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Impossible Cloud, a Germany-based decentralized cloud platform, raised $7 million in seed funding, led by HV Capital and 1kx. 

The equity round, which closed last month, featured participation from Protocol Labs, TS Ventures and Very Early Ventures. The startup began fundraising toward the end of the third quarter of last year, according to a written interview with founders Kai Wawrzinek and Christian Kaul. 

Wawrzinek is the founder of gaming studio Goodgame Studios while Kaul is a former Airbnb director, who later joined Goodgame initially as a head of talent acquisition before rising up to VP level. The pair are joined by co-founder and CTO Daniel Baker, formerly of open source platform D2iQ. 

Impossible Cloud looks to provide decentralized cloud services for B2B customers looking to delve into web3 tech.

The problem in the clouds, and a silver lining

Currently, the startup says that centralized cloud platforms offered by big tech players such as Amazon, Meta and Microsoft suffer from complex pricing models, capacity limitations and a single point of failure, with one server vulnerability resulting in the possible loss of data.

It’s also made intentionally difficult to change providers, meaning users are locked into using one particular service even if it could benefit from another one. That’s not to mention that some states require data to fulfill certain standards, such as storage in a particular country which centralized providers with large but few data centers are unable to cater for. 

“We feel that web3 is inevitably the future of the most relevant cloud services, like cloud storage and computing, and is a highly positive development for business and government,” said the founders. “It’s a natural progression from web1 (read-only), web2 (read-write, highly centralized by now) to web3 (read-write-own, decentralized Cloud).” 

A cloud service powered by web3 technologies would benefit from an incentive system to speed up scaling, a distributed system to solve the issue of the geographical location of data storage and enable many participants to have a stake in the cloud systems that they use every day. 

Target users

Sales for the services offered by Impossible Cloud will be done in fiat so users can benefit from the possible benefits that web3 technology could offer without having to change the fundamentals of their business models.

It will look to target online picture or video platforms and industries that rely on frequent backups of large datasets, such as surveillance video companies, said Wawrzinek and Kaul. 

“More generally, we’re targeting companies that already incur more than $10,000 in Cloud storage bills and want to save up to 70% of their monthly total cost of ownership,” they added. 

The company will primarily use the funding to finance its cloud storage solution, add further staff and incorporate in the U.S. 

© 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.

Episode 16 of Season 5 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Arkham Intelligence Founder and CEO Miguel Morel.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Feedback and revision requests can be sent to podcast@theblockcrypto.com.

Miguel Morel is the Founder and CEO of Arkham Intelligence — an analytics platform that is attempting to de-anonymize the crypto markets. It is backed by high-profile investors including Tim Draper and the founders of Palantir and OpenAI. 

In this episode, Morel unpacks how increased on-chain visibility can help traders and investors alike discern the ‘truth’ behind market activity, and how Arkham’s technology can help prevent another FTX-type of event.

During this episode, Chaparro and Morel also discuss:

• Whether or not anonymity is a good thing in crypto
• How technology tends to drift towards ‘GovTech’
• What’s on Arkham’s roadmap

This episode is brought to you by our sponsors Circle, Railgun, Flare Network

About Circle
Circle is a global financial technology company helping money move at internet speed. Our mission is to raise global economic prosperity through the frictionless exchange of value. Visit Circle.com to learn more.

About Railgun
Railgun is a private DeFi solution on Ethereum, BSC, Arbitrum and Polygon. Shield any ERC-20 token and any NFT into a Private Balance and let Railgun’s zero-knowledge cryptography encrypt your address, balance and transaction history. You can also bring privacy to your project with Railgun SDK and be sure to check out Railgun with partner project Railway Wallet, also available on iOS and Android. Visit Railgun.org to find out more.

About Flare
Flare is an EVM-based Layer 1 blockchain designed to allow developers to build applications that can use data from other blockchains and the internet. By providing decentralized access to a wide variety of high-integrity data from other blockchains and the internet, Flare enables new use cases and monetization models. Build better and connect everything at Flare.Network.

© 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.

The developer behind Conflux Network has raised $10 million from DWF labs. Its native token, CFX, gained 9.6% following the announcement.

DWF Labs purchased CFX from the project’s team and foundation reserve. The tokens will “linearly unlock” over an unspecified period, said Fan Long, Conflux co-founder. The Layer 1 blockchain will use the funding to build out its tech stack and expand its user base. 

