Katherine Ross

Polymarket announced that it acquired derivatives exchange QCEX for $112 million on Monday.&nbsp;



The deal allows Polymarket to re-enter the US market, which it left after <a href="https://blockworks.co/news/cftc-fines-crypto-betting-service-polymarket-1-4-million-orders-shutdown">settling with the CFTC </a>in 2022. The regulator fined the prediction market $1.4 million at the time.&nbsp;



“The transaction marks a significant step toward expanding access to Polymarket&#8217;s category-defining platform in the United States, enabling more users than ever to trade prediction market contracts with regulatory clarity and confidence,” a press release announcing the acquisition said.&nbsp;



&#8220;Now, with the acquisition of QCEX, we are laying the foundation to bring Polymarket home — re-entering the US as a fully regulated and compliant platform that will allow Americans to trade their opinions,” CEO Shayne Coplan said.&nbsp;



Read more: <a href="https://blockworks.co/news/kalshi-2b-valuation-prediction-markets">Why Kalshi’s new $2B valuation makes sense</a>



The acquisition announcement comes after QC Exchange <a href="https://www.cftc.gov/sites/default/files/filings/documents/2025/orgdcmqcexorderofd250709.pdf">filed</a> with the CFTC to be designated as a contract market.&nbsp;



Prediction markets, in recent years, have picked up in popularity. Just last year, the CFTC <a href="https://blockworks.co/news/kalshi-election-markets-cftc">lost a court case</a> to ban election markets in the US, which allowed Polymarket competitor Kalshi to launch such markets.&nbsp;



&#8220;When we began the process to obtain our DCM &amp; DCO licenses over 4 years ago, the prediction market was in its infancy. But we have long believed in its potential to change the way people access and understand information and express their views on that information,&#8221; QCEX founder Sergei Dobrovolskii said.



Earlier this summer, Bloomberg reported that Polymarket was looking to raise funding at a $1 billion valuation. Bloomberg was also the first to report the acquisition.



This is a developing story.



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gambling

Polymarket acquires QCEX for $112M

Donovan Choy

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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It has often been said that most crypto startups are guilty of making “blockchains in search of a problem.”



Perhaps one segment that defies that stereotype is crypto casinos.&nbsp;The Financial Times pegs this niche market to be <a href="https://www.ft.com/content/66f879c6-e51c-4e9d-91ba-b15eecac45c1?utm_source=chatgpt.com">roughly</a> at $81 billion in 2024.



Consider Shuffle.



Incubated by Fisher8 Capital and co-founded by former Alameda trader Noah Dummett, Shuffle is a casino and lottery platform boasting at least $100 million in annualized “net gaming revenues” — meaning all revenues after VIP rebates and cashbacks.



The SHFL token’s current FDV of $232 million is about a cheap 2.3x multiple, compared to the range of 10-40x revenue multiples for most other top DeFi tokens. Those revenue numbers would place Shuffle on a list of the top 20 revenue-generating Web3 businesses, yet the project remains largely absent from the so-called “<a href="https://x.com/simononchain/status/1942460321525911857">revenue meta</a>” conversation on Crypto Twitter.



<h2 class="wp-block-heading">Shuffle’s architecture</h2>



Despite being frequently referred to as a “crypto casino,” Shuffle executes the majority of its gameplay mechanics offchain — largely due to the fact that posting every bet on a public chain would overwhelm even the fast L2 networks.



Additionally, most of Shuffle’s gambling games are outsourced to iGaming content studios like Evolution, Hacksaw Gaming, Pragmatic Play, etc. So while Shuffle provides players with a frontend and bankroll, iGaming studios generates the outcomes on the backend.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeGUlAzRa_bCzwfxYawpZZl9A4SG4e2dqCwTCzhBWIveIFKkDuhnpY6waH-K_MFr14xeTzmxrZjU9blRUfPScu8-Nqb8SIRNatrsfoqeSs5SOjY2JZFQm6MB0EhmHrq0KeVdRrfGw?key=75US7HV7Q6NZkZ3cXZidqA" alt=""/><figcaption class="wp-element-caption">Source: Shuffle.com</figcaption></figure>



This separation limits Shuffle’s tampering risk but also means revenue cannot be verified onchain.&nbsp;



Yet in a highly commoditized sector like gambling, this may be a conscious decision, where revealing wager volumes would expose strategic information about a casino’s balance sheet, runway, and its ability to take large bets to competitors.



<h2 class="wp-block-heading">How blockchains come in</h2>



Traditional casino businesses rely on card networks and bank wires that typically treat gambling as a high-risk “sin” vertical. This means that players face various forms of friction such as extremely high fees, frequent declines, chargeback complications, and blocked cross-border deposits.



These problems that plague traditional gaming businesses introduce a lucrative entrepreneurial opportunity for crypto casinos like Shuffle to tackle using blockchains, through which crypto assets can settle globally in seconds without chargeback risks.



This on- and off-ramping of assets is the decisive key selling point for crypto casinos like Shuffle, Stake, Roobet and more.



But then there is also, of course, the SHFL token, an ERC-20 token on Ethereum. This is where Shuffle gets interesting and stands out from its crypto competitors.



While Shuffle originally used a buyback and burn value accrual mechanism, last year it introduced a weekly lottery that pays out USDC rewards to staked SHFL token holders.



15% of Shuffle’s weekly revenues (something like $200k-$300k) are returned through this lottery, which closes at a fixed time every Friday. In APR terms, the team told me that’s about a 48% annual return.



