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The price of FTX’s native token FTT traded slightly in the green after a dramatic weekend for the exchange operator and its biggest rival. 

FTT swung wildly over the course of Saturday after Binance CEO Changpeng “CZ” Zhao said the exchange would sell its position in the token, which it received when it sold its stake in FTX for $2.1 billion last year. CZ’s tweet added to existing pressure on FTT, which makes up a sizable portion of FTX sister trading firm Alameda Research’s balance sheet, CoinDesk reported. 

While Alameda’s CEO Caroline Ellison said the leaked information only represents a portion of the firm’s entire balance sheet, CZ’s announcement resulted in a volatile session for FTT, which saw $300 million in trading volumes across FTX and Binance—the highest level in more than a year. It’s not clear whether Binance has begun to unwind their position in FTT. 

Still, FTT’s price has appeared to stabilize and at 2:30 pm EST was trading down 0.1% over the last 24-hours at $22.24, according to TradingView.

FTTUSD Chart by TradingView

FTT proved to be relatively resilient, illustrating the degree to which “market makers are working overtime to maintain the price,” data provider Kaiko said in a briefing. “Despite a massive surge in selling pressure, there is barely a dent in market depth and only a slight increase in price slippage.”

Kaiko calculates that a $50,000 market sell order on the most liquid FTT pairs on FTX and Binance would result in 0.17% and 0.5% slippage, respectively, representing “a slight increase from pre-Alameda revelation levels.”

“Ultimately it may be in all parties’ best interest to engage in an OTC transaction as suggested by Caroline Ellison to limit price impacts, especially considering Binance, FTX, and Alameda all risk large losses should FTTs price fall significantly,” Kaiko said.

The Block Research said the events had served as a “great stress test for FTX” after it identified wallets that have been continuously depleted and re-filled in a move that suggested the company is “committed to fulfilling their creditors’ withdrawals.”

“These series of events give us a good perspective on the current fearful sentiment around crypto contagion that is still ever-present,” The Block researcher Arnold Toh wrote. “In a cycle where major hedge funds and lending platforms have become insolvent, it is not surprising that, despite FTX’s stellar branding and standing, unconfirmed rumors led to massive withdrawals.”

© 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 Central Bank of Russia is working on integrating crypto assets into the local financial system.

The CBR released a report on digital assets, focusing on integrating them into financial systems. Main areas of concern included proper taxation and regulation of digital asset issuance — familiar themes in crypto regulatory discussions worldwide. 

Notably absent is the mention of any money laundering regulations, which tend to be major focus of crypto policies elsewhere in the world. There’s also very little talk of the sanctions currently wreaking havoc on the Russian economy even though CBR Governor Elvira Nabiullina has been largely successful in shoring up the Russian economy from their impact.

Crypto’s role in Russia, and particularly the central bank’s increasing openness to crypto technology, comes as the country has tried to monetize its natural resources and move away from the US dollar, which is a powerful tool for sanctions and remains the currency of note in global oil and natural gas markets. Prior to invading Ukraine, President Vladimir Putin spoke out in favor of crypto and its possibilities for the Russian economy. 

In a Telegram post on today’s report, the CBR noted its interest in “opening the domestic market to foreign issuers from friendly countries.”

“Friendly countries” has become a euphemism in recent Russian law for the dwindling list of nations that are not actively excising Russian entities from their markets. 

The report also noted that the CBR is working on a separate report focusing on the digital ruble, a central bank digital currency that the CBR has said it will be piloting in 2023. 

© 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.

From a distance, the only thing you could see of NFT.London was a yellow and orange fast food truck parked outside in the rain.

It was a collaboration between frozen potato product corporation McCain’s — which recently launched a Roblox game where children can farm metaverse potatoes — and Bored and Hungry, a Bored Ape Yacht Club-themed restaurant in California. Perhaps one of the stranger web3 collaborations, it wasn’t the only gimmick that drew attention. Nearby sat an NFT vending machine through which one could purchase NFTs using card. Upstairs there were puppies and a “zen den.”

From NFT t-shirt printers and new metaverse platforms to tables littered with QR codes advertising whitelists for upcoming mints, NFT.London’s two-day inaugural stint saw over 2,500 registered attendees and 800 speakers.

