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After days of rumors surrounding layoffs at Huobi, the Singapore-based crypto exchange confirmed it would cut about 20% of its overall staff.

“The planned layoff ratio is about 20%, but it is not implemented now. With the current state of the bear market, a very lean team will be maintained going forward,” a Huobi spokesperson told The Block, adding: “The personnel optimization aims to implement the brand strategy, optimize the structure, improve efficiency and return to the top three.”

The confirmation comes roughly a week after journalist Colin Wu first reported layoffs at the crypto exchange on Dec. 30. More recently, Wu said that Huobi had moved to enforce salary payments in stablecoins instead of fiat currency, sparking protests from staff.

A recent internal Huobi email — translated into English and obtained by The Block — states that all domestic salaries will be paid in USDT, with staff required “to register a Huobi account to receive salary.” It further indicates that year-end bonuses have been canceled along with various other benefits, including welfare subsidies. The Huobi spokesperson did not comment on those points.

Huobi was acquired by About Capital Management’s M&A fund on Oct. 7. Days later, Tron founder Justin Sun was named an advisor to Huobi. Speculation abounded that he was, in fact, the actual buyer behind the About Capital deal, but Sun repeatedly denied those claims in email correspondence with The Block. In late November, Sun unveiled a plan to reestablish Huobi as one of the world’s biggest exchanges — with part of it hinging on establishing a hub in the Caribbean.

“The new shareholders have taken over so far, and in just three months, have slowly reversed the declining trend of the Huobi, established a new organizational structure, as well as adjusted the business departments, and partially optimized for the personnel,” Huobi’s spokesperson said, adding that the exchange is currently adding 390,000 new users monthly.

Twitter is currently awash with rumors that Huobi has now closed down internal communication and feedback channels. As it embarks on a global expansion plan, Huobi’s spokesperson said the exchange will “fully respect the legitimate demands of local employees, and continue to provide industry-competitive incentives and treatment for outstanding talent.”

© 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.

Barry Silbert’s Digital Currency Group is shuttering HQ Digital, a subsidiary focused on wealth management that it launched last year.

DCG, parent of troubled crypto broker and lender Genesis Trading, informed customers that HQ ceased operations on Jan. 2, according to a memo obtained by The Information.  

A spokeswoman for DCG told The Information that HQ is winding down due to the “state of the broader economic environment and prolonged crypto winter presenting significant headwinds to the industry,” adding that the company may revisit the project in the future. DCG did not immediately respond to a request for comment from The Block. 

Launched last year to manage the money of crypto entrepeneurs and investors, HQ managed more than $3.5 billion as of December, according to The Information report. Former Figure co-founder Alana Ackerson was its CEO.

DCG subsidiary Genesis halted withdrawals and new loan originations after the collapse of FTX in November — a move that had knock-on effects for other crypto firms, including crypto exchange Gemini and its Earn product. DCG boss Barry Silbert recently become embroiled in a public tiff with Gemini co-founder Cameron Winklevoss over the matter. Genesis began a new round of layoffs yesterday, reducing its workforce by 30%.

© 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.

A federal court in Brooklyn charged Aurelien Michel with crimes related to defrauding customers of the NFT project “Mutant Ape Planet” out of $2.9 million. 

Michel allegedly promised to design ways for the NFTs to grow in value and that buyers would receive rewards for holding their NFTs. However, Michel purportedly ended up pocketing the $2.9 million in user funds for personal use.

In later social media chats with customers, Michel admitted to “rugging” — crypto slang for when developers raise funds designed for a project but disappear with the money — but said it was due to the toxic NFT community.

“We never intended to rug but the community went way too toxic,” Michel was quoted as saying according to a Department of Justice release.

“As alleged, Aurelien Michel perpetrated a ‘rug pull’ scheme — stealing nearly $3 million from investors for his own personal use,” said Ivan J. Arvelo, a Homeland Security special agent, in a DOJ statement. “Purchasers of Mutant Ape Planet NFTs thought they were investing in a trendy new collectible, but they were deceived and received none of the promised benefits.”

Michel is a French national of the United Arab Emirates. He was arrested at John F. Kennedy International Airport in New York. 

