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Sen. Kirsten Gillibrand (D-NY) raked in thousands from crypto executives including FTX CEO Sam Bankman-Fried and Gemini’s Cameron and Tyler Winklevoss, according to her latest fundraising report.

Gillibrand has emerged as a key figure in Washington as lawmakers eye regulating the volatile digital asset industry. The New York Democrat co-authored a sweeping crypto regulation bill with Sen. Cynthia Lummis (R-WY), which the pair released in June. The wide-ranging proposal offers a framework to split which parts of the digital asset industry are regulated by the Securities and Exchange Commission, versus the Commodity Futures Trading Commission, among other policies. 

Venture capitalists, developers and industry groups flocked to Gillibrand’s campaign in the most recent quarter. According to her second-quarter report, Gillibrand’s donors included Bankman-Fried and FTX US president Brett Harrison, who gave $5,800 and $2,900 respectively. Four members of Multicoin Capital — co-founder and managing partner Kyle Samani, managing partner Tushar Jain, partner John Robert Reed and general counsel Gregory Xethalis — gave Gillibrand a combined $19,400. 

According to the report, crypto industry players donated more than $150,000 during the reporting period.

Gillibrand, a former presidential candidate who is up for reelection in 2024, reported raising $872,000 and had $3.9 million on hand at the end of June. Lummis also collected thousands from the crypto industry in the second quarter of the year, The Block reported earlier this week. Campaign finance reports are due to the FEC today, and cover April 1-June 30. 

Gillibrand received cash from crypto-minded members of traditional financial firms. Amy Oldenburg, the head of emerging markets at Morgan Stanley Investment Management, gave $1500. Bain Capital Crypto partner and head of regulatory & policy TuongVy Le donated $1000.

At least eight crypto CEOs cut checks for the New York lawmaker last quarter. They included Hivemapper CEO and co-founder Ariel Seidman, Aptos CEO and co-founder Mo Shaikh, Paxos CEO and co-founder Charles Cascarilla, Messari CEO and founder Ryan Selkis and Matcha Design Labs CEO and founder Avani Miriyala.

Industry groups also put some cash in Gillibrand’s campaign coffers. Texas Blockchain Council President Lee Bratcher donated $750, Crypto Council for Innovation CEO Sheila Warren gave $5,800 and Dan Spuller, the head of industry affairs at the Blockchain Association, donated $250. 

Additional notable Gillibrand donors hailed from Union Square Ventures, Uniswap Labs, Delta Blockchain Fund, Andreessen Horowitz, Meta, dYdX Trading and HODL PAC.

© 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.

EquitiesFirst, an institutional finance firm known for lending cash against stock holdings, owes embattled crypto lender Celsius $439 million.

According to a Financial Times report, two people familiar with the matter said that the “private lending platform” identified by Celsius CEO Alex Mashinsky in a Chapter 11 bankruptcy filing on Thursday is EquitiesFirst. 

The court filing said the relationship between the two firms initially came from deals in which Celsius was the borrower back in 2019.

In July 2021, Celsius sought to repay a loan and retrieve collateral but was informed it would be unable to do so. It then became EquitiesFirst that owed Celsius, per the report. While the debt is steadily being paid off, there is still $439 million — made up of 3,765 bitcoin and $361 million in cash — outstanding. 

“EquitiesFirst is in ongoing conversation with our client and both parties have agreed to extend our obligations,” an EquitiesFirst spokesperson told the FT. Celsius didn’t respond to the report. 

The Block also reached out to both parties but did not hear back by the time of publication. 

Last month, Celsius paused withdrawals and transfers amid turbulent market conditions. The Block reported last month that Celsius’s lawyers had been pushing for it to enter Chapter 11 bankruptcy. The company ultimately filed for bankruptcy yesterday, revealing a $1.2 billion hole in its balance sheet. The move will allow it to continue operations as it meets its obligations to creditors. 

© 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.

