Reserve Rights

Katherine Ross

Anatoly Legkodymov, founder of the dark web-tied crypto exchange Bitzlato, has pleaded guilty to operating an unlicensed money transmitting business in a New York court.&nbsp;



The Department of Justice originally filed charges against the Hong Kong-based exchange’s majority owner last January.&nbsp;



Bitzlato “sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars worth of deposits as a result,” US attorney Breon Peace said in a statement at the time.



According to the DOJ, Legkodymov will dissolve Bitzlato and “release any claim over approximately $23 million in seized assets of Bitzlato” as part of the plea agreement. A sentencing date has not been set yet.



Read more: <a href="https://blockworks.co/news/bitzlato-law-enforcement-significance">Bitzlato may make crypto scoff, but law enforcement thinks otherwise</a>



“We are dismantling and disrupting the cryptocrime ecosystem using all tools available — including criminal prosecution. In January, the Department and our partners took down Bitzlato’s infrastructure and seized its cryptocurrency. Today’s conviction of Bitzlato’s founder is the latest product of our efforts,” Deputy Attorney General Lisa Monaco said in a press release.



The <a href="https://blockworks.co/tag/doj">DOJ</a> and German authorities shut down Hydra Market — which allegedly specialized in being a marketplace for drugs and stolen financial information — back in 2022. The online marketplace exchanged roughly $700 million worth of crypto with Bitzlato, the authorities said.&nbsp;&nbsp;



<a href="https://blockworks.co/news/bitzlato-founder-held-without-bail">Legkodymov was denied bail</a> at a hearing back in March due to his status as a Russian national in the US on a visa and his “access” to crypto, cited as reasons to keep him detained.



The initial <a href="https://blockworks.co/news/doj-busts-crypto-exchange">DOJ announcement surprised some in crypto</a>, with some taking to X to post that they had never heard of the exchange before.&nbsp;&nbsp;



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Bitzlato founder pleads guilty, agrees to dissolve dark web exchange 

Sotheby’s digital art arm announced that it would be auctioning off pieces from BitcoinShrooms, a Bitcoin Ordinals project designed by artist Shroomtoshi.



The BitcoinShrooms collection was originally minted on-chain back on Oct. 22. Both the BitcoinShroom website and X account claim that it’s the “first ever Ordinals collection.”&nbsp;



“Within the BitcoinShrooms collection lies a trove of references — from iconic Bitcoin memes to advanced technical concepts— a visual symphony that captures Bitcoin’s essence from the perspective of someone there since the early days,” Sotheby’s <a href="https://www.sothebys.com/en/digital-catalogues/bitcoinshrooms-an-ordinals-auction">wrote</a>.&nbsp;



The auction will go from Dec. 6 to Dec. 13, and three pieces are currently available to bid on.&nbsp;



The collection includes two shroom individuals and a pixelated avocado seed dubbed BIP39 — the common standard for creating a mnemonic code which is needed for seed phrases. All three are expected to fetch around $20,000 to $30,000, though the auction house also accepts bids in crypto.&nbsp;



“The BitcoinShrooms collection is a pixelated recap of the first 13 years of Bitcoin, a homage to the 8-bit style of art that expresses a slight nostalgia for the 90s, a way to soil 10s of thousands of SSDs spread across the world with my art (-&gt;next level cyber-vandalism), a tool to raise awareness about Bitcoin and what I personally view as its core principles, an ironic way to vent at what I see as its annoying pop elements and aberrations,” Shroomtoshi said about the Ordinals.&nbsp;



“It is a thank you to those I worked with and learned from, to those who are not around anymore but whose name should not be forgotten. it is knowledge condensed and a journey for the curious.”



The collection includes over 200 pieces, which are intended to pay homage to bitcoin’s history. These include depictions of a private key, a pixelated character wearing a &#8216;mountain&#8217; hat as a nod to the Mt. Gox incident, an enigmatic figure with a question mark to represent anonymity, and an illustration of a &#8216;fiery&#8217; hot wallet, among others.



The collection also seemingly includes representations of iconic characters and logos from well-known franchises like Batman, Iron Man, Wall-e and Super Mario.



The BitcoinShrooms account on X boasts around 13,000 followers. It is unclear who Shroomtoshi is, as the artist has not made their identity public.&nbsp;&nbsp;



In a post on X prior to the announcement, Sotheby’s head of digital art Michael Bouhanna teased the auction. He shared an AI generated image of an auction room with mushrooms and bitcoin on a screen.



<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">Tomorrow 🫶🏽 <a href="https://t.co/O1Z6ED4i1g">pic.twitter.com/O1Z6ED4i1g</a>&mdash; Michael Bouhanna (@michaelbouhanna) <a href="https://twitter.com/michaelbouhanna/status/1732084210272239622?ref_src=twsrc%5Etfw">December 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Following the announcement, he made a <a href="https://twitter.com/michaelbouhanna/status/1732475149385965904">post</a> proclaiming that the art auction would mark the first time that Sotheby’s has sold Ordinals.&nbsp;



Ordinals on the Bitcoin blockchain are conceptually similar to NFTs. They utilize the Ordinals protocol to <a href="https://blockworks.co/news/bitcoin-ordinals-ethereum-flippening">inscribe data onto individual satoshis</a>, the smallest denomination of Bitcoin, creating unique digital assets that can include art, collectibles, or other forms of content.



By the end of November, analysts from JPMorgan noted that the advent of Ordinals had sparked &#8216;renewed interest&#8217; in the NFTs space.



Since that time, exchanges like <a href="https://blockworks.co/news/bitcoin-ordinals-nfts-binance">Binance</a> and <a href="https://blockworks.co/news/okx-offers-ordinals-trading">OKX</a> have opened their doors for Ordinals trading.



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Sotheby’s announces its first Bitcoin Ordinals sale

Ben Strack

Bitcoin rose above $44,000 on Tuesday before dipping below that level early Wednesday and subsequently straddling the price. Analysts expect it could inch higher by the end of the year and benefit from several tailwinds in 2024.



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) dropped to as low as about $16,000 amid the collapse of crypto exchange FTX in November 2022 — a year after bitcoin reached its all-time high of roughly $69,000.&nbsp;



The asset’s price was at $43,780 at 4 pm ET Wednesday, up 25% in the last 30 days and 16% higher than seven days ago, CoinGecko data shows.&nbsp;



Analysts have attributed the recent bitcoin price surge to optimism around the approval of spot bitcoin ETFs, <a href="https://blockworks.co/news/binance-news-bitcoin-impact">Binance’s settlement with the US government</a> and easing inflation, among other factors.&nbsp;&nbsp;



Potential approval of a <a href="https://blockworks.co/tag/spot-bitcoin-etf">spot bitcoin ETF</a> could be “a rare buy the rumor, buy the fact event” LMAX Group market strategist Joel Kruger told Blockworks.&nbsp;



The Securities and Exchange Commission is <a href="https://blockworks.co/news/pinning-down-bitcoin-etf-approval-dates">expected to rule on a spot bitcoin ETF</a> proposed by Ark Invest and 21Shares — and possibly other similar proposals — by Jan. 10.&nbsp;&nbsp;



“We still don’t believe the ETFs are fully priced in, and once confirmed, there should be plenty of additional demand given the compelling economics around bitcoin as an exceptionally scarce, limited-supply asset,” Kruger said.&nbsp;



Read more: <a href="https://blockworks.co/news/cathie-wood-spot-btc-etf">Spot bitcoin ETF would be ‘final seal of approval’ for institutions: Cathie Wood</a>



Kruger called it “reasonable” to expect BTC’s price to be $50,000 at the end of 2023, noting major resistance zones” between $48,000 and $53,000.&nbsp;



Julius de Kempenaer, senior technical analyst at StockCharts.com, agreed $48,000 — a peak set at the end of March 2022 — is the next expected level of resistance.&nbsp;



Bitcoin could be at that level as 2023 concludes, he said, noting that $38,000 is a “support” level in the case of a price dip.



