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ENS DAO votes to sell $16.5 million of ETH for USDC via CoW Swap

Ethereum Name Service (ENS) DAO delegates have voted to sell 10,000 ether ($16.5 million) from the DAO’s treasury to fund the project’s activities for the next 18 to 24 months.

The vote ended with 89% of all participants in favor of the plan, according to figures from Tally. Major ENS personalities who supported the vote include founder Nick Johnson and ENS Foundation chair Brantly Millegan.

The ENS DAO will now proceed to sell 10,000 ETH in exchange for USDC. These funds will come from the project’s spendable treasury, which is denominated fully in ether. By selling 10,000 ETH, the proposal aims to reduce the DAO’s exposure to ether.

This trade will take place via CoW Swap. The DAO hopes to earn at least $13 million from the sale, increasing the DAO’s USDC balance to above $15 million.

There was some debate over how the tokens should be sold. The proposal stated a single swap of the 10,000 ETH tokens for USDC. Some USDC delegates argued in favor of breaking down the sale into smaller units. They also suggested that the DAO should employ a dollar-cost averaging technique to get the best value out of the sale.

Ultimately, the DAO has gone for a single swap strategy. The reason for this is that a phased sale process would have required delegates to vote for each stage, said Johnson on the DAO forum.

The bulk of the funds raised will go toward covering the daily expenses incurred by ENS Labs. The Singapore-based ENS project developer receives a daily stream to the tune of $11,500 USDC from the DAO. Over two years, this spending bill will reach $8.4 million.

The funds raised will also be used to support the DAO’s core working groups, of which ENS DAO has three. The budget proposed could see these working groups claim as much as $6 million in the next two years.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Osato Avan-Nomayo

DEX aggregator CoW Swap falls victim to $180,000 hack

Decentralized exchange aggregator CoW Swap suffered a major hack, with the attacker making off with over $180,000 in funds, according to security firms PeckShield and BlockSec.

As a decentralized exchange (DEX) aggregator, CoW Swap’s goal is to provide users with the best prices across decentralized exchanges. However, a hacker targeted its trade settlement smart contract, GPv2Settlement, to drain funds.

PeckShield estimated that the attacker drained roughly $180,000 worth of DAI from CoW Swap before routing the funds through Tornado Cash to obtain 551 BNB. The attack targeted the GPv2Settlement, a trade settlement smart contract that is part of the CoW Swap alpha (GPv2) protocol.

It appears that the attacker tricked the owner of the GPv2Settlement contract into approving the use of the SwapGuard, which is normally not permitted.

According to PeckShield, SwapGuard is a second contract used by CoW Swap to assist and validate swap results. This approval may have contributed to the success of the attack, as SwapGuard allows arbitrary function calls. In the context of smart contracts, arbitrary function calls allow anyone with access to the contract to execute any function within its code.  

A BlockSec spokesperson told The Block that there is a function in the contract SwapGuard that can transfer money to any address. The attacker invoked the public function to transfer the DAI into their address.

The CoW Swap team said that the settlement contract that was exploited only has access to the fees collected by the protocol in a week and that the hacker was unable to directly access user funds.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Vishal Chawla

File-sharing heavyweight WeTransfer dips toe in NFT waters

File hosting giant WeTransfer and blockchain platform Minima will begin rolling out an NFT minting service in March.

The NFTs will be offered through a secure peer-to-peer network, allowing the transfer of an NFT from person-to-person without third-party intermediaries, according to a company release. 

Anyone who uses the free Minima cooperative can create their own assets to share on the network, and will also allow creators to collect royalty payments – a levy paid back to creators upon any sale or resale of an NFT. Users will need to run a Minima node to use the service. 

Witht the involvement o WeTransfer, it’s the latest example of a large establishment tech company dabbling in NFTs. Recent data suggests that 70 million people send around 2 billion files every month through WeTransfer. E-commerce giant eBay has also made a concerted play for the NFT space in recent months.

“This partnership will explore the practical use of NFT technology, [and] be a test case to demonstrate the potential of wider adoption of this innovative digital tool,” said Hugo Feiler, CEO of Minima.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Lucy Harley-McKeown

MMA bruiser Jon Jones gets cuddly with cute panda NFTs

Looks like UFC fighter Jon Jones isn’t afraid to get into the octagon with some pandas.

With about a month to go before his heavyweight title fight, Jones, a famous mixed-martial arts star, inked a deal to become the brand ambassador for the NFT collection Kanpai Pandas.

Jones will not only represent the NFT brand, which has generated more than $7 million in trading volume since launching in April according to OpenSea, he will also be the face of Kanpai Pandas’s new streetwear collection.

Kanpai Panda’s push into selling apparel and partnering with the famous UFC fighter follows other top-tier NFT brands’ efforts to diversify. NFT brands want to woo mainstream consumers with products like merchandise and video games after being hit by the slump in prices for NFTs and cryptocurrencies. Yuga Labs’ Bored Apes Yacht Club, Doodles and Azuki have all recently launched efforts to expand the reach of their brands with new initiatives geared towards moving beyond being digital-asset collections.

