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Decentralized finance (DeFi) lending protocol Compound is getting ready to launch its third version called Comet, the project stated on Tuesday.

Compound is a DeFi protocol that lets anyone lend or borrow funds, having put up crypto as collateral. It currently runs on Ethereum but Comet or Compound III will mark its transition to becoming a multi-chain protocol. Aave — Compound’s main rival in the DeFi money market — also went multi-chain with its third iteration, called Aave v3, in March.

Commenting on the project’s DAO forum, senior software engineer at Compound Labs Kevin Cheng stated that Compound III’s first deployment will be a usd coin (USDC) market on Ethereum. Once launched, the USDC market on Comet will support five different cryptocurrencies that can be used as collateral. These are wrapped ether, wrapped bitcoin, uniswap, chainlink, and Compound’s native coin (COMP).

According to Cheng, all the release candidate contracts for the first Comet deployment have been deployed. Release candidate contracts are final versions of blockchain protocol smart contracts that are ready for live deployment. Cheng also stated that the contracts have been audited by the likes of OpenZeppelin and ChainSecurity.

With the contracts ready, the responsibility for launching Comet now rests with the project’s community. “Compound III is now just a governance proposal away from being live,” wrote Cheng on the DAO’s forum.

The typical procedure here will begin with a governance proposal to launch Comet. The DAO will then debate the launch, followed by an on-chain vote. Comet will go live once the DAO votes to approve its final deployment.

© 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 mining and infrastructure company Prime Blockchain is no longer set to list on the Nasdaq stock exchange. 

Prime Blockchain and 10X Capital Venture Acquisition Corp II, a special purpose acquisition company (SPAC), have mutually agreed to terminate a $1.25 billion merger deal, according to an 8-K filing published on August 12. 

A SPAC is a company without operations that is formed purely with the goal of acquiring a company and taking it public. 

Prime Blockchain announced its plans to go public via a SPAC in April of this year. The goal was to have the merger complete by the second half of 2022. 

Several crypto companies like Bitdeer and Apifiny planned to leverage SPACs to go public. In July, Apifiny and the SPAC Abri also mutually terminated its deal, according to a release. 

Only 74 IPOs have taken place so far this year via SPACs, compared to the 613 took place last year, according to data from SPACInsider. 

A reason for the termination of the merger deal is not provided in the filing. 

However, the news comes at a time when US IPO activity slows to a five-year low in the first half of this year, according to data from FactSet.  

Crypto companies are also grappling with inflation, recessionary fears and a crypto bear market with bitcoin and ether down 48% respectively since the start of this year. 

BitGo acquisition falls flat

On Monday, crypto investment firm Galaxy Digital announced that it had terminated its acquisition of BitGo. Galaxy said the crypto custodian had failed to deliver audited financial statements for 2021 that would comply with the requirements of the acquisition agreement. 

BitGo responded, calling Galaxy’s decision “improper” and said it would pursue legal action and damages in excess of $100 million, according to a statement. 

Mergers and acquisitions have remained one of the few bright spots in crypto deal making as the industry grapples with several macro headwinds. The Block Research’s recent report shows that M&A transactions are on pace for a record year. 

Chart: The Block Research

© 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.

Blockchain analytics firm TRM Labs says that the Tornado Cash sanctions present new problems for crypto firms trying to comply with US regulations.

TRM Labs provides information to crypto entities such as Uniswap, Aave and Circle which helps them comply with various regulations and track criminal activity. It monitors crypto addresses and categorizes them by their level of risk, enabling crypto entities to avoid dealing with laundered funds or bad actors. It also assesses whether addresses are compliant with US sanctions.

The firm issued a statement on August 15 that broke down how it works with DeFi protocols to help them try to stay compliant. Yet the firm highlighted that these sanctions are different from previous rules in a way that makes it more ambiguous in how to adhere to them.

