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Fidelity has filed three U.S. trademark applications to provide services in the metaverse and other virtual worlds in its latest step into the realm of digital assets. 

The firm wants to provide its traditional services in alternate realities, according to the filings. The applications mention NFTs and NFT marketplaces, virtual real estate investing, crypto trading and metaverse investment services.  

Fidelity has been quicker to embrace digital assets than most other large investment companies and in October said it was planning 100 more crypto hires to expand its digital asset team to 500. The firm opened up commission-free retail crypto trading accounts in November after first announcing a waiting list.

The firm has received some pushback. Three U.S. senators last month asked it to reconsider a decision to allow retirement plan participants to invest in bitcoin, saying the industry has become increasingly “volatile, tumultuous and chaotic.” 

© 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.

BTC.com parent company BIT Mining Limited said it was hacked earlier this month, with about $700,000 in client assets and $2.3 million in company assets stolen.

The publicly-traded firm said it was hit by a cyberattack on Dec. 3. It reported the incident to law enforcement authorities in Shenzhen, and some of BTC.com’s digital assets have since been secured.

Authorities started an investigation on Dec. 23 into the matter.

“In the wake of discovering this cyberattack, the company has implemented technology to better block and intercept hackers,” BIT Mining said. “BTC.com is currently operating its business as usual, and apart from its digital asset services, its client fund services are unaffected.”

Shares of the miner are down 98% over the past year as miners have seen margins squeezed with higher energy costs and a slump in the price of bitcoin.

© 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.

BitKeep user wallets have been hacked and funds stolen.

The theft appears to have occurred on unofficial APK package downloads that were hijacked and installed with code implanted by hackers. Some $8 million in assets have been stolen, according to PeckShield, a blockchain security services company.

“Today’s currency theft incident is mainly due to the hijacking of 7.2.9 APK. If you are using the APK version, it is very likely that it is not the official version. So please transfer the funds to BitKeep Chrome plug-in wallet as soon as possible, or the app downloaded from the official store, and create a new wallet address and keep your mnemonic phrase safe,” the firm said in a Telegram chat.  

BitKeep didn’t immediately respond to requests for comment via Telegram.

BitKeep urged those using the APK version of the app to transfer the funds to a wallet downloaded from another official store such as the App Store or Google Play. 

“If your wallet is stolen, please submit relevant materials in the form as soon as possible, we will figure out the solution and assist as soon as possible,” BitKeep said.

© 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.

Here are some of the most significant events of 2022 told through charts. 

Bitcoin crashed around 65% year-to-date, dropping to $16,800 from $47,000 at the top of the year. As cryptocurrencies entered a bear market in line with traditional markets, several key events exacerbated the collapse. 

Gone with the wind 

The number of stolen funds in DeFi hacks increased sharply in 2022.

The biggest-ever exploit detected in crypto happened in March on the Ethereum sidechain Ronin, supporting the then mega-popular play-to-earn game Axie Infinity. A total of 173,600 ETH (at the time worth roughly $590 million) and 25.5 million of the stablecoin USDC were lost — all thanks to a fake job offer, as The Block reported. The U.S. government later tied the incident to the North Korean hacking group Lazarus.

Terra collapse

The circulating supply of Luna surged to more than 6.5 trillion in May before the Terra blockchain was halted for a second time in an attempt to salvage the collapsing ecosystem. The attempts were inevitability in vain. 

TerraUSD — the algorithmic stablecoin of the Terra blockchain — lost its peg to the U.S. dollar in May, kickstarting a downward spiral for Luna, a related token that was supposed to prop up UST’s value. The design of terraUSD meant that sales of Luna were supposed to help the algorithmic stablecoin keep parity with the U.S. dollar. But once terraUSD lost its peg and investors tried cashing out en masse, the mechanism put much downward pressure on Luna. 

Throughout the beginning of May, the supply of Luna was around 340,000, according to data from Terra Analytics. Between May 10 and 12, the network rose to 176 billion tokens, despite the chain being halted for a short time. It reached 6.5 trillion on May 13. 

Tornado Cash 

In August, the U.S. Treasury announced it was sanctioning Tornado Cash, a cryptocurrency mixing service that allows users to obscure the details of transactions. The regulator added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Nationals list. The wallets include the smart contract that runs Tornado Cash, its Gitcoin grants address and the Tornado Cash donation wallet. 

