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London transport authorities have tightened the reins on crypto advertising following a number of rulings by the UK’s marketing regulator. 

Short of an outright ban, a spokesperson for Transport for London (TfL) told The Block that the body is not currently approving any adverts which “look to promote [crypto] products in a similar fashion to those being investigated.”

TfL has been monitoring crypto advertising since 2018, but only recently decided to take a harder line on ad approvals.

A spokesperson from the Advertising Standards Authority (ASA) said that the regulator is “proactively monitoring” the situation as firms push to market products. The watchdog is set to issue new guidance on crypto ads early in 2022. 

Advertising industry sources, who asked not to be named due to commercial sensitivity, told The Block they have been having trouble getting crypto-related adverts for clients signed off, including ones promoting NFTs. 

The new stance from TfL is said to have come into effect following the ASA investigation into Floki adverts, which had breached its code. 

These ads urged consumers to look to the token if they had not been quick enough to buy into other popular cryptocurrencies such as Dogecoin before meteoric price bumps.

“Missed Doge? Get Floki,” said one strapline. 

In December, the ASA issued a ‘red alert’ warning on the marketing of crypto-assets, banning seven separate ads in one swoop.

Companies whose ads were deemed to have broken the rules at the time included trading platforms eToro and Coinburp; exchanges EXMO, Luno, Kraken and Coinbase; as well as a promotion from pizza chain Papa John’s. 

Since then it has also ruled on Arsenal Football Club’s marketing of fan tokens and two adverts from Crypto.com.

© 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

• There are two main types of sharding for blockchains: state and network
• State sharding is typically more difficult to execute but scales blockchains more sustainably than network sharding
• Contrary to the belief that shard chains are fully functional, most shard chains are currently mainly utilizing a single shard for smart contracts to reduce the technical complexity
• The eventual growth in shard chains can serve as a useful precursor for the development of Ethereum 2.0 shard chains

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In recent months Kazakhstan’s new regime for cryptocurrency mining has established a new registry that is growing at a rapid clip amid pressure on the country’s electrical grid. Amid issues with that grid, some miners have already left, but the situation seems to be stabilizing.

As of the New Year, the Kazakh Ministry of Digital Development has registered 146 firms involved in crypto mining. The new registry includes 53 companies currently actively mining, 82 looking to begin mining and another 11 infrastructure providers. Such providers are mostly data centers like Enegix, which, advertising 180 megawatts, is one of the largest of its kind in the world. 

The list of miners has followed from new law on Kazakhstan’s cryptocurrency industry adopted at the end of June. Since the beginning of the year, miners have been subject to an additional charge of 1 tenge per kilowatt-hour of electricity — worth $0.0023 as of press time.

Kazakhs involved in the mining industry tell The Block that they are awaiting either new taxes or a special fee on energy for crypto miners. 

Now the second-largest source of Bitcoin’s hashrate in the world — after the U.S. and ahead of neighboring Russia — Kazakhstan has seen a  surge in cryptocurrency mining since a mass exodus from China earlier this year. While miners came to Kazakhstan in part due to its cheap electricity, the country found its resources strained.

One local mining consultant told The Block: “For around a month, all of the large centers were shut off. Now they are turning them back on again.”

Amid those issues, some miners left Kazakhstan. BitFuFu, one of the largest, told CoinDesk that it was abandoning its machines in the country in favor of U.S. operations, following inconsistent rules and energy cutoffs. 

Other miners are still moving in. On January 4, Chinese Bitcoin mining firm Canaan filed with the U.S. Securities and Exchange Commission announcing that it was adding 10,000 machines to its Kazakh operations. 

Kazakh outlet TengriNews reported that energy minister Magzum Mirzagaliyev is not interested in cutting off electricity to registered “white miners.” Mirzagaliyev was, rather, interested in locking down on what he called “gray miners,” referring to unregistered and illegal operations. 

“We already see ‘white miners’ in our country. They consume over 600 megawatts of electricity. ‘Gray miners,’ we have determined, consume 340 megawatts,” said Mirzagaliyev. While acknowledging that Kazakhstan will need years to up its overall capacity, he said “I want to put out the clear message that nobody is planning to cut off ‘white miners.’ We want to move ‘gray miners’ into the zone of ‘white miners.'”

