James Cirrone

Busan is well on its way toward building an urban blockchain and a digital asset exchange, a local South Korean outlet reported Thursday.&nbsp;



The South Korean city sits at the southeastern tip of the peninsula and has started to become something of a blockchain hub of the country.&nbsp;



The purpose of the urban blockchain is to unify all the various blockchain services currently offered on chains such as Ethereum and Cosmos onto a single citywide platform, News1 <a href="https://m.news1.kr/articles/?5179142">reported</a>.



One well publicized use case is an identity management program called <a href="https://coinplug.com/EN/busan">BPASS</a>. Busan and Coinplug pioneered the program, which uses decentralized identifiers (DID) so residents can anonymously authenticate themselves when applying for public or private services. BPASS users can store their driver’s license, library card and even university graduation certificates on mobile devices.&nbsp;



There was no timeline given for the upcoming Busan blockchain, but the city plans for it to be public and interoperable with Ethereum and Cosmos.



Read more: <a href="https://blockworks.co/news/south-korea-insider-trading-law">South Korea passes crypto legislation to crack down on ‘illegal trading practices’</a>



A city digital asset exchange, initially announced sometime in January 2023, is also part of Busan’s recent blockchain push.&nbsp;



The exchange is set to debut tokenized precious metals and raw materials, with full-scale operations launching in the first half of 2024. The corporation overseeing the exchange will launch in November 2023, following a public offering in October.



News1 reported that crypto assets won’t be available for trade initially, but there are plans to expand tradable assets to global intellectual property rights, carbon emissions and tokenized securities.



To support all of this new building in the sector, Busan also announced a blockchain innovation fund. Its goal is to raise 100 billion won ($74.3 million) from public financial institutions, News1 reported.



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



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/thebreakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

digital asset exchanges

Busan to build urban blockchain and digital asset exchange

Ben Strack

<div id="highlights-block_61c201e74d35d" class="highlights">
 <ul>
 <li>Staked enables investors in proof-of-stake networks to easily and securely compound their holdings</li>
 <li>Large industry players will continue building out capabilities through acquisitions to ensure competitiveness, according to Ryan McCulloch, investment banking associate at M&amp;A advisory firm Architect Partners</li>
 </ul>
 
</div>



<a href="https://www.kraken.com" target="_blank" rel="noreferrer noopener">Kraken</a> has acquired staking platform <a href="https://staked.us" target="_blank" rel="noreferrer noopener">Staked</a> as a way to expand its number of supported networks and enable a non-custodial alternative to the company’s existing custodial staking service.



Staked enables investors in proof-of-stake networks to easily and securely compound their holdings, according to Kraken’s acquisition announcement on Tuesday. The company did not disclose the sum of money it paid for the staking platform.



“We are excited to add Staked to our portfolio of yield products, which has seen great uptake by a growing population of crypto investors,” Kraken Co-founder and CEO Jesse Powell said in a statement. “Staked is highly complementary to our existing staking business and will allow us to further strengthen our product offering through world-class infrastructure for clients who prefer to retain custody of their staked assets.”



Kraken’s buy of Staked is its fifth acquisition in 2021, according to the company. Its client base, which totals about 8.5 million, trades more than 90 digital assets and 7 different fiat currencies globally.



As a provider of security, access and service for digital assets on its platform, Kraken noted <a href="https://blog.kraken.com/post/12265/kraken-to-allow-a-new-way-to-earn-crypto-rewards-with-staked-acquisition/" target="_blank" rel="noreferrer noopener">in a blog post </a>that the company does not believe in “not your keys, not your coins.”



“But, we do respect and support our clients who do – and their right to retain custody over their crypto,” the post states.&nbsp;



A Kraken spokesperson did not immediately return Blockworks’ request for further comment.



The market capitalization of the top 30 proof-of-stake assets reached an all-time high of $594 billion during the third quarter, according to <a href="https://fs.hubspotusercontent00.net/hubfs/6693156/Staking%20Reports/State%20of%20Staking%20Q3%202021%20by%20Staked.pdf" target="_blank" rel="noreferrer noopener">a report by Staked</a>, which was a 65% increase from the prior quarter.&nbsp;



“Kraken clearly shares our commitment to supporting proof-of-stake networks, having a security-first mindset, and unwavering focus on customer experience, which makes them an ideal partner,” Staked CEO Tim Ogilvie said in a statement. “Combining our businesses will enable us to provide a more seamless experience and expand our product offering to meet our clients’ needs in staking and beyond.”



