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Paxos said it “categorically disagrees” with the U.S. Securities and Exchange Commission in calling Binance USD (BUSD) a security.

The stablecoin issuer said it got an SEC Wells notice pertaining to BUSD after the regulator alleged Paxos listed the stablecoin as an unregistered security.

“We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary,” the company said in an emailed statement to The Block. “To be clear, there are unequivocally no other allegations against Paxos.”

Paxos will stop issuing BUSD following an order from the New York Department of Financial Services.

“Paxos has always prioritized the safety of its customers’ assets,” the company said. “BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts.”

Paxo will stop issuing new BUSD stablecoins starting Feb. 21, but will allow for BUSD redemptions through at least February 2024, the company said.

“BUSD is a stablecoin wholly owned and managed by Paxos. As a result, BUSD market cap will only decrease over time,” a Binance spokesperson told The Block earlier. “Paxos will continue to service the product, manage redemptions, and will follow-up with additional information as required.”

© 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 lower on Monday, with four gaining and 13 declining.

Bitcoin fell 1.5% to $21,653 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.

Limit Break took to one of the biggest stages in television on Sunday to promote a new NFT collection belonging to its anime-styled DigiDaigaku brand during the Super Bowl. Far from the spotlight a scam artist was busy stealing several DigiDaigaku NFTs from their rightful owners, according to crypto security firm PeckShield.

“The phisher 0xA69F8 has grabbed 153 NFTs in the past 12 hours, including four Digidaigaku and six DigiDaigakuHeroes,” PeckShield posted on Twitter. The crypto security firm also said that DigiDaigaku #756 and DigiDaigaku #1407 had, in the past, sold for more than $12,000 each on the X2Y2 platform.

NFT studios are trying to expand the reach of their brands in order to attract mainstream consumers, even as the broader industry has suffered a months-long crisis of confidence triggered by hacks, scams and allegations of fraud.

Limit Break’s Super Bowl advertisement, which cost $6.5 million, was the lone crypto promotion made during the highly-anticipated game. In a 30-second spot, the company broadcast a QR code that people could scan in the hopes of minting a free NFT in the DigiDaigaku ecosystem.  

Limit Break didn’t immediately respond to a request for comment about the phishing scam reported by PeckShield.

The Super Bowl promotion advertised Limit Break’s 10,000-piece NFT collection called DigiDaigaku Dragon Eggs. The NFTs, which were free to mint, have already generated more than $1.7 million in trading volume on the secondary market, according to OpenSea data.

Limit Break’s DigiDaigaku Genesis collection has racked more than $28 million in volume since launching last year, also according to OpenSea.

© 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.

It’s been a mixed bag today for crypto-related equities as U.S. regulators continued a clampdown that has hit both staking and stablecoins.

Silvergate fell 3.7% to $14.46 by 2 p.m. EST, according to Nasdaq data. The crypto-friendly bank has faced increasing scrutiny over the past few months following the collapse of FTX amid fears of increased regulatory oversight in the U.S. on banks that interact with cryptocurrency. SI was the most shorted stock on Wall Street, according to a recent report from MarketWatch.

SI chart by TradingView

Coinbase was trading around $56, down about 0.8% having pared earlier losses. Shares in the exchange traded down 22% last week as the Securities and Exchange Commission said the Kraken exchange agreed to pay a $30 million penalty and cease its staking products for U.S. customers.  

COIN chart by TradingView

“Last week’s share price decline and today’s extended losses are likely related to the recent reports of the SEC’s desire to crack down on staking,” said Ryan Coyne, senior equity analyst at Mizuho.

Coyne said that despite the crypto rally in January, retail investors haven’t returned to the market just yet. “If true, this would put pressure on COIN’s top line, as the majority of COIN’s revenue is earned from transaction fees it charges on retail trades,” he said. 

MicroStrategy and Jack Dorsey’s Block were trading higher, gaining 2% and 3%, respectively. All major U.S. stock indices were higher, with the S&P 500 gaining 1.15%, the Nasdaq 100 rrising 1.7% and the Dow Jones Industrial Average adding 1%.

© 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.

Circle filed a complaint with the New York State Department of Financial Services last year over rival Binance’s “mismanagement of reserves” for its own tokens, Bloomberg News reported. 

The news comes hours after the regulator ordered Paxos to stop issuing the Binance USD stablecoin, citing “several unresolved issues related to Paxos’ oversight of its relationship” with Binance over the branded stablecoin. 

Circle, which offers the USDC stablecoin, alerted the NYDFS last fall that Binance didn’t have enough reserves to back the tokens it issued, Bloomberg said, citing an person familiar with the matter. 

Reuters earlier reported that the NYDFS found that Paxos “violated its obligation to conduct tailored, periodic risk assessments and due diligence refreshes of Binance and Paxos-issued BUSD customers to prevent bad actors from using the platform.”

© 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.

Web3 gaming has been a bright spot in an otherwise down year for an industry that has seen funding dry up. That might not be the case for much longer if interest in blockchain gaming continues to wane. 

The number of active users for such games dropped 30% since October, crypto market researcher Messari said. The number of new users dropped by 34%. 

After an initial wave of simple “play-to-earn” games like Axie Infinity gained popularity during crypto’s bull run, a new class of more sophisticated games developed by seasoned developers has entered the market. Crypto enthusiasts continue to see blockchain gaming as a surefire way to eventually convince consumers to embrace web3, possessing digital wallets and owning digital assets.

