CoinDesk Crypto

University of Cambridge data show China’s share of the bitcoin mining industry was in steady decline even before the country’s crackdown in May.

• According to the Cambridge Centre for Alternative Finance (CCAF), China accounted for a 46% share of the industry in April 2021, compared with 75% in September 2019.
• The methodology is based on China’s share of the power of computers connected to the bitcoin hash rate.
• Data after April are not available, so it is unclear how China’s crackdown on mining has affected the figures.
• The Chinese state began taking harsher steps against the mining industry in late May, shutting down operations in several regions rich in the coal and hydropower that miners been using.
• The main beneficiaries of the decline appear to be the U.S. and Kazakhstan, according to the CCAF.
• The U.S.’s share has more than quadrupled since September 2019, sitting at 16.8% as of April.
• Kazakhstan has become the third-largest producer of bitcoin, with a share of 8.2%.
• There have been signs in recent weeks that the central Asian country is the preferred destination for mining firms migrating from China, with BIT Mining and Canaan both establishing operations there in the past month.

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Bitcoin remains on a downward trajectory toward $32,000 despite rallying as much as 4.6% during the early trading hours in Asia on Wednesday.

Bouncing from a 24-hour low of $31,620, prices were hovering just around $32,500 at press time after reaching a 24-hour high of $33,182, CoinDesk data show.

The gradual slide is continuing to eat into year-to-date gains, which stand just above 12%.

Related: Google Searches for ‘Bitcoin Price’ Reach 7-Month Low

Intraday volume for the world’s oldest cryptocurrency remains considerably lower than weeks past, with the number of coins traded every four hours having tapered since the June 29 sell-off.

Yet, according to some, that may be an indication of greater things to come.

The stalemate between bulls and bears in bitcoin‘s ever-narrowing range between $36,000 and $31,500 may soon come to an end, some analysts are suggesting.

“All the on-chain analysis suggests we’re at the tight end of a slingshot, BCB Group CEO Oliver von Landsberg-Sadie told CoinDesk via Telegram. “It’s quiet now but don’t mistake that for lack of interest.”

Related: Bitcoin Under Pressure, Faces Support at $30K

Landsberg-Sadie said it’s “anyone’s guess” how close bitcoin would get to a $100,000 price tag when the “tension breaks.”

Indeed, June 29’s peak of $36,623 marked the last time bitcoin’s intraday spot price maintained a higher-low, higher-high setup. That’s an indication the price action is now firmly in the seller’s court.

Some observers are suggesting bitcoin may get a boost later this month following the expiration of investor restrictions on the sale of shares in the Grayscale Bitcoin Trust, as CoinDesk previously reported.

“Price pressure may actually never realize,” said Kirill Suslov, CEO of trading app TabTrader, in response to Grayscale releasing nearly 40,000 bitcoin shares (GBTC). Grayscale Investments is owned by Digital Currency Group, the parent company of CoinDesk.

“Usually, institutions rebalance their portfolio according to the mandate. So if they are underwater because the bitcoin price has dropped, they will actually have to buy more to keep the mandated allocation to this asset class.”

Because Grayscale’s Trust lacks a redemption mechanism, Laurin Bylica, co-founder of a decentralized crypto finance project TheStandard.io, said the unlocking of GBTC shares shouldn’t move bitcoin’s spot price.

“However, misleading and complex information lets investors worry and, therefore, can create short-term bearish anxiety, Bylica said in an email.

Looking toward altcoins, other cryptos in the top 20 by market value were mostly green, up between 1% and 10% over a 24-hour period with Solana (SOL) having clocked the biggest gains.

Asian equity markets were mostly up between 0.5% and 1%, with the exception of Japan, which fell 1.2%.

Related Stories

• Another Bitcoin Investor Sues T-Mobile Over Sim Swap Attack
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Singapore-based cryptocurrency exchange Bybit has launched a new spot trading platform as a complement to its core derivatives offering.

• The platform opened at 6:00 UTC July 15 with four trading pairs: BTCUSDT, ETHUSDT, XRPUSDT, and EOSUSDT.
• More trading pairs are to follow shortly, according to an emailed announcement.
• Bybit determines spot trading as “a complementary vector” to its derivatives offering for hedging traders.
• Bybit has faced a trying few months in the face of regulators, having cut off its service to U.K. customers in March following the Financial Conduct Authority’s ban on crypto derivatives.
• This was followed in June by an accusation from the Ontario Securities Commission that Bybit was operating an unregistered crypto asset trading platform that encouraged customers to trade crypto assets that are securities and derivatives on its platform.

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• BitMEX to Offer Custody, Spot Trading to Expand Beyond Crypto Derivatives

Cell phone carrier T-Mobile is staring down a lawsuit over allegations it failed to safeguard against a SIM swap scam that cost one customer $55,000 in lost bitcoin.

Plaintiff Richard Harris is alleging T-Mobile’s misconduct including its failure to adequately protect customer information, hire appropriate support staff, and its violation of federal and state laws led to his loss of 1.63 bitcoin.

Harris is demanding a trial by jury, according to a court document filed last week in the U.S. Eastern District of Pennsylvania.

