay out what the NFT would consist of — an image, video or an object — nor whether it would be utilized for profit by the state. It also wasn’t known whether the Treasury would’ve accepted cryptocurrency for the tokens.



A Treasury spokesperson confirmed that the plans are abandoned for now. “The Royal Mint operates as a commercial business and has confirmed now is not the right time to launch an NFT,” they told Blockworks via email.



“In light of recent developments in the wider crypto market and the Royal Mint’s current capacity for delivery, the Treasury agreed the NFT should not be pursued at this time. However, the Royal Mint will keep this under review.”



<h2>UK PM has been pro-crypto</h2>



Sunak himself has been a vocal crypto enthusiast and has often declared his interest in blockchain.



“It’s my ambition to make the UK a global hub for cryptoasset technology,” he has said. But the crypto ecosystem has faced a slew of critical incidents since, including crashing prices and a string of critical bankruptcies.



London itself has seen more than 600 people in the crypto sector losing their jobs in the last year, according to a recent <a href="https://www.bitcoincasinos.com/blog/2023/02/27/crypto-layoffs/">study</a>. The report predicts that the number of layoffs in 2023 is set to outpace those in 2022.



The UK can still achieve its ambitions by creating a supportive regulatory framework and developing crypto-friendly infrastructure, according to Alexandr Onufriychuk, head of growth at Corite, a firm that creates NFT collections and works with artists in the UK.&nbsp;



Other steps could include encouraging investment in the crypto space, he said, or collaborating with the private sector to develop blockchain-based solutions for supply chain management or digital identity verification.



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UK Treasury: Not the Right Time To Launch Official NFT

Florida lawmakers may have to revise a recently passed bill barring central bank digital currencies (CBDCs) to avoid inadvertently banning bitcoin.



Governor Ron DeSantis’ proposal would make Florida the first US state to ban CBDCs, with a House panel voting 15-5 in favor on Monday.



DeSantis, who has served as Florida governor since 2019, is opposed to the idea of a federally-controlled digital currency, arguing it would hurt innovation and “promote government-sanctioned surveillance.”



The bill blocks the use of a federally-backed <a href="https://blockworks.co/tag/cbdc" target="_blank" rel="noreferrer noopener">CBDC</a> as currency under Florida’s Uniform Commercial Code. It also prohibits CBDCs issued by a foreign reserve or foreign sanctioned central bank, and calls on other states to embrace the same prohibitions.



A CBDC is a type of digital currency, which may or may not run on a blockchain or distributed ledger system, backed and issued by a central bank. <a href="https://blockworks.co/news/biden-signs-crypto-executive-order-promoting-responsible-innovation">US President Joe Biden signed an executive order</a> last year asking federal agencies to study benefits and risks of a US CBDC, but no definite decision has been made on whether the US will actually come up with one.



Even so, the <a href="https://blockworks.co/news/us-treasury-weighs-prospect-for-cbdc-adoption">US Treasury is working on the technology</a> that would be required to create a CBDC if lawmakers do decide to go ahead with the concept.



But there’s a small problem with DeSantis’ bill. Per <a href="https://floridapolitics.com/archives/598740-house-moves-on-gov-desantis-call-for-centralized-digital-currency-ban/">Florida Politics</a>, it defines CBDCs as digital currencies “validated directly by” a foreign government.&nbsp;



While the language is somewhat open to lawmaker interpretation, bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) can fit that description: <a href="https://blockworks.co/tag/el-salvador" target="_blank" rel="noreferrer noopener">El Salvador</a> has adopted bitcoin as legal tender, thereby “validating” it in the non-technical sense (it’s unclear whether El Salvador’s central bank or other government institution runs fully-validating Bitcoin nodes, also known as full nodes).



Wyman Duggan, a member of Florida’s House of Representatives sponsoring the bill, reportedly said they hadn’t set out to ban bitcoin along with CBDCs, and that they may change the bill if necessary.&nbsp;



The Bitcoin Policy Institute, a nonpartisan bitcoin think tank, recently <a href="https://www.btcpolicy.org/articles/in-attempt-to-stop-cbdcs-states-are-rejecting-ostensibly-pro-bitcoin-legislation">warned</a> that anti-CBDC legislation could unwittingly make it more difficult for the bitcoin ecosystem to flourish, unless they include specific language vetting BTC.&nbsp;



DeSantis has previously presented as pro-bitcoin, having floated accepting the top crypto for state taxes last March.



<h2>CBDCs and the US Constitution</h2>



While proponents of CBDCs argue that they can be used to speed up transactions, make cross-border payments more efficient, and discourage criminal activity, opponents like DeSantis believe such a system raises heavy privacy and security concerns.



Some Florida lawmakers have agreed with DeSantis’ view. Rep. Duggan reportedly raised apprehensions that CBDCs would give government in-depth insight into consumer purchases and could potentially freeze or seize anyone’s assets.



DeSantis himself previously <a href="https://floridapolitics.com/archives/596576-gov-desantis-wants-centralized-digital-currency-ban-raises-fear-government-could-control-purchases/">warned</a> that government oversight of digital currency would mean people wouldn’t be able to purchase gas or guns. “Who knows whether they would let you buy a firearm or things they disapprove of?” he said.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The Biden Administration’s creation of a central bank digital currency is about one thing &#8211; control. I am calling on the Legislature to prohibit the use of a so-called CBDC in Florida, protecting Floridians from government surveillance and control of their personal finances. <a href="https://t.co/ob1E90R5Gn">pic.twitter.com/ob1E90R5Gn</a>&mdash; Ron DeSantis (@GovRonDeSantis) <a href="https://twitter.com/GovRonDeSantis/status/1638173916299657225?ref_src=twsrc%5Etfw">March 21, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Democrats were among those who voted against the bill. They raised the debate of unconstitutionality, since it is the US Constitution that gives the federal government the power to create and circulate national currency.



Rep. Allison Tant reportedly asked the House panel whether such a move indicated that Florida would be lagging economically. Duggan disagreed that this would happen, but admitted that there could be legal challenges if the bill became law.



“There’s obviously a federal Supremacy Clause in the [US] Constitution. That’s an enumerated power of the federal government, to mint money,” Duggan said. “We’re clearly going to have to have a court explore the contours of this relationship.”



The bill hasn’t yet become law and must pass the entire chamber of the House and Senate, before finally reaching the governor. He can then choose to sign it, or allow it to become law without signature, or veto it.



David Canellis contributed reporting.



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Florida Bill Banning CBDCs Might Accidentally Ban Bitcoin Too

Crypto was created for this moment, Galaxy Digital CEO Mike Novogratz said during the company’s fourth quarter earnings call Tuesday morning.&nbsp;



Galaxy Digital, traded on the Toronto Stock Exchange, hosted the call Tuesday before the open.



“Satoshi Nakamoto, way back in 2009, worried about the breakdown of the legacy financial system, he worried about… constant printing of fiat currencies and a debasement of money and created Bitcoin,” Novogratz said.



“Bitcoin really is the first decentralized store of value or money, which then really gave birth to this whole industry of a decentralized revolution.”



