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Grayscale’s GBTC discount to NAV hits all-time low of 47%

The price of Grayscale Bitcoin Trust (GBTC) versus the bitcoin it actually holds hit an all time low on Wednesday, with the discount ratio reaching 47.3%, according to data from The Block.

The GBTC discount hit a previous all-time low on Nov. 21, when it reached 45.2%. Concerns over the liquidity profile of Grayscale’s sister firm Genesis have put pressure on the fund. One hedge fund is suing Grayscale to force redemptions from the fund.

GBTC trades at a discount to the net asset value (NAV), as shares in the fund don’t grant the holder access to the underlying assets. Shares traded at a premium until early 2021 before flipping to a discount. As a result, the market price of GBTC shares is over 47% lower than the value of the bitcoin in the fund or its net asset value (NAV).

Fir Tree Capital revealed plans to sue Grayscale this week. The fund hopes to get information to investigate potential mismanagement and conflicts of interest, according to Delaware court documents. Fir Tree will use the information to push Grayscale to address the considerable discount it trades at relative to the bitcoin it holds by lowering fees and resuming redemptions, Bloomberg said. 

The discount narrowed before the Fir Tree news on the back of positive murmurings from the Fed on potential for the pace of interest rate increases to slow as soon as this month, but expansionary economic indicators tempered hopes of Fed action.

The Fed’s next rate decision is Wednesday.

© 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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Author: Adam Morgan McCarthy

a16z leads $6.9 million investment in decentralized video platform Shibuya

Shibuya, a decentralized video platform co-founded by Emily Yang of pplpleasr fame, has raised $6.9 million in seed funding. 

Crypto investment firms a16z and Variant led the round, with additional participation from Joe Tsai, GMJP, Kevin Durant and Paris Hilton, among others. 

Shibuya will use the funding to bring in new creators and intellectual property onto the platform, as well as to grow its engineering team and overall platform. 

Yang first announced Shibuya at ETHDenver in February of this year. The platform’s main entertainment offering is a serialized show called White Rabbit, which Yang previously described as a mix of anime, the English drama Black Mirror and web3.

Users can mint NFTs, called Producer Passes, and vote with them to direct the next chapter of the story. When the White Rabbit film is completed, users can own fractions of the IP through $WRAB tokens. 

Shibuya raised $1.5 million via NFT sales to support the show’s development, Yang said in a release. 

Yang, under the name of pplpleasr, helped the business magazine Fortune raise $1.3 million by selling its crypto-focused issue cover as an NFT on Aug. 13, 2021. 

© 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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Author: MK Manoylov

Alameda-backed Ren warns users of losses as it plans to wind down protocol

Ren Protocol, an Alameda-funded issuer of a wrapped bitcoin asset called renBTC warned its users of the potential risk of losses after it shuts down its existing product. 

The Ren team said that this tokenized bitcoin, referred to as Ren 1.0, would soon be shut down. The primary reason for the shutdown of Ren 1.0 is the lack of funding after the financial collapse of Alameda Research.

Ren allows bitcoin holders to lock their assets and mint a wrapped version that can be used on Ethereum, but this mechanism has been put on hold for some time. After Ren’s version 1.0 is shuttered, it will be replaced by a new community-run Ren 2.0.

But the two versions may not be compatible. The project told users to immediately burn the circulating tokens on Ethereum and claim them back to the original chain as soon as possible to protect themselves from potential risk. “As compatibility between Ren 1.0 and 2.0 cannot be guaranteed, holders of Ren assets should bridge back to native chains ASAP, or risk losing them,” the team noted.

According to data from The Block, there are currently 1130 renBTC ($19.2 million) that exist on Ethereum. After version 1.0 is retired, it’s possible its holders may not be able to recover their assets, as noted by the team.

Earlier this year, Alameda Research, the trading firm closely linked to FTX, acquired the Ren project and funded its development each quarter.

After Alameda and the FTX exchange filed for Chapter 11 bankruptcy protection, Ren said its main source of funding would be removed, forcing it to wind down. Ren’s team previously said it was left with a runway that would finish at the end of the 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.

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Author: Vishal Chawla

Cosmos’ largest DEX Osmosis launches a stableswap: Exclusive

Cosmos-based decentralized exchange Osmosis has launched a stableswap — a protocol for trading stablecoins. 

With this launch, Osmosis developers hope to become the main venue where Cosmos users can access and trade a wider range of stablecoins, both centralized and ones backed with crypto tokens. If successful, it could become the Cosmos-equivalent to Ethereum’s main stablecoin exchange Curve.

“We want to support multiple stablecoins in the Cosmos ecosystem — both larger centralized stablecoins (like USDC, USDT, BUSD), as well as some of the newer stablecoins in the Cosmos ecosystem,” Osmosis founder Sunny Agarwal, said in a statement.

The Osmosis stableswap is similar to other stablecoin exchanges, leveraging what’s called a “curve algorithm” that concentrates tokens in asset pools in a way that traders can exchange large amounts of stablecoins with minimal price impact or fluctuations in value. 

