An $80 million deal between a rising decentralized finance (DeFi) project and a juggernaut crypto investment firm unraveled Monday, with both projects pointing fingers and wagging chins.
Reef Finance, a multi-chain liquidity provider, appeared to reverse course on an over-the-counter (OTC) deal for its REEF tokens halfway through due to “doubts around Alameda’s long-term interest in being a strategic investor,” the startup said in a Monday blog post.
Reef had offered a 20% discount on the tokens to promote “synergies” between Serum and Solana – two projects in which Alameda is heavily invested. The dispute turned into a Twitter flame war, however, after a large portion of that initial token set was immediately transferred to Binance, presumably to be sold.
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With the conflict, crypto plebs got a behind-the-scenes glimpse at an over-the-counter deal between one of crypto’s most aggressive trading desks and yet another young DeFi team trying to make it big.
“For the first $20M tranche, we followed the movement of the sold [REEF] tokens and immediately saw that the tokens we had just transferred to Alameda were being offloaded on the Binance exchange,” Reef wrote in its blog post. “We could not understand why Alameda, our long-term strategic investor, would offload their tokens immediately after purchase to Binance.”
In contention is the existence of a vesting period for the tokens. Reef CEO Denko Mancheski told CoinDesk in an email that an immediate token flip was “definitely not what was supposed to happen.” Alameda, on the other hand, says there was no agreed-upon vesting period. Now the whole ordeal is public, with legal threats mounting. Alameda directed CoinDesk to its blog post when reached for comment.
High-stakes OTCAlameda agreed to purchase 2.7 billion REEF tokens worth an estimated $80 million on March 8, according to public documents. The purchase was set to be broken into two parts: One $20 million transaction followed by a press announcement, and then a second $60 million transaction.
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However, both sides now dispute if the second transaction was ever supposed to occur under the verbal agreements (occurring on messaging app Telegram) made prior to the trade.
Mancheski told CoinDesk, “There was literally no legal agreement/contract (or any kind of paperwork whatsoever).”
“They portray themselves as a reputable VC fund while in reality they just manipulate projects/retail with their ‘reputation,’” Mancheski said of Alameda, which is helmed by FTX CEO and breakout crypto star Sam Bankman-Fried.
Alameda said in its Monday blog post the Reef team “initially agreed to an [$80 million] trade and locked in the price for the entire size. After settling the first tranche, Reef reneged and refused to settle the following tranches.”
Those claims were preceded by a tweet from Alameda Research trader Sam Trabucco, who said Reef “went to the press to brag” over the initial transaction and then “reneged on the OTC trade.”
Indeed, Reef did issue a press release on the initial $20 million purchase, as reported by CoinDesk and others. The Alameda blog post published Monday after Trabucco’s tweet makes it clear Alameda knew in advance about the press release.
Regardless, the tokens remain at issue.
Trabucco and Alameda agreed to take the remainder of the tokens under a vesting period as offered by Mancheski in a counter offer, with the caveat that the tokens would be transferred to Alameda. When Mancheski declined moving funds to Alameda, the dispute went public.
Next stepsAccording to documents obtained by CoinDesk, Alameda is considering legal action against Reef.
“I don’t really need to threaten here,” Alameda Head of OTC Ryan Salame said in a chat with Mancheski seen by CoinDesk. “We’re 100% in the right here.”
Alameda partner exchange FTX also threatened to delist REEF for conducting a “rugpull” in a now-deleted tweet. Some REEF contracts do remain on FTX as of press time.
Mancheski, on the other hand, told CoinDesk Reef has petitioned Binance to reveal its REEF trade book in order to prove Alameda pushed the REEF token’s price down.
“Basically we will be requesting Binance to give their trading log because we believe that they fulfilled their threat and dumped the price – which triggered liquidations and people lost a lot of money,” he said.
The REEF token was down by as much as 20% on Monday, according to CoinGecko. As of press time, it was down 4.5% over the past 24 hours.
