David Canellis

Ripple Labs’ XRP token has dropped 20% since the SEC sued the firm, and two top executives, over alleged unregistered securities sales back in December 2020.



And since then, Ripple Labs has poured billions of dollars into buying back the XRP token on secondary markets.



Some <a href="https://fortune.com/crypto/2023/02/01/despite-sec-litigation-ripple-sold-226-million-of-xrp-last-quarter-and-the-token-gained-21-last-month/" target="_blank" rel="noreferrer noopener">reports</a> have focused on Ripple Labs’ direct XRP sales in the fourth quarter of 2022. The move to acquire XRP tokens — ostensibly a bullish indicator — has been trumpeted as boosting the ecosystem’s liquidity.



Those reports often link the nearly $3 billion of in-house sales to XRP’s fast-moving 27% pump in January. They have propped up a narrative in which XRP’s latest revival has been made all the more notable by the fact that it’s played out with an uncertain, and, likely decisive, regulatory outcome hanging in the balance.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Those sales specifically refer to institutions and other corporate clients acquiring XRP from Ripple directly for use within its On-Demand Liquidity (ODL) network, a product pitched to help smooth the cross-border remittance process via XRP-powered crypto rails.



Blockworks compiled the full six-year history of Ripple Labs’ quarterly markets reports, stretching back to the inaugural edition in the fourth quarter of 2016.



Ripple’s direct XRP sales only tell one part of the story. It’s true that Ripple sold around $2.97 billion of XRP last quarter — on par with the previous period’s $2.82 billion — but the reality is that Ripple has appeared to push much of that money into buying XRP on public markets, per its own disclosures.



In total, Ripple Labs has publicly reported $11.1 billion in ODL-related sales from the beginning of 2021 until the end of 2022. Since then, the firm has shelled out nearly $8.4 billion throughout a sustained XRP buying campaign initially pitched to protect the token’s markets and its customers, averaging more than $1 billion per quarter.



Ripple Labs’ disclosures indicate the firm has, since the SEC’s charges, essentially recycled 75% of the revenue generated from direct XRP sales on buying its own token on secondary markets, and 67% of overall sales revenue from the start of 2016’s fourth quarter.



Blockworks reached out to several contacts at Ripple on multiple occasions with the specific details contained in this story, and did not receive any response.



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</div></figure>



<h2>Ripple spends billions on XRP market ‘health’</h2>



Collating figures contained in each of Ripple’s quarterly market reports (including the most <a href="https://ripple.com/insights/q4-2022-xrp-markets-report/">recent</a>), across the six years of disclosures, Blockworks found that Ripple sold $12.55 billion in XRP directly to customers across that period.



Of that, $744.6 million was sold “programmatically,” a common term for selling on public markets, such as crypto exchanges.



Ripple stopped programmatic sales after the third quarter of 2019. No particular reason was given in the underlying <a href="https://ripple.com/insights/q3-2019-markets-report/">disclosure</a>. But the firm then said it was focusing on over the counter (OTC) sales with partners working in “strategically important” regions including EMEA and Asia.



The following year, Ripple said it was <a href="https://ripple.com/insights/q2-2020-xrp-markets-report/">focusing</a> “solely on its OTC sales as part of providing increased XRP liquidity to RippleNet’s ODL customers.” It described that liquidity as “vital” as ODL grows.



Ripple first disclosed that it was an XRP buyer on secondary markets in 2020&#8217;s second <a href="https://ripple.com/insights/q2-2020-xrp-markets-report/">quarter</a>, although purchase <a href="https://ripple.com/insights/q3-2020-xrp-markets-report/">figures</a> didn’t appear until the third quarter of that same year.&nbsp;



“A healthy, orderly XRP market is required to minimize cost and risk for customers, and Ripple plays a responsible role in the liquidity process,” Ripple <a href="https://ripple.com/insights/q2-2020-xrp-markets-report/">said</a> in Q2 2020.



<blockquote class="wp-block-quote">
“As more financial institutions leverage RippleNet’s ODL service, more liquidity is added into the XRP market. That said, Ripple has been a buyer in the secondary market and may continue to undertake purchases in the future at market prices.”
</blockquote>



To start, Ripple Labs was snapping up around $40 million per quarter, in Q3 and Q4 2020. It then took a break until Q4 2021, when it ramped up efforts significantly by spending $322 million.



Around $1.08 billion was spent in the first three months of 2022, then $1.71 billion in the following quarter. That expenditure jumped almost 50% in the quarter after that, when Ripple <a href="https://ripple.com/insights/q2-2022-xrp-markets-report/">reported</a> $2.5 billion in secondary purchases.&nbsp;



Last quarter, it spent $2.74 billion on XRP. The price of XRP, meanwhile, dropped by 30%.



Ripple described its buying campaign as a “near-term product solution” for an XRP lending operation <a href="https://ripple.com/insights/fund-instant-cross-border-payments-with-a-line-of-credit-from-ripplenet/">announced</a> in Oct. 2020.



The firm said in its Q3 2020 <a href="https://ripple.com/insights/q3-2020-xrp-markets-report/">report</a> that it was building “new ODL capabilities to dynamically source XRP liquidity from the open market, not just Ripple,” hinting that its XRP buys on secondary markets would eventually slow — but its budget for XRP buybacks has only increased.



<h2>Centralization and securities laws</h2>



The question of whether XRP and its underlying crypto infrastructure are sufficiently decentralized to avoid SEC scrutiny plagued San Francisco-headquartered Ripple Labs for years.



That debate culminated in the SEC’s lawsuit, which seeks to prove that purchases of the XRP token constitute investment contracts. Ripple Labs holds sway over the network and the value XRP, the regulator has argued, which would mean that its token offering falls under securities law per the Howey test.



Companies selling securities must register with the SEC and lodge regular financial disclosures, among other things, in order to provide reliable information on which investors can base their decisions.



In a landmark <a href="https://www.sec.gov/news/speech/speech-hinman-061418">speech</a> in 2018, William Hinman of the SEC noted that “If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.” He specifically named Bitcoin and Ethereum as tokens that met this standard. XRP’s omission from his speech was the first sign that XRP was potentially under the gun.



Still, decentralization is a spectrum, and there are many ways by which to <a href="https://blockworks.co/news/measuring-decentralization-is-your-crypto-decentralized">gauge decentralization of crypto projects</a>. Some relate to their technological underpinnings — how many validator nodes the network has, for example, and how they’re chosen.&nbsp;



Another is the centralization of supply; if one party holds too many tokens, they could wield outsized influence over markets.



In October 2022, Ripple <a href="https://twitter.com/bgarlinghouse/status/1585777993359642625">declared</a> that it — for the first time — owned less than 50% of the outstanding supply of XRP, which is currently about 50.8 billion ($21.08 billion). In 2017, that <a href="https://www.cnbc.com/2017/12/29/ripple-soars-becomes-second-biggest-cryptocurrency-by-market-cap.html">figure</a> was as high as 61%.&nbsp;



Ripple distributing XRP through its direct and ODL-related sales contributed to that reduction.&nbsp;



It’s difficult to gauge the actual market impact of Ripple consistently buying so much XRP over the past two years (it’s now the sixth largest digital asset by market value, in <a href="https://coinmarketcap.com/historical/20150101/">2015</a> it was the second-biggest behind bitcoin).



<h2>Buybacks common Wall Street practice</h2>



While order book depth is a fluid metric and changes rapidly, CoinGecko recently <a href="https://www.coingecko.com/en/coins/xrp#markets">place</a>d the 2% depth of Binance’s XRP/USDT market at about $2.3 million on the upside and $1.6 million on the downside — meaning bids of those sizes would shift XRP’s price 2% in either direction.&nbsp;



When averaged out on a daily basis, Ripple’s XRP buys over 2022 would’ve amounted to $22 million per day – more than 10 times the reported amount required to move the needle on markets. (Ripple disclosed sales were executed daily in its Q2 2017 <a href="https://web.archive.org/web/20220124004742/https://ripple.com/insights/q2-2017-xrp-markets-report/">report</a>, although no information has been given about the rate of purchases)



Ripple has openly telegraphed its buys. And, for what it’s worth, token buyback schemes are common in crypto markets. Crypto exchange tokens often <a href="https://blockworks.co/news/native-crypto-exchange-tokens-hint-at-first-sign-of-broader-market-recovery">acquire and burn their own token</a>s; crypto lender Nexo has been <a href="https://nexo.io/media-center/nexo-commits-additional-50-million-to-long-standing-buyback-initiative">running</a> buybacks for years, a move that has carried over to buzzy projects like <a href="https://twitter.com/blockworksres/status/1612056633718476801">BitDAO</a>.



