CoinDesk Crypto

A recent blockchain analysis has pinpointed a dramatic shift in trading patterns this year from Asia to North America and Europe.

By analyzing trading activity on centralized exchanges from different days and time zones, blockchain data firm Kaiko found that on Coinbase, Gemini and Kraken, the ratio between the volume of weekend and weekly BTC/USD trading doubled from March 2020. This finding showed that the average weekend bitcoin trading volume is growing relative to the average weekday volume on the three exchanges that are more popular among users in the West.

Meanwhile, as the chart below shows, the ratio of the BTC/USDT pair on crypto-to-cyrpto exchanges Binance, Huobi and OKEx has remained at around 1 in weekday and weekend volume over the past year. The three exchanges represent the power of retail investors in East Asia, especially in China.

Related: Market Wrap: Bitcoin Slips as Infrastructure Bill With Crypto Tax Provision Heads to House

On the derivatives market, Kaiko saw that, on an hourly basis, trading volume for bitcoin perpetual futures contracts on Binance and FTX, the two biggest derivatives exchanges, surged around 16:00 UTC. The peak trading time on the two exchanges overlaps between European and U.S. trading hours, suggesting that European Union and U.S. jurisdictions have become “extremely” significant for global crypto exchanges.

“With China cracking down on crypto trading and businesses, a lot of the volume has shifted to North America in the last 12 months,” said Kevin Kang, founding principal of U.S.-based quant hedge fund BKCoin Capital.

Kaiko’s report also show that while the crypto community has focused on the growing presence of institutional investors, it may have underestimated an increase in retail investors.

“This trend conflicts with bitcoin’s institutional narrative as it supposes that retail participation is increasing,” Dessislava Aubert, research analyst at Kaiko, told CoinDesk.

TradFi playing a role

Related: FTX Market Share in Bitcoin Futures Nearly Doubled Since June

Kaiko’s findings also highlight how investors from traditional finance may have played a role in changing trading behaviors, according to market observers.

Rising weekend trading volume could be partly attributed to automated trading tools that can move some trading activities to weekends, according to Kaiko. Traders who usually conduct large-volume transactions may choose to split their orders into smaller sizes over a longer period of time to “minimize the execution costs and price impact,” Kaiko said.

“As more traditional market makers and quant shops [are] coming into the [crypto] space, we see higher liquidity on weekends than we saw in the past,” Kang said.

Joel Kruger, cryptocurrency strategist at institutional crypto exchange LMAX Digital, told CoinDesk that the trading volume in the past weekend at LMAX Digital was up by 85% from the weekend before, as institutional investors tracked the hotly debated $28 billion tax reporting provision of the $1 trillion U.S. infrastructure bill.

“We’re definitely seeing institutional players taking advantage of the 24-7 access to markets,” Kruger said. “This means being able to react to developments as they’re happening as opposed to being stuck in a position and needing to wait for the market to open up on Monday.”

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Related: Coinbase’s Second-Quarter Earnings Report: Here’s What You Need to Know

“The role will work on scaling operations for our Cryptocurrency investment capability as well as managing all operational aspects pertaining to new Cryptocurrency initiatives.”

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Bitcoin pulled back on Tuesday after a nearly 20% rise over the past week. The cryptocurrency was trading at around $45,000 at press time and is down 2% over the past 24 hours, compared with a nearly 1% loss in ether over the same period.

Analysts remain optimistic about bitcoin despite regulatory uncertainty in the U.S. regarding crypto tax rules. 

“The crypto sector itself is new, and leaning on a nascent technology industry for taxes could impair its growth,” Lucia della Ventura, a researcher at Trinity College Dublin and legal compliance manager at financial software company Ledgermatic, wrote in an email to CoinDesk.

Related: Changing Crypto Trading Patterns Reveal the Market’s Power Shift to the West

“It is necessary to wait for the final vote, taking into account that several amendments have been tabled as they can potentially change the impact of the bill for companies,” Ventura wrote.

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $45593, -1.37%
• Ether (ETH) $3135.1, -0.33%

Traditional markets:

• S&P 500: 4436.8, +0.1%
• Gold: $1728.6, -0.05%
• 10-year Treasury yield closed at 1.347%, compared with 1.319% on Monday

“Cryptocurrency traders are not so much focused on the expected passing of President Biden’s infrastructure bill, which, as it stands, will include new tax-reporting rules that are very negative for the space,” Edward Moya, an analyst at online brokerage Oanda, wrote in an email to CoinDesk.

Related: Crypto Panhandlers Beg Poly Network Attacker for Share of $613M Haul

In the meantime, “Wall Street is also closely watching bitcoin outperform the dollar and gold,” Moya wrote.

Also, on Tuesday, decentralized finance (DeFi) platform Poly Network was attacked, with the alleged hacker draining roughly $600 million in crypto. The cyberattack contributed to a sour mood across the crypto market.

BTC and ETH options strategy

Bullish sentiment is rising in the options market for bitcoin and ether. “There’s been a spike in demand for near-term options as BTC and ETH obliterated their multi-month price ranges,” Delphi Digital tweeted. “Both assets seem to be in a strong uptrend, and speculators have been buying short-term options.”

