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The Chinese police in the city of Yancheng in Jiangsu province have arrested a group of developers behind a decentralized gambling app on the EOS network.

The Jiangsu police, the same division that busted the PlusToken Ponzi scheme last year, announced on Thursday that it arrested 15 people and subsequently confiscated 1.3 million units of EOS and BTC that are worth a combined 26 million yuan, or $3.8 million.

The police said this is the first criminal case that it cracked down on that used smart contracts to operate illegal online gambling businesses inside China.

The dApp, called Biggame, allowed players to use EOS smart contracts to place bets on various games such as Dice and Texas Hold’em. Between June 2018 and December 2020, the team behind Biggame allegedly profited from the operations with crypto assets worth 60 million yuan, or nearly $10 million, law enforcement officials said.

It appears the Jiangsu police have also become increasingly savvy with blockchain forensic technology, building on their experience in the PlusToken case.

Authorities said that after establishing the case in November, they analyzed 27 million on-chain transactions that interacted with 26 smart contract addresses associated with Biggame and located four EOS accounts as the main suspects.

The arrest is the latest example of Chinese law enforcement’s wider “Internet Cleansing Movement” that aims to crack down on any illegal online activities, from gambling and Ponzi schemes to telecommunication fraud and money laundering.

The Block reported last month that such efforts have had a chilling effect on the Chinese cryptocurrency space.

Since Q4 last year, an increasing number of court rulings show that nearly 100 individuals have been convicted for knowingly laundering money through crypto over-the-counter trading desks that involved more than $30 million worth of Tether’s USDT.

© 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.

Ethereum’s latest network upgrade, Berlin, went live on Thursday morning. But a syncing issue appears to have snarled a number of companies and services that rely on a particular Ethereum software client, including exchange service Coinbase.

The client in question is OpenEthereum, formerly the software client maintained by Parity. Developers for both OpenEthereum as well as the network’s core developer team are working on a fix, according to a statement from data service provider Etherscan.

“The OpenEthereum team and core developers are aware of the syncing issues facing the OE [OpenEthereum] client and are working to diagnose and fix,” Etherscan said in a message posted to its website.

The syncing problem cropped up at block 12,244,294, shortly after Berlin went live at block number 12,244,000, according to Etherscan.

Meanwhile, major services that appear to be impacted by the syncing problem issued statements about potential disruptions in light of the issue. 

“We have disabled ETH & ERC-20 withdrawals while we investigate a potential issue with the recent network upgrade. Receives will also be delayed,” Coinbase’s status page reads as of press time.

Ledger said its users’ ETH balance in the Ledger Live app might not update due to the Berlin upgrade issue, and new transactions won’t be shown.

Services of other firms, including BitGo and Coin Metrics, have also been impacted. 

In a tweet, the Gnosis team said that “[t]he Gnosis Safe mainnet app may experience some issues related to today’s Ethereum hardfork.” Gnosis has maintained the OpenEthereum client since Parity ceased work on the client in 2019.

Berlin is the fifth network upgrade in Ethereum’s history, after December 2019’s Istanbul. As The Block Research reported recently, Berlin is mainly focused on reducing gas fees and allowing new transaction types.

This is a developing story and will be updated.

© 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.

French crypto brokerage Bitit is shutting down after six years in operation.

The closure comes at a time when the crypto market is in a bull run and bitcoin is trading near all-time highs of above $62,000.

“We are going to close Bitit by the end of April,” Bitit co-founder and CEO Nicolas Katan told The Block in an exclusive interview. The firm is disabling its buy and sell features on Thursday and is set to halt withdrawals on April 30.

Operational difficulties, regulatory issues, and loss of competitiveness are the key reasons behind the closure, Katan told The Block.

Last September, Bitit lost its credit card acquirer, which heavily impacted its business, said Katan. He declined to name the acquirer, but The Block has learned it was Transact Payments. A credit card acquirer helps merchants process credit or debit card payments.

Credit cards were the most popular payment option at Bitit, Katan told The Block. So when the acquirer stopped working with Bitit due to its internal policies around working with crypto firms, it took almost two months for Bitit to find another acquirer.

“During those two months, we lost a lot of money,” said Katan.

Soon after, in December, the deadline to get registered as a virtual asset service provider (VASP) with France’s financial regulator AMF approached.

