Coinbase Tokenized Stock on FTX

David Canellis

Katherine Ross

<h2 class="wp-block-heading">Beating bitcoin ain’t easy</h2>



Not all bitcoin ETF investors are built the same.



It’s been four months since nine spot bitcoin ETFs hit US markets, alongside the conversion of Grayscale’s Bitcoin Trust.



The temptation is to lump them all together —&nbsp;but some are doing better than others.



All the funds are operating as intended by tightly tracking bitcoin. But zooming into each fund shows significant variance in how their respective investor classes have performed.



Take Invesco-Galaxy’s BTCO. It has so far netted $286.8 million since Jan. 11, acquiring about 6,698 BTC. At current prices, BTCO’s bitcoin is worth $421 million — putting current shareholders almost 47% up on their collective investment to date.



Read more from our opinion section: <a href="https://blockworks.co/news/blackrock-bitcoin-etfs-scarcity">BlackRock and other bitcoin ETFs rob bitcoin of its room to grow</a>



Bitcoin, meanwhile, has rallied about 35% during that period. The same analysis of VanEck’s fund shows HODL shareholders are only barely above water, about 1% up on their net flows.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/95LIKXfPhKw7VgbUkkHH2libn_YGD17uOZRpRF7EyIjTuFD2NMivMmG94E6zXlmT50txNOHRNrhv7-L0tc4_UTtbrCwDxye44wnHNwozdIH6Md-Cv7tbLb_duAa0Xw-7CsBC-7njhHnogT96YckrSts" alt=""/></figure>



What’s making the difference? It turns out that Invesco-Galaxy’s BTCO bought the majority of its bitcoin in the first week and a half of the fund’s existence — when bitcoin was in the low $40,000s (current price: $62,500).&nbsp;



A decent chunk of BTCO’s bitcoin was offloaded on the way up, as bitcoin marched to all-time highs in mid-March.



Overall, the fund bought low and sold high — demonstrating how the notion that bitcoin ETF buyers are almost exclusively long-term holders could very well be a meme.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/_5Xp2ybzMRJcZSV083UUrIWue52cvjbpFobk9Jed4K0aCP-ejbsLK2_TTPdHZhmT2LlEmdGBHfXlVCxtr9sErqfTxWL8pTzQiNH5Kl-c-GPDyZZterJlH60bBWK11hkgCwT7-vdz8LYhtYM52PVN1ec" alt=""/><figcaption class="wp-element-caption">The purple columns show bitcoin flows — notice how much came in in the earliest days</figcaption></figure>



Compare that to VanEck&#8217;s HODL. Fund contributors steadily poured in dollars for weeks, with HODL buying about 91 BTC ($5.7 million) per trading day, on average.



Then, in the two days leading up to bitcoin’s all-time high of near $73,800 in March, HODL investors flooded the fund with more than $200 million. HODL was forced to buy 2,800 BTC at the top. An almost simultaneous <a href="https://www.vaneck.com/us/en/press-releases/vaneck-waives-fee-for-bitcoin-etf-hodl.pdf">reduction</a> in fees surely didn&#8217;t help, either.



To make matters worse, HODL has ironically since seen negative flows on three separate days — the worst on May 1 saw 112.25 BTC ($6.5 million at the time) pulled overall, just as bitcoin hit lows around $58,000.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/lvcINAvRorasAqVL7BSs0hiTDIEQ4QaGyvz9fpB5XoE1dB2HWIq1P2mqFI4ZM6ky4_OAX2R5LjEPm0v9KjqP8sDOTzlZv6zdOCPjwvim-BPrG0yF55_YZiHKCAUG6ilhRv3hjTNGd9BuXXvf0GtDpe0" alt=""/><figcaption class="wp-element-caption">HODL bought the top and sold the local bottom</figcaption></figure>



As a cohort, the nine bitcoin ETFs (sans GBTC) have net spent nearly $29.32 billion on 533,919 BTC, now worth $33.56 billion.



That puts those funds almost 15% ahead of their net flows to date.



— David Canellis



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>ETH has now been <a href="https://ultrasound.money/">inflationary</a> for a month straight, on track to add $1.3 billion to the supply over the next year at current prices.</li>



<li>$158 million overall has been pulled from Arbitrum <a href="https://defillama.com/bridges/chains">bridges</a> in the past seven days, while $116 million has net flowed into bridges for rival Optimism.</li>



<li>Daily DEX <a href="https://defillama.com/dexs/chains">volumes</a> are at their lowest point since February: $2.71 billion yesterday compared to $15 billion highs in March.</li>



<li>BTC and ETH are doing their best to pare weekly losses, with BTC aiming to reclaim $63,000 as ETH eyes $3,000.</li>



<li>TON has flipped DOGE over the past week to take ninth <a href="https://www.coingecko.com/">place</a> by market cap, and now closes in on Lido Staked ETH.</li>
</ul>



<h2 class="wp-block-heading">Forget the yen&nbsp;</h2>



We’ve <a href="https://blockworks.co/news/empire-newsletter-succeeding-in-crypto">talked</a> about Metaplanet before, specifically after the Japanese company announced that it would copy <a href="https://blockworks.co/tag/microstrategy">MicroStrategy</a>’s bitcoin acquisition strategy.



On Monday, the company announced that it was making a “strategic treasury transformation” in the wake of the Japanese yen’s weakness.&nbsp;



ICYMI: Earlier this month, the Bank of Japan had to intervene to prop up the yen after it hit lows not seen in over 30 years.&nbsp;



This state of affairs led the company to adopt bitcoin as a treasury reserve asset. The firm plans to focus on buying bitcoin “instead of retaining the ever-weaker yen.”



Metaplanet could potentially use share issuances and other “strategic financial offerings” to buy up more bitcoin. “This approach is designed to be accretive on a bitcoin per share basis, underpinning shareholder value on a long term basis,” the firm said.



Mind you, this is a whole new ballpark for Metaplanet.&nbsp;



According to my napkin math, as David would say, the firm owns around 117 BTC. Metaplanet bought 97.85 BTC, its first purchase, at the end of April, and then added 19 BTC a few days ago, meaning that the company has spent over $7 million.



(That’s a drop in the bucket for MicroStrategy, which <a href="https://blockworks.co/news/microstrategy-second-convertible-senior-notes-offering">bought over $800 million</a> worth of bitcoin in a single purchase back in March.)



When Metaplanet first announced its bitcoin focus, I called it the MicroStrategy of Japan (with caveats, of course). But now I’m beginning to think that it could be more like a sibling of the MicroStrategy strategy.&nbsp;



As Metaplanet <a href="https://contents.xj-storage.jp/xcontents/33500/78d457c2/7534/4ed6/abe3/90f046c452cf/140120240510590390.pdf">points</a> out in a white paper released today, focusing on bitcoin allows the firm to protect itself from further currency depreciation, and potentially show the use case of bitcoin in the context of a publicly traded company.&nbsp;



While Saylor’s firm has <a href="https://blockworks.co/news/microstrategy-bitcoin-supply-rivals-blackrock-ibit">seen huge success</a> with its strategy, it has benefited from the bitcoin ETFs and overall bull run. The company hasn’t had to deal with currency issues, obviously, since it’s based in the US.&nbsp;



It’ll take time — and far more bitcoin buying — but Metaplanet’s strategy shift demonstrates its willingness to adapt to an uncertain financial environment.&nbsp;



It also shows an interesting way to do it: Turn to bitcoin.



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>Crypto startups led by academics are <a href="https://news.bloomberglaw.com/crypto/crypto-vcs-turn-back-to-professor-coins-as-funding-rebounds">drawing renewed interest</a> from VCs, Bloomberg writes.&nbsp;</li>



<li>House Financial Services Committee Chair Patrick McHenry, R-N.C., said a measure focused on crypto market regulation will receive <a href="https://www.coindesk.com/policy/2024/05/10/us-houses-mchenry-says-bill-on-crypto-market-structure-will-get-floor-vote/">a floor vote</a>, according to CoinDesk.&nbsp;</li>



<li>More than 1 million Pudgy Penguin plush toys have been <a href="https://twitter.com/LucaNetz/status/1789729571262042328">sold</a> in the past year, according to project CEO Luca Netz.&nbsp;</li>



<li>Chinese and US government officials are set to begin <a href="https://www.washingtonpost.com/technology/2024/05/13/us-china-ai-talks/">talks</a> on artificial intelligence in Geneva today, per the Washington Post.&nbsp;</li>



<li>A phishing attack victim’s funds —&nbsp;some $71 million worth of WBTC —&nbsp;were <a href="https://twitter.com/lookonchain/status/1789699903041700023">returned</a> by the attacker, according to X account Lookonchain.&nbsp;</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



Sexual misconduct allegations have been raised against Neel Somani, the founder of Eclipse. He denied the claims and <a href="https://twitter.com/neelsalami/status/1788658998411133067?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet">announced</a> he was stepping back from being the “public face” of Eclipse.&nbsp;



I bring this up not because I want to talk about the Somani allegations, but because I think that there’s an interesting discourse bubbling under all of this: Where’s the transparency?



Crypto is hailed for prioritizing transparency, and I think that partially bled into the aforementioned scenario as women spoke out on X about their alleged experiences with Somani.



But I think there’s still room for improvement. Haseeb Qureshi, managing partner at Dragonfly, <a href="https://twitter.com/hosseeb/status/1788710996196065575?s=46">said</a> his firm passed on investing in Eclipse because they heard rumors about Somani’s alleged behavior.&nbsp;



When asked if the firm said anything, Qureshi said they let “a couple folks” know about the rumors, and they also declined to invest. I agree with what Qureshi added, which is that it’s not okay to “put someone on public blast over rumors.”



Qureshi said his firm heard about the “longstanding pattern of behavior” with “minimal diligence.” If that’s the case, why did it take women posting on X for these rumors to go public?



That’s what I’ve spent the weekend mulling over, and I’m not sure there’s a clear or good answer.



But I pose this to you: If crypto wants to be transparent, and it wants to be different from places like Wall Street, then how can we balance more transparency without spreading baseless rumors?&nbsp;



This isn’t just about the money or the technological promises — there are people’s lives to think about as well. They deserve to be informed and protected.



— Katherine Ross



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Empire Newsletter: Not all ETFs buyers were created equal

Jack Kubinec

Crypto’s love affair with derivatives drags on.&nbsp;



In the week’s largest funding round, Arbelos Markets raised $28 million for a principal trading firm specializing in crypto derivatives. Dragonfly led the seed round, which also drew participation from FalconX, Circle Ventures, Paxos and Deribit, among others.



Derivatives are financial contracts that base their value on an underlying asset. Put and call options are examples, as are futures contracts. DeFi pioneered the concept of perpetual futures, a crypto-native innovation that lets futures contracts be traded without an expiration date. Huge leverage, huge risk.&nbsp;



But Arbelos is less degen and more institutional. In a press release, co-founder and CEO Joshua Lim <a href="https://www.prnewswire.com/news-releases/arbelos-markets-raises-28-million-to-rebuild-trust-build-next-generation-crypto-derivatives-trading-business-to-provide-liquidity-for-crypto-capital-markets-302139249.html">called</a> it a “smart principal risk-taker with a strong balance sheet and a flexible product.” Former FTX.US CEO Brett Harrison is building a product in a similar vein.&nbsp;



Read more: <a href="https://blockworks.co/news/brett-harrison-architect-fundraise">Ex-FTX US exec Brett Harrison’s startup raises $12M for derivatives brokerage</a>



But Arbelos is not a brokerage. It’s a firm that provides liquidity and infrastructure for the trading of assets including <a href="https://blockworks.co/tag/derivatives">derivatives</a>. The firm will use the fresh funds to “improve its quant trading infrastructure, hire top talent, and expand its access to new markets and its range of products,” Arbelos said in a press release.



