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USDC — a stablecoin pegged to the U.S. dollar — has exceeded $10 billion in total supply for the first time. 

USDC is now the second-largest stablecoin by supply, coming in at $10.7 billion. In addition to Ethereum, USDC also runs on the Algorand, Solana and Stellar blockchains. 

Tether (USDT) remains the largest stablecoin by supply, with roughly $40.6 billion in total supply.

Additional data collected by The Block shows that USDC currently encompasses 16.69% of the total stablecoin supply, compared to USDT’s 69.95%.

As The Block Research’s new stablecoin report shows, CENTRE, a consortium jointly founded between Coinbase and Circle, first issued USDC in September 2018. Funding to further develop the stablecoin has since reached $45 million. 

USDC is most commonly used in North American timezones, according to the stablecoin report, whereas Tether continues to dominate in the Asia-Pacific region.

© 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.

Protocol Labs, the team behind the Filecoin network, has denied any bugs from their end causing the FIL double deposit issue, which drew wide attention on Thursday. 

The San Francisco-based Protocol Labs published a blog post late Thursday that said reports of a Filecoin “double-spend due to a serious bug” in the network’s code are “incorrect and misleading.”

“The Lotus team has investigated the report thoroughly and have found no issues with the Filecoin network or the remote procedure call code (RPC) API. There is no double-spend on the blockchain itself, and no bug in the API code,” the project team claimed in the post.

Protocol Labs’ post was in response to reports that first emerged early Thursday PST. Some China-based Filecoin miners notified crypto exchanges that there was a potential double spend loophole on the Filecoin network.

Word of a potential double spend quickly spread across social media. To be sure, there was no on-chain double-spend. But the actual issue in question has now triggered a tug-of-war over who is to blame. 

For its part, Protocol Labs said there are no bugs in its API, contending instead that exchanges “misused” its APIs.

Wallet and custody startup Cobo, co-founded by F2Pool co-founder Discus Fish, posted a follow-up article on Friday in an effort to explain the technical process behind the issue.

Cobo didn’t explicitly use the word “bug” in Filecoin’s API code, but called some of the code’s designs “illogical.”

Some users did get double-credited for their Filecoin deposits worth some $4 million. According to Protocol Labs, the affected exchange has already reverted those off-chain transactions in their internal bookkeeping system.

So what happened?

Around Friday midnight China time, developers behind the Filecoin blockchain explorer Filfox and a Filecoin hard-fork project Filestar, spotted that some FIL deposits with $4.6 million to Binance got double-credited, and subsequently notified exchanges and also Protocol Labs.

It appears that they also immediately notified Chinese media about a potential but unconfirmed on-chain double-spending, which triggered news headlines that spread across social media.

6Block, a China-based Filecoin mining firm, is the team behind the development of both Filfox and Filestar. In fact, 6Block also effectively shares the same team with Chinese public blockchain project QTUM.

As a precaution, crypto exchanges like Binance and OKEx suspended deposits in the wake of the news.

Protocol Labs initially responded to some of the Chinese media reports that it found no double spend occurred, explaining that it was a front-end issue with Filfox’s blockchain explorer.

The team behind Filfox and Filestar quickly pushed back, saying that after a thorough investigation, they found a serious bug inside the Filecoin API that Protocol Labs recommended to crypto exchanges for communicating with the network when crediting user deposits.

It was through this loophole, some users managed to get their FIL deposits credited twice, Filfox and Filestar developers said.

Hours later, Protocol Labs put out its review that there is no bug in the API itself but one unnamed exchange – effectively Binance – used it incorrectly.

“The exchange in question caught this API misuse and has taken immediate action to halt deposits, withdrawals, and transfers. They have reverted the incorrect transaction in question (so no funds were lost in this incident), and are correcting their use of lotus APIs to match the recommended use,” Protocol Labs said.

The firm added that other exchanges have been alerted and to its knowledge, “no other exchange has misused this API in this way.”

Per Cobo’s explanation, the process happened like this: Filecoin’s Lotus nodes provide different types of APIs for pulling information from on-chain transactions.