The SDN list bars U.S. persons and firms looking to operate in the U.S. from financial interactions with designated entities. In May, OFAC added Blender.io, its first designation of a crypto mixer. However, Tornado Cash is distinct from Blender.io in being a decentralized protocol. It might well have been the first example of a U.S. sanction targeting a DeFi operator. 

The day after the sanctions, just $6 million was deposited into the protocol, according to data from The Block Research. This represented a 78.5% decline compared to the same length of the previous week. 

ASIC mining machine prices plunge (all years, later half more)

At the height of the bull market last year, bitcoin miners raced to grow hashrate and were happy to sign purchase deals with months-long delivery times. But as mining economics worsened over the past months, ASIC machine prices also slumped. The market was saturated with them and, per terahash generally, prices fell over 80%.

On top of that, companies used those same machines to secure loans, which might pose a challenge to financiers like BlockFi, as they deal with potential defaults.

The Merge 

The highly anticipated move of the Ethereum blockchain from proof-of-work to proof-of-stake finally happened on Sept. 15. Instead of miners using GPU machines to approve transactions, the network now relies on validators that stake tokens to participate, with rewards sharply going down. The move addressed Ethereum’s high energy consumption.

Ether futures come in ahead of bitcoin

For the first time, the volume of ether futures was larger than bitcoin futures, during August.

The volume of ether futures exceeded that of bitcoin futures by 1.11 times in August, according to The Block Research. The Block’s Lars Hoffman attributed this to a carry play around the Ethereum Merge.

GBTC discount to net asset value (NAV)

GBTC’s discount to net asset value (NAV) reached fresh all-time lows throughout the year. The bitcoin fund dipped on June 17, when it reached -34%. The discount narrowed ahead of the SEC’s ruling on whether or not GBTC could be converted to a spot bitcoin ETF. The discount widened to a near 50% discount to NAV in December 2022. 

Grayscale’s bid to convert its product into a spot ETF was rejected based on the regulator’s conclusion that the company hadn’t shown sufficient planning to prevent fraud and manipulation. Grayscale later filed a lawsuit against the SEC after the decision. 

In the 73-page response brief, the SEC argued its rejection was “reasonable, reasonably explained, supported by substantial evidence,” with “no inconsistency in the Commission’s disapproval of Grayscale’s spot ETP despite having approved two CME bitcoin futures ETPs.” The SEC said futures and spot-based bitcoin funds are “fundamentally different products.”

FTX’s downfall

The quick unraveling of FTX caught many by surprise in early November. Pressure started mounting after a leaked balance sheet from Alameda Research showed that a large portion of its holdings was made up of FTT tokens. A “bank run” followed and by Nov. 8, the centralized exchange had halted most withdrawals. The aftermath of the collapse is still unfolding, with crypto lender BlockFi filing for chapter 11 bankruptcy last week.

Apes vs. Punks

The two top non-fungible token (NFT) collections, Bored Ape Yacht Club (BAYC) and CryptoPunks, have been trending closed together in recent months in terms of a floor price, meaning the lowest price available for sale. Apes fell below for a short period in late August and then again in November.

Bitcoin volatility reached a multi-year low

Annualized bitcoin volatility hit 27.06% on Oct. 25 — its lowest level since July 2020, when it fell as low as 23.37% — according to The Block’s data.

Volatility here was defined as the standard deviation of the previous 30 days’ daily percentage change in the price of bitcoin. The lack of volatility saw price movement stagnate, although it didn’t last long as the FTX collapse came just weeks later.

© 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.

DeGods and y00ts, two of the leading non-fungible token collections on Solana, have announced plans to bridge to Ethereum and Polygon early next year, the teams announced on Twitter. 

The two collections were created on Solana in October 2021 by Rohun Vora, an NFT creator who goes by the pseudonym “Frank DeGods.” They are the two most significant NFT projects on the Solana blockchain regarding floor price.

The DeGods collection will migrate to Ethereum, aiming to compete with NFT blue chips like Bored Ape Yacht Club, CryptoPunks and others. Its floor price is 460.00 SOL ($5,221), which tops the entire NFT market on Solana. Meanwhile, y00ts — with a floor of 140 SOL ($1600) — is planned to move over to Polygon, a sidechain of Ethereum that allows for faster and cheaper transactions.

