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Crypto exchange Kraken is planning to release structured products focused on staking as part of a bid to enhance its existing offerings for institutional clients.

Kraken acquired a staking company called Staked late last year to move into the burgeoning market. The company is now seeking to combine its staking prowess with the trading services provided by its main exchange.

In an interview, Tim Ogilvie, head of Staked at Kraken, told The Block that the company will introduce structured products that are a variant on using staking and a derivative or futures product to achieve specific objectives. He said these products will be rolled out in the near future.

Ogilvie said the products are being referred to internally as cash, carry and stake, a strategy that sophisticated investors are already doing. The idea is you stake an asset and then sell a futures contract on the same asset.

This strategy lets investors capture the rewards generated by staking while mitigating exposure to the underlying cryptocurrency. “You basically eliminate the underlying currency risk to allow you to get just a yield,” he said.

But not only does this approach capture the staking rewards — which can range from 4-7% — it also can see extra yield as a result of going short on the asset, where a return can be seen from funding rates.

“And so until it’s a US dollar-denominated yield that includes both staking rewards plus the sale of the future and Kraken was kind of uniquely positioned to be able to offer that because they own both a staking business and a future business,” said Ogilvie. He said returns last year on a trade of this type would have yielded around 11.5%. 

These structured products would be offered via Kraken and to its institutional clients. The clients will need to go through KYC and AML procedures to access them.

While now part of Kraken, Staked largely operates as a standalone business, treating the exchange as more of a priority client. Staked counts Pantera, Multicoin and Three Arrows Capital among its customers and runs nodes on 44 proof-of-stake blockchains. Its core business is offering staking directly to customers, alongside a white-label staking service to other exchanges and businesses.

Beyond these products, Ogilvie said Kraken will bring out liquid staking offerings, although wouldn’t provide any further details. Liquid staking is a way for staking services to free up the liquidity of tokens currently being staked.

Staking firms Figment and Blockdaemon are both working on bringing liquid staking to institutional investors.

© 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.

Lightning Labs today unveiled a new product designed to widen the range of assets supported by the Lightning Network, a Layer 2 protocol that speeds up blockchain-based transactions.

Named Taro, the protocol aims to “bitcoinize the dollar” — pairing the speed of the Lightning Network with the security of bitcoin — and enabling the use of stablecoins in Lightning Network apps such as Jack Mallers’ Strike, according to an announcement. 

“When it comes to the Lightning component, you’re routing through bitcoin,” Elizabeth Stark, Lightning Labs’ co-founder and CEO, told The Block. “You’re literally doing a conversion from dollars to bitcoin back to dollars.” She clarified that by “dollars,” she meant a stablecoin pegged to the price of the dollar.

For Stark, most stablecoin usage today takes place in trading or DeFi settings, rather than for everyday payments. Lightning Labs’ goal is to change that, she said, by “bringing bitcoin to billions.”

Stark added that numerous big hitters, including some that haven’t yet announced plans involving stablecoins, are exploring using Taro to issue stablecoins on Lightning.

The Taro protocol wouldn’t have been possible without taproot, an upgrade to Bitcoin’s code implemented in November last year that aimed to improve the privacy and security of transactions.

A means not an end

In tandem to announcing the launch of Taro, Lightning Labs said it had raised $70 million in an equity-based Series B funding round, led by Peter Thiel’s Valor Equity Partners and Baillie Gifford, the asset manager. Goldcrest Capital, Kingsway, Moore Strategic Ventures, Brevan Howard, Robinhood CEO Vlad Tenev, NYDIG, and Silvergate CEO Alan Lane also participated. 

Both Brevan Howard and NYDIG — which helps institutions expand into crypto with a range of custody and trading tools — are doubling down on the Lightning Network. In October last year, NYDIG acquired Bottlepay, a Lightning Network payments firm, for $300 million. Former Brevan Howard CEO Alan Howard has previously invested in the startup.

Lightning Labs did not disclose a valuation for its latest raise. It also refrained from doing so when it secured the backing of former Twitter boss Jack Dorsey and others in a $2.5 million seed round in 2018, and when it raised $10 million in February 2020.

Indeed, Stark mocked the focus placed on private market valuations in the wider crypto market, arguing that products are more important than price tags. “Money is a means, it’s not an end,” she said.