“After five or six days of strong upward movement in BTC, the daily chart is now getting overbought which may cause a small setback or hesitation,” de Kempenaer said in an email. “But the trend is still up; there is little doubt about that.&nbsp;



<h2 class="wp-block-heading">Looking ahead to 2024</h2>



Bitfinex analysts said Wednesday they expect bitcoin’s price to reach between $60,000 and $75,000 by the end of next year — noting spot bitcoin ETF approval could spur a surge in institutional investment.



Mathieu Ziaei, portfolio manager and risk officer at Criptonite Asset Management, said while $48,000 could be “the local top” for bitcoin in the short term, BTC could “rally freely” after that.



Traders front-running the spot bitcoin ETF approval possibility could hurt that prospect though, he added.&nbsp;&nbsp;



“There is also a high probability that we see a classic ‘buy the rumor, sell the fact’ move in early 2024 leading to a sharp move to the downside,” Ziaei said.



Kruger pointed to the 2004 launch of the first gold ETF — the SPDR Gold Trust (GLD) — and noted the seven-year price rally that followed for the metal.&nbsp;



“If this was the case with gold, we believe it most definitely will be the case with bitcoin,” Kruger said.&nbsp;



Galaxy Digital research associate Charles Yu said in an October <a href="https://www.galaxy.com/insights/research/sizing-the-market-for-a-bitcoin-etf/">report</a> that, based on historical gold market price action, BTC’s price could increase by 74% in the 12 months following spot bitcoin ETF approval. &nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-spot-etf-analysts-gold">To gauge impact of bitcoin spot ETF, analysts look to gold</a>



Many expect the upcoming bitcoin halving will also be a boon for bitcoin’s price. The event, slated for April, means per-block rewards for mining bitcoin will be cut from 6.25 BTC to 3.125 BTC.&nbsp;&nbsp;



“This event is associated with supply scarcity, driving up the price,” Bitfinex analysts said. “Combined with the fact that we currently have the highest [inactive supply] statistics, especially for long term holders, this effect is already in play.”



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Bitcoin has rallied. But where is the price going next?

Casey Wagner

If it were up to JPMorgan CEO Jamie Dimon, the crypto industry would be “closed down,” he told US senators Wednesday during the Financial Services Committee’s annual banking oversight hearing.&nbsp;



CEOs from the world’s top banks, including Morgan Stanley, Goldman Sachs, Bank of America and BNY Mellon, among others, joined Dimon <a href="https://www.banking.senate.gov/hearings/11/29/2023/annual-oversight-of-wall-street-firms">Wednesday</a> to answer lawmakers’ questions about how effectively the banking industry is serving Americans.&nbsp;



Sen. <a href="https://blockworks.co/tag/elizabeth-warren">Elizabeth Warren</a>, D-Mass., a vocal critic of the banking industry, found a rare moment of agreement with Dimon when she shifted the topic of conversation from Basel III — the international agreement spurred by the 2008 financial crisis — to cryptocurrencies.&nbsp;



“Today&#8217;s terrorists have a new way to get around the Bank Secrecy Act: cryptocurrency,” Warren said during her allotted five minutes. “Last year an estimated $20 billion in illicit crypto transactions funded every kind of dangerous criminal. North Korea has funded at least half its missile program, including nuclear weapons, using the proceeds of crypto crime.”&nbsp;



Warren appeared to be citing a January 2023 <a href="https://go.chainalysis.com/rs/503-FAP-074/images/Crypto_Crime_Report_2023.pdf">report</a> from data firm Chainalysis, which found that more than $23 billion of cryptocurrency was laundered in 2022. A mid-year <a href="https://www.chainalysis.com/blog/crypto-crime-midyear-2023-update-ransomware-scams/">report</a> from Chainalysis published in July however found that for the first half of 2023, illicit crypto activities were down 65%.&nbsp;



Warren continued to ask <a href="https://blockworks.co/tag/jamie-dimon">Jamie Dimon</a> why, based on his experience leading <a href="https://blockworks.co/tag/jpmorgan">JPMorgan</a>, criminals are so drawn to crypto.&nbsp;



“I&#8217;ve always been deeply opposed to crypto, bitcoin etc.,” Dimon responded. “You pointed out the only true use case for it is criminals, drug traffickers, anti money laundering, tax avoidance, and that is a use case because it is somewhat anonymous, not fully, and because you can move money instantaneously.”&nbsp;



“If I was the government, I’d close it down,” he added.



Dimon’s comments come as his institution <a href="https://blockworks.co/news/jpmorgan-lobban-blockchain-financial-instruments">continues to push ahead into the blockchain space</a>. The banking giant launched its corporate stablecoin, JPM Coin, in 2017, which today is still available to select institutional clients. The bank also launched <a href="https://blockworks.co/news/jpmorgan-blockchain-payments">its blockchain platform, Onyx,</a> in 2020, at the time hailing it as the first-ever bank-led project of its kind.&nbsp;



Warren did not ask Dimon about any of JPMorgan’s crypto-related initiatives. She posed her next question to each witness: “Do you think that crypto companies facilitating financial transactions should have to follow the same anti-money laundering rules that your bank has to follow?”



“Absolutely,” each of the eight banking representatives answered.



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JPMorgan’s Jamie Dimon: I’d shut crypto down

David Canellis

Crypto has a terrible track record when it comes to ads. Coinbase clearly isn’t phased.



The most awkward ads of recent memory — Matt Damon’s Super Bowl spot for Crypto.com and FTX’s anti-ad starring Larry David — played up a fear of missing out.



“Fortune favors the brave,” Damon <a href="https://twitter.com/Blockworks_/status/1453687300899155968">said</a>, so you’d better buck up and buy bitcoin before that fortune runs out.&nbsp;



A time-traveling Larry meanwhile missed out on groundbreaking technologies like the wheel, forks and toilets, and now doesn’t get the big fuss about crypto.&nbsp;



Don’t be like Larry, FTX said, invest in digital assets while they’re still the next big thing. FTX went bankrupt one year later under the weight of <a href="https://blockworks.co/news/sbf-guilty-verdict-sentencing">Sam Bankman-Fried’s fraud</a>.



The <a href="https://blockworks.co/news/whos-coughing-up-crypto-winter-dollars-for-super-bowl-ads">ads were unfortunately timed</a>, debuting near bitcoin’s all-time high only for the coin to crash 60% over the next six months. Damon and David were dragged by the media as a result, with the latter even <a href="https://deadline.com/2022/11/tom-brady-giselle-bundchen-ftx-lawsuit-larry-david-steph-curry-crypto-1235174541/">sued</a> for promoting FTX. By the time the FTX scandal hit, the whole notion of crypto Super Bowl ads felt a little embarassing.



It’s no surprise, then, that Coinbase’s latest campaign opts for a bit more substance than its own Super Bowl ad, which featured only a bouncing QR-code that led to a sign-up page and a $15 bitcoin giveaway that <a href="https://www.theverge.com/2022/2/13/22932397/coinbases-qr-code-super-bowl-ad-app-crash">crashed</a> the app due to demand.&nbsp;



The new ad leans more into the philosophical and is conspicuously celebrity-less. A little girl tells us that we’re born into a system — a system with “numbers and papers and lines and waiting.”&nbsp;



You work hard in that system, get good grades, go to college and still take on loads of debt. Starting a family means working two or three jobs, but you still can’t afford rent, let alone buy a house. Not to mention, used cars cost as much as new ones!



“Breaking news — everything is terrible. But does it have to be this way? What if it was different?” Coinbase asks.



<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">⏪️ Accept that it will always be this way. ⏩️ Build something better. <a href="https://twitter.com/hashtag/UpdateTheSystem?src=hash&amp;ref_src=twsrc%5Etfw">#UpdateTheSystem</a> <a href="https://t.co/TT22o2iQke">pic.twitter.com/TT22o2iQke</a>&mdash; Coinbase 🛡️📞 (@coinbase) <a href="https://twitter.com/coinbase/status/1730633199087161813?ref_src=twsrc%5Etfw">December 1, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Coinbase wants to #UpdateTheSystem with crypto</figcaption></figure>



Crypto (or more specifically, the crypto you can buy on Coinbase) gives us an out — a way to raze and rebuild a financial system that’s rapidly pricing us all out.&nbsp;



Or, at the very least, crypto might help you afford a used car. “Because you&#8217;re born into a system, doesn&#8217;t mean you have to live with it,” according to the Coinbase ad.