The event was substantially smaller than the 15,000-strong NFT.NYC, which is run by the same group. But its cosier feel and lack of the usual conference circuit speakers — many of whom spent that week at WebSummit in Lisbon instead — gave it the relaxed community atmosphere that NFT collections always seem to be striving for.

“This was our first major event in London (we hosted a small NFT event there in March 2018) and have seen a great response from the community. At our first NFT.NYC in 2019 we had total attendance of only 460,” said Cameron Bale, co-founder and producer of NFT.NYC.

The event offered NFT ticketing via YellowHeart, which recently launched its own metaverse hub, but 90% of attendees still opted for QR code tickets.

Like NFT.NYC, people The Block spoke to at the event commented at the poor showing at talks in London. While areas such as the VIP lounge were bustling — although that’s likely due a company offering free bottles of wine — many talks had fewer than a handful of people in attendance, particularly toward the end of the event. 

Perhaps there were simply too many speakers, some of whom took to the stage to do little more than pontificate over how “web2 + web3 = web5.”

There were some gems, however. Independent fashionistas took aim at the web3 efforts of the big fashion houses. Fashion designer and creator of NFT collection The Rebels, Robertas Kalinkinas was not impressed with the likes of Gucci’s metaverse marketing.

He argued for web3 as a way for designers to get around the barriers for entry into high fashion. He recounted dropping thousands of dollars for booths at fashion shows and designers doing unpaid internships. Web3 could give people a better and cheaper way to connect directly with customers and show off their collections. 

Some ideas for web3 fashion might raise eyebrows among the more privacy-focused though. A phygital fashion panel floated the idea of putting trackers in garments to collect data about what customers do with their clothes after they buy them in the name of sustainability. Production limits could also be placed on companies who aren’t selling out their stock.

“Putting NFC chips in every garment and then tracking what is actually being wasted is how we make change because [when] you visibly see data and see where the problem is, [that’s] when you can really fix it,” said Lauren Kacher, founder and creative director of DAO-led fashion label Alterrage.

The NFT.London event organizers rounded off the conference by announcing the dates of NFT.NYC 2023. It will be held in Hudson Yards and Times Square April 12-24. NFT.London will be making a return too.

“We think it is still early days and will be back in 2023,” Bale 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.

One of the largest trading firms operating in the crypto space believes a “budding uptrend” is forming in the volatile market for digital assets. 

In a Twitter thread, Cumberland—the crypto unit of trading powerhouse DRW—said that the uptrend is underpinned by what it says is a weakening U.S. dollar and the adoption of cryptocurrencies by new market participants. 

“Earlier this year, the dollar’s inexorable-seeming rally ended up killing sentiment across every major risk asset class, including some severely supply-constrained commodities,” the firm said. “This rally seems to have topped out, likely the result of expectations that the Fed reverse course by mid-2023.”

The dollar has soared for much of this year as the Federal Reserve embarked on its tightening efforts to rein in inflation, but has weakened recently. Meanwhile, Bitcoin has gained 5% over the last month. That’s a reversal of market dynamics from earlier in the year.

Another tailwind for digital assets, in Cumberland’s view, is a waning of geo-political disruptions, namely the Russia-Ukraine conflict and supply chain bottlenecks. 

The firm also highlighted the possibility of a more favorable environment in Washington, DC in the event of a Republican sweep in tomorrow’s midterm elections. 

Crypto adoption among large technology companies is also a factor. Instagram, for instance, said last week that it would leverage the Polygon network for its upcoming NFT minting feature in its app. Meanwhile, Google Cloud became a validator of the Solana network.

“The impact of this has yet to be felt, but as we’ve seen from previous cycles, strong adoption narratives can lead to parabolic rallies,” the firm said.  “Thus, the current risk/reward feels meaningfully asymmetric.”

© 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.

European Union leaders see a digital euro undertaking as an opportunity to preserve the value of the shared currency.

“The entry of big tech into payments could increase the risk of market domination and dependence on foreign payment technologies with consequences for Europe strategic autonomy,” European Central Bank President Chistine Lagarde said today in a video statement opening the Digital Euro Conference in Brussels.