Galaxy <a href="https://viavid.webcasts.com/viewer/event.jsp?ei=1602915&amp;tp_key=afe1222a80" target="_blank" rel="noreferrer noopener">reported</a> a net loss of $288 million for the fourth quarter of 2022, <a href="https://investor.galaxy.com/financials/quarterly-results/default.aspx" target="_blank" rel="noreferrer noopener">earnings</a> show, compared with a net income of $521.3 million during the fourth quarter of 2021. For the year of 2022, Galaxy logged a net loss of $1 billion. 



“The loss was primarily attributable to unrealized marks to market on investments in our Principal Investments portfolio, driven by depressed market conditions,” the earnings report noted.



Galaxy Trading’s counterparty trading volume increased about 19% from the third quarter of 2022, the company noted in its report, and lost about 65% from the fourth quarter of 2021.&nbsp;



Galaxy still plans to list in the US after reorganizing and becoming a Delaware-incorporated company and completing the necessary SEC review. Galaxy’s most recent amended registration was submitted to the SEC in February 2023 and is currently under consideration, the filing noted. 



Shares of Galaxy are currently up about 1% year-to-date, but have lost 86% over the past 12 months. 



“I feel for you, our stock price has been ugly,” Novogratz said. “Last earnings call I cared a lot about the stock price, and, you know it&#8217;s lower, not higher.”&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13225386/embed#?secret=ZSIzhy021Y" data-secret="ZSIzhy021Y" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Galaxy stock and Coinbase diverged at the start of the year</figcaption></figure>



Galaxy is committed to cost-saving efforts, Novogratz said. The company announced layoffs in late 2022 and its bonus pool is now “way down,” the CEO said.&nbsp;



“Our stock is just at the wrong price,” Novogratz said.&nbsp;



In terms of the future of crypto as a whole, Novogratz said we are at a crucial inflection point.&nbsp;



The industry seems to be thriving overseas, he said said, but regulatory headwinds in the US makes expansion in America challenging.&nbsp;&nbsp;



“I go to bed and I say a Hail Mary hoping that the stewards of our country and our economy can land the plane, can actually maneuver our economy into something that&#8217;s sustainable without a real disaster, but that challenge is real and a challenge gets worse and worse,” Novogratz said. 



“And so things like this banking crisis are a great reminder, and it gives bitcoin and bitcoin’s community unbelievable resilience.”



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Galaxy Still Hopes For US Listing, Application Under SEC Review

Shortly after <a href="https://blockworks.co/news/noble-solve-cosmos-liquidity" target="_blank" rel="noreferrer noopener">coming out</a> of stealth, token protocol Noble has announced it has partnered with Circle to bring USD Coin (USDC) natively to the Cosmos ecosystem in Q2.



USDC is the second-largest stablecoins in the cryptocurrency ecosystem behind Tether, and is pivotal to many decentralized finance (DeFi) projects. It is often used as collateral for lending and borrowing to generate yield due to its ability to remain steadily pegged to the US dollar.



Although it recently went through a <a href="https://blockworks.co/news/stablecoins-peg-usdc-all-time-low" target="_blank" rel="noreferrer noopener">few hiccups</a> following the collapse of Silicon Valley Bank and Silvergate bank, the stablecoin has now regained its peg to the dollar.



Noble CEO Jelena Djuric told Blockworks in an interview that the Cosmos inter-blockchain communication protocol (IBC) ecosystem hasn&#8217;t yet gained a native fiat-backed stablecoin that is not only highly liquid but also fully collateralized on its network.



“That’s about to change with Noble’s first issuance partner, Circle,” she said. “They’re bringing a native USDC to Cosmos for the first time.” Noble, a token issuance protocol, will help facilitate USDC&#8217;s management and issuance.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This is a huge moment for our ecosystem.<a href="https://twitter.com/cosmos?ref_src=twsrc%5Etfw">@Cosmos</a> has never had a native, fiat-backed stablecoin that is highly liquid &amp; fully collateralized. For the first time in <a href="https://twitter.com/cosmos?ref_src=twsrc%5Etfw">@Cosmos</a> history, 50+ IBC-enabled blockchains (&amp; counting!) will soon be able to access USDC natively via IBC.&mdash; Noble (@noble_xyz) <a href="https://twitter.com/noble_xyz/status/1640670153535897600?ref_src=twsrc%5Etfw">March 28, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Currently on Cosmos, the major stablecoins can only be accessed through <a href="https://blockworks.co/news/bridge-protocols-race-to-win-consumer-trust" target="_blank" rel="noreferrer noopener">bridge protocols</a> such as Gravity and Axelar. Estimates suggest around 100 different bridged USDC assets currently exist across the Cosmos landscape.



Now that DeFi protocols can stick with just one single official stablecoin, Noble hopes this partnership will inject and and facilitate new liquidity in the ecosystem. Circle first <a href="https://www.circle.com/en/pressroom/circle-announces-next-wave-of-usdc-support-for-multi-chain-ecosystem" target="_blank" rel="noreferrer noopener">flagged</a> intent to issue USDC on Cosmos last September.



“It’s also for the users themselves to have a seamless process of accessing native assets in the ecosystem,” Djuric said. “At the end of the day, we’re seeking to rectify the challenges that users and app chains face when interacting with bridge assets.”



The decision to quickly onboard USDC onto Cosmos is also related to the fact that popular lending protocol dYdX will soon migrate from Ethereum onto the Cosmos IBC.



“We’re very much doing this in preparation for dYdX’s launch. We see this as a huge moment for the Cosmos and the app chain thesis because this is a project that has already got a lot of success on Ethereum,” Djuric said.



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Circle Stablecoin USDC To Launch on Cosmos

Sebastian Sinclair

US federal regulators are allegedly waging a “clandestine financial war” against the crypto industry, according to Washington, D.C. law firm Cooper &amp; Kirk PLLC.



The FDIC, the OCC and others are allegedly using “regulatory tools and pressure tactics” to limit the extent digital assets have on the financial system, the law firm said Monday in a <a href="https://www.cooperkirk.com/wp-content/uploads/2023/03/Operation-Choke-Point-2.0.pdf" target="_blank" rel="noreferrer noopener">white paper</a>.



The law firm is calling the latest regulatory actions in the US “Operation Chokepoint 2.0.” The operation is modeled after a similar initiative under the Obama administration, which attempted to target fraudulent and high-risk industries, including the tobacco and payday lending industries.



Its white paper attempts to explain how regulators are issuing informal guidance documents that target crypto users deemed as posing a higher risk to banks. The paper raises concerns over the way in which the crypto industry has been subject to increased regulatory scrutiny in recent years.



It follows <a href="https://blockworks.co/news/banks-should-back-crypto-deposits-with-cash">prior statements</a> by banking regulators last month in which they pressed banks to apply existing risk management principles when it came to crypto-related transactions.



“Operation Choke Point 2.0 deprives businesses of their constitutional rights to due process in violation of the Fifth Amendment,” the firm said. “Operation Choke Point 2.0 violates both the non-delegation doctrine and the anticommandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.”



The end result has led to industry-related firms and individuals being debanked and revoked access to the automated clearinghouse network, it said.&nbsp;



Cooper &amp; Kirk said in a statement on Monday, while it was instrumental in halting the original operation 1.0 from progressing further, it would be up to Congress to hold federal banking regulators accountable.