It’s all very “<a href="https://knowyourmeme.com/memes/gamer-joker-gamers-rise-up-we-live-in-a-society">we live in a society</a>” and even a little Marxist. Still, rather than overintellectualize an already very edgy ad, this is a great moment to check in on how the alternative crypto financial system is really doing.



<ul>
<li>All of crypto is currently worth two Apples, or more than 10 BlackRocks.</li>



<li>Ethereum’s annualized revenue is just under $3 billion — about 15% of what the average US <a href="https://www.statista.com/forecasts/409832/casinos-except-casino-hotels-revenue-in-the-us">casino</a> brings in per year.</li>



<li>That’s nearly one-tenth of Visa’s yearly <a href="https://www.macrotrends.net/stocks/charts/V/visa/gross-profit">profit</a> and about one-eighth <a href="https://www.macrotrends.net/stocks/charts/MA/mastercard/net-income#:~:text=Mastercard%20net%20income%20for%20the%20twelve%20months%20ending%20September%2030,a%2035.5%25%20increase%20from%202020.">Mastercard’s</a>.</li>
</ul>



Those metrics are cute, but don’t really capture the spirit of Coinbase’s ad. In Coinbase’s world, crypto supposedly evens the financial odds to such a degree that houses suddenly become affordable and debt becomes mostly useless.



Crypto indeed can bank the unbanked. For those without easy access to traditional finance rails, much of blockchain’s promise is that it offers a permissionless sandbox in which to store value, transfer funds, own protocols and unlock generational wealth by investing in a tidal wave of digital assets.



To some degree, all that is true. And Coinbase’s advert actually hinges on the idea that crypto is an inflation hedge. Inflation is a massive rolling boulder, and we’re Indiana Jones in Raiders of the Lost Ark desperately hoping to outrun it.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/16022165/embed#?secret=mfXoMb3Ddv" data-secret="mfXoMb3Ddv" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">The small green dot in the middle? That’s US dollar inflation</figcaption></figure>



Opting into crypto — and the myriad <a href="https://blockworks.co/news/brian-armstrong-tokens-for-science">token economies</a> that come with it — is a cheat code for dodging it. These are internet-native currencies that may well outperform the dollar, after all.



It&#8217;s enough to make a crypto exchange want to film a dramatic advertisement about it. But one key detail missing is crypto’s own addiction to printing money.&nbsp;



Comparing circulating supplies for the top 100 or so cryptocurrencies over the past two years shows nearly three quarters have supply inflation greater than US dollar inflation.



<ul>
<li>About 40% have seen supplies increase by 50% or more since December 2021.&nbsp;</li>



<li>Almost a quarter of token supplies have more than doubled.</li>



<li>Their average supply inflation over the past year was 43%, compared to a US dollar inflation rate of 5.55%.</li>
</ul>



In some instances, the increases in supply converted to market cap growth even where token prices went down.



Take budding layer-1 blockchain Kava: The supply of its <a href="https://blockworks.co/price/kava">native token</a> has multiplied seven times over the past two years, while its price lost 80% of its value. Its market cap still grew more than 40%.



Similar stuff for Immutable (<a href="https://blockworks.co/price/imx">IMX</a>), the Ethereum layer-2 network focused on gaming NFTs: Its supply has also multiplied seven times while its token price has collapsed 75%. IMX’s market cap — determined by multiplying price versus circulating supply — grew by two-thirds.&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/16033997/embed#?secret=agXfYWkVMZ" data-secret="agXfYWkVMZ" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Bigger bubbles mean higher supply inflation — and they tend to post lower returns</figcaption></figure>



In crypto’s defense, token unlock schedules and supply distributions are usually communicated somewhere online, with maximum token supplies often outright defined by code, which can’t be done for the US dollar.



And token supply inflation isn’t exactly the same as the consumer price <a href="https://edition.cnn.com/2023/11/14/economy/consumer-price-index-october/index.html">inflation</a> seen in the US over the past couple of years.&nbsp;



In many cases, supply inflation is a feature, not a bug. Tokens are added to the circulating supply to incentivize usage, pay salaries and allround fund development.&nbsp;



This makes token supply inflation more similar to the stock options employees at Web2 tech companies receive, rather than anything like the Federal Reserve’s <a href="https://www.investopedia.com/terms/q/quantitative-easing.asp">quantitative</a> easing throughout the pandemic — on which recent US inflation has been <a href="https://www.ft.com/content/2c3fc086-b543-4efe-b696-8c84aa919b69">blamed</a>.&nbsp;



(Although I wouldn’t describe tokens like that around the SEC, which might get the idea that they’re tokenized equity.)&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/16040205/embed#?secret=P4IaRM4Yuw" data-secret="P4IaRM4Yuw" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Uniswap is by far the most deflationary top-100 crypto</figcaption></figure>



For now, crypto’s addiction to inflation isn’t totally noticeable. Less than one third of tokens with more than zero supply inflation over the past year have seen falling token prices over the same period.



Because the number goes up despite the additional supply, your average crypto investor might not even realize their tokens are being watered down by the fresh tokens regularly unleashed on markets.&nbsp;



Just like how the average wage earner might not see their dollars are worth less the longer they sit in a bank account, even though the US dollar is worth more and more.



The raw censorship resistance of Bitcoin and the permissionless nature of the decentralized finance economy supported by other prominent networks are certainly worth celebrating. They may even be enough to base an advertisement on.



But if what Coinbase says is true — that crypto is a legitimate alternative to our current system — then it must kick its addiction to supply inflation, or else continue to speedrun the worst of what legacy finance has offered us so far.



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


<div class="wp-block-post-author-biography">David is an Editor based in The Netherlands focused on data-driven journalism. Previously, he wrote for TheNextWeb&#8217;s crypto vertical before launching Protos in 2021. He&#8217;s a reformed hardline Bitcoiner passionate about permissionless and decentralized networks. Contact David at david@blockworks.co</div>


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Crypto still has a long way to go to live up to Coinbase’s latest ad

The approval of spot Bitcoin ETFs by the Securities and Exchange Commission could serve as “the final seal of approval” for institutions considering involvement in the crypto space, according to Ark Invest CEO Cathie Wood.



Ark Invest, in partnership with 21Shares, has a live filing in front of the agency for such a product. <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf#">The deadline for the SEC to rule</a> on the proposed Ark 21Shares Bitcoin ETF (ARKB) is Jan. 10.



The SEC allowed bitcoin futures ETFs to start trading in October 2021. Wood said during a Wednesday webinar those approvals were “interesting” given the counterparty risk for those funds — compared to a spot product backed by bitcoin held in cold storage. Most issuers seeking to launch bitcoin ETFs have named <a href="https://blockworks.co/tag/coinbase">Coinbase</a> as custodian of the funds’ BTC.&nbsp;



Grayscale Investments <a href="https://blockworks.co/news/grayscale-sec-spot-bitcoin-etf#">notched a court victory against the SEC</a> in August. Judges ruled that the commission denying the conversion of the Grayscale Bitcoin ETF (GBTC) to an ETF, but allowing futures-based funds, was “arbitrary and capricious.”&nbsp;



“I think it’s all coming together, and if you look at our appreciation expectations for bitcoin, the biggest part of the appreciation during the next five to 10 years we think will come from institutional,” Wood added.&nbsp;&nbsp;&nbsp;



The executive has <a href="https://www.wsj.com/finance/cathie-wood-urges-investors-to-heed-the-risks-of-a-deflationary-world-465e3d2c">said</a> the price of one bitcoin could hit $1 million or more in the long term.&nbsp;&nbsp;



Bloomberg Intelligence analysts put the odds of spot bitcoin ETF approval, by Jan. 10, at 90%.&nbsp;



Read more: <a href="https://blockworks.co/news/pinning-down-bitcoin-etf-approval-dates">Industry watchers pin down possible bitcoin ETF approval dates</a>



Approval would be a change in stance for a securities regulator that has blocked dozens of spot bitcoin ETF proposals over the last decade. But 21Shares President Ophelia Snyder <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">reiterated previous comments</a> Wednesday that there have been “pattern breaks” in recent months as issuers look to get these funds approved.



