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Blockchain gaming startup N3TWORK Studios announced Wednesday that it closed a $46 million Series A funding round.

Griffin Gaming Partners, a venture firm focused on financing gaming startups, led the round. Additional participants include Kleiner Perkins, Galaxy Interactive, Floodgate, LLL Capital, N3TWORK Inc (the parent company of N3TWORK Studios) and others.

N3TWORK games incorporate free-to-play elements and blockchain technology such as non-fungible tokens, into their mobile games.

The firm intends to use the funding to continue building out its web3 gaming titles Legendary: Heroes Unchained and Triumph, Forte to platform its games and build out the tokenomics.

Over 60 individuals from the entertainment industry, such as EA, Zynga, Warner Brothers, and Disney, comprise the N3TWORK team.

“We’re a group of passionate veteran game makers who see a generational opportunity to leverage our expertise building and operating free-to-play games to create authentic web3 experiences that can reach audiences of millions of players,” said N3TWORK Studios president Matt Ricchetti in a 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.

Latin American cryptocurrency exchange Bitso has officially launched its app in Colombia, allowing its residents to load pesos into their wallets using a widely-used online payment system connected to the country’s major banks.

The company announced its expansion into the South American country in February and has been working on a pilot program for cash-in and cash-out operations with Banco de Bogotá.

But now, Bitso’s product is officially available to the wider Colombian public.

Using a popular online payment method called PSE, Bitso users can open the wallet, load Colombian pesos and use the app to purchase assets such as Bitcoin, Ether, ApeCoin, Aave and Solana in addition to U.S. dollar-pegged stablecoins including Dai, Tether and TrueUSD. 

Speaking at a launch event on May 17 in Bogotá, Bitso CEO Daniel Vogel explained that the exchange has been interested in the Colombian market for a while due to its potential. Colombia ranked 11th on Chainalysis’ latest global crypto adoption index, and Vogel noted in a press statement that an estimated $70 billion in crypto is traded here each month. Other exchanges with a local presence in Colombia include Buda.com, Binance and Ripio. 

And yet Bitso is announcing its Colombia launch just a week after one of the most volatile weeks in the history of crypto, in a market where many are still unfamiliar with digital assets. Not surprisingly, people across Latin America are asking questions.

“Every regulator we’ve met has asked us about Terra and Luna,” Vogel said, noting that customers and media have also asked the company about what the recent market events have meant. 

“I think we’re definitely in a crypto winter, it definitely feels that way,” Vogel added, noting that he likes building during such periods because it creates an environment for focusing on the fundamentals and attracting clients for the right reasons. 

“Of course, it’s a lot easier to launch when the markets are hot, when there’s a lot of demand and whatnot, but you can build a lot more intentionally when that’s not happening,” said Vogel, who added that he thinks last week will be a “blip” on the radar in the history of crypto. 

Although Colombia could be ripe for crypto adoption, its use case is arguably less clear here than in places like Venezuela or Argentina where ongoing, unmanageable inflation makes it hard for consumers to save in local currencies. Prices have been rising here, too, albeit at comparatively lower rates than some neighboring countries.

But Vogel said that one situation piquing Colombians’ interest in crypto at the moment is the country’s upcoming presidential election. 

“A lot of people that we’ve met are sort of, a little bit unsure of the political situation, and what that might mean in terms of volatility of the Colombian peso,” Vogel said. 

Vogel said that Bitso’s participation in the regulated sandbox will continue until the end of the year and that the company expects further crypto guidance from regulators in the next few months.

Bitso is a Gibraltar-registered company that also operates in Mexico, Brazil and Argentina. It counts more than 4 million users in those countries.

© 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.

Pantera Capital, one of the high-profile backers of Terraform Labs, cashed out nearly 80% of its Terra (LUNA) investment well before TerraUSD (UST) collapsed last week.

“The market has been fairly frothy over the last year and thus we’d exited the majority of our position before any of this happened,” Joey Krug, co-chief investment officer at Pantera Capital, told The Block. “Roughly 80% over the last year, fairly gradually over time.”

