Ben Strack

Crypto investment firm Paradigm is urging the courts not to embrace what it argues the SEC is pushing for — that crypto tokens are essentially temporary securities.



The argument came in an amicus brief — insight filed by an entity who is not a party in a legal case — in the SEC’s case against Ishan Wahi.&nbsp;



US authorities <a href="https://www.justice.gov/usao-sdny/pr/three-charged-first-ever-cryptocurrency-insider-trading-tipping-scheme">charged</a> Wahi, a former product manager at Coinbase, with wire fraud last July as part of an alleged scheme to commit crypto-related insider trading. He <a href="https://www.justice.gov/usao-sdny/pr/former-coinbase-insider-pleads-guilty-first-ever-cryptocurrency-insider-trading-case">pleaded</a> guilty to two counts of wire fraud conspiracy in Manhattan federal court last month.&nbsp;



But the SEC’s case against Wahi is ongoing. Judge Tana Lin, of the US district court for the western district of Washington, allowed Paradigm’s amicus brief to be filed on Monday, Paradigm crypto counsel Rodrigo Seira said in a tweet.&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">Today, Judge Tana Lin officially granted <a href="https://twitter.com/paradigm?ref_src=twsrc%5Etfw">@paradigm</a> leave to file our amicus brief in the SEC&#39;s case against Ishan Wahi Our brief rejects the SEC&#39;s expansive and unsupported application of securities laws to crypto secondary markets <a href="https://t.co/OWxiajwuxZ">pic.twitter.com/OWxiajwuxZ</a>&mdash; Rodrigo (@RSSH273) <a href="https://twitter.com/RSSH273/status/1640405640907751424?ref_src=twsrc%5Etfw">March 27, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The US securities regulator alleges that Wahi offered inside information to his brother, Nakhil Wahi, and Sameer Ramani, who then allegedly traded based on that knowledge. This included trading in at least nine crypto assets, according to the SEC — assets the regulator is calling securities.&nbsp;



<h2>Temporary securities?</h2>



Paradigm says in the brief the SEC is incorrectly arguing that because the crypto tokens were sold as transactions defined as investment contracts, the tokens themselves became investment contracts — deemed as a type of security per the Securities Exchange Act of 1934.&nbsp;



The nine tokens would not be considered securities “without considering extrinsic factors,” according to the brief.&nbsp;



“The SEC asks the court to accept the novel idea that these tokens are securities for only so long as they are deemed to “embody” an ongoing investment scheme…making them effectively temporary securities,” Paradigm states.



Accepting this “embodiment theory,” as Paradigm calls it, could have “sweeping and unintended effects” on the crypto industry, the company added.&nbsp;&nbsp;&nbsp;



“Essentially, the SEC seems to suggest that market participants should simply assume that&#8230;virtually all crypto assets are securities until the SEC tells them otherwise, a power not granted to the SEC by the Congress,” Paradigm said.



The SEC did not immediately return a request for comment.&nbsp;



<h2>Securities or not?</h2>



Though Paradigm calls the SEC’s latest argument “a novel idea,” the broader argument of whether crypto tokens are securities is not new.



The SEC alleged in 2020 that Ripple Labs and two of its executives raised more than $1.3 billion in 2013 through the sale of crypto token XRP as part of what it deems to be an unregistered security offering. <a href="https://blockworks.co/news/sec-ripple-xrp-case-trial">That case is ongoing</a>.



The regulator <a href="https://blockworks.co/news/bitcoin-and-ether-are-commodities-says-cftc-in-binance-lawsuit">served Coinbase with a Wells notice</a> last week about alleged securities violations, though the exchange has <a href="https://www.coinbase.com/blog/coinbase-does-not-list-securities-end-of-story">argued</a> the digital assets it lists are not securities.&nbsp;



Industry participants have told Blockworks that US regulators are jockeying for position in regulating the crypto industry in the absence of comprehensive regulation.The CFTC <a href="https://blockworks.co/news/bitcoin-and-ether-are-commodities-says-cftc-in-binance-lawsuit">called bitcoin, ether and litecoin commodities</a> in a lawsuit brought Monday against Binance and its CEO.



