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Abra, a crypto trading and lending platform, slashed a dozen jobs this week, two sources familiar with the matter told The Block.

When contacted, Abra CEO Bill Barhydt confirmed the layoffs to The Block, saying that the firm has cut 12 jobs “purely as a cost-saving measure.” That translates to around 5% of the total workforce, he added.

Founded in 2014 by Barhydt, California-based Abra provides a crypto platform for both individual and institutional clients with services such as trading, lending and borrowing.

Abra is backed by venture capital investors, including Blockchain Capital, CMT Digital Ventures and Kingsway Capital. Last September, the firm raised $55 million in Series C funding and was valued at around $500 million at the time.

Barhydt said while Abra has cut certain jobs the firm is still looking to hire for various roles. He declined to comment on specific functions but said around 10 positions are currently open.

US-based Abra has operations in Asia as well. Barhydt said those operations continue. “We have a large team there with staff throughout the region,” he said.

Abra is the latest crypto firm to announce layoffs. Earlier Thursday, The Block reported that Hong Kong-based crypto exchange OSL has trimmed between 40 and 60 jobs, or about 15% of its workforce.

In recent weeks, several crypto firms, including Coinbase, Gemini and BitMEX, have all slashed their workforces.

© 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 Commodity Futures Trading Commission charged Mirror Trading International and boss Johannes Steynberg with alleged fraud and registration violations on Thursday.

The commission deemed the South Africa-based operation as the “largest fraudulent scheme involving Bitcoin charged in any CFTC case.”

Mirror Trading International allegedly engaged in an “international fraudulent multilevel marketing scheme,” for nearly three years, according to the complaint.  Steynberg allegedly solicited Bitcoin from members of the public for participation in a commodity pool operated by Mirror Trading International — without being registered as an operator — from May 2018 to March 2021.

“The defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from the pool participants,” the CFTC said in a release. The commission filed its civil enforcement action in the US District Court for the Western District of Texas.

Steynberg allegedly accepted at least 29,421 BTC, with a value of more than $1.7 billion, from 23,000 participants in the United States who were not eligible contract participants. He also took contributions from others around the world, according to the CFTC.

Per the agency, Steynberg “purportedly traded off-exchange, retail foreign currency on a leveraged, margined and/or financed basis” with the participants “through what the defendants falsely claimed was a proprietary ‘bot’ or software program.”

Investigators in the United States joined the investigation into Mirror Trading International last summer, Bloomberg reported in August. The commission is seeking restitution to defrauded investors and disgorgement of ill-gotten gains. The CFTC is also seeking civil monetary penalties, permanent registration and trading bans and a permanent injunction against future violations of CFTC rules and the Commodity Exchange Act. 

Steynberg disappeared two years ago after Mirror Trading International stopped payouts to many of its members. He was arrested in Brazil last year and lost a bid earlier this month to be released from prison ahead of an extradition hearing, according to South African news outlet News24.

© 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

• This piece collects current proposals and discussions from major DeFi projects and their communities
• We cover recent notable community governance discussions and proposals from major DeFi protocols, highlighting project developments in lending, exchange, yield, and liquid staking
• One readily apparent issue is the centralization of voting power in coin voting governance and one promising development is the move toward departmentalization as DAOs mature
• This week we look at MakerDAO, Compound, Aave, Uniswap, Yearn, and Lido

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members of The Block Research.
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OP Crypto, a venture capital firm, said on Thursday that it has launched a new fund to invest in fund managers focused on early-stage crypto investments.

The fund, called OP FOF I, has already raised $50 million from traditional and crypto-native LPs like LedgerPrime and FJ Labs. LedgerPrime is the subsidiary arm of crypto exchange FTX, and FJ Labs is a venture capital firm with $500 million AUM.

OP Crypto is targeting a $100 million hard cap. 

