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Digital currency company Tether wants the judge presiding over a class action suit against it to remove law firm Roche Freedman from the case, a request that if granted could weaken the suit against the stablecoin giant.

The request comes less than a week after video of one of Roche Freedman’s founding partners, Kyle Roche, was published by an anonymous blog, Crypto Leaks, with an accompanying post alleging Roche strategically brought multiple class actions on behalf of development company Ava Labs. Roche claims that the video was selectively edited and illegally obtained, and both he and leadership at Ava Labs vigorously deny the allegation.  

Yesterday Roche filed to remove himself from the case, among other class actions, citing that he is no longer with the firm’s class action practice. But in a filing made yesterday, Tether’s lawyers argue Roche’s prior involvement in the case is enough to throw the firm off of it.   

“The individual withdrawal of Mr. Roche, however, does little if anything to address the serious issues regarding the potential misuse of discovery and class action lawsuits generally,” Tether’s lawyers Tether. “Even if he is no longer counsel of record, he would still have access to discovery materials, would retain the ability to direct the conduct of other lawyers at his firm, and would profit from any potential recovery in this lawsuit.”

Roche Freedman initiated the class action against sister firms Bitfinex and Tether in 2019, alleging over $1.4 trillion in damages suffered by plaintiffs. The suit claims a “sophisticated scheme” that defrauded investors, manipulated markets and concealed illicit proceeds.

On Thursday Roche filed to withdraw from another suit, the firm’s class action against Binance.US. That case has been one of the firm’s highest-profile suits, addressing the fallout of the Terra/Luna collapse.  

© 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 were down Thursday, some by double digits, as the coin’s value fell from the previous day.

Bitcoin was trading at around $19,900 at market close, according to data from TradingView.

Bitcoin mining revenues were up in August by 10% month-over-month, according to data compiled by The Block Research.

Northern Data’s stock fell 14.43%, followed by Digihost (-12.75%), Cipher Mining (-10.95%) and SAI.TECH (-10.23%).

Bitfarms was down by 5.17% on the Toronto Stock Exchange after the company announced Thursday morning that it mined 6.8% more BTC in August compared to the previous month.

Here’s how crypto mining companies performed on Thursday, September 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.

Bitcoin miner Bitfarms mined 534 BTC in August — a 6.8% increase from the previous month — while increasing its hashrate by 1% to 3.9 exahashes per second (EH/s).

The company is close to completing the first 50-megawatt warehouse of its facility in Rio Cuarto, Argentina, Bitfarms said Thursday in a monthly update.

“More specifically, the first 10 MW of this warehouse is planned to be energized and start production ahead of schedule later this month, with capacity being added incrementally throughout Q4 2022,” said president and chief operating officer Geoff Morphy.

The company expects to grow its hash rate to 4.2 EH/s by the end of September. Construction on the second warehouse in Rio Cuarto is supposed to start in the second quarter of 2023.

As of August 31, the company held 2,128 BTC in custody, equivalent to $43 million based on a bitcoin price of $20,300.

It sold 427 BTC last month, down from 1,623 BTC in July and 3,000 BTC in June.

© 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 Celsius, which halted client withdrawals in June and filed for bankruptcy in July, is seeking to reopen withdrawals for select customers.

In a filing submitted Thursday in the Bankruptcy Court for the Southern District of New York, Celsius said that customer assets held in the “Custody Program and Withhold Accounts” are not the company’s property and thus customers should be allowed to withdraw them.

Celsius argues that customers of the custody program own their assets, unlike customers of its Earn or Borrow programs. “The Debtors believe that assets in the Earn Program and the Borrow Program are likely property of their estates, and that the transfer of such assets to Custody Program or the Withhold Accounts would have been a transfer of the Debtors’ property to customers on account of such customers’ claims against the Debtors,” Celsius said in the filing.

Around 58,300 users hold “custody assets” worth about $210 million, and around 5,000 users hold “withhold assets” worth about $15 million as of August 29, according to the filing.

The court will discuss the motion at a hearing scheduled for October 6.

The filing comes a day after a group of 64 Celsius customers, represented by bankruptcy-focused law firm Togut, Segal & Segal, filed a complaint in the court to recover their assets. The group sought to recover more than $22.5 million worth of assets collectively held in Celsius’s custody program.

Assets held in Celsius’s custody program represent only a small part of the company’s total liabilities. Recent court documents showed that Celsius’s liabilities are more than $6.7 billion and its assets are worth only around $3.9 billion — resulting in a balance sheet hole of $2.8 billion.

© 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.

Regulators want help assembling a regime for private funds to report their crypto exposure. 

On September 1, the Securities and Exchange Commission and the Commodity Futures Trading Commission put out a request for comment on proposed changes to Form PF.

The SEC and CFTC are the key regulators for U.S. financial markets. Form PF is a confidential filing that hedge funds make to the SEC to report their exposure to certain assets. It originated after the 2008 financial crash, which was largely a product of opaque private funds holding junk assets — most famously, subprime mortgages.