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Paradigm: SEC’s Temporary Securities Theory Could Have ‘Unintended Effects’

Shalini Nagarajan

<div id="highlights-block_634e587917466" class="highlights">
 <ul>
 <li>“The community of people making decisions on the DAO is fluid, ever-changing and different for each proposal on which they vote,” Paradigm said</li>
 <li>It argues the CFTC should identify and serve its lawsuit against individual DAO members</li>
 </ul>
 
</div>



Crypto venture capital firm Paradigm has <a href="https://github.com/LeXpunK-Army/Crypto-CaseLaw/blob/main/bZx%20DAO%20Case/paradigm_amicus.pdf" target="_blank" rel="noreferrer noopener">filed a motion</a> to join other parties in arguing that the Commodity Futures Trading Commission (CFTC) improperly served members of Ooki DAO.&nbsp;



The CFTC <a href="https://cms.blockworks.co/cftc-pursues-first-case-against-a-dao/" target="_blank" rel="noreferrer noopener">controversially sued Ooki DAO</a> in September, alleging that it facilitated unregistered margined and leveraged crypto trading products for US residents.



In the Monday filing, Paradigm said the Commission should seek to hold accountable only those who directly contributed to Ooki’s registration requirements under the Commodity Exchange Act. Paradigm argues DAO members should have been served a summons directly, rather than through a general website chat bot.



“A key characteristic of DAOs is that unrelated, anonymous people come together to decide whether to adopt ad hoc proposals about how to run the underlying protocol,” the firm said in the motion requesting to file an <a href="https://www.law.cornell.edu/wex/amicus_curiae" target="_blank" rel="noreferrer noopener">amicus brief</a>. An amicus refers to a party intending to influence the court’s decision, as it holds a substantial interest in the matter.



“A person might choose to participate once or many times, but the community of people making decisions on the DAO is fluid, ever-changing and different for each proposal on which they vote,” Paradigm added.



The regulator had settled charges against the DAO and its founders Tom Bean and Kyle Kistner, but it was unable to identify key figures attached to the DAO&nbsp; — so it served its court summons through Ooki’s website chat bot.&nbsp;



The news was met with some disbelief over whether the CFTC was serious about bringing forward a complaint against every individual member of a DAO.



<h3>Other groups support Ooki DAO against CFTC action</h3>



Last week, US District Judge William Orrick ruled that two crypto advocate groups — who asked to join the case — could argue the CFTC shouldn’t be able to serve the DAO through a website help bot. LeXpunK Army and the DeFi Education Fund both have filed for permission to add amicus briefs similar to Paradigm’s.



Paradigm has joined them, saying identifying all voting token holders as “members” of the same associations “threatens to seriously distort the law.”



<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">While we are not a party to the case, we thought it was necessary to speak up against the CFTC’s attempt to expand liability to unsuspecting technology users and impair the ability of DAOs to operate in the US.&mdash; Rodrigo (@RSSH273) <a href="https://twitter.com/RSSH273/status/1582051230007799816?ref_src=twsrc%5Etfw">October 17, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Since being served, the DAO appears to have geo-fenced users with IP addresses located in the US. It was set a deadline to respond to the allegations by Oct. 13, but that date has passed with no filing from the DAO.



A hearing has been set for Nov. 30 where the various parties will be allowed to present their views.



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DAO Gains Venture Capital Ally in CFTC Suit

<div id="highlights-block_62f6544f67544" class="highlights">
 <ul>
 <li>Partnership will help investors better “take advantage of pricing dislocations,” Paradigm co-founder says</li>
 <li>Spread trades through the deal will be available on BTC, ETH, SOL, AVAX, APE, DOGE, LINK and LTC</li>
 </ul>
 
</div>



Liquidity platform <a href="https://www.paradigm.co/" target="_blank" rel="noreferrer noopener">Paradigm</a> has partnered with crypto exchange FTX to launch spread trading, allowing users to take advantage of pricing dislocations with “cash-and-carry” plays.