“There is actually quite a lot of picked up demand due to people not knowing where exactly is best to park capital amidst the current bear market,” said Lucas He, general partner at OP FOF I and David Gan, president and advisor of OP FOF I, in a joint email to The Block.

“We offer a fairly downside protected safe haven vehicle with a very diversified portfolio base,” they added. “Especially for investors that are not as crypto native, this is the ideal vehicle to gain diversified exposure with a single check where LPs can also double down on investments that fit their thesis via co-investment opportunities from managers within the FOF vehicle.”

The new fund will back managers with expertise in areas such as DeFi, NFTs, metaverse, gaming and other unique web3 areas, focusing on geographies such as Latin America, Africa, India and Southeast Asia.

“From our venture vehicle perspective, we take a very disciplined approach to investing, having only invested 20% in the past year, and looking to double down when there is a market downturn at reasonable valuations,” said He and Gan.

“Lucas, a veteran in the crypto space since 2013 has been through three major market cycles and we see current market conditions as an ideal market for the FOF vehicle specifically, to back managers who have a similar disciplined approach to invest during this bear market with reasonable valuations and be able to catch the bull run upside.”

© 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 Securities and Exchange Commission (SEC) rejected yet another application for a bitcoin spot-based exchange-traded fund (ETF) on Wednesday.

Shares in Grayscale Bitcoin Trust (GBTC) were trading at $12.16 today at the time of writing, down about 9% since the decision by the SEC.

Grayscale’s bid to convert its product, GBTC, 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 filed a lawsuit against the SEC after its decision. 

The asset manager argued that since the SEC has approved bitcoin futures ETFs, that opened the door for a spot-based fund, but the regulator disagreed. According to the SEC, a bitcoin spot-based ETF would be more susceptible to market manipulation as the price of bitcoin can be influenced by a variety of factors. 

Futures products sidestep this issue as the market is smaller and based on futures prices from the CME, an SEC-regulated derivatives exchange that would be much more difficult to manipulate than an unregulated bitcoin market. 

The SEC’s decision came as no surprise to many with knowledge of the situation. James Malcolm, head of FX strategy at UBS, spoke with The Block before the ruling, noting that it would have been a shock to see Grayscale’s spot ETF conversion approved, especially while Gary Gensler heads up the SEC and Janet Yellen is secretary of the Treasury. 

Here’s a look at GBTC and how it works:

Overview of the Grayscale Bitcoin Trust 

Grayscale launched its flagship product, GBTC, in 2013 as a solution for institutional investors looking to gain exposure to bitcoin. As of June 30, it controlled about 3.5% of bitcoin’s circulating supply with 638,725 bitcoin worth around $13 billion.

GBTC issues accredited investors shares that represent ownership in the trust. In the US, accredited investors are defined as persons earning more than $200,000 a year individually, or couples with combined incomes of more than $300,000 for the past two years. 

Unlike other investment products, exchange-traded products (ETPs) for example, the shares do not grant investors a right to underlying assets — there is no redemption program in exchange for bitcoin.

The lack of such a function means that since 2014 there has been a disparity between GBTC’s trading price and its net asset value, known as the premium. The premium can be defined as the difference between the value of the underlying holdings and the market price of the holdings, as seen in the chart below. 

On June 17, GBTC’s discount hit an all-time low of -34%, which arrowed ahead of the SEC decision. This followed Grayscale’s announcement that it had struck a deal with Wall Street firms Jane Street and Virtu Financial to close the discount on GBTC if its application gained approval.

So following the latest rejection, proponents of a bitcoin ETF now look toward Wisdomtree’s application decision, slated for October, and 21Shares’ joint application with Cathie Wood’s Ark Invest — which has an expected decision deadline of January 26, 2023, according to Bloomberg Intelligence.

Ahead of the SEC decision on GBTC, Hany Rashwan, CEO and co-founder of 21Shares, told The Block in an email that approval of a spot bitcoin ETF in the US would open the asset class to institutional and retail investors alike. He went on to say that “on the retail side, investors would be able to access crypto by investing in an ETF without needing to create a wallet or figure out trading on their own.”

