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Crypto exchange Coinbase is entering the Japanese market through its partnership with Japanese financial giant Mitsubishi UFJ Financial Group (MUFG).

Coinbase said in an announcement on Thursday that it is launching Coinbase Japan as part of its global strategy in one of the largest markets by crypto trading volumes. 

“In line with our global strategy, we will aim to be the easiest to use and most trusted exchange in Japan that’s fully compliant with local regulations,” the firm said in the statement. “That’s why we are also excited to announce our partnership with MUFG — one of the largest banks in Japan serving 40 million Japanese customers.”

The partnership will give Japanese customers the access to fiat on- and off-ramp through MUFG’s Quick Deposit services, according to the statement.

The exchange said it will initially support the trading for five largest crypto assets by trading volume with more assets to come in the coming months but did not provide specific names.

Coinbase said it plans to launch other localized versions of its existing global services such as advanced trading and Coinbase for Institutions.

© 2021 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.

U.S.-listed bitcoin mining firm BIT Mining has reported $443 million in Q2 revenues – a whopping 150 times growth over the first quarter – thanks to the acquisition over mining pool BTC.com.

Previously known as 500.com, Shenzhen-based BIT Mining said in an unaudited earnings report Tuesday that 95% of the Q2 revenues came from BTC.com, which it acquired from Bitmain earlier this year.

This is the first time a crypto mining pool’s financial numbers are released as part of a public mining firm’s earnings report, which also reflects how mining pools was accounted for their revenues in the U.S.

Per BIT Mining’s report, BTC.com’s $422.8 million in revenues from April 15 to June 30 essentially referred to all the block rewards the pool had received from the bitcoin blockchain before distributing almost all of them to its miner customers.

Mining pools are hashing power aggregators. After mining blocks, they distribute the block rewards pro rata with each miner customer’s hash rate contribution. They make money by charging roughly a 2.5% handling fee. BTC.com operates in a Full Pay Per Share (FPPS) model, which means it pays out both block subsidies and transaction fees to miner customers.

Hence $414 million of BTC.com’s total revenues in Q2 – about 98% – essentially belonged to its miner customers but were booked as cost of revenue “for the allocation to pool participants.”

That means BTC.com was able to pocket just $8.4 million for itself before deducting other operating expenses like manpower or rent, etc.

A spokesperson for BIT Mining told The Block that because the mined rewards arrived first in BTC.com’s own blockchain addresses before being further transacted out, those rewards had to be booked as their total revenues as per the Generally Accepted Accounting Principles in the U.S.

“From an accounting perspective, that is the proper way to look at it if the pool operates as FPPS payment method,” said Ethan Vera, co-founder and COO of North America mining pool Luxor. “Miners are suppliers of hash rate to a mining pool and so payments to them are represented as an expense, often classified as cost of goods sold.”

“That is how our accountants advised us to do it under a FPPS method,” he said but cautioned that for investors, they always talk about the revenue after deducting the payouts since the total revenues could be misleading.

Indeed, when Bitmain filed for an initial public offering in Hong Kong in 2018, it specified that under the International Financial Reporting Standards, its BTC.com and Antpool generated revenue from up to five percent of the mining rewards from the mining activities connected to the two mining pools.

© 2021 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 man accused of operating bitcoin mixing service Helix has pled guilty to money laundering conspiracy charges, according to the U.S. Department of Justice (DOJ).

Larry Dean Harmon of Ohio has admitted to operating Helix from 2014 to 2017, in addition to the Darknet search engine known as Grams. Helix conspired with Darknet markets, including AlphaBay, Evolution and Cloud 9, to launder money. According to the DOJ, Helix moved over 350,000 bitcoin, which was valued at over $300 million at the time of the transactions. 

“Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office in a statement. “Today’s guilty plea demonstrates the FBI’s commitment to infiltrate and shut down the cryptocurrency money-laundering networks that support cyber-criminal enterprises.”

The DOJ first brought the case against Harmon in February. It coordinated its investigation with the Financial Crimes Enforcement Network (FinCEN), which separately levied a $60 million civil penalty against Harmon for violations of the Bank Secrecy Act through Helix. 

The plea will see Harmon forfeit more than 4,400 bitcoin valued at more than $200 million today. He is awaiting sentencing, facing a maximum penalty of 20 years in prison, a term of supervised release and a fine of $500,000 or twice the value of the property involved in the transaction.

© 2021 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.

MobileCoin, a crypto payments project, announced Wednesday that it raised $66 million in its Series B funding round. 

Participants in MobileCoin’s most recent round include Alameda Research, Los Angeles-based investment firm Berggruen Holdings, BlockTower Capital, Coinbase Ventures, General Catalyst, Time Ventures, and Vy Capital, according to a release.