Arbelos seems to be pitching itself as more trustworthy and grown-up in contrast to the crypto firms that played fast and loose with risk controls and blew up the market in 2022.&nbsp;



“Post the collapses of last cycle, Arbelos is rebuilding the DNA of the modern primary dealer, and in the process they’re returning trust &amp; transparency to the space at large,” Dragonfly’s Omar Kanji <a href="https://x.com/TheOneandOmsy/status/1788249516811927956">wrote</a> on X.



<h2 class="wp-block-heading">Founders Fund backs zero-knowledge proof startup</h2>



Peter Thiel-backed Founders Fund led a $13.2 million round in Lagrange. Archetype Ventures, 1kx, Maven11, Fenbushi Capital, Volt Capital, CMT Digital and Mantle Ecosystem Fund also contributed.



Lagrange says it’s building a “hyper-parallel ZK coprocessor.” In plainer terms, Lagrange is trying to apply privacy-preserving <a href="https://blockworks.co/tag/zero-knowledge-proof">zero-knowledge proofs</a> in a way that can handle tons of data — as blockchains tend to do.&nbsp;



Lagrange has launched zk light clients for Ethereum rollups as an actively validated service on EigenLayer.&nbsp;



<h2 class="wp-block-heading">Other notable funding news</h2>



<ul>
<li>AgriDEX, a platform for the tokenization of agricultural commodities, <a href="https://x.com/AgriDexPlatform/status/1788572073704481217">disclosed</a> a $5 million raise.&nbsp;</li>



<li>Blockchain data access protocol Lava Network <a href="https://x.com/lavanetxyz/status/1787879172687503635">announced</a> a strategic $11 million raise.&nbsp;</li>



<li>Solana-based game developer Seeds Labs <a href="https://cointelegraph.com/press-releases/bladerite-game-developer-seeds-labs-raises-12m-seed-funding-strategically-building-on-solana">raised</a> $12 million.</li>
</ul>



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Funding Wrap: Arbelos raises $28M for derivatives-focused exchange

Casey Wagner

If you’ve been pining for the opportunity to have your favorite photos replicated onto a digital Reebok sneaker, you are in luck.&nbsp;



On Friday, the sports brand announced a new feature in partnership with Futureverse called “Reebok Impact” — an AI-powered tool where users can send a photo via Instagram direct message and in return receive “a custom sneaker in the colors and style of the image.”



Users can create up to four pairs for free and send the file to games like Fortnite and Roblox.&nbsp;



Leveraging AI creates an easy-to-navigate user experience that meets sneaker fans where they are. The future of fashion has arrived, and this is only the beginning,” Futureverse co-founders Shara Senderoff and Aaron McDonald said in a statement.&nbsp;



Reebok is the latest to jump into the digital fashion game. Parent company Adidas <a href="https://blockworks.co/news/web3-branding-adidas-on-chain">announced a “long term collaboration”</a> with move-to-earn app STEPN last month, intended to bring Adidas sneaker NFTs to the platform.&nbsp;



Corporate rival Nike this week also announced new developments in their digital wearable business. .SWOOSH, Nike’s NFT platform now allows users to create their own designs and enter a competition to make their digital shoe real.&nbsp;



Reebok is not offering users the ability to purchase physical pairs of their “Reebok Impact” sneakers, but the company said using Reebok Impact will come with an “incentive” to make some real-life purchases.&nbsp;



<h2 class="wp-block-heading">Is Onchain Summer the new DeFi Summer?</h2>



The so-called “DeFi Summer” of 2020 saw a massive surge in activity with the rise of liquidity mining and yield farming. Now, <a href="https://blockworks.co/tag/base">Base</a> hopes its second-annual Onchain Summer will <a href="https://blockworks.co/news/base-kicks-off-onchain-summer">bring a similar sense of excitement</a> and innovation to the space.&nbsp;



The event kicks off next month with a four-week hackathon. Base says it has 600 ETH to spend on prizes and grants. Learn how to apply <a href="https://base.mirror.xyz/HoH9cZVi8CMdvxVUNjvOzceUPVQcVZvvkf8ZbCOVOco">here</a>.&nbsp;



<h2 class="wp-block-heading">One interesting stat:&nbsp;</h2>



<ul>
<li>If you thought <a href="https://blockworks.co/tag/meme-coins">memecoins</a> were over, think again. Memecoin trading shop Pump.fun has made <a href="https://blockworks.co/news/having-fun-pump-fun">around $500,000 in revenue</a> in the past 24 hours alone. That’s about double Uniswap’s profit, <a href="https://defillama.com/">per</a> data from DeFiLlama.&nbsp;</li>
</ul>



<h2 class="wp-block-heading">In other news:&nbsp;</h2>



<ul>
<li>Creator-driving publishing and newsletter operation Paragraph acquired Mirror, an Ethereum-based decentralized content shop, for an undisclosed amount.&nbsp;</li>



<li>The Sandbox is partnering with Virtual Brank Group and ITV studios to create a new Web3 gaming experience based on NBC’s “The Voice.”</li>



<li>Digital fashion house <a href="https://www.draup.xyz/">Draup</a> is launching a new collection focused on internet trends. Bring on the influencers. (Well, maybe.)</li>
</ul>



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Web3 Watch: Reebok jumps into digital wearable game 

Marc Taverner

Bitcoin is over 15 years “old,” and more and more companies and brands now accept the cryptocurrency as a way of payment. 



But for most people, paying with bitcoin is as familiar as paying with galactic credits.&nbsp;



The truth is bitcoin as it is now won’t be used to buy your coffee. But it might be funding a company that would change your life — which is why we need to give it some room to be used.



By design, bitcoin is scarce. This makes it a reliable store of value, and therefore, people want to be allowed to use it. And as bitcoin is used less for everyday transactions (your coffee, for example), it is becoming increasingly popular as a means of exchange in other ways; like strategic investments in startups by funds, VCs and angel investors. We know this because we’ve seen more startups look for providers to exchange bitcoin for fiat currency in order to run their operations (like paying salaries and office rent).



We have also seen an increase in large institutional investors purchasing bitcoin as an alternative investment, looking for ways to diversify their portfolios and seek returns that hedge against market volatility.&nbsp;&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoins-21-million-limit-myth">Bitcoin’s 21 million limit is a boomer myth</a>



And, of course, we’ve seen the popularity as a result of the recently approved BTC ETFs, with BlackRock making itself one of the largest purchasers of bitcoin ever. As of <a href="https://www.blackrock.com/us/individual/products/333011/ishares-bitcoin-trust">May 2024</a>, BlackRock&#8217;s iShares Bitcoin Trust had accumulated more than 274,000 bitcoin (worth, at time of writing, around $16 billion).



For these reasons, bitcoin is clearly now seen as a viable investment opportunity for major players. And in turn, it is time to be concerned that big players may be monopolizing the market to the detriment of the companies, founders and investors that still prefer to use bitcoin as a means of exchange.



The vice grip organizations like BlackRock have on bitcoin (in order to fill their ETFs) is a threat to bitcoin’s adoption simply because they limit the circulating supply of bitcoin.&nbsp;



At the same time, the price increases that these institutions drive make bitcoin an even more interesting asset to invest with and hold. It’s bitcoin’s catch-22, and it’s causing real issues already.&nbsp;



As more companies hold bitcoin on their balance sheets, they need the ability to transact and exchange it in a more liquid ecosystem. The ETFs, on the other hand, are designed to not “let go” of their bitcoin. So what’s next?



The only answer with any teeth is regulation. Not to deregulate the bitcoin ETFs themselves, but support the regulatory approval of more financial products leveraging bitcoin’s value and making ETFs not the only game in town.



Approval of other financial products that leverage other digital assets (like the impending decision on the Ethereum ETF) could also relieve some ETF buying pressure. And the licensing and approval of more fiat to bitcoin payments and exchange rails (so the way to access bitcoin is not just through a brokerage), could also help get more bitcoin back on the market.&nbsp;



Within the Web3 ecosystem, more and more investors are using crypto assets to back promising startups. Some many great projects and initiatives are already funded with BTC or other stablecoins, and we should see more of them in the future.&nbsp;



But in order to make this happen, we need to make sure there is enough bitcoin circulating in the market. That requires more financial products with different buying models and different digital currency backing, as well as more access to mediums of exchange so that investors and companies funding their companies with bitcoin can still grow.&nbsp;



Best of all, the BlackRocks of the world should be on board with this plan — if their bitcoin ETFs were any indication, there’s only growing demand for digital currency investment products.



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


<div class="wp-block-post-author-biography">Marc Taverner is the CEO and co-founder of XEROF, a leading Swiss financial services provider specializing in cryptoassets. He has more than 30 years of experience in the technology industry and now pioneers the use of cryptoassets for liquidity and efficiency in financial services worldwide.

Previously, Marc founded InComm Conferencing, a company focusing on detailed events ranging from large-port calls, operator-assisted conferences, webcasts, medical education events, investor relations calls, and onsite production. He successfully sold the company to join the C-suite of the leading European Bitcoin and blockchain firm, Bitfury. Marc then directed INATBA, one of the largest multi-stakeholder blockchain trade associations in Europe, backed by the European Commission and Abu Dhabi Global Market. During his tenure, he led the multi-stakeholder response to the EU cryptoasset regulation MiCA. Marc is also an angel investor and advisor to several web3 and crypto companies.</div>


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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

BlackRock and other bitcoin ETFs rob bitcoin of its room to grow

A month ago, Monad raised $225 million on the promise of a high-throughput Ethereum-compatible layer-1 blockchain. It’s now putting those funds to use on the hiring front.



Kevin Canlas announced he joined the protocol as a senior designer. Canlas has previous experience in similar roles at the NFT collection Isekai Meta and smart contract security firm Cyfrin.&nbsp;



At Monad, Canlas will be “leading internal designs and helping startups build on the Monad ecosystem,” he <a href="https://x.com/kvncnls/status/1788547718195069432">said</a> on X.



Read more: <a href="https://blockworks.co/news/paradigm-leads-monad-parallel-evm-fundraise">Paradigm leads $225M round for high-throughput blockchain Monad</a>



Also this week, SungMo Park joined Monad as its APAC lead and head of Korea. Park previously served as head of business for Asia Pacific and for Korea during a nearly two year stint at Polygon Labs.



Park also becomes Monad’s first hire in the APAC region, he <a href="https://x.com/sungmo_nad/status/1788569126832848902">said</a> on X.&nbsp;



Hear more: <a href="https://blockworks.co/podcast/0xresearch/98ca33d6-6303-11ee-a8d9-e7be60ee99b1">Monad: Unleashing parallel execution on the EVM</a>



Monad isn’t done hiring yet either. Charlie Noyes, of lead Monad investor Paradigm, <a href="https://x.com/_charlienoyes/status/1788666277709402570">advertised</a> an open role for a senior crypto economics researcher at the protocol. Monad currently <a href="https://boards.greenhouse.io/monad">lists</a> twelve job openings in total, mostly in its engineering department.&nbsp;



<h2 class="wp-block-heading">Mini-Q&amp;A: What crypto firms are looking for</h2>



Blockworks spoke with Stephen Moskowitz, founder and managing partner of Web3 recruiting firm Pyxis, about his recent observations on the crypto labor market.&nbsp;



Keep reading for excerpts from Blockworks’ interview with Moskowitz, edited for brevity and clarity.



_________________________________________________________________________________________



Blockworks: What sorts of roles are most in-demand at the moment?



