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StarkWare has debuted another full node client for its scaling solution StarkNet called Papyrus, which is written in the Rust programming language. This will enable a more diverse set of implementations of the scaling solution, potentially bolstering security and decentralization.

Papyrus will improve the project’s transaction throughput capabilities, the team announced on Wednesday. It joins Pathfinder as the second Rust-coded full-node client. StarkNet also has another full-node client called Juno that is being coded in Golang. 

The newly released node will help expand StarkNet’s performance and decentralization, the announcement stated. Papyrus will reportedly enhance the StarkNet Sequencer’s block production capabilities. The Sequencer is the tool responsible for ordering and executing transactions on StarkNet. Papyrus will provide an efficient storage layer to help improve the Sequencer’s throughput.

StarkWare has previously outlined its growth map for StarkNet with a focus on functionality, scalability, and decentralization in that order. The team says it has achieved excellent functionality with Visa recently proposing to use StarkNet for recurring payments. Now, attention is moving to system performance concerns with the aim of improving scalability, hence the rollout of Papyrus.

The introduction of Papyrus will also help the push toward greater decentralization, the team stated, as it is an open-source node client. This move is part of efforts to open-source the project’s wider technology stack.

© 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 lending platform Nexo’s Bulgarian offices have been raided by local police as authorities carry out investigations into suspected money laundering and tax violations. 

Police are investigating a Bulgarian entity that’s not client facing but has operational functions including payroll and customer support, according to a Nexo spokesperson. 

“The allegation are absurd — we are one of the most stringent entities with regards to KYC/AML,” Nexo co-founder and managing partner Antoni Trenchev said in a statement. 

More than 300 police officers, prosecutors and national security agents are involved in the operation, according to a report by Bloomberg, citing comments from Siyka Mileva, a spokesperson for Bulgaria’s chief prosecutors. Nexo, which is based in London, is suspected of money laundering, tax crimes and offences involving unlicensed banking activities, Mileva told reporters. 

Nexo has been locked in discussions to buy out rival lender Vauld in recent weeks. Vauld rejected Nexo’s latest bid, raising questions about the company’s solvency in the process.

© 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.

Decentralized storage network InterPlanetary File System (IPFS) has released a browser extension called “Pin Tweet to IPFS,” which allows users to archive tweets on its network. 

IPFS is a storage protocol and network designed to create a peer-to-peer method of storing and sharing files. It aims to replace the traditional, centralized model of the web with a decentralized one so that content can be distributed directly between devices, rather than being stored on a centralized server and accessed through a single point of failure.

By using the new extension, users have an option to ensure that their tweets are stored on IPFS and remain accessible at a later date. Additionally, since the data is stored on a decentralized network, it adds an extra level of security by making sure there’s no single point of failure in case something goes wrong. This can be beneficial for those who need reliable storage solutions for information that can face censorship or accidental deletion.

“What happens when these sites suffer financial trouble, change ownership, or face acquisition? When the original authors are censored or delete their posts? This can cause a domino effect of lost content, leaving us searching across the web for screenshots (which are easily manipulated), quoted text and archives,” IPFS noted, explaining the need for the service.

How does this extension work?

The extension, which is available on Chrome and Edge browser, can make it easier for users to upload tweets and other web content. It uses an archiving tool called WebRecorder to create verifiable archives of tweets in a Zip file format. These files can then be uploaded directly onto IPFS, allowing users access them via the network at a later date. The archived content remains secure and tamper-proof, as each file is cryptographically signed by its creator before being stored. 

It’s worth noting that it was already possible to backup people’s tweets on IPFS, as the platform is designed to store any type of data in a distributed manner. One way to do this would be to use a tool or application that can scrape tweets from Twitter and then upload them to the network. Another way would be to use a twitter API to pull the tweets and then add them. However, Twitter’s API has a rate limit and you need to have a developer account for this. 