MobileCoin intends to use the Series B funding to build out a crypto chatbot service called MOBot, merchant services support, and a stablecoin pegged to the U.S. dollar. 

MobileCoin completed its Series A funding in March with $11.5 million from Future Ventures and General Catalyst, and now has a total of $107 million in backing. 

MobileCoin is a cryptocurrency project that strives to give users quick and private crypto transactions. The MobileCoin cryptocurrency is not available for individuals in the United States, though it is available on the exchanges FTX, Bitfinex, BigOne, and HotBit. 

Moxie Marlinspike, the creator of the encrypted messaging app Signal, technically managed MobileCoin early on in the project’s development. 

© 2021 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.

Robinhood’s second-quarter earnings show crypto has become the driving force of growth in the investment app’s revenue.

Between Q2 2020 and Q2 2021, transaction-based revenues from cryptocurrency trading increased by a jaw-dropping 4,282%.

Total transaction-based revenue was $451 million, forming the bulk of the firm’s $565 million revenue in Q2. Crypto transaction fees were, consequently, responsible for the lion’s share of growth between 2020 and 2021. Robinhood’s filing also notes that 62% of its cryptocurrency transaction-based revenue was attributable to Dogecoin trades.

That change has happened alongside a rise in user interest in crypto. “Robinhood’s customers demonstrated significant interest in cryptocurrencies, with over 60% of our net cumulative funded accounts trading in crypto during the second quarter,” the firm said.

As The Block previously noted, the firm has grown more reliant on crypto while revenues from payment for order flow for stock trades have declined during the second quarter. 

© 2021 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.

Earlier today, the central bank of the Netherlands (DNB) issued a warning against Binance, saying that the crypto exchange is not registered in the country and is illegally offering services.

When reached for comment, a Binance spokesperson told The Block that the company will apply for registration with the central bank.

“We are aware of a notice by DNB about Binance in the Netherlands. As part of our commitment to redoubling our efforts in compliance, Binance is in the process of submitting an application for the required registration,” the spokesperson said. “We will be working constructively with DNB and hope to give a positive update in the near future.”

The comment appears to be different from what Binance has previously said about similar regulatory warnings from countries including the U.K., Japan, and Italy. At the time, Binance did not say it plans to get registered in these countries. In the Netherlands, crypto firms have to be in compliance with the country’s Anti-Money Laundering and Anti-Terrorist Financing Act. They must be registered with the DNB if they wish to operate in or from the country.

“Binance takes compliance very seriously and although we are not formally registered with DNB yet, we have a robust compliance program that incorporates tools and procedures to combat money laundering and terrorist financing,” said the spokesperson.

Binance has also beefed up its compliance efforts with several high-profile appointments in recent months. Earlier today, the exchange announced the hiring of Greg Monahan, a former U.S. government official at the Internal Revenue Service, to lead its global money laundering reporting efforts.

Binance recently also named former U.S. Senator Max Baucus as policy and government relations advisor and former FATF members Rick McDonell and Josée Nadeau as compliance and regulatory advisors.

© 2021 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.

ConsenSys wants major financial groups to jump into the world of decentralized finance — and believes MetaMask Institutional can serve as a gateway for such firms. 

While most listeners are likely familiar with MetaMask, the DeFi wallet that boasts millions of monthly users, MetaMask Institutional (MMI) is a new initiative within ConsenSys focused on providing institutional access to DeFi. Already, the firm counts several large multi-billion dollar crypto-native and traditional funds among its clients, according to Johann Bornman, the initiative’s product lead. 

For bigger investment firms, interest in DeFi centers around exposure to higher yields from lending protocols like Aave or Compound. 

“Some of them are very active in terms of their yield fund strategies and their yield farming strategies,” Bornman explained during a new episode of The Scoop podcast. “But on average, if you’re talking about these larger hedge funds and pension funds that you mentioned and also some of the larger crypto funds, on average, you’re seeing them sort of  dip their toe into the space.”

Bornman added:

“And this might entail minting assets or lending assets on Compound and Aave or using some of the most well-known protocols in the space.”

© 2021 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.

David Marcus, the leader of Facebook Financial and Novi, apparently remains confident in Novi’s ability to succeed despite more than two years of regulatory hurdles.

In an August 18 blog post, Marcus wrote: “Novi is ready to come to market. It’s regulated, and we’re confident in our operational ability to exceed the high standards of compliance that will be demanded of us.”

Novi initially launched as Calibra, a wallet designed for Libra, which now goes by the name Diem. Both faced intense regulatory scrutiny as soon as Facebook announced the project back in June 2019. Diem has yet to officially launch, and the organization backing it moved from Switzerland to the United States.

