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Optimism sets aside $3B for grants to its blockchain builders

Ethereum layer-2 scaling network Optimism is putting aside $3.3 billion worth of its Optimism (OP) token for its community to grant to projects or people deemed important contributors to the blockchain’s ecosystem. On March 26, the chain’s governance and community arm, Optimism Collective, said that some of the 850 million OP would be doled out over four categorized rounds starting in May and continuing throughout 2024. Optimism Foundation chief operating officer Bobby Dresser told Cointelegraph that the 850 million OP — 20% of the initial OP token supply — is allocated for funding, with 40 million OP, worth around $158 million, being doled out across three past rounds. On-chain builders will kick off the fourth round for Optimism’s retroactive public goods funding (RPGF), or retro funding — where some of its community votes on what projects get tokens if they’ve shown value. Rounds five through seven will see infrastructure, governance and dev tooling contributors rewarded with “everyone, anywhere putting the work in to improve Optimism” eligible for the funds. The last round wraps in mid-November. Public goods in crypto are service projects or people giving to a blockchain or crypto community for free, and retro funding aims to reward them for their demonstrated contributions. Related: Ethereum Dencun upgrade lowers transaction fees for L2s Retro funding has cropped up as a funding source for such contributors who typically can’t raise capital from other means, like venture capital, as their contributions aren’t expected to turn a profit. In the last round of funding in January, a share of the 30 million OP tokens on offer was given to data aggregators DefiLlama and L2Beat, token approval revoking tool Revoke.cash and blockchain sleuth ZachXBT, among hundreds of others. Ethereum co-founder Vitalik Buterin said in an X post after the round that he was “really impressed” by Optimism’s commitment to public goods funding. “Hope to see more projects doing [Quadratic Funding] QF and RPGF rounds in the future!” he added. Magazine: Here’s how Ethereum’s ZK-rollups can become interoperable

US Justice Department charges KuCoin and two founders with violating AML laws

United States Justice Department officials unsealed an indictment against cryptocurrency exchange KuCoin and two of its founders for “conspiring to operate an unlicensed money transmitting business” and violations of the Bank Secrecy Act, or BSA. In a March 26 announcement, the U.S. Department of Justice said KuCoin founders Chun Gan and Ke Tang had willfully failed to maintain an Anti-Money Laundering program at the exchange, leading to the platform being used for “money laundering and terrorist financing.” The company itself was charged with operating an unlicensed money-transmitting business and violating the BSA. “KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin’s platform,” said U.S. Attorney Damian Williams. “Indeed, KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume.” Williams added: “In failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering.” The DOJ criminal charges were announced in parallel to a civil enforcement case from the U.S. Commodity Futures Trading Commission (CFTC), which charged KuCoin “with multiple violations of the Commodity Exchange Act (CEA) and CFTC regulations” on March 26. According to the Justice Department, KuCoin received more than $5 billion and sent more than $4 billion of “suspicious and criminal funds.” Related: KuCoin responds to claims of user funds being locked Gan and Tang helped launch KuCoin in 2017. According to its website, KuCoin’s operational headquarters was in Seychelles. The two founders, Chinese nationals, remained at large at the time of publication. U.S. officials have pursued similar criminal charges against crypto exchanges and their executives doing business in the country. On March 28, former FTX CEO Sam Bankman-Fried will be sentenced following his conviction on seven felony charges. Former Binance CEO Changpeng Zhao is expected to be sentenced on April 30. Magazine: US enforcement agencies are turning up the heat on crypto-related crime

Bitcoin block art? Marathon showcases visualization potential of block building

A Bitcoin Core contributor has immortalized Marathon Digital’s logo into the data visualization of a Bitcoin block by using the mining firm’s template building tools. X user Portland.HODL laid claim to the intriguing piece of “block art”, a custom graphic crafted by ordering transactions in a block that can be then seen on Bitcoin indexer website. Blockchain indexers visualize bitcoin transactions using square blocks and color gradients based on transaction sizes and fee rates. Marathon Digital shared details of block 836361 which it successfully mined on March 26. The firm dubbed it the M block and wanted the visualization to demonstrate its template building capabilities and technology stack. The company explained that by owning its mining pool, it can craft the order of transactions to create a form of block art. While not offering this specific output capability as a service, the mining company speculated that this could present a wave of creative potential not yet explored in the Bitcoin space. Related: Bitcoin halving will be a litmus test for inefficient ops: Mining execs Marathon also noted that the Bitcoin network should exclude blocks from full pay-per-share (FPPS) calculations to ensure more accurate miner fee estimates. This is to avoid any effect that Marathon’s experiments might have on network fees. Portland.HODL claims to have successfully crafted the block’s visualization through a long process of trial and error. The process of creating this block art made use of OP_RETURN transactions in the Bitcoin protocol. This is a type of transaction that allows for a small amount of arbitrary data to be included in a transaction. The data is typically used for embedding messages or metadata onchain. If a user carefully crafts the content of these OP_RETURN transactions and orders them correctly, an image or pattern emerges when the block data is visualized. Before a block is mined, all transactions wait in an area called the mempool. A miner can create numerous transactions to generate this kind of art once mined into a block. They would develop transactions with outputs that, when visualized, correspond to the pixels of the desired image. Creating block art would also require a miner to modify their software to select specific transactions that will form the desired pattern instead of prioritizing transactions that maximize profit based on the fee density or satoshis per byte. Related: Wall Street funding has changed Bitcoin mining’s incentive structure: Report There is also the rest of the network to contend with. Mining a block with a specific set of transactions that will form an image or text, requires significant hashing power like that of Marathon. Cointelegraph has reached out to Marathon and Portland.HODL for further details on the “M block” and the ramifications of block composability. According to Bitcoin Gandalf, the total fees paid to get the desired output was $122,524, which Marathon paid itself. Why did Marathon Digital Holdings' MARA Pool just mine a block with their logo on it? I'll get to that, but first here's some things I haven't seen anyone talk about yet. 1⃣ Each coloured square represents a transaction in the block. 2⃣ To achieve this visual effect, the block… pic.twitter.com/LFIqSfsiSf — ₿itcoin Gandalf (@BTCGandalf) March 26, 2024 The X user, previously worked at Braiins mining, each colored square represents a transaction in the block and its associated fee. The block is constructed to create an image through the mempool space block visualizer. Marathon launched a direct BTC transaction submission service in February 2024 designed to facilitate and speed up large and complex Bitcoin transactions. Magazine: Big Questions: How can Bitcoin payments stage a comeback?

