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ConsenSys AG, the Ethereum software company behind crypto wallet MetaMask also known as Mesh, is facing a multi-billion dollar audit, as a group of 35 former employees seek to investigate what they are calling “serious irregularities.”

Claims published on Tuesday state that in August 2020, fundamental intellectual property and subsidiaries were illegally transferred from CAG into a new entity, ConsenSys Software Incorporated (CSI).

This was in exchange for 10% ownership of CSI and an offset of a $39 million loan by founder Joseph Lubin. 

The former employees claim that the transaction, internally code-named “Project North Star”, resulted in legacy financial institutions such as JPMorgan Chase acquiring an influential stake in MetaMask and Infura, two of the most widely used infrastructure tools in Ethereum.

The claims by former employees also state that one year on, the IP from CAG was used to fundraise for CSI. 

The company raised funds in November 2021, when it announced a $200 million round at a valuation of $3.2 billion. New investors in that round included British hedge fund Marshall Wace, Daniel Loeb’s Third Point Ventures and HSBC.

The Block reported exclusively in January that the firm had held talks with potential backers about investing at a valuation of roughly $6.5 billion, citing three people close to the discussions. Several sources said the company’s post-money valuation would be close to $7 billion.

CAG minority shareholders were not given information about the transfer, due to delayed shareholder meetings. Due to the delays, Weinert was allowed to be re-elected to the board of directors, the validity of which is also being brought into question alongside issues with the transaction, per the allegations. 

The minority shareholders say their requests for information relating to the transaction were denied for more than a year until the directors learned of legal efforts to enforce minority shareholder rights.

As shareholders have argued for their rights, staff numbers have been cut dramatically at CAG by Lubin, from a peak of 1,700 in 2017, according to the group’s claims. The minority shareholders say the events have resulted in a de-facto liquidation of CAG without their consent. 

A ConsenSys AG spokesperson said: “Mesh refutes the allegations underlying the legal action as well as those contained in the factually inaccurate press release that was self-authored by one of the former employees. Mesh looks forward to formally refuting the allegations and accusations in Swiss courts.”

They added that the spin-out was “conducted properly” and that the business environment has changed since the time of the deal.

“Though the group would like to apply a valuation that might be achieved today to a set of projects that were pre-monetization during the darkest days of COVID when the transaction took place,” they 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.

Jane Dietze, the chief investment officer of Brown University, has been appointed to Galaxy Digital Holdings’ board of directors.

Dietze has over 30 years of experience in the financial industry, starting her career as a financial analyst at Goldman Sachs, and most recently overseeing Brown University’s endowment fund which amounted to $6.9 billion as of June 2021. She was also previously managing director at Fortress Investment Group, where she focused on “asset management of asset-backed securities and distressed credit opportunities,” according to her LinkedIn.

“I find her smart, curious, she understands our space, I think she is a thought leader in the endowment space,” Novogratz said in an interview with Bloomberg, which first reported the news. “I think she helps credentialize us with the endowment space.”

According to Brown’s endowment report from June 2021, the fund saw a 51.5% annual return, or investment returns of $2.4 billion, though the report doesn’t state what the investments were in. “It is the largest gain in dollar terms in the history of the endowment, which is natural for a pool of capital that is managed to appreciate over time,” the report says.

“My value to Galaxy is just bringing an institutional investor perspective,” Dietze said to Bloomberg. “What would an endowment or another institution want from Galaxy? I can provide that perspective.”

© 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.

In an appearance before Congress today, the chair of the Federal Reserve made a rare commentary on legislation, addressing crypto in sanctions avoidance on the part of Russia.

Jerome Powell, the Fed’s recently renominated chair, testified on monetary policy before the House Financial Services Committee. The testimony, originally scheduled for March 1, featured a shift in priorities given Russia’s invasion of Ukraine and the subsequent surge in financial sanctions. 

Powell is famous for his insistence on the Fed’s limited role, emphasizing twin priorities of maximum employment and stable prices across his term. When asked about sanctions, he was similarly cautious about overemphasizing the Fed’s role.

