Ben Strack

While many say FTX founder Sam Bankman-Fried inadvertently ran a master class on how not to run a business, several crypto executives have recently partnered with online education platform MasterClass to teach a course on the space.&nbsp;



But the class does not elaborate on the bankruptcy of FTX and what led up to it. A MasterClass spokesperson told Blockworks that the lessons were in production before the crypto exchange’s crash.



&#8220;Sam Bankman-Fried was filmed for the class prior to the FTX crash,&#8221; the representative said. &#8220;Given recent events, he was removed.&#8221;&nbsp;



The class is taught by Binance CEO and co-founder Changpeng ‘CZ’ Zhao; Emilie Choi, president and COO of Coinbase Exchange; Chris Dixon, founder and managing partner at venture capital firm a16z; and Paul Krugman, an author and New York Times columnist.&nbsp;



The crypto executives join more than 180 instructors on the platform, which launched in 2014.



&#8220;Cryptocurrency and the blockchain have the potential to disrupt the financial system,&#8221; MasterClass CEO David Rogier said in a statement. &#8220;With the landscape rapidly changing every day, we&#8217;re bringing together the industry&#8217;s key voices to help members gain a foundational understanding of the crypto and blockchain ecosystem.”



Topics of the lessons range from the history of crypto, decentralization, Web3, DAOs, NFTs, the segment’s volatility and a debate between Krugman and Zhao on stablecoins — a hot topic following the collapse of <a href="https://blockworks.co/search" target="_blank" rel="noreferrer noopener">Terra</a>’s algorithmic stablecoin earlier this year.



The course comes nearly a month after crypto exchange FTX <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing" target="_blank" rel="noreferrer noopener">filed for bankruptcy</a> amid allegations that the company transferred billions of dollars of user funds to sister company Alameda Research, also founded by Bankman-Fried.



The exchange faced a “liquidity crunch” after <a href="https://blockworks.co/news/binance-ceo-goes-full-fud-in-attempt-to-bury-ftx" target="_blank" rel="noreferrer noopener">Zhao tweeted</a> that Binance would liquidate its holdings of FTX token FTT. The price of FTT subsequently tumbled, leading to what Bankman-Fried called a “withdrawal backlog” at FTX.



Veteran restructurer John J. Ray III replaced Bankman-Fried as FTX’s CEO after his resignation. <a href="https://blockworks.co/news/worse-than-enron-sbfs-ftx-has-a-complete-absence-of-trustworthy-information" target="_blank" rel="noreferrer noopener">Ray said</a> the internal management of the company was “a complete failure.”



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Binance’s CZ Among Instructors for New Crypto MasterClass

Casey Wagner

<div id="highlights-block_6359552ac1c5d" class="highlights">
 <ul>
 <li>The report comes months after the firm announced the biggest crypto venture fund in history</li>
 <li>Before this year’s drop in performance, Crypto Fund I had been one of a16z’s highest-performing investments</li>
 </ul>
 
</div>



Crypto-friendly venture capital firm Andreessen Horowitz’s digital asset investments may be struggling more than the industry initially believed, according to a new report from the Wall Street Journal.&nbsp;



The firm’s flagship crypto fund, Crypto Fund I, which launched in 2018 with $350 million, lost around 40% in the first six months of 2022, the Wall Street Journal <a href="https://www.wsj.com/articles/andreessen-horowitz-went-all-in-on-crypto-at-the-worst-possible-time-11666769270" target="_blank" rel="noreferrer noopener">reported</a> Wednesday.&nbsp;



Crypto Fund I was revolutionary for bringing traditional firms into the developing crypto space. The firm launched its second crypto fund in 2020 with $515 million.&nbsp;



Before this year’s drop in performance, Crypto Fund I had been one of a16z’s highest-performing investments.



The crypto fund ended 2021 more than ten times its original amount. Andreessen Horowitz’s first-ever venture fund, launched in 2009, saw 7x returns at the end of 2021.&nbsp;



Andreessen Horowitz — also known as a16z — has adjusted its crypto portfolio in the second half of the year, though, according to data provider PitchBook.



In the third quarter of 2022, the firm sealed nine crypto startup deals, down from its record 26 startup deals in the fourth quarter of 2021.