The current Form PF features no mention of digital assets at all. The two regulators agreed to a joint proposal to add digital asset reporting early in August. “The proposal would add a new sub-asset class for digital assets and define the term ‘digital asset,'” the request for comment explains.

The questions that appear in the request for comment are, consequently, pretty foundational: Should reporting entities have to identify the specifics of their holdings by name or by type of digital asset, should there be different standards for fiat-redeemable stablecoins and central bank digital currencies, and should tokens that represent equity be another class. 

The comment period ends October 11. 

© 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 revenues jumped 10% in August — the first month-over-month increase since March.

Last month, miners brought in about $657 million in revenue, according to data compiled by The Block Research.

Bitcoin mining difficulty jumped 9.26% in the most recent update posted on Wednesday, while in the same time period hash rate rose by more than 13%.

The growth in hash rate is due to “a combination of heat waves finally subsiding (on a global level) and facilities slowly coming online,” said Kevin Zhang, senior vice president of mining strategy at Foundry, which runs the Foundry USA mining pool. “There’s also the added kicker of the higher efficiency Bitmain S19 XP’s finally hitting the market as well!”

Most bitcoin mining revenues came from the block reward subsidy ($647.72 million) and only a small portion from transaction fees ($9.24 million). The share of bitcoin transaction fees over total revenue fell to about 1.4%.

Ethereum miners made $725 million, or 1.1 times more in revenue than bitcoin miners did in August.

© 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.

Quick Take

• In this bi-weekly series, we look into some of the most interesting data and developments across the Layer 2 blockchain landscape, from DeFi and bridges to network activity and funding
• The Ethereum Merge is drawing significant attention from the crypto community and many traders are attempting to speculate on the developments pre- and post-Merge
• One of the main implications is that traders will attempt to maximize the amount of Ether held by their private keys pre-Merge, which may include borrowing Ether from alternative ecosystems
• Rollups, bridges and alt L1s will likely see an outflow of Ether from their TVL and liquidity pools and into Ethereum mainnet
• There will likely be a scramble post-Merge where traders would seek to unwind any leveraged positions on alternative ecosystems

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members of The Block Research.
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this Research content on The Block Research.

New banking platform LevelField Financial announced it has acquired Netshares Financial Services, a broker-dealer regulated by the U.S. Securities and Exchange Commission (SEC).

LevelField is a financial services firm that aims to meld traditional banking and digital asset products into one trusted platform.  

Using the acquisition, LevelField will launch LevelField Capital to service client demands, including capital raising, accessing private investments, project finance, and advisory services, LevelField said in a release on Thursday. 

The terms of the deal were not disclosed, and the acquisition is still subject to regulatory approval,  the release said. 

Building traditional financial services within crypto 

Founded by banking veteran Gene Grant II in 2018, LevelField is only now rolling out its first features with its digital asset trading and custody platform launching in September, the release said. 

“When you think of LevelField, don’t think of it as a crypto company, because that’s the absolute wrong definition,” Grant said in an interview with The Block. “We are a traditional financial services company that specializes in the niche of customers interested in the digital asset class, and I think that’s a huge differentiation in definition and the way that we think.” 

“Our goal is to provide a full-service banking experience to our customers,” Grant said, adding that digital assets should be treated the same as every other asset within the financial services industry. 

Raising $50 million

LevelField raised a small amount of pre-seed funding in 2018 and used the funds to focus on researching the regulatory environment, Grant said. The firm planned to do a major raise in March 2020, but it was derailed by Covid-19, he added. 

“It took us all the way to February of 2022 to raise the next round of funding,” Grant said. “So, we kept at it for two additional years, bootstrapping, essentially from my pocket until we were able to raise enough money to really put the company forward.” 

LevelField raised two seed rounds at the start of this year and currently is in the process of raising $50 million, according to an SEC filing. 

“We’re hoping to close that out in September,” said Grant confirming the round.  Some of the funds will be used towards the acquisition, he added.

The firm also doesn’t plan to slow down on acquisitions either. Grant is looking to acquire a U.S. chartered bank, among other deals. 

© 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.

Quick Take

• In this weekly series, we dive into some of the most interesting data and developments across the Layer 1 blockchain landscape, from DeFi and bridges to network activity and funding
• L1 teams continue to optimize for greater scalability and cross-chain communication, but on-chain metrics point to declining activity in DeFi protocols across the board
• This week, we check in with Avalanche, Solana, and Cosmos

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

Former Commodity Futures Trading Commissioner Jill Sommers has joined the board of FTX’s US derivatives subsidiary.

A Republican appointee under Presidents George W. Bush and Barack Obama, Sommers served on the commission for six years and is currently a senior advisor at the financial consultancy Patomak Global Partners.  

“The company has been at the forefront of bridging the gap between traditional and digital assets while staying true to its founding principles of transparency and leading the charge toward becoming the most regulated digital asset exchange in the world,” Sommers said in the release announcing her board seat.  

Mark Wetjen, another former CFTC commissioner, currently leads FTX.US’s policy and regulatory strategy. The exchange has pushed the commodities regulator to allow it increased flexibility in how it can offer leveraged trades on cryptocurrency to US retail investors.  

© 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.