Zebec Protocol

Katherine Ross

The money laundering trial against Binance and two of its executives — Tigran Gambaryan and Nadeem Anjarwalla — was delayed until May 17.&nbsp;



The postponement was confirmed to Blockworks by a family spokesperson for Gambaryan, who’s been detained in the country since late February.&nbsp;&nbsp;



The postponement is just the latest development in a series of delays for Gambaryan, who was sent — by a Nigerian court — to the Kuje Correctional facility. The notorious prison was attacked as part of a jailbreak by the Islamic State two years ago.&nbsp;



Thursday’s adjournment, which specifically focuses on the money laundering charges, pushed the court date back. Binance, Anjarwalla and Gambaryan also face a second trial — this time for tax evasion — which was delayed to May 17 back in April.



Read more: <a href="https://blockworks.co/news/binance-comments-on-exec-nigeria-detention">Binance ‘deeply disappointed’ about the ongoing detention of an executive in Nigeria</a>



The decision came after a lawyer for <a href="https://blockworks.co/tag/binance">Binance</a> said they had not yet been served with documents necessary for case preparation, according to <a href="https://www.reuters.com/business/finance/nigeria-court-adjourns-binance-execs-trial-may-17-2024-05-02/">Reuters</a>.&nbsp;



Gambaryan’s bail hearing is also set for May 17.&nbsp;



Binance didn’t immediately return a request for comment.&nbsp;



Earlier this week, Garba Umar of Interpol Africa said that his agency had paperwork for Anjarwalla and was working on it. However, a red notice — which tells law enforcement that an individual is wanted for arrest — has not yet been issued for Anjarwalla, according to Interpol’s <a href="https://www.interpol.int/en/How-we-work/Notices/Red-Notices/View-Red-Notices">site</a>.&nbsp;&nbsp;



“The process is ongoing,” Umar told a local TV station on Tuesday.



The relationship between Binance and <a href="https://blockworks.co/tag/nigeria">Nigeria</a> deteriorated earlier this year, and the crypto exchange has since <a href="https://blockworks.co/news/binance-ends-support-nigeria-naira">ended support for the Nigerian Naira</a>. Nigeria, on the other hand, threatened fines against Binance after it claimed that <a href="https://blockworks.co/news/nigerian-government-binance-fine">$26 billion passed through</a> Binance Nigeria.



The company has <a href="https://blockworks.co/news/binance-employees-detained-nigeria">previously said</a> that the executives have “no decision-making power in the company.” A spokesperson called the decision to send Gambaryan to Kuje “outrageous.”



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Nigerian court postpones another Binance case to May 17

StakeKit, emerging from stealth after 18 months of development, has launched its powerful self-custodial yield API, powering Zerion&#8217;s newly unveiled Earn page. This integration marks a significant milestone in providing users a unified platform to manage and grow their digital asset portfolio across more than 13 blockchain networks natively within Zerion.&nbsp;



StakeKit aggregates over 500 yield opportunities into a single, easy-to-use interface. This includes staking, restaking, liquid staking, yield vaults, and lending pools. 



&#8220;Our goal was to make earning yield in self-custodial wallets as easy as earning yield on a CEX. We’ve spent more than 1.5 years building StakeKit and worked closely together with protocol teams and DeFi developers to make this a reality. We’re excited to power the new Earn section in Zerion and allow users to get yield with ultimate ease of use and without having to give up even an ounce of self-custody” says Serafin Lion Engel, CEO of StakeKit.



The Earn section on Zerion now offers users the ability to stake, liquid stake, restake, and earn DeFi yields with the simplicity typically available on centralized exchanges (CEXs), but with the crucial benefit of users retaining 100% self-custody over their funds. This integration not only simplifies access to diverse DeFi yields but also enhances user safety. 



&#8220;Each yield contract featured on our platform is manually authenticated and integrated which mitigates risks users would normally face if they sought yield in third party dapps, such as phishing risks. This allows users to stack yields safely and effectively,&#8221; added Engel.



While users can delegate to any validator of their choice, StakeKit enables users to delegate to members of their Preferred Validator Network which provides users additional benefits such as slashing protection and uptime guarantees, which safeguard their staked assets and ensure optimal yield generation.



“We&#8217;re thrilled to partner with StakeKit to offer users the opportunity to earn passive income with their assets across multiple networks, seamlessly. At Zerion, our users enjoy the multichain experience, from portfolio tracking to bridging and swapping natively within our self-custodial wallet. StakeKit further enhances this experience by abstracting the specifics of each chain and protocol,” shared Yassine, senior product manager at Zerion.



The new Earn section in Zerion is available as of the release of this article. For more information about StakeKit and the new Earn page on Zerion, visit <a href="https://app.zerion.io/earn">their website</a>.



<h3 class="wp-block-heading">About StakeKit&nbsp;</h3>



StakeKit is the leading provider of self-custodial yield solutions in the Web3 space. By combining the most powerful self-custodial yield API with a user-focused interface, StakeKit enables seamless, secure, and efficient yield generation across over 50 blockchain networks. Learn more at <a href="https://www.stakek.it/">https://www.stakek.it/</a>. 



<h3 class="wp-block-heading">About Zerion&nbsp;&nbsp;</h3>



Zerion is your premier crypto wallet for everything onchain. Easily and safely manage assets, collections, staked positions, and airdrops across multiple chains — all in one app. Over 550K monthly users trust Zerion as the self-custodial wallet for exploring Web3. Learn more at <a href="http://zerion.io/">zerion.io</a>. 



This content is sponsored by StakeKit and does not serve as an endorsement by Blockworks. The veracity of this content has not been verified and should not serve as financial advice. We encourage readers to conduct their own research before making financial decisions.



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StakeKit launches market’s most comprehensive self-custodial yield API, powering Zerion’s new Earn section

Ben Mills

Financial technology has been an incredible growth sector for investors and innovators. But relatively soon, blockchain will become the only part of fintech that matters.



The success story of fintech over the past 15 years has been defined by tremendous developments on the part of electronic and online payments systems, with companies like PayPal, Venmo and Stripe becoming household brands. (Not to mention the evolution of monoliths like American Express, Visa and Mastercard.)



Only three years ago, venture funding for fintech companies topped $140 billion. But since then, investment in the sector, <a href="https://news.crunchbase.com/fintech-ecommerce/financial-services-funding-exits-forecast-2024/#:~:text=Early%2Dstage%20investment%20in%20fintech,in%202020%20and%20prior%20years">particularly in early-stage rounds</a>, has dwindled to levels not seen since Barack Obama was in the White House, totalling a mere $25 billion in 2023.



Caveat: I’m a huge admirer of fintech. It’s where I’ve spent most of my career, first at Braintree (acquired by PayPal), and later heading up Product at Venmo. I’ve seen firsthand how these companies have transformed societal habits around money.&nbsp;



But after diving down the rabbit hole with smart contracts and crypto, it became clear to me that blockchain is the new foundation we’ve been looking for to create a new global financial system.



Building anything involving traditional finance payments is complex and requires developers to take on a lot of scope — collecting user data, integrating payments and handling security, risk and compliance. If any one of those components is deficient, the entire system is doomed to fail. That’s a lot of responsibility for any project, and often requires small armies of developers to sustain.



So much time and resources are invested in overcoming risk-and-compliance barriers that you rarely see real innovation in building fintech products. Ultimately, many of these barriers relate to the complex web of regulations and requirements that have only become more complex as fintech has grown.&nbsp;



Blockchains not only solve those problems, but preclude them. Universal accounts mean there is no need to collect user data. Blockchains’ public and immutable ledger offers a single, universal and flexible payment system. Self-custody means developers can’t access user funds, which significantly simplifies considerations around security, risk and compliance.



In short, blockchain has eliminated many of the responsibilities that developers normally have to take on to build applications. That enables small teams to deliver uniquely valuable products to millions of people.



Just consider the impact that DEX pioneers like Uniswap and dYdX have had, springing from the heads of individual founders to quickly rival large corporate centralized exchanges in terms of trade volume, and then continuing to maintain absurdly small development teams thereafter.



Critics like to claim that crypto developers “don’t want to follow the rules,” but the reality is that blockchains and public key cryptography make many of the old rules irrelevant.



As a sector, crypto is burdened with regulatory inconsistencies and blind spots, of course. Applying old rules to new systems that have radically different characteristics was never going to make sense.



Innovation in fintech is being held back by the increasingly obsolescent traditional financial system. Blockchain gives fintech a new future because it is developing from a far stronger technical foundation where the possibilities have only just begun to be explored.