Principal author and Cooper &amp; Kirk attorney, David H. Thompson, said in the paper, federal bank regulators are dodging the notice and comment rule making requirements by implementing binding measurements on the banking industry.



“Having decided that they will not permit banks that serve a broad base of customers to serve the crypto industry, the federal bank regulators are now taking steps to ensure that those banks that specialize in serving the crypto industry are unable to do business in the US,” Thompson said.



<a href="https://blockworks.co/tag/banking">Several banks</a> with ties to crypto collapsed earlier this month, including Silicon Valley Bank, after facing a liquidity crisis spurred on by poor risk management.



The FDIC, the OCC and Kirk &amp; Cooper law firm did not immediately respond to requests for comment.



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US Bank Regulators Waging Secret War on Crypto Says Law Firm

The net worth of Binance CEO Changpeng Zhao fell more than $2 billion on Wednesday following revelations the CFTC is pursuing legal action against his exchange.



Zhao dropped seven placements from #46 at $27.9 billion to #51 at $25.8 billion, <a href="https://www.bloomberg.com/billionaires/profiles/changpeng-zhao/#xj4y7vzkg" target="_blank" rel="noreferrer noopener">according to</a> the Bloomberg Billionaire Index.



Even at current paper valuations, Zhao’s worth can purchase up to 13.2 million troy ounces of gold, and 330 million barrels of crude oil. That’s equivalent to 0.11% of the US’s total GDP, index data show.



Born in China, Zhao was later raised in Canada by his mother, a teacher, and his father, who received a job at the University of British Columbia as an academic.



To date, Zhao has seen more than 65% of his paper net total worth erased from a year ago, from $73.9 billion to current levels, Bloomberg data shows. The losses come after several industry-wide company failures in 2022 negatively impacted digital assets valuations and harmed investor interest.



The CEO’s fortune stems from his controlling interest in Binance, which is said to serve more than 120 million users worldwide and plays host to hundreds of cryptoassets. Zhao also owns Binance.US, which was previously valued at $4.7 billion in a funding round in March of last year.



<h2>“Unexpected and disappointing civil complaint”</h2>



The CFTC sued the exchange, Zhao and Binance’s former chief compliance officer, Samuel Lim, on Monday over allegations of trading and derivatives violations.



Zhao responded Monday, tweeting the number “4” in reference to a <a href="https://twitter.com/cz_binance/status/1610018096122851328?s=20" target="_blank" rel="noreferrer noopener">separate tweet</a> in January, meant to spur observers into ignoring “fake news” as well as fear, uncertainty and doubt.



In a <a href="https://www.binance.com/en/blog/from-cz/czs-response-to-the-cftc-complaint-2408916493005890282" target="_blank" rel="noreferrer noopener">blog post</a> on the same day, Zhao said the CFTC’s suit contains an “incomplete recitation of facts” before attempting to address several issues in the complaint. 



The CEO pointed to Binance’s multiple industry licenses, its “transparency” with law enforcement and its KYC measures, intended to block US users by nationality — a subject the CFTC takes particular issue with.



Industry observers have painted a dim picture for the exchange, which they say would have a hard time defending those allegations in what is perceived as a “<a href="https://blockworks.co/news/reactions-to-cftc-lawsuit-binance">fatal blow</a>” to its operations.



It follows similar actions taken against crypto firms by regulators this month, including the SEC serving Coinbase a <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">Wells notice</a> as it intends to probe the exchange over allegations of securities violations.



But Dmitry Lapidus, of crypto-native investment fund Dragonfly, told Blockworks the drop in Zhao’s worth meant little more than an “ego hit.”



“When you’re the king, everyone comes at you right?” Lapidus said.



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Over $2B Wiped From Binance CEO’s Net Worth Thanks to CFTC Suit

The native digital asset of the world’s largest exchange is facing significant sell-side pressure after the US commodities regulator announced legal action against Binance and its CEO.



The CFTC filed suit against the exchange and CEO Changpeng Zhao for allegedly violating trading and derivatives laws. Binance’s former chief compliance officer, Samuel Lim, is also named as a defendant in the suit.



Zhao said in a <a href="https://www.binance.com/en/blog/from-cz/czs-response-to-the-cftc-complaint-2408916493005890282" target="_blank" rel="noreferrer noopener">statement</a> late Monday he disagrees with the “characterization of many of the issues” alleged in the CFTC’s complaint. 



A spokesperson told Blockworks the company has made “significant investments” to ensure it did not have US users active on its platform — from boosting compliance staff to implementing market surveillance and investigative tools.



Binance’s BNB token — the utility of which is derived from reducing fees on the exchange — fell more than 6.2% on Monday to $308, the hardest hit among the top 20 cryptos by market value.&nbsp;



BNB is the fourth-largest crypto by total market capitalization with a value of $48.7 billion, <a href="https://www.blockworksresearch.com/assets">Blockworks Research data shows</a>.



<h3>Broader market</h3>



Other exchange tokens have fared better.&nbsp;



Rival exchange Huobi’s native token (HT) was down 3%, as of 7:30 p.m. ET, while Crypto.com’s token (CRO) had shed 4% on the day. LEO, which is used for trading fees and other services for the Bitfinex exchange — was down about 3%.



Those moves are in line with the broader digital asset market sell-off over the last 24 hours.



Bellwether asset bitcoin has shed 3.2% of its value to $27,000, technically its steepest decline since the start of the month. The industry’s total market capitalization, which measures the value of all crypto in circulation, has dipped 2.3% to $1.17 billion.



It appears the CFTC is seeking to strike a legal <a href="https://blockworks.co/news/reactions-to-cftc-lawsuit-binance">hammer blow</a> against the exchange in an attempt to do what others around the world have failed so far — bring Binance under their purview.



“Obviously if Binance goes under due to overwhelming fines then it&#8217;s unlikely BNB is worth much anymore,”&nbsp; Xavier Ekkel, founder of DeFi trading platform prePO told Blockworks.



The asset, however, may retain some “ghost value,” similar to how FTX’s native token, FTT, managed to retain a portion of its value despite the collapse of Sam Bankman-Fried’s empire, Ekkel added.



A hit to BNB’s value follows from the start of the month’s turmoil for another Binance branded token — its BUSD stablecoin — which faced regulatory actions from the New York Department of Financial Services (NYDFS) and the SEC. Several on-chain metrics are now pointing to a <a href="https://blockworks.co/news/the-end-of-busd-on-chain-metrics">swift end for BUSD</a>.



Binance declined to comment on BNB.



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Binance Token BNB Falls 6% after CFTC Files Suit

Ticketmaster has launched a feature that allows artists to grant NFT owners special access to events, marking another use case for the evolving technology powering digital collectibles.



Such “token-gated ticket sales” are compatible with Ethereum-minted tokens stored in digital wallets, including MetaMask or Coinbase, Ticketmaster said in a statement on Monday.&nbsp;



Heavy metal band Avenged Sevenfold (A7X) first requested the tool as a way to reward holders of its Deathbats Club NFT collection, launched in late 2021. In addition to presale access, rewards can include specific seats or custom travel packages — at the discretion of the artist.