Jeffery Howard, head of business development and institutional sales for OSL in North America, told The Block that a spot ETF is highly unlikely until Congress assigns their regulatory oversight to either the SEC or CFTC. 

Currently, neither agency has the budget nor the authority to provide oversight and enforcement, according to Howard. 

Grayscale Investments, which manages GBTC, is a unit of the Digital Currency Group, which also owns CoinDesk — a media unit that competes with The Block in supplying news on crypto markets.

© 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.

Decentral Bank, a decentralized autonomous organization (DAO), working on the USN stablecoin, stated it has temporarily paused allowing the use of NEAR tokens in the minting process of USN, a pivot away from its original design. The DAO cited shaky crypto market conditions for its decision.

The developers of USN stablecoin, announced version 2 (v2.0) update of their project on Thursday. USN is a decentralized stablecoin soft-pegged to the US dollar and exists on Near Protocol, a scalable Layer 1 blockchain

USN was originally built similarly to TerraUSD (UST), the stablecoin that collapsed and brought down its sister token Luna (LUNA) with it. After UST collapsed, it led to concerns that stablecoins built in the same way would suffer similar fates.

From Thursday, the stablecoin will exclusively be minted with USD Tether (USDT), the largest centralized stablecoin issued by Tether. This means that USN will be 1:1 collateralized and redeemed with USDT, rather than NEAR, the native token of the Near Protocol blockchain as originally decided.

Furthermore, the DAO said it is planning to use a basket of market-leading stablecoins as its underlying collateral, including USDT, USDC and DAI. The team claimed that this strategy will make the stablecoin more resilient in current market scenario.

“We concluded that given the uncertainty around how long this bear market will last and the selling pressure induced by tightening macro conditions, the v1.0 could, potentially, pose a risk that $USN could become undercollateralized from sustained volatility of the NEAR price,” Decentral Bank DAO said in a media statement.

© 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 FBI is set to announce that it will add OneCoin founder Ruja Ignatova to its Ten Most Wanted Fugitives list at a press conference on Thursday at 11am.

According to a statement from the US Attorney for the South District of New York, Ignatova “allegedly defraud[ed] investors of more than $4 billion through the OneCoin cryptocurrency company.”

OneCoin’s business was built on selling educational cryptocurrency trading packages to its members, who were incentivized with commissions to sell to yet more new members. The scheme claimed its membership was as large as 3 million people during its peak, including victims across the globe. 

However, it had no blockchain technology behind it and users were unable to redeem their coins for fiat or transfer it into other cryptocurrencies. Instead, those that made money from the scheme did so through recruiting new investors. 

Ignatova, who holds Bulgarian and German citizenship, disappeared in late 2017. She was last seen in Athens, Greece, in the company of two Russian-speaking men. Despite attempts to locate her — including by the popular BBC podcast series “The Missing Cryptoqueen” — her whereabouts are currently unknown.

Other key figures in the OneCoin leadership have been apprehended. In 2019, the Southern District of New York charged Ignatova and others involved in OneCoin with fraud. Among them was her younger brother Konstantin Ignatov, who despite a plea deal is currently awaiting sentencing of up to 90 years in prison. 

In May, Ignatova was added to Europol’s most wanted list.

© 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.

Kyve Network, a decentralized data storage solution, has raised $9 million in a round led by Distributed Global, according to a news release. Kyve was valued at $100 million after the raise. 

Wicklow Capita, IOSG Ventures, Blockchain Coinvestors, Anagram, Cerulean Ventures, Huobi Incubator and MEXC Global also took part in the round. 

Kyve, which operates as a decentralized autonomous organization, or a DAO, is a protocol that allows providers to standardize, validate and permanently store blockchain data streams. This decentralized data storage solution reduces dependence on centralized services such as AWS for web3 companies.