Related StoriesLong-term bitcoin (BTC) holders have been adding to their positions over the past 10 months as supply held for shorter time periods has shrunk, based on an analysis of blockchain data by the cryptocurrency market-research firm Arcane.
Positive long-term holder behavior could support the broader uptrend in bitcoin, whose prices have nearly doubled this year.
Belarus President Alexander Lukashenko mentioned cryptocurrencies during his meeting with senior government officials on Tuesday, saying the current regulation of the industry should be changed, according to a local news agency.
Lukashenko said the government, the National Control Committee and the country’s central bank should “clarify some regulatory norms and establish necessary control” over crypto usage in Belarus, Belarusian news agency Belta reported. The country should also establish a special governmental body to control the development of digital economy, using China’s regulatory practices as an example, Lukashenko said.
The discussion followed the recent use of bitcoin as a tool for dissidents in Belarus.
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Cryptocurrencies have been regulated in Belarus since 2017, and there is one locally registered crypto exchange, Currency.com.
Lukashenko added there haven’t been any notable cases of criminal usage of crypto in Belarus, but “there have been new rules established in the world recently to prevent money laundering, terrorism financing and any encouragement of criminal activities” using crypto, Lukashenko said.
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In response, Deputy Prime Minister Nickolay Snopkov suggested the country’s government-backed IT incubator, the Belarus Hi-Tech Park, should be tasked with supervising the nation’s cryptocurrency services.
Related: Market Wrap: Bitcoin Stuck Near $56K, Ether Faces Short-Term Sell Pressure
The Hi-Tech Park, an incubator offering tax benefits for IT startups in Belarus, has recently became a hotbed of protest after Lukashenko won the presidential election in August, provoking nationwide protests that are continue. Many IT entrepreneurs took part in the protests, calling for Lukashenko, the authoritarian leader of Belarus for more than two decades, to quit. Many have had to leave the country, including the founder of the Hi-Tech Park and Lukashenko opponent Valery Tsepkalo.
Read more: Belarus Nonprofit Helps Protestors With Bitcoin Grants
Some supported the protestors with crypto. BYSOL, a nonprofit of Belarusian IT entrepreneurs, has distributed over 2 million euros in bitcoin (or more than $2.8 million) to people who lost their jobs as a result of their protest activities or quit their government jobs in protest. BYSOL transferred $1,500 grants to verified applicants for help, using bitcoin as a way to circumvent the financial surveillance.
Eugene Romanenko, Belarusian crypto expert, believes Lukashenko understands the limits crypto puts on his power: “Apparently, he was briefed that the government can’t financially control Belarusians because of cryptocurrencies, but he wasn’t told that this technology can’t be destroyed.”
Read also: Bitcoin Dissidents: Those Who Need It Most
Any new regulatory ideas from Lukashenko would include easing the rules for people supporting the regime and clamping down on others, Romanenko said. Digital economy and IT startups are considered a source of money for the country’s small economy, but Lukashenko actually can’t neither understand nor control them, he said.
“Economically, Lukashenko is totally dependent on [Russia’s president, and Lukashenko’s largest creditor, Vladimir] Putin, in everything but the digital tech,” he added. “So we are most likely watching his desperate attempts to find the funds for Belarus’ economy and repressive state somewhere other than in Russia, and at the same time he’s trying to tighten his grip on IT so that it stops evading his control.”
Related StoriesThe buyer of a record-breaking $69.3 million non-fungible token (NFT)-based artwork last week says he bought it to ensure the work stays in the crypto space.
Talking on CoinDesk TV’s “First Mover” on Tuesday, MetaKovan – the pseudonymous founder of NFT fund Metapurse – said he plans to “build monuments in the virtual world” for the work by digital artist Beeple.
“It’s like a bridge between the traditional world and the virtual world and I think it’s more appropriate that a guy from crypto bought this,” he said.
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Appearing anonymously on CoinDesk TV behind an avatar, MetaKovan confirmed he is of Indian descent but intends to remain anonymous as he believes it lends itself to the virtual world.