Pantera Capital invested at least twice in Terraform Labs — once backing its $25 million round in January 2021 and then joining its $150 million ecosystem fund round in July 2021.

Since Pantera exited most of its investment early on, it generated a significant profit, per the firm. The firm turned $1.7 million into around $170 million, Paul Veradittakit, partner at Pantera Capital, told The Block.

Meanwhile, other venture capital firms that backed Terraform are reeling under losses since Terra’s native LUNA token has lost almost its entire value due to the UST crash.

The UST algorithmic stablecoin de-pegged sharply last week to levels below 10 cents, far from its target price of $1. It is still trading at that level. Meanwhile, LUNA is currently trading at a fraction of a cent, from over $80 earlier this month.

When Pantera noticed UST’s de-pegging last week, it sold more of its LUNA holdings from the remaining 20% investment.

“We got out of 2/3 of that at an average price of $25.6,” said Krug. “The remainder of that was staked via LUNAX and so unable to be sold.” LunaX is a liquid staking token by Stader Labs.

Anchor promotions

Veradittakit had promoted investing in Terra-based decentralized finance platform Anchor, which has also lost almost all of its customer funds due to the UST collapse.

Anchor’s total value locked (TVL) has tanked from over $16 billion before the UST crash to now just over $150 million, according to data from DeFi Llama.

Veradittakit had called Anchor a high “fixed” interest rate “savings account.”

“20% APY [annual percentage yield]. A fixed-income, low-risk financial instrument with returns as high as Anchor’s is truly incredible,” Veradittakit had said in a Medium blog post in April 2021.

Anchor offered UST depositors a 20% APY. Due to the UST crisis, Anchor contributors recently proposed cutting the APY to an average of 4% in an effort to make its yield reserves more sustainable.

The UST failure has had a domino effect on the Terra ecosystem. Meanwhile, Terraform hopes to amend the situation. Terraform Labs CEO Do Kwon has promoted a plan to fork Terra to create a new blockchain.

The fork proposal went live at about 7:30 a.m. ET on Wednesday. At the time of writing, it had over 84 million LUNA voting in favor, with over 9 million against. The vote needs 188 million LUNA in favor to pass.

© 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.

Mike Novogratz, the billionaire CEO of crypto investment manager Galaxy Digital, opined on the recent crisis in the Terra blockchain ecosystem, which saw the market collapse of both the LUNA token as well as the algorithmic stablecoin UST. 

The shareholder letter penned by Novogratz comes days after Galaxy released an update on its liquidity position. Galaxy is an early backer of Terraform Labs, the developer of the Terra blockchain, having taken part in a $25 million funding round announced in January 2021. 

“There is no good news in what happened in markets or to the Terra ecosystem,” Novogratz wrote. “In Luna and UST alone, $40bn of market value was destroyed in a very short amount of time. Both large and small investors saw profits and wealth vanish. The collapse dented confidence in crypto and DeFi. Whenever money is lost in such an abrupt fashion, people want answers.”

Novogratz went on to note that “[o[ur principal investments team invested in Luna in Q4 of 2020,” saying that Galaxy felt drawn to invest because of the focus on payments. 

He contended in the latter that last week’s market event occurred in the context of a “brutal” macroeconomic environment, citing a decline in global asset prices since the start of 2022, a highly inflationary environment, and central bank actions to unwind “a massive liquidity bubble.”

“This macro backdrop put pressure on Luna and the reserves held to back UST. UST’s growth had exploded from the 18% yield offered in the Anchor protocol, which eventually overwhelmed other uses of the Terra blockchain,” he wrote. “The downward pressure on reserve assets coupled with UST withdrawals, triggered a stress scenario akin to a ‘run on the bank.’ The reserves weren’t enough to prevent UST’s collapse. With hindsight things always look clearer. “

“My tattoo will be a constant reminder that venture investing requires humility,” Novogratz added.

Novogratz concluded the letter by stressing the financial health of Galaxy and his belief in the broader ecosystem.

“This does not mean the crypto market will bottom and head straight back up. It will take restructuring, a redemption cycle, consolidation, and renewed confidence in crypto,” Novogratz wrote. “Crypto moves in cycles, and we just witnessed a big one.”