Related: Las Vegas Strip Club Now Accepts Bitcoin Payments Over the Lightning Network

It isn’t the first time the major U.S cell phone carrier has faced litigation over its alleged breach in its duty of care over customer data and loss of bitcoin. Earlier this year, T-Mobile was sued over a SIM-swap attack that resulted in the loss of more than $450,000 in bitcoin.

A SIM swap is a type of scam involving the purchase of a new prepaid SIM card. A bad actor contacts a company representative, in this case, T-Mobile, convinces the rep they are their victim’s identity and asks the rep to port the victim’s old number to a new prepaid SIM.

From there, the actor can then gain access to bank accounts, crypto exchange wallets, and more simply by having an access code sent as a text message to the prepaid SIM.

“Numerous instances of mishandling of customer account information have occurred at T-Mobile,” the complaint by Harris alleges.

Related: Nodes on Bitcoin’s Lightning Network Double in 3 Months

Specifically, Harris argues T-Mobile violated the country’s Federal Communications Act, which stipulates that the cell phone carrier must protect the “confidential proprietary information of [its] customers” and “customer proprietary network information.”

As such, the plaintiff is seeking restitution for a number of damages including actual, statutory, treble, and punitive as well as lawyer fees and prejudgment interest.

Related Stories

• Market Wrap: Bitcoin Flat; Fed’s Powell Grilled on Crypto
• New York Giants Star Saquon Barkley Will Take All Future Endorsement Money in Bitcoin

• Hong Kong authorities arrested four men suspected of involvement in a money laundering syndicate that involved HK$1.2 billion (US$155 million), the South China Morning Post reported on Thursday.
• The men, aged 24-36, were arrested last week during operation “Coin Breaker,” SCMP cited a Hong Kong Customs official as saying.
• It is alleged the syndicate operated from February 2020 to May this year, with shell companies using e-wallet accounts and a local platform to trade in “privacy coins” issued by Tether Ltd.
• Stuart Hoegner, General Counsel for Tether told CoinDesk via Telegram on Thursday his company did not issue so-called “privacy coins.”
• It is the first money laundering case involving cryptocurrency detected by the city’s Customs authorities, according to the report.
• Money laundering in Hong Kong carries a maximum penalty of 14 years in prison and a fine of up to HK$5 million (US$643,000).

UPDATE (July 15, 2021, 6:15 UTC): Adds comments from Stuart Hoegner

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A strip club in Las Vegas is taking its first step in accepting bitcoin payments over the Lightning Network in a bid to speed up payments, lower costs and provide some much-needed privacy to clients.

Crazy Horse 3, which dubs itself a “gentlemen’s club,” says it has become the first major entertainment venue in the opulent desert oasis to accept payment using Lightning.

Bitcoin payment processor and infrastructure provider OpenNode is overseeing the club’s new payment rail, which enables guests to make purchases via the club’s website.

Related: Another Bitcoin Investor Sues T-Mobile Over Sim Swap Attack

The question, some might ask, is why?

Bitcoin’s Lightning Network is a layer-two protocol solution designed to settle transactions off-chain in a bid to cut down the time it takes to transact in the world’s oldest cryptocurrency as well as reduce the fees associated.

When Bitcoin was first unveiled to the world back in 2009, the ability to settle seven transactions per second (TPS) seemed, at the time, just fine. Now as the network and number of users have grown, so too has the demand on Bitcoin’s infrastructure.

The Lightning Network attempts to solve that demand by increasing the maximum throughput to 25 million TPS. This is an important factor for a place like Crazy Horse 3 looking to leverage bitcoin’s growing adoption as a form of payment.

Related: Nodes on Bitcoin’s Lightning Network Double in 3 Months

Lightning also offers an extra layer of transaction privacy; for instance, its nodes utilize Tor’s anonymous communication network known as onion routing. The routing affords nodes the ability to send transactions through each other while keeping the bitcoin transacted encrypted.

 “We are embracing the opportunity to accept Bitcoin as a way to deliver convenience, first-class hospitality and an added level of anonymity for our guests,” said a representative for Crazy Horse 3 in a statement. 

Privacy in the adult entertainment business, as they say, is sacrosanct.

What’s in it for the Horse?

Located a stone’s throw away from the new Allegiant Stadium, Crazy Horse 3 is not exactly tucked away. Though, like most adult entertainment businesses, the club faces financial judgment in the form of being labeled a “high-risk” industry.

As such, fees to payment processing companies via traditional rails are higher. On the other hand, those fees charged by using bitcoin as a form of payment are significantly lower.

Bitcoin payments can be particularly beneficial to international clients flying into Las Vegas because they don’t need to use their debit/credit cards to make fast payments.

So far, the club is only accepting bitcoin payments for bottle service, but it has plans to expand transactions to include “admission, food selections, craft cocktails, retail and the club’s signature “dance dollars,” valid toward lap dances and entertainer tipping.”

Tipping is where the Lightning Network has the potential to truly make an impact. Under the conditions of privacy, lower fees, and faster payments, the ability to pay entertainers in satoshis or “sats” – fractions of a whole bitcoin – those on the receiving end can forge entirely new local economies.

Onchain bitcoin microtransactions would be prohibitively slow and expensive. But payments on Lightning are ideally made in smaller increments, just right for tips. Add in the extra level of privacy and it’s easy to see why Crazy Horse 3 is interested in expanding its Lightning Network capabilities.