In a Twitter Spaces, Vora said that Ethereum and Polygon would individually serve as the new homes for the collections, helping them to tap into a broader NFT user base. He added that the migration would happen with the help of a cross-chain bridge. However, the team hasn’t yet provided the technical details about the migration and how the so-called bridge will work. Those details will be revealed later.

“The details of the bridge will be released when it’s ready and tested. This has never been done before at this scale. We want to make sure that it’s airtight,” the DeGods team noted.

© 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 lender Nexo, which was in talks with rival crypto lender Vauld to potentially acquire it, has terminated the discussions.

The potential deal has fallen through after six long months of dialogue, according to a source with direct knowledge of the matter and an email obtained by The Block. The email, dated today and sent by Vauld founder and CEO Darshan Bathija to the firm’s creditors, states that “our discussions with Nexo have unfortunately not come to fruition.”

Nexo and Vauld had been in discussions for a potential deal since early July when Vauld halted client withdrawals after facing a severe liquidity crunch. At the time, Nexo had entered into a 60-day exclusive due diligence agreement with Vauld to potentially acquire it. It then extended the due diligence period twice. Now, the two parties have formally ended the discussions.

“We have since sought a mutual agreement with Nexo to terminate the existing exclusivity arrangements and we are continuing our active engagement with the shortlisted fund managers in developing a viable strategy that would best serve the creditors’ interests,” Bathija’s email reads.

The source said there are a couple of reasons why the potential deal didn’t go through. These include Vauld losing a significant amount in the collapsed Terra ecosystem, Indian authorities seizing its assets, funds stuck on the bankrupt crypto exchange FTX and huge loan receivables from Amber Group. Further, Vauld has many customers in the U.S. and Nexo recently announced its plans to leave the country, so the potential deal did not make sense for Nexo, the source added.

Before terminating the talks, Nexo presented the potential deal terms to Vauld twice. However, Vauld and its creditors weren’t happy with those terms. Bathija’s email reads:

“The Revised Nexo Proposal does not allow for a debt tender offer by way of a Reverse Dutch Auction (the ‘RDA’) which would give creditors an early exit option. We had explained to them that based on our engagement with creditors, an early exit option is vital to the success of any proposed restructuring. Unfortunately, the benefits offered under the Revised Nexo Proposal, such as an early credit withdrawal, are set at a threshold which in our view is generally unachievable by the majority of creditors.”

“Given the above, we believe that the Revised Nexo Proposal would not be in the best interests of all the creditors,” the email continues.

Vauld and its creditors also believe that, in discussions, Nexo wasn’t transparent enough about its financial condition. “Nexo has failed to respond to requests for a comprehensive due diligence exercise on them, including a solvency assessment of Nexo, or otherwise what measures may be able to be agreed upon to provide creditors with a greater level of assurance in the event of Nexo’s insolvency,” Bathija’s email reads.

Now that the potential Nexo deal has fallen through, Vauld’s proposed restructuring plan is to select a fund manager to manage customer assets. “In our search process, we identified six potential candidates as fund managers, received proposals from four, and following initial discussions and review, shortlisted two potential fund managers.” Bathija’s email reads. “We are in the course of developing the proposed strategies and mandate, in consultation with creditors with a view to agreeing terms with the final shortlisted fund manager candidate in the new year.”

Vauld’s financial hole currently stands at $98 million, per the email. “Overall, in the period from 1 August 2022 when we last provided an update of the financial position of the Company, the net deficit or ‘gap’ has increased from USD81m to USD98m,” the email reads. “This is largely a result of a loss in value due materially to: (i) FTX bankruptcy proceedings where we had a net exposure of USD8.8m; and (ii) depreciation of token prices relative to stables by approximately 24%.”

Vauld has until Jan. 20 to sort its financial issues, having received another credit protection extension last month. The firm, however, has applied for yet another extension, according to a document obtained by The Block. “We have the hearing for the moratorium extension on 17th January 2023,” the document reads.

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

© 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.

Episode 129 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Larry Cermak

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.

For The Scoop’s final episode of 2022, Larry Cermak, vice president of Research at The Block, joins host Frank Chaparro to unpack highlights from The Block Research’s 2023 Digital Assets Outlook Report and to break down some of the major events that shaped the crypto market in 2022.

