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South Korean investment firm Blockwater failed to repay its $3.4 million loan taken from uncollateralized lending provider TrueFi, according to a blog post by TrueFi.

Blockwater received a “notice of default” on Oct. 6 after it missed a scheduled payment for a loan that was taken in the BUSD stablecoin, per on-chain data.

TrueFi said it has collected approximately $645,000 in eight repayments and the remaining debt is estimated to be $2.96 million at the time of the default. The $3.4 million loan default represents about 2% of TrueFi’s Total Value Outstanding, the lender added.

“While this represents TrueFi’s only declared default to date, the credit group continues to remain vigilant and proactive with existing borrowers to ensure that reporting and compliance requests are being promptly met, given the challenging market conditions,” said TrueFi.

Originally, the loan had a maturity of 90 days ending in the of the first week of August. Later, as part of negotiations between the two parties, the $3.4 million loan was restructured with the loan maturity extending through to October and a weekly repayment schedule. 

TrueFi lets crypto players take loans without the use of collateral. The borrowers on TrueFi are institutions that have to pass various Know Your Customer (KYC) procedures to open a borrower pool.

Blockwater’s default is yet another example of financial distress faced by many centralized crypto entities and lenders in 2022. Since May, institutional players like Three Arrows Capital and Celsius Network have defaulted on unsecured loans, thereby triggering financial woes across the crypto space.

© 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 Department of Justice announced charges against a California man Friday over allegedly attempting to launder drug trafficking proceeds through crypto channels.

John Khuu allegedly distributed fake prescription drugs and other substances on dark web markets, receiving payment primarily in bitcoin. Through hundreds of transactions, Khuu exchanged the crypto for dollars, according to the indictment, laundering more than $5,350,000. 

Khuu faces an indictment in the Northern District of California for unlawful importation of a controlled substance in addition to the new money laundering charges handed down in the Eastern District of Texas. Authorities arrested Khuu in August.  

© 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 development company Nethermind has warped the decentralized exchange Uniswap onto the Ethereum Layer 2 network StarkNet.

The core idea is that this will make a version of Uniswap — albeit unaffiliated with the exchange — available for those using StarkNet. In theory, this should make it cheaper for Ethereum users to swap tokens, if they’re using StarkNet, since the network offers lower fees than making transactions and swaps on the main Ethereum blockchain.

The plugin is still in development and more is to come on the testing front, according to Nethermind team lead Jorik Schellekens in a blog post.

It’s challenging to take projects on Ethereum to StarkNet because the former uses the Solidity coding language, while the latter uses Cairo. As a result, the code has to be translated so that it works in the different language.

This migration effort of Ethereum applications to StarkNet is the main purpose of Nethermind’s Warp project. Schellekens said that some of StarkNet’s recent improvements enabled the Warp project to take on more advanced applications, starting with Uniswap. He noted that by warping a project as big as Uniswap, Warp itself is becoming more mature and this is lowering the barrier to entry for other projects to test out StarkNet.

He added, “Warp is not about to stop with Uniswap! We will continue working hard on features and repeat this experiment with a few other protocols, bringing new protocols to StarkNet at warp speed.”

© 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.

Cryptocurrencies traded marginally higher over the last week, despite a robust jobs report.

The U.S. added 263,000 new jobs in September, above expectations of 255,000 and below the previous month, when 315,000 jobs were added. The unemployment rate fell to 3.5%, below expectations of 3.7%, according to Friday’s report. Markets ticked lower following the data.

Bitcoin plummeted below $20,000 on Friday following the release of jobs data — equities sank lower too. Bitcoin was trading at $19,525 today, up 1% over the past week, while ether traded up just under 1% at $1,324.

Binance’s BNB token fell drastically on Thursday following a hack that siphoned at least $100 million. BNB has since pared some of those losses. Elsewhere Ripple’s XRP token clocked the largest gains of the top 10 cryptocurrencies by market cap, up 11.30%, as the token builds momentum following developments in its SEC trial. 