© 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.

Could a future version of the internet allow people to turn what turns them on into cash and rewards? That’s what some web3 leaders believe, turning personal data into a sort of side hustle. 
 
In this case, whether you want to call the future of the internet web3 or the metaverse, blockchain technology may offer online users the ability to exercise more control over their personal data and consumer behavior. 
 
“People getting rewarded [for] data, I love that,” said Napster CEO Jon Vlassopulos, prognosticating about what opportunities the next era of the internet might unlock for both consumers and companies. “It’s moving in the direction of providing data in exchange for value.” 
 
Vlassopulos joined other technology executives at a panel in Las Vegas this week, where he and peers traded ideas about what the metaverse and web3 might look like from a brand perspective. The panel was a CES-sponsored event — one of the year’s biggest tech conferences — and part of an all-day series called Digital Hollywood. 
 
“If I say I want to go to Iceland and somehow an airline gets that data and I allow them to have it, and they offer me a companion ticket to Iceland, that’s money in my pocket. That’s like magic,” said Vlassopulos, noting that some internet companies like Brave’s is already experimenting with ways to compensate people for online behavior. 
 
Vlassopulos’ comments come in an era where both consumers and regulators have never been more aware of — and in some cases perturbed to the point of taking countermeasures — by how internet companies have made billions from users’ personal data. In recent years, social media empires like Meta-owned Facebook and Instagram, or the world’s largest search engine Google, have come under intense scrutiny for engaging in what has been called by some “surveillance capitalism.”  

Blockchain-enabled paradigm shift?

Many have recently theorized how wider adoption of encrypted, blockchain technology would give people more options when it comes to managing and safeguarding both their digital identity and personal data. 

A new set of standards underpinned by blockchain technology could create a “paradigm shift,” according to Mary Hamilton, a technological innovation executive for global consulting giant Accenture. Hamilton is optimistic about a new model where people not only own their data, but also choose if and how to monetize that data. 
 
“It’s almost better for brands too. You’re allowing them to have the correct data, not a guess at who you are or an approximation, but who you really are,” Hamilton said. “And you allow it for the brands you trust, and you want to engage with.” 
 
Users already have been taking more ownership of how certain technology, like smartphone applications, monitor their behavior. Most famously, Apple recently implemented a system where iPhone users can choose if they want an app to track their behavior or not. The move could not only prove to be a watershed moment in online privacy policy; it’s also causing Meta to lose billions of dollars in revenue as many users opt out of being tracked. 

While some might argue actively selling one’s personal data to different companies in pursuit of compensation conjures thoughts of a technological dystopia, metaverse enthusiast Brian Weiner believes his company Sizzle Network can improve the lives of consumers in a meaningful way. 

“Consumers are incentivized to sell … data to the brands, and it puts them in the power seat,” the Sizzle Network CEO said during the panel discussion. “A lot of them are excited about having that income opportunity.”

© 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.

A dramatic tussle between rival crypto lenders Vauld and Nexo escalated on Thursday, with the two companies throwing barbs over a proposed acquisition.

Shortly after The Block reported that Vauld and its committee of creditors (COC) had a rejected “final” takeover proposal from Nexo because of concerns about its financial health and others issues, Nexo responded by saying that Vauld CEO Darshan Bathija doesn’t have the best interest of its creditors in mind.

“Darshan Bathija and his clique do not have their creditors’ best interest in mind; on the contrary, they are now not even trying to hide the fact that they are doing everything they can to push aggressively for a questionable deal with an affiliated obscure fund manager that — given how they operated the company so far — will most certainly result in the total loss of whatever little assets are still left on Vauld’s balance sheet through speculation and hefty management fees,” Nexo management said in a letter that was obtained by The Block.

Vauld has been planning to pursue a fund management option for restructuring, given that it is not keen on the potential Nexo deal, and it has identified six potential candidates.

Best Offer?

“The contender is an unknown fund manager with no track record, no past performance to point to but grandiose unattested promises of exorbitant annual returns, regardless of market conditions,” Nexo said in the letter. “Since the proposal makes little sense, a number of people have argued that those voting for this bid must be part of this secret deal favoring the previous management along with a selected few whale customers.”