“The framework KYVE is building across chains allows developers to collect and categorize data from a truly decentralized environment,” said Fabian Riewe, co-founder of Kyve. “Instead of relying on centralized snapshots, KYVE Network is powered by decentralized uploaders and validators, therefore respecting the original web3 ethos.” 

Kyve claims it has had more than 85,000 unique users interacting with the protocol, creating 23.7 million on-chain events. 

With the new funding, the company plans to build support for more blockchain networks — it recently incorporated Cosmos and Polkadot — and expand its team as it gears up for a mainnet launch. It is looking to recruit senior executives in engineering, marketing and 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.

The Ethereum core developers successfully launched the Gray Glacier hard fork today, a network upgrade that implemented the Ethereum Improvement Proposal (EIP) 5133 at block height 15,050,000.

The Gray Glacier hard fork required that client software providers on the execution layer — like Nethermind and Geth — update their Ethereum nodes. Nethermind confirmed in a Twitter post on Thursday that the upgrade was successful.

The upgrade was planned to delay the so-called difficulty bomb, a pre-defined increase in the complexity of Ethereum’s proof-of-work mining algorithm, by 100 days. The difficulty bomb will now activate in mid September, roughly around the same time when the networks switch to proof-of-stake consensus is tentatively scheduled. 

What is the difficulty bomb?

The difficulty bomb is a feature that ensures Ethereum’s merge, the blockchain’s switch from proof-of-work to proof-of-stake consensus, is carried out smoothly. The mechanism makes Ethereum blocks harder to mine on its proof-of-work layer and serves as a disincentive for miners from forking the chain in what’s called as Ethereum’s “Ice Age.”

Why is the difficulty bomb delayed?

Earlier, Ethereum’s core developers had scheduled the difficulty bomb to go live on June 29, anticipating the merge around this time. However, due to a delay in the merge schedule, the difficulty bomb in June was no longer needed.

Furthermore, a premature activation of the difficulty bomb would have likely make the blockchain unnecessary slow. According to data from Etherscan, block times had already started spiking on Ethereum, going from 13 seconds to 16 seconds. Now that the difficulty bomb has been pushed further, it is estimated that block times will come back down to normal levels. 

© 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 exchange operator FTX looked at making a deal with troubled crypto lender Celsius but ultimately walked away, two people with knowledge of the matter told The Block.

FTX began talks with Celsius about providing financial support or making an acquisition but decided against proceeding after looking at Celsius’s finances, the sources said. Celsius had a $2 billion hole in its balance sheet and FTX found the company difficult to deal with, one of the sources said.

Celsius did not respond to The Block’s request for comment.

Celsius has been fighting for survival since freezing all withdrawals on June 12, citing “extreme market conditions.” Clients’ funds have remained stuck ever since. Celsius claimed 1.7 million customers and around $12 billion in assets under management in May.

Amid its financial woes, Celsius has remained almost silent. Its last official update was issued on June 19, when the company said its objective “continues to be stabilizing our liquidity and operations. This process will take time.”

The Block reported recently that Celsius has appointed Wall Street giant Citigroup to advise on its financial options and the Wall Street Journal said the lender is working with restructuring consultants from advisory firm Alvarez & Marsal.

Celsius is resisting a Chapter 11 bankruptcy filing — a recommendation from its lawyers — people with knowledge of the situation told The Block earlier this week. The firm has instead been seeking a show of support from users to help win the internal argument against its own legal advisors.

Celsius was founded in 2017 by CEO Alex Mashinsky and grew quickly by promising attractive interest rates to users. The firm won over high-profile investors, including Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and growth equity firm WestCap. Last year it raised $750 million at a valuation of $3.5 billion.

While FTX decided to walk away from Celsius, the exchange giant is still interested in rival crypto lender BlockFi. As The Block reported yesterday, FTX is seeking to acquire BlockFi outright after providing a $250 million revolving credit facility to the firm.

© 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.