Episode 64 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Adam Dell,  founder and CEO of Domain Money.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

As the industry continues to cope with fallout from the implosion of Three Arrows Capital, July has been a brutal month for crypto lenders, with both Voyager Digital and Celsius declaring bankruptcy, and other prominent lenders including Genesis, BlockFi and Blockchain.com incurring severe losses.

In the case of Celsius — which is now reporting a $1.2 billion hole in its balance sheet — retail investors have a long road to recovering any of the crypto they deposited in the platform.

In this episode of The Scoop, Domain Money founder and CEO Adam Dell walks through some of the fatal mistakes made by the recently collapsed crypto lenders and explains what a responsible approach to portfolio management looks like in the digital asset space.

In contrast to the way Celsius allegedly deployed users’ funds into levered strategies, Dell says it is important that Domain Money remains market neutral:

“We don’t take balance sheet risk. And so many of the entities you mentioned were using their clients’ funds to basically take levered positions in the market.”

Domain Money is also looking to differentiate itself through quality portfolio managers. Dell has brought in teams from Goldman Sachs and Bridgewater to help construct and manage portfolios in the hope that veterans from traditional finance will be able to use their experience to manage the volatility of the crypto market.

While the contagion stemming from Three Arrows Capital and rampant global inflation have caused crypto prices to plummet, Dell says this is healthy in the long-run: 

“I’m a little bit conflicted in that I certainly want all of our investors to have positive returns in any timeframe, but I also think this is, in the long-term, a very good thing for this industry to go through to weed out the bad actors, to weed out the momentum and meme-focused investors, and have a set of investments thrive and grow over time that are solving real world problems.”

During this episode, Chaparro and Dell also:

• Compare Robinhood, Marcus, and what makes a good retail investing app
• Discuss why forthcoming regulation will be beneficial for the crypto industry
• Examine the intersection of crypto and traditional finance

This episode is brought to you by our sponsors Chainalysis & IWC Schauffhausen

About Chainalysis
Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.

About IWC Schaffhausen
IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com

© 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 African Republic (CAR) will launch the Sango Platform on July 25, according to an email seen by The Block that was sent to pre-registered users of the country’s crypto project.

According to the email, the Sango Platform will serve as a central hub for crowdfunding, distribution and community support efforts.

“Users are now able to become eligible and get ready for the official launch on the 25th of July by registering & getting KYC approved,” the email said.

Sango is a national crypto project being developed by the CAR government with Sango Coin (SANGO) as the native currency of the ecosystem. SANGO has a total supply of 21 billion tokens.

CAR became the first African country to adopt bitcoin (BTC) as legal tender in April. The country says it has plans to tokenize its vast mineral deposits using the SANGO cryptocurrency.

Sango sidechain

According to the recently published Sango Genesis white paper, Sango will function as a private bitcoin sidechain similar to that of Blockstream’s Liquid Network. Per the document, Sango will work best as a digital monetary system if it is deployed as a bitcoin sidechain rather than settling transactions directly on the bitcoin network.

The Sango Layer 2 will reportedly have a built-in bitcoin interoperability via a two-way peg mechanism. In this arrangement, a set of validators called the Institutional Quorum will have custody of CAR’s bitcoin treasury.

Users who deposit BTC into the Sango sidechain will mint Sango bitcoin (s-BTC), a wrapped version of bitcoin. Users can trade s-BTC for SANGO, which is the currency used for transactions in the country’s crypto platform.

The Sango platform will have a built-in automated market maker to handle conversions between s-BTC and SANGO. Users who wish to withdraw their BTC will trade SANGO back to s-BTC, which will then be burned to return the bitcoin deposit.

The Sango sidechain will have 21 node validators responsible for facilitating transactions on the network. These validators will be controlled by elected officials, including the presidency, federal ministers and members of the national assembly.

© 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.

Three Arrows Capital’s (3AC) liquidators are in the process of asking the Singapore legal system to recognize its British Virgin Islands (BVI) liquidation proceedings, according to a report today in the local press. 

The Straits Times, a Singaporean daily newspaper, reported that advisory firm Teneo, which was appointed by a BVI court, hired Singapore law firm WongPartnership to petition the High Court to allow Teneo to subpoena 3AC co-founders Su Zhu and Kyle Davies and to administer the fund’s assets.  