“If everything goes the way it always goes, you’re going to end up with the same result,” she said on the webinar alongside Wood. “I think the fact we’re seeing very material differences in this round of the spot process versus prior rounds is a very promising indication of a different outcome.”



The changes include issuers continuously updating their Bitcoin ETF filings. Industry watchers noted that this activity may signal ongoing dialogue with the SEC. BlackRock and Bitwise, for example, updated their S-1 forms Monday.



<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">What does this mean? Without having read them &#8212; it just means that the wheel is still turning. Both the SEC and these issuers are working hard to iron things out. These filings are likely the result of many conversations and a lot of man hours on/between both sides.&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1731804911350804573?ref_src=twsrc%5Etfw">December 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Among the additions in BlackRock’s <a href="https://www.sec.gov/Archives/edgar/data/1980994/000143774923033524/bit20231201_s1a.htm">amendment</a> was the language around the firm raising $100,000 of seed capital for the fund. Such <a href="https://www.nasdaq.com/articles/seed-capital%3A-what-is-it-and-why-does-it-matter">capital</a> is used to fund creation units that allow shares to be offered and traded in the open market.&nbsp;



“[It’s] meaningful because it shows they are doing everything needed to launch,” Bloomberg Intelligence analyst James Seyffart told Blockworks. “But I don’t think it means much more than that.”



Other amendments have been more technical, including disclosure language around <a href="https://twitter.com/SGJohnsson/status/1712285307087852001">electricity</a> usage of bitcoin mining or the impact of a digital asset being deemed a security in the future.&nbsp;&nbsp;&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Interesting update to BlackRock / IShares S-1 filing regarding the concern that the SEC could take an approach that Bitcoin is a potential security 🧐 Seems silly, but apparently the SEC wants that language in there. <a href="https://t.co/84sCkgFncC">pic.twitter.com/84sCkgFncC</a>&mdash; Joe Carlasare (@JoeCarlasare) <a href="https://twitter.com/JoeCarlasare/status/1732072315649745018?ref_src=twsrc%5Etfw">December 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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The latest bitcoin ETF filing from Ark and 21Shares came in April, which was a couple months before <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">BlackRock entered the picture</a> — a move that spurred Fidelity, Invesco and a range of others to re-up their own bitcoin ETF efforts.&nbsp;&nbsp;



“We do think while we’re first in line that a number of the firms will be approved at the same time,” Wood said. “Depending on exactly how they filed, it could be that more than a half dozen are approved in the first go.”



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Spot bitcoin ETF would be ‘final seal of approval’ for institutions: Cathie Wood

Jack Kubinec

The tech-focused venture capital firm Andreessen Horowitz released its “big ideas” list for 2024. For the second year in a row, the list was capped off with insights from a16z&#8217;s crypto arm.



A16z crypto’s <a href="https://a16z.com/big-ideas-in-tech-2024/">set</a> of big ideas show multiple references to artificial intelligence (AI), gaming and digital security. The 2024 list contains no mentions of “zero knowledge” technology; a stark contrast to last year&#8217;s <a href="https://a16z.com/big-ideas-in-tech-for-2023-an-a16z-omnibus/">list</a>, where it was the highlight of the first two points.



A group including general partner Ali Yahya wrote about the potential for crypto to “democratize” AI innovation. Decentralized markets can let anyone contribute and be compensated for working on <a href="https://blockworks.co/tag/artificial-intelligence">artificial intelligence</a> models, moving the training of the extremely powerful tools beyond the hands of just a few tech giants, they wrote.&nbsp;



Read more: <a href="https://blockworks.co/news/ai-cryptocurrency-connection">Crypto, please leave AI alone</a>



Investing partner Carra Wu also wrote about AI, arguing that the advent of AI-generated video games will create a need for guarantees that game models are uncorrupted and neutral.



“The most important thing that crypto offers is such guarantees,” Wu said.



General partner Ariana Simpson said “<a href="https://blockworks.co/tag/gaming">play to earn</a>” games are becoming “play-and-earn,” meaning users can play crypto-enabled games without financialization clouding the experience.



Read more: <a href="https://blockworks.co/news/play-to-earn-socialfi-gaming">Play-to-earn as we know it is dead: Long live SocialFi</a>



In the realm of security, chief technology officer Eddy Lazzarin said cryptographically-generated “passkeys” can make website and app sign-ins more secure. Furthermore, crypto projects are making formal verification, or the use of mathematical models to check a program’s security, easier for smart contract developers, writes research engineering partner Daniel Reynaud.&nbsp;



Meanwhile, general counsel Miles Jennings made reference to his recent essay on how Machiavellian principles can improve DAOs.&nbsp;



Read more: <a href="https://blockworks.co/news/machiavellian-dao-governance-a16z-miles-jennings">DAOs should learn from Machiavelli, says a16z crypto’s Jennings</a>



Andreessen Horowitz has made sizable investments in several crypto projects including Yuga Labs, Solana and Uniswap. However, its exuberance in crypto investing seems to have cooled this year. The firm’s thirty largest crypto-related fundraises all <a href="https://cryptorank.io/funds/andreessen-horowitz/rounds?page=1&amp;sort=raise">came</a> before 2023, according to funding aggregator CryptoRank.



Some crypto fans were <a href="https://x.com/daglihet/status/1716381466727522442?s=20">rankled</a> when Marc Andreessen’s “Techno-Optimist Manifesto” from October contained zero references to crypto.



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A16z’s crypto ideas list for 2024 spotlights AI, gaming

“Iran Unchained” released a streamlined version of its platform, built for sending crypto to anti-government activists in Iran where compliance laws make donations difficult.&nbsp;&nbsp;



The NGO’s “V2” site is a fork of crypto fundraising platform Gitcoin that lets donors outside the US sidestep fundraising limits and send money directly to activists’ wallets. The site’s founder is trying to keep the funds obscured from Iran’s Islamic Republic while also proving to the US Treasury that its crypto donations aren’t funding illicit causes.



Iran Unchained was started in January 2023, a few months after a young woman’s death in police custody sparked protests against Iran’s Islamic Republic. The NGO organizes requests for grants from Iranians with the overarching <a href="https://twitter.com/UnchainIran/status/1732064284560220246">goal</a> of overthrowing the Islamic Republic and installing a secular government in its place.&nbsp;



Soleimani’s fundraising <a href="https://v2.iranunchained.com/">platform</a> combats what he calls “overcompliance” in the fiat realm, where banks and funding platforms shut down compliant donations to Iran to avoid liability altogether in dealing with the OFAC-<a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/iran-sanctions">sanctioned</a> state. An anti-censorship group called Free Internet for Iran was yanked from GoFundMe for opaque reasons before turning to Iran Unchained, Soleimani said.



Read more: <a href="https://blockworks.co/news/nfts-for-maui">Maui wildfire recovery gets the spotlight thanks to charitable NFT collection</a>



The NGO still has to follow compliance laws itself though. Iran Unchained is registered as a nonprofit in Wyoming and files quarterly <a href="https://blockworks.co/tag/ofac">OFAC</a> reports giving assurance it’s on the right side of sanctions laws.