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The White House is creating a new group to investigate and tackle ransomware, including cryptocurrency payments, Politico reported Wednesday.

The task force will try to find ways of “halting ransom payments made through cryptocurrency platforms,” the report said, alongside other missions like helping potential ransomware victims bolster their internal defenses, and launching attacks against ransomware operators.

The Financial Crimes Enforcement Network (FinCEN) will host a conference, and other branches of the government will provide different resources for potential ransomware victims, according to the report, which cited Deputy National Security Advisor for Cyber and Emerging Technologies Anne Neuberger.

Related: Don’t Blame Bitcoin for Ransomware

A spokesperson for FinCEN hadn’t responded to CoinDesk’s request for comment by time of publication. A spokesperson for Neuberger could not immediately be located.

Ransomware has become an increasingly important focus for U.S. lawmakers and federal officials after several high profile attacks on different infrastructure firms, including Colonial Pipeline, a fuel logistics company, and JBS, a meat purveyor. Both companies paid bitcoin ransoms to their attackers, though federal officials were later able to recover most of the ransom paid by Colonial Pipeline.

Most recently, an IT solutions firm called Kaseya suffered a ransomware attack, which may have impacted hundreds of other firms that rely on Kaseya’s client Managed Service Providers.

Earlier on Wednesday, the Senate Judiciary Committee announced it plans to hold a hearing on ransomware later this month, and other lawmakers have sent different companies questions about paying ransoms.

Related: Will Bitcoin or Russia Be Blamed for the Latest Ransomware Attacks?

It’s unclear what sort of proposed regulations around crypto may emerge from this task force. Members of an international Ransomware Task Force said in an April report that more consistent enforcement of anti-money laundering and know-your-customer (KYC) laws in different nations would be the most effective tool for mitigating payments, rather than attempting to ban cryptocurrency or prevent its use entirely.

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Digital soccer collectibles platform Sorare is expected to announce that it is receiving a record $532 million in funding, according to a Business Insider report Wednesday.

• The Paris-based company’s valuation could exceed $3.8 billion, the article said, based on comments from three unnamed sources. The amount would represent the largest capital raise in the history of France’s technology sector, according to the story.
• Japanese investment firm SoftBank is prepared to lead the funding round and Atomico, a U.K.-based venture firm, will also take part.
• Sorare raised $50 million in Series A funding in February, led by venture capital firm Benchmark, and including investments from Reddit co-founder Alexis Ohanian, former soccer stars Rio Ferdinand and Oliver Bierhoff, and current standouts Gerard Pique and Antoine Griezmann.
• A number of Europe’s most powerful club teams, including Bayern Munich, Juventus, Real Madrid and Liverpool have launched non-fungible tokens (NFTs) through the platform.
• Asked by CoinDesk Wednesday to confirm the report, Sorare said that it did not have “anything to announce.”

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A documentary film team is working on the first feature-length documentary about Ethereum – and they’re looking for ETH donations to fund it.

“Ethereum: The Infinite Garden” will feature interviews with various people involved in the development of the world computer, including the network’s co-creator, Vitalik Buterin, and Aya Miyaguchi, the executive director of the Ethereum Foundation. 

The film production company Optimist is behind the documentary, with Carrie Weprin producing and Zach Ingrasci and Chris Temple co-directing. Weprin and Ingrasci had both been aware of the crypto ecosystem before getting involved in the project, but they said the interviews they’ve done for the film really turned them into Ethereum fans. 

Related: Valid Points: The Problem With MEV on Ethereum

Funding for “Ethereum: The Infinite Garden” is taking place on Mirror until Friday, July 16, with a goal of raising 750 ETH (about $1.5 million at today’s prices). As of press time, 67 people had contributed a total of 60.3 ETH.

For the filmmakers, crypto crowdfunding felt like the most authentic way to raise funds for the film because it allows members of the community to get involved and shape the outcome of the project, which is still currently in the early stages of development. 

“I think it’s so exciting that a DAO [decentralized autonomous organization] could be our executive producer,” Ingrasci said. “That would be the first time that’s ever happened for a film. For sure the executive producer will be someone from the community. This is why we wanted to involve the community as early as possible.”

Non-fungible tokens (NFTs) designed by crypto artist pplpleasr are available for purchase on Mirror, with each denoting a level of involvement in the project. 

Related: Ether Erases Early Losses, Faces Resistance Above $2K

Morgan Beller, co-creator of libra and now an investor at NFX, connected the Optimist team to Buterin. 

“I’ve always thought Buterin deserved to have his story out there. The whole Ethereum team is just so pure, authentic, kind and wonderful,” Beller said, adding:

“If you’re first learning about Ethereum and you’re not a crypto person, you don’t necessarily see that side. But I always thought that if the world were able to somehow see and understand where this is all coming from, the heart and thoughts behind it, people would both understand it and be more supportive.”

Weprin said the team hopes to place the film in a major film festival in 2023 and will likely pursue distribution on major streaming platforms. 

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Bitcoin was flat, holding around $33,000, after falling for two straight days. The largest cryptocurrency by market capitalization is now in its eighth straight week of trading roughly sideways. 

