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Silvergate Bank has agreed with a Federal Reserve order to file a self-liquidation plan with California financial regulators within 10 days.

The Federal Reserve’s Board of Governors announced the order on Wednesday as part of the process to wind down the crypto-friendly California bank’s operations. The bank must conserve cash and other resources in order to make depositors whole.

The California Department of Financial Protection and Innovation has to approve the plan to liquidate the bank’s assets, though a deadline extension for the plan can be granted. Silvergate announced in March that it would end operations after the bank’s business failed.

The Fed order notes that the most recent examination of Silvergate Bank by state regulators and officials with the Federal Reserve Bank of San Francisco “identified numerous deficiencies, including with respect to both safety and soundness and compliance with banking laws and regulations.” It connected the bank’s failure to its dealings with the now defunct crypto exchange FTX.

The bank temporarily survived FTX’s collapse, as well as a write down on hundreds of millions of dollars-worth of Facebook-linked digital asset Diem, by taking out an unusual and controversial multi-billion dollar emergency loan from the Federal Home Loan Bank of San Francisco, a government-created entity meant to backstop mortgage borrowing in the U.S.

“The Bank experienced significant declines in deposits by its crypto-asset-related customers, triggered in part by the collapse of the crypto-asset exchange FTX Trading Ltd. and its affiliated proprietary trading firm Alameda Research LLC (collectively, ‘FTX/Alameda’),” the Fed said. The FTX and Alameda failure, combined with Silvergate’s business strategy tied to the digital asset industry, and a bank run that was prelude to similar higher-impact runs at Silicon Valley and Signature Banks “resulted in funding and liquidity stress on the Bank and a decline in activities that were key sources of revenue.”

The announcement from the Fed notes that Silvergate’s leadership voluntarily agreed to all parts of the enforcement action. As part of the order, any bonuses, promotions or severance payments for senior executives have to be approved by regulators.

The Fed has authority to take action with regards to state-chartered banks like the La Jolla, Calif.-based Silvergate if they are part of the central bank’s system in which it acts as the lender of last resort.

© 2023 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.

Two bills that will seem to embrace mining have been sent to the governor, whereas one that would adversely affect miners was stopped at committee.

Thanks to memecoins with names like pepe, piza and ordi, Bitcoin saw a bit of a bumpy ride last month.

After sinking to its lowest level in nearly two years, the number of addresses active on the Bitcoin network rebounded dramatically last month as transactions skyrocketed to more than 16 million, according to The Block Research data.

That total was a 52% increase compared to April and more than double the number of transactions a year before in May 2022, The Block data shows.

The jump in transactions had the knock-on effect of driving fees skyward, causing them to hit an average of $16.08 on May 11, its highest level in roughly two years, according to The Block’s Data Dashboard.

But then fees sank dramatically to little more than $4, a more than 70% decline.

The Block Research analyst Rebecca Stevens said the rapid rise in fees was unsustainable in the long-run.

“If it costs more than $15 to transact on Bitcoin then people are going to stop transacting,” she said, adding that the frenzy surrounding Ordinals is to blame for wild swings in fees and transaction counts.

The majority of Ordinals — tokens created on the new token standard for Bitcoin called BRC-20 — have been memecoins. At one point, the total market value of BRC-20 memecoins surpassed $900 million.

Much like the data points aforementioned, the total market value for those tokens has since receded substantially to about $475 million, according to data from brc-20.io, which tracks BRC-20s.

© 2023 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 venture investment firm Electric Capital appointed two new general partners. 

The firm — which has backed a wide range of crypto projects and companies, including dYdX, Kraken, and Bitwise — announced the promotions of Ken Deeter and Maria Shen to the role of general partners on Thursday. 

Engineers by background, Shen and Deeter join Avichal Garg, a former product management director at Facebook, and Curtis Spencer, previously an engineer at Facebook, to the upper echelon of the firm. 

The changes come amid a slowdown in venture capital activity in the crypto market and a broader slump in token prices. 

Still, Electric is long-term bullish on the space — specifically, the role of engineers building out new use cases. The promotion reflects Electric’s focus on hiring engineering talent to lead investments in web3.

“Engineering capability and technical contributions are essential to helping founders succeed on these new open platforms,” the firm said in a statement to The Block. “VCs will need expertise in areas such as liquidity provisioning, governance, code security, designing novel token mechanisms, and more.”

Deeter previously spent the last 20 years building teams at companies like VMare and Facebook. He currently leads the firm’s liquidity provisioning and governance initiatives, while Maria invests in companies in the non-fungible token space and is the brainchild behind the firm’s annual Developer report. 

In March 2022, Electric Capital closed a billion raise for a fund to invest in tokens and back crypto startups. It joined a handful of other venture firms that raised billion-dollar-plus funds, including a16z and Paradigm. 

© 2023 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 sportswear giant and game publisher are partnering to build new immersive experiences in the EA Sports gaming ecosystem.

The result is a significant blow for Paxos as MakerDAO currently holds roughly half of USDP’s total supply.

Bitcoin mining revenue reached $916.6 million in May, a 13.7% month-over-month increase.

According to The Block’s Data Dashboard, that figure includes more than $120 million in transaction fees. That’s a sizeable bump, driven by on-chain activity.

As previously reported, the rise of bitcoin NFTs via Ordinals has driven a surge in transaction fee revenue to miners.

Data from The Block Research shows that May saw a significant jump in transaction activity on bitcoin, reaching 16.9 million for the month.

© 2023 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.

Skale Network has released the Levitation Protocol — a Zero Knowledge (ZK) rollup aimed at providing a new scaling solution for Ethereum developers.

Skale operates as an ecosystem of more than 20 application-specific sidechains that run parallel to Ethereum. These chains stand to provide scaling benefits through the deployment of ZK-Rollups, which, along with Optimistic Rollups, constitute the most widely adopted Layer 2 solutions.

Beyond enabling developers to write ZK-Rollups for Ethereum, Skale’s core team intends to launch a dedicated decentralized Layer 1 blockchain to augment Levitation. This blockchain will be specifically designed for publishing Levitation-derived Layer 2 ZK proofs back to Ethereum and is intended to expand Ethereum’s scalability by utilizing off-chain computation, while simultaneously preserving the security of the primary blockchain.

A public testnet is anticipated for later this year, with the mainnet launch scheduled for the fourth quarter of 2023. This, according to Skale contributors, suggests a comprehensive scaling-centric roadmap that Skale is striving for.

“By uniting Skale’s instant finality with the enhanced security of a novel Layer 2 ZK approach, Skale offers developers a platform for creating new, decentralized applications,” Chris Sharp, CTO of Blockdaemon and a validator of the Skale Network, commented on the new release. “Developers will now have the opportunity to utilize not only app-specific chains but also ZK roll-ups, and SKALE-G. We believe this pioneering approach will significantly expand the blockchain ecosystem.”

ZK-Rollup space continues to heat up

The rollout of the Levitation Protocol occurs in a competitive landscape. Over the past few years, Layer 2 projects such as Polygon, Starknet, zkSync, and Scroll have been aggressively vying for dominance in the ZK-based Layer 2 sector.

Skale Labs, the developer behind this blockchain scaling ecosystem, closed a $17 million in a 2019 funding round from notable venture capital firms including Winklevoss Capital, Arrington XRP Capital, ConsenSys Labs, and Multicoin Capital.

© 2023 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 actions showcase how Multichain’s faltering infrastructure and AWOL CEO are sending shockwaves through Fantom, the blockchain most heavily dependent on Multichain’s bridges.