(Ripple doesn’t burn XRP directly, instead its ledger automatically <a href="https://xrpl.org/transaction-cost.html">burns</a> a small amount for every transaction).&nbsp;



Token buybacks, while an unregulated process, mimic stock buybacks seen in traditional equities markets (which are all securities). Meta just <a href="https://www.cnbc.com/2023/02/01/facebook-parent-meta-announces-40-billion-stock-buyback.html">announced</a> a $40 billion buyback scheme which appears to have heavily influenced its recent 27% rally, despite somewhat lackluster earnings.&nbsp;



Stock buyback schemes are intended to return capital to shareholders. They can present their own <a href="https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-buybacks-mitigating-common-pitfalls/">concerns</a>, including executive compensation gaming and destroying long-term value propositions.



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</div><figcaption class="wp-element-caption">XRP has more-or-less tracked bitcoin since SEC filed its charges</figcaption></figure>



Whether XRP <a href="https://blockworks.co/news/ripple-sec-final-briefs-provide-case-summary">is a security</a> has yet to be determined. A ruling is expected sometime this year.&nbsp;



On Dec. 22, the day SEC filed charges against Ripple, co-founder Chris Larsen and CEO Brad Garlinghouse, the latter stated in a <a href="https://ripple.com/insights/the-secs-attack-on-crypto-in-the-united-states/">blog</a>: &#8220;Unlike securities, the market value of XRP has not been correlated with Ripple’s activities. Instead, the price of XRP is correlated to the movement of other virtual currencies.&#8221;



Crypto prices across the board indeed tend to correlate. But based on Ripple’s own disclosures, it’s clear the firm has been busy directly maintaining the “health” of XRP markets throughout its battle with the SEC — to the tune of billions — all while attempting to <a href="https://dfpi.ca.gov/wp-content/uploads/sites/337/2022/09/Ripple-comment-letter-8.5.22.pdf?emrc=4cdda7">disprove</a> its influence over XRP.



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Ripple Bought $8.4B XRP Since SEC Lawsuit ‘To Support Healthy Markets’

Casey Wagner

Terraform Labs founder Do Kwon has been indicted in the US on fraud charges hours after <a href="https://blockworks.co/news/do-kwon-arrested">his arrest in Montenegro</a>.&nbsp;



A grand jury in New York federal court charged Kwon with securities fraud, wire fraud and commodities fraud, the indictment shows.&nbsp;



<a href="https://blockworks.co/tag/do-kwon">Kwon</a> also has pending federal cases in the Southern District of New York with the <a href="https://blockworks.co/tag/sec">SEC</a>. The securities regulator <a href="https://blockworks.co/news/sec-charges-do-kwon-terraform-labs-with-fraud-misleading-investors">charged Kwon</a> with an alleged unregistered security offering last month.



The crypto executive was first served with a subpoena from the SEC in November 2021. Kwon and Terraform then countersued the agency challenging the subpoenas, citing alleged violations to due process law.



Montenegrin authorities may hand Kwon over to the US, based on prior agreements.&nbsp;



Montenegro has in the past “provided significant assistance” in extraditions to the US, the Department of Justice said in November 2022. 



Montenegro will only extradite on bilateral agreement and will transfer the person who has been granted extradition within 30 days, according to the <a href="https://rm.coe.int/16803ab7f1#:~:text=Citizen%20of%20Montenegro%20can%20be,of%20the%20decision%20on%20extradition.">Council of Europe</a>. 



Kwon is still wanted by government officials in South Korea, who issued a warrant for his arrest in October 2022.&nbsp;



Terraform Labs’ stablecoin, TerraUSD (<a href="https://blockworks.co/price/ust">UST</a>), rocked crypto markets with its sudden collapse last year. The fall of UST, and its sister coin, <a href="https://blockworks.co/price/luna">LUNA</a>, led to billions of dollars in losses for investors.



The US Department of Justice <a href="https://blockworks.co/news/doj-terrausd-stablecoin">is reportedly investigating UST’s failure</a>, alleging that Kwon and his company misled investors about the stablecoin’s risks.



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Do Kwon Indicted on Fraud Charges in New York

Ben Strack

Coinbase executives doubled down on the possibility of taking the SEC to court a day after the regulator warned the crypto company it could bring an enforcement action against it.&nbsp;



<a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">The SEC hit Coinbase with a Wells notice</a> Wednesday about alleged securities violations. Coinbase said in a statement Wednesday it is “confident in the legality of [its] assets and services,” adding that the regulator’s claims lacked detail about specific problems.&nbsp;



Coinbase CEO <a href="https://blockworks.co/tag/brian-armstrong" target="_blank" rel="noreferrer noopener">Brian Armstrong</a> said during a Twitter <a href="https://twitter.com/coinbase/status/1638940882597744642" target="_blank" rel="noreferrer noopener">Space</a> Thursday that while the SEC’s move wasn’t totally unexpected, it was “a very strange outcome” after the firm met with the regulator roughly 30 times during the last nine months. 



“I think the courts could maybe actually give us some clarity here,” Armstrong said. “In a way we’re happy to go to court if that’s what it takes to finally get some case law developed for this industry so the industry can be built in a safe, trusted and regulated way here in America.”&nbsp;&nbsp;



The regulator is targeting Coinbase Prime and Coinbase Wallet, according to the Wells <a href="https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm" target="_blank" rel="noreferrer noopener">notice</a> — a letter that follows an investigation and precedes a potential enforcement action. 



The SEC declined to comment further.



The <a href="https://blockworks.co/tag/sec" target="_blank" rel="noreferrer noopener">SEC</a>’s latest Wells notice against <a href="https://blockworks.co/tag/coinbase" target="_blank" rel="noreferrer noopener">Coinbase</a> reflects a belief by some in the US that crypto industry players seek to take advantage of regulatory loopholes, Crypto Council for Innovation CEO Sheila Warren said in a Thursday statement.



“What’s true is that a reprehensible amount of resources and brainpower have been spent in the US trying to engage with this SEC and trying to create substance and a path out of the wraithlike comments issued by the agency,” Warren said. “Are we really going to allow one agency in the US to set the entire trajectory of an innovation for the entire country, especially if that agency refuses to engage with the industry it is trying to regulate?”



Armstrong said while other US regulators — such as the <a href="https://blockworks.co/tag/cftc" target="_blank" rel="noreferrer noopener">CFTC</a> and state agencies — have been “reasonable” to work with, the SEC has been “a real outlier.” 



Despite many meetings with the SEC and Coinbase spending tens of millions of dollars in legal fees, Armstrong said, the agency has not offered feedback to the company.&nbsp;



Policy by enforcement is the “worst possible way” to move a nascent space forward, Coinbase Chief Policy Officer Faryar Shirzad said during the Twitter Space.



Despite a <a href="https://blockworks.co/news/crypto-regulation-policy-law">lack of US crypto policy movement</a> thus far, Shirzad said he is confident politicians will start to respond to aggressive actions against the crypto industry.



“I think what you’ll see now over the next few weeks is that Congress is going to step up,” he said.



<h2>White House crypto stance said to be “disappointing”&nbsp;</h2>



The warning to Coinbase came the same day the SEC <a href="https://blockworks.co/news/sec-sues-justin-sun">launched a lawsuit</a> against Tron Network founder Justin Sun for allegedly selling unregistered securities. Sun <a href="https://twitter.com/justinsuntron/status/1638742625003130881" target="_blank" rel="noreferrer noopener">tweeted</a> that the complaint “lacks merit.” 



The SEC’s Office of Investor Education and Advocacy then renewed its warning about crypto risks in an investor <a href="https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/crypto-asset-securities" target="_blank" rel="noreferrer noopener">alert</a> Thursday, stating that “investments in crypto asset securities can be exceptionally volatile and speculative.”



The alert said that crypto companies may not be complying with federal securities laws. It added that <a href="https://blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust">proof-of-reserves</a> efforts “may not provide any meaningful assurance that these entities hold adequate assets to back their customers’ balances.”



The White House has even weighed, <a href="https://www.whitehouse.gov/wp-content/uploads/2023/03/ERP-2023.pdf" target="_blank" rel="noreferrer noopener">saying</a> in its annual Economic Report of the President earlier this week that the design of digital assets “frequently reflects an ignorance of basic economic principles.”



“Indeed, crypto assets to date do not appear to offer investments with any fundamental value, nor do they act as an effective alternative to fiat money, improve financial inclusion, or make payments more efficient,” the report states. “Instead, their innovation has been mostly about creating artificial scarcity in order to support crypto assets’ prices — and many of them have no fundamental value.”