For instance, ChainGetBlockMessages is one API designed to pull details of all transactions within a designated block. StateGetReceipt is another way for pulling the execution results of a designated transaction ID.

Cobo wrote that “there’s one part that’s not really logical in StateGetReceipt’s design,” which would count the same thing twice if there’s a replace-by-fee transaction.

Replace-by-fee happens when a sender wants to speed up unconfirmed transactions by replacing them with a new one, usually with a higher fee attached.

“Assuming an attacker first send TX1 with a corresponding ID as TXID1. Then the attacker conducted RBF to generate TX2 with a corresponding TXID2. Eventually only TX2 got transacted on-chain. But if you use StateGetReceipt to inquire both TXID1 and TXID2, you’d get results that both are executed,” Cobo wrote in the post.

Cobo said it already detected this problem when it was working with Protocol Labs to support the FIL deposit to its custody service and hence didn’t use the ChainGetBlockMessages and StateGetReceipt APIs to access on-chain information.

After the report of the issue, Filecoin developers clarified the StateGetReceipt API’s design and said it will discard the API after the V1 version.

© 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 first bitcoin exchange-traded fund (ETF) of Latin America has been approved in Brazil, the region’s largest economy.

The bitcoin ETF was launched by QR Asset Management and is expected to be listed on Brazil’s main stock exchange B3, according to a Friday announcement from QR Capital, the asset manager’s holding company. The listing date has yet to be disclosed, but Reuters reported Friday that the listing will take place “by June.”

The ETF, sporting the ticker symbol QBTC11, has been approved by CVM, the Securities and Exchange Commission of Brazil, said QR Capital.

QBTC11 is the fourth bitcoin ETF to receive approval in the Western Hemisphere after three Canadian bitcoin ETFs were launched in recent weeks — Purpose Bitcoin ETF, Evolve Bitcoin ETF, and CI Galaxy Bitcoin ETF.

QR Capital said the approval of QBTC11 could speed up the approval of a bitcoin ETF in the U.S. because CVM and the SEC are affiliated members of the International Organization of Securities Commissions.

Indeed, recent developments suggest that a bitcoin ETF may finally get the nod from regulators in the U.S. this year, as The Block reported last week.

There are currently four bitcoin ETF applications pending review by the SEC — each one from WisdomTree Investments, VanEck Associates Corp., NYDIG Asset Management, and Valkyrie Digital Assets.

© 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.

Recent filings reveal that billionaire financier Alan Howard, co-founder of the hedge fund Brevan Howard, owns a significant stake in CoinShares, Europe’s largest crypto asset manager.

CoinShares recently went public through a heavily oversubscribed listing on Sweden’s Nasdaq First North Growth Market. The shares for CoinShares International Limited began trading on March 11.

CoinShares’ website shows that AH (St Helier) Limited — a Jersey entity owned by Howard — holds 5,484,580 shares, or 8.24% of CoinShares International Limited’s issued share capital. CoinShares’ IPO prospectus shows the entity owned those shares prior to the IPO, though the exact timing of Howard’s investment is unclear.

The holding makes AH (St Helier) Limited the fourth-largest shareholder of CoinShares, behind only executive chairman Daniel Masters, CEO Jean-Marie Mognetti and co-founder Russell Newton. 

Data provided by Nasdaq gives the CoinShares’ stock trading on the exchange a market capitalization of 6.4 billion SEK (approximately $750 million), suggesting Howard’s stake in the crypto asset management firm is currently worth around $61.5 million, at the time of publication. 

Founded in 2015, CoinShares manages a range of exchange-traded products that offer investors exposure to cryptocurrencies, including bitcoin and ether. According to its website, the company currently has $4.64 billion in assets under management.

Howard, who stepped down as CEO of Brevan Howard in November 2019, has invested heavily in cryptocurrency-focused financial infrastructure over the past few years.

He is the owner of Elwood Asset Management, an investment firm focused on crypto and blockchain that was set up in 2018. More recently, Howard has led and participated in a handful of venture capital deals for startups in the crypto space. In March alone, he has been involved in $25 million and $30 million fundraises for crypto custodian Komainu and Cologne-based neo-broker Nextmarkets, respectively. Komainu was set up as a joint venture between CoinShares, Japanese investment bank Nomura and Ledger, the crypto security firm.

