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Soups Ranjan, former director of data science and risk at Coinbase, has come out of stealth with a new anti-fraud startup called Sardine.

Sardine has been in stealth mode since February 2020 and has now launched a fraud prevention-as-a-service platform for digital businesses.

Using advanced artificial intelligence (AI) techniques, Sardine helps online businesses detect fraud such as identity and payment frauds. Ranjan believes that companies who take fraud seriously at the time of their launch are the ones who survive.

“We have built the first zero-day fraud prevention technology to catch bad actors no matter what they do, because we look for intrinsic behavior patterns,” said Ranjan, who left Coinbase in February 2019. “With Sardine, a fraudster can swim but never hide.”

Sardine aggregates data points around browser fingerprinting, mobile device attributes, network traffic, sensor data, and intrinsic user behavior to identify bad actors. The startup’s service then provides machine-learned fraud scores and user behavior biometrics to detect fraudsters.

Dharma, Moonpay, Unifimoney, and Relay Financial are some of the existing clients of Sardine.

As Sardine comes out of stealth, it has also disclosed that it raised $4.6 million in a seed round. XYZ Ventures led the round, with participation from Coinbase Ventures; Dan Romero, former VP of Coinbase; Adam Nash, former CEO and president of WealthFront; and several others.

“Sardine’s team is made up of the best and brightest, where they helped scale Coinbase by 1,000x, launched Revolut’s US business, fought ghost-riding at Uber, and built fraud protection for Bolt and PayPal,” said Ross Fubini, founder and managing partner of XYZ Ventures. “That’s why we’re excited to invest in Sardine’s anti-fraud 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.

Earlier this month, I participated in the NYDFS Techsprint, a two-week hackathon that convened over 90 participants from a variety of digital assets stakeholders, including regulators, BitLicensees, consultants, vendors and more. The sprint culminated with a demo event that drew over 550 viewers across 22 countries. The nine teams collaborated to build solutions to solve four problem statements identified by NYDFS:

• Spotting early warning signs using timely financial data
• Harnessing transaction data to spot risks in real time
• Putting unstructured data to work
• Shutting down criminal enterprises

With the dust settled, the Techsprint appears to have been a big success. It served as a clarifying moment for NYDFS, demonstrating how industry engagement can help solve the challenge of supervising digital asset businesses.

The teams took similar but nuanced approaches reflecting current challenges of supervision in digital assets. One winning team built a dashboard, creating a one-stop shop of widgets for risk assessment. Another winner chose to consolidate data and metrics to a self-regulatory organization model and share relevant results with NYDFS. My team, the Block-Busters, which was capably led by Suzanne LampowBernard from FTI Consulting, built a collaborative supervisory tool that analyzes structured data from BitLicensees to help NYDFS examiners improve effectiveness of their risk-based reviews. This won an award for Most Functional Prototype.

While approaches varied, several common themes emerged. All incorporated consolidated data across venues and data sources, moved toward real-time, accelerated reaction times and sought to provide better tools to identify bad actors. The teams also highlighted well-understood challenges: an uncertain regulatory landscape, questions around cybersecurity and data privacy, and the lack of a common reporting method among venues.

The Techsprint highlighted the natural tension between quickly empowering existing regulators with tools that leverage consolidated data and creating a more decentralized supervisory framework. This tension was evident as the judges repeatedly raised the issue of standardizing data while respecting the realities of the current regulations, data privacy and cybersecurity. Participants shared a desire to foster transparency and fairness. We learned that in a nascent industry like this one, a robust discussion is crucial for refining ideas and securing industry buy-in.

Looking ahead, NYDFS set the standard for regulators to be thoughtful and proactive in their quest to effectively supervise digital asset businesses. The Techsprint is an example of what can be achieved through a public and private sector partnership. Regulators globally are engaged both with the industry and among themselves to ensure regulations and supervision keep pace.

In an industry where bad actors cause massive financial losses and negative public sentiment, function matters above all else. I was proud to play a part in delivering the most useable surveillance technology to NYDFS, just as I am proud to deliver best-in-class surveillance every day for our clients around the world at Eventus Systems. As the crypto space continues to mature, we at Eventus stand ready to put our expertise to work for the betterment of all stakeholders.

***

Joe Schifano is the Global Head of Regulatory Affairs at Eventus Systems, where he partners with client stakeholders, champions their needs and concerns, communicates regulatory trends, offers insights to maximize effectiveness, and helps compliance and supervisory staff build best-in-class surveillance and monitoring capabilities

© 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 fund founded by billionaire investor George Soros has backed crypto data provider Lukka in a $53 million Series D fundraise.

Lukka is among the several firms that have cashed in on the bitcoin boom, raising rounds within quick successions. It only announced its Series C fundraise—which was led by Wall Street juggernaut State Street—this past December. Elsewhere in the crypto market, Blockchain.com, BlockFi and NYDIG have announced their own big rounds. 

