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A UK minister moved to quell concerns that a digital pound issued by the Bank of England could be used to create a “surveillance state” where the government can track all citizens’ spending. 

If the UK decides to move forward with a retail-focused central bank digital currency [CBDC], it will be “a platform model that wouldn’t allow the government to know individual transaction data,” Andrew Griffith, Economic Secretary to the Treasury, said in evidence to a Parliamentary select committee. 

Intermediaries like banks will issue a wallet that individuals would use, he assured members of Parliament. The government wouldn’t have visibility on the end user’s actions, except under existing measures to protect against money laundering or fraud. 

“The government takes these concerns very seriously and will proceed on a design basis that fully accommodates those concerns about privacy,” Griffith said.

Coming consultations 

A consultation on CBDCs from the UK government and the Bank of England will be published in the coming weeks, the minister said, as well as an additional consultation on crypto regulation more generally. 

Aside from the user-facing retail function, a wholesale CBDC for payment settlements is also in consideration. 

“A central bank settlement system through sovereign digital coin is likely to be one of the first use cases,” Griffith said. However, he noted that stablecoins will be able to provide that function far before a digital pound comes along. 

The Financial Services and Markets Bill, which is scheduled for a second reading in the House of Lords later today, covers the regulation of stablecoins in the UK and increases crypto asset supervision under regulators. 

Griffith set the intention to build out a regime for crypto assets and stablecoins “that foster growth and innovation” in 2023, though suggested that no new legislation is likely to come out this year.

Benjamin Robertson assisted with reporting.

© 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 has implemented another round of layoffs, affecting 950 employees and reducing its operating expenses by 25%.

After examining the firm’s prospects for 2023, Coinbase CEO Brian Armstrong said, “It became clear that we would need to reduce expenses to increase our chances of doing well in every scenario.” Armstrong added that, while the decision to cut staff was difficult, “there was no way to reduce our expenses significantly enough, without considering changes to headcount.”

Coinbase cut 1,100 jobs, or 18% of its workforce, in June 2022 and 60 employees in November 2022.

The exchange estimates it will incur between $149 million and $163 million in restructuring expenses relating to these actions, according to its 8K filing. Around $58 to $68 million of this will consist of cash charges related to employee severance and other termination benefits. Stock-based compensation expenses related to the layoffs will be between $91 million and $95 million. 

Coinbase expects to recognise these expenses in the first quarter of this year. 

Armstrong also noted that crypto trended downward throughout 2022, along with a turbulent macroeconomic backdrop — as the U.S. Federal Reserve brought interest rates to 14-year highs to tackle red-hot inflation.

Furthermore, there was a fallout from unscrupulous actors in the crypto industry, and Armstrong said there’s a chance of further contagion. 

Coinbase is just the latest firm to announce layoffs. Last week Genesis Trading announced a fresh round of layoffs, reducing its workforce by 30%.

© 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.

Cosmos-based electronic payment system e-Money has stopped issuing its euro-backed stablecoin EEUR citing bear market conditions.

e-Money stated that it will honor EEUR stablecoin redemptions until Mar. 6. Customers with funds below 100,000 EEUR can unwind their positions by swapping their tokens directly in the stablecoin market on Osmosis, the largest decentralized exchange on Cosmos. They can exchange their tokens for USDC or Cosmos-native assets like atom and osmo. e-Money advised users to unwind their positions in small batches to reduce market congestion and price slippage.

Customers who wish to redeem amounts larger than 100,000 EEUR can do so directly for euros, the announcement added. These users will have to pass through customer identification checks and the process will take up to five business days.

e-Money stated that unwinding its stablecoin project was a difficult decision. “Given the current market conditions, that effort has unfortunately reached a stage where it is prudent and responsible to wind it down,” the project stated.

Despite unwinding its EEUR stablecoin, e-Money stated that its blockchain project will continue to operate. The project has plans for a chain upgrade within the first quarter of the year, which will integrate the latest Cosmos features.

© 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.

Mark Cuban is scheduled to be deposed in February as part of a defense against a proposed class-action lawsuit regarding his alleged promotion of now-bankrupt crypto lender Voyager Digital.

U.S. Magistrate Judge Lisette M. Reid denied the Dallas Mavericks owner’s request to separate the deposition into two sessions. Instead, it has been ordered that his full under-oath questioning will take place on Feb. 2 and will not be limited to jurisdictional issues.

Additionally, Reid ordered the three plaintiffs to appear for in-person depositions this month.

© 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 U.S. Securities and Exchange Commission is also investigating self-confessed Mango Markets exploiter Avraham Eisenberg over his role in extracting $110 million from the decentralized protocol. 

Kristin Johnson, a Commodity Futures Trading Commission commissioner, noted the SEC’s parallel investigation in a statement published Monday. The CFTC filed its charges against Eisenberg, alleging manipulation of the decentralized swaps markets.

A spokesperson for the SEC did not immediately respond to an email sent out of hours seeking comment.

Eisenberg is currently in custody after the Department of Justice filed criminal charges against him last month. He admitted on Twitter to being responsible for draining most of Mango Markets’ capital, arguing that his trading strategy was legal and used the protocol as designed. 

Investigators allege he illegally manipulated the price of Mango’s own token, MNGO, to make substantial illicit profits.

© 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 are probing whether former FTX Director of Engineering Nishad Singh played any role in trading schemes that resulted in the illicit use of customers’ funds, Bloomberg first reported. 

