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U.S. banking regulators remain skeptical of banks holding digital assets. 

The Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. put out a joint statement that reminded banks of their safety and soundness obligations and outlined risks they see in the cryptocurrency sector. Though the statement noted that banks aren’t prohibited from doing business with companies that operate within the law, the regulators raised several red flags for those hoping to dive deeper into crypto-related activities. 

The list highlighted risks that include the potential for fraud, scams and deceptive practices, in addition to the susceptibility of stablecoins to bank runs.  The statement also named issues such as uncertain redemption rights and unknown custody practices at crypto businesses as areas of concern.

“Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices,” the agencies wrote. “Given the significant risks highlighted by recent failures of several large crypto-asset companies, the agencies continue to take a careful and cautious approach related to current or proposed crypto-asset-related activities and exposures at each banking organization.”

The bank regulators also warned against business models that concentrate on “crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.”

Bank relationships with crypto firms have come under additional scrutiny after FTX’s high-profile collapse, which was caused by a run on the exchange’s utility token FTT, which Alameda Research, the crypto exchange’s closely-affiliated investment fund, used as collateral for loans. California-based Silvergate Bank, which does significant business with stablecoin issuers and counted FTX as a client, has come under particular focus, as has Moonstone Bank, a Washington state-based bank that received investment from Alameda Research. 

The warning statement followed similarly-toned public remarks from Fed Vice Chair of Supervision Michael Barr and recently-confirmed FDIC Chair Martin Gruenberg. 

© 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 difficulty is down 3.6%, following a winter storm that led a number of miners to power down.

The update was posted in the early hours of Tuesday, according to BTC.com.

Difficulty refers to the complexity of the computational process behind mining, and it adjusts roughly every two weeks (or every 2,016 blocks) based on the average block time.

The estimated global network hashrate fell from 245 EH/s after the last update down to 222 EH/s last Wednesday and back up to 256 EH/s, according to data from The Block.

Meanwhile, revenues went up by a slight 0.9% month-over-month in December, with miners bringing in a combined $476.7 million.

Most bitcoin mining revenues came from the block reward subsidy ($467.34 million) and only a small portion from transaction fees ($9.31 million). Bitcoin’s transaction fees as a share of total miner revenue decreased to around 2%.

Bitcoin miners generated about 5.9 times the revenues of Ethereum stakers in December.

© 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.

Security auditing firm Debaub received a Uniswap “bug bounty” worth $40,000 after discovering a critical vulnerability in a smart contract on the protocol.

The vulnerability was found in Uniswap’s Universal Router contract, a new technology and scripting language that allows users to swap multiple tokens for NFTs in one transaction.

Debaub said on Twitter that the vulnerability could have allowed someone to implement third-party code during a transfer and steal funds.

“Clearly, the UniversalRouter should not hold any balances between transactions, or these can be emptied by anyone,” founder of Debaub Yannis Smaragdakis wrote.

The UniversalRouter contract is capable of performing several transaction commands in a row on the back end, which improves the user experience. Debaub found that the contract did not have what is known as a re-entrancy lock, which mitigates hackers from making additional commands during transfers that would allow them to steal funds.

Debaub said it received immediate confirmation from the Uniswap team a few weeks ago when it first found the vulnerability. It received $40,000 in USDC for the discovery of the bug.

© 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.

Disgraced former FTX CEO Sam Bankman-Fried pleaded not guilty to fraud charges in a New York federal court on Tuesday.

Bankman-Fried faces multiple charges, including wire fraud and campaign finance law violations, after his crypto exchange empire imploded last year. Bankman-Fried is accused of misusing FTX customer funds to prop up his crypto trading firm and make political donations, among other misdeeds. The not guilty plea was first reported by CNBC.

A spokesperson for Bankman-Fried did not immediately respond to a request for comment.

The former FTX boss was arrested in the Bahamas last month. He was later extradited to the U.S. and released on a $250 million bail bond that was co-signed by his parents. Bankman-Fried’s lawyer requested on Tuesday the court conceal the identities of two people who also co-signed Bankman-Fried’s bond, saying the individuals may face threats and harassment if they are identified.