The chart below shows the declining 25 delta skew for one-week BTC and ETH option contracts, which means there is more demand for calls than for puts. 

Some traders see an opportunity to short BTC and ETH volatility given the recent activity in the options market. The chart below shows the recent rise in BTC three-month and six-month at-the-money volatility.

“We maintain our short volatility view. In fact, vega (longer dated puts and calls) looks like a good sell at these elevated levels,” QCP Capital wrote in a Telegram chat. 

QCP said that the frenzied buying of calls in both BTC and ETH across the volatility curve led to the short-squeeze rally. “We think this flow comes from funds and large speculators making large topside bets, buying BTC strikes up to $80K to $100k and ETH strikes up to $8K to $10K from as early as September 2021 out to June 2022,” QCP wrote.

Large bitcoin transactions

Bitcoin’s blockchain transaction volume with values of at least $1 million has risen 10% since the beginning of August and accounts for nearly 70% of the total value transferred. 

These larger investors, as represented by large-value dollar transactions, fueled bitcoin’s nearly 20% price gains since last week, Glassnode said. 

A number of analysts say the trend shows that these institutions are focusing more on the cryptocurrency’s upside than on potential obstacles, CoinDesk’s Muyao Shen wrote.

Blockchain spending behavior

The “spent output profit ratio,” or SOPR, which is calculated by dividing the realized value of a spent output by the value at creation of the original unspent transaction output, has broken above 1.0, reached a local high, and then reset back to 1.0, after months trading below 1.0, according to Glassnode. The movement indicates “a textbook bullish reversal,” Glassnode said.

An SOPR value above 1 “implies that the coins moved that day are, on average, selling at a profit (price sold is greater than the price paid)” and vice versa. 

​​“Most important to watch is whether SOPR holds above 1.0,” Glassnode wrote. “Should SOPR continue to trade higher, this reflects a bullish scenario where the market is adequately absorbing profits realized on spent coins. If, on the other hand, SOPR falls and trades back below 1.0 on a sustained basis, it would suggest a general weakness in the market and potentially a fake-out rally.”

Altcoin roundup

• Poly network hacked with potential loss of $600M: As mentioned above, Poly Network was attacked on Tuesday, with the alleged hacker draining roughly $600 million in crypto, CoinDesk’s Eliza Gkritsi and Muyao Shen reported. Poly Network, a protocol launched by the founder of Chinese blockchain project Neo, operates on the Binance Smart Chain, Ethereum and Polygon blockchains. Tuesday’s attack struck each chain consecutively, with the Poly team identifying three addresses where stolen assets were transferred. At the time that Poly tweeted news of the attack, the three addresses collectively held more than $600 million in different cryptocurrencies, including USDC, wrapped bitcoin (WBTC, -1.88%), wrapped ether (ETH, -1.35%) and shiba inu (SHIB), blockchain scanning platforms show. After the hack, opportunistic cryptocurrency users flooded Ethereum’s blockchain explorer with pleas for even a tiny portion of the plunder.
• Ether held on centralized exchanges hits three-year low: The proportion of ether held on centralized exchanges (CEXs) dropped to 9.4% of the total supply today, the lowest in three years, according to data from crypto intelligence platform OKLink. Out of the 117 million ether in circulation, only 11 million were held on addresses related to CEXs, OKLink data show. Ether is the second-largest cryptocurrency by market capitalization. The main factor for the outflow is DeFi, Eddie Wang, a senior researcher at OKLink, told CoinDesk. Wang pointed to wrapped ether (WETH) being the top address in the Ether Rich List, as well as deposits and liquidity pools of popular DeFi protocols to explain the outflow of ether from CEXs.
• A16z Leads $111M Token Sale for Helium’s HNT: Helium’s ascent is being rewarded with a $111 million token sale led by venture capital firm Andreessen Horowitz (a16z). Ribbit Capital, 10T Holdings, Alameda Research and Multicoin Capital also invested, the company said Tuesday. The decentralized telecommunications network now has more than 100,000 hotspots, a16z said in a blog post announcing the investment. The network uses “LoRaWAN” technology to connect devices (think scooters, e-bikes or environmental sensors) to the internet. Helium is one of the few “real-world” Web 3.0 projects tapping token-powered incentives to fuel growth.

Relevant news:

• US Senate Sends Infrastructure Bill to House
• Venmo Credit Card Holders Can Now Trade Cash Back for Crypto
• Tron Foundation Launches $300M Fund to Invest in GameFi Projects
• ​​DeFi Has Accounted for Over 75% of Crypto Hacks in 2021

Other markets

Most digital assets on CoinDesk 20 ended up higher on Tuesday. 

Notable winners of 21:00 UTC (4:00 p.m. ET):

cardano (ADA) +7.01%

the graph (GRT) +5.84%

uniswap (UNI) +3.4%

Notable losers 

dogecoin (DOGE) -1.93%

litecoin (LTC) -1.75%

filecoin (FIL) -0.71%

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Coinbase posted $1.9 billion in transaction revenue in the second quarter, in its second-ever earnings report as a public company. Analysts had estimated the exchange would post $1.57 billion in transaction revenue.