Analysts said bitcoin trading was buoyed along with assets in traditional markets by Federal Reserve Chair Jerome Powell’s assurances that he’s still not seeing “substantial further progress” on an economic recovery – signaling that the U.S. central bank isn’t likely to dial back monetary stimulus anytime soon. 

Powell’s comments come after Tuesday’s U.S. Labor Department report that inflation accelerated in June by the fastest pace in 13 years. Bitcoin is seen by some investors as a hedge against inflation because of the cryptocurrency’s fixed supply schedule.

Related: Las Vegas Strip Club Now Accepts Bitcoin Payments Over the Lightning Network

“What helped cryptocurrencies turn positive was the broad-based rally on Wall Street,” Edward Moya, senior market strategist at Oanda, wrote in an email. “The Fed seems stubbornly dovish and willing to tolerate a few more months of surging pricing pressures before considering a change of tune over the transitory/persistent inflation debate.”  

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $32,787.2, +1.62%
• Ether (ETH) $1,986.1, +3.19%

Traditional markets:

• S&P 500: 4374.3, +0.12%
• Gold: $1827.1, +1.04%
• 10-year Treasury yield closed at 1.344%, compared with 1.41% on Tuesday

Ether tracked higher with bitcoin, but among altcoins the day’s big story was a jump in price for the FOX token after the backing ShapeShift exchange announced plans to become more decentralized and airdrop the token.   

Looking for clues

Related: Nodes on Bitcoin’s Lightning Network Double in 3 Months

With bitcoin stuck in the $30,000 and $40,000 range for eight weeks now, cryptocurrency analysts are scouring blockchain data for clues on which way the market will go.  

David Grider, head of digital assets at FundStrat, wrote Wednesday in a weekly report that he is looking closely at the “spent output profit ratio,” or SOPR. The metric is calculated by dividing the average price at which bitcoin was sold by the average price at which it was bought. 

Writes Grider: “When SOPR is above 1, it implies owners of the asset are in profit at the time of the transaction. Below 1 implies sellers have capitulated and sold at a loss.”

The metric has stayed below 1 since May, possibly a sign there’s a “healthy reset of profit taking,” reminiscent of a similar episode that played out in March 2020, at the start of the coronavirus pandemic. Several months after that, bitcoin prices rallied and ended up quadrupling on the year. 

“In a bull market, as we expect we are in today, a SOPR below 1 can indicate a local bottom as sellers are reluctant to sell at a loss,” Grider wrote. 

Powell talks stablecoins

Jerome Powell spent much of his semiannual testimony before the House Financial Services Committee addressing the outlook for the U.S. economy, the prospects for inflation and the likely path of monetary policy. 

He was also questions on cryptocurrencies, as reported by CoinDesk’s Nate DiCamillo.

U.S. Rep. Patrick McHenry of North Carolina, the. ranking Republican on the committee, asked when the Fed would deliver its much-anticipated report on central bank digital currencies (CBDC) and crypto. 

Powell said that report, previously expected to arrive this month, will appear in September.

“U.S. regulation, along with environmental, social and governance (ESG) concerns, are the biggest risks to cryptos, so a September Fed release of [the central bank’s] concerns on digital currencies should be viewed as good news for bitcoin,” according to Oanda’s Moya.   

Powell also weighed in on stablecoins, arguing they will need to be more closely regulated if they are going to be a major part of U.S. payments networks. 

“Stablecoins certainly have some advantages in terms of faster payment systems and have some attributes of CBDCs, but there are some risks with stablecoins right now,” Powell said. “I think the issue is that stablecoins are a lot like money market funds or bank deposits or a narrow bank.”

In response to a question from Rep. Stephen Lynch (D-Mass.), Powell said the dollar’s status as the world’s reserve currency isn’t in danger of being threatened, even as other countries develop CBDCs.

The chairman said central bank digital currencies might undermine the case for decentralized digital assets.

“You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency,” Powell said. “I think that’s one of the stronger arguments in its favor.” 

ShapeShift shutdown

Crypto trading pioneer ShapeShift is closing its doors, handing over its legacy to a decentralized autonomous organization (DAO) controlled by holders of its FOX token.

As it begins a months-long process of closing up shop, it will begin by airdropping $98 million in crypto to decentralized finance (DeFi) investors across multiple blockchains. 

Following the news, the price of ShapeShift’s exchange token FOX surged. FOX was changing hands at $0.51 as of press time; before the news went out this morning, the token was trading at $0.28. It hit $0.68 about an hour after the 11:00 a.m. ET announcement.

Altcoin Roundup

• AXS Rally: The rally in Axie Infinity’s governance token AXS is showing no signs of slowing down as users continue to flock to the play-to-earn battle economy amid lackluster action in the broader crypto markets. The AXS token clocked a new record high of $23.60 early Wednesday, surpassing the previous peak of $22.50 reached Tuesday, according to data source Messari. Axie Infinity shards, or AXS, is the governance token of the Axie Infinity platform, an Ethereum-based digital marketplace for the game Axie Infinity. “Axie Infinity, created by SkyMavis, allows players to earn income through non-fungible tokens, or NFTs, and cryptocurrencies by breeding, battling and trading digital pets called Axies,” a Philippines-based Axie trader told CoinDesk.
• Chia continues expansion: Chia Network, the smart transaction platform created by BitTorrent founder Bram Cohen, has added five executives across multiple divisions, including sales, product development and professional services, and has nearly doubled its workforce since closing its last venture round in early May.
• Solana’s Phantom Wallet Raises New Round to Go Multi-Chain: Phantom, a digital wallet that’s on the Solana blockchain network, has raised $9 million in a Series A funding found led by Andreessen Horowitz (a16z). Other participating investors included Variant Fund, Jump Capital, DeFi Alliance, the Solana Foundation and Coinbase investor Garry Tan. The funding will be used to expand the Phantom team, develop new features and expand to other blockchains, said the firm.

