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John and Tina Barksdale were charged Tuesday for alleged securities fraud, wire fraud and conspiracies to commit both by selling a cryptocurrency called “Ormeus Coin.” 

According to a release from the Department of Justice, John Barksdale misrepresented that Ormeus Coin secured a $250 million mining operation and accrued more than $5 million in revenue each month, despite the coin never approaching such value. 

“As alleged, John Barksdale perpetrated a scheme to sell the cryptocurrency Ormeus Coin to investors around the world through a web of lies, which he spread through in-person roadshows, social media and even a jumbotron in Times Square,” U.S. attorney Damian Williams said in a press release. 

The alleged crimes occurred starting in June 2017, with Ormeus Coin reaching its peak market capitalization of $52 million at around January 2018. The Barksdales allegedly defrauded investors for more than $124 million through Ormeus Coin, a release from the Securities and Exchange Commission (SEC) states. 

The Barksdales face up to a maximum sentence of 20 years for each charge of securities fraud, wire fraud, with a maximum of five years for conspiracy to commit securities fraud.

© 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.

WalletConnect, a web3 infrastructure startup that allows users to connect crypto wallets with decentralized applications via QR codes, has raised $11 million in a Series A funding round.

Union Square Ventures and 1kx co-led the round, with Coinbase Ventures, Semantic Ventures, Zerion and others participating. Angel investors including Alex Svanevik, Eric Conner, Arjun Bhuptani, Viktor Bunin, Mara Schmiedt, Anna Rose and Ajit Tripathi also backed the round.

This was an equity funding round and will help WalletConnect become a decentralized web3 messaging layer, the project’s founder, Pedro Gomes, told The Block. To that end, WalletConnect is building two new protocols — a direct messaging protocol and a push notification protocol.

The messaging protocol will allow all WalletConnect-enabled wallet users to communicate with each other and the push notification protocol will allow users to stay up-to-date with all blockchain activity for DeFi, DAO and NFT applications directly from their wallets, said Gomes.

WalletConnect also plans to launch its own token for its decentralization efforts. “The token launch is what will enable our infrastructure and other service providers to interoperate the messaging network with low latency and high availability,” said Gomes.

With decentralization, WalletConnect’s code — which is currently mostly in the public domain — will become entirely open-source, Gomes said. 

To meet its developmental plans, WalletConnect is also looking to double its current team size to about 24 by the end of the year, according to Gomes. 

Gomes said WalletConnect’s current closest competitor on Ethereum is WalletLink. But while WalletLink only integrates with Coinbase Wallet, WalletConnect can be used with more than 100 different types of wallet across multiple blockchain networks.

The Series A round brings WalletConnect’s total funding to date to $12.25 million. It raised $1.25 million in a seed round led by 1kx in April 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.

Binance CEO Changpeng Zhao, the high-profile crypto billionaire universally known as CZ, spent last Thursday night wooing an influential gathering of UK government officials in Westminster. 

Zhao delivered a speech at a dinner on March 3 for guests from 10 Downing Street and the Treasury, as well as MPs and Lords, according to people who attended the event. The evening was organized by the Centre for Policy Studies, a conservative think tank. 

In his speech, Zhao conceded that mistakes had been made building the crypto exchange into the behemoth it is today — but stressed that he now wants to engage more proactively with regulators. 

“It felt like he was here doing a charm offensive,” said one source. Another said that the presence of advisors from Downing Street and the Treasury “indicates how seriously the government is taking this.”

A checkered past

Binance has a checkered history in the UK. In June last year, the Financial Conduct Authority (FCA) ordered Binance Markets Limited, the firm’s UK entity, to halt all regulated activity in the country. The FCA later said it’s “not capable” of supervising Binance — adding that the firm had refused to answer questions.

Only yesterday, after Binance announced a deal with Nasdaq-listed crypto firm Eqonex that appears to give it control of an FCA-registered crypto custodian named Digivault, the FCA issued a statement warning that it could withdraw the registered status “if it is not satisfied the firm or its beneficial owner is fit and proper.” 

One person at the event said Zhao’s speech gave the impression that Binance is now pursuing compliance “in a much more serious way than they have before.”

A spokesperson for Binance declined to comment on what was discussed at the dinner, but said Zhao “has been quite clear on the record that we are fully compliant globally and we want to get every license and registration that we can.” 

Conservative MP Matt Warman and Ed Vaizey, the former minister for culture, communications and creative industries, were among those who attended the dinner. 

