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A California-based man pleaded guilty on Friday for his participation in a “coordinated cryptocurrency and securities fraud scheme” that once attracted the endorsement of celebrity actor Steven Seagal.

John DeMarr pled to one count of conspiracy to commit securities fraud and will be sentenced in January. He faces a maximum sentence of five years in prison. DeMarr was arrested and charged in February and accused by U.S. prosecutors of conspiring to “defraud investor victims by inducing them to invest in their companies, “Start Options” and “B2G,” based on materially false and misleading representations.”

DeMarr, along with two others, were charged by the SEC earlier this year. 

As noted by prosecutors, B2G — also known as “Bitcoiin” emerged in early 2018 as part of the initial coin offering craze. B2G was an extension of the Start Options scheme intended to keep investors around. “In late January 2018, rather than permitting Start Options investors to withdraw money from their accounts after the requisite time period, DeMarr and others required investors to roll over their accounts into an unregistered “initial coin offering,” or ICO, of B2G, the second of the two fraudulent companies in which DeMarr was involved.”

Bitcoiin infamous netted the endorsement of Seagal, who went on to settle with the SEC in February 2020. He neither admitted nor denied the findings of the SEC, which alleged at the time that he failed to disclose payments he received. 

Friday’s statement indicates that the B2G/Start Options investigation is ongoing.

© 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.

Quick Take

• Decentralized Finance has typically been too unregulated or complex for institutional investors.
• But some DeFi firms are now trying to offer products aimed specifically at institutions.
• Here are the key details for the two biggest offerings: Aave and Compound.

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subscribers of The Block Daily.
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this Daily feature on The Block.

According to a Friday tweet from BlockFi, the Kentucky Department of Financial Institutions has issued the firm an order barring it from soliciting or offering securities in the state. Even though the firm believes its interest account product is not a security, it will stop offering it to new customers in Kentucky, it said. 

Kentucky becomes the fifth state to call into question the regulatory status of BlockFi’s interest accounts, following similar actions in the firm’s home state of New Jersey, Alabama, Texas, and Vermont.

BlockFi offers crypto savings accounts with rates of return significantly higher than any comparable offerings from FDIC-insured banks in the U.S. Like banks, BlockFi earns money by lending out funds deposited on its platform. 

Savings accounts with traditional banks do not need to answer to securities regulation, and BlockFi has long been in communication with U.S. regulators over its offerings. The recent actions from state securities regulators are based on their view that these interest accounts are, unlike bank savings accounts, securities. It’s been a shock to the crypto community. 

The recent actions have, however, not been full shutdowns of the platform. BlockFi’s products are unavailable to new customers in the states concerned, pending what may well be extensive legal back and forth. According to the firm, “BlockFi firmly believes that the BIA is lawful and appropriate for crypto market participants.”

© 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.

Keynote: The DeFi Opportunity

Featuring: Jim Bianco – President, Bianco Research

The Future of Stablecoins

Featuring: 

Rune Christensen – Founder, MakerDAO
Matthew Cantieri – General Manager, Terraform Labs
Robert Bench – Applied Fintech Research,  Federal Reserve Bank of Boston
Matt Werner – Associate Director, Product Management, Wallet, Gemini

The DeFi Stack Today & Tomorrow

Featuring: 

Dan Robinson – Research Partner, Paradigm
Amir Bandeali – Co-CEO, 0x Labs
Sergey Nazarov – Co-Founder, Chainlink Labs
Zubin Koticha – CEO, Co-Founder, Opyn

Venture Landscape in DeFi

Featuring: 

Mable Jiang – Partner, Multicoin Capital
Santiago R. Santos – Partner, ParaFi Capital
Michael Anderson – Co-Founder, Framework Ventures
Haseeb Qureshi – Managing Partner, Dragonfly Capital
Meltem Demirors – CSO, CoinShares

Intermediaries in DeFi: Institutional Market Making and Liquidity Provisioning

Featuring: 

