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Crypto exchange FTX’s subsidiaries in Gibraltar and the Bahamas have received licenses as the company continues to foster relationships with local regulators.

FTX’s Gibraltar subsidiary, Zubr Exchange, has received authorization from the Gibraltar Financial Services Commission (GFSC) as a distributed ledger technology (DLT) provider. Zubr is a local crypto derivatives exchange, which FTX acquired earlier this year, but revealed the deal on Friday.

FTX said it has begun integrating the Zubr team, but the latter will maintain its local presence and operational autonomy in line with the DLT provider license requirements.

As for FTX’s Bahamas subsidiary, FTX Digital Markets, it has been registered by the Securities Commission of the Bahamas as a digital assets business under the Digital Asset Registered Exchanges Bill or the “DARE Act.”  FTX said its Bahamian subsidiary is the first digital asset business licensed under the DARE Act.

As part of its expansion plans in the Bahamas, FTX Digital Markets has also appointed Ryan Salame, former head of OTC at Alameda Research as its CEO. The firm also has headquarters in Nassau, Bahamas, and plans to hire local talent for areas such as finance, marketing, and engineering.

“I’m excited to plant the flag for FTX in The Bahamas,” said Salame. “The relationship we have fostered with local regulators culminating with us being authorized under the framework offered through the DARE Act, gives me confidence that we’ll be able to work closely with regulators to make sure our offerings are compliant in multiple jurisdictions.”

FTX and its units appear to be taking regulatory initiatives in several countries. Last month, FTX.US acquired regulated crypto derivatives exchange LedgerX to enter the derivatives market. FTX CEO Sam Bankman-Fried today said the company is “committed to maintaining a close working relationship with local regulators so that together we can navigate putting a comprehensive regulatory framework in place to help promote the growth of this nascent asset class.”

© 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 exchange Coinbase has dropped plans to launch its crypto lending product, dubbed Lend, in light of the SEC’s view that it would constitute a security, per an update to its original announcement blog post.

In the blog post update, issued Friday, Coinbase wrote:

“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world. As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We have also discontinued the waitlist for this program as we turn our work to what comes next. We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest. We will not stop looking for ways to bring innovative, trusted programs and products to our customers.”

The original link to the offering no longer works, and instead routs to Coinbase’s main page.

Coinbase, which announced plans for Lend in June, said that it was later warned by the SEC that such a product would violate securities law. Just a few weeks ahead of its planned launch, the SEC sought a set of records from the exchange, and required testimony from its employees, according to Coinbase CEO Brian Armstrong.

At the time, Armstrong claimed that the SEC would not explain to Coinbase why the product was deemed a security. Other commentors, however, such as Anderson Kill attorney Preston Byrne, claimed that it was clear such lending products are securities because they are essentially unsecured bonds.

Other crypto lending platforms in the U.S., such as BlockFi and Celsius, have come under regulatory scrutiny in recent weeks regarding their lending offerings. These include multiple cease and desist letters from state authorities.

© 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 U.S. Department of Homeland Security has signed a deal with Coinbase to use its blockchain tracing software, Coinbase Analytics.

The current deal value is $455,000 for one year, but it can go up to a total amount of $1.4 million through 2024, according to government tracker USAspending.gov.

If extended through 2024, this will be the largest government contract for Coinbase Analytics, according to tracker Tech Inquiry. The previous agreements have had maximum ceilings between $29,000 and $695,000.

As for the latest deal, Homeland Security’s Immigration and Customs Enforcement agency, specifically, awarded the contract. The agency did not detail the terms of the deal but said Coinbase’s software will help support Homeland Security’s cyber crimes center. Coinbase “is the only vendor who can provide the licenses required by the agency,” it said.

The Coinbase Analytics platform arose from the company’s controversial acquisition of Neutrino, which, as previously reported, was founded by members of the Italian spyware company Hacking Team. Last year, Coinbase CEO Brian Armstrong said the company wants to recoup costs and build relationships with law enforcement and hence decided to sell its analytics software to government agencies. At the time, the company stressed that “the information offered in Coinbase Analytics has always been kept completely separate from Coinbase internal data.”

Other government agencies that have awarded contracts to Coinbase include the Secret Service, the Internal Revenue Service, and the Federal Bureau of Investigation (FBI).

© 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.

pNetwork, a cross-chain decentralized finance (DeFi) protocol, announced late Sunday that it suffered an attack and lost 277 pBTC (worth over $12 million at current prices).

pBTC is a version of wrapped bitcoin in the pNetwork ecosystem. Wrapped bitcoin is a token on a smart contract blockchain that is backed by an equivalent amount of bitcoin. It’s created so that the bitcoin can be used in DeFi protocols, to generate yield for instance. In this case, the pBTC exists on various blockchains, including Ethereum and Binance Smart Chain (BSC).

pNetwork did not detail how the attack took place but said a hacker was able to leverage a bug in its codebase and drained pBTC from the BSC blockchain. “The other bridges were not affected. All other funds in the pNetwork are safe,” it added.

