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The Commodity Futures Trading Commission has published its annual report on enforcement actions, with cryptocurrency getting top billing. 

The CFTC’s division of enforcement’s report on fiscal year 2022, which ended Sept. 30, highlighted the commission’s 82 enforcement actions, especially their 18 in digital assets, more than 20% of the enforcement proceedings this year. 

“This FY 2022 enforcement report shows the CFTC continues to aggressively police new digital commodity asset markets with all of its available tools,” CFTC Chairman Rostin Behnam said in a statement. “I personally thank the Enforcement Division’s hardworking and dedicated leadership team and staff.”

The agency noted its flurry of activity at the end of the fiscal year, including a high-profile action against Ooki DAO, the first enforcement against a decentralized autonomous organization, and its suit against Digitex. 

During the past fiscal year the agency completed over $2.5 billion worth of enforcement orders, across its entire jurisdiction, including but not limited to digital asset activities. 

The CFTC similarly touted its suits against a South African crypto pool operator that was handling over $1.7 billion in bitcoin, as well as cases against crypto exchange Gemini and stablecoin operator Tether for making false statements about their products. Tether’s sister exchange, Bitfinex, also received mention for charges that it facilitated “illegal, off-exchange retail commodity transactions in digital assets with U.S persons.”

Crypto’s prominence in the report comes as Chairman Rostin Behnam has explicitly rejected the notion of the CFTC as “light touch” amidst a lobbying push to earn the agency more power over crypto spot markets. Last month the Treasury Department also called on financial regulators to “double down” on enforcement of current financial laws and rules in regards to digital assets. 

© 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.

Kyle Roche, the lawyer at the center of an unusual hidden camera controversy, has formed his own legal practice after departing the firm he co-founded. 

According to a filing in the Celsius bankruptcy giving notice to the court of the change, Roche now has his own practice after departing the high-profile crypto class action firm he co-founded, Roche Freedman. He will continue to represent clients in that bankruptcy. 

Roche and his old firm, now rebranded as Freedman Normand Friedland LLP, parted ways this week Roche in the wake of controversy that saw the firm removed as interim class counsel from one of its highest profile cases.

Roche found himself at the center of a scandal last month when anonymous site Crypto Leaks published a series of videos in which he appeared to discuss an improper relationship with blockchain development firm Ava Labs. The footage, which Roche said was heavily edited, taken out of context and filmed without his consent while he was intoxicated, drew conclusions that Roche had filed cases on behalf of Ava Labs and utilized the discovery process in other class actions to benefit the firm. Both Roche Freedman and Ava Labs have vehemently denied these claims. 

Roche moved to withdraw from class action cases he led following the leaked clips. Defendants in the Tether class action, a case seeking to take exchanges to task over an alleged market manipulation scheme they say defrauded investors of $1.4 trillion, called for Roche Freedman’s removal as interim class counsel in the case. Roche Freedman pushed back on those requests, saying they effectively walled off Roche from the class action group and forfeited any financial interests in the cases he once led, but were still replaced by the two remaining class firms. 

Due to the departure of Roche, a founding partner, the firm will now be known as Freedman Normand Friedland LLP, for the firm’s other partners, Edward Normand and Amos Friedland. 

“We are focused on continuing to provide our clients with top quality representation and are proud of the firm’s accomplishments to date,” the firm said in a statement to The Block. “We wish Kyle the best in his future endeavors.”

© 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.

Binance.US has hired a new head of investigations from the FBI’s cybercrime team. 

BJ Kang leaves the FBI for the crypto exchange after two decades with the federal investigation authority, where he most recently worked on the Washington field office’s cyber crime squad. 

“Binance.US operates with a compliance-first mindset, and over the past year we have made significant investments in our legal, regulatory, and compliance operations,” CEO Brian Shroder said in a statement. 

According to the company’s announcement, Kang was an FBI supervisory special agent with the National Cyber Investigative Joint Task Force Financial Pursuit Team, where he worked with counterparts from the IRS, U.S. Secret Service, and FinCEN on bitcoin-related cases.

