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Crypto markets traded relatively flat as the market prepares for Federal Reserve Chair Jerome Powell’s Congressional testimony on Tuesday and the release of U.S. jobs data on Friday.

Bitcoin was trading around $22,362 by 4:10 p.m. EST, down 0.3%, according to TradingView data. Ether added 0.2% to $1,561. 

BTCUSD chart by TradingView

Altcoins remained little changed to start the week, with Binance’s BNB sliding 0.9%, Ripple’s XRP up 0.4% and Cardano’s ADA down 2.4%.

Crypto stocks 

After starting the day with a steep decline, shares of Silvergate see-sawed, ending down 6.2% to $5.41, according to NYSE data.

On Friday, the bank announced the suspension of its Silvergate Exchange Network, its internal payment network for transmitting USD between customers, amid ongoing concerns over the bank’s capitalization. 

Silvergate has been one of the most shorted stocks on Wall Street over the past two months, according to NYSE data via Fintel. Short-seller Marc Cohodes, who has been attacking Silvergate since last year, says he expects the bank to close within a week.

SI chart by TradingView

Coinbase was down 2.7% to around $62. Block lost 0.9% to trade around $80 and MicroStrategy declined by 3.83% to $237.45.

© 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.

Collapsed crypto exchange FTX filed a lawsuit against Grayscale Investment, citing mismanagement of the firm as evidence that it was in violation of Trust agreements.

The FTX debtors also filed claims against Grayscale’s CEO, Michael Sonnenshein, and its owners, Digital Currency Group and Barry Silbert.

The lawsuit, filed in the Court of Chancery in the state of Delaware, claims that in the past two years alone Grayscale has extracted over $1.3 billion in “exorbitant management fees” in violation of the Trust agreements.

It also claims that the “contrived excuses” used by the trust to prevent shareholders from redeeming their shares have resulted in the Trusts’ shares trading at approximately a 50% discount to net asset value.

“The lawsuit filed by Sam Bankman-Fried’s hedge fund, Alameda Research, is misguided,” a Grayscale spokesperson told The Block. “Grayscale has been transparent in our efforts to obtain regulatory approval to convert GBTC into an ETF – an outcome that is undoubtedly the best long-term product structure.”

FTX is seeking “injunctive relief to unlock $9 billion or more in value for shareholders.”

The firm hopes to “realize over a quarter billion dollars in asset value for the FTX Debtors’ customers and creditors.”

The complaint alleges that if Grayscale had reduced its fees and “stopped improperly preventing redemptions,” then FTX debtors’ shares would be worth at least $550 million, approximately 90% more than their current value. 

“Our goal is to unlock value that we believe is currently being suppressed by Grayscale’s self-dealing and improper redemption ban,” FTX CEO John Ray III said in a statement. 

“FTX customers and creditors will benefit from additional recoveries,” Ray said, “along with other Grayscale Trust investors that are being harmed by Grayscale’s actions.”

© 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.

Galaxy Digital has leftover capital after its two infrastructure acquisitions late last year, but plans on getting it right with those first investments, co-president Chris Ferraro said.

In December, the firm agreed to buy the Helios bitcoin mining facility and its related operations from Argo Blockchain for about $65 million and last month completed its purchase of “substantially all of the assets of GK8, a secure institutional digital asset custody platform, for approximately $44 million.”

Ferraro, speaking at the JMP Securities Technology Conference, said this year “should be about fortifying the acquisitions we made, integrating them, getting the foundation right and building.”

“We are blessed to have excess capital, to be capitalized even after all this. I won’t discount that we might get active again on the M&A side, but if we don’t get these right, we don’t get the right to buy more companies,” he said. 

Shares in the Mike Novogratz-led company have plummeted alongside cryptocurrency prices, dipping down to around $3.34 from about $19 a year ago. Ferraro noted that ether and bitcoin have been among the top performing assets in 2022 and 2023 when compared with “the assets to own,” namely gold, the Dow Jones, the S&P 500 and others.