The bug has been identified and a fix has been proposed for review, said pNetwork. It expects the bridges to be back up in approximately 12 hours.

pNetwork said it will offer a $1.5 million bug bounty to the attacker if they return the stolen funds. “Finding vulnerabilities is part of the game unfortunately, but we all want DeFi ecosystem to continue growing, returning funds is a step in that direction,” it said.

The price of pNetwork’s governance token PNT, which runs on Binance Smart Chain, has dropped over 18% in the past 24 hours, according to CoinGecko. PNT is currently priced at around $0.97.

As a cross-chain DeFi platform, pNetwork validators help to move assets from one blockchain to another. They do so using wrapped tokens, which they call “pTokens.” The network supports pTokens on seven blockchains: Ethereum, BSC, EOS, Polygon, Telos, xDAI, and Ultra.

© 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.

British stock trading app Freetrade has hired Paul Brooking as chief financial officer, according to a press release.

Brooking joins the startup from rival Revolut, the $33 billion fintech firm that offers stock trading alongside a range of other financial products, where he served as deputy CFO and head of financial control.

Prior to Revolut, Brooking worked at London-listed trading platform IG Group. Freetrade’s founder and CEO Adam Dodds said Brooking will bring “a wealth of private and public company experience in senior finance roles,” which he said would be “invaluable” as the startup expands into new markets.

One of those markets is crypto trading. The Block revealed in February that Freetrade was hiring a product manager to for a new crypto offering. Revolut, which at its core is a current account product, has offered crypto trading tools to customers since 2017.

The two London-based startups have a history of poaching from one another. Notably, Revolut hired former Freetrade co-founder and CTO André Mohamed to lead its wealth and trading product in January 2019 (he later left the company).

Launched in 2018, Freetrade claims to have grown both its funded customer accounts and revenue by four times in the 12 months up to August this year. The startup raised $69 million in March in a Series B round led by Left Lane Capital.

© 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.

El Salvador has purchased 150 more bitcoins (worth $6.8 million at current prices), President Nayib Bukele said on Twitter Monday, tweeting, “We just bought the dip.”

El Salvador now holds a total of 700 bitcoins, worth about $32 million at current prices. One bitcoin is currently priced at around $45,600, according to TradingView.

El Salvador legalized bitcoin on September 7, becoming the first country to do so. The Central American nation is also the first country in the world to hold bitcoin on its balance sheet and hold it in its reserves.

El Salvador has taken several initiatives in recent weeks to grow the adoption of bitcoin in the country. It operates a wallet app called Chivo, which citizens can use to transact in bitcoin. El Salvador also brought bitcoin ATMs dubbed Chivo to several U.S. cities to make remittances easier and cheaper.

The country recently also passed a law to create a $150 million fund to provide $30 to citizens when they sign up to the Chivo app and to help facilitate conversions from bitcoin to U.S. dollars. While bitcoin is legal tender in El Salvador, citizens are not required to use the cryptocurrency. Businesses, on the other hand, that have access to the proper technology need to accept it as a payment method. They can then convert bitcoins into U.S. dollars using the Chivo wallet.

© 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 bitcoin fund created by investment services firm NYDIG has raised nearly $17 million to date. 

NYDIG Bitcoin Fund LP, which made its first sale in July 2019, has raised $16.95 million from a total of 121 investors, according to a Securities and Exchange Commission filing from September 17. The prior filing, published last October, showed a total of $4.95 million in sales.

At least some of the total amount may have been raised thanks to a deal announced in August between NYDIG and a broker-dealer firm owned by insurance company MassMutual.

“Select [MML Investors Services] financial professionals will offer qualifying clients access to the fund, which provides an alternative and efficient way to invest in bitcoin,” the company said at the time. MMLIS is named in the latest filing for NYDIG Bitcoin Fund LP, which states that the broker-dealer “will receive certain placement and servicing fees with respect to clients it refers to the issuer.”

MassMutual bought $100 million in bitcoin last December. The insurance company is also an equity investor in NYDIG.

© 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.

Bloomberg reported Friday that a broad U.S. government investigation into the operator of crypto exchange Binance has widened to include “whether Binance or its staff profited by taking advantage of its customers.”

Citing anonymous sources, the outlet said that U.S. officials including the Commodity Futures Trading Commission are investigating the exchange operator for “possible insider trading and market manipulation.” In recent months, Bloomberg has covered what officials say is a wide-ranging inquiry into Binance, encompassing efforts from the Internal Revenue Service and the Department of Justice as well as the CFTC. 