The U.S.’ largest cryptocurrency exchange grew to 8.8 million monthly transacting users (MTUs) and 68 million total users in the quarter, versus analyst estimates for 6.7 million monthly users and 62.8 million total users. The exchange’s take rate – or retail trading revenue divided by retail trading volumes – was 1.24%, up from 1.21% last quarter.

The exchange slightly lowered its yearly forecast range for active users, a key metric, from a range of 5.5 million to 9 million by the end of the year, to a range of 5.5 million to 8 million. 

Related: PNC Bank Is Planning a Crypto Offering With Coinbase

Coinbase reported that more than 9,000 financial institutions are now using the exchange to create their own crypto products. The exchange publicly named PNC Bank as a partner for the first time, and it also named Elon Musk, SpaceX, Tesla, Third Point LLC and WisdomTree Investments as partners.

For Q2, Coinbase reported:

• Net income of $1.6 billion, up from the first quarter’s $771.5 million and significantly ahead of analysts’ expectations for net income of $569 million.
• Adjusted EBITDA of $1.12 billion, down slightly from last quarter’s $1.15 billion.
• Revenue of $2.2 billion, with $1.9 billion from transaction revenue and $103 million from subscriptions and services revenue. Analysts were expecting revenue of $1.78 billion.
• Retail transaction revenue of $1.8 billion, up 26% from Q1.
• Institutional transaction revenue of $102.4 million, up 20% compared to Q1.
• Custodial fee revenue of $31.7 million, a 35% increase from Q1.
• Trading volume was $462 billion, up 72.5% from $335 billion in the previous quarter.
• Total assets on Coinbase’s platform decreased in value along with the decrease in the price of bitcoin: $180 billion compared to $223 billion in Q1.
• Total operating expenses were $1.4 billion, led by $335 million in transaction expenses, $292 million in technology and development expenses and $248 million in general and administrative expenses. That compared to total operating expenses in Q1 of $813 million.
• The firm added 450 employees, ending the quarter with a total of 2,176 employees.

The company did note that monthly transacting users in July had declined significantly to 6.3 million and trading volume was only $57 billion in the month. While August’s numbers were slightly higher than this, Coinbase warned that MTUs and trading volume would be lower in Q3 compared to Q2.

Coinbase also noted that for the first time, ether was traded more than bitcoin on its platform in Q2, with 26% of trading volume denominated in ether, 24% in bitcoin and 50% in other crypto assets.

Related: Coinbase’s Second-Quarter Earnings Report: Here’s What You Need to Know

Shares of Coinbase initially rose after-hours on Tuesday following the release of the report, but were recently trading down 1% to $266.98. Coinbase shares are up about 7% from their reference price of $250, but down around 30% from their opening trading price of $381.

This is a developing story and will be updated.

UPDATE (August 10, 20:33 UTC): Updated with additional results as reported by Coinbase.

UPDATE (August 10, 20:57 UTC): Updated with analyst estimates from FactSet.

UPDATE (August 10, 21:34 UTC): Updated with additional results reported by Coinbase.

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The Bank of Jamaica minted the island nation’s first batch of central bank digital currencies (CBDC) on Monday. 

• A total of J$230 million, or roughly US$1.5 million, will be issued to deposit-taking institutions and authorized payment service providers as part of the CBDC pilot program that ends in December. 
• In a Tuesday ceremony, Jamaica Minister of Finance Dr. Nigel Clarke promised that a legislative amendment to accompany the country’s CBDC would be in place by the end of the fiscal year.
• The bank had originally planned to begin its pilot program in May but was delayed for unspecified reasons. Jamaica has been working on developing a CBDC since early 2020. 
• The central bank has been working with Ireland-based technology firm eCurrency Mint on the project.
• As reported by CoinDesk, the Jamaican government views the accelerated transition to a digital society and economy as vital to an economic recovery following the COVID-19 pandemic.
• The government said anticipated benefits of the CBDC include increased financial inclusion since it will provide another, easier-to-access means to make payments, and for deposit-taking institutions, the opportunity to improve cash management processes and costs.

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After an alleged hacker drained more than $600 million from cross-chain decentralized finance (DeFi) protocol Poly Network, opportunistic cryptocurrency users flooded Ethereum’s blockchain explorer with pleas for even a tiny portion of the plunder.

“Anything would help comments section of the blockchain data site Etherscan.   

“I already live in a sh**ty country so life is hard,” another user wrote. “Will you help a brother out?”

Related: Market Wrap: Bitcoin Slips as Infrastructure Bill With Crypto Tax Provision Heads to House

“Be a modern robin hood and airdrop it to everyone here!!” came another request.

As the popularity of DeFi has mushroomed over the past year, with collateral locked into the blockchain-based lending protocols growing 17-fold to some $80 billion, this corner of the cryptocurrency sub-industry has become a target of attacks. 

And the often-cynical base of cryptocurrency users are apparently getting used to the attacks – to the point that, instead of condemning the alleged perpetrators in a realm that’s largely digital and pseudonymous, they’re instead cozying up. Maybe there’s enough loot to go around?