© 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

• Blockchain-enabled decentralized storage is off to a promising start, with rapid adoption in 2021 showing promise for the tech and incentive systems powering P2P cooperative cloud storage
• Here, we dive into specific technologies conferring unique advantages to decentralized storage networks that may drive their further adoption
• Topics include low-latency content addressing, object-oriented key-value databases, zero-knowledge proofs, and economic games for providing trustless service guarantees

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

Block is no longer just a payments company, according to Block Head Jack Dorsey.

But if the firm’s 2022 investor day is any indication, it’s certainly looking to be a Bitcoin company.

Dorsey touted Block’s latest approach to its products as an “ecosystem of ecosystems.” Bitcoin is one such ecosystem the firm is pouring resources into. Block Finance lead Amrita Ahuja said the firm sees a $3 billion gross profit opportunity for bitcoin consumer trading.

“We think we’ve just scratched the surface for further adoption of Bitcoin in the United States and globally,” said Ahuja. “We believe Bitcoin is going to have a profound impact on financial services, particularly as a tool for economic empowerment and as a global currency for the Internet.”

This approach means capturing value across a number of sectors within crypto. That, of course, includes Block’s wheelhouse, payments, but it has also expanded to building hardware and platforms for crypto users to capture value in the crypto ecosystem.

Indeed, the firm is building its own wallet, which will integrate hardware and software to enable self-custody, a decentralized exchange dubbed “TBDex” and a decentralized mining system.

“These initiatives are early in their development and we intend to build out in the open,” said Ahuja.

Dorsey committed to building an “open” bitcoin mining system at the start of this year. Block contends that the current state of mining is dominated by large firms and hard to access for small firms or individuals.

“We want to dramatically expand access to this rapidly growing market, which would add resilience and security to the Bitcoin ecosystem and generate value for a broader set of stakeholders,” said Ahuja. “This is what our mining initiative intends to fulfill.”

Its TBD project was kept under wraps until Block circulated a white paper on the project’s design in November of last year. That document proposed the “tbDEX” would facilitate “decentralized networks of exchange between assets by providing a framework for establishing social trust, utilizing decentralized identity (DID) and verifiable credentials (VCs) to establish the provenance of identity in the real world.”

At today’s events, Ahuja said Building a new system for managing identity and trust in a decentralized manner is at the core of the product’s development.

“Our plan is to build consumer-facing proprietary products and also enable developers and other industry participants to build upon our standards,” she said.

The hope is to enable cheaper remittances for consumers through services built on TBD, while also enabling developers to build products geared towards decentralized financial services. As of now, Ahuja said Block is already actively engaging potential partners in the financial services space, and said the firm is “encouraged about the interest they’re showing.”

Today’s event is Block’s first Investor Day since 2017.

© 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 intelligence firm TRM Labs has unveiled a community-based scam reporting platform.

Crypto users are able to report illicit activity to the platform’s public forum. Others then upvote, downvote or comment additional information. Information regarding the same addresses or entities is consolidated in a searchable database that allows users to check addresses or projects. The hope is that users can better vet projects before engaging with them.  

Crypto money laundering grew from $6.6 billion to $8.6 billion between 2020 and 2021, with the biggest source of illicit funding coming from scams aimed at collecting crypto.

TRM worked with Circle, Solana Foundation, The Aave Companies, Hedera, Binance.US and Civic to develop the platform. It supports seven blockchains: Ethereum, Bitcoin, Solana, Polygon, Hedera, Binance Smart Chain and Tron. 

In addition to enabling individuals to be proactive about investigating potential projects, it also allows crypto firms to track the activity on the blockchains they build on or develop.

Though it launches publicly today, reports are already active. As of publication time, Ethereum leads with the most reports, clocking in at 249. TRM Labs said in its announcement that the platform has already tracked more than 100 scam reports related to Ukraine crypto fundraising campaigns among other reports. 

© 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.