Bloomberg further reported Friday that the CFTC has been contacting “potential witnesses” as part of the new inquiry area.

The news comes amid Binance’s efforts to shore up its compliance and regulatory efforts. Last month, Binance moved to enforce mandatory KYC on its user base. The exchange operator framed the decision as part of a process to “determine changes and improvements in light of evolving global compliance standards.”

On Friday, Binance hired former Europol dark web specialist Nils Andersen Röed to serve as its senior director of audit and investigations.

“His focus will be on conducting and leading internal and external investigations with the purpose of identifying bad actors that attempt to commit crimes on Binance’s platforms and to protect users’ funds, as well as proactively supporting law enforcement agencies with their investigations,” Binance said in a press statement. 

© 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 securities regulator for Alabama issued a show-cause order on Thursday to Celsius, seeking an explanation from the crypto lending platform for why its offerings don’t constitute the sale of securities under state law.

The order precedes actions by Texas and New Jersey, which on Friday moved to launch administration actions against Celsius — in the case of New Jersey, a cease-and-desist was issued. CoinDesk reported on Alabama’s show-cause order late Friday. 

According to the order, “[t]he investment programs, identified as Celsius Earn Reward, constitute the solicitation of an investment of money; from which an investment return is expected; with such investment return based on the managerial efforts of [Celsius]. The solicited investments, identified as the Celsius “Earn Rewards program”, are “investment contrast” and are securities under the Securities Act.”

As a result, the Alabama Securities Commission has put it to Celsius to “demonstrate compliance with the registration provisions of the Act or demonstrate why such instruments should not be required to be registered.” 

During a Friday ask-me-anything session, Celsius CEO Alex Mashinsky said that he hoped to work with regulators in explaining the nature of the crypto lender’s business. 

© 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 decentralized autonomous organization (DAO) out of Wyoming is looking to register with the Securities and Exchange Commission (SEC) as a public company, according to a new S-1 filed with the agency.

DAOs are leadership structures for grassroots economies run on the blockchain, and can contain secondary markets for exchanging governance tokens that members use to express consensus on leadership decisions for the group. 

American CryptoFed DAO LLC is one of the first DAOs to formally request recognition from the SEC via S-1 registration and touts itself as the first DAO out of Wyoming. Crypto advocates have debated the best way for such decentralized organizations to be recognized by governments, and the U.S> state made a significant mark on the conversation earlier this year. In a hotly-debated law, the state allowed DAOs to be chartered in and recognized by state authorities as limited liability companies.

Though there are multiple paths to compliance, CryptoFed is following Wyoming’s path. Its attached exhibit designates the DAO as located in Wyoming and that the governance contracted will be interpreted by Wyoming law and token holders will submit to Wyoming jurisdiction.

CryptoFed is seeking to use two tokens to establish its secondary market. The so-called Ducat token will be utilized to price transactions, while the Locke token will be utilized for governance decisions.

The group is registering to enable a secondary market for these tokens in addition to refundable auctions of Locke and the sale of Ducat at a higher market price than their initial value. However, it intends for Ducat to be a stable token pegged to the U.S. dollar, and any proceeds from their sale at fluctuating value will be returned to purchasers “in one way or another.” It’s looking to the SEC to determine how to calculate and pay the registration fees related to the offerings. 

To be clear, the DAO’s organizers contend the tokens are not securities and seek registration with the SEC as utility tokens. The DAO is looking to Commissioner Hester Peirce’s most recent draft of the Token Safe Harbor proposal as a guideline for disclosures and a path to compliance with the securities regulator. Though the proposal has yet to be formally recognized by the entirety of the Commission as a path to compliance for burgeoning projects, it details proposed disclosures and creates definitions for token projects and establishes a threshold for decentralization. 

“CryptoFed is registering both Locke and Ducat tokens with the SEC as utility tokens, not as securities. Registration of the tokens offered under this prospectus does not mean that CryptoFed or Locke token holders will offer or sell Locke or Ducat tokens. The prices which CryptoFed or token holders may sell the tokens in this offering will be determined by the prevailing secondary market price for the tokens.”

Until the SEC declares CryptoFed’s Form S-1 effective, the tokens will be distributed, but restricted, unable to be traded and non-transferable. The DAO specifically contrasts itself with the U.S. Federal Reserve system in the S-1, touting inflation control and maximum employment in its decentralized system. It plans to utilize the EOS blockchain to run its own CryptoFed Blockchain as a sister-chain.

Users will be expected to open accounts at participating banks to handle necessary know-your-customer, anti-money laundering and money transmitter regulations.

© 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.