Hong Kong’s in-kind ETF creation could be a significant market opportunity: Analysts

Hong Kong’s financial regulators aim to offer in-kind creation models for spot Bitcoin exchange-traded funds (ETFs). This could be a significant market opportunity, which could considerably increase assets under management (AUM) and trading volume for Bitcoin ETF issuers in the region, according to a research note by Bloomberg ETF analyst Rebecca Sin, shared in a March 26 X post by Eric Balchunas: “Hong Kong is aiming for in-kind creation of the ETF, unlike the US, where the transaction is cash only — in the US, it’s cash in, Bitcoin ETF out, while Hong Kong aims for Bitcoin in, ETF out. This could be an opportunity for the market.” Hong Kong ETFs chart. Source: Eric Balchunas Hong Kong’s approach is in contrast with the model of the United States Securities and Exchange Commission, which only allows cash creation models for spot Bitcoin ETFs. Related: TradFi Wall Street firms pushing for Ether ETF approval, says former Binance Labs head The U.S. Bitcoin ETFs have amassed a total of $11.28 billion worth of flows since launch, with a net negative of $1.07 billion in net flows last week, before starting to pick up on March 25. After five consecutive days of negative outflows last week, the spot Bitcoin ETFs saw over $15 million worth of flows on March 25, the same day Bitcoin (BTC) price recorded its highest daily close of above $69,000 in the past 10 days. Bolstered by the ETF inflows, Bitcoin price reclaimed $70,000 on March 25. As investors have resumed accumulating BTC off exchanges, BTC supply on Coinbase reached a nine-year low of 344,856 BTC on March 18. Last week’s negative spot Bitcoin ETF inflows aren’t a long-term concern for Bitcoin holders and price actio, Bitfinex analysts told Cointelegraph: “Even though negative ETF outflows featured heavily last week, all of it is from the Grayscale Bitcoin Trust (GBTC), as investors both switch out of the higher fees demanded by GBTC and also take profit, especially as many of these investors are long-term holders who entered during the bear market. GBTC investors are not the only sellers in the market. Whale wallet activities have also indicated significant profit taking.” Related: Over $6B worth of BTC moved by 5th-richest Bitcoin whale

Galaxy Digital reports $296M net income in 2023 after $1B loss in 2022

Digital asset management firm Galaxy Digital has reported a net income of $296 million for 2023, marking a reversal in fortune after a disastrous 2022 with $1 billion in net loss. The change in fortune for the digital asset management firm comes amid a change in crypto market trends from bearish to bullish. The firm’s assets under management (AUM) grew from $1.7 billion to $5.1 billion in 2023 and nearly doubled in the first two months of 2024, reaching $10.1 billion by the end of February. Mike Novogratz, Galaxy Digital’s founder and CEO, reported $302 million in net income for the fourth quarter of 2023, a 421% increase from the previous quarter. The firm also reported $18.7 million in mining revenue for Q4, recording a 31% increase from the previous quarter. “Our average marginal cost to mine in the fourth quarter increased relative to prior quarters due to fewer opportunities to economically curtail our mining operations and a higher network hash rate," the company said in its statement. “For the full year 2023, Galaxy mined 1,077 Bitcoin from our proprietary mining operations at an average marginal cost to mine of less than $8,000.” Galaxy Digital highlighted that the change in fortune came with the rising prices of major cryptocurrencies such as Bitcoin (BTC). The company’s quarterly earning report highlighted that it had already made “approximately $300 million” in before-tax income, “driven primarily by the appreciation of digital asset prices and growth in our operating businesses.” Related: Is the Bitcoin halving the right time to invest in BTC? The asset manager reported successfully closing five deals in 2023 on investment banking while highlighting the challenging market conditions. The team completed a restructuring mandate with Prime Trust in the fourth quarter. The firm also reported realized revenue associated with advising online gaming platform Gamercraft on its seed financing round and serving as the exclusive financial adviser to Securitize on its acquisition of Onramp Invest. The firm reported mandates representing $2.2 billion in potential deal value. Magazine: ‘Am I sorry? No’ — 3AC founder. $6B BTC laundered for fast food worker: Asia Express

Portuguese data regulator bans Worldcoin operations for 90 days

The Portuguese data regulator — the National Data Protection Commission (CNPD) — issued a statement announcing the decision to temporarily limit Worldcoin’s collection of biometric data through its Orb devices within the country. According to the CNPD, the decision was made in an effort to protect the rights of its citizens, minors in particular. The measure will take effect immediately and until the conclusion of an investigation, which it initially opened on March 8. Worldcoin operates through scanning individual’s irises via its Orb devices, which it exchanges for a digital ID and its own cryptocurrency. Worldcoin was founded by Sam Altman, CEO and co-founder of artificial intelligence developer OpenAI. According to the company, over 4.5 million people in 120 countries have signed up with Worldcoin. Portugal reports that 300,000 people have already provided their biometric data for the project. The CNPD said these measures come after receiving “dozens of reports” on the collection of data from minors without the proper authorization from parents or legal authorities. It stated: “Given the current circumstances, in which there is illegality in the processing of minors’ biometric data, associated with potential violations of other GDPR standards, the CNPD understood that the risk to citizens’ fundamental rights is high, justifying urgent intervention to prevent serious or irreparable damage.” Related: Data privacy and security concerns worry nearly half of tech industry consumers: Report Paula Meira Lourenço, president of the CNPD, called the measure “indispensable and justified” to effectively defend the public interest in safeguarding fundamental rights, especially those of minors. The complaint was addressed to the Worldcoin Foundation, which is the entity behind the Worldcoin data collection initiative. These troubles follow a slew of other complaints from regulators around the world. Kenya’s government continued to uphold its ban on the project despite what it said was “pressure” from the United States to relax its stance. Legal authorities in Spain have also told Worldcoin to cease activity in the country after complaints that local users could not withdraw their consent. It was also alleged that data collection was being collected from minors. Despite these bans, on March 18, Worldcoin released a statement assuring that it operates “lawfully in all of the locations in which it is available” and is designed to fully comply with related laws. On March 22, the project announced that it would be open-sourcing its software and providing a new “personal custody” privacy feature to give users more control over their data. Magazine: ‘Am I sorry? No’ — 3AC founder. $6B BTC laundered for fast food worker: Asia Express