“May god bless you babe!!!” one user wrote, attaching an ostensible wallet address where the alleged attacker could transfer funds. “OMG you are my hero!!!” wrote another, also kind enough to include a wallet address. “Wow you are so smart,” wrote user “Smart dev.”

Related: DeFi Has Accounted for Over 75% of Crypto Hacks in 2021

There were appeals to the heart: “Pls help me pay my moms mortgage,” one user wrote. 

“Hello mr.hacker i know you will read this message just want to ask for a little help so we can get masks and oxygen because COVID-19 in our country is very severe anyone can donate to this address,” wrote another. 

There were also appeals to the venality: “Let me launder it for you,” one user wrote.

Not to mention some notes from the just plain lazy: “i wish to retire at age 20 and no longer be a wage cuck i am sure u can understand just 1 million ser and i will never be a wagecuck and i will live rest of my life in true harmony of a stranger, ser pls u stole more money than u could ever use. help me be free and no longer wage cuck.”

Of course, this whole episode could just be an elaborate instance of social media trolling or gallows humor. In a pseudonymous world, sometimes it’s hard to tell.

Either way, dozens of hopefuls even went as far as to send tiny fragments of the cryptocurrency ETH to the alleged attacker’s wallet address on the Ethereum blockchain. (Etherscan identified the address as “reported to be involved in a PolyNetwork exploit,” and the Poly Network project team called on “miners of affected blockchain and crypto exchanges to blacklist tokens coming from the above addresses.”)

“Here come all the opportunists also sending the hacker messages in hopes to receive a tip,” the Twitter user Hsaka posted Tuesday. 

According to Etherscan, the alleged perpetrator’s Ethereum address held 28,954 ETH as of press time, worth about $90.7 million.

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Cryptocurrency exchange FTX has overtaken competitors to become the second-largest exchange in the bitcoin futures market, behind only Binance, according to a report by Arcane Research. 

• From the end of June through now, FTX’s market share has grown from 9% to 16%. 

• FTX was founded by billionaire Sam Bankman-Fried, 29, in 2019. The exchange announced recently that its $900 million Series B funding round included more than 60 investors, including Paradigm, Ribbit Capital and Sequoia, and valued the company at $18 billion.
• “The exchange has long been the second-largest futures market in the broad crypto sector, but their bitcoin futures have lagged behind OKEx, CME (Chicago Mercantile Exchange) and Bybit up until recently,” the report said. 
• Bybit’s bitcoin perpetual swap was the dominating futures instrument in April at around the time the cryptocurrency hit its $64,000 peak, according to the report. 
• “Paying attention to the Bybit OI (open interest) could be a viable indicator to gauge whether the sentiment is turning over exuberant in the future,” Arcane’s report said.
• Global open interest recently surpassed $15 billion for the first time since May. Despite that climb, the market, in general, seems less over-leveraged given how the bitcoin denominated open interest sits at 330,000 BTC currently, according to the report. 
•  “Both prior to the May 19th crash and the July 26th short squeeze, the bitcoin-denominated open interest sat at a far more substantial 400,000 BTC,” Arcane said. 
• “This indicator suggests that the market is currently careful with leverage.” 

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Crypto derivatives trading platform BitMEX announced Tuesday it had reached a settlement on civil charges with the U.S. Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN).

BitMEX will pay a $100 million penalty to resolve the charges, the firm announced in a blog post, with $50 million going to the CFTC and the remainder to FinCEN. The blog post did not address the criminal charges filed by the U.S. Department of Justice against former BitMEX CEO Arthur Hayes and other executives.

A consent order in the CFTC case, filed Tuesday, found that BitMEX offered U.S. persons leveraged and unlicensed crypto products – a violation of federal law – between 2014 and 2020. The firm’s oversight systems were “inadequate” and lacked effective know-your-customer (KYC) and anti-money laundering (AML) safeguards, the document said.

Related: CFTC Commissioner Says SEC Lacks Authority Over Commodities, Including ‘Crypto Assets’

In doing so, BitMEX employees violated the Bank Secrecy Act, commodities regulations and CFTC rules, the court found.

In a statement, CFTC Director of Enforcement Vincent McGonagle said crypto trading platforms must comply with U.S. laws if they’re doing business in the nation.

“This action highlights that the registration requirements and core consumer protections Congress established for our traditional derivatives market apply equally in the growing digital asset market,” he said.

A FinCEN statement said BitMEX processed more than $200 million in transactions for darknet markets or mixing services.

Related: FinCEN Names New Acting Director to Replace Michael Mosier

“BitMEX’s rapid growth into one of the largest futures commission merchants offering convertible virtual currency derivatives without a commensurate anti-money laundering program put the U.S. financial system at meaningful risk,” Deputy Director AnnaLou Tirol said.

BitMEX bounceback?

As part of the settlement, BitMEX will refrain from offering futures or other types of crypto commodity contracts in the U.S. without registering with the CFTC, or operating a swap trading facility. The company is also required to ensure it has adequate KYC procedures moving forward.