Jones also owns multiple NFTs from the collection, according to Kanpai Pandas. The UFC fighter has a heavyweight bout with Ciryl Gane on March 4 in Las Vegas.

The current floor price for Kanpai Pandas’s profile-picture NFTs is more than $3,000 up from $280 in November.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: RT Watson

Genesis, Gemini and DCG reach agreement in bankruptcy court

Genesis, its parent Digital Currency Group, Gemini and other creditors have reached a bankruptcy agreement to recover assets. 

Sean O’Neal, a lawyer representing the debtors, said the sides agreed in principle and were working to finish the term sheet, with plans to file that as early as tonight or Tuesday. The deal involves Genesis Global Capital, DCG, two ad hoc creditor groups, including those representing more than $2 billion dollars in claims against GGC, and Gemini Trust Company, he said.  

As part of the plan, DCG will contribute its equity interest in Genesis Global Trading to Genesis Global Holdco, bringing all Genesis entities under the same holding company, according to a statement released on Monday.    

Genesis Global Holdco filed for Chapter 11 bankruptcy protection last month after taking a financial hit following the collapses of crypto hedge fund Three Arrows Capital and exchange FTX last year.   

Gemini is committed to contributing $100 million to the proposed plan, Anson B. Frelinghuysen, a lawyer representing Gemini lenders, said today during a proceeding in the U.S. Bankruptcy Court for the Southern District of New York. 

“Gemini founders Cameron and Tyler Winklevoss are doing this because they believe in the debtors’ reorganization and the Gemini platforms and they want to do the right thing for their users,” he said.  

Gemini’s Cameron Winklevoss called the plan a “critical step forward,” on Twitter on Monday. 

“There is still much work to be done to complete this process, including further due diligence of Genesis financials and judicial approval of this plan, but we are confident that we now have a framework in place to execute on,” he tweeted. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Sarah Wynn

Former Coinbase manager seeks to dismiss watershed insider trading case

Lawyers are asking a judge to dismiss a case against their client, a former Coinbase manager and his brother, arguing that the tokens involved are not securities. 

In an 81-page brief, lawyers from five law firms said the Securities and Exchange Commission was “wrong” to say that nine digital assets were securities, comparing them to Beanie Babies and baseball cards — after the agency charged Ishan Wahi, 32, for insider trading, along with his brother and a friend.  

The lawyers argue that all nine tokens are utility tokens necessary for the use of the networks that created them, making the case one that could have broader implications for Coinbase and other exchanges listing those assets in the U.S. 

“None of the tokens were like stock — something that sits as an investment with no practical utility. Rather, the very object of each token was to facilitate activity on the underlying platforms and, in so doing, enable each network to develop and grow,” the lawyers said.  

The SEC charged Ishan Wahi, the former Coinbase product manager, in July for insider trading. The agency alleges Ishan Wahi tipped off his friend and brother, Nikhil Wahi, about which tokens were going to be listed for trading on Coinbase — and in the process made over $1 million.  

The lawyers say the digital assets in question were sold on the secondary market and add that there is not an investment in money — all pointing to those nine assets not being securities.  

The long arm of the SEC

The SEC uses the Howey Test, a 1946 U.S. Supreme Court case, to help determine whether cryptocurrencies are securities. The ruling established that “an investment contract exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others,” SEC Chair Gary Gensler has said.  

The lawyers argue that the SEC’s moves could have broader implications. 

“In addition to holding Ishan and Nikhil Wahi liable for actions nobody could have anticipated would violate the securities laws — indeed, even Ishan’s publicly traded employer was convinced these tokens were not securities — it would establish sweeping SEC jurisdiction over an industry without any input from Congress,” the lawyers said.  

The SEC also did not “adequately allege scienter,” the lawyers continued. Scienter is the intent or knowledge of wrongdoing. 

If the SEC shows the tokens satisfies the Howey definition, its complaint “fails to adequately allege scienter,” the lawyers said. “Because the SEC cannot establish that the Wahis had the culpable state of mind necessary to commit securities fraud, the amended complaint must be dismissed,” they said.  

If the judge denies the motion to dismiss then the case would proceed, unless there is a settlement. 

The motion to dismiss was jointly filed by attorneys from Greenberg Traurig LLP, Harris St. Laurent & Wechsler LLP, Jones Day, Chaudhry Law PLLC and Allen Hansen Maybrown & Offenbecher in the U.S. District Court, Western District of Washington.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Sarah Wynn

UK government and central bank tease CBDC consultation

The UK’s Treasury and the Bank of England are preparing the groundwork for a potential central bank digital currency to launch this decade, with a report on the issue to be published on Tuesday morning, according to an announcement from the British government. 

Coming just a few days after the UK government released its report on broader crypto regulation calling for input from stakeholders, this consultation outlines more details about what a digital pound may entail, while seeking public comment.

UK Economic Secretary to the Treasury Andrew Griffith promised the report last month, while also looking to assuage privacy concerns that a digital pound would not track retail transactions. However, the UK government and Bank of England have said that although they would not program or track spending, the digital pound would not be anonymous, so as to prevent money laundering.