<a href="https://www.investopedia.com/terms/c/cashandcarry.asp" target="_blank" rel="noreferrer noopener">Spread trades</a> involve buying one security and selling another related security — such as a futures contract — to produce an overall net trade with a positive value called the spread.&nbsp;



A so-called <a href="https://www.investopedia.com/terms/c/cashandcarry.asp" target="_blank" rel="noreferrer noopener">cash-and-carry trade</a> exploits variances in market prices and could entail taking a long position in an asset while simultaneously selling the associated derivative.



Paradigm users will be able to trade the spread between spot, perpetuals and futures instruments through FTX on bitcoin, ether, solana, avalanche, apecoin, dogecoin, chainlink, and litecoin, the companies revealed Friday.&nbsp;&nbsp;



FTX is the third exchange to partner with Paradigm (not to be confused with the crypto investment firm of the same name) on futures spreads. Paradigm is integrated with <a href="https://www.bybit.com/en-US/" target="_blank" rel="noreferrer noopener">Bybit</a> and <a href="https://www.deribit.com/" target="_blank" rel="noreferrer noopener">Deribit</a> and started offering futures spreads cleared through those exchanges in February.



“Having more exchanges means Paradigm users have alternative venues to clear and custody assets, as well as take advantage of pricing dislocations,” Paradigm co-founder Micki Koonin told Blockworks in an email. “This is especially attractive when it is one of the largest global exchanges, like FTX.”



FTX is the first exchange through which Paradigm can offer spot trade as part of the spread — such as spot versus future trades — as well as perpetual and future combinations, Koonin added. The exchange also allows trading of futures spreads on more coins, such as APE and DOGE.&nbsp;



Spread trading on Paradigm has guaranteed <a href="https://people.dmi.uns.ac.rs/~natasa/mknkr2.pdf" target="_blank" rel="noreferrer noopener">atomic execution</a> of both legs, the company said. Spreads executed on Paradigm and cleared on FTX will be charged half the fees compared to executing two individual trades. 



<a href="https://cms.blockworks.co/tag/sam-bankman-fried/" target="_blank" rel="noreferrer noopener">FTX CEO Sam Bankman-Fried</a> and Paradigm CEO <a href="https://www.linkedin.com/in/anandgomes/" target="_blank" rel="noreferrer noopener">Anand Gomes</a> said in statements that the firms plan to work together on future products.



Paradigm has more than 1,000 institutional clients — such as hedge funds, over-the-counter desks, lends, structured product issuers, market makers and family offices — trading roughly $10 billion per month.



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Paradigm and FTX Team Up To Launch Crypto Futures Spread Trading

David Canellis

<div id="highlights-block_628be37ae5488" class="highlights">
 <ul>
 <li>Coinbase co-founder Fred Ehrsam has acquired $75 million in company stock over the past two weeks</li>
 <li>Some crypto executives bought in February, causing them unrealized losses</li>
 </ul>
 
</div>



A raft of crypto executives bought the dip of their own companies’ stock this month — hinting that industry insiders are hoping for a sharp rebound.



Coinbase (COIN) and Paradigm co-founder Fred Ehrsam led the charge, buying up $75 million worth of company shares over the past two weeks, split between trades on May 13 and May 17.



Ehrsam acquired almost 1.1 million Coinbase shares for an average price of $68.70 — marking the first time he’s bought Coinbase stock since the exchange went public in April 2021. 



In that time, Ehrsam has sold 1.5 million shares at an average price of $328 to rake in $492 million, according to SEC filings compiled by finance portal <a href="http://openinsider.com" target="_blank" rel="noreferrer noopener">OpenInsider</a>. This includes $2.1 million in exercised options.



Ehrsam is not yet in the green on his recent buys. In fact, he’s down $2 million. Coinbase stock currently trades for around $67 — 82% below its initial list price of $381.



Cathie Wood’s Ark Invest fund appears to have fared better, having acquired 546,579 Coinbase shares across four funds just after COIN crashed 25% on May 11. Ark’s new Coinbase holdings were worth $29 million at the time. They’re now worth $36.6 million thanks to a 25% recovery.