“Settling Defendants shall cooperate with the Commission, including the Commission’s Division of Enforcement, in this action and in any current or future Commission civil litigation or administrative matter related to, or arising from, this action,” the consent order added.

BitMEX has also told the CFTC it no longer maintains any operations or business functions in the U.S. beyond certain cybersecurity functions. 

The CFTC sued BitMEX in October 2020 on allegations it violated the Bank Secrecy Act and commodities laws, and sought a permanent injunction against the company.

Enforcement spillover

The case’s conclusion could spell added trouble for BitMEX’s embattled former CEO, Arthur Hayes. Hayes is at the center of a criminal probe the Department of Justice launched in unison with the CFTC action last year.

Court documents show the CFTC has agreed to share a trove of corporate records, witness interview memos and notes with federal prosecutors. It may also share a series of foreign regulatory documents from authorities in the Seychelles, Bermuda and Hong Kong, if their commodities counterparts sign off. 

A spokesperson for Hayes and fellow co-founders Ben Delo and Sam Reed told CoinDesk that the three were not involved in the settlement.

“As their defense will show, from the company’s earliest days, the co-founders sought to comply with applicable law as it developed over time. The actions against Arthur, Ben, and Sam by the U.S. authorities are unfounded and represent an unwarranted overreach. The co-founders look forward to defending themselves in court,” the spokesperson said in a statement.

UPDATE (Aug. 10, 2021, 19:25 UTC): Adds additional context and statements from the CFTC, FinCEN and a spokesperson for BitMEX’s co-founders.

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Coinbase’s retail trading volumes reached record highs during bitcoin’s volatile second quarter, but Tuesday’s earnings report, due out at 4 p.m. ET, will reveal how much money the company made on that volume. 

Coinbase’s take rate – or retail trading revenue divided by retail trading volumes – has been declining consistently over the past few quarters, according to Mizuho Securities’ Ryan Coyne. In Q1 2021, retail transactions yield was 1.21%, down from 1.41% in Q4 2020 and 1.46% in Q3. 

Using publicly available data, Coyne estimated that total trading volume for Coinbase in Q2 was around $458 billion, a 36.7% increase from the $335 billion in total trading volume the company reported in Q1. Whether or not Coinbase’s stock (COIN) will react positively to the Q2 results this afternoon depends on how much money Coinbase earns on those volumes, Coyne said. 

Related: PNC Bank Is Planning a Crypto Offering With Coinbase

One factor driving down yield for the U.S.’ largest cryptocurrency exchange is the mix of Coinbase Pro retail users, who benefit from lower transaction fees compared to regular Coinbase retail users, Coyne noted. Another factor is larger transactions coming from bigger crypto traders, which would also drive down yields.  

The company’s forecasts for monthly transacting users will also give investors a view into how the company expects to fare with the price of bitcoin stuck in the $30,000 to $35,000 range in June and July. 

“We believe that [average daily trading] volumes in August are tracking well above July,” Coyne said. “If they hold or raise guidance, that will be viewed positively.” In the company’s first-quarter report, Coinbase raised its annual forecast range for monthly transacting users to 5.5 million to 9 million, up from its initial predicted range of 4 million to 7 million.

Any sign that Coinbase’s trading volumes are less dependent on bitcoin or that its sources of revenue are less reliant on trading volumes overall will be a positive signal to the market, said Oppenheimer analyst Owen Lau. This could include an update on Coinbase’s acquisitions of crypto infrastructure firm Bison Trails (now called Coinbase Cloud), data analytics platform Skew or crypto data aggregator Zabo. 

Related: Coinbase Rakes In $1.9B in Transaction Revenue in Q2, Beating Estimates

“All of these initiatives could help Coinbase expand their current revenue base,” Lau said. “Many people think they focus too much on trading revenue.” 

The top line revenue numbers of the report will matter much more to the stock price than bottom line earnings numbers, DA Davidson’s Chris Brendler said. 

“Because a lot of the tech companies like Square and PayPal want to invest as much [as possible] in the growth phase, if they have extra revenue they’ll spend it,” Brendler said. 

Second-quarter estimates

While Coinbase’s stock is down on the day along with several other crypto stocks, Coyne, Lau and Brendler all expect today’s earnings to beat the consensus estimate. Coinbase shares are up about 8% from their reference price of $250, but down around 30% from their opening trading price of $381.

According to FactSet, the analyst consensus is 6.7 million monthly transacting users for Q2, a 600,000 increase from Q1 results. Analysts expect Coinbase to have as many as 62.8 million verified users on its platform, versus 56 million in the first quarter. 

Analysts estimate that transaction revenue – where Coinbase makes the bulk of its money via trading fees – reached $1.57 billion from the $1.54 billion Coinbase recorded in the first quarter. Analysts expect total revenue to have hit $1.78 billion in Q2. With costs factored in, analysts expect to see net income of $569 million, much less than the $771 million that Coinbase generated in Q1.

Analysts actually expect total assets at Coinbase to have decreased from $10.2 billion to $9.7 billion in the second quarter, likely because of how low the price of bitcoin has dropped compared to earlier this year, Mizuho’s Coyne said. 

