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Stock trading giant Citadel Securities announced Tuesday that it has raised $1.15 billion in a funding round backed by Sequoia Capital and crypto VC firm Paradigm.

This is Citadel Securities’ first-ever external funding round. Sequoia invested in the company through its three funds — Sequoia Heritage, Sequoia Capital Global Equities, and the Global Growth Fund.

As part of the deal, Alfred Lin, partner at Sequoia Capital, will join Citadel Securities’ board of directors.

Citadel Securities handles nearly 30% of all trading in the U.S., including equities, derivatives, bonds, and other assets. One of its biggest clients is Robinhood.

With fresh capital in hand, Citadel Securities plans to continue expanding globally. The company could also go public, according to a report from the Wall Street Journal.

“As technological innovation in financial markets becomes only more important, we see enormous opportunities to meet the needs of our clients across more markets and more products,” said Citadel Securities CEO Peng Zhao. “Our partnership with Sequoia and Paradigm puts us in an even stronger position as we continue to scale our business, broaden into new markets and attract the world’s most brilliant minds.”

© 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.

Coinbase is testing out giving employees four ‘recharge weeks’ off in a bid to balance out what it has called an ‘intense’ working environment. 

In a blog posted on Monday, the company wrote: “The bottom line: We work incredibly hard at Coinbase — for most of us, Coinbase is the most intense place we’ve ever worked. That intensity is only magnified by the current moment in crypto, and it often results in long days and long weeks.”

The experiment will allow roughly one recharge week per quarter in 2022, when “nearly the entire company will shut down.” This is to allow all employees some down time without work piling up, the company said.

Although recharge weeks are — in theory — in addition to annual leave, the company has encouraged employees to schedule vacations to coincide with them. 

It added that the move is to ensure its pace of growth is sustainable for the long term. Coinbase does not expect to offer this perk beyond 2022. 

Outlining why the company is such an all-consuming place to work, it referenced its culture document: “We are a winning team, not a family, and have high expectations for performance and delivering results…. We have an intense work culture, and are regularly pushed out of our comfort zones.”

Long working hours are justified, it said, because “the risk of missing out on a huge opportunity is too great.”

Amid the fight for talent in tech and crypto, offering perks, such as more time off, alongside big compensation packages, is becoming increasingly common. 

Earlier this week, e-commerce platform Bolt said it would permanently switch to a four-day working week after an experiment with reduced hours led to improved productivity. 

© 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.

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The Securities and Exchange Commission is fining tZERO, a leading platform for security tokens in the US, for off-market trading.

Per a January 10 order, the SEC says that tZERO made a number of errors in its filing of disclosures. tZERO operates as an alternate trading system, which has different filing requirements than a typical securities exchange.

According to the settlement, tZERO failed to disclose several changes to its operations within the normal timings. These include the use of non-U.S. trading information from Blue Ocean Financial Technology (a Singapore-based firm that tZERO acquired in 2017), a subscribing broker’s publication of tZERO’s security token pricing on its platform, and the way it was vetting user access to the platform itself. 

The order requires tZERO to pay $800,000 in penalties to the US securities regulator, without admitting or denying the findings, and issues a cease and desist against future violations in the future. On the whole, it’s a fairly minor fine but may signal heightened expectations for alternative trading systems to keep their reporting in line in the future. 

Despite earlier hype around security token offerings or STOs, the market has been plagued by limited venues for trading. tZERO is one of the largest such platforms but still sees most of its volumes come from its own digitized securities or those of affiliate Overstock. Overstock has faced its own inquiries from the SEC in the past.

Following the 2019 departure of CEO Patrick Byrne, Overstock cut funding to tZERO, which subsequently downsized its operations heavily. The firm’s CEO, Saum Noursalehi, stepped down from that position last August.

A representative did not respond to The Block’s request for comment by publication time.

© 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.

Quick Take

• Last year closed with another blockbuster month for VC funding, with NYDIG raising $1 billion in December.
• December added for more mega-deals worth more than $100 million, bringing the year’s total to over 50. 

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The Associated Press, the leading global news wire service, is looking to non-fungible tokens to monetize its photojournalism.

Per a January 10 announcement from the AP, the NFT marketplace will go live on January 31. Blockchain-as-a-service firm Xooa has built out the marketplace, minting the NFTs on Polygon (formerly Matic), an Ethereum-tied network that the AP identifies as “environmentally friendly.”

“As a not-for-profit news cooperative, proceeds go back into funding factual, unbiased AP journalism,” the announcement says, optimistic that collectors will be drawn to NFTs of both the photography and unique metadata on the origins of the shots up for sale. 

The site for the AP’s platform itself currently features just a countdown until launch. 

The Associated Press has demonstrated an interest in blockchain in the past. In October, it announced work with oracle network Chainlink to help developers access AP data. 

NFTs have seen widespread adoption from media companies and artists eager to monetize digital content in the past. Previous examples of marketplaces pursued by news majors include CNN’s “Vault” project.

© 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.