MetaKovan beat Tron founder Justin Sun to the winning bid for Beeple’s “EVERYDAYS,” paying 42,329.453 ether in a Christie’s auction. “I had no idea who I was bidding against,” MetaKovan told CoinDesk.
There has been some backlash to the sale, with accusations that MetaKovan is a crypto “whale,” or large holder, conducting a form of insider trading. “You should ignore those kind of comments. It’s not something I spend my time on,” he said.
See also: Now Robots Are Making Digital Art NFTs
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MetaKovan bought another work by Beeple in December that Metapurse offered to the public in fractionalized form through B20 token sales.
“We spent around $2.2 million plus 30% for the cost of sale, and sold 23% of it for not a lot of premium. I took back around $1.3-1.4 million,” he said.
MetaKovan still holds around 50% of the tokens for this piece and said he does not plan to sell “any time soon.”
Related StoriesXRP, the digital token used in Ripple Labs’ payments network, was outperforming bitcoin and other major cryptocurrencies on Tuesday, with a longer-duration technical indicator flashing a bullish signal.
The token’s price was around 48 cents at press time, up 9% on a 24-hour basis, based on CoinDesk 20 data. Other prominent cryptocurrencies such as bitcoin, ether, chainlink and litecoin were nursing moderate losses.
XRP’s 50-week moving average crossed above the 100-week moving average (MA) earlier this month, confirming a pattern known in price charts as a “golden crossover” – a long-term bullish indicator.
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Traders and chart-reading analysts often see the golden cross as a sign of a definitive uptrend. As such, the latest cross may attract stronger buying pressure from trend-following traders, leading to continued price gains.
XRP’s weekly chart shows major resistance at 80 cents. The area has capped gains multiple times since September 2018.
Readers, however, should note that the golden cross isn’t the Holy Grail of the market and often traps buyers on the wrong side of the markets. That’s because moving averages follow prices. By the time the crossover happens, an asset is sometimes overbought and due for a correction.
XRP, however, looks far from being overbought, with the daily and weekly chart relative strength indices hovering well below 70.
Related StoriesNon-fungible tokens (NFTs) are in a bubble, VaynerMedia CEO Gary Vaynerchuk said Tuesday on CoinDesk TV, though he doesn’t doubt the technology will have staying power.
A performing arts company is tokenizing real-world dance moves to bring them into the digital realm.
According to a press release shared with CoinDesk on Tuesday, Beauty in the Streets is working with blockchain platform Enjin to enable performing artists and dancers to create non-fungible token (NFT)-based “emotes” (think animated emojis).
The NFTs represent signature moves and mannerisms of various performers which, in turn, can then be sold to fans via online stores and live shows and used as emotes within participating video games and apps.
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The company’s first NFT is a signature dance move from founder Cjaiilon Andrade, aka Snap Boogie, called “Speedy Walkovers.” Token holders are able to use the NFT to perform the move in a 3D PC and VR game called AlterVerse.
“NFTs are turning everything into a market, even human movement,” said Simon Kertonegoro, vice president of developer success at Enjin. “By taking memorable moments and tokenizing them as emotes, the joy and awe we experience in the real world will echo across the digital space.”
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Kertonegoro added that despite speculation about whether NFTs are a bubble, the initiative demonstrates how artists can “create value” by adding their own content to games and apps. By doing so they can market their intellectual property directly to existing fanbases.
Related StoriesHoward Marks, co-founder of alternative investment manager Oaktree Capital, says he has reconsidered his previous “dismissive” stance on bitcoin.
The investor, who is worth $2.1 billion according to Forbes, previously said in a 2017 memo that cryptocurrency was “an unfounded fad.” The comment was “a knee-jerk reaction without information,” Marks conceded in a video interview with the Korea Economic Daily on Monday.
While he’d previously considered bitcoin to have no intrinsic value, he said that “there are plenty of things that people want and value highly that have no intrinsic value. How about a painting or a diamond or a bar of gold?” he said.
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Marks described the positives of of bitcoin as being able to trade 24 hours a day and confidentiality.