As a liquidation handler, Teneo’s main job is to protect the assets of 3AC and ascertain who its creditors are. Teneo is essentially representing the creditors. 

Lawyers involved in the case told The Straits Times one path they may explore is looking at what personal culpability the 3AC founders may have had in the fund’s downfall. If the liquidators are able to prove misconduct or mismanagement, they may look to seize their assets. 

Three Arrows is facing insolvency after being liquidated by its lenders. The fund sustained significant losses during the collapse of the Terra ecosystem, then encountered further turmoil during a wider industry selloff. In June, 3AC founders Zhu and Davies were reportedly trying to work out how to repay their lenders and other counter-parties.

Insolvency proceedings come along with a July 1 Chapter 15 bankruptcy filing in the Southern District of New York, which allows foreign debtors to declare bankruptcy in the US. 

Earlier this week, a judge in the Southern District of New York gave the green light to issue subpoenas to the founders and relevant firms to obtain information needed for the investigation. 

© 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.

DeFiance Capital, the crypto venture capital firm with ties to Three Arrows Capital (3AC), has distanced itself from the bankrupt hedge fund in a statement today.

Sharing the statement exclusively with The Block on Friday, DeFiance Capital said its founder Arthur Cheong created the firm “entirely separate” from 3AC in 2020, eight years after 3AC was founded by Kyle Davies and Zhu Su. DeFiance went on to say that none of its assets under management were raised from 3AC, its founders or any of its affiliates.

“Arthur grew, developed and managed the DC [DeFinance Capital] business, assets and investments since that time,” the statement claims. “Arthur is not, and never was, a director of 3AC and/or any of its affiliates. Further, Arthur is not, and never was, involved in the management of 3AC.”

3AC had grown into one of the crypto industry’s biggest hedge funds, before May’s collapse of the Terra ecosystem left it facing significant losses. Last month, a court in the British Virgin Islands appointed financial advisory firm Teneo to handle 3AC’s liquidation and 3AC filed for Chapter 15 bankruptcy in New York a few days later. 

As The Block has reported previously, DeFiance Capital’s website once said it operated as a “sub-fund and share class of Three Arrows Capital.” Now their website says: “DeFiance Capital is not a related company to, and operates independently from, Three Arrows Capital Pte. Ltd. (‘Three Arrows’), which is a Registered Fund Management Company in Singapore.”

DeFiance Capital declined to comment on this change and other questions when contacted.

‘No visibility’

The firm’s statement further claims that Cheong “has had no access to and consequently no visibility on 3AC’s financial statements and/or financial condition and only became aware of 3AC’s solvency problems around the time the news became public in mid-June 2022.”

The exact business relationship between DeFinance and 3AC isn’t clear, but the former claims that it was a counterparty to the latter.

“Like many counterparties which had dealings with 3AC, the business of DC has been materially affected and indeed prejudiced by the liquidation of 3AC,” the statement reads. “Arthur Cheong is committed to taking all necessary steps to protect, preserve and recover all assets which are and were owned in the context of DC’s business.”

DeFiance Capital’s statement is similar to another known affiliate of 3AC, TPS Capital.

TPS Capital, which once described itself on its LinkedIn page and in messages seen by The Block as the over-the-counter (OTC) trading arm of 3AC, said last week that it’s an independent firm with separate management.

“TPS is an independent legal entity and its operations are separate and distinct from those of 3AC,” TPS Capital said at the time. “TPS is run by a separate management team and operates its main count business without the involvement of 3AC or its principals.”

© 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.

Circle issued its first monthly report closely detailing reserves for its US-dollar backed stablecoin, showing $55.7 billion in cash and three-month US Treasury securities at the end of June. 

The fintech company, best known for its dollar-pegged stablecoin, USDC, disclosed in the unaudited report that it is holding $13.58 billion in cash at regulated US banks. The banks include: Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank, Silicon Valley Bank, Silvergate Bank and US Bancorp.