Venture funding has been on the decline this year compared to 2021, according to a second quarter 2022 <a href="https://files.pitchbook.com/website/files/pdf/Q2_2022_PitchBook-NVCA_Venture_Monitor.pdf" target="_blank" rel="noreferrer noopener">report</a>. In 2021, 999 venture funds launched, compared with 415 in 2022 as of June 30. 



These 415 funds have collectively brought in more than $121 billion, largely driven by a16z’s fund. This marks 2022 as the second-highest crypto venture funding year on record.&nbsp;



The firm’s crypto portfolio holds several dozen companies, including big names such as Dapper Labs, OpenSea, Solana and Uniswap.&nbsp;



<h3>Andreessen Horowitz bullish on crypto builders</h3>



Five months into 2022, as crypto token prices were continuing their downfall, the firm released its inaugural “State of Crypto” research report.&nbsp;



Bitcoin’s total market capitalization sat at around $570 billion at the time, down more than 50% from its November 2021 high of about $1.2 trillion.&nbsp;



Crypto follows a “price innovation cycle,” the report noted. Talent is drawn to the space when prices are high, Chris Dixon, general partner at Andreessen Horowitz, said at the Permissionless conference in Palm Beach in May 2022 following the release of the report.&nbsp;



“Not to minimize the bad stuff that’s going on,” Dixon said. “But I do think if you step back and look at the broader trends, it’s promising.”



A16z launched its fourth crypto fund in May 2022. At $4.5 billion, it is the <a href="https://cms.blockworks.co/andreessen-horowitz-launches-largest-crypto-fund-ever/" target="_blank" rel="noreferrer noopener">largest-ever</a> crypto venture fund and brings the firm’s total crypto venture capital holdings to $7.6 billion.&nbsp;&nbsp;“Our frequent conversations with builders have given us the confidence to go big, and we’re grateful to be your partner,” Dixon wrote in a <a href="https://a16zcrypto.com/state-of-crypto-report-a16z-2022/" target="_blank" rel="noreferrer noopener">blog post</a> about the latest fund.



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Flagship A16z Crypto Fund Lost 40% in First Half of 2022: WSJ

Macauley Peterson

<div id="highlights-block_62965ba34bd01" class="highlights">
 <ul>
 <li>The no-loss lottery has been the target of a politically-motivated lawsuit from a former staffer for Elizabeth Warren</li>
 <li>PoolTogether’s NFTs have so far raised 463 ETH</li>
 </ul>
 
</div>



DeFi protocol PoolTogether, which offers prize-linked savings accounts, has been embroiled in a class action lawsuit since last October. But now, co-founder Leighton Cusack is raising defense funds in a novel way with a crypto twist — using NFTs.



Defendants include Delaware-based ​​PoolTogether Inc., founded by Cusack, but also Cusack personally, plus investors in the protocol such as venture capital funds Dragonfly, Nascent and Galaxy Digital. The “Pooly NFT” (non-fungible token) comes in a series of 1,110, available at three donation levels. The goal is to raise about $1.5 million of ether in a month.



PoolTogether lets users deposit cryptoassets — chiefly the USDC stablecoin — which are pooled into money market protocols Compound and Aave to generate yield. The interest funds daily random prize drawings.



Each depositor&#8217;s odds of winning is proportional to their stake. Unlike a conventional lottery, users can withdraw 100% of their principal, as well as any prize winnings. Otherwise, deposits remain in the pool and are automatically entered into the next drawing.



The concept is a modern incarnation of the mid-20th century “<a href="https://www.theguardian.com/money/2019/nov/01/premium-bonds-go-on-sale-for-the-first-time-archive-1956" target="_blank" rel="noreferrer noopener">premium bonds</a>” offered by the British government. It encourages saving by offering participants a small chance of winning a large prize. In the case of PoolTogether, a $100 deposit into the Polygon pool today, for example, would offer the player about a 1 in 275 chance of winning a prize. Multiple prizes are awarded each day, starting at $5.



The lawsuit alleges the defendants operate and promote an “illegal lottery” in New York.



The lead plaintiff, Joe Kent, is a software engineer who led a technology team for Sen. Elizabeth Warren’s 2020 presidential bid. The thrust of the suit is overtly political; the complaint <a href="https://drive.google.com/file/d/1VlgbQiw8Ac1SyGk6W6o3xw05Pylq9Vz6/view" target="_blank" rel="noreferrer noopener">notes</a> that Kent “is gravely concerned that the cryptocurrency ecosystem — which requires the use of enormous amounts of electricity — is accelerating climate change and allowing people to evade financial regulations and scam consumers.”