Moskowitz: Almost every single company in crypto right now is trying to hire either a head of marketing or a [chief marketing officer], and there&#8217;s a huge supply-demand imbalance there. There’s just a lack of crypto-native marketing talent.&nbsp;



What I am seeing happen is that there&#8217;s a lot of title inflation in crypto, so people can go out with a head of marketing title, and they end up hiring someone that is coming from maybe a marketing manager or marketing lead type of role, or maybe they&#8217;ve got a couple of years of experience, and those people also might be more crypto-native, like someone coming out of school who spent a couple years in marketing.&nbsp;



I think that those people are gonna be the next crop that kind of rises up as opposed to very senior Web2 people moving into Web3. Maybe at the CMO level that might happen if they don&#8217;t need someone quite as native, but if they want somebody who’s tweeting and more like an [individual contributor]-level role, I think that it’s gonna have to be the junior talent that steps up into these more senior titles because there just aren&#8217;t enough of these people that exist.&nbsp;



<h2 class="wp-block-heading">Other notable hiring news</h2>



<ul>
<li>Wyatt Lonergan, the head of Circle Ventures, <a href="https://x.com/Wyatt_Lonergan/status/1788959345843019805">departed</a> the firm.</li>



<li>Polygon Labs head of DeFi Jack Melnick <a href="https://x.com/jackmelnick_/status/1788590852303908994">announced</a> he’s left the company.</li>



<li>Elisha Aswani <a href="https://www.linkedin.com/posts/elishaaswani_keepbuilding-activity-7191702040639586306-Y1Eo/?utm_source=share&amp;utm_medium=member_desktop">left</a> a growth role at Binance.</li>
</ul>



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Crypto Hiring: Monad is using its $225M haul to load up on talent

Molly Jane Zuckerman

Jeff Albus

US presidential candidates on both sides of the two-party spectrum are taking advantage of the crypto industry.



You’ll notice how I didn’t say that crypto will be a hot button topic this election season, or that the crypto space will play any sort of role in shaping election discourse.&nbsp;



No. It’s clear to me that some of the main players in this presidential race are planning to exploit the crypto world for money and votes — and those in crypto should stop playing along.



Why should favorable cryptocurrency legislation take precedence over all else? Perhaps you really believe that the financial system is broken, and that a path forward for cryptocurrency in the US is the best way to create a new, more egalitarian society that will allow all to flourish.&nbsp;



But that’s not what I see.&nbsp;



What I see is a small number of wealthy individuals, who made that wealth from cryptocurrency, looking for the government to let them continue growing that wealth unfettered.



<a href="https://twitter.com/twobitidiot/status/1788389754502856707?s=46&amp;t=HJ9nSw8K9AtRcTq80T7XVw">Among diehard crypto evangelists right now</a>, “voting for crypto” means voting Republican for president. According to this side of the debate, any other decision will virtually assure the death of the American crypto industry.&nbsp;



This fear (true or not) has led some major personalities in Web3 to push crypto supporters into becoming single-issue voters. Their message is clear: Choose your 2024 candidates based solely on their cryptocurrency stance, or else.



In other words, Americans should prioritize their own selfish financial interests over broader societal and ethical concerns. When you promote the idea of voting for America’s crypto industry above all else, you’re deciding to ignore all of the other issues that are really at stake this election season — healthcare access, Social Security, gun legislation, women’s rights, LGBT issues, immigration, to name a few.&nbsp;&nbsp;



I want to be clear — I do not care if you vote Republican, Democrat, or third-party, as long as you care about the issues at stake, and truly believe that the candidate in question is representative of your views. But voting for a candidate you would not otherwise support, simply because they favor the deregulation of a sector in which you hold a profit motive, is a compromise that you should not make.



<h2 class="wp-block-heading">Crypto isn’t political by accident</h2>



Cryptocurrency has undeniably (and perhaps unfortunately) become a partisan issue.



Blockchain technology, which underpins the entire crypto industry, is neither inherently good or bad. But it’s the actions of individuals and what they do with this technology that has drawn regulatory scrutiny over the years. This has transformed a neutral technology stack into a deeply partisan issue, with sharply divided views across party lines concerning its integration into the American financial system and beyond.



On the left side of the political spectrum — the same side already in favor of stricter financial regulations — politicians often place crypto against a global backdrop of scams, money laundering and market manipulation to strengthen their calls for oversight. Their tagline is to keep consumers safe.



Lawmakers on the right — who already favor less financial regulation as a rule — instead posit that intense crypto regulation will cripple innovation and impede technological advancement. They say that their aim is to keep American innovation moving forward at a brisk pace, far ahead of other countries like China.&nbsp;



However, their supposed motivations are arguably applicable only during the election season. Because what all politicians actually want is your attention, your money, and ultimately your ballot. As with most issues, when the time comes, it is unlikely that much in the way of meaningful change will come from either side of the aisle. Instead, it will be the actions of the innovators within the crypto space that move the needle forward — which you would think that anyone who truly supports a limited government would appreciate.



The very idea that crypto needs to be “voted” into office has led to the platforming of some very unsavory people who really have nothing to do with crypto at all —&nbsp;besides a shared desire to solicit donations from this niche, newly rich subset of Americans.



Vivek Ramaswamy <a href="https://messari.io/mainnet/videos/fireside-with-presidential-candidate-vivek-ramaswamy">gave a fireside chat</a> at Messari’s Mainnet last fall, promoting his presidential crypto plan a few months before he dropped out of the race. Consensus will have <a href="https://www.coindesk.com/policy/2024/05/07/robert-f-kennedy-jr-a-pro-crypto-presidential-candidiate-to-appear-at-consensus-2024/">Robert F. Kennedy Jr. speak</a> this year, announcing the news with a headline calling him a “pro-crypto presidential candidate.” I can think of a lot of other modifiers for RFK Jr. that are more headline-worthy than his stance on crypto. 



And most importantly, Crypto Twitter has, for the most part, <a href="https://twitter.com/twobitidiot/status/1788389754502856707?s=46&amp;t=HJ9nSw8K9AtRcTq80T7XVw">widely embraced</a> former President Donald Trump’s words of support for NFTs and crypto. And far be it for me to say whether that support is genuine, or more largely based on the fact that he&#8217;s made millions of dollars selling NFTs branded with his own image.



Backing these candidates simply because they seem to make positive noise about crypto isn’t taking back the power from Wall Street or helping make the world a more financially equitable place —&nbsp;it’s falling for empty campaign rhetoric.&nbsp;



The idea that any presidential (or gubernatorial or senatorial) candidate is trying to win favor with the crypto crowd because they truly believe in crypto is laughable. These candidates are looking for crypto money, nothing more and nothing less. Those in crypto who support such candidates are either willing to pretend that these officials understand even the basic strokes of how crypto works under the hood (let alone its implications for the broader frameworks of finance and democracy), or they are willing to compromise their morals and ethics for the mere possibility of moon-making crypto legislation in the future.



As the one, big, obvious example: If you believe that Donald Trump will truly support the crypto industry, you have to be willing to overlook his judicially acknowledged sexual assault charges, overt institutional fraud and genuine attempts to overthrow American democracy when you cast your vote in November.&nbsp;



Is cryptocurrency really that important to you?



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



Molly Jane Zuckerman is the opinion editor at Blockworks. She previously led educational content at CoinMarketCap and ran the news desk at Cointelegraph. Molly Jane is now based in New York after almost a decade in Russia, and can talk your ear off about Russia lit and detective novels. 



Jeff is an editor at Blockworks, based in the United States. He has been a part of the blockchain space for over a decade, most recently working as US news editor at Cointelegraph. His areas of focus include empowering artists and creators through technology, using proof-of-participation methods to reward self-improvement, reducing the effectiveness of Sybil attacks, seeking transparent equity for disadvantaged communities, and exploring fairer models of world governance.

Only a fool would vote on crypto alone

The Securities and Exchange Commission asked a court to deny Coinbase’s motion for an interlocutory appeal on Friday.&nbsp;



The regulatory agency and the crypto exchange have been locked in a legal battle for nearly a year after the agency charged Coinbase with operating as an unregistered exchange and alleged that its Staking program was violating securities laws.



“Interlocutory review is not warranted simply because Coinbase proposes a new legal test and disagrees with the Court’s rejection of that test, nor can it be supported by Coinbase’s desire for quicker appellate review of its invented test,” the SEC said in the filing.&nbsp;



The <a href="https://blockworks.co/tag/sec">SEC</a> further argued that there’s no “substantial ground for difference of opinion,” because that would mean there is more than the obvious disagreement between the two parties. Coinbase, the SEC said, has yet to create “substantial doubt” about the court’s ruling.



“It is also possible that <a href="https://blockworks.co/tag/coinbase">Coinbase</a> simply does not like the answer provided for years now by the SEC and the courts, having decided to structure its business in ways that now may make it difficult or costly to comply with the securities framework put in place by Congress and the SEC over our capital markets for nearly a century,” the SEC wrote.&nbsp;



Read more: <a href="https://blockworks.co/news/judge-rules-against-coinbase-sec-dismissal">Court largely rules against Coinbase’s dismissal efforts in SEC case</a>



“But Coinbase’s desire to change the rules, to do so quickly, and to enlist the federal judiciary in this endeavor, supply no basis to certify an appeal,” the filing continued.



Coinbase Chief Legal Officer Paul Grewal, in a post on X, pushed back against the response. He said that the SEC “couldn&#8217;t help contradicting its own arguments for the same kind of appeal in Ripple.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today <a href="https://twitter.com/SECGov?ref_src=twsrc%5Etfw">@SECGov</a> filed its response to our request to file an interlocutory appeal with the 2nd Cir. The Commission couldn&#39;t help contradicting its own arguments for the same kind of appeal in Ripple. Here&#39;s just example&#8211;compare what they said before to what they say now. 1/3 <a href="https://t.co/LkbXefV07N">pic.twitter.com/LkbXefV07N</a>&mdash; paulgrewal.eth (@iampaulgrewal) <a href="https://twitter.com/iampaulgrewal/status/1789033328936710636?ref_src=twsrc%5Etfw">May 10, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The SEC’s response comes after Coinbase filed for an interlocutory appeal last month. Coinbase wanted a higher court to review whether or not the SEC can <a href="https://blockworks.co/news/coinbase-dismissal-denial-staking-and-securities">apply Howey to crypto transactions</a>.&nbsp;



The company noted that the amount of differing opinions — from regulators to politicians on Capitol Hill — shows the “difficulty of the subject matter.”



Coinbase and the SEC have been engaged in multiple legal battles since last year after the SEC <a href="https://www.coinbase.com/blog/we-asked-the-sec-for-reasonable-crypto-rules-for-americans-we-got-legal">served</a> the former with a Wells notice last March. Coinbase <a href="http://sec.gov/cgi-bin/browse-edgar?company=&amp;CIK=&amp;type=S-1&amp;owner=include&amp;count=40&amp;action=getcurrent">took</a> to the courts afterward, asking for answers from the regulator. Then, in June, the <a href="https://blockworks.co/news/sec-sues-coinbase">SEC filed its suit</a>.&nbsp;



Last December, the SEC denied Coinbase’s rulemaking petition, <a href="https://blockworks.co/news/coinbase-to-sec-rules-for-securities-just-do-not-work-for-digital-assets">which it filed in 2022</a>. The petition asked the regulator to create rules for crypto and argued that the current securities laws don’t work for the blossoming industry. The SEC, notably, had made the opposite claim and it shows through its regulation-by-enforcement approach under Chair Gary Gensler.&nbsp;



Read more: <a href="https://blockworks.co/news/coinbase-will-rechallenge-sec">Coinbase says it will challenge SEC crypto rulemaking rejection</a>



Coinbase, in a ruling last month, was mostly denied its motion to dismiss. However, the court found that the SEC’s claims against its wallet service — the SEC alleged that it acted as an unregistered broker by offering the service — were unfounded.&nbsp;



“The factual allegations concerning Wallet are insufficient to support the plausible inference that Coinbase ‘engaged in the business of effecting transactions in securities for the account of others’ through its Wallet application,” Judge Katherine Polk Failla wrote.