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


<div class="wp-block-post-author-biography">Ben Mills is the co-founder of Meso, a payments platform connecting banks and blockchains. Prior to Meso, Ben spent a decade building payments products as an early team member at Braintree (acquired by PayPal), as Head of Product at Venmo, and working on Solana Pay at Solana Labs.</div>


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Fintech has hit a wall. Blockchain will break through it.

David Canellis

Casey Wagner

<h2 class="wp-block-heading">Fully active</h2>



How many crypto users are there, really?



It turns out that it’s quite hard to measure. An “active user” can mean all sorts of different things depending on the use case.&nbsp;



Someone staking with MakerDAO for the yield is definitely an active user, for instance, but it’s murky at what point their “activeness” should be counted.



Only counting users when they deposit and withdraw would ignore the most critical activity of all: not touching the crypto once it’s in. This provides some types of crypto apps with massive user counts, while others seem relatively unused by little fault of their own.



We could use reported figures from widely popular apps as a proxy for the rest of the crypto space. MetaMask, for one, said it had more than <a href="https://blockworks.co/news/metamask-monthly-active-users-blockaid">30 million monthly active users</a> in February, almost an all-time high.&nbsp;



But to MetaMask, an active user is anyone who either “loads a page within the MetaMask extension or opens the mobile app at least once during any rolling 30-day period.” Not all of those users actually used their crypto —&nbsp;and as you can see, we’re now back to our original problem.



Token Terminal still gives it a stab. It says there were 88.6 million active addresses across all of crypto last month, with BNB Chain, Tron and Bitcoin making up about 40% of the total.



Read more: <a href="https://blockworks.co/news/privy-web3-onboarding-wallets">Privy launches to ease onboarding to consumer crypto apps</a>



One year ago, about 56 million monthly active addresses were recorded, representing nearly 60% growth year on year.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/F95PMdX9ubYv4uXzt5tVS5kFs-5YaQaU0Dvxxv8G-AGof_yiV9X5DWdF50o4uesnpy0XKBAouM8TfRrIs05EjHk_ip3z4d6m5SXyLhkvug-lVv_8L3_Qcrf8Tlu6Xv-qy0J811BjlYJTa__UYel2wsw" alt=""/><figcaption class="wp-element-caption">While the data isn’t exhaustive, it still shows that DEXs and token bridges are the most used apps in crypto</figcaption></figure>



Zooming into the app level shows where much of that growth has come from: DEXs, infrastructure protocols, onchain derivatives and decentralized social media.



By number of raw active addresses, DEXs and related protocols have by far added the most: 6 million over the past year. That figure stands at 9.56 million as of April, led by Uniswap, PancakeSwap, 1inch and SyncSwap.



Social media protocols and infrastructure apps have otherwise exploded by percentages: 2,100% and 1,150% over the past year. Social apps brought on an additional 100,000 active addresses year on year while infrastructure apps gained 670,000.



Read more: <a href="https://blockworks.co/news/farcaster-blockchain-onboarding">Farcaster is marrying social media and Web3 to onboard the masses</a>



<a href="https://blockworks.co/tag/farcaster">Farcaster</a>, the network powering crypto-infused social media app Warpcast, had about 3,100 active addresses this time last year, while the past three months have averaged out to 90,000 (in Farcaster’s case, data was sourced from this Dune <a href="https://dune.com/queries/3074977">dashboard</a>, not Token Terminal).&nbsp;



Lens Protocol and ICP-powered OpenChat have also seen decent activity upticks.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/N6KysgYB76GDmDI8qH6aqCKxCt12C8hfBbGNFqlJ59GotjK5kyRVw1T5G8-1xHU6wpBzOlbyD_wVYnGoRN-6jKJYes3D75_mk6ea518MmUbAicODKlIF_x6cW9eyAsQ1Zac8jKQhQuuGZctc8FxuhaY" alt=""/></figure>



As for the infra apps, blockchain data indexing platform The Graph has nearly quintupled its monthly active address count over the past four months, from 14,100 in January to 66,800 in April. Last April, that figure came in at under 1,000.&nbsp;



Worldcoin is also a standout, with active addresses surpassing 600,000 last month, practically double since January.



NFT marketplaces, however, are losing ground. Nearly half a million active addresses were recorded on OpenSea and others in April last year. Last month saw less than half that, with OpenSea shedding 57% year on year.&nbsp;



Zora is bucking the trend. It added close to 10% this year, rising from 72,200 in January to 78,600 last month.



Read more: <a href="https://blockworks.co/news/a16z-backed-social-dao">Web3 Watch: A16z-backed Scene Infrastructure Company hopes to show crypto is ‘not just money’</a>



Big picture: Trading remains the number-one crypto activity by far. The top 15 apps by active address count are, overwhelmingly, DEXs and bridges.&nbsp;



But other, less finance-focused use cases are clearly gaining traction.



— David Canellis



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



<ul>
<li>Bitcoin is holding above $58,000 — now more than 20% below its all-time high in March.</li>



<li>Bitcoin’s hash rate is <a href="https://www.coinwarz.com/mining/bitcoin/hashrate-chart">steady</a> after the halving, now slightly ahead since April 19. It seems miners overall haven’t yet had to turn off many rigs.</li>



<li>Six <a href="https://explorer.rated.network/slashings?network=mainnet&amp;timesSlashedPage=1&amp;slashesReportedPage=1">slashing</a> events affected Ethereum validators last month, up from four in February. Slashings have been low since the 106 slashings in November, which largely <a href="https://twitter.com/BitcoinSuisseAG/status/1724741985141993821">affected</a> Bitcoin Suisse.</li>



<li>Buzzy layer-3 Degen’s TVL is <a href="https://defillama.com/chain/Degen?chainTokenVolume=false&amp;derivatives=true">down</a> almost 80% since shortly after launch, now under $2.5 million.</li>



<li>EigenLayer’s ETH <a href="https://defillama.com/protocol/eigenlayer?denomination=ETH">deposits</a> are net positive again after its stakedrop was confirmed, gaining ~10,000 ETH ($30 million) overnight.</li>
</ul>



<h2 class="wp-block-heading">Square one</h2>



All square? Maybe not for Block.



Jack Dorsey’s company reportedly faces a probe from prosecutors in New York, per <a href="https://www.nbcnews.com/business/personal-finance/prosecutors-examining-transactions-block-owner-cash-app-squarc-rcna147181">NBC News</a>.&nbsp;



Prosecutors, thanks to a potential whistleblower, are digging into unreported transactions and alleged compliance lapses.&nbsp;



Documents provided by a former Block employee allegedly show that Square and CashApp failed to collect enough information from customers, and that the company processed transactions that were subject to economic sanctions. The transactions include fiat and bitcoin.&nbsp;



But the story doesn’t end — or, honestly, begin — there. NBC News <a href="https://www.nbcnews.com/business/personal-finance/whistleblowers-cash-app-leaves-door-open-money-laundering-terror-rcna138958">reported</a> in February that other whistleblowers filed a complaint with the Financial Crimes Enforcement Network earlier this year, alleging similar compliance faults.&nbsp;



“Our compliance program includes systems, tools, and processes for sanctions screening, as well as investigating and reporting on sanctions issues in accordance with our regulatory obligations,” a Block spokesperson told NBC, though Block didn’t respond to our request for comment.



Do some of these allegations sound familiar? If you keep up with short-sellers, then you’ll probably remember Hindenburg Research’s <a href="https://hindenburgresearch.com/block/">report</a> on Block, which dropped in March of last year.&nbsp;



While some of the report&#8217;s allegations may not come up with prosecutors — like the Maryland gang that goes by Cash App — Hindenburg said that the compliance approach “made it easy for bad actors to mass-create accounts.”



Read more: <a href="https://blockworks.co/news/treasury-warns-congress-about-illicit-crypto-financing">Illicit actors are getting better at using crypto, Treasury tells Congress&nbsp;</a>



“Former employees described how Cash App suppressed internal concerns and ignored user pleas for help as criminal activity and fraud ran rampant on its platform,” Hindenburg’s report claimed.



The short-seller didn’t mention the potential sanctions issues raised by the whistleblowers in NBC News, but that adds another layer to a potentially sticky situation for Block.&nbsp;



If there’s any merit to the allegations, the company could face potential action from authorities and prosecutors. There are many unknowns in the land of crypto regulation, but New York has been steady in requiring compliance. In March, the <a href="https://blockworks.co/news/doj-alleged-kucoin-violation-aml-laws">SDNY DOJ charged KuCoin</a> with unlicensed money transmission offenses.