Many apps in the crypto space, like NFT marketplaces, use IPFS to store data in a decentralized manner that also allows for faster and more secure data storage and retrieval. Additionally, the decentralized nature of the network allows these apps to bypass traditional points of failure and censorship, making them more resilient and open.

© 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 BlockFi executive team members saw their equity stakes wiped out last year as part of its emergency restructuring plan, which included borrowing $400 million from collapsed crypto exchange FTX.

A statement of assets and liabilities document filed on Jan. 12 as part of BlockFi’s bankruptcy proceedings documented the financial positions of both the platform and executives in the lead-up to the lender filing for Chapter 11 bankruptcy protection.

Senior management lost around $800 million in equity due to the loan transaction with FTX. BlockFi CEO and founder Zac Prince took the biggest hit with a loss of $412 million. Yet, at the same time, the firm approved a ”retention program” by increasing salaries by up to 50% for top staff.

“The massive impact of the FTX transaction on management equity led BlockFi’s board of directors to, among other things, increase base salaries and make retention payments for those that remained in the interest of retaining business critical knowledge and capabilities,” said the filing.

Members of the executive team also stored over $2 million in individual accounts on the lending platform in the lead-up to its bankruptcy in November. Prince also had the most-significant deposit within the management team, with $1.4 million on the platform as of Nov. 21, 2022. Amit Cheela, the firm’s chief financial officer, had $292,000 on the BlockFi, while Flori Marquez stored $109,000 on the platform.

No member of the BlockFi management team withdrew any cryptocurrency from BlockFi’s platform after Oct. 14, 2022, the filing said. It also showed that management team withdrawals represented 0.15% of the total volume in 2022. Prince did, however, take out around $10 million from the platform to pay taxes in April.

© 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.

Disgraced FTX founder Sam Bankman-Fried has an expensive year ahead of him. Unemployed, under house arrest and stripped of his Robinhood shares, his options for funding his defense are limited.

The former crypto mogul is staring down a criminal trial for what officials have deemed “one of the biggest financial frauds in American history.” Then there’s the wide-ranging bankruptcy playing out in two countries and three civil complaints that federal and state regulators filed against him. In order to deal with it, Bankman-Fried hired five lawyers, and he has his own spokesperson.

It’s not clear how the former billionaire will pay for it all.

“There’s no way to know how much it’s going to cost,” said attorney Ira Sorkin, who represented infamous Ponzi schemer Bernie Madoff more than a decade ago. “If he chooses to plead guilty, his legal fees will be certainly less, far less, than if he chooses to go to trial. Going to trial, that’s going to be a very expensive proposition.”

Bankman-Fried pleaded not guilty to fraud charges during a court appearance in New York earlier this month. The 30-year-old could face 115 years in jail if he is convicted on all counts. His criminal trial is set to begin in October.

The former FTX boss could be on the hook for millions of dollars in legal bills, according to lawyers and crypto watchers, and his on-paper fortune has evaporated over the last three months. Bankman-Fried claimed he had less than $100,000 left in his bank account in December, not long after Forbes pegged his net worth at $17.2 billion just weeks before his $32 billion crypto exchange collapsed. 

‘Edge of our seats’ 

“We are all on the edge of our seats,” said Alex More, a partner at Carrington, Coleman, Sloman & Blumenthal who focuses on digital assets. “SBF has already retained several criminal defense lawyers — a pretty formidable legal defense team — and so there’s this question of how is he going to be able to pay them?”

Bankman-Fried was dealt a nine-figure blow this week when the Department of Justice seized his $450 million in shares of the online brokerage firm Robinhood. Bankman-Fried had said he needed the shares to fund his legal bills. 

“The withholding of costs necessary to an adequate criminal defense can constitute irreparable harm,” Bankman-Fried’s lawyers wrote in a court filing last week, arguing he should have access to the shares. 

The new leadership brought on to steer the FTX group of companies through bankruptcy and defunct crypto lender BlockFi have both tried to claim the Robinhood shares, which will be subject to future forfeiture proceedings. The shares belong to an entity that is 90% owned by Bankman-Fried and one of more than 100 companies tied up in Delaware bankruptcy court proceedings. 