Failla said that the SEC could move forward with its claims against the Staking service and Coinbase’s role as an unregistered exchange. The SEC, she said, “plausibly alleged” that Coinbase violated parts of the security act.&nbsp;



The reasoning, she said, is because Coinbase’s “managerial effort” could meet Howey’s standards, which would make it a security offering.



Updated May 10, 2024 at 5:17 pm ET: Added comment from Coinbase CLO.



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

SEC asks court to deny Coinbase’s motion for interlocutory appeal

Ben Strack

Following the recent reduction in bitcoin mining rewards, the largest public bitcoin miners have begun to hone in on fresh strategies in an attempt to maintain a competitive edge.



Segment standouts continue to tout the importance of greater scale and revenue diversity, with one prepared to jump with both feet into high-performance computing.



<h2 class="wp-block-heading">Marathon touts growth, revenue diversity plans&nbsp;</h2>



Marathon Digital said it plans to have half its revenue come from outside of <a href="https://blockworks.co/tag/mining">mining</a> over the long term.



Such targets are consistent with industry-wide efforts to diversify revenue streams after per-block mining rewards <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">dropped from 6.25 BTC to 3.125 BTC on April 19</a> as part of the roughly quadrennial Bitcoin halving event.&nbsp;&nbsp;



<a href="https://blockworks.co/tag/marathon-digital">Marathon</a> debuted an immersion cooling system, as well as firmware and control board, in March. A month prior, it introduced a transaction submission service on Bitcoin called Slipstream, that executives expect will help the company capture more transaction fees.



North America’s largest miner by self-mining capacity also has a huge balance sheet, and talks about it often.&nbsp;



Its cash and bitcoin holdings were worth a combined $1.6 billion, as of March 31. Such resources have allowed the Florida-based miner to <a href="https://blockworks.co/news/marathon-digital-aquisition-bitcoin-halving">acquire sites in Nebraska and Texas</a> so far this year.



“If we were to construct such sites on our own, it would have taken us more than a year to energize and likely cost twice the amount on a per megawatt basis,” Chief Financial Officer Salman Khan said during a Thursday earnings call.



Marathon, with an energized hash rate of 29.9 exahash per second (EH/s) as of April 30, is on track to reach 50 EH/s by the year’s end, executives noted.



Read more: <a href="https://blockworks.co/news/marathon-post-halving-expansion">A bitcoin mining giant is ahead of schedule on its post-halving expansion</a>&nbsp;&nbsp;



CEO Fred Thiel said on the Thursday call that he expects more opportunities to continue buying capacity, adding, “we’re not going to stop at 50 exahash.”



In addition to acquiring sites for scale, its latest buys mark a shift from Marathon outsourcing its operations to third-party hosting providers to owning and operating sites.



Such control can reduce costs and puts any operational complexities into the owner’s hands.



Now, 54% of Marathon’s 1.1 gigawatts-capacity mining portfolio is housed on sites it owns and operates — up from 3% before the start of this year.



Despite that improvement, this is an area rival miner Core Scientific has Marathon beat.&nbsp;



<h2 class="wp-block-heading">Core ready to pull HPC lever</h2>



Sure, Core Scientific’s balance sheet, comprising $98 million in cash as of the end of March, pales in comparison to some of its competitors. The company is required to sell all the bitcoin it mines as part of the terms upon emerging from bankruptcy in January, limiting the BTC it can hold.



Core Scientific is also behind Marathon in self-mining energized hash rate, with 20.4 EH/s as April’s end.



Read more: <a href="https://blockworks.co/news/adam-sullivan-core-scientific-bitcoin-halving">Core Scientific CEO: Machine buys, deleveraging key around Bitcoin halving</a>



But the Texas-based company’s “significant advantage” over industry peers is its exclusive control over its in-demand high-power data center infrastructure, Core Scientific CEO Adam Sullivan said on a Wednesday earnings call.&nbsp;&nbsp;



“We own and control every structure, every transformer and every concrete pad in our seven mining data centers,” he said. “We now believe our infrastructure is well positioned to take advantage of the enormous demand for power and infrastructure required for high-performance compute.”



That HPC segment is “the next major growth opportunity for our business,” Sullivan added. Others, like Hut 8 Mining and Hive Digital Technologies, have <a href="https://blockworks.co/news/bitcoin-miners-ai-computing">also gravitated toward this space</a>.



Read more: <a href="https://blockworks.co/news/hut-8-diversification-around-bitcoin-halving">Bitcoin miner Hut 8 doubles down on diversification, discipline around halving</a>



Core Scientific said in March that it would lease up to 16 MW of capacity in its Austin data center to cloud provider CoreWeave. Possible revenue from the deal exceeds $100 million, the company said at the time.



More than 500 MW of the miner’s total 1.2 gigawatts of contracted power can be utilized for alternative compute workloads, executives noted.



“We can offer clients a shorter time to power as compared to them waiting potentially three to five years for new greenfield data center capacities to come online,” Sullivan said. “We see this as a powerful mix that provides the potential for multi-year, high visibility, cash flows to buffer against the inherent volatility of bitcoin pricing.”



Compass Point Research &amp; Trading analyst Joe Flynn said in a Thursday research note that Core Scientific’s stock can “re-rate” upon the company retrofitting its existing capacity to service HPC clients.



After all, annual revenue from such deals are estimated at between $1.5 million and $1.7 million per megawatt, he wrote.



Core Scientific’s price of about $3.50 was 10% down on Friday at 12 pm ET. The shares are roughly flat year-to date.&nbsp;



Flynn’s price target for Core Scientific is $8.50, and he maintained a buy rating for the stock.



<h2 class="wp-block-heading">Riot and CleanSpark continue expansion</h2>



Public mining competitors Riot Platforms and CleanSpark, meanwhile, are also among the industry planning to capitalize on post-halving opportunities.



Riot Platforms intends to grow its self-mining hash rate capacity from 12.6 EH/s on April 30 to 31 EH/s by the end of 2024. It <a href="https://blockworks.co/news/riot-plots-hash-rate-growth">ordered 66,560 MicroBT machines</a> for $290.5 million in December and 31,500 more miners in February.



The company, which operates primarily in Texas, also appears better positioned to benefit from power curtailment revenue as temperatures start to increase.



<a href="https://blockworks.co/tag/riot-blockchain">Riot</a> is able to take advantage of periods of high volatility in power markets, as was experienced during Texas heat waves last summer.&nbsp;



It received $31.6 million in power and demand response credits last August, for example.



“In a declining hashprice environment post-<a href="https://blockworks.co/tag/bitcoin-halving">halving</a>, revenue generated from bitcoin mining on a per megawatt hour will decrease, giving Riot more windows of opportunity to economically curtail power and participate in demand response,” Riot CEO Jason Les told Blockworks. “We view our contracts as being a hedge against declining mining break-evens after halving because of our ability to sell power anytime the price of power exceeds mining break-even amounts.”



Meanwhile <a href="https://blockworks.co/tag/cleanspark">CleanSpark</a>, just minutes before its Thursday earnings call, said it agreed to acquire 75 MW worth of mining sites in Wyoming for $18.75 million.



The pending purchase comes after the company bought <a href="https://blockworks.co/news/crypto-miners-hash-rate-bitcoin-halving">three bitcoin mining facilities in Mississippi</a> earlier this year.



CleanSpark CEO Zach Bradford said Thursday the company intends to be “one of the most measured and active acquirers in the industry.”



Scale allows CleanSpark to better cover overhead costs with bitcoin production margins so that profits stemming from additional capacity go straight to its bottom line, he added.



“Many try to find a single metric that levels the playing field between small and large miners, but the playing field isn’t level,” Bradford said. “A company that has scale can achieve escape velocity with much lower incremental inputs.”



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Rival miners Marathon, Core Scientific each think they have an edge over peers

Santiago Roel Santos

<h2 class="wp-block-heading">Why AI needs crypto</h2>



Crypto is very good at one thing: getting humans to do one thing. This will become incredibly important in an AI world.&nbsp;



Technology is deflationary and creates abundance, but it is also a centralizing force. Look at Google (<a href="https://www.proceedinnovative.com/blog/search-engine-market-share-2023-2024/#:~:text=According%20to%20statistics%20from%20Statcounter,Bing%20%E2%80%93%203.31%25">owns 90% of search</a>) and social (TikTok, Meta).&nbsp;



Chris Dixon documents this phenomenon well in his latest book “Read Write Own.” Unlike internet protocols (TCP/IP, HTTPS, SMTP), internet service companies like Google and Meta have amassed monopoly-like market shares. These companies own your data and, after achieving scale, adopt monopoly-like practices to squash competition. Meta shut down their App Store, OpenAI did the same, and Google has crushed multiple calendar-app startups.&nbsp;



In theory, you can use other social media platforms, but none achieve the same level of network effects as TikTok or Meta.&nbsp;



Read more: <a href="https://blockworks.co/news/ai-monopoly-privacy-blockchain">AI has a monopoly on power and privacy. Blockchain fixes this.</a>



The centralizing effect of technology may be even greater with <a href="https://blockworks.co/tag/artificial-intelligence">AI</a>. I recently came across Anthropic’s CEO interview on CNBC where he estimates “we&#8217;re going to see models trained in the next year are going to be about $1 billion…and then 2025, 2026, we&#8217;re going to go to $5 billion or $10 billion. And I think there&#8217;s a chance it may go beyond that to $100 billion.” Few companies will afford that.&nbsp;



Perhaps more importantly, companies that own the data will have an edge to train models. A startup may be able to raise a couple billion, but they won’t be able to easily replicate clinical trial data or years of user behavior data.



The promise of technology is that it is democratizing and lowers the barriers for companies to reap the benefits. This narrative rings true with AI&nbsp; —&nbsp;after all, companies will be able to embed LLMs and other forms of AI (robots, automation processes etc)&nbsp; to unlock productivity gains. Like trickle-down economics, trickle-down tech will benefit many. But the centralizing effect of technology will likely be no different and perhaps even greater with AI.&nbsp;



So where does crypto fit into all of this?



Crypto has proven to be very good at getting humans to do a specific action which benefits the overall network. From Bitcoin to DePIN, crypto networks are case studies on how to scale networks more efficiently by transferring the costs to do-it-yourself (DIY) participants incentivized to spend resources (time, hardware, compute) expecting to earn in return tokens which represent ownership in the network.&nbsp;



The challenge is that bootstrapping and scaling the supply side of networks can be very capex-intensive in these networks. Historically, this has been one of the reasons why there is network centralization. You have 1-2 ride-sharing companies and social media platforms. But when you radically lower the financial burden to bootstrap a network from a company/protocol to participants, then you level the playing field.&nbsp;



You can more easily overcome the cold-start problem networks face by attracting supply and demand because both sides are incentivized to earn tokens (i.e., ownership in the network).



Giving network participants a greater cut of revenue/profits will be the reason why crypto networks from DePIN to AI will <a href="https://blockworks.co/news/solana-depin-projects-with-real-world-utility">emerge as leaders</a> and will be able to displace incumbents.&nbsp;



One area I see this already playing out is in training —&nbsp;specifically, reinforced learning from human feedback (RLHF).&nbsp;



In short, AI models with human feedback are superior to AI models without it. The more RLHF you have, the better the model. Capturing human feedback can be very expensive. But again, crypto has proven to be good at getting people to do a specific action with token incentives, so we may be able to create systems that capture RLHF in greater scale and in a more cost-effective manner than traditional methods.&nbsp;



Instead of having one company to raise a ton of VC money to fund RLHF, a network can finance this with clever cryptoeconomics.