(A new onchain lottery is soon to be <a href="https://shfl.shuffle.com/the-shfl-lottery-the-internets-lotto">launched</a>.)



A further 30% of gaming revenues earned in SHFL continues to be burned, creating a deflationary sink for the token.



To date, Shuffle has burned about 5% of its total circulating supply.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeCUF69cjnV-Msh5xyDGcpoWAGHikpGMcb9yP_LuEaZQ-7CXcFKfuXZ0RuqbAGDgHdtkNzc7nl1W9qK9-wlc13jaYcwJF8rTprnHfdA95NhZccny9YNhb-GklWbhDcRUipSqgzj?key=75US7HV7Q6NZkZ3cXZidqA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://shuffle.com/token">Shuffle</a></figcaption></figure>



This decision was largely motivated by strategic customer retention reasons — because buyback and burns were perceived as an intangible value accrual mechanism, Fisher8 Capital investment analyst Lai Yuen told me.



Because all token movements occur onchain, anyone can track lottery prize funding, draws and burns in real time — levels of transparency that are almost unheard of in traditional gambling.



On Crypto Twitter, gambling businesses seem to be largely left out of the conversation, perhaps for ethical reasons. Other sources I’ve spoken to have also mentioned that some liquid funds generally have a mandate to avoid sin verticals.



But there’s no denying that GambleFi offers a unique insight into the kind of technological innovation that blockchains bring.



Companies like Shuffle have traction precisely because they solve an acute payments-and-access problem for a global customer base that wants to gamble, and is willing to accept regulatory risk in exchange for instant deposits and fast withdrawals.



That regulatory-payments arbitrage is the wedge that lets crypto casino businesses carve out an annual $80 billion gray-market industry despite outright bans or geoblocks in most major jurisdictions.



Shuffle recently announced plans to channel that model into a compliant US offering (ShuffleUSA), signaling growth expansion on the horizon.



<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">A new era of play is about to land 🇺🇸<a href="https://t.co/Gj7KpvH5Fn">https://t.co/Gj7KpvH5Fn</a> <a href="https://t.co/SJNPR8UHWS">pic.twitter.com/SJNPR8UHWS</a>&mdash; Shuffle.us (@ShuffleUSA) <a href="https://twitter.com/ShuffleUSA/status/1941165106626216397?ref_src=twsrc%5Etfw">July 4, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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0xResearch Newsletter

How blockchains are changing the traditional casino business

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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The below picture of Ukrainian President Volodymyr Zelenskyy was from a recent NATO summit.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcQpDmiCMb16Fq-gF22r9AYwjBxS92otQyClfWO_GXPNYYBPOSK7NZZN2LIIzE6gsMI5wyMUt9RhBPClbUxBOj0vkIXxJ8bRw12VIh1pR-8PNUan6V6uP1GsxfosDheNh9ccGDd3A?key=AnwRqr6vCbGnGEl0xq39XA" alt="" style="width:483px;height:auto"/></figure>



Is that a suit Zelenskyy is wearing?



The <a href="https://nypost.com/2025/06/25/world-news/volodymyr-zelensky-dons-suit-for-donald-trump-meeting-at-nato-summit/">New York Post</a> called it a suit, <a href="https://www.the-sun.com/news/14560567/zelensky-new-look-suit-trump-nato-summit/?utm_source=chatgpt.com">The Sun</a> called it a “slick black suit”, and <a href="https://www.reuters.com/world/zelenskiy-opts-more-formal-calibrated-wardrobe-ahead-trump-meeting-2025-06-25/">Reuters</a> called it a “suit-style jacket”.



But ChatGPT disagrees:



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
Under a narrow, traditional definition (tailored jacket with lapels + matching trousers made of the same suiting fabric), this outfit would not be called a suit. The jacket’s collar, patch pockets, utilitarian cut, and overall “field” or “workwear” styling put it outside classic suiting.
</blockquote>



Anyway, the answer to that incredibly inane question is key — there&#8217;s a <a href="https://polymarket.com/event/will-zelenskyy-wear-a-suit-before-july?tid=1751288477194">Polymarket bet</a> (&#8220;Will Zelenskyy wear a suit before July?&#8221;) with $12 million of open interest riding on it.



Unfortunately for bettors, mainstream media opinion is not the final resort of resolution on Polymarket — that decision lies with UMA token holders.



UMA whales are disputing that Zelenskyy was wearing a suit, so the market has currently cratered to a 3% implied probability of resolving to a “YES” vote now.&nbsp;



That has, hilariously, sparked activist <a href="https://x.com/Addict9Nft/status/1938912728506343441">Twitter</a> pages like “ZELENSKYY WORE A SUIT,” accusations of oracle capture, and what some are calling “Suitgate.”



I’m not here to referee Zelenskyy’s wardrobe debate.



I only wish to point out that newer prediction markets are catching on to this problem and innovating new ways to mitigate this “buy-the-truth” problem that can emerge on UMA.



<h2 class="wp-block-heading">Inside XO Market</h2>



Take XO Market, an upcoming prediction market built as a sovereign appchain using Celestia for data availability.



To eliminate oracle capture, XO Market’s oracle system is designed to be AI-first. The oracle queries “trusted APIs” and “uses algorithmic data retrieval and machine learning to quickly determine objectively verifiable outcomes,” according to its <a href="https://drive.google.com/file/d/1-jVRlM2zNQ8jlwlmX2MW1nORoM0tcpJM/view">whitepaper</a>.