Even worse for Bankman-Fried, his top lieutenants at FTX have turned on him. FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison have pleaded guilty to criminal charges and are cooperating with investigators, likely strengthening the Justice Department’s case against him.

SBF could lean on family, still access Robinhood shares 

“He’s now constricted to his parents’ Palo Alto home. He’s got a monitoring bracelet. His passport has been forfeited. He’s got no real prospects of employment.” said Richard Mico, the CEO and chief legal officer of the fintech platform Banxa. “He’s now at the mercy of receiving funds from his family and friends.” 

Many expect Bankman-Fried’s friends and family will chip in to cover his ballooning legal bills. His parents, Stanford Law School professors Joseph Bankman and Barbara Fried, already have put their California home on the line for his $250 million bond. Bankman did not respond to a request for comment. A pair of cosigners whose identities Bankman-Fried’s lawyers successfully kept secret in court, at least so far, also helped.  

Although his Robinhood shares were seized, Bankman-Fried could have a way to access them. His lawyers could ask the court to allow him to use the seized shares to fund his legal bills. Seized assets, or at least a portion of them, have been used to fund legal bills in some cases.

“It’s entirely up to the judge,” Sorkin said. 

Bankman-Fried recently retained a separate legal team specifically for his effort to reclaim the Robinhood shares. He is represented by Edward Schnitzer, Gregory Donilon and David Banker of Montgomery McCracken Walker & Rhoads. His criminal defense team includes Mark Cohen, who represented Ghislaine Maxwell during the child sex trafficking case she recently lost, and Christian Everdell, partners at the New York law firm Cohen & Gresser. 

The former FTX boss also has a spokesperson, Mark Botnick, who declined to comment on how Bankman-Fried is paying for his legal defense.

There’s always money in the … officer liability insurance plan

Aside from friends and family or the seized shares, funding could come from director and officer liability insurance if FTX purchased such protection before it imploded.  

“Most companies are going to have D&O insurance for their officers,” said David Maria, general counsel for crypto exchange Bittrex. “It just depends what FTX was doing with their insurers. But that’s routine. Executives are indicted, it’s not an uncommon thing.” 

Bankman-Fried resigned as CEO of FTX when the firm filed for bankruptcy. An FTX lawyer did not respond to a request for comment about whether the company had insurance that Bankman-Fried might use for his legal defense, or whether he might still be covered by it. 

Whatever happens in court, there’s one certainty from extended legal battles: The high price tag for a criminal defense team, along with the bankruptcy and civil enforcement cases, would cost Bankman-Fried millions over the next several years. 

“If you were to fully litigate against all of these entities, the SEC, the CFTC, your stake in bankruptcy and the criminal side, just keep writing checks,” Maria said.

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.

Bill Gates downplayed the growth of web3 and the metaverse, instead backing artificial intelligence as the next revolutionary technology.

In his 11th Ask Me Anything on Reddit, the Microsoft co-founder was asked whether any mammoth technology is at a similar stage now as the internet was in the early 2000s. The Redditor referenced Gates’ purported comments at the time — which were similar to comments he made in a revised version of his book The Road Ahead — that the internet would be much bigger in the long term than people were expecting.

Gates replied that he felt AI was the most suitable answer to this, downplaying other technologies such as crypto and the metaverse.

“AI is the big one. I don’t think web3 was that big or that metaverse stuff alone was revolutionary but AI is quite revolutionary,” he said.

Gates has previously dismissed crypto and NFTs claiming that they are “100% based on greater fool theory.”

At the time, he joked about expensive monkey pictures saving the world, instead saying that he prefers asset classes like farms that have actual outputs. When asked about farmland in the AMA, Gates said he owned “less than 1/4000 of the farmland in the U.S.,” which some Redditors pointed out was quite a lot of land.

© 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.

Alkimiya raised $7.2 million to “build decentralized capital markets for blockspace” in a round led by 1kx and Castle Island Ventures.