Lukka raised at a valuation of around $200 million, according to the firm. Soros Fund Management participated alongside S&P Global, and CPA.com. Soros Fund Management also participated in NYDIG’s most recent fundraise, and the fund has been exploring crypto as far back as 2018. 

Lukka CEO Robert Materazzi said the firm was approached by existing investors looking to allocate to the market. He added that the funding round will help the firm expand the features of its existing products, which span data and tax solutions. Lukka’s products are aimed at Wall Street’s middle and back offices that need help pinpointing the exact price of bitcoin and building out the necessary administrative tools to account for their trading activity within the nascent market.

To date, Lukka has partnered with firms like IHS Markit to provide institutional-grade crypto data to financial-services firms. 

“We are seeing material growth in enterprise sales,” Materazzi told The Block.

The growth in the crypto asset management space—which could be further propelled by the several bitcoin ETFs sitting on the sidelines—may serve as a tailwind for Lukka. Already, the firm counts Hashdex, a manager of funds in Bermuda and Brazil, as a client. 

“We can cater to the fund administrators who work with these funds,” Materazzi said. 

© 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

• Cover Protocol is a decentralized market that offers pseudo-insurance against DeFi exploits
• Coverage seekers buy protocol-specific CLAIM tokens to get covered, whereas underwriters buy NOCLAIM tokens to earn premiums, and prices are market-driven
• They have undergone a series of controversies and the market sentiment is mixed

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Indian companies have been mandated to disclose their crypto holdings in financial statements, according to new rules that are coming into effect on April 1.

India’s Ministry of Corporate Affairs amended Schedule III of Companies Act, 2013 on Thursday and it now requires companies to detail their crypto holdings.

The details include “profit or loss on transactions involving crypto currency or virtual currency,” “amount of currency held as at the reporting date,” and “deposits or advances from any person for the purpose of trading or investing in crypto currency/ virtual currency.”

The rules apply for all Indian firms, including private and publicly-listed companies, Amit Maheshwari, partner at accounting firm AKM Global, told The Block. He added that companies will have to report crypto holdings in both their profit and loss statements and balance sheets.

“I think the message is clear. The government is going to examine crypto transactions of companies,” said Maheshwari.

Last month, there were reports that India’s top securities regulator wants promoters of companies looking to go public to sell their cryptocurrency holdings before raising money.

The new rules come as India is said to be banning the use of cryptocurrency. The country’s government was expected to discuss a crypto bill in the Budget session of Parliament but ended up not discussing it as the session ended today. The session originally was to conclude on April 8 but the plan changed due to Assembly elections in some states.

The crypto situation in India remains confusing, as The Block reported earlier this month. Crypto exchange executives are preparing for the worst-case scenario — a full ban that would force them to relocate. But they are also optimistic that this won’t happen.

© 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.

Exchange giant Cboe Global Markets could re-list bitcoin futures, CEO Ed Tilly has suggested.

“We’re still interested in the space, we haven’t given up on it,” Tilly told Bloomberg in a report published Thursday. “We’re keen on building out the entire platform. There’s a lot of demand from retail and institutions, and we need to be there.”

Cboe was the first regulated exchange in the world to list bitcoin futures in December 2017 but decided to stop the offering from June 2019 for reasons unknown. The exchange at the time, however, had not ruled out the possibility of listing crypto derivatives again. It had said it was “assessing” its approach.

Cboe rival CME Group has been offering bitcoin futures since December 2017 and is the largest regulated bitcoin futures venue globally. CME had nearly $3 billion worth of open interest for its bitcoin futures as of March 24, only after Binance, OKEx, and Bybit.

Besides bitcoin futures, Cboe appears to be also keen on listing a bitcoin exchange-traded fund (ETF). Asset managers VanEck and WisdomTree have both separately filed for a bitcoin ETF to be listed on the Cboe bZx Exchange.

“We’re very keen to move along approval for the VanEck ETF,” said Tilly.

© 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.

Amundi — Europe’s largest asset manager that oversees more than $1.5 trillion worth of client assets — has warned that new cryptocurrency regulations could initially prove “brutal” for the price of bitcoin and other cryptocurrencies.

In a report shared with The Block on Wednesday, Amundi’s deputy CIO Vincent Mortier and head of global views Didier Borowski said that G7 regulators are “determined” to regulate cryptocurrencies. Such regulation will likely “initially lead to an adjustment of their price, possibly brutal.”

Mortier further told The Block that when “some regulations will start to being contemplated,” bitcoin could quickly go back to “$30,000 or $20,000 — what is a fair value is very difficult to say.” Bitcoin is currently trading at around $53,760.

Bitcoin and cryptocurrency buyers do not seem to be discounting any regulatory risk, according to Mortier and Borowski.

The duo further argued that cryptocurrencies are not money because they do not possess the three qualities that have characterized money: a unit of account, a store of value, and a medium of exchange. Cryptocurrencies are also volatile, not always liquid, and aren’t a legal tender, the two said. So, it would ultimately be more accurate to call them crypto-assets, according to their reasoning.