0G Labs raises $35M pre-seed funding from over 40 crypto investors for on-chain AI

Web3 modular infrastructure firm 0G Labs announced the successful completion of a $35 million pre-seed funding round on March 25. According to a press release from 0G Labs, the round received participation from more than 40 crypto-native institutions, including Hack VC and Blockchain Builders Fund. The funding will be used to build out 0G Labs’ vision of creating a full-stack blockchain-based solution for training, deploying, and running artificial intelligence models. Per the press release, one of the major advantages of its platform is speed over current state-of-the-art solutions such as Ethereum’s smart contract network. Ed Roman, Managing Partner at Hack V, lauded 0G Labs a pioneer in the area of on-chain generative AI infrastructure: “0G is positioned as the premier modular data availability solution for web3, including the next frontier of crypto-powered AI networks. Their data availability technology has shown to achieve speeds 1000x+ faster and cheaper than ETH L1, which is simply phenomenal. We’re proud to be their partners in this journey, and can’t wait to see their ecosystem thrive as the team pushes forward towards main-net." Pre-seeding is typically the first funding round a startup receives. This $35 million dollar emergence round represents one of the largest initial startup funds for a company operating at the intersection of Web3 and artificial intelligence (AI). For comparison, OpenAI, the company behind ChatGPT and Dall-E, raised $120,000 in its pre-seed round on Aug. 22, 2016. In the time since, OpenAI has ridden the success of its generative AI technology to a current valuation of around $80 billion as of Feb. 2024. Related: FTX to offload $1B Anthropic stake to pay off bankruptcy debts within weeks — report 0G Labs’ website states that one of the products it’s developing is called “Uni-Chain.” Accoridng to the site, this is an architecture for Web3 that seamlessly connects networks into a unified metaverse where users can transact with users and services on any chain through through single wallet access. “Our modular technology will enable frictionless interoperability between chains,” reads the site, “while ensuring security, eliminating fragmentation, and maximizing connectivity for a weightless and open meta-uni-verse.”

Turkish Misyon Bank moves into Bitcoin with Taurus

Update March 27: The article was updated to reflect that Misyon Bank and Taurus' collaboration will enable custody of cryptocurrencies like Bitcoin and Ether in the first phase of implementation. Misyon Bank — an investment banking firm and one of the first neobanks in Turkey — is moving into digital asset custody and tokenization with Swiss cryptocurrency custody provider, Taurus. The Turkish neobank signed a partnership agreement with Taurus to implement its technology in order to provide crypto custody and tokenization services at Misyon Bank. The custody service will support Bitcoin (BTC), Ether (ETH) and Avalanche (AVA) in the first phase, a spokesperson for the Misyon Bank told Cointelegraph. “We plan to extend our coverage by including the other essential cryptocurrencies provided by Taurus for our clients in the following phases,” the representative noted, adding that crypto support is enabled in addition to tokenization of real world assets. Announcing the news on March 26, Misyon mentioned that the collaboration is structured through its wholly-owned subsidiary MisyonTech. Misyon will deploy multiple Taurus-developed solutions, including the custody platform Taurus Protect, the tokenization tool Taurus Capital and the blockchain node infrastructure Taurus Explorer. Taurus is known for providing its custody service to major European banks, including the Spanish financial services giant Banco Santander and global investment bank Credit Suisse. The latter is also a major Taurus investor, leading a $65 million Series B raise for the firm in February 2023. According to Misyon Bank CEO Önder Halisdemir, the partnership with Taurus is a significant step forward in its plan to make Turkey the “Switzerland of its region.” “With this collaboration, Turkish assets will be made accessible to investors worldwide through tokenization,” Halisdemir noted. He added that local solutions for digital assets will be designed with the contributions of Istanbul Technical University and KPMG. The exec stated: “With the completion of the local regulatory framework for digital asset custody services, our efforts will make Turkey a center of excellence and attraction in its region regarding custody services and tokenization.” Misyon and Taurus didn’t mention whether the collaboration targets the addition of cryptocurrencies like Bitcoin (BTC) on the Misyon platform directly. Related: OKX announces launch of Turkish platform Turkey has emerged as one of major crypto economies in the world, ranking fourth in terms of crypto transaction volumes, or $170 billion in 2023, according to data from Chainalysis. The country is just behind the United States, India and the United Kingdom. According to Misyon Bank and Taurus, the newly signed partnership opens the door for a wave of institutional activity in the region. “We have been impressed by Misyon and MisyonTech team of experts, and we are confident that through this significant collaboration, Turkey could establish a prominent position within the region in digital asset custody and tokenization,” Taurus co-founder Lamine Brahimi said. Magazine: Asia Express: $383M for HK crypto hub, APAC exchanges expand, Digital Yuan bridge