Launched in 2016 and with a staff of less than 30 people, Lightning Labs is the primary developer of the Lightning Network. A majority of the more than 30,000 nodes on the network rely on its infrastructure, according to its announcement. More than 300 companies are building tools using software developed by the startup.

© 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.

Alyse Killeen’s Stillmark is trying to raise about $500 million for a new credit fund dedicated to lending capital to companies operating in the bitcoin market, according to sources familiar with the firm’s plans. 

Launched in 2019, Stillmark is a venture capital firm focused on backing companies investing in bitcoin and Lightning Network infrastructure. The firm’s portfolio companies include Satoshi Energy, Casa, and Lightning Labs. The firm’s managing partner and founder previously held positions at venture capital firms including Clearstone Venture Partners and March Capital Partners. 

As for the new fund — dubbed the Stillmark Credit Fund — it will offer companies in the Bitcoin space with debt “as they grow their transaction and payment processing capabilities, [a] critical inflection point that requires ‘liquidity,'” according to a deck reviewed by The Block. 

On Wall Street, credit funds lend out capital to companies in return for interest payments. For investors, they offer a less risky return than a traditional hedge fund or venture fund structure, while providing a way for startups to have access to capital without having to give up equity. 

“Informed by our venture work, Stillmark recognizes both an imminent inflection point for the ecosystem and an acute need for innovating companies,” the deck said. 

“Lightning Network targets the $5 trillion payment market; SCF targets the needs of leading Lightning innovators,” the deck said, referring to the Layer 2 platform built on Bitcoin that supports faster and cheaper bitcoin transactions. 

© 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.

German authorities have shut down the darknet marketplace Hydra after securing server infrastructure and seizing 543.3 BTC (25 million USD). 

The Frankfurt am Main Public Prosecutor’s Office, Central Office for Combating Cybercrime (ZIT), and Federal Criminal Police Office (BKA) announced the seizure in a statement (in German) on Tuesday. In a note to The Block, the press office said no arrests had been made.

The closure of Hydra follows the closure of several other darknet markets over the past few months including UAS Store, Ferum Shop, Sky-Fraud Forum and Trump’s Dumps.

The marketplace began operations in December 2015 and focused on the trade of illegal narcotics, as well as forged documents and digital services. It became the top Russian-language darknet marketplace following the closure of Russian Anonymous Marketplace (RAMP) in 2017.

Hydra was particularly notable for its brazen business tactics. It ran advertising campaigns on clearnet sites such as YouTube and may have even conducted DDoS attacks against competitors, according to analysis from blockchain forensics team Ciphertrace last year.

 At the time of closure, approximately 17 million customer and more than 19,000 vendor accounts were registered on the marketplace. ZIT and BKA estimate the market to have had sales of more than 1.23 billion euros in 2020. 

They added that its “Bitcoin Bank Mixer” service for obfuscating digital transactions made investigations immensely difficult for law enforcement.

In a previous report, The Block highlighted a number of factors contributing to Hydra’s long existence.

Among them was the complicated links between the Russian drug trade and law enforcement, as well as the latter’s unwillingness to cooperate with international partners. 

For international authorities, the closure of the site was therefore less pressing due to its focus on operations within the former Eastern Bloc. Its vendor terms of service also prohibited the sale of certain goods such as weapons.

Hydra’s homepage has been replaced with a banner announcing its seizure, according to the announcement. When accessing several .onion addresses that until recently led to the marketplace, The Block did not find those banners. Instead, we found warnings of high traffic and guidance to reload the Hydra homepage.

© 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 publicly-traded company MicroStrategy has acquired an additional 4,167 BTC worth around $190.5 million, according to an April 5 filing with the SEC.

MicroStrategy acquired the new holdings at an average price of $45,714 between February 15, 2022 and April 4, 2022.

As of April 5, the company and its subsidiaries hold approximately 129,218 bitcoins, with MicroStrategy holding around 115,110.

The bitcoins “were acquired at an aggregate purchase price of approximately $3.97 billion and an average purchase price of approximately $30,700 per bitcoin,” according to the filing. 

The firm made big purchases at the end of 2020 and at the start of 2021. In September, the company purchased another 5,050 bitcoin, holding 114,042 BTC, The Block wrote at the time.

© 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.