Frank Chaparro – Director of News, The Block
Jake Dwyer – Head of DeFi, GSR
Evgeny Gaevoy – Founder & CEO, Wintermute
Brad Koeppen – Head of Trading & Business Development, CMT Digital
Ricky Li – Co-founder, Altonomy
Peter Johnson – Partner, Jump Capital

Intermediaries in DeFi: Data, Infrastructure, & Insurance

Featuring:

Aya Kantorovich – Head of Institutional Coverage, Falcon X 
Alex Svanevik – CEO, Nansen
Eva Beylin – Director, The Graph Foundation
Esteban Castano – Co-founder & CEO, TRM
Michael Shaulov – CEO, Co-founder, Fireblocks

Governance: A fireside chat

Featuring: 

Angela Walch – Professor of Law, St Mary’s University School of Law
Gabriel Shapiro – General Counsel, Delphi Labs

Aave product Reveal – A look at Aave’s institutionally focused product, ARC

Featuring:

Ajit Tripathi – Head of Institutional Business, Aave

Fireside Chat with Jan Van Eck – Emerging Opportunities

Featuring: 

Jan Van Eck – CEO, VanEck
Imran Khan – Lead, DeFi Alliance

Sizing The DeFi Market Opportunities for Institutions

Featuring: 

Patrick O’Kain – Manager, Cryptoasset Services, KPMG
Jeff Dorman – CIO, Arca
Noelle Acheson – Head of Market Insights, Genesis
Ben Reynolds – CSO, Silvergate 
Christine Sandler – Head of Marketing and Sales, Fidelity Digital Assets

Regulations and DeFi: Where are We Today? Tomorrow?

Featuring: 

Jake Chervinsky – General Counsel, Compound Labs
Marc Boiron – General Counsel, dYdX
Mike Frisch – Government Litigation and Investigations, Croke Fairchild Morgan & Beres
Colleen Sullivan – Co-founder, CEO CMT Digital

© 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.

Signs point to the looming specter of regulation slowly bringing the days of bitcoin and crypto’s “Wild West” to an end. The only question, perhaps, is if not now, then when?

“We’re getting to a boiling point,” The Block’s Aislinn Keely told The Scoop.

On this policy report episode of The Scoop, host Frank Chaparro is joined by The Block’s policy and regulatory reporters — Editor of Wonk Talk Aislinn Keely and Senior Politics Reporter Kollen Post — for an update on where the United States currently sits on the digital asset policy front.

Post and Keely touched on how regulators will be tackling exchanges first. “It’s not necessarily that we’re waiting for exchange regulation, but the way crypto will be regulated is going to be related to on/off ramps and that happens to be centralized exchanges right now,” Keely told The Scoop.

Keely and Post also covered what a Gensler-led SEC looks like, citing Elizabeth Warren’s letter to the SEC questioning how the US plans to regulate exchanges. 

Keely and Post noted the potentially risky domino effect of agency mandates on policies such as those that targeted crypto startup BlockFi, particularly in instances for which crypto products mimic savings accounts and securities and don’t have the provision of FDIC backing. 

Post noted that if the NY investigation of Tether becomes a federal case, it could change the narrative of the White House’s coverage of digital assets in terms of how much cash the Senate wants to monitor the ecosystem. As of this podcast’s publication, The Block received new details stating that an upcoming infrastructure bill in the U.S. Senate will in fact be partially paid for by enhanced tax enforcement of cryptocurrency. 

Keely also clarified where the US currently stands on Central Bank Digital Currency or CBDC. Keely said that the US is still on the perceived “losing side” relative to countries like China, which is in the process of developing a digitized version of the yuan. The US government has not made any final decisions on whether it will issue a digital dollar.

This podcast also covers:

• The status of bitcoin ETF’s
• The ransomware update in crypto
• Facebook’s Diem and Libra coins
• New of FATF international regulation of crypto exchanges
• The US’s losing role in creating a Central Bank Digital Currency or CBDC

© 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.

