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Microsoft’s virtual reality and mixed reality products have reportedly born the brunt of the tech giant’s latest layoffs, with entire teams cut from the organization. 

The layoffs, which overall affected 10,000 workers at Microsoft, claimed the entire team at AltSpaceVR. AltSpaceVR was bought out by the computer company in 2017 under undisclosed terms. It will shutter completely in March, according to a blog post by the company.

It appears that Microsoft will channel its VR energies into Microsoft Mesh, a “collaboration” platform which utilizes a range of VR and AR tech.

The team behind MRTK — or the Mixed Reality Toolkit — is also facing cuts, with the entire team in jeopardy, according to industry publication Windows Central.

Meanwhile HoloLens, the unit producing Microsoft’s headset, faces an uncertain future, according to Windows Central. 

Microsoft seems to be scaling back on VR at a time when investors and companies are pouring billions of dollars into technologies eager to construct a more immersive digital landscape that includes both virtual and augmented reality (VR and AR) experiences.

With a new VR-AR device set to be hitting shelves later this year, Apple has pitted itself against Meta, the leading producer of VR headsets. Whichever company is more successful will likely gain an advantage colonizing the metaverse.

Microsoft did not respond to a request for comment. 

Read more: In Apple and Meta’s fight for VR-AR dominance, an open metaverse may be collateral damage

© 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 1 of Season 5 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Jump Crypto President Kanav Kariya.

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

Since its beginnings as a skunkworks intern project in late 2015, Jump Crypto has developed a multifaceted crypto strategy that spans proprietary trading, venture investing, and infrastructure development. 

Although Jump had some exposure to FTX, the firm says it remains well capitalized. 

In this episode of The Scoop, Jump Crypto President Kanav Kariya reflects on lessons learned during 2022 and analyzes the current state of the industry’s capital markets. 

According to Kariya, many crypto market participants struggled with proper collateral management over the course of last year: 

“The perceived maturity of a lot of the participants in the market was clearly way out of line with what the reality was — the quality of the collateral was astonishing across the board.” 

Going forward, Kariya envisions deep-pocketed institutions from traditional finance entering the market instead of crypto-native startups. 

As he explains: 

“When it comes to institutional lending and prime brokerage, that feels like an opportunity for a much better capitalized player to step into the market at this point — it’s not a startup opportunity in my mind.”  

During this episode, Chaparro and Kariya also discuss: 

• Lessons Jump Crypto learned the hard way in 2022. 
• The evolution of the role of ‘trust’ in the crypto industry. 
• How identity protocols and decentralized social graphs will change web3. 

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from former FTX and Alameda founder Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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

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 monetisation models. Build better and connect everything at Flare.Network

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© 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.

Ethereum co-founder Vitalik Buterin has proposed a “stealth address system” to improve transactional privacy on the Ethereum blockchain. In a research blog, Buterin wrote that privacy is “one of the largest remaining challenges in the Ethereum ecosystem.” 

The stealth address system is based on a mechanism that would allow any Ethereum wallet to generate cryptographically obfuscated public addresses called “stealth addresses” in order to receive funds in a private manner and access them using a special code called a “spending key.”

Buterin described that stealth addresses give the same privacy properties as someone generating a fresh address for each transaction. These proposed stealth addresses are a way to increase privacy on Ethereum by creating unique, anonymous addresses for each transaction.

Each time someone makes a transaction, they can generate a new stealth address so that it is difficult for anyone to track the transactions or determine who is sending and receiving assets. This means that each user’s transactional history can remain private. Buterin also suggested using ZK-SNARKs, shorthand for zero-knowledge proofs, to boost the privacy of the system and make it difficult to link the stealth addresses.

On Ethereum, transactions are public by default, which can pose a privacy concern. There are ways to attain transactional privacy on the network, such as using cryptocurrency mixers like Tornado Cash. However, such methods can raise regulatory issues. This was seen with Tornado Cash, which was sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for potentially illicit activities. 

© 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 revenue extorted by ransomware attackers fell significantly in 2022, down 40.3% to $456.8 million from $765.6 million the previous year.