Ferraro pointed out that since the Covid lows in March 2020, ethereum is the number one performing asset on a risk-adjusted basis and bitcoin’s ranked sixth. So far this year, bitcoin is number one and ethereum is number three, he said.

“We think it’s impossible for investors who care about looking at all the tools they could have in their toolkit to look at those assets and not be interested,” Ferraro said.

© 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.

Luxury fashion brand Hermès is asking a federal court to block sales of non-fungible tokens based on its popular Birkin bag, according to Reuters.

Last month, a New York jury ruled digital artist Mason Rothschild had violated Hermès’s intellectual property rights by promoting and selling his “MetaBirkin” NFTs based on the Birkin bags. Rothschild was ordered to pay $133,000 in damages.

Hermès alleges in its filing that Rothschild has continued to promote the NFTs despite the ruling, Reuters said. The fashion company wants the federal court to intervene and force Rothschild to not only stop selling the digital assets but also transfer the NFTs he still owns to Hermès.

The court’s February ruling in favor of Hermès has been considered significant and potentially precedent-setting as whether or not NFTs are art or commodities has been brought into question. As was the case with MetaBirkins, other artistic NFT collections have borrowed elements of existing intellectual property.

Rothschild’s lawyer plans to oppose Hermes’s filing this week, said Reuters.

© 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 markets were relatively flat to start the week ahead of Jerome Powell testimony and some significant economic indicators.

Bitcoin was trading around $22,500 by 12:30 p.m. EST, up 0.3%, according to TradingView data. Ether added 0.4% to $1,577. 

BTCUSD chart by TradingView

Altcoins dipped slightly to start the week, remaining in a broadly similar range to last week. Binance’s BNB slid 1.1%, Ripple’s XRP shed 0.8% and Cardano’s ADA was down 0.9%.

Markets will look to U.S. jobs data on Friday and Federal Reserve Chair Powell’s Congressional testimony on Tuesday. 

Consensus calls for a headline figure of 215,000 new jobs, said Adam Farthing of market maker B2C2, adding, “with recent inflation data showing clear signals of a re-acceleration, and rates pushing higher, one feels that another big number would be difficult for risk in general.”

Farthing noted that Powell’s testimony to Congress, his first appearance since Feb. 7, ought to “contain important clues as to Fed thinking about the economy and speed of rate hikes over the coming few months.”

“For crypto, all eyes will be on technical support levels below: short term is the $22,000 level, touched last Friday, but below that is a key support level at $21,500, which was a high in November pre-FTX, and a low in February. Below there, things would open up a little; $18,500 could potentially become the target,” he concluded. 

Crypto stocks

Silvergate traded higher after dipping at the open, up 5.8% to $6.11 by 12:25 p.m. EST, according to NYSE data. The crypto-friendly bank suspended the Silvergate Exchange Network on Friday amid ongoing concerns over the bank’s capitalization and an exodus of clients. 

SI chart by TradingView

Short-seller Marc Cohodes, who has been attacking Silvergate since last year, says he expects the bank to close within a week. Silvergate has been one of the most shorted stocks on Wall Street over the past two months, according to NYSE data via Fintel.

Coinbase was up 3.7% to just below $70. Block gained 1.2% to trade around $82 and MicroStrategy increased by 0.3% to $247.60.

© 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.

Web3 startup Unstoppable Domains is putting women front and center in leadership roles with two key promotions.

The startup is promoting Sandy Carter, whose current role is senior vice president and channel chief, to chief operating officer. Carter joined Unstoppable from Amazon Web Services (AWS) where she drove partnerships in cloud, machine learning and blockchain. 

Carter will continue to drive partnerships for Unstoppable, while also leading business development, communications and legal. Since joining in Dec. 2021, she has helped to drive partnerships to over 750 from 61, the company said in a release.

 “She has a unique ability to lead and inspire that sets an example for the entire Web3 industry,” said Matt Gould, CEO and co-founder of Unstoppable Domains, in the release. “As COO and head of business development, Sandy will continue to help us redefine what it means to own your identity in web3.”

