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MetaMask and PayPal are joining forces to offer an ETH onramp to the web3 application, ConsenSys announced today.

“Buying crypto is riddled with friction, and there isn’t a one-size-fits-all solution for our global user base. So we’re working with several companies to make the process easier and safer for users,” a ConsenSys spokesperson told The Block.

The integration represents the first between PayPal and a web3 wallet, and will be initially rolled out to select U.S.-based PayPal users, according to ConsenSys. From within the MetaMask app, users will be able to log directly into PayPal and buy ETH, or send existing ETH reserves on their PayPal account directly to their MetaMask wallet.

“As the leading self-custodial wallet, MetaMask acts as a digital authority manager and portal for web3, providing users with secure access to their data and online assets. With the addition of PayPal, MetaMask is expanding its payment options to serve its users better and support the broader web3 ecosystem,”ConsenSys said.

As it expands access to crypto services, PayPal continues to branch out into additional regions. Earlier this month, the payment provider introduced crypto services in Luxembourg, extending account support to allow customers to buy, hold or trade Bitcoin, Ethereum, Litecoin and Bitcoin Cash.

© 2022 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 U.S. Federal Reserve raised the federal funds rate by 50 basis points, increasing it to a range of 4.25% to 4.5%, the highest since 2007.

Today’s interest rate decision was largely expected, with traders pricing in such a rise ahead of time. The price of bitcoin dipped below $18,000 following the news.

The central bank said it remains “highly attentive” to inflation risks. Policymakers projected rates would peak next year at 5.1% before being cut to 4.1% in 2024. That’s higher than previously predicted.

Source: federalreserve.org & bls.gov.org

Bitcoin immediately fell on the news. The leading crypto by market cap dipped below $18,000 briefly, from $18,355 before the announcement. The move appears to be a classic example of “buy the rumor, sell the news.”

© 2022 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 federal bankruptcy judge will hear evidence about the potentially criminal movement of assets out of FTX and its affiliated companies, in what is the latest escalation of a heated legal struggle between the failed crypto firm new leadership and federally indicted former CEO Sam Bankman-Fried.

New FTX CEO John Ray III and lawyers from the firm Sullivan and Cromwell, who represent the company in the Chapter 11 bankruptcy process, have alleged that Bankman-Fried, FTX co-founder Gary Wang and the Bahamian government have colluded to shield hundreds of millions of dollars worth of assets from U.S. court proceedings.

Because of that, they want to block ongoing access for lawyers representing FTX Digital Markets, the Bahamian operation that handled much of the failed corporate empire’s digital asset trades, to computer systems of that subsidiary. FTX DM was the branch of the company that lost hundreds of millions of dollars in assets hours after Bankman-Fried moved his companies into bankruptcy protection; the Bahamian Securities Commission, a financial regulator, said days later that it now held a large portion of those assets in a cold wallet.

“We believe that any dynamic access will be provided immediately to the government of the Bahamas and, particularly, the Securities Commission,” argued James Bromley, a Sullivan and Cromwell partner representing FTX, to Judge John Dorsey of the U.S. Bankruptcy Court, District of Delaware.

Bromley noted that previous access given to the commission has led to the movement of hundreds of millions of dollars worth of assets out of FTX and into the control of the Bahamian regulator. This was done in a way that may violate U.S. bankruptcy law meant to maintain assets in place to eventually recoup funds for anyone who lost money in the failure of companies. The Sullivan and Cromwell partner suggested providing “static access” from the systems rather than “dynamic,” ongoing access.

Chris Shore, a lawyer hired to liquidate the Bahamian operation, took issue with Bromley’s characterization while asking the judge for continuous access to FTX DM’s systems. The bar should not be set where the liquidators, “must prove that there was no collusion between the commission and SBF,” before getting access to the computer systems.

The full hearing on the subject, scheduled for Jan. 6, adds another item to Bankman-Fried’s long list of legal concerns, while accusations of operating in bad faith have also been made against lawyers he hired for the Bahamian operation, and the Bahamian government itself. The Jan. 6 hearing could include witnesses, possibly including Bankman-Fried, depending on the status of his other legal proceedings. The scandal-ridden crypto mogul was arrested by Bahamian authorities and denied bail last night.