Only in the event of a rare dispute does the resolution kick up to a similar jury system, where staked XO token holders are randomly selected to decide. Quadratic voting mechanisms are also implemented to deter the influence of any single large token holder from dominating a market’s outcome.



Then the market resolves in accordance with majority vote. Minority token holders are slashed.



XO Market also wants to be permissionless, in contrast to Polymarket or Kalshi where markets are subject to approval from central gatekeepers.



Think a marriage between pump[dot]fun and Polymarket, Ali Habbabeh, co-founder of XO Market, tells me.



Any user with a hot take can draft a question, define resolution criteria, choose any collateral, and set a fee to earn on all trades, so good questions become a revenue stream.



Allowing creators to use any token they wish leads to liquidity fragmentation, but it also enables different communities to introduce utility to their own tokens through what Habbabeh likes to think of as “conviction markets.”



To bootstrap liquidity for a long tail of niche markets, XO depends on a kind of adaptive liquidity AMM, or what some may remember as Augur’s Liquidity-Sensitive Logarithmic Market Scoring Rule (LS-LMSR).



The general idea is that creators start by seeding a market for a few dollars, then graduate to deep liquidity over time as trading volume increases.



This design lies in contrast to Polymarket’s liquidity model that relies on professional market-makers. Niche markets are therefore ignored until makers are convinced it is worth their capital.



“LMSR was very compute intensive and that&#8217;s why Augur died,” Habbabeh tells me, “It&#8217;s the best pricing algorithm for prediction markets and nobody&#8217;s using it.”



An orderbook may be eventually used for when adoption scales, he added.



XO Market is launching open alpha this week.



The team recently emerged as one of the winners at Celestia’s Mammothon hackathon and subsequently closed a $500,000 pre-seed round led by Cyber Fund and Delphi Ventures.



<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">💭 <a href="https://twitter.com/xodotmarket?ref_src=twsrc%5Etfw">@xodotmarket</a>: A social media-powered prediction market via <a href="https://twitter.com/privy_io?ref_src=twsrc%5Etfw">@privy_io</a>. <a href="https://t.co/D4QvoPZOh2">pic.twitter.com/D4QvoPZOh2</a>&mdash; Celestia 🦣 (@celestia) <a href="https://twitter.com/celestia/status/1902752214558621865?ref_src=twsrc%5Etfw">March 20, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 class="wp-block-heading">The prediction markets landscape</h3>



XO Market’s alpha launch comes in the backdrop of both Polymarket and Kalshi achieving unicorn status.



Bloomberg reported last week that Polymarket was <a href="https://www.bloomberg.com/news/articles/2025-06-24/polymarket-is-set-to-raise-funding-at-1-billion-valuation">raising</a> $200 million at a $1 billion valuation. Kalshi, on the other hand, recently closed a Paradigm-led $185 million round at a $2 billion valuation.



Polymarket’s open interest has held generally steady at the $100 million-$120 million mark in the last several months.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXddJXqCeULzxZ0l7t1L_F-ydx93eJyLVahKtLG9JhViU4ayTdexiSt9wBOPBkKgPSLm-4KQZJYErsARj7ty4nqdgGc2iSpalV4TkijJxE0TZKmSEsItzkmYcIRVLKc0dVS0E-n6ag?key=AnwRqr6vCbGnGEl0xq39XA" alt=""/></figure>



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Permissionless prediction market XO Market raises $500K in pre-seed round

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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“It&#8217;s the first time in US history, since the Great Depression, that you really can financialize anything,” Kalshi CEO Tarek Mansour said yesterday during a Permissionless panel.&nbsp;



His talk, which was moderated by Paradigm’s Charlie Noyes, covered a range of topics from the rise of prediction markets to Kalshi taking on the CFTC and winning.&nbsp;



&#8220;The reason why [the legal fight against the CFTC] was important is, I never thought that there would be institutional adoption the way that we&#8217;re seeing today if we didn&#8217;t get regulated,” Mansour explained.&nbsp;



The fight, which he clarified started before Coinbase even took on the SEC, opened doors for both Kalshi and <a href="https://www.cnbc.com/2024/11/07/polymarket-plans-to-return-to-the-us-founder-says-.html">other prediction markets</a>.&nbsp;



And then, just a few hours after the two were on stage, we got some news.&nbsp;



Kalshi raised $185 million in a Series C led by Paradigm. Other investors included Sequoia and Multicoin. The raise, according to Mansour, puts Kalshi at a $2 billion valuation, making yet another crypto-related unicorn.&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">I’m excited to announce our $185M Series C valuing Kalshi at $2B. The round was led by Paradigm with participation from Sequoia, Multicoin, Peng Zhao, Neo, and Bond Capital. People choose to work at Kalshi not because of the money we&#39;ve raised, but because of our ambition:… <a href="https://t.co/OGgZSwOPvj">pic.twitter.com/OGgZSwOPvj</a>&mdash; Tarek Mansour (@mansourtarek_) <a href="https://twitter.com/mansourtarek_/status/1937947818276339734?ref_src=twsrc%5Etfw">June 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Polymarket is in a similar boat, with a recent Bloomberg <a href="https://www.bloomberg.com/news/articles/2025-06-24/polymarket-is-set-to-raise-funding-at-1-billion-valuation">report</a> claiming that Peter Thiel’s Founders Fund is leading a round that would put Polymarket’s valuation over $1 billion.&nbsp;