Decrypt first <a href="https://decrypt.co/124607/ticketmaster-debuts-nft-gated-ticket-sales-starting-avenged-sevenfold">reported</a> the Ticketmaster launch.&nbsp;



M. Shadows, A7x’s lead singer, outlined his band’s link-up with Ticketmaster in a tweet earlier this month.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Yes, we have integrated <a href="https://twitter.com/DeathbatsClub?ref_src=twsrc%5Etfw">@DeathbatsClub</a> into <a href="https://twitter.com/Ticketmaster?ref_src=twsrc%5Etfw">@Ticketmaster</a> assuring that fans get the best tickets at the best prices without Bots, scalpers and long wait times. More info to come but there is 3 hours left. So if you have a Deathbat head here… <a href="https://t.co/lB8hlLCkkF">https://t.co/lB8hlLCkkF</a>&mdash; M. Shadows (@shadows_eth) <a href="https://twitter.com/shadows_eth/status/1636037928257458177?ref_src=twsrc%5Etfw">March 15, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“This new capability allows artists to get special access and rewards to specific fans they want to super serve,” David Marcus, Ticketmaster’s executive vice president of global music, <a href="https://business.ticketmaster.com/business-solutions/nft-token-gated-sales/">said</a> in a statement. “Artists like Avenged Sevenfold are using Web3 and NFTs to build deeper relationships with their fans, and we’re proud to help foster that connection through live events.”



M. Shadows said in a separate tweet last week that holders of Deathbats NFTs “had the easiest experience I’ve ever seen for buying tickets.”&nbsp;



“Let’s hope more bands follow,” he said on Twitter.



The launch follows Ticketmaster introducing an offering last August that aimed to give sellers on its platform the ability to issue NFTs before, during or after events.&nbsp;&nbsp;



Ticketmaster had already minted more than 5 million NFTs on the Flow blockchain, Dapper Labs <a href="https://www.dapperlabs.com/newsroom/ticketmaster-launches-new-capability-to-issue-digital-collectible-nfts-to-fans-before-during-or-after-an-event">said</a> in a blog post at the time. <a href="https://blockworks.co/tag/dapper-labs">Dapper Labs</a>, the company behind CryptoKitties and NBA Top Shot, created the Flow (<a href="https://blockworks.co/price/flow">FLOW</a>) blockchain in 2019.



Ticketmaster also utilized Flow to distribute more than 70,000 commemorative ticket NFTs at Super Bowl LVI in 2022.



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Ticketmaster Goes Live With NFT-gated Features

US law enforcement officials are lauding Blockchain Intelligence Group for the crypto investigative firm’s “significant collaboration” with federal officers probing the Frosties NFT collection rug pull.



Blockchain Intelligence Group’s role, officials said in a <a href="https://www.globenewswire.com/news-release/2023/03/27/2634710/0/en/Crypto-Investigative-Support-Company-Recognized-in-U-S-Department-of-Homeland-Security.html">statement</a> on Monday, resulted in the first federal arrest pertaining to an alleged NFT scam and prevented “additional victims from being defrauded.”&nbsp;



Federal authorities awarded Blockchain Intelligence Group’s parent company, the publicly traded BIGG Digital Assets, the Homeland Security Investigations’ annual “private sector partnership award,” they said. Firm executives and employees were recognized in a ceremony at New York’s John Jay College of Criminal Justice on Friday.&nbsp;



Blockchain Intelligence Group CEO Lance Morginn accepted the honor on behalf of the company, according to the company. It was bestowed by Ivan J. Marvel, who holds the title of special agent in charge for the New York unit of Homeland Security Investigations (HSI).



The Frosties scam is said to have resulted in NFT holders being defrauded of as much as $1.3 million in early 2022. At the time, the ruse was indicative of rising proliferation of bad crypto actors in a bullish digital collectibles space.



Frosties are a “cool, delectable, and unique” NFT collection, according to its OpenSea <a href="https://opensea.io/collection/frosties-nft">page</a>, which lists the 8,888 total Frosties minted.&nbsp;



Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna were <a href="https://www.justice.gov/usao-sdny/pr/two-defendants-charged-non-fungible-token-nft-fraud-and-money-laundering-scheme-0">charged</a> by the Department of Justice in relation to the rug pull, which was <a href="https://blockworks.co/news/nft-creators-stole-1-3m-from-investors-then-vanished-sources-say">previously reported by Blockworks</a>. The previous account cited sources, including interviews with Frosties holders who said they were defrauded, in breaking the news.&nbsp;&nbsp;



In the statement on Monday, Morginn said that when the Blockchain Intelligence Group “identified suspicious behavior occurring over social media channels relating to what appeared to be an apparent rug pull involving the Frosties NFT” and notified law enforcement “without hesitation.”&nbsp;



The blockchain tracing specialist then teamed up with law enforcement officials, Morginn said, and “quickly tracked and traced the flow of funds as well as the NFT all on one graph.”



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Investigators Sing Blockchain Intelligence’s Praises in Frosties NFT Probe

Community governance that oversees MakerDAO, the decentralized protocol behind stablecoin DAI, has voted in favor of the “Maker Constitution,” making its first steps toward Endgame.



The Endgame plan is a roadmap designed by <a href="https://blockworks.co/news/rune-christensen-wants-out-of-maker">Rune Christensen</a>, the protocol’s co-founder, to decentralize governance at <a href="https://blockworks.co/tag/makerdao" target="_blank" rel="noreferrer noopener">MakerDAO</a> and improve DeFi innovation.



It includes a set of 14 different Maker Improvement Proposals (MIPs) — designed collectively to create rules and corresponding frameworks that will eventually enable the launch of Endgame.



The first MIP up for a vote was the Maker Constitution, otherwise known as <a href="https://mips.makerdao.com/mips/details/MIP101">MIP101.</a>



The Maker Constitution can be considered the foundation of Endgame. Made up of 11 constitutional articles and 12 scope frameworks, the constitution will implement the following changes at MakerDAO:



<ol>
<li>Create a “purpose system” to enable token allocations to SubDAOs, which will determine charities to donate to through community votes.</li>



<li>Make strides toward <a href="https://blockworks.co/price/dai">DAI</a> stablecoin decentralization through <a href="https://blockworks.co/price/mkr">MKR</a> token generation in the event there is not enough DAI collateral.</li>



<li>Introduce a standardized and regulated application to align voter incentives and prevent voter manipulation.</li>



<li>Invite “constitutional conservers” or external entities to facilitate governance operations.</li>



<li>Create “constitutional voter committees” consisting of groups of MKR holders tasked with reaching compromises with other teams to minimize chances of making bad decisions.</li>



<li>Establish a protocol delegation system that will enable the delegation of MKR tokens as collateral to generate more DAI to increase voter incentive.</li>



<li>Continue the function of Core Units and project-based funding.</li>



<li>Launch six new SubDAOs alongside the activation of Endgame.</li>



<li>Create modifiable subcomponents designed to move MakerDAO toward greater decentralization.</li>



<li>A new set of boundaries to manage the modifiable subcomponents or “Scope Frameworks.”</li>



<li>A process to make amendments to the Maker Constitution.</li>
</ol>



A shadow delegate <a href="https://vote.makerdao.com/polling/Qmbndmkr#comments">noted</a> the constitution gave them a “good starting point to grab [the] whole view of [the] next governance structure of MakerDAO,” and hence chose to vote “yes” for the proposal.&nbsp;



London Business School Blockchain association, meanwhile, <a href="https://vote.makerdao.com/polling/Qmbndmkr#comments">wrote</a> in a forum that they chose to vote against the proposal because there were “important aspects of the Constitution that we do not understand, or simply cannot support.”