TRM Labs noted that this is the first time the Office of Foreign Assets Control (OFAC) has sanctioned a set of smart contracts instead of normal blockchain wallets. With wallets, it’s generally easy to identify if someone has interacted with the wallet either by sending or receiving funds from them. But smart contracts are more complicated.

“What makes the Tornado Cash designation challenging from a compliance and enforcement perspective is that any person who deposits funds into Tornado Cash can trigger the Tornado Cash smart contracts to send funds to any other Ethereum address(es),” said TRM Labs. “Theoretically, someone could send funds to Tornado Cash and then specify that those funds be deposited into a totally unrelated cryptocurrency address belonging to a random, unsuspecting, or even unwilling person.”

As TRM Labs noted, this has already happened. One user sent small amounts of ETH from the sanctioned Tornado Cash smart contract to a range of well-known crypto and mainstream individuals (including Coinbase CEO Brian Armstrong, talk show host Jimmy Fallon and former basketball player Shaquille O’Neal).

Due to the uncertainty, TRM Labs explained that it provides three levels of risk data. When a crypto firm pings it with an address (to check whether the address is compliant), TRM Labs provides data on whether the address is a sanctioned address, and whether it has direct or indirect exposure to sanctioned addresses. 

Yet TRM Labs highlighted that so-called dusting attacks are a particular problem. Since they are technically an interaction with a sanctioned entity, the firm is unable to dismiss them — especially without any guidance from regulators.

The result is that this pushes the onus onto crypto entities, which will be forced to individually decide whether to allow wallets that have been hit by dusting attacks. 

© 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.

Yuga Labs released its long-awaited intellectual property (IP) licensing agreement for CryptoPunk and Meebits non-fungible token (NFT) holders on Monday.

CryptoPunk and Meebits holders have been waiting for this announcement since Yuga Labs first bought the collections from Larva Labs in March. The agreement confers full commercialisation rights to create projects and products based on a holder’s NFTs, putting them on par with the IP rights enjoyed by the Bored Ape Yacht Club’s holders, some of whom have already used the IP in projects.

Among them, Seth Green is launching a show based on his recently-returned Ape, which was — in his words — “kidnapped” in May. Restauranteur Andy Nguyen also opened Bored Ape-themed restaurant Bored & Hungry in Los Angeles in June.

While Yuga Labs owns the IP, it licenses it to NFT holders. Previously, collection owners Larva Labs handled IP licensing differently and retained the intellectual property rights to the collections — a decision which attracted criticism and prompted at least one holder to sell their CryptoPunk in protest.

Across the board, collection creators have taken different approaches to handling IP rights. Popular brand Moonbirds ruffled feathers earlier this month when it switched to a public domain usage model, adopting the Creative Commons CC0 copyright code. This allows anyone to commercially use and reproduce art from both Moonbirds and its sister project Oddities.

The decision prompted backlash on social media as holders argued that they had bought into the project believing they had exclusive rights to their NFT.

© 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.

Embattled Asian crypto lender Hodlnaut, which halted client withdrawals last week, has filed for protection against creditors in Singapore as it works toward resolving its liquidity crisis.

Announcing the news on Tuesday, Hodlnaut said it filed the application on August 13 in the Singapore High Court to be placed under judicial management — a process to prohibit any legal claims and proceedings against it by creditors.

Hodlnaut’s move is similar to Zipmex and Vauld, who both sought creditor protection in Singapore and received around three months’ time to resolve their financial issues.

Hodlnaut said it is working with lawyers and aims to avoid forced liquidation of its assets at current lower prices. The firm is expected to provide its next update on August 19.

As part of Hodlnaut’s judicial management process, the Singapore High Court will appoint a judicial manager — an independent officer of the court to manage the company.

But this process could take “up to a few months,” according to Hodlnaut. To that end, it has applied for Tam Chee Chong of Kairos Corporate Advisory to be appointed as the interim judicial manager and subsequently the judicial manager.