But Judge Dorsey asked lawyers representing FTX, the lawyers hired by Sam Bankman-Fried to liquidate FTX DM, and representatives of the Bahamian government to try to resolve the issue

Lawyers representing FTX in bankruptcy filed documents on Monday showing emails between Bankman-Fried and Bahamian Attorney General Ryan Pinder in which Bankman-Fried offers to make Bahamian customers whole before those from other countries. The company’s lawyers connect that correspondence to the movement of hundreds of millions of dollars worth of assets, and say that Bankman-Fried and Wang minted new tokens and included them in the assets that they transferred to the Bahamian government after filing for U.S. bankruptcy, which requires the freezing of assets.

Pinder and the Securities Commission have said they do not recognize the bankruptcy process that the majority of companies that fall under the FTX corporate umbrella have entered, and maintain their own jurisdiction over the Bahamian operation.

The judge is also delaying arguments around making public the names of some of the entities that FTX and its affiliates owe money to. The company has objected, saying that its lists of customers are a valuable asset that can be sold to then repay money for those affected by the collapse, and that there are privacy concerns related to a public listing, especially for individuals. Lawyers for the U.S. government have argued that the businesses FTX and its affiliates owe the most money should be made public as part of standard bankruptcy practice.

Those arguments will now take place after a committee of customers affected by FTX’s collapse, known as a creditor committee, can be established. A representative for the U.S. government said that forming a committee has been difficult due to the geographical dispersion of the failed company’s customers. 

But Judge Dorsey kept a hearing in the case scheduled for Friday at 10 a.m. EST in case lawyers to hear further arguments around the computer access issue if a resolution can’t be reached outside of court. 

© 2022 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 New York-based asset manager Wisdom tree has launched nine new blockchain-enabled funds. 

These nine funds are effective with the U.S. SEC and come ahead of WisdomTrees digital wallet, slated to launch in the first quarter of 2023, according to a company release. The nine bring WisdomTree’s total digital funds up to 10. The firm’s first digital fund, the WisdomTree Short-Term Treasury Digital Fund, was approved by regulators in September of this year.

“We believe that blockchain-enabled finance has the potential to improve the investor experience through enhanced liquidity, transparency and standardization, which we aim to achieve over time, and these nine digital funds are setting the foundation as we seek to bridge the gap between traditional finance and digital finance today,” said WisdomTree Head of Digital Assets Will Peck in a company statement. 

WisdomTree attempted to list a bitcoin spot ETF in 2022 and 2021. The SEC rejected both proposals, citing insufficient parameters to prevent fraud and market manipulation.

Despite meeting estimates in the third quarter of 2022, the firm’s crypto holdings fell 56% from $406 million at the beginning of the year to $178 million in October, The Block previously reported. 

© 2022 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 soared ahead of the Federal Reserve’s last interest rate decision of the year while the U.S. dollar has erased much of its 2022 gains. 

Bitcoin was trading at $18,080 at 10:53 a.m. ET ahead of the Fed’s decision — its highest level since mid-October.

BTCUSD chart by TradingView

Ether continues to trade above $1,300, having jumped above the level following Tuesday’s inflation figures. Altcoins were less buoyant. Ripple’s XRP was up just 0.6% in the past day, while Cardano’s ADA rose just 0.2%

The Fed is expected to opt for a 50-basis points rate hike today, bringing the overall interest rate to 4.25-4.5%, said David Stritch, an analyst at Caxton. “This would bring the interest rate to its highest level since 2008 — not good news for the stumbling U.S. housing sector, but hope may be on the horizon,” he added.

Yesterday’s inflation numbers gave hope for a quick fall in the inflation rate, Stritch added, before saying that this will allow “the Fed to take its foot off the windpipe of the U.S. economy in the second or even first half of 2023.”

Beyond the interest rate decision, analysts and investors will look to the Fed’s dot plot for clues as to where the committee sees rates going next year. 

