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New York Senator Kirsten Gillibrand and Wyoming’s Senator Cynthia Lummis are joining forces on a yet-to-be introduced bill that promises regulatory clarity for crypto.

The two teased their forthcoming bill at a Politico Live event Thursday. The provisions of the bill are still in flux as the two continue to solicit comments from stakeholders, with Gillibrand saying they’re in “the beginning of the process.” The result, according to Gillibrand, will be a “broad-based regulatory framework for how this industry should potentially be regulated in the future.”

Specific details have yet to be disclosed, but Lummis and Gillibrand said the bill won’t change any existing definitions that the Securities and Exchange Commission uses for securities.

“That is not the intention of our bill,” said Gillibrand. “We will take existing parameters, existing definitions and then place different types of products in different places.”

It will also include a “standing body,” according to Gillibrand, that will make judgments as the industry grows and parameters change. In December, news broke surrounding yet-to-be-filed legislation from Lummis that would mandate “a new organization under the joint jurisdiction of the Commodity Futures Trading Commission and the Securities and Exchange Commission to oversee the digital asset market,” among other provisions. At the Politico event, Lummis and Gillibrand said their bill will seek to empower the CFTC with more resources to regulate the crypto market.

The bill also seeks to ameliorate concerns surrounding the recently passed infrastructure bill, which sought to increase crypto tax reporting measures. That bill included a controversial definition of “broker,” which left some unsure what types of entities would be required to report user information. Lummis said the forthcoming bill clarifies the broker definition.

“The definition of broker is altered in a way that would reflect what really happens on the ground with the developers of the software, the miners, the validators and so forth,” she said. 

The bill will be introduced in “the next several weeks,” according to Gillibrand. At that point, it would go through the usual process of getting through committee, facing hearings and proposed amendments.

“I think it is something we can hopefully get a vote on by the end of the year if we do our work well and if our committees have hearings and it has a chance to go through regular order,” said Gillibrand.

© 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.

Popstar Madonna has acquired a Bored Ape non-fungible token (NFT) valued at more than half a million dollars.

The 63-year old singer said in an Instagram post on Thursday evening that she had “entered the metaverse” by acquiring Bored Ape #4988, a cartoon monkey with funky fur and an ‘S&M hat.’

In the post, she thanked MoonPay, a crypto payments outfit that has been purchasing big ticket NFTs on behalf of celebrities since late last year.  

Transaction records on OpenSea, the NFT marketplace, show that MoonPay acquired Madonna’s Bored Ape for 180 ether (around $564,000) last week. The company then transferred the piece to a wallet presumably owned by Madonna two days ago.

Shortly after, MoonPay transferred Bored Ape #1506 to another wallet. That item — a leopard-furred primate with an eye-patch — has since become the Twitter profile picture of rapper Wiz Khalifa.

The fresh endorsements come at a busy time for Yuga Labs, the company behind the Bored Ape Yacht Club collection. It has just rolled out a new token and is preparing to launch a metaverse gaming project, in addition to announcing a $450 million investment from venture capital backers earlier this week.

© 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.

Exxon is reportedly diverting some of the natural gas it has no use for to power crypto mining operations, with a pilot program in North Dakota.

The oil and gas behemoth has partnered with Crusoe Energy Systems to convert the gas into power mobile generators used for mining operations on-site, sources close to the project told Bloomberg.

The project launched in January of last year and the company is already looking to set up similar ones in Alaska, Nigeria, Argentina, Guyana and Germany, the publication also reported.

Projects like this one have been touted as a win-win situation. On one side, excess natural gas that would have been burned off via the flaring process is put to use and, on the other, energy-intensive crypto mining operations find a power source that would have been wasted otherwise.

Back in 2019, Crusoe Energy Systems got financing from big names including KCK Group and Winklevoss Capital to fund projects including a bitcoin mining facility using gas that would have been flared.

A report from October of last year indicated that Russian regulators were likewise considering the use of wasted flare gas for crypto mining.

© 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.

Buenos Aires-based exchange Buenbit has added four new stablecoins to its platform, citing growing popularity for the digital asset class.

These stablecoins keep parity with the U.S. dollar. These include Tether (USDT), Circle (USDC), Binance USD (BUSD) and TerraUSD (UST). The additions expand Buenbit’s portfolio to 12 digital currencies. 