Of course, it’s far too early to speculate if Block will face repercussions — and what they could look like.&nbsp;



But this is one that I’ll be closely watching.



— Katherine Ross



<h2 class="wp-block-heading">MiCA gets some backup</h2>



Europe’s crypto regulatory footprint is about to get bigger.&nbsp;



The European Parliament pushed through a number of crypto and Web3-related bills just before recessing late last month, a year after the Markets in Crypto Assets law passed.



Lawmakers are hopeful that the package will fill some gaps in KYC and due diligence.&nbsp;



You may recall MiCA being the overwhelmingly dominant topic of conversation in the fall and winter of 2023. Some say the law is a valiant first step in bringing regulatory clarity to the region, others say it leaves out essential parts of the industry (hi, DeFi).&nbsp;



Now, a year later, EU member-states are taking some creative license when it comes to implementing the regulations. This approach, naturally, has led to some fragmentation.&nbsp;



Read more: <a href="https://blockworks.co/news/eu-crypto-aml-provisional-agreement">EU comes to provisional agreement to expand AML to crypto&nbsp;</a>



Enter the new legislative package.&nbsp;



The latest basket of laws from the <a href="https://blockworks.co/tag/european-union">EU</a>, as with MiCA, was widely anticipated to pass. Time will tell —&nbsp;literally, the laws take years to come into application —&nbsp;how member-states interpret the new policies.&nbsp;



Here’s a breakdown of the possible changes:



<ul>
<li>“Crypto asset service providers,” or CASPs (think exchanges, crypto gambling operations, you name it) will have to maintain due diligence standards and are subject to anti-money laundering supervision when they operate in six or more EU member-states.</li>



<li>The Anti-Money Laundering Authority will be established and based out of Germany in an attempt to streamline enforcement across member-states.&nbsp;</li>



<li>Parliament has expressed interest in beefing up consumer protection laws around financial influencers and how they promote crypto products, services and tokens.&nbsp;</li>
</ul>



Negotiations are slated to continue with the EU Council after elections next month, so keep an eye out.&nbsp;



— Casey Wagner



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



<ul>
<li>A former FTX executive in Europe paid $1.5 million to buy a <a href="https://www.wsj.com/finance/ftx-survivor-pays-1-5-million-for-gold-watch-recovered-from-titanic-71af4ae8">gold watch</a> recovered from the wreck of the H.M.S. Titanic, per the WSJ.&nbsp;</li>



<li>Ethereum co-founder Vitalik Buterin explored ways to make <a href="https://blockworks.co/news/vitalik-buterin-zk-proofs-more-efficient">zero-knowledge tech</a> more efficient in a new blog post.&nbsp;</li>



<li>BlackRock’s head of digital assets <a href="https://www.coindesk.com/business/2024/05/02/blackrock-sees-sovereign-wealth-funds-pensions-coming-to-bitcoin-etfs/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">told</a> CoinDesk that the firm sees pension funds, sovereign wealth funds and more eventually entering the spot bitcoin ETF market.&nbsp;</li>



<li>MicroStrategy has <a href="https://twitter.com/intangiblecoins/status/1785795596798054832">unveiled</a> a new bitcoin-based decentralized identity product, dubbed Orange.</li>



<li>Microsoft inked a four-year $2.2 billion <a href="https://apnews.com/article/malaysia-microsoft-satya-nadella-invest-ai-chatgpt-25e92ce637a36ea8f88c2725dfa3d1f0">AI deal</a> with the government of Malaysia, AP reports.&nbsp;</li>
</ul>



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



Crypto thought leaders are negging memecoins these days.&nbsp;



Vitalik <a href="https://blockworks.co/news/cheatsheet-vitalik-buterin-on-memecoins">says</a> there’s nothing new or interesting about them, while, more recently, a16z execs Chris Dixon and Eddy Lazzarin have respectively said they represent <a href="https://www.ft.com/content/1ceaa1c6-47df-4430-950e-ffcbf1cc8f7b">gambling</a> — not innovation — and cause <a href="https://twitter.com/eddylazzarin/status/1783179299085856934">damage</a> to crypto.



David: Smart dudes but boomer takes.&nbsp;



Ignoring the fact that almost every cryptocurrency on the market today is a memecoin in one way or another (even bitcoin and ether), memecoins are by far the industry’s most effective stress tester.



Without them, crypto loses its only consistent scaling benchmark: memecoin mania.&nbsp;



Let ‘em rip.



Katherine: I’ve heard this argument before, though it was used back when memestock mania dominated the market.&nbsp;



If crypto’s really trying to be taken seriously, the memecoins — especially the racist and sexist ones —- don’t help. But one of the fun facets of crypto is that it’s not as stodgy as Wall Street.



Unfortunately, though, we’re doomed to be dubbed the “Wild West” until we can put together some semblance of respectability (and proper regulation is established, duh).&nbsp;



I’ll still be watching dogwifhat, though.



— Katherine Ross, David Canellis



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Empire Newsletter: Here’s where all the crypto users really are

Ben Strack

US spot bitcoin ETFs saw unprecedented outflows Wednesday, as most of them came from funds other than Grayscale’s BTC fund.&nbsp;



Ten spot bitcoin ETFs trading in the US saw net money leave their coffers Wednesday, as bitcoin’s price dipped significantly. A fund by Hashdex saw zero flows.&nbsp;



The Grayscale Bitcoin Trust ETF (GBTC) contributed $167 million of the $564 million in net outflows seen on the day, according to Farside Investors data.&nbsp;



But <a href="https://blockworks.co/tag/fidelity">Fidelity Investments</a> saw the most capital leave its bitcoin ETF, enduring $191 million of net outflows — by far its most ever in a single day. 



BlackRock’s iShares Bitcoin Trust (IBIT) had seen five straight days of zero flows after its <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">71-day streak of bringing in net money ended</a>. The fund witnessed its first ever net outflows, amounting to $37 million on Wednesday, the <a href="https://farside.co.uk/?p=997">data</a> shows.&nbsp;&nbsp;&nbsp;



The Ark 21Shares Bitcoin ETF (ARKB) hemorrhaged $98 million, while others saw more minimal investor capital trickle out.&nbsp;



Wednesday’s outflows come as bitcoin ETF demand has stalled over the last month or so. Analysts have attributed this in part to investors in the funds taking profits after seeing big price appreciation on their shares after entering the market earlier this year.



Read more: <a href="https://blockworks.co/news/bitcoin-etf-outflows-persist-third-straight-week">Bitcoin ETF snapshot: A few firsts during another week of outflows</a>



Still, the scope of the outflows across nearly the whole segment is something the fund category has not seen before.&nbsp;



BlackRock and Fidelity had been consistent asset gatherers in the space since the funds launched on Jan. 11, with their net inflows amounting to about $15.4 billion and $7.9 billion, respectively.&nbsp;



GBTC now has outflows of nearly $17.5 billion since converting to an ETF in January. The fund category overall has notched net inflows of $11.2 billion in nearly four months. &nbsp;



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BlackRock, Fidelity bitcoin ETFs bleed Wednesday, joining GBTC

Bessie Liu

Vitalik Buterin, the co-founder of Ethereum, has released a new blog post discussing a new cryptographic proving system that can make zero-knowledge proofs more efficient.



The proving system, called Binius, is designed to operate directly over binary code on computers. Binary code is a language understood by computers, and it is used to store information and represents data using the symbols zero and one, otherwise known as bits. 



Although there are some similarities between STARKs and Binius, Buterin explains that the mathematical tricks that enable these different proving systems are very different.&nbsp;



Generally speaking, STARKs is a technology that has enabled complicated statements to be easily cryptographically verified. It is designed in a way that can easily compute numbers when they are of small value, when there are large values, STARKs generate extra values, which can lead to inefficiency.&nbsp;



Unlike STARKs that “arithmetize” a statement into a polynomial equation — a mathematical expression which model a relationship between variables in a block — Binius treats data as a hypercube and grid, and uses multilinear polynomials to perform cryptographic proofs.



<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">BInius: highly efficient proofs over binary fields<a href="https://t.co/lHAGXbgI9r">https://t.co/lHAGXbgI9r</a> <a href="https://t.co/3Xx4zIAm1b">pic.twitter.com/3Xx4zIAm1b</a>&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1784912087098999263?ref_src=twsrc%5Etfw">April 29, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Binius converts individual values into bits and places them in a hypercube and a square. This hypercube is then converted into a grid and computations are performed in order to receive an output matrix.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1021" height="637" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png" alt="" class="wp-image-85182" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=1021 1021w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=412 412w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=418 418w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=351 351w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=80 80w" sizes="(max-width: 1021px) 100vw, 1021px" /></figure>



A verifier will then perform its own computational calculations to ensure that the information itself matches and ensure that the compute columns returns a value claimed by the prover.