Wealthfront has begun integrating crypto-related offerings into its robo-advisory offerings, starting with a pair of Grayscale funds.

The company, which signaled its move this spring as previously reported by The Block, is making the Grayscale Bitcoin Trust and Grayscale Ethereum Trust available alongside a raft of new options for users.

“GBTC and ETHE round out our significantly expanded menu of investment options. Clients can now choose from a bigger selection of ARK ETFs, pick ETFs that are specific to industries like cannabis or self-driving cars, or choose from a larger pool of socially responsible investments, just to name a few,” the firm said in a blog post Friday, explaining:

“You can add GBTC and/or ETHE to your portfolio by following the instructions here and selecting a combined allocation of up to 10% of your total portfolio. We limit your allocation to GBTC and ETHE because, as a fiduciary, we act in your best interests at all times, and these investments can be riskier and more volatile than most ETFs.”

In April, Wealthfront co-founder Dan Carroll previewed the push for a wider portfolio, selection, telling The Block: “We believe that Wealthfront can be the place where people invest responsibly alongside a diversified portfolio.”

© 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.

Quick Take

• This research piece contains simple overviews and context around recent discussions/arguments in the crypto community.
• Topics include Uniswap Labs’ decision to remove specific trading pairs from its UI, time-bandit attacks in liquidity provision, the split between crypto and institutional DeFi, etc.
• Previously, a similar piece focused on Rollups, multi-chain deployments, algorithmic stablecoins, impermanent loss protection, etc.

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

Quick Take

• There has been a big increase in the flow of talent from Wall Street to the crypto world.
• We take a look at the 12 biggest moves that have happened so far this year.

This feature story is available to
subscribers of The Block Daily.
You can continue reading
this Daily feature on The Block.

On Friday, Uniswap Labs, the development firm behind decentralized crypto exchange Uniswap, announced that it would cut off access to certain tokens on the protocol it supports. 

The decentralized exchange cited “the evolving regulatory landscape” in its explanation of cuts. The news comes on the heels of heightened scrutiny on tokens imitating offerings that are typically regulated at an exchange level, particularly by the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission. 

The list that Uniswap published included 129 tokens. These range from tokenized stocks, mirror stocks, options and derivatives. Examples include Tether Gold, opyn options on ETH at different strikes and expirations, synthetix products on other coins and stocks, tokenized versions of Zelda and Mini Mario Cash, UMA yield dollars, and stocks like “mirror Amazon” and “mirror Tesla.”

SEC Chair Gary Gensler recently cautioned the crypto industry about securities offerings in tokenized form. Gensler said: “It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities.” 

However, the announcement noted that it is simply the official interface that the protocol itself remains unchanged:

“Importantly, the Uniswap Protocol — unlike the interface — is a set of autonomous, decentralized, and immutable smart contracts. It provides unrestricted access to anyone with an Internet connection. “

© 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.

E-commerce giant Amazon appears set to toe the digital currency waters, outlining a blockchain-specific role in a new job ad.

The job spec appears wide-ranging, mentioning “central bank digital currencies” and “distributed ledger” among other catch-all phrases for digital currency applications.

“You will leverage your domain expertise in Blockchain, Distributed Ledger, Central Bank Digital Currencies and Cryptocurrency to develop the case for the capabilities which should be developed, drive overall vision and product strategy, and gain leadership buy-in and investment for new capabilities. You will work closely with teams across Amazon including AWS to develop the roadmap including the customer experience, technical strategy and capabilities as well as the launch strategy,” the post explains. 

Specific duties for the would-be hire include working on “Amazon’s Digital Currency and Blockchain strategy and product roadmap.”

In a statement, the company positioned the position as a wah for Amazon to “explore” what’s happening in the crypto space. 

A spokesperson told The Block:

“We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon. We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.”

© 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.