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Author: Yogita Khatri
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Author: Arnold Toh
The Securities and Exchange Commission is going to continue to aggressively pursue enforcement actions against crypto companies, its lead enforcer told a legal conference in Washington on Sept. 9.
“We’re not giving crypto a pass,” Gurbir Grewal, the director of the SEC’s division of enforcement, said at a forum hosted by the Practising Law Institute, a legal education nonprofit.
“We will continue to bring actions regardless of what technology is used,” Grewal continued, saying that “Non-enforcement of the most fundamental rules underlying our regulatory structure – that would be a betrayal of trust.”
The crypto industry has criticized the SEC as stifling innovation, which Grewal dismissed. His remarks come on the heels of a speech from SEC Chair Gary Gensler that similarly rejected the notion that the securities regulator had been unclear in its guidance.
In July, Grewal appeared before Congress, saying much the same thing. Days later, the SEC launched its insider trading case against Coinbase employees, designating a roster of tokens as securities.
© 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.
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Author: Kollen Post
The blockchain-based game development firm Revolving Games raised more than $25 million in two of its seed funding rounds.
Revolving Games raised $12 million in pre-seed funding and $13.2 million in seed funding, the company said in a release. Pantera Capital, Animoca Brands, Polygon, Dapper Labs and Grand Theft Auto producer Dan Houser participated in the seed funding round.
The firm will use the combined $25 million to finance original and fully decentralized web3 games over the next two years.
“We couldn’t be more passionate about building out a true web3 ecosystem of exciting, unique gaming experiences, and we see that reflected in the work being created here,” Animoca Brands co-founder Yat Siu said in a statement.
Revolving Games specializes in AAA games, or video games that have a higher budget and production value. Grand Theft Auto, Halo and Call of Duty are considered AAA game franchises. While blockchain gaming has seen an uptick in the past year following the meteoric rise of Axie Infinity, blockchain-based AAA games are not as common compared to its mobile- or web-based counterparts.
© 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.
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Author: MK Manoylov
Cryptocurrency prices rose across the board on Friday, with bitcoin jumping as much as 10% and ether rising more than 6%.
At the time of writing, bitcoin is changing hands at roughly $21,100 per Coinbase data, which represents a rise of 9.2% over the past 24 hours. Meanwhile ether is trading above $1,700, up 6.4% in the past day.
The native asset of the Ethereum network is at $1,712, a jump of nearly 7% on the day, ahead of the much anticipated Merge next week.
The Ethereum blockchain is moving to a proof of stake consensus mechanism some time between Sept. 10 and Sept. 20. The long-anticipated upgrade spurred traders to take bets on the second largest cryptocurrency by market cap in August. The Block identified in July that ether derivatives trading was surging ahead of The Merge.
Elsewhere, traditional financial markets are also trending upwards. S&P 500 futures were up 0.78% and the Nasdaq 100 composite was up 1% at the time of writing. Cryptocurrencies have begun to trade in correlation with equities, having incrementally followed them since January.
The global crypto market cap also regained the $1 trillion mark on Friday, as it continuously flirts with this level.
© 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.
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Author: Adam Morgan McCarthy
Ethereum is on the brink of The Merge, which will transition the network from proof of work to proof of stake. This major shift is being undertaken primarily to reduce the network’s energy consumption and make it more environmentally friendly.
After the change to proof of stake, Ethereum will no longer make use of miners and their powerful, energy-hungry hardware. Instead, they’ll be replaced by validators, who pony up large amounts of ETH and tie it to their reputation — if they act maliciously, they lose some of their tokens.
But there is a second, highly anticipated change that will also happen: a significant change in Ethereum’s tokenomics.
This will result in a large reduction in Ethereum’s inflation rate, as fewer tokens will be issued each year. Put simply, the network is going to reward validators with fewer tokens than it currently awards to miners.
Additionally, with the amount of ether (ETH) that gets burned each year in the transaction fee process, it’s possible the network may even become deflationary — meaning, the total supply of ETH actually decreases each year.
Here’s a look at how Ethereum’s tokenomics will change and what impact that will have.
Under Ethereum’s proof of work system, the network pays out 2 ETH for every block that a miner creates and 1.75 ETH for every uncle block. An uncle block is when a block is created but narrowly loses out to another block that was created around the same time — so it doesn’t end up in the chain but it still receives a smaller reward.
On average, this results in around 13,000 ETH issued each day and given to miners as rewards.
This translates to a 4.1% inflation rate (although there is also some issuance on the proof of stake chain already, so this is technically a little higher).