Discussion of central bank digital currencies took off after Facebook announced it would launch a blockchain-native currency, and after China began experimenting with a digital yuan. The Libra project (later dubbed Diem) has since tanked, but the examination of central bank digital currencies remains. EU policymakers in particular saw the private tech giant offering its 2.5 billion active users the possibility to make payments in currencies other than euro proved a threat to the financial autonomy of the bloc. 

“We cannot let anyone other than us Europeans say what will happen in our digital market in terms of payment,” Thierry Breton, European Commissioner for the Internal Market, said on a panel at the same conference, adding that payments are becoming more and more a matter of sovereignty. 

“We are lacking a pan-European digital solution for payments. If we do not come with solutions, others will,” Breton continued.

The ECB is currently investigating the possibility of launching a CBDC. Once the prototype is designed and evaluated, the ECB will announce by September 2023 whether a realization phase will follow. 

“By designing digital public money we can get ahead of these developments and ensure that confidence in the monetary system is maintained and innovation is nurtured,” said Lagarde.  

The EU leadership’s relative urgency around a possible digital euro contrasted with the U.S.’s approach towards a digital dollar, which remains a longer-term project subject to much debate. 

“We’re clearly aware that countries are working on CBDCs and are at a further stage of development than the U.S., China for example,” said Nellie Liang, Under Secretary for Domestic Finance at the U.S. Department of the Treasury, who appeared virtually. “And for some of you, a CBDC is critical to defending the currency role.”

Liang outlined that the U.S. is laying down the groundwork for a possible digital dollar, but that it will not rush the decision. 

“In the near term, we don’t believe the introduction of the CBDC in other countries earlier is likely to change the fundamental role of these underlying structural factors for a currency.” 

© 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 new Solana scaling protocol named Layer N that could quicken DeFi derivatives and on-chain social networks has come out of a stealth development phase ahead of a mainnet launch expected next year. 

Similar to Ethereum’s multichain scaling architecture, Layer N builds on top of Solana with the goal of increasing scalability and will be working with Ledger Prime and Pattern Research as liquidity partners.

Layer N says it’s the first blockchain that will be able to match the throughput, or speed, of a centralized exchange. The protocol said it employs a “novel execution environment, dubbed the guardian network, as well as a few sets of unique technical innovations and optimizations to scale up execution.”

“Layer N will push the boundaries of throughput and latency that users are accustomed to on the Solana blockchain,” Layer N Co-founder Dima Romanov said in a statement provided to The Block.  “Through our technology, on-chain computation will approach centralized server performance for the first time.”

Execution environments are a critical infrastructure component that shape the way assets and smart contracts behave on blockchains and impact the end-user and developer experience. While yet to be proven, Layer N said it could open up use cases that previously were not possible in the current blockchain environment.

“For DeFi derivatives, a sub 100ms sequencer that settles to Solana could rival the user experience of a centralized exchange, opening the door for new and innovative DeFi products,” Solana Co-founder Anatoly Yakovenko said in the statement. 

Layer N plans to deploy a “sandbox” testing environment by the end of this year that will allow anyone to view a testing program it plans to deploy on its devnet.

© 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 mining operator Iris Energy Limited said two of its miners received a notice of default on more than $100 million in debt.

In a document filed with the Securities and Exchange Commission, the Sydney, Australia-based mining operator said the miners’ lender alleges that they have failed to enter into “good faith” debt restructuring negotiations. The current standoff began when the two mining groups of financed bitcoin miners, operated by Iris Energy, saw their capacity fall below the income the miners provide.

Iris said the two groups have a combined $103 million in outstanding loans. The mining group also disagrees with the lender’s allegations and will not provide additional financial support if the lender refuses to agree to modified terms. This would cause the miners to miss tomorrow’s upcoming payment, the statement said.

Last week, Iris warned of the possible default notice and noted that the miners generate $2 million BTC a month, which falls short of covering their monthly payment of $7 million.

If the lender confiscates mining equipment in an effort to recoup debt, operations could be affected, the company said in last week’s filing. 

Including its subsidiaries, Iris Energy had $53 million parked in a bank as of the end of last month, today’s statement 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.

Web3 gaming infrastructure startup Xternity raised $4.5 million in a pre-seed funding round as the space continues to grab the most venture funding.

NFX, a pre-seed and seed-stage-focused venture capital firm based in Israel, led the round. Other investors included Jibe Ventures, Flori Ventures, Secret Chord Ventures and vGames, the startup said.