“The logistical challenge for Iran Unchained is how to send money securely to grantees and beneficiaries inside of Iran while protecting them from the Islamic Republic and while providing enough documentation to the United States Treasury to convince them that we&#8217;re not sending money to terrorists,” Soleimani said.&nbsp;



Funds have gone towards internet provision, humanitarian aid, <a href="https://blockworks.co/tag/nfts">NFTs</a> from Iranian artists and sending Iranian developers to <a href="https://blockworks.co/tag/ethereum">Ethereum</a> conferences.&nbsp;



Iran Unchained grants are voted on by a decentralized autonomous organization (DAO) made up of Iranian friends of Soleimani. Grants that pass governance are listed on the NGO’s homepage alongside crypto wallet addresses where donors can send funds directly.&nbsp;



Cross-border aid is a popular use case for crypto. Ether poured into <a href="https://blockworks.co/news/ukraine-cancels-proposed-airdrop-after-receiving-record-donations">Ukraine’s crypto wallet</a> following Russia’s 2022 invasion, and <a href="https://blockworks.co/news/crypto-aid-charity-donations">Crypto Aid Israel raised $185,000</a> in a little over a week following attacks on Oct. 7.



Updated Dec. 6, 2022 at 2:20 pm ET: Updated headline for clarity.



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Grant program aims to overthrow Iran’s Islamic Republic with crypto

Societe Generale is debuting its stablecoin on Bitstamp Wednesday.



France’s third largest bank originally unveiled EUR CoinVertible — developed by its crypto division, SG Forge — back in April. It’s the first time a regulated European bank has made a euro-pegged stablecoin available on a crypto exchange.



EURCV is issued on the Ethereum blockchain.



“With this listing, SG-FORGE offers the opportunity to the crypto ecosystem to diversify its positions and gain access to a robust, stable asset built on Societe Generale’s regulatory and structuring expertise. This is an important step towards widespread adoption of our stablecoin,” said Jean-Marc Stenger, SG-FORGE CEO, in a <a href="https://www.sgforge.com/stablecoin-listing-bitstamp/">press release</a>.



When the <a href="https://blockworks.co/news/euro-stablecoin-societe-generale-ethereum">stablecoin was announced back in April</a>, SocGen’s crypto unit touted it as a way to let institutional investors manage their cash flow in a different way and bridge gaps between traditional markets and the emerging digital asset class.&nbsp;



The Bitstamp listing allows retail traders to access EURCV.



Read more: <a href="https://blockworks.co/news/brazil-drives-tradfi-crypto-convergence">How a Brazilian banking giant’s latest move reflects the ongoing TradFi-crypto convergence&nbsp;</a>



“Stablecoins bridge the gap between traditional fiat currencies and cryptocurrencies — offering the best of both worlds due to their stability and on-chain feature set — whilst also supporting our goal of increased financial inclusion,” Bitstamp CEO Jean-Baptiste Graftieaux said.



EURCV joins Tether and Circle’s USDC, though the latter two currently dominate the <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> market. Stenger <a href="https://www.ft.com/content/cd733a7c-2e74-412f-b234-6f495c118cc6">told</a> the Financial Times that the French bank is hopeful that there’s a “place” for a euro-pegged stablecoin. 



The stablecoin announcement comes just days after <a href="https://blockworks.co/tag/societe-generale">SocGen</a> said it issued its <a href="https://blockworks.co/news/green-bond-ethereum-issued">first green bond on the Ethereum blockchain</a>. The transaction, which took place in late November, amounted to 10 million euros or roughly $10.8 million. It has a three year maturity.



The bank previously expressed interest in the digital asset space through its crypto arm, FORGE.&nbsp;



The FORGE team secured a license to operate as a digital asset service provider in France back in July, though it initially registered as a digital asset custodian with the French stock market regulator in 2022.



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SocGen’s crypto unit debuts euro-pegged stablecoin

Bessie Liu

Crypto companies are looking to improve their user experiences and interfaces in hopes of onboarding new customers.



Centralized crypto exchange Coinbase recently enabled users of its Wallet app to link directly to crypto payments through messaging apps, including WhatsApp, iMessage and Telegram.



“With this launch, users can now send money across borders for free using the most commonly accessible identifier &#8211; a phone number or email address &#8211; as opposed to needing to know the recipient&#8217;s wallet address,” Chintan Turakhia, Coinbase senior director of engineering told Blockworks.



“By reducing complexity while expanding global access, we hope to enable millions of new people to engage with the crypto economy.&#8221;



Sending crypto is free and settled instantly, Coinbase said. Recipients will have up to two weeks to claim the money sent to them before they are returned to the sender. 



<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">Sending money has never been easier. Now you can send <a href="https://twitter.com/search?q=%24USDC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDC</a> in just a few taps. Across borders. Without fees. Here&#39;s how ↓<a href="https://t.co/71V6dBA6i5">https://t.co/71V6dBA6i5</a>&mdash; Coinbase Wallet 🛡️📞 (@CoinbaseWallet) <a href="https://twitter.com/CoinbaseWallet/status/1732098052335260117?ref_src=twsrc%5Etfw">December 5, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Turakhia said Coinbase believes the best way to increase economic freedom is by simplifying the payment experience.&nbsp;&nbsp;



Decentralized crypto trading platform Matcha meanwhile recently enabled cross-chain swaps across seven blockchains, including Ethereum, Arbitrum, Optimism, Base, Polygon, BSC and Avalanche.



This means that Matcha users will be able to swap tokens across various blockchains without having to leave the Matcha interface or visit a separate bridging site.



<h2 class="wp-block-heading">Safety remains a barrier to crypto adoption</h2>



With improvements like these, the crypto space may find it easier to introduce users to their products. 



But lacking trust in crypto is still a chief concern. Ido Ben-Natan, the co-founder and CEO of Blockaid, notes that a crucial part of the UX narrative will be improved user security.



“Survey after survey shows that one of the key barriers to entry for web3 users is the perception that it’s easy to get scammed,” Ben-Natan told Blockworks.



In fact, according to a <a href="https://www.pewresearch.org/short-reads/2023/04/10/majority-of-americans-arent-confident-in-the-safety-and-reliability-of-cryptocurrency/">study</a> by the Pew Research Center, over 75% of Americans in the US who have heard of crypto remain skeptical of its safety and reliability. 



Of the Americans who do hold cryptocurrencies, the majority of them (74%) first purchased crypto between one and five years ago, with only a handful (16%) having decided to purchase crypto over the past year.



An estimated 31% of traders who have previously purchased or traded crypto no longer own any.



“For peer-to-peer payments to flourish globally, we need to make it easy for users to stay safe. This is why we’re laser-focused on working with the largest wallet providers to protect users globally from malicious actors,” Ben-Natan said.



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Coinbase and other crypto companies hope to boost adoption with UX

As traditional finance players continue wading deeper into the crypto space, Brazil could serve as a “proof of concept” for such integrations.



Brazil bank Itau Unibanco launched crypto trading, Reuters reported Monday. A spokesperson for the company did not immediately return a request for comment.&nbsp;



The reported move signals “a clear demand from clients” and marks the ongoing crypto initiatives by major banks in the country, said Pedro Lapenta, head of research at crypto asset manager Hashdex.



Nubank, for example, launched crypto trading in May 2022 — <a href="https://international.nubank.com.br/consumers/nubank-cripto-adds-ten-new-cryptocurrency-options-in-less-than-1-year/">adding</a> access to polkadot (DOT), avalanche (AVAX), stella lumens (XLM), arbitrum (ARB) and optimism (OP) last month. The company <a href="https://twitter.com/jerallaire/status/1732111464243106078?s=46&amp;t=yjAdM2ddX0KgGQimu7jcDQ">partnered</a> with stablecoin issuer Circle Tuesday to extend USDC exposure to Brazilian Nubank customers.&nbsp;



“To anticipate how the convergence of traditional and crypto markets will unfold, it seems appropriate to consider Brazil as one of the most advanced countries, and perhaps the primary case to observe in the next one to two years,” Lapenta told Blockworks.



Read more: <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">TradFi, DeFi convergence continues through tokenizing real-world assets</a>



He noted the Brazil central bank’s efforts in developing its Digital Brazilian Real, or Drex. &nbsp;&nbsp;



The country’s securities regulator in 2021 <a href="https://blockworks.co/news/brazil-bitcoin-etf-follows-similar-launches-in-canada">approved Brazil’s first bitcoin ETF</a> — a type of fund the US Securities and Exchange Commission has never allowed to come to market.&nbsp;&nbsp;&nbsp;



“It is reasonable to envision that, similar to the way we observed with the <a href="https://www.bcb.gov.br/en/financialstability/pix_en">Pix</a> in the payment sector, Brazil could serve as a proof of concept for the seamless integration between traditional finance and crypto, potentially offering valuable insights for the global economy,” Lapenta added.