Is the $2 billion valuation for Kalshi a bit much? Actually, based on Mansour’s comments yesterday, I don’t think so. Prediction markets have really hit a mainstream audience — and are akin to stablecoins in that everyone acknowledges there’s a need and a product-market fit for them. Then there’s also the fact that Mansour, yesterday, said that Kalshi’s doing roughly $1 billion in monthly volume.&nbsp;



“We have around 1500 markets live today, up from 80 back in October. So, yeah, I think in terms of broader asset classes, I think prediction market is definitely the fastest one,” he said.&nbsp;



Mansour also alluded to where Kalshi — and prediction markets in general — may be going.&nbsp;



“Imagine a world where basically any difference of opinions can be settled on prediction markets, like you debate about something on a dinner table, and, whether this is the price of an asset or something happening in the future, and you can basically trade it actively on a prediction market,” he explained.&nbsp;



Getting a payout for a debate at the dinner table…and getting bragging rights…sounds pretty good to me.&nbsp;



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Empire Newsletter

Why Kalshi’s new $2B valuation makes sense

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We’re kicking off this week with a collection of charts around political markets on Polymarket, Maple’s unstoppable SyrupUSDC growth, and an ambitious Celestia proposal to leave proof-of-stake behind.



<h2 class="wp-block-heading">Polymarket political markets</h2>



Polymarket is back in the limelight amid recent geopolitical conflicts.



In the last week, markets in the “Politics” category saw a jump from $3.9 million to $19.5 million in volumes, as denoted by the light blue bars in the chart below.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc7hUObP8pVy4XKuQ58DPZVGrHGak8rhCt8v4aJbESeWy1ZQbuUOs4sbrb2FYKWggkDpthx_SlAP5mWnRfzly6ZwKn_SuQT_Cy7_J43tKo6nP2JCAWMz03oVChiBY4ORL56tYOy?key=cRSo9z7KKeL8tZciBY-DLw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/polymarket?dashboard=53">Polymarket</a>.</figcaption></figure>



All eyes were focused on the “US military action against Iran before July?” market, which <a href="https://polymarket.com/event/us-military-action-against-iran-before-july?tid=1750273470067&amp;utm_source=hs_email&amp;utm_medium=email&amp;utm_content=367725286&amp;_hsenc=p2ANqtz-8TeV1lleAcBdX0r-vOK9uiPIEv5Nbrs65tK4kFmpL4j8SICyG1mHZ5ThEudBWgPAtIcq25zZeOdR1gHD7q0PLJeWtOTg">contract</a> resolved yesterday following reports of US strikes on alleged Iran nuclear facilities. The market saw a total $29.9 million in trading volumes.



Just before the market surged to 99%+ near certainty, “Yes” shares on the market had been trading at $0.59, meaning markets were pricing in about a 59% probability of the US taking military action against Iran.



<h2 class="wp-block-heading">Celestia’s governance</h2>



Celestia should abandon proof-of-stake consensus for “proof-of-governance” (PoG), argues Celestia co-founder John Adler in an ambitious new governance <a href="https://x.com/jadler0/status/1936813032140636643">proposal</a>.



If passed, the following material changes will be enacted:



<ol class="wp-block-list">
<li>TIA issuance will be cut by about 20x, or 95%.</li>



<li>Delegated staking and liquid staking contracts will be phased out. No more onchain governance.</li>



<li>All TIA issuance will be routed solely to validators as payment for running nodes.</li>



<li>Validators would be picked by off-chain governance, because Celestia lacks general execution and is not suited to support onchain token voting. </li>



<li>Network fees would be burned as a form of value accrual to TIA token holders. Celestia’s protocol fees amount to <a href="https://app.blockworksresearch.com/analytics/celestia?dashboard=138">$100–$300</a> daily.</li>
</ol>



TL;DR: Reduce Celestia’s constant emissions in a bid to stave off its declining price action (see chart).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfSvCeKCWgEbxevKpPXgnWus4Riw0ipBzOlV5NxZJXyWREgS2YblbE3G60fXhrjPF6SRSni1lOALN0SjbEic-fYrINK9x6YkolncwKAfXNjP-w1UUfNYyNFV0ePpOReClVD0MoV?key=cRSo9z7KKeL8tZciBY-DLw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/celestia?dashboard=134">Blockworks Research</a>.</figcaption></figure>



The proposal challenges many common sense “wisdoms” of Ethereum thought, namely where a chain’s “economic security” is derived from (not slashing), the framing of PoS as really permissioned “proof-of-authority,” and how to think about “blockchain profitability.” Expect Ethereum maxis to be triggered.



<h2 class="wp-block-heading">SyrupUSDC growth</h2>



Maple’s yield-bearing stablecoin SyrupUSDC is now at a market cap of $780 million, making it the fastest-growing stablecoin this year.



Users deposit USDC onto the platform, which is then used to issue overcollateralized loans to institutional borrowers. The interest charged on those loans is resulting in above average APYs of about 10% today (6.4% base yield +3.5% Drip points), driving SyrupUSDC’s rapid growth.



You can also forgo points to snag a <a href="https://app.pendle.finance/trade/markets/0x9a63fa80b5ddfd3cab23803fdb93ad2c18f3d5aa/swap?view=pt&amp;chain=ethereum">9.2%</a> PT fixed yield on Pendle instead.