Saying his early comments hadn’t been proven correct so far, Marks added that, with bitcoin now over $50,000, people who bought at $5,000 “look right.”
See also: JPMorgan Sends Its Private Clients a Primer on Crypto
However, while bitcoin, unlike the U.S. dollar, has a limited supply of 21 million units, Marks argued the market is “circular,” meaning people want the cryptocurrency because the price is rising and that demand drives prices up.
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Marks also said in a recent Oaktree memo that his son “thankfully owns a meaningful amount” of bitcoin.
Related StoriesAhead of an upcoming public listing announced Tuesday, eToro saw explosive growth at the start of 2021.
Over 2020, eToro grew its revenue 147% year over year, with the crypto trading business accounting for 16% of revenue, said CEO Yoni Assia.
“Obviously we started this year with a bang thanks to the crypto rally,” Assia told CoinDesk in an interview. “In January 2021 we added 1.2 million new registered users to the network versus an average of 440,000 per month in 2020, and a 192,000 monthly average in 2019.”
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The merger with a special purpose acquisition company (SPAC), which elevates eToro’s value to around $9.4 billion, will drive an aggressive expansion plan, said Assia, with “hundreds of positions” to the current 300 staff being added over the coming year.
“Globally, we’re very excited about our expansion in the U.S., both the triple-digit growth rate we’re seeing right now in the U.S. as well as our expected launch of equity in the U.S.,” he said.
The firm has made several acquisitions in the crypto space including asset tokenization startup Firmo and Delta, a crypto portfolio tracker application company, both in 2019.
During an investor call Tuesday, eToro said 87% of total revenue in 2020 were generated from the spread of buy and sell prices of assets. The residual revenue were derived from interest income from margin position, currency, conversions and other income, the firm said.
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The eToro social investment platform was launched back in 2010, and the firm was one of the earliest to get into cryptocurrency. Before any cryptocurrency was added to the trading platform, Assia began to buy and hold bitcoin, he explained.
“We bought some crypto for our treasury 10 years before Elon Musk for between $5 and $20 back in 2011. Unfortunately, we only bought about $50,000 back then. But that enabled us to become the first regulated brokerage in Europe to offer cryptocurrency trading back in 2013,” he said.
Even assuming all were bought at $20, eToro would have a trove of 2,500 BTC – worth over $138 million at today’s prices.
It may be the perfect time for companies that handle cryptocurrency to go public, but eToro was around for the last bull run and the “winter” that followed.
The firm said it grew its business significantly during the first crypto rally of 2017-2018 and has extended its equities business, which grew from 11% of revenue in 2017 to 44% of revenue in 2020.
“I think for us, what we learned from the crypto winter, is the importance of diversification,” Assia said. “A significant amount of users joined eToro during a crypto rally in 2017, and many are still active on eToro today in trading both stocks and cryptocurrencies.”
Related StoriesCharles Stewart, CEO of Sotheby’s, has announced a partnership that will see the top auction house hold a sale of NFT-based digital art from anonymous artist Pak.
See also: What Are NFTs and How Do They Work?
Related StoriesRapper Post Malone’s concert streaming service, AUX Live, will begin minting Fyooz-based non-fungible tokens (NFTs) that blur the line between art and experience.
The collaboration, Malone’s second in the NFT space, is set to take off on March 18 with a series of NFTs meant to memorialize concert experiences. In a world where attending concerts in person is still out of the question for many, Malone and his manager, Dre London, are hoping NFTs can bring some of the magic back.
The resulting token structure operates much like a colorful artistic Super Bowl ticket of past years, said Alex Shultz of Fyooz. It’s a collectible piece of artwork that also grants its holders access to an exclusive event.
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Such perks might involve getting “backstage” or “flying” with Malone to the venue or even playing virtual beer pong with him; once COVID-19 restrictions ease, perhaps even in person. Holders can use their tokens for access now and then perhaps trade them later.