Hacker mints 1B tokens in $16M Curio smart contract exploit

Real-world asset (RWA) liquidity firm Curio suffered a smart contract exploit involving a critical vulnerability related to voting power privileges, allowing the attacker to steal $16 million in digital assets. Curio alerted its community of the exploit and highlighted that they are addressing the situation. The company said that a MakerDAO-based smart contract used within Curio was breached. However, the company assured its users that the exploit only affected the Ethereum side and that all Polkadot and the Curio Chain contracts remained secure. Web3 security firm Cyvers estimated that the losses from the exploit are about $16 million. The security firm said the exploit involved a “permission access logic vulnerability.” On March 25, Curio published a post-mortem of the exploit and a compensation plan for affected users. Within the report, Curio highlighted that the problem was a flaw in the voting power privilege access control. With this, the attacker acquired a small number of Curio Governance (CGT) tokens, allowing them to gain access and elevate their voting power in the project’s smart contract. With the elevated voting power, the attacker performed a series of steps that ultimately allowed the execution of arbitrary actions within the Curio DAO contract. This led to the unauthorized minting of 1 billion CGT. In the report, Curio said all the funds affected in the exploit will be returned. The team said it would release a new token called CGT 2.0. With the new token, the team promised to restore 100% of the funds for CGT holders. Related: Hacker moves $10M from 2023 phishing incident to Tornado Cash For liquidity providers, Curio said that it will conduct a fund compensation program. The team said it will be paid in four stages, with each stage lasting 90 days. This could mean that full payment could potentially take one year. They wrote: “The compensation program will consist of 4 consecutive stages, each lasting for 90 days. During each stage: compensation will be paid in USDC/USDT, amounting to 25% of the losses incurred by the second token in the liquidity pools.” The company also said that it would reward white hat hackers who can help in recovering the lost funds. The team said that hackers could receive a reward equivalent to 10% of funds recovered in the initial recovery phase. Magazine: ‘Am I sorry? No’ — 3AC founder. $6B BTC laundered for fast food worker: Asia Express

Lower ETF demand, unrealized gains may weigh on BTC selling pressure post-halving

A slowdown of inflows to spot Bitcoin exchange-traded funds (ETFs) combined with a high volume of unrealized gains from traders could lead to bearish pressure on the Bitcoin price after the upcoming halving event. According to Julio Moreno, head of research at CryptoQuant, unrealized profits from Bitcoin’s recent rally are driving up selling pressure. An eventual slowdown of inflows to spot Bitcoin ETFs in the coming months could result in further pressure on Bitcoin (BTC) prices. CryptoQuant’s net unrealized profit and oss (NUPL) indicator supports the analysis. The indicator’s warning sign is the 0.7 mark, indicating that Bitcoin investors may be ready to take profits, further driving prices down and increasing selling pressure. On March 17, the NUPL indicator reached 0.606, up 0.41% from the previous 24 hours, despite recent BTC price corrections. “For a bearish outlook for price: 1. Slowdown in ETF Bitcoin purchases and 2. Getting into the halving at a high level of unrealized profits for traders, as highly likely traders would sell to take profits,” Moreno said about possible price-depressing events. NUPL indicator. Source: CryptoQuant The Bitcoin ETFs recorded one of their lowest net inflow days on March 14, with just $132 million in net activity, their lowest level in eight trading sessions and an 80% decline from the previous days. A possible downward trend, however, may not be as severe as previous bear markets, as institutional investors typically engage in portfolio rebalancing strategies, which could temper volatility rather than increase it, James Butterfill, head of Research at CoinShares, told Cointelegraph. “Volatility in the last bull market in 2021 was 120%. It is now only 45%, and prices have risen above all-time highs. We believe this is due to the dampening effect of portfolio rebalancing,” he said. Bitcoin ETFs have so far been in high demand. The cumulative net inflows into the crypto products surpassed the $12 billion mark on March 15, while industry insiders anticipate further demand as brokerage firms speed up due diligence to offer clients Bitcoin ETFs. Miners brace for impact Capital flowing through Bitcoin ETFs is counteracting the negative price effects of miners sales ahead of the halving — Bitcoin’s deflationary mechanism. The halving cuts the reward for mining new blocks by 50%, thus reducing the rate at which new Bitcoin are generated. This year’s reduction will slash Bitcoin miner rewards from 6.25 BTC to 3.125 BTC per block. The cost of mining, however, remains the same or may even increase as miners usually improve operations to remain profitable after the event. CoinShares anticipates the average cost of production post-halving for crypto miners to be at $37,856. “Looking at price performance of the miners year to date highlights investor concerns for the miners around the halving, but I believe many are being tarred with the same brush, so to speak, as average costs to mine Bitcoin vary greatly, but those with higher costs to seem to have been hit harder,” said Butterfill. Miners cost production per Bitcoin post-halving. Source: CoinShares. Historically, miners have sold more of their BTC reserves before the halving to maximize profits, and 2024 is no exception. Data from CryptoQuant shows miner reserves at their lowest level in two years, with 1.81 million Bitcoin held by miners on March 15. The Bitcoin halving takes place every four years, with the next expected to happen around April 19, 2024. Magazine: This is your brain on crypto — Substance abuse grows among crypto traders