Blockchain Association CEO Kristin Smith called the latest White House report “disappointing.”



“While other countries are increasingly receptive to the burgeoning crypto industry, some in government appear increasingly allergic to its promise, sending companies and innovators offshore,” she said in a statement the day later. “We urge the Biden administration to consider how it will be remembered: as a leader of profound innovation or a roadblock to a global tech revolution.”



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Brian Armstrong: Coinbase ‘Happy To Go To Court’ With SEC To Defend Industry

The Department of the Treasury and IRS issued a new notice proposing most NFTs be taxed higher than securities and other assets.&nbsp;



Certain <a href="https://blockworks.co/tag/nft" target="_blank" rel="noreferrer noopener">NFTs</a> should be classified as collectibles, the agencies suggested in the notice issued this week. 



Net capital gains tax from selling collectibles for a profit can be as high as 28% for the highest earners, per <a href="https://blockworks.co/tag/irs" target="_blank" rel="noreferrer noopener">IRS</a> code. Capital gains taxes on securities and other goods generally range from 15% to 20%. 



The notice states that NFTs could be classified as collectibles if the associated right or asset is a collectible. For example, stamps are collectibles under US tax code, so an NFT tied to ownership of a stamp would also be a collectible. The IRS calls this reasoning the “look-through analysis.”&nbsp;



“The [analysis] will be instrumental in an investor&#8217;s individual NFTs being classified correctly on one&#8217;s tax return as well as taxed at the correct rate rather than lumped into one rate and only one classification,” Gabriel Brin, vice president of tax and accounting product at Ledgible, told Blockworks in an interview.&nbsp;&nbsp;



The notice marks the first time the tax regulator has addressed NFTs, which have long been a headache for accountants.&nbsp;



Some NFT traders have already been claiming their assets as collectibles for tax purposes, but appraisals and tax rates have still been a headache, Erin Fennimore, head of tax and information reporting solutions at TaxBit, <a href="https://blockworks.co/webinar/the-big-picture-are-you-prepared-for-new-digital-asset-regulations">said</a>. 



“There’s different tax rates for collectibles, but also, collectibles like a fine piece of art are appraised as part of that valuation, but can you actually appraise an NFT as a collectible?,” Fennimore said.&nbsp;



When an NFT has been resold, there is a point of contact to determine fair market value, but when NFTs are first created this is more of an issue, she added.



Other traders have historically treated NTFs like any other digital asset. Property, for instance, comes with a minimum 20% tax when held for over a year. The IRS and Treasury’s proposal ups this tax up to 8%.&nbsp;



The agencies have some fine print to work out as well, the notice acknowledges. The “look-through” approach broaches the question of whether an NTF can be considered a work of art, which would also impact tax rates.&nbsp;



“If the Treasury department and the IRS find that in their conclusion a digital file does constitute a ‘work of art,’ then the vast majority of NFTs will be classified as collectibles and treated as such (28% max tax rate for long term holdings),” Brin said. “NFTs in general can have many use cases and utilities, the classifications can be endless based on different industries that may adopt blockchain technology.”



The agencies are accepting public comments on the notice now through June 19, 2023 before issuing official guidance.



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IRS Floats New Guidance Around NFT Classification That Would Increase Taxes

Michael Bodley

As the price of bitcoin has stabilized in recent weeks, and notched a notable increase in performance terms over the past seven days, a new joint venture designed to capitalize on institutional interest in ESG Bitcoin initiatives is set to hit the market.



Sustainable Bitcoin Protocol (SBP), has teamed up with <a href="https://blockworks.co/tag/bitgo" target="_blank" rel="noreferrer noopener">BitGo</a> — the crypto service provider known for its digital asset custodial solutions — to launch what both companies dubbed “the first sustainable custody solution” in a statement provided to Blockworks exclusively. 



It’s called the &#8220;Sustainable Bitcoin Certificate (SBC),” representatives told Blockworks, and it involves an on-chain solution to address problems environmental proponents say have long plagued bitcoin mining: dirty energy.



Non-renewable energy sources still power mining hardware on the original <a href="https://blockworks.co/news/proof-of-work-vs-proof-of-stake-whats-the-difference">proof-of-work</a> blockchain, in many parts of the world, meaning securing the <a href="https://blockworks.co/tag/bitcoin" target="_blank" rel="noreferrer noopener">Bitcoin</a> network adds carbon pollution to the atmosphere.



The crux of BitGo and SBP’s partnership — SBCs — are “on-chain assets that represent sustainable Bitcoin mining and can be added to the holdings of a Bitcoin investor, 1:1, ensuring that they are sustainably holding Bitcoin without disrupting its fungibility.”



Brad van Vorhees, SBP’s chief executive and co-founder, told Blockworks on Thursday that the partnership with BitGo is not a new idea. The CEO and his team have “recognized this opportunity for a couple of years actually,” he said.



“It’s because we’ve had the time to have the right partner join us to fill out the technical structure,” he said. “It’s the right time to leverage bitcoin to help drive the clean-energy transition — and ultimately change the narrative from ‘Bitcoin is a sustainability problem’ [to]…there’s unique potential to drive the clean energy transition [with BTC], and that’s really what we’re trying to unlock.” 



<h2>Institutional winds at BTC’s ESG sails?</h2>



The effort is getting off the ground as retail and institutional traders alike are pushing <a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>’s price, as well as associated volumes and market capitalization, generally higher over a prolonged period of time. 



Its end result is designed to offer a viable on-chain alternative to past and prevalent attempts to mitigate bitcoin’s environmental impacts — including tokenized, off-chain carbon credit models with crypto-native backing. 



Carbon credits have been floated and have gathered steam, at least here and there, especially among Wall Street players looking to gain ESG exposure.&nbsp;



The metrics defining <a href="https://blockworks.co/news/upstart-crypto-carbon-credits-platform-raises-2b-to-tap-internet-of-energy">how ESG relates to crypto carbon credits</a> have resulted in a mixed bag, according to previous Blockworks reporting, but the sentiment did not altogether stop those efforts from moving forward last year.&nbsp;



Though bitcoin was roughly flat over the last 24 hours, the asset is up about 12.8% on a seven day-basis and about 16.5% over the past 30 days, marking a notable stabilization and ensuing recovery from the 49.5% price plummet of 2022.



Macro headwinds, including the Fed’s shifting stance on interest rates and the <a href="https://blockworks.co/tag/sec">SEC</a>’s moves to reign in what the US regulator alleged as bad crypto actors buffeted digital and traditional financial markets.



&#8220;We are excited to partner with SBP to offer our clients a solution that addresses their concerns around Bitcoin&#8217;s environmental impact while incentivizing verified clean energy use in bitcoin mining,&#8221; said Steve Scott, a director at BitGo, in the statement, a novel solution he calls “a key differentiator” in the custody space.



&#8220;This collaboration allows us to offer the most secure and sustainable Bitcoin custody solution on the market, providing our clients with a way to hold Bitcoin that aligns with their investment strategies and values,&#8221; Scott said.&nbsp;



A “proof of sustainability API” is in the works, which is designed to allow investors to maintain exposure in a 1:1 ratio to BTC and SBC, the on-chain token under BitGo custody, which has already obtained regulatory approval.&nbsp;



BitGo and van Vorhees’ SBP summed up their team up by saying “the new offering aims to address the increasing demand from ESG and climate-focused institutional investors who want to hold Bitcoin but are concerned about its climate impacts.”



There are 19.2 million bitcoins in circulation, and van Vorhees estimated the “entire renewability certification market” at around $26 billion and the bitcoin-specific ESG market at $12 billion or so. Carbon credits are not included in either metric. 



If you take the energy consumption and associated costs of renewable power premiums into account, van Vorhees said the impact of the token SBC would mitigate bitcoin’s environmental impact by 85x over a 25-year time horizon. That’s provided SBC can maintain a 1:1 backing to BTC.&nbsp;



The end goal, the SBP founder said, is “verifiably ensuring that bitcoin miners are using renewable energy from the grid, ensuring that every single bitcoin [is mined] in a totally transparent way.”



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BitGo, Sustainable Bitcoin Protocol Launch ESG-friendly Bitcoin-backed Token

Bessie Liu

Ethereum layer-2 scaling solution Arbitrum has officially launched its governance token airdrop. 



Immediately following the airdrop token claim event, Arbitrum’s front end was forced to shut.&nbsp;



Almost 85,000 users had signed onto the webpage in a 30-minute window, Arbiscan, its blockchain scanner, said in a <a href="https://twitter.com/arbiscan/status/1638897253388800001" target="_blank" rel="noreferrer noopener">tweet</a>. 



