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The upgrade would bring enhancements to sidechains and bug fixes.

The latest price moves in bitcoin (BTC) and crypto markets in context for May 19, 2023. First Mover is CoinDesk’s daily newsletter that contextualizes the latest actions in the crypto markets.

BitDAO, a prominent decentralized autonomous organization known for its sizable treasury, announced a merger with Mantle Network, an Ethereum Layer 2 solution to which it formerly provided funding. This consolidation was done following the approval of a governance proposal from BitDAO community members, titled BIP-21.

The merger amalgamates BitDAO’s governance framework and treasury with the technical prowess of Mantle Network, thereby creating a newly unified ecosystem.  The primary aim is to refine branding, tokenomics, and create a unified product focus, according to a press release. In line with this, BitDAO’s governance token will undergo a rebranding, transitioning from BIT to a new identity, Mantle, represented by the ticker symbol MNT.

With this consolidation, Mantle Network developers inherit almost $300 million in stablecoin reserves and over 270,000 ETH ($485 million) from BitDAO, the announcement said. This capital will play a pivotal role in funding the expansion and broader adoption of Mantle Network.

“We are thrilled to witness the formal dedication of the Mantle Ecosystem, led by an exemplary case of DAO governance,” said Arjun Kalsy, head of ecosystem at Mantle. “Inheriting BitDAO’s mantle, we will usher in the phase two of Mantle Network testnet within the month of May.”

Mantle Network will progress into the second phase of its testnet, code-named “Ringwood,” in May. This phase will introduce planned technical advancements to the network. Among these advancements, key features include the integration of fraud proofs to enhance security, the onboarding of multi-party computation (MPC) validator nodes, data availability (DA) nodes, and the initiation of external audits on the code base.

© 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 canton of Zug, Switzerland’s “crypto valley,” has increased the threshold for tax payments with bitcoin (BTC) and ether (ETH) to 1.5 million Swiss francs (over $1.6 million) from the previous CHF 100,000 (over $110,000) with immediate effect.

“The increase in the limit is an important step towards the digital future,” Zug finance director Heinz Tannler said in a statement on Friday. “From the second half of 2023 on, another innovation will be possible — paying taxes with cryptocurrencies directly by scanning the QR code on the payment slips issued by the tax administration. This simplified process makes paying with cryptocurrencies even more attractive.”

The canton of Zug began accepting bitcoin and ether for tax payments in February 2021 after first announcing the plan in September 2020. The canton of Zug’s partner for accepting crypto tax payments has been Swiss firm Bitcoin Suisse since the beginning. As part of the deal, Bitcoin Suisse converts taxpayers’ bitcoin and ether into Swiss francs for the canton.

“The Canton of Zug has long been an important hub for the crypto industry. The increase of the threshold for tax payments again demonstrates the leading position of the Canton of Zug in integrating cryptocurrencies,” said Bitcoin Suisse CEO Dirk Klee in the statement.

Since introducing the initiative in 2021, the canton of Zug has had around 150 crypto tax transactions with a total volume of around 2 million Swiss francs (over $2.2 million), according to the statement. “Based on the positive experiences so far, the Finance Directorate of the Canton of Zug invites individuals and businesses liable for taxes in the Canton of Zug to try out the new payment channel and pay their taxes with cryptocurrencies,” per the statement.

Switzerland has become an attractive hub for crypto firms over the past several years, thanks to its favorable regulatory environment and positive attitude toward digital currencies. Swiss city Zug also accepts bitcoin for tax payments via Bitcoin Suisse since 2016. The Swiss municipalities of Zermatt and Chiasso has also accepted the cryptocurrency for smaller tax payments over the last few years.

© 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.

Tether’s market cap has been growing at the expense of rival stablecoins such as USD Coin, the report said.

Swaprum, a decentralized exchange on the Ethereum Layer 2 network Arbitrum, appears to have executed an “exit scam” commonly referred to as a “rug pull,” absconding with an estimated $3 million in user deposits.

On-chain analysis from blockchain security firm PeckShield found that approximately 1,628 ETH, equivalent to $3 million, was siphoned off from the platform’s liquidity pools.

The Swaprum team withdrew liquidity provided against the platform’s native token on its exchange. It subsequently sold the tokens against ETH which led to a complete plunge in the price of swaprum (SAPR) tokens, rendering the remaining tokens held by unsuspecting investors virtually worthless.

The funds were then transferred from the Arbitrum network to Ethereum. The ill-gotten ether was laundered through Tornado Cash, a popular Ethereum mixer service in an apparent attempt to obfuscate the transaction trail and deter authorities from tracing the funds.

Swaprum deletes social media

Swaprum’s digital footprint virtually vanished overnight, with their social media accounts on Twitter, Telegram and GitHub being deleted. The official website, which served as the front-end for the project’s protocol, remains active. The Block wasn’t able to contact the project was comment. 

Security analysts at Beosin discovered that Swaprum’s smart contract harbored a hidden backdoor functionality. Beosin stated, “The deployer of Swaprum used the add() backdoor function to steal LP tokens staked by users, then removed liquidity from the pool for profit.” This malicious action allowed the perpetrators to take over assets at will.

This is the latest exit scam to have resurfaced in the Ethereum Layer 2 ecosystem. Last month, developers of a decentralized exchange on the zkSync network, known as Merlin, disappeared with nearly $2 million in a similar case.