Over $6B worth of BTC moved by 5th-richest Bitcoin whale

The fifth-largest Bitcoin (BTC) holding address — also dubbed “37X” — has moved over $6 billion worth of BTC to three new addresses for the first time since 2019. The Bitcoin whale transferred nearly its entire balance of 94,500 Bitcoin, worth $6.05 billion, on March 23, leaving only 1.4 BTC in the initial address, according to a March 25 X post by Arkham Intelligence. It wrote: “$5.03B BTC was sent to bc1q8yj, with addresses bc1q6m5 and bc1q592 receiving $561.46M and $488.40M in BTC respectively. bc1q592 has since sent those funds onwards.” Fifth-largest BTC address flows. Source: Arkham The transfer occurred during a period of increased institutional interest in Bitcoin, driven by the upcoming Bitcoin halving, which will slash block issuance rewards in half when it occurs in late April. Despite the Bitcoin price reaching an all-time high before the halving for the first time in history, the incoming supply issuance reduction is still not priced in to the full extent, co-founder of D8X decentralized exchange and former executive director at UBS told Cointelegraph. Related: Is the Bitcoin halving the right time to invest in BTC? The over $6 billion BTC transfer occurred two days before Bitcoin reclaimed the $70,000 psychological price level on March 25 for the first time in 10 days. As investors have resumed accumulating BTC off exchanges, BTC supply on Coinbase reached a nine-year low of 344,856 BTC on March 18. Bitcoin rose 6.4% in the 24 hours leading up to 9:53 am in UTC to trade at $71,222, according to CoinMarketCap. BTC/USDT, 1h chart. Source: CoinMarketCap Bitcoin’s current rally is mainly driven by the anticipation of the halving and the increased institutional inflows from the ten spot Bitcoin exchange-traded funds (ETFs) in the United States, Christopher Cheung, partner at digital asset funds Ten Squared, told Cointelegraph in a research note: “The involvement of traditional financial institutions like BlackRock and Fidelity in launching BTC products is further legitimizing cryptocurrency as an alternative asset class. This reduces the ‘career risk’ for investors who were previously hesitant to enter the crypto market.” Bitcoin ETFs have reached a combined total of $58.3 billion in on-chain holdings, which represents 4.17% of the current BTC supply, according to Dune. Related: Who is ‘Mr. 100’? Mysterious Bitcoin whale becomes 14th-biggest BTC holder

IMF recommends stablecoins and CBDCs to boost Pacific Islands’ economies

The International Monetary Fund (IMF) believes that digital money, both private and public, could help the world’s most remote and dispersed nations in the Pacific Ocean to raise financial inclusion and the quality of financial services. On March 25, the IMF published a report on the potential role of stablecoins and central bank digital currencies (CBDCs) on the economies of the Pacific Islands countries. In a 58-page text, the IMF’s senior economic experts highlighted the challenges faced by the dozens of countries and microstates located in a Pacific Islands area: “Limited and unequal access to financial services contributes to persistent poverty and inequality. The countries also are highly dependent on remittance flows, which makes them disproportionately impacted by diminishing correspondent banking relationships.” The IMF believes these nations can benefit from the digital money revolution by developing payment systems, expanding financial inclusion and mitigating the loss of correspondent banking relationships. Related: Global policymakers are still pushing CBDCs despite their failures While the report predictably focuses on CBDCs, a cause heavily advocated by the IMF, it also mentions private stablecoins backed by foreign currencies. The IMF discourages smaller Pacific Island countries (PICs) from issuing their own sovereign stablecoins due to the lack of oversight capacities. However, the only private stablecoin explicitly mentioned in the report is Tether (USDT). Overall, the report states that the best option for PICs with existent national currency and mature banks is a two-tier CBDC, whereby the central bank issues but delegates the operation to private intermediaries. As for others: “Foreign currency–based stablecoins could be a realistic alternative for countries without their own currencies, though only with robust regulation and supervision.” As the summary of current PICs’ financial systems shows, none of them officially uses private crypto or stablecoins, while only several — Fiji, Palau, Solomon Islands and Vanuatu — are exploring a CBDC. The IMF remains one of the leading international advocates for implementing CBDCs. In November 2023, its managing director, Kristalina Georgieva, urged the public sector to “keep preparing to deploy” CBDCs. She believes CBDCs can replace cash and co-exist with “private money,” being its “safe and low-cost alternative.” Magazine: 5 dangers to beware when apeing into Solana memecoins

South Korean police catch $4.1M crypto scam duo

South Korean police have caught a pair of fraudsters who stole 5.5 billion won ($4.1 million) from a senior citizen with the promise of profitable crypto investments. The Haeundae Police Station in Busan, South Korea, detained two individuals in their 20s and 30s for deceiving a senior citizen and stealing 5.5 billion South Korean won spread across multiple transactions. According to a local report, the victim was promised high returns on cryptocurrency investments between September 2022 and December 2022. The scammers guaranteed 70% profits in a monthly investment of 1 billion won. The police quoted the fraudsters saying: “It’s a boom period for coin (cryptocurrency). If you invest 1 billion won, I will call it 1.7 billion won a month later.” The victim sent 5.5 billion won in total over six different transactions to the scammers, who then forged balance certificates to show as proof of investments. During the scam, the victim was shown fake balance sheets of crypto investments and real estate contracts. South Korean police said the fake balance sheet showed 20 billion won worth of cryptocurrencies, even though none of the victim’s 5.5 billion won funds made it to the crypto trading account. While the police have detained the fraudsters in a timely manner, information about the recovery of funds has yet to be made public. Related: South Korean crypto criminals face life imprisonment Meanwhile, South Korea’s most infamous crypto entrepreneur, Terraform Labs co-founder Do Kwon, was reportedly released from prison in Montenegro on March 23 amid extradition requests from the United States and South Korea. Kwon is currently facing legal charges for the collapse of the Terra ecosystem in 2022. Prison director Darko Vukcevic reportedly said by phone: “We released Do Kwon from prison as his regular prison term for traveling with fake papers ended. Since he is a foreign citizen and his documents were withheld, he was taken for an interview to the police directorate for foreigners, and they will deal with him further.” The decision to release Kwon reportedly came from the Council of the Supreme Court, which is set to review a decision that could grant or deny extradition to his native South Korea. Magazine: 5 dangers to beware when apeing into Solana memecoins