About $587 million is used across DeFi, mainly 55% in Spark and 19% in Pendle.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcjOKU0Y9_fXBG5bWNQwjMk2DQKWWs9NpxTbl0ymw9c9uktQr7seFQ99V8g68hy9po0-e3bF8G6ydZ4EeDvKgf4x1O8GqkxftYu3-ITL9x3u5dxyRYFLqrQV8ax3CWGXtL7mFsDcw?key=cRSo9z7KKeL8tZciBY-DLw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://dune.com/jonaso/syrup-usdc-usage-in-defi">Dune</a>.</figcaption></figure>







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Polymarket ‘politics’ markets surge, Celestia rethinks consensus

Macauley Peterson

Michael McSweeney

Online gambling site Stake, which allows bets to be placed using crypto, has seen millions worth of ether and USDT transferred out of known wallets.



First reported by Web3 security firm Cyvers, the pattern of transfers includes swaps from USDT, a stablecoin, to ether.



<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">🚨ALERT🚨Our AI-powered system has detected multiple suspicious transactions with <a href="https://twitter.com/Stake?ref_src=twsrc%5Etfw">@Stake</a>.<a href="https://t.co/0ZoMITOyF5">https://t.co/0ZoMITOyF5</a> address received about $16M in <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> <a href="https://twitter.com/search?q=%24USDC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDC</a> <a href="https://twitter.com/search?q=%24USDT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDT</a> and <a href="https://twitter.com/search?q=%24DAI&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$DAI</a> All the stable coins are converted to <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> and distributed to different EOAs. FYI: <a href="https://twitter.com/tayvano_?ref_src=twsrc%5Etfw">@tayvano_</a> <a href="https://twitter.com/zachxbt?ref_src=twsrc%5Etfw">@zachxbt</a> <a href="https://t.co/CSGwRHEiVm">pic.twitter.com/CSGwRHEiVm</a>&mdash; 🚨 Cyvers Alerts 🚨 (@CyversAlerts) <a href="https://twitter.com/CyversAlerts/status/1698690342113931422?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



According to Etherscan, the transactions occurred between 8:52 am ET and 10:05 am ET. At 10:08 am ET, the site’s official Telegram posted that “[d]eposits &amp; withdrawals on Ethereum &amp; BSC/ERC20 networks are undergoing temporary maintenance.”



Messages to the site’s published press email were returned as undeliverable, and a spokesperson did not return Blockworks request for comment.



However, at 1:16 pm ET, Stake posted a statement saying they were investigating but that &#8220;user funds are safe.&#8221;



<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">Three hours ago, unauthorised tx’s were made from Stake’s ETH/BSC hot wallets. We are investigating and will get the wallets up as soon as they’re completely re-secured. User funds are safe. BTC, LTC, XRP, EOS, TRX + all other wallets remain fully operational.&mdash; Stake.com (@Stake) <a href="https://twitter.com/Stake/status/1698746766076588057?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The transfers were considered suspect in particular due to the swapping of USDT to ether (ETH), which cannot be frozen by Tether.



<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">It seems that <a href="https://twitter.com/Stake?ref_src=twsrc%5Etfw">@stake</a> exploited for 6000 ETH 👀 <a href="https://t.co/bfuAT1ZnMG">https://t.co/bfuAT1ZnMG</a> <a href="https://t.co/NSAYGf1UvI">pic.twitter.com/NSAYGf1UvI</a>&mdash; Officer&#39;s Notes (@officer_cia) <a href="https://twitter.com/officer_cia/status/1698706436136829174?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In addition to the <a href="https://etherscan.io/address/0x3130662aece32f05753d00a7b95c0444150bcd3c">Ethereum transfers</a>, on-chain investigators have <a href="https://twitter.com/zachxbt/status/1698712407177150729?s=20">tracked</a> $17.8 million on <a href="https://bscscan.com/address/0x4464e91002c63a623a8a218bd5dd1f041b61ec04">BNB Chain</a> and $7.8 million on the <a href="https://polygonscan.com/address/0xfe3f568d58919b14aff72bd3f14e6f55bec6c4e0">Polygon PoS</a> chain.



MetaMask product manager Taylor Monahan <a href="https://twitter.com/tayvano_/status/1698713232532467837?s=20">characterized</a> the transfers as &#8220;quite methodical,&#8221; and speculated that Stake suffered a &#8220;systems compromise.&#8221;



&#8220;[I]nitial transactions were sent via the [S]take systems to addresses the hackers controlled,&#8221; she said in the <a href="https://t.me/ETHSecurity">ETHSecurity Community</a> on Telegram.



On-chain evidence <a href="https://twitter.com/0xArhat/status/1698729017342570717?s=20">indicates</a> that a private key belonging to Stake&#8217;s wallets was compromised, which Andrey Lazutkin, chief technology officer at wallet developer Tangem, said is happening with increasing frequency. 



&#8220;The only solution to this problem is to store a private key in a protected environment, where the user will not have access to it himself, and therefore no third parties (hackers, scammers or scam projects) will have access to it either,&#8221; Lazutkin told Blockworks.



Stake, a Curacao-based platform which bills itself as a “leading crypto casino,” lets customers bet on sports and online games using bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), ether (<a href="https://blockworks.co/price/eth">ETH</a>), and dogecoin (<a href="https://blockworks.co/price/doge">DOGE</a>). The platform, launched in 2017, allows betting in other currencies including the US dollar.&nbsp;



Stake has been the <a href="https://blockworks.co/news/drake-endorsed-crypto-gambling-firm-stake-lawsuit">subject of a trademark infringement lawsuit</a> in Australia and <a href="https://www.afr.com/technology/aussie-crypto-billionaire-alleges-ex-associate-embezzled-millions-20230212-p5cjvq">a separate</a> $400 million claim against the founders from a former associate.