Bitit had to be registered as a VASP by December 18, 2020 but didn’t receive the green light. The AMF told Bitit that it could continue its activities but without accepting new clients.

“That killed us,” said Katan. “Around 90% of our trading volumes had been coming from new clients.”

Existing customers contributed “extremely low” volumes, said Katan, because they viewed Bitit “like a McDonald’s. You go over there, you take what you want, and then you leave.”

Bitit was a non-custodial platform, meaning after buying cryptocurrencies, customers had to transfer out to their personal wallets.

Katan said Bitit could have continued and registered as a VASP, but there were “great uncertainties” of regaining its market share amid an increasingly competitive environment.

“If we get a VASP registration, then we will need to wait at least six to eight months to recover trading volumes. But we are not sure of that because we have lost all of our competitiveness. It’s really catastrophic,” he said.

Not only local but global competitors also impacted Bitit, said Katan. It was a “fee war” with these platforms, he said.

Katan founded Bitit in 2015 with Ugo Mare and Simon Potier. They bootstrapped Bitit into a fiat-to-crypto onramp in crypto’s initial years. “The only problem that we solved in the last six years was accessibility,” Katan told The Block.

Bitit claims to have served around 500,000 customers from over 50 countries and processed over $230 million worth of transactions. “We did it all with €5000 [around $6,000] in initial capital and less than €215,000 [around $260,000] raised,” said Katan.

As for what’s next, Katan said he would take some time off and then return to the crypto space. As for Mare and Potier, they will pursue personal projects, said Katan.

© 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.

Three funds under Cathie Wood’s Ark Investment Management have bought a total of $246 million worth-of Coinbase shares during the crypto exchange’s Wednesday listing debut.

According to Bloomberg and Fortune reports, the three funds, Ark Innovation ETF, Ark Fintect Innovation ETF and Ark Next Generation Internet ETF, bought 749,205 shares in total, which are worth nearly $250 million, based on the closing price of COIN at $328 on Wednesday.

COIN is also trending up at 10% during the premarket trading on Thursday at $361 as of writing,.

It is still lower than the opening price of $381 when the trading started on Wednesday.

After the trading started, COIN’s price had jumped to as much as $429 and dropped to a low of $310 before closing at $381.

© 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.

Insurance giant AXA Switzerland now allows customers to pay premiums in bitcoin.

Announcing the news on Thursday, AXA Switzerland said the bitcoin payment option is available for all its non-life products. Life insurance products do not support the option for “regulatory reasons.”

“This is AXA’s response to growing demand from its customers for alternative payment solutions, with new technologies playing an ever-greater role,” said Claudia Bienentreu, head of open innovation at AXA Switzerland.

The company has partnered with Swiss crypto broker Bitcoin Suisse for the initiative, meaning bitcoin payments would go to Bitcoin Suisse and be converted into Swiss francs for AXA Switzerland.

“AXA holds no bitcoins on its balance sheet,” said the company.

While AXA doesn’t charge any fee for using the bitcoin payment option, Bitcoin Suisse charges a 1.75% commission to cover currency exchange and transaction fee costs.

Axa said it would also support other payment options in the near future, including TWINT, a mobile app-payment solution for the Swiss market.

© 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

• The Danish Red Cross has teamed up with blockchain startup Replexus to issue the first-ever blockchain-based catastrophe bond.
• So-called cat bonds let the relief organization raise money that can be spent immediately in the event of a disaster.
• But why does the bond need a blockchain?

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subscribers of The Block Daily.
You can continue reading
this Daily feature on The Block.

On Wednesday, the European Commission published its new strategy to fight an organized crime ecosystem that has become increasingly digitized.

The report, published on April 14, outlines a strategic time frame of 2021-2025 and heavily focused on the challenge of investigating organized crime within the European Union. Specific risk areas cited in the report include cryptocurrency transactions, dark markets, and malware, among others.

As the report noted:

“To detect and prosecute organised crime, investigators need to detect suspicious online activity, to track virtual currencies criminal transactions, to understand what they found (data can be encrypted or must be put in context with other data), to preserve the data and to use them as electronic evidence in court.”

On the topic of organized crime transactions, the report stated that despite developments on the legal front, such activities are difficult to detect.

“Despite the development of the anti-money laundering and asset recovery legal frameworks, only a minor share of money laundering activities is detected, and only 1% of criminal assets is confiscated,” the report said. “This has been aggravated by the increasing use of financial channels with more limited oversight than the banking sector, such as virtual currencies.”