FTX filed for bankruptcy protection in November, after a run on its native utility token caused the crypto behemoth to collapse. FTX, once valued at $32 billion, could owe $3.1 billion to its top 50 creditors. 

Several of Bankman-Fried’s top lieutenants have already pleaded guilty to FTX-related criminal charges and are cooperating in the case. Caroline Ellison, the former CEO of Bankman-Fried’s Alameda Research trading firm, and FTX co-founder Gary Wang pleaded guilty, according to U.S. Attorney for the Southern District of New York Damian Williams. 

Bankman-Fried faces additional civil charges from the Securities and Exchange Commission and the Commodity Futures Trading Commission. 

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.

© 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.

Sam Bankman-Fried’s lawyers asked for the identities of two guarantors of his $250 million bond to be redacted and not be publicly disclosed, citing concerns of threats and harassment.  

Mark Cohen and Christian Everdell of law firm Cohen & Gresser LLP, who are representing the former FTX CEO, made that request on Tuesday in a letter to U.S. Judge Lewis Kaplan.  

“In recent weeks, Mr. Bankman-Fried’s parents have become the target of intense media scrutiny, harassment, and threats,” Everdell and Cohen said in the court document. “Among other things, Mr. Bankman-Fried’s parents have received a steady stream of threatening correspondence, including communications expressing a desire that they suffer physical harm.” 

They said there is a “serious cause for concern that the two additional sureties would face similar intrusions on their privacy as well as threats and harassment if their names appear unredacted on their bonds or their identities are otherwise publicly disclosed.” 

Bankman-Fried will hear charges against him on Tuesday. The Wall Street Journal has reported that he is likely to plead not guilty to all fraud and campaign finance-related charges against him.  

The cryptocurrency exchange failed spectacularly in November, and subsequently filed for bankruptcy protection. In addition to criminal charges related to the operations of FTX and the multinational group of companies that Bankman-Fried owned, he also faces civil charges from the Securities and Exchange Commission and Commodity Futures Trading Commission. The disgraced crypto mogul was released last month on the $250 million bond, which was secured in part by the equity in his family home and by the signatures of his parents, as well as the two anonymous co-signers, who are on the hook for that money if he flees. 

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. 

© 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 trading volumes on Solana are showing signs of strength for the ecosystem despite its native token losing about 94% of its value last year, with the week of Dec. 25 seeing the most activity since September. 

Despite depressed market conditions that settled in around July, Solana never lost its second spot to Ethereum throughout 2022, according to the The Block’s Data Dashboard. 

Despite the solid month, there could be uncertainly looming ahead as most of the trading volumes stemmed from Solana’s darling NFT projects DeGods and its spinoff collection y00ts. Both are bridging to Ethereum in an attempt to dethrone other blue-chip NFT projects, like Bored Ape Yacht Club, which may affect Solana’s trading volume going forward. 

Solana’s Sol has surged more than 15% over the past 24 hours and is up more than 30% so far this year. Amid declines last month, Avalanche’s native AVAX briefly overtook its market cap.

© 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.

Riot Blockchain, one of the largest bitcoin miners in the industry, is rebranding its name to Riot Platforms to reflect the company’s diversified business operations, it said in a statement on Tuesday.

“The scope and scale of our businesses continues to expand, and this rebranding better reflects our position as strategic allocators of capital to increasingly broaden the scope of our Bitcoin-focused operations,” said Riot Platforms CEO Jason Les.

Hosting provider Applied Digital, formerly known as Applied Blockchain, similarly dropped the word “blockchain” from its title to reflect its shift away from being completely crypto-focused.

Miners have struggled in the past year with shrinking margins, and Stronghold Digital Mining even switched the core of its business this summer to selling power from mining. 

Riot Platforms and its flagship facility in Texas, Whinstone U.S., will be under the umbrella of Riot Platforms Inc., while its electrical equipment manufacturing business will operate as ESS Metron, it said.