Updated on Sep. 4, 2023 at 12:58 pm ET with additional context and at 1:20 pm ET with comment from Stake.



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exploit

More than $40M in suspicious crypto outflows from Stake raise hack fears

Sebastian Sinclair

Crypto gambling firm Stake, co-founded by Australian billionaire Ed Craven and endorsed by Canadian music artist Drake, has hit a legal snag in its bid to enter the Australian market.&nbsp;



Stake&#8217;s nationwide ambition is being challenged by a Sydney-based share trading platform of the same name, the <a href="https://www.aapnews.com.au/search/news/high-stakes-as-billionaire-s-crypto-gambling-firm-sued?q=crypto">Australian Associated Press</a> reported Friday.



The trading platform reportedly filed a Federal Court lawsuit last week, seeking to prevent the casino from using the Stake brand within Australia. Stake, the casino, is barred from providing its services in Australia, according to its website.



It argues it has already built up a reputation with the Stake name within the country and that the crypto gambling firm&#8217;s use misleads consumers into believing the two are connected.



The Federal Court is now being asked to issue orders prohibiting the gaming company from promoting itself using the Stake name in Australia, per the report.



&#8220;The [share platform] has demanded that the [casino ceases] engaging in the conduct that is complained of &#8230; and the [casino has] refused or failed to do so,&#8221; the firm reportedly wrote.



In addition to the current legal headaches, a former business associate sued the casino’s founders in February for <a href="https://www.afr.com/technology/aussie-crypto-billionaire-alleges-ex-associate-embezzled-millions-20230212-p5cjvq">$400 million</a>, accusing them of betrayal.



The company, which promotes itself as a “leading crypto casino” allowing wagers in bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), ether (<a href="https://blockworks.co/price/eth">ETH</a>), and dogecoin (<a href="https://blockworks.co/price/doge">DOGE</a>) on sports events and online games, is currently incorporated in Curacao.&nbsp;



Melbourne-based Craven and his American partner, Bijan Tehrani, have turned Stake into a significant player in the online gambling scene.&nbsp;&nbsp;



Since its founding in 2017, Stake has grown to become the <a href="https://blockworks.co/news/crypto-casino-stake-revenue">seventh-largest</a> gambling group globally, reporting nearly $2.6 billion in gross gaming revenue last year.



Over that time, Stake has attracted high-rollers and high-profile endorsements, including a $100 million-per-year deal with rapper Drake.



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Drake-endorsed crypto gambling firm Stake hit with lawsuit over name use

James Cirrone

Hamster racing: A phenomenon that very much exists.



Crypto Twitter fell in love with yet another 24-hour fadcoin, as adorable rodents were urged to race while degen crypto addicts checked the formbook to place their wagers on winners.



The elementary school pets speed down the course to the jeers and cheers of a rabid trollbox audience. Theoretically. Although, to the consternation of some gamblers, they sometimes simply fall asleep.&nbsp;



The HamstersGG betting platform combines wholesome, cute activity with the age-old desire of crypto degens to bet away huge sums of money on complete and utter nonsense. In fact, 10 years ago more than half of all blockchain transactions were <a href="https://medium.com/@lightspeedvp/at-least-half-of-all-bitcoin-transactions-are-for-online-gambling-8e14ed19564b">related to gambling</a>.&nbsp;



HamstersGG went live on July 11, 2023 and livestreamed a series of races through Twitch on Thursday. People interested in placing a wager could do so using BUSD. While deposits were accepted from either Ethereum or Binance Smart Chain, payouts appeared to rely on BSC entirely.&nbsp;



While stablecoin bets are placed for the individual races, the project also features a purportedly revenue-sharing token, HAMS. According to the project’s <a href="https://hamsters.gg/whitepaper.pdf">white paper</a>, the platform takes a 5% rake of all bets, 4% of which is distributed to token holders. The <a href="https://etherscan.io/address/0x48c87cDacb6Bb6BF6E5Cd85D8ee5C847084c7410">token’s</a> price has proved to be <a href="https://www.geckoterminal.com/eth/pools/0x479d7a7864e00668da1ee507fa1b925fb1b2ae19">volatile</a> on Uniswap so far.



The token’s lone source of liquidity, a Uniswap v2 pool with just under $100,000 with WETH liquidity, has traded $900,000 in volume on the day. At $.11 per token, HAMS currently boasts a $1.1 million market capitalization, and the token <a href="https://www.geckoterminal.com/eth/pools/0x479d7a7864e00668da1ee507fa1b925fb1b2ae19?utm_source=coingecko&amp;utm_medium=referral&amp;utm_campaign=searchresults">rose</a> as high as $.38 cents this afternoon before retreating as low as $.08 – only to climb back to $.38 under an hour later, and fall back to $.14 at press time.&nbsp;



During today’s races, there were at times over 1,000 people watching and eagerly rooting for their pre-furred steed.



At around 2:30 pm ET, people in the live chat room began complaining about not being able to withdraw their money after an earlier race concluded and subsequent races didn’t begin on schedule. Other users argued back, telling them to stop FUDing (Fear Uncertainty Doubt).