The trend in reduced ransomware payments was clear, as blockchain data platform Chainalysis highlighted in a new report. Still, the actual totals are likely higher as many cryptocurrency addresses controlled by attackers are yet to be identified on blockchain networks and incorporated into Chainalysis’ data.

Unfortunately, the decline in revenue did not correspond to fewer attempted attacks. Cybersecurity firm Fortinet reported more than 10,000 unique ransomware strains in the first half of 2022, almost doubling those of the prior six months. On-chain data also confirmed that the number of active types of ransomware has increased dramatically in recent years. Still, the average lifespan of each type dropped by more than half to 70 days in 2022 as attackers tried to obfuscate their activities by utilizing various strains.

While numerous strains remain active, Chainalysis said the number of individuals in the ransomware ecosystem is probably small. This is because affiliates carry out attacks over multiple strains, creating the illusion of many different attackers despite re-using the same wallet addresses.

Ultimately, Chainalysis said, evidence suggests the drop in payments may be attributed to more victims refusing to pay ransomware attackers.

Money laundering

On the money laundering front, Chainalysis said most ransomware attackers were increasingly sending victims’ funds to mainstream, centralized crypto exchanges. The share of ransomware funds going to such platforms increased to 48.3% in 2022 from 39.3% in 2021. Meanwhile, those sent to high-risk exchanges fell to 6.7% from 10.9%. Money laundering of ransomware funds through illicit services such as darknet markets also declined, while crypto mixers including Tornado Cash proved more popular, increasing to 15% from 11.6%.

© 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.

Several stories developed over the last seven days that could have reverberations into next week. Let’s take a look at some of the key themes to keep an eye on.

Restarts

Not one but two collapsed crypto institutions revealed plans to come back from the dead this past week.

First up were the founders of failed crypto hedge fund 3AC, Su Zhu and Kyle Davies, pitching to raise $25 million for a new crypto exchange dubbed “GTX” because “G comes after F,” according to the opening line of a leaked pitch deck.

The pair is partnering with Mark Lamb and Sudhu Arumugum, who founded the crypto exchange Coinflex that’s currently going through a restructuring. Following an inevitable mocking of the GTX name on Crypto Twitter, Coinflex said the GTX name wouldn’t be used, but it would provide a further update once a possible round or partnership materializes. 

FTX also raised a few eyebrows, with new CEO John Ray saying the collapsed crypto exchange could be restarted. Many users criticized the idea anyone would ever trust depositing funds onto the platform again. Still, Ray was adamant, telling the Wall Street Journal, “If there is a path forward on that, then we will not only explore that, we’ll do it,” sending the essentially worthless FTX-related FTT token up 30% following the comments.

Genesis is also looking to pull the proverbial rabbit out of the hat, moving “quickly and efficiently” to exit the bankruptcy process after its crypto lending business filed for Chapter 11 bankruptcy protection owing more than $3.6 billion to its top creditors. First-day proceedings for Genesis’s bankruptcy case will take place on Monday.

Enforcement action

After a report from Cornerstone Research outlined a 50% increase in U.S. Securities and Exchange Commission crypto enforcement actions in 2022, the regulator is showing no signs of slowing down. 

The SEC’s recent charge against crypto exchange Gemini and crypto lender Genesis over their lending products came just days before the latter’s Chapter 11 bankruptcy protection filing. In doing so, it fired a warning shot to the industry on yield-bearing accounts — something we could see more of given the number of similar services still active across the crypto space. Indeed, news of Nexo’s $45 million settlement with the regulator followed shortly after, having failed to register the offer and sale of its retail crypto asset lending product.

The SEC isn’t afraid of tackling the decentralized side of crypto either, demonstrated by the charges it brought against Avraham Eisenberg on Friday after the securities regulator said Eisenberg stole $116 million from the DeFi platform Mango Markets.

