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Jamil Nazarali, the global head of business development for market maker Citadel Securities, is leaving to become CEO of the firm’s crypto venture, according to a spokesperson. Bloomberg first reported the news. 

Nazarali will head the firm’s joint venture with Virtu Financial, Charles Schwab and Fidelity Digital Assets which aims to boost investors’ access to crypto and digital assets. The idea is to create a digital asset trading ecosystem for brokerages, as a source previously told The Block.

In March this year, Citadel Securities founder Kenneth Griffin told Bloomberg that it was fair to assume that it will be market-making in crypto in the months to come.

© 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.

Dynamic, a startup building web3 authentication and authorization tools for developers, has raised $7.5 million in a seed funding round led by Andreessen Horowitz (a16z).

Sharing the news exclusively with The Block on Tuesday, Dynamic said other investors in the round included Castle Island Ventures, Solana Ventures, Circle Ventures, Breyer Capital, Hypersphere and Chapter One.

Dynamic was founded in January by two Israeli friends — Itai Turbahn and Yoni Goldberg — who have known each other for over 15 years. They first met at the Massachusetts Institute of Technology (MIT) and have worked together for several organizations in the past, including Israel Defense Forces and Juul Labs.

Dynamic is their first own venture separately and together and also their first work experience in the crypto space. But Turbahn and Goldberg are not new to crypto. Turbahn told The Block in an interview that he and Goldberg have been crypto investors since 2012, having bought their first bitcoin at the time.

As early crypto adopters, Turbahn and Goldberg are confident that wallet-based authentication will become a norm in the future.

“We really fundamentally believe that everyone will have a wallet on their phone or computer in the next five years,” said Turbahn. “The speed at which wallets will be integrated into someone’s daily lives will increase exponentially. So we’re prepping for that world.”

web3 authentication

Dynamic can be seen as “Auth0 for web3,” Goldberg said in the interview.

Auth0 is a leader in the web2 authentication space. Last year, it was acquired by Nasdaq-listed identity software company Okta for $6.5 billion. Auth0 provides authentication and authorization tools for web2 application developers. Put simply, to log in to an app, users must prove their identity. And in web2, the common method is through email address and password. Auth0 provides a smooth email-based authentication infrastructure for that.

As for Dynamic, it will provide wallet-based authentication infrastructure, said Goldberg. The web2 industry will also move toward wallet-based authentication in the future, according to Goldberg and Turbahn.

Dynamic aims to serve different types of startups and companies in both web2 and web3 space. Its current alpha clients include Llama, Popartcats, Handstamp and Lunchclub.

Dynamic’s platform is today opening in closed beta and general availability is expected later this year.

Dynamic was founded last December and closed the seed round in April of this year, said Turbahn. The cash proceedings will be used to hire people and ship Dynamic’s platform, he added. The current headcount of Dynamic is eight people. “We’re actively hiring,” said Goldberg.

© 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 the previous piece, we provided a primer on Souls and soulbound tokens (SBTs), covering topics about how they can encode identity and individuation in web3, unlocking new capacities such as access to uncollateralized lending
• Here, we continue this discussion by expanding the discussion to how Souls and SBTs can give rise to a decentralized society (DeSoc), unlocking web3’s transformative potential beyond finance to political, economic, and social domains

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A draft law that would exempt issuers of cryptocurrencies and digital assets from value-added tax (VAT) was approved by the Russian parliament on Tuesday.

According to a Reuters report, the law would not only exempt issuers from paying VAT but also establish a new tax rate of 13% for Russian companies and 15% for foreign ones on taxed incomes from digital assets. It was approved by the State Duma members in both the second and third readings today.

This proposed legislation — which must be approved by both the upper house and President Vladimir Putin before becoming law — represents a change in thinking for the country that has previously heavily criticized digital assets.

Earlier this year, the Russian central bank advocated for a blanket ban on crypto, citing its potential for increasing the financial instability of Russian citizens. However, as the country has found itself increasingly financially isolated due to its invasion of Ukraine, it has softened its stance in the face of sanctions from the West which saw several banks banned from the SWIFT payments network. 

In March, Russia’s largest bank, Sberbank, announced it would soon start issuing and exchanging digital assets after getting the green light from the Russian central bank. This followed a February move to give blockchain platform Atomyze Russia, the first license to exchange digital assets. 

© 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.

On Monday, a document released by a group of Cosmos contributors, revealed that the Cosmos network will soon enable interchain security. This is an optional feature allowing certain application-specific chains on Cosmos to secure themselves by using the same security validators that run Cosmos Hub — the central blockchain of the Cosmos network.