<h3 class="wp-block-heading">Staying competitive</h3>



About <a href="https://cms.blockworks.co/kraken-clients-earned-100-million-in-staking-rewards-in-first-half-of-2021/" target="_blank" rel="noreferrer noopener">$100 million in rewards</a> had been paid out to Kraken’s clients in the first half of 2021. The total number of assets staked on Kraken had reached $10.8 billion, as of Sept. 20, and Kraken Chief Product Officer Jeremy Welch <a href="https://cms.blockworks.co/kraken-is-building-out-staking-consumer-capabilities-and-monitoring-nft-space/" target="_blank" rel="noreferrer noopener">told Blockworks at the time</a> that the company shifted its focus on professional traders and institutions to bringing a full offering directly to consumers.&nbsp;&nbsp;&nbsp;



Kraken launched its staking service last year, which allows users to earn rewards — which Kraken pays out twice a week — on top of their holdings and grow them further by compounding those future rewards.



Ryan McCulloch, an investment banking associate at M&amp;A advisory firm Architect Partners, said that proof-of-stake blockchain protocols are gaining prominence and will likely continue to do so with the transition of Ethereum from proof-of-work to proof-of-stake.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Users and token holders of these proof-of-stake blockchains have a clear financial incentive to participate in running the respective blockchain,” he told Blockworks. “Kraken, and other crypto-asset financial services firms, must offer this capability to their clients, both individuals and institutions.”</blockquote>



The deal follows Kraken competitor Coinbase’s <a href="https://blog.coinbase.com/coinbase-to-acquire-leading-blockchain-infrastructure-platform-bison-trails-f879654421d6" target="_blank" rel="noreferrer noopener">acquisition earlier this year of Bison Trails</a>, which McCulloch called a “highly comparable” staking and blockchain infrastructure company to Staked.



Emilie Choi, the company’s president and chief operating officer, <a href="https://cms.blockworks.co/coinbase-president-crypto-on-pace-for-1-billion-users-within-5-years/" target="_blank" rel="noreferrer noopener">said during a webinar</a> at the Bloomberg Financial Innovation Summit last week that Coinbase would try to acquire “incredible” companies it sees in the space.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“This transaction demonstrates the need for large crypto exchanges to own the infrastructure layer of the blockchain and provide a broad array of services to satisfy the needs of retail and institutional investors,” McCulloch said of Kraken’s latest deal. “Large players such as Coinbase, Kraken [and] Binance will continue to acquire and build out their capabilities to ensure competitiveness.” </blockquote>



<hr class="wp-block-separator"/>



Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.



<hr class="wp-block-separator"/>

cryptocurrency

Kraken Acquires Staking Platform Staked

<div id="highlights-block_61ba2c37d2d1f" class="highlights">
 <ul>
 <li>Crypto.com looks to continue marketing push after buying naming rights to the Staples Center in Los Angeles and partnering with Formula 1, UFC and Matt Damon </li>
 <li>Partnerships that bring brand to mainstream audience show “there’s an industry leader in Crypto.com who’s taking [the space] forward,” CMO Steven Kalifowitz said</li>
 </ul>
 
</div>



Anyone who types in Crypto.com on their search bar will see Matt Damon’s face appear as the webpage loads.



“Fortune Favours the Brave,” the site displays in bold font.



Steven Kalifowitz, the chief marketing officer of Crypto.com, told Blockworks in an interview that the tagline captures the mentality of the company and the industry more broadly.&nbsp;&nbsp;



The company’s <a href="https://www.youtube.com/watch?v=9hBC5TVdYT8" target="_blank" rel="noreferrer noopener">one-minute television spot</a> starring Damon, which began airing in October, aimed to recognize the people who have worked in the industry for years and invite others not yet involved in crypto to enter the space, he added.



Founded in 2016, the Singapore-based company allows users to buy and sell more than 200 cryptocurrencies. It also offers users the ability to earn rewards by depositing crypto or using its Visa card.



In addition to the Damon commercial, which is set to run for a few more months, Crypto.com bought the naming rights to the Staples Center in Los Angeles last month as part of a 20-year, $700 million deal. The venue — the official home of the NBA’s Lakers and Clippers, the NHL’s Kings and the WNBA’s Sparks — will be known as Crypto.com Arena on Dec. 25.&nbsp;&nbsp;&nbsp;



“That’s probably the strongest statement that we’re not going anywhere and that we’re here to stay,” Kalifowitz said.