Meanwhile, MicroStrategy (MSTR) executives bought fewer company shares. Timothy Lang, who’s served as the firm’s senior executive vice president and chief technology officer since 2014, spent $500,000 on 2,500 shares at $200.



Lang cashed in $53.2 million worth of MicroStrategy stock between October 2020 and November 2021 — 115,000 shares at an average price of $463. MicroStrategy stock now changes hands at just under $209 — more than 75% below its most recent peak of $891, recorded in November.



MicroStrategy director Leslie Rechan secured 2,000 shares at $204.42, a haul worth about $408,000 at the time. Rechan and Lang both made their trades on May 11.



Between November 2020 and November 2021, Rechan exercised options and sold 20,650 shares at an average price of $531, receiving $11 million. MSTR surged 300% in that time — from around $200 to $800 — gains inspired by ravenous BTC purchases actioned by bullish CEO Michael Saylor. Both Rechan and Lang are about even on their recent buys as of 3:30 pm ET.



Kevin Denuccio, director at bitcoin mining giant Marathon Digital Holdings (MARA), bought 15,424 MARA shares at $9.63 earlier this month, worth $148,500 at the time. Those shares are now worth almost $154,000 as MARA trades for $10 — a 4% gain.



<h3>Some crypto executives “bought the dip” too early</h3>



Some crypto executives bought in February when BTC hovered around $40,000, resulting in unrealized losses.&nbsp;



Director Michael Lempres of California-based crypto bank Silvergate Capital (SI) snatched up $56,000 in company stock in February, paying $112.20 per share. Lempres’ new holdings are now worth roughly $37,300, as SI stock has fallen 33% to below $75.



Silvergate Capital made headlines in late January when the firm acquired assets tied to failed Meta stablecoin project Diem.



Insiders at crypto mining outfit CleanSpark (CLSK) also bought in February. Chief Financial Officer Gary Vecchiarelli acquired more than $213,000 in company stock together with director Thomas Wood; 22,757 shares at an average price of $9.36.&nbsp;



CLSK now trades for $5.52, representing paper losses for Vecchiarelli and Wood of almost 40%.



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Crypto Execs at Coinbase, MicroStrategy and Marathon Buy the Dip

Morgan Chittum

<div id="highlights-block_622f6a34c8037" class="highlights">
 <ul>
 <li>The capital will go toward staff expansion, product development and future partnerships</li>
 <li>Other investors include Sequoia Capital, Electric Capital, Greylock Partners, Kindred Capital, Variant Fund and Solana Ventures</li>
 </ul>
 
</div>



Magic Eden, a Solana-based NFT marketplace, announced a $27 million Series A funding round on Monday. The round was led by Paradigm with participation from Sequoia Capital, Electric Capital, Greylock Partners, Kindred Capital, Variant Fund and Solana Ventures.



The raise will go toward staff expansion, future partnerships and product development.



Jack Lu, CEO and co-founder of Magic Eden, told Blockworks that the funding will “help [them] expand as a company, including hiring the best talent, improving [their] product and infrastructure and investing in community initiatives.”



Among those initiatives is MagicDAO, a recent attempt to launch a decentralized autonomous organization (<a href="https://cms.blockworks.co/the-investors-guide-to-daos/" target="_blank" rel="noreferrer noopener">DAO</a>) gated by the startup’s NFT (non-fungible token) collection Magic Ticket. The project airdropped 30,602 such tickets, which provide access to the group&#8217;s Discord channels, to community members and plans to involve those members in governance decisions in the future.



Magic Eden has recorded over $736 million in total trading volume since its launch last year — establishing itself as the largest Solana marketplace, according to data dashboard <a href="https://dappradar.com/nft/marketplaces/protocol/solana" target="_blank" rel="noreferrer noopener">DappRadar</a>.



Trading volumes for Magic Eden, however, have declined 85.76% to roughly $41 million in the past month — mirroring the performance of the broader NFT market.