A spokesperson for the Centre for Policy Studies said of the event: “We hosted a private dinner with the Binance CEO last week, to discuss cryptocurrency with a group of interested policy experts.” 

© 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 Avalanche Foundation announced incentives worth hundreds of millions of dollars on Tuesday to stimulate new types of development on the Avalanche blockchain.

The so-called Avalanche Multiverse program — funded by four million AVAX tokens (worth around $290 million at current prices) — aims to encourage the growth of subnets on the network.

The subnets are blockchains linked to Avalanche, in that they share similar tools and features, but that can be customized to suit the requirements of specific apps.

They are also siloed in terms of competing for resources, meaning their speed and costliness won’t be affected by events — such as a popular NFT drop — elsewhere on the Avalanche blockchain. Subnets can also use a token of their own design instead of AVAX.

“It’s kind of like blockchain as a service,” John Wu, president of Ava Labs, said in an interview with The Block. He added that subnets, while app-specific, retain “all the power of Avalanche.”

The launch puts Avalanche in competition with rivals Cosmos and Polkadot, blockchain operators that already offer similar functionality.

News of the Multiverse program comes after the creation of an $180 million program in August of last year, named Avalanche Rush, which aimed to entice DeFi developers to the blockchain. Similar rewards packages have been dangled by Ethereum challengers Algorand, Hedera and Celo — and early signs suggest they have proven effective.

In its latest announcement, the Avalanche Foundation highlighted two examples of subnet projects that are already under way: DeFi Kingdoms and an institutional DeFi initiative featuring half a dozen big-hitters in crypto.

Startup subnets

The first subnet to receive incentives through the Multiverse program is NFT gaming project DeFi Kingdoms, for which $15 million in incentives has been set aside. Those rewards will be denominated in AVAX and a new DeFi Kingdoms token named CRYSTAL, which will sit alongside the game’s existing JEWEL token.

In a statement, DeFi Kingdoms’ pseudonymous executive director Frisky Fox said the team had been looking for technology to help the project “scale and introduce new features like using our native tokens for gas fees, without sacrificing security or decentralization.”

Another key subnet project focuses on crafting regulatory-compliant access to DeFi for institutional investors.

Ava Labs, which helps drive the development of Avalanche, has partnered with Aave, GoldenTree Asset Management, Wintermute, Jump Crypto, Valkyrie, Securitize and others to build the subnet. Participants will be required to undergo know-your-customer (KYC) checks.

“In this case, a consortium can help govern who is participating in this subnet in order to stay compliant with the rules and regulations,” said Wu.

How the incentives work

Launched in September 2020, Avalanche is a proof-of-stake protocol that touts its smart contracts platform as the fastest in the blockchain space. In proof-of-stake systems, participants are required to stake tokens for the chance to be randomly selected to validate transactions.

Developers must stake 2,000 AVAX tokens (around $144,000 at current prices) to create and validate a subnet, according to Luigi D’Onorio DeMeo, a director at Ava Labs.

For projects that qualify, the Multiverse initiative could cover that cost. But the program can also dish out rewards to subnet users and liquidity mining incentives, paid out to entities that stake tokens in order to help validate transactions in subnets.

The Avalanche Foundation said the Multiverse program will be divided into at least six phases to support multiple cohorts of projects.

Several subnets have already been created on Avalanche — including one by Shrapnel, a first-person shooter game that recently raised $10.5 million in funding. But DeFi Kingdoms is the first project to receive incentives under the Multiverse label, according to D’Onorio DeMeo.

© 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.

Asset management firm GoldenTree said Tuesday that it has hired Avi Felman, who most recently served as BlockTower Capital’s co-portfolio manager, to be its new head of digital assets trading.

“Mr. Felman will also be a General Partner of GoldenChain, a wholly owned subsidiary of GoldenTree which will manage the funds launched by GoldenTree that will focus on digital assets,” GoldenTree said in a press statement. 

Before BlockTower, Felman held roles at Wave Financial, CryptoAM and Ledger Capital, per his LinkedIn profile. 

GoldenTree has participated in several crypto funding rounds in recent months, including a $12.5 million round for staking firm Stader Labs and infrastructure company Qredo’s $80 million round. 

“GoldenTree’s Partners have been personally investing in digital assets for years, and as the marketplace has expanded and matured, believe there is an attractive and increasing opportunity set that can be captured in GoldenTree’s opportunistic strategies,” GoldenTree said in its Tuesday statement. 