<figure class="wp-block-image"><img decoding="async" src="https://lh5.googleusercontent.com/VH26tSmOtLbm0FFEotmvhtJOtE4fekv4wbKfs94WWEma1f9Qk24aIX7LFhitBpQXSiz1FMmx2JSCMqHo7LFEaKLnKwHGTc9UG80u8uPCC_7h4i5eYOVQ6_UuCV48ijAgBZ2wdlBX" alt=""/></figure>



Ty Smith, founder and CEO of <a href="https://coinbound.io" target="_blank" rel="noreferrer noopener">crypto marketing agency</a> Coinbound, said that the deal to buy the naming rights to one of the country’s most iconic arenas will help support widespread adoption, noting that Crypto.com’s company name points directly to the industry.



“I think a ton of crypto brands as well as advertising entities have been on the fence with respect to how mainstream audiences will perceive crypto ads in the public light,” Smith said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“This move tells brands and advertisers that the game is on.”&nbsp;</blockquote>



Mindy Kaling, an actress, comedian and screenwriter, was talking about the Lakers <a href="https://www.nbc.com/access/video/mindy-kaling-took-her-dad-to-a-lakers-game-and-loved-it-its-intoxicating/999109690" target="_blank" rel="noreferrer noopener">during an interview with Access Hollywood</a> last month when the discussion shifted to the team’s upcoming arena name change.&nbsp;



“It does make me think that I need to understand crypto,” Kaling said during the interview. “&#8230;If this is going to be where the Lakers now live, I have to understand what crypto is.”



Though Kalifowitz said it’s hard to measure the exact impact of the company’s major marketing efforts, he noted it signals that Crypto.com is in the center of a discussion that has gone mainstream.&nbsp;&nbsp;



“Did people go and download the app?” he said about the Access Hollywood interview. “Did people go and read more about it? Yeah, of course.”



<h3 class="wp-block-heading">Growing the crypto.com brand</h3>



The ad featuring Damon and the deal to rename the L.A. sports arena capped a year in which Crypto.com aimed to introduce the company to a global audience, Kalifowitz said.



Kalifowitz joined Crypto.com in August 2020, at which time the company had between 3 million and 5 million users, the CMO said. Crypto.com reported reaching 10 million users in February, noting at the time that it expects to reach 100 million users by 2023. A company spokesperson declined to comment on its current number of users.



The crypto industry’s number of users doubled from about 100 million to 200 million between January and June of 2021, the CMO added.



“That was a trend line that we saw coming in the middle of last year,” Kalifowitz told Blockworks. “We committed to the strategy of really getting ourselves out there, partnering with the best brands that we can and finding the best ways to not just introduce our brand to people but to raise awareness for crypto as something that’s not going away.”



Though certain prospective partners were hesitant to work with a crypto company at the beginning of the year, that changed once they learned Crypto.com was a serious company focused on regulatory compliance, Kalifowitz explained.&nbsp;&nbsp;&nbsp;



Crypto.com became the first cryptocurrency sponsor of Formula 1 in a reported $100 million deal, <a href="https://blog.crypto.com/formula-1-r-announce-crypto-com-as-global-partner-and-inaugural-partner-of-the-f1-sprint-series/" target="_blank" rel="noreferrer noopener">the company announced in June</a>. Mixed martial arts organization Ultimate Fighting Championship (UFC) announced <a href="https://blog.crypto.com/ufc-r-and-crypto-com-announce-historic-partnership/" target="_blank" rel="noreferrer noopener">its partnership with Crypto.com</a> a week later in a reported 10-year, $175 million partnership that put the firm’s branding on the athletes’ apparel and around the event venues.&nbsp;



Reaching what Kalifowitz called “Super Bowl-size” audiences through Formula 1 and UFC is even more important amid a fractured media landscape that has people watching content at different times.&nbsp;



“To be able to not just put our brand there, but put the word crypto there, gets everyone to talk about it,” he said. “Live sport is really the only thing that brings everyone together, and that water cooler effect is important.”



In addition to making deals with the NHL’s Montreal Canadiens and the Paris Saint-Germain soccer team, the company <a href="https://blog.crypto.com/76ers-crypto-com-official-jersey-partner/" target="_blank" rel="noreferrer noopener">partnered with the Philadelphia 76ers</a> in September to put a logo patch on the players’ jerseys and the Crypto.com branding on and around the team’s court. The 76ers launched its first NFT through Crypto.com as part of the deal.