And the SEC isn’t alone, with the U.S. Department of Justice’s announcement of an announcement leading to speculation Binance may be on the receiving end of some enforcement action. In the end, “B” was for Bitzlato, with the little-known Hong Kong-registered exchange accused of transmitting $700 million in illicit finds. Crypto Twitter ridiculed the DOJ given a perceived lack of intervention against more high-profile cases like FTX and Celsius.

However, others suggested the Bitzlato action could merely be a stepping stone, with the DOJ quietly working on larger crypto enforcement cases.

Hot topics

Optimism outpacing Arbitrum was one of the key narratives picked up on by the crypto community last week, with transaction counts between the Layer 2 rivals diverging dramatically. However, following the end of Optimism Quests (educational tasks and quizzes to earn commemorative NFTs) on Jan. 17, that divergence is retracing. Optimism also still lags behind Arbitrum by the total value of assets on the protocol, holding $636.6 million compared to the $1.1 billion on Arbitrum.

Unlike Arbitrum, Optimism has already released its native OP token, up more than 150% in January, with some of Optimism’s ecosystem tokens up over 200% year-to-date. Since launching its V2 derivatives platform on Optimism, Synthetix has also benefited from the ecosystem, with its daily users doubling as the Layer 2 overtook Ethereum as Synthetix’s main hub.

Layer 2s are just one area of interest with investors looking for high-beta exposure to the Ethereum ecosystem. Tokens underlying liquid staking derivative (LSD) protocols such as Lido (LDO) and Rocket Pool (RPL) also performed well following a week where they were integrated into the web3 wallet MetaMask. Stablecoin issuer Frax is another project that continues to benefit since launching its own liquid staking derivative. Its FXS governance token is one of the best-performing assets since the FTX-fueled market collapse. Alongside the OP token, LDO, RPL and FRX are among the biggest gainers from the top 100 crypto assets this year.

That particular narrative will likely continue as we get closer to Ethereum’s proposed Shanghai upgrade in March — aiming to deliver the unstaking feature that has been missing from the blockchain since its transition to a proof-of-stake system that culminated in The Merge.

Finally, chatter around bridged BTC on Avalanche also picked up following attractive DeFi yields for the token that saw it surpass the BTC held on Bitcoin’s Lightning Network. It’ll be interesting to see how that trend among the other hot topics continues into the coming week.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

© 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 past week has seen crypto prices continue their upward trajectory, with bitcoin rising 16.8% and jumping over the $23,000 mark going into the weekend.

Bitcoin was trading at $23,262 as of 2 p.m. ET. Meanwhile, ether rose 14.3% to around $1,663.

Cryptocurrencies like Binance’s BNB, Polygon’s MATIC and XRP also rose by 3.7%, 9.2% and 6.8%, respectively.

FTT jumped up this week on the news that FTX’s new CEO was considering restarting the exchange. It was trading at around $2.30.

Crypto stocks and structured products

Not all crypto stocks had a positive week. Silvergate, which posted $1 billion losses in its fourth quarter, fell 1.7% over the past five days.

Galaxy Digital also slipped by about 4%.

On the other hand, shares of Coinbase rose by 13.3%, even as it was downgraded by Moody’s, and MicroStrategy by 13.1%.

For structured products, GBTC surged 18.1% and ETHE rose 19.2%.

© 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.

Bitcoin’s price briefly rose past $23,000 on Saturday morning, settling at its highest point since August ahead of the Lunar New Year celebration in Asia. It was trading at $22,741 at 6 a.m. ET. 

Although some way off all time highs of around $69,000 seen in previous years, the price jump echoed last weekend’s rise. 

BTC/USD chart by TradingView

The largest cryptocurrency has rallied since the start of the year as a slightly more optimistic macro picture has emerged. 

© 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.

Another week, another bankruptcy. Another plan to launch a new crypto exchange. Another several million dollars announced in startup funding. 

The drama in the crypto world continued this week in earnest with a number of high profile announcements and market-shifting moves. 

Here’s The Block’s top three stories of the past week:

Genesis files for bankruptcy 

America woke up to another crypto bankruptcy filing on Friday morning, this time from the lending unit of Genesis. 

After filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York late on Jan. 19, the company published a list of its top 50 unsecured claims. The total value of the claims amounts to more than $3.6 billion. 

The list includes numerous claims involving well-known crypto firms. Gemini Trust, which has for weeks been involved in a public spat with Genesis’s parent company Digital Currency Group, tops the list with a claim of $766 million.

Finer details of the filing revealed a complicated relationship with metaverse heavyweight Decentraland, to which it owes $55 million. 

Genesis has a roadmap to exit bankruptcy and hopes to do so as “quickly and efficiently as possible,” interim CEO Derar Islim told clients on Friday in a letter obtained by The Block. 

Ex-3AC founders and an ex-FTX.US president raise funds

People often say a month of news in crypto could tally up to a year of news anywhere else. Redemption arcs also seem to have been placed on fast-forward. 

A scoop by Yogita Khatri, Ryan Weeks, and Kari McMahon revealed that founders of defunct crypto hedge fund Three Arrows Capital and crypto exchange CoinFlex are pitching investors on a new crypto exchange focused on claims trading. 

News of the fundraise comes two months after exchange giant FTX imploded, leaving more than a million creditors out of pocket. The new exchange takes advantage of the situation offering depositors the ability to transfer their FTX claims to GTX and receive immediate credit in a token called USDG, the pitch deck said. 

The exchange’s name is even a spin on “FTX,” with one of the GTX pitch decks opening with the line “because G comes after F.” 

Meanwhile, former FTX.US president Brett Harrison was cooking up his own new project. His new infrastructure start up named Architect said on Friday it had raised $5 million from investors including Coinbase Ventures and Circle Ventures. 

The new firm — for which Harrison has been raising in stealth since he left FTX in September — will provide software trading tools in the decentralized finance space for large investors and institutions. The raise was first reported by Bloomberg.

Zero knowledge becomes the hottest ticket in venture funding

Our deals team has been busy learning about the latest in cryptographic tech development. No fewer than three start-ups developing ZK tech announced funding rounds this week.

Ulvetanna, a startup that builds hardware to increase the efficiency of zero-knowledge-proof generation, raised $15 million in seed funding from the likes of Bain Capital web3 venture firm Paradigm and Jump Crypto.

The equity round, which closed in June last year, valued the startup at $55 million, according to email correspondence from founder Radisav Cojbasic. 

Later in the week, the Nil Foundation, which is written as =nil; Foundation, said it had raised $22 million in a round led by Polychain Capital. 

The round, which closed toward the end of last year, brings the foundation’s valuation to $220 million and saw participation from other investors including Blockchain Capital, Starkware and Mina Protocol, according to a release. 

ZK middleware developer Hyper Oracle ended the week saying it had closed a $3 million round co-led by Sequoia China’s seed fund and Dao5. Foresight Ventures and FutureMoney Group also participated in the round, according to a company release.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

© 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.

Seemingly incestuous business relationships across the cryptosphere appear to have become so commonplace, the market may be numb to it.

In the case of Decentraland, its relationship with key investor Digital Currency Group grew more complicated this week after revelations that Decentraland leaders seemingly lent tens of millions of dollars to the cryptocurrency lender Genesis Global, which is owned by DCG.  

DCG, which is run by CEO Barry Silbert and owns Genesis, not only invested in Decentraland, it also became one of Decentraland’s biggest owners of virtual land. Additionally Grayscale, which is also owned by DCG, simultaneously raised capital for an investment vehicle known as Decentraland Trust, which allowed investors to passively invest in the metaverse platform’s native digital currency, MANA.

The bottom line: A significant amount of capital that started flowing when DCG invested into Decentraland appears to have more or less come full circle.

While none of this necessarily amounts to malfeasance, and might boil down to a simple case of entrepreneurs seeking a robust return on their money, Genesis’s bankruptcy documents making it public that Decentraland’s founders had lent it money to DCG’s lending firm comes at a time when the crypto world has been, by an almost non-stop barrage of news, roiled by tales of corruption and mingling interests.