Buenbit, founded in 2018, was one of the first local exchanges to offer Argentines the option of using stablecoins as a way to avoid the high inflation of their local peso currency. That year it started offering MakerDAO’s decentralized stablecoin DAI, whose value is equal to the U.S. dollar and uses crypto assets as collateral. 

“We start from the premise that a stablecoin like DAI, having parity with the dollar, would serve as a natural gateway to the crypto world, since historically Argentines have used the dollar as a form of savings and as a way to protect themselves from economic factors such as inflation and devaluation,” Buenbit said in a statement shared with The Block. “Today, we can say that we weren’t wrong.”

Buenbit has been expanding its presence in Latin America as well as the number of cryptocurrencies in its portfolio over the past few months, following an $11 million Series A raise last June led by London-based Libertus Capital. It opened its platform to individual traders in Peru last October, and expanded to Mexico last November. 

Earlier this month, Buenbit announced that it would add five new cryptocurrencies to its platform, in addition to DAI, Bitcoin and Ethereum. They include DOT (Polkadot), SOL (Solana), MATIC (Polygon), BNB (Binance Coin) y ADA (Cardano).

Buenbit is also giving its users the option of using decentralized finance (DeFi) protocols to generate interest on their crypto investments, with rates varying depending on the cryptocurrency. 

© 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
• L1 teams are starting to develop closer partnerships with other teams, leveraging the technical strengths and communities of their respective networks to forge new synergistic strategies for growth
• This week, we take a look at Avalanche, Terra, BNB Chain, and Cosmos

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

The Department of Justice said Thursday that it has charged two individuals with conspiracy to commit wire fraud and conspiracy to commit money laundering related to a non-fungible token scam known as Frosties.

Per the DOJ, Ethan Nguyen and Andre Llacuna allegedly absconded with the money raised during the NFT sale rather than continue to develop the project. The case appears to be the first of its kind as it relates to NFTs.

Details of the Frosties scheme were featured in a February report by Protocol, which played out in one of the many Discord servers that are home to NFT communities today.

As the department noted:

“Since in or about January 2022, IRS-CI and HSI have been investigating a NFT fraud scheme based on reports from purchasers of Frosties utility NFTs[2] that they had been defrauded in what is colloquially referred to as a “rug pull.” As the term suggests, a “rug pull” refers to a scenario where the creator of an NFT and/or gaming project solicits investments and then abruptly abandons a project and fraudulently retains the project investors’ funds.

The DOJ further alleged that “NGUYEN and LLACUNA, whose legal identities were disguised to Frosties NFT purchasers, abruptly abandoned the Frosties NFT project within hours after selling out of Frosties NFTs, deactivated the Frosties website, and transferred approximately $1.1 million in cryptocurrency proceeds from the scheme to various cryptocurrency wallets under their control in multiple transactions designed to obfuscate the original source of funds.”

Per the release, “[p]rior to their arrests in Los Angeles, California, NGUYEN and LLACUNA were preparing to launch the sale of a second set of NFTs advertised as “Embers,” which was anticipated to generate approximately $1.5 million in cryptocurrency proceeds.”

A project with that name is expected to initiate its minting process on March 26, per its official website. 

The two defendants potentially face decades in prison in connection with the charges. 

© 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.

It’s been a bad week for DeFiance Capital. 

On Tuesday, it was reported that DeFiance Capital founder Arthur Cheong fell foul to a phishing attack by clicking a malicious link in an email. His personal crypto wallet was compromised, losing $1.7 million in NFTs and cryptocurrency. What wasn’t reported is that a second wallet was also compromised, initially losing more than 200,000 Lido tokens ($720,000) of money belonging to the firm.

And worse: it contained a further 3.7 million of vested Lido tokens, worth $13.3 million, that were steadily getting unlocked and drained from the wallet.

The vesting did, however, provide some respite. Even though the hacker had access to the staked Lido tokens, they could not sell them all because they were locked in a ‘linear vesting’ contract. Linear vesting is a system in which crypto protocol holds funds for a scheduled period and a tiny amount is released with each new block. 

Only a small number of Lido tokens kept getting unlocked and it appears from the wallet’s transaction history the hacker kept selling them slowly.

In an effort to stop the bleeding, a representative from DeFiance Capital by the name of ‘jacob.defiance’ made a governance proposal to the Lido DAO community on voting platform Aragon. As discussed on Lido’s governance forum, they proposed to burn the vested Lido tokens and mint them to a new wallet in the fund’s control.

On Wednesday, Lido DAO members voted to pass the proposal. following which the team burned the entire sum of vested tokens. The tokens will now be returned to the fund’s control.