<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">We&#39;re sorry for turning off the lights on Arbitrum for a while. It seems abundantly clear that ARB will need to migrate to its own chain in order to properly scale. We&#39;d like to encourage the DAO to start thinking in this direction.&mdash; foobar (@0xfoobar) <a href="https://twitter.com/0xfoobar/status/1638891090202722304?ref_src=twsrc%5Etfw">March 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Previously governed by New York-based <a href="https://blockworks.co/tag/offchain-labs" target="_blank" rel="noreferrer noopener">Offchain Labs</a>, the ARB token is <a href="https://blockworks.co/news/arbitrum-airdrop-faq">designed for Arbitrum to decentralize its governance</a>. 



The Airdrop will allocate 12.75% of ARB’s total supply to users and DAOs building on the network.&nbsp;



Roughly 11.6% of the supply goes to users at a present value of $1.56 billion and 1.1% of the supply goes to DAOs, currently valued at $151 million, Blockworks Research <a href="https://dune.com/blockworks_research/arb-airdrop" target="_blank" rel="noreferrer noopener">data</a> shows. 



At the time of writing, over half of eligible users have claimed their airdrop — equating to roughly 330,000 unique addresses.&nbsp;



Of the remaining <a href="https://blockworks.co/price/arb" target="_blank" rel="noreferrer noopener">ARB</a> tokens, 43% will go to the DAO treasury — managed by the community, while 27% will be allocated to Offchain Labs. And 17.5% will be given to investors of the New York-based startup. 



Eligible airdrop recipients will have six more months to claim their airdrops.



<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">Remember <a href="https://twitter.com/hashtag/Arbinauts?src=hash&amp;ref_src=twsrc%5Etfw">#Arbinauts</a>, you have 6 months to claim your tokens! Gas fees will be quite high, and there will be server congestion.&mdash; Arbitrum (💙,🧡) (@arbitrum) <a href="https://twitter.com/arbitrum/status/1638889046964305922?ref_src=twsrc%5Etfw">March 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The company warned users to only use the official <a href="http://arbitrum.foundation/" target="_blank" rel="noreferrer noopener">website</a> to avoid potential copycat scams. “This is the safest way to claim, and you&#8217;ll be able to vote for your favorite ecosystem delegate.”



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Technical Difficulties Aren’t Stopping Users From Claiming Arbitrum Airdrop

Though crypto firms have rushed to build out a presence in the United Arab Emirates (UAE) following the passage of what they believe to be friendly crypto regulation, many still wait for the go-ahead to fully operate there.



<a href="https://blockworks.co/dubai-is-the-latest-government-to-roll-out-crypto-law-set-up-regulator">Dubai launched its Virtual Assets Regulatory Authority</a> (VARA) — which oversees crypto trades and new product issuances — in March 2022.



Various crypto companies revealed plans to enter the <a href="https://blockworks.co/tag/uae">United Arab Emirates</a> last year, including <a href="https://blockworks.co/news/binance-granted-license-to-operate-in-dubai">Binance</a>, <a href="https://blockworks.co/news/okx-to-expand-in-uae-after-dubai-regulatory-approval">OKX</a>, <a href="https://blockworks.co/news/crypto-custodian-komainu-follows-exchanges-to-dubai">Komainu</a> and <a href="https://blockworks.co/news/crypto-com-secures-provisional-approval-to-open-crypto-exchange-in-dubai">Crypto.com</a> — and many firms have received provisional licenses.&nbsp;



VARA rolled out the Virtual Assets and Related Activities Regulations 2023 last month in an effort to give the market “greater clarity on the expected level of operator responsibility,” according to a VARA press release at the time.&nbsp;



The regulations span seven licensed activities — advisory, broker-dealer, custodial, exchange, lending and borrowing, and payments and remittances services, as well as virtual asset management and investment activities.



Existing Minimal Viable Product (MVP) operational license applicants — as well as holders of provisional MVP licenses, UAE-based virtual asset service providers and new market entrants — will be offered a path to become fully licensed, according to VARA.&nbsp;



<a href="https://blockworks.co/tag/hex-trust">Hex Trust</a> officially launched operations in Dubai late last month after being granted an MVP Operational License. The designation, which allowed the company to offer crypto custodial and staking services to institutional clients, made it the first virtual asset custodian in the emirate, VARA <a href="https://www.vara.ae/en/#0">said</a>.&nbsp;



Spokespeople for VARA and Hex Trust did not immediately return requests for comment.&nbsp;



<h2>Ramping up UAE activity&nbsp;&nbsp;</h2>



Binance has three regulated entities in the UAE, according to a spokesperson — two with financial services permissions granted by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) and one with an MVP license from VARA.&nbsp;



The MVP license allows the company to offer a range of approved virtual asset-related services to suitably qualified retail and institutional investors in Dubai, the Binance representative told Blockworks.



Overall, the exchange already has roughly 600 employees in the UAE.



“We are officially operating in the UAE per the current licensing framework,” the spokesperson added. “The Virtual Assets and Related Activities Regulations 2023…clearly speaks to Dubai’s ambition to set the global benchmark for the Web3 industry, and we continue to collaborate in this space for the next phase of licensing.”



Crypto.com, which first received provisional approval from VARA in June 2022, said Monday it moved a step closer to operating in the region by receiving what is known as an MVP preparatory license. The new license came after regulators reviewed the firm’s personnel, governance procedures, anti-money laundering (AML) capabilities and know-your-customer (KYC) procedures, among other things.



Once licensed to be operational, Crypto.com intends to offer spot and derivatives exchange services, a brokerage, and OTC offerings around settlements for institutional investors.&nbsp;



A Crypto.com spokesperson declined to comment on when that could be.&nbsp;



Meanwhile, <a href="https://blockworks.co/tag/komainu">Komainu</a> is in “the final stages” of being operational in Dubai, according to Sebastian Widmann, Komainu’s head of strategy.&nbsp;&nbsp;



The company gained provisional approval to operate in Dubai last July and entered the MVP license phase in November. It has said it would seek to bring Komainu Yield — a product giving institutions the ability to earn yield on assets custodied with the company — and other services to clients in the region.



“We see a growing demand from institutional clients with exposure to digital assets in the region and are committing significant resources to make this expansion a success,” Widmann told Blockworks in an email.



Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-01-25/bitcoin-options-exchange-deribit-looks-to-relocate-to-dubai">reported</a> in January that <a href="https://www.bloomberg.com/quote/1913639D:PP">Deribit</a>, the world’s largest bitcoin and ether options exchange, was making plans to relocate from Panama to Dubai this year.



Deribit Chief Commercial Officer Luuk Strijers told Blockworks the company intends to obtain a “full market license” in Dubai in the third quarter. That would allow Deribit to launch trading for institutional clients, followed by retail investors, he added.



The options exchange, which does not yet have a provisional license in the UAE, is looking at office space in One Central, part of the Dubai World Trade Centre (DWTC) Free Zone, Strijers told Blockworks — where other crypto platforms are set to be located.



<h2>UAE hiring processes underway</h2>



“Deribit has not started hiring or moving staff yet, but expects to start with around 10 this summer, including senior management,” Strijers said.&nbsp;



Hex Trust seeks a compliance officer to manage “maintenance of the company’s compliance and AML program” in Dubai, according to a LinkedIn job post. The professional would report directly to the company’s head of legal and compliance.



The digital asset custodian is also seeking vice presidents of risk management, as well as institutional sales and business development.&nbsp;&nbsp;



Crypto.com was seeking to hire a regional head of compliance and money laundering reporting officer to be based in Dubai, according to a job post listed on LinkedIn earlier this week. The person would help Crypto.com secure licenses and manage regulatory examinations, among other things.



The listing is no longer active.



Binance is seeking to hire a range of professionals in the UAE, according to LinkedIn job listings. Such openings include a government affairs manager, regulatory counsel, an HR operations specialist and engineers, among other roles.&nbsp;&nbsp;&nbsp;



The exchange, unlike many other companies in the sector, has continued hiring efforts in 2023 — onboarding about 600 new employees globally year-to-date. It plans to hire roughly 500 more people worldwide, including in the Middle East, by the end of the quarter, a spokesperson said.



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Crypto Firms Bullish on UAE Entrance — But Now They Wait

The long-awaited Ethereum Shanghai-Capella upgrade is <a href="https://blockworks.co/news/ethereum-set-date-for-eth-withdrawals">right around the corner</a>, and it will enable validators to withdraw their staked ether from the network.