The U.S. dollar tumbled following the inflation news and the Fed slowing the rate of increases today could send it lower. The U.S. Dollar Index fell to its lowest point since June yesterday, reaching 103.58. Bitcoin typically trades higher when the dollar is weaker. 

DXY chart by TradingView

Crypto stocks

U.S. stock indices traded higher today, with the S&P 500 and Nasdaq 100 each gaining 0.6%.

Coinbase gained 4.3% to trade above $40. COIN shares reached an all-time low on Tuesday amid ongoing concern over the fallout of FTX and the firm’s weakening revenue.

Silvergate shares recovered some of the past week’s losses. Shares in the crypto bank were up almost 2%, trading above $19.

Block shares were trading at $72.3, up 1.8$, and MicroStrategy jumped almost 3% to $207.

© 2022 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.

Uncollateralized lender Maple Finance has updated its protocol to a second version aimed at opening up the lending platform to a wider range of institutional borrowers, including those from outside the crypto industry. 

With the new update, called Maple 2.0, the team hopes to reduce the risks associated with its services that arise from sector concentration. Currently, most of the lending activity on Maple involves crypto firms and market makers in the digital assets space, which Maple said exposed the protocol to contagion risk from the fallout related to the collapse of the FTX exchange. 

Maple Finance is a decentralized protocol that enables verified firms to access loans without collateral. The company’s operations differ from normal crypto lending protocols like Aave, where each loan is secured with excess collateral. In addition, Maple does not take the credit risk by itself, as it only provides the lending infrastructure while other eligible firms called “Maple delegates” offer lending pools. 

Anyone can add funds to Maple’s pools and earn interest, and it’s up to the delegates to check the creditworthiness of a borrower. Last week, a delegate called M11 suffered a $36 million default from crypto firm Orthogonal Trading, which had borrowed from an M11-run pool on Maple. Orthogonal claimed its funds became tied up on the bankrupt exchange FTX. 

The Orthogonal default has drawn skepticism from crypto industry players about the viability of uncollateralized lending. Maple’s chief, however, says that uncollateralized lending is a necessity to bring players from multi-trillion dollar capital markets to the blockchain.

“Maple is set up to target institutional borrowers and institutional lenders,” Maple CEO and co-founder Sidney Powell said. “I know that uncollateralized lending is not vogue in the decentralized finance space. But it is the way that most business finance works, you know, Apple doesn’t go and put down a bunch of collateral in order to borrow from a bank.”

Adjusting risk parameters

Rather than pivoting away from such lending practices, Powell said Maple would focus on better managing risk for its delegates, which serves as the main factor for its latest update. The platform is also seeking to attract more delegates with diversified sector expertise. 

After the new update, the firm said its delegates — who double as underwriters – will adopt better risk parameters as well as the ability to verify on-chain capital.

“Maple 2.0 is a complete overhaul of our smart contract infrastructure, as well as a new web app and experience for interacting with those smart contracts,” Powell said. The update has also introduced multiple technical improvements that were previously not present.

For example, Maple has introduced a new and more immediate default process. If a borrower fails to uphold the terms of agreement, a pool delegate will be able to declare an early default which immediately makes the loan payable. If no payment is made within the grace period, the delegate can liquidate the loan and all lenders in that pool will realize losses right away while recovery efforts are pursued.

Another improvement is that Maple will let lenders deposit and request withdrawals from the platform at any time without waiting for the existing 30-day capital lock-up period to lapse. 

Outside of crypto, Maple team sees an opportunity to lend to fintech firms seeking debt financing for the first time. The company said it’s receiving attention from large banking players and other financial institutions that are interested in borrowing from the platform but did not reveal specific names. 

© 2022 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.

Sens. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan., introduced legislation to tighten U.S. anti-money laundering rules to digital assets.

The bill would expand know-your-customer rules to wallet providers, miners, validators and other network participants, according to a joint release from the senators. It would also prohibit financial institutions from using or interacting with transaction mixers — decentralized applications that obscure transaction sources on distributed ledger networks like Ethereum.

“The crypto industry should follow common-sense rules like banks, brokers, and Western Union, and this legislation would ensure the same standards apply across similar financial transactions,” said Warren.