A retail CBDC with spending caps

A digital pound would allow retail users the possibility to make payments using central bank-backed digital currency, but it will not offer saving or investing possibilities through a central bank account. On top of that, there will be limits on how much a person or company can hold in private digital wallets for the digital pound. 

The European Central Bank is taking a similar approach in its digital euro design phase, by introducing restrictions on storage and transactions. However in the UK, this feature is bound to change in the future. 

“This would strike a balance between both encouraging use and managing risks, such as the potential for large and rapid outflows from banking deposits into digital pounds,” the Treasury announcement reads. 

Long-term consideration

The consultation will remain open until June 7 while the Treasury will start designing the necessary technology and policies, though a digital pound remains far from certain for widescale introduction. 

“While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use,” Chancellor of the Exchequer Jeremy Hunt said in the announcement. “That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”

The government will only make a decision on whether to implement the CBDC around 2025, with a potential launch it further down the line. 

“This consultation and the further work the bank will now do will be the foundation for what would be a profound decision for the country on the way we use money,” Governor of the Bank of England Andrew Bailey said.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Inbar Preiss

Bitcoin mining report: Feb. 6

Bitcoin mining stocks tracked by The Block were mostly lower on Monday, with six gaining and the other 13 declining.

Bitcoin rose 0.5% to $22,994 by market close.

Here is a look at how the individual miners performed today:

 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Catarina Moura

Binance to temporarily suspend USD transfers on Feb. 8

Binance said Monday that it would temporarily halt U.S. dollar transfers on Feb. 8, a move the company claims would only affect a “small proportion” of its users.

“It is worth noting that USD bank transfers are leveraged by only 0.01% of our monthly active users,” Binance CEO Changpeng Zhao tweeted, acknowledging that “this is still a bad user experience and the team is working on quickly resolving this issue.”

“While some banks withdrawing support for crypto, other banks are moving in. Some setbacks were expected from last year’s incidents. Long term, keep building,” he added in a later tweet

“All other methods of buying and selling crypto remain unaffected,” the company added.

The restrictions will not affect Binance.US, the company’s separate U.S. exchange that’s a “licensed and regulated digital asset marketplace in the United States.”

Binance did not immediately respond to a request for comment from The Block.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Jeremy Nation

Judge delays FTX examiner ruling in hopes of ‘consensual resolution’

A federal bankruptcy court judge in Delaware did not rule on whether to appoint an examiner in FTX’s enormous bankruptcy case, and instead will allow lawyers to discuss a “consensual resolution” on the issue.

The U.S. Trustee responsible for federal oversight of the bankruptcy has requested the court appoint an independent examiner to investigate the failed crypto empire’s finances. Lawyers for the FTX debtors argued against appointing an examiner during a court hearing on Monday, saying it would be too expensive and could raise cybersecurity concerns. 

Lawyers for the U.S. Trustee, the FTX debtors, the creditors committee and the liquidators are expected to update the judge on their progress at the next FTX hearing on Wednesday in the U.S. Bankruptcy Court for the District of Delaware.

“It’s simply going to be a duplication of effort and an enormous amount of expense,” said James Bromley, a lawyer for FTX and other affiliated debtors, like Alameda Research. “We do not have enough money to pay back all of our creditors.”

Judge John Dorsey acknowledged on Monday that appointing an examiner could cost the bankruptcy estate hundreds of millions of dollars and discussed the possibility of giving the examiner a set budget to head off that concern. 

The fact that FTX has $1.2 billion in unrestricted cash “is not the point,” Bromley continued, because the debtors “need $8 billion of unrestricted cash.”

Arguments and cross-examinations lasted approximately five hours. After the lawyers finished closing arguments, Dorsey invited them to talk privately in his conference room to find a “consensual resolution” that would pre-empt a ruling by the judge.  

A similar examiner was appointed in the bankruptcy proceedings of crypto lender Celsius, and filed a bombshell report last week. Lawyers for the Official Committee of Unsecured Creditors of FTX and joint provisional liquidators in the Bahamas also argued against the examiner motion. 

Millions of documents

FTX CEO John Ray III testified as a witness during the Monday hearing and offered a glimpse into the trove of documents and data his team has sifted through since the firm filed for bankruptcy protection in November. Ray has previously said that FTX’s old leadership did not keep trustworthy financial records. 

“The company was really unlike any other I’ve ever seen. Not a single list of anything,” Ray said, describing a hack into FTX shortly after the bankruptcy filing as “pure hell.”

Ray said he was paid $690,000, excluding expenses, for his work from Nov. 11, when he took over as CEO of the company, to Dec. 31.

The corporate empire’s new management has collected millions of documents and fielded hundreds of government requests in the last several months. FTX has collected more than 10 terabytes of data, or 27 million documents.

The firm is cooperating with criminal and regulatory investigators, fielding 156 requests from prosecutors in the Southern District of New York, the office that filed criminal charges against former FTX CEO Sam Bankman-Fried two of his top lieutenants. FTX has produced 70,000 documents for investigators and gave four presentations based on “synthesis of evidence,” according to Ray.  

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Stephanie Murray