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The tool offers more efficient incentives than competitors like Curve Finance’s rewards and can help pegged assets such as stablecoins, liquid staking derivatives keep their prices more stable, the protocol said.

Prior to the announcement, Bullish had only logged $200 billion in trading volume since its launch in November 2021.

Interoperability protocol Axelar has enabled Sommelier, a yield optimization protocol on Cosmos, to become a cross-chain application by connecting it with Ethereum Layer 2 network Arbitrum One.

Sommelier’s DeFi vaults automatically rotate capital across different assets and let users optimize yields on their crypto assets through lending and trading services. These DeFi vaults operate on Sommelier’s own blockchain in the Cosmos ecosystem and Ethereum, and now they will be available on Arbitrum, a Layer 2 blockchain developed by Offchain Labs. 

“At Offchain Labs, we are delighted to welcome high-caliber protocols such as Sommelier who focus on finding innovative ways to improve capital efficiency in DeFi on Arbitrum One,” said Peter Haymond, senior partnership manager at Offchain Labs.

Sommelier leverages Axelar’s GMP protocol

Sommelier will utilize Axelar’s General Message Passing (GMP) protocol. This is a general-purpose communication protocol between the Cosmos ecosystem and blockchains that support Ethereum-based smart contracts, like Arbitrum.

“Sommelier has pioneered the architecture for non-custodial access to sophisticated DeFi strategies. Axelar GMP enables Sommelier to pass strategy instructions to vaults on Arbitrum One, unlocking its strategies’ potential,” said Sergey Gorbunov, co-founder of Axelar.

The communication protocol enables data and assets to move between the two ecosystems, making it possible for cross-chain apps to operate. Typically, interoperability protocols focus on allowing users to send assets between chains using mechanisms like wrapping; however, passing data can remain a challenge.

Axelar, with its own computing environment called the Axelar Virtual Machine, facilitates more complex activities, such as transmitting data and commands between smart contracts on two different chains.

In October 2021, Zaki Manian, who is a former lead developer for Cosmos and Tendermint, raised $23 million for Sommelier in a Series A funding round led by Polychain 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.

Coinbase’s top executives made themselves richer by $1.09 billion by failing to disclose negative information about the company prior to listing its shares in April 2021, according to a lawsuit filed in a Delaware state court.

Coinbase denies the claims, calling the action “frivolous” and “meritless.”

The suit was filed by Adam Grabski, an investor in Coinbase stock, on behalf of all shareholders, on May 1. It names famed investors Marc Andreessen and Fred Wilson as defendants, alongside Coinbase CEO Brian Armstrong and his top management team. It also details exactly how much money they all made selling stock.

The suit discusses in detail the Coinbase board’s confidential plan to go public two years ago, a process which internally was given the nickname “Project Fall Fruits”.

Coinbase ‘direct listing’ had lucrative advantages for execs

At the time, Coinbase chose to do a direct listing of its existing shares, rather than the more common initial public offering (IPO), in which new shares are offered to the public markets.

An IPO had two key disadvantages for Coinbase insiders, the suit claims:

• In an IPO the stock being offered to the public is usually composed of new shares, which would dilute existing shareholders and therefore potentially depress their value.
• And an IPO usually requires a “lockup” period during which insiders are banned from selling their shares, in order to prevent them dumping stock onto the market in a way that would depress the value of the newly offered shares.

The main advantage of a direct listing, the suit claims, was that the shares being offered for sale to the public were pre-existing ones already owned by Coinbase executives and investors. Any stock sales would therefore directly benefit the executives and investors . In the event, insiders at Coinbase sold their stock through a 10b5-1 trading plan. Such a plan sells stock for the executive frequently and automatically, on a schedule they don’t control. Crucially, according to the suit, those 10b5-1 sales would begin on the first day of public trading.

Coinbase released bad news after shares were sold, suit says

At the same time, the suit alleges, Coinbase’s board members knew there were two pieces of bad news that they had not yet made public:

• The company’s revenue was being squeezed as more of its customers objected to Coinbase’s transaction fees and went elsewhere for cheaper deals. The company “must prepare for inevitability of fee compression,” a document presented to the board prior to the direct listing says, according to the suit.
• The company was also planning an additional private sale of $1.25 billion in new convertible notes after the direct listing that would dilute any existing shareholders.

This set up a tightly scheduled series of events that would make Coinbase insiders rich before the bad news dropped, according to the suit:

“On April 14, 2021, Coinbase became a Nasdaq-listed company, with its stock trading over $380 per share at the outset and as high as $429 per share in a volatile first day on the public markets.”

“Defendants took full advantage of the absence of any lock-up in the Direct Listing, rapidly selling over $2.9 billion of Coinbase stock on the first day and in the days that followed, from April 14, 2021 through April 22, 2021.”

“[By] May 18, 2021, both the compression of the Company’s revenue margins during the first fiscal quarter and the issuance of a dilutive convertible offering were publicly disclosed. Neither detail was disclosed in the offering prospectus or the preliminary results provided by the company prior to the Direct Listing on April 6, 2021. By May 18, the stock had declined by more than 37% since its listing, wiping out just over $37 billion in value.”