© 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.

Bain Capital Ventures (BCV), the venture arm of 38-year-old private equity firm Bain Capital, has launched its first crypto-focused fund worth $560 million, Bloomberg reported Tuesday.

BCV has been investing in crypto startups for the last seven years, but its Crypto Fund I will exclusively back such companies. BCV first filed for this fund last September, closed it in November, and has already invested $100 million in several yet-to-be-disclosed startups.

BCV’s current crypto portfolio includes companies such as BlockFi, Compound, Digital Currency Group, and Lolli. With the new fund, it’s looking to back all types of crypto startups from DAOs to Layer 1 blockchains to storage.

“We’ve become quite high conviction we are at the beginning of a multi-decade technology shift,” Stefan Cohen, a managing partner at Bain Capital Crypto, which is running the fund, told Bloomberg. “We really needed a dedicated team and a dedicated fund structure. That’s really what lead to the addition of Bain Capital Crypto.”

BCV isn’t worried about short-term gyrations of the crypto market. It looks to invest in crypto startups with a 10-year time horizon and expects to invest in around 30 startups over the next two to three years. It also plans to actively participate in the governance of crypto projects through its investments. Thus, it is seeking both equity and token deals. It also plans to purchase tokens from DAOs’ treasuries or secondary markets.

Bain is the second storied venture capital firm to unveil a crypto-focused fund in recent weeks. Last month, Sequoia Capital launched its first crypto fund worth $500-600 million. Sequoia Capital also plans to actively manage tokens of projects it will invest in, including from staking them to providing liquidity to participating in governance.

© 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 company Santander said it will offer a new type of loan in Argentina, backed by tokens based on agricultural commodities. 

In a March 7 blog post, the Spanish multinational said it was partnering with startup Agrotoken to offer loans for the agricultural sector. The loans are backed by tokens tied to grains like soy, wheat and corn.

Agrotoken offers stablecoins that each represent a ton of stored grain. These include soy (SOYA), corn (CORA) and wheat (WHEA). Each token’s value is pegged to the price of each commodity in US dollars. The firm has already undergone a pilot project with producers in Argentina to validate the product, Santander said. 

Agrotoken says it has a “multichain infrastructure,” with a platform built on Ethereum, Polygon and Algorand. 

According to Santander’s blog post, each ton of grain is validated through a system called the PoGR, or “Proof of Grain Reserve.” A 2020 Agrotoken whitepaper describes how agricultural producers can use oracles to create a PoGR certificate, which is used as collateral for their so-called “cryptograins.” These tokens are then minted and deposited into the producer’s wallet, with the idea of making them available on any exchanges, DeFi apps and marketplaces supporting them. 

Agrotoken notes several other ways farmers could use the tokens on its website, including exchanging them for things like seeds, machinery and fuel, or getting a pre-funded credit card. 

Santander announced in November that it would invest $225 million in Argentina over a three-year period. According to Reuters, inflation in the South American country recently reached a nine-month high based on January figures.

© 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.

Bitcoin mining firm Hive announced plans to buy Intel’s new ASIC chip. 

The deal, coupled with a manufacturing agreement with an original design manufacturer (ODM), is expected to increase Hive’s aggregate Bitcoin mining hashrate by up to 95%, from 1.9 exahashes per second (EH/s), according to a statement from the company issued Monday. 

Hive, a publicly-traded company based in Vancouver, Canada, also laid out its plans to host 100 megawatts of mining capacity in one of Compute North’s Texas renewable energy data center facilities. This will be their first foray into the U.S.

Last year, Hive ordered a total of 4,000 machines from Canaan, a China-based publicly listed bitcoin mining hardware manufacturer.

As The Block has documented, companies in North America have ramped up investments in bitcoin mining equipment, in a race to scale up, ever since China’s crackdown on the multi-billion industry in May 2021.

Intel’s new bitcoin mining ASIC chips will be incorporated into mining equipment custom-built for HIVE, according to the company. The tech giant has previously described its much-anticipated blockchain accelerator as ultra-low voltage and energy-efficient.

While expanding its mining operations, Hive said it is also prioritizing the use of clean energy.

“Intel’s energy-efficient and high performance blockchain accelerator is expected to reduce our power consumption over current ASIC miners on the market,” said president and COO of Hive Aydin Kilic.

Intel revealed that its new chip — nicknamed Bonanza Mine — provided more energy efficiency than other models currently available in the market, during the 2022 edition of the International Solid-State Circuits Conference (ISSCC) last month.

