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© 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 cadre of crypto industry leaders announced Friday the formation of a new political action committee (PAC), the latest sign that crypto riches made in recent years are bleeding into the American political system and executives want to influence election outcomes.

Dubbed GMI PAC, the new committee will back congressional candidates in the 2022 midterm elections “who work to give consumers and innovators the opportunity to build and use next-generation technologies services here in America.”

The PAC’s founding donors and board of directors include CMS Holdings co-founder Dan Matuszewski, Framework Ventures co-founder Vance Spencer, and FTX Digital Markets CEO Ryan Salame.

Multicoin Capital, Messari, and Blockchain Capital are also backing the PAC, among other firms.

The PAC plans to spend more than $20 million in the 2022 cycle and is currently evaluating candidates in Texas ahead of the March 1st primary.

“This is long overdue,” said Matuszewski.

The crypto market has seen its participants increasingly flex their muscles in the face of mounting skepticism among the upper echelons of the Washington political class.

As recently reported by The Block, data from the Federal Election Commission shows that Coinbase spent $1 million in total lobbying expenses in the fourth quarter of 2021. Last year, several cryptocurrency executives, including FTX’s Sam Bankman-Fried and Coinbase’s Alesia Haas, descended upon Washington DC to make a case for digital asset technology to the House Financial Services Committee.

While the cryptocurrency industry has been a source of job creation in the US, some leaders are skeptical about the risk such assets pose to the broader financial system.

President Joe Biden’s White House is reportedly preparing to release a “government-wide strategy” for cryptocurrencies. That directive should be presented to the President in the coming weeks.

© 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 cross-chain bridge of DeFi protocol Qubit Finance, called X-Bridge, has been exploited and lost $80 million in the process.

X-Bridge facilitates swapping tokens from Ethereum to Binance Smart Chain. In other words, when someone deposits an ERC-20 token to the bridge, they receive a BEP-20 token in return, which can then be used on Binance Smart Chain.

There was a “logical error” in X-Bridge’s smart contract code that led to the exploit, according to blockchain security firm CertiK. The error in the code allowed the attacker to withdraw tokens on Binance Smart Chain when none was deposited on Ethereum.

The attacker ended up netting 77,162 qXETH ($185 million), which they then used as collateral and borrowed other asserts from lending pools worth $80 million, according to CertiK.

These assets are 15,688 wETH ($37.6 million), 767 BTC-B ($28.5 million), around $9.5 million worth of various stablecoins, and about $5 million worth of CAKE, BUNNY, and MDX tokens.

While the attacker exploited X-Bridge for $185 million, they did not directly convert the 77,162 qXETH to ETH, thus they ended up profiting only $80 million through the above tokens, CertiK told The Block.

“This is by far the largest exploit of 2022 to date,” the firm added. Last year, DeFi projects lost $1.3 billion in hacks, according to CertiK.

Qubit Finance said it has contacted the exploiter to offer the maximum bounty. Meanwhile, it has disabled certain functions of X-Bridge until further notice, while claiming of funds is available.

© 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

• The Block Research reviews social media metrics for the three biggest hype cycles of 2021
• We researched Twitter, Reddit, and Wikipedia to assess the degree of engagement around major Layer-1 blockchains, NFTs, and meme coins

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members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

Apifiny Group Inc announced Thursday that it is going public after a merger with Abri SPAC I, a special purpose acquisition company. 

Apifiny is expected to be listed on NASDAQ once the $530 million deal officially closes in the third quarter of 2022. 

Founded in 2018, the San Francisco-based firm consolidates various aspects of digital asset trading markets, such as clearing and settlement, onto one platform. The firm’s partners include crypto big weights such as Huobi Global, OKEx, OKCoin and Blockchain.com. 

Apifiny intends to bolster its blockchain technology tool offerings and regulatory transparency through the merger, according to a release.

“We are proud to be joining forces with Abri, a team that brings years of capital markets expertise and experience operating and running both public and private companies. Together, we intend to create one unified global market for digital assets,” said Apifiny founder and CEO Haohan Xu in the statement.