Taking the lead from recent actions against criminal networks like EncroChat and Sky ECC, the strategy also emphasized the need to stay abreast of such high-tech means for criminals to exchange information. Correspondingly, the EC also encourages greater development of the EU’s international mechanisms of exchanging information and transferring criminal proceedings between member-states.

Once again, the focus was on digitized crime, with the commission emphasizing: “This requires coordination in developing tools and trainings, among Member States and across sectors in areas such as digital forensics, open source intelligence, cryptocurrencies, and darkweb investigations, e.g. to gain access to, and where possible take down, forums selling illegal goods and services.”

New technologies have also appeared among the European Commission’s priorities in a positive light. In November, the commission issued a call for a contract for a public-sector blockchain platform. 

© 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.

© 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 reached the end of its first day of public trading.

The firm’s stock closed out Wednesday’s trading session at a price of $328.28 following its direct listing on Nasdaq. Accounting for the fully diluted capitalization of 261.3 million shares of common stock, that pegs Coinbase’s end-of-day valuation at approximately $85.7 billion. Based on the total number of shares outstanding, 199.2 million, Coinbase’s valuation comes in at about $65.4 billion.

As shown in the chart below, the price of $COIN swiftly rose above the $400 level, hitting a session high of $429.54 after opening at $381 — significantly above the $250 initial reference price announced Tuesday. 

Coinbase hit a low of $310 during the final hour of trade, reaching $328.28 at 4 p.m. ET. As of the time of writing, $COIN is trading hands at approximately $332 after-hours.

Notably, Coinbase’s market close makes it the largest direct listing ever, eclipsing the performance of Palantir, Spotify and Roblox, as shown in the chart below.

© 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 officially trading on Nasdaq under the ticker COIN and its chief financial officer has a message for Wall Street: its business can’t be pigeonholed into one category.

“Coinbase is Coinbase for crypto,” Alesia Haas said in a message to The Block. The crypto exchange, which has seen its share price whipsaw throughout Wednesday’s trading session—has been referred to as the Google of the crypto world and the Goldman Sachs of the market, illustrating its central position in the blockchain world. 

Coinbase traded above $420 shortly after its public debut but fell as low as $310 before the close at $328.28. At the time of writing, the exchange’s share price is trading hands at about $330 in post-market trading.

During its first day of trading, $COIN traded more than SPY, as noted by Bloomberg’s Eric Balchunas. 

But Haas wants would-be investors to take a broader view of the firm, which has raked in most of its revenues from custody and trading-related services. While those revenues came in at an estimated $1.8 billion in the first quarter of 2021, the firm’s core brokerage business could be threatened by fee compression in the future. 

“We are focused on the long-term where we will continue to diversify our offerings,” Haas said. “Today we are primarily investing, but interestingly enough, we’re seeing over 20% of users engaging with multiple products – from staking to earning, and borrowing/lending.”

Today, nearly 90% of Coinbase’s revenues are transactional. But Haas told The Block in a phone interview that those revenues will diversify. 

“We don’t yet know where value will accrue,” she said. “We have products that touch payments, brokerage, and the broader cryptocurrency ecosystem. And value can accrue in many ways. It may take 5 to 10 years longer for them to play out. But we are going to try to build a platform that engages in all the new types of transactions that exist from fiat to crypto to decentralized finance.”

Still, it’s no secret that Coinbase operates in an increasingly competitive environment not only from crypto exchanges but also a growing list of fintechs and other incumbent financial services looking to leverage crypto capabilities as a new lever for monetization and user engagement.

Haas said the firm’s history in both crypto and traditional finance would serve as a competitive moat down the road.

“We are competing against other crypto native companies and financial services companies. On the crypto side, we are deeply committed to compliance in the way we’ve positioned ourselves. Meanwhile, compared to Square, PayPal, Fidelity we are crypto native. We are deeply integrated with crypto protocols and are not producing just the simple bitcoin experience and are not wall gardened like many of these platforms.”

To be sure, the share of Coinbase’s assets on platform (AoP) relative to the total value of the crypto market has only continued to grow over the past eight quarters. As of March 31st, 2021 the company estimated that it had over $220 billion worth of crypto on its platform.

© 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.