Crypto may also be crucial to minimize data selection for training bias (data is open, accessible and immutable in blockchains) and platform risk.&nbsp;



Look at Google’s Gemini as an example — one platform has many opinions on the data on which the models are trained. The bet is that companies/developers will want certainty that the models they are utilizing are as unbiased as possible and have cryptographic proofs that models are doing what they are being told.



The most exciting thing about this is that the impact crypto can have on AI is already being felt.&nbsp;



AI will be explosive. Its effect will be felt by everyone, but incumbents may capture even more value. Crypto offers an interesting and viable solution to counteract the centralizing force of technology and restore the original principles of the internet. I see a world where crypto —&nbsp; specifically, this idea of creating participatory networks — will become the de facto go-to-market mechanism for networks.&nbsp;



Crypto is the extension pack of the internet.



— Santiago Roel Santos



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>Bitcoin’s price is up over 3% to $63,000 early Friday.</li>



<li>Marathon mined 2,811 BTC last quarter, a decrease of over 30% from the previous quarter.</li>



<li>Pump.fun has brought in nearly $500,000 in revenue over the past 24 hours, per <a href="https://defillama.com/fees/simple">DefiLlama</a>.</li>



<li>Grayscale’s outflows have picked back up, with $43 million leaving the fund yesterday, according to data from <a href="https://farside.co.uk/?p=997">Farside</a>.</li>



<li>ETH’s price is up 2% to over $3,000, per <a href="https://www.coinbase.com/price/ethereum">Coinbase</a>.</li>
</ul>



<h2 class="wp-block-heading">Not selling is still holding</h2>



<a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s memecoin balance is piling up.



Nearly $200,000 in random tokens are parked in addresses linked to BlackRock’s onchain money market fund, BUIDL. New deposits come in every day.



To be clear, BlackRock is not buying memecoins, despite the spoofed Uniswap <a href="https://basescan.org/tx/0x08b85d42432c433fe160fd6310996da4502577f99b60591b4f0930e9c6af314c">trades</a> that suggest it had bought trillions of BOMEPEPE.



It’s long been tradition for memecoin holders, and maybe even the creators themselves, to direct funds to the wallets of popular figures.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/blackrock-ethereum-memecoins-tornado-cash-dusting">BlackRock clearly wants to take crypto seriously. Too bad it’s forever silly.</a>



Think of it as part hat-tip, part marketing spend — the onchain equivalent of renting a billboard inside a blockchain explorer.



BUIDL’s onchain history has seen more than 500 transactions but only about two dozen appear to be actioned by BlackRock itself.&nbsp;



BlackRock initially <a href="https://etherscan.io/tx/0xe71e19859070d965af84c4d6163a09974767563866729ef222762a851bc7faa1">funded</a> BUIDL with 1 ETH from Kraken and 200 USDC <a href="https://etherscan.io/tx/0xd08188e628719167fa76d1ba5d18c7dbab3110470d7b9c3cdf99ae8ee643c9cd">minted</a> directly via Circle. The fund then sent small amounts of USDC between itself, in early-to-mid March, apparently to warm up, about a week before the fund was formally announced.



Since then, Larry Fink’s firm, the world’s largest asset manager, has been interacting with Ondo Finance, which has been <a href="https://www.coindesk.com/markets/2024/04/30/blackrocks-buidl-becomes-largest-tokenized-treasury-fund-hitting-375m-toppling-franklin-templetons/">acquiring</a> BUIDL’s tokens as one of its reserve assets (there are <a href="https://etherscan.io/token/0x7712c34205737192402172409a8f7ccef8aa2aec">currently</a> 13 holders of BUIDL).&nbsp;



All while almost 300 different tokens have flooded BUIDL’s addresses, not just on Ethereum, but on any EVM-compatible chain with an analogous wallet, including Binance Smart Chain, Polygon and Avalanche.



Most of the tokens sent to BlackRock to date are worthless. But there are some with active markets, which gives them real value, and not all are strictly <a href="https://blockworks.co/tag/meme-coins">memecoins</a>. 



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/yC6WDUNDKUHIbWy26a2ETyGmcttn_BiCutjdaWuhmc540gjPOwN33q38WsganZHGVoci1g08S85mGhZ3NMv8XcaD93YJwmHolWYb2E3U66sUnLpVRfTNWOJCzpyDlcRs33HFFc9sXliSonqJML9DXJg" alt=""/><figcaption class="wp-element-caption">Caution is advised when looking into any of these tokens — their place in BlackRock’s wallet isn’t exactly an endorsement.</figcaption></figure>



BlackRock has been forced to hold more than $60,000 worth of UBXS alongside its legitimate stablecoin balance. UBXS is pitched as a utility asset for tokenized real estate app Bixos.&nbsp;



There’s also nearly $30,000 of ISP, which supposedly powers open-world, play-to-earn metaverse platform Ispoverse that can support virtual hackathons.&nbsp;



Although, I’m not sure it really helps perception of those projects to be placed alongside tokens like FINKWIF, NOODS, PEEON and BOBO MUMU.



Still, BlackRock hasn’t sold any of the tokens playing stowaway in its Ethereum wallet. Does that count for anything?&nbsp;



Probably not. Sad.



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>Kraken is pushing harder for a <a href="https://www.bloomberg.com/news/articles/2024-05-10/kraken-battles-sec-over-investment-concept-wording-in-filing?embedded-checkout=true">dismissal</a> in its SEC lawsuit, Bloomberg writes.&nbsp;</li>



<li>Token projects are increasingly <a href="https://www.coindesk.com/business/2024/05/09/inside-cryptos-kol-economy-influencer-investors-get-special-treatment-in-token-deals/">turning</a> to online influencers for help, according to CoinDesk’s Danny Nelson.</li>



<li>Neel Somani, founder of Ethereum scaling startup Eclipse, <a href="https://twitter.com/neelsalami/status/1788658998411133067">says</a> he is “reducing” his role amid sexual misconduct <a href="https://twitter.com/jiwoo_jun/status/1788038821663178852">allegations</a> made against him.&nbsp;</li>



<li>Espresso and Polygon Labs are <a href="https://blockworks.co/news/espresso-polygon-partnership-rollup-interoperability">partnering</a> on rollup interoperability.</li>



<li>US airlines are expanding their <a href="https://www.nytimes.com/2024/05/10/travel/airlines-artificial-intelligence.html">use</a> of AI, according to the New York Times.</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



Pump.fun is exactly what Gary Gensler and the <a href="https://blockworks.co/tag/sec">SEC</a> are afraid of.&nbsp;



It’s also one of those things that is so unique to crypto — mixing fun with the potential to profit.&nbsp;



But it’s also risky, as Blockworks reporter Jack Kubinec <a href="https://blockworks.co/news/having-fun-pump-fun">pointed out</a> in the Lightspeed newsletter yesterday. Folks who go to casinos are probably of the same mindset as a lot of folks on Pump.fun, and for them, the risk is worth the potential reward.&nbsp;



For the SEC and <a href="https://blockworks.co/tag/gary-gensler">Gensler</a>, though, this is a scenario they claim they want to protect investors from. While Pump.fun says it prevents rug pulls or exit scams, it can’t stop shady people from doing shady stuff.&nbsp;



So while the SEC continues its crusade against companies that have said they want to — or have tried to — come in and register, I’ll sit back and watch crypto’s latest venture play out.



— Katherine Ross



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Empire Newsletter: How crypto can solve AI’s centralization problem

The TradFi world has been exploring more ways to use blockchain tech for years now.



But the sheer number of financial players involved in the latest proof-of-concept makes it different from most. Not to mention the size of the entities, and their approach.



Payment giants Visa and Mastercard are coming together with banks JPMorgan, Citigroup and others to test a so-called Regulated Settlement Network.&nbsp;



The proof-of-concept sets out to experiment with shared ledger technology to settle tokenized commercial bank money, wholesale central bank money, US Treasury securities and other tokenized assets, a Wednesday news release notes.



Read more: <a href="https://blockworks.co/news/digital-asset-summit-tradfi-crypto">Digital Asset Summit Day 2: Financial giants say they’re here to stay</a>



This project represents a new phase of the Regulated Liability Network. Launched in November 2022, the <a href="https://regulatedliabilitynetwork.org/wp-content/uploads/2022/11/The-Regulated-Liability-Network-Whitepaper.pdf">initiative</a> set out to demonstrate the use of shared ledger technology for regulated money movement on one platform.



The Securities Industry and Financial Markets Association (SIFMA) is set to manage the new proof of concept. Others involved include Swift, TD Bank, US Bank, USDF, Wells Fargo and Zions Bancorp.



Lamine Brahimi, co-founder of crypto platform Taurus, said he welcomes any initiative that puts cash on-chain at scale.&nbsp;



“The real benefits of tokenization will come when both the securities and the cash legs of a transaction are both on-chain,” he told Blockworks.



<h2 class="wp-block-heading">An evolution of projects</h2>



Financial players have long explored how it could unlock greater automation and more standardized data rails via blockchain tech while cutting costs and offering greater transparency.



Blockchain-focused proof-of-concepts and other tokenization efforts have seemed to ramp up in recent months.&nbsp;



JPMorgan’s blockchain arm Onyx last year <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">carried out tests under the Monetary Authority of Singapore’s Project Guardian</a> to explore how fund managers could tokenize portfolios on various blockchains in a permissioned manner.



BlackRock used JPMorgan’s Tokenized Collateral Network to tokenize shares in one of its money market funds around the same time. It then sent those tokenized interests to Barclays as collateral for an over-the-counter derivatives trade.



Also under Project Guardian, Switzerland-based <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">UBS brought a tokenized investment fund</a> on Ethereum in November.



Even more recently, Citi tokenized a private equity fund issued by Wellington Management on Avalanche’s Spruce subnet in February.



Read more: <a href="https://blockworks.co/news/citibank-explores-tokenization-wisdomtree">Citi the latest TradFi player to test out asset tokenization</a>



But the latest efforts revealed on Wednesday appear “incrementally more important” than prior trials, said Colin Butler, global head of institutional capital at Polygon.



“I say that because the parties mentioned are looking to align on a standard, to which they&#8217;re getting closer,” he told Blockworks. “This represents to me the five-yard-line for mass institutional adoption.&#8221;



The financial industry’s approach to more recent blockchain projects is “qualitatively different” than in the past several years, said Ralf Kubli, board member of The Casper Association.



“It is clear that large institutions have decided that shared ledger technology offers a compelling value proposition in many critical areas of the value chain, and that they must be part of this development,” he explained.&nbsp;



Institutional involvement in this space has come through experimentation, or by investing in or acquiring startups with mature technology stacks, Kubli noted.



The Depository Trust and Clearing Corporation (DTCC) closed its deal in December to acquire Securrency — a blockchain-based financial and regulatory technology developer.&nbsp;



The world’s largest asset manager last week led a $47 million funding round for Securitize, a firm focused on bringing physical and traditional financial assets on-chain.



Read more: <a href="https://blockworks.co/news/blackrock-tokenization-investment">BlackRock doubles down on tokenization via investment in Securitize</a>



“This strong commitment by established financial institutions will drive the emergence of enterprise grade infrastructure by startups and spinouts, as well as provide a glimpse on the future interaction between public chains and permissioned environments,” Kubli told Blockworks.&nbsp;&nbsp;



<h2 class="wp-block-heading">Proof-of-concept expectations</h2>



The proof-of-concept will publish an analysis of whether the network could operate under existing laws or guidance in the United States. Findings intend to inform “next generation settlement models,” SIFMA said in a news <a href="https://www.sifma.org/resources/news/members-of-the-u-s-financial-sector-to-explore-multi-asset-settlement-using-shared-ledger-technology/">release</a>.



Brahimi said he hopes to see “the confirmation of major efficiency gains” by having both securities and cash on-chain. The experiment could also demonstrate reduced counterparty risk and improved collateral transfers between institutions.