Kang praised Binance.US’s existing work with law enforcement, noting the need for “close coordination.”

The global Binance brand has been subject to immense scrutiny from law enforcement as well as regulators. Last year, Shroder’s predecessor left Binance.US after reportedly fighting with global CEO Changpeng Zhao over his ownership of the U.S. affiliate. 

© 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.

Ethereum staking rewards have risen in the last few weeks, with validators receiving larger transaction fees as a result of increased network activity.

As an example, the seven-day moving average for annualized staking rewards on stETH, a liquid staking token backed by ether, has climbed to 5.5%, as noted by DeFi researcher Mika Honkasalo on Twitter. This is up from just 3.5% in September, according to data from Lido Finance. 

The staking APR for stETH has shot up in recent weeks. Image: Lido Finance

For those leveraging their staking rewards, through offerings such as icETH or ETHMAXI, APRs have shot up as high as 11%. This is where the tokens are used to borrow more tokens and all of them are staked, increasing the yield. 

The main cause for the rising yield is increased network activity, specifically in ways that result in higher fees for network validators. In particular, maximal extractable value (MEV) activity — where bots front-run transactions on the blockchain — has picked up, Honkasalo told The Block.

Honkasalo also said there has been an increase in trading of altcoins on Uniswap in recent weeks. This has been led by a token called The Protocol, which was created as a joke following one of Ethereum co-founder Vitalik Buterin’s recent tweets.

There has also been a lot of extra activity in the form of XEN in recent weeks. XEN is a token that’s free to claim as long as claimants paid for the Ethereum transaction fees, which effectively spammed the blockchain for a couple of weeks. 

This increased activity on Ethereum has seen the supply of ether decrease in recent weeks, as more tokens have been burned during the transaction fee process than were created as rewards for validators. EthHub co-founder Anthony Sassano highlighted on Twitter that the supply of ether has not grown over the last 30 days as the burning process has equaled out the issuance. 

Were activity to increase even further, it could lead to higher APRs and cause the supply of ether to become deflationary.

© 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.

Former Revolut employees have raised £5.8 million ($6.5 million) for DeFi investment app Boku, according to recent filings. A co-founder denies this.

Venture firms Lakestar and Connect Ventures were the biggest investors in the round, according to filings last week to Companies House, the registrar of information on UK private companies. Augmentum Fintech, Eagle Investments and Nordstar Ventures also took part, according to the documents, which indicated that several current and former Revolut employees invested as angels.

Two people with knowledge of the matter confirmed several details of the fundraising. One of these said that Boku had initially looked to raise $10 million.

However, Phuc To, the former Revolut product head who is among Boku’s co-founders, told The Block “your source is not correct. I’ve not raised any money recently.” When asked directly about the filings to Companies House, he stopped responding to messages. 

Lakestar declined to comment and Connect Ventures didn’t respond to a request for comment. 

Boku is a “centralized, chain agonistic” yield and liquidity aggregator, according to a job description, which also names Revolut’s former head of card payments Mikael Peydayesh and head of crypto trading Arthur Johanet as co-founders.

Peydayesh and Johanet didn’t respond to requests for comment.

Taking a page out of Robinhood’s playbook, Boku will aim to offer commission-free trades across centralized and decentralized yields in a mobile application. It plans to allow users to access trading opportunities on par with those leveraged by top hedge funds, focusing on ease of use, Apple and Google pay integration and social-media-like features. According to a person with knowledge of the matter, Boku claims to offer a yield of up to 7% on customer deposits.

The Revolut to crypto founder pipeline

This latest fundraise follows a string of venture capital raises by Revolut employees turned web3 founders. Last month, former Revolut chief revenue officer Alan Chang raised $78 million for his web3 energy startup Tesseract, founded with fellow ex-Revoluter Charles Orr. This was followed by former employees of the neobank raising $3.5 million to build crypto investment app Solvo, in a round led by Index Ventures.