Hodlnaut was started up in 2019 in Singapore to let users deposit their crypto holdings and earn interest. As of December last year, the firm said its assets under management were more than $500 million and that its active users were 10,000.

While Hodlnaut goes through judicial management, its clients’ funds remain stuck. The firm doesn’t have a definite date as to when it will likely open withdrawals.

“We will be exploring available solutions on allowing our users to tap into emergency exit liquidity, but these are currently still subject to discussions and approvals by various stakeholders,” said Hodlnaut.

© 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.

Major Brazilian broker XP is the latest financial firm in the country to offer its customers the ability to trade crypto, with its platform Xtage launching today. 

XP executives rang the opening bell of the Nasdaq exchange this morning in New York and revealed that the platform is now live for users of its mobile app who want to trade bitcoin and ether. 

XP customers will be able to trade crypto using the same app they already use, Xtage CEO Marcos Horie said during the opening bell event. The company received “tons of requests” from its clients to start investing in crypto within XP’s existing ecosystem, Horie said, noting that they were looking to work with a company where they already had most of their investments.

XP counts more than 3.6 million active clients and first announced its plans to launch Xtage in May. 

Several other high-profile Brazilian banks and fintechs have launched crypto trading features in the past few weeks.

Latin America’s largest investment bank, BTG Pactual, finally launched its long-awaited crypto platform Mynt a few weeks ago, CoinTelegraph Brasil reported on July 26. BTG, which has long supported crypto, first discussed its plans to launch Mynt last September, and had been hoping to have the feature live before the end of 2021.  

Brazilian fintech app PicPay also confirmed on August 10 that its Paxos-powered crypto trading platform was now available. 

Digital banking unicorn Nubank also launched a crypto trading platform called Nucripto at the end of June. By July 26, it had already attracted 1 million customers to the new product. Mercado Libre (known as Mercado Livre in Brazil) also said it reached 1 million users for its own crypto offering earlier this year. 

© 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 is running out of cash fast, according to new court documents.

Projections from law firm Kirkland & Ellis filed yesterday show the lender could run out of funds by October. The firm also owes depositors $2.8 billion more in crypto than it’s currently holding.

Celsius entered Chapter 11 bankruptcy last month after cascading crypto prices forced it to halt withdrawals. Since then, it’s been working its way through a restructuring process and examining ways to pay creditors. Early in the process, documents showed a $1.2 billion hole in its balance sheet, with the firm reporting $4.3 billion in assets and $5.5 billion in liabilities.

Now, it appears the firm’s financial standing has gotten worse. 

It still has about $130 million in cash balance as of August, but that’s set to run out by October. With all current operating, capital and restructuring expenditures, Kirkland & Ellis projects the firm will be nearly $40 million in the red by the close of October.

Monthly Cash Flow Table from Kirkland & Ellis filing

Still, the greater hole is in its crypto holdings. The firm reported significant gaps between assets held and liabilities in the filing, amounting to a $2.8 billion hole in crypto liabilities. The firm currently has $348 million in BTC on hand, with $2.5 billion in BTC liabilities. There’s about a $1 billion spread between ETH liabilities and ETH on hand, and a little less than $700 million gap in USDC liabilities. Little to no WBTC and stETH liabilities and holdings of $557 million and $683 million respectively make up a little ground, along with an additional $438 million in its native CEL token after disbursements. The lender also has a gap of $625 million in other coins.

Coin Report from Kirkland & Ellis filing

The figures were filed ahead of the firm’s second day hearing, which is scheduled for tomorrow at 2 p.m. EST. A meeting of creditors will also occur on August 19. 

© 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 Greenidge Generation will “pause” parts of its expansion into Texas, focusing instead on sites in South Carolina and New York, the company said on Monday

“We have chosen to pause our plans to develop certain additional sites in our pipeline in the ERCOT market and, instead, intend to concentrate our operations at our two existing sites in South Carolina and New York for the time being,” the company said in a statement. ERCOT, or the Electric Reliability Council of Texas, manages the state’s power grid. 