The company recently broke ground on an additional site in Texas, which it says will be expandable up to 1 gigawatt.

© 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.

Physical versions of Tiffany’s ‘NFTiff’ diamond pendants are finally arriving on customer doorsteps. 

The collection was launched last year by the luxury jewelry firm, which offered the diamond-encrusted pendants to CryptoPunks holders for 30 ETH, or about $50,000 at the time. The 250 available NFTiffs sold out within 20 minutes of their debut on Aug. 7 and netted $12.5 million for the firm. 

The creation of this so-called “phygital” item — a physical item with a digital counterpart — revealed key insights for brands producing this type of product, Deepak Thapliyal, CEO of blockchain tech firm Chain, told The Block.

“NFTiff was a very successful project bringing a prominent luxury brand into Web3,” he said. “We sold out in minutes, and clients were able to create a 1/1 pendant to match their CryptoPunks which they are now starting to receive throughout the globe.”

Chain partnered with Tiffany’s in August to facilitate the launch of NFTiffs. 

Customer engagement 

Thapliyal said that the unique nature of the NFTiff prolonged the production and delivery period for the pendants, giving the firm insights into customer and community communication. 

“Brands need to be willing to listen to and react to feedback provided by the community during the course of the project,” he said. “They also need to prioritize the NFT component equally with the physical good to give the best user experience possible.”

Customers who received pendants seem to be pleased with the results.

“It’s beautiful and I just put it on for the first time,” an NFT influencer who goes by Gmoney.eth told The Block. “I plan on wearing it a bunch.” 

View on Twitter.

CryptoPunks remains one of the most valuable NFT projects of all time. The collection has a trading volume of over 1 million ETH among 22,000 transactions, according to the NFT marketplace OpenSea. However, CryptoPunks’s floor price is second to Bored Ape Yacht Club, 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.

Bitcoin miner Stronghold reached an agreement with noteholders that will see $17.9 million of debt be turned into equity.

The notes will be extinguished in exchange for a new series of convertible preferred stock with a face value of about $23.1 million, the company said in a filing with the U.S. Securities and Exchange Commission.

The move follows other measures the miner has taken to improve cash flow, such as ending a hosting deal with Northern Data and eliminating $67.4 million in debt with NYDIG.

“We are pleased to announce another deleveraging transaction that is expected to materially reduce our debt, strengthen our balance sheet, and improve our liquidity position,” said Greg Beard, co-chairman and chief executive officer.

The company expects the deal to close in February and reduce its debt to less than $55 million. The new shares will be convertible into common stock at a price of $0.40 per share.

‘Preserve cash’

“We acknowledge the significant number of shares of common stock that could be issued as a result of the Exchange Agreement, but we believe this is necessary to preserve cash, reduce our financial obligations, and better position the Company to survive a potentially prolonged crypto market downturn,” Beard said.

Stronghold shifted focus away from mining and into selling power during the summer. The company owns and operates two waste coal plants in Pennsylvania.

Like others in the industry, it has seen mining economics worsen with a fall in bitcoin prices falling and a rise in energy prices.

Mining giant Core Scientific, which filed for bankruptcy this month, also plans to turn most of its debt into equity.

© 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.

Most cryptocurrencies fell on Tuesday alongside traditional markets.

Bitcoin and Ethereum were down up by 0.4% and 0.8%, respectively, and trading at around $6,640 and $1,200.

The S&P 500 fell by 0.5% and the Nasdaq 100 by 0.6%.

Shares of Coinbase, which Cathie Wood’s Ark bought last week, were down 2.6%, while MicroStrategy’s rose 0.9% and Galaxy Digital’s by 1.3%

Meanwhile, the Grayscale Ethereum Trust (ETHE) hit a record discount of approximately 60%.

The Grayscale Bitcoin Trust (GBTC) has also recently hit record lows and is currently trading at a discount of around 45%.

© 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.