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Crypto asset management firm Grayscale aims to take advantage of the slide in crypto prices with a new investment product focused on bitcoin mining hardware. 

The new product is “designed to capture (the) upside of crypto winter,” Grayscale said. 

It was launched via the newly founded Grayscale Digital Infrastructure Opportunities (GDIO), a “private, co-investment opportunity in mining hardware that powers the bitcoin ecosystem.”

“GDIO will use invested capital to purchase mining equipment – as it becomes available for sale in the coming months at what is likely to be discounted prices,” said Rayhaneh Sharif-Askary, Grayscale head of investor relations. “GDIO will then deploy this equipment to mine bitcoin, sell bitcoin daily, and distribute cash generated to investors, generating income.

GDIO will be open for investments from “eligible” individual and institutional accredited investors, the company said.

“While a lot of people have exposure to cryptocurrencies themselves, it’s significantly more difficult for the everyday investor to source, store, and operate mining equipment to generate a profit mining bitcoin,” Sharif-Askary said.

Foundry, which runs one of the biggest mining pools, Foundry USA, will manage the day-to-day operations of the new entity, which is the first of its kind for Grayscale. Foundry and Grayscale are both subsidiaries of the Digital Currency Group (DCG).

“As part of Foundry’s mission to empower a decentralized infrastructure, we’re excited to partner with Grayscale to broaden the ability to invest in bitcoin mining during this opportune time,” said Foundry CEO Michael Colyer in a statement from Grayscale.

Bitcoin miners have seen their margins decline in the past few months, as the cryptocurrency has fallen in value.

“In the coming months, we anticipate some miners will be forced to liquidate their mining equipment,” said Sharif-Askary. “GDIO is positioned to provide liquidity to these miners, purchasing mining equipment at distressed prices, and mining profitably as the price of Bitcoin recovers.”

There’s been talk of consolidation in the bitcoin mining industry, and companies like CleanSpark already have been leveraging market conditions to scoop up thousands of mining machines at discounted prices.

© 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.

Flamengo, one of Brazil’s biggest sports franchises, announced on Thursday that it would launch a number of web3 products via a multi-year partnership with MoonPay. The fiat on-ramping service-turned-web3 infrastructure provider will attempt to help boost fan engagement at the football club through ticketing, marketing and merchandise, according to a release. 

The scope of the partnership could include loyalty programs, unique experiences and complimentary offers, the company said — giving the example of personalized food and beverage options during games.

“NFTs and web3 technology have helped increase fan engagement and loyalty as well as create new revenue streams worth hundreds of millions of dollars for sports teams around the world,” said Ivan Soto-Wright, co-founder and CEO of MoonPay. 

The pair will share the revenue, a MoonPay spokesperson told The Block when asked about the value of the deal. 

Over the course of the pandemic, the way football clubs make money has been brought into sharp focus — with near-total shutdowns in sports, and games played in empty stadiums during lockdowns. The combined revenue of European clubs declined by £3.4bn ($3.8bn) to £22bn ($24.7bn), according to the Deloitte Annual Review of Finance.

This is MoonPay’s first foray into the sports market, and it follows brands such as Socios into the space. Socios is known for pairing up with football clubs to launch fan tokens. These have previously been criticized for being volatile, and also for being a conduit for fans to lose money through.

MoonPay launched HyperMint earlier this year – a platform that allows brands to create and mint their own utility NFTs. In September, it said it would launch an in-person NFT scavenger hunt at Universal Studios Theme Parks. It has also previously had a sideline in brokering sales of expensive NFTs for celebrities through a white glove concierge service. 

MoonPay was valued at $3.4 billion in a recent funding round.  

© 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.

Serial entrepreneur Ben Leventhal has raised $11 million in a seed round for his new web3 hospitality platform Blackbird. 

Leventhal previously co-founded two startups that have shaped the restaurant industry: the food publication Eater and restaurant discovery platform Resy.  

Eater was acquired by Vox in 2013 and Resy was acquired by American Express in 2019. 

The round for Blackbird is co-led by Union Square Ventures, Shine Capital and Multicoin Capital, Leventhal said. Other backers include Variant, Circle Ventures and IAC, according to a statement from the company. 

“I love building things from scratch,” said Leventhal in an interview with The Block. 

“I think when you can take an idea and bring it all the way to fruition and form a real enterprise and a real product around it, there’s nothing more exhilarating,” he added. “Maybe I’m a glutton for punishment, but it didn’t really occur to me to do anything but this.” 

What is Blackbird?

Blackbird is a web3 platform purpose-built for the hospitality industry with a focus on creating a direct connection between the restaurant and their guests through loyalty and membership services. 

“In many ways my thinking is around, how can I point technology at restaurants to help them solve problems and to help create magical consumer experience?” Leventhal said. “So, the enticing question is, how do we point crypto at restaurants in an exciting way? And I think very much Blackbird is the result of that thinking and those conversations.” 

Leventhal observed an increasing disconnection between restaurants and their consumers with technology companies often sitting in the middle. 

