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A Coinbase survey found that crypto winter may not be as cold as expected.

The 2022 Digital Assets Outlook Survey shows that 62% of investors who are currently invested in crypto increased their allocations in the past 12 months compared to 12% who decreased allocations.

“This is evidence that institutional investors have continued to take a long-term view of the asset class even as prices have fallen,” the exchange said. “Looking ahead, 58% of investors expect to increase their allocations over the next three years.”

About 59% of investors are currently using or planning to use a buy-and-hold approach, according to the poll.

The survey interviewed 140 institutional investors to get a read on current sentiment and outlook toward digital assets since the start of the current crypto winter.

© 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.

Barry Silbert broke his silence to address what he called the “noise” around his Digital Currency Group even as the drumbeat about a possible bankruptcy grew louder. 

The CEO, in a letter addressed to shareholders, said the company would come out of the current environment “stronger” a day after media reports that its Genesis may need to file for bankruptcy protection and as the New York Times reported that it had hired investment bank Moelis & Company to explore options. 

“DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system,” he wrote in a note to clients obtained by The Block. “We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.”

Questions have swirled around the health of Genesis and DCG since Genesis Global Capital, the lending business of Genesis Trading, temporarily suspended redemptions and new loan originations last week in the wake of FTX’s collapse.

DCG gave Genesis a $140 million equity infusion after it said its derivatives business had $175 million locked up on the FTX platform.

Investment offers

Genesis sought an emergency loan of $1 billion from investors before the suspending redemptions, The Wall Street Journal reported.

Silbert said that DCG had received investment offers, adding that he would let shareholders know if the company decides to do a financing round. His note also confirmed that Genesis hired financial and legal advisors.

“This is an issue of liquidity and duration mismatch in the Genesis loan book,” Silbert said. “Importantly, these issues have no impact on Genesis’ spot and derivatives trading or custody businesses, which continue to operate as usual.”

Silbert said that DCG has a liability to Genesis Global Capital of roughly $575 million, which is due in May 2023. The company also took on the debt that bankrupt Three Arrows Capital failed to pay Genesis, which was estimated to be over $1 billion.

“Despite the difficult industry conditions, I am as excited as ever about the potential for cryptocurrencies and blockchain technology over the coming decades and DCG is determined to remain at the forefront.”

Note to shareholders

The full note to shareholders:

Dear Shareholders,

There has been a lot of noise over the past week and I want to get in touch directly to clarify where we stand at DCG.

Most of you are aware of the situation at Genesis, but to recap up front: Genesis Global Capital, Genesis’ lending business, temporarily suspended redemptions and new loan originations last Wednesday, November 16 after market turmoil sparked unprecedented withdrawal requests. This is an issue of liquidity and duration mismatch in the Genesis loan book. Importantly, these issues have no impact on Genesis’ spot and derivatives trading or custody businesses, which continue to operate as usual. Genesis leadership and their board decided to hire financial and legal advisors and the firm is exploring all possible options amidst the fallout from the implosion of FTX.

In recent days, there has been chatter about intercompany loans between Genesis Global Capital and DCG. For those unaware, in the ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms. These loans were always structured on an arm’s length basis and priced at prevailing market interest rates. DCG currently has a liability to Genesis Global Capital of ~$575 million, which is due in May 2023. These loans were used to fund investment opportunities and to repurchase DCG stock from non-employee shareholders in secondary transactions previously highlighted in quarterly shareholder updates. And to this day, I’ve never sold a share of my DCG stock.

You may also recall there is a $1.1B promissory note that is due in June 2032. As we shared in our previous shareholder letter in August 2022, DCG stepped in and assumed certain liabilities from Genesis related to the Three Arrows Capital default. As stated in August, because these are now DCG liabilities, DCG is participating in the Three Arrows Capital liquidation proceedings on the Creditors’ Committee and is pursuing all available remedies to recover assets for the benefit of creditors. Aside from the Genesis Global Capital intercompany loans due in May 2023 and the long-term promissory note, DCG’s only debt is a $350M credit facility from a small group of lenders led by Eldridge.

