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American credit reporting firm TransUnion is set to introduce credit scores to the crypto lending space, the Wall Street Journal reported on Wednesday.

TransUnion has partnered with security outfit Spring Labs to use the latter’s ky0x Digital Passport service for credit data checks for cryptocurrency lending transactions. Spring Labs’ ky0x Digital Passport incorporates identity verification protocols including know-your-customer and anti-money laundering (KYC/AML) checks.

As part of the process, blockchain companies will have access to consumers’ credit scores when issuing loans to such users. The move will introduce creditworthiness checks for borrowers in the crypto lending market, especially for zero-collateral loans, the WSJ report stated. Users with good credit ratings will be able to secure loans at fairer interest rates.

According to Steve Chaouki, president of U.S. markets at TransUnion, introducing credit scores to crypto lending will incentivize greater participation from mainstream entities. Both companies plan to have the credit scoring system on the Digital Passport before the end of the year.

Meanwhile, crypto lending platforms have come under scrutiny from state and federal regulators in the United States. In October 2021, crypto lenders Nexo and Celsius were linked to a probe by the New York Attorney General’s office.

© 2021 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.

One of the largest crypto trading firms has a new chief executive officer and chief technology officer to chart its course as it builds out its business into new arenas, including non-fungible tokens (NFTs) and decentralized finance (DeFi).

GSR, a firm that facilitates more than $4 billion in crypto trades per day, announced Tuesday that Jakob Palmstierna has taken the reigns as chief executive of the firm.

He was previously GSR’s head of product and business development. Meanwhile, the firm has hired former Citadel Securities managing director John MacDonald as its CTO.

MacDonald is a veteran of the market-making space and has held several senior roles at Ken Griffin’s Citadel Securities, including global head of derivatives trading and global head of fixed-income technology.

Cris Gil, GSR’s founder, will transition to the role of executive chairman, according to Tuesday’s announcement.

The shuffle in the firm’s executive leadership follows a period of breakneck growth for GSR’s headcount and various business lines. In 2021, the company grew its team by 215% and expanded into bespoke derivatives for metaverse tokens, NFT trading, and DeFi.

MacDonald told The Block in an interview that the firm aims to position itself as an ecosystem player versus a traditional market-making firm. That’s similar to firms like Jump Trading and Alameda Research, which both act as trading firms and also incubate crypto projects and invest in new token projects.

GSR also wants to enhance its platform for traders by allowing them to interact with a wider range of trading venues, spanning both standard and decentralized markets.

“There’s hundred of venues, different market structures, DEXes, and you end up with a very interesting mix-match,” MacDonald said. “We want to build very stable systems that allow people to react very quickly, for a wide range of clients.”

© 2021 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 services startup Zero Hash announced on Wednesday it has raised $105 million in a series D fundraising round. 

The news comes just three months after the company’s series C, which raised $35 million from Point72, NYCA Partners and DriveWealth, as well as a group of angel investors that included Mercury founder Immad Akhund and Deserve founder Kalpesh Kapadia, among others. It has also been backed by Bain Capital in previous rounds. Steve Cohen’s Point72 participated in the latest round. 

Zero Hash offers tech to third-party retail brokers and fintech firms. The company now powers some of the largest neobanks (including MoneyLion and Wirex), fastest-growing payment processors (including Moonpay, Ramp, and Transak), and prominent retail brokers (including Tastyworks, TradeZero, and TradeStation).

In a press release, Zero Hash said it would use the proceeds of the round to continue expanding its compliance, marketing, product, and engineering teams. It also said it would enhance support for Layer 2 protocols as well as doubling the number of assets it supports to more than eighty by the end of the year.

The money will also be used for “opportunistically looking at strategic acquisitions,” it said. 

The firm declined to share its valuation.

© 2021 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.

SEBA — the Switzerland-based regulated crypto bank founded by former UBS employees — has raised 110 million Swiss francs (around $120 million) in a Series C funding round.

The round was co-led by a consortium of three investment firms — Altive, Ordway Selections, and Summer Capital — and DeFi Technologies. Alameda Research and SEBA’s existing investor Julius Baer, a Swiss private bank, also participated in the round, among other investors.

The fresh capital will help SEBA expand internationally, increase its headcount and launch new products and services, the bank’s CEO Guido Buehler told The Block in an interview. Buehler was formerly the head of asset servicing at UBS Wealth Management and founded SEBA in 2017 with Andreas Amschwand, former global head of foreign exchange at UBS, who left SEBA as its chairman in 2020.

SEBA is currently present in over 25 markets, and it is looking to expand in the UAE, Hong Kong, and Singapore. As for headcount expansion plans, Buehler said the bank looks to double its current team size of over 100 in the next 12 to 18 months.

SEBA is an institutional-focused crypto bank providing services such as custody, trading, lending, and investment management. Buehler said the bank is also exploring opportunities in the NFT market, such as lending and custody services, and the DeFi market, such as providing access to permissioned pools.

Earlier this month, SEBA was whitelisted by Fireblocks to participate in Aave’s permissioned protocol Arc. Now the bank is looking to be a whitelister of Aave Arc to onboard its customers.