Marcus alluded to this blowback from policymakers, referring to efforts to block Facebook’s involvement in the payments system as “profoundly un-American.” He further emphasized the utility of stablecoins and the need for the best-designed to come out on top.

“What defines a well designed stablecoin is how its reserves are designed and managed, how transparent these are to consumers and regulators, and what consumer protections and compliance features the issuer offers,” wrote Marcus. 

The Block recently reported that Novi is exploring the use of other stablecoins. In today’s post, Marcus appeared to echo Novi’s interest in creating a sense of distance from the Diem brand: 

“In the US, we have secured licenses or approvals for Novi in nearly every state, and we will not launch anywhere we have not yet received such clearances. The Diem Association has become an independent entity.”

© 2021 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 Avalanche Foundation, the organization behind the Avalanche blockchain, has kicked off a new incentive program under the title Avalanche Rush.

The foundation is putting up $180 million in incentives to lure more decentralized finance (DeFi) assets and applications to the network.

Leading DeFi protocols Aave and Curve are among the first to participate in the scheme, alongside BENQi, a liquidity protocol native to Avalanche, with which the foundation recently launched a $3 million liquidity mining initiative. Stake DAO, another DeFi platform, is lined up to build yield generation strategies using Aave and Curve’s upcoming deployments on the network.

In the first phase of the program, AVAX – the network’s native currency – will be used as a liquidity mining incentive for Aave and Curve users over a three-month period. The foundation has set aside $20 million worth of AVAX for Aave users and $7 million for Curve users. Further allocations are planned for the second phase of the scheme over the coming months.

“This is an allocation for effectively a fund that will be disbursed over time, not all of that amount has been allocated,” said Luigi D’Onorio DeMeo, a director at Ava Labs. “This is really our effort to showcase what Avalanche can do as a Layer 1 technology and bring over some of the largest protocols that exist.”

The foundation is an organization distinct from Ava Labs; whereas the latter is a software development company (akin to ConsenSys in the context of the Ethereum), the foundation plays a broader support role for the ecosystem at large.

Bridging the gap

Avalanche, a proof-of-stake protocol, touts its smart contracts platform as the fastest in the blockchain space. Launched in September 2020, the protocol today underpins more than 225 projects, including Tether, Chainlink, Circle and The Graph.

The Avalanche Rush incentive scheme follows the launch of a new cross-chain bridge project that enables the smooth transfer of assets between blockchains.

In February, the team behind Avalanche unveiled a new bridge connecting it with the Ethereum network – allowing DeFi users to transfer assets over. But that first bridge did not work particularly well, according to Emin Gün Sirer, director at the Avalanche Foundation. It proved expensive to use and offered a poor user experience “on days when Ethereum had hiccups,” he explained.

“We recently got a new bridge, a lot of this was predicated on the bridge. We were waiting for a bridge technology that was easy to use and cheap for bringing assets over,” Gün Sirer continued.

With the better bridge, the incentive scheme up and running, and some of DeFi’s best-known protocols involved, Avalanche’s claims of superior speed will be put to the test.

“I think every one of these new launches is both a challenge and an opportunity for us and it’s always going to be a testament to just how scalable the underlying technology is,” said Gün Sirer.

© 2021 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.

Firoz Patel, the former co-founder and CEO of Payza who was convicted of money laundering charges last year, is suing London-based crypto firm Blockchain.com.

The lawsuit, filed in the United Kingdom’s High Court of Justice on June 23, concerns a cache of 450 bitcoin – about $20.4 million at today’s prices – held in Patel’s Blockchain.com account.

In March 2018, the United States Department of Justice charged Payza and its co-founders, brothers Firoz and Ferhan Patel, with running an unlicensed money services business, accusing them of processing more than $250 million of proceeds from Ponzi schemes and other criminal enterprises.

The Patel brothers took plea deals in November 2020, forfeiting $4.5 million and agreeing to serve prison sentences – three years in Firoz’s case. His brother Ferhan received an 18-month sentence. 

Blocked chain

In the High Court filing in June, Patel claims that his requests to transfer the bitcoin stash to a specific bitcoin address have been ignored by Blockchain.com, despite early indications that they would be complied with – which he claims represents a breach of contract. He is seeking an injunction to force the transfer through.

Patel further claims he suffered a loss of around $9.3 million because the price of bitcoin fell sharply between May and June, when the lawsuit was filed – and so is seeking damages equal to that sum or more.

“This is a fast-paced area of the law that involves highly valuable assets often across multiple jurisdictions. We continue to pursue our clients’ interests to protect and recover cryptocurrency,” said Leo Nabarro, a partner at Candey, the law firm representing Patel.

It is not clear why Blockchain.com denied the transfer request, and the filing notes that no explanation has been offered to Patel by the exchange. The company is yet to file its defense and had no immediate comment when reached by The Block.

© 2021 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.