But Axie Inifity’s popularity collapsed as the bear market set in. So far there have not been any new blockchain game – Yuga Labs’s recent headline-grabber Dookey Dash may or may not qualify, depending on how one defines a web3 game – which have managed to attract a large number of gamers.

During the last several months, a sharp reduction in cryptocurrency prices and non-fungible token trading volumes has caused sentiment to sour. But investment in blockchain gaming and NFT projects has remained robust, pulling in hundreds of millions of dollars in fresh venture capital each month. The trend continued last month with the NFT-gaming vertical securing the most funding among all categories, outpacing both infrastructure and financial services, according to The Block Research.

Well-funded game developers are generally optimistic about the months to come.

“We’re starting to see games that get into millions of players,” Mythical Games CEO John Linden said last month. Linden is encouraged by the growth of web3 gaming and how well his company’s game Blankos Block Party is performing, but he knows there’s a long way to go.

“Blankos has a million players. Axie has a couple million players. But that’s not really that big, to be super honest, in gaming. Call of Duty mobile has 500 million. Niantic has a billion. We’re still in the infancy.”

Mythical Games achieved a value of $1.25 billion after it raised $150 million in 2021 from investors including Andreessen Horowitz.

© 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.

HadesDAO, the organization associated with the Hadeswap protocol, acquired NFT darling SolanaMonkeyBusiness (SMB) and its IP in the latest example of consolidation in the NFT market. 

“It is a unique opportunity to be able to empower a brand so powerful and unique,” Hadeswap wrote in a blog announcing the deal.

The terms of the deal were not disclosed. 

SMB is a collection of 5,000 SolMonkey NFTs minted on the Solana blockchain. It rode a wave of hype after launching in summer 2021 to become one of the most valuable collections on the chain.  

HadesDAO said it would look to work closely with MonkeDAO, the original community of SMB holders following the buyout. 

“The acquisition of SMB by HadesDAO does not change SMB holder’s access to MonkeDAO nor does it grant HadesDAO access to MonkeDAO’s governance,” MonkeDAO tweeted following the announcement. “The plans for OMC remain unchanged and we are still expecting to release the Official MonkeDAO Collection in the upcoming months.”

The move echoes other consolidation in the market. In March last year, Bored Ape Yacht Club developer Yuga Labs bought the IP for blue chip projects CryptoPunks and Meebits. April also saw Netz capital acquire Pudgy Penguins for $2.5 million.

© 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 CEO Brian Armstrong said he was in Washington, D.C. today in a push for clearer rules amid rising uncertainty in the sector following enforcement actions this month against Kraken and Paxos. He also said a Senate cafeteria needed more low sugar options.

“’I’m in Washington D.C. and had a meeting canceled,” he wrote on Twitter. “Will be at the Dirksen Senate Office building snack bar for the next hour or so, if anyone wants to come chat about crypto and how we get crypto legislation + regulatory clarity this year.”

“This place is carb central,” he wrote in a follow up tweet after spotting soft serve ice cream in the cafeteria. “Need more low sugar options.”

© 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 Iris energy bought 4.4 EH/s worth of machines with $67 million in Bitmain prepayments and now expects to nearly triple its hashrate.

The company turned off about 3.6 EH/s worth of machines collateralizing over $100 million in loans in November after getting a default notice from its lender.

The new miners (S19j Pro) will be installed “over the coming months” and bring Iris’s hashrate up to 5.5 EH/s, the company said.

“This is a significant milestone for Iris Energy. We are delighted to have been able to utilize our remaining Bitmain prepayments to acquire new miners without any additional cash outlay,” said co-founder and co-CEO Daniel Roberts.

The company is also considering selling any surplus miners over 5.5 EH/s of self-mining capacity “to re-invest in growth initiatives and/or corporate purposes.”

Iris is debt free after extinguishing its loans at the end of last year.

The firm said in November that given mining economics, the machines used as collateral weren’t making enough money to pay for loans, generating around $2 million in BTC per month in gross profit, versus the $7 million in debt obligations.

“The facilities were intentionally structured for prudent risk management to protect the underlying business and data center infrastructure the Group has built (i.e., without a parent company guarantee and without recourse to any other Group entities),” the firm 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.

Galaxy Bahamas, a subsidiary of Mike Novogratz’s crypto investment firm, received approval from the Securities Commission of The Bahamas in December for registration as a digital asset business under its Digital Assets and Registered Exchanges Act of 2020. 

Galaxy Bahamas Ltd. will physically operate out of the Bahamas and intends to initially serve as an extension of the company’s trading, custody and money services operation businesses. It will also offer market making and staking services, the latter of which has recently seen increased scrutiny in the U.S.

“In light of the FTX dispute, customers, counterparties and regulators may view operations within the Bahamanian cryptoeconomy as more risky than operations in other jurisdictions,” the firm said in a February filing.

Galaxy Digital didn’t immediately respond to a request for comment.

The move comes amid increased scrutiny of crypto firms, including recent news that the New York Department of Financial Services ordered Paxos to stop issuing Binance USD. Last week, crypto exchange Kraken agreed to settle charges brought by the Securities and Exchange Commission for failing to register its staking program.

© 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.