The relevance to PoolTogether is its presence on Ethereum, which relies on electricity-consuming proof-of-work consensus until after <a href="https://www.blockworksresearch.com/research/the-merge-what-effects-will-it-have-on-eth/" target="_blank" rel="noreferrer noopener">The Merge</a> — the completion of its transition to proof-of-stake, which is projected to <a href="https://blog.ethereum.org/2021/05/18/country-power-no-more/" target="_blank" rel="noreferrer noopener">reduce energy consumption</a> by 99.9%. But PoolTogether has also been <a href="https://medium.com/pooltogether/pooltogether-on-polygon-2730010478b8" target="_blank" rel="noreferrer noopener">available on Polygon</a> since March 2021 <a href="https://twitter.com/PoolTogether_/status/1473383880044462085" target="_blank" rel="noreferrer noopener">and Avalanche</a> since December 2021, both of which already use proof of stake.



The suit also states that “sending cryptocurrency to PoolTogether is remarkably expensive,” and that “because PoolTogether keeps up to 50% of each weekly prize as a ‘reserve,’ which may never be paid out, PoolTogether may never offer a positive expected value.”&nbsp;



Kent’s alleged harm stems from his fees to use the Ethereum blockchain while depositing a total of $12 of GUSD and USDC stablecoins to PoolTogether. Ethereum has — during periods of high demand — required high transaction fees, but both Polygon and Avalanche do not. In all cases, the transaction fees are external to PoolTogether, which, assuming it operates as intended, always offers participants a positive expected value.



The reserve is used to increase the size of the pool generating interest and is <a href="https://medium.com/pooltogether/perpetual-growth-db101a47791" target="_blank" rel="noreferrer noopener">controlled by a DAO</a> (decentralized autonomous organization), which was <a href="https://medium.com/pooltogether/governance-101-fca9ab8b8ba2" target="_blank" rel="noreferrer noopener">created in February 2021</a>.



That’s not to say PoolTogether is risk-free — the protocol documentation includes thorough <a href="https://docs.pooltogether.com/security/risks" target="_blank" rel="noreferrer noopener">risk disclosures</a> and <a href="https://web.archive.org/web/20210813172059/https://docs.pooltogether.com/security/risks" target="_blank" rel="noreferrer noopener">has done so</a> prior to the filing of Kent’s complaint.



The legal defense NFT campaign has attracted some high-profile support, including from Chris Dixon of Andreessen Horowitz, which purchased one of the 75 ETH (about $148,000) variety.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We just bought a 75 ETH Pooly Judge to support. <a href="https://t.co/MCxTMIJUI7">https://t.co/MCxTMIJUI7</a> <a href="https://t.co/IhrpOR2WXT">https://t.co/IhrpOR2WXT</a>&mdash; cdixon.eth (@cdixon) <a href="https://twitter.com/cdixon/status/1530295948051525632?ref_src=twsrc%5Etfw">May 27, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Due to the ongoing litigation, Cusack was unable to comment to Blockworks other than to say, “I trust anyone who has familiarity with my work would share my belief that the case is without merit.”



Kent referred Blockworks to his legal counsel, who declined to comment.



To date, the effort has raised about $914,000 toward its $1.5 million goal. If all NFTs offered are sold, they will raise 1,076 ETH, or about $2.2 million as of 1 pm ET Tuesday.



“Litigation is unpredictable,” <a href="https://mint.pooltogether.com/#about" target="_blank" rel="noreferrer noopener">the website</a> states. “The important thing is to have enough funding to see the lawsuit through until its conclusion.”



This story was updated on May 31, 2022, at 4:00 pm ET.



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PoolTogether Flocks to NFTs To Raise Legal Defense Funds

<div id="highlights-block_628e315869ea5" class="highlights">
 <ul>
 <li>a16z has earmarked $1.5B for seed investments in Web3 startups</li>
 <li>It’s time for the “golden era” of Web3, the firm said</li>
 </ul>
 
</div>



Venture capital behemoth Andreessen Horowitz (a16z) has raised the largest-ever crypto venture fund: $4.5 billion.