The NFT marketplace OpenSea&#8217;s trading and transaction volumes fell as well, declining <a href="https://dappradar.com/nft" target="_blank" rel="noreferrer noopener">22.4%</a> and <a href="https://dappradar.com/nft" target="_blank" rel="noreferrer noopener">11.61%</a> respectively over the past month. OpenSea, unlike Magic Eden, auctions off NFTs on Ethereum and Polygon.



Paradigm, which launched <a href="https://cms.blockworks.co/paradigm-launches-2-5-billion-crypto-fund/" target="_blank" rel="noreferrer noopener">a $2.5 billion crypto fund</a> last November, is an investor in OpenSea as well.Benjamin Cohen, managing partner of crypto fund Web 3 Equities, previously <a href="https://cms.blockworks.co/crypto-portfolio-managers-collectors-say-nft-market-bound-for-correction/" target="_blank" rel="noreferrer noopener">told</a> Blockworks when a market is as fast as OpenSea, it is “fair to assume that [it] will experience large swings and corrections.”



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NFT Marketplace Magic Eden Secures $27M Series A

Jacquelyn Melinek

<div id="highlights-block_6222590637379" class="highlights">
 <ul>
 <li>The total money invested this week came from over 20 deals and funds, PitchBook data showed</li>
 <li>Prominent venture capital firm a16z invested $70 million into DeFi staking platform Lido on Thursday</li>
 </ul>
 
</div>



March started off strong as crypto companies and funds alike brought in another substantial week of capital, nearing a total of $1.34 billion. The total money invested this week came from over 20 deals and funds, PitchBook data showed.



The week’s biggest raise came from Electric Capital. The firm <a href="https://cms.blockworks.co/electric-capital-raises-1-billion-to-launch-crypto-venture-token-funds/" target="_blank" rel="noreferrer noopener">raised $1 billion</a> to launch two funds: a $400 million venture fund and a $600 million token fund. The capital raise brings the firm into the big leagues alongside major funds such as Andreessen Horowitz (a16z), Paradigm and 10T Holdings.



On Thursday, the prominent venture capital firm, a16z, invested $70 million into DeFi staking platform Lido. The decentralized platform offers Ethereum staking and other proof-of-stake assets to users through a decentralized autonomous organization (DAO) governance structure.



The fresh funds from a16z will be used to build out its staking solution and prepare for upgrades surrounding the Ethereum transition from <a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/" target="_blank" rel="noreferrer noopener">proof-of-work to proof-of-stake</a>, Jacob Blish, Lido’s head of business development and partnerships, said to Blockworks.



<blockquote class="wp-block-quote">“The roadmap for 2022 is prioritizing the Ethereum network upgrade, researching and building out layer-2 solutions, and expanding to a number of new protocols,” Blish said.</blockquote>



Since 2022 started, Lido has launched liquid staking for Kusama and Polygon and plans to add Polkadot, Avalanche and Cosmos in the second half of the year, Blish noted.



In other news, a seed-stage venture capital firm, Arcanum Capital, launched its first fund of $12 million, Wednesday, to focus on blockchain technology companies in emerging markets — mainly in India.&nbsp;



“We launched the fund because we wanted a vehicle to raise significant institutional capital into, to then deploy into India and make a big impact,” James McDowall, founding partner at Arcanum Capital, said to Blockworks.



The company’s fund includes prominent investors like Polygon Co-founder Sandeep Nailwal, venture capitalist Tim Draper, and Bybit’s venture capital arm, Mirana Ventures, among others. To date, Arcanum has invested about $4 million in over 20 startups.



“We are seeing blockchain technology disrupt almost every industry,” McDowall said.