© 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.

Episode 48 of Season 5 of The Scoop was recorded with The Block’s Frank Chaparro and Tron Founder Justin Sun.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Please send feedback and revision requests to podcast@theblock.co.

 

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In this episode, Justin Sun reveals Huobi’s and Poloniex’s procedure for listing new memecoins and explains why the crypto market has grown too big for any single exchange to service effectively.

Sun claims that Binance may be the biggest exchange by market share, but it is not the best venue for trading smaller memecoins:

“Binance these days has a very high standard of listing crypto assets. [A coin] needs to be at least $100 million or even $1 billion to get listed on Binance in the first place. So that’s why I think this leaves a very big room for other exchanges to grow.”

Justin Sun himself recently announced on Twitter that he would start trading memecoins for “fun.”

During this episode, Chaparro and Sun also discuss:

• What Justin Sun personally looks for in memecoins
• Huobi’s and Poloniex’s revenue sources
• The global crypto regulatory environment

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This episode is brought to you by our sponsor CleanSpark.

About CleanSpark

CleanSpark (NASDAQ: CLSK) is America’s Bitcoin Miner™. Visit cleanspark.com/theblock to learn more about the CleanSpark way.

© 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 firm is looking to capitalize on Hong Kong’s re-emergence as a potential crypto hub as the city has looked to formulate a clear regulatory structure for digital assets.

As much as blockchain technology promises to improve the plumbing of financial markets, crypto still has a lot to learn from traditional finance when it comes to reducing conflicts of interest and safeguarding client funds, according to Duncan Trenholme, global co-head of digital assets at TP ICAP, the world’s biggest interdealer broker.

Following a year that saw the collapse of exchange giant FTX, crypto lender Celsius and hedge fund Three Arrows Capital, Trenholme sees crypto as an industry that missed some basic lessons around protecting users in its rush to build new technology.

“It doesn’t matter what technology, what asset class, if you allow venue providers to also participate in the order book that is a clear conflict of interest,” Trenholme said in an interview in London this month. “If you allow venue providers to hold customer funds — again, that is a clear conflict of interest.”

Now that the dust of 2022 — crypto’s annus horribilis — is settling, Trenholme is hopeful that the giant institutions that dominate global finance will eventually regain their appetite for digital assets. And while his small team represents a tiny fraction of TP ICAP’s more than 5,000 staff, he’s steadily building it out to meet that demand.

TP ICAP’s crypto ambitions

TP ICAP first announced its plans to set up a cryptoasset exchange back in 2021 and won approval from the UK regulator in December of last year. The broker is currently onboarding clients to the platform, known as Fusion Digital Assets, but is yet to announce a formal launch date.

Onboarding takes time because — to ensure the aforementioned separation of funds — clients have one relationship with TP ICAP, where trades are executed, and another with Fidelity Digital Assets, a custody partner who keeps their assets secure.

“We thought it was incredibly important to have that segregation and make sure that the venue isn’t holding the funds. And we’ve obviously seen that play out in the last 18 months — the reasons why,” Trenholme explained. “Finance has already learned those lessons in its history and therefore we have clear regulation for it in traditional markets.”

Carbon trading on the blockchain

As TP ICAP builds out its capacity to offer trading in digital assets, some more “forward thinking” clients have been keen to explore the potential. Attracting an audience beyond these early adopters, however, will require crypto to offer a superior experience to traders, Trenholme said.

“Ultimately, if it’s going to work, it needs to be dramatically better than the way they currently trade.” 

According to Trenholme, traditional markets most ripe for improvement by the addition of blockchain technology include bonds, where the cost of settling trades can be high, and carbon credits, where trades sometimes fail to settle at all.

Most carbon credit transactions happen on an over-ther-counter basis between two parties, away from an exchange, he explained. These deals can sometimes fall apart 10 or even 20 days afterwards, because the settlement process — where the buyer’s cash is officially swapped for the seller’s securities — is so slow.

TP ICAP isn’t alone is seeing potential for crypto technology to benefit the carbon markets. Professional services giant EY last week launched their own Ethereum-based platform for enterprises to track their emissions.

Real-world crypto use cases

For Trenholme, however, the real excitement will start if more businesses start using crypto as the basis for real-world economic activity.

To illustrate what that would look like, he gave the example of an airline deciding to issue NFTs to customers as part of a loyalty program. That airline might suddenly find itself holding a chunk of ether or polygon and then needing to hedge that price in the market — as they would with their fuel — to make business planning easier.

Financial markets of the kind TP ICAP runs — whether commodities, equities, bonds or crypto — only exist to support and facilitate those real-world business decisions.

“When we start to see more firms that come to a wholesale market as a byproduct of doing some form of economic activity where they are essentially using blockchain tech and using using Ethereum or Polygon or whatever as a means of doing something — I think that’s going to be the the sign of growth in the ecosystem,” Trenholme said.

If and when more airlines find themselves needing to hedge their polygon exposure, TP ICAP wants to be right there, ready.

“There’s this new asset class: crypto. We want to do the same role we do in traditional markets — which is provide a big secondary market, a professional secondary market — and we want to do that for crypto.”

© 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.

Ripple has historically maintained a distance from XRP, the token that powers some of its products and the XRP Ledger network