“I highly encourage people to understand and explore! Lots of innovations have been happening in ZK-proving recently. And I expect lots more to come soon,” Buterin wrote in an <a href="https://twitter.com/VitalikButerin/status/1784912152655974533">X post</a>.



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Vitalik Buterin talks ways to make zk proofs more efficient

In a highly anticipated move, the Federal Reserve chose to hold interest rates at their existing level on Wednesday following the Federal Open Market Committee two-day policy meeting.&nbsp;



The rate hike pause marks the central bank’s sixth since consecutively raising interest rates from March 2022 to July 2023. Persistent inflation and a healthy labor market contributed to central bankers’ decision to hold rates, they said.&nbsp;



“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” Wednesday’s <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20240501a1.pdf">statement</a> read. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.” 



Central bankers will need to see more evidence that inflation is easing before cutting rates, Fed Chairman Jerome Powell said Wednesday during a press conference.



“The path forward is uncertain,” <a href="https://blockworks.co/tag/jerome-powell">Powell</a> said.&nbsp;



“Although some measures of short-term inflation expectations have increased in recent months, longer-term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households, businesses and forecasters, as well as measures from financial markets,” he added.



Stocks and cryptocurrencies were little changed on the news. Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) traded sideways in the moments after the <a href="https://blockworks.co/tag/federal-reserve">Fed</a> released its statement at 2 pm ET, sitting around $57,786 at time of publication, per Coinbase. The largest cryptocurrency is down about 4% over the past 24 hours.&nbsp;



Ether (<a href="https://blockworks.co/price/eth">ETH</a>) similarly traded flat, hovering around $2,900 at time of publication – about 1% lower over 24 hours.&nbsp;



The Nasdaq Composite and S&amp;P 500 indexes inched marginally higher on the news, managing to move just barely into the green after an otherwise disappointing trading session.&nbsp;



Bitcoin has hovered below $60,000 since early Wednesday, a downward trend analysts say is poised to continue.&nbsp;



“A break to the downside through $59,200 in BTC has led to an accelerated selloff and, barring an unforeseen catalyst, there seems little in the way of this market testing the [$53,000] area before a meaningful turnaround,” Mike Tauckus, head of trading and structuring at BitOoda, said.&nbsp;



Markets on Wednesday expected about a 9% chance a rate cut will come in June, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.



Updated May 1, 2024 at 2:37 pm ET: Added statement from Fed Chair Jerome Powell. 



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Fed holds interest rates, markets hardly react 

Molly Jane Zuckerman

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="256" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=1024&amp;h=1024" alt="" class="wp-image-60166" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



This isn’t going to be another op-ed about how silly it is for celebrities to do cryptocurrency ads. We all know that they don’t age well.



Instead, what I’d like to opine on is why a cryptocurrency ad with Marshall Mathers, aka Eminem, falls flat in particular. If you’re going to put a celebrity in your crypto ad, you need to go all out with creativity, humor or just overall entertainment value. Eminem’s new crypto ad does none of that —&nbsp;it has almost nothing to do with the rapper, or crypto at all.



The rapper’s voiceover on an <a href="http://crypto.com">advertisement for Crypto.com</a> aired during the Lakers NBA play-off game last week. The ad itself, just a minute long, shows a nameless, faceless boxer getting ready to face-off in a match at the Crypto.com Arena. You can hear Eminem’s voice saying empty platitudes of encouragement in the background, telling the audience to enjoy the moment, before the screen shows the somewhat infamous slogan, “Fortune favors the brave.”



I say infamous, because Matt Damon’s 2022 Crypto.com SuperBowl commercial —&nbsp;where the Oscar-nominated actor was actually pictured on screen saying that catchphrase out loud — just looked so silly in the wake of the FTX crash. Damon later gave an <a href="https://gizmodo.com/matt-damon-crypto-com-crypto-bitcoin-1850282413">awkward, pause-filled red carpet interview</a>, noting that he only did the commercial to support his water non-profit in a down year.



Some are <a href="https://www.stereogum.com/2261473/eminem-is-crypto-coms-new-spokesman-teases-new-album-the-death-of-slim-shady/news/">already speculating</a> that Eminem’s main motivation to lend his voice to Crypto.com’s latest ad is part of a marketing push for his upcoming album. But his motivations for being crypto’s latest celebrity spokesperson aren’t important. What’s important is how soulless that advertisement is. Watching the commercial for the first time as a longtime Eminem stan, I lamented all of the missed opportunities staring me in the face.



Read more from our opinion section: <a href="https://blockworks.co/news/cryptos-best-use-case-buying-goats-twitter">Crypto’s best use case? Buying goats on Twitter</a>



For one, this is far from Eminem’s first foray into crypto —&nbsp;he had his own, pretty cringey Bored Ape phase at the peak of the NFT boom, culminating in a <a href="https://www.youtube.com/watch?v=RjrA-slMoZ4">half-animated BAYT music video</a> with none other than Snoop Dogg. That was terrible, and also funny: and Crypto.com’s pretty basic ad could have benefitted from any sort of creative reference to Eminem’s actual crypto interests.&nbsp;



Granted, Crypto.com is not an NFT platform. That doesn’t mean that you aren’t allowed to have a sense of humor — especially when creating a likely very expensive advertisement with a very famous, previously NFT-obsessed rapper.



Which brings me to my second point —&nbsp;there’s no rap. Paying Eminem to remain faceless and read a short, only slightly rhyming text over a black-and-white boxing video feels like paying <a href="https://www.thecut.com/2019/07/i-think-about-bob-dylans-victorias-secret-ad-a-lot.html">Bob Dylan to promote Victoria’s Secret</a>.



Eminem’s crypto ad isn’t the first since the unfortunate crypto Super Bowl. Both Coinbase and Greyscale also <a href="https://blockworks.co/news/nba-nhl-bitcoin-halving-ads">put out slightly more entertaining ads</a> in the lead up to the Bitcoin halving, albeit celebrity-less ones.&nbsp;



As I said at the top, my point here isn’t to convince the world that celebrities in crypto ads are setting themselves up for <a href="https://blockworks.co/news/celebrities-erase-ftx-ties">future embarrassment</a>, <a href="https://blockworks.co/news/what-do-tom-brady-steph-curry-and-naomi-osaka-have-in-common-an-ftx-lawsuit">loss of money</a> and even potentially <a href="https://www.sec.gov/news/press-release/2022-183">SEC fines</a>. We already know that. And I also know that no one will stop crypto companies, especially during a bull market, from paying celebrities tons of money to promote their brands anyway. Sam Bankman-Fried set that precedent, and even with him in jail, it really shows no signs of abating.



Instead, I’d like to propose that if we are going to keep having celeb-studded crypto ads —&nbsp;make them really sparkle. Pay Eminem to write an entire song about trading on Crypto.com and release it alongside his new album, with a specially crypto-themed music video (he already has the experience). Get JoJo Siwa to <a href="https://www.tiktok.com/@itsjojosiwa/video/7352686405887331630">wrap another car</a> with whatever memecoin logo, or Brooklyn Beckham to tattoo Dogecoin eyes next to his <a href="https://pagesix.com/article/brooklyn-beckham-tattoos-for-nicola-peltz/">tattoo of his wife’s eyes</a>.



Celebrity crypto ads, in my opinion, should only exist if they do something really creative or really silly: In other words, make them match the whimsy and creativity of this burgeoning financial tech industry. I’m not sure that any SEC lawyers would agree with me. Good thing I don’t work for the SEC.



Otherwise, make celebrity crypto endorsements illegal for all of the obvious reasons (high potential for securities fraud and misleading investors to start). In a nutshell — go silly or go home.



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I don’t care much about tech, I don’t care a whole lot about finance, either. I care about writing stories and watching weird things unfold. And that’s why I’ve ended up in crypto. But because I’m missing that passion for what crypto and blockchain are all about — finance, tech, privacy, yadda yadda — I’m going to write instead about what I am actually interested in. Everything about crypto that has very little to do with crypto. That’s what this column will be about. All the tangential stories that come out of the blockchain and crypto space, what I think about them, and how I navigate it all as a skeptical former Russian literature major. It’s precisely my perch as an outsider that lets me do what I do: Opine on all sides of any crypto issue, no strings attached, no skin in the game. If you want to talk crypto with me, let’s go off topic.