Itau Unibanco’s trading service is initially set to be limited to bitcoin and ether, Reuters <a href="https://www.reuters.com/technology/brazilian-lender-itau-launches-crypto-trading-2023-12-04/">reported</a>.



Rather than trying to compete with centralized exchanges such as Binance, Itau is likely more focused on adding an extra option for existing clients, market observers said.&nbsp;&nbsp;



<h2 class="wp-block-heading">Reflecting a broader theme</h2>



The new way to trade crypto in Brazil reflects a broader trend gaining steam globally.



“Itau Unibanco launching crypto trading and custody services confirms the thesis we have had throughout 2023: Traditional organizations are building the rails to enter the digital asset ecosystem, right now,” said Caspar Sauter, co-founder of decentralized exchange D8X. “From Brazil to Switzerland, we have seen multiple banks entering the space over the last months.”



Switzerland-based St.Galler Kantonalbank launched bitcoin and ether custody and trading services to certain clients via a link-up with AMINA Bank (formerly known as SEBA Bank).



Sauter noted that he expects more traditional banks to start offering crypto-related services, with a focus first on custody and trading.&nbsp;



“Instead of developing in-house solutions, they will leverage white-label products offered by players such as Amina Bank, Sygnum Bank or AlphaPoint,” he told Blockworks. “Ultimately those banks will also build rails to the DeFi ecosystem, which is what we at D8X are banking on.”



Sauter said large banks in Europe will follow soon, but added those in the US could lag behind considering the country’s current regulatory environment.



Still, some have already taken steps.&nbsp;



Germany-based Deutsche Bank said in September it was <a href="https://blockworks.co/news/deutsche-bank-crypto-custody-tokenization">set to establish digital asset custody and tokenization services</a> by teaming up with crypto infrastructure firm Taurus.



In the US, financial services giant Fidelity Investments <a href="https://www.cnbc.com/2022/11/03/fidelity-to-open-commission-free-crypto-trading-to-retail-investors.html">launched</a> a crypto trading product for retail investors in 2022. The country’s oldest bank, BNY Mellon, has expressed its <a href="https://blockworks.co/news/bny-mellon-crypto-plans">long-term focus on digital innovation</a>.



JPMorgan has explored various tokenization and blockchain initiatives for several years — recently <a href="https://blockworks.co/news/blackrock-barclays-jpmorgan-chase-dapp-tcn">facilitating a collateral transaction between BlackRock and Barclays</a> via a decentralized application.



“We maintain a positive outlook on the consistent trend of [traditional finance] incorporating crypto and blockchain technology into their products and infrastructure,” Lapenta said. “We&#8217;re also cautiously optimistic about how this movement will eventually translate into positive price action in the crypto market.”



Bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) price was roughly $43,750 at 4 pm ET Tuesday — about 14% higher than seven days ago and up nearly 5% in the last 24 hours.



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How a Brazilian banking giant’s latest move reflects the ongoing TradFi-crypto convergence

Jack Harlow concert-goers scanned QR codes on their phones before entering the multi-platinum rapper’s show on Monday in Lexington, KY.&nbsp;



What they may not have known was how their entry had been facilitated by blockchain tech.



MITH is a fan engagement startup that partnered with Harlow to offer on-chain VIP tickets for the rapper’s recent mini-tour in Kentucky. The company created on-chain records of attendance at the shows, but its founders told Blockworks they are taking a “mullet” approach to get users on board — Web2 in the front, Web3 in the back. 



In the future, MITH will launch platforms for creatives to monetize fan interactions and for fans to accrue rewards and collectibles — with the on-chain pieces happening behind the scenes.&nbsp;



Incubated by Range Media Partners in 2022, MITH came out of stealth in late November after Jack Harlow <a href="https://x.com/OnlywithMITH/status/1726686109038756081?s=20">debuted</a> his MITH-powered website where fans could purchase founding memberships to his so-called Private Garden and receive perks including proof of attendance passports at his upcoming slate of shows.



Read more: <a href="https://blockworks.co/news/uk-sports-committee-football-nfts">UK sports committee wants football to tackle fan tokens, NFTs</a>



MITH authenticated Private Garden memberships with <a href="https://pitch.com/v/tokenproofoverview-dc3gnt/1090d4eb-a158-4836-a3b3-7e620e7db02b">Tokenproof</a>, an on-chain ticketing protocol, so fans only needed to scan a QR code to enter. The contents of fans’ digital wallets are stored in the “My Profile” tab on Harlow’s website.



<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">Check in for Private Garden members for the last stop on the No Place Like Home Tour &#8211; smooooth thanks to our friends at <a href="https://twitter.com/tokenproof?ref_src=twsrc%5Etfw">@tokenproof</a> <a href="https://t.co/YPuByo4eqh">pic.twitter.com/YPuByo4eqh</a>&mdash; MITH (@OnlywithMITH) <a href="https://twitter.com/OnlywithMITH/status/1731444759770661318?ref_src=twsrc%5Etfw">December 3, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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MITH didn’t pay Harlow for his use of the platform, the company’s co-founders told Blockworks, saying he “wanted to advise on the future” of the product and “have upside.”&nbsp;



Soon after Harlow’s website went up, Axios <a href="https://www.axios.com/pro/media-deals/2023/11/30/mith-fan-platform-jack-harlow">reported</a> that MITH raised $3.5 million in seed funding with participation from Warner Music Group, Winklevoss Capital and the NEAR Foundation, among others.&nbsp;



MITH initially built a more complex platform for Harlow before the rapper asked the company to scale back the “Private Garden” <a href="https://www.privategarden.us/">website</a> to initially focus on fan engagement for his Kentucky tour before broadening the platform, Sanchez said. 



A demo of the scrapped site, which is more in line with MITH’s broader vision for the platform, shows a place for Harlow or other creators to make membership tiers. Creators could gate live streams or chat rooms depending on how much fans pay, for instance. Purchasing behavior and fan engagements all go on-chain, but the platform otherwise bears a Web2 look.



MITH has a post-FTX sensibility, co-founder Matty Ayers said, focusing on the technological possibilities unlocked by blockchain without letting lay perceptions of crypto scare users off.&nbsp;



Read more: <a href="https://blockworks.co/news/sports-fan-token-launch-socios">Pro sports teams piling on to Chiliz fan token opportunities</a>



“We create a wallet for you, and we don’t even tell you,” Ayers said. “If you focus on ‘wallet,’ that has a certain feeling. If you focus on ‘account,’ like this is my profile, it’s a completely different feeling.”



Emilia Clarke and Halle Berry are currently advisors to the project alongside Harlow, and Sanchez said MITH plans to open up “self-serve” to more creators in the first half of 2024. Ayers said MITH is also working on “co-creation” where fans can create derivative works started by popular creatives, and monetization and intellectual property rights are handled via blockchain.&nbsp;



MITH’s founders believe the best uses of blockchain tech for fan engagement will ultimately emerge down the road.



“We&#8217;re meeting with some heavy hitters in the digital identity space that are tied to [<a href="https://blockworks.co/tag/layer-1">layer-1s</a>] and we&#8217;re saying, ‘are you guys going to jump into the future with us?’ It&#8217;s not gonna be about speculative assets. It&#8217;s gonna be about participation and playing in a playground and testing tools and assumptions,” Ayers said.



Updated Dec. 6, 2023 at 3:45 pm ET: Updated to clarify details regarding Harlow’s website and partnership with MITH.



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How MITH brought Jack Harlow fans to the blockchain

The Securities and Exchange Commission is asking Judge Jed Rakoff to rule on whether or not Terraform offered and sold unregistered securities.&nbsp;



The SEC, in its <a href="https://blockworks.co/news/terraform-labs-do-kwon-sec-lawsuit">case against Terraform Labs and former CEO Do Kwon</a>, is making the request to prevent a jury from making a decision on the alleged securities.



