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The Chinese rig maker’s new model can deliver a wooping 320 TH/s.

Brooklyn-based crypto trading platform Coin Cafe is paying back $4.3 million to defrauded investors, according to a Thursday statement from the New York Attorney General’s office, which accused the company of misleading customers about “exorbitant and undisclosed” fees.

The number of NFT traders active on a weekly basis has sunk to its lowest level since August 2021, according to The Block Research.

Liquidity farming driven by marketplace Blur’s ambitious incentive program aimed at wooing traders away from OpenSea, the long-time leading platform in NFT trading, has spurred an erosion in pricing. The lower pricing coupled with general market volatility has then had the knock-on effect of reducing the number of traders, said The Block Research Analyst Brad Kay.

“This erosion of the floor price, paired with heightened market volatility, has dampened the usual urgency to buy, the ‘fear of missing out,’ among regular traders,” he said. “This volatility, in turn, has had a discouraging effect on regular traders, leading to a decrease in overall trading activity.”

Last week, the number of active traders buying and selling Ethereum NFTs slid to about 49,000, according to data from Dune analytics. The total number of traders has not been that low since August 2021, the data shows.

NFTs are sometimes traded on Solana and Bitcoin blockchains, but the volume is negligible when compared to Ethereum, the chain used by top-tier collections like CryptoPunks, Bored Ape Yacht Club and Azuki.

The impact of Blur’s strategy of offering lucrative incentives to traders in order to overtake OpenSea as the top marketplace by trading volume has been unprecedented, said Kay.

“Driven by Blur Marketplace’s aggressive airdrop and bidding incentives, liquidity farming has surged,” he said. “While this has stimulated short-term liquidity, it’s also instigated a downward pressure on the market floor. Farmers, pursuing Blur’s rewards, accept short-term trading losses, consequently pushing prices lower.”

“Liquidity farmers” are essentially traders aiming to take advantage of Blur’s incentives by “artificially inflating the price or volume of an NFT before rapidly selling it off,” said Kay, adding that this discourages “genuine” trading while simultaneously threatening liquidity.

© 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.

It hasn’t even launched yet, but already there are signs of a new kind of black market springing up around Worldcoin.

Co-created by OpenAI’s Sam Altman, the Worldcoin project revolves around a soon-to-launch token that will be distributed to anyone who proves they’re a unique individual. The main way of doing that is to get an iris scanned by one of Worldcoin’s orbs. Over 1.7 million people have already signed up — the majority of them in the Global South.

But as its launch nears, scammers are finding ways to cheat the system.

BlockBeats, a Chinese news site, said in tweets posted earlier today that people in China — where people cannot yet sign up to receive a share of the Worldcoin token when it launches — are purchasing iris scans taken in Cambodia and Africa for as little as $30. The news drew sharp criticism from Twitter users.

A spokesperson for Worldcoin acknowledged these incidents in a written statement sent to The Block, but stressed that the problem was confined to “a few hundred instances.”

“Through ongoing threat and awareness monitoring measures, the Worldcoin team identified suspicious and potentially fraudulent activity whereby individuals were incentivized to sign up for a verified World ID that was then delivered to a third party’s World App rather than their own,” they said.

Defensive measures

Worldcoin has taken several steps to try to contain the issue. Those include “adjustments to the initial in-person signup process and the implementation of dynamic vs static QR codes,” the spokesperson said.

The project had previously addressed the subject of account theft in a blog post published in March. “Once a proof of personhood is granted, it is crucial to ensure that it is difficult to sell or steal, yet easy to recover,” Worldcoin said in the blog post.

It explained that users could reclaim their World ID — their verified account — by getting scanned by an orb a second time. This, Worldcoin said, would help deter the illegitimate sale of proof-of-personhood credentials.

“Despite these precautions, it is important to acknowledge that they do not entirely safeguard against collusion or other attempts to bypass the one-person-one-proof principle. To address these challenges, innovative ideas in mechanism design and the attribution of social relationships will be necessary,” the project added.

Token launch

Worldcoin has said previously that its token will go live in the first half of this year. The project rolled out its self-custodial mobile app in early May.

The organization is currently valued at $3 billion after reportedly raising $100 million from Khosla Ventures and a16z in March 2022. The Block revealed in February that the company is seeking another round of funding at the same valuation.

© 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 new service is expanding access to the U.K., Germany and Ireland.

Squint and you can see resemblances Do Kwon’s bitcoin buying during Terra/luna’s high days.

Global payments giant Visa delved further into the world of Ethereum, this time experimenting on the blockchain’s Goerli testnet with smart contracts aimed at transaction-free payments with the help of account abstraction. 

Visa deployed two sets of “Paymaster” smart contracts to leverage account abstraction, which expands the capabilities of such contracts to user accounts and allows wallets to autonomously perform complex tasks and manage transaction costs on behalf of other accounts. The company detailed their testing in a report.

The primary objective of these contracts is to simplify user interaction with the Ethereum network by eliminating the need for end-users to hold ether (ETH), the native cryptocurrency of Ethereum, for transaction or “gas” fees or letting users pay with any token. According to Visa’s report, this methodology provides a more flexible alternative to the standard fee structure on the Ethereum mainnet.

The move by Visa is the latest in a relationship with Ethereum that dates back to at least 2021 when it announced it was settling payments in the USDC stablecoin on the blockchain. In doing so, it became the first major payments network to use the stablecoin as a settlement currency.  

Interest in account abstraction

Visa initially expressed its interest in account abstraction in a blog post in December 2022. However, at that time, the functionality for account abstraction had not been implemented on Ethereum. Subsequently, in March 2023, developers made significant progress and introduced ERC-4337, code that enabled account abstraction on Ethereum through specialized smart contracts.