The company reported $107.9 million in net losses in the second quarter, mainly due to a $71.5 million nonrecurring, non-cash charge, according to a statement on Monday.

The miner said that due to the “sudden change in mining economics” it has opted to prioritize liquidity and capital preservation over “aggressive growth.” It expects to reach a hash rate of at least 3.6 exahash per second (EH/s)  by the first quarter of 2023, having finished the second quarter at 2.5 EH/s.

The company announced last year that it closed an exclusive deal with a developer that had a development pipeline of at least two gigawatts of capacity and a separate exclusive agreement with a company controlling over one gigawatt of power generation, both in Texas.

Greenidge mined 10.7% more bitcoin (621 BTC) in the second quarter but saw its revenues decrease by 17% to $31.3 million compared to the first quarter.

“While our team once again delivered strong operational performance in terms of bitcoin production and plant uptime for the quarter and for the month of July, the approximately 60% decrease in the price of bitcoin during the second quarter coupled with the spike in global energy prices clearly presents a challenging earnings environment,” said  CEO Jeff Kirt.

Greenidge is planning to focus operations at its current sites in New York and South Carolina “for the time being.”

The company recently had its air permit renewal denied by New York’s Department of Environmental Conservation but said it would challenge the regulator’s decision and continue to mine in the meantime.

“While no adjudicatory proceedings have been scheduled to date, Greenidge has been advised that, based on the progression of previous and ongoing cases of a similar nature, the appeals process may take a number of years to fully resolve,” it said Monday.

© 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.

Brazilian fintech unicorn Nu Holdings added 5.7 million customers in the second quarter, bringing the number of people and businesses using its services to 65.3 million. 

Nu dipped its toe into the world of cryptocurrencies in July, adding 1 million customers to its Nucripto platform within three weeks of its launch. 

The digital banking company grew its total customers by 57% year-over-year in the second quarter, up from about 41.7 million in June 2021. Nu disclosed the figures in a second-quarter earnings release ahead of a conference call today.

Nu calculates that 52.3 million of its total customers — almost 80% — are considered active. The total consists of about 63.3 million consumers and 2 million small and medium-sized enterprises (SMEs), according to a slide deck company executives presented during the earnings call. 

Nu’s biggest operation is in its home country of Brazil, where it grew customers 51% year-over-year in the second quarter to 62.3 million. 

Nu is also expanding its reach in Mexico and Colombia, where it has about 2.7 million and 314,000 customers, respectively. The company added nearly 700,000 customers in those countries during the quarter, it said. 

The banking company’s revenues jumped 230% in the second quarter to $1.2 billion on a foreign exchange-neutral basis. 

Nu Holdings’s net loss grew to $29.9 million in the second quarter, compared with $15.2 million in the same three months of 2021. This was due to “higher share-based compensation and related tax effects in the quarter,” the company said in its earnings release.

The company’s adjusted net income was $17 million in the second quarter, up from $16.5 million in the previous-year period. 

Nu’s main financial institution, NuFin, reported adjusted capital of $3.9 billion at the end of June. Of this, 79% was cash or cash equivalents. 

© 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 bitcoin miners had a positive day on the stock market, even as the coin’s value dropped close to $24,000, after temporarily hitting $25,000 on Sunday night.

Bitcoin was trading at around $24,000 at market close, according to data from TradingView. It was at around $24,200 on Friday afternoon.

SAI.TECH’s stock went up by 14.70%, followed by TeraWulf (+13.53%), Stronghold Digital Mining (12.46%) and Greenidge Generation (11.78%).

Bitfarms was up by 9% on Nasdaq after announcing its second-quarter earnings earlier in the day. The company posted a net loss of $142 million and $42 million in revenues.

Here’s how crypto mining companies performed on Monday, August 15:

© 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.