Osmosis is the largest decentralized exchange in the Cosmos ecosystem by daily volume and holds over $177 million in crypto assets, according to DeFiLlama.

Growing stablecoin volume on Cosmos

As various bridging solutions have come online in the last one year, including Axelar and Gravity Bridge, many Ethereum-based stablecoins have poured into Cosmos, including USDC, USDT, BUSD and DAI. In October, Circle, the issuer of USDC stablecoin, said it planned to natively launch on Cosmos in the first quarter of 2023.

With the increasing expansion on Cosmos, stableswap pools will get a great deal of use, especially as the ecosystem further matures, Osmosis said. It added that it will allow developers to create pools of different stablecoins similar to Curve’s 3pool, which it said will help improve stablecoin liquidity in the Cosmos ecosystem.

In addition to hosting stablecoin trading, Osmosis also let quasi-pegged assets like liquid staking derivatives be traded with their corresponding native assets with similar efficiency.  For example, trading of staked ATOM (stATOM), the liquid staking token issued by Cosmos’ native asset called ATOM, will have a pool called ATOM/stATOM.

© 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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Author: Vishal Chawla

Tranchess launches qETH for non-custodial liquid staking on Ethereum

Tranchess, a liquid staking provider for the BNB ecosystem, will expand liquid staking on Ethereum with the launch of a non-custodial staking service and the qETH token.

A majority of leading liquid staking protocols on the Ethereum network come from centralized sources. In the wake of the collapse of centralized service providers such as FTX and those companies caught up in the backlash, decentralized approaches are becoming a greater necessity, Tranchess CEO and co-founder Danny Chong told The Block in an interview.

“We didn’t really want to be a centralized entity,” Chong said, adding that the company is working with node operators it can trust for technical execution. Offering a decentralized alternative to major competitive staking services like Lido, Tranchess provides a 4% return on staked ETH, according to its website.

A market has grown around liquid staking protocols in the absence of an exact date slated for the Shanghai upgrade on Ethereum. The upgrade would allow users to withdraw their staked ETH. The protocols allow users to stake tokens. In turn they would receive a token of equivalent value — such as qETH— that serves as a redeemable receipt, usable as collateral with participating DeFi platforms.

Bringing with it lessons learned validating on BNB Chain, the Tranchess team took time to ensure its deployment on Ethereum would be seamless, according to Chong. The company today has just over $45 million in total value locked, which it hopes to grow by branching into the Ethereum liquid staking ecosystem.

“DeFi is now back into the limelight especially in the lights of liquid staking,” Chong said. “The yields in terms of returns are stable and people know exactly where it comes from, which is from gas fees.”

On the difficult topic of centralization on Ethereum and censorship, Chong admitted that the team doesn’t have the perfect solution.”It’s a topic that was widely discussed within the team.” 

The Tranchess team recently met with Ethereum founder Vitalik Buterin in Singapore, who advocated the integration of zero knowledge proof protocols that allow for transactional verification and user privacy. The team is now looking into this.

The approach encouraged by Buterin appeals to Tranchess, according to Chong, who noted, “You do not have to reveal every single part of yourselves or information just because you need to prove who you are, what you do. I think that doesn’t really make sense.”

© 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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Author: Jeremy Nation

Nouns DAO to donate $123,000 to on-chain sleuth ZachXBT

The Nouns DAO community voted to donate 100 ETH ($123,000) to crypto on-chain sleuth ZachXBT as a retroactive reward for their efforts exposing cryptocurrency scammers.

Thursday’s vote was based on a proposal submitted to the DAO’s governance forum. It ended with 90% approval from participants, according to data from the voting page.

The governance proposal that spurred the vote called ZachXBT, who runs a pseudonymous Twitter account with 335,000 followers, a “public good.” It described ZachXBT as working tirelessly to research and expose scams in the crypto space. The account has revealed several fraudulent crypto activities, especially in the NFT space.

Nouns is an NFT project that sells a profile picture every 24 hours. Proceeds of these auctions are deposited in the Nouns DAO treasury, with decisions on spending governed by Noun owners. 

Nouns DAO treasury

The donation will be made to the zachxbt.eth crypto address from the Nouns DAO treasury, which currently holds 29,124 ETH denominated almost entirely in ether and staked ether. The Nouns DAO treasury draws funds from Noun NFT auctions and the community is able to vote on grants that the funds can be used to support.

The 100 ETH donation has not been made as of the time of publishing.

Responding to the gesture, ZachXBT expressed gratitude in a reply to a post by the DAO. The on-chain sleuth said the funds may remain unspent if the bear market lasts for a long time or be used to hire an intern.

© 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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Author: Osato Avan-Nomayo

Blur offers some NFT traders 50% refund after ether losses from UI ‘bug’

NFT marketplace Blur is offering some traders a 50% refund after a user lost 70 ether (about $83,300) due to the platform’s user interface.