To participate in staking and earn rewards on Ethereum, individual validators must lock in 32 <a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a> (about $52,500) into the staking contract. 



Activating withdrawals will enable these Ethereum stakers to claim rewards for participating in securing the network, and eventually to completely reclaim their locked-up ether, if they so choose.



But what about those who don’t run their own validator nodes and instead rely on one of a plethora of staking services or liquid staking tokens?



As April 12 draws near, these staking service providers must plan how to enable withdrawals as well.&nbsp;



“If you are part of a staking pool or hold liquid staking derivatives, you should check with your provider for more details about how staking withdrawals will affect your arrangement, as each service operates differently,” the Ethereum Foundation <a href="https://ethereum.org/en/staking/withdrawals/">said</a> in a blog post.&nbsp;



Following the upgrade, users will have the option to redeem their underlying staked ether or switch staking providers.&nbsp;



“If a particular pool is getting too large, funds can be exited and redeemed, and re-staked with a smaller provider. Or, if you’ve accumulated enough ETH you could stake from home,” the blog post said.



<a href="https://blockworks.co/tag/lido" target="_blank" rel="noreferrer noopener">Lido</a> — one of the largest liquid staking service providers, with a market capitalization of a little over $10 billion — won’t allow its users who hold <a href="https://blockworks.co/price/steth" target="_blank" rel="noreferrer noopener">stETH</a> to redeem ETH initially. The Lido DAO noted on <a href="https://twitter.com/LidoFinance/status/1635739571227951117?s=20">Twitter</a> that a needed upgrade is expected by mid-May, citing security checks.



Calling the delay “a safety margin,” the group tweeted that “stETH withdrawals won’t launch on mainnet until all audits concerning on-chain code are completed.”



<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">An update on Lido Ethereum withdrawals: TL;DR: &#8211; Lido DAO is currently undertaking 7 V2 audits. &#8211; Codebase is very close to being finalized. All major fixes have been merged. &#8211; 4 week Goerli testnet will commence next week (c. March 20th). &#8211; Mainnet upgrade expected mid May.&mdash; Lido (@LidoFinance) <a href="https://twitter.com/LidoFinance/status/1635739571227951117?ref_src=twsrc%5Etfw">March 14, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In the case of <a href="https://blockworks.co/tag/coinbase" target="_blank" rel="noreferrer noopener">Coinbase</a>, a centralized exchange that also provides staking services, withdrawal requests will be available 24 hours following the upgrade, the company <a href="https://twitter.com/coinbase/status/1636047279793528833">said</a> in a tweet. 



“All unstaking requests are processed on-chain, and we’ll pass the unstaked funds and staking rewards to you once released by the Ethereum protocol,” Coinbase <a href="https://twitter.com/coinbase/status/1636047279793528833">tweeted</a>.



The exchange is currently under scrutiny from the <a href="https://blockworks.co/tag/sec" target="_blank" rel="noreferrer noopener">SEC</a> after <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">receiving a Wells notice</a> over alleged security concerns.



Rocketpool, another decentralized Ethereum staking protocol, noted in a <a href="https://medium.com/rocket-pool/rocket-pool-atlas-upgrade-7c69e39a3d5f">blog post</a> earlier this month that staking withdrawals will likely be possible in time for Shanghai-Capella, following an upgrade dubbed Atlas, though specific dates have not yet been confirmed.



“We are targeting a mainnet Atlas release for end of March / early April,” RocketPool founder David Rugendyke said.



Stakewise has not provided clear documentation outlining dates of withdrawals but is estimated to be available following its “<a href="https://docs.stakewise.io/stakewise-pool">Phase 2</a>” plans.



“Upon arrival of Phase 2, StakeWise users will be able to burn sETH2 and rETH2 within the app and receive ETH in return at a 1:1 ratio,” the company <a href="https://docs.stakewise.io/stakewise-pool">said</a> in a blog post.&nbsp;



Similar to Stakewise, Frax has not detailed specific withdrawal dates. A representative for Frax was not immediately available for comment.



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Which ETH Staking Providers Will Be Ready for Withdrawals on Day 1?

Jon Rice

Ah, the old bait-and-switch, that tactic so beloved of used car sales agents, clickbaity headline writers (hello!) and now of course — the Securities and Exchange Commission.



Yesterday Gensler sued Coinbase, a public US-based business that has made significant and ongoing efforts to comply with US laws in its operations. And in so doing, he finally played his hand.



The bait in this case was very simple. “Come in and get registered,” he cried, pointing to a sign above the SEC entrance that says “Free puppies and ice cream in Room 101.”



The switch was equally simple: A Wells notice for the firm, explaining that the SEC intends to sue Coinbase over several matters including its staking service, and assets listed on the exchange that the SEC alleges to be securities.



Paul Grewal, chief legal officer at Coinbase, explained on Twitter that the company has tried to work with the SEC, but that any good-faith efforts to do so have been either ignored or rebuffed.



“Over the past 9 months, CB has met with the SEC more than 30 times, sharing details of our business to build a path to registration. During this time, the SEC hasn&#8217;t given basically 0 feedback on what to change, or how to register. Instead, today we received a Wells notice.” Grewal tweeted after the notice was made public.



“Even when giving us our Wells notice, the SEC wouldn’t specific assets giving them concern or what specific arguments that we’ve made on staking are wrong. Instead, we were simply told to consider the Chair’s generic statements.”



Gary Gensler has repeatedly made such statements…and “generic” is somewhat generous.



“Come in and get registered,” may well be his go-to, but there are others.



“Kraken knew how to register, others know how to register, it&#8217;s just a form on our website,” he said when Kraken settled over their own staking program.



However, a source within Kraken told Blockworks that the ‘form on the website’ is an S-1, which carries a reporting burden of over 970 hours, according to the Corporate Finance Institute — even when the rules are clear.



And, perhaps more pertinently, the S-1 is a pre-IPO form which would involve the admission that the filer intends to trade securities.



Which, of course, Coinbase and Kraken deny, for the simple reason that it has never actually been made clear by the SEC which tokens are possibly securities, which aren’t, and which might be open for debate.



So what’s the point of suing Coinbase?



This is the real bait and switch, and it’s playing out not only against the exchange itself, but against the entire industry.



Compliance was never the goal for Gensler’s SEC. The only thing he’s selling is chaos, and it’s a very deliberate ploy.



The Coinbase lawsuit, if forthcoming, will be vigorously contested by the company. Which means that it could take years to resolve.



The unsuccessful party might then decide to appeal whatever decision is handed down by the court, and even pursue the verdict all the way to the Supreme Court. More years.



Quoting Grewal, <a href="https://twitter.com/iampaulgrewal/status/1638660057750724609?s=20" target="_blank" rel="noreferrer noopener">again</a>: “So what happens next? We avail ourselves of the court system to finally start to get some clarity for the crypto industry in the U.S. Ironically, establishing some case law may be our best shot at getting the regulatory clarity that the industry deserves.”



Gensler doesn’t care if he wins or loses — he’ll be long gone by then, perhaps to the Treasury job he apparently covets. (Sources tell Blockworks that because Gensler is one of the most detested people on Capitol Hill, the chances of that role materializing are between zero and nil.)



Meanwhile, the regulatory purgatory in which crypto exists will persist. Many institutional investors will be unable to safely and confidently participate in the industry due to the ongoing lawsuit and the lack of clarity that will continue until it is resolved.



Which is precisely the situation that we’re in today.



We don’t know the rules, and if we try to play by the rules, the rules get changed. (Retroactively, no less!)



As Brian Armstrong, CEO of Coinbase — rather eloquently — <a href="https://twitter.com/brian_armstrong/status/1638662289799917569?s=20">put it</a> “Imagine you&#8217;ve got both football and soccer refs on the field, but we&#8217;re actually playing pickleball (fastest growing new sport in America). The refs can&#8217;t really agree on the rules of this new game, and one of them decides to change a call they made back in April 2021.”



Uncertainty is the one thing that truly destroys financial innovation. Fiduciaries can’t deal with it. Responsible investors and entrepreneurs shouldn’t have to.&nbsp;



And yet that’s the whole point of Gensler’s latest, and perhaps most serious, action.



The bait: He’s suing Coinbase.



The switch: He’s trying to destroy the entire crypto industry in the USA.

Gary Gensler Refuses To Wax His Gross, Hairy Back

Do Kwon, founder of the now collapsed Terraform Labs, has been arrested in Montenegro, local officials say.



Montenegrin police have detained the disgraced entrepreneur at the Podgorica airport, the country’s minister of interior, Filip Adzic, tweeted.&nbsp;



“The former ‘cryptocurrency king,’ who is behind losses of more than $ 40 billion, was detained at the Podgorica airport with falsified documents,” Adzic <a href="https://twitter.com/filip_adzic/status/1638886164118802432">wrote</a>.