Ultimately, a total of <a href="https://vote.makerdao.com/polling/Qmbndmkr#vote-breakdown">76%</a> of delegates voted in favor, and <a href="https://vote.makerdao.com/polling/Qmbndmkr#vote-breakdown">24%</a> voted against. Less than 0.01% of members abstained.&nbsp;



Endgame has been in talks since May 2022. Only recently has it finally been given the go-ahead by MakerDAO’s community governance.&nbsp;&nbsp;



A governance delegate of MakerDAO that goes by the pseudonym <a href="https://twitter.com/park_eth">park_eth</a> told Blockworks that, “anyone who’s involved with DeFi governance will know that Maker is probably the most complicated one.”&nbsp;



“Maker has actually built a very good culture of encouraging different opinions and voices onto the community platform and actually having rigorous debate on the issues. Generally the quality of discussion [is] very, very high,” they said. “I think [decentralization] is not necessarily a bad thing [but] decisions always feel really hard.”



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MakerDAO Makes First Steps Toward Endgame

Binance’s latest legal troubles show how muddy the jurisdictional waters are for crypto.&nbsp;



The CFTC’s lawsuit against Binance alleges that the exchange and affiliated executives violated commodities and derivatives laws, shows how complicated the relationship between US agencies is when it comes to overseeing crypto. The CFTC’s lawsuit, filed on Monday, follows the SEC’s series of enforcement actions, and The White House’s Council of Economic Advisors <a href="https://blockworks.co/news/bidens-view-on-crypto">has weighed in on the sector</a>.&nbsp;



“Binance is being sued for options, futures, and other derivatives activities of these tokens. This shows that the underlying asset can be a security but, since it’s being traded like a derivative, that activity is regulated by the CFTC,” said Yankun Guo, a partner at Chicago law firm Ice Miller. “This, coupled with the multifaceted nature of how tokens function and are used, can cause them to fall under multiple agency’s jurisdiction.”



The lawsuit, irrespective of its resolution, will impact how Binance interacts with US markets going forward, legal experts said. A Binance spokesperson told Blockworks in a statement on Monday that the filing is “unexpected and disappointing,” considering the exchange has been “working collaboratively with the CFTC for more than two years.”&nbsp;



“Nevertheless, we intend to continue to collaborate with regulators in the US and around the world,” the statement said, adding that Binance has increased its compliance headcount from about 100 two years ago to “around 750 core and supporting compliance personnel today.”



Jeffrey Blockinger, chief legal counsel at decentralized exchange Vertex Protocol, said that a settlement or litigation is possible for Binance.



“Any settlement will certainly include an agreement by Binance to cease and desist from any further violations related to derivative sales and Bank Secrecy Act violations,” Blockinger said.&nbsp;



Added Blockinger: “If the matter is litigated, this could take years to resolve. During that period Binance will seek to correct any deficiencies that exist to avoid any further charges and show good faith to the CFTC.”



In fact, Dave Weisberger, the CEO and co-founder of CoinRoutes, an algorithmic-trading platform for the digital asset industry, told Blockworks that the case could potentially damage the Binance.US platform completely.



“It’s possible that Binance might soon see its operations in the United States come to an end entirely,” Weisberger said.



Such a drastic move, if it comes to fruition, could momentarily impact crypto liquidity in the United States. Weiserberger said that there are “many quality exchanges that operate in the United States and have more liquidity than BinanceUS.”



There was no immediate indication on Monday that Binance would have to shutter its US operations. The CFTC’s complaint did not name Binance.US as a specific defendant, but did mention the entity a number of times throughout.&nbsp;



The Binance spokesperson said the exchange has made “significant investments over the past two years to ensure we do not have US users active on our platform.” The spokesperson appeared to be referring to Binance’s core operations, which are not regulated or based in the US.&nbsp;



“Derivatives trading – of which Binance is currently the largest centralized exchange – might also be impacted,” Weiserberger said. “But, again, there are many global firms looking to expand into that market. It does, however, look like the CFTC action is going to stop whatever US domestic money is trading in the global crypto derivatives market.”



<h2>Ongoing blows to crypto</h2>



It’s yet another major blow to the crypto industry in recent months. Just last week, <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">Coinbase was issued a Wells Notice from the SEC</a> and <a href="https://blockworks.co/news/sec-sues-justin-sun">Tron’s Justin Sun was served legal papers</a>.&nbsp;



FTX’s November bankruptcy filing, followed by founder Sam Bankman-Fried’s arrest and indictment, was a major setback for the regulatory process in the US, industry members said. But Binance’s troubles may be less powerful.&nbsp;



“I think [the Binance lawsuit] will have less of an impact,” said Cody Carbone, vice president of policy at the Chamber of Digital Commerce. “FTX was a gut punch because SBF was a player at the table and made members/regulators feel foolish. They thought FTX was doing things right.”&nbsp;



Binance, on the other hand, has maintained a different reputation, according to Carbone.&nbsp;



“Binance has always been viewed more skeptically, rightly or wrongly, even by crypto champions on Capitol Hill,” he said.&nbsp;



Even <a href="https://blockworks.co/news/crypto-markets-stumble-binance-woes">markets have, so far, have not been impacted much</a>. Bitcoin lost an initial 4% or so before recovering. It was trading back above $27,000 within the hour. Ether, over the same period, briefly dipped slightly below the $1,700 level before bouncing back.&nbsp;



Darius Tabatabai, co-founder of decentralized exchange Vertex Protocol, said that the “CFTC taking actions against Binance isn’t entirely surprising,” given the spate of preceding “recent actions taken by US regulators.”



“This may be why the markets are largely nonplussed by the lawsuit,” Tabatabai said.



<h2>The silver lining</h2>



Following the FTX debacle, regulators have been quite stringent on their examination into centralized exchanges, Aaron Kaplan, co-CEO and co-founder of Prometheum, told Blockworks.



Prometheum is the parent company of Prometheum ATS, an SEC-registered trading firm and FINRA member.&nbsp;



“Many centralized exchanges operated in gray zones and historically took advantage of regulatory or jurisdictional arbitrage,” Kaplan said. “While this might mark a difficult period for centralized crypto exchanges, this is all part of forced maturation that will see the existing crypto financial services ecosystem being replaced by one that is regulated under the securities and commodities laws.”&nbsp;



Recent enforcement actions, in fact, could potentially help determine whether specific cryptoassets should be classified as commodities or securities, Luke Hoersten the founder and CEO of Bitnomial, a US-regulated international bitcoin derivatives exchange.



“As federally regulated exchanges become fully operational in the US, we expect a trend towards exchanges that have clearer regulatory standing as investors seek out safer and more secure options for participating in the crypto markets,” Hoersten told Blockworks. “Whether regulatory clarity comes from rule making or enforcement action, ultimately it will enable a much broader customer base to participate in crypto.”



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Binance Lawsuit Means More Regulatory Hurdles for Crypto

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Infrastructure

Elixir: A Decentralized Liquidity Engine

Digital Asset Summit (DAS) is returning March 2024.