The Block Research’s 2023 Digital Assets Outlook Report offers a deep look into the state of the crypto markets today and analysis on trends that could emerge in the year ahead.

Generally speaking, Cermak says institutional investors are becoming more comfortable with crypto’s extreme volatility:

“The institutional investors understand now that just because we have dropped by 80%, and just because a lot of funds and a lot of companies have gotten destroyed, that doesn’t mean that crypto will not come back. They understand the volatility, understand the cycles, and a lot of them want to be in a better position before the next movement.”

Although bear markets are characterized by a lack of exuberance among market participants, “these are really the periods when a lot of new projects are born,” Cermak says. “A lot of new narratives for the industry are going to be born.”

During this episode, Chaparro and Cermak also discuss:

• Which crypto companies performed well throughout 2022;
• The future of NFTs and web3 gaming;
• Why DeFi is here to stay.

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 Tron, Ledn, Athletic Greens, NordVPN

About Tron
Founded in 2013, Huobi Global is one of the largest virtual asset exchanges in the world. Huobi Global serves millions of users across international markets. Since its establishment, Huobi Global has committed to providing first-class virtual asset investment services. Huobi Global’s robust infrastructure, product innovation and capital strength provide a truly customer-centric and secure trading environment to help our international users to achieve their investment objectives. Please refer to Huobi’s official website for more information: huobi.com.

About Ledn
Ledn was founded on the unshakeable conviction that digital assets have the power to democratize access to the global economy. We help you to experience the real-life benefits of your Bitcoin without having to sell it. Start a savings account, take out a loan, or double your Bitcoin. For more information visit Ledn.io

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© 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 continuing blizzard in the U.S. has had a drastic impact on bitcoin miners, causing many of them to shut down. 

A major shake-up is happening on the Bitcoin network with the hashrate — a measure of how much computing power is being used to process transactions — dropping significantly. Since Saturday, the hashrate of the Bitcoin network has dropped by more than 30%, down to 155 EH/s from 230 EH/s, according to CoinMetrics data. This comes as many big miners paused operations after the National Weather Service warned of an “arctic blast” hitting the country.

Mining firm Riot Blockchain said it was closing its Rockdale facility in Texas because of extreme weather conditions. Other miners took similar positions. Core Scientific, which recently filed for bankruptcy protection, said it would be “participating in multiple power curtailments to help stabilize the electrical grid.” Bitcoin production is expected to decrease during this time, Core Scientific said on Twitter. 

“Please be prepared for some ups and downs this weekend as we deal with the winter storm,” Neil Galloway, director of mining operations at Compass Mining, said on Twitter, adding that its sites in Texas were offline. “Because your miner is offline, people can heat their homes and cook.”

The weather event has created a unique set of challenges for U.S. bitcoin miners. They depend on access to reliable electricity in order to conduct operations, and any prolonged power outages have serious implications for their ability to engage in mining activities. The U.S. accounts for the biggest share of Bitcoin’s global hashrate, at least 37%, according to the Cambridge Centre for Alternative Finance.

© 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.

There are trending stories to watch for in the world of crypto as we head toward 2023. Though it may be the holiday season, it seems there is always action in crypto. Here’s what’s potentially on the docket in the next few weeks:

Sam Bankman-Fried to face hearing

Sam Bankman-Fried, the disgraced former CEO of major crypto exchange FTX, is scheduled to face a legal hearing in New York on Jan. 3, following an array of fraud charges filed against him. Bankman-Fried was arrested in the Bahamas on Dec. 12 and after consenting to extradition, he arrived in the United States last week and was subsequently freed on bail.

The court proceedings have major implications not only for Bankman-Fried, but for the entire crypto industry.

Bad weather and Bitcoin

Weather-related issues may continue to impact bitcoin miners in coming days — something that all cryptocurrency enthusiasts should keep an eye on as we move into the New Year. The past week saw a major winter storm sweep across the United States, bringing bitter temperatures and power outages to many parts of the country.

In particular, the weather event has created a unique set of challenges for bitcoin miners in the US. They rely on access to reliable electricity to conduct their operations, so any prolonged power outages have serious implications for their ability to engage in mining activities. Additionally, extreme cold can cause systems malfunctions that could further hinder operations. This will bear watching.