Wall Street funding has changed Bitcoin mining’s incentive structure: Report

Institutional capital investment in public Bitcoin (BTC) mining companies has disadvantaged individual and small-scale miners and could have lasting implications on network dynamics. A Bitfinex report delving into market dynamics around the upcoming Bitcoin halving unpacks a changing dynamic in the cryptocurrency mining ecosystem over the past decade. It suggests that publicly listed Bitcoin mining firms mark a shift away from a decentralized vision of individual miners contributing to the security of the network for personal gain. “These corporate entities, with their focus squarely on shareholder returns, operate on a vastly different scale and with distinct priorities compared to their smaller counterparts,” an excerpt reads. The report highlights the imperative to maximize profitability and manage investor expectations as a critical reason for strategic decisions prioritizing financial performance over the Bitcoin community’s altruistic ideals. Related: Bitcoin halving will be a litmus test for inefficient ops: Mining execs These are other qualities and ideals inherent to Bitcoin, which include securing the Bitcoin network, egalitarian access to the network and censorship resistance. The current landscape offers both opportunities and challenges the network’s foundational principles. Infusion of Wall Street funding The analysts note that the influx of capital and “professionalization” of mining operations by publicly traded firms can lead to increased hashing power, potentially enhancing the overall security and stability of the Bitcoin network. Conversely, this leads to concerns about centralization and the influence of corporate interests, given that Bitcoin’s network was intended to be open, borderless and resistant to control by single entities. “As these companies grow and consolidate their position, the Bitcoin community watches closely to ensure that the network’s decentralized ethos and the principles of Satoshi’s game theory design remain intact, even as the mining landscape evolves,” the analysts explain. The report also suggests that “Wall Street funding” in corporate mining has fundamentally altered the incentive structure of the network. The resource disparity favors corporate miners’ ability to scale operations, secure more affordable energy contracts, and invest in emerging technology. The Bitfinex report adds that large-scale miners increase their efficiency and profitability at a scale unreachable by the average individual miner or large independent competitor. Related: Bitcoin mining battles 2023 — Surging hash rates test industry limits The analysts also question whether a more centralized landscape could threaten the “decentralized ethos of Bitcoin,” which could potentially affect network security and mining reward distribution. Survival of the fittest Questions over the future of independent miners, hobbyists and the geographic spread of the network’s hash rate all come into focus. The report states that independent miners must innovate and collaborate to ensure viability. Mining pools offer a means for smaller miners to combine computational power for shared rewards to remain competitive. Hobby mining’s sustainability could hinge on continuous innovation in mining technology and methods, including developing more energy-efficient hardware and exploiting renewable energy sources. The analysts also highlight the geographical diversification of mining as a critical factor in maintaining the network’s decentralization. Emerging markets with access to renewable or untapped energy resources offer fertile ground for mining operations. Magazine: Big Questions: How can Bitcoin payments stage a comeback?

Bakkt declares $780M full-year revenue in 2023 earnings report

Crypto custody and trading company Bakkt has published its quarterly report, recording a full-year total revenue of $780.1 million for 2023. Bakkt said that in the fourth quarter of 2023 alone, it had earned a total revenue of $214.5 million. This includes its gross crypto and net loyalty revenues. The report highlighted that Bakkt’s acquisition of Bakkt Crypto (formerly Apex Crypto) drove the increase in its gross crypto services revenues. With its balance sheet strengthened, the crypto custody firm aims to scale its business further in 2024. Bakkt’s incoming president and CEO, Andy Main, said the company will focus on several initiatives this year. The executive explained: “Our focus for 2024 is on a set of strategic initiatives that will provide our business with efficient scale, including broadening our client network, expanding our product set and prudently managing expenses.” Within the report, the company also published its expectations for its performance in 2024. According to the company, it is expecting full-year revenue of between $3.2 billion to $5.1 billion. This includes gross crypto revenues of $3.2 billion to $5 billion. However, it also expects its crypto costs to be similar to its revenue in crypto, seemingly predicting to break even in its crypto business. Related: Bakkt shifts focus to custody services, adds support for DOGE, SHIB, other coins Main said in the report that its new balance sheet helped put the company in a position to alleviate conditions that placed doubt in the company’s ability to continue. On Feb. 7, Bakkt filed an amendment to its quarterly report with the United States Securities and Exchange Commission, with a section containing a note that it may “not be able to continue as a going concern.” This meant the company was running low on cash to fund its operations in the next year. However, with its latest report showing positive results, Main said that this alleviated the conditions that raised concerns about its capabilities to continue its business. Furthermore, the company’s incoming president expressed excitement about the crypto space’s improving market conditions and said it would help them execute their key priorities and drive the company toward profitability. Magazine: ETH a security? Celsius clawbacks, SBF says sentence too harsh: Hodler’s Digest, March 17-23

Cathie Wood’s ARK dumps $31M in Robinhood stock, stacks Roblox

ARK Invest, the investment management firm founded by veteran investor Cathie Wood, started dumping large amounts of stock of the cryptocurrency-friendly broker-dealer Robinhood (HOOD). On March 25, ARK dumped 1.6 million Robinhood shares from its three funds, according to a trade notification seen by Cointelegraph. The amount is worth $31.5 million, based on HOOD’s closing price of $19.08 on Monday, according to data from TradingView. The most significant portion — or 1,247,181 shares — was offloaded from the ARK Innovation ETF (ARKK), worth about $24 million. ARK also offloaded 275,933 and 128,137 HOOD shares from the ARK Next Generation Internet ETF (ARKW) and ARK Fintech Innovation ETF (ARKF), respectively. ARK’s latest Robinhood sale is the largest one since the company started actively stacking HOOD stock last year. The sales came amid Robinhood seeing significant success, with its price surging 36% over the past 30 days. The firm was selling smaller portions of Robinhood shares previously, with the majority of such sales being forced by compliance with Rule 12d3-1. The rule prohibits funds from acquiring more than 5% of the value of its total assets in securities. Related: Coinbase to launch DOGE futures, says it ‘transcended’ meme origins After dumping $24 million in Robinhood shares, ARK’s ARKK holds HOOD as its eighth-largest portfolio asset, accounting for 4.3% of its entire $8.2 billion assets under management. The top three assets are Coinbase (COIN), which accounts for 10.6% as of March 26, Tesla (TSLA) and Roku (ROKU), which make up 8.4% and 7.5%, respectively. ARKK’s top nine assets by value as of March 26, 2024. Source: ARK Invest While dumping Robinhood, ARK has continued buying more shares of the online game platform Roblox (RBLX). On March 25, ARK acquired 740,115 Roblox shares for its three funds, including ARKK, ARKW and ARKF. The amount is worth $27 million at the closing price on Monday, according to TradingView. In addition to selling Robinhood, ARK continued to offload Coinbase shares, dumping 4,291 COIN on Monday. The sale is worth roughly $21 million as of Tuesday morning, according to TradingView data. Founded in 2013, Robinhood is a crypto-friendly stock trading application that allows users to trade cryptocurrencies like Bitcoin (BTC) and Ether (ETH) in addition to stocks, exchange-traded funds (ETFs), options and other assets. On March 20, 2024, Robinhood launched the Android version of its self-custodial wallet, the Robinhood Wallet app. Magazine: Bitcoin ETFs make Coinbase a ‘honeypot’ for hackers and governments: Trezor CEO