YouTuber Logan Paul may have been bamboozled by a set of fake Pokémon cards that he spent $3.5 million on, but that experience hasn’t deterred his love for collecting trading cards.

Alongside co-creators Ryan Bahadori and Amin Nikdel, he’s now launched a platform called Liquid MarketPlace, with the goal of taking physical (and digital) items like trading cards and tokenizing them. The idea is to take particularly high-end items, especially one-of-a-kind pieces, and make them accessible to anyone.

Someone who wants to sell their physical item on the marketplace has to have it delivered to a vault. Once in Liquid MarketPlace’s possession, the item can then be sold on the marketplace, with each token accounting for 10 cents of the item’s value. The tokens will be ERC-20 tokens on the Ethereum blockchain and can be transferred outside of the marketplace, although it recommends users avoid doing so for safety reasons.

To get under way, Liquid has raised 10 million Canadian dollars ($8 million) from undisclosed investors, according to a press release. At the same time, it touts a number of advisors, including Jeremy Padawar, the former co-president of Wicked Cool Toys, which received the Pokémon toy license outside of Asia, alongside musician Steve Aoki, who’s spent his time recently either selling NFTs or performing in the metaverse.

Bahadori said that the team wanted to level the playing field for those who are passionate about collecting items and claimed that the platform offers “genuine ownership” over the assets. 

The issue of ownership when it comes to tokens is a bit complex. It’s unclear whether ownership is fully represented by purchases of tokens, or possession of them after sales on a secondary market.

Another tricky issue regarding tokenizing assets — whether physical or digital — is about what happens at the end of the process. Once an item has been split up into thousands or millions of pieces and these tokens are possessed by thousands of people, how do you piece it back together in order to reclaim ownership? 

In this case, there’s a buyout system. If one person manages to acquire a certain buyout percentage (not stated in the platform’s terms and conditions) then they are able to trigger a buyout vote. If 80% of the token holders vote in favor of a buyout at a given price within 72 hours, then that person is able to buy everyone else out. In this case, they are then able to claim the item and have it physically delivered to them.

Upon the marketplace’s launch, it will offer a few items including “Logan Paul’s Personal WOTC Pokémon 1st Edition Base Set Booster Box,” a number of rare National Treasures basketball cards and CryptoPunk #6837, which sports an eye mask and a purple cap.

If Liquid MarketPlace takes off, it will cross off one of Paul’s goals for 2022 that he published to his Instagram account last year. Other goals include building a web3 community through culture and art and leading a shift from NFT 1.0 to NFT 2.0 (whatever that means).

© 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.

Elon Musk has been appointed to Twitter’s board of directors following the Tesla CEO’s acquisition of a stake in the social media giant.

Announcing Musk’s appointment to Twitter’s corporate board, the company’s CEO Parag Agrawal stated that the Tesla CEO will “bring great value” to the board. As reported by The Block on Monday, Musk acquired a 9.2% stake in the company as of March 14, according to an SEC filing.

Agrawal described Musk as a “passionate believer and intense critic” of Twitter, making him a welcome addition to the board. The Tesla chief has previously slammed the company for working on projects like NFTs instead of solving the spate of scams and spambots on the social media service.

Reacting to the news, Musk stated that he was looking forward to making “significant improvements to Twitter in the coming months.”

Musk posted a poll on Twitter late Monday in which he asked users if they wanted an edit button for tweets.

© 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 new study shows that while two-thirds of financial advisers have discussed crypto or digital assets with their clients in the past year, not much action has followed.

Only 15% of more than 600 advisers in the study conducted by Coalition Greenwich, a global provider of strategic benchmarking, analytics and insights to the financial services industry, had created a strategy or offered products involving bitcoin or digital assets to retail investors.

Behind this reticence were 32% of respondents who said their firm’s policies would not allow it, 26% who said it was not suitable for their clients, 15% said they had not but expected to in the next year and 13% who said they lacked the tools to do so. The total does not equal 100% because of rounding.

Those who are offering crypto options are doing so via products including the Grayscale Bitcoin Trust, NYDIG, Bitwise 10 Crypto Index Fund (BITW) and separately managed accounts, primarily to accredited investors.

The study also pointed out that the last year has seen movement toward crypto for retirement, with numerous bitcoin IRA companies now operating, including Bitcoin IRA, AltoIRA, iTrustCapital and Coin IRA. Still, it noted that bitcoin in employer 401(k) plans seems some way off.