UPDATE (August 10, 19:35 UTC): Updated with most recent FactSet estimates.

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Helium’s ascent is being rewarded with a $111 million token sale led by venture capital firm Andreessen Horowitz (a16z). Ribbit Capital, 10T Holdings, Alameda Research and Multicoin Capital also invested, the company said Tuesday.

The decentralized telecommunications network now has over 100,000 hotspots, a16z said in a blog post announcing the investment. The network uses LoRaWAN technology to connect devices (think scooters, e-bikes or environmental sensors) to the internet.

Helium is one of the few “real-world” Web 3 projects tapping token-powered incentives to fuel growth.

Related: Telecoms Giant Swisscom Launches Chainlink Node for DeFi Data

“What Helium has so far done with telecoms in the wireless space is almost like Airbnb enabling people to monetize their real estate in the form of a mini-hotel,” Helium CEO Amir Haleem told CoinDesk in April. At the time, the project had partnered with FreedomFi to stand up a decentralized alternative to 5G networks from telco giants.

Early progress on building a user-powered wireless network from the ground up was a key factor in deciding to invest, a16z General Partner Ali Yahya told CoinDesk.

“Helium’s recent progress comes at an interesting time in the broader conversation about crypto,” Yahya said. “Crypto offers a new paradigm for computation that is already reaching into verticals far beyond finance and money.”

The Silicon Valley venture capital firm announced a mammoth $2.2 billion fund for crypto investments in June.

Helium’s growth

Related: Ex-Poker Pros Raise $130M Fund for DeFi Bets

“We’re proud to double down on our investment in the Helium network in this round, and remain bullish with the launch of Helium 5G expected this fall,” said Tushar Jain, managing partner at Multicoin Capital, which first invested in Helium in 2019.

Helium hotspots, which mine HNT as a reward for expanding wireless coverage, are now in 112 countries, the company said Tuesday. “Smart infrastructure” partners ranging from fleet-tracking company Invoxia to Southern Connecticut University are using the network, Helium said.

HNT is up sharply on the news, jumping from $14.11 per token to $17.35 as of press time.

UPDATE (Aug. 10, 18:06 UTC): Adds comment from a16z.

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FalconX, an institutionally minded cryptocurrency trading desk, reached unicorn status Tuesday with a $210 million series C funding round led in part by Tiger Global.

• The three-year-old Chicago-based firm said it is now valued at $3.75 billion. It received lead backing from Tiger Global, Altimeter Capital, Sapphire Ventures and B Capital Group, and got additional funding from an array of earlier investors including Coinbase Ventures, Fidelity’s ventures fund, Accel and Avon.
• “As institutional investors continue entering the cryptocurrency market, FalconX has significantly scaled its business and product lines to meet their needs,” said Scott Shleifer, a partner at Tiger Global Management, which had led FalconX’s previous funding round, in a statement. He said the red-hot VC firm was “doubling down” on FalconX.
• The round adds fuel to FalconX’s institutional growth at a time of buzzy expansion in the crypto industry. FalconX said in a press statement that revenue has increased by 30 times, year over year. 
• The new funding will bolster FalconX product lines, which include trading services, credit and clearing; allow it to hire key executives; and help the company pursue acquisitions, the firm said.

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Circle Internet Financial, a payment infrastructure provider and principal issuer of U.S. Dollar Coin (USDC), plans to become a full-reserve national digital currency bank in the United States.

The U.S. Senate passed its bipartisan infrastructure bill to the House of Representatives Tuesday after a 69-30 vote.

The bill, which dedicates $1 trillion to infrastructure improvements over the next 10 years including roughly $550 billion in new spending, drew controversy from the crypto community due to a “pay-for” that anticipates raising $28 billion from a broadened crypto tax provision. 

The provision expands the definition of a “broker,” leading to concerns that the IRS might seek to impose broker information reporting requirements on non-broker entities such as miners. 

Related: Crypto News Roundup for Aug. 10, 2021

Advocates for the crypto industry pushed back on the provision, leading to lawmakers introducing amendments to try and modify the language. Senators Ron Wyden (D-Ore.), Pat Toomey (R-Pa.) and Cynthia Lummis (R-Wyo.) proposed explicitly defining which types of entities are brokers, while a competing amendment introduced by Senators Rob Portman (R-Ohio), Mark Warner (D-Va.) and Kyrsten Sinema (D-Ariz.) proposed a more narrow modification that only exempted proof-of-work miners.

Ultimately, no amendments were considered, and the Senate voted to discuss only the base bill late on Sunday night. 

A last-ditch effort to add a compromise amendment was scuttled on Monday. Toomey, Lummis, Warner, Sinema and Portman proposed a new amendment that needed unanimous consent to pass under the Senate’s procedural rules. 

Senator Richard Shelby (R-Ala.) objected to the provision after his effort to add a military funding amendment was blocked by Senator Bernie Sanders (D-Vt.). 

Related: State of Crypto: What Just Happened in the US Senate?