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Eminem’s new crypto ad fails to capture the moment, lets it slip

Stablecoin issuer Tether has notched a record quarterly net profit at a time during which the company is broadening its scope.&nbsp;



Tether tallied an all-time high net profit of $4.52 billion in the first quarter, according to a Wednesday attestation report by auditing firm BDO.&nbsp;



Tether’s first quarter net operating profits of $1 billion were driven by its US Treasury holdings, the company added. Other profits stemmed from mark-to-market gains in its bitcoin and gold positions.



Bitcoin’s price hit a new peak of about $73,000 in mid-March before trending downward in April.



The $4.52 billion total obliterates the former record of $2.85 billion in net profit gathered during the last three months of 2023.



Read more: <a href="https://blockworks.co/news/tether-monthly-profit-q4">Tether made nearly $1B in monthly profit during Q4</a>



Tether’s token, <a href="https://blockworks.co/tag/usdt">USDT</a>, is intended to maintain a value of $1 and can be redeemed for US dollars at any time.&nbsp;&nbsp;



As of March 31, <a href="https://blockworks.co/tag/tether">Tether</a>’s reserves were nearly $6.3 billion higher than the liabilities of the companies issuing USDT.&nbsp;&nbsp;



USDT’s market capitalization was roughly $110 billion at 10 am ET, behind only bitcoin and ether among crypto assets. That figure is more than triple the $33 billion market cap of competing stablecoin USDC.&nbsp;



The latest disclosure comes as Tether seeks to build out its business beyond just <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>.



Read more: <a href="https://blockworks.co/news/tether-hiring-ai-division-jobs">Tether looks to ‘build the next generation of open AI models’ with new data division</a>



It recently launched a data initiative focused on developing and investing in new technology, for example. Other new divisions include a unit focused on blockchain-based financial infrastructure and one involved in the <a href="https://blockworks.co/tag/mining">mining</a> and energy sectors.&nbsp;



“With this evolution beyond our traditional stablecoin offerings, we are ready to build and support the invention and implementation of cutting-edge technology that removes the limitations of what’s possible in this world,” CEO Paolo Ardoino said in a statement last month.



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Tether just obliterated its former net profit record for a single quarter 

The world’s largest asset manager appears poised to move deeper into the tokenization space after injecting capital into a tokenization firm it has worked with before.



BlackRock led a $47 million funding round for Securitize, a company focused on bringing physical and traditional financial assets onto the blockchain, the firms said Wednesday.&nbsp;



Fintech companies and <a href="https://blockworks.co/news/citibank-explores-tokenization-wisdomtree">traditional finance giants have increasingly been testing out tokenization</a>, noting that blockchain rails can help reduce costs and improve transparency. BlackRock Larry Fink has called tokenized securities “the next generation for markets.”&nbsp;



To that end, <a href="https://blockworks.co/tag/blackrock">BlackRock</a> and Securitize are not strangers.&nbsp;



BlackRock launched its first tokenized fund — the BlackRock USD Institutional Digital Liquidity Fund — in March, offering a different way to earn US dollar yields. Qualified investors can subscribe to that fund through Securitize Markets.



Read more: <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">Circle debuts way to trade BlackRock tokenized fund shares for USDC</a>



&#8220;We believe that <a href="https://blockworks.co/tag/tokenization">tokenization</a> has the potential to drive a significant transformation in capital markets infrastructure,” Joseph Chalom, BlackRock&#8217;s global head of strategic ecosystem partnerships, said in a statement. “Our investment in Securitize is another step in the evolution of our digital assets strategy.&#8221;&nbsp;&nbsp;



Chalom is now a member of Securitize’s board of directors.



Other investors in the $47 million funding round include Hamilton Lane, ParaFi Capital and Tradeweb Markets.&nbsp;



Private markets investment firm Hamilton Lane in January 2023 made <a href="https://securitize.io/learn/press/hamilton-lane-fund-securitize-polygon">available</a> one of its equity funds through a Securitize feeder fund tokenized on Polygon.&nbsp;



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BlackRock doubles down on tokenization via investment in Securitize

Michael McSweeney

<h2 class="wp-block-heading">CZ is no SBF&nbsp;</h2>



CZ was sentenced yesterday to four months in prison for violating the Bank Secrecy Act.&nbsp;



It’s not what the government wanted and it’s not what CZ wanted. But all things considered, we say he got a pretty damn good deal. I wonder what SBF is thinking.&nbsp;



Zhao pleaded guilty last November for failing to maintain an effective anti-money laundering program at Binance. He had to resign as CEO and hand over $50 million in fines, but his ownership of the exchange is intact and his net worth is still in the tens of billions (Forbes estimates $33 billion while Bloomberg says it’s closer to $36 billion, either way, $50 million is pocket change).&nbsp;



The prosecution asked the judge for three years. CZ’s team made a valiant attempt for house arrest or probation.&nbsp;



Read more: <a href="https://blockworks.co/news/changpeng-zhao-sentencing-verdict">Former Binance CEO Changpeng Zhao sentenced to 4 months in prison</a>



In the end, judge Richard Jones settled in the middle, citing the moving letters CZ’s supporters wrote to the court and the indifference the Binance founder displayed while breaking the law. After all, CZ’s apparent catch phrase was “ask for forgiveness not permission.”&nbsp;



Even if it wasn’t exactly what they wanted, <a href="https://blockworks.co/tag/changpeng-zhao">CZ</a>’s team seems pretty content. The New York Times <a href="https://www.nytimes.com/2024/04/30/technology/binance-founder-changpeng-zhao-sentenced.html">reported</a> that CZ’s son, a college student in the US, attended the hearing and “silently pumped his fist” when the judge said he would be ignoring the government’s request.&nbsp;



CZ’s co-founder seemed to be taking a victory lap on X hours after the sentencing was announced.&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">Got it. <a href="https://t.co/qctXcY0b0r">https://t.co/qctXcY0b0r</a>&mdash; Yi He (@heyibinance) <a href="https://twitter.com/heyibinance/status/1785411272156061958?ref_src=twsrc%5Etfw">April 30, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The sentencing comes roughly a month after <a href="https://blockworks.co/tag/ftx">FTX</a>’s founder SBF was sentenced to 25 years in prison. It’s a large discrepancy, but it should come as no surprise.&nbsp;



Read more: <a href="https://blockworks.co/news/sbf-shows-no-remorse-sentencing-reaction">25 years for Sam Bankman-Fried — A fair sentence, or no?</a>



SBF<a href="https://blockworks.co/news/sbf-blew-it-final-defense-trial"> famously avoided accepting responsibility</a> for his actions, a point the judge held against him. It also didn’t help that SBF lied on the stand. CZ, on the other hand, pleaded guilty. He cooperated and took responsibility.&nbsp;



And then, of course, there is the difference in the type of crimes. The SEC does claim in its civil suit that Binance <a href="https://blockworks.co/news/binance-pushes-back-sec-lawsuit">was commingling funds</a>, but no one ever made any allegations of theft. Plus, the very nature of the crimes CZ admitted to make Binance an asset to the US government — the exchange itself is essentially a tool for tracking down money launderers and illicit actors.&nbsp;



They may both be exchange founders, and they both may be in prison for an overlapping 120 days, but the similarities stop there.&nbsp;&nbsp;



— Casey Wagner



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



<ul>
<li>Daily net flows into <a href="https://blockworks.co/tag/binance">Binance</a> have mostly kept an even <a href="https://dune.com/21co/binance-proof-of-reserve">keel</a> over the past month leading up to Zhao’s sentencing, ranging from -$613 million to $1.9 billion.</li>



<li>Ethereum is working through the <a href="https://www.validatorqueue.com/">validator</a> queue, with 11,780 currently waiting, down from 22,300 earlier last month.</li>



<li>Arbitrum and Base are neck-and-neck for daily active addresses. The former has <a href="https://app.artemis.xyz/chains">taken</a> the lead with 373,500 to 369,600.</li>



<li>Futures traders have been <a href="https://www.coinglass.com/LiquidationData">liquidated</a> for $420 million on centralized exchanges over the past day — more than 80% of it longs.</li>



<li>Tether’s <a href="https://www.coingecko.com/en/coins/tether">supply</a> is steady at about $110.5 million, currently on its longest sideways streak since January.</li>
</ul>



<h2 class="wp-block-heading">BTC memecoins take a breather</h2>



Runes are tipped to eventually replace the more experimental BRC-20 tokens. Let’s see how that process is going.