Osmosis, dYdX and Synthetix most actively developed DeFi projects: Santiment

Osmosis, a decentralized exchange (DEX) built on Cosmos, has surged to become the most actively developed decentralized finance (DeFi) project in the last month, according to data shared by crypto intelligence platform Santiment. In a March 25 post to X, Santiment wrote that Osmosis had seen over 169 commits on GitHub in the last 30 days. The decentralized perpetuals exchange dYdX stood in second place with 145 commits, while derivatives liquidity protocol Synthetix came in third with 116. Osmosis was the most-developed DeFi project in the last month. Source Santiment Santiment explained the list of “developer activity” was collected by compiling all non-redundant GitHub activity listed on each project’s respective records and providing an average number of those values. The total value locked (TVL) and overall trading volumes on Osmosis significantly increased between early October and March 15. Osmosis TVL and volumes surged between October and March. Source: DefiLlama Much of the uptick in activity can be traced back to a surge of interest in airdrop farming on Cosmos-related infrastructure throughout the wider crypto sector, with Osmosis being the primary DEX on Cosmos. Several projects, such as data availability blockchain network Celestia and multilayer RollApp deployer Dymension, use core elements of the Cosmos ecosystem for their networks and have now yielded hundreds of millions of dollars in airdrops for farmers. Related: Cosmos-based networks Umee and Osmosis to merge, creating ‘DeFi Hub’ For dYdX, much of the development activity could be linked to its early-January v4 upgrade, a network shift that saw the decentralized derivatives exchange transition from an Ethereum layer-2 network to a standalone blockchain in the Cosmos ecosystem. The dYdX v4 network has generated over $60 billion worth of trading volume since going live on Jan. 25, per DefiLlama data. dYdX v4 has generated over $60 billion in trading volume since its launch. Source: DeiLlama Meanwhile, the TVL on the Synthetix protocol has also been steadily increasing since mid-February and currently stands at $994 million across the Ethereum and Optimism networks. In July 2023, Synthetix founder Kain Warwick announced the upcoming launch of a new derivatives front-end called Infinex. The alpha version of the platform is live on mainnet, and the full-release version is currently slated for the coming months. Magazine: 5 dangers to beware when apeing into Solana memecoins

Ethereum client diversity improves, non-Geth clients now account for 34%

The market share of Geth — a major Ethereum execution client — has fallen from a high of 84% in late January to 66% following Coinbase’s recent move to switch around half of its validators to Nethermind, though one commentator says that the fight for decentralization is far from over. The reduced reliance on Geth helps to address a long-feared centralization risk for Ethereum, with concerns a critical bug in an execution client with a 66% or more share could stop the chain from finalizing. One commentator however, warns that the industry shouldn't decalre victory just yet though. On March 22, Coinbase Cloud revealed that “roughly 50%” of its validators switched to Nethermind, which helped bump the execution client’s share up to 22%, according to Client Diversity. Besu owns a 10% share of Ethereum validators, while Erigon — which is also being supported by Coinbase — has a 2% share, bringing the total minority client share to around 34%. Share of execution clients on Ethereum. Source: Clientdiversity.com Execution clients on Ethereum play a major role in handling transactions and executing smart contracts on the blockchain. Geth is widely regarded as the most advanced client. However, its strong preference among Ethereum validators has led to an imbalance in execution client diversity over the last few years. The fight isn’t over yet "We can’t declare victory yet,” Lachlan Feeney, founder and CEO of Ethereum infrastructure firm Labrys told Cointelegraph. Feeney claims the methodology Client Diversity uses to obtain its figures is flawed and that Geth needs to move a “decent amount below the 66% threshold to account for any margin of error before we are confident that a supermajority bug isn’t possible.” The “real victory” cannot be declared until no singular client controls greater than a 33% share, Feeney added. He emphasized the importance of solo staking in diversifying executions clients, which would also prevent those stakers from being subjected to a supermajority bug on Geth. Related: Vitalik Buterin on fix for Ethereum centralization: Make running nodes easier Ethereum decentralization advocate “Superphiz” recently voiced that a critical bug in Geth could potentially wipeout 80% or more of Ether (ETH) staked on the network. There are currently 31.5 million Ether staked, according to Beaconcha.in, which is worth about $113.5 billion at current prices. Meanwhile, Coinbase said it will continue to play its part in diversifying its own validator set to help decentralize Ethereum: “Ensuring the security of our customers’ assets and contributing to the resiliency of the Ethereum network are — and have always been — of paramount importance to us. Diversifying execution clients on our validators helps us accomplish both.” Coinbase said it intends to “evenly distribute” its validators between Geth, Nethermind and Erigon over the long term. Feeney noted that Sigma Prime, Kiln, Octant, Lido, Ankr and Twinstake have also reported a reduced reliance on Geth. Magazine: Ethereum restaking: Blockchain innovation or dangerous house of cards?