The new technology has drawn interest from other industry players, including Block (formerly known as Square), Argo Blockchain and bitcoin mining company GRIID, which have all signed up to purchase Intel’s new mining hardware. The company will start shipping the chip later 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.

Collaborators at Stanford University have raised $32 million in funding for Espresso, a new layer-one blockchain focused on privacy and decentralization. 

“This funding will provide the resources necessary to grow the team researching, building, and implementing the infrastructure and products that will make Web3 ready for broad adoption,” says a blog post on Espresso’s website. “The funds will also go towards bringing these products to market through a range of channels: distribution of native end-user products, developer adoption, and partnerships with entrepreneurs, startups, and enterprises.”

The company behind Espresso, called Espresso Systems, is led by four co-founders. The latest funding round was led by Greylock Partners and Electric Capital with participation from Sequoia Capital, Blockchain Capital, and Slow Ventures. 

The developers behind Espresso contend that one factor hampering broader adoption is high transaction fees that fluctuate. “Soaring fees render many of today’s most popular decentralized applications inaccessible for large numbers of would-be consumers,” says the blog post.

Espresso aims to change that, by using zero-knowledge proofs, which allow a party to prove that a statement is true without showing the evidence behind it, said CEO Ben Fisch to TechCrunch.  Espresso uses ZK-Rollups to achieve greater throughput by consolidating transactions into a single proof. 

“If you use a zero-knowledge proof to prove the validity of a large number of transactions that never get sent to the consensus protocol, then while the consensus protocol can verify their validity, they’re not able to provide data to users that is needed for constructing future transactions,” Fisch said to TechCrunch. “We’re working on a way of integrating the roll-up carefully with consensus so that we still achieve higher throughput and thus lower fees, but without compromising so much on decentralization,” Fisch said. 

Espresso’s blockchain focuses on privacy using an open-sourced smart contract called Configurable Asset Privacy for Ethereum, or CAPE. CAPE allows digital asset creators to customize what information can be shown regarding ownership and movement of assets.

Digital assets on CAPE, like stablecoins and NFTs, can be customized to balance transparency with privacy by users. CAPE transactions appear anonymous and hide the asset being transacted, but the creator of an asset can “configure a viewing policy, which ensures that select parties can decrypt select information about transactions for that asset,” according to a statement on their website.

© 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.

US authorities continue to be on high alert for Russia to use cryptocurrencies to evade the recent round of sanctions. 

On March 7, the Financial Crime Enforcement Network, or FinCEN, put out an alert, warning financial institutions to look out for convertible virtual currencies, or CVC, in Russia’s efforts to circumvent sanctions. FinCEN’s alert said: 

“It is critical that all financial institutions, including those with visibility into CVC flows, such as CVC exchangers and administrators — generally considered money services businesses under the BSA — identify and quickly report suspicious activity associated with potential sanctions evasion, and conduct appropriate risk-based customer due diligence or, where required, enhanced due diligence.”

FinCEN is an office within the US Treasury. It is actually the Office of Foreign Asset Control that administers the US sanctions regime, but it is FinCEN that maintains general standards for identifying money laundering risks and reporting them.

US agencies and lawmakers have been on guard for use of crypto in Russia’s attempts to get around sanctions. And yet, there has been minimal evidence that Russia is looking to crypto. The alert, indeed, acknowledges this repeatedly.

“Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people,” said Acting Director of FinCEN Him Das in a statement.

The alert itself elaborated on the familiar difference in scale between crypto markets — which collectively have market caps of around $1.7 trillion as of publication time — and the liquidity necessary for Russia’s sanctions needs:

“While large scale sanctions evasion using CVC by a government such as the Russian Federation is not necessarily practicable, sanctioned persons, illicit actors, and their related networks or facilitators may attempt to use CVC and anonymizing tools to evade U.S. sanctions and protect their assets around the globe, including in the United States.”

Following Russia’s invasion of Ukraine starting on February 24, nations including the US, EU, UK, Japan, South Korea and Switzerland united in sanctioning state actors and oligarchs and freezing their accounts. Ukrainian officials have been applying public pressure to crypto exchanges to freeze all assets in Russian accounts, which is not at this point a requirement of any of these sanctions regimes.

However, as the ruble’s value has slipped and Russia has lost foreign exchange access, trading between Bitcoin and the ruble has gone up in volume. 

© 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.