<blockquote class="wp-block-quote">“DeFi alone has trillions of dollars of market share to go at. Add in [non-fungible tokens], gaming, and decentralized applications, and it is clear that blockchain is a gargantuan technology trend in its relative infancy.”</blockquote>



Other notable capital raises this week include:&nbsp;



<ul><li>South African crypto exchange VALR’s <a href="https://cms.blockworks.co/in-one-of-africas-largest-crypto-raises-south-african-exchange-takes-in-50m/" target="_blank" rel="noreferrer noopener">$50 million</a> round</li><li>Thetanuts Finance closed an <a href="https://cms.blockworks.co/thetanuts-finance-get-18m-in-seed-funding-to-flest-out-defi-platform/" target="_blank" rel="noreferrer noopener">$18 million</a> round to democratize DeFi-structured products</li><li>Pantera Capital led a <a href="https://cms.blockworks.co/subspace-labs-raises-33m-led-by-pantera-capital-to-further-web3-efforts/" target="_blank" rel="noreferrer noopener">$33 million round</a> for Subspace Labs to further its Web3 efforts</li><li>Multicoin Capital and Jump Crypto co-led a <a href="https://multicoin.capital/2022/03/02/dialect-the-smart-messaging-standard/" target="_blank" rel="noreferrer noopener">$4.1 million</a> seed investment in smart messaging protocol Dialect&nbsp;</li><li>Ignite Tournaments closed a $10 million financing round to build a play-to-earn esports tournament and streaming platform</li></ul>



Check back next week for more funding news.



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Funding Roundup: $1.34B Invested in Crypto Companies and Funds This Week

<div id="highlights-block_61ddb04071b0c" class="highlights">
 <ul>
 <li>Venture capital firm Sequoia led the round through investments from its Heritage, Global Equities and Global Growth funds</li>
 <li>Crypto-focused investment firm Paradigm will help Citadel expand to more markets and asset classes, including crypto, according to Paradigm co-founder Matt Huang</li>
 </ul>
 
</div>



Venture capital firm <a href="https://www.sequoiacap.com" target="_blank" rel="noreferrer noopener">Sequoia Capital</a> and crypto-focused investment firm <a href="https://www.paradigm.xyz" target="_blank" rel="noreferrer noopener">Paradigm</a> have invested $1.15 billion in market maker <a href="https://www.citadelsecurities.com" target="_blank" rel="noreferrer noopener">Citadel Securities</a> as it looks to ​​further scale its business and expand into new markets.



Based in Chicago, Citadel offers equity and fixed income products to 1,600 clients globally, including central banks, financial institutions, government agencies, corporations, insurers and sovereign wealth funds.



&#8220;As technological innovation in financial markets becomes only more important, we see enormous opportunities to meet the needs of our clients across more markets and more products,” Citadel Securities CEO Peng Zhao said in a statement.



Citadel Securities Chairman Ken Griffin told the Economic Club of Chicago in October that his company does not trade cryptocurrencies because of regulatory uncertainties around them, <a href="https://www.reuters.com/business/citadel-securities-avoids-crypto-due-regulatory-uncertainty-founder-2021-10-04/" target="_blank" rel="noreferrer noopener">Reuters reported</a>.



A Citadel spokesperson did not immediately return Blockworks’ request for comment about how the company could look to get involved in crypto.&nbsp;



Sequoia led the funding round through investments from Sequoia Heritage, Sequoia Capital Global Equities and its Global Growth Fund.



&#8220;Citadel Securities has carved out a unique place in the financial markets through its ability to absorb and price risk using techniques and capabilities from far outside the traditional world of Wall Street,&#8221; Sequoia Partner Alfred Lin said in a statement.&nbsp;



A Sequoia representative did not immediately return Blockworks’ request for comment.&nbsp;



Sequoia has <a href="https://cms.blockworks.co/sequoia-capital-may-be-embracing-crypto/" target="_blank" rel="noreferrer noopener">recently signaled its interest</a> in the crypto space. It changed its Twitter bio last month to say: “Mainnet faucet. We help the daring buidl legendary DAOs from idea to token airdrops. LFG.”  It also recently <a href="https://opensea.io/assets/0x97e5762a9670bb5aa5b47e132a045d6df1c309fe/0" target="_blank" rel="noreferrer noopener">auctioned off</a> its 2005 YouTube memo as a non-fungible token (NFT) on OpenSea for $884,776 worth of ether.