When Ethereum migrates to proof of stake, validators will replace miners. These validators will pony up large amounts of ETH as collateral and will get to produce blocks on the network. If they act maliciously, they can lose their collateral.
Since the network will no longer have to cover the expenses of miners (who pay massive electricity bills to power their 24-hour operations), it can be more efficient when it comes to handing out rewards for producing blocks.
Under the new system, there will be a dynamic payment model. This new model will be a lot lower than under the current system and it will vary depending on a few factors, including the amount of ETH staked.
Based on the current amount of ETH staked, the network will issue around 1,600 ETH per day, translating to an inflation rate of 0.5%. This means when The Merge takes place, there will be an effective 90% decrease in the daily issuance of new ETH.
As more ETH gets staked, this issuance may increase to as high as 5,000 ETH. Yet even though this will rise, the effective yield for each validator will still decrease if this happens.
Until now, we’ve kept this discussion fairly simple and limited to the issuance of new ETH as mining or staking rewards.
But there is one other big element that impacts Ethereum’s effective inflation rate and that’s token burning.
Introduced as part of the London upgrade in August 2021, EIP-1559 brought in a burning process as part of making transaction fees on the network. When a person makes a transaction on Ethereum, they have to burn part of their transaction fee and the rest goes to the miner (or soon, the validator). This removes part of the total supply of ETH.
This transaction fee burning has made a big impact. Since it was introduced, more than 2.6 million ETH has been destroyed through this alone. This roughly cut Ethereum’s inflation rate in half.
As Ethereum moves to proof of stake and the rewards will get cut significantly, this makes it much easier for the amount getting burned to be greater than the amount being issued. If this happens, the network will become deflationary — meaning the supply reduces over time
For the network to have an equal amount of issuance and burn after The Merge, transaction fees would need to happen at an average of 16 gwei (a unit of measurement used for paying fees). Anything higher than this at the network will be deflationary, and vice versa.
While transaction fees were very high for much of last year, they have dropped significantly. As a result, a lower number of ETH is now being burned due to transaction fees.
As a result, the net issuance after The Merge is expected to be around 0.1%.
© 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.
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Author: Mike Truppa and Tim Copeland
Bitcoin miner CleanSpark is buying a facility in Georgia from competitor Mawson Infrastructure Group, its second site acquisition in the span of a month.
The company will pay up to $33 million for the facility, and an additional $9.5 million for 6,468 ASIC miners, it said on Friday.
“The site is nothing but impressive,” said CleanSpark CEO Zachary Bradford. “We are enthusiastic about Georgia and believe that our expansion there will continue to build value for our shareholders and the communities we operate in throughout Georgia.”
Based in Australia, Mawson is a Nasdaq-listed company with other facilities in the U.S. and Australia. Nasdaq has threatened to delist the company for trading under $1, according to a recent U.S. Securities and Exchange Commission 8-K filing.
“Per the 8-K, if we trade above $1 for 10 days the issue is cured, or we can simply do a reverse split to cure, so we’re not worried about that,” said Nick Hughes-Jones, chief commercial officer at Mawson. He added that the transaction with CleanSpark is a “win-win for both parties.”
“We now intend to focus our attention on the continued development of our Pennsylvania and Texas facilities where we see the opportunity for compelling returns on capital,” Mawson CEO James Manning said in a press release.
CleanSpark has now announced its second acquisition in a month, after buying a 36 megawatt mining facility in Georgia last month from bitcoin miner Waha Technologies for $16.2 million.
“The market has been preparing all summer for consolidation, and we are pleased to be on the acquiring side,” Bradford said last month. “Our focus on sustainability and maximizing value for our stakeholders have put us in a unique position to take advantage of the unprecedented opportunities that the current market has created.”
The company also has taken advantage of the declining prices of ASICs, buying 6,200 machines between June and August, and an additional 10,000 this week.
The miners purchased from Mawson at the Georgia facility will add 0.558 exahashes per second (EH/s) to CleanSpark’s current hashrate of 3.8 EH/s. The site can expand an extra 150 megawatts, which would be able to power 70,000 latest generation miners, producing over 7 EH/s, the company said.
CleanSpark agreed to provide Mawson with up to 30 megawatts of temporary hosting capacity for up to 180 days, while it transfers its miners to the Pennsylvania location.
The deal breaks down to $26.5 million of cash consideration, $11 million in CleanSpark stock ($4.5 million of which is subject to reaching certain earn-out commitments), $3 million in seller financing in the form of promissory notes and $2 million in a seller-financed earn-out payable at least 60 days after closing upon certain conditions being met, the company 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.
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Author: Catarina Moura
Sam Bankman-Fried’s FTX Ventures is continuing its investment spree and will take a 30% stake in Anthony Scaramucci-led investment firm SkyBridge Capital, according to a CNBC report today.
