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Meta Platforms announced it was ending its support for NFTs after less than a year from its initial test program. The move is a setback for Web3 creators who use social media to promote their art and interact with their community – and signals that Meta maybe hasn’t yet figured out how to dive into Web3.

Crypto exchange Coinbase is exploring launching an offshore platform to trade perpetual swaps tied to cryptocurrencies, according to two sources familiar with the firm’s aspirations to gate-crash a sector dominated by rival Binance.

The firm has briefed market-making and trading firms about the plans to roll out the platform in an offshore jurisdiction. Perpetual swaps — a type of future and a popular product in the crypto space – will be among the offerings. They provide a more capital-efficient way for traders to make bets on the underlying crypto market.

Coinbase didn’t immediately respond to an email seeking comment. 

Bloomberg reported earlier that Coinbase Global is considering setting up a new trading platform overseas, without specifying what the new venue would trade.

Binance dominance

Crypto exchange behemoth Binance commands a plurality of market share in bitcoin futures, according to The Block’s data dashboard. At its peak, FTX was a large player in the market as well, with nearly 25% market share in early 2021.

Last year, Coinbase acquired of FairX, a CFTC-regulated derivatives exchange, and in 2021 applied for membership in the National Futures Association, the U.S. self-regulatory organization for such businesses. 

© 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.

Bitcoin climbed to hover around $27,000 Friday morning as cryptocurrencies in general continued to rally. Traditional markets were trading lower.

The coin was trading at $26,560 as of 10 am ET on Friday. Ethereum was also up by 4.8% in the last 24 hours, trading at around $1,742.

BTC/USD chart by TradingView

Bitcoin had been closer to $22,000 prior to the Silvergate, SVB and Signature collapses. And while most cryptocurrencies generally had a positive week, bitcoin has been leading the rally.

Ben McMillan, founder and CIO at IDX Digital Assets, told The Block the move into bitcoin and the increase in its dominance is “100% a reflection of its value as a flight from risk asset”

The past week has shown how the coin’s “fundamental properties stand in stark relief to the shakiness of fractional reserve banking,” said Alex Thorn, Galaxy Digital’s head of firm-wide research.

He also pointed out that the correlation between bitcoin and the S&P 500 has decreased. “At the same time, bitcoin volatility continues to decline.”

Publicly traded crypto companies were also up on Friday. Galaxy gained 8.8%, Coinbase by 7.1% and MicroStrategy 7.6%.

In traditional markets, the Nasdaq fell 1% while the S&P 500 was down by 1.2%.

© 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.

Smart contacts are neither smart, nor are they contracts. That’s just techie jargon, according to Polgyon Labs’ new chief policy officer. 

Rebecca Rettig thinks the wonky words and less-than-precise meaning are doing their part to hold the crypto and web3 industry back. And she wants to help change that.

What’s “really important is that people who understand the technology can speak about it precisely, clearly, without using a lot of complicated jargon to make sure that we can allow policymakers to understand what this technology really does,” she said in an interview with The Block.

A smart contract, as Rettig explained it, is simply software that lays out the “rules of the road” for transactions that are transparent and easily checked. The continued use of technical terms to describe new technology is confusing the general public and lawmakers alike, resulting in distrust and confusion instead of tapping into the possibilities of new technology, she said.

Rettig joined Polygon Labs from Aave Companies, where she was general counsel, at a time when policy and regulation is at the forefront of the crypto industry conversation. Agencies from the Securities and Exchange Commission to the Justice Department and the Commodity Futures Trading Commission brought cases against Sam Bankman-Fried following the discovery of rampant fraud at his companies and since then they have been on a roll.

Last month, the SEC sued Terraform Labs and in January fined Nexo and charged Genesis with offering unregistered securities.

It has become “politically attractive” to go after digital assets, Rettig said. Regulatory agencies which have enforcement power are exercising in the wake of FTX, but at some point, “Congress is still going to act and that will be the law of the land.”

Not her first go

Rettig’s been in the industry since 2017 and is “very passionate” about crypto, web3 and the changing paradigms from transactions going through intermediaries – including in arts and media – to decentralization. Though she’s been a lawyer in the space for a while, the focus mostly on policy will be a new challenge for her.

“I wanted to take it on for a few reasons,” she said. “The end of last year was obviously very difficult for the industry and I wasn’t willing to give up on the space. I also think that open, permissionless decentralized systems are very different from what we saw” previously.

“In order to ensure that there is proliferation of this technology and it’s protected and can grow, we need good regulatory guardrails,” she said. The lawyer is hopeful the U.S. will pass evergreen legislation that will permit the industry to flourish.

“I want 2023 to be the year of the use case,” Rettig said. There are “amazing applications” that people are building that need to be highlighted, like tracking food to get to developing countries. Household name brands are also incorporating blockchain into their long-term innovation plans, and those actions should be spotlighted.

© 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.

Fireblocks, a digital asset security platform, discovered a critical vulnerability in BitGo’s Threshold Signature Scheme (TSS) wallets, putting the private keys of its users at risk of exposure to potential hacks.

BitGo utilizes TSS wallets to improve security by distributing partial private key information across multiple parties as one of its offerings. 

BitGo, a cryptocurrency custody firm, promptly suspended the affected wallet service in December 2022 upon learning of the vulnerability, dubbed the “BitGo Zero Proof Vulnerability,” according to a media release from Fireblocks. The company then released a patch in February 2023 to address the flagged issue and informed clients to update their systems by March 17.