“A legal assessment of what needs to be modified to scale these activities will also be useful,” he added. “Based on the projects Taurus is involved in, it will be faster than what people think.&#8221;&nbsp;



Read more: <a href="https://blockworks.co/news/taurus-custody-tokenization-platforms">Tokenization top of mind for Taurus in 2024 after FINMA approval</a>



Morgan Krupetsky, who leads business development for institutions and capital markets at Ava Labs, said she is encouraged by the array of entities involved.&nbsp;



Still, more buy-side participation from asset managers, corporates, hedge funds and pension funds, for example, in such blockchain trials would be beneficial. Having that segment’s buy-in and support will be critical, she added.



“They often experience comparable pain points, [and] they&#8217;re increasingly viewing this space as a strategic imperative,” she told Blockworks. “[It] would provide valuable input and insight to the banks who ultimately service these, and other, clients.”



Those anxiously awaiting an overhaul of legacy financial services infrastructure and systems will have to stay patient.&nbsp;



The lengthy experimentation ultimately helps financial institutions, infrastructure providers and regulators assess the benefits of dedicating resources to ultimately building products that use shared ledger tech, Krupetsky explained.&nbsp;&nbsp;



Kubli added: “I believe we will see serious and productive environments in the coming six to 12 months as part of the various peer-to-peer engagement…and more importantly, through the various sandbox approaches and <a href="https://blockworks.co/news/bis-tokenization-central-banks-cryptocurrencies">central bank-led initiatives</a>, including <a href="https://blockworks.co/news/cbdcs-tokenized-deposits-unified-ledger">the [Bank for International Settlements</a>].”



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

How the latest TradFi blockchain trial could mark the ‘five-yard-line’ for mass adoption

President Joe Biden has promised to back Securities and Exchange Commission Chairman Gary Gensler after a resolution to overturn an agency accounting practice advanced out of the House Wednesday evening.&nbsp;



The House on Wednesday approved joint resolution 109 — which would invalidate the SEC’s Staff Accounting Bulletin (SAB) 121 — in a 228-182 vote. The measure now moves on to the Senate, but Biden’s administration warned it would veto the resolution if it makes it to the president’s desk.



“Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto assets would introduce substantial financial instability and market uncertainty,” the Biden administration wrote in a <a href="https://www.whitehouse.gov/wp-content/uploads/2024/05/SAP-HJRes109.pdf">statement</a> Wednesday.&nbsp;



SAB 121, introduced in March 2022 and enacted the following month, states that digital asset custodians <a href="https://blockworks.co/news/sec-staff-call-for-crypto-entities-to-show-liability-on-balance-sheet">should report a liability and “corresponding assets”</a> on their balance sheets for all custodied cryptocurrencies. The practice, SEC staff <a href="https://www.sec.gov/oca/staff-accounting-bulletin-121">said</a>, is intended to guard against the “significant risks and uncertainties associated with safeguarding crypto assets.”&nbsp;



Reps. Mike Flood, R-Neb., Nick Wiley, D-N.C., Tom Emmer, R-Minn., Darren Soto, D-Flo., and French Hill, R-Ark., introduced the joint resolution in the House in February.&nbsp;



“The SEC issued SAB 121 without conferring with prudential regulators despite the accounting standard’s effects on financial institutions’ treatment of custodial assets, and the SEC issued SAB 121 without going through the notice-and-comment process,” Rep. Flood said of the resolution in a statement earlier this year. “In the face of overreach by a regulator, it is the role of Congress to serve as a check.”&nbsp;



Read more: <a href="https://blockworks.co/news/us-gao-sec-violation-law">SEC failed to follow the Congressional Review Act, may have broken the law</a>



While SABs are not enforceable rules under <a href="https://blockworks.co/tag/securities">securities</a> law, they are used by staff for interpretations and practices, the <a href="https://blockworks.co/tag/sec">SEC</a> said. Unlike traditional rules issued by the agency, SABs do not require public notice or comment periods and do not reflect the official approval of Commissioners, a point Flood and his co-sponsors find troubling.&nbsp;



All voting House Republicans were in favor of passing the joint resolution Wednesday. 21 Democrats also supported the measure.



Senator Cynthia Lummis, R-Wyo., a long-time crypto supporter, <a href="https://blockworks.co/news/senators-oppose-sec-accounting-standards">introduced a companion joint resolution</a> in the Senate, although she lacked bipartisan support. <a href="https://blockworks.co/tag/cynthia-lummis">Lummis</a>’ effort has not advanced to Committee markup or a vote, and now that the House’s resolution is making its way to the Senate, the measure is all but dead.&nbsp;



<a href="https://blockworks.co/tag/gary-gensler">Gensler</a> in December 2023 defended SAB 121, saying it was “just a staff accounting bulletin,” and it is consistent with precedent set in US bankruptcy court.&nbsp;



Read more: <a href="https://blockworks.co/news/empire-newsletter-gary-gensler-crypto-regulation">Empire Newsletter: The SEC’s internal rift</a>



“It basically addresses whether liabilities should be on balance sheet, and what we have found actually in bankruptcy court, time and again, many times now, that indeed bankruptcy courts have said that crypto assets are not bankruptcy remote,” <a href="https://blockworks.co/tag/gary-gensler">Gensler</a> said during a Dec. 2023 appearance hosted by the American Bar Association. 



Gensler, who has previously <a href="https://www.bloomberg.com/news/articles/2024-02-14/gensler-vows-to-advance-with-sec-s-rule-agenda-as-election-looms">denied</a> that he is working against the clock, could face significant headwinds in advancing his agenda after this year’s election. Should Republicans gain control of both chambers in November, additional efforts to overturn and undermine agency policy are likely to continue.



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Biden backs Gensler as House advances resolution to power-check SEC 

Howdy!&nbsp;



Welcome to Lightspeed, the newest addition to the Blockworks Newsletter suite. We are Solana news, analysis and culture, all the time. If that sounds like you, we&#8217;re psyched to have you on board. Let&#8217;s get into it!



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



Most traders are unlikely to strike it rich off of memecoins, but it won’t be for a lack of trying.



In the past 24 hours, the memecoin trading platform Pump.fun has <a href="https://defillama.com/">brought</a> in around $500,000 in revenue, per DeFiLlama. For context, that’s nearly double Ethereum’s dominant decentralized exchange, Uniswap, and the second highest for protocols writ large — trailing only Ethereum.



Pump.fun lets so-called developers launch tokens without seed liquidity for around $2 in fees. It earns revenue via a 1% swap fee from users buying and selling tokens, and it also nabs 2 SOL when a token draws enough liquidity to be listed on the decentralized exchange Raydium. Pump.fun is closed-source and has closed APIs, a Pump.fun Telegram admin told Blockworks.&nbsp;



The platform says it prevents rug pulls — or exit scams where founders quietly shut down projects while absconding with investor funds — by keeping all launches under a strict no-presale, no-insider allocation regime.&nbsp;



But that hasn’t kept traders from losing a whole bunch of money on the platform. After token creators spin up a coin, they’re able to purchase a large allocation before other traders come in. If the token sees a whiff of interest, there’s nothing stopping the “developer” from dumping their supply, crashing the price, and walking away with (let’s be realistic) dozens of dollars in profit.&nbsp;



Of note however, Pump.fun tokens that reach market caps of $69,000 can be listed on the decentralized exchange Raydium, which has become a rallying cry for users of the platform (let’s send this coin to Raydium!). But even then, there’s no reason a well-stocked developer couldn’t just take the liquidity and run.&nbsp;



In other words, the average user has the deck stacked against them on Pump.fun, which begs the question of what makes Pump.fun so fun — because clearly, people are using the platform.



People go to casinos where they know they’ll lose to the house, and I suppose the guesswork in trying to identify a winning memecoin could be a good time.&nbsp;



And sometimes, the grift is itself entertainment.



One developer created a token called “NoHandsNoRug” and live <a href="https://x.com/koolk123456/status/1787350631549714581">streamed</a> himself several steps away from his computer with his hands behind his back. As the price surged, he ran up to his computer, sold a bunch of tokens, then ran back to his post.&nbsp;



Never change, crypto.



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



<h2 class="wp-block-heading">Zero In</h2>



<img loading="lazy" decoding="async" src="https://lh7-us.googleusercontent.com/bdlespV_5HmumdURvJeHRxxBHk89gaQCJHBMvLOk3NrDt7Wfpbq5elN4xrYk7cbz4sTxRE39j6j_CY6lLPXw2OU6Wmj5rBu09r2NgaMwh3RCyUFWs2rdq8cCa33fkrYMwcKwhe4P17jZ3MDcSq6-93w" width="624" height="391">



Solana’s transaction success rate has gotten better but it’s still … not great. More than 60% of non-vote transactions are failing, per Blockworks Research. But this figure might not be as bad as it seems. As Blockworks Research’s Dan Smith <a href="https://x.com/smyyguy/status/1781148253284929589">laid out</a>, the high fail rate is likely more indicative of spam than of poor user experience. Accounts that make over 5,000 transactions a day — either bots or people who really should touch grass — experience a fail rate of 79%. For people making fewer than 50 transactions in a day, the fail rate is closer to 8%.



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



<h2 class="wp-block-heading">Plugged In</h2>



Ready to have your mind blown?&nbsp;



Solana&#8217;s validators now outpace Ethereum in earning maximal extractible value (MEV), pulling in nearly $7 million last week, largely thanks to Jito. The protocol — which supports 78% of Solana&#8217;s validators — enables transaction bundling and tip inclusion for quicker processing.&nbsp; However, issues like spam, bot activity, and predatory practices like “sandwich attacks” continue to pose challenges for the Solana ecosystem.



Read more: <a href="https://blockworks.co/news/solana-mev-validators-ethereum">MEV collected by validators is now higher on Solana than on Ethereum</a>



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



<h2 class="wp-block-heading">One Good DM</h2>



Jack Kubinec:



What&#8217;s the biggest factor preventing crypto payments from catching on more broadly?



Stijn Paumen, founder and CEO of Helio, which runs Shopify&#8217;s Solana Pay plugin:



The benchmark is Apple Pay. For crypto payments to go mainstream, they need to match its convenience. While we’re still a few years away from that, the growing adoption of crypto and integration of hidden wallets into mainstream apps bring us closer than ever. With lower costs, enhanced privacy, and faster transactions, crypto payments will ultimately surpass Apple Pay and other traditional payments.



Updated May 9, 2024 at 3:30 pm: Removed a section discussing rug pulls in the Solana ecosystem.



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Is anyone having fun on Pump.fun?

FTX’s latest plan to pay back its creditors is another step in a process that could require plenty more negotiation…and time.



In other words, the saga is not over.&nbsp;&nbsp;&nbsp;



Creditors will have a chance to weigh in on the bankrupt crypto exchange’s joint reorganization plan — filed late Tuesday — before it gets presented before a court in June.&nbsp;



The new plan could fully reimburse creditors — <a href="https://blockworks.co/news/ftx-former-customers-oppose-bankruptcy-plan">at November 2022 prices</a> — with some receiving interest. The FTX estate owes creditors roughly $11 billion, though it has managed to cobble together between $14.5 and $16.3 billion in cash.&nbsp;



The returns are “really unheard of,” Jonathan Groth, partner at DGIM Law, told Blockworks.&nbsp;



A crypto bull run and the potential subordination of big government claims have spurred the estates projecting better-than-expected returns, noted Erin Broderick, a partner at Eversheds Sutherland and lead counsel for the FTX.com customer claim holders.&nbsp;



“But to deliver the prospective recoveries, the debtors need stakeholder support,” she told Blockworks. “Delays in achieving that support are a threat to the value to ultimately be given back to customers.”



<a href="https://blockworks.co/tag/ftx">FTX</a> said in a Wednesday press release that its plan would end disputes “without costly and protracted litigation.”