The lack of crypto exposure might also be tied to the lack of a spot bitcoin ETF, which the Securities and Exchange Commission has yet to approve. About 80% of financial advisers supported the creation of spot bitcoin and other currency-tracking exchange-traded funds (ETFs), the study showed, based on 530 respondents. The SEC has rejected such proposals in the past.

“Such an ETF would likely bring billions in retail investor assets into Bitcoin that currently sit on the sidelines,” the authors of the study said. An SEC-approved spot bitcoin ETF would leave 32% of the advisers more willing to suggest cryptocurrencies in asset allocation strategies when appropriate.

The study concluded that “more regulatory clarity, more regulated investment vehicles and technology enabling easier access will likely set the stage for increased crypto-asset allocations in the coming year.”

© 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.

Ledger has unveiled the latest version of its crypto hardware wallet called the Ledger Nano S Plus which, among other new features, prioritizes the needs of NFT collectors.

According to the announcement issued on Tuesday, the new hardware wallet offers support for clear signing via the company’s web app to ensure the safety of NFT collectors when signing transactions. Clear signing is part of a new trend by both hardware and software wallet makers to ensure that users are aware of the nature of transactions that they are executing.

Ian Rogers, chief experience officer at Ledger, explained the clear signing feature will help to prevent collectors from falling for NFT scams.

“Billions of dollars in transactions happen via ‘blind signing,’ monthly and those are all vulnerable transactions. Fortunately, the Nano S Plus connected to Ledger Live allows users to see their transaction details when signing, ‘clear signing,’ and users should avoid signing transactions when they can’t see this information,” Rodgers told The Block

Apart from being an NFT-focused wallet, the Ledger Nano S also comes with a storage capacity of 1.5 megabytes and can support up to 100 apps. In March, the company sold 10,000 units within three days as part of a limited-edition release of the wallet.

Commenting on security concerns for wallet owners, Rodgers stated that Ledger remains a secure way to protect digital assets from theft. “As long as you do not share your 24 words or pin with anyone, with a Ledger you’re giving yourself the best prevention possible.”

Ledger has been the victim of several data attacks in the past with user information stolen from the company. Trezor, another hardware wallet maker, recently saw its users targeted in a phishing attack tied to a data breach that occurred on MailChimp.

© 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.

Decentralized mapping network company Hivemapper has raised $18 million in a Series A funding round.

The round brings the company’s total financing to date to $23 million, according to a statement on Tuesday. The company declined to disclose Hivemapper’s valuation.

Investment firm Multicoin Capital led the round, with participation from Craft Ventures, Solana Capital, Shine Capital, Spencer Rascoff’s 75 and Sunny Ventures — as well as previous investors Spark Capital, Founder Collective and Homebrew. 

US-based Hivemapper is a blockchain-based mapping network that turns dashcam footage into “state of the art” maps that are “constantly evolving.”

It rewards map contributors who capture 4K street-level imagery with the network’s native token HONEY. Map editors then process the dashcam data, carry out quality assurance, and annotate contributor imagery. These editors also receive HONEY for their efforts.

Tech giants such as Google, Apple and Alibaba currently dominate the digital mapping market, which — according to Hivemapper — is worth about $300 billion. 

But the incumbents may face growing competition, with reports last week that the US Justice Department had “breathed new life” into an investigation into Google Maps and alleged anti-trust violations. 

“Mapping is an extremely complex, expensive, and time-consuming process. Only the largest and most capitalized tech companies in the world have the resources to do digital mapping, and even with all those resources street-level imagery in many parts of the world is only updated once every two years,” said Ariel Seidman, co-founder and CEO of Hivemapper. 

“This causes cascading logistical, municipal, and political problems. However, maps have the potential to be near real-time. An open-source, community-owned map is the only way to continuously construct a living, breathing, ever-updating view of our world,” he said.

Hivemapper said it will use the newly raised funds to further develop its network. It plans to launch its mainnet this summer and will continue to onboard new contributors.

 In addition, the company will begin shipping its own $449 crypto-integrated dashcam from July.

As part of the financing, co-founder and CEO of Nova Labs, Amir Haleem, will also join Hivemapper’s board of directors.

© 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.