The tweet has since been <a href="https://twitter.com/DritanAbazovic">retweeted</a> by the country’s prime minister, Dritan Abazovic. Local news site Vijesti has also <a href="https://www.vijesti.me/vijesti/crna-hronika/649046/adzic-u-podgorici-uhapsen-juznokorejac-sumnja-se-da-je-jedan-od-najtrazenijih-bjegunaca">confirmed</a> the reports.&nbsp;



Following his arrest, the price of <a href="https://blockworks.co/price/luna">LUNA</a> immediately dipped by <a href="https://www.coingecko.com/en/coins/terra">8.2%</a>. It is now trading at $1.33, according to information on <a href="https://www.coingecko.com/en/coins/terra">CoinGecko</a>.



Montenegrin officials directed Blockworks to Mr. Adzic’s Twitter account for further information.



The depeg of the <a href="https://blockworks.co/tag/terrausd" target="_blank" rel="noreferrer noopener">TerraUSD</a> stablecoin resulted in a more than $40 billion loss by crypto investors and institutions.



Unlike stablecoins such as USDC, USDT and DAI, TerraUSD was not backed by reserves and maintained its peg to the dollar through an algorithm, which ultimately failed.



<a href="https://blockworks.co/news/sec-charges-do-kwon-terraform-labs-with-fraud-misleading-investors">Do Kwon was charged by the SEC</a> for ​​“orchestrating” cryptocurrency securities fraud earlier this year.&nbsp;



He is also sought after by government officials in South Korea, who have issued <a href="https://blockworks.co/news/5-legal-threats-do-kwon-faces-since-terras-collapse">a warrant for his arrest</a>. Kwon is <a href="https://blockworks.co/news/doj-terrausd-stablecoin">under investigation</a> by Singaporean officials as well.



Updated March 23, 2023 at 11:26 am ET: Added additional context throughout. Updated March 23, 2023 at 1:32 pm ET: Added response from Montenegro government official.



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Do Kwon Arrested, Montenegrin Officials Say

Shalini Nagarajan

The stage is set for Wyoming to officially adopt a stablecoin — if it so desires — after its Republican governor Mark Gordon signed off the Wyoming Stable Token Act.



The bill enables creation of a specialized stablecoin commission with authority to issue them. It also seeks to employ staff to manage the project with a $500,000 administration budget.



Gordon advised the stablecoin commission be properly set up before it proceeds to mint any tokens. He unspecifically pointed to recent tumult across the crypto sector that should serve as a guide “for what can befall a poorly thought through build-it-and-they-will-come scheme.”



Other aspects, such as qualifications an executive director must have, the type of staff needed, their responsibilities and other financial considerations, should be looked into, he said.



He added that he wasn’t sure whether a robust market for a Wyoming stablecoin exists given the current climate.



Lawmakers first proposed the act last year but were cut short after Gordon exercised his veto authority. Gordon said he was concerned that not all stakeholders had been consulted on the matter.&nbsp;



He also said there wasn’t enough time to consider the potential impact and that he didn’t want the state to be a first mover without having recognised associated risks.&nbsp;



In a <a href="https://s3.documentcloud.org/documents/23720110/sf0127_letter_3_17_23.pdf" target="_blank" rel="noreferrer noopener">letter</a> sent to Wyoming’s Secretary of State Chuck Gary last Friday, Gordon said the state’s legislature worked to improve the act and put forth a “better piece of legislation” than the one he saw last year.&nbsp;



Gordon highlighted that some concerns still remain, but “enough improvements have been made to the legislation that I have decided to allow the Stable Token Act to become law without my signature.”



He still has some doubts about the impact that the stablecoin act may have on the state’s reputation as a leader in the crypto ecosystem. But he admitted that it needn’t be perfect in order to go forward.



“Innovation does not always wait for the perfect, rather it emerges, is refined, and eventually becomes established. Still, first movers are not aways rewarded. They are, however, vital to progress.”



Wyoming is seen as a friendly state for crypto companies, investors and even DAOs. If the initiatives outlined in the legislation are successful, the state could become a role model in stablecoin territory.



The state&#8217;s stablecoin development comes as two city-endorsed cryptocurrencies — MiamiCoin and NYC Coin — have been effectively snuffed out, although they weren&#8217;t dollar-pegged tokens. 



OKX, the main exchange that listed them, <a href="https://blog.okcoin.com/weve-suspended-trading-for-nyccoin-and-miamicoin/" target="_blank" rel="noreferrer noopener">suspended</a> their trade earlier this month, citing limited liquidity and potential price manipulation.



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Wyoming Could Be First US State to Issue Official Stablecoin

Sebastian Sinclair

Macauley Peterson

Increased use of digital assets could help to improve the quality of life for society, but they also present challenges to the banking sector, the US Treasury said Wednesday.



Private digital assets, such as stablecoins issued by banks, as well as public central bank currencies, could harm financial stability, increasing the likelihood of sector-wide crises, according to a <a href="https://www.financialresearch.gov/working-papers/files/OFRwp-23-01_digital-currency-and-banking-sector-stability.pdf" target="_blank" rel="noreferrer noopener">report</a> published by the US Treasury Department&#8217;s Office of Financial Research (OFR).



Their proliferation could make it harder for banks to recapitalize following losses due to digital assets’ ability to depress spreads, meaning the difference between interest rates that banks charge for loans and the interest rates they pay to depositors.



The irony of the well-worn narrative is not lost on market observers, who witnessed a historic run on Silicon Valley Bank earlier this month, despite most of its issues stemming from poor risk management <a href="https://blockworks.co/news/dont-blame-crypto-for-banking-problems">and not its exposure</a> to the nascent asset class.



The OFR report sidesteps the contribution digital assets or CBDCs may make to bank runs and the disintermediation of bank deposits. The focus, instead, is on cases of systemic deleveraging and requisite financial fragility resulting from low levels of bank equity.



The adoption of digital assets can increase household welfare “significantly despite the decrease in financial stability,” the authors wrote — but only up to a point, after which financial instability can become harmful.



“The welfare-maximizing level of digital currency may be less than what would be provided by profit-maximizing issuers in a competitive market,” the report reads. It suggests regulation or other policy interventions may be necessary to square the interests of issuers with what’s best for society.



For instance, the authors caution, if digital assets move closer to a “perfect substitute” for deposits, their issuance is more likely to lead to welfare declines.



On average, digital currency issuance leads to an increase in asset prices and a decrease in their volatility, the report concludes.



In other words, the authors write, financial markets improve even as the financial sector suffers.



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Digital Assets May Be Good for Households But Bad For Banks

In the first crypto-related US Supreme Court appearance, justices appear split over whether to freeze Coinbase customer lawsuits while the exchange awaits appeals decisions.



Coinbase is trying to push two lawsuits into arbitration, seeking Supreme Court intervention after lower courts allowed the cases to proceed.



While Coinbase is separately dealing with a <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation" target="_blank" rel="noreferrer noopener">legal threat</a> from the Securities and Exchange Commission over some of its products, the cases before the Supreme Court have more to do with legal procedure than with digital assets themselves.&nbsp;



<a href="https://www.govinfo.gov/content/pkg/USCOURTS-cand-3_21-cv-07478/pdf/USCOURTS-cand-3_21-cv-07478-0.pdf" target="_blank" rel="noreferrer noopener">One</a> was brought forward by a California-based plaintiff who argues a scammer pretending to be a PayPal representative scored remote access to his Coinbase account.&nbsp;



Their digital wallet was said to have been eventually drained of more than $31,000, after which they encountered a “customer-service nightmare.” The victim tried to use Coinbase’s live chat to seek help, but they said they were consistently met with a bot providing futile responses.&nbsp;



The plaintiff later sued Coinbase for violations against the Electronic Funds Transfer Act by not reimbursing him for the loss.



A second case was brought by Coinbase users who claimed the firm violated California’s False Advertising Law by allegedly duping them into a pay-to-play sweepstakes for Dogecoin prizes in 2021.



Coinbase’s user agreement, like some <a href="https://www.ibanet.org/stop-scrolling-read-Ts-Cs-arbitration-agreements-in-crypto-disputes" target="_blank" rel="noreferrer noopener">other</a> crypto firms, requires disputes to be resolved by arbitration. Arbitration is primarily a faster and cheaper route than court litigation, which can carry the burden of heavy damages and higher legal fees.&nbsp;



But plaintiffs in both lawsuits bypassed Coinbase’s user agreement and went straight to California courts, which agreed to hear the disputes.