Carter will report directly to Gould who founded the startup in 2018. It’s since clinched unicorn status after raising $65 million in a Series A fundraising round last year. The startup allows users to secure domains as non-fungible tokens (NFTs) for a one-time fee. The domains can then be used in several ways from hosting crypto applications to replacing wallet addresses with an easy-to-read domain.

Breaking down tech barriers

“By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will hold,” said Carter in the release. “Yet in the Web3 space, less than 5% of leadership roles are held by women. I’m proud to be part of a web3 company that’s leading the charge in closing this gap — both through gender parity on our leadership team, and through initiatives like Unstoppable Women of Web3.”

Lisa DeLuca will also be playing a role in helping to close this gap. DeLuca, who joined the startup at the start of last year, has  been promoted to senior director of engineering. Like Carter, DeLuca has an established background in industry, having spent more than 16 years at IBM as a distinguished engineer and product management director. 

DeLuca focused on engineering and product management for emerging solutions within IBM’s AI Applications division. This is an area that Unstoppable Domains has been dabbling with. Carter announced on LinkedIn that the company was rolling out an AI-based profile picture service for users. The startup is already using OpenAI’s GPT-3 to create AI-generated domains.

“Lisa is an exceptional leader, inventor, and engineer, and she makes Unstoppable better every day,” said Gould in the release. “Her mindset for innovation will help us continue to foster a world-class engineering organization.”

DeLuca has filed over 800 patent applications and had over 650 granted, said the company in the release.

Women have often been underrepresented in leadership roles in the technology industry. A study from Deloitte Insights shows that the industry is starting to make progress, with women making up 25% of leadership and technical roles at large technology companies.

© 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.

Scroll, an Ethereum Layer 2 network that uses zk-rollups technology, raised $50 million in a new funding round.

Investors in the round included Polychain Capital, Sequoia China, Bain Capital Crypto, Moore Capital Management, Variant Fund, Newman Capital, IOSG Ventures and Qiming Venture Partners, Scroll said Monday.

Scroll declined to comment on the valuation and the structure of the round, but a source with direct knowledge of the matter told The Block that the round brings Scroll’s valuation to $1.8 billion.

Scroll previously raised $33 million in two funding rounds and hadn’t disclosed its valuation then. The new round brings Scroll’s total funding to date to $83 million.

Scaling Ethereum

Scroll was founded in 2021 with the vision of scaling Ethereum to a billion users. As a Layer 2 network, Scroll processes transactions off Ethereum on its own network and then ports the transaction data back to Ethereum — helping increase transaction speed and reduce costs.

Scroll uses zk-rollup technology for its network, helping achieve scalability. Scroll’s zkEVM, or zero-knowledge Ethereum virtual machine, batches transactions and then generates proof that these transactions are all legitimate. This proof is then broadcast to Ethereum, and the transactions get approved.

Scroll launched its zkEVM on the Goerli testnet last week as it moved out of its pre-alpha testnet phase. Traction on the pre-alpha testnet was strong, Scroll co-founder Sandy Peng told The Block in an interview. It reached one million unique addresses and 16 million transactions on pre-alpha, she said. The mainnet is expected to launch in the next three to four months, Peng added.

Scroll is one of several Ethereum scaling networks that use zk-rollups. Others include Polygon, StarkWare and Matter Labs. Peng said Scroll’s three design principles or core values — community-driven, security first and decentralization at every level — are its competitive edge.

With the fresh capital, Scroll plans to continue building its product, launch its mainnet and expand its ecosystem. To that end, it is also looking to increase its current team size from around 60 to nearly 100 in the near future, Peng said.

© 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.

Coinshares reported a fourth consecutive week of digital asset investment product outflows. 

Outflows totaled $17 million last week ,with bitcoin leading the way. Short-bitcoin saw inflows for a third week, this time totaling $1.8 million. 