Built atop Fyooz’s social token system, the experiential NFTs add a crypto streak to one-year-old AUX Live, a Netflix-like streaming platform specific to live concerts.
London said AUX Live will also begin accepting payment in Fyooz’s token for fans outside of the U.S. (Shultz was hopeful the company can soon add the U.S. to that list. He’s waiting for input from token-skeptical securities regulators on the matter.)
Earlier this month, rock band Kings of Leon trotted out “golden tickets” as part of its NFT album release. The latest from Malone represents an escalation of sorts in the fan-engagement arms race among tech-savvy musicians.
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Only last month Malone and Dre launched their first NFT crossover event with the suds-soaked “Celebrity World Pong League.” There, as here, the rapper partnered with Fyooz to bring an experiential crypto offering to fans. Holders of the NFTs minted in that event were given the chance at playing pong against the rapper.
London said the Pong NFT event, which launched right at the start of the current NFT mania, outperformed his expectations in terms of community engagement and uptake. He said it laid the foundation for the act to develop the far more robust program debuting now.
London told CoinDesk it’s only the beginning of a partnership he said will span multiple Post Malone concerts and perhaps branch off into different acts, too. The only difference from a few months ago when he first heard of NFTs: The medium is exploding far faster than he ever anticipated.
Related StoriesIn a sign of just how dramatically the coronavirus vaccine has altered the market calculus on Wall Street, the fear of soaring inflation has displaced the pandemic as fund managers’ biggest worry, according to the latest monthly survey by Bank of America.
And betting on a bitcoin rally remains one of the hottest trades.
According to the survey, higher-than-expected inflation is now seen as the biggest “tail risk” – an event that’s seen as statistically unlikely but with potentially dramatic consequences. The coronavirus slipped from the No. 1 concern for the first time since February 2020.
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“This implies that global fund managers think vaccination will finally lead us to re-opening and that the extremely loose monetary policy in times of economic recovery is not without risk,” Jeroen Blokland, portfolio manager for the Robeco Multi-Asset funds, noted in a daily analysis.
Concerns about rising inflation could boost hedging demand for the store of value assets such as bitcoin and gold, although recently investors have started to wonder whether the Federal Reserve might unwind stimulus as the economy reheats. That might set up the cryptocurrency’s price for a fall because the 12-year-old digital asset is still seen as a risky investment, similar to stocks.
However, the survey shows “long bitcoin,” or a bullish bet on the cryptocurrency, is the second-most crowded trade in the financial market. A crowded trade is one that is extremely popular, but also so widely held that a market pullback could trigger a violent unwind as traders scramble to exit positions.
Related StoriesIn a sign of just how dramatically the coronavirus vaccine has altered the market calculus on Wall Street, the fear of soaring inflation has displaced the pandemic as fund managers’ biggest worry in the latest monthly survey by Bank of America.
And betting on a bitcoin rally remains one of the hottest trades.
According to the survey, higher-than-expected inflation is now seen as the biggest “tail risk” – an event that’s seen as statistically unlikely but with potentially dramatic consequences. The coronavirus slipped from the No. 1 concern for the first time since February 2020.
Related: Sotheby’s Moves Into ‘New World’ of Digital Art and NFTs
“This implies that global fund managers think vaccination will finally lead us to re-opening and that the extremely loose monetary policy in times of economic recovery is not without risk,” Jeroen Blokland, portfolio manager for the Robeco Multi-Asset funds, noted in a daily analysis.
Concerns about rising inflation could boost hedging demand for the store of value assets such as bitcoin and gold, although recently investors have started to wonder whether the Federal Reserve might unwind stimulus as the economy reheats. That might set up the cryptocurrency’s prices for a fall, since the 12-year-old digital asset is still seen as a risky investment, similar to stocks.
However, the survey shows “long bitcoin,” or a bullish bet on the cryptocurrency, is the second-most crowded trade in the financial market. A crowded trade is one that is extremely popular, but also so widely held that a market pullback could trigger a violent unwind as traders scramble to exit positions.