“We provide technical support. We implement those sanctions, and we make sure that banks obey them,” said Powell. “But we’re not the decision-makers on those things. These are decisions that are made at the level of the elected government, not at the level of the Fed.”

However, Representative Juan Vargas (D-CA) made special note of concerns about cryptocurrencies in sanctions evasion, in response to which Powell gave a rare legislative opinion: 

“It underscores the need for congressional action on digital finance, including cryptocurrencies. Ultimately what’s needed is a framework in particular, ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist finance and general criminal behavior — tax avoidance and the like. That’s what I would say, but I don’t really know the extent to which it’s happening, but you read about it in the paper.”

The West and allies including Japan and South Korea have rapidly cut off Russia’s access to the global financial system, with the value of the ruble and Russian stocks consequently plummeting in the past ten days. Crypto’s role in potentially circumventing those sanctions has drawn attention at the highest levels, with Ukraine’s minister of finance even calling for crypto exchanges to block all of Russia, not just sanctioned entities. 

Crypto in sanctions has drawn coverage from all corners, including the Wall Street Journal, New York Times and Bloomberg. However, those reports have been remarkably speculative, and evidence has remained tangential that sanctioned entities are actually using crypto.

Trading on the ruble on Binance has spiked, but volumes are nowhere near where they would need to be to represent a noteworthy portion of capital flight from an economy the size of Russia’s. 

© 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.

Digital Currency Group (DCG) has announced plans to buy back $250 million in shares of several Grayscale crypto trusts amid continued negative premiums for these products.

According to an announcement issued on Wednesday, the $250 million repurchase plan is split into two separate buybacks. The first buyback covers up to $50 million in total for shares of Grayscale Litecoin Trust ($30 million), Grayscale Horizen Trust, and Grayscale Zcash Trust. 

The remaining $200 million could be used for buybacks of any of the other six publicly-traded Grayscale products including the company’s flagship Grayscale Bitcoin Trust (GBTC).

Wednesday’s announcement increases the limit of its share buyback program for Grayscale products. As of October 2021, DCG’s limit stood at $1 billion for GBTC shares alone. According to today’s announcement, only $301.3 million remains unspent in GBTC share buybacks.

The share repurchase announcement also comes amid significant negative premiums for the six publicly-traded Grayscale products. Data from otcnode shows that all six are in negative premiums, the highest of which is the Ethereum Classic Trust at -58%.

These negative premiums for Grayscale’s crypto trusts mean that shares of the product are trading at a discount when compared to the net asset value. GBTC has been trading at a discount to the bitcoin NAV since February 2021, according to The Block’s Data Dashboard.

These buybacks are seen as a way to supply some demand for Grayscale’s crypto trusts. Meanwhile, Grayscale is working to convert its GBTC product to a full-fledged bitcoin exchange-traded fund (ETF) as part of its broader crypto ETF push.

The US Securities and Exchange Commission (SEC) has so far delayed its decision on whether to approve or reject Grayscale’s bitcoin ETF filing.

© 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.

French DeFi platform Nested has raised a $7.5 million Series A round led by hedge fund heavyweight Alan Howard as the company seeks to expand its offering of social-focused trading tools.

The British investor was joined by Republic Capital, Kenetic Capital and CMT Digital, according to a statement today. The former president of Polychain Capital, Joseph Eagen, also took part in the round.

This is not the first crypto startup Howard has backed. Last year, he led a $25 million investment into London-based crypto custodian Copper, along with previous investments in payments startup Bottlepay and Canadian lender Ledn, among others. 

Nested differs from his previous investments in that it sees itself as a social trading platform for DeFi. After connecting with a supported wallet, Nested allows users to build portfolios of tokens which are themselves minted as NFTs. In a parallel of the “copy trading” features developed by online broker eToro, Nested says these “Nested NFTs” are easily discoverable on the platform and can be used by creators to share DeFi investment strategies.

“[We] backed Nested because we are thrilled to see such a mature product with a UX that is primed for ease,” Andrew Durgee, co-managing partner at Republic Capital, said in the statement. “We believe that Nested is ready to be used out of the box and geared for adoption.”