SkyBridge will use a portion of the funding to deploy $40 million in crypto investments to hold on its balance sheet, the report said.
More traditionally associated with hedge funds, SkyBridge pivoted to crypto during the bull run and was impacted by the recent downturn in the crypto market. According to Bloomberg, after sharp declines in July, Skybridge suspended redemptions from one of its funds, which had exposure to FTX.
Still, Scaramucci remains bullish on bitcoin in the long term, despite the short-term difficulties. In July, it was reported that the firm also plans to roll out a web3-focused fund.
© 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.
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Author: Callan Quinn
An Ethereum address connected with an exploit last year of DAO Maker has laundered 500,000 DAI stablecoins through Tornado Cash, security firms PeckShield and CertiK said today.
DAO Maker (not to be confused with stablecoin project Maker DAO) is a crowd fundraising platform that suffered a hack in August 2021. Because of a bug in DAO Maker’s smart contract, a hacker was able to steal more than $7 million in stablecoins. These funds were then scattered across different addresses controlled by the hacker.
A year after the incident, one of the addresses, which was labeled by Etherscan as the exploiter of DAO Maker, has transferred $500,000 worth of DAI stablecoins through Tornado Cash. Hackers often funnel stolen assets through Tornado Cash because it allows them to obscure the transactional activity.
Tornado Cash has been in the spotlight in recent weeks, since it was sanctioned by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). Following the sanctions, all US-based individuals and entities are prohibited from interacting with the app, given its potential for money laundering.
Still, even after the sanctions were announced, Tornado Cash has continued to experience usage by hackers of decentralized finance protocols, as seen today and in other recent events.
On Aug. 19, PeckShield detected that an address responsible for a December 2021 exploit of Grim Finance moved almost $3.3 million into Tornado Cash. Then on Sept. 6, the exploiter of MonoX Finance laundered $2.1 million via Tornado Cash.
While Tornado was originally intended to ensure Ethereum users’ privacy, it also became a tool for hackers to launder assets obtained by illegitimate means. According to the U.S. Treasury Department, bad actors including North Korea’s Lazarus group have used Tornado to transact more than $7 billion worth of crypto assets since it was founded in 2019.
© 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.
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Author: Vishal Chawla
Episode 84 of Season 4 of The Scoop was recorded remotely with The Block’s Tim Copeland and ConsenSys Head Economist Lex Sokolin.
Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.
After years of anticipation and development, the Ethereum blockchain is finally on the verge of transitioning its consensus mechanism from proof-of-work to a more energy-efficient mechanism known as proof-of-stake.
According to a blog post from The Ethereum Foundation, switching the consensus mechanism of the blockchain is like changing the engine of a spaceship, and in just a few days, it will be “time to hot-swap the new engine for the old mid-flight.”
In this special Ethereum Merge edition of The Scoop, host Tim Copeland and Lex Sokolin, head economist at leading Ethereum development company ConsenSys, examine the implications of Ethereum’s Merge for the future of the network. During the discussion, Sokolin explains why the switch will help improve the reputation of web3 outside of the crypto space — particularly with those who prefer ESG investments.
A long-standing criticism of cryptocurrency technology singles out the amount of energy required to power the underlying blockchains. According to Sokolin, the fact that Ethereum is set to reduce its energy consumption by roughly 99.95% will help alleviate this concern:
“I think removing the objection around ESG is very meaningful because it does change culturally some of the value proposition of Ethereum to those communities who take really seriously these issues around electricity consumption and impact.”
By removing ESG concerns, Sokolin hopes more people in the world will be able to see the potential for web3 technology, without having to worry about negative externalities.
As Sokolin explains,
“A lot of how people align with web3 and crypto is through idealistic storytelling about what the world could be, and it’s really important to be open minded and have a kind of hope for what new platforms can create.”
During this episode, Copeland and Sokolin also discuss:
This episode is brought to you by our sponsors Tron, Chainalysis & IWC Schaffhausen
About Tron
On August 1st, 2022, Poloniex launched a faster and more stable trading system along with a brand new user interface. Poloniex was founded in January 2014 as a global cryptocurrency trading platform. With its world-class service and security, it received funding in 2019 from renowned investors, including H.E. Justin Sun, Founder of TRON. Poloniex supports spot and margin trading as well as leveraged tokens. Its services are available to users in nearly 100 countries and regions with various languages available. For more information visit Poloniex.com.
About Chainalysis
Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.
About IWC Schaffhausen
IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com.
© 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.
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Author: Davis Quinton and Tim Copeland
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