Per Cosmos contributors, interchain security will go live between August and September.

Cosmos — an ecosystem of more than 200 blockchains — lets developers build new application-specific chains if they can manage their own validators. But, building a validator set from scratch consumes a lot of time and resources. This is where interchain security comes in.

Rather than setting up independent validators, the feature will make it possible for new Cosmos-enabled blockchains to rely on Cosmos Hub’s security validators. It also means these blockchains will send fees to those validators, providing further rewards to ATOM stakers.

By launching interchain security, Cosmos will emulate the design of another interoperability network: Polkadot. On Polkadot, all application-specific chains share their validator security with the central relay chain by default.

“Launching on the Cosmos Hub August/September 2022, Interchain Security will emerge as the premier method for projects to get the highest level of security in Cosmos by leveraging the entire 175+ Cosmos Hub validator set,” Cosmos contributors stated. They added that interchain security could be vital to onboard projects from outside Cosmos that are interested to launch on Cosmos as their own blockchain. 

Cosmos contributors have proposed spending 150,000 ATOM tokens ($1.1 million) from the official Cosmos Hub community pool to attract projects that use interchain security.

The interchain security feature is planned at a time when Ethereum-based projects like decentralized exchanges dYdX and Paraswap have shown interest in expanding to Cosmos as independent application-specific chains.

© 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.

Zigazoo, a social media network for children, said on Tuesday it had raised $17 million in a Series A fundraise led by Liberty City Ventures.

The round brings the total raised by the company to $21 million since it launched in 2020. Other funders in the Series A include Animoca Brands, The NBA, Dapper Labs, OneFootball, Causeway, Medici VC, Lightspeed Venture Partners, Flamingo Capital, Core Ventures, Spartan Group and Charli and Dixie D’Amelio.

Zigazoo allows children to create TikTok-like videos in response to challenges set by brands and to showcase talents to friends. It has partnered with companies including Nickelodeon, Peanuts, Netflix Kids and US-based Zoos, as well as celebrities such as Dolly Parton.

In early April, the company rolled out a non-fungible token (NFT) platform, with collections from children-focused brands such as Moonbug Entertainment and Invisible Universe. With the prices ranging from $5.99 to $49.99 depending on rarity, children can use the NFTs in their videos, as their profile pictures and can trade them with other children on the platform.

“Like it or not — web3 is the future of the internet and economy, and kids need a safe space to learn about it. Child-friendly NFTs are a perfect way to introduce kids to web 3 technology and financial literacy,” Zak Ringelstein, CEO and founder of Zigazoo, told The Block via email. “There are tons of fun and engaging products teaching kids how to code, but very little content that teaches kids about what blockchain technology is and what it’s capable of.” 

Ringelstein said the funding will help expand the company’s presence in web3 “while building towards becoming the leading social network for kids to interact directly with creators and brands in the kids’ media space.”

It plans to continue to introduce new NFT collections, build more gaming elements into Zigazoo, and “spark joy” by using QR codes to create learning experiences through AR. It will also build out its creator and marketplace tools for creators.

© 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.

MakerDAO, the issuer of the Dai (DAI) stablecoin, is currently voting on how to allocate 500 million DAI ($500 million) of treasury funds into investments in US treasury bills and bonds, the protocol announced on Monday.

The governance vote is the result of the community agreeing to an asset allocation for a liquid bond strategy and execution. Maker says this asset allocation introduces a new real-world asset vault. Maker vaults allow owners to deposit collateral to generate the DAI stablecoin.

The reason this is happening is because Maker’s current treasury is largely held in stablecoins that generate little-to-no yield. By investing excess funds elsewhere, the hope is to reduce counterparty and credit risk.

This new vault will hold Maker’s investment in liquid bond strategies. As part of the previous agreement, the community chose US short-term treasuries and investment-grade (IG) corporate bonds as the preferred asset allocation options.

The ongoing vote is whether to allocate the $500 million completely to US short treasuries or an 80%-20% split between short treasuries and IG corporate bonds.

The 80-20 split option is currently accounting for the most votes — almost 99% as of the time of publishing — according to data from the voting page. Voting will end on June 30 at 11 a.m. EDT.

Private wholesale lender Monetalis will create the trust that will hold the bonds for Maker but only Maker will have sole control of the funds of the legal structure. The Maker Governance will also be able to liquidate the investment via an executive vote, the project stated.

© 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.