Additional agencies including the Securities and Exchange Commission and the Commodity Futures Trading Commission are also investigating Singh, Bloomberg reported, citing sources familiar with the issue.

Although Singh has yet to be officially charged for any crimes related to the FTX case, if prosecutors find a connection he may face charges as soon as this month, Bloomberg 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.

The Flare token airdrop finally happened after a two-year wait, with billions of tokens distributed to millions of recipients on Monday.

Originally scheduled for distribution in 2020, the airdrop occurred at 6:59 p.m. EST on Monday. The token distribution saw 4.28 billion flr tokens — Flare’s native coin — shared among qualified recipients who were selected based on a snapshot taken in December 2020 that captured wallets holding at least 1 xrp at the time.

The 4.28 billion flr airdropped to users constitutes the initial airdrop for the project and amount to 15% of the project’s total supply. The remaining 85% will be distributed over the next three years, Flare stated in an announcement on Monday. This secondary phased distribution will proceed based on a community vote within the Flare network community.

Holders of the flr tokens from today’s airdrop will be able to vote on the governance proposal for the secondary distribution. To do so, they will have to wrap their flr tokens.

While today’s airdrop marks the official flr token distribution, users have been able to trade the coin on exchanges like Bitrue and Poloniex using an IOU token.

What is Flare?

Flare started out as a project that aimed to create a DeFi eocsystem for Ripple, which is why the airdrop was linked to xrp. The project has since been modified over the last two years and now aims to provide smart contract solutions for blockchains that lack the capability to operate with smart contracts.

The Flare blockchain is a Layer 1 network that encompasses data acquisition protocols and an oracle service, with its Time Series Oracle providing highly decentralized prices and data feeds to crypto apps without the need for centralized data providers. Flare says its oracle service has about 100 independent data providers that deliver reliable data every three minutes.

“Flare’s objective is to enable developers to build applications that securely access more data,” Flare Co-founder and CEO Hugo Philion said in the announcement. “This could enable new use cases to be built, such as triggering a Flare smart contract action with a payment made on another chain, or with input from an internet/web2 API.”

The project raised $11.3 million in a June 2021 funding round led by Hong Kong blockchain outfit Kenetic Capital. The likes of Digital Currency Group and Coinfund also participated in the capital raise.

© 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.

Bankrupt crypto lender BlockFi said its CEO cashed out close to $10 million from the platform to pay taxes last year as FTX provided about $15 million in payments to certain insider accounts as part of a confidential settlement.

Thanks to a $400 million loan from FTX, CEO Zac Prince was able to withdraw around $9.2 million from BlockFi in April 2022, according to a presentation BlockFi released outlining the progress, schedules and proposed agenda of its ongoing court case. 

Prince withdrew an additional $1.36 million at then-market prices in August. He used the funds to pay taxes, the company said.

In June, after sector-wide contagion caused material withdrawals from platforms across the industry, FTX provided the $400 million loan to BlockFi so the company would be able “to process billions of dollars in clients’ requested withdrawals and other transactions between June and November 2022.”

BlockFi is one of several companies that took loans out from FTX, which itself filed for bankruptcy in November.

By the company’s own disclosure, its management team “deployed their personal assets on the platform, to trade, earn interest, and store different cryptocurrencies under the same terms of service as clients,” thus transmitting to them client benefits from the FTX bailout.

“Like many BlockFi clients, Zac deployed his own personal assets on BlockFi’s platform. Zac kept a substantial portion of his assets on the platform, and the withdrawal he made in April 2022 was to pay U.S. federal and state taxes. Zac and other insiders did not make any withdrawals since October 14, 2022, and no withdrawals of [greater than] 0.2 BTC in value since August 17th,” BlockFi told The Block in an emailed statement.

FTX provided an additional $15 million to BlockFi insiders in June after a counterparty threatened litigation. “Due to the structure of the settlement, certain payments from BlockFi were routed through the executives and ultimately made to the counterparty,” according BlockFi.  

© 2022 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 Monday, with 18 gaining and the other one declining.

Bitcoin rose 1.6% to $17,234 by market close.

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

© 2022 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 Commodity Futures Trading Commission is suing Avraham Eisenberg, aka Mango Avi, over alleged manipulation of swaps on Mango Markets, a decentralized exchange on the Solana blockchain. 

The new complaint from the CFTC notes “a manipulative and deceptive scheme to artificially inflate the price of swaps offered by Mango Markets.”

Specifically, Eisenberg managed to inflate the native MNGO token relative to stablecoin USDC by buying the small-cap token in bulk. Its price spiked by 1,300% in October as a result. Eisenberg and his team were then able to use the inflated MNGO as collateral to take out more USDC on loans — all of which he admitted to, while maintaining that his actions were legal. 

Eisenberg is already in custody and facing criminal manipulation charges from the Department of Justice. By joining in, the CFTC is saying that swaps — even on decentralized exchanges — in at least some cryptocurrencies are part of its remit as a regulator.

The CFTC is under pressure in the aftermath of FTX’s bankruptcy. Up until its collapse, FTX was pushing a bill in Congress that would give the CFTC a bigger role in crypto markets, a push that the CFTC and its commissioners joined.

With former FTX CEO facing criminal charges, the CFTC is fighting accusations of regulatory capture by ill-doers. Chairman Rostin Behnam is still defending the bill’s central push, but he and the other commissioners are eager to demonstrate that the regulator is capable of holding crypto companies and other actors to account. 

© 2022 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.