Meanwhile, Paradigm is an investment firm focused on investing in crypto and Web3 companies and protocols. It often invests at early stages and offers additional capital to its portfolio companies over time, according to the firm.



Paradigm <a href="https://cms.blockworks.co/paradigm-launches-2-5-billion-crypto-fund/" target="_blank" rel="noreferrer noopener">announced the launch</a> of a $2.5 billion venture fund in November. The new fund was to operate alongside Paradigm’s existing flagship fund and will “continue investing in the next generation of crypto companies and protocols,” Paradigm co-founders Matt Huang and Fred Ehrsam said at the time.



&#8220;We look forward to partnering with the Citadel Securities team as they extend their technology and expertise to even more markets and asset classes, including crypto,&#8221; Huang said in a statement.&nbsp;



A Paradigm spokesperson declined to comment on the investment in Citadel.



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Sequoia and Paradigm Invest $1.15B in Citadel Securities

<div id="highlights-block_61b1f748951a3" class="highlights">
 <ul>
 <li>“This funding round allows us to continue building out our network of institutional traders, CeFi exchanges, and DeFi protocols,” Anand Gomes, Paradigm’s co-founder and CEO said in a statement</li>
 <li>Paradigm has increased trading volume on its network by 1,300% year-over-year to $10 billion in total volume traded per month, it said</li>
 </ul>
 
</div>



Paradigm.co, the liquidity and communications platform for institutions and professional traders, has closed a $35 million Series A round co-led by Alameda Ventures and Jump Capital, bringing its valuation to $400 million, the institutional liquidity network announced Thursday. 



Other investors include Genesis Trading, QCP Capital, <a href="https://cms.blockworks.co/nexo-partners-with-fidelity-digital-assets/" target="_blank" rel="noreferrer noopener">Nexo</a>, Optiver US, IMC, GSR Markets, Akuna Capital, Babel Finance, MGNR, Avon Ventures, CMT Digital, executives at Goldentree Asset Management and Amber Group.&nbsp;



“This funding round allows us to continue building out our network of institutional traders, CeFi exchanges, and DeFi protocols, while also enhancing our 24/7 customer support, and expanding upon our current product offerings to better accommodate the needs of our clients,” Anand Gomes, Paradigm’s co-founder and CEO said in a statement.



<a href="https://www.paradigm.co/" target="_blank" rel="noreferrer noopener">Paradigm’s</a> network is for derivatives traders across centralized finance and DeFi. It works with about 600 institutions and has increased trading volume on its network by 1,300% year-over-year to $10 billion in total volume traded per month, it said.&nbsp;



“We are super excited to be working with all our new investors, most of whom are already clients of Paradigm,” Gomes told Blockworks. “These strategic partnerships will help us accelerate our growth towards our goal of becoming the largest institutional liquidity network in crypto,” Gomes said.&nbsp;



This story was updated at 8:45 am ET to remove mention of Paradigm, the unrelated investment firm.



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



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Alameda Ventures, Jump Capital Co-led $35M Series A for Paradigm.co

<div id="highlights-block_61927fa6e348a" class="highlights">
 <ul>
 <li>“This new fund and its size are reflective of crypto being the most exciting frontier in technology,” the co-founders said </li>
 <li>The firm’s portfolio includes 40 different investments to date, such as companies like Uniswap, FTX, Fireblocks, BlockFi and Matrixport, according to its website</li>
 </ul>
 
</div>



Crypto-focused investment firm Paradigm is launching a new $2.5 billion venture fund, Matt Huang and Fred Ehrsam, the company’s co-founders and managing partners, announced on Monday.&nbsp;



The investment will be used to “continue investing in the next generation of crypto companies and protocols.” The fund will also operate alongside Paradigm’s existing flagship fund, the co-founders said.



“This new fund and its size are reflective of crypto being the most exciting frontier in technology. Over the past decade, crypto has come a long way. But cryptocurrencies are still owned by less than ten percent of the global population,” Huang and Ehrsam wrote in a blog <a href="https://www.paradigm.xyz/2021/11/paradigms-new-venture-fund/" target="_blank" rel="noreferrer noopener">post</a>.&nbsp;



“The journey is just beginning, and the potential of crypto has never been more clear,” they added.