Matthew Gold, a partner at Kleinberg Kaplan, said FTX could be referring to several potential legal actions — including ongoing mediation regarding priority tax claims.



The FTX proposal would resolve the $24 billion claim by the Internal Revenue Service for periods prior to the Chapter 11 proceedings. This resolution would be in return for $200 million in cash and a $685 million subordinated claim that would rank below all other claims.



“Also, the plan is in essence a proposed settlement of disputes regarding the relative priority of creditors of the various silos,” Gold added. “If those allocations are challenged, the litigation could be costly and protracted.”



Groth noted that while some creditors pushed for the estate to pay back claims at current prices (bitcoin, for example, was trading under $20,000 when FTX declared bankruptcy, but is now over $60,000) the FTX estate just didn’t have the crypto.&nbsp;



“<a href="https://blockworks.co/news/ftx-meltdown-timeline">When FTX went into bankruptcy</a>, they were holding a fraction of the percent of the coins that they were claiming to have,” he said. “The fund they amassed to repay creditors is really based more on liquidation of securities holdings…and other recoveries from third-party claims and selling off other assets.”



Even if some creditors are unhappy with the plan, Groth said “it’ll be really difficult for a court to look at this and say, ‘How unhappy can you be?…You’re being made whole.’”&nbsp;



Overall, Broderick said she believes the plan is “a good outcome for customers” that came as a result of “<a href="https://blockworks.co/news/new-ftx-ceo-on-government-claims">hard-fought negotiations</a>” concerning the interest of all stakeholders.



“We will continue to be closely involved in plan developments, including with the governmental agencies, and have been focused on assisting the estates with distribution mechanics and potential issues to ensure that customers get the largest initial distribution possible as soon as possible,” Broderick noted



While the FTX debtors have proposed a “confirmation timeline,” bankruptcy code procedural requirements take time. The court must first hold a disclosure statement hearing — currently scheduled for June 25 — at which point it can pencil in a confirmation hearing date.&nbsp;



Those hearings could be 60 days apart in a large case like this, Gold said.



According to the current court docket, there are other hearings planned for July and August as well.



The plan also contains what Gold called “controversial elements,” like release and injunction provisions that would shield many non-debtor entities from lawsuits.&nbsp;



The question of whether a bankruptcy court can impose releases of claims against non-debtors in this way, and to what extent, is before the Supreme Court in a case involving Purdue Pharma.



Whether the releases in the FTX plan are lawful will depend on how the court rules, Gold said.



“This plan and disclosure statement are best understood as negotiation documents,” he added. “They are signed as draft versions, and have many blanks in them. Further negotiations will likely be required before they are finalized.”



Though the plan could be the final one filed with the bankruptcy court, Groth said, that’ll depend on factors including the creditor vote and the government negotiations.&nbsp;



Such details will be up for discussion at the upcoming hearing to decide whether the current iteration should be “rejected or needs to be modified in some significant way.”



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

What’s next for FTX after the creditor payback proposal?

Bessie Liu

Shared sequencer solution Espresso will partner with Ethereum layer-2 scaling solution Polygon Labs to develop AggLayer (aggregation layer) in order to solve rollup interoperability.



AggLayer was first introduced in January. It is designed to solve the fragmented liquidity problem in the blockchain space by centering scaling UX on one single, unified aggregation layer. AggLayer is similar to Risc Zero’s <a href="https://blockworks.co/news/risc-zero-zkevm">“Type 0” zkEVM, Zeth</a>, a general-purpose programming language that can be EVM equivalent.



Both solutions are designed to enable transaction verification across multiple chains. In the case of AggLayer, the protocol uses a process called “proof aggregation” to ensure that transactions across its ecosystems are valid.&nbsp;



Read more: <a href="https://blockworks.co/news/polygon-zkevm-type-1-prover">Polygon zkEVM prover reaches Type 1 status</a>



According to Polygon Labs documents, all transactions will be <a href="https://polygon.technology/blog/aggregated-blockchains-a-new-thesis">guaranteed</a> on AggLayer without having to depend on a third-party bridging solution.&nbsp;



In the long term, <a href="https://blockworks.co/tag/polygon">Polygon</a> hopes that when a rollup creates a message for a destination chain, it will also create a validity proof that verifies its accuracy instantaneously.



That’s one problem that Anurag Arjun, the founder of Avail, and his team are hoping to resolve.&nbsp;



Arjun notes that although cross-chain communication is great for users who belong to the same ecosystem, once they leave the ecosystem, they are likely to receive a “subpar experience.”&nbsp;



Read more: <a href="https://blockworks.co/news/avail-fundraise-addressing-interoperability">Avail raises $27M, readies entrance into modular narrative</a>



“If you want to really bring these <a href="https://blockworks.co/tag/rollups">rollups</a> together, you need two things primarily,” Arjun told Blockworks. “You need a proof of ordering — the transaction data ordering — in the sense that if a rollup has committed to a certain order of the transactions, you need some guarantees for that. That is what Avail validity proof [data availability sampling] provides. And then you need the execution proofs, which are provided by the rollup themselves.”



The distinction that needs to be made is that proof aggregation itself is not enough, and transaction ordering of these rollups is equally important, Arjun said.&nbsp;



“So when you combine ordering guarantees with the actual execution proof, then that is why we are able to do this orchestration — connecting these rollups,” he explained.



However, the state of proving at this point in time is not yet at the speed of real-time verification, and all interdependent rollups must be created, aggregated and verified jointly before they are settled on <a href="https://blockworks.co/tag/ethereum">Ethereum</a>.



This is where Espresso comes in. Espresso will be the coordinator that unifies the interdependent rollups before they are settled onto Ethereum.&nbsp;



Ben Fisch, the CEO of Espresso Labs described the collaboration efforts between <a href="https://blockworks.co/tag/espresso-systems">Espresso</a> and Polygon as pivotal for both ecosystems.



“Our respective teams have been thinking deeply about layer-2 interoperability over the last year — it’s amazing to see our solutions converge in such a synergistic way. Polygon’s AggLayer and Espresso’s coordination layer are perfect complements,” Fisch told Blockworks.



Marc Boiron, CEO of Polygon Labs, shares this sentiment. He told Blockworks he believes this new partnership will synergistically elevate interoperability within Ethereum&#8217;s layer-2 environment.



&#8220;While the AggLayer guarantees the integrity of data exchange among Ethereum <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a>, Espresso&#8217;s sequencing marketplace optimizes this process by enabling efficient coordination and fast transaction finalization across multiple Ethereum layer-2s,” Boiron said. “This integrated approach markedly enhances the fluidity and user experience of transactions within Ethereum&#8217;s layer-2 network.”



Espresso&#8217;s latest partnership with Polygon on AggLayer shows the progress of the modular approach to scaling Ethereum, one that stands in contrast to what, for instance, the Nil Foundation is working to achieve with sharded layer-2s.



Misha Komarov, the founder of Nil Foundation, previously told Blockworks that it aims to take a protocol-level approach to interoperability by embedding the sequencer into the protocol to make it capable of sending transactions between different shards.&nbsp;



Read more: <a href="https://blockworks.co/news/ethereum-rollup-zksharding-nil-mainnet">New Ethereum rollup takes a zero-knowledge approach to sharding</a>



“So basically, that means it keeps them all composable, it keeps them all together, it keeps the liquidity unified. It&#8217;s like no separation, no Balkanization of ETH is happening, in fact,” Komarov said.



In simpler terms, the two approaches can be viewed as vertical versus horizontal scaling, though they combined features of both to varying degrees.



“ZkSync and Polygon pursue vertical scaling — layer-2s and layer-3s — [while] on our side, we pursue horizontal scaling,” he said. “We kind of say, okay, modularity can be done in a better way. It might be not even the modularity anymore.”



Whichever approach ultimately prevails, there is a widespread recognition that the fragmentation of UX and liquidity that currently prevails across many Ethereum scaling efforts is an impediment to adoption.



“This whole industry is a competition of ideas,” Komarov adds. “A competition of who gets the better idea and the first one who gets there — the implementation of it — captures the market.”



Macauley Peterson contributed reporting.



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Espresso partners with Polygon Labs to solve rollup interoperability 

Sean (Xiang) Ren

Many Americans got their first glimpse behind the machine learning curtain when details of Amazon’s “Just Walk Out” technology <a href="https://www.businessinsider.com/amazons-just-walk-out-actually-1-000-people-in-india-2024-4">went public</a>. Instead of pure technology tallying up customers’ purchases and charging them when they left the store, the sales were manually checked by about 1,000 real people working in India.



But these workers were the human-half of what most AI really is — a collaboration between reinforcement learning and human intelligence.&nbsp;



The human element tends to be ignored in discussions of AI safety, which is a little disturbing given how much of an impact AI will likely have on our job markets and ultimately our individual lives. This is where decentralization, the inherent trustlessness and security of blockchain technology can play a major role.



The Center for Safe AI <a href="https://www.safe.ai/ai-risk">identifies</a> four broad categories of AI risk. As a start, there’s malicious use, in which users might “intentionally harness powerful AIs to cause widespread harm” by engineering “new pandemics or [using them] for propaganda, censorship and surveillance, or [releasing AIs] to autonomously pursue harmful goals.”&nbsp;



A more subtle concern is the risk of an AI race, where corporations or nation states compete to quickly build more powerful systems and take unacceptable risks in the process. Unchecked cyberwarfare is a potential outcome, another is allowing systems to evolve on their own, potentially slipping out of human control; or a more prosaic, but no less disruptive outcome, could be mass unemployment from unchecked competition.&nbsp;



Organizational risks with AI are similar to any other industry. AI could cause serious industrial accidents, or powerful programs could be stolen or copied by malicious actors. Finally, there’s the risk that the AIs themselves could go rogue, “optimizing flawed objectives, drifting from their original goals, becoming power-seeking, resisting shutdown or engaging in deception.”&nbsp;



Regulation and good governance can contain many of these risks. Malicious use is addressed by restricting queries and access to various features, and the court system could be used to hold developers accountable. Risks of rogue AI or and organizational issues can be mitigated by common sense and fostering a safety-conscious approach to using AI.&nbsp;



But these approaches don’t address some of the second-order effects of AI. Namely, centralization and the perverse incentives remaining from legacy Web2 companies. For too long, we’ve traded our private information for access to tools. You can opt out, but it’s a pain for most users.



AI is no different than any other algorithm, in that what you get out of it is the direct result of what you put in — and there are already massive amounts of resources devoted to cleaning up and preparing data to be used for AI. A good example is OpenAI’s ChatGPT, which is trained on hundreds of billions of lines of text taken from books, blogs and communities like Reddit and Wikipedia, but also relies on people and smaller, more customized databases to fine-tune the output. 



Read more from our opinion section: <a href="https://blockworks.co/news/blockchain-ai-misleading-narrative">What can blockchain do for AI? Not what you’ve heard.</a>



This brings up a number of issues. Mark Cuban has recently pointed out that AI will eventually need to be trained on data that companies and individuals might not want to share, in order to become more commercially useful beyond coding and copywriting. And, as more jobs are impacted by AI — particularly as AI agents make custom AI applications accessible — the labor market as we know it could eventually implode.&nbsp;



Creating a blockchain layer in a decentralized AI network could mitigate these problems.&nbsp;



We can build AI that can track the provenance of data, maintain privacy and allow individuals and enterprises to charge for access to their specialized data if we use decentralized identities, validation staking, consensus and roll-up technologies like optimistic and zero-knowledge proofs. This could shift the balance away from large, opaque, centralized institutions and provide individuals and enterprises with an entirely new economic system.



On the technological front, you need a way to confirm the integrity of data, the ownership of data and its legitimacy (model auditing).&nbsp;



Then, you would need a method of provenance, (to borrow a phrase from the art world), which means being able to see any piece of data’s audit trail in order to properly compensate whoever’s data is being used.