Israel-based Xternity aims to help web2 game publishers adopt web3 technologies, including NFTs, through its “no-code” platform, co-founder and CEO Sagi Maman told The Block.

It’s the latest funding announcement for companies pushing web2 into web3. Earlier this year, Nerdystar raised almost $6 million to produce blockchain games based on Line Games’ web2 brands and Paragraph raised about $2 million to challenge legacy publishing giants by offering web3 tools for content creation. 

The number of M&A transactions for NFTs/Gaming has increased for three consecutive quarters, according to The Block Research.

Xternity, co-founded earlier this year by childhood friends Maman and Shahar Asher, says it allows publishers to create NFT collections and offers them a customized wallet, as well as a loyalty club. The platform supports multiple blockchains, including Polygon, ImmutableX, Solana, Binance, Celo and Ethereum, Maman said.

NFX’s founding partner Gigi Levy-Weiss, a former founding CEO of mobile casino game company Playtika, and the firm’s general partner Morgan Beller, who co-founded Meta’s digital currency initiative Libra, have joined Xternity’s board as observers, Maman, also formerly of Playtika, said. Maman added that executives from the other four investors have also joined Xternity board as observers.

There are currently ten people working for Xternity, and the firm plans to add around five more people across functions, including product and engineering, Maman 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.

The Securities and Exchange Commission has prevailed in a courtroom battle with decentralized publishing platform LBRY after arguing that its token was subject to regulatory oversight.

The court found that LBRY’s LBC token was an investment contract, even though the project did not sell it via an initial coin offering, or ICO. The project began in 2016 with the stated aim of decentralizing publishing.

“LBRY is mistaken about both the facts and the law,” the New Hampshire District Court said in the decision. Judge Paul Barbadoro granted the SEC’s motion for summary judgment, sealing the fate of a case that begin last March. 

The decision is a major blow to crypto issuers, many of whom have argued that the SEC is pursuing a course of “regulation by enforcement.” Like LBRY, many defenders of token issuance claim that the commission has not given enough warning to crypto firms of how it will apply its oversight. It’s a defense that SEC Chair Gary Gensler has criticized very publicly in recent months while commending the SEC’s application of existing laws and, particularly, the Howey Test, which refers to a U.S. Supreme Court case revolving around whether a transaction may qualify as an investment contract.

“What the evidence in the record discloses is that LBRY promoted LBC as an investment that would grow in value over time through the company’s development of the LBRY Network,” the court said. Referring to the Howey Test decision, the court said that “the SEC has based its claim on a straightforward application of a venerable Supreme Court precedent that has been applied by hundreds of federal courts across the country over more than 70 years. While this may be the first time it has been used against an issuer of digital tokens that did not conduct an ICO, LBRY is in no position to claim that it did not receive fair notice that its conduct was unlawful.”

LBRY tweeted: “We lost. Sorry everyone,” in response to the decision. Despite brief spikes alongside bull markets in 2017 and 2021, the token has languished, as has the project as a whole.

© 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 man who the Department of Justice said pleaded guilty to swiping more than 50,000 bitcoins is linked to a personality from the early days of crypto through the wallet addresses highlighted by authorities.    

Silk Road hacker James Zhong may have been “Loaded,” the online persona who described himself as a “Bitcoin multimillionaire, broker, and asset manager” and made 135 posts on BitcoinTalk between November 2012 and March 2017. 

Comments from around the time described Loaded as a “legend” and said he deserved the “legendary” title on the forum. Others were more suspicious of him.

Connecting the two

On Loaded’s profile on the BitcoinTalk forum, he signed a message proving that he owned the bitcoin wallet “1Bqc…” which has seen 80,000 bitcoin move through it in its history. It’s the same wallet that was highlighted in the DoJ’s press release.

Separately, Loaded once tried to make a bet with Bitcoin Cash proponent Roger Ver. In March 2017, he signed a message from a different wallet that contained 40,000 bitcoin. Following the path of this 40,000 bitcoin back in time, when you get to September 2012, it passes through another wallet highlighted in the DoJ release.

Ver seemed to want to make the bet at the time but it’s unclear if it went through. The Block reached out for comment but didn’t immediately get a response.  

© 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.