Revolut’s former head of crypto, Soups Ranjan, also recently raised $52 million in a round led by Andreessen Horowitz for his fraud detection startup, Sardines — which serves customers such as FTX, Blockchain.com and Brave. Two weeks ago, The Block reported that the chief operating officer of Revolut’s EU banking service left the neobank to join Deblock, a non-custodian crypto fiat banking service backed by Headline and Hoxton Ventures.

This growing class of former Revolut employees diving into web3 comes as the neobank plows ahead with its digital asset push. Last month, it finally secured a place on the UK’s Financial Conduct Authority register to operate as a cryptoasset firm.

With additional reporting by Yogita Khatri. 

© 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.

Edge Capital Management, a DeFi-focused hedge fund, has raised two separate funds totaling $66.8 million. 

The hedge fund has raised one offshore fund in the Cayman Islands from eight investors for $38.6 million and another Delaware-incorporated fund for $28.1 million from six investors, according to Securities and Exchange Commission filings dated Oct. 19. 

While public information on the fund is scant, it describes itself as “an alternative investment manager focused on digital assets, blockchain and decentralized finance (DeFi) markets” using macro-investing strategies. 

Previously it advertised a role on LinkedIn seeking a DeFi analyst “responsible for identifying and investing in various DeFi protocols that can deliver high returns in yield-farming and macro strategies”. 

In both filings, capital raise limits were not set, meaning that it’s possible Edge Capital is seeking to raise further. Founded by former Bank of America director Vadim Khramov in May 2020, the filings also show that the firm is based in Florida. 

The raise follows previous endeavors by hedge funds in the crypto space. Blocktower, a firm that has a history as a hedge fund, launched a $150 million fund backed by BPI France and Mass Mutual earlier this month. In August, Brevan Howard Asset Management’s digital assets-focused vehicle raised more than $1 billion from institutional investors. 

© 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.

On Wednesday, a Sushi core contributor floated a proposed update called “Meiji Governance Rework,” aiming to bring a wide array of changes to Sushi’s decentralized autonomous organization, which is collectively owned and managed by its members,  

The Meiji update could make the project’s governance “more equitable & decentralized,” SushiSwap’s newly appointed head chef Jared Grey noted. According to DeFiLlama, SushiSwap is the seventh-largest decentralized exchange, holding over $739 million in locked deposits.

If the proposal is passed, Sushi will be led by Meiji DAO —  a new group that replaces the project’s governance body called Sushi DAO. 

“The Sushiswap Meiji DAO will supersede all responsibilities currently held by the Sushi DAO. The Meiji DAO will bring governance on chain, and kickstart the Meiji Restoration of Sushi, which will become a new phase of Sushi and a new grand vision to execute on,” the proposal noted.

The most notable change proposed is that the Meiji DAO body will conduct voting with the help of Sushi “shares” which represent non-transferable governance rights to participate in Sushi governance. The shares can be obtained by locking up the DEX’s native Sushi tokens in a smart contract. The holders can exit shares at any time by forfeiting them, per the proposal.

The proposal, still in a discussion phase, claimed the use of so-called Sushi shares will be useful in preventing Sybil actors or users who accumulate large amounts of tokens to influence the DAO voting results. Shares will not be issued immediately, and members will have to wait for double the voting period before they can vote on different proposals.

The non-transferable design, the proposal said, will help the team implement “quadratic voting”, a governance system that reduces the weight of additional votes used to cast votes by a single voter.

While quadratic voting is still a nascent concept in DAOs, it’s meant to make governance processes more inclusive by amplifying the voting power of the average voter.

© 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.-based film and entertainment studio Warner Bros will release the fantasy classic The Lord of the Rings: The Fellowship of the Ring as a series of collectible NFTs. 