Genesis bankruptcy unearths the Decentraland connection

Genesis Global filed for Chapter 11 bankruptcy protection on Thursday and in doing so released a list of the 50 largest non-insiders with unsecured claims against it. Among the 50 entities listed were companies connected to Decentraland co-founders Esteban Ordano and Ari Meilich, as well as CFO Santiago Esponda.  

Esponda’s name emerged because his Decentraland email address was listed in court filings as the contact for Heliva International, a Panama-based company owed $55 million by Genesis. Ordano, who now acts as a Decentraland adviser, is listed in the Genesis bankruptcy filing as the contact for an entity called Winah Securities, which is owed about $27 million by Genesis.

Winah and Heliva are located on the same floor of the same building in Panama.  

Lastly, Genesis owes $20 million to Big Time Studios, a gaming company run by second Decentraland Co-Founder Meilich. While Meilich started Big Time in 2020, he also remains a Decentraland adviser.

Ordano told The Block that Winah has no relationship with Decentraland. Meilich declined to comment. Esponda did not immediately respond to requests for comment pertaining to this story.

The DCG-Decentraland connection further explained

At the end of 2021, with New Year’s Eve celebrations looming, DCG announced a plan to create “One Time Square” in Decentraland. DCG said it planned to hold a metaverse party at the newly-created space located in the virtual world “featuring music and entertainment acts, rooftop VIP lounges, CryptoArt galleries, and immersive games.” In the same statement, DCG also claimed it was “one of the largest owners of digital real estate” inside Decentraland.  

Manu Araoz first created Decentraland in 2017. Afterwhich, Araoz and co-founders Ordano and Meilich, helped found the virtual world’s first settlement, which they christened Genesis City.  

Along with The Sandbox, Decentraland has been considered one of the higher-profile platforms in the burgeoning metaverse. JPMorgan even rode the wave of hype, opening a lounge in Decentraland last year.

Despite reports of lackluster use and a prolonged crypto winter that has seen digital-asset prices crater, as of late last year, Decentraland was valued at more than $1 billion.

Grayscale’s interests in Decentraland

Silbert has been publicly promoting Decentraland online since 2018. In May 2020, Silbert and Genesis CEO Michael Moro conducted a filmed tour of the virtual world, which was published by CoinDesk.

Then in February 2021, DCG subsidiary Grayscale launched what it called its Decentraland Trust. The aim was for the trust to “solely and passively invested in MANA,” Decentraland’s native token, Grayscale said.  

In doing so, Grayscale said it would allow investors “to gain exposure to MANA … in the form of a security while avoiding the challenges of buying, storing, and safekeeping MANA directly.”  

Purchasing MANA is how investors are then able to buy property in Decentraland.

MANA is an “ERC-20 token that serves as the native digital currency in Decentraland and serves as the unit of account for users to pay for goods and services and LAND,” Grayscale proclaimed in a 14-page investor presentation dated March 2021.

Screenshot from Grayscale presentation labeled as “a picture of the DCG team listening to music in Decentraland.”

The presentation also included some artwork including a screenshot displaying half a dozen colorful avatars standing around inside a virtual world with the caption: “Here’s a picture of the DCG team listening to music in Decentraland.”

Along with nearly all digital assets, MANA’s price has been battered since it surpassed $5.00 in November of 2021, according to CoinGecko. But the token’s price has rebounded lately, more than doubling since the beginning of this month after trading above $0.70. 

© 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.

Federal prosecutors this Friday took $697 million worth of cash and assets primarily made up of Robinhood shares from former FTX CEO and founder Sam Bankman-Fried, court documents show. 

Prosecutors also seized assets from accounts at Silvergate Bank holding over $6 million, and an additional $50 million, taken from a Moonstone Bank account. Undisclosed sums were custodied from accounts on Binance and Binance.us, according to court filings first reported by CNBC.

The funds used by SBF to purchase the more than 55 million now-contested Robinhood shares were stolen from customers, prosecutors claim. 

SBF denied the allegations of misappropriation of customer funds.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

© 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.