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Congressional Democrats invited Jack Dorsey, the founder of Block (formerly Square) and Twitter, to talk about bitcoin, The Block has learned.

According to two sources familiar with the matter, Dorsey briefed the Democrats of the House Financial Services Committee during a private Q&A session on March 31.

The Block has obtained notes taken by an attendee of the meeting, which was hosted by the committee but open to other Democratic members and their staffs.

The notes indicate that members asked Dorsey a series of questions related to frequently-cited concerns over crypto. These include Bitcoin’s energy consumption, application in money laundering, and limited circulation as a means of payment.

Dorsey referenced changes in the energy mix that powers proof-of-work networks like Bitcoin, the transparency of blockchain-based transactions for investigators, and the growing userbase for crypto in payments outside of the Western world.

The members were also interested in Block’s move to focus on bitcoin-based payments.

“We want to build services and don’t want to be a Visa or Mastercard. We want to be an open medium for everyone in the world,” Dorsey is quoted as saying.

The particulars are familiar discussion points in Congress, with responses that the committee has heard in prior formats, including public hearings. More significant is that such a briefing is happening at all.

Committee Democrats hosted a similar closed discussion on crypto with Gary Gensler, chair of the Securities and Exchange Commission, back in February.

Staff for Financial Services Committee chair Maxine Waters had not returned a request for comment as of publication time.

© 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.

Blockchain.com, a London-based crypto firm that provides various services, including trading, lending and custody, is now a decacorn (a term for a company valued at more than $10 billion).

The firm has raised a Series D funding round at a $14 billion valuation, Brooks Wallace, head of communications at Blockchain.com, told The Block. The round was led by Lightspeed Venture Partners with “significant participation” from UK-based independent investment manager Baillie Gifford, said Wallace.

Wallace declined to comment on how much the firm has raised in the round. Bloomberg first reported the news.

The Series D round comes three months after Fortune reported, citing an anonymous source, that Blockchain.com is looking to raise $400 million in Series D at an $18 to $20 billion valuation. The company’s Series C round was worth $300 million, raised in March 2021, at a $5.2 billion valuation.

Blockchain.com is one of the oldest firms in the crypto space, having been founded in 2011. It claims to have 37 million verified users globally, with 82 million wallets created and more than $1 trillion transacted.

In separate news, The Block reported earlier Thursday that Blockchain.com has withdrawn its UK application and has decided to operate in Europe from a Lithuanian subsidiary. The company is looking to register its business in Lithuania, the US and Ireland, a person familiar with the matter told The Block. It is also seeking regulatory approval in Germany.

© 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.

Financial services firm Galaxy has renegotiated the terms of its acquisition of crypto custodian BitGo, according to its 2021 financial results.

Galaxy initially announced the $1.2 billion deal on May 5. The plan at that time was to make the purchase with $265 million in cash and the rest in 33.8 million newly issued shares of Galaxy Digital. That would have given BitGo shareholders 10% stake in Galaxy Digital. 

The deal was expected to close in the fourth quarter of 2021, but the firm revealed today that the terms have been renegotiated. The two still intend to complete the proposed transaction but have extended the deal to the end of the year.

“We adjusted the deal some, for progress that BitGo has made,” said CEO Mike Novogratz on today’s earnings call. “They’ve hired close to 150 people or more than 150 people since we originally signed. And so, it’s a bigger and better company. And we’ll continue to work on integration side-by-side until we close the deal.”

A source with knowledge of the process indicated that the completion of the deal is tied to prospective plans to go public on Nasdaq, which Galaxy highlighted in its press release Thursday. Other companies including Bullish and Circle are facing similar roadblocks on their paths to list in the US, industry sources say. 

“As previously announced, the Company intends to complete its proposed reorganization and domestication to become a Delaware-based company, and subsequently list on the Nasdaq, upon completion of ongoing SEC review and subject to stock exchange approval of such listing,” Galaxy said Thursday. 

© 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.

Max Bronstein, who previously held roles at crypto startups Coinbase and Dharma, has joined the C-suite of the core team at Synapse, a DeFi-focused firm.

Bronstein will serve as the team’s chief operating officer, focusing on “growth, strategy, and operations,” he said in a Twitter post.

Synapse is the team behind one of a growing number of cross-chain protocols, which seek to link disparate blockchains and allow users to transact between them. Synapse supports cross-chain swaps between 15 blockchains.

As The Block’s Tim Copeland has reported, cross-chain swaps are complex to stage-manage, owing to varying consensus mechanisms, transaction speeds and varying coding languages. In sum, there are numerous moving parts.