The infrastructure bill will now go to the House of Representatives, which is expected to take up the issue in the fall. The crypto provision faces bipartisan opposition there as well, with Representatives Patrick McHenry (R-N.C.), Darren Soto (D-Fla.), Ro Khanna (D-Calif.), Tom Emmer (R-Minn.) and Ted Budd (R-N.C.) all expressing an interest in modifying the language.

It’s unclear how much leeway the House will have to modify the bill.

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Venmo credit card customers can now convert their monthly cash back rewards to crypto, the unit of payments giant PayPal announced Tuesday.

• Venmo’s new “Cash Back to Crypto” feature will allow users to choose between bitcoin, ether, litecoin and bitcoin cash, the same four cryptocurrencies that are currently available on the Venmo app.
• Unlike Venmo’s normal fees for cryptocurrency purchases, which can range from $.50 to 2.3% of the transaction amount, the Cash Back to Crypto program will not have a transaction fee. Instead, a conversion spread is baked into the monthly transaction. 
• Once the purchase is complete, customers will be able to either hold their crypto or sell it on the Venmo app. The program will not support transfers to external wallets.
• “We’re excited to bring this new level of feature interconnectivity on the Venmo platform, linking our Venmo Credit Card and crypto experiences to provide another way for our customers to spend and manage their money with Venmo,” Darrell Esch, a general manager at Venmo and “head of checkout” at PayPal, said in a statement. 
• The Cash Back to Crypto rollout begins Tuesday and will be available to all Venmo credit card holders in the coming weeks.

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Justin Sun’s Tron Foundation has partnered with APENFT and WINKLink to launch the $300 million Tron Arcade fund, which will invest in so-called GameFi projects over the next three years. 

• GameFi introduces financial mechanisms into games, allowing users to make money by playing. It’s also known as “play-to-earn.”
• The fund’s goal is to support developers and create GameFi projects by building decentralized finance (DeFi) content, the foundation said in a press release.
• APENFT is a Tron-based non-fungible token (NFT) marketplace and WINKLink is a data oracle running on the Tron network. Both are prototypes scheduled to be completed in the third quarter, and the joint product is estimated to be available to users in the fourth quarter.
• “GameFi is going to be the next big thing that makes the DeFi, NFT and the larger crypto space easy to understand and be involved in,” said Sun.

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Nasdaq-listed bitcoin mining company CleanSpark has acquired a second data center in the U.S. state of Georgia for $6.6 million.

• The 87,000-square-foot facility is located in Norcross, 33 miles from the company’s current operation in Atlanta, CleanSpark announced Tuesday.
• The acquisition will provide 20 megawatts of additional power, enough for the installation of 6,000 additional S19 mining machines. It is expected to produce over 650 PH/s. (PH/s stands for “peta” hashes per second, or one quadrillion hashes per second, a measure of the computational power of a mining machine.)
• “Based on current difficulty rates, this processing power would result in an additional five to six bitcoins per day,” CEO Zack Bradford said. “This, along with our other initiatives, is expected to result in 2.0 EH/s (exahashes per second, or one quintillion hashes per second) by the end of 2021, which, at current difficulty rates, would result in 17 to 18 bitcoins per day.”
• CleanSpark said it expects the center to be fully operational by late 2021.
• The facility is part of Georgia’s Simple Solar program, which allows CleanSpark to offset any carbon-based energy included in its energy mix with solar power.

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Liquality, a crypto wallet company, has raised $7 million in a funding round that was led by venture firm Hashed and financier Mike Novogratz’s Galaxy Digital. Other notable investors included venture capital firm Accomplice, Coinbase Ventures and White Star Capital.

Liquidity is a portfolio company of Brooklyn, N.Y.-based blockchain software company ConsenSys.

Liquality co-founder Simon Lapscher told CoinDesk the funding will be used to build out new functionalities and expand the concept of the wallet to a more developer-focused platform “so that developers can build integrations into the wallet and make it super powerful.”

Related: A16z Leads $20M Bet That Celo’s Valora Becomes a ‘Global Gateway to Crypto’

“The idea is that we are creating this main interface to the decentralized economy,” Lapscher added. “As dapps evolve and wallet functionality evolves, our take is that all of the functionality will live inside the wallet and interact with different applications in a super easy and seamless way.”

Creating and building out products that work on different blockchains for customers to manage crypto assets is a burgeoning market as multiple blockchains emerge with usable applications. But as they do, users’ assets can become stranded on networks that don’t talk to each other. To date, porting tokens from the Ethereum blockchain to, say, the Solana blockchain has been difficult.

Founded in 2018, Liquality is a browser extension wallet very similar to MetaMask. It allows users to manage crypto assets and swap them among dapps on Ethereum, Polygon, Binance Smart Chain, NEAR, Rootstock and other networks.

Lapscher said Liquality will have a number of other functionalities and integrations launching later this year. “We are in the works with Solana currently and with Arbitrum on layer two, and also the Cosmos and the Terra ecosystem which are starting to take off as well,” he said, referring to some blockchain technology products.

Related: Terra Attracts $150M for DeFi Ecosystem Fund

In April, Liquality released a feature for users to spend bitcoin and other coins at online crypto merchants without having to manage addresses or QR codes.