The bipartisan legislation faces long odds to become law during this Congress but will likely be reintroduced after the next one starts in January. The bill, which would further extend rules that are anathema to many cryptocurrency users and advocates, may also hasten rulemaking processes already underway within federal agencies.

The Massachusetts Democrat and Kansas Republican want the Treasury Department to establish an exam, similar to what bank regulators perform with banks, for money service businesses, the payments service classification that crypto firms typically register under. The U.S. The Securities and Exchange Commission and Commodity Futures Trading Commission would also be required to establish their own for the businesses they regulate, like broker-dealers and digital asset exchanges.  

“Following the September 11, 2001 terrorist attacks, our government enacted meaningful reforms that helped the banks cut off bad actors’ from America’s financial system,” Marshall said in the release. “Applying these similar policies to cryptocurrency exchanges will prevent digital assets from being abused to finance illegal activities without limiting law-abiding American citizens’ access.”

The pair of senators also want the Financial Crimes Enforcement Network to finalize a rule to require banks and money service businesses to report and keep records on counterparties and transactions involving unhosted digital asset wallets, or wallets hosted in jurisdictions that don’t comply with U.S. anti-money laundering rules.

The bill also includes information filing requirements for offshore digital asset transactions of $10,000 or more, and a mandate that cryptocurrency ATMs in the U.S. verify customer identity and regularly provide the locations and number of machines they own to federal authorities.

© 2022 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.

Two new NFT projects saw over $18 million in transaction volume within the last seven days. 

The depressed market conditions of 2022 spared no one, not even blue chip NFT projects, but these projects brought in ample transaction volumes despite the state of crypto. 

Vahalla is the third most popular NFT project this week, with $9.4 million in transaction volume from 6,774 sales, according to the NFT data tracker CryptoSlam.  Valhalla is a tactical strategy NFT-based game created by Stacked, a Los Angeles-based startup founded in 2019. It was envisioned by the creators of Floki, a memecoin. The firm raised $15 million from Pantera Capital, Comcast Ventures and other investors, according to Stacked’s website. 

Cockpunch, the fourth most popular NFT project this week, had $9.2 million in transaction volume from 9,554 sales within the last week. Cockpunch is a narrative fantasy fiction NFT collection founded by author and entrepreneur Tim Ferriss, best known for his book The 4-Hour Work Week. The NFT collection’s associated podcast of the same name reached #21 for fiction podcasts on the audio streaming platform Spotify. One Cockpunch NFT even sold for 55.55 ETH, or over $70,000. 

Overall NFT collectible sales remain a fraction of their sales volume at the beginning of 2022. The first week of December brought in $63 million in weekly NFT sales, compared to $230 million at the same time last year — a 73% decrease, according to The Block’s Data Dashboard. 

© 2022 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.

Spaceport, a web3 intellectual property protocol, raised $3.6 million in pre-seed round co-led by Arca, Decasonic and Crit Ventures, the venture arm of game developer Com2us.

Infinity Ventures Crypto, FBG Capital and Republic Asia are also among the investors that participated in the round, according to an announcement.

Spaceport is designed to help creators, brands and agencies monetize their intellectual property. 

“I think unlike a lot of other folks in this space that saw an opportunity within web3, we saw an opportunity in the real world and web3 was just the best solution to solve it,” said Le Zhang, co-founder and CEO of Spaceport, in an interview with The Block.

What’s wrong with the existing lP processes?

Zhang explains that the monetization of intellectual property is just too difficult currently. Every time a creator wants to monetize their IP they need to negotiate a new deal often getting lawyers and accountants involved each time, Zhang said.

“It’s an extremely tedious process,” Zhang said.

Spaceport aims to use blockchain technology to make this more efficient and cost effective for creators. Its first application Spaceport Core will enable creators to upload their works, convert the assets to be web3-compatible and then put that IP catalogue in front of brands to secure licensing deals and get contracts signed with royalties going back to the creator via the application, Zhang said. 

“You can think of it as like a multi-stack solution solving the entire licensing process,” Zhang said.