The vehicle, the firm’s fourth, brings a16z’s total crypto and Web3 holdings to $7.6 billion.&nbsp;



The launch makes good on <a href="https://cms.blockworks.co/andreessen-horowitz-looking-to-raise-4-5b-for-new-crypto-funds/" target="_blank" rel="noreferrer noopener">a plan unveiled in January</a>, when the company published a now-updated <a href="https://a16zcrypto.com/#vertical-landing-investment-thesis" target="_blank" rel="noreferrer noopener">investment thesis</a> predicated on the “power of software” as “the encoding of human thought, and as such has an almost unbounded design space.”



“We think we are now entering the golden era of Web3,” general partner Chris Dixon said in a <a href="https://cms.blockworks.co/a16zs-chris-dixon-crypto-growth-is-consistent-despite-downturn/" target="_blank" rel="noreferrer noopener">blog post</a> announcing the new fund. “Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users. More importantly, a massive wave of world-class talent has entered [Web3] over the last year.”



Talent flocks to the industry during a bull market, Dixon <a href="https://cms.blockworks.co/a16zs-chris-dixon-crypto-growth-is-consistent-despite-downturn/" target="_blank" rel="noreferrer noopener">told the audience</a> at last week’s Permissionless conference in Palm Beach, adding that a bear market is the prime time for builders to focus on what comes next.



The fund will invest in Web3 startups that run the gamut from DeFi, to gaming, infrastructure, DAOs, NFTs, privacy, decentralized social media “and many other areas.”



The firm also plans to expand its in-house staff to meet the vetting needs of additional startup investments.&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">We will also keep expanding the a16z crypto operating teams that provide world-class support to our founders, spanning research and engineering, security, talent &amp; people, legal &amp; regulatory, go-to-market, and a lot more.&mdash; AriannaSimpson.eth (@AriannaSimpson) <a href="https://twitter.com/AriannaSimpson/status/1529419370534952960?ref_src=twsrc%5Etfw">May 25, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The crypto portfolio of a16z consists of several dozen companies, including big names like Dapper Labs, dYdX, OpenSea, Near, Solana, Phantom and Uniswap. The <a href="https://a16z.com/2022/05/24/investing-in-flowcarbon/" target="_blank" rel="noreferrer noopener">most recent addition</a> is Flowcarbon, which is building an on-chain carbon credit tokenization platform.



“Our frequent conversations with builders have given us the confidence to go big, and we’re grateful to be your partner,” Dixon wrote of the latest fund.



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Andreessen Horowitz Launches Largest Crypto Fund Ever With $4.5B

<div id="highlights-block_6283abfc30d05" class="highlights">
 <ul>
 <li>Andreessen Horowitz’s inaugural “State of Crypto” report addresses recent market moves </li>
 <li>A slowdown in the market is often the best time to focus on building, a16z&#8217;s Chris Dixon said</li>
 </ul>
 
</div>



In crypto, prices are often a leading indicator of performance, according to researchers at venture capital firm Andreessen Horowitz.&nbsp;



“Prices are a hook,” analysts at Andreessen Horowitz wrote in a <a href="https://a16zcrypto.com/state-of-crypto-report-a16z-2022/" target="_blank" rel="noreferrer noopener">blog post</a> Tuesday announcing the firm’s inaugural “State of Crypto” research report. “The numbers drive interest, which drives ideas and activity, which in turn drives innovation.”&nbsp;



Talent is drawn to the space when prices are high, Chris Dixon, general partner at Andreessen Horowitz, said Tuesday at the Permissionless conference in Palm Beach, referring to the recent market sell-off that has many skeptical of what is next for the digital asset space.



“Not to minimize the bad stuff that’s going on,” Dixon said. “But I do think if you step back and look at the broader trends, it’s promising.”



The movement into Web3 is shifting the way creators interact, Dixon added. The social networks of Web2 have made it possible for anyone to be a publisher and creator, but Web3 innovations are going to transform ownership and earning capabilities.



“There&#8217;s about four or five companies that basically control the internet,” Dixon said. “I think we&#8217;re at risk of having the internet turn into the 1970s broadcast landscape [with networks] controlling everything.”&nbsp;



NFTs are the start of what is next for the creator economy, Dixon said. NFT (non-fungible tokens) creators earned on average $174,000 per creator in 2021. Music platform Spotify, which hosts 11 million artists, earned on average $636 per artist in 2021, the research report noted.



To give power back to creators, Dixon said, there will need to be a push for building improved infrastructure. A slowdown in the market is often the best time to focus on this building, he added.&nbsp;



“It&#8217;s a really exciting time,” he said. “There&#8217;s a lot of great people building logic and reason.”



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