Nexo says it maintains its view that its final proposal represents the best for Vauld’s creditors.

“Nexo’s Final Proposal is the best possible path forward and is the only path forward – we are not sugar-coating the situation, Darshan Bathija’s management of Vauld has been devastating,” the company said. “Nexo’s team has devised a plan that will create the maximum value possible for creditors, and it is a plan that we know and have proven that we can execute.”

Vauld and Nexo have been in discussions for a potential deal since early July, when the former halted client withdrawals after facing a severe liquidity crunch. Vauld owes more than $400 million to its creditors.

Nexo presented the latest proposal to Vauld creditors on Dec. 26. Bathija told Nexo on Wednesday that Vauld and its COC “unanimously” rejected the offer. 

Termination fee

Among Vauld’s concerns are how Nexo would treat claims of its U.S.-based creditors since it recently announced plans to exit the market. It’s also not sure about Nexo’s overall financial health.

Nexo responded by saying that it has published real-time information about its assets and liabilities since 2021. It said that Vauld will have to pay it $20 million if it walks away from the deal.

“Nexo has an exclusivity period for its acquisition of Vauld — having had to hire different advisors and invest significant time, money, and efforts for the successful completion of the Vauld acquisition, Nexo has accumulated material costs,” the company said. “While we take no pleasure in enforcing the breakup clause that grants Nexo $20 million, as it would shrink even further the assets available to creditors, Nexo has to recoup the losses it has suffered through the sabotage of Darshan Bathija and his clique.”

Nexo, Vauld and its financial advisor, Kroll, did not immediately respond to requests for comment from The Block.

With additional reporting by Jeremy Nation.

© 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.

Crypto prices steadied while stocks tied to digital assets sank on ratings news and financial results. 

Bitcoin was trading at roughly $16,800 by 1 p.m. ET, down 0.3%, according to TradingView data. 

BTC/USD chart by TradingView

Ether was hovering around $1,240, down by about 0.8%, while altcoins like Polygon’s MATIC and Ripple’s XRP also fell by 2.4% and 2.7%, respectively.

Crypto Stocks

The S&P 500 and Nasdaq 100 were both off by more than 1%.

Silvergate took a beating, slumping 43% after announcing job cuts and an $8.1 billion drop in deposits in the fourth quarter  amid a “crisis of confidence across the ecosystem.” 

Crypto exchange Coinbase fell 8.5%. Cowen downgraded the stock earlier today, but Needham’s John Todaro noted that trading volume declines have likely mostly been digested by the market, given those numbers are already out there.

“In our view the bigger reaction is in regards to Silvergate seeing $8 billion in withdrawals and cutting 40% of its workforce. Silvergate has been a key infra provider for exchanges and the issues there are reverberating throughout the industry, including to COIN,” the vice president of crypto asset and blockchain research said. “In light of FTX, Celsius, and Voyager, investors have been very keen on contagion risks so any issues with one company weighs on the whole industry, especially liquid public companies.”.

MicroStrategy shares fell 5.2%, while Galaxy Digital was down by 6.3% and Block by 1.7%.

Silvergate chart by TradingView

Macro matters

The Federal Open Market Committee (FOMC) — which decides U.S. central bank policy — published minutes on Wednesday from its Dec. 13-14 meeting. The minutes reiterated the Fed’s commitment to fighting inflation. 

The Fed’s next interest rate decision is slated for Feb. 1, with a 25 basis point increase widely expected. The CME’s FedWatch tool — which uses 30-Day Fed Funds futures pricing data to predict probabilities — showed a 56% chance of a 25 basis point increase prior to the release. 

The target probability of a 25 basis point increase fell from 70% prior to the release of the Fed’s meeting minutes yesterday. 

© 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.

Founders of the failed crypto hedge fund Three Arrows Capital were served subpoenas on Twitter by the fund’s liquidators, the latest wrinkle in the firm’s unusual bankruptcy case.

Three Arrows Capital founders Kyle Davies and Zhu Su have been on the run since their billion-dollar hedge fund collapsed last year. Liquidators claim the pair have been reluctant to participate in bankruptcy proceedings, leading to the unusual Twitter subpoena.