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="512" height="341" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg" alt="" class="wp-image-11150" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Paradigm.jpeg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /><figcaption>Fred Ehrsam and Matt Huang; Source: Paradigm</figcaption></figure></div>



The company declined to provide additional comments beyond the blog post when requested by Blockworks on Monday.



In recent months, the firm has led token sales and investment rounds for automated market maker <a href="https://cms.blockworks.co/osmosis-closes-21m-token-sale-led-by-paradigm/" target="_blank" rel="noreferrer noopener">Osmosis</a> and decentralized derivatives exchange company, <a href="https://cms.blockworks.co/paradigm-leads-65m-round-for-decentralized-exchange-dydx/" target="_blank" rel="noreferrer noopener">dYdX</a>, Blockworks previously reported.&nbsp;



Paradigm invests in crypto companies, protocols, and currencies from early stage to late-stage and stages in between.



The firm’s portfolio also includes 40 different investments to date such as companies like Uniswap, FTX, Fireblocks, BlockFi and Matrixport, according to its <a href="https://www.paradigm.xyz/portfolio/">website</a>.



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



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Paradigm Launches $2.5 Billion Crypto Fund

<div id="highlights-block_60c8bc3552ba7" class="highlights">
 <ul>
 <li>The Series C round, along with three previous fundraising rounds, brings the company’s total funding raised to $87 million to date</li>
 <li>There are no current plans for additional fundraising and the company is not disclosing the valuation at this time</li>
 </ul>
 
</div>



The decentralized derivatives exchange company, dYdX, has raised $65 million in a Series C funding round this month led by Paradigm, the company told Blockworks in an email.&nbsp;



Liquidity providers including QCP Capital, CMS Holdings, CMT Digital, Finlink Capital, Sixtant, Menai Financial Group, MGNR and Kronos Research participated as investors in the round.&nbsp;



Crypto venture capitals including HashKey, Electric Capital and Delphi Digital and dYdX’s partner StarkWare also joined the fundraising for this round. The Series C, along with three previous fundraising rounds, brings the company’s total funding raised to $87 million to date.



The San Francisco-based dYdX <a href="https://cms.blockworks.co/decentralized-exchange-dydx-raises-10m-for-product-growth-asian-expansion/" target="_blank" rel="noreferrer noopener">raised $10 million in Series B funding</a> co-led by Three Arrows Capital and DeFinance Capital in late January, Blockworks previously reported. dYdX also raised $10M in a Series A round co-led by a16z and Polychain Capital in July 2018 and $2M in a seed round co-led by Andreessen Horowitz and Polychain Capital in September 2017, the company said.&nbsp;



On June 15, dYdX’s <a href="https://dydx.exchange/blog/public" target="_blank" rel="noreferrer noopener">Layer 2 perpetual protocol</a> supported about $2.3 billion in cumulative volume from over 11,000 traders, <a href="https://metabase.dydx.exchange/public/dashboard/5fa0ea31-27f7-4cd2-8bb0-bc24473ccaa3" target="_blank" rel="noreferrer noopener">up almost 92%</a> from $1.2 billion cumulative volume on May 15, the month-ago date.



Additionally, dYdX’s platform has an <a href="https://dydx.exchange/" target="_blank" rel="noreferrer noopener">all-time trading volume of $6.1 billion</a>, over 33,000 trades in the last 30 days and an open interest of $24.1 million in the past 24 hours alone.



There are no current plans for additional fundraising and the company is not disclosing the valuation at this time, it told Blockworks.&nbsp;



The company said it runs on audited smart contracts powered by ethereum, which eliminates the need to trust a central exchange while trading. “We combine the security and transparency of a decentralized exchange, with the speed and usability of a centralized exchange,” it added.&nbsp;



The additional capital will be used to do a handful of things including launch a mobile application, partner with infrastructure players to bridge the gap between centralized and decentralized and continue to invest in international growth markets such as Asia, the company said.&nbsp;