CFX was trading for $0.231 by 4:30 a.m. EST, up around 9.3% over the past few hours, according to TradingView data. 

CFXUSD chart by TradingView

Betting on brands

Conflux recently benefited from brand partnerships with China Telecom and Little Red Book.

China Telecom is the country’s second-largest telecom provider. Conflux is working with the firm to develop blockchain-enabled SIM cards. “The Web3 product will be the largest blockchain hardware product ever seen globally, involving the most users and applications,” according to a Twitter post. China Telecom has over 391 million mobile subscribers.

Before this, Conflux revealed in January that it would integrate with Little Red Book, the Chinese version of Instagram. The partnership will allow users to display their NFTs on the platform

The price of CFX token climbed in response to both partnership announcements. 

© 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.

Conflux, a Layer 1 blockchain developer, raised $10 million from DWF Labs.

The investment will help Conflux expand its technology and grow its user base, DWF Labs said Wednesday. Conflux co-founder Fan Long confirmed the investment, saying it was settled “a few days ago.”

DWF Labs bought Conflux (CFX) tokens from the project’s team and foundation reserve and will “linearly unlock over a period of time,” Long said.

He added that DWF’s “strategic investment” will “tremendously” help Conflux build its ecosystem.

China blessings

Conflux was developed by Long, who is also an assistant professor of computer science at the University of Toronto, and Andrew Chi-Chih Yao, the only Chinese Turing Award winner, who serves as the chief scientist of Conflux, according to Long.

The Conflux network went live in 2020, but it has been in the news lately as it recently formed partnerships with China Telecom, the country’s second-largest wireless carrier, and Little Red Book, China’s version of Instagram.

Long said Conflux is “the only regulatory compliant permissionless blockchain in China” and that the project’s core research and development team is entirely Chinese. “Unlike all other public chains, we never did ICO [initial coin offering]-like activities, which are restrictively banned by the Chinese government,” Long said. In 2021, the Shanghai government provided a grant of over $5 million to Conflux, he added.

On how Conflux is different from other blockchain networks, Long said the network’s “Tree-graph” consensus algorithm allows it to achieve a capacity of 3,000 transactions per second with a confirmation time of 23 seconds, all while maintaining a high level of security.

“This elevates public chain technology to new levels of day-to-day performance,” he said. “Over 300 platforms, brands, and IP parties have recognized, adopted, and strategically incorporated Conflux.”

Expanding ecosystem

With fresh capital in hand, Conflux plans to further expand its ecosystem around Hong Kong’s new web3 policy, Long said.

Hong Kong recently said in an announcement that it would earmark $6.4 million (HK$50 million) for developing its web3 ecosystem. Hong Kong’s Securities and Futures Commission also recently published its proposed rules for virtual asset platforms.

There are currently around 70 people working for Conflux and the project doesn’t have immediate hiring plans, according to Long.

The DWF Labs investment brings Conflux’s total funding to date to more than $50 million. The project has previously raised over $40 million, Long 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.

Bitcoin mining stocks tracked by The Block were mostly higher on Tuesday, with 12 gaining and the other seven declining.

Bitcoin fell 0.6% to $23,215 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.

A former director of engineering at FTX was “an active participant” in a plan to deceive FTX’s investors and went so far as to withdraw millions from FTX for his personal use, the Securities and Exchange Commission alleged.  

Nishad Singh was charged Tuesday for “his role in a multiyear scheme” to defraud investors on the crypto exchange FTX, according to an SEC statement. That exchange filed for bankruptcy protection in November and its former CEO Sam Bankman-Fried is facing criminal and civil charges.  

Singh consented to a “bifurcated settlement” regarding the SEC charges, which awaits a court’s approval. Earlier on Tuesday Singh reportedly pleaded guilty to separate criminal charges brought by federal prosecutors. 

Singh was “an active participant” in a plan to deceive FTX’s investors, according to the SEC’s complaint. Singh went so far as to withdraw about $6 million from FTX for his personal use including a “multi-million dollar house and donations to charitable causes.” 

Alameda code

The SEC said Singh also created software code that allowed FTX customer funds to go to Alameda Research, a crypto hedge fund founded by Bankman-Fried and Gary Wang. That was done “despite false assurances by Bankman-Fried to investors that FTX was a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and that Alameda was just another customer with no special privileges,” a statement from the SEC said.  