The issue at hand, lawyers for the regulatory agency wrote, is a legal question that requires court determination, and is not “a factual question for the jury.”



“There is no dispute, for example, as to any of the facts that establish that Defendants’ crypto asset offerings involved an investment of money, in a common enterprise, with an expectation of profit to be derived from Defendants’ efforts,”&nbsp; the SEC wrote in the Dec. 4 filing.



“Whether Defendants’ offers and sales of their crypto assets are investments contracts is thus a question of law for the Court, not the jury.”



The SEC goes on to claim that Terra, in its opposition filing to the SEC’s motion for summary judgment, failed to raise issue with the SEC’s allegations that Terra sold and offered unregistered securities in the form of crypto.



Lawyers for the commission believe that the “undisputed facts” they’ve put forward in former filings are enough to “satisfy the governing legal standard” and therefore are enough for Judge Rakoff to rule on.



The case is “straightforward,” the SEC claims and therefore Rakoff should be able to grant a summary judgment — which is “routinely” done in “such circumstances.”



A <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security">summary judgment was granted</a> in another crypto case this summer: the SEC’s case against Ripple. However, the outcome was not fully in favor of the regulatory agency.&nbsp;



Instead, Judge Analisa Torres — a district court judge for the Southern District of New York — ruled that programmatic sales of Ripple’s XRP didn’t pass the Howey test. Institutional sales, she ruled, constituted an unregistered securities offering.&nbsp;&nbsp;



Rakoff, also a district judge for the Southern District of New York, didn’t seem to agree with the Torres ruling earlier this summer when <a href="https://blockworks.co/news/terraform-lawyers-use-ripple-ruling-dismiss-suit">Terraform attempted to use the ruling</a> to get its case dismissed.&nbsp;



Rakoff, in his denial, said that the <a href="https://blockworks.co/news/judge-denies-terraform-motion-dismisshttps://blockworks.co/news/judge-denies-terraform-motion-dismiss">Ripple and Terraform cases are separate</a>, in part due to the SEC’s allegations that Terraform “had the motive to mislead investors about the utility of their crypto-assets” were upheld due to the evidence provided by the Commission.



Rakoff’s <a href="https://blockworks.co/news/terraform-labs-opinion-ripple">opinion also plainly stated that his court</a> “rejects the approach recently adopted by another judge of this District in a similar case,” citing the SEC’s case against Ripple.



Howey, he said, does not make a distinction between institutions that buy crypto or those who purchased the assets via secondary transactions.&nbsp;



“That a purchaser bought the coins directly from the defendants or, instead, in a secondary resale transaction has no impact on whether a reasonable individual would objectively view the defendants’ actions and statements as evincing a promise of profits based on their efforts,” Rakoff wrote in late July.



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SEC wants judge overseeing Terraform case to rule on securities claims

Fresh off the close of its merger with US Bitcoin Corp., crypto mining firm Hut 8 is looking to boost its standing in the growing artificial intelligence (AI) infrastructure and computing markets.&nbsp;



Hut 8 Chief Strategy Officer Mike Ho said on a Monday call with analysts that the firm is currently positioned to meet demand for high-density data center infrastructure. It is actively seeking additional opportunities to invest in “the immense growth potential of AI,” he added.&nbsp;



The company’s stock price was up about 15% on the day, as of 12:30 pm ET Tuesday.



Hut 8’s ongoing focus on the evolving segments comes after Hut 8 acquired five Canada-based data centers in early 2022 through its buy of wireless connectivity company TerraGo.&nbsp;



Its plan was to use the data centers’ unused cloud space for gaming rendering, NFT storage, node infrastructure management and general storage for exchanges.



Read more: <a href="https://blockworks.co/news/bitcoin-miner-targets-gaming-web3-with-cloud-services-expansion">Bitcoin miner targets gaming, Web3 with cloud services expansion</a>



Interior Health tapped Hut 8 in June for high-performance computing services. Revenue stemming from that deal was set to start coming in this quarter, <a href="https://blockworks.co/news/hut8-mining-q2-earnings-revenue">executives previously said</a>.&nbsp;



“There is a clear opportunity to leverage our capabilities across the data center infrastructure and software value chain to build a presence in nascent markets like AI infrastructure and compute,” Ho told Blockworks in an email.&nbsp;



The company is not the only one doubling down on artificial intelligence. <a href="https://blockworks.co/news/hive-blockchain-ai-rebrand">Hive Digital Technologies rebranded in July</a> to reflect its use of Nvidia graphics processing unit (GPU) chips that the firm called “a vital tool” for AI, machine learning and advanced data analysis.&nbsp;



Bit Digital more recently <a href="https://blockworks.co/news/ai-bitcoin-mining-revenue">launched an AI-focused business unit</a> amid the broader trend of <a href="https://blockworks.co/news/bitcoin-miners-ai-computing">crypto miners seeking new revenue streams</a>.&nbsp;



<h2 class="wp-block-heading">A big move before the halving</h2>



Hut 8 CEO Jaime Leverton, in a statement, called the merger “the largest M&amp;A transaction that has ever transpired within our industry.”&nbsp;



The new-look crypto miner now has 7.5 exahashes per second (EH/s) of installed self-mining capacity at six sites across Canada, New York, Nebraska and Texas.&nbsp;



It still trails large North American competitors Marathon Digital and Riot Platforms, which had energized hash rates of 19.2 EH/s and 11.7 EH/s, respectively, as of Oct. 31.&nbsp;



“The combined company will be not only one of the top 10 in terms of bitcoin production but also one of the most diversified bitcoin mining operations, including self-mining, hosting, power generation and high-performance computing services,” BlocksBridge Consulting founder Nishant Sharma said <a href="https://blockworks.co/news/hut8-merger-usbtc-closing-soon">just before the deal closed</a>.



Read more: <a href="https://blockworks.co/news/hut-8-mining-merger-us-bitcoin-corp#">A deeper look at Hut 8’s imminent merge with US Bitcoin Corp</a>



The merged firm indeed has more revenue streams as well as “uncorrelated fiat-based business units,” Leverton said during a Monday call with analysts.&nbsp;&nbsp;&nbsp;



Hut 8 has increased its fiat-based revenue from roughly 19% — for the 12 months ended June 2023 — to about 30%, the CEO added.



“Both sides of our business also have a strong track record of forging blue-chip growth partnerships to scale both rapidly and cost-effectively as we’ve done with our joint venture at King Mountain, Texas — and as we’re planning to do with our stalking horse <a href="https://www.prnewswire.com/news-releases/hut-8-receives-court-approval-for-a-stalking-horse-bid-for-four-natural-gas-power-plants-and-the-north-bay-bitcoin-mine-301976734.html">bid</a> for four energy sites in Ontario,” Leverton said.&nbsp;



New Hut will manage 220 megawatts (MW) of hosting infrastructure at its King Mountain site in Texas and 680 MW of energy under its managed services division — a unit that helps mining sites owners with operations via management software.&nbsp;



Competition among large miners is heating up ahead of <a href="https://blockworks.co/news/anniversary-of-2016-btc-halving">the next bitcoin halving </a>— an event slated for April that industry watchers expect could separate winners and losers in the space.&nbsp;



<a href="https://blockworks.co/news/riot-plots-hash-rate-growth">Riot Platforms’ latest deal with MicroBT</a> could lead to the company growing its hash rate to more than 100 EH/s over the long term. Bitfarms also recently bought more miners as part of “a transformative fleet upgrade plan,” while Marathon Digital  <a href="https://blockworks.co/news/marathon-mining-bitcoin-halving">continues to expand geographically</a> and diversify its mining methods.



“Our immediate goal is to drive operational synergies and optimize returns across our existing infrastructure platform,” Ho told Blockworks. “At the same time, we continue to monitor opportunities for both organic and inorganic growth.”



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New-look Hut 8 eyes AI-related opportunities after merger

Corey Wilton

Web3 gaming can take inspiration from esports economics — and improve on it with SocialFi.