Nested plans to use the extra funding to hire staff and introduce features such as portfolio leaderboards, staking, and social media-like aspects such as user profiles and integrated messaging.

© 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.

Crypto payments firm MoonPay emerged as the top bidder for a coveted non-fungible token (NFT) at Christie’s on Tuesday — while acting on behalf of a mystery buyer. 

The startup splashed £567,000 ($754,340) at the London Evening Sale at Christie’s auction house for a rare item in the World of Women (WoW) collection. 

The price paid by MoonPay — which a source close to the situation confirmed as the buyer — makes #5672 one of the most expensive WoW pieces ever sold. 

WoW #5672 just sold for 567,000 GBP at @ChristiesInc London Evening Sale! 🤩

Thanks to everyone 🤵‍♀️ who witnessed this historical moment with us 😉 and welcome to the WoW fam to our new buyer! 💜 pic.twitter.com/sO6WPjzyAa

— World of Women (@worldofwomennft) March 1, 2022

The piece sports rare traits such as a night goddess skin tone and a tuxedo. It was sold among lots by world-renowned artists such as Keith Haring, Pablo Picasso and David Hockney. 

Moonpay’s main business provides infrastructure that enables web and mobile developers to let their users purchase virtual currencies using credit cards. 

But it also launched a concierge service late last year, previously described as a “white glove service for high net worth individuals who want to purchase NFTs in the simplest way without all the hassle of setting up a wallet, buying crypto, using that crypto to purchase an NFT and then taking custody of it.”

MoonPay purchases NFTs and later invoices its clients for them and any other services rendered. This sale appears to be the latest play by that service, which usually buys items through OpenSea. It is not clear, as yet, who MoonPay purchased the WoW item on behalf of. 

British auction house Christie’s has form for working with NFT sales, and accepts payment in ether or bitcoin, although only through UK Financial Conduct Authority approved firms. 

Last year, it sold a collection of nine CryptoPunks and a work by Beeple. The Block contacted Christie’s for comment. 

© 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.

When Joe Bowman came back from the Cosmoverse conference – a community conference focused on Cosmos held in Lisbon – late last year, he had a sudden desire to start building in the space again.

At the time he was an engineering manager at Chorus One and had been working on a liquid staking concept for some time, but Chorus One – unlike many other top staking firms – had decided against executing on the idea. So, as Bowman told The Block in an interview, he figured he would build it himself.

He launched a company called Ingenuity to build the liquid staking protocol, now named Quicksilver, alongside two other Chorus One team members. Chorus One also invested in the project when it did a small seed round, cementing the new endeavor’s connection to the mothership.

Quicksilver spun out of Chorus One on February 1 and released its whitepaper yesterday. It plans to launch its testnet in the second quarter. As a native Cosmos blockchain, it will be looking to expand support across multiple zones in the Cosmos ecosystem once live.

Liquid staking is a new form of staking that seeks to unlock the value held by the tokens that are being staked. Someone who uses a normal staking protocol is unable to access their staked tokens, while someone who uses a liquid staking protocol receives a set of tokens equivalent in value to their staked tokens – freeing up the liquidity that would otherwise have been frozen.

The biggest liquid staking protocol right now is Lido Finance, which launched on Ethereum and has the majority of the market share. Yet Quicksilver is focused on the Cosmos ecosystem, where it hopes to find greater opportunity for capturing market share. While there are some liquid staking protocols within the Cosmos ecosystem – such as Persistence’s PStake and Lido’s expansion to the Luna blockchain – the field is much more open.

What makes Quicksilver different

Quicksilver is not your typical liquid staking protocol; it’s trying a different approach. 

Rather than provide liquid staking as the main service, it seeks to be more of a middle man between people who want to stake their tokens and current staking services.

Right now, if you use a liquid staking protocol, it’s the protocol itself that issues you the tokens when you stake them. As a result, when you see protocols sucking up the majority of staked tokens, they end up with a lot of influence over governance decisions.