Markets will now look to next Thursday’s inflation data as the Fed has fought inflation with rate hikes, and any sign that inflation is stemming may be taken positively by markets hoping for a Fed pivot. Still, a pivot is looking increasingly unlikely, especially as Neel Kashkari said the Fed is quite a way from pausing rate hikes. 

‘Market appears to have come to its senses’

From Coinbase to Silvergate, Friday was a bad day for crypto stocks. 

“While weak data earlier in the week fueled expectations that the Fed could consider a less hawkish stance, the market appears to have come to its senses. With inflation still over four times the Fed’s 2% target and the jobs market still strong, any dovish pivot is likely still a long way off,” Fiona Cincotta, senior financial markets analyst at City Index, said of the market moving lower. 

Jack Dorsey’s Block (née Square) fell more than 7.3% on Tuesday, trading at $57.41 at the the close on Friday, according to Nasdaq data via TradingView. Elsewhere, Silvergate was down 4.81% to $70.21, Coinbase shed 9.35% to trade at $67 and MicroStrategy was trading at $220.30, down 8.84%.

It was a mixed week for equities in general, the Nasdaq traded down marginally while the S&P 500 added modest gains.

The correlation between cryptocurrencies and stocks continued to decline throughout the week, with bitcoin’s correlation to the Nasdaq dropping to 0.56 and the S&P 500 slipping to 0.55, 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.

Quick Take

• In this weekly series, we dive into some of the most interesting data and developments across the Layer 1 blockchain landscape, from DeFi and bridges to network activity and funding
• The Cosmos ecosystem is facing a major potential shift in its development with the recent introduction of the Cosmos Hub 2.0 whitepaper
• With a continued rollout of liquid-staking solutions and Interchain Security on the horizon, a proposed overhaul of ATOM issuance reliant on the success of these two components may be the most important change for the Cosmos Hub to date

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Decentralized finance (DeFi) startup Arch has raised $5 million to try to achieve the lofty goal of becoming the “BlackRock of web3.”

The oversubscribed seed round was co-led by Digital Currency Group and SoftBank spinoff Upload Ventures. Other investors included the venture arm of Latin America blockchain firm Ripio, TechStars and GBV, Arch said in a company release. 

The startup aims to make investing in DeFi accessible to the everyday investor. 

“We kept hearing stories of people who, for instance, wanted to get into crypto, and the only option they really had was going out to exchange and buy this single token that a friend had recommended to them that they really didn’t know anything about,” said Christopher Storaker, co-founder and CEO of Arch, in an interview with The Block. “They were basically putting all their eggs in one basket.” 

Storaker says diversification is the only free lunch in finance and wants to make it simple for the web3 ecosystem. His decentralized asset management protocol creates well-diversified tokenized investment portfolios that individuals will be able to buy via a smart contract and then self-custody, he said. 

Going head-to-head with BlackRock

But why should an investor use Arch instead of buying a crypto exchange-traded product from a big player like BlackRock or 21Shares?  Especially as BlackRock increasingly makes moves into crypto. 

Storaker says Arch will take a different approach by going beyond just Bitcoin and Ethereum to provide investors exposure to the cutting edge of what’s happening in web3. 

“When we say ‘BlackRock of web3,’ we really want to be on par on the methodology side with what they do and what people expect from passive products,” Storaker said. 

The team also wants to ensure that the transition of capital from web2 to web3 is as seamless as possible for newcomers to the space. 

“It’s not something that comes naturally,” he added. “But I think people are willing to try it.” 

Tapping into the everyday investor

This is why Ripio Ventures, the venture arm of Latin America-based blockchain firm Ripio, decided to back the team. They said Arch has the potential to touch millions of users in Latin America and offers potential collaboration opportunities for Ripio. 

Ripio currently has about 3.5 million users, mainly in Argentina and Brazil, a Ripio spokesperson said. 