If the swift rise and equally precipitous fall of token prices in Web3 play-to-earn games like Axie Infinity and Pegaxy proved anything, it’s that the traditional P2E token models do not work. Relying heavily on a continuous stream of new users for growth, even when P2E tokens stage large rallies, they inevitably drop — and <a href="https://coinmarketcap.com/currencies/smooth-love-potion/">struggle to recover</a>.&nbsp;



We can’t build the future of Web3 games on broken token models. But we can look to esports&nbsp; and extend the success of its economics by blending it with a Web3 innovation — SocialFi.&nbsp;



To create Web3 economies that will stand the test of time, we must rethink how they produce returns. Instead of creating models that rely on attracting new players, we can monetize the relationships players have with one another already; and in doing so, give more people the opportunity to participate in these economies. In other words, Web3 games don’t need P2E. They need SocialFi.&nbsp;



For the uninitiated, “SocialFi” refers to the use of blockchain tech to monetize social interactions — one of the most talked about trends in blockchain this year.&nbsp;&nbsp;



The world was introduced to SocialFi in a big way in August, when Friend.tech — a social token platform that lets users make money from the digital communities they build — burst <a href="https://blockworks.co/news/friend-tech-financialization-goldentre">onto the scene</a>.



Despite the fanfare, Friend.tech wasn’t the first attempt to merge blockchain with social relationships. Decentralized social media has made it possible for creators to monetize their content for years. But Friend.tech was the first social platform to introduce a model that monetized relationships rather than content: A novel approach that initially garnered a significant user base and feverish media attention.&nbsp;



Since then, the platform’s popularity has fluctuated, along with public opinion about the likelihood of its long-term viability. An early surge in transactions gave way to a <a href="https://blockworks.co/news/web3-cryptopunks-nfts-socialfi">steep fall</a> just weeks after its debut, and it has faced criticism for its dependence on social and para-social relationships formed outside its own ecosystem.



But love it or hate it, Friend.tech did prove something important: That decentralized, token-based systems can effectively monetize our connections with one another.



<h2 class="wp-block-heading">Building SocialFi rails for the gaming ecosystem</h2>



So, what does this new social phenomenon have to do with esports and the Web3 gaming world?&nbsp;



Friend.tech <a href="https://blockworks.co/news/friendtech-downturn-socialfi">is struggling</a> because it did not start life with its own social ecosystem. Instead, it siphoned off the connections people had formed on separate platforms, such as X. But gaming ecosystems come with the crucial missing component for successful SocialFi already installed: Community.&nbsp;



Relationships have been critical to many of the world’s most popular games for years. In both Web2 and Web3, team systems boost player retention and expand gameplay options for studios and players. In esports, teams and fans engage in a familiar economic dance: Fans support teams through merchandise, ticket sales and viewership, while teams provide entertainment and community. And in blockchain games, community plays what is arguably an even more crucial role. Players in Web3 games rely on one another to boost earning potential — most commonly, through guilds: Groups of players that team up to share resources, train new players and earn rewards.



These community elements in games are precisely where the mechanics of SocialFi can be applied. The SocialFi rails that monetize social and para-social relationships in Friend.tech could be used to do the same for guild communities in SocialFi for games. Just as people buy “keys” to connect with others on Friend.tech (and sell them, potentially for a profit), players could buy and sell guild memberships.&nbsp;



It doesn&#8217;t end there: SocialFi for games could also open up game economies for people who don’t play or even directly interact with games. In addition to the seats players buy in guilds, anyone could purchase a “fraction” of the guilds they want to support.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/blockchain-gaming-gamers">Hey gamers, blockchain isn’t that bad</a>



We have FinTech and now Friend.tech, and I call these new gaming mechanisms “GuildTech.” As guilds earn rewards, its fraction owners could also receive a portion of those, or choose to buy and sell more fractions as speculative tools.



I believe this kind of infrastructure has the power to create blockchain game economies that last and that SocialFi will inevitably become a crucial element of blockchain games. By allowing a broader swathe of users to reap rewards from Web3 games, adding these rails will attract a whole new population of participants — not only new players, but an army of engaged supporters and stakeholders, too.



That’s why the fusion of SocialFi and gaming is not just a fleeting trend: It’s the key to unlocking untapped potential and ensuring a strong future.&nbsp;



I urge developers, industry leaders and the broader crypto community to take inspiration from esports and delve deeper into the possibilities that SocialFi presents. Let&#8217;s collaboratively shape an era where gaming isn&#8217;t just about play, but also about forging beneficial connections with one another.&nbsp;



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<div class="wp-block-post-author-biography">Corey Wilton is the co-founder and CEO of Mirai Labs, a leading international Web3 gaming studio headquartered in Vietnam. Mirai Labs’ first release, Pegaxy, was recognized as the second-most popular crypto project in the Philippines in 2022.</div>


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Play-to-earn as we know it is dead: Long live SocialFi

Macauley Peterson

Using blockchain in finance to establish more efficient markets is one of the technology&#8217;s most logical applications. Whether you call it decentralized finance, open finance, or simply crypto, there are benefits to its enhanced transparency, automated accounting and reduced counterparty risk.



The trillion-dollar question is, where are the apps to onboard the masses?



Heron Finance, an US Securities and Exchange Commission-registered investment advisor (RIA), is swooping in to provide investors with a robo-advisor for private credit markets via the Goldfinch protocol, both of which are developed by Warbler Labs.



It’s a bid to democratize access to an asset class previously reserved for high net-worth individuals able to foot the high minimum investment amounts.



Heron’s approach is aimed at individual investors of all sizes. While Heron has not yet launched, Goldfinch, an open-source lending system, has facilitated over $110 million in loans across more than 20 countries in its three-year history.



Read more: <a href="https://blockworks.co/news/undercollateralized-lending-wildcat">Is ‘hands-off’ undercollateralized lending possible? Wildcat thinks so</a>



Warbler Labs co-founders Mike Sall and Blake West have previously proffered the “crazy” idea that all private debt will move to crypto rails.



“Eventually, for people running companies, it will seem silly to get a loan from a private bank rather than a crypto protocol,” Sall <a href="https://gov.goldfinch.finance/t/gip-06-proposed-goldfinch-roadmap/825">wrote</a> in 2022. “Going to a bank will be like bartering your goods with your neighbors instead of using the internet to sell them online.”



The recent &#8220;Blueprint for Goldfinch&#8221; proposal, known as <a href="https://gov.goldfinch.finance/t/grc-02-a-blueprint-for-goldfinch/1881">GRC-02</a>, outlines a strategic plan to transform Goldfinch into an extensive ecosystem for on-chain lending businesses. This strategy aims to capitalize on the $1.4 trillion private credit market with a crypto edge, to make the market more open, interoperable and liquid.



Heron Finance is a reflection of that blueprint. Its clients will select an investment strategy that aligns with their risk tolerance and objectives. The platform then constructs a diversified portfolio of private credit deals, ensures ongoing rebalancing, and pays out a steady monthly yield — projected to fall in the range of 11-16% annually.



Read more: <a href="https://blockworks.co/news/cryptocurrency-investment-bull-market">Investor rush into crypto products the largest since 2021 bull market high</a>



The team behind Heron created the first non-fungible token (<a href="https://blockworks.co/tag/%20nfts">NFT</a>) for compliance with know-your-customer (<a href="https://blockworks.co/tag/kyc">KYC</a>) requirements in 2021, Sall said in a statement. This has culminated in Heron becoming the first SEC-registered robo-advisor primarily focused on private credit.



West pointed to the company&#8217;s commitment to transparency and cost-effectiveness.



&#8220;We built Heron Finance on the open-source, blockchain-based Goldfinch protocol because we believe investors deserve better transparency and costs compared to traditional finance,&#8221; he said.



The launch comes alongside an anticipated boom in the private credit sector, driven by macroeconomic and regulatory tailwinds, Sall said, citing Morgan Stanley <a href="https://www.morganstanley.com/ideas/private-credit-outlook-considerations">analysis</a> projecting the private credit market will grow from $1.4 trillion in 2023 to $2.3 trillion over the next four years.



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