Related StoriesCryptocurrency exchange Crypto.com is developing a non-fungible token (NFT) platform and has appointed music industry veteran Joe Conyers III to lead the project.
Tesla’s Elon Musk is auctioning off a non-fungible token (NFT)-based “artwork,” with bids now over the million-dollar mark.
Tweeted late on Monday, the NFT features a gold trophy decorated with “diamond hands,” Shiba Inu dogs (presumably referencing dogecoin), a moon and the crypto term “HODL,” all tastefully spinning and gleaming to some house music.
In typical joking style, Musk – who officially became “Technoking of Tesla” on Monday – announced the news, saying, “I’m selling this song about NFTs as an NFT.”
Related: Sotheby’s Moves Into ‘New World’ of Digital Art and NFTs
Bids for the tweet on the Valuables (by Cent) marketplace have been rolling in and, at the time of publication, the highest bid comes from @sinaEstavi at $1.12 million.
NFTs are the latest white-hot sector in the digital-asset space, with celebrities lining up to launch art or music cryptographically linked to the digital tokens. On Thursday, an NFT artwork by crypto artist Beeple was sold for a record $69.3 million by major auction house Christie’s.
Twitter CEO Jack Dorsey recently auctioned off his first tweet, raising $2.5 million for charity. It’s not clear so far if Musk will donate his NFT earnings to a good cause.
Read more: Musk Says He Hopes Rumors He’s in the SEC’s DOGE House Are True
Related StoriesTrading platform eToro said Tuesday it will become publicly traded via a merger with a special purpose acquisition company (SPAC). The site has long supported cryptocurrency buying and selling.
Ledger, the brand most people associate with hardware wallets, is doubling down on institutional business with a new unit and an aggressive hiring plan.
Announced Tuesday, Ledger Enterprise Solutions will drive forth the firm’s institution-focused Ledger Vault, the first crypto custody technology to be publicly linked to a major bank in the form of Nomura and the Komainu consortium, which recently raised $25 million.
As large financial institutions look to enter the new realm of digital assets, a handful of specialized custody technology firms, such as Anchorage, BitGo, Fireblocks and Curv (recently acquired by PayPal), are hoovering up this hand-holding business. Meanwhile, large corporate entities are also joining the party, following the likes of Tesla and MicroStrategy.
Related: Sotheby’s Moves Into ‘New World’ of Digital Art and NFTs
“We took the decision to create an independent business unit with around 50-60 people, aiming to grow that to about 120 people by the end of the year,” said Ledger Vice President of Business Solutions Jean-Michel Pailhon, who is leading the new division. “The Leger Vault solution we created in 2018 has lived within the larger group, and now it needs to come into the light a little bit more.”
Joining Pailhon’s leadership team is newly-appointed VP of Sales and Partnerships Alexandre Lemarchand. Beefing up things on the engineering side, Ledger Enterprise has hired former SIX Digital (SDX) developer Alex Zinder as VP of engineering and former Thales engineer Laurent Castillo as VP of technical architecture.
Ledger’s institutional custody tech clients include Komainu, Crypto.com, Uphold, Bank Frick, BitStamp and Nexo.
Komainu, a joint venture between Ledger, Nomura and CoinShares, went live in June 2020, after a two-year test period. Komainu’s recent $25 million seed round was led by hedge fund billionaire Alan Howard.
Related: Post Malone to Mix NFTs, Experiences in Revamped Music Streaming Platform
“We were a little ahead of the curve when we launched Komainu during a bearish market cycle, but that also gave us time to grow and develop and we have learned a lot,” Pailhon said in an interview.
Two or three years back, big banks would tell Ledger they wanted to do “blockchain and not bitcoin,” Pailhon said.
“The good news is that it’s now time for all the banks and institutional players to enter this market,” said Pailhon. “And guess what? Most of them are not equipped to build this from scratch and are looking for partners.”
Related StoriesHaruhiko Kuroda, governor of the Bank of Japan (BOJ), has said the central bank must “prepare thoroughly” for the possible future need to issue a digital yen.
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