Ordinals creator Casey Rodarmor launched the Runes protocol at the same block height as the Bitcoin halving, now nearly two weeks ago.&nbsp;



Read more: <a href="https://blockworks.co/news/runes-bitcoin-token-standard-ordinals">A look into Runes, a new Bitcoin token standard for issuing fungible tokens</a>



Technically, Runes (and BRC-20 tokens) can be issued for purposes other than memecoins, but practically every one of the hundreds of thousands onchain are memecoins with silly names, like DOG•GO•TO•THE•MOON and ANARCHO•CATBUS.&nbsp;



Putting a dollar value on BRC-20 and Runes markets isn’t exactly feasible. Their markets are mostly illiquid and spread across multiple platforms with large price variations.



Still, the top 15 or so most liquid and widely held BRC-20 tokens are currently altogether worth around $2 billion, going by the most simple calculations, while the entire Runes market is currently valued at under $800 million, according to a GeniiData <a href="https://geniidata.com/user/poshi/runes-market-overview">dashboard</a>.



The most prominent BRC-20s have, however, been shedding market value ever since the halving, although it could be said they were trending downwards all year.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/xdCcrxLRVcROCqZNhLoWvjI129lW_52G1JbPnQA0KFdYP7lnrGguvOVBJNukTmkUCabHHPb_u935BansBfcR-qEPub8x9HWMg5ldIIp1G5yh2GBtjepl0XRnJFgzChCWJdeAsfK271OmKQrmHZucfUE" alt=""/></figure>



We’re still a ways away from Runes flipping BRC-20s for total market cap, but they’re making progress



Overall, Runes represented about 20% of all Bitcoin <a href="https://dune.com/cryptokoryo/runes">transactions</a> over the past two days, with BTC transfers comprising the rest. Before the halving, BRC-20s often made up one third of Bitcoin activity.&nbsp;



Meanwhile, BRC-20 <a href="https://geniidata.com/user/poshi/ordinals-brc20">activity</a> dried up almost immediately after the halving and has now dropped by upwards of 90%. It was common to see more than 100,000 BRC-20 mints and over 10,000 transfers per day in the weeks leading up to the halving — yesterday, there were only 825 mints and 6,300 transfers.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-runes-launch">Bitcoin Runes look to spice up the halving party</a>



Runes traders are also taking a breather. Bitcoin processed more than 400,000 Runes <a href="https://geniidata.com/user/poshi/runes-market-overview">transactions</a> per day in the three days following the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>. Tuesday saw only about a quarter of that number.&nbsp;



Daily volumes for Runes are now looking to rebound and find equilibrium around $15 million per day, after notching almost $30 million daily in the beginning.



It could be that some of the biggest BRC-20s keep some staying power due to the Lindy effect, even if Runes continue to grow.&nbsp;



But considering how many new Runes debut and are minted each day, it seems like only a matter of time until capital flight really hits.



— David Canellis



<h2 class="wp-block-heading">Take a deep breath&nbsp;</h2>



Well, this week is certainly a lesson in patience.&nbsp;



With bitcoin under $60,000 and US <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETF</a> inflows down to a trickle, it’s tempting to expect good news.&nbsp;



Unfortunately, you’re not going to find such news with the Hong Kong spot bitcoin and ether ETFs. At least, not with the expectations that many have thanks to the incredibly successful launch of their US cousins.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-etf-outflows-persist-third-straight-week">Bitcoin ETF snapshot: A few firsts during another week of outflows</a>



Bloomberg’s Eric Balchunas and James Seyffart have warned that the Hong Kong market <a href="https://blockworks.co/news/hong-kong-crypto-etf-predicted-inflows">won’t replicate the US demand</a>, and they were right. Trading day volumes, according to K33 Research, came in around $12.4 million. That’s a bit shy from the launch day volume of $4.5 billion seen by the US products.



“Initial indications showed expected inflows to total close to $300 million, while real combined volumes amounted to little more than $11 million,” &nbsp;BitOoda wrote. The firm noted that the “disappointing” numbers led to the “dramatic selloff” that we saw Tuesday.



But the thing is: the two markets are not at all comparable.&nbsp;



“By market size, it’s more reasonable to compare the Hong Kong ETF market to the Brazilian and Australian ETF markets, which saw BTC ETF launch day volumes of $3.3 million and $1.1 million, respectively. The HK ETF launch is thus decent when assessed through more sober comparisons,” K33 said in its note.



Read more: <a href="https://blockworks.co/news/crypto-etf-regulation-in-asia">After crypto ETF movement in Hong Kong, other Asia regulators could act&nbsp;</a>



The funds, in the next few months, could see 23,000 to 28,000 of bitcoin inflows as the segment matures in the <a href="https://blockworks.co/tag/hong-kong">Hong Kong</a> market. Again, this will surely disappoint those looking for flashy numbers —- that figure represents about two days worth of inflows from <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s bitcoin ETF IBIT back in February.&nbsp;



All of this is to say that there should be a “check yourself before you wreck yourself” realignment of expectations when it comes to the Hong Kong ETFs.



It’s —&nbsp;quite literally — the earliest of days for the products, and there is still time for them to show impressive numbers. Traders just need to put aside their comparisons for a while.&nbsp;



— Katherine Ross



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



<ul>
<li>Rep. Patrick McHenry <a href="https://twitter.com/PatrickMcHenry/status/1785317163110130028">accused</a> SEC Chair Gary Gensler of misrepresenting the regulator’s position on ETH.&nbsp;</li>



<li>BlackRock’s BUIDL hit $375 million in deposits, CoinDesk <a href="https://www.coindesk.com/markets/2024/04/30/blackrocks-buidl-becomes-largest-tokenized-treasury-fund-hitting-375m-toppling-franklin-templetons/">reports</a>.</li>



<li>Coinbase <a href="https://www.coinbase.com/blog/coinbase-integrates-bitcoins-lightning-network-in-partnership-with">integrated</a> Bitcoin’s Lightning Network.</li>



<li>Standard Chartered warned that bitcoin could fall to $50,000, The Block <a href="https://www.theblock.co/post/291908/standard-chartered-bitcoin-price-fall-50000">reports</a>.</li>



<li>Tether notched a net profit of $4.5 billion, <a href="https://tether.io/news/tether-releases-q1-2024-attestation-reports-record-breaking-4-52-billion-profit-highest-treasury-bill-ownership-percentage-ever-total-group-equity-of-11-37-billion/">according</a> to its latest attestation report.&nbsp;</li>
</ul>



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



There are no crypto coincidences.



That fact surely includes yesterday’s indictment of longtime Bitcoin investor Roger Ver just as ex-Binance boss CZ was handed a meme-length prison sentence.



Ver, <a href="https://blockworks.co/news/roger-ver-tax-fraud-charges">accused of tax fraud</a>, is almost a picture-perfect “send a message” target for the US government’s crypto investigators.&nbsp;



Pile on last week’s <a href="https://blockworks.co/news/doj-arrests-founders-samourai">arrests of the Samourai Wallet</a> co-founders, and you’ve got a pretty convincing picture of a regulatory apparatus that wants to put the <a href="https://blockworks.co/news/samourai-wallet-matters-memecoins-privacy">crypto industry on notice</a>.&nbsp;



Maybe I’m being conspiratorial. Then again, it feels like crypto kind of snuck up on the US government. One day, it&#8217;s weird internet money, the next it’s a major driver of Wall Street activity and there’s billions of dollars worth of BTC on Uncle Sam’s balance sheet.



It’s easy to write of Ver’s indictment. But if you’ll pardon the tin-foil hat I’m sporting these days, I think things are just getting started.&nbsp;



4 indeed.&nbsp;



— Michael McSweeney



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Empire Newsletter: Why CZ and SBF’s sentencings were so different

Anchorage Digital is now custodying shares of a tokenized Treasury fund via a partnership with Arca Labs meant to advance institutional participation in the segment.&nbsp;



The link-up comes as the tokenization of real-world assets is set to continue as a “defining trend” for institutional crypto in 2024, Anchorage CEO Nathan McCauley told Blockworks.



The innovation unit of crypto investment firm Arca first issued shares of its US Treasury Fund as digital asset securities, known as ArCoin, in 2021. The company has argued that ArCoin can replace US Treasurys in enterprise workflows while reducing costs and improving transparency.