Indeed, the so-called bridges that serve as links between the chains have served as prime targets for would-be attackers. Past examples include last summer’s Poly Network attack and February’s Wormhole attack.

Just this week, a bridge between the Ethereum and Ronin blockchains was exploited, resulting in the loss of hundreds of millions of dollars worth of crypto. Synapse dodged the loss of some $8 million worth of crypto during an attempted exploit last fall.

Still, such mechanisms are at the heart of efforts to create an interconnected-multi-chain ecosystem, and numerous startups in the space have attracted venture capital with the aim of building out these capabilities.

It’s a goal that Bronstein highlighted in his post on Thursday:

“Onboarding millions of new users to crypto has come with creating new blockchains. Be they layer 2s, roll-ups, subnets, or app-chains, more blockchains and execution environments are required to usher in adoption,” he wrote. “As more blockchains come to market, the infrastructure required for users to seamlessly move between them will become even more vital.”

In an interview with The Block, Bronstein said that Synapse is aiming to differentiate itself by focusing on user interface. 

“We’re aiming for a Coinbase equivalent in terms of security and peace of mind,” he 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.

The European Parliament has approved provisions to a bill that takes aim at so-called unhosted wallets. 

On March 31, the ECON and LIBE committees voted to approve amendments to its Transfer of Funds Regulation that would require crypto service providers ⁠— usually exchanges ⁠— to verify the identities of the owners of unhosted wallets with which they transact in advance of a transaction.

The committee votes on the amendments in question were 58 for, 52 against, with 7 abstentions, per voting tallies shared with The Block. The committees will hold another vote on the Transfer of Funds Regulation today, but the final vote is not expected to see much resistance. Pending a final vote, the bill could face trilogues with the European Commission and European Council as soon as mid-April.

The European Parliament has sped up its process for the Transfer of Funds Regulation, which is the bloc’s response to the Finance Action Task Force’s globally envisioned travel rule.

However, while the European Commission and the European Council’s versions of the regulation include an equivalent requirement for crypto servicers to ask users to identify the owners of external self-hosted wallets, they do not demand those servicers independently verify the identities of those wallet owners themselves — a requirement impractical enough that the crypto community sees it as basically a blockade on transactions from exchanges to self-hosted wallets. 

The new provisions, while threatening to self-hosting, are on track to face significant blowback from the Council and Commission, which are generally more technically savvy and less politically exposed than Parliament.

© 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

• Amid the crypto market slump, raising capital from the public markets becomes tougher than before for Bitcoin mining companies.
• Yet they still face the pressure for cash as they undergo infrastructure expansion and are due for the monthly equipment installments.
• We identified 38 private loans over the past two years from more than 10 institutional lenders to a dozen mining companies.
• More than half of the loan facilities were issued after October and they offer a look into how this marketplace has evolved.

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members of The Block Research.
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this Research content on The Block Research.

A leader of US financial regulation has defended his agency’s work with crypto exchange FTX in a Congressional hearing, which will apparently be the subject of yet another hearing in May. 

Rostin Behnam, the chairman of the Commodity Futures Trading Commission, appeared before the House Agriculture Committee on March 31 in a hearing entitled “The State of the CFTC.”

In a notable moment, committee chairman David Scott (D-GA) said he was “very concerned” about “a proposal pending at the CFTC by a cryptocurrency exchange that is seeking approval to operate a new and untested system of clearing derivative trades.” 

Scott was referring to FTX’s push for a new means of clearing derivatives, without the intermediation of futures commission merchants.

“I would just assure you and this committee that as we are considering and contemplating the FTX proposal that we are doing it cautiously, we are doing it deliberately and patiently,” Behnam responded. “Despite the novelty, as chairman, I feel I have the responsibility to give every stakeholder and every market participant an opportunity to share their views and to present their ideas that they have to the market.”

The CFTC chairman continued: 

“In many respects, this proposal could be a turning point or an inflection point for market structure. I don’t know that. I don’t believe that right now, necessarily, but I do think I have to consider the proposal in case there is a possibility for a new market structure that could provide innovation, provide more efficient markets, better pricing, better hedging tools.”

The CFTC opened up FTX’s proposal to public comment three weeks ago, a period that the commission has expanded from 30 days to 90 days. 

Scott did not appear convinced.

“This needs far more review. It needs more oversight,” he concluded. Scott then announced that the committee will hold another hearing on May 17 to focus specifically on the FTX proposal. 