Buehler said SEBA’s business has grown significantly over the past year, with an almost tenfold increase in revenue and three times growth in client base. He declined to share absolute numbers but said the bank isn’t profitable yet.

Buehler also declined to share SEBA’s valuation. Last week, SEBA rival Sygnum raised $90 million in a Series B funding round at a post-money valuation of $800 million.

The Series C round brings SEBA’s total funding to date to around $295 million, said Buehler, adding that the round was oversubscribed by almost 100%.

© 2021 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.

Ghozali Ghozalu, 22, from Indonesia, has become an overnight celebrity in the non-fungible token (NFT) space after selling pictures of himself on OpenSea.

The collection, dubbed “Ghozali Everyday,” features selfies taken by the 22-year old every day from when he was 18 to 22, covering a span of 2017 to 2021. Ghozali sold the pictures at 0.001 ETH ($3.25) and they took a few days to sell out.

“It’s really a picture of me standing in front of the computer day by day,” Ghozali described the collection on OpenSea.

Yet during the sale a few NFT collectors piled in and it somehow became a meme. So far today, the collection has seen 194 ETH ($560,000) in sales. Ghozali Everyday even cracked the top 40 on OpenSea’s 24-hour trading volume rankings with a 72,000% gain in activity according to data from the NFT marketplace.

The cheapest NFT in the collection is on sale for 0.475 ETH ($1,500) as of the time of writing. With 933 NFTs in the collection, Ghozali Everyday’s floor is worth close to $1.4 million, a massive jump from the $3,000 the Indonesian made in the primary sale. A few hours ago, the floor rose to just shy of 1 ETH ($3,250), putting the value of the collection at that time around $3 million.

The interest in the Ghozali collection is in keeping with the massive NFT trading volumes that has characterized the start of 2022. In only the first ten days of January, OpenSea recorded over $1.36 billion in volume and could be set for a new all-time high in monthly trading volume.

© 2021 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.

Indonesian investment super-app Pluang has announced a $55 million round led by Accel. A wide range of additional investors also participated in the round, with Monzo COO Sujata Bhatia, Axie Infinity founders Aleksander Leonard Larsen and Jeffrey Zirlin, and even The Chainsmokers joining the fray.  

The raise comes at a pivotal time for fintech in South East Asia. Last year, fintech startups in the region raised $6 billion from investors. Pluang’s raise is just the beginning of what should be a banner year for fintech in South East Asia, according to Accel’s Ethan Choi, who compared the upcoming year to Latin America’s fintech boom in 2021. 

Set up by Claudia Kolonas and Richard Chua after meeting at Harvard, Pluang began by offering gold as a trading asset and later expanded into indexes, mutual funds, and crypto. 

“Their story is very unique to Indonesia in that they started with gold. There are 16 times more gold investors than equities in Indonesia and there are 80 million gold investors in the country,” explains Accel’s Ethan Choi. “They used [gold] as an entryway to get people used to buying assets, and investing online.”

Pluang’s founders aim to increase access to financial investment tools for Indonesians so that the population is able to participate in markets to drive wealth creation. While the app currently only offers access to shares traded on the US stock market, Kolonas says that she is looking at introducing Indonesian ETFs and stocks, which will guide the company’s acquisition strategy in the region. 

Betting big on crypto in Indonesia

Along with the traditional stock market, Pluang is looking to build out its crypto offerings to tap into the growing interest in digital assets in the country. 

“When we launched [digital asset trading], we were just trying to get users to dip their toes into crypto,” says Kolonas. “What we didn’t expect was that crypto now has almost 10 million users in Indonesia — larger than the stock market.” 

Similar to crypto investment products offered by fellow financial super-app Revolut, Pluang currently offers a walled garden approach, withholding the ability for users to withdraw their crypto from the app. Chua says, however, that support for NFTs, DeFi, and even a possible crypto wallet are all in the pipeline as the startup tries to emulate the features of a typical crypto exchange.

© 2021 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.

Former Twitter boss Jack Dorsey is helping to launch a new fund that will help defend Bitcoin developers against litigation.

Its first port of call will be to come to the aid of the Bitcoin developers who are being sued by Craig Wright’s Tulip Trading Limited over an alleged “breach of fiduciary duty.” The fund will provide funding for outside counsel.

In an email addressed to developers, sent early on January 12, Dorsey described the open-source community as “especially susceptible to legal pressure.”

“In response, we propose a coordinated and formalized response to help defend developers,” he wrote.

The Bitcoin Legal Defense Fund, a non-profit entity, will aim to assist developers with legal disputes that might interrupt their work, he added.

It will do this by helping to appoint defense counsels, devising defense strategies and footing legal bills. The proposed service will come free for developers of Bitcoin-based projects — Dorsey made mention of the Lightning Network.

The fund will be staffed by volunteers and part-time lawyers to begin with, with a board responsible for allocating its resources. That board is comprised of Dorsey, Chaincode Labs co-founder Alex Morcos and academic Martin White, based on the email.

“At this time, the fund is not seeking to raise additional money for its operations but will do so at the direction of the board if needed for further legal action or to pay for staff,” wrote Dorsey.