Relevant News

• Australia Faces Big Choices on Crypto Regulation
• SEC Further Delays WisdomTree Bitcoin ETF Decision
• BlackRock CEO Larry Fink Seeing ‘Very Little’ Demand for Crypto Lately
• ECB Moves to Start Digital Euro Project

Other markets

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

stellar (XLM) +5.31%

bitcoin cash (BCH) 1.79%

aave (AAVE) +1.37%

Notable losers: 

tezos (XTZ) -5.26%

algorand (ALGO) -3.83%

polkadot (DOT) -3.78%

Related Stories

• New York Giants Star Saquon Barkley Will Take All Future Endorsement Money in Bitcoin
• FOX Token Up 77% on ShapeShift DAO, Airdrop News

New York Giants star running back Saquon Barkley said on Wednesday that he will be taking all of his future endorsement money in bitcoin.

Barkley made his announcement on an episode of Joe Pompliano’s new show on YouTube, “The Best Business Show.”

“You see how high [inflation] is and you learn you can’t save yourself through wealth,” Barkley said on the show. “That’s why I am going to be taking my marketing money in bitcoin.”

Related: Market Wrap: Bitcoin Flat; Fed’s Powell Grilled on Crypto

Barkley said he was influenced by conversations he had with Jack Mallers, the CEO of Strike who was also on the show, in making his decision. Strike uses the Lightning Network payments platform to convert direct deposits made into checking accounts into bitcoin. Mallers said the product Barkley will be using to be paid in bitcoin will be rolled out to all users in the U.S. in the next 30 to 60 days.

Pompliano put Barkley’s annual endorsement earnings in the “eight-plus figures.” Barkley has signed deals in the past with Nike, Pepsi, Visa and Dunkin’ Donuts, among others. 

“I think it’s just a smart thing to do and the right thing to do to start taking my investment money in bitcoin and through Strike,” Barkley added.

Barkley, who was drafted by the Giants with the No. 2 pick in 2018, was the National Football League’s offensive rookie of the year but was out almost all of last year with an injury. He has a four-year, $31.2 million contract with the Giants that included a $20.8 million signing bonus.

Related: BlackRock CEO Larry Fink Seeing ‘Very Little’ Demand for Crypto Lately

Several other high-profile NFL athletes have decided to invest all or part of their earnings in bitcoin, including Carolina Panthers tackle Russell Okung, who is splitting his $13 million yearly salary 50-50 between bitcoin and fiat, and Kansas City Chiefs tight end Sean Culkin, who elected to take his entire 2021 base salary of $920,000 in bitcoin. Culkin was cut by the Chiefs before he had a chance to execute his plans.

In addition, this year’s No. 1 draft pick, quarterback Trevor Lawrence, reportedly accepted his signing bonus from the Jacksonville Jaguars in April in a mix of bitcoin, ether and solana. Lawrence has an endorsement deal with cryptocurrency portfolio management app Blockfolio.

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The U.S. Securities and Exchange Commission (SEC) said Wednesday it has settled charges against U.K.-based Blotics, the operator of Coinschedule.com, for violating the anti-touting provisions of federal securities law. 

The SEC alleges Coinschedule, a once-popular website that profiled initial coin offerings (ICOs) from 2016 to 2019, was secretly receiving compensation from the issuers of the digital assets it was profiling. 

The settled charges against Coinschedule are among a series of charges recently brought by the SEC against operators of ICOs the regulator has deemed fraudulent or otherwise in violation of federal securities law. The SEC has taken an increasingly strong stance against unregistered token offerings since the ICO boom of 2017, deeming them unregistered securities. 

Related: Australia Faces Big Choices on Crypto Regulation

Blotics agreed to a settlement that includes a $43,000 disgorgement plus prejudgement interest, a penalty of $153,434 and an agreement to stop violating the anti-touting provisions. 

Two SEC commissioners, Elad Roisman and Hester Peirce, issued a statement that they agreed Coinschedule was violating federal law, but they lamented the settlement did not offer any regulatory clarity for other market participants. 

“We agree with our colleagues that touting securities without disclosing the fact that you are getting paid, and how much, violates Section 17(b),” Peirce and Roisman wrote. “We nevertheless are disappointed that the commission’s settlement with Coinschedule did not explain which digital assets touted by Coinschedule were securities, an omission of which is symptomatic of our reluctance to provide additional guidance about how to determine whether a token is being sold as part of a securities offering or which tokens are securities.”

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Crypto’s mainstream adoption has gained further momentum as the 277-year-old British auction house Sotheby's sold a rare 101.38-carat diamond for $12.3 million in cryptocurrency to an anonymous buyer.