In a recently released interview from December with WealthTrack, the billionaire Bill Miller says that over half of his personal wealth is in bitcoin and other cryptocurrency-related investments. 

“Bitcoin has gone up, on average, 170% every year for the past 11 years,” Miller said in the interview, citing that it has gone down by more than 80% three times during that time frame — making the currency highly volatile. But that volatility didn’t deter the founder and CIO of the investment advisor Miller Value Partners. 

Miller started rebuying it at around $30,000 in the spring of 2021 after first purchasing bitcoin around the $200 mark. “My reasoning is that there’s a lot more people using it now, there’s a lot more money going into it in the venture capital world, and there are a lot of people who are skeptics who are now at least trying it out,” he said in the interview.

In addition to the “fair amount” of bitcoin he bought when it was worth $30,000, Miller also said he has added to bitcoin-related investments such as in the bitcoin mining firm Stronghold Digital Mining and the software tech firm MicroStrategy. Per the interview, the remaining half of his portfolio is chiefly held in Amazon, for which Miller was an early investor. 

© 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.

Darius Moukhtarzade is a researcher at Sygnum, the world’s first digital asset bank. Prior to Sygnum, he worked for Ernst & Young in blockchain consultancy and for several startups in the Swiss Crypto Valley.

Undoubtedly, NFTs have received the most attention in the crypto space in 2021.

While some market observers had foreseen their rise in popularity and use a while ago, their skyrocketing adoption among both traditional and crypto-native players took most of us by surprise. The hype around punks, apes, and rocks overshadowed even the thriving DeFi sector.

Yet I expect that DeFi will come back into the spotlight again next year, experiencing a second “DeFi summer” as it did in 2020 for two main reasons: yield opportunities are likely to be more sought after, especially in a sideways or a bear market scenario; and the establishment of a regulated version of DeFi, which I will call RDeFi.

Attractive yield opportunities

Since the “DeFi summer” of 2020, many new and innovative projects have emerged while the established ones further developed their offerings. A trend that we already saw this year especially in the first half was different types of yield generation as DeFi offers very attractive yield opportunities ranging from conservative products between 3-5% and with more aggressive ones between 30-40% on stablecoins depending on the investor’s risk appetite.

Many new joiners to crypto who entered the space in the recent bull run will start exploring DeFi. For some, it will be the “traditional” path from Bitcoin to Ethereum and then DeFi. For others, it will be from NFTs to Ethereum and then DeFi.

Regardless of whether someone started with the mother of all coins or with a cyborg shark, the result will be the same: increased adoption of DeFi which could lead to a DeFi 2.0 summer.

Evading high gas fees

Even though the ETH 2.0 update is planned for the first half of next year, I believe that Ethereum will still deal with very high network fees for most of the year.

This will not stop DeFi adoption but push investors to use even more Layer-2 scaling solutions such as Arbitrum, Polygon, or Optimism and alternative smart contract platforms such as Polkadot, Solana, Avalanche, or Terra.

I am very excited about Polkadot’s DeFi platform Acala, which recently became one of the first projects to get a parachain slot on Polkadot. Also, Solana, which gained a lot of NFT share from Ethereum due to lower network fees, will be interesting. Its high TPS and scalability allow DeFi applications that would not be possible with Ethereum.

The emergence of ‘RDeFi’

I believe that in 2022 we will see the emergence of RDeFi, “Regulated DeFi”.

This may sound like an oxymoron to some, but I see it as the next evolution of DeFi. I expect that alongside the DeFi that we all know and love, a parallel DeFi sector will emerge, mirroring its rebel twin but with a regulated wrapper around it that matches the regulatory requirements in traditional finance. This RDeFi will only be accessible through the same know-your-customer process that traditional investment instruments use and will have to satisfy the same anti-money laundering standards.

We have already seen early examples of RDeFi project in 2021 with lending & borrowing protocols Aave and Compound both offering regulatory compliant versions of their platforms, Aave Arc and Compound Treasury, respectively.

This trend is likely to continue, and I expect that other types of DeFi projects, such as DEXs, will also offer regulated versions of the platform. It would not surprise me to see an Uniswap Pro version next year.

I also expect to see more projects that are regulatory compliant from inception, such as Swarm Markets that received regulatory approval from German regulator BaFin earlier this year and operates as the first regulated DEX.

Furthermore, I expect large exchanges such as Coinbase or Kraken to offer their investors access to DeFi applications through a regulated gateway. As using centralized exchanges avoids the burden of self-custody and private key management, they can offer DeFi platforms without the need to download a web wallet or to interact directly with dApps. Such offerings would bring further adoption and liquidity to the space.

While some crypto exponents would argue that DeFi applications with KYC requirements go against the spirit of decentralized finance, I prefer to define DeFi as an economic model with owner-operators rather than a service offered by a for-profit entity. The conditions of access to the service do not alter the economic model. RDefi offerings tap into a new customer base for these platforms, regulated financial institutions who would not be able to interact with these platforms otherwise.