© 2021 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-technology and cryptocurrency companies like Coinbase and Wise enjoyed a rebound on Tuesday, a much-needed relief for a group of stocks that have been shunned by Wall Street over the past few months. 

The S&P 500 snapped a five day losing streak after a trading session in which Wall Street digested fresh comments on inflation and rate hikes from US Federal Reserve chair Jerome Powell. Technology companies led the rebound. 

Crypto firms like Galaxy Digital and Coinbase surged, gaining 8.5% and 5.4% respectively. Fintech firm Robinhood — which has fallen more than 70% since it clocked in all-time highs in August — ended today’s session up 5%. Wise, a fintech that trades on the London Stock Exchange, traded up 3.66%.  

Bakkt, which has fallen a whopping 85% since October, gained 7.6%. 

While private fintech and cryptocurrency companies have enjoyed lofty valuations in private markets, public market investors have shunned them for the better part of the last year. Such stocks were darlings of the market earlier in the pandemic as new users flocked to platforms like Robinhood and Block’s Cash App to buy stocks and collect government stimulus. 

In a note, JMP’s Devin Ryan outlined his bullish thesis for the sector despite recent “choppiness.” 

Here’s Ryan (emphasis is our own):

© 2021 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 big rally in stocks over the course of 2021 did not translate into outsized returns at some of the world’s largest hedge funds. But their crypto counterparts were able to produce returns that beat both stock and digital asset indexes. 

In aggregate, hedge funds eked out a return of just over 10% last year, underperforming the S&P 500 index’s return of 26.9% as well as the aggregate performance of hedge funds in 2020. The lagging results of hedge fund managers are tied to their underexposure to big tech names like Apple and car-maker Tesla, which clocked in eye-watering returns in 2021. 

Even top hedge funds like Ken Griffin’s Citadel performed on par with the broader market. Citadel delivered a 26% return for 2021, according to Bloomberg News.  

It’s a different story for crypto funds, according to data provided by Hedge Fund Research. The firm’s crypto index suggests crypto hedge funds returned, on average, 214% in 2021. Aside from the 2017 boom cycle, that represents the best performance for crypto hedge funds since the firm started tracking this particular subset in 2015. 

Indeed, the performance is not only strong relative to their equity brethren, but is also strong relative to some accepted benchmarks. Bitcoin returned 48.5% over the course of 2021. The Bloomberg Galaxy Crypto Index, meanwhile, posted a return of 153.39%. TCAP — a cryptocurrency that leverages oracles to track the entire market — gained 185% in 2021.

Still, cryptos like ether outperformed funds, with the native asset of the second-largest network by market capitalization clocking in a return of more than 400% in 2021. 

The solid performance of hedge funds in the crypto market might be a function of the lack of competition in the market relative to equities, according to Jeff Dorman, the chief investment officer at crypto investment management firm Arca. “TradFi Hedge fund portfolios look very similar, and passive indexes largely outperform active management in today’s picked over market. Contrast that to digital assets, and there really isn’t much competition at all yet.”

Dorman says most Wall Street institutions are focused entirely on bitcoin and ether, leaving opportunities among the mid-cap tokens available for crypto funds. 

“The sweet spot for active management is a growing and evolving investment opportunity set without growing competition, and that’s where we stand today,” he noted. “Due to regulatory issues, size constraints, and lack of education, large TradFi funds have not penetrated digital assets in any meaningful way outside of buying a few private deals, and trading BTC and ETH.”

© 2021 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 class action against EthereumMax and its promoters has named reality star Kim Kardashian, boxer Floyd Mayweather Jr. and former NBA player Paul Pierce among the defendants. 

Plaintiff Ryan Huegrich brought the suit on behalf of all investors who purchased EthereumMax, or EMAX, tokens between May 14 and June 17 of 2021. The case alleges EthereumMax executives and promoters made false or misleading statements through social media advertisements and other promotional efforts.

Huegrich claims the executives obscured their control over the tokens, as well as what percentage were available for public trading during the May to June timeline, in order to pump the price and sell their own portions of EMAX at a profit. They pumped the price by driving interest in the token through celebrity endorsements, including those of Kardashian, Mayweather Jr. and Pierce according to the complaint. 

“In plain terms, EthereumMax’s entire business model relies on using constant marketing and promotional activities, often from “trusted” celebrities, to dupe potential investors into trusting the financial opportunities available with EMAX Tokens,” said the complaint.

The UK’s Financial Conduct Authority chair, Charles Randell, expressed his concern over Kardashian’s EMAX promotions in September 2021, saying it was imperative that crypto regulations cover paid-for advertising on online platforms.

EMAX tokens are ERC-20 tokens based on the Ethereum blockchain, but have no other connection to Ethereum itself, according to the case. The case alleges the name is another obfuscation by the EthereumMax defendants to dupe investors into believing they had deeper ties to the Ethereum network.

“It would be akin to marketing a restaurant as “McDonald’sMax” when it had no affiliation with McDonald’s other than the name similarity and the fact that both companies sell food products,” argued the complaint. 

© 2021 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.