Ethereum’s main public testnet, Ropsten, is set to undergo “the merge” next month in one of the final preparations before the main Ethereum blockchain can switch to proof-of-stake consensus. 

Parithosh Jayanthi, who works in devops at the Ethereum Foundation, merged the pull request on GitHub today, meaning that this code is set to be implemented.

The merge is Ethereum’s long-awaited move to becoming a proof-of-stake blockchain, under which the current proof-of-work chain will merge with the new proof-of-stake one. It’s a big change and there have been multiple tests to see whether it will work. The move to do so on Ethereum’s main public testnet is one of these final checks.

When it comes to testing, such a transition happens in two parts. First a genesis version of the consensus layer is created, then the network — in this case the Ropsten testnet — goes through the merge. The first part will take place on May 30, while the merge is estimated to take place on June 8.

“Merging Ropsten is a huge testing milestone towards Ethereum’s mainnet merge later this year,” said Preston Van Loon, an Ethereum core developer at Prysmatic Labs, on Twitter.

Anthony Sassano, co-founder of the Ethereum research tool EthHub, told The Block that the public testnet going through the merge transition is the final stage before it happens on the main Ethereum blockchain. “I believe there will be three public testnets run through the transition and if all goes smoothly then mainnet will be scheduled shortly after,” he said.

Sassano estimated that the merge on mainnet could happen as early as August but stressed that this is his own guess and no official timeline has been presented.

© 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.

Securities and Exchange Commission chair Gary Gensler told a Congressional subcommittee Wednesday that his agency needs more human resources as it looks to regulate the US crypto space.

“I wish we had more to dedicate to this,” he said in response to questioning from Rep. Steve Womack about the SEC’s crypto work to date. Congress is weighing a budget request from the SEC, which has sought $240 million for FY 2023 above the previous year’s appropriation. Part of that push is related to its work on crypto and the need to hire more in-house experts. 

Gensler highlighted a recently announced move to expand the ranks of a cyberfraud-related unit within its enforcement wing but conceded that its current staff level is insufficient relative to the scope of its work. 

“We’re really out-personed,” he told Womack, ranking Republican member on the Financial Services and General Government Subcommittee.

Gensler later referenced the blow-up of the Terra blockchain ecosystem and its related stablecoin, UST, though not by name. 

“There was one crypto complex that went from like 50 billion dollars of value to near-zero just in the last three weeks. I mean these are highly speculative, volatile, and I dare say, the public is not protected.” Gensler has called for stronger stablecoin regulations, as The Block previously reported. 

Gensler went on to remark with respect to crypto exchange services: “The crypto exchange should come in and register or, frankly, we’re going to continue to bring, use what Congress has given us in our examination and enforcement functions.”

© 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 specialized financial crimes unit has been tasked with investigating last week’s collapse of the Terra blockchain’s main cryptocurrencies while founder Do Kwon faces hefty tax fines, according to South Korean media reports.

The group, consisting of prosecutors and employees from the Financial Services Commission and the Financial Supervisory Service, will investigate the methods Terraform Labs used to attract investors, SBS News reported on Wednesday. 

The unit’s accuracy and clinical approach has earned it the nickname “Yeouido Grim Reaper,” after the Yeouido financial district of Seoul. It is coming back into operation to investigate Terra after being disbanded two years ago, according to SBS News.

The Terra ecosystem fell into chaos last week after its stablecoin offering, TerraUSD (UST), de-pegged — causing the price of Terra’s native token Luna to plummet in value as supply soared to protect the peg. Kwon is now proposing forking Terra to revive the network. 

A separate report in Edaily said Kwon is facing a tax bill of 100 billion won ($78 million) for evading corporate and income tax payments. 

The investigation related to the formation of the Luna Foundation Guard (LFG) in Singapore, a relocation of the company’s headquarters which appeared to be for tax purposes, according to Edaily. It found that despite the legal entity relocating to Singapore, LFGs management continues to be carried out by domestic companies and residents in South Korea. 

Korean tax authorities are also preparing a separate 100 billion won fine to LFG, according to the report.

Kwon and LFG didn’t immediately respond to requests from The Block to comment on the reports.

© 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.