Catherine Gu, head of CBDC and protocols at Visa, stated in a Wednesday tweet, “We tested two core user operations: paying with ERC-20 tokens using ERC-4337 Paymaster; and sponsoring transaction fees for users (aka gasless txs) with ERC-4337 Paymaster.”

As Visa settles the USDC stablecoin on the Ethereum blockchain, the company can potentially employ account abstraction scenarios to facilitate more user-friendly stablecoin transactions. This includes taking care of transaction fees for users or offering users the option to pay with any token of their choice including stablecoins. 

“Paymasters assess whether to accept a UserOperation during the verification stage and implement any required fee logic during the execution phase. By doing so, they can sponsor transaction fees for users and enable users to pay for gas in ERC-20 tokens, like dollar stablecoins,” Visa highlighted in its report.

© 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.

Debate over whether or not states should be able to regulate stablecoins, and tension over whether that would create a “race to the bottom,” took up much of the latest Congressional hearing on creating a comprehensive framework for digital assets. 

The hearing at the Digital Assets, Financial Technology and Inclusion Subcommittee on Thursday featured dueling stablecoin bills from the top Republican and Democrat on the House Financial Services Committee, bringing formerly closed door negotiations out into the public. 

Debate on stablecoin legislation drew unusual lines of agreement as House Republicans, who typically favor lowering regulation, argued that their bill went far enough in creating new guardrails for the still-nascent technology. 

Both sides see the need for stablecoin legislation after supposedly-stable tokens crashed much of the crypto market last year, culminating with the collapse of FTX and its affiliated firms and financial contagion throughout much of the crypto and digital asset industry. 

State of play

Some Democrats on the panel took issue with allowing state regulators to set standards for stablecoin issuance, arguing that the baseline could be lowered too far, driving firms to states with the loosest regulation.

“A race to the bottom is a practice, is the custom of this industry, you know, to go offshore and seek areas of least regulation,” argued Rep. Stephen Lynch, the top Democrat on the subcommittee. “My feeling is that if we directed this to 50 states, and territories perhaps, that that practice would continue and that cryptocurrencies would seek out those areas, those jurisdictions, that offer the best opportunity for them to maximize their profit and avoid cumbersome and costly regulation and disclosure.”

That would hamstring regulations like the New York Department of Financial Services, Lynch said. New York’s approach to stablecoins was put forward as a model by all sides, though Republicans say they want states, which currently regulate payments providers, to have the freedom to set their own standards as long as they meet certain criteria.

The Federal Reserve, given prominence over the area by Democrats in their own draft, would still potentially play a role under the Republican bill. Republicans also want the Office of the Comptroller of the Currency to continue to oversee stablecoin issuers who register as national trust companies, a bank-like category that focuses on providing a service that does not involve lending. 

‘Both sides of the aisle’ 

Republicans could try to pass their own legislation out of committee along party lines, and the House of Representatives, with zero support from Democrats since a simple majority is all that’s needed in that chamber of Congress. But Democratic control of the Senate and White House means the more support they can gain from across the aisle, the more likely a bill will become law. 

Republicans on the committee did not see the gap between the two sides over state-level regulation as insurmountable.

“It’s important as we work through the drafts that we strike the right balance there,” said Rep. French Hill, the Republican subcommittee chair. “It’s a key, effectively, a difference between these two drafts and one that we’re going to try to figure out between both sides of the aisle as we work through this.”

© 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 Digital Asset Anti-Money Laundering Act that Senators Elizabeth Warren and Roger Marshall are pushing through Congress is the legislative equivalent of a Trojan Horse, writes John Rizzo. It would effectively ban crypto in the guise of fighting money laundering.

What a difference a year makes. Last year, when Bitcoin was over $40,000, a giant metal bull greeted visitors to the annual Bitcoin Magazine conference in Miami, proclaiming that the “future of finance” had arrived. A year later, and well into a fresh crypto winter, Pepe seems to have taken over.

In the first day of the three-day event, the mood was somewhat subdued as crowds trickled in to hear panel discussions such as “The Fed vs. The Financial System,” “Fighting the Anti-Crypto Army” and “Bitcoin & The Banking Crisis.” The mood was serious, yet hopeful. But the real star of the show was Pepe, whose omnipresence coincides with the memecoin that caused a frenzy when it hit the market in mid-April.

Off to the side of the large expo hall at the conference, an art gallery featured both physical and digital art, some of which could be purchased in an ongoing auction using bitcoin.

The show stopper is a massive, 21-panel mural that pays meme homage to Picasso’s Guernica, the famed 1937 oil painting that became a symbol of the Spanish Civil War. Dubbed Pepernica, the painting by artist Luis Simo is over 11 feet tall and 25 feet long. The current bid is 3.1 millions sats, or nearly $850.

Another work by Simo called “Las Pepinas” is an original oil painting that memes Diego Velázquez’s Las Meninas (The Ladies-in-Waiting).

Las Pepinas

Other Pepe-themed works at the show included Pepe-ized pop art “Plans for the Dollar” and “Oswald’s Diary.” The Indipepe series by artist JB is a memed derivative of Robert Indiana’s famous “LOVE” work that “seamlessly integrates the iconic Pepe the Frog into the annals of art history.”

To bid on the art, you have to deposit 1% of your bid as collateral, or 0.02 BTC for unlimited bids.

Pepe as Love

The gallery was not without digital art, and an “Ordinals Alley” displayed some of the earliest and most prominent Bitcoin Ordinals that have taken the sector by storm. Pepe was also there.

Pepe shoes

Art wasn’t the only thing for sale, with the event also featuring a peer-to-peer Bitcoin Bazaar where you could buy Bitcoin related items.

© 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.