Sam Reynolds

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 <li>Institutional exchange Bullish, backed by Peter Thiel and Galaxy Digital, launches in Gibraltar today as institutional interest in digital assets continues to climb</li>
 <li>The exchange launched with deep pools of crypto liquidity thanks to the backing from controversial EOS developer Block.one, and already plans to go public via a SPAC</li>
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Bullish, an institutional exchange backed by some of the biggest names in traditional finance as well as Block.one of EOS fame, launched today in Gibraltar.



The exchange was <a href="https://cms.blockworks.co/biggest-names-in-macro-back-new-10b-digital-asset-exchange-bullish/" target="_blank" rel="noreferrer noopener">first announced</a> back in May and caught the attention of many, given the names attached to it like Peter Thiel, Galaxy Digital, global investment bank Nomura, and fund manager Alan Howard, as well as the significant capital commitment from Block.one in the form of 164,000 bitcoins, 20,000,000 EOS tokens, and $100 million in cash.



Gibraltar, not a well known destination for the digital assets industry, was chosen because the Gibraltar Financial Services Commission’s “principles-based approach” sets the outcomes that it intends to achieve, leaving the ‘how’ to achieve compliance up to the regulated firms,” said Anthony Smith, the exchange’s head of compliance.&nbsp;&nbsp;



Bullish is unique insofar as it integrates its own internal automated market-makers (AMM), a defining aspect of decentralized exchanges, but will do so in a regulated environment. In a release, Bullish said that it is initially making available $3 billion of its over $10 billion on the balance sheet to its liquidity pools.



“What sets us apart is that the Bullish exchange is designed to integrate a regulated and compliant exchange, operating a high-performance central-limit-order-book matching engine. This is combined with Decentralized Finance (DeFi)-derived liquidity pools to enable automated market-making (AMM) capabilities and yield earning opportunities,” Michael Lau, Head of Institutional Clients, told Blockworks via email. 



In the future, Bullish users will be able to stake their assets via Bullish Earn to provide liquidity to the exchange’s AMM in exchange for yield. However, no details on the staking and yield arrangement have been released.&nbsp;



Lau added that Bullish plans to draw materially on its own digital assets and dollars to facilitate liquidity, something that many decentralized and centralized exchanges would find “hard to replicate” simply because they don’t have the war chest.&nbsp;



For now, Bullish is only available to non-US residents, and it doesn’t have a timeline as to when that will change. The exchange isn’t providing a full list of its institutional customers yet, but says that a non-U.S. affiliate of Virtu Financial and Hong Kong based liquidity provider <a href="https://cms.blockworks.co/amber-group-raises-100-million-series-b-as-defi-booms/" target="_blank" rel="noreferrer noopener">Amber Group</a> are among the first to be onboarded.



<figure class="wp-block-image size-large"><img decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/shutterstock_1073747786-1024x537-1.jpg" alt="Gibraltar" class="wp-image-11918"/><figcaption>Gibraltar; Source: Shutterstock</figcaption></figure>



<h3 class="wp-block-heading">The EOS legacy</h3>



Despite having some of the biggest names in TradFi attached to the project, many industry observers are skeptical of Bullish given its connections to EOS and Block.one. Block.one launched EOS in 2016 as an ‘Ethereum Killer’ and raised approximately $4 billion via an ICO in 2018. But despite the impressive funds available to it, EOS has never really gone anywhere. None of the major DeFi protocols listed on <a href="https://defipulse.com/" target="_blank" rel="noreferrer noopener">DeFi Pulse</a> are on the chain, and there’s only one Dapp based on EOS — a game called UpLand — on DappRadar’s top-25 list. In the era of Solana and Polkadot, EOS just isn’t a competitive proposition.



This mega-ICO attracted the attention of regulators, and the SEC <a href="https://www.sec.gov/news/press-release/2019-202" target="_blank" rel="noreferrer noopener">fined</a> Block.one in 2019, the company behind EOS, $24 million for selling unlicensed securities.



That’s not the only negative attention EOS has gotten in recent history. In August, forensic financial analysis firm <a href="https://www.integrafec.com/post/eos-ico" target="_blank" rel="noreferrer noopener">Integra FEC</a>, posted a 14-page paper levelling some serious allegations that the EOS ICO was “pumped up” from wash trading. The paper identifies 21 wallets that during the ICO made whale-sized purchases of EOS and then dumped them on exchanges less than an hour later, a process the paper identifies as “recycling.” For its part, Block.one commissioned the law firm Clifford Chance LLP to test the Integra FEC claims. With help from PwC, Clifford Chance LLP said that it “found no evidence of any arrangements between Block.one and third parties by which third parties bought tokens on Block.one’s behalf.”



Meanwhile, token holders were disappointed both by the regulatory scrutiny on Block.one and the underperformance of EOS. The Crypto Assets Opportunity Fund (CAOF), along with investor Johnny Hong, had accused Block.one of failing to sufficiently decentralize EOS and not due proper legal due diligence in the process of launching the EOS crowd sale in order to &#8220;capitalize on the investor fervor for cryptocurrencies.&#8221; The resulting class action lawsuit <a href="https://b1.com/press/announces-settlement-of-class-action-lawsuit/?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=corporate_news&amp;utm_content=settlement" target="_blank" rel="noreferrer noopener">was settled in June 2021</a> for $27.5 million.&nbsp;



<h3 class="wp-block-heading">Is a SPAC’ed Bullish another crypto macro proxy?</h3>



Bullish <a href="https://cms.blockworks.co/bullish-plans-to-go-public-through-spac-merger/" target="_blank" rel="noreferrer noopener">previously announced</a> its intention to go public through a SPAC back in July. This was a surprising move considering that the exchange had yet to launch. Sam Bankman-Fried, FTX’s founder and CEO, suggested that one reason why there was an expedited push for a SPAC despite Bullish being nothing more than a website, at the time: the market wants listed macro proxies for crypto more than it wants another exchange.&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">15) But anyway, maybe this is all besides the point. Bullish seems to be comparing itself to Bakkt and Coinbase, but maybe that&#39;s not really what it is. Maybe Bullish is really another MicroStrategy.&mdash; SBF (@SBF_FTX) <a href="https://twitter.com/SBF_FTX/status/1413688840489816065?ref_src=twsrc%5Etfw">July 10, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Bankman-Fried (admittedly, a Bullish competitor) concluded, after reviewing the exchange’s pitch deck, that their fees are higher than what the market can support, and their growth projections are optimistic. Still, the value of Bullish’s holdings has increased to nearly $9 billion since this SBF summer tweet, plus $6 billion in additional crypto assets could make for an interesting listed crypto play for investors that can only hold listed companies, and are willing to pay a premium for them.



“Maybe Bullish is really another MicroStrategy,” rather than a competitor to Coinbase or Bakkt, SBF concluded. That may be the reason why so many significant players in TradFi are lending their names to the project despite the EOS albatross.



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