2 theories why GBTC sticks to high fees despite bleeding billions

Grayscale may be sticking to high fees for its spot Bitcoin (BTC) exchange-traded fund to keep “stuck” holders from cashing out while betting that Bitcoin’s price will continue to rocket upward, according to one market analyst. The Grayscale Bitcoin Trust (GBTC) has seen daily outflows since its launch on Jan. 11 — totaling over $14 billion as of March 25. Many, including Bianco Research founder and former Wall Street analyst Jim Bianco, have pointed to GBTC’s fees as “the problem.” In a March 25 X post, he speculated at least half of GBTC outflows were those moving to lower-fee ETFs. Chart showing GBTC net outflows from Jan. 11 up to March 22. Source: Jim Bianco/X Grayscale’s ETF charges a 1.5% per year management fee, five times that of the 0.30% average of the other spot Bitcoin ETFs. Bianco said two possible reasons why Grayscale doesn’t drop the fee. Firstly, it could be a bet that GBTC holders won’t leave as the asset manager “analyzed its holders’ tax bill [...] And concluded they are ‘stuck’ as it is too costly to leave until they need the money.” GBTC wields assets under management of nearly $24.7 billion as of March 25, per YCharts data. Bianco also believes Grayscale’s firmness on its fees could result from optimism that Bitcoin’s price “will moon well over $100k in the next year or two.” “Under this scenario, [Grayscale] are betting the price of BTC will rise enough to increase their assets (for which they charge a fee) to “offset” most or all their outflows,” Bianco wrote. If BTC falls, he added, “then this strategy could prove disastrous” as GBTC selling could ramp up “and ‘stuck’ tax bill holders find these bills shrink enough that they can leave and never return to GBTC again.” “Expect GBTC to be a constant selling source until it’s held by dead people, those who forgot they owned it, or those “trapped” with giant tax bills if they sell it.” Bloomberg ETF analyst Eric Balchunas posted in response to Bianco’s theory that “there may never be an inflow to GBTC ever.” “My guess is we see a few more big outflow days and then a slow trickle into eternity,” Balchunas added. “If BTC price goes up [...] They’ll be just fine revenue-wise.” Why sue the SEC just to bleed? United States spot Bitcoin ETFs only came about due to Grayscale winning a lawsuit against the Securities and Exchange Commission last year which forced it to review Grayscale’s bid to convert GBTC to an ETF. “Why did GBTC spend all the time and effort to sue the SEC to allow it to convert to an ETF and only manage it like this (so that it will slowly bleed out)?” Bianco asked. Answering, Balchunas speculated that Grayscale maybe knew that even if GBTC were to “bleed out every last investor,” the ETF hype would “pump BTC enough” to offset the losses, and its assets under management would remain stable. Related: BlackRock’s ETF could flip GBTC in Bitcoin holdings within 3 weeks Grayscale had also long said it would convert GBTC, so it “had to follow through” and didn’t lower fees as it’s “TOUGH to kill 80% of your revenue stream in one shot,” Balchunas added. Grayscale likely “underestimated just how brutally competitive” the U.S. ETF market is, Balchunas said, and maybe wasn’t expecting the cutthroat fee war issuers started in a bid to gain market share. Bloomberg ETF analyst James Seyffart postulated another reason could be that Grayscale was acting to try to help bankrupt crypto lender Genesis — both are subsidiaries of crypto conglomerate Digital Currency Group (DCG). Genesis had over 62 million GBTC shares used to collateralize loans made by Gemini Earn users and the two companies were in a long legal fight over them. “There was 100% a selfish interest in just being able to get out of those positions at [net asset value],” said Seyffart. Magazine: Bitcoin ETFs make Coinbase a ‘honeypot’ for hackers and governments — Trezor CEO

Is Bitcoin’s pre-halving retrace over? 52K BTC accumulated on Sunday alone

Bitcoin’s (BTC) pre-halving retrace may already be over following one of the largest accumulation days in years, which saw Bitcoin reclaiming the $71,000 price level. On March 25, blockchain analytics firm Santiment reported that Bitcoin just “caught traders off guard” with a rebound as “key stakeholders” had a huge accumulation day over the weekend. Wallets, which it terms “sharks” and “whales,” holding between 10 and 10,000 coins accumulated 51,959 BTC on March 24, worth around $3.4 billion at the time, the firm revealed. It added that this equates to 0.263% of the entire currently available supply being accumulated in one day. As the Bitcoin halving approaches, three weeks away on or around April 19, “it would be unsurprising to see these wallets continue to grow, resulting in a positive impact on crypto-wide market caps,” it noted. Source: Santiment Crypto analysts were concerned about a more sizeable pre-halving retrace, assuming that history would rhyme with previous market cycles. However, BTC only fell around 17% from its March 14 all-time high of $73,738, dipping to $61,494 on March 20, according to CoinGecko. Technical analyst Rekt Capital said that if this ends up being the end of the pre-halving retrace, Bitcoin will have almost equaled the 2020 pre-halving retrace. “Bitcoin pulled back -18% in this cycle whereas BTC retraced just over -19% in 2020,” he noted. The analyst had previously predicted that this pre-halving retrace “would more likely be on the shallower side than on the deeper side” and could also be much shorter than has otherwise been the case historically. Related: Trading Bitcoin’s halving: 3 traders share their thoughts Reporting on market volatility and last week’s dip on March 25, crypto research firm Kaiko revealed that after an analysis of buy and sell orders, “selling intensified following the U.S. market close.” It concluded that “liquidity in the cryptocurrency market is not only fragmented across exchanges but also across trading pairs.” BTC was trading up 5.2% on the day at $70,252 at the time of writing after hitting an intraday high of $71,000 in late trading on March 25. Magazine: ‘Am I sorry? No’ — 3AC founder. $6B BTC laundered for fast food worker: Asia Express