Taking a step back, let me be crystal clear: DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system. We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger. DCG has only raised $25M in primary capital and we are pacing to do $800M in revenue this year.

I bought my first bitcoin a decade ago in 2012 and made the decision that I would commit to this industry for the long term. In 2013, we founded the first BTC trading firm – Genesis – and the first BTC fund, which evolved into Grayscale, now the world’s largest digital currency asset manager. Foundry runs the largest bitcoin mining pool in the world and is building tomorrow’s decentralized infrastructure. CoinDesk is the industry’s premier media, data, and events company and they have done phenomenal work covering this crypto winter. Luno is one of the most popular crypto wallets in the world and is an industry leader in the emerging markets. TradeBlock is building a seamless institutional trading platform and as the newest subsidiary, HQ is establishing a life and wealth management platform for digital asset entrepreneurs. Each of these subsidiaries are standalone businesses that are independently managed and are operating as usual. Lastly, with a portfolio of 200+ companies and funds, we’re often the first check for the industry’s best founders.

We appreciate the words of encouragement and support, along with offers to invest in DCG. We will let you know if we decide to do a financing round.

Despite the difficult industry conditions, I am as excited as ever about the potential for cryptocurrencies and blockchain technology over the coming decades and DCG is determined to remain at the forefront.

© 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.

Sequoia Capital partners apologized to investors for the $150 million it lost on investments in crypto exchange FTX, the Wall Street Journal reported.

In a Tuesday call with investors, Sequoia partners said the firm would improve its due-diligence process on future investments and that it believed it was misled by FTX founder and CEO Sam Bankman-Fried. 

During the call, one partner at Sequoia reportedly said the firm will be able to have a Big Four accounting firm audit financial statements of the early-stage startups it invests in, the Wall Street Journal reported. 

Sequoia Capital earlier this month said it had written off its entire investment in the struggling crypto exchange that filed for bankruptcy protection on Nov. 11. FTX Group owes $3.1 billion to its top 50 creditors, according to recent court filings.

© 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.

Synapse, one of the most popular cross-chain bridges, has enabled bridging for an emerging blockchain called Canto.

This is the 18th chain to join Synapse’s bridging network, and it’s the first time a Cosmos ecosystem bridge integration has gone live on its platform.

One of the main issues for the adoption of Canto has been bridging accessibility to other large blockchains. Prior to the Synapse bridge integration, the only way to move assets onto Canto was through the Cosmos Gravity Bridge.

Canto’s integration with Synapse also opens the door for applications on other chains to deploy on its network, Synapse wrote in an announcement article. Canto is built on top of Cosmos, which allows developers to spin up their own chain. It is taking a new approach to scaling by having a natively built-in decentralized exchange and lending market that are both free-to-use for users.

© 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 prolific NFT collector who goes by the pseudonym “Vincent Van Dough (VVD)” has launched a new NFT gallery called Art of This Millennium.

AOTM is opening today with 32 artists featured including AlphaCentauriKid, Cath Simard, Claire Silver, Dmitri Cherniak, Deekay, Grant Yun, Isaac Wright (DrifterShoots), Other World and Sam Spratt, VVD told The Block in a statement. 

VVD’s new project comes shortly after they had to bid adieu to their NFT fund Starry Night Capital, which had been launched last year with Su Zhu and Kyle Davies, founders of the now-bankrupt crypto hedge fund Three Arrows Capital.

Starry Night Capital had aimed to raise $100 million and collected hundreds of NFTs, but it had to move all assets to 3AC liquidator Teneo in October. 

VVD was once friends with Zhu and Davies, having known them outside of crypto for over ten years. When asked if they are still in touch with the 3AC founders, VVD said they last had contact with them before 3AC’s collapse was reported in June. VVD added that Zhu and Davies are “not at all” involved with AOTM.

AOTM was set up earlier this month, VVD said, adding that it was bootstrapped, meaning it hasn’t raised external funds. As an NFT gallery, AOTM will offer services such as curation, marketing, promotion, sales, and organizing exhibitions. AOTM’s business model is commission-based, said VVD, adding that the startup will take a 15% cut of any sales it helps facilitate, similar to SuperRare.