Singh knew or should have known that those statements were misleading, the agency said.  

“We allege that this was fraud, pure and simple: while on the one hand FTX touted its supposed effective risk mitigation measures to investors, on the other Mr. Singh and his co-defendants were stealing customer funds using software code Mr. Singh helped create,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. 

The Commodity Futures Trading Commission and the U.S. Attorney’s Office for the Southern District of New York also announced charges against Singh in parallel actions. Singh pleaded guilty to six criminal charges brought by SDNY prosecutors in a court hearing on Tuesday, according to Reuters.

 The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 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.

Bitcoin miner Marathon Digital canceled its fourth-quarter earnings call scheduled for Tuesday after the U.S. close.

The miner postponed the release of its fourth-quarter and 2022 full-year results after getting a notice from the U.S. Securities and Exchange Commission about “accounting errors,” according to a filing on Tuesday.

Those errors were related to the impairment of digital assets and impacted published results going as far back as 2021. Marathon said it intends to correct the errors and restate the impacted financial statements.

The company should have recorded revenue from its MARA pool on a gross basis and not on a net basis, the filing said.

“The company estimates that both its revenues and its cost of revenues for the year ended December 31, 2021 were understated due to the ‘net’ vs. ‘gross’ presentation of revenues in its financial statements. As a result, both revenues and cost of revenues, energy, hosting and other are expected to increase upon completion of this restatement for 2021,” the filing said.

However, it shouldn’t have any effect on total margin, operating income or net income in 2021 or in any of the interim periods in 2021 or 2022, it added.

“The company intends to provide additional updates at an appropriate time in the future,” Marathon said in a press release on Tuesday.

Shares of Marathon were up 4.22% as of 12:42 p.m. EST.

The miner was expected to report $38.4 million in revenue, triple what it posted in the previous quarter but still down year-over-year from $60.3 million, according to analyst estimates compiled by FactSet.

© 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.

The French National Assembly passed a set of licensing rules for crypto firms operating in the country as part of a broader bill aimed at harmonizing French law with European Union standards.

The final National Assembly vote tally was 109 in favor to 71 against. The French Senate already passed the bill, so it will travel next to French President Emmanuel Macron, who has 15 days to either approve it or send it back to the legislature, though the bill is expected to become law. 

Following an industry push, the provisions will take a milder form than French policymakers originally proposed amid a regulatory push after the collapse of FTX — taking a step toward broader anticipated EU rules.

The rules on crypto firms mean that French companies offering crypto services must attain a registration more robust than currently offered from the Financial Markets Authority (AMF). France’s action is meant to complement the EU-wide Markets in Crypto-Assets legislaton, expected to pass a final European Parliament vote in April, essentially bringing French registered firms into compliance with the anticipated law ahead of schedule. 

The beefed-up registration process will apply to companies registering from July 2023 onward. Companies that are already registered with the AMF, following existing anti-money laundering provisions, will be able to continue to operate as they are until the end of the transition period which MiCA offers, likely in 2026.

Potential barrier to innovation

“While this is a good step forward, it is not a huge leap, rather a bridge towards MiCA,” says Anne-Sophie Cissey, head of legal and compliance at Paris-based crypto service company Flowdesk. “For crypto companies, the message is prepare, get ready for MiCA.”

The new registration proposal would lock down higher regulatory standards for crypto service providers. It would ensure their compliance in areas like governance, rules on the segregation of funds, and guidelines for reporting to regulators. Firms would also be required to provide clear disclosures on risk and implement policy for conflict of interests. Many of these provisions overlap with those outlined under the EU’s regulatory framework expected to soon be passed by the European Parliament. France’s new regulations would take effect well before MiCA is expected to though, as the Europe-wide framework would take effect over a year after its final vote. 

Faustine Fleuret, head of French crypto lobbying group ADAN, told The Block that while it is desirable for crypto companies to comply with measures to bolster consumer protection, she is afraid the requirements will set too high a bar for smaller companies. This may cause a competitive disadvantage compared to those in other jurisdictions.

“The risk is that they will simply not be able to launch their activities and that France will be deprived of this innovation,” Fleuret said.

“While the French regulation is a blueprint for MiCA, complying with that will surely be more difficult for smaller projects — to the point that we see the fears that it would drive fresh start-ups from Europe not entirely unjustified,” Cissey added.