This year&#8217;s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency.



What you can expect:



<ul>
<li>Insights on the impact of regulatory implications and the need for realistic policy</li>



<li>Access to institutional dinners and exclusive networking events,</li>



<li>Unparalleled insights from industry leaders</li>
</ul>



And more! Don’t miss out on the opportunity to be in the room when the future of crypto is decided.



Join us and help shape the future of our industry.

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March 18-20 | Washington, D.C.

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Digital Asset Summit 2024 | Washington, D.C.

Permissionless is the brainchild of Blockworks and Bankless. Over 5,500 people attended the inaugural event in 2022, making Permissionless the world’s largest DeFi conference.&nbsp;



What sets Permissionless apart? It’s a crypto native’s paradise, crafted specifically for both builders and investors who are dedicated to scaling the industry.&nbsp;



Permissionless is headed to Austin in 2023, and you know what they say… Everything is bigger in Texas.&nbsp;



Permissionless 2023 will feature the biggest names in Web3, a gargantuan exposition hall filled with the top brands in the space, an awe-inspiring NFT Gallery, inclusive, community-focused parties and events, metaverse experiences, and so much more.



See you in Paradise.

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Speakers

Erik Voorhees

Mary-Catherine (MC) Lader is the Chief Operating Officer of Uniswap Labs, a developer of foundational web3-based products and applications. In this role, she oversees the company’s growth efforts, strategic initiatives, and operations. Previously, she held various leadership roles at BlackRock, including as the Global Head of the firm’s digital sustainability business, Chief Operating Officer of the firm’s digital wealth business, and leader of the firm’s strategic fintech investments and blockchain activities. MC began her career as an investor in Goldman Sachs’ Special Situations Group. She received her J.D. and M.B.A. degrees at Harvard Law School and Harvard Business School, respectively, and her B.A. at Brown University.

Mary-Catherine Lader

Zaki Manian is a Co-Founder of Sommelier, the most powerful coprocessor yet for DeFi traders and Liquidity Providers. He’s also a Co-Founder of iqlusion, which provides infrastructure like a data center and a Cosmos validator for next-gen crypto technologies. Previously, Zaki helped build the Cosmos ecosystem, including launching the first public Cosmos testnet, and served as a director of Tendermint. Zaki has been a leading developer in the blockchain space since 2014, when he taught himself cryptography and began contributing to projects including Bitcoin, Ethereum, Zcash, and Tendermint. Having studied history of science at the University of Pennsylvania, Zaki’s skill sets in software engineering, programming, and computer science are largely self-taught.

Zaki Manian

Justin Drake

At Alluvial, Chief Growth Officer Mara Schmiedt focuses on advancing industry participation and adoption of Liquid Collective, seeking out world-class partnership opportunities, and overseeing Business Development, Sales, and other strategic functions. Mara recently joined Alluvial as Chief Growth Officer from Coinbase, where she served as the Head of Sales for Coinbase Cloud, the leading developer platform for blockchain-based infrastructure products and APIs. She expanded Cloud's staking business, supporting large-scale organizations, enterprises, and institutional investors. Prior to joining Coinbase, she managed Business Development at Bison Trails, a leading provider of blockchain-based infrastructure acquired by Coinbase in February 2021. Mara also served as Strategy Manager at ConsenSys, where she supported the strategic development of Codefi, the blockchain application suite for Web3 Commerce and Finance.



Mara is passionate about open-source technology and has published multiple research reports and papers on liquid staking, such as <a href="https://drive.google.com/file/d/13-s15SvCIUBukhSZiNkpd0sTff3izQ5G/view">The Internet Bond</a> and <a href="https://consensys.net/insights/eth-2-staking-ecosystem-report/">Ethereum 2.0 Staking Ecosystem Report</a>.&nbsp;



Additionally, she has led various industry initiatives, including leading the working group with the Ethereum Foundation that developed the Ethereum Launchpad and the first distributed validator technology (DVT) PoCs. Mara's deep experience in bringing technology and blockchain-based products and services to market — as well as her track record of building world-class business and sales organizations — bolsters Alluvial's support of Liquid Collective.

Mara Schmiedt

Stani Kulechov

Hasu

Christine is a Partner and Head of Digital Asset Strategy at Apollo Global Management, Inc. In this newly created position, Christine leads digital asset strategy across the firm, exploring more ways to apply blockchain technologies to Apollo’s business. She also plays a key role in Apollo’s strategy to invest in some of the most innovative digital asset companies and founders, with a specific focus on those transforming the financial services sector where Apollo can serve as a validator and enabler of new technologies. Previously, she was a Managing Director at J.P. Morgan and led its Blockchain/Crypto/Metaverse program through initiatives in digital assets, tokenized payments, internet of-things, decentralized identity, NFTs, and virtual worlds. She is a graduate of Brown University. Christine was named in Fortune’s The Ledger 40 Under 40 list of “the most impressive, young superstars transforming business at the leading edge of finance and technology.”

Christine Moy

Santiago Roel Santos (CryptoPunk #9159) is an investor focusing at the intersection of DeFi and the Web3 metaverse (NFTs/gaming). Most recently was a Partner at ParaFi Capital, one of the largest crypto funds specializing in DeFi. Prior to that, he was at Sageview Capital investing in Internet and software and, before that, at JP Morgan investment banking. Santiago began investing in crypto in 2012.

Santiago Roel Santos

Michael Anderson is the co-founder of Framework Ventures, one of earliest and largest VC firms to enter the “DeFi” or Decentralized Finance industry. With over $1B in AUM, the firm has since expanded into additional maturing verticals like blockchain gaming and social crypto. Prior to Framework, Michael and his co-founder Vance Spencer launched Hashletes, a digital collectible startup with official licensing from the NFL. Before entering crypto, Michael served as a product manager at both Snapchat and Dropbox, where he helped build out their monetization platforms.

Michael Anderson

Soona Amhaz is founder and GP of Volt Capital, a venture firm that focuses on pre-seed and seed companies in the digital assets space. Soona is also an advisor to On Deck, Forbes 30 under 30 in VC, and an alum from the University of Michigan School of Engineering.

Soona Amhaz

Colleen Sullivan is Co-Head of Ventures at Brevan Howard Digital. Prior to joining Brevan Howard Digital, Colleen co-founded and served as CEO of CMT Digital, where she was also a partner with the broader CMT Group and commenced activities in the crypto industry in 2013. Prior to starting CMT Digital, Colleen co-founded Sullivan Wolf Kailus, a boutique law firm that specializes in hedge fund, private equity, venture capital, digital assets, and other alternative investment products. Colleen also previously practiced law in the Investment Funds and Derivatives group at Sidley Austin LLP and, at age 25, co-founded a company called iOptions Group LLC, which developed hedging and monetization strategies for holders of employee stock options. Ms. Sullivan currently serves on the Advisory Board of the Chamber of Digital Commerce.

Colleen Sullivan

Tarun is an alumni of D. E. Shaw Research (DESRES), Vatic Labs, an HFT firm, and Cornell. He fell into the blockchain world in 2011, when he was working on ASICs at DESRES and observed Bitcoin ASIC mining rigs substantially delay DESRES’s ASIC production. He has spent the last seven years working on simulation-based R&amp;D at the intersection of high-performance computing and AI and is applying this knowledge to the blockchain ecosystem.