PolySign, a crypto startup that offers custody, trading and administration infrastructure for institutions, has raised $53 million in a Series C funding round.  

Investors in the round included Brevan Howard, a hedge fund co-founded by British billionaire Alan Howard; Cowen Digital, the crypto division of the investment bank Cowen; and GSR, a crypto trading firm and market maker, according to an announcement on Tuesday. There was no lead investor mentioned for the round.

Besides the equity funding, PolySign has also received a credit facility worth $25 million from private equity firm Boathouse Capital.

When asked why PolySign went for the credit facility instead of raising a bigger Series C round, CEO Jack McDonald told The Block in an interview that it was a “very deliberate” decision to raise debt for the first time. PolySign, in fact, raised more equity than it initially planned, he added.

“We have a lot of confidence in our business and in our future opportunities, so we did not want to” share more equity with investors, said McDonald.

PolySign started its fundraising efforts in the first quarter of this year and closed the round earlier this month, said McDonald.

With fresh capital in hand, PolySign aims to complete the acquisition of MG Stover that it announced in April, McDonald said. MG Stover is a crypto fund administrator providing investors accounting and reporting services. It claims to maintain over $40 billion in digital assets under administration.

PolySign also plans to expand its custody business that it operates via its subsidiary — Standard Custody & Trust Company — a regulated custodian by the New York State Department of Financial Services (NYDFS).

McDonald said PolySign plans to expand in Europe, the Middle East and Asia. As for product expansion, he said the firm is looking to support decentralized finance (DeFi) platforms within its infrastructure. There are currently 180 people working for PolySign and the firm is looking to add around 50 more people, said McDonald.

PolySign’s Series C funding round comes over a year after the firm raised also $53 million in Series B funding. McDonald declined to comment on the firm’s valuation with the latest round.

© 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.

Web3 network Peaq has raised $6 million in a round led by blockchain venture capital firm Fundamental Labs. 

Other investors in the round included HashKey, Delta VC, GSR and Cypher Capital, according to a statement t0day. The valuation was not disclosed.

Peaq says it’s a network that empowers individuals to build decentralized applications (dApps) for vehicles, robots and devices including sharing, charging and parking functionalities. It says that through this system people can retain profit, ownership and governance rights over machines in what it terms as the “economy of things”. The company believes that this will become a decentralized alternative to the Big Tech-controlled Internet of Things (IoT).

The blockchain underpinning Peaq is built with Substrate, a software development kit used by developers to create the parachains that make up the Polkadot blockchain network. 

“Peaq provides a vital mechanism as we step closer to fulfilling the vision underpinning web3”, said Fundamental Labs managing partner Eric Yang. “As the infrastructure of the next iteration of the Internet of Things blossoms, and as the benefits of blockchain technology in everyday life become clearer, the need for Peaq’s machine-centric network becomes more and more apparent.”

The funding will be primarily used to grow its development team with a share set out to launch new products and features. It will also carve out part of its budget to market and increased awareness of the project. 

Peaq isn’t the only company hoping to create a decentralized IoT business model that has raised funds recently. Earlier this year, decentralized wireless network Helium raised $200 million in a round that included investors such as Tiger Global and FTX Ventures.

© 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 Huobi has said layoffs are a “possibility” after a tweet from Chinese outlet Wu Blockchain claimed the company could lay off as much as 30% of its workforce.

The move was said to be due to a sharp drop in revenue following the removal of Chinese users, amid a wider crypto ban in the country.

A spokesperson from Huobi told The Block it had dedicated significant resources to its hiring efforts around the world as it pushed for international expansion, but was reconsidering given the current market environment.

“Huobi Global is in the process of reviewing both its hiring policies and its current manpower, with the goal of realigning them to its operational needs. Further to such a review, lay-offs are a possibility,” the spokesperson said.

Founded in China in 2013, but now based in the Seychelles, Huobi claims over 10 million users globally. On LinkedIn, it lists its company size as between 1,001 and 5,000 employees.

Despite its push for expansion it has also faced issues in some markets, most notably on its former home turf due to the Chinese government’s repeated crackdowns on crypto. It will also shut down permanently in Thailand on July 1 after local authorities revoked its license to operate there.

Should it announce layoffs, Huobi will not be the only exchange to do so in recent weeks. Gemini slashed around 10% of its workforce at the beginning of this month. Coinbase also laid off 18% of its staff, or around 1,000 people, after admitting it had “over-hired.” Alongside these, Bybit has confirmed plans to lay off staff but has not said how many.

© 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.