“What Arch offers is a solution that is interesting because it’s bringing in something that is complex … [and] making it easy for everyone to do it,” said Andres Fleischer, managing partner of Ripio Ventures. 

Arch is currently built on Ethereum rails. Primarily because it’s an order of magnitude greater than any other ecosystem, Storaker said.

Are tokens securities?

Offering tokenized products to the average investor does, however, create challenges. 

Securities and Exchange Commission (SEC) Chairman Gary Gensler has repeatedly reiterated that he believes “most crypto tokens are securities” and that many intermediaries need to register with the SEC, “whether they call themselves centralized or decentralized.” 

“We have been working with counsel almost from day one, in making sure that we don’t run afoul of regulation here in the U.S. and elsewhere,” Storaker said. “For us that means sometimes going slower than then you might have done otherwise, but so you don’t mess up.” 

The platform will offer two index-tokens: the Arch blockchain token, which tracks the world’s largest blockchains, and the Arch Ethereum Web3 token, which tracks native tokens of major protocols like Chainlink and Uniswap.

Arch previously raised a pre-seed round and went through the TechStars accelerator program.  

The new funds from the round will be used to tokenize a wider suite of decentralized finance indices and to develop the platform into a decentralized asset management protocol. 

© 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.

NFT company Dapper Labs has confirmed that it’s blocking crypto accounts with Russian ties and said it was because of new EU sanctions on Russia.

The sanctions prohibit companies from offering crypto wallet, account and custody services to accounts with connections to Russia, Dapper Labs said in a statement. It added that its payment service is based in the EU, which has directed it to comply with the sanctions.

The company said it is restricting Russian accounts from being able to buy, sell or gift NFTs, as well as make other purchases or withdraw NFTs from the platform.

Dapper Labs added that while users cannot access their NFTs, they still own them and can continue to view them.

The statement comes after multiple crypto users complained that they could no longer access their accounts, and revealed email correspondence from Dapper Labs about the restrictions.

Dapper Labs is the creator of CryptoKitties and the Flow blockchain, which is used by NFT project NBA Top Shot and others.

© 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.

Token holders of DeFi project Yam Finance are debating whether to dissolve the project’s treasury and distribute the funds among token holders in an attempt to salvage what’s left of the project.

Yam Finance is an automated yield farming protocol that was born in DeFi Summer and came out of another project called YFI. It achieved initial success, seeing $600 million in assets in its first 48 hours post-launch, before it was briefly shut down due to a bug. The platform would go on to become the seventh-largest DeFi platform during the yield farming craze. 

Still, as the DeFi hype faded and attention turned to NFTs, projects like Yam Finance lost the spotlight. As a result, its token continued to slide, falling from highs of more than $6 to its current price of $0.17. This, and a lack of meaningful progress, has caused its community to lose faith in the current trajectory.

“After years of Yam contributors making various efforts in different and sometimes conflicting directions, we believe that Yam has reached a critical juncture where it can either continue on its downward trajectory (~97.69% value destruction from ATH) or allow token holders to redeem the assets that they rightfully own,” wrote a community member called 1tx in the proposal.

Core contributors are taking more than $30,000 out of the treasury each month to fund development work, 1tx wrote, yet there was not much to show for this. The proposal would largely shut the project down, stop funding further development and split treasury assets among token holders — with anything unclaimed going to charity.

“The correct, but unfortunate, choice is that Yam should be dissolved before there is further value destruction,” the proposal said.

How has the proposal been received?

A core contributor known as Feddas responded strongly against the proposal, claiming that it was a tactical move by those buying the token at less than the amount that could be redeemed if the treasury were to be dissolved. 

Beyond this, opinion was split. Two commentators agreed with the idea, noting similar points and claiming that it was “better than doing nothing.” 

On the flip side, two others argued that the core developers should be given a chance to bring the project back, claiming there was “not much to lose at this point.”