The complicated Three Arrows Capital bankruptcy proceedings are playing out in the United States, Singapore and the British Virgin Islands. The fund is being liquidated by financial advisory firm Teneo, which asked a Southern District of New York court for the authority to subpoena the founders via Twitter and email last year. 

“We remain focused on diligently advancing the liquidation process for Three Arrows Capital Limited in order to maximize asset recoveries on behalf of creditors,” the joint liquidators said in a statement. “The founders have unfortunately resisted cooperating in these efforts, and as such, we have received authority from courts in both the US and Singapore to serve them targeted and comprehensive discovery demands through email and their frequently-used Twitter accounts.”

Davies’ subpoena was granted by a U.S. court, while a dual subpoena was granted by a Singapore court. 

The subpoenas order the founders to provide information to the firm’s liquidators later this month. Liquidators are seeking documentation of the firm’s accounts, digital assets and any books, papers or records pertaining to the company. The subpoena also seeks information on Starry Night Capital and curator Vincent Van Dough, among other entities. 

© 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.

Genesis Trading begun a new round round of layoffs, reducing its workforce by 30%, a source familiar with the matter told The Block. 

“As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our headcount globally. These measures are part of our ongoing efforts to move our business forward. We sincerely appreciate the hard work of our talented and dedicated team as we continue to work to identify the best outcome for Genesis’s business, clients and employees for the long-term,” said a spokesperson for Genesis.

The firm told clients this week that the company is working toward finding a solution for its borrowing and lending unit but will need more time. The crypto lender halted withdrawals and new loan originations amid the FTX fallout in November. 

“While we are committed to moving as quickly as possible, this is a very complex process that will take some additional time,” interim CEO Derar Islim wrote in a letter to clients obtained by The Block.

Former Chief Executive Officer Michael Moro stepped down with immediate effect on Aug. 17. The firm reduced headcount by 20% at the same time, saying it planned to “align our organization to our strategic priorities.”

© 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.

New York’s attorney general filed a lawsuit against Alex Mashinsky, alleging that the former CEO of the now-bankrupt crypto lender Celsius defrauded investors.

“The collapse of Celsius left many individuals in a state of desperation and financial ruin,” the complaint filed today reads. “Celsius’s business model was unsustainable. As Celsius proved unable to generate sufficient returns through safe loans and investments, it began to make uncollateralized loans to institutional borrowers and engage in risky strategies on unregulated decentralized finance protocols.” 

“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” Attorney General Letitia James said in a statement. In the civil suit, James and her office assert that Mashinsky misled investors by saying that the company had $11 billion under management without disclosing that Celsius also had $11.9 billion in liabilities. 

The case is a civil suit that would require Mashinsky to pay damages and give back money to investors, while also barring him from leading any business in New York state.

Celsius is also in a contentious bankruptcy process in federal bankruptcy court, with a judge ruling Wednesday that digital assets of customers held in Celsius accounts were considered property of the company due to terms of service. 

Celsius offered high interest rates on its users’ crypto deposits while advertising them as analogous to bank accounts. But those accounts were not insured, and the firm collapsed amid the stablecoin crash last year. Users are now scrambling to get funds locked up in legal proceedings.

© 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.

NFT-related trademarks fell for 10 straight months after March of 2022. 

The highest number of trademarks filed to the United States Patent and Trademark Office (USPTO) were 1,089 in March, according to USPTO data compiled by trademark attorney Mike Kondoudis. But by December, they had fallen to 341 applications — a 69% decrease from the year’s high.

View on Twitter

Despite the steady fall in trademark applications, the number of NFT-related trademarks filed in 2022 had more than tripled those filed in 2021. Brands who filed NFT-related trademarks last year include Kanye West’s Yeezus and Sony Music, the record label behind Adele and other top music artists.

Firms file trademarks for digital assets like NFTs to protect their intellectual property in virtual spaces and prevent “copy cats,” The Block previously reported. 

Falling trademark applications correlate to the depressed market conditions last year. Weekly trading volume for gaming and art NFTs peaked on May 1, 2022 at $1.2 billion, The Block’s Data Dashboard shows. 

© 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.