The round for the protocol, which closed in November, featured participation from Dragonfly, Circle Ventures and Coinbase Ventures among others. Founder Leo Zhang declined to share the valuation in an interview with The Block. 

Founded by ex-Itaú Unibanco engineer Ricardo Grobel and former Morgan Stanley employee Zhang, Alkimiya aims to provide hedging solutions for blockspace producers such as miners and staking validators. 

Zhang equates such entities as similar to traditional commodity producers in that they have a set of costs they bear to produce a good, or in the case of blockspace producers, coins. Yet with fluctuating yields and cryptocurrency prices, blockspace producers take on the risk of producing an inherently volatile and variable good but without the financial instruments to manage them. 

“Traditional commodity companies like oil or gold companies use futures and options to hedge against their production risk,” said Zhang. “The problem with blockspace producers is that they can hedge against the price of bitcoin or ETH but they don’t actually know how much bitcoin or ETH to hedge.” 

Currently, the vast majority of DeFi yields rely on the liquidity of crypto coins that are vulnerable to volatility. But Alkimiya promises yields directly linked to blockspace production by enabling blockchain producers to lock in an upfront fixed return for their future production. This hedging solution enables them to manage risk and in turn, DeFi users can tap into the value accrued by blockchain producers. 

“If we look at the crypto space across the board, we need to identify naturally recurring cash flow that is sustainable and that’s relatively independent of all of these liquidity-driven activities that happening here,” Zhang said. 

Alkimiya initially launched on Layer 1 blockchain Avalanche in March last year as a public beta to test out the protocol on-chain and iron out any possible loopholes. 

The funding will primarily be used to expand its team as it gears up to launch a full product suite, including a Vault product and ETH staking contracts on the Ethereum mainnet in the first quarter of this year. 

© 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.

Yuga Labs, creator of the Bored Ape Yacht Club collection, unveiled plans to gamify the process of minting NFTs.

The startup today announced an upcoming online game in which players must navigate a sewer to claim rewards in the form of NFTs.

From Jan. 17, players will be able to claim a free “Sewer Pass” — giving them access to a course named “Dookey Dash.” They then have until Feb. 8 to record as high a score as possible to claim power sources, the purpose of which remains unclear. These prizes will “evolve throughout 2023,” according to Yuga’s tweets.

Anyone with a sewer pass can play the game, even if they don’t own a Bored Ape NFT.

“You’ll get three weeks to play as many times as you want. Players will be rewarded based on their performance in the sewer. When the sewer closes, the leaderboard freezes. After scores are validated, eligible sewer passes will prepare for the summoning and the highest score gets the key,” Yuga said on its website. The “summoning” takes place on Feb. 15, a week after the game closes.

Yuga Labs is a heavyweight in the NFT market, valued at $4 billion in a $450 million round led by a16z last year.

© 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.

El Salvador’s Legislative Assembly approved a law on the issuance of digital assets, paving the way for bitcoin bonds that have been championed by President Nayib Bukele.

The new law establishes the legal order granting legal certainty to transfer operations of any kind of digital asset  used in public offerings in El Salvador. It also creates a new government agency to administer El Salvador’s digital assets. The bitcoin bonds have been in the works since at least early 2022.

Bitcoin already is legal currency in the country

The opposition alleged that the regulations facilitate money laundering, tax evasion and greater indebtedness, according to ElSalvador.com.

Digital asset service providers in El Salvador would have to complete a registration process and follow several rules under the proposed law. These entities would have to provide a list of digital assets they plan to offer, including their “benefits, restrictions and limits.” They would also have to demonstrate cybersecurity precautions and customer service capabilities, as well as providing the names and titles of company employees.

Issuers of digital assets would also have to follow certain rules, such as disclosing information about the jurisdictions or countries where they operate.

© 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 mostly lower on Wednesday, with six gaining and the other 13 declining.

Bitcoin rose 0.5% to $17,559 by market close.

Here is a look at how the individual miners performed today:

© 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.