<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">🔔 The 2021-22 <a href="https://twitter.com/sixers?ref_src=twsrc%5Etfw">@sixers</a>! 🔔<a href="https://twitter.com/hashtag/NBA75?src=hash&amp;ref_src=twsrc%5Etfw">#NBA75</a> <a href="https://twitter.com/hashtag/NBAMediaDay?src=hash&amp;ref_src=twsrc%5Etfw">#NBAMediaDay</a>&mdash; NBA (@NBA) <a href="https://twitter.com/NBA/status/1444046965075951617?ref_src=twsrc%5Etfw">October 1, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Ren Besnard, vice president of marketing at Unstoppable Domains, said he loved to see Crypto.com’s major marketing initiatives in 2021, adding that education is a huge component for new consumer technologies.



“Crypto marketers are going to step their game up,” Besnard said. “Now that Crypto.com has led the way in showing that large traditional media buys with crypto companies can help them cross into the mainstream, I expect others to follow suit.”&nbsp;



Other crypto firms also spent much of the year boosting brand awareness through large partnerships, most notably <a href="https://cms.blockworks.co/crypto-companies-dive-further-into-sports-sphere/" target="_blank" rel="noreferrer noopener">in the sports world</a>.



Cryptocurrency exchange FTX <a href="https://cms.blockworks.co/ftx-inks-135m-sponsorship-deal-for-miami-heat-arena/" target="_blank" rel="noreferrer noopener">finalized a deal</a> earlier this year for the naming rights of the Miami Heat’s arena and became the official cryptocurrency exchange brand of Major League Baseball. The company has also signed on star athletes as brand ambassadors, including Tom Brady, <a href="https://cms.blockworks.co/ftx-names-stephen-curry-a-global-ambassador/" target="_blank" rel="noreferrer noopener">Stephen Curry</a> and <a href="https://cms.blockworks.co/ftx-inks-deal-with-mlb-star-shohei-ohtani/" target="_blank" rel="noreferrer noopener">Shohei Ohtani</a>.



FTX on Tuesday <a href="https://cms.blockworks.co/ftx-us-partners-with-golden-state-warriors/" target="_blank" rel="noreferrer noopener">announced a partnership</a> with the Golden State Warriors. Voyager Digital had revealed an agreement <a href="https://cms.blockworks.co/voyager-digital-partners-with-dallas-mavericks/">with the Dallas M</a><a href="https://cms.blockworks.co/voyager-digital-partners-with-dallas-mavericks/" target="_blank" rel="noreferrer noopener">a</a><a href="https://cms.blockworks.co/voyager-digital-partners-with-dallas-mavericks/">vericks</a> in October to make cryptocurrency more accessible through educational and community programs, as well as fan engagement promotions.&nbsp;&nbsp;



Kalifowitz said he doesn’t focus on what competitors are doing.&nbsp;



“We were the first to start these big sponsorships and partnerships in the industry, and we have the largest portfolio, but I love that others in the crypto space are also raising awareness of crypto,” he said. “I think all ships will rise, and we think crypto is for everybody.”



<h3 class="wp-block-heading">Looking ahead</h3>



Crypto.com has succeeded in sparking interest, Kalifowitz said, and its future marketing efforts will look to build on that.&nbsp;



“Now that you know what this logo is, and you know that this company exists…next year is more about layering it, more about who we are as a company, telling good stories and focusing more on that education,” he explained.



Besnard noted that crypto education will continue and strengthen, noting that marketing initiatives like those executed by Crypto.com and others in 2021 will accelerate.



“As crypto and NFTs increasingly make their way into the culture and top consumer brands rush to enter the metaverse, I anticipate a growing number of collaborations between brands, digital creative agencies and crypto firms,” he said. “I predict that during the next Super Bowl, the best advertisement will come from a crypto company.”&nbsp;



Smith said he expects crypto money to start flooding into advertising channels like sports arenas and other venues, as well as television commercials.



“We are already seeing major ad spend go towards more traditional, branding-focused initiatives as well,” the Coinbound CEO said. “For a long time, the crypto marketing industry has seen these platforms as off-limits. Not anymore.”