What’s being billed as “the largest airdrop in history” is doing wonders for the FOX token’s price.

ShapeShift’s exchange token is surging Wednesday following news that the storied crypto exchange is tossing the keys to FOX holders and shutting up shop over the next 12 months.

The move is akin to Uniswap’s UNI distribution last summer as ShapeShift moves to wind down corporate operations and exist as a decentralized exchange on the internet governed by token holders.

Related: Market Wrap: Bitcoin Flat; Fed’s Powell Grilled on Crypto

FOX was changing hands at $0.52, as of press time; before the news went out this morning, the token was trading at $0.28. It hit $0.68 about an hour after the 11:00 a.m. ET announcement.

ShapeShift is in the process of airdropping 340 million FOX tokens to all past users. Perhaps driving the surge is a liquidity mining scheme slated to start on July 16.

ShapeShift launched FOX in November 2019 as an early step in wooing retail traders away from custodial exchanges, founder Erik Voorhees said at the time.

Its previous all-time high was $1.46 in April 2021.

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• ShapeShift to Shut Down, Airdrop FOX Tokens to Decentralize Itself Out of Existence
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The U.S. Securities and Exchange Commission (SEC) pushed a decision on WisdomTree’s bitcoin exchange-traded fund (ETF) application to the autumn.

In a Tuesday order launching proceedings on whether or not the agency should approve the application, the SEC asked for feedback from the general public and industry experts on the WisdomTree application and whether the ETF would be a safe product for investors. Comments must be submitted within three weeks of the document’s publication in the Federal Register, the national logbook, with rebuttals filed within seven weeks.

The SEC is currently reviewing over a dozen active bitcoin ETF applications. Industry participants, including WisdomTree, have also filed applications for an ether ETF product and a bitcoin futures ETF. The federal securities regulator has yet to approve any crypto ETF within the U.S., though proponents claim that a bitcoin ETF can help investors by creating a more regulated market.

Related: SEC Settles Charges Against Coinschedule Operator for Touting ICOs

The SEC has typically delayed making any firm decisions on bitcoin ETF applications as long as it legally could, meaning Tuesday’s delay is no surprise. This is the second active application to proceed to this phase of SEC rulemaking in 2021, joining a similar application filed by VanEck, indicating the process for potentially approving an ETF continues to move ahead.

Proponents also believe that a bitcoin ETF will expand access to the crypto markets. Because an ETF is regulated, some fund managers, financial institutions or even retail investors may be more willing to purchase shares of an ETF, rather than buy bitcoin directly.

Still, the chances of the SEC approving a bitcoin ETF seem slim. SEC Chairman Gary Gensler has raised concerns about bitcoin market manipulation and investor protection during testimony before Congress. The agency has often cited market manipulation as a key concern in rejecting past bitcoin ETF applications.

Indeed, the SEC published questions around whether the ETF “would be susceptible to manipulation” and how the proposed product could be protected from fraudulent activity in its decision on Tuesday.

Related: Hashdex to Launch Bitcoin ETF Seeking to Offset Mining Emissions

The SEC also questioned whether CME’s bitcoin futures market is large enough to evade manipulation.

“What are commenters’ views on whether there is a reasonable likelihood that a person attempting to manipulate the Shares would also have to trade on CME to manipulate the Shares?,” the document asked.

Ron Hammond, the Blockchain Association’s director of government relations, tweeted that investor protection and market structure concerns remain top of mind for the agency, and said rumors suggest an ETF will not be approved this year.

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U.S. Federal Reserve Chair Jerome Powell said an anticipated Fed report on central bank digital currencies (CBDC) would come in early September, during a Wednesday hearing before the U.S. House Committee on Financial Services.

In response to a question from ranking member Patrick McHenry (R-N.C.), Powell said the report will outline the benefits and risks of CBDCs, as well as cryptocurrencies and stablecoins more broadly. In the hearing, Powell reiterated that stablecoins need regulation if they are going to play a major part within U.S. payments networks.

“Stablecoins certainly have some advantages in terms of faster payment systems and have some attributes of CBDCs but there are some risks with stablecoins right now,” Powell said. “I think the issue is that stablecoins are a lot like money market funds or bank deposits or a narrow bank.”

Related: Market Wrap: Bitcoin Flat; Fed’s Powell Grilled on Crypto

Powell had previously said the report would be published in July.

The Boston branch of the Federal Reserve announced last year it was conducting research into what a possible CBDC would need to be useful within the U.S., and that it is expected to write the document.

In response to a question from Rep. Stephen Lynch (D-Mass.), Powell added the dollar’s status as the world’s reserve currency isn’t in danger of being threatened, even as other countries develop CBDCs.

The chairman also added that digital currencies could replace decentralized digital assets.

Related: Federal Reserve Vice Chair: ‘We Do Not Need to Fear Stablecoins’

“You wouldn’t need stable coins you wouldn’t need cryptocurrencies if you had a digital U.S. currency, I think that’s one of the stronger arguments in its favor,” Powell said.

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Blocknative, a crypto infrastructure data dredger that monitors transactions as they wait to be confirmed, has raised $12 million in its latest funding round, CoinDesk has learned.