Meanwhile, Kazakhstan is already facing a new energy crisis, this time in petroleum shortages that have driven up the price of gas. Significant protests are gathering across the country, despite police suppression. 

© 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.

Aave Arc, a permissioned version of the popular DeFi lending platform Aave, has launched today. Fireblocks, an institutional crypto custody firm, has become the first whitelister of Aave Arc.

Aave first revealed the permissioned platform in July last year. The platform is aimed at institutions who want to participate in the DeFi sector in a compliant manner.

Aave Arc enables certain parties who have undergone financial due diligence to be able to borrow and lend cryptocurrencies automatically to other such parties. It operates in the same way as Aave’s main protocol works, but only approved parties can participate.

Fireblocks, being Aave Arc’s first whitelister, will run due diligence on institutions that are looking to lend or borrow crypto assets through the platform. Aave Arc will initially support four assets: ether (ETH), wrapped bitcoin (WBTC), the USDC stablecoin, and Aave’s native token AAVE.

The launch of Aave Arc will enable the world’s largest institutions to begin participating in DeFi, according to Fireblocks co-founder and CEO Michael Shaulov.

Shaulov told The Block that Fireblocks will employ globally accepted KYC and due diligence procedures per FATF guidelines to onboard institutions to DeFi.

At launch, Fireblocks has whitelisted 30 institutions to participate on Aave Arc. These include SEBA Bank, Bluefire Capital (acquired by Galaxy Digital), Celsius, CoinShares, GSR, Ribbit Capital, QCP Capital, and Wintermute.

“The launch of Aave Arc is a pivotal moment in DeFi,” according to Rich Rosenblum, co-founder and president of GSR. “As a result of Fireblocks making institutional access to DeFi pools possible, companies like ours are able to create new products for our customers.”

While Fireblocks is the first whitelister of Aave Arc, more entities are expected to join as a whitelister of the platform. Last month, Securitize made a proposal to Aave’s governance forum for it to be the next whitelister.

“Additional whitelisters for Aave Arc will help facilitate market participants’ choice of onboarding onto Aave Arc via one or more whitelister,” Aave founder and CEO Stani Kulechov told The Block.

© 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:

• FLEX has grown from $0.05 in December 2020 to more than $5 today, representing 100x+ growth
• Assets under custody hit $1.2 billion
• CoinFLEX’s repo market went from millions to billions of dollars per day in volume
• flexUSD market cap reached $370 million and has paid out $17 million in interest to holders
• CoinFLEX’s automated market maker (AMM+) hit $100 million in assets

CoinFLEX focuses not only on building for the crypto markets today, but also for what will remain true ten years from now:

• In the crypto markets, end-users care most about liquidity.
• Most investors are passive, not active, meaning they prefer to “set something and leave it” rather than trade multiple times a day.
• Passive capital wants the highest possible yield for the least amount of mental effort and risk.

Armed with these truths, CoinFLEX has created products that enable passive investors to earn yield directly from the volatility and leverage available in the crypto derivatives markets without being a full-time professional trader or money manager.

Last year, CoinFLEX saw success in several products: flexUSD, AMM+, FLEXDAO, and the first smartBCH bridge.

flexUSD
With nearly $400 million in market cap, flexUSD – CoinFLEX’s stablecoin – has seen both increasing retail and institutional adoption.

• Not everyone owns crypto, but everyone uses fiat currency. USD-pegged stablecoins are seen as US Dollars on crypto rails. flexUSD is an upgrade on this concept as flexUSD tokens earn interest while held in wallets or used in some form of activity (DeFi, trading, payments, etc).
• The flexUSD interest rate (ranging currently between 10-20% APY) is earned from collateralized lending into CoinFLEX’s futures market, a borrow/lend market called “repo.”

AMM+
Learning from DeFi-borne financial primitives, CoinFLEX created the first automated market making (AMM) model for the futures market. The hybrid CeFi + DeFi model offers:

• Greater capital efficiency
  On November 10, 2021, AMM+ trading volume reached $1.5 billion with less than 10% of that size ($103 million) in total value locked (TVL). TVL skyrocketed from $23 million at the start of August 2021 and reached an all-time high of $133 million later in the year.
• More scalable orderbook trade volumes than DEXes, implying more yield
  This implies more yield to AMM+ stakers as the hybrid model bypasses the high gas fees on Ethereum and is not exposed to the risks of onchain front-running.