So in all, the fund lost more than $2.42 million but saved a further $13.3 million from getting stolen, a small silver lining.

© 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 senior lawmaker in Russia’s State Duma has expressed openness to selling the country’s energy in Bitcoin, following major moves away from the dollar and euro.

Pavel Zavalny, who heads the State Duma’s Committee on Energy, held a press conference with the Russian government news outlet Russia Today on March 24. In it, he tried to explain how Russia would move away from selling its natural gas for dollars and euros when global energy markets are overwhelmingly denominated in the two.

After naming “friendly” nations like China, Turkey and Serbia and Russia’s willingness to trade with them for their own currencies, Zavalny said “the set of currencies can be different. It’s standard practice.”

In what resembled an afterthought rather than a statement of policy, Zavalny went on to say, “if it’s in bitcoin, then we’ll trade in bitcoin.”

Zavalny’s appearance follows Putin’s announcement yesterday that Russia would require “unfriendly countries” — namely, the U.S. and the EU — to pay for natural gas in rubles rather than the dollar or the Euro. The move is a reaction to the tightening sanctions on Russia and its financial system, which have isolated the country’s banks as well as its wealthiest citizens from much of the rest of the world. As an example, the US Treasury sanctioned 328 of Zavalny’s colleagues on the State Duma by name today, though Zavalny himself has yet to appear on the specially designated national list.

Europe is heavily dependent on Russian natural gas for energy, leaving those markets open to trade despite pressure from the U.S. to move away from them. While demanding Europe find rubles to pay for Russian gas is likely to harm those imports, it is part of a dwindling arsenal of countermeasures at Russia’s disposal.

While the US has banned imports of Russian oil, gas and coal, it has not applied secondary sanctions to non-US actors who buy those commodities. Settlement in BTC would be no more a sanctions violation than in any other currency, depending strictly on who was on the other end of the trade.

Still, the US government has repeatedly flagged its concern that crypto could be used in sanctions evasion going forward. But Bitcoin, with a current market cap of just over $800 billion, would face serious liquidity issues if it were to accommodate any significant part of Russia’s energy exports.

© 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

• DeFi Kingdoms is a browser-based game that gamifies decentralized finance (DeFi) activities through its 2D user interface on Harmony and Avalanche subnet.
• The tokenomics design of its native token JEWEL manages to capture more value accrual than Axie Infinity’s dual model token AXS and SLP. This is largely thanks to its effective game sources and sinks.
• The expansion of its game to the Avalanche subnet may establish a new precedent for the Game-as-a-Service model by allowing third-party protocols to set up their business within its game ecosystem.

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

Two MEV trading bots made considerable returns today, targeting large stablecoin trades, as pointed out by Robert Miller, product lead at Flashbots.

MEV — which stands for maximum extractable value — is the term given to when value is extracted through the reordering and censoring of blocks. Typically those incentivizing the miners (or validators) are arbitrageur traders paying miners with high fees. The goal is often to frontrun a specified transaction in order to take advantage of an opportunity.

In these cases, the trading bots were used to exploit changes in price after large stablecoin trades. The bots also paid considerable sums to miners in order to make sure their transactions went through at the opportune moments.

The first trade

The first bot targeted a $24 million stablecoin swap. It took advantage of the arbitrage opportunity that arose from the massive stablecoin trade to trade between ether and the stablecoins in question. 

Data from Etherscan shows a trade was initiated at 7:57 AM UTC on Thursday, at block 14447742, by a trader swapping 24.54 million USDC for 22.94 million USDT. This difference of approximately $1.5 million between what the trader started out with and what they received is known as slippage; the size of the trade dropped the price considerably as it went through.

The bot used this to their advantage and scheduled its transaction in the very next block. Data from Etherscan shows the bot was able to earn 275 ETH ($832,000) by exchanging ether for USDC and then for USDT.

However, it paid most of the winnings to block producer Ethermine, ending up with a net profit of 10 ETH ($30,000).

The second trade

The second bot enjoyed greater success, as it landed a 164 ETH ($492,000) arbitrage opportunity. As was the case in the previous situation, the process involved swaps between the same trading pairs.

Of the 164 ETH scooped from the arbitrage opportunity, the bot only had to pay a 16.44 ETH ($49,000) bribe to F2Pool, the mining pool responsible for inserting its transaction in the appropriate block. This means this particular bot earned about 147 ETH ($446,000) profit.

© 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.