The NFT drop, launching on Oct. 21, 2022, is part of a new web3 movie initiative called “Warner Bros Movieverse.” The drop marks Warner Bros as one of the first major media conglomerates to drop digital collectibles from its popular films. 

Users can pick from two options for The Lord of the Rings NFTs. There’s the “Mystery Edition” in which the user randomly mints a common, uncommon or rare NFT respectively based on The Shire, Rivendell and Mines of Moria locations in the film. Minting one of these NFTs also gives the user access to the extended 4K version of the film, eight hours of special features and commentary, as well as location-specific images and AR collectibles. This option contains 10,000 NFTs costing $30 each. 

The second option is the “Epic Edition,” costing $100 for the 999 NFTs. They include image galleries and AR collectibles to The Shire, Rivendell and Mines of Moria in addition to the extended 4K film and eight hours of special features and commentary. 

Warner Bros brands include Middle Earth, a part of the Lord of the Rings series, as well as Harry Potter, Game of Thrones, DC, Scooby Doo and classic cartoons such as Tom and Jerry and Hanna-Barbera.

The blockchain-tech firm Eluvio is facilitating Warner Bros’s NFT drop. Eluvio provides partners blockchain-based ticketing, streaming, e-commerce and other tools for producing web3 content.

© 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.

Venture capital giant Andreesen Horowitz named Collin McCune, most recently the Republican deputy staff director of the House Financial Services Committee, to be its new head of government affairs.

“The future of web3 and crypto is one of the few bipartisan issues and we are thrilled that policymakers are taking a hard look at how crypto, web3, and blockchain technology should be regulated,” wrote a16z Managing Partner and Chief Operating Officer Anthony Albanese in a post announcing the hire. Noting that the prominent VC firm has hired “a variety of experienced former regulators,” Albanese continued that, “While we have built up an incredible bench, we felt it was essential to add a deep understanding of the U.S. legislative process to complement our team.” 

McCune worked on Capitol Hill for 10 years, with stops at the House Transportation and Infrastructure and Rules Committees before joining the staff of House Financial Services Committee Ranking Member Patrick McHenry, R-N.C., as member services and coalitions director in 2019. He was named deputy staff director for Republican staff of the committee a year ago.

a16z, as the firm brands itself, has played an active role in lobbying around digital asset policy in Washington, though the hiring suggests its engagement could further ramp up. McCune’s former boss looks likely to become committee chair next year, as Republicans are favored to win a majority in the House of Representatives in midterm elections, and McHenry has played a major role in negotiating a comprehensive, bipartisan framework for stablecoins. 

© 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 acting head of the Federal Deposit Insurance Corporation, a U.S. bank regulator, is calling for more restrictions on stablecoin issuance. Most notably, the bank regulator is suggesting limiting stablecoins to permissioned blockchains.

“Payment stablecoins would be safer if they were transacted on permissioned ledger systems with a robust governance and compliance mechanisms,” said FDIC Acting Chair Martin Gruenberg, in remarks prepared for a speech at the Brookings Institution, Washington-based thinktank, this morning. “The ability to know all the parties – including nodes and validators – that are engaging in payment stablecoin activities is critical to ensuring compliance with anti-money laundering and countering the financing of terrorism regulations, and deterring sanction evasion,” he continued, adding that, “innovation can be a double-edged sword.” 

The idea that validators and nodes would themselves be subject to know-your-customer provisions could receive strong pushback from various companies and projects in the digital asset industry.

Senior U.S. regulators have also highlighted that stablecoins resemble money market funds — which are securities investments — a sentiment that Gruenberg echoed. 

The acting FDIC chair also cautioned about statements misleading users about “the availability of federal deposit insurance for a given crypto-asset product violate the law,” an issue that the FDIC has brought up with some of the biggest names in the industry.

“We will continue to work with our supervised banks to ensure that any crypto-asset-related activities that they engage in are permissible banking activities that can be conducted in a safe and sound manner and in compliance with existing laws and regulations,” added Gruenberg. 

© 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.