© 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.

Less than a month after The Merge, the Ethereum community is set to have a celebration of sorts this coming week with its annual global conference — while also looking at what’s next in store for the blockchain platform. 

At the same time, the crypto industry will be watching for any more big-name exits, as more high-profile crypto executives head for the door. Plus, keep an eye on the drama surrounding Flashbots and how it hopes to make amends.

Watch out for news from Devcon Bogota

It’s Devcon time again. This annual Ethereum event will take place in Bogata, Colombia. The sixth Devcon is scheduled for Oct. 11-14 at the Agora Bogotá Convention Center.

Key speakers include Ethereum co-founder Vitalik Buterin, Ethereum Foundation Executive Director Aya Miyaguchi and Ethereum researcher Danny Ryan. Offchain Labs, Optimism and Matter Labs will all have representatives at the event as discussion around Layer 2 topics becomes more important following the successful implementation of The Merge.

Who will be the next to go?

While the crypto industry’s gravity pulled in a huge amount of talent from the traditional finance and tech sectors during 2021 and early this year, that trend has largely broken down. It’s been replaced with a reckoning of sorts, as many high-profile crypto executives have been stepping down over the last few months, starting with MicroStrategy CEO Michael Saylor, Genesis CEO Michael Moro and Alameda Research Co-CEO Sam Trabucco.

Still, this has reached fever pitch in the last few weeks with departures of Kraken CEO Jesse Powell, Voyager CFO Ashwin Prithipaul, Celsius CEO Alex Mashinsky and NYDIG’s CEO Robert Gutmann and President Yan Zhao. Plus we saw FTX US President Brett Harrison moving to an advisory role. Ready your bingo cards as we see who’s next.

Flashbots fallout set to continue

Flashbots has been one of the biggest stories of the day for the last few weeks. It all started when it was made clear that the protocol — used to propose Ethereum blocks for the validators who run the network — was being used to create blocks that censored transactions from sanctioned crypto mixer Tornado Cash. The problem was that Flashbots was dominating the block proposing space, resulting in a lot of censorship on the network.

The Ethereum community reacted strongly, recommending that if Flashbots couldn’t solve the issue, it should shut down. In turn, Flashbots explained its reasoning and set out a path forward, seeking to redeem itself. Yet it’s also struggling internally; Flashbots co-founder Stephane Gosselin revealed that he had resigned from the protocol last month following disagreements with the team. The question for this next week is how will Flashbots continue to manage a difficult situation?

© 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 string of notable crypto executive shakeups continued through September into October as companies continued to grapple with the bear market.  

Two of the most high-profile departures involved executives from Celsius Network and Voyager Digital, which continue to pick up the pieces after declaring bankruptcy in July. Long time CEO and founder of crypto exchange Kraken also surprised the market with his departure announcement. 

These departures follow a wave of crypto executives leaving their posts in August, including MicroStrategy CEO Michael Saylor, Genesis CEO Michael Moro and Alameda Research co-CEO Sam Trabucco.

Here are some of the most notable exits The Block reported over the last month.

Sept. 21: Kraken’s Jesse Powell steps down as CEO  

The Block reported on Sept. 21 that Kraken CEO Jesse Powell would be leaving the crypto exchange after co-founding it in 2011. Former Chief Operating Officer David Ripley will step into the role in the next few months. Powell told Fortune that he wanted to spend more time on things he enjoyed, such as product development and industry advocacy work.

Sept. 22: Galaxy Digital’s co-head of trading Robert Bogucki leaving for BH Digital  

Axios reported that Galaxy Digital’s Co-Head of Trading Robert Bogucki would be leaving the company for BH Digital, the crypto division of hedge fund titan Alan Howard’s Brevan Howard. Bogucki’s departure came after news in late August that the company’s co-head of investments Michael Jordan and other executives from Galaxy Digital and Genesis were launching a new fund called DBA Crypto. 