Circle, which has described USDC as being fully backed, reported 55.57 billion USDC in circulation as of June 30. The company also launched a euro-backed stablecoin called EUROC in June. These securities have a weighted average maturity of 43.9 days.

In addition, Circle disclosed holding $42.12 billion in three-month Treasury securities. The list shows 19 securities maturing between July 5 and September 29 of this year. 

“The USDC reserve is held solely in cash and three-month US Treasuries, held in segregated accounts for the benefit of USDC holders, and is entirely separate from Circle’s operations,” the blog post said.  The company added that it has received third-party attestations on a monthly basis since introducing USDC in 2018.

The disclosure is the latest in a series of Circle blog posts entitled “How To Be Stable,” which Circle co-founder and CEO Jeremy Allaire highlighted in a July 2 Twitter thread denying rumors circulating on social media that claimed USDC was facing collapse.

In a new thread posted today, Allaire said the disclosure about USDC reserves was part of the company’s ongoing efforts to focus on transparency. 

“As part of our commitment to increasing transparency and disclosure around USDC, today we’re publishing our first monthly breakdown of the USDC reserve assets, by each and every Treasury bond and list of cash reserve custodians,” Allaire wrote.

“We are not done, we are continuing to do more to provide even greater transparency, including seeking permission from our banking partners to disclose how much cash at each institution, as well as moving towards daily public reporting on reserve assets. We will get there,” Allaire added.

Paxos announced on July 8 that it would start providing detailed disclosures for the reserves backing its Pax Dollar (USDP) and Binance USD (BUSD) stablecoins on a monthly basis. It offers the latter through a partnership with Binance.

© 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 US Securities and Exchange Commission (SEC) could tailor disclosures to suit crypto companies, Chair Gary Gensler said Thursday, offering new insight into the commission’s future rulemaking.

“I’ve said to the industry, to the lending platforms, to the trading platforms, come in, talk to us. We do have robust authorities from Congress, also, to use our exemptive authority so that we can tailor investor protection,” Gensler said during a Yahoo Finance interview on Thursday. 

“Even tailoring what the disclosures might be, because maybe not all of the disclosures for somebody issuing equity are the same as a crypto token. But I would note we don’t have the same disclosures for an asset-backed security that we do for a stock offering,” Gensler said. “So it’s a thoughtful way to sort of tailor things.”

Gensler’s comments come during a downturn in the crypto market. JP Morgan Chase analysts warn the price of bitcoin could keep falling.

This week, crypto lender Celsius filed for Chapter 11 bankruptcy protection in New York.  The SEC chief warned that the public lacks protection because some platforms and tokens don’t comply with regulations, despite the SEC’s ability to write rules and use its exemptive authority to ensure compliance. 

“The public benefits by knowing full and fair disclosure and that somebody’s not lying to them. You know, basic protections,” Gensler said. “We in America let investors take risks, you get to decide what risks you want to take. But the person raising the money and selling you those financial assets, ought to not defraud you, ought to give you the information so you can make your decisions.”

© 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.

As bitcoin’s price rose above $20,000 on Thursday, mining stocks showed mixed results by the end of the trading session.

Companies like Riot, Hut 8 and Digihost saw their stocks go up by 7.91%, 3.65% (on the Toronto Stock Exchange) and 3.64%, respectively.

Others fell on the stock market, including Cipher Mining, BIT Mining and Iris Energy — down 6.98%, 3.74% and 3.69%, respectively.

Bitcoin’s price was around $20,600 at the time of publication, according to TradingView.

CleanSpark announced Thursday that it bought 1,061 rigs at a “substantially discounted price,” after announcing another large order just last month. The company’s stock rose by 0.24% on Thursday.

Here’s how crypto mining companies performed on Thursday, July 14:

© 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
• Transparency and privacy are two sides of the same coin in the realm of crypto, each offering important security benefits to both protocols and their users
• Protecting data is a key component of scaling solutions as well. This week, we explore some of the different approaches to scaling currently under development, taking a look at Avalanche, Polkadot, and Oasis. 

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