Though Kalifowitz declined to specify what types of marketing initiatives the company would embark on going forward, he pointed to the existing deals that have allowed Crypto.com to access massive fan bases.



“You can imagine a lot of what we’ll do will spring off of that,” he said.



<hr class="wp-block-separator">
Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.
<hr class="wp-block-separator">

cryto.com

Crypto.com CMO on How Company Went from App to Global Brand

Sam Reynolds

<div id="highlights-block_619cb0d210858" class="highlights">
 <ul>
 <li>Binance has registered a fourth entity in Ireland, according to a corporate filing spotted by The Independent</li>
 <li>For some time it looked as if Binance would call Singapore home base, but relations have soured between the company and the Monetary Authority of Singapore</li>
 </ul>
 
</div>



It looks as if Ireland will be the new home for Binance. The exchange, which until recently was famously decentralized, has registered a new entity in Ireland — first spotted by <a href="https://www.independent.ie/business/irish/cryptocurrency-exchange-binance-steps-up-plans-for-hq-in-ireland-41079314.html" target="_blank" rel="noreferrer noopener">The Independent</a>. 



Binance Exchange (Ie), the new entity, is believed to be poised to serve as the corporate “mothership” and not a technology licensing holding company or a regional subsidiary.&nbsp;



In an <a href="https://www.reuters.com/technology/binance-ceo-says-ireland-is-part-its-hq-plans-2021-10-07/" target="_blank" rel="noreferrer noopener">interview with Retuers in October</a>, Binance CEO Changpeng Zhao said that the company was considering Ireland as a headquarters, along with France, according to an interview with French newspaper <a href="https://www.lesechos.fr/finance-marches/marches-financiers/binance-le-patron-de-la-plus-grande-plateforme-de-cryptos-mondiale-explique-sa-strategie-aux-echos-1362803" target="_blank" rel="noreferrer noopener">Les Echos</a>, and another unnamed European city. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;When we first started we wanted to embrace the decentralized principles, no headquarters, work all around the world, no borders,&#8221; he said to Reuters. &#8220;It&#8217;s very clear now, to run a centralized exchange, you need a centralized, legal entity structure behind it.&#8221;</blockquote>



<h3 class="wp-block-heading">Why not Singapore?</h3>



As Binance began its existence in Asia, it was thought that it would try to maintain its headquarters there. Given <a href="https://cms.blockworks.co/hong-kong-and-singapore-take-different-approaches-to-regulating-digital-assets/" target="_blank" rel="noreferrer noopener">Singapore’s crypto-friendly</a> nature, the city-state would be a logical choice to host the exchange’s headquarters. In August, it announced that it had hired Singapore Exchange executive Richard Teng as CEO of Binance Asia Services Pte, a company it registered in Singapore in 2018.



“Singapore is widely considered to be the blue-chip destination for financial and regulatory security and oversight,” Michael Conn, CEO of Singapore-based Zilliqa Capital, told Blockworks in an earlier interview. “Setting up their business in Singapore will make it much easier for Binance to pursue a traditional equity raise, since Singapore is not seen as a tax haven or a place for shady dealings.”&nbsp;



However, Binance poisoned the well in early September by running afoul of the Monetary Authority of Singapore which alleged the exchange — a different entity entirely from its Binance.sg subsidiary —&nbsp; was in violation of the Payment Services Act for carrying on the business of providing payment services to, and soliciting such business from Singapore residents without an appropriate license.



<h3 class="wp-block-heading">First a headquarters, then a sovereign wealth fund</h3>



Zhao’s vision for Binance includes an IPO and investment from the world’s largest institutional investors. But for that to happen, there needs to be a headquarters, which is something he’s also admitted.&nbsp;



In a recent interview with the <a href="https://www.ft.com/content/006b727a-cc20-403e-ad53-6a23571e6c1c" target="_blank" rel="noreferrer noopener">Financial Times</a>, Zhao has said Binance is in talks with sovereign wealth funds about investment in the exchange. 



Speaking with the paper, Zhao said that investment from these funds would improve the exchange’s “perception and relationships” with various regulators around the world.



“But it may also tie us to specific countries&#8230;which we want to be slightly careful with,” he also said.  Binance’s BNB token appears to be unaffected by the news and, at time of publication, is up 0.2% on the day according to <a href="https://www.coingecko.com/en/coins/binance-coin" target="_blank" rel="noreferrer noopener">CoinGecko</a>.