The unusual nature of the project got some people on Twitter theorizing that hamster racing may not be quite so reputable.&nbsp;



One user on Twitter claimed all the races were staged and the videos were looped. The HamsterGG account denied this in the replies, claiming the server went down due to unexpectedly high interest in rodentia, and that they were in the process of looking into it.



<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">this hamster racing this is fake lmao, they just loop the streams and rename the hamsters everytime, same one wins everytime lol <a href="https://t.co/0eUkin5BWQ">pic.twitter.com/0eUkin5BWQ</a>&mdash; zoomer (@z00m3rf13d) <a href="https://twitter.com/z00m3rf13d/status/1682092125482000400?ref_src=twsrc%5Etfw">July 20, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



As the time neared 4 pm ET with no races commencing, the viewership on the Twitch live stream dipped below 600.



With no racing activity over the last couple of hours, and reports of problems with withdrawals, some bettors are now smelling a rat, and asking whether the hamsters — Rocky, Charlie, Popcorn and Teddy, among other furry athletes — might actually be scamsters?



(The answer, at least for now, may be no. With literally seconds remaining before Blockworks sent this article live, a new race saw Sparky absolutely crush the competition and wibble his (or her) way to the finish line in around 10 seconds — to the delight of at least some of the assembled, and deeply profane, observers. At least some watchers reported, however, that the race was a replay: <a href="https://www.imdb.com/title/tt0070735/">Robert Redford</a> could not be reached for comment.)







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BUSD

Crypto finds its killer app: Hamster racing for degens

The British government has rejected a proposal to regulate crypto trading and investing as if it were gambling.&nbsp;



Economic Secretary to the HM Treasury Andrew Griffith has “firmly” disagreed with the UK Parliament’s Treasury Committee’s idea to police “retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”



In the May <a href="https://committees.parliament.uk/publications/39945/documents/194832/default/" target="_blank" rel="noreferrer noopener">report</a>, the Committee considered bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) “unbacked cryptoassets” that have <a href="https://blockworks.co/news/crypto-gambling-uk-treasury">“no intrinsic value” and serve “no useful social purpose</a>.”



Griffith argued that rendering crypto trading synonymous with gambling, instead of bringing it under a “financial services regulatory framework,” would oppose established recommendations from “international organizations and standard-setting bodies.”



One such body mentioned was the UK Financial Stability Board, which published a set of nine guidelines for regulating crypto in October 2022. Nowhere in the 77-page <a href="https://www.fsb.org/wp-content/uploads/P111022-3.pdf" target="_blank" rel="noreferrer noopener">document</a> does the FSB suggest bringing crypto asset activity under the umbrella of the Gambling Commission as the Committee had requested.



Griffith also said that the gambling rules approach could fail to mitigate “critical risks” to consumers such as “market manipulation, inadequate prudential arrangements, and deficiencies in core financial risk management practices.”



The UK government published a consultation paper in February 2023 in its first major foray into crypto regulation, professing a desire to work with digital asset firms “<a href="https://blockworks.co/news/uk-crypto-regulation-in-the-works">to develop a regulatory framework</a>.”



More recently, the UK’s Financial Conduct Authority has <a href="https://blockworks.co/news/crypto-memes-regulated-uk">mulled plans to rein in crypto memes</a>.



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UK folds on plan to regulate crypto like gambling

Shalini Nagarajan

Critics have often labeled investing in crypto something akin to gambling. But if UK lawmakers get their way, the industry could soon be regulated in much the same way as casinos.



A new report from a group of UK parliamentary representatives outlines perceived risks associated with unbacked crypto assets, emphasizing a supposed lack of intrinsic value and extreme price volatility.



The findings suggest these traits expose consumers to significant gains or losses, resembling gambling more than a financial service.



&#8220;We are concerned that regulating retail trading and investment activity in unbacked crypto assets as a financial service will create a &#8216;halo&#8217; effect that leads consumers to believe that this activity is safer than it is, or protected when it is not,&#8221; the Parliament’s Treasury Committee said in a House of Commons <a href="https://committees.parliament.uk/publications/39945/documents/194832/default/" target="_blank" rel="noreferrer noopener">committee report</a> published May 17.



The report cites bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) as examples of “unbacked crypto assets,” apparently delineated from asset-backed tokens such as stablecoins USDC, tether or even Pax Gold.



CryptoUK, a crypto trade association, <a href="https://cryptouk.io/resources/cryptouk-strongly-rejects-treasury-committees-crypto-gambling-claim-cryptouk-response-to-the-tsc-statement/" target="_blank" rel="noreferrer noopener">said it strongly disagreed</a> with the recommendation, arguing that this approach would overlook the sector’s intricacies and its potential for attracting investment and fostering economic growth for the UK economy.



“No other global jurisdiction has taken this approach and referencing MiCA in the EU, we need to be taking a bespoke and tailored approach for regulation within the industry to ensure the UK does not become a hostile environment for businesses to be domiciled,” the organization said in a statement.&nbsp;



“Likewise, this approach will not provide the right level of protection for UK consumers — they will likely take opportunities to invest and transact with non-UK organizations which is wholly against the objective of protecting these consumers through regulation.”



Ian Taylor, board advisor at CryptoUK, highlighted the contradiction between the Treasury’s statement and HM Treasury’s consultation proposals. The proposals aim to bring activities, such as operating trading venues and serving as intermediaries, within the scope of existing financial regulations.