A pseudonymous Twitter user with the handle Keung pointed out the issue with Blur’s new bidding system, adding that it could have been a human error that caused the mistake. The loss occurred after the user deposited more than 140 ether into the bidding pool and accidentally paid 70 ether for an Art Gobblers NFT. This mistake could have been avoided if the marketplace were to auto-add a zero in front of a bid with a decimal point as its first character, they said. They also suggested disabling the bid button when the bid price exceeds the collection’s floor price. 

“We originally considered the bid mistake to be a user error because there was no bug in the product per see,” Blur wrote in a thread on Twitter. “After evaluating further, we see how this can be considered a bug from the user’s perspective, so we will refund 50% to traders who were affected by this UI behavior.” 

“Specifically, we will query for collection bids that were accepted over 25% of the non-flagged floor and refund them automatically,” the team added. “We’ll do this within the next 10 days (likely sooner).” 

Blur launched mid-October to much fanfare from the NFT community — muscling in on an increasingly competitive market corner. The move to refund fat-fingered traders comes just days following the platform’s second airdrop to its users. 

© 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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Author: Lucy Harley-McKeown

EU crypto taxation proposal will target firms all over the world

Companies offering crypto services to residents of the European Union will need to comply with tax reporting rules to close tax evasion gaps.

A new proposal from the European Commission will require crypto asset service providers of all sizes and geographical locations to report on the transactions of EU-based clients to tax authorities.

“Tax authorities currently lack the necessary information to monitor proceeds obtained by using crypto-assets, which are easily traded across borders,” the European Commission wrote in a statement. “This severely limits their ability to ensure that taxes are effectively paid, which means European citizens lose important tax revenues.”

The gap in expected and collected tax on taxable goods and services within the bloc was €93 billion ($98 billion) in 2020, according to statistics released by the Commission. That makes up 9.1% of the total expected revenue. Collecting taxation on crypto activity in the EU could bolster an additional €2.4 billion ($2.5 billion) of revenue, The Block reported earlier this week.

The scope of the legislation covers crypto assets “issued in a decentralized manner,” including stablecoins and non-fungible tokens. The Commission also suggested monitoring the cross-border activity of high-net-worth individuals as means to expand the data used by tax authorities to prevent opportunities to hide wealth from tax officials.

Now, the proposal will make its way onto the desks of policymakers in the European Parliament. A stamp of unanimous approval from state representatives in the European Council will also be needed before new rules come into force. The European Commission is hoping for enforcement starting in 2026.

The crypto tax reporting proposal, formally the eighth in a series of directives on administrative cooperation, sits in the EU’s 2020 package of 25 initiatives to adapt the process of taxation to new technologies. DAC8 forms another pillar of the EU’s growing crypto-asset legislation, alongside the framework in the Markets in Crypto-Assets regulation and anti-money laundering rules.

© 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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Author: Inbar Preiss

Nomad to restart bridge after $190 million hack in August

Cross-chain bridge protocol Nomad is getting set to relaunch and partially reimburse those that lost funds in its $190 million hack earlier this year.

“Since the Nomad Token Bridge hack, the team has been working hard on recovering funds and making the necessary updates to safely relaunch the Nomad Token Bridge,” the team noted, in a Medium post. 

Nomad has asked affected users to go through Know Your Customer (KYC) verification via CoinList, a centralized exchange and launchpad platform, to receive their reimbursements. The team at Nomad said the KYC process was essential to ensure the payments were in line with compliance norms.

This verification process is now open. Once it has been completed, users will receive a special non-fungible token (NFT), granting them access to a proportional share of the recovered funds on the Ethereum blockchain. These NFTs will be non-transferable and will allow them to receive any additional funds that are recovered in the future.

On Aug. 1, an estimated 300 crypto users took funds from Nomad’s cross-chain bridge, a tool that lets users move tokens across Ethereum, Moonbeam, Evmos and Avalanche blockchains. The incident occurred after a faulty software update from Nomad developers allowed anyone to drain funds from it. 

The total funds stolen in the incident amounted to $190 million, making it one of the largest crypto hacks of 2022. Of this amount, ethical hackers saved and returned more than $22 million. The team hopes to reopen the bridge to return these recovered funds after months of halt.

© 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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Author: Vishal Chawla

Hong Kong passes amendment introducing VASP licensing regime

Hong Kong’s Legislative Council passed an Anti-Money Laundering and Counter-Terrorist Financing amendment primarily introducing a licensing regime for virtual asset service providers (VASPs).

Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 also applies traditional customer due diligence and record-keeping requirements to VASPs when conducting certain transactions.

The Hong Kong Monetary Authority confirmed the news in a letter on Dec. 7.

The new rules for VASPs are scheduled to commence on June 1, 2023.

The amendment does not exclusively deal with VASPs. It also establishes a registration regime for precious metals and stones dealers. 

© 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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Author: Adam James