Insiders booked $2.9 billion in sales

Coinbase insiders benefitted massively from the staged release of shares and negative information, the suit alleges, avoiding $1.09 billion in losses as they sold $2.9 billion in shares. The suit lists the beneficiaries:

• Investor Marc Andreessen‘s Andreessen Horowitz group sold $118,655,765.50.
• CEO Brian Armstrong sold $291,827,965.50.
• Chief Product Officer Surojit Chatterjee sold $61,885,000.
• Coinbase’s Chief Operating Officer Emilie Choi sold $223,967,939.54.
• Cofounder/board member Frederick Ernest Ehrsam III sold $219,496,913.77.
• Chief Financial Officer Alesia J. Haas sold $99,320,793.18.
• Board member and general partner at Andreessen Horowitz Kathryn Haun sold $52,606,693.76.
• Chief Accounting Officer Jennifer Jones sold $43,435,000.00.
• Investor Fred Wilson‘s Union Square Ventures firm sold $1,816,773,943.24. He “led Coinbase’s Series A funding round, investing $5 million at 20 cents per share for a valuation of around $20 million,” the suit says. The sale was “the firm’s largest exit in its history,” Grabski claims.

The Block contacted Coinbase for comment but did not immediately hear back. Coinbase responded to the suit in a statement to Bloomberg: “As the most popular and only publicly traded crypto exchange in the US, we are at times the target of frivolous litigation… This is an example of one of those meritless claims.”

© 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.

Revolut is making its first foray into Latin America, attempting to tap into Brazil’s growing demand for crypto assets.

While the stablecoin exchange balance has dropped 44% this year, bitcoin’s price has rallied by 70%.

The country’s tax authority is consulting the public on new rules it said are aimed at reducing the burden on crypto users.

Dubai’s digital assets regulator issued a formal reprimand to the co-founders of bankrupt crypto investment firm Three Arrows Capital, according to a statement. 

The Middle Eastern country’s so-called Virtual Assets Regulatory Authority said Kyle Davies and Su Zhu’s latest venture, OPNX, is operating without the requisite licenses, adding that it is investigating the firm “to access further corrective measures that may be required.”

“VARA became aware of OPNX soliciting, and collecting personal data from the public to participate in its new (to be launched) exchange,” the agency added. “Through social media platforms, OPNX had been engaged in marketing the exchange without establishing warranted restrictions for residents of Dubai/UAE.”

Bloomberg earlier reported the news. 

OPNX’s claims platform

Davies and Zhu — former classmates — launched OPNX last month out of crypto trading platform Coinflex, which was founded by Mark Lamb. The firm, which offers traders a platform to trade bankruptcy claims, is led by Lamb’s wife Leslie Lamb, who told Bloomberg that the firm is operating above board. 

“At no point in time have UAE customers been able to open an account on OPNX,” Leslie Lamb said in a WhatsApp message to Bloomberg. 

Zhu told Bloomberg that he and Davies are not involved in day-to-day operations. 

© 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 action by the Virtual Assets Regulation Authority targeting Kyle Davies, Su Zhu and others follows two cease-and-desist letters for operating an unregulated exchange.

The developers of decentralized exchange Curve Finance deployed smart contracts for decentralized stablecoin crvUSD on the Sepolia testnet today.

Sepolia serves as one of the two main testnets employed by Ethereum developers for testing code prior to mainnet deployment. Specifically, this code was deployed for the purpose of testing the token’s verification on Ethereum block explorer Etherscan, according to a comment made on GitHub. 

Created in 2020, Curve is the largest decentralized exchange focused on swapping stablecoins with reduced slippage and minimal fees. It has more than $4.2 billion locked on its platform across its markets that run over 12 blockchains. The Sepolia deployment signals that the team is getting closer toward a mainnet release of its platform and stablecoin.

The stablecoin’s design

Curve founder Michael Egorov initially revealed that the team was working on developing a native stablecoin in July 2022. Subsequently, in November 2022, Curve developers published its white paper and initial code.

The stalecoin will be pegged to the U.S. dollar and feature a token design akin to that of MakerDAO’s DAI stablecoin. That means it will be overcollateralized by supported crypto assets exceeding the value of the crvUSD users wish to mint.

Additionally, the stablecoin will rely on a new algorithm called Lending-Liquidating AMM (LLAMMA). This continuously liquidates and automatically deposits collateral to manage the risk associated with the stablecoin, while maintaining its peg to the U.S. dollar, according to its whitepaper.

Being developed by one of the most-widely used DeFi protocols — one that’s heavily focused on stablecoins — crvUSD has a chance at finding adoption. But it will enter a highly competitive field, currently dominated by centralized stablecoins like USDT and USDC, which account for $81 billion and $30 billion respectively, of the $131.2 billion total stablecoin market. DAI, the closest stablecoin in design to crvUSD, has a $4.7 billion market capitalization.

© 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.