Apifiny is one of the newest crypto companies to go public through a SPAC deal. Despite their utility and activity surge in the last year, The Block reports that SPAC deals may face trouble ahead in 2022.

© 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 and equities trading platform Robinhood is looking to expand its crypto offerings, despite missing revenue targets for Q1 2022 and posting a decline in crypto transaction-based revenue.

Robinhood posted its fourth quarter earnings today, reporting total revenues of $363 million. Though that’s an increase compared to Q4 2020, Robinhood’s projections for Q1 2022 are falling short of Wall Street’s expectations. The firm expects to rake in $340 million, considerably less than the projected $448.2 million.

In Q4 2021, crypto saw a mild decline in its share of the firm’s transaction-based revenue. Crypto made up 18.18% of the firm’s transaction-based revenue, down from 19.1% the previous quarter.

Crypto transaction-based revenues increased by 304% compared to Q4 2020, clocking in at $48 million, but were considerably less than the highs of Q2 2021. The firm’s crypto activity has declined since then.

Still, the firm is looking to grow its crypto offerings in 2022, eyeing a Q1 release of its crypto wallet and making plans to launch its own crypto platform some time this year. It plans to focus on the international expansion of those offerings.

“Robinhood has set aggressive goals to start opening its crypto platform up to customers internationally in 2022,” said the firm in its report. “The company believes in the immense potential of the crypto economy and sees a big opportunity in serving customers across the globe.”

© 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.

On Tuesday night, Democrats of the House of Representatives released their draft language for the America COMPETES Act, a bill that aims to bolster the US in its global rivalry with China. 

The Biden administration’s legislative agenda has faced a number of hurdles. The 3,000-page bill seems to be an attempt to garner a legislative win based on bipartisan concerns over China in advance of the November midterm elections. However, some in the crypto world are calling out a provision entitled “Prohibitions or Conditions on Certain Transmittals of Funds.”

The section cites national security concerns over ransomware as a reason to expand the oversight authority of the Financial Crimes Enforcement Network, the US Treasury’s anti-money laundering office. The Treasury repeats its earlier questionable estimate of $590 million in ransomware payments tracked in “just the first half of 2021.”

“These innovations, particularly through digital assets and informal value transfer systems, while useful to legitimate consumers, are also a boon for bad actors like sanctions evaders, fraudsters, money launderers, and those who commit ransomware at tacks on victimized U.S. companies and which use the financial system to move and obscure the proceeds of their crimes.”

The Treasury’s solution is to give FinCEN broad authorization to freeze or limit transactions from jurisdictions or even just accounts to be deemed “of primary money laundering concern.”

Coin Center, a non-profit organization that lobbies on behalf of decentralized technology, flagged the new provision the next morning. Congressman Tom Emmer (R-MN), a co-chair of the Blockchain Caucus, amplified those concerns on Twitter as well. 

Effectively, the concern is that the language would put minimal checks on the Treasury’s authority over transactions, whichever they determine to be concerning.

The current bill is just a draft. But as illustrated by the Infrastructure Act of late last summer, legislation is moving in fits and starts. This bill, too, could face a truncated process given political pressures. However, the Senate, in particular, has been a stumbling block. 

© 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.

Per the latest data from the Federal Election Commission, lobbying programs have become practically a must-have for crypto exchanges, especially those based in the US. 

As was the case last quarter, Q4 saw Coinbase at the head of the pack. Its internal lobbying program grew to $740,000 with an additional $260,000 in contracts with outside law and lobbying firms. 

The combined total of Coinbase’s reported lobbying spending hit $1 million even for the quarter, an unprecedented figure for the industry. 

The Block has previously noted a surge in lobbying spending as a result of fights over crypto tax reporting language in the Infrastructure Bill that began in Q3 2021. Coinbase’s most recent lobbying reports indicate a continued interest in those reporting requirements, which the Treasury has yet to clarify. 

Meanwhile, the Crypto Council for Innovation, a high-profile lobbying initiative from Fidelity and Square (now Block) alongside Coinbase back in April, terminated its last contract. 