The company has now turned to <a href="https://blockworks.co/tag/anchorage-digital">Anchorage</a> — a crypto-focused bank chartered by the US Office of the Comptroller of the Currency (OCC) — to custody the shares.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" width="5763" height="3842" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=1024&amp;h=1024" alt="" class="wp-image-85120" style="width:467px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=5763 5763w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=80 80w" sizes="(max-width: 5763px) 100vw, 5763px" /><figcaption class="wp-element-caption">Anchorage Digital Co-Founders Nathan McCauley and Diogo Mónica</figcaption></figure></div>


The alliance allows Anchorage clients to keep ArCoin in custody at the bank. Institutions can now access the tokenized shares from the Anchorage platform as it would for the hundreds of assets the company supports.&nbsp;



Read more: <a href="https://blockworks.co/news/federally-chartered-bank-intros-settlement-network">Crypto-focused federal chartered bank intros settlement network</a>



McCauley has said Anchorage meets the Securities and Exchange Commission’s definition of a “qualified custodian.” The term was included in the regulator’s February 2023 <a href="https://www.sec.gov/news/press-release/2023-30">proposal</a> that would “entrust safekeeping of client assets” to such entities.



“Now that institutions have validated the benefits of blockchain technology, companies are seeking the most secure and seamless digital assets solutions that meet US regulatory standards,” Arca Labs president Jerald David said in a statement.



The Anchorage platform uses hardware security modules, which keeps assets offline in segregated, on-chain vaults while keeping them accessible. The model serves as a “major unlock” for institutional participation in <a href="https://blockworks.co/tag/tokenization">tokenization</a>, McCauley argued.



Tokenizing assets — from real estate to funds — has made headlines in recent years as some of the biggest fintech companies and traditional finance players delve deeper into blockchain-related experiments. Read more: <a href="https://blockworks.co/news/citibank-explores-tokenization-wisdomtree">Citi the latest TradFi player to test out asset tokenization</a>



The world’s largest asset manager, <a href="https://blockworks.co/tag/blackrock">BlackRock</a>, launched the USD Institutional Digital Liquidity Fund in March, marking the firm’s first tokenized offering.&nbsp;



Fellow fund behemoth Franklin Templeton, which debuted its OnChain US Government Money Fund in 2021, started allowing institutional investors to transfer shares of the fund — represented by BENJI tokens — to other shareholders last week.



Roger Bayston, Franklin Templeton’s head of digital assets, previously told Blockworks that BENJI essentially acts as a stablecoin while also generating income.&nbsp;



“Looking ahead, we will continue to expand our custody support for tokenization projects to advance institutional participation in the ecosystem for the long term,” McCauley said.



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Anchorage, Arca Labs link up in bid to advance tokenization adoption

While inflows into spot bitcoin ETFs and anticipation around the Bitcoin halving helped fuel BTC’s price rally in the first quarter, the asset may now need a new upward driver.



Investor demand for the US bitcoin funds have stalled in recent weeks and “halving” headlines have slowed given the event came and went on April 19.



Bitcoin’s price (<a href="https://blockworks.co/price/btc">BTC</a>) was about $60,300 on Tuesday at 3 pm ET — down 13% from a month ago.&nbsp;



The asset had seen a record seven consecutive months of price growth. That is set to end in April, a fate <a href="https://blockworks.co/news/btc-record-monthly-growth-streak-jeopardized">some segment observers had expected</a>.&nbsp;



It’s tricky to determine whether the long-term effects of the latest halving — an event during which per-block rewards for mining bitcoin <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">dropped from 6.25 to 3.125 BTC</a> — have been priced in, said Hashdex research head Pedro Lapenta.&nbsp;



Bitcoin prices have historically peaked between 12 to 18 months after each halving, indicating BTC’s price might not hit new heights until next year. But bitcoin had never reached a record price so soon before a halving as it did this year — putting into question past trends.



Read more: <a href="https://blockworks.co/news/history-of-bitcoin-halvings">The history of Bitcoin halvings — and why this time might look different</a>



Either way, the recent BTC slump in April shouldn&#8217;t be alarming, Lapenta added.



“With bitcoin seeing seven straight months of gains, it&#8217;s typical for the period following a <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> to involve modest increases or corrections, as we&#8217;re observing now,” he told Blockworks.



Fineqia International analyst Matteo Greco attributes BTC’s price decline to more investors taking profits after entering the market during the downturns of 2022 and 2023. Many ETF investors who saw significant share price appreciation since January did the same, he added.



To that end, the bitcoin ETF category has seen <a href="https://blockworks.co/news/bitcoin-etf-outflows-persist-third-straight-week">three straight weeks of net outflows</a> — an unprecedented streak since such funds hit the US market in January.



Read more: <a href="https://blockworks.co/news/franklin-templeton-institutional-bitcoin-etf-allocation">New mix of bitcoin buyers bode well for ecosystem: Franklin Templeton exec</a>



Those outflows are driven mainly by money exiting the Grayscale Bitcoin Trust ETF (GBTC), which is not new. That said, the category flow-leader — BlackRock’s iShares Bitcoin Trust (IBIT) — has seen zero flows on four straight trading days <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">following a 71-day inflow streak</a>, according to Farside Investors <a href="https://farside.co.uk/?p=997">data</a>.&nbsp;&nbsp;



“Short-term uncertainty remains regarding whether demand for bitcoin ETFs has peaked or if investors are simply cautious due to BTC&#8217;s seven-month streak without a correction since September of last year,” Lapenta said.



K33 Research analysts Anders Helseth and Vetie Lunde wrote in a Tuesday note that “increasingly cautious traders” have indeed contributed to BTC’s price fall in recent weeks — “with the current market neither signaling bullish nor bearish aggression,” they added.&nbsp;



The macroeconomic outlook is set to be a BTC price-mover this week, Helseth and Lunde noted, as traders will listen for the Federal Reserve’s guidance on rate cuts and easing.&nbsp;&nbsp;



“Rate cut expectations have moderated substantially in the past month, with the market now pricing in one rate cut for the remainder of 2024 compared to the market&#8217;s expected six cuts in December 2023,” they wrote in the research note.



Read more: <a href="https://blockworks.co/news/crypto-slides-ahead-of-fed-rate-decision">Cryptocurrencies, stocks slide ahead of Fed rate decision</a>&nbsp;



A less uncertain macroeconomic environment for risk assets would likely contribute to the next positive price movement for bitcoin, Lapenta said.&nbsp;



Renewed demand for bitcoin’s network utility, like <a href="https://blockworks.co/news/runes-bitcoin-token-standard-ordinals">via the Runes protocol</a>, points to a bullish outlook for BTC, he added. So too does large banks, pension funds and other traditional finance players wading deeper into the space, via ETFs or otherwise.&nbsp;



Lapenta noted: “Taking everything into account, our outlook for 2024 remains positive, with a strong possibility of reaching another all-time high by year-end.&#8221;



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What could drive BTC price with halving complete, ETF demand stalled

The Runes protocol has gained a lot of interest in the Bitcoin community over the past few months.&nbsp;



Runes is a fungible token standard designed by Casey Rodarmor, the creator of Ordinals. The protocol is designed to be an alternative to BRC-20, an experiment token standard for fungible tokens on Bitcoin.



The BRC-20 standard is built on ordinals, which means it stores information in a Bitcoin transaction&#8217;s witness data, in a similar way, runes data is stored in a data storage function called OP_RETURN, Bob Bodily, the founder of Bioniq, told Blockworks.



Read more: <a href="https://blockworks.co/news/motoko-sentinels-ordinal-volume-bitcoin-halving">Motoko Sentinels gain traction despite ordinal volume decrease post-halving&nbsp;</a>



“Runes is a very elegant byte-efficient protocol; everything is encoded down into integers that you can store in the operator,” Bodily said.&nbsp;



Unlike BRC-20 tokens, which often leave behind “junk” after transactions which can consequently clog the network, runes use Unspent Transaction Outputs (UTXOs), and messages sent using the rune protocol (called runestones) will be <a href="https://docs.ordinals.com/runes.html">stored </a>on Bitcoin transaction outputs.&nbsp;



With Runes, users can deploy (etch), mint, and launch tokens in the same way that they can with ERC-20 tokens.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-runes-launch">Bitcoin Runes look to spice up the halving party</a>



Rennick Palley, the founding Partner at Stratos, a VC firm focused on early-stage crypto projects, believes that Runes may have a bright future in enabling bitcoin miners to remain profitable.&nbsp;



&#8220;By adding a whole new layer of fungible tokens on <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a>, Runes is making the network busier and more versatile. This should mean more transactions and, by extension, more fees for miners. It’s especially promising because it meshes well with Bitcoin’s existing UTXO model, which is a core part of how miners operate,” Palley said.