Coinbase immediately requested the court of appeals to block the litigations from moving ahead until a ruling on the matter is finalized.



So, is it right for these cases to proceed before the appellate court’s ruling? Even top court officials aren’t sure. 



<h2>Coinbase Supreme Court ruling could impact big tech</h2>



Six circuit courts maintain that appeals should result in mandatory stays, but three others, including the Ninth US Circuit Court of Appeals, refused requests to put further litigation on hold.



During arguments, justices shared divided opinions over Coinbase’s wrangling. Others showed they were concerned about the consequences of companies looking to arbitrate customer lawsuits, as this technique generally favors the company over users.



Justice Brett Kavanaugh reportedly questioned the downside for Coinbase — and other companies in the same position — if litigation were permitted to continue before a decision on arbitration could be made.



Kavanaugh pointed out that Coinbase could be forced into “massive settlements” without the appellate court deciding on whether arbitration is the “appropriate forum,” <a href="https://www.law.com/2023/03/21/justices-appear-divided-in-crypto-arbitration-dispute/?slreturn=20230222164131" target="_blank" rel="noreferrer noopener">Law.com</a> reported.



Justice Ketanji Brown Jackson indicated she didn’t agree with Kavanaugh’s position, saying defendants given the ability to appeal aren’t really forced into settling. “That seems like a pretty significant arrow in their quiver to not settle because they’re about to go to the appeals court, and hopefully the appeals court will move quickly and resolve this in their favor,” she said.



Coinbase’s current situation is notable not only for crypto. The Supreme Court’s decision is relevant to tech companies that also use arbitration agreements when faced with lawsuits (Blockworks has reached out to Coinbase for comment).



Peter Rutledge, dean at the University of Georgia School of Law, reportedly said the court was “closely divided.” He expects most of the justices will eventually be in favor of a default mandatory stay order, which means judicial proceedings could be temporarily stopped.



A trial judge in the Dogecoin sweepstakes lawsuit decided to halt the case until the end of March, after Coinbase moved the Supreme Court to hear the case, <a href="https://www.reuters.com/legal/us-supreme-court-weighs-coinbase-arbitration-dispute-2023-03-21/" target="_blank" rel="noreferrer noopener">Reuters</a> reported.



The Supreme Court is expected to rule by June end.



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Coinbase Fronts Supreme Court Over User Lawsuits in Crypto First

Despite the world’s second-largest digital asset lagging bitcoin’s performance recently, developments across Ethereum’s ecosystem continue unabated while macro headwinds persist.



With the Shanghai-Capella upgrade <a href="https://blockworks.co/news/ethereum-set-date-for-eth-withdrawals">slated for April 12</a>, industry participants and investors are now bracing for the initial impact from validators seeking to withdraw and sell their locked-up ether (<a href="https://blockworks.co/price/eth">ETH</a>).



ETH fell 4.7% Wednesday as part of a broader market sell-off following US Federal Reserve Chair Jerome Powell’s press briefing of <a href="https://blockworks.co/news/federal-reserve-interest-rate-25-bps-march">the Fed’s latest interest rate hike</a> and news of <a href="https://blockworks.co/news/sec-sues-justin-sun">SEC enforcement actions against Justin Sun</a> and Tron-affiliated groups and individuals.&nbsp;



Ether remains about 46% higher on a year-to-date basis compared to bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) 65% at $1,750 and $27,700 respectively.



Ether has seen its performance stumble behind bitcoin, which research firm BitOoda attributes in part to the “looming staking withdrawal effect,” according to its latest research note.



Bitcoin’s dominance, measuring its relative market share compared to other digital assets, rose to a nine-month high last week as fears over the global banking sector took hold.



But ether holders depositing their ETH to new validators or liquid staking pools is at all-time highs.



“Ethereum&#8217;s Shanghai upgrade has generated divided opinions on its bullish or bearish impact, and ETH lacks a strong presence in the financial collapse hedging narrative,” Xavier Ekkel, founder of DeFi trading platform prePO said.



The upgrade will induce short-term ETH volatility but “ultimately prove long-term bullish,” he said. “Once staking and unstaking activity becomes more predictable, which might happen sooner than we think, worries about the upgrade will likely dissipate.”



Total ETH staked edged slightly higher last week from 17.6 million ETH to 17.8 million ETH, data from <a href="https://etherscan.io/address/0x00000000219ab540356cbb839cbe05303d7705fa#analytics" target="_blank" rel="noreferrer noopener">Etherscan shows</a>, while the fees garnered from annualized staking yields dropped by 1.3%, BitOoda said.



That comes as the total supply of ether has <a href="https://blockworks.co/news/ethereum-deflationary-2-months">decreased for more than two months</a>, which, squared with locked tokens, can lead to an increase in value if demand remains the same or increases.



<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"><a href="https://twitter.com/hashtag/ethereum?src=hash&amp;ref_src=twsrc%5Etfw">#ethereum</a> has been deflationary for over 2 months now! <a href="https://t.co/7WnO9lJn1Q">pic.twitter.com/7WnO9lJn1Q</a>&mdash; Lark Davis (@TheCryptoLark) <a href="https://twitter.com/TheCryptoLark/status/1638658463638380544?ref_src=twsrc%5Etfw">March 22, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



BitOoda also estimates roughly 5 million ETH, worth some $8.6 billion at current prices, could be sold off, over time, following withdrawals next month.



However, the exit queue for withdrawals has limitations in place to prevent the entire validator set from leaving, Blockworks <a href="https://blockworks.co/news/effect-ethereum-shanghai-upgrade-price">previously reported</a>, meaning the timeframe for those sales could be up to two years.



Other analysts, including Arcana’s CEO Rich Falk-Wallace, believe roughly 0.2% of ether’s total supply, roughly 245,000 ETH — worth some $427 million — would make its way to exchanges, leading to sell-side pressure over the first few days that withdrawals are enabled.



The impact on price is predicted to be minimal.



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Bitcoin Outshining Ether as Shanghai Looms

The SEC served Coinbase with a Wells notice Wednesday over concerns about alleged securities violations, according to a filing.&nbsp;



The Wells notice, which precedes an enforcement action, states that the <a href="https://blockworks.co/tag/sec">SEC</a> will be targeting Coinbase’s spot market, staking service, Coinbase Prime and Coinbase Wallet. The agency moves forward with a Wells notice after it has determined laws have been violated through an investigation.&nbsp;



The exchange in response on Wednesday <a href="https://www.coinbase.com/blog/we-asked-the-sec-for-reasonable-crypto-rules-for-americans-we-got-legal">said</a> it has “produced documents and provided two witnesses for testimony, one on the basic aspects of our staking services and one on the basic operation of our trading platform.”&nbsp;



The SEC declined to comment, and Coinbase pointed to its public statements and declined to comment further.



“We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets,” <a href="https://blockworks.co/tag/coinbase">Coinbase</a> said in its response statement on Wednesday.&nbsp;&nbsp;



The exchange said it’s “confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for.”



The SEC “simply has not been fair or reasonable when it comes to its engagement on digital assets,” according to the exchange, which added that the company “provided multiple proposals to the SEC about registration over the course of months, all of which the SEC ultimately refused to respond to.”



The Wells notice, Coinbase said, relates to an “unspecified portion” of its listed digital assets, which the company says are not securities. Even so, exchange representatives said there’s still no clear “regulatory path” toward industry compliance with the “current U.S. crypto regulatory confusion.”



“We spent millions of dollars on legal support to build these proposals and repeatedly asked for the SEC’s feedback,” Coinbase said. “We got none.”



Coinbase has met with the SEC on numerous occasions, claiming to have interacted 30 times in more than nine months — without much to show for it, in the exchange’s estimation.



<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 perfect ex: &#8211; CB has 30+ meetings with SEC &#8211; Spends millions drafting a registration proposal despite that literally being the SEC&#39;s job &#8211; Gets ghosted by SEC for 9+ mo &#8211; Promised meeting for clarity with SEC cancelled on 1 day notice &#8211; CB sued for being a bad actor??? <a href="https://t.co/IsNFvmp4tK">pic.twitter.com/IsNFvmp4tK</a>&mdash; Collins Belton (@collins_belton) <a href="https://twitter.com/collins_belton/status/1638662815886999552?ref_src=twsrc%5Etfw">March 22, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Regulatory uncertainty in the crypto industry is getting worse,” Coinbase said. “Instead of developing a regulatory framework for crypto, the SEC is continuing to regulate by enforcement only.”



