FreeCryptoCurrency.Me

Crypto lending firm BlockFi said Monday that it is laying off “roughly 20%” of its staff.

In a blog post, penned by co-founders Zac Prince and Flori Marquez, the company cited “market conditions that have had a negative impact on our growth rate and a rigorous review of our strategic priorities.” BlockFi said its team had grown to more than 850 people.

“Since Q1 of 2022, the macroeconomic environment has shifted dramatically, sparking a dramatic pull back in equity and crypto markets. As a result, our number one goal has been to achieve profitability so that we can own our destiny as we navigate what many expect to be an extended global recession,” the company said, citing efforts to reduce spending on marketing and slowing its headcount growth, among other areas.

“Clients should not experience any material disruption to our platform, products or services; you will receive the same great service you have come to expect from BlockFi,” the company said.

The Block reported last week that BlockFi is raising a down round at a $1 billion valuation.

Other firms, including Gemini, Klarna and Bitso, have moved recently to trim employee numbers. Coinbase drew controversy earlier this month when it moved to rescind job offers as part of an effort to cut costs. 

© 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

• Known for its hardware wallet Nano Series, Ledger has been expanding its product/service offerings (Ledger Live and Ledger Enterprise Solutions) to satisfy the evolving needs of its customers and embrace the Web3 ecosystem
• In June 2021, Ledger closed a $380 million Series C funding round with an implied valuation of +$1.5 billion – this capital has been used to accelerate Ledger’s hardware (Nano wallets) & software (Ledger Live) developments and strengthen the capacity of Ledger Enterprise Solutions
• In April 2022, Ledger released Ledger Nano S Plus, an upgraded version of the Nano S device that integrates some of the benefits of the Nano X device

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

Rival crypto lenders moved quickly to distance themselves from staked ether (stETH) on Monday after Celsius Network paused all client withdrawals to stabilize its liquidity position. 

Staked ether is a form of ether (ETH) offered by Lido Finance that allows staked crypto to be used in other trades in a process known as liquid staking. BlockFi CEO Zac Prince tweeted it has “zero stETH exposure” and Kiril Nikolov, decentralized finance (DeFi) strategist at Nexo, told The Block that Nexo holds only a “limited number of stETH.”

So why all the excitement about staked ether?

Celsius, a centralized platform, works to offer returns to its customers. These yields come from various DeFi lending activities, where it makes uses of its own client funds to earn additional income. Celsius’s terms and conditions state user deposits act as loans which the platform can use however they like.

On-chain activity shows that Celsius transferred clients’ ether into Lido Finance, a liquid staking protocol which lets ETH holders stake on the Ethereum Beacon Chain to earn direct staking rewards. The protocol gives back stETH, a token that unlocks the underlying capital so it can be reused as collateral on other DeFi projects. 

Why is staked ether important?

We know from on-chain data that Celsius took large amounts of ETH and staked it on the Beacon Chain via Lido Finance. It then deployed the underlying stETH collateral for additional yield generation.

Recently, though, stETH faced liquidity issues on Curve Finance, a decentralized exchange, where the stETH is traded against ETH, usually at the ratio of 1:1. That ratio has now become unbalanced, causing a liquidity crunch for Celsius. 

An analysis of Celsius wallets from Larry Cermak, The Block’s VP of Research, shows that Celsius holds at least 409,170 stETH in its wallets, worth about $463 million.

Meanwhile, the Curve pool contains 120,613 ETH paired against 515,018 stETH, which is highly unbalanced ratio of 19% ETH to 81% stETH. This mismatch has led to an operational crisis, making it very hard for Celsius to convert their stETH holdings back to ETH to meet user withdrawal requests for the asset.

“Celsius owned so many stETH tokens that it is close to impossible to convert back to ETH without finding a counterparty via OTC,” said Eden Au, Research Director at The Block, referring to over-the-counter trading, where counterparties are matched away from an exchange. 