There are currently six people working for AOTM, and VVD plans to hire more people over the coming months. 

VVD has been in the crypto space since 2013, they told The Block last year in an interview. Their involvement with NFTs was as one of the original CryptoPunks claimers and one of the first CryptoKitties participants. At the time, they owned over 2,000 NFTs and spent a little bit over $20 million on these pieces.

Today, that number has grown to around 6,000 NFTs, they said.

© 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.

Digital Currency Group founder and CEO Barry Silbert updated shareholders on Tuesday and said the company would come out of the current environment stronger a day after media reports that its Genesis unit faced a possible bankruptcy. 

“DCG will continue to be a leading builder of the industry and we are committed to our long-term mission of accelerating the development of a better financial system,” he wrote in a note to clients obtained by The Block. “We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.” 

• “Genesis Global Capital, Genesis’ lending business, temporarily suspended redemptions and new loan originations last Wednesday, November 16 after market turmoil sparked unprecedented withdrawal requests.”
• “This is an issue of liquidity and duration mismatch in the Genesis loan book.  Importantly, these issues have no impact on Genesis’ spot and derivatives trading or custody businesses, which continue to operate as usual.”
• “Genesis leadership and their board decided to hire financial and legal advisors and the firm is exploring all possible options amidst the fallout from the implosion of FTX.”
• “In recent days, there has been chatter about intercompany loans between Genesis Global Capital and DCG.  For those unaware, in the ordinary course of business, DCG has borrowed money from Genesis Global Capital in the same vein as hundreds of crypto investment firms.  These loans were always structured on an arm’s length basis and priced at prevailing market interest rates.  DCG currently has a liability to Genesis Global Capital of ~$575 million, which is due in May 2023.  These loans were used to fund investment opportunities and to repurchase DCG stock from non-employee shareholders in secondary transactions previously highlighted in quarterly shareholder updates.”
• “We appreciate the words of encouragement and support, along with offers to invest in DCG.  We will let you know if we decide to do a financing round.”
• “Despite the difficult industry conditions, I am as excited as ever about the potential for cryptocurrencies and blockchain technology over the coming decades and DCG is determined to remain at the forefront.”

© 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.

Quick Take

• Founded in 2003 by Dan Morehead, Pantera Capital was initially a traditional hedge fund focused on global macro trends. However, the firm shifted its focus to digital assets and blockchain technology in 2013
• DeFi is the most popular category in Pantera’s portfolio, but the fund applies a diversified approach to crypto investing
• The firm has invested in at least 172 startups and protocols across ten categories, which The Block has mapped out

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A federal judge granted a preliminary request to maintain the anonymity of creditors in the FTX bankruptcy case, but noted that more information on the company’s creditors could become public in the near future.

“On an interim basis I’ll enter the order allowing for the redaction of the names and addresses,” said Judge John Dorsey of the U.S. Bankruptcy Court, District of Delaware. “Everyone in the room knows the internet is wrought with potential dangers.”

A representative for the U.S. Trustee, an office within the Justice Department responsible for overseeing bankruptcy cases, argued in favor of disclosing more information on businesses that FTX or its related entities owe money than is currently available. 

“We oppose the redaction of the names and addresses of customers who are not individuals,” said Benjamin Hackman, an attorney with the office. “There should be transparency about who those entities are, especially on the top 50 list.”

Making creditor information public is standard practice in U.S. bankruptcy proceedings, although Celsius creditors were upset after a similar disclosure in that proceeding.  

Lawyers for FTX and the other companies falling under its corporate umbrella argued in favor of keeping as much of the information as possible redacted. The company wanted to keep that information confidential not only due to privacy concerns, but also because it views its customer list as an asset.

“The debtors’ customer list, numbering in the millions, is an asset of the estate,” argued Brian Glueckstein, a partner with Sullivan and Cromwell, which is representing FTX in the bankruptcy proceedings. “Public release of the customer list would give the debtors’ competitors a free opportunity to poach the debtors’ customers and would interfere with the ability to sell assets and maximize value as these cases progress,” he continued.