FTX, Binance and market stability

The recent collapse of FTX, one of the biggest cryptocurrency exchanges, left many investors feeling uneasy about the safety of their funds. In response, many major exchanges attempted to demonstrate proof of reserves in order to reassure customers that their money was safe. 

Even Binance, the world’s biggest crypto exchange, has seen recent outflows and fought to restore confidence, with the company’s leader promising to “lead by example” in embracing transparency, according to a Reuters report. 

Binance CEO Changpeng Zhao first engaged accounting firm Mazars for an agreed-upon-procedures attestation. This differs from a traditional financial audit in that it only requires the accountant to perform specific verification procedures requested by the client. Mazars’ work with Binance, therefore, did not instill the same level of confidence as a full independent audit might have, particularly with regard to the exchange’s liabilities. This was further compounded when Mazars removed its crypto attestations and announced that it would no longer work with crypto companies.

Without a full audit, there is no obvious way to independently verify whether crypto companies hold sufficient assets to cover their liabilities. Still, Zhao has also questioned the abilities of large accounting firms to accurately audit crypto exchanges.

Over the next few weeks, it will be interesting to see if there are new developments on this front.

The fate of crypto markets in the New Year

The crypto asset market saw more than its fair share of drawdowns in 2022. As of the year’s end, the largest crypto asset Bitcoin settled at about $16,900 from its all-time high of more than $69,000. Other cryptocurrencies have been struggling to stay afloat amid the market plunge and financial crises facing multiple firms operating in the space.

Even as the crypto market has been dragged down by losses this year, many enthusiasts are hopeful that 2023 will bring stability and increased liquidity to the space. Recently, there have been declines in trading volume; understandable given it is the time of year when many traders may be taking well-deserved breaks after a challenging period. Still, it is difficult to predict what will happen imminently and whether a recovery might begin in the first few weeks of the New Year. 

Some analysts say that it will require some time before we see a stabilization of prices across different cryptos as well as Bitcoin itself.  Still, as we enter 2023 there is some optimism among crypto enthusiasts who hope for a better performance than the “bear market” that was experienced in 2022.

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.

A wallet address associated with a suspected North Korean APT Group stole more than 1,000 NFTs from victims of phishing attacks and made 300 ETH ($365,000) from their sale, according to a report by blockchain security firm SlowMist.

APT stands for advanced persistent threat, cyber criminals who access internet networks and can remain undetected for long periods to steal data. These entities use various attack vectors such as phishing, and a few of them are reportedly sponsored by the North Korean government.

The SlowMist report said that North Korean APT Groups have been leading a massive NFT phishing campaign. Phishing is an attack method used by hackers in which they pretend to be reputable organizations in order to trick victims into revealing sensitive information. In the NFT space, such attacks can be modified with hackers posing as known NFT projects or marketplaces to deceive victims into signing malicious transactions that can lead to losing valuable NFTs from their wallets.

“The North Korean APT group targeted Crypto and NFT users with a phishing campaign using nearly 500 different domain names,” the report said. SlowMist identified one wallet address associated with the group that had stolen 1,055 NFTs. The wallet sold the items for 300 ETH ($365,000).

Several “blue chip” NFTs have been stolen in multiple phishing attacks this year. Hackers stole 29 Moonbirds in May, valued at $1.5 million at the time. Before that, 35 NFTs including Bored Apes were stolen in phishing attacks within a one-week spell in March.

Crypto goldmine

The coordinated phishing attacks on NFT holders by North Korean hackers are part of a larger trend. Cybercrime syndicates reportedly sponsored by Pyongyang have also been targeting crypto exchanges and other cryptocurrency-related businesses. These groups have been linked with several large-scale crypto exchange platform hacks.

The UN reported in 2019 that North Korean crypto hackers had stolen as much as $2 billion. The funds were reportedly being used to further the country’s nuclear program. The U.S. government has since sanctioned Tornado Cash, a crypto mixer that was reportedly being used by these hackers to funnel their stolen funds.

U.S. officials also continue to warn that North Korean hackers have not eased up in their crypto assault. The Department of Justice in May reported that North Korean IT workers were getting tech and crypto jobs online.

© 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.