A decades old problem

Spaceport has already brought on board several notable partners, which it will reveal in the coming months, Zhang said. The protocol leverages a series of Ethereum Virtual Machine (EVM) compatible smart contracts and will launch on Ethereum first, but Zhang is also exploring EVM compatible chains such as Polygon.

The round closed in the spring following the collapse of Terra-Luna, Zhang said.

“Spaceport unblocks a key challenge for creators to adopt Web3 by aligning value creation with their IP. Their licensing infrastructure is accessible, easy to use and drives accretive revenues,” said Paul Hsu, founder and CEO of Decasonic, in a statement. “I see large potential today for smart contracts to improve the licensing process and contracts.”

The funds from the raise will be used to hire talent and for product development, according to the announcement.

“This has been a decade’s old problem that they’ve been waiting for someone to come around and solve,” Zhang said. “And so the feedback has been incredible even without our digital presence fully up and running.”

© 2022 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.

Decentralized sports prediction market Frontrunner raised $4.75 million in a seed round led by Susquehanna Private Equity Investments. 

Other investors in the round include SOMA Capital, Toy Ventures, Ledger Prime and WAGMI Ventures, according to the release. 

What is a sports prediction market?

Frontrunner is a prediction market that simplifies sports betting by removing the complexity of betting odds. Instead, individuals buy and sell shares in teams and players using crypto across sports markets such as the NBA, NFL and others. 

Prediction markets are like futures markets. In the futures market, traders are betting on the future price of an underlying asset. In prediction markets, contracts pay out based on the outcome of future events.

Co-founder and CEO Neil Zhang was inspired to build Frontrunner after placing a pre-season bet on the NFL team the San Francisco 49ers to win the Superbowl. Even as the team made it into the final, he realized there was still a good chance he could end up with nothing if they lost. 

“The way that sports betting is, you’re basically having this relationship where the sports betters are competing against the book directly,” said Zhang in an interview with The Block. “And in that case the book or the bookie is not incentivized to give users the best price based on liquidity, it really seems like a much more inefficient market when there’s only a single source of your odds and your ability to buy or sell bets.” 

Decentralizing prediction markets

Frontrunner set itself up as a decentralized network in an effort to ensure that the house doesn’t always win. It’s non-custodial with users interacting with markets built on smart contracts, Zhang said.  

“Every share essentially represents a bet between two parties, opposite sides, adding to a dollar,” Zhang said. “And the outcome of a season or a game or whatever prop were betting on, the $1 goes to the winning side and the other side is going to have nothing.” 

Bettors can trade to the very last second or take profits early, he added. The platform was built using Injective, which is a protocol within the Cosmos ecosystem. 

“The Injective protocol turned out to be perfect for us,” Zhang said. “The protocol is built specifically for companies to be able to quickly spin up decentralized exchanges of various assets.”

The startup launched on testnet last quarter enabling people to test the platform without needing to spend crypto. Its mobile app is projected to be ready by the end of January, Zhang added.

Susquehanna’s bet on Frontrunner

The fundraise closed in May. The proceeds have been put toward product development, team growth and securing licensing, Zhang said. 

“We believe that the open and decentralized platform Frontrunner is building will bring together sports fans and betting enthusiasts from all around the world,” said Dean Carlson, head of digital asset investments at Susquehanna Private Equity Investments LLP in a statement. 

Susquehanna has its roots in sports betting having been founded by former poker players. 

“They’re basically looking to get more exposure to both web3 and cryptocurrency and also to be able to get more liquidity and more capital into sports betting,” Zhang said. “And so, there’s even the potential in the future for potentially having Susquehanna be a market maker or liquidity providers on our platform, which is such an exciting prospect for us in terms of really making this into a fully-fledged liquid market system.” 

Frontrunner aims to operate as a fully licensed platform, Zhang said. It’s hoping to receive an offshore gaming license in the Isle of Man in the first quarter of next year, which means it will be able to legally operate in a variety of jurisdictions including Canada, Mexico, Africa, Asia as well as parts of Europe and South America. 

© 2022 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.