In addition, regulation can add customer protection and hold platforms accountable, which may be preferred also by those who are not restricted to regulated services. I believe this development will help mature the space. RDeFi will be pivotal in further increasing liquidity on DeFi platforms and indeed it is the only way for regulated institutions to enter the space.

Closing thoughts

While I expect that NFTs will continue to attract interest, especially in connection with the metaverse and blockchain-based gaming, I believe that the DeFi space will reclaim some of the limelight.

DeFi has matured over the last year and it remains a very innovative sector. The high yields will continue to attract investors, and RDeFi will bring Defi to another level, increasing adoption and liquidity.

© 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.

NFT marketplace aggregator Flip, co-founded by UpOnly podcast host Brian Krogsgard (aka Ledger Status), has raised $6.5 million in a seed funding round.

The round was led by co-led by Distributed Global and Chapter One, with participation from CMS Holdings, NFT artist PplPleasr (aka Emily Yang), Keyboard Monkey, DeeZe, and Larry Cermak, VP of research at The Block, among other investors.

This was an equity funding round and will help Flip expand its team and launch its platform, Krogsgard told The Block. The current headcount of Flip is seven people, and it is hiring for several engineering roles.

What is Flip?

Flip aggregates NFT marketplaces under one roof on its platform, allowing users to easily navigate through available NFTs to buy.

Krogsgard said today OpenSea remains the largest NFT marketplace with over 95% market share, but that will change as Coinbase, FTX, and other players launch their NFT platforms and start to gain traction.

“New users aren’t going to know the right place to shop for an NFT. So what we do is pull together those global markets,” said Krogsgard.

Flip will list NFT collections across marketplaces, their floor prices, and trading volumes, among other data and information.

The platform will also allow users to view and track their NFT portfolio in one place, which is a “quite difficult” task today, according to Krogsgard. Users will be able to bundle their multiple NFT wallets together to track their portfolios.

Flip will be free to use. As for its business model, Krogsgard said Flip will get a “minor fee or referral bonus” for transactions that initiate from the platform with partner exchange APIs.

The platform will open for the public by the end of this month or early February, said Krogsgard.

When asked if Flip will launch its own token, Krogsgard said there are no plans for it due to regulatory uncertainty in the US. “Tokenization is a risk under uncertain US regulatory climate at the moment, and we would never force a token for the sake of short-term liquidity. We think Flip is a very valuable business as an equity play,” he said. 

Flip’s seed round follows a pre-seed round raised last year, which was led by CMS Holdings. The startup will also look to raise a Series A round in the near future, said Krogsgard.

Disclosure: Members of The Block Research may, from time to time, participate in equity or token sales announced by industry startups. The Block News has no knowledge of this participation ahead of announcements and no special consideration is given to funding news involving members of The Block Research.

© 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.

The Federal Investigation Agency (FIA) of Pakistan has sent an inquiry to Binance as part of a criminal investigation into a scam that allegedly used Binance wallets and integrated applications to defraud about $100 million from Pakistani users. 

Head of FIA Cyber Crime Zone Sindh Imran Riaz tweeted a letter sent to Binance’s Cayman Islands office and Humza Khan, the general manager at Binance Pakistan, dated Jan. 6, 2022. 

“As reported to this office by number of complainants, an online financial scam took place in Pakistan affecting thousands of victims from different cities of the country involving fraudulent applications robbing innocent people of millions of dollars,” said the letter.

The investigation so far found fraudulent accounts on 11 applications: MCX, HFC, HTFOX, FXCOPY, OKIMINI, BB001, AVG86C, BX66, 91FP, UG, TASKTOK. The investigation found 26 Binance wallets linked to the applications.

The fraudsters asked Pakistani users to register an account with Binance, and then transfer funds from their Binance wallet to the application. The users were then added to Telegram groups where the administrators would give advice on price action until users had transferred considerable funds into the applications. The applications would then crash and make off with the funds.

The FIA estimates that the average investment per person on these apps was $2,000, and each app had about 5,000 customers, meaning scammers made off with an estimated $100 million.

“It is pertinent to mention here that Binance is the largest unregulated virtual currency exchange where Pakistanis have invested millions of dollars,” said the FIA in a statement. “Fia Cyber Crime Sindh has started steps towards keeping a close eye on peer to peer transactions done by Pakistanis on Binance to curb the menace of terror financing and money laundering as Binance is the largest easy-to-go platform facilitating such activities.”

The Jan. 6 letter seems to be the start of those steps. It requests records on the 26 wallets, in addition to other operational questions like how the process with which the fraudulent applications were linked to Binance. The FIA said it expects Binance’s cooperation, but in the case the exchange does not comply, the FIA said it will be ustified to “recommend financial penalties on Binance through State Bank of Pakistan.”

Binance Pakistan tweeted that it does not comment on specific regulatory matters, but that its general approach is one of cooperation.

“We do not comment on specific matters with regulatory and law enforcement authorities,” said the tweet. “However, as a matter of policy, our general approach is to cooperate with investigations wherever possible. Specifically, Binance tries to work closely with the law enforcement and regulatory.”

© 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.