Sept. 23: Voyager CFO Ashwin Prithipaul resigns 

Bankrupt lender Voyager announced on Sept. 23 that Chief Financial Officer Ashwin Prithipaul would be resigning to “pursue other opportunities.” He had held that position since May, according to his LinkedIn profile. Prior to Voyager, Prithipaul held CFO positions at DriveDigital and Galaxy Digital. Voyager announced on Sept. 26 that FTX US won an auction for its assets with a bid of about $1.4 billion. 

Sept. 27:  Celsius CEO Alex Mashinsky steps down

Alex Mashinsky, now-former CEO of bankrupt lender Celsius Network, resigned on Sept. 27. The price of Celsius’ native token, CEL, dropped sharply on the news. Celsius’ creditor committee said it had called for Mashinsky’s removal after conducting an investigation into the company. Mashinsky had withdrawn $10 million before Celsius declared bankruptcy and froze withdrawals on June 12, the Financial Times reported.  

Sept. 27: FTX US President Brett Harrison moves to advisory role

Former FTX US president Brett Harrison tweeted on Sept. 27 that he would be leaving his position and moving into an advisory role. He stepped into the president position in May 2021, and helped the company grow into new areas such as stocks and non-fungible tokens (NFTs). 

Harrison previously held positions at Jane Street, where he overlapped with FTX founder Sam Bankman-Fried, and high-speed trading firm Citadel Securities, where he led a team of more than 100 engineers.  

Sept. 28: Genesis co-head of sales and trading Matt Ballensweig steps down. 

Genesis Trading’s co-head of sales and trading Matt Ballensweig stepped down on Sept. 28 after more than five years with the company. He will serve in an advisory role for the “foreseeable future,” according to a Twitter thread announcing his departure. 

“We built an 8-person company huddled in a small office in NYC back in 2017 to a sell-side trading behemoth doing billions in volumes in multiple countries today,” Ballensweig wrote in a tweet.

Oct. 3: Coatue’s Matt Mazzeo leaves the firm 

Matt Mazzeo, a general partner at tech-focused investment manager Coatue Management, left the firm to start a new investment fund focused on early-stage startups on Oct. 3. The Information reported the news. A few days later, the same news outlet wrote that two more general partners — Luca Schmid and Sebastian Duesterhoeft — left in August and September, respectively.  

Coatue has invested in crypto firms including OpenSea and crypto market maker Portofino Technologies, and participated in Dapper Labs’ $725 million ecosystem fund.  

Oct. 4: Celsius Network co-founder Daniel Leon leaves  

Daniel Leon, co-founder of bankrupt lender Celsius Network, resigned during the week of Oct. 4, Bloomberg reported. The company confirmed the departure to the news outlet. Celsius CEO Alex Mashinsky also resigned from the company in late September. 

Oct. 6: Aya Kantorovich, FalconX’s head of institutional coverage, announces departure 

Earlier this week, FalconX’s head of institutional coverage Aya Kantorovich announced she would be leaving the firm in a LinkedIn post. She had been at the crypto financial services firm since 2019. She got her start at crypto-focused investment firm Pantera. 

Oct. 7: Greenidge Generation reshuffles executive ranks, with CEO Jeffrey Kirt out  

Bitcoin miner Greenidge Generation reshuffled its executive ranks, with CEO Jeffrey Kirt leaving. As of today, two executives from forestry products company Millar Western — David Anderson and Scott MacKenzie — stepped in to replace him.  

Oct. 7: OpenSea CFO Brian Roberts announces departure after less than a year 

OpenSea Chief Financial Officer (CFO) Brian Roberts wrote on LinkedIn that he left the non-fungible token (NFT) marketplace and would continue in an advisory role. He joined Open Sea in December after serving as the CFO for Lyft.  

“I had the rare opportunity to build a team literally from the ground up and handpicked game changers,” Roberts wrote in his LinkedIn post. 

© 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.