“Hospitality is very much an intimate relationship, and that direct connectivity matters a whole lot,” Leventhal said. “What we intend to do with the product is really create something that facilitates that direct connectivity.” 

What that means exactly? Leventhal is still figuring it out. He’s first going to explore loyalty and memberships. 

Bringing web3 to consumers

During the pandemic, consumers really showed up for the restaurants they loved. Leventhal wants Blackbird to help formalize this relationship. 

“You could think about products in the loyalty and membership space that reward frequency of dining, that reward spend, that reward various behaviors,” Leventhal said. “In the end, we think those things are going to increase the lifetime value of an individual consumer and if we do that then obviously, we’re going to improve the restaurant business overall.” 

The tech stack for Blackbird is still up in the air, but Leventhal expects that web3 components will need to be abstracted away to make it appealing to a mainstream consumer audience. 

“Hopefully, for consumers Blackbird feels like magic,” Leventhal said. “We want it to feel like a magic decoder ring in your pocket in terms of how the consumer product feels.” 

“For a crypto native audience, I hope that they’re thrilled by how we’re thinking about pointing this at a specific use case,” he added. 

Oversubscribed round

Leventhal started raising for Blackbird at the tail end of the bull market and into the bear market. The round ended up being oversubscribed. 

“I think we could have raised a lot more money,” Leventhal said. 

“Given the macroeconomic environment and the overall landscape, it felt prudent for us to probably go a little bit smaller than we could have and a little bit more conservative on the valuation,” he added. 

Blockchain seed and pre-Series A deal size

Blackbird’s $11 million raise is above the average check size for a seed round in August, according to data from The Block Research. 

Union Square Ventures’ Fred Wilson will join the board and a minimum viable product of Blackbird will likely ship in the first half of 2023, Leventhal said. 

“We will crawl before we walk,” Leventhal 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.

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The Seoul Southern District Prosecutors’ Office has reportedly arrested Yu, head of general business operations at Terraform Labs, making its first arrest in an ongoing investigation.

The prosecutors’ office has taken the action because it believes that Yu ran bots to wash trade crypto and manipulate prices, Korean media outlet JTBC reported the news exclusively on Thursday. The office has accused Yu of violating Korea’s Capital Markets Act.

Yu is the person’s second name; first name was not disclosed. In Korea, authorities don’t often reveal the full names of detained people.

The prosecutors’ office has reportedly also requested a bench warrant for Yu. Yu was said to be already on the list of the arrest warrants that were issued last month for Kwon and six of his colleagues.

A bench warrant allows prosecutors to keep a person detained during a trial if they think the person might run away during the trial period.

Whether Yu continues to be detained or not will be determined by the court, and a decision could come as soon as today, per the JTBC report. If the court approves the prosecutors’ bench warrant application, Yu will continue to be detained, and if not, he could be part of a non-custodial investigation, according to the Korean court system.

Yu was reportedly a key aide of Kwon, the creator of the Terra ecosystem, which imploded in May and wiped out around $40 billion in investor wealth. Earlier today, The Block reported that South Korea’s Ministry of Foreign Affairs has ordered Kwon to return his local passport in 14 days. If not returned, Kwon risks losing the passport, and re-applications may be rejected.

© 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.

South Korea’s Ministry of Foreign Affairs has ordered Do Kwon, the controversial founder of the Terra ecosystem that crashed dramatically in May, to return his local passport.

The order was issued on Wednesday and requires Kwon to hand over his passport in 14 days. If not surrendered, the passport will be revoked — meaning, if Kwon is in South Korea, he won’t be able to leave the country.

Kwon’s application for re-issuance of the passport may be rejected, according to the order, if he were to apply until Sept. 13, 2023.

Kwon’s current location is unclear and he is the subject of an Interpol red notice. Kwon was believed to be in Singapore, but local police recently confirmed that is not the case. Red notices are issued for fugitives wanted either for prosecution or to serve a sentence.

Kwon was behind the Terra ecosystem — both the TerraUSD (UST) stablecoin and Terra (LUNA) token — which imploded in May as UST lost its 1:1 peg against the U.S. dollar, wiping out around $40 billion in investor wealth. The Terra collapse also pushed several crypto firms toward insolvency and financial troubles, including Three Arrows Capital and Vauld.

Last month, the Seoul Southern District Prosecutors’ Office issued an arrest warrant for Kwon. He is charged with violating the country’s Capital Markets Act.

Last week, Terraform Labs said it believes prosecutors are acting unfairly and that LUNA wasn’t legally a security to be covered by the country’s capital markets law. “We believe that this case has become highly politicized, and that the actions of the Korean prosecutors demonstrate unfairness and a failure to uphold basic rights guaranteed under Korean law,” the company said.

Kwon recently tweeted that he is “not on the run” from any government agency. He has also denied reports that say his funds, worth millions of dollars, have been frozen by prosecutors.

© 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.