Binance

Binance Looks to Settle on Ireland as Global Headquarters

Casey Wagner

<div id="highlights-block_fb72f42b604bc4d27d18c3d6af768663" class="highlights">
 <ul>
 <li>The FBI issued a warning to cryptocurrency holders and exchanges about active security threats</li>
 <li>The FBI alert comes shortly after Senator Elizabeth Warren called for increased SEC crypto regulations</li>
 </ul>
 
</div>



The Federal Bureau of Investigation (FBI) issued a warning to cryptocurrency exchanges and digital asset owners about active security threats that may result in loss of assets.&nbsp;



“Cybercriminals are targeting cryptocurrency users, exchanges, and third-party payment platforms in the virtual asset industry, resulting in large amounts of financial loss to victims,” the report read.&nbsp;



The FBI released the alert via the Traffic Light Protocol, a system for distributing sensitive information to selected groups and individuals, on Thursday. The alert was classified as green, which means that alerted parties may share the information with other relevant groups, but the report cannot be distributed through public channels.&nbsp;



Hackers may use techniques including SIM swapping, tech support fraud, and account stealing, the FBI said. SIM swapping is when a hacker uses a victim’s phone number to go around two-factor authentication security and access an account. It is a process that the FBI has warned about in the <a href="https://www.fbi.gov/contact-us/field-offices/sanfrancisco/news/press-releases/fbi-san-francisco-warns-the-public-of-the-dangers-of-sim-swapping">past</a>.&nbsp;



Officials recommended that individuals and groups with crypto holdings keep an eye out for phishing emails and monitor accounts closely. Crypto experts largely agree that hackers pose a significant threat to the industry.&nbsp;



“Once a crypto account is hacked, attackers often use the unique structure, trading and economics of crypto markets to withdraw the funds and make other gains,” said Chen Arad, COO of risk monitoring firm Solidus Labs. “For example, often if hackers can&#8217;t immediately withdraw the funds, they may try to get them out of the account by trading valuable cryptos for less valuable altcoins in another account the hacker owns. Hacked accounts can also be used for market manipulation like wash trading or spoofing.”&nbsp;&nbsp;



As retail and institutional interest in digital assets continues to grow, industry members expect federal organizations to become more involved in regulating the space.&nbsp;



&#8220;The industry-wide warning from the FBI does not come as much of a surprise. As the cryptocurrency market grows and there is more money on the line, the threat from attackers online becomes more prevalent,” said Marcus Sotiriou, sales trader GlobalBlock. “I believe the FBI&#8217;s involvement in the industry will be a net positive, as it will hopefully result in a more secure digital economy and protect more cryptocurrency owners.&#8221;



The FBI alert comes shortly after Senator Elizabeth Warren released a <a href="https://www.warren.senate.gov/imo/media/doc/Draft%20SEC%20Crypto%20Exchange%20Letter%2007.7.2021%20clean.pdf">letter</a> to Securities and Exchange Commission Chairman Gary Gensler about the importance of cryptocurrency market regulation.&nbsp;



“I write to request information regarding the Security and Exchange Commission’s (SEC’s) authority to properly regulate cryptocurrency exchanges and to determine if Congress needs to act to ensure that the SEC has the proper authority to close existing gaps in regulation that leave investors and consumers vulnerable to dangers in this highly opaque and volatile market,” Warren wrote.&nbsp;



Warren claimed that unregulated exchanges leave investors vulnerable to market manipulation and fraud, particularly with decentralized platforms, citing <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/opaberkovitz7">recent comments</a> made by Commodity Futures Trading Commission (CFTC) Commissioner Dan M. Berkovitz.&nbsp;



“Berkovitz stated: ‘In a pure ‘peer-to-peer’ DeFi system… [t]here is no intermediary to monitor markets for fraud and manipulation, prevent money laundering, safeguard deposited funds, ensure counterparty performance, or make customers whole when processes fail,’” Warren wrote.&nbsp; As investors and industry leaders <a href="https://cms.blockworks.co/sec-postpones-decision-on-valkyrie-bitcoin-etf-to-august/">continue to wait</a> for SEC guidance on crypto, Congress recently heard from crypto industry experts during the <a href="https://cms.blockworks.co/washington-is-divided-on-crypto-hearing-reveals/">“America on FIRE” hearing</a> last month. It was made clear that lawmakers have vastly different thoughts when it comes to determining how to address cryptocurrency regulation.