FLEXDAO
First exchange token DAO launched by a centralized exchange.

• FLEXDAO allows for the long-term success of CoinFLEX and incentivizes FLEX holders by providing greater stability to the FLEX market.
• While initially a staking mechanism, FLEXDAO will expand to become a governance and voting mechanism, allowing its community members to vote on many of the critical decisions impacting the future of the exchange.

First smartBCH bridge
CoinFLEX serves an important role as the first bridge between the BCH chain and smartBCH.

• Users can deposit BCH on the Bitcoin Cash network and withdraw on smartBCH, vice versa, enabling Bitcoin Cash enthusiasts easy access to DeFi protocols via the smartchain.
• CoinFLEX has also launched FLEX and flexUSD on smartBCH. flexUSD has become the dominant stablecoin within smartBCH, and holders who use it in the various DEXes and DApps receive the flexUSD yield even while they trade, lend, and stake.

Crypto Yield 2.0
A major theme that will develop in 2022 is the rise of Crypto Yield 2.0.

This means, users will find new ways of sourcing yield directly from the most liquid crypto market (futures) rather than interacting with protocols or centralized intermediaries. This direct, transparent, and market-based solution that CoinFLEX provides will continue to fuel the growth of crypto yield from a multi-billion to a multi-trillion dollar industry.

© 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.

Filmmaker Quentin Tarantino announced Wednesday that he is moving forward with a public non-fungible token (NFT) auction of his Pulp Fiction screenplay — despite an outstanding lawsuit from the American entertainment giant Miramax, which produced the film. 

Tarantino and his partner SCRT Labs, the creator of a privacy-focused blockchain, plan to auction six chapters of the Pulp Fiction script between January 17 and January 31. The NFTs in the collection will reflect a single scene from one of seven chapters in the script, as well as audio commentary from Tarantino. 

Individuals must pre-register for the auction in order to buy an NFT. Registration for the auction begins January 10. The NFTs in the Tarantino Collection are based on the Ethereum blockchain, and users must have ETH or ETC-20-compatible stablecoins to purchase an NFT. 

Tarantino and SCRT Labs originally announced plans to hold the Pulp Fiction NFT auction on November 2, 2021 on the Secret Network, which privatizes some NFT metadata so that only the token owner can view them. Miramax then sued the filmmaker, alleging that “Tarantino kept his Pulp Fiction NFT plans a secret from Miramax,” ignored a cease-and-desist concerning the NFT sale and infringed on the production company’s copyrights over Pulp Fiction.

SCRT Labs did not respond in time to clarify how much a Tarantino NFT will initially cost at the auction, whether the firm expects further legal action from Miramax after the auction or how Tarantino is proving he owns the copyright to the Pulp Fiction NFTs. Miramax claimed in a November 2021 lawsuit that he does not own the copyright. 

“Secret Network is proud to stand with Quentin,” said Guy Zyskind, Founder and CEO of SCRT Labs, in a release sent to The Block. 

© 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.

Livepeer, a decentralized video streaming platform built on the Ethereum blockchain, has raised $20 million in a Series B extension round.

Alan Howard and Tiger Global participated in the round, along with existing investors such as Digital Currency Group, Northzone, and Warburg Serres. There was no lead investor in this round.

The Series B extension round comes just five months after Livepeer raised $20 million in Series B funding. The new round is also an equity round and brings Livepeer’s total funding to date to around $51 million, its co-founder and CEO Doug Petkanics told The Block.

With additional capital in place, Livepeer plans to expand its market share. Petkanics said the project has a large scaling update scheduled for shipping early this year called Confluence, which will move Livepeer’s internal protocol from Ethereum’s base layer to the Layer 2 network Arbitrum. This will also keep the Livepeer token (LPT) and core security mechanism anchored to Ethereum.

“This will enable cost-effective participation for our supply-side node operators and token holding delegators,” said Petkanics.

In the future, Livepeer also plans to expand its capability across the media value chain, including video NFT support. Livepeer is a decentralized platform for transcoding videos — the process of converting a video from one file format to another.

“We’ve seen strong organic growth in demand for transcoding, as well as growing awareness of the reliability, value, and efficiency of web3 infrastructure,” said Petkanics.