A compromise for industry

However, the current provisions are a far milder version of the former implications of the bill, formed as a compromise between policymakers and industry.

Social-liberal Senator Hervé Maurey originally proposed a December amendment which would oblige French crypto firms to acquire a never-before-attained license with the AMF, following a spur to regulate crypto following the collapse of crypto exchange giant FTX in November.

“The recent bankruptcy of FTX has highlighted the risks inherent in any investment in crypto assets, especially when the company operates outside of any regulation,” Maurey wrote in the text accompanying an amendment. The high-tier license, which is currently optional for crypto firms, would have been mandatory by October 1, 2023.

Following a push from the crypto industry, liberal-centrist Senator Daniel Labaronne proposed to instead offer a more attainable registration and push the deadline to 2024. 

Fleuret told The Block at the time that “these proposals are a step in the right direction, both to effectively protect the investor and to preserve the dynamics of innovation and business creation in France.” 

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 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.

Coinbase is taking the crypto gospel on the road with plans to make inroads all across the United States.

On Twitter, the crypto exchange operator announced an initiative aimed at advancing “pro-crypto policy in all 435 Congressional Districts across the U.S.,” while also posting a link to an online petition. The cryptocurrency exchange is eager to influence both the legislators and regulators who will likely determine how people and companies are able to buy, sell and trade digital assets.

“We need thoughtful policymaking and smart regulation so that we can continue to advance crypto and web3, and make progress on our mission to increase economic freedom,” Coinbase said in a Twitter post.

Coinbase’s effort to harness the power of people interested in a future where digital assets play an integral part in society comes at a potential crossroads for the crypto industry. Amid a series of bankruptcies and fraudulent behavior, lawmakers and regulatory bodies like the U.S. Securities and Exchange Commission have intensified their scrutiny of digital assets.

Reaching out to politicians and potentially influencing how they vote on future legislation appears to be at the heart of the exchange’s campaign. “Coinbase will empower the #Crypto435 community with information about how to contact specific politicians in their local districts,” the company also posted to Twitter

© 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.

UBS strategists say impending Mt. Gox bankruptcy repayments might not be cause for concern for the price of bitcoin.

Crypto prices have been sluggish toward the end of February. Bitcoin was trading just below $23,500 by 10:30 a.m. EST, relatively flat, according to TradingView data. The cryptocurrency has traded in a narrow range over the past week, unable to cling to levels above $24,000. 

BTCUSD chart by TradingView

A significant moment for bitcoin price action could be the liquidation process of the defunct Japanese exchange Mt. Gox. Following a nearly decade-long process, creditors are about to recoup some of their funds, said Ivan Kachkovski, a strategist at UBS.

The current plan gives creditors several options on repayment methods and timing.

“The most important ones are, first, whether to take an early lump sum payment or wait for further proceedings and additional asset recoveries and second, receiving funds in fiat or crypto,” Kachkovski said. The deadline to select a repayment option is currently set for March 10, and payments could commence in September of this year. 

Kachkovski notes the early lump sum option with fiat repayments would result in the exchange selling bitcoin to raise the requisite cash and could give authority to the “long-held fear that Mt.Gox redemptions would hurt bitcoin’s price,” he added. 

Crucially, it won’t be over 700,000 bitcoin being disposed of since the exchange has only recovered about 142,000 bitcoin — as well as 143,000 bitcoin cash and 69 billion Japanese yen ($505,000), “roughly 20% of the hack,” according to Kachkovski.

He added that the amount of bitcoin available to the exchange represents 16% of the recent daily trading volume. While this might seem meager, it would amount to about “90% of average supply active within the last day, 28% in the last week, and 10% of the last month,” he pointed out. When active supply increases, bitcoin’s price tends to fall, according to Glassnode and UBS data. 

Due to most early adopters remaining crypto believers, most of this is unlikely to reach the market, Kachkovski added. Recent reports say two of the exchange’s largest creditors, with 20% of claims, have opted for the crypto payout. While new supply could come to market, he noted that this at least implies it would be less concentrated.

“It’s certainly difficult to estimate the extent to which the market has been pricing massive sales coming from Mt.Gox. However, we think such news could have been an additional factor for—what we believe could be mainly retail-led — BTC’s surprising resilience of late,” Kachkovksi’s note concluded. 

© 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.