The “in-flight transaction” tracker received Series A investments from Foundry Group, Blockchain Capital Robot Ventures and others, CEO Matt Cutler told CoinDesk. Rho Capital’s Ignition Fund led the round. Last July Blocknative raised $5 million in a seed round. 

Blocknative’s tools surveil the mempool – digital waiting rooms for not-yet-validated crypto transactions – to get a sense of upcoming on-chain activity. Shedding light on this “dark forest” can help projects estimate gas fees, detect attackers and track “in-flight transactions” that haven’t settled in their wallets yet, Cutler said.

Related: Draper Goren Holm Taps Ex-Disney Leader to Manage Events

Front-running bots on the Ethereum network have become an issue for professional traders.

Mempool data is publicly available, but Cutler said it’s nearly impossible for laypersons to parse. Only a handful of companies in the space are currently building tools for the mempool, he said, but he expects that to change as the market grows. 

The market has so far responded with gusto. Annual recurring revenue has spiked 1,500% with well-known projects including Compound, Curve, Zapper and Yearn Finance signing up in the last 12 months. About 40% of Blocknative customers are “builders” such as them, Cutler said. The other 60% are traders hoping to leverage mempool data.

“The trading category has grown really rapidly – it came from basically zero” at this point last year, Cutler said. 

Related: Ash Egan Launches VC Fund With $55M in ‘Inception Capital’

Altonomy, a crypto trading desk based in New York, began using Blocknative eight months ago as a way to confirm its transactions were executing on decentralized exchanges, head of investments Ricky Li said.

“There’s a lot of very basic things that you enjoy trading at a centralized exchange,” he said, offering order execution notifications as an example. “But on the DeFi side if you trade on 1inch or Uniswap, you don’t have the luxury of that. We send an order out, it’s like sending it into a black hole,” he said.

Beyond tracking “in-flight” orders. Li said Altonomy has also leveraged mempool intelligence for an all-important edge on cutthroat digital trading floors. “If we’re trying to front-run somebody,” it’s useful, he said. 

A majority of the top decentralized finance protocol builders are also using Blocknative to shore up their networks, according to Blockchain Capital partner Spencer Bogart, who sits on Blocknative’s board.

“If you’re very proactively monitoring the mempool, you can run  blocknative simulation platform to detect if any of those transactions” would pose a threat to the protocol once they confirm, he said.

Cutler plans to double Blocknative’s 20-person staff by year’s end, with new hires in marketing, sales, C-suite, customer support and development. 

“We’re trying to build a real core infrastructure that’s going to be sustained and grow as the whole ecosystem grows,” he said.

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The rally in Axie Infinity’s governance token AXS is showing no signs of slowing down as users continue to flock to the play-to-earn battle economy amid lackluster action in the broader crypto markets.

• AXS token clocked a new record high of $23.60 early today, surpassing the previous peak of $22.50 reached Tuesday, according to data source Messari.
• The cryptocurrency was changing hands at $23.86 at press time, up 700% from the low of $2.36 reached on June 22, when the broader market tanked and bitcoin fell below $30,000 for the first time since early January.
• Axie Infinity shards, or AXS, is the governance token of the Axie Infinity platform, an Ethereum-based digital marketplace for the game Axie Infinity. 
• “Axie Infinity, created by SkyMavis, allows players to earn income through non-fungible tokens, or NFTs, and cryptocurrencies by breeding, battling and trading digital pets called Axies,” a Philippines-based Axie trader told CoinDesk.
• Players use AXS tokens to trade these digitized creatures. AXS holders can also stake their coins to earn weekly rewards and participate in governing the protocol. New entrants have to purchase at least three axies priced in ether, and the protocol makes money through axie sales, land sales, axie breeding fees and marketplace fees.
• Data tracked by Token Terminal shows Axie has raked in $51.3 million in the past 30 days, the most among decentralized finance (DeFi) protocols and blockchains tracked by the site. That’s four times more than the second highest, PancakeSwap with $12 million.
• According to DappRadar, the game is quite popular and is viewed as an income source in developing countries like Brazil, India, Indonesia, the Philippines and Venezuela.
• Axie Infinity has widened its lead over prominent DeFi protocols like PancakeSwap, Uniswap and Compound in terms of revenue collection since CoinDesk’s last update.
• Axie recently crossed $25 million daily trading volume, marking a 10-fold increase since early May, DappRadar CEO Skirmantas Januškas tweeted.

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Crypto trading pioneer ShapeShift is closing its doors, handing over its legacy to a decentralized autonomous organization (DAO) controlled by holders of its FOX token.

As it begins a months-long process of closing up shop, it will begin by airdropping $98 million in crypto to decentralized finance (DeFi) investors across multiple blockchains (more on that value estimate below).

Founded in 2014 by Erik Voorhees, the Colorado-based ShapeShift announced today it will begin winding down its operations as a formal company. Currently employing 65 people, ShapeShift will have no employees, no bank accounts and no CEO in somewhere between four and 12 months’ time, according to Voorhees.

Related: Market Wrap: Bitcoin Flat; Fed’s Powell Grilled on Crypto

“It’s definitely radical,” Voorhees said in a phone call, adding:

“A year ago I would have thought this was sort of fanciful, but at this point I’ve seen how this tool is getting built and I’ve seen how these communities get built around a token instead of an equity structure. The fact that ShapeShift is really closing its corporate entity sets it apart.”

