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BlockFi was one of the companies that liquidated the collateral on a loan from Singapore-based crypto hedge fund Three Arrows, according to the Financial Times.

The Block had previously reported that the liquidation totaled at least $400 million and that the firm faces potential insolvency.

The company had borrowed bitcoin from BlockFi but failed to meet a margin call on that loan, according to the Financial Times.

CEO of BlockFi Zac Prince seemed to comment on the situation while saying that he would not mention “specific counterparties.”

“BlockFi can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations on an overcollateralized margin loan. We fully accelerated the loan and fully liquidated or hedged all the associated collateral,” he said. “We believe we were one of the first to take action with this counterparty.”

Prince also argued that the company needs to act with “prudent and proactive risk management” in order to stay afloat “during times of market stress.”

© 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.

Tesla CEO Elon Musk is facing a new class-action suit that alleges his actions involving the meme-themed cryptocurrency Dogecoin constitute a Ponzi scheme.

Keith Johnson, a US citizen, lodged the suit against Musk and his businesses Tesla and SpaceX on behalf of himself and those similarly situated in the Southern District of New York today.

Johnson claims Musk and his business’s activities around Doge defrauded him and other investors in what amounts to a pump and dump scheme.

The complaint alleges that Musk’s consistent messaging that he was a fan of the cryptocurrency directly led to its price spike, and when market conditions changed, investors lost out.

“Every statement and endorsement from Defendants on social media regarding Dogecoin has knowingly caused millions of people to spend billions of dollars buying into the Dogecoin Crypto Pyramid Scheme,” said the complaint.

Musk has a long history promoting Dogecoin and the complaint highlights the greatest hits of Musk’s Doge tweets since a satirical article piqued his interest about the meme coin in 2019. The complaint points out that Dogecoin grew in value following Musk’s tweets about it in 2019, which led Musk to self-appoint himself the “CEO of Dogecoin.”

The complaint also highlights that Musk engaged with Dogecoin developers and prompted the community to take action, though he would later point out that the Doge community is not a formal organization and no one reports to him as a leader, so his ability to take action in the community was limited.

But Musk’s activities weren’t just through his personal Twitter account, according to the complaint. He attempted to utilized his businesses to proliferate use of the crypto. Musk claimed Tesla would sell Dogecoin merchandise in 2021 and the electric vehicle maker tested accepting payments in DOGE in 2022. 

In June of this year, Musk finally sold his DOGE at $0.08, a far cry from its May 2021 high of $0.73. After claiming Musk pumped the price ahead of the general crypto crash, it points out that Musk called crypto “a hustle” during an appearance on Saturday Night Live’s Weekend Update.  

The complaint seeks $86 billion in monetary damages with $172 billion in treble damages. Treble damages are usually used as a punitive measure – the statute allows a court to impose up to triple the amount in damages. But more than money, the suit wants a Judge to rule that the trading of Dogecoin constitutes gambling under New York and federal law and enjoin unlicensed professionals, like Musk and his firms, from promoting the cryptocurrency.

Musk has a history of legal actions over his Twitter activity.

In 2018 he settled with the Securities and Exchange Commission (SEC) for misleading investors after prematurely tweeting that he intended to take Tesla private. The complaint also pointed to other investigations into Musk’s dealings, including an insider trading probe into Musk and his brother Kimbal Musk and an unconfirmed FBI investigation into his dealings with Dogecoin.

© 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 investors of crypto lending platform Celsius are “unlikely” to provide additional financial support, the Wall Street Journal reports.

The news outlet said investors such as Canadian pension fund firm Caisse de dépôt et placement du Québec and other participants in the $400 million round from last fall are staying on the sidelines. Growth equity firm WestCap was also named in the WSJ report.

The developments come as Celsius weighs its options amid a freeze in withdrawals, swaps and account transfers. The firm has brought in restructuring lawyers and is consulting with Citigroup on possible steps. 

“[The Celsius] team is working non-stop. We’re focused on your concerns and thankful to have heard from so many,” CEO Alex Mashinsky said in a Wednesday tweet. 

© 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

• Soulbound tokens are attestations of identity-relevant information about an individual, such as their credentials, affiliations, and memberships
• They are envisioned to form the basis of individuation and sociality in web3
• Their core properties are being issued, publicly or partially publicly visible, and non-transferrable
• Here, we discuss how they allow one to build reputation, establish provenance, access uncollateralized lending, and build and protect their reputation and identity in web3

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

The Texas State Securities Board has opened an investigation into troubled crypto lender Celsius, according to reports on Thursday afternoon. 

Reuters first reported that the regulator has begun investigating Celsius’ move to freeze withdrawals and transfers on Monday. 

The report states that Texas has labelled its investigation a “priority,” and that the regulator is “very concerned” that the freeze may result in “significant financial consequences” for customers. 

The firm, which sources told The Block earlier in the week only had a few more weeks’ worth of financial resources to support customer withdrawals, had taken to Twitter to announce the suspension of withdrawals, transfers, and swaps.