The publicly traded US company said potential enforcements could incur injunctive relief, disgorgement and civil penalties, per the filing.&nbsp;



The notice marks the SEC’s second regulatory action against the crypto industry on Thursday. Earlier in the afternoon, the agency <a href="https://blockworks.co/news/sec-sues-justin-sun">charged Tron network’s Justin Sun</a> with alleged securities violations.



Updated March 22, 2023 at 7:15 PM ET: Additional context and quotes throughout.



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SEC Serves Coinbase in Latest Alleged Crypto Securities Violation

Notional open interest on the largest centralized crypto derivatives exchange hit a record high Wednesday, with demand for bitcoin options leading the way amid a turbulent time for the traditional finance industry.



Deribit’s notional open interest on the platform exceeded $20 billion Wednesday, according to the company. Most of that was attributed to $11.7 billion from bitcoin options — also an all-time high — and $6.9 billion from ether options.&nbsp;



The record comes after <a href="https://blockworks.co/news/silvergate-collapse-not-crypto-problem">the fall of Silvergate Bank</a>, <a href="https://blockworks.co/news/silicon-valley-bank-meltdown-has-little-to-do-with-crypto">Silicon Valley Bank</a> and <a href="https://blockworks.co/news/signature-possession-nothing-to-do-with-crypto">Signature Bank</a> in recent weeks, which some said has shaken trust in financial institutions.&nbsp;



“The first cause of it all could be that BTC is finally acting as a hedge for the traditional financial and especially banking system,” said Luuk Strijers, Deribit’s chief commercial officer. “Bitcoin has failed to meet expectations as an inflation hedge in the past but is finally acting as it was intended to do, triggering an elevated level of interest.”



Derivatives exchange CME Group has also seen consistent volume and open interest growth in its crypto futures and options products.&nbsp;



Its average daily bitcoin options open interest in 2023 is up an all-time record of 140% — a notional value of $936 million, a company spokesperson told Blockworks. CME bitcoin options hit record daily open interest on Tuesday, reaching a value of $1.55 billion.



A potential end to rate hikes could also be causing more interest in all risk assets, including bitcoin, Strijers told Blockworks. The <a href="https://blockworks.co/news/federal-reserve-interest-rate-25-bps-march">Federal Reserve raised interest rates by 25 basis points</a> Wednesday, continuing a trend of slower-paced increases after previous bumps of 0.5% and 0.75%.



Luke Hoersten, founder and CEO of bitcoin derivatives exchange Bitnomial, argued bitcoin has emerged as a safe store of value as people realize putting their money into US Treasury-backed cash deposits can be risky. Traders are moving money into bitcoin, he added, and using futures and options to protect themselves from price changes.&nbsp;&nbsp;



“Some traders are worried about synthetic cash-settled exposure because it can debase or de-peg as the environment becomes uncertain and more volatile,” Hoersten said. “Physically settled futures and options are a better choice because they give people native exposure to both cryptocurrency and fiat currency.”



CK Zheng, co-founder and chief investment officer of crypto hedge fund ZX Squared Capital, said he believes bitcoin is “starting a new cycle” after reaching a bottom following the bankruptcy of crypto exchange FTX last November.&nbsp;



He agreed the current banking crisis further validates bitcoin’s thesis as a digital gold of sorts against government money printing, and offered other reasons for the increased open interest in crypto derivatives.&nbsp;&nbsp;



“There are not many natural sellers, like crypto miners, who need to get rid of BTC, [and] the leverage in the crypto industry is no longer a great threat to this ecosystem,” Zheng explained. “The next BTC halving is coming early next year, which is very bullish given the design of the halving process.”



The halving refers to the bitcoin mining reward being reduced from 6.25 <a href="https://blockworks.co/tag/btc" target="_blank" rel="noreferrer noopener">BTC</a> per block to 3.125, <a href="https://blockworks.co/news/bitcoin-halving-a-year-out">anticipated to take place in April 2024</a>.



No matter the exact cause of the Deribit notional open interest record high, Strijers said, increased volatility implies investor interest in instruments that enable them to benefit from protecting themselves from the consequences.



“For us, this implies higher option volumes, an increase in the number of contracts outstanding, and more call buying to position for possible upside,” he said. “Now that the price has increased, we are also seeing some more put activity demonstrating clients&#8217; interest in potentially hedging downward risk,” he said.&nbsp;



The majority of Deribit’s bitcoin options contracts are for the strike price of $30,000. The strike price of an option is the level at which an investor can buy the underlying security in the case of a call, or sell it in the case of a put, before the contract expires.&nbsp;



Bitcoin’s price was roughly $28,100 at 3:00 pm ET — up 13.1% from seven days ago.&nbsp;



“$30,000 is the next resistance level,” Zheng said. “If BTC breaks this level convincingly, it will be very bullish for the near term.”



Updated March 22, 2023 at 5:05 pm ET: Added information about CME Group&#8217;s bitcoin options open interest.



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Deribit Bitcoin Options Open Interest Hits All-time High

The SEC is going after the Tron network’s founder for allegedly selling unregistered securities in the latest action taken by US regulators against crypto industry players.



<a href="https://blockworks.co/tag/justin-sun" target="_blank" rel="noreferrer noopener">Justin Sun</a> orchestrated the “unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities,” according to an SEC <a href="https://www.sec.gov/news/press-release/2023-59" target="_blank" rel="noreferrer noopener">press release</a> and legal documents filed Wednesday in the US District Court for the Southern District of New York.



The SEC’s probe extended beyond Sun, however, considering the regulator said it reached a settlement with eight celebrities, ranging from&nbsp;Lindsay Lohan to “Soulja Boy,” for allegedly promoting the tokens in question.&nbsp;



Sun founded the Tron network in 2017. The network launched its mainnet the following year and became a <a href="https://blockworks.co/tag/daos" target="_blank" rel="noreferrer noopener">DAO</a> in 2021.



The SEC alleges that starting in about August 2017, Sun distributed billions of <a href="https://blockworks.co/price/trx" target="_blank" rel="noreferrer noopener">TRX</a> and <a href="https://blockworks.co/price/btt" target="_blank" rel="noreferrer noopener">BTT</a> tokens to the public while creating secondary markets on which these assets could be traded.&nbsp;



Because Sun sold these as securities, the commission alleges, he was obligated to register these sales with the SEC, but never did.&nbsp;&nbsp;



The agency is also accusing Sun of “fraudulently manipulating the secondary market for TRX through extensive wash trading,” according to the press release. He allegedly accomplished this through the Tron network, as well as the BitTorrent Foundation, which owned accounts used in the trading, and Rainberry — whose employees transferred funds to facilitate the trading, the lawsuit claims.



The <a href="https://blockworks.co/tag/tron" target="_blank" rel="noreferrer noopener">Tron</a> network did not immediately comment on the charges. Sun did not immediately return multiple requests for comment, but <a href="https://twitter.com/justinsuntron/status/1638742625003130881" target="_blank" rel="noreferrer noopener">tweeted</a> Thursday that the &#8220;complaint lacks merit.&#8221; 



“While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement. “As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities.”



An SEC spokesperson did not immediately return a request for further comment.&nbsp;



Including Soulja Boy (DeAndre Cortez Way) and Lindsay Lohan, a total of eight celebrities have found themselves in the crosshairs of regulators. The SEC additionally charged the following for allegedly illegally promoting TRX and/or BTT without disclosing a paid partnership: Jake Paul, Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon).



Each of the above individuals, with the exceptions of Cortez Way and Mahone, has settled with the SEC for $400,000, the agency said.&nbsp;



It’s <a href="https://blockworks.co/news/ripple-counsel-crypto-usa">not the first time the SEC has targeted a crypto company</a> for issuing a token it deems a security. Ripple has been battling with the agency in court for more than two years over its XRP token, which the vast majority of exchanges delisted when the lawsuit began in 2020.&nbsp;



Sun’s charges may be settled before going to trial.&nbsp;



Updated March 22, 2023 at 7:26 PM ET with additional context and quotes throughout, and March 23, 2023 at 9:25 am ET with Justin Sun&#8217;s comment.



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SEC Sues Tron Network Founder for Allegedly Selling Securities

Matthew Fiebach

AVAX

Avalanche Update: Elastic Subnets, AWM, and The HyperSDK

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.

Get Involved

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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.

Tickets

Buy Tickets

Prices increase every 2 weeks. Only 250 tickets available in each drop. Register today and save!

General Admission Pass

Get notified 

Student tickets will be launching in early 2023

Student Ticket 

Prices increase every 2 weeks. Only 250 tickets available in each drop. Register today and save!

Presenting Sponsor 

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;