Other leading US crypto exchanges also stepped up their lobbying activities.

BAM Trading Services, the Delaware-registered corporate entity for Binance.US, registered its first contracts with lobbyists at the end of September and beginning of October, ultimately reporting $60,000 through Q3. Those figures rose to $180,000 in Q4, spread between three firms. 

FTX US — officially, West Realm Shires Services Inc. — reported its first incursions into lobbying, registering contracts two within January that they reported spending $50,000. The two firms they contracted, Rich Feuer Anderson and T Cap Solutions. T Cap is a new boutique advisory firm founded by Charlie Thornton, a former advisor to Heath Tarbert during the latter’s time chairing the Commodity Futures Trading Commission. 

Neither Binance.US nor FTX.US’s lobbying declarations named their global brands as affiliates. 

Crypto exchange and stablecoin issuer Gemini also released its first reports on its lobbying activities though those extend back to Q3 and seem to have stayed at a single $60,000 per quarter contract with Sternhell Group. Sternhell Group is run by Alex Sternhell, an advisor at Coin Center and former staffer for the Senate Banking Committee.

The Block could find no reports of lobbying from the other largest US-based exchange, Kraken, which operates under the business name of Payward.

A number of factors contributed to new interest in influencing federal policy in addition to the notorious tax brokerage act. For one, Gary Gensler, the chair of the Securities and Exchange Commission, has spent much of the past year indicating that he would like to bring centralized exchanges into the reporting regime that securities exchanges are subject to. Gensler has also gotten some legislative support for his pursuit of such a policy change. 

Moreover, Gensler has been pushing on crypto lending products, including shutting down the prospective Coinbase Lend. Gemini has offered a similar lending product for some time. 

Meanwhile, FTX.US has invested heavily in making inroads with the Commodity Futures Trading Commission, corresponding to its work to get approval for crypto derivatives trading in the US.

The Lobbying Disclosure Act maintains a fairly narrow definition of lobbying that requires disclosure. These figures should, therefore, not be taken as anywhere approaching the beginning and end of these firms’ policy departments. 

© 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

• Mina protocol uses recursive zero-knowledge proofs to maintain a small blockchain size
• The current size of the entire Mina blockchain is 22kb, although the actual on-chain size is closer to 11kb
• Mina uses a modified version of the Ouroboros protocol, the proof of stake consensus developed by IOHK and is used by Cardano
• Unlike typical blockchains, Mina’s nodes do not host the entire blockchain’s history
• There are still various challenges that have not been addressed, such as the low transaction throughput, the lack of applications and developers, as well as limited smart contract capabilities

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

The institutional market for non-fungible tokens is heating up, with Genesis Global confirming that it wants to build out its own platform to address the needs of large traders in this fast-growing corner of the crypto market. 

The firm, which traded $100 billion in spot crypto last year, said in its fourth-quarter report that it currently holds “curated NFT collateral” on behalf of certain clients. Indeed, much ink has been spilled explaining the unique role of NFTs in the broader crypto market amid the ongoing macro-driven rout. While liquid tokens have seen their prices collapse since the beginning of the year, the floor price of NFTs and volumes on marketplaces like OpenSea have ticked higher. 

The introduction of new institutional products could reinforce this phenomenon. 

“It’s pretty clear there is a large cohort of whales that are always in the market, but what they are investing in is constantly changing,” said one trader in the market.  “No one just goes to stablecoins to ride out the winter.”

As for Genesis’s new institutional platform, Genesis hopes it will serve as a destination to address “both liquidity and hedging requirements amidst recent high-profile raises of NFT venture funds.”

“While this market is still in its nascent stages, we believe institutional adoption will continue to grow, and that the appetite for NFTs and metaverse ecosystems will continue to develop rapidly among both institutional and mainstream audiences,” Genesis explained. 

NFT volumes have surged since the start of the year, with OpenSea setting a record after clocking in more than $3.5 billion in total volumes as of January 27, as per data from The Block. 

© 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.