Tarun Chitra

Kevin Owocki is the founder of Gitcoin.co — Where builders &amp; funders come together to build the open web.  Gitcoin has delivered <a href="http://gitcoin.co/results">$50mm worth of value</a> to OSS devs in the last several years. He has a BS in Computer Science, 15 years of engineering leadership experience in Open Source Software and Web Startups. Kevin is a community organizer in the Boulder Colorado Tech Scene.

Kevin Owocki

Meltem Demirors is Chief Strategy Officer of CoinShares, a publicly listed investment firm that manages over five billion in digital assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem.



 An established veteran of digital asset investing, Meltem draws on her substantial experience and widespread influence to accelerate growth and acceptance of the asset class. Prior to joining CoinShares, Meltem helped build and grow Digital Currency Group, raising capital from the world’s largest corporations and managing a portfolio of 120 companies and 4 subsidiaries. Before she was bitten with the bitcoin bug, Meltem worked in the Oil &amp; Gas industry in trading, corporate treasury, and M&amp;A roles. 



Meltem has been recognized for her personal contributions to the industry and serves as an outspoken advocate. She is a founding member of the World Economic Forum Blockchain Council. Meltem teaches at her alma mater MIT as well as Oxford, and is passionate about privacy and civil rights.

Meltem Demirors

Vance is the co-founders of Framework Ventures, a thesis-driven venture capital firm whose team of technologists, researchers, and investors partner with founders and teams to build token-based networks and develop the requisite cryptoeconomics, governance, and community to scale.

Vance Spencer

Jim Bianco is President and Macro Strategist at Bianco Research, L.L.C. Since 1990 Jim’s commentaries have offered a unique perspective on the global economy and financial markets. Unencumbered by the biases of traditional Wall Street research, Jim has built a decades long reputation for objective, incisive commentary that challenges consensus thinking. In nearly 20 years at Bianco Research, Jim’s wide ranging commentaries have addressed monetary policy, the intersection of markets and politics, the role of government in the economy, fund flows and positioning in financial markets.



Jim appears regularly on CNBC, Bloomberg and Fox Business, and is often featured in the Wall Street Journal, Bloomberg News, Grants Interest Rate Observer, and MarketWatch. Prior to joining Arbor and Bianco Research, Jim was a Market Strategist in equity and fixed income research at UBS Securities and Equity Technical Analyst at First Boston and Shearson Lehman Brothers. He is a Chartered Market Technician (CMT) and a member of the Market Technicians Association (MTA). Jim has a Bachelor of Science degree in Finance from Marquette University (1984) and an MBA from Fordham University (1989).

Jim Bianco

Mr. Forman is the Founder and Managing Partner of ParaFi Capital. ParaFi is a leading investment firm focused on the blockchain and digital asset markets, and an early pioneer in decentralized finance (“DeFi”). ParaFi is one of the largest investors, users, and governance participants within the DeFi ecosystem, spanning the full network lifecycle from pre-launch to full decentralization. Mr. Forman serves as the Chief Investment Officer across the firm’s strategies, which include investing in public and private cryptoassets, systematic credit and market neutral DeFi strategies, and blockchain-focused venture capital and growth equity investing.



Prior to founding ParaFi in 2018, Mr. Forman spent 10 years at leading alternative investment managers, including KKR and TPG. While at KKR, Mr. Forman served as a Director in the Credit business, investing across a wide array of industry sectors and strategies, including distressed special situations, private credit, and opportunistic and liquid credit. Prior to KKR, Mr. Forman served as a Vice President with TPG’s former credit business, Sixth Street Partners, as one of the first investment professionals to join the platform, helping scale its private credit vehicle, TPG Specialty Lending, which listed publicly in 2014. Earlier in his career, Mr. Forman worked in private equity at Littlejohn &amp; Company and investment banking at Rothschild &amp; Co. Mr. Forman graduated with a B.A. in Philosophy, Politics and Economics, magna cum laude, from the University of Pennsylvania.

Ben Forman

Haseeb is a Managing Partner at Dragonfly. He was previously a partner at Metastable Capital, and has a background in software engineering at Airbnb and Earn.com (acquired by Coinbase).

Haseeb Qureshi

Vanessa Grellet is a Managing Partner at Aglaé Ventures. Vanessa is a Global Executive with over 20 years of expertise in the Financial Services and Tech industry. At Aglaé Ventures she manages the Web 3 focused fund. Prior to joining Aglae she has Head of Portfolio growth at CoinFund and Executive director at ConsenSys where she focused on driving adoption for Ethereum based products,  Strategic initiatives, Alliances and Channels.  She was involved in setting up the Enterprise Ethereum Alliance (EEA), the Accounting Blockchain Coalition (ABC) and the Blockchain for Social Impact Coalition (BSIC). Prior to ConsenSys she was a Strategy Executive at NYSE focused on investments and M&amp;A and a key member of PwC’s global wealth management team. Vanessa is a Founding Board member of AABC focused on Blockchain and Art, a member of the Advisory Council of ConsenSys, a Milken Institute Associate, a contributor to the  World Economic Forum Digital Future Council and part of <a href="https://cointelegraph.com/top-people-in-crypto-and-blockchain-2022/vanessa-grellet">Cointelegraph’s list of 100 most influential people for 2022</a>. Mrs. Grellet graduated Cum Laude from Law School (Paris II Assas) and Business School (HEC).

Vanessa Grellet

Mihailo Bjelic received his MSc in CS from the University of Belgrade. Prior to entering Web3/blockchain industry, he co-founded an AI/ML-powered platform for automotive industry and several other smaller startups and side projects. In 2017, he decided to join the Web3 movement full-time, primarily as a researcher interested in Ethereum scaling and multi-chain paradigms. In parallel with his work, he became one of the prominent Ethereum proponents and community members. In 2019, he started working on Polygon and conceptualized its architecture, vision and brand. In 2020, he joined hands with the Matic Network team and they have been working together on Polygon since then.

Mihailo Bjelic

Ben is a co-founder of Optimism, a leading Ethereum L2 ecosystem. He served as Chief Scientist before becoming a director at the Optimism Foundation. In his free time, he makes Ethereum-based parody songs under his stage name, Weird ETH Yankovic.

Ben Jones

Kristin is the CEO of the Blockchain Association, the Washington, D.C.-based trade association representing more than 100 of the industry’s leading companies. She also serves as a board member of the Filecoin Foundation for the Decentralized Web. Kristin serves as a liaison between policymakers and the cryptocurrency industry to assist in the creation of legislation and regulation that promotes the growth of the cryptocurrency ecosystem in the U.S. She is also a leading, public voice advocating for the cryptocurrency and blockchain industry through top-tier media interviews, op-eds and letters to the editor, and global speaking engagements. Kristin is a renowned voice for the industry, having been featured on Fortune’s 2020 40 under 40 list, CoinDesk’s 2021 50 people who defined the year in crypto, and CoinTelegraph’s 2022 top 100 Influencers in Crypto and Blockchain. Prior to leading the Blockchain Association, Kristin helped blockchain and technology companies achieve their public policy objectives in Washington. She served as a Senate and congressional aide on Capitol Hill for nearly ten years, much of which was spent focusing on technology policy.