Quicksilver lets users stake their tokens with their desired staking provider and issues a token that provides liquidity – all while remaining separate from the staking provider. As a result, tokens are staked among multiple staking providers, while users are kept happy with the liquidity they receive.

Quicksilver also aims to let stakers retain their ability to decide governance proposals. It has a system that lets users vote on proposals and automatically passes these decisions along, so their votes get submitted.

The result of this is that it’s unable to take a 10% (or so) cut on staking rewards, as most staking protocols do. Right now it hasn’t specified how much its fee will be but it will be more in the half a percent range. 

So while many staking businesses are pivoting to liquid staking, Quicksilver looks to reverse that trend — taking charge of the liquid staking element and letting staking firms do their thing. But whether it catches hold will depend on how highly stakers value decentralization and the ability to exercise their governance rights.

© 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.

With its nation laboring under Russian invasion, Ukraine set crypto Twitter abuzz with the promise of an airdrop, a common reward to early investors in new coins and NFTs. 

“Airdrop confirmed,” Ukraine’s official Twitter account posted today. “Snapshot will be taken tomorrow, on March 3rd, at 6pm Kyiv time. Reward to follow!”

It wasn’t clear what “snapshot” referred to and whether any reward would be in tokens, NFTs or some other form. Ukraine’s ministry of digital transformation didn’t immediately respond to an email asking for more details on the airdrop.

Since Russia invaded last week, Ukraine’s government has been using memes and digital growth hacking techniques to raise awareness of its plight and garner funds – including an online appeal to “Send Putin to Jupiter” by buying virtual rocket parts for $2.99 a pop. 

Ukraine first asked for crypto donations on February 26 and has raised more than $30 million so far. At the same time, it’s raising far greater sums using more conventional funding tools such as war bonds. 

© 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.

Revolut’s Russian CEO Nikolay Storonsky has published a letter condemning the war in Ukraine.

It is the first time that Storonsky — a billionaire entrepreneur born in Russia, who holds British citizenship, and whose father is Ukrainian — has clarified his stance on the conflict.

“I would like to make clear, publicly, what I’ve felt privately from day one: war is never the answer,” he wrote in an open letter published late on March 1. He also called the war “wrong and totally abhorrent,” and called for an immediate end to the fighting.

Storonsky’s Ukrainian co-founder Vlad Yatsenko, who is Revolut’s CTO, had already publicly condemned the actions of Russian president Vladimir Putin after he ordered his forces to invade Ukraine on February 24.

Revolut itself had also taken action by helping customers donate to relief efforts in Ukraine through its app, while waiving fees for transfers to Ukraine.

In his letter, Storonsky said that Revolut users had donated more than £1 million to Red Cross Ukraine’s appeal within 24 hours — and pledged that the startup would match every pound, euro, złoty or franc donated over the next 7 days, up to £1.5 million.

Staff in Russia

Some of Revolut’s more than 2,150 staff are based in Russia and Ukraine, and Storonsky said in his letter that he had to consider the wellbeing of those based in Russia before making any statement on the war.

“They have done nothing wrong; they have simply helped build Revolut, supporting their own families through their hard work, just like their colleagues in Ukraine (or London or New York or Sydney or Mumbai, or anywhere else in the world where our people are based). I was, and remain, mindful of them in all of my actions,” he said.

Since the war in Ukraine began, fintech remittance firms such as Wise, Zeps, TransferGo and Remitly have suspended their services in Russia. Revolut is yet to follow suit.   

© 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 miners brought in $1.06 billion in revenues during February 2022, according to data compiled by The Block Research.

Most of these revenues came from the block subsidy ($1.05 billion) and only a small portion from transaction fees ($12.92 million).

Revenue totals have dropped for the fourth consecutive month, with a month-over-month decrease of 12.9% between January and February.

Total revenues in October were $1.72 billion and have been falling since. They hit an all-time high in March 2021, with a total of $1.75 billion.

For more must-read figures from around the digital asset space, read the February by-the-numbers breakdown by The Block Research’s Lars Hoffmann (Research subscription required). 

© 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.