To make matters worse, stETH has lost its supposed parity with ETH and has been trading under a ratio of 0.95. The end situation is a catch 22 for Celsius where it can’t sell stETH on Curve, unless it wants to further push its price down and jeopardize the value of its own customer funds.

Celsius didn’t immediately respond to a request for comment on its investments. Lido Finance didn’t immediately comment on the role of stETH in the situation.  

© 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 by double digits at market open on Monday morning amid turbulence in crypto and equities markets. 

Argo Blockchain, for instance, had fallen by over 18% on the London Stock Exchange and over 16% on Nasdaq. Core Scientific, Iris Energy and TeraWulf stocks were down by 12.87%, -12.66% and 11.32%, respectively.

With many of these companies holding on to a majority of bitcoin that they mine, the value of their assets is largely dependent on the price of bitcoin. Core Scientific, for example, held 8,058 BTC as of May 31, according to a recent statement.

Bitcoin’s price was at around $22,750 at the time of publications, having fallen over 13% from the day before.

Major Bitcoin holder MicroStrategy also saw its stock drop by 23% as the markets opened Monday. The software company owns 129,218 BTC together with its entities.

Generally, the global market cap for crypto has also dipped below $1 trillion — a 50% fall from $2 trillion in November 2021. On Sunday, crypto lending firm Celsius announced that it was pausing all withdrawals and transfers due to unfavorable market conditions.

The broader equities market was in the red as of press time. The Dow Jones Industrial Average is down 2.3%, with the S&P 500 and Nasdaq down 4.24% and 3.55%, 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.

Goldman Sachs has expanded its client-facing crypto offering with a derivatives product linked to ether (ETH), according to a statement from London-based Marex Financial. 

The investment bank restarted its crypto operations in 2021 as a flood of institutional money entered the market, the core of its offerings has centered around derivatives tied to cryptocurrencies like bitcoin. 

Now, amid a tumultuous backdrop, Goldman has commenced a derivatives product linked to the price of ether — the possibility of an ETH-linked derivative product was first mooted by the bank in June 2021.

According to a statement made on Monday, this was the first over-the-counter (OTC) non-deliverable forward (NDF) crypto trade on ether by Goldman, with Marex acting as the counterparty. Marex’s hedging and investment solutions arm, Marex Solutions, organized the trade.

An NDF is a derivative product that allows the holder to have exposure to an asset without having to hold it. This pays out in cash based on the price of ether at the time of settlement. 

© 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.

Software company MicroStrategy opened down 23% as markets across the board were in the red on Monday.

Michael Saylor’s company was trading at its lowest levels since September 2020 as cryptocurrency prices continue to fall together with broader financial markets.

Shares in the company were trading at $155.80 at the time of writing, after closing at $203.36 on Friday.

MicroStrategy’s massive bet on bitcoin — the company and its entities currently hold 129,218 BTC —  has been in the red since May, having fallen below the average purchase price of $30,700. Currently the firm’s bet is sitting on an unrealized loss of almost 20%, along with other prominent bitcoin holders.

Bitcoin was trading at $23,815 at the time of writing, its lowest level since December 2020. Cryptocurrency prices were down as a whole as the global crypto market cap fell below $1 trillion for the first time since January 2021. 

Broader financial markets have been rattled by a tough macroeconomic landscape as governments and central banks address rapidly growing inflation, with data last week showing US inflation reached a 41-year high of 8.6%. 

This has left most major US stock indexes down year-to-date. The S&P 500 has lost 21%, the Nasdaq Composite is down 30% and the Dow Jones Industrial Average has slipped 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.

Molecule, a platform where medical research projects can receive funding via decentralized autonomous organizations (DAOs), has raised $13 million in seed funding in a round led by biotech venture capital firm Northpond Ventures.

Other participants in the round included Backed VC, Shine Capital, Speedinvest and former Coinbase CTO Balaji Srinivasan, according to a press release today. This is Molecule’s first raise in the web3 space. 