Kristin Smith

Avichal is a successful entrepreneur with executive experience at Google and Facebook, which acquired his previous company. As an angel investor, Avichal has invested in 15 unicorns and 5 decacorns including Airtable, Boom Supersonic, Color Genomics, Cruise, Deel, Figma, Newfront Insurance, Notion, Nova Credit, Pulley, and others. He co-founded Electric Capital in 2018 and has grown it to one of the largest crypto venture firms globally. Electric is an investor in many of the leading web3 protocols and companies such as Bitwise, Bitnomial, dYdX, Frax, Kraken, Magic Eden, NEAR, and Solana.

Avichal Garg

Matt Hougan is one of the world’s leading experts on crypto, ETFs, and financial technology. He is Chief Investment Officer for Bitwise Asset Management, a pioneer in cryptoasset index funds with more than $1.2 billion in assets under management. He was previously CEO of ETF.com, where he helped build the world’s first ETF data and analytics system, the leading ETF media site, and the world’s largest ETF conference, Inside ETFs. Hougan is co-author of both “A Comprehensive Guide to Exchange-Traded Funds” and “Cryptoassets: The Guide to Bitcoin, Blockchain and Cryptocurrencies for Professional Investors” from the CFA Institute’s Research Foundation. He is a crypto columnist for Forbes, and a three-time member of the Barron’s ETF Roundtable.

Matt Hougan

Li Jin

Ethan is the co-founder of the Cosmos network and serves as the CEO of Informal Systems. Informal Systems is a member-driven worker’s cooperative building software that enables trustworthy relationships between protocols and people to flourish. Ethan also serves as the President of the Interchain Foundation which funds and coordinates development of public goods in the Cosmos ecosystem. Ethan sees local money systems as the basis for self-sufficient local economies to prosper. With a background in cell biology, neuroscience, mathematics, machine learning, and distributed systems, his goal is to build systems that encourage humans to work cooperatively through methods of self-organization. He is currently focused on blockchain technology as a means to bring greater political and economic sovereignty to local communities around the globe. Prior to Informal Systems, Ethan co-founded the Tendermint and Cosmos projects, and served as CTO of Tendermint Inc. Today, dozens of projects are adopting technology conceived in the original Cosmos whitepaper, including the Inter-Blockchain (IBC) Communication protocol – an industry-standard for permissionless communication between sovereign blockchains. Today, the Cosmos ecosystem continues to pioneer technological paradigms for building interoperable application-specific blockchains.

Ethan Buchman

Tyrone leads J.P. Morgan’s Blockchain team and is responsible for creating innovative Web3-focused products &amp; solutions for J.P. Morgan’s businesses and clients, and for engaging with the industry at large in order to provide a holistic blockchain strategy for the firm. Tyrone is also the Head of Onyx Digital Assets, a multi-asset tokenization platform that enables the exchange of value for various types of digital assets. Tyrone was previously a Senior Blockchain Product Manager in J.P. Morgan’s Blockchain Center of Excellence and was also the Head of Product for Quorum, an open-sourced Ethereum-based blockchain platform built for Enterprise use. Prior to moving into the blockchain industry in 2015, Tyrone was a software engineer within J.P. Morgan's Credit Markets business, and before that he spent several years in Product transformation, managing and delivering large strategic programs across various businesses within J.P. Morgan, across Front, Middle and Back Office risk and trading systems. Tyrone sits on the Board of Directors of The Enterprise Ethereum Alliance and The Hyperledger Foundation.

Tyrone Lobban

Rich is a Co-Founder and President of GSR and leads the group across strategic initiatives and growth. He began his career at Goldman Sachs where he spent 11 years between New York and London in commodities trading as a Managing Director and Global Head of Crude Oil and Derivatives Trading. Prior to joining GSR, he spent a few years on the buy-side, running energy trading teams at two New York-based hedge funds. Rich earned a bachelor’s degree in Mathematics from Columbia University.

Rich Rosenblum

Kain Warwick is an Australian cryptocurrency entrepreneur most-known as the founder of Synthetix protocol. Synthetix is a financial primitive that enables the creation of synthetic assets, offering unique derivatives and exposure to real-world assets on the blockchain.&nbsp;In 2020, Kain popularised the concept of yield farming that sparked the 2020 DeFi boom, earning the moniker: ‘the father of modern agriculture.

Kain Warwick

Brian Quintenz is the Head of Policy for a16z crypto, where he helps to translate between the crypto and policy communities.



Brian has long stood out as an innovative thinker in crypto and DeFi and was one of the earliest leaders in Washington to recognize the value of crypto. Brian initially joined a16z crypto as a senior advisor. In December 2022, he moved to the full-time role leading its policy team.



Prior to joining a16z, he was nominated by both Presidents Obama and Trump to serve as commissioner of the Commodity Futures Trading Commission (CFTC) and, in August 2017, was unanimously confirmed by the U.S. Senate. He also led the agency’s Technology Advisory Committee, which hosted the most comprehensive set of public crypto-related policy discussions and briefings of any federal financial regulator. During his service, the CFTC oversaw the listing of the first U.S. regulated Bitcoin and Ether futures contracts on derivatives exchanges, and the rapid expansion of DeFi. All the while, he was a champion for tailored, risk-calibrated regulation.



Prior to his appointment to the CFTC, Brian was the Founder and Managing Principal of Saeculum Capital Management, LLC where he developed and implemented Saeculum’s long term, momentum-based investment process for both traditional discretionary accounts as well as a managed-futures, commodity pool hedge fund.



Brian began his career on Capitol Hill, where he worked for 6.5 years and served as senior policy aid to a Member of Congress. He received his B.S. from Duke University and M.B.A. from Georgetown University.

Brian Quintenz

Robby Yung, Animoca Brands’s CEO of Investments, partner at Animoca Capital, a leader in digital entertainment, blockchain, and gamification with a portfolio of products and games including the REVV and SAND tokens, as well as investment and partnerships with companies like Axie Infinity,  OpenSea, Dapper Labs, and Alien Worlds and subsidiaries like The Sandbox, Gamee, Quidd, and Lympo. Robby has been in gaming since 2012 and blockchain gaming since 2018. He served as the first CEO of Animoca Brands after taking the group public in 2015. Prior to that, he cofounded magazine publisher, One Media Group, which he listed on the Hong Kong Stock Exchange. He also founded Chinese television and outdoor media concern, Redgate Media Group, which was acquired by  Inno-Tech Holdings . He began his career in technology, building wireless telecom networks in China and Indonesia with Metromedia.

Robby Yung

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<h2>Why Sponsor Permissionless 2023?</h2>
If you’re serious about crypto, you have to be at Permissionless. Permissionless brings together DeFi builders, DAO participants, protocol developers, crypto companies, funds and institutions, and more. It’s a true crypto-native’s paradise, where you’ll have the opportunity to showcase your offerings and form lasting connections with the community.
We’ll work with your team to define the perfect sponsorship opportunity that best fits your needs and budget. Want to do something completely revolutionary? Our team can help design a bespoke package that brings your vision to life.
Get in touch with us at <a href="mailto:sales@blockworks.co">sales@blockworks.co</a>
&nbsp;