“Professional investment managers see bitcoin and other crypto assets as a new alternative investment class — not as a form of gambling — and institutional adoption of unbacked crypto assets has increased significantly,” Taylor said.



“Furthermore, gambling is exempt from capital gains tax. Does the Government really wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?&#8221;



Blockworks has reached out to the UK’s finance ministry for comment.



<h2 class="wp-block-heading">Gambling or not, UK Treasury digs cross-border crypto</h2>



In February, the UK government <a href="https://blockworks.co/news/uk-crypto-regulation-in-the-works" target="_blank" rel="noreferrer noopener">published a consultation paper</a> to establish a regulatory framework for crypto assets, aiming to stabilize the industry.



This followed its <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1088774/O-S_Stablecoins_consultation_response.pdf" target="_blank" rel="noreferrer noopener">announcement</a> last year to introduce regulations for stablecoins and crypto assets used in payments through the Financial Services and Markets Bill.



The Treasury’s statement on likening crypto markets to gambling is not a new perspective. Todd H. Baker, a lecturer in law at Columbia Law School, wrote a <a href="https://clsbluesky.law.columbia.edu/2022/11/29/lets-stop-treating-crypto-as-if-it-were-finance/?amp=1" target="_blank" rel="noreferrer noopener">blog</a> last year comparing crypto trading to professional esports gambling, and encouraged policymakers to regulate it as such.



Not to mention, billionaire investor Warren Buffett has famously <a href="https://www.cnbc.com/video/2023/04/12/warren-buffett-on-bitcoin-and-crypto-weve-had-an-explosion-of-gambling.html" target="_blank" rel="noreferrer noopener">referred to bitcoin</a> as a &#8220;gambling token.&#8221;



The Treasury committee did acknowledge potential benefits associated with certain types of crypto assets. Among the most compelling use cases it mentioned were crypto&#8217;s ability to boost payment efficiency and reduce costs, particularly for cross-border transactions and in economically disadvantaged regions.



“We therefore welcome the government publishing proposals for how it plans to regulate crypto assets used in financial services,” the Treasury said.



However, the committee said the government should refrain from allocating public resources to support crypto asset activities that lack a clear and beneficial purpose. They pointed to the Royal Mint’s plan to launch an NFT, which was <a href="https://blockworks.co/news/uk-treasury-nft-halted" target="_blank" rel="noreferrer noopener">scrapped this year</a>.



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cryptocurrency

Regulate Crypto Just Like Gambling, UK Treasury Committee Says

Casey Wagner

<div id="highlights-block_60f87de6c211c" class="highlights">
 <ul>
 <li>TCG Capital Management leads $20 million Series A for virtual horse racing platform </li>
 <li>It is the second investment into an NFT platform Andreessen Horowitz has revealed this week </li>
 </ul>
 
</div>



Virtually Human Studio, the Australia-based startup behind online horse racing platform Zed Run, has raised $20 million in a Series A round led by The Chernin Group Capital Management. Andreessen Horowitz and Red Beard Ventures also participated in the round.&nbsp;



VHS is the latest company profiting from the growing gaming and non-fungible token (NFT) industries. Zed Run is a marketplace and gaming program for what creators refer to as “breathing NFTs,” or NFTs that change and evolve over time, similar to real-life animals.&nbsp;



Zed Run users can virtually breed, sell and buy horses. Virtual horse owners can pay entrance fees to compete in races, and the site collects fees for all of the above. Race participants that come in first, second or third receive prize money in the form of ETH.&nbsp;



It’s a concept that may sound absurd to anyone unfamiliar with the gaming and NFT industries, but the demand is there.&nbsp;



“What the team at Virtually Human Studio is building fundamentally alters what it means to be a fan,&#8221; said Jacob Smilovitz, vice president at TCG, in a statement. &#8220;Fans are now empowered to come down from the bleachers, become owners themselves and play an active role in determining the outcome of the game.”



When launched in 2019, horses on Zed Run sold for around $30, but the explosion of the NFT market has proven to be fruitful for the company.



At time of publication, the Zed Run marketplace was completely sold out, but secondary markets abound. One has a horse available for <a href="https://opensea.io/collection/zed-run-official" target="_blank" rel="noreferrer noopener">1.3 ETH</a>, or around $2,550 USD. 



It is the second NFT investment a16z has revealed this week. On Tuesday, the firm led a $100 million Series B funding round in NFT marketplace <a href="https://cms.blockworks.co/a16z-leads-100m-round-for-nft-unicorn-opensea/" target="_blank" rel="noreferrer noopener">OpenSea</a>. 



The funding rounds come amid a major moment for NFTs across industries. Galaxy Digital founder and CEO Mike Novogratz and digital media entrepreneur Gary Vaynerchuck are part of the team behind <a href="https://cms.blockworks.co/vaynerchuck-novogratz-partner-with-fanatics-for-new-nft-company-candy/" target="_blank" rel="noreferrer noopener">Candy</a>, a new sports NFT marketplace with a focus on baseball. <a href="https://cms.blockworks.co/binance-to-debut-nft-marketplace-with-warhol-dali-thursday/" target="_blank" rel="noreferrer noopener">Binance</a> recently made its NFT marketplace debut with an auction featuring works from Andy Warhol and Salvador Dali. 



Zed Run is VHS’s first major project with more than 125,000 connected users. VHS closed its first seed funding round in May 2020, according to the company.&nbsp;