Privacy is also important — a user must be able to secure their data on their own electronics and be able to control access to their data, including being able to revoke that access. Doing so involves cryptography and a security protection certification system.



This is an advancement from the existing system, where valuable information is merely collected and sold to centralized AI companies. Instead, it enables broad participation in AI development.&nbsp;



Individuals can engage in various roles, such as creating AI agents, supplying specialized data or offering intermediary services like data labeling. Others might contribute by managing infrastructure, operating nodes or providing validation services. This inclusive approach allows for a more diversified and collaborative AI ecosystem.



We could create a system that benefits everyone in the system, from the digital clerics a continent away to the shoppers whose cart contents provide them raw data to developers behind the scenes. Crypto can provide a safer, fairer, more human-centric collaboration between AI and the rest of us.



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


<div class="wp-block-post-author-biography">Sean is the CEO and co-founder of Sahara, a platform building blockchain-powered infrastructure that is trustless, permissionless, and privacy-preserving to enable the development of customized autonomous AI tools by individuals and businesses. Additionally, Sean is an Associate Professor in Computer Science and the Andrew and Erna Viterbi Early Career Chair at the University of Southern California, where he is the Principal Investigator (PI) of the Intelligence and Knowledge Discovery (INK) Research Lab. At Allen Institute for AI, Sean contributes to machine common sense research. Prior, Sean was a data science advisor at Snapchat. He completed his PhD work in computer science at University of Illinois Urbana-Champaign and was a postdoctoral researcher at Stanford University Department of Computer Science. Sean has received several awards recognizing his research and innovation in the AI space including Samsung AI Researcher of the Year, MIT TR Innovators Under 35, Forbes Asia 30 Under 3, and more. </div>


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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

AI has a monopoly on power and privacy. Blockchain fixes this.

Michael McSweeney

<h2 class="wp-block-heading">Crypto gets political</h2>



In a new interview, Gary Gensler made no bones about his special focus on the crypto space, bristling at what he decried as excessive questions about his plans.&nbsp;



Those comments, as expected, drew widespread criticism across the crypto space. But there was also some dissent from inside the proverbial building, in the form of SEC Commissioner Mark Uyeda.



According to Fox Business’ Eleanor Terrett, Uyeda took issue with Gensler’s tack when it comes to crypto regulation.



“While the easiest regulatory response to crypto and digital asset innovation is to use bad actors as an excuse to ‘shut it all down,’ regulators should be creating a pathway to compliance for legitimate efforts,” Uyeda told Terrett. “The SEC has yet to develop that pathway.”



Sound familiar? Uyeda has been a consistent voice of dissent on what we might call the Gensler approach.&nbsp;



Uyeda was a <a href="https://blockworks.co/news/commissioner-etf-statements-signals-contention">supporter of spot bitcoin ETFs</a>. He <a href="https://blockworks.co/news/sec-commissioners-disagree-with-coinbase-decision">objected to the SEC’s denial</a> of Coinbase’s request for rulemaking. He, alongside fellow Commissioner Hester Peirce in these instances, <a href="https://blockworks.co/news/sec-nfts-dissenting-hester-peirce">questioned the SEC’s approach</a> to NFTs and called on the agency to answer questions of jurisdiction when it comes to tokenized digital art.&nbsp;



This is all to say that there appears to be a deep split within the SEC leadership. What’s more, it’s a split that comes as the agency wages legal war —&nbsp;or prepares to potentially do so —&nbsp;with some of the biggest names in the industry: Coinbase, Binance, Uniswap, Consensys and Kraken.



<a href="https://blockworks.co/tag/gary-gensler">Gensler</a>’s strategy has taken on more <a href="https://blockworks.co/news/secs-gensler-crypto-disclosures-for-investors">explicitly political dimensions</a> in recent days — during a critical election season, no less.&nbsp;



The expression of dissent over Gensler’s crypto strategy reached the floor of Congress last night with the passage of a <a href="https://www.congress.gov/bill/118th-congress/house-joint-resolution/109/cosponsors">resolution</a> that objects to SEC’s controversial crypto accounting guidance.&nbsp;



That joint resolution was the <a href="https://blockworks.co/news/house-hearing-democrats-republicans-clash">subject</a> of a contentious House hearing one day earlier, as Blockworks’ Casey Wagner previously reported. The measure faces an uncertain future in the Senate and, more critically, President Joe Biden has promised to veto it should it reach his desk.



At least as far as Crypto Twitter is to be believed, opposition to the SEC —&nbsp;as well as Democrats like Sen. Elizabeth Warren, D-Mass., and Biden himself —&nbsp;has fueled support for former US president Donald Trump, who is seeking a second term this fall. The thinking seems to be that a Trump win means Gensler’s ejection from office and perhaps the ascent of more industry-friendly leadership.



Trump, for example, won <a href="https://twitter.com/CoinDesk/status/1786083216270516253">an X poll</a> hosted by CoinDesk that drew about 8,800 participants last week.



Trump <a href="https://twitter.com/twobitidiot/status/1788389754502856707">appeared</a> to throw his support behind crypto —&nbsp;or the American crypto industry, at least —&nbsp;during an event for holders of one of his NFT collections last night. Trump also touted his <a href="https://blockworks.co/news/cash-grab-trump-nfts-political-cultism">branded NFT products</a> and said “I don’t like that investment” when asked about a Joe Biden-themed memecoin.



How serious Trump actually is — given that his business and political careers were defined by a propensity for telling people exactly what they want to hear —&nbsp;remains to be seen, as does the question of how crypto might factor into his <a href="https://time.com/6972021/donald-trump-2024-election-interview/">second-term plans</a>.&nbsp;



— Michael McSweeney



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>BODEN is up 14%, according to <a href="https://www.coingecko.com/en/coins/jeo-boden">CoinGecko</a>, after former president Donald Trump was asked about it last night.</li>



<li>Meanwhile, the Doland Tremp memecoin is up 119% in the past 24 hours, per <a href="https://www.coingecko.com/en/coins/doland-tremp">CoinGecko</a>.</li>



<li>Bitcoin ETFs mostly reported flat flows on Wednesday (with the exception of Bitwise’s BITB, which brought in $11.5 million of inflows), per <a href="https://twitter.com/FarsideUK/status/1788414492029657595">Farside</a> data.&nbsp;</li>



<li>Bitcoin’s down to $61,000, though it bounced back after hitting $60,000 early Thursday morning.</li>



<li>Robinhood’s up 5% to nearly $19 a share in pre-market trading.</li>
</ul>



<h2 class="wp-block-heading">To the moon</h2>



I’m bringing Robinhood up again. But don’t worry, it’s not about the Wells notice this time.&nbsp;



An earnings report naturally sets the tone for the follow-up analyst call, which tends to occur a bit after the report itself is released.&nbsp;



When it’s a good report, the call’s tone tends to be more positive —&nbsp;that much was evident with <a href="https://blockworks.co/tag/robinhood">Robinhood</a> yesterday.&nbsp;



But Robinhood’s leaders struck a pretty bullish tone on the crypto side of the business, all things considered.&nbsp;



They definitely had a right to that bullishness, <a href="https://blockworks.co/news/robinhood-trading-volume-february">based on the numbers</a>.&nbsp;



Robinhood’s crypto business helped to drive the company’s massive earnings beat that left Wall Street impressed. Crypto transactions made up $126 million in revenue last quarter, an increase of over 230%. Transaction-based revenue itself weighed in at $329 million.&nbsp;



Net revenues jumped to $618 million. To put the number in perspective, analysts expected $549 million.&nbsp;



Finally, the company reported that it held custody of $26 billion in customer crypto at the end of March —&nbsp;a 78% increase from the end of 2023.&nbsp;



Pretty impressive numbers, right?



Keep in mind that these figures were recorded after a massive bull run in the first quarter. We’re set to get April data from Robinhood next week, which’ll provide a better picture on how the current market is reflected in the business side of things.&nbsp;



Based on CFO Jason Warnick’s comments, I wouldn’t be surprised if the strength continued last month with maybe a slight dip.&nbsp;



One analyst asked if Robinhood would reconsider the coins it offers <a href="https://blockworks.co/news/robinhood-wells-notice-sec">because of the Wells notice </a>—&nbsp;yes, I know, we have to talk about it for a moment —&nbsp;due to Robinhood’s previous attempts to avoid the SEC’s ire.&nbsp;



The executives unsurprisingly didn’t address that directly, though Warnick reiterated that the company is “confident” it listed coins that met its standards.&nbsp;



CEO Vlad Tenev, in response to a question about volumes in March, noted: “But if our market share is growing throughout all conditions, then over the long run, we’ll do very, very well on that side of the business.”



Sounds pretty bullish to me.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>Binance, in late 2023, fired an investigator who uncovered a client manipulating markets, the Wall Street Journal <a href="https://www.wsj.com/finance/currencies/binance-investigation-suspicious-trading-dwf-5f481f9d">reports</a>.</li>



<li>VanEck <a href="https://www.marketvector.com/indexes/digital-assets/marketvector-meme-coin">launched</a> its memecoin index on MarketVector, which tracks the top six memecoins.</li>



<li>JPMorgan analysts believe the SEC could establish a “middle category” for ETH, declaring that it’s neither a security or commodity, The Block <a href="https://www.theblock.co/post/293417/jpmorgan-sec-wells-notice-robinhood-crypto-spot-ethereum-etf-approval">reports</a>.</li>



<li>The US House of Representatives <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409250">voted</a> to overturn the SEC’s Staff Accounting Bulletin 121.&nbsp;</li>



<li>Speaking of SAB 121, President Biden <a href="https://www.whitehouse.gov/wp-content/uploads/2024/05/SAP-HJRes109.pdf">said</a> he’ll veto the joint resolution if it hits his desk.</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



The back-and-forth between <a href="https://blockworks.co/tag/binance">Binance</a> and Nigeria took another turn this week after Binance CEO Richard Teng penned a blog post essentially accusing Nigeria of bribery.



Teng also called the country out for setting a “dangerous new precedent” by detaining an executive who visited the country with the intention of discussing the relationship between Binance and Nigeria (both the executive, Tigran Gambaryan, and Binance face tax evasion and money laundering charges now).&nbsp;



Yesterday, <a href="https://blockworks.co/tag/nigeria">Nigeria</a> denied the bribery allegation and called it an “act of blackmail” by Binance.&nbsp;



Meanwhile, Gambaryan <a href="https://blockworks.co/news/nigeria-court-postpones-binance-case">sits in the Kuje correctional facility</a>.&nbsp;



Binance has been notably quiet when asked by yours truly about updates to the Nigeria situation. But the blog post sheds some light on the lead-up to the executive detentions.&nbsp;



It’s undoubtedly a <a href="https://blockworks.co/news/binance-comments-on-exec-nigeria-detention">concerning situation</a>. While the court proceedings appear to be moving along on paper, there’ve been so many changes at this point that it’s hard to keep the trials and hearings straight.&nbsp;



<a href="https://blockworks.co/news/nigeria-court-postpones-binance-case">Keep an eye on May 17</a>, at least until the next postponement is announced — currently, there are two trials and a hearing set to take place on the same day.



— Katherine Ross



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



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Coinbase Tokenized Stock on FTXCOIN

market data

Coinbase Tokenized Stock on FTX Stats

What is the market cap of Coinbase Tokenized Stock on FTX?

What is the current trading activity of Coinbase Tokenized Stock on FTX?

What is the current price of Coinbase Tokenized Stock on FTX?

How many Coinbase Tokenized Stock on FTX are there?

What is the relative popularity of Coinbase Tokenized Stock on FTX?

latest Coinbase Tokenized Stock on FTX news