Many companies in crypto build a decentralized protocol but leave a business standing that takes part in creating profit atop their blockchain creation (case in point, Compound Labs just launched Treasury to do precisely that). Calling the move “true decentralization,” Voorhees said ShapeShift is going a step further.

To get more people involved in this new incarnation of the ShapeShift project, it is airdropping 340 million FOX tokens to all past users of ShapeShift (around 900,000 addresses) and 120,000 addresses on several well-known DeFi protocols.

Will you get the airdrop?

Related: FOX Token Up 77% on ShapeShift DAO, Airdrop News

Users of ShapeShift and many flavors of DeFi will get part of the drop.

At the time of this writing, the price of FOX is trading at about $0.29, with an all-time high of $1.65 in April. There’s a total supply of 1,000,001,337 FOX tokens with no inflation.

Of that, 34% is getting distributed to the community and to other crypto communities, 32% will be distributed to ShapeShift staff, 24% to the ShapeShift DAO (of which FOX token holders will have control), 7.5% to the Foundation (which will steward whatever can’t be decentralized now until it can) and 1.3% to the company to use as it winds down.

There are approximately 10 million FOX tokens already in the wild now.

At the opening of this post we wrote that the airdrop was worth $98 million, but, honestly, that’s a wild guess. That assumes the price of FOX stays basically the same as the airdrop begins, an unlikely supposition; but any other guess would be even worse.

There are many different ways a user might get an airdrop. The details can be found on ShapeShift’s blog, but here’s the really key point for everyone concerned: Airdrops have to be claimed within 90 days. After that, airdrops will gradually reduce to nothing over the following 10 days and everything left over converts to the DAO.

Here’s who will get the airdrop: First of all, everyone who has ever used ShapeShift in any way. More usage yields more FOX. More kinds of usage also yields more, so if a user made trades and has a KeepKey connected, that will yield a larger airdrop.

ShapeShift is also making a small airdrop to users of lots of different DeFi protocols, including Gitcoin, Uniswap, Yearn and several others.

There will also be an airdrop for various users of Thorchain.

The checks for those eligible were mostly made as of June 9, 2021, so the relevant activity has to have taken place before then. For Thorchain, eligibility ends on June 16.

FOX isn’t needed to use ShapeShift, but it makes the experience better, as Voorhees explained. Holders are able to earn income from the platform, for example.

Users who get the airdrop and want to earn more will also be able to take part in liquidity mining, starting on July 16. Much like Synthetix early on, ShapeShift will reward users who become liquidity providers to key Uniswap pools that help increase liquidity depth for the FOX token.

For the next three months, 15.8 million FOX tokens have been set aside to encourage Uniswap liquidity. After that, it will be up to governance.

The company

ShapeShift’s name is apt at this point.

The company has taken several forms. It has evolved from an identity-free facilitator of crypto trades, to an exchange, to something Voorhees says there is no great term for now. 

It’s become a sort of control panel that allows a crypto user to both monitor their positions and conduct economic activity across multiple blockchains.

“We’re essentially a crypto interface,” Voorhees said, and it has been built with an eye toward integrating with any wallet, app, blockchain or primitive entrepreneurs want to build.

There are, it should be noted, parts of ShapeShift that could be complicated to run via a DAO, such as its hardware division, KeepKey. Its future remains a question mark for now. It could be spun off into its own company, for example.

As the founder of his company, Voorhees was not especially wistful about the end of this era. He said he looked forward to getting rid of all the bureaucracy he’s been burdened with.

Voorhees is hopeful, however, that the move could deepen his relationships with users and builders. “The most meaningful part of a company is the people. I’m hoping this enhances those relationships,” he said, adding:

“Nothing is really next for me. I’m going to remain part of ShapeShift and just be one leader among many.”

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Valkyrie Digital Assets is offering a second proof-of-stake trust giving clients access to the appreciation of the underlying asset as well as the yield from staking. 

The digital asset manager launched its first Algorand Trust on Wednesday. Valkyrie also plans to stake the asset through Coinbase Custody, allowing it to offer a 4%-6% yield on top of exposure to ALGO within a few months, Steven McClurg, Valkyrie’s chief investment officer, said in an interview. 

While Valkyrie follows Osprey Funds in offering an Algorand trust, it’s the only asset manager that offers staking within the trust, McClurg said. In April, both Valkyrie and Osprey launched Polkadot funds.  

Related: CoinFund, ParaFi Lead $5.2M Seed Round for Liquidity Staking Platform ClayStack

“We will have a few other trusts in the future that do proof-of-stake staking,” McClurg said, adding:

“We have to make sure that the process in which we stake doesn’t violate any type of grantor trust rules. … We’ve figured everything out, and now we just have to implement it from the technology side, which that’s why I say it’s probably another 30 or 60 days before we begin staking.”

Shares of the Aglorand Trust can be redeemed in seven days, slower than the company’s 24-hour redemption process for its Bitcoin Trust and faster than the 30 days needed for its Polkadot Trust.

Coinbase is the custodian for the Algorand fund, Cohen & Company handles audit and tax, Theorem Fund Services acts as the fund administrator and Chapman and Cutler LLP is the legal counsel. Valkyrie is charging a 2% fee on the fund.

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