The poor sentiment likely represents continued investor concerns over regulatory uncertainty for the asset class, the firm said.

The price of bitcoin is down more than 7% over the past two weeks. 

© 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.

A cross-border system connecting central bank digital currencies could allow for cheaper and safer global payments, according to a report published by the Bank of International Settlements on Monday. 

The Basel-based bank for central banks’ Innovation Hub, in cooperation with the central banks of Israel, Norway and Sweden, has wrapped up “Project Icebreaker” to find solutions for DLT-based cross-border transactions.

The project “first allows central banks to have almost full autonomy” when designing their consumer-facing digital currencies before providing a “model for that same CBDC to be used for international payments,” said Cecilia Skingsley, who leads the BIS Innovation Hub, in the report.

As jurisdictions worldwide are racing to develop their own CBDCs, this proposal aims to allow for interoperability between national infrastructures and reduce settlement and counterparty risks while cutting time and costs for transactions.

“Although domestic payments have become less expensive, safer and more efficient, payments across currencies are still associated with high costs, slow speed and risk,” said Aino Bunge, deputy governor of Sweden’s Sveriges Riksbank. “When exploring CBDCs, it is important to include cross-currency opportunities from the start.”

A ‘hub-and-spoke’ model

Project Icebreaker proposes a model that bridges domestic retail CBDC systems through a “hub-and-spoke” model. The so-called Icebreaker hub would consist of foreign exchange providers on both sides picking the cheapest conversion path for the payer in a cross-border transaction. 

“FX providers would hold and manage [retail CBDC] liquidity in their operating currencies,” the report reads. “Each FX provider would submit buy and sell rates for those currencies to the Icebreaker hub. The Icebreaker hub therefore maintains a live database of the submitted FX rates and returns the best available rate along with the identity of the FX provider to the payer upon request.” 

The BIS has been supporting the acceleration of central bank-backed digital currencies. “CBDCs replicate existing forms of money in a technologically superior way,” general manager  Agustin Carstens said in a speech in February.

The development of CBDCs is topping policymakers’ agendas this year, with major steps forward in countries like Australia and the UK. Last week, the Biden administration in the U.S. also announced it would start regular meetings to talk about a potential digital dollar to complement the Federal Reserve’s exploration.

© 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 18 of Season 5 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Kraken’s Chief Legal Officer Marco Santori.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Feedback and revision requests can be sent to podcast@theblockcrypto.com.

Marco Santori is the Chief Legal Officer for Kraken — the crypto exchange recently charged by the SEC for failing to register the offer and sale of its “crypto asset staking as-a-service program” in the U.S.

In this episode, Santori explains how recent regulatory actions in the U.S. have caused banks to become hesitant to accept crypto companies as new clients, and how this favors ‘incumbent’ crypto players in the U.S., such as Coinbase and Kraken.

During this episode, Chaparro and Santori also discuss:

• ‘Operation Choke Point 2.0’
• Kraken’s efforts to establish a bank
• How regulators view DeFi

This episode is brought to you by our sponsors Circle, Railgun, Flare Network

About Circle
Circle is a global financial technology company helping money move at internet speed. Our mission is to raise global economic prosperity through the frictionless exchange of value. Visit Circle.com to learn more.

About Railgun
Railgun is a private DeFi solution on Ethereum, BSC, Arbitrum and Polygon. Shield any ERC-20 token and any NFT into a Private Balance and let Railgun’s zero-knowledge cryptography encrypt your address, balance and transaction history. You can also bring privacy to your project with Railgun SDK, and be sure to check out Railgun with partner project Railway Wallet, also available on iOS and Android. Visit Railgun.org to find out more.

About Flare
Flare is an EVM-based Layer 1 blockchain designed to allow developers to build applications that can use data from other blockchains and the internet. By providing decentralized access to a wide variety of high-integrity data from other blockchains and the internet, Flare enables new use cases and monetization models. Build better and connect everything at Flare.Network.

© 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.