Molecule is part of a nascent movement called decentralized science (DeSci) that emerged from web3, explained founder Tyler Golato in an interview with The Block. This is the idea that instead of a science ecosystem that relies on centralized bodies of research and funding, funding for research can be crowdfunded and decentralized in terms of ownership. 

“Imagine if insulin was collectively owned and governed by diabetics — how would they price the drug, access it and how would information be shared within that community,” said Golato whose background is primarily in biochemistry and biology research. “It’s this idea of trying to take an industry that is anti-collaborative and monopolistic and figure out a way to open that to a broader group of people who have the most skin in the game.” 

Molecule aims to build this ecosystem through its platform, a marketplace for researchers to list projects which are non-fungible tokens (NFTs) intended to signal intellectual property. Current projects on the platform include a Newcastle University study into molecular aging and a University of Copenhagen project into longevity. These projects receive funding via DAOs, usually in a stablecoin such as USD Coin. 

Currently, much of the funding comes via its associated DAO named VitaDAO. However, with part of the new funding, Molecule plans to build out an accelerator framework for biotech DAOs that target specific diseases that it will initially support with $100,000 seed checks with the hope that it becomes self-funded. Much of the funding will also be used to build out its team, particularly in the engineering space and to create a non-profit foundation to steward the Molecule protocol. 

“The broader vision is to create a DeSci ecosystem that won’t just consist of DAOs funding research but also hopefully pharmaceutical companies along with the general public investing into these research projects,” explained Golato. 

The decentralized science ecosystem

The Molecule team, however, recognized that one of its biggest obstacles was likely to be the lack of public knowledge on DeSci. In particular, they noted that it was hard to convince the tier one law firm hired by its lead investor to do due diligence on its round. Golato also said that it even had to explain the fundamentals of web3 to its lead investor. 

“It was a lot of learning. It was getting them to understand tokenomics, non-profit foundations that steward a protocol, and the idea of investing into an ecosystem, not a company” he said. “All of these structures are very foreign to an organization that is used to typically investing in [centralized companies] and taking a massive ownership stake.” 

© 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.

El Salvador, MicroStrategy, Tesla and Block Inc. saw their bitcoin holdings fall deeper into the red following crypto market turmoil on Monday. 

Bitcoin’s price plunged to lows not seen since December 2020 as the cryptocurrency fell over 10% in the past 24 hours, changing hands for $23,750 as of 7:15 a.m. ET, according to Coinbase data via TradingView. 

The latest dip follows negative sentiment in broader financial markets as recession fears persist on the back of ever-increasing inflation in the US and Europe, forcing central banks to hike rates for the first time in decades. 

At last count El Salvador owned 2,301 BTC with an average purchase price of $45,171.86. As of Monday the Central American country’s investment is fast approaching an unrealized loss of up to 50%. 

Michael Saylor’s MicroStrategy saw its massive bet on bitcoin fall into the red in May when the price fell below its average purchase price of $30,700. Developments today have seen this bet plunge even lower.

MicroStrategy currently owns 129,218 BTC, held at an unrealized loss of 18% — although Saylor maintains his company has no need to consider selling.

Meanwhile Elon Musk’s Tesla owns approximately 42,000 BTC with a slightly higher average purchase price of $31,620. This leaves the auto company’s investment down a little over 20% at the time of writing. 

Finally, Jack Dorsey’s Block (formerly Square), which has the lowest average purchase price at $27,407, holds 8,027 BTC for an unrealized loss of just over 8%.

According to data via The Block Research dashboard, 72% of BTC supply is now in profit, down from 92% a month 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.

Atmos Labs has raised $11 million in a seed funding round to develop its “play and earn” metaverse.

Sfermion, an investor focused on non-fungible tokens (NFTs), led the round, according to an announcement on Monday. British hedge fund billionaire Alan Howard, Animoca Brands, Collab+Currency, FBG Capital, GSR, CoinGecko Ventures and Avocado Guild also participated, among several others.