Howard has also been linked with the hedge fund One River Asset Management, which Bloomberg reported had holdings of bitcoin and ether worth around $1 billion as of early 2021.

Brevan Howard, the company Howard founded in 2002, was once one of the largest macro hedge funds in the world — with some $40 billion in assets under management in 2013.

CoinShares did not respond to requests for comment by the time of publication.

© 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.

Bitcoin mining machines continue to be in demand by institutions.

Two more firms — The9 Limited and Blockcap — have now purchased a total of 36,000 bitcoin miners worth more than $150 million from Bitmain.

Specifically, The9, a Nasdaq-listed Chinese gaming company, is buying 24,000 Antminer S19j machines. The total cost is estimated at around $120 million. One unit of S19j, Bitmain’s latest model of bitcoin miner, is priced at about $5,000.

North American Blockcap, on the other hand, has purchased 12,000 Antminer S19 machines, according to an announcement shared with The Block exclusively. The total cost of the purchase is estimated at more than $33 million. One S19 cost around $2,800.

This is an additional major purchase by Blockcap, the bitcoin mining firm founded by Core Scientific veteran Darin Feinstein. Last month, the firm bought 10,000 S19 miners in a bid to double its hashrate.

With the latest purchase, Blockcap’s total number of miners to be deployed by Q4 2021 will increase to more than 40,000. And by that time, its hashrate is expected to exceed 3.5 exahash per second (EH/s), more than three times its current hashrate of 0.95 EH/s.

Feinstein said Blockcap aims to position the U.S. as a global player in the bitcoin mining space. Currently, China has a major share of around 65% in the space, while the U.S. has a share of about 7%, according to Cambridge Centre for Alternative Finance.

The9’s machines are scheduled to deliver starting from November 2021, and upon the completion of deliveries, the firm is expected to own an additional hash rate of approximately 2,160 petahash per second (PH/S).

Institutions continue to grab miners new and old. Earlier this week, Chinese firm 500.com bought years-old machines, including S9 to scale up its bitcoin mining operations. Publicly-traded bitcoin mining firm Bitfarms also recently ordered 48,000 new machines from MicroBT to expand its hashrate.

To date, more than ten firms have announced bulk pre-orders estimated at more than $500 million, as The Block reported recently. 

© 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

• Qatar currently features no regulatory framework for digital assets.
• Regulatory advances relating to cryptocurrencies in other Sharia law countries may lead Qatar’s regulators to reconsider their current negative stance, given an otherwise beneficial regulatory environment for private individuals and businesses.

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

SBI Crypto, a wholly-owned subsidiary of Japan’s SBI Holdings, has opened its bitcoin mining pool for the public.

The move means institutions and individuals looking to mine bitcoin and other cryptocurrencies can join the SBI Crypto Pool service.

SBI Crypto has been self-mining bitcoin, bitcoin cash, and bitcoin SV since August 2017. Its bitcoin mining pool is currently ranked eleventh and has a hashrate of 2.44 exahash per second (EH/s), per BTC.com.

SBI Crypto said part of its pool’s service had been developed with its partner Northern Data AG to complement data center management services. SBI first partnered with Northern Data last July by becoming its strategic shareholder.

The SBI pool appears to be the second well-known pool to open for the public after Digital Currency Group’s Foundry. After months of operating its pool in private beta mode, Foundry last week opened its public service.

Bitcoin miners have been raking in millions of dollars in revenue given the cryptocurrency’s recent rally.  According to data compiled by The Block, bitcoin miners made an all-time high revenue of $1.36 billion in February. For this month so far, their revenue has been nearly $1 billion.

Bitcoin is currently trading at around $58,500, according to TradingView.

© 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 upper chamber of Wyoming’s legislature has passed a bill that, if approved, would clear the way for decentralized autonomous organizations, or DAOs, to become incorporated under state law.

The 28-2 vote took place on Wednesday, public records show, and was sent to the State House of Representatives the same day. On Thursday, the bill was formally introduced and transferred to that chamber’s Minerals, Business & Economic Development committee.