Scott also sits on the House Financial Services Committee, which hosted testimony from FTX CEO Sam Bankman-Fried in December. Fried, one of the biggest donors to President Biden’s 2020 campaign, has become a go-to representative of the crypto industry on Capitol Hill in recent months.

Today’s hearing takes place in the wake of the White House’s budget proposal for 2023, which puts forward appropriations for executive agencies including the CFTC. Behnam has previously cited the expansion of the CFTC’s work with crypto as a basis for a massive boost in resources. 

© 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 announced Thursday that it has partnered with the Recording Academy, the organization behind the Grammy Awards, to become its first official crypto exchange partner.

The partnership will allow Binance to bring “web3 solutions” to the Recording Academy’s music community, a Binance spokesperson told The Block. They declined to comment on specific initiatives but said it wouldn’t involve NFTs, when asked.

Panos A. Panay, co-president of the Recording Academy, said in a statement that the organization will explore new monetization avenues for its members and create new experiences for music fans along with Binance, without disclosing specific details. The Recording Academy did not respond to The Block’s requests for comments.

As part of the deal, Binance will be the academy’s crypto exchange partner for the 64th Annual Grammy Awards and Grammy Week events, including the inaugural Recording Academy Honors celebration.

The deal size wasn’t disclosed. The Binance spokesperson declined to comment on it but said the partnership is for “more than a year,” and that further details will be announced at a later date.

This is the Recording Academy’s second deal in the crypto space in recent months. In November, the organization partnered with NFT platform OneOf to release NFTs on the Tezos blockchain for the 64th, 65th and 66th annual Grammy Awards.

© 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.

Lending protocol Ola Finance suffered a hack today on Fuse Network, one of the many blockchains it operates on, with the attacker pocketing an estimated $3.6 million in various assets.

The incident involved a common issue known as a reentrancy bug, a smart contract vulnerability that enables hackers to make repeated calls to a protocol in order to steal assets. Just a few weeks ago, two DeFi protocols on Gnosis Chain – Hundred Finance and Agave – lost customer funds amounting to more than $11 million in flash loan attacks resulting from reentrancy bugs. 

Security firm PeckShield told The Block that the Ola Finance hacker started by first borrowing funds using their own collateral. After that, taking advantage of the reentrancy vulnerability within Ola’s smart contracts, the hacker was able to remove the collateral without repaying the loan they took. The perpetrator then repeated the same process on other Ola Finance pools to make off with $3.6 million in total. 

After draining the funds, the perpetrator transferred them from Fuse to other blockchains – BNB Chain and Ethereum – via Fuse’s own cross-chain bridge. Of the total loot, it is reported that the hacker holds $3 million on Ethereum and another $637,000 on BNB Chain.

Ola Finance said it’s still investigating the incident and promised to come out with a post-mortem report soon. Ola’s decentralized lending product on Fuse Network remains paused to control the damage. The project noted its lending services on other blockchains were unaffected in the incident.

© 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.

CleanSpark announced Thursday that it will soon expand its crypto mining capacity by 200 megawatts in West Texas, with a goal of adding 300 megawatts on top of that in the future.

The company closed a deal with energy technology company Lancium, which has been building out so-called “clean campuses” across the state of Texas, largely drawing power from renewable energy, according to the announcement.

About 50 megawatts of CleanSpark’s new mining capacity will come online by December 2022 and the remaining 150 megawatts should be operational in the spring of 2023. That will take CleanSpark’s hashrate from the current 4 EH/s to an estimated 20 EH/s.

As more and more crypto miners move to the US after the China ban, many of them have turned to Texas, with its relatively cheap power and deregulated grid. West Texas, in particular, has attracted miners drawn to the abundance of wind and solar capacity.

CleanSpark said its strategy is to both expand its own mining facilities and to partner with colocation service providers such as Lancium.

“This hybrid approach helps us ensure that we always have rackspace ready to deploy new machines when they are delivered to us by the manufacturers,” said Zach Bradford, CEO of CleanSpark. “Such speed and optionality is critical as we scale our mining operations from megawatts to gigawatts in the coming years.”

The company said the deal with Lancium stipulated that a least 70% of the energy delivered should be carbon-free, “with a commitment to work toward 100% renewable energy.”

CleanSpark is expected to be located in Abilene, the company said. Lancium owns another operating site in Houston and is building out one in Fort Stockton.

In November of last year, the company said that it had raised $150 million and had its sights set on reaching 2 gigawatts of capacity in development across its sites in the next 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.