Glueckstein also argued that “there are significant privacy concerns raised by the disclosure of this protected creditor information. The debtors’ customer base is global. Those customers who reside in the United Kingdom and the European Union member countries have additional data privacy protections under local law.”

Despite the judge’s interim order keeping creditor information redacted, the U.S. Trustee will still have access to that information on a confidential basis. An additional hearing on the subject is expected next month.

© 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 current corporate leadership of FTX and its associated companies are cooperating with investigators for the U.S. government and regulators, a lawyer representing the troubled firm said in an inaugural bankruptcy hearing today.

“We are also in constant communication with the U.S. Department of Justice,” including the Southern District of New York’s Cyber Crimes Unit, and “in communication constantly with the SEC and CFTC,” said Jason Bromley, a partner at Sullivan and Cromwell and co-counsel representing the company in the U.S.

New FTX CEO John Ray III and the rest of the exchange’s new leadership are coordinating with “the U.S. government and the various regulators around the world who have taken a very keen interest in this situation,” Bromley continued.

Bromley added: “We have received requests, I would say some might say demands, from the U.S. Congress, both from the Senate and the House, to have Mr. Ray appear in December.”

FTX remains under hacking threat, Bromley warned, noting a hack that took place hours after the initial bankruptcy filing, and the firm has taken measures to protect its remaining assets.

A house divided

FTX’s representatives remain unusually at odds with former CEO Sam Bankman-Fried and other former members of FTX leadership, a disagreement that appears to involve the Bahamian government.

Bankman-Fried told a Vox reporter earlier this month that he regretted filing for bankruptcy. The lawyers now representing the company asked for an emergency motion from a federal judge to place FTX Digital Markets, the Bahamas branch of FTX’s corporate empire and where much of the company’s operations took place.

Representatives for FTX Digital Markets have reached a partial agreement with the U.S. legal team over moving proceedings for consolidating that part of the bankruptcy, but Bromley told the U.S. Bankruptcy Court for the District of Delaware today that they have evidence assets were moved out of other accounts to the Bahamas, and implied that the Bahamian government has not been forthright about its actions.

“We do have evidence that there has been movement of assets out of the debtors’ estates to the Bahamas, and there have been somewhat cryptic comments that had been issued by the government of the Bahamas as to the actions they have taken in respect to certain assets,” Bromley continued. 

The Securities Commission of the Bahamas issued a statement late on Nov. 17 saying that it had directed the moving of FTX assets on Nov. 12, and did not recognize FTX Digital Markets as part of the main bankruptcy proceedings ongoing in the U.S. 

Bromley built on previous accusations of poor corporate governance — or worse — levied by FTX’s leadership and lawyers toward Bankman-Fried and other former members of the FTX leadership team, saying, “Some or all of them were also compromised individuals.”

According to the company’s current leadership, roughly 260 employees remain at the company. 

© 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 company making a blockchain game based on the popular 80s football manga Captain Tsubasa raised $15 million in its latest funding round.

Tokyo-based web3 and VR gaming studio Thirdverse received backing from round leader MZ Web3 Fund as well as 8DAO, B Dash Ventures, Double Jump.tokyo, Fenbushi Capital, Flick Shot, Holdem Capital, Kusabi, OKCoinJapan, OKX Ventures and Yield Guild Games.

The company previously raised $20.3 million over three rounds, including most recently its 2021 Series B featuring web3 gaming giant Animoca Brands. It did not respond to a request to confirm if this round is its Series C or to share its valuation.

The funds will be used for hiring and developing more titles including VR games. Thirdverse currently has three on its books, two of which launched this year and a third that is in development.

Thirdverse is also working on its first blockchain game. Earlier this month, the company announced a partnership with Polygon and will launch Captain Tsubasa Rivals on the chain by the end of this year.

While the name Captain Tsubasa will mean little to those with no interest in manga or football, over 80 million copies of the manga have been sold worldwide since it was launched in 1981. The upcoming blockchain game will allow players to train an NFT avatar and take part in PvP battles.

© 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.