Still, cryptocurrencies do not have the usual characteristics of assets, they said. Unlike other assets such as stocks and bonds, cryptocurrencies have “no real economic underlying asset. As a result, there is no valuation model.”

Cryptocurrencies could compete with gold, but they are yet to prove themselves against the yellow metal, said Mortier and Borowski.

Cryptocurrencies “soared during the Covid-19 economic crisis but haven’t been through an episode of financial stress,” they said. So, “giving them the same status as gold, ex ante, when estimating their upside potential is questionable.”

As for stablecoins, they are the most direct competitors for official government-backed currencies, according to the researchers. But they could pose risks to the financial system, “particularly if one of them suddenly ceases to be able to maintain its fixed value.”

Overall, crypto regulation is an “exogenous risk factor” for buyers, said Mortier and Borowski. But once the regulatory environment is clarified and the main risks are addressed, cryptocurrencies are “likely to flourish again,” they said.

“Only once the regulatory environment has stabilized, and the relationship with CB [central bank] digital currencies has been clarified, will asset managers be able to recommend digital assets as safe investment vehicles. At the end of the day, investments in CCs [cryptocurrencies] may be promising, but they are still speculative in nature,” they concluded.

© 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 new filing with the U.S. Securities and Exchange Commission indicates that asset management giant Fidelity is seeking to create a bitcoin exchange-traded fund (ETF).

The Wise Origin Bitcoin ETF is the latest entrant in a growing race to launch a bitcoin exchange-traded product in the United States. According to the filing, a firm called FD Funds Management LLC is the sponsor of the fund, with Fidelity Service Company, Inc. serving as administrator. Per the document, FD Funds Management LLC shares the same Boston, MA address as Fidelity’s office.

Fidelity Digital Assets, the asset manager’s crypto-focused arm, will serve as custodian. 

The ETF, if approved, will also employ Fidelity’s in-house bitcoin price index, per the filing.

“The Trust’s investment objective is to seek to track the performance of bitcoin, as measured by the performance of the Fidelity Bitcoin Index PR (the “Index”), adjusted for the Trust’s expenses and other liabilities,” the filing notes, explaining elsewhere:

“The Trust provides direct exposure to bitcoin, and the Shares of the Trust are valued on a daily basis using the same methodology used to calculate the Index. The Trust provides investors with the opportunity to access the market for bitcoin through a traditional brokerage account without the potential barriers to entry or risks involved with holding or transferring bitcoin directly, acquiring it from a bitcoin spot market, or mining it.”

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.

The New York Times has turned one of its columns into a non-fungible token (NFT) and it’s up for grabs.

“Why can’t a journalist join the NFT party, too?” wrote NYT tech columnist Kevin Roose in a tweet thread explaining the initiative. 

According to the column, the proceeds of the 24-hour sale will go to the publication’s Neediest Cases Fund, which supports social causes in New York and elsewhere. In addition to this, the buyer will be featured in a follow-up article about the sale, along with their name, affiliation, and an image of their choosing. Buyers also have the option to remain anonymous. 

At press time, the NFT was bidding at 4.65 ETH (about $7,600) on NFT marketplace Foundation, which hosted the sale of the “Nyan Cat” graphic for $600,000. 

The Times is the latest publication to explore the use of NFTs, which are akin to digital certificates or tags connected to a piece of art or creative work. The data is held in the form of a token on a blockchain network, with the idea being that said tokens are unique and scarce.

TIME Magazine has minted and is in the process of selling three of its issue covers, currently bidding at 31 ETH (nearly $53,000). Quartz sold its first NFT news article for 1 ETH (about $1,800).

© 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 inspector general of the U.S. Postal Service is conducting a crypto policy audit for the government agency’s law enforcement arm.

According to a notice published on Tuesday, the U.S Postal Service Office of the Inspector General (USPSOIG) said that it intends “to evaluate the effectiveness of the Postal Inspection Service’s policies and procedures for managing cryptocurrency.” The notice includes a start date of March 8 and an expected report release date sometime in August.

The United States Postal Inspection Service (USPIS) dates back to the 18th century and, as of 2019, had more than 1,200 active agents within its ranks. The service works to prevent the U.S. mail system from being used for illegal purposes. 

The March 23 notice states that USPIS officers “may use cryptocurrency, while undercover, to expose criminal activity and seize this currency as [a] result of their investigations.” At the same time, the IG’s office wants to “evaluate the effectiveness” of current policies and procedures, soliciting feedback from other law enforcement agencies.

The questions include:

“What practices or guidelines do other law enforcement agencies follow for acquiring, managing, and seizing cryptocurrency while investigating criminal or illicit activities?… What risks have you encountered while using cryptocurrency?… What kind of training did you receive prior to using cryptocurrency for investigative purposes?… What unique challenges have you encountered while seizing cryptocurrency during an investigation?”

Editorial credit: Christopher Penler / Shutterstock.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.