Liquality co-founder Thessy Mehrain stressed the importance of “unifying blockchain communities within one wallet,” adding that “most, if not all, crypto activity will happen directly through users’ wallets.”

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Bitcoin Core contributor Jon Atack is the latest developer to receive funding from the Human Rights Foundation’s Bitcoin Development Fund.

Atack, who is one of Bitcoin’s most prolific code authors, will receive an $80,000 one-time donation sponsored by Compass Mining. The contribution from Compass follows earlier donations from fintechs Strike and Square Crypto to fund Atack’s work. 

Many exchanges including Gemini, OKCoin and Square donate money to fund Bitcoin protocol development, but Compass is one of only three mining companies that currently support Bitcoin development, along with Marathon Digital Holdings and Braiins.

Related: Bitcoin Upside Stalls; Lower Support at $38K-$40K

“We believe it’s essential for Compass to support the development of the protocol our entire industry is built on,” Whit Gibbs, CEO of Compass, said in a press statement. “Without contributors like Jon, the speed and quality of Bitcoin’s development would noticeably suffer.”

Previous donations made through the Bitcoin Development Fund have varied in value. According to Alex Gladstein, chief strategy officer at Human Rights Foundation, the $80,000 donation was decided in collaboration with Compass Mining.

“We felt that $80,000 over a full year would be a well-deserved grant for Jon to complement his existing income streams,” Gladstein told CoinDesk.

Read more: Human Rights Foundation Gives Out $210K in Bitcoin Development Grants

Related: Bitcoin Breaks Key Resistance as Market Health Improves on Institutional Demand

HRF launched the Bitcoin Development Fund in June 2020 to support software developers working to strengthen and improve the Bitcoin network. HRF sees bitcoin and other cryptocurrencies as a financial tool for activists, civil society organizations and journalists and has been a longtime supporter of privacy-oriented projects like CoinSwap.

The next round of grants through the Bitcoin Development Fund will be announced in September and will support at least four projects, according to Gladstein.

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Over three-quarters of crypto hacks this year have occurred in decentralized finance (DeFi), according to a study by crypto intelligence firm CipherTrace.

• DeFi-related hacks made up 76% of major hack volume in the crypto arena this year as of the end of July, CipherTrace’s “Cryptocurrency Crime and Anti-Money Laundering Report” concluded.
• That works out at some $361 million, 2.7 times more than in 2020.
• According to CipherTrace’s report, DeFi-related fraud made up 54% of major crypto fraud, up from just 3% in 2020.
• An attack today on DeFi platform Poly Network that may have drained $600 million is a notable example of this trend.
• Crypto crime in general, however, is declining compared with previous years. It totaled $4.5 billion in 2019, $1.9 billion in 2020 and dropped to $681 million in the first seven months of 2021.
• Another major finding of the the report concerns the implementation of the cryptocurrency “travel rule.” The Financial Action Task Force (FATF), an intergovernmental body for preventing money laundering and terror financing, said not a single crypto service provider in any jurisdiction was fully compliant with the rule, which states that the sender and recipient of crypto funds must be properly identified.
• CipherTrace released a tool in March designed to tackle fraud in this area by scanning addresses associated with incoming crypto transactions. Binance tapped CipherTrace’s tool in July to aid its travel-rule compliance.

UPDATE (AUG. 10, 15:24 UTC): Adds attack on Poly Network

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Cross-chain decentralized finance (DeFi) platform Poly Network was attacked on Tuesday, with the alleged hacker draining roughly $600 million in crypto.

Poly Network, a protocol launched by the founder of Chinese blockchain project Neo, operates on the Binance Smart Chain, Ethereum and Polygon blockchains. Tuesday’s attack struck each chain consecutively, with the Poly team identifying three addresses where stolen assets were transferred.

At the time that Poly tweeted news of the attack, the three addresses collectively held more than $600 million in different cryptocurrencies, including USDC, wrapped bitcoin (WBTC), wrapped ether (WETH) and shiba inu (SHIB), blockchain scanning platforms show.

Related: DeFi Has Accounted for Over 75% of Crypto Hacks in 2021

“We call on miners of affected blockchain and crypto exchanges to blacklist tokens coming from the above addresses,” the Poly team tweeted.

The $600 million figure would place the Poly Network hack among the largest in crypto history.

Tether froze approximately $33 million in relation to the hack, Tether CTO Paul Adroino tweeted.

About one hour after Poly announced the hack on Twitter, the hacker tried to move assets including USDT through the Ethereum address into liquidity pool Curve.fi, records show. The transaction was rejected.

Related: State of Crypto: What Just Happened in the US Senate?

Meanwhile, close to $100 million has been moved out of the Binance Smart Chain address in the past 30 minutes and deposited into liquidity pool Ellipsis Finance.

The Poly team could not be reached for comment at the time of publication.

Poly Network was the second Chinese interoperability protocol to be featured on the government-backed Blockchain-based Service Network.

This is a developing story and will be updated.

UPDATE (Aug. 10, 14:30 UTC): Adds information about the wallet addresses and Tether’s move.

UPDATE (Aug. 10, 14:54 UTC): Adds information about funds moving out of the Binance Smart Chain address.

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