The regulator had learned of the account freeze from the company’s website and social media announcement, according to Reuters. 

The Block contacted the regulator for comment. 

© 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 investment vehicles nosedived Thursday as markets across Europe closed in the red for the day.

Bitcoin (BTC) and ether (ETH) were trading down over 7% and 10%  respectively over the past 24 hours, at the time of writing, according to Coinbase data via TradingView.

ETNs and ETPs across Europe tracked the decline in crypto as traditional markets also fell on Thursday — the Europe Stoxx 600 closing down 2.31%. 

All of 21Shares ETPs tracked by The Block closed down on Thursday, with 21Shares Polkadot ETP leading the losses, down 5.95%. 

Here’s how some of the major European crypto investment vehicles performed on Thursday, June 16:

© 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
• Underlying risks in the crypto economy are being exposed at an alarming rate as on-chain activities by troubled lender Celsius and the hedge fund Three Arrows Capital reveal the cascading effects of forced selling in the Ethereum ecosystem and beyond
• As valuations in the market continue to shrink, users are starting to look cross-chain in their search for the best sources of on-chain liquidity
• Meanwhile, TRON faces a major test with the depegging of USDD from USD

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

Animoca Brands said in a news release on Thursday that it had completed the acquisition of an 80.45% stake in blockchain-based education tech platform TinyTap for $38.875 million in cash and shares. 

TinyTap provides a no-code platform enabling educators to create and distribute interactive content while earning usage-based revenue. 

“Educators number among the most prolific creators and traders of content,” said Yat Siu, executive chairman of Animoca, adding that the model allows educators to generate their own equity.

TinyTap was founded in 2012 and currently employs a staff of 30. The company has raised $13 million to date from investors including Aleph Venture Capital, Inimiti, Reinvent VC, Omega Group Enterprises, Radiant Ventures HK, Animoca Brands and others.

Animoca said blockchain is a useful tool in education because of the utility of creating immutable learning records, the fact that blockchain assets are platform-agnostic and user-owned and amid the financial incentives gleaned through tokenization of content.

Other shareholders of TinyTap include: Mario Ghio and Guilherme Mélega, respectively the CEO and the vice president; K12 of Somos Educação, which is part of Brazilian high-growth K-12 education company Vasta Educação, as well as current and former TinyTap team members.

It is the latest example of Animoca expanding its blockchain portfolio. In early June, the company announced the purchase of Notre Game, a gaming firm that incorporates physical and digital items into its titles.  

Animoca Brands also acquired racing-focused blockchain gaming startups Grease Monkey Games and Eden Games in February and April, respectively.

© 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 Tron DAO Reserve will pull another 3 billion TRX (worth about $180 million) from crypto exchanges as it supports the price of Decentralized USD, the stablecoin known by its ticker USDD. 

In a tweet on Thursday, the Tron DAO Reserve claimed that withdrawing tron (TRX) tokens from unnamed centralized and decentralized exchanges back to its own control will “safeguard the overall blockchain industry and crypto market.”

The Reserve’s decision to dry up TRX’s liquidity comes as USDD, an algorithmic stablecoin inspired by the now defunct TerraUSD, trades under a dollar for a fourth straight day. The token is currently trading at $0.975 after falling as low as $0.959 on Wednesday, per CoinGecko.

Following this latest withdrawal, the DAO Reserve will have pulled 5.5 billion TRX from exchanges in two days, or nearly 6% of its total circulating supply. Withdrawing a token from exchanges is a highly unusual step, although controlling liquidity in this way can limit the ability of short sellers to bet against tron. It also ensures the Tron DAO can maintain a large reserve of tron, with which to redeem USDD holders looking to sell.

Whenever USDD drops below its dollar peg it puts inflationary pressure on tron as more tokens are created to defend the peg. On Monday, the funding rate for shorting tron on Binance had crossed 500%, suggesting huge demand for the trade.

Tron traded at about $0.06 as of the time of writing, up 6% over the past 24 hours – but still 25% lower than its price a week ago.

© 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.

USD Coin (USDC) issuer Circle Internet Financial is expanding with a new euro-centric stablecoin.

Euro Coin (EUROC), according to Thursday morning’s announcement, will be made available starting June 30. 

The new stablecoin will be “a regulated, euro-backed stablecoin issued under the same full-reserve model and built on the same pillars of trust, transparency, and security that have made USDC one of the world’s most trusted digital currencies,” per the announcement.

To start, EUROC will be issued as an ERC-20 token on the Ethereum blockchain, the firm said, “with support for additional blockchains expected later this year.”

Circle said a number of exchanges will provide support for the stablecoin at launch, naming FTX, Bitstamp, BinanceUS, Huobi as well as Uniswap. Other platforms providing support for EUROC at launch include Anchorage, Compound, Curve and Fireblocks, among others.

According to data from The Block’s Data Dashboard, USDC is the second-largest stablecoin by circulating supply. 

© 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.