Atmos says it will offer metaverse-native sports, in which players will also be able to own their gear, teams, identities and moments. “Atmos will deliver AAA-quality competitive gameplay and rich narratives that today are not very present in metaverse gaming,” Kevin Beauregard, founder and CEO of Atmos Labs, told The Block.

“Atmos will deliver the promise of play-and-earn as opposed to play-to-earn. The game always comes first, with web3 technologies powering players and enabling economic layers,” he added.

Beauregard said the round closed in March. He declined to comment on the valuation it gave Atmos or whether it was an equity or a simple agreement for future tokens (SAFT) round. 

The first game

Atmos’s first game will be ExoGP, which is described by Beauregard as “Formula 1 meets flight.” 

Players will race with each other to be among the first to cross the finish line. There will be three core player activities: mining (resource gathering), fabricating (crafting) and competing (initially flight racing), said Beauregard.

Every player will need “exoskeleton suits,” called “exos,” to compete. Exos will be in the form of  NFTs.

“Exos can be staked to mine land with variable mineral distributions to generate resources that players can use to modify and upgrade their composition and capabilities,” said Beauregard.

As for Atmos’s business model, it will generate revenue from selling NFTs and “receive a portion of racing purses and secondary market sales,” according to Beauregard.

Phased approach

Atmos will launch its games in phases, with alpha, beta and production releases. Its early adopters will have first access to games in the fall of this year, said Beauregard.

Atmos is currently building on Ethereum, but the firm is evaluating several Ethereum Virtual Machine (EVM) compatible Layer 2s and competitive Layer 1s for gameplay, according to Beauregard.

When asked how Atmos was able to onboard high-profile investors, Beauregard said the firm’s team is highly experienced in video games, crypto and design, among other factors. Atmos’s vice president of game design, for example, is Dylan Bushnell, son of Atari founder Nolan Bushnell and VP of product Todd Moffett has a background in streetwear and skater culture.

© 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.

A class action lawsuit has been filed against Binance.US, the American affiliate of global crypto exchange Binance, over the sale of luna and USD Coin (UST) to buyers in the US. 

Filed in the Northern District of California on Monday, the lawsuit alleges that Binance.US sold unregistered securities to the plaintiffs, misleading them in the process.

It also says that Binance.US’s business model is “premised on illegally enabling the sale of unregistered securities to as many US investors as possible, as often as possible.”

In conjunction with this, the plaintiffs allege that Binance.US promoted the sale of UST and participated in airdrops of tokens which were “designed to increase trading volume.”

The 72-page complaint goes on to allege that Binance.US listed and sold UST despite the fact it is not registered as a broker-dealer, which, it says, is a violation of US securities laws. 

The Block contacted Binance.US for comment but had not heard back before press time. 

The move comes following the death spiral of UST, Terra’s algorithmic stablecoin, which erased more than $40 billion in value from the market almost overnight. Terraform Labs CEO Do Kwon has since tried to make amends for lost funds, by airdropping luna 2.0 to holders. 

The plaintiffs of this law suit have demanded a trial by jury for all issues deemed trialable. 

This lawsuit, which is being brought by law firms Roche Freedman and Dontzin Nagy & Fleissig, could be the first of a number of legal complaints triggered by the breakdown of UST in May. If successful, it could also go some way to doing what governments have been thus far unable to do: put more clear parameters around the legal status of centralized finance (DeFi) and who is culpable when something goes wrong.  

A named partner at the law firm Roche Freedman, Kyle Roche, tweeted on May 13: “If you purchased $LUNA or $UST on either @coinbase @krakenfx @binance or @Gemini, please reach out to TerraRecovery@rochefreedman.com . My firm is coordinating an effort to help those who lost funds from the recent collapse of #terra and #luna.”

© 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.