According to Fireblocks’ researchers, the vulnerability resulted from a missing implementation of mandatory zero-knowledge proofs in the TSS wallet protocol. This omission could potentially have made it possible for attackers to extract users’ private keys and gain access to their assets. Fireblocks did not say if there has been any loss of user assets because of the vulnerability. 

“The vulnerability is a result of the wallet provider failing to follow a well-reviewed cryptographic standard,” said Idan Ofrat, co-founder and CTO at Fireblocks.

Fireblocks added it worked closely with BitGo to resolve the vulnerability and improve the security of its wallet services.

BitGo did not immediately respond to a request for comment.

© 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.

Formfunction, an NFT marketplace platform on Solana, will shut down its website on March 29, about a year after the project raised $4.7 million in a seed funding round.

Creators on the platform have been advised to delist their items before March 29. Formfunction launched in February 2022 to support “one of one” NFT creators on Solana. One of one, stylized as 1/1, in the NFT space, refers to non-fungible tokens minted as single, unique editions. They resemble unique pieces in the traditional art world and are usually created by NFT artists.

Formfunction said it has supported more than 4,000 creators on its platform and that 60% of them had made at least one sale, with over 600 earning at least $1,000. The website added that 70 creators had earned more than $10,000 each during its run.

Despite these successes and the $4.7 million fundraising, Formfunction is shutting down. The March 15 announcement did not give reasons for ending the project, but called the decision “extremely difficult.” Formfunction CEO Katherine Liu thanked team members for their efforts in a statement issued on Wednesday.

Formfunction’s announcement comes amid a massive decline in Solana NFT trading volume. The Block’s Data Dashboard shows daily NFT marketplace volume on Solana down more than 70% year-to-date.

© 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.

BlockSec, a smart contract audit firm, prevented a hacker from stealing 2,900 ether ($5 million) from the NFT lending project Paraspace amid a major vulnerability, it said.

BlockSec detected a hack in real time and rescued the funds, it said.

“We monitored and observed the failed transaction. Meanwhile, we re-deployed the [hacker’s] contract with some upgrades to do the rescue,” said Matthew Jiang, director of security services at BlockSec.

Paraspace said in a Twitter post it had paused its lending protocol and was investigating the issue. It added that NFT assets deposited to the platform were safe.

BlockSec thwarts theft using its real-time monitoring system

The vulnerability in Paraspace’s lending contracts could have allowed the attacker to borrow crypto tokens with less NFT collateral than needed, which may have then allowed the hacker to drain its liquidity.  “On Paraspace, the loan collateral’s balance could be manipulated by the attacker,” Jiang further noted.

BlockSec added that it was able to thwart the hack using an internal system that detects hacking incidents in real time. “We have an internal system that is able to monitor attack transactions and try to prevent them automatically,” said Lei Wu, co-founder and CTO of BlockSec.

After the incident, the hacker left an on-chain message requesting BlockSec return gas fees of about 0.7 ETH the person spent in trying to hack Paraspace. “I couldn’t make it work because of a stupid gas estimation error. Since I lost a lot of money trying to make it work, it would be cool to get at least some of them back… best of luck,” the hacker wrote.

This was not the first time BlockSec has leveraged its internal system to save funds for projects. BlockSec was able to rescue $3.8 million from the exploiters of Saddle Finance in April 2022. In February it recovered $2.4 million from Platypus Finance hackers.

Paraspace did not immediately respond to a request for comment.

© 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.

Marathon Digital Holdings said Thursday that revenue for the fourth quarter of the year declined 58% from the same period a year earlier to $28.4 million.  

The bitcoin miner had been expected to report revenue of around $38.4 million for the quarter. The company last month cancelled an earnings call and postponed the release of the results to correct accounting errors that related to the impairment of digital assets.

In the newly released report, full year revenue for 2022 declined 26% to $117.8 million from a restated $159.2 million in 2021. The company recorded a net loss of $686.7 million for the year compared to a loss of $37.1 million in 2021.

The results were affected by a “fourth quarter impairment charge related to the carrying value of mining rigs and advances to vendors” of $332.9 million and “declines in the carrying value of our digital assets” that totaled $317.6 million.

Bitcoin production was up 42% in the fourth quarter to a record 1,562. On an annual basis, production increased 30% to 4,144.

“In February 2023, we terminated our credit facilities with Silvergate Bank, which resulted in the release of 3,132 bitcoin that were previously held as collateral,” CEO Fred Thiel said in a statement. “We are also pursuing alternative banking relationships in light of the recent developments with Signature Bank.”

Marathon shares declined 0.8% in post-market trading, according to TradingView. They had risen 7.6% in normal trading hours earlier in the day.

© 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.

Amid layers of market uncertainty, the price of bitcoin traded up today, hovering just below $25,000 toward the close of traditional markets.

By 5:36 p.m. EDT, the token was trading at $24,869, up 2.1% on the day, according to data from TradingView.

Other cryptocurrencies also rose, with ether rising 0.5% to trade at $1,665. Binance saw its BNB token climb 6.6% after announcing yesterday that Uniswap will be released on the BNB Chain network.

Polygon’s MATIC added 0.8%, and Cardano’s ADA dropped 1.6%.

Crypto-related stocks also climbed throughout the day, buoyed by a rise in equities as distressed bank Credit Suisse secured a $54 billion line of credit.

Coinbase shares added about 5.1% by 5:20 p.m. EDT, according to TradingView data. MicroStrategy and Block were both higher by 5.9 and 1.3%, respectively.

© 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.

Bitcoin mining stocks tracked by The Block were higher on Thursday, with 16 gaining and the other three declining.

Bitcoin rose 2.8% to $25,028 by market close.

© 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.