Alluvial Chief Growth Officer Mara Schmiedt said she expects significant growth in the staking industry in the coming years. However, before that growth can be realized, she said issues must be addressed in terms of operational security, onboarding and warm up periods, activation queues and withdrawal periods.

“Institutions are getting a lot more serious about participating in the space and participating in staking,” Schmiedt said in an exclusive interview with The Block. “In order to facilitate that mixed adoption curve, we need the right products and capabilities to welcome that adoption and to drive it.”

Insight from experience 

Schmiedt’s background gives her particular insights into the staking industry, having formerly served as head of sales for Coinbase Cloud, where she extended staking services to institutional clientele. Before that, Schmiedt managed business development at the now-Coinbase owned blockchain infrastructure provider, Bison Trails. In addition, at ConsenSys, Schmiedt supported the development of the blockchain and web3 commerce finance suite, Codefi.

“I think that is one of the biggest hurdles that I see today for the adoption of staking more broadly,” said Schmiedt. She pointed out that capital efficiency and liquidity are important to well-functioning capital markets. “Today protocols are not trying to optimize for that” she added, and explained that optimization instead remains focused on security standards and the measures used to enforce them. 

At Alluvial, Schmiedt is tasked with advancing the company’s recently launched Liquid Collective protocol. Designed to be a multi-chain protocol, she called the new framework a blanket architecture to enable major integrators, custodians, exchanges, and other financial institutions to optimize for the right liquidity, volume, and utilization. The company draws inspiration from the participatory approach companies such as Visa engaged in to build today’s widely utilized payment processing standards, she added. 

A collaborative industry-specific approach

Liquid Collective was launched as the collaborative effort of teams from industry-leading organizations, notably Coinbase, Kraken, Figment, and other web3 providers, Schmiedt said.

“We want to build something that allows our integrators to build the most user-friendly access and experience so that we can support a very broad range of end users,” she said. “A KYC, AML-enabled protocol that effectively creates the right compliance checks at the point of deposit and withdrawal.”

Although staking services may be appealing to what she characterized as a broadening base of participants, Schmiedt acknowledged a trend towards more centralization in terms of validation power among major blockchain networks. However, Liquid Collective’s industry-specific enterprise grade framework will play an important role in decentralizing the general participation of network validation support by bringing in new adopters, she said.

On reward volatility

Staking rewards are down by roughly 51.7% on a month-over-month basis, The Block Research shows. Schmiedt emphasized the importance of noting “reward rates are effectively always endogenous to the systems that they’re part of. Reward rates are optimizing for security, so lower staking rates mean higher reward rates because protocols incentivize participants to come into the network to hit a certain security budget to secure the network.”

Conversely, she said, once a certain threshold of participation is reached, an adequate security budget justifies lowering reward rates. In the long term, these factors, as well as general adoption, price, volatility, and considerations around liquidity will ultimately drive the equilibrium of where the pendulum swings on network rewards, Schmiedt 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.

GoldenTree, an asset management firm with about $47 billion in assets under management, has taken a $5.3 million stake in the governance token for SushiSwap.

GoldenTree outlined its purchase as well as its broader strategy, both in regards to SushiSwap and crypto generally, in a post on the SushiSwap community forum.

“We want Sushi to succeed and wish to engage with the Sushi community, but ultimately we trust the core team and the community to hear views and come to their own conclusions,” the company wrote in the post.

Included in the post was a link to an Ethereum address that contains the roughly 3 million SUSHI tokens. Blockchain data show the tokens were added to the address 22 days ago. 

GoldenTree’s crypto investment manager, called GoldenChain Asset Management LP, is co-led by Avi Felman and Joe Naggar, according to the post. GoldenTree hired Felman, who previously worked at BlockTower Capital, as its head of digital asset trading earlier this year. 

© 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.

Apollo Global Management and Elon Musk are “no longer in talks” about a potential financing deal for the billionaire entrepreneur’s prospective bid to buy Twitter, according to Reuters.

Apollo had previously considered taking part in Musk’s offer to buy Twitter at $44 billion or $52.40 a share in April of this year. At the time, Apollo weighed whether it should provide another bidder with the proper equity or debt for the purchase.

Dozens of outside firms had offered to help Musk buy the social media platform, including the crypto exchange giant Binance. Of the outside firms, Apollo had sought to lead preferred financing for Musk’s Twitter bid. 

Musk first offered to buy Twitter in April of 2022 for $44 billion, backed down in July, then renewed interest in buying the social media platform on October 4, The Block previously reported. Should the deal go through, Musk has said that he intends to tackle Twitter’s bot problem.

© 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.

Most bitcoin mining companies tracked by The Block trended downward on Wednesday.

The cryptocurrency was trading at slightly more than $20,100 by market close, according to data from TradingView.

Greenidge Generation’s stock was down by 7.80%, followed by Core Scientific (-7.65%), Northern Data (-6.46%) and Cipher Mining (-6.43%).

Core Scientific announced earlier in the day that it mined 9% less BTC in September while expanding hash rate by 2.4%.

Here’s how crypto mining companies performed on Wednesday, Oct. 5:

© 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.