Should the House of Representatives clear the bill, any differences would need to be hammered out between the two chambers before being sent to Wyoming Governor Mark Gordon for signature.

The bill, as The Block reported in early February, is the first of its kind, and would create a legal link between would-be decentralized organizations and a U.S. state. Wyoming has gained a reputation as an industry-friendly state following previous legislative developments and the establishment of crypto-focused banks there. 

The so-called DAO law has attracted both supporters and critics. As Decrypt noted when the State Senate’s bill passed a committee vote earlier this month, some believe that the law, if approved, would set the stage for a new host of decentralized organizations to form. Cardozo School of Law professor and OpenLaw co-founder Aaron Wright helped draft the bill, telling the Decrypt: “It still takes a lot of work to set one of these up lawfully, and that’s what the whole Wyoming bill is trying to do — make it a lot easier, cheaper to do.”

Anderson Kill partner Preston Byrne, on the other hand, has argued that the state should “scrap this bill.” 

© 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 Securities and Exchange Commission pushed back Thursday after two executives of distributed ledger company Ripple asked a federal court to stop the U.S. regulator from subpoenaing personal financial records.

Lawyers representing CEO Brad Garlinghouse and co-founder/directors’ board executive chairman Chris Larsen asked the court to quash the subpoenas sent to a group of banks in a March 11 letter, as Bloomberg reported at the time. In that letter, representatives said that “[t]he SEC’s multi-front attempt to troll through the Individual Defendant’s personal financial information in a non-fraud litigation, where the Defendants have already agreed to produce the relevant information regarding the challenged transactions, is a wholly inappropriate overreach.”

“The Individual Defendants’ privacy interests are especially powerful here because the requests and subpoenas seek such a comprehensive intrusion into their personal financial lives,” the letter, dated March 11, argued, charging that the “SEC seeks comprehensive records of every aspect of the Individual Defendants’ personal financial lives, including their wealth, their investment decisions, and what they purchased and when.”

In a March 17 court letter, the SEC outlined three reasons for which it wants access to the records in question. First, they “are the only reliable way to de-anonymize their movements of XRP and determine exactly how much they raised from their XRP sales to the public.”

The SEC also believes that the “financial records will show whether Individual Defendants personally funded efforts to increase the value of XRP, which is relevant to the “efforts of others” prong of the Howey test.” 

The agency went on to argue that the personal finance information could show to what extent Larsen and Garlinghouse’s actions related to XRP could have been financially motivated:

“Finally, financial records will show how much Defendants—who insist they had no idea their conduct was wrongful—enriched themselves relative to other income, which bears on the powerful, personal financial motivation they had to look the other way when confronted with the legal consequences of their conduct.”

The SEC filed suit against Ripple, Garlinghouse and Larsen in mid-December, alleging that the digital asset XRP is a security and that the firm’s sales of XRP constituted an unregistered securities offering. Ripple has blasted the SEC for its legal moves, accusing the U.S. securities regulator of broad overreach. Garlinghouse described the SEC’s efforts as “an assault on crypto at large” when the lawsuit was first filed. 

© 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.

Six people from New Hampshire were charged Tuesday with operating an unregistered cryptocurrency exchange business, according to a statement from the United States Department of Justice (DOJ). 

The charged individuals are Aria DiMezzo, 34; Colleen Fordham, 60; Ian Freeman, 40; Nobody (formerly Richard Paul), 52; Renee Spinella, 23; and Andrew Spinella, 35. The indictment of the six individuals alleges that they knowingly violated federal anti-money laundering laws by operating the unlicensed fiat-to-cryptocurrency exchange business. 

Since 2016, more than $10 million allegedly flowed through the business, which charged a fee for transactions. The business operated via websites as well as crypto ATMs based in New Hampshire. 

Some of the individuals, though it’s not clear who based on the DOJ statement, allegedly laundered the funds by making their business appear like a religious organization, receiving charity donations in their bank records. 

The Federal Bureau of Investigations, Internal Revenue Service, Financial Crimes Enforcement Network, and United States Postal Inspection Service are investigating the case.

© 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.