© 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 OpenSea has lined up investors for a new funding round that would value the company at $13 billion. A successful raise would make it the latest cryptocurrency firm to ride the venture capital wave to deca-unicorn status. 

Sources tell The Block that the firm, which raised at a $1.5 billion valuation last year, was planning to raise at a valuation as high as $15 billion, but investors have settled on a lower figure. Eric Newcomer first reported the $13 billion figure earlier Tuesday morning. Newcomer reported that hedge fund Coatue Management is leading the round. 

Sources tell The Block that crypto fund Paradigm — which raised a whopping $2.5 billion fund late last year — is also participating. 

The fresh injection of capital could help the startup fend off new rivals in the non-fungible token (NFT) market, which includes fine art and digital collectible sets. Coinbase is preparing to launch its own NFT marketplace while FTX already has one up and running. 

The fresh capital could also help OpenSea make acquisitions. Axios has reported that the firm is set to acquire Dharma in a deal that could value the project at more than $100 million. The terms of the deal are being “ironed out,” according to the Axios report. 

© 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 UK’s marketing regulator on Wednesday said it had banned two adverts from Crypto.com following a complaint. 

The first ad, seen on 1 September 2021 in the Daily Mail app, featured text which stated, “Buy Bitcoin with credit card instantly.”

The second ad, seen on 30 July 2021 in the Love Balls app, promised “up to 3.5% p.a”. The number in the text increased to “8.5%.”

“We understood that consumers would interpret the claim ‘Earn up to 3.5% p.a.’ which increased to ‘Earn up to 8.5% p.a.’ to mean that any deposit could increase by the highest amount shown,” the Advertising Standards Authority (ASA) said. 

The ads failed to illustrate the risks of the investment, were irresponsible, and took advantage of consumers’ inexperience or credulity, the regulator added.

The watchdog also objected to the suggestion that consumers should buy crypto on credit without also warning of the dangers of going into debt. 

The ban adds to a host of other rulings against crypto-related firms from the regulator. In December, it banned seven crypto ads, calling crypto-assets a ‘red alert’ priority. The companies included trading platforms eToro and Coinburp; exchanges EXMO, Luno, Kraken and Coinbase; as well as a promotion from pizza chain Papa John’s. 

It also comes amid a marketing push by Crypto.com. In November, it signed a 20-year agreement with AEG to rename Staples Center in Los Angeles to Crypto.com Arena. A source familiar with the matter told The Block that the deal cost the exchange $700 million, making it one of the largest sponsorship deals in sports history.

© 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.

WonderFi Technologies, a Vancouver-based decentralized finance (DeFi) platform, announced today that it will acquire Toronto-based crypto exchange Bitbuy for around $206 million CAD ($162 million USD) in cash and shares.

The deal establishes WonderFi, backed by venture capitalist Kevin O’Leary, as Canada’s largest publicly traded end-to-end consumer platform for crypto and DeFi. It’s also a bet on the regulatory environment in Canada — and reflects a global strategy of seeking out crypto-friendly regulators, according to O’Leary.

“I’m investing in a geography that has a progressive regulator, and a company that wants to grow beyond just the Canadian borders,” he said in an interview with The Block, noting that Canada was the first country “to provide ETFs, with the underlying being bitcoin or ethereum.”

WonderFi plans to grow globally in jurisdictions with similarly “progressive” regulations while waiting out the regulators in the US, said O’Leary. “There are different jurisdictions and different geographies that are far more progressive and they can offer their products and services,” he said. 

Beyond the policy-related considerations, “Bitbuy offers almost 400,000 users and significant revenue,” Ben Samaroo, WonderFi co-founder and CEO, told The Block. 

Bitbuy became Canada’s first regulated crypto marketplace in November 2021, with more than $4.4 billion in transactions through the platform. Between September 2020 and September 2021, the company generated more than $31 million in revenue.

“I’m really interested in finding the best engineering teams and betting on them, and certainly when you look at the execution skills of WonderFi’s team and what has been created by Bitbuy, these are cutting edge teams,” said O’Leary.

WonderFi plans to acquire more companies in 2022, said Samaroo. “We’re really going to continue this aggressive growth through organically growing our products and then rolling up companies we see with great management teams, great technology, and that can expand our userbase more quickly.”

The acquisition is expected to close in the first quarter of 2022.  

© 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.