However, he notes that with Runes&#8217; growing popularity, transaction fees may climb, making everyday Bitcoin transactions less appealing due to their cost.&nbsp;



“It should encourage more BTC to transact off the layer,” Palley remarked. “Overall, I see the rise of layer-2 solutions as a major positive. These technologies will be the key to enabling hyperbitcoinization. Bitcoin would always need layer-2 solutions to scale — <a href="https://blockworks.co/tag/ordinals">ordinals</a>, BRC20s and Runes have just accelerated the timeframe, which is great.”



Alexei Zamyatin, co-founder of BOB, a hybrid layer-2 powered by Bitcoin and Ethereum, shares this sentiment. He notes that although bitcoin miners are likely to remain profitable thanks to the Runes protocol, high fees remain a concern.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-cycle-miners-energy-strategy">This Bitcoin halving cycle, miners need a new energy strategy</a>



“Ultimately, trading and other DeFi related activity will have to move to Bitcoin layer-2s/sidechains if [they] are to compete with the UX people are used to from Ethereum and Solana. Otherwise, the 10 min[ute] block times and high fees will result in a decrease of activity very quickly once first speculation is done,” Zamyatin said.



Zamyatin also noted that the growing interest in Bitcoin layer-2s can not be credited solely to Runes but remains a net positive for the Bitcoin ecosystem. Additionally, he notes that many projects are currently riding the “hype wave,” though these projects will likely disappear from the ecosystem in the long term.&nbsp;



“There are a number of strong technical and product teams that may be able to create a strong competition for ETH layer-2s. A lot of this still depends on technical innovation in the form of BitVM or a fork to Bitcoin, which I personally do not believe will happen soon, unfortunately,” he said.



Despite this, Zamyatin remains optimistic, noting that <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a> and Bitcoin sidechains will likely bring more value to the Bitcoin blockchain.&nbsp;



“The Bitcoin learning curve is steep and we need to give people a simple way to start playing around with Bitcoin assets — instead of, as previously, tell[ing] them that anything else but Bitcoin is a scam,” he said. “This is certainly something that has changed since Ordinals: Bitcoin has become more welcoming of new developers and builders, with the toxic maximalist culture subsiding into irrelevance.&#8221;



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A look into Runes, a new Bitcoin token standard for issuing fungible tokens

Former Binance CEO Changpeng Zhao was sentenced to 4 months in US prison today.&nbsp;



The sentence is lower than some bettors expected, with those on Polymarket expecting the judge to hand down a sentence of six months.



Zhao will now head to a US prison to serve out his sentence, which is lower in comparison to the 36 months sought by the Department of Justice. Zhao’s team only sought five months probation.&nbsp;



Zhao also must pay a $50 million fine, as stipulated in his guilty plea signed in November.&nbsp;



Prosecutors aimed high when requesting Zhao’s sentence — which is double the 18 months at the high end of the guidelines — because they wanted the sentence to match the “gravity” of Zhao’s crimes, the government wrote in their sentencing memo last week.&nbsp;



&#8220;If Mr. Zhao does not face incarceration after deliberately and willfully planning to violate U.S. law to build the largest crypto exchange in the world and get rich in the process … then no one will face incarceration and the BSA will for intents and purposes be a dead letter,” prosecutors argued at the hearing, <a href="https://twitter.com/nikhileshde/status/1785355429582979304">according</a> to CoinDesk’s Nikhilesh De.&nbsp;



We broke down what you need to know about the sentencing in our X article:



<figure class="wp-block-image size-large"><a href="https://twitter.com/Blockworks_/status/1785384325329920330"><img loading="lazy" decoding="async" width="1192" height="872" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=1024&amp;h=1024" alt="" class="wp-image-85087" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=1192 1192w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=351 351w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=299 299w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=80 80w" sizes="(max-width: 1192px) 100vw, 1192px" /></a></figure>



<h2 class="wp-block-heading">Now what?</h2>



Zhao’s sentencing comes less than a month after former FTX CEO Sam Bankman-Fried received his own legal judgment.&nbsp;



Unlike CZ, SBF didn’t reach a deal with the government and was instead found guilty of fraud by a jury in New York at the end of last year. He’s now serving a sentence of 25 years; far more jail time than the former Binance CEO.



As part of his plea deal, he agreed not to contest a sentence of 18 months.



While this wraps up the DOJ’s actions against Zhao and Binance, the two still face charges from the Securities and Exchange Commission. The regulator was notably absent from the DOJ’s settlement. The agreement included the Commodity Futures Trading Commission, Treasury’s Financial Crimes Enforcement Network, and Office of Foreign Assets Control.



The SEC and Binance, in court documents earlier this month, said that they were in the middle of the discovery process. The filing <a href="https://www.courtlistener.com/docket/67474542/securities-and-exchange-commission-v-binance-holdings-limited/?filed_after=&amp;filed_before=&amp;entry_gte=&amp;entry_lte=&amp;order_by=desc">noted</a> that Zhao “served responses to the SEC’s interrogatories” and the two continue to discuss the SEC’s document requests.



<h2 class="wp-block-heading">What led to Zhao’s jail time</h2>



Zhao&#8217;s guilty plea was part of the multibillion-dollar settlement the government reached with Binance at the end of last year. The agreement&#8217;s sticker price, set at $4 billion, shocked many, although the investigation into the crypto exchange had been reported several times over a period of years.



Prior to the judge’s decision, the former executive received 161 letters of support from family and friends, asking the judge for leniency.&nbsp;



Zhao, in his letter to the judge, wrote that there was “no excuse” for the lack of anti-money laundering and compliance controls at Binance. He said he wished he could “change that part of Binance’s story.”



Since late last year, Zhao has been on US soil as ordered by the court. The former executive is not a US citizen — something that his team brought up to argue for leniency — and resides with his family in the United Arab Emirates. Zhao, his lawyers said ahead of the sentencing, cannot be sent to a minimum security facility because he’s not a US citizen, which they wanted taken into account.



While the Tuesday hearing shuts the book on the DOJ&#8217;s case against Binance and Zhao, the crypto enforcement actions against others in the Web3 space don’t end there. Just last week, the <a href="https://blockworks.co/news/doj-arrests-founders-samourai">Justice Department arrested the founders of Samourai Wallet</a>, alleging that it acted as a mixer for criminal funds. <a href="https://blockworks.co/news/roman-semenov-tornado-cash-ofac-list">It also has open cases</a> against Tornado Cash’s Roman Semenov and Roman Storm.



Want more details about CZ’s sentencing and what’s next? <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter here</a>. ICYMI, Blockworks reporter Casey Wagner <a href="https://blockworks.co/news/empire-newsletter-eigenlayer-airdrop-criticisms">gave some insight</a> into the hearing ahead of CZ’s Tuesday court date.



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Former Binance CEO Changpeng Zhao sentenced to 4 months in prison

Bitcoin investor Roger Ver was charged with tax fraud by the US Department of Justice on Tuesday.



The DOJ is seeking Ver’s extradition for a trial in the US. He was arrested in Spain on US criminal charges. 



The DOJ alleges that Ver evaded $50 million in taxes. Ver, the DOJ noted, became a citizen of St. Kitts and Nevis in 2014, but he still had two US companies — MemoryDealers.com and Agilestar.com. The Justice Department said that Ver bought bitcoin for both himself and the two companies. 



Ver was required to pay an “exit tax” on the capital gains. Both the companies and Ver allegedly owned roughly 131,000 bitcoin in 2014, with the companies specifically owning 73,000 of that sum.



“As a result of his expatriation, Ver allegedly was required under U.S. law to file tax returns that reported capital gains from the constructive sale of his world-wide assets, including the bitcoins, and to report the fair market value of his assets,” the DOJ’s release <a href="https://www.justice.gov/opa/pr/early-bitcoin-investor-charged-tax-fraud">said</a>.



The IRS, the DOJ said, lost “at least” $48 million due to the allegations against Ver.&nbsp;



“The indictment further alleges that by June 2017, Ver’s two companies continued to own approximately 70,000 bitcoins. Around that time, Ver allegedly took possession of those bitcoins and in November 2017 sold tens of thousands of them on cryptocurrency exchanges for approximately $240 million in cash,” a press release from the DOJ said.&nbsp;



Ver also provided “false or misleading information” to a law firm he hired so that he could allegedly conceal the amount of bitcoin both he and his companies held. 



“As a result, the law firm allegedly prepared and filed false tax returns that substantially undervalued the two companies and their 73,000 bitcoins and did not report that Ver owned any bitcoins personally,” the release said.



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