CoinDesk Crypto

The Japanese trustee of Mt. Gox said creditors will now have a chance to approve a draft rehabilitation plan for assets still held by the long-defunct bitcoin exchange.

• Creditors will vote on the plan proposed by trustee Nobuaki Kobayashi, outlined in March 2020 and filed in December.
• The measure comes after the draft was approved by the Tokyo District Court’s examiner.
• The vote will be conducted online, by mail and in person, with a goal of resolution at a creditors’ meeting on Oct. 20 this year.
• The draft outline indicates that creditors who have filed claims will receive the assets in their original deposited form if they are fiat currencies, bitcoin or bitcoin cash. Other crypto assets will be liquidated and refunded as fiat currency.
• Mt. Gox creditors have been awaiting such a resolution since 2014 when it was revealed that 850,000 bitcoins had been stolen from the exchange by hackers.

See also: Cryptopia Exchange, Currently in Liquidation, Gets Hacked Again: Report

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• Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’
• Digital Artwork Sells for Record-Breaking $6.6M in Ether on Winklevoss-Owned Marketplace

Coinbase CEO Brian Armstrong received $1.78 million to cover “personal security” expenses in FY2020 as the 38-year-old tech CEO prepared to take the cryptocurrency exchange operator public.

• Armstrong, who founded Coinbase in 2012, netted nearly $60 million in salary, stock options and “all other compensation” in FY2020, according to the crypto firm’s newly-filed S-1, making him Coinbase’s highest-paid executive.
• While the lion’s share of that sum – $56.6 million – came via option awards and an additional $1 million for his base salary, Armstrong also received $1.78 million to cover “costs related to personal security measures.”
• “We view personal security expenses for Mr. Armstrong as reasonable business expenses due to a bona fide business-oriented security concern and not the receipt of taxable personal benefits,” the S-1 read. Armstrong appears to be the only Coinbase employee with such an arrangement.
• Joining Armstrong on Coinbase’s list of highest-paid employees are Chief Product Officer Surojit Chatterjee ($15.8 million in 2020 compensation) and Chief Legal Officer Paul Grewal ($18 million in 2020). Chatterjee’s and Grewal’s packages also leaned heavily on stock and option awards.

• DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees
• Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others
• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Digital Artwork Sells for Record-Breaking $6.6M in Ether on Winklevoss-Owned Marketplace

Artwork represented by a non-fungible (NFT) token has sold for a record-breaking sum of $6.6 million in the ether cryptocurrency.

According to a tweet from NFT marketplace Nifty Gateway on Thursday, “history has just been made” with the sky-high sale of the animated artwork created by digital artist Beeple. It depicts what appears to be a monumental Donald Trump lying face down in the grass and covered in graffiti.

The sale was brokered by Nifty’s art buying services, according to the platform, which said the buyer wishes to remain anonymous. Nifty was acquired by the Winklevoss brothers’ cryptocurrency exchange Gemini in 2019.

Related: DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees

The NFT artwork movement has been steadily growing and has seen buyers, who are connected to artists via online marketplaces such as Nifty Gateway, Larva Labs and Open Sea, snatching up digital artworks at increasingly high prices.

See also: What Are NFTs and How Do They Work?

“NFTs are the future, and this is just a glimpse of that … there is no ceiling on what a piece of art can be worth.” Nifty Gateways co-founder Griffin Cock Foster told CoinDesk via email. “Soon the most valuable NFTs will be worth more than any physical artwork.”

Foster said he believed Beeple’s artwork sold for such a substantial amount because it was the artist’s “first-ever 1/1,” meaning the artwork is the only one in existence.

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

See also: It’s an NFT Boom. Do You Know Where Your Digital Art Lives?

Mike Winkelmann, aka Beeple, is a graphics designer from Charleston, S. C., who creates a variety of digital art, including short films and videos.

He has also worked on concert visuals for such performers as Justin Bieber, Katy Perry and Eminem, according to his profile on social media platform Behance.

“Beeple is quickly becoming, or arguably already is, the most important crypto artist in the world,” Foster said.

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

Digital collectibles on blockchains are driving the retail mania for crypto higher right now, in part because they are cool and in part because the market seems to have finally come to this consensus: Provable ownership of digital items can accrue real value.

When there is real value, there is finance. These collectibles, also known as non-fungible tokens (NFTs), have proven lately to have very high values. 

“NFTs are a foundational building block of the emerging virtual economy,” Stephen Young, the founder and CEO of NFTfi, said in a press release.

Related: DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees

The latest data point in the ongoing story of the marriage of NFTs and decentralized finance (DeFi) is the new funding for NFTfi, a project that allows borrowers to post digital items as collateral. NFTfi announced Thursday an $890,000 investment round from backers including CoinFund, 1kx, The LAO and Dapper Labs CEO Roham Gharegozlou, among others.

NFTfi is one of several companies making it a lot easier to get money in, earn yield and get it back out of the digital collectible space.

NFTfi is basically like DeFi giants Compound and Aave, both money markets, but those two use fungible collateral, like ETH or various stablecoins. NFTs are non-fungible and they are markets with less liquidity in them, making price discovery trickier.

That’s changing fast with more and more products coming onto the market making it easier for liquidity to flow through the many creations. And remember, this is crypto: Changing fast means a wildly different thing in this industry than in the pokey old world of mobile phones and social networks.

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

“As NFTs re-imagined how we produce and define ownership of digital content online, we’ll also, in turn, begin to re-imagine a whole new category of financial services based on these new building blocks,” Lasse Clausen, a partner at the venture firm 1kx, said in a press release.

Beyond NFTfi, here are 10 more projects that are making the NFT market nearly as complex, flexible and liquid as the rest of crypto:

The startup, whose platform makes fractional ownership of NFTs possible, is working on a new version with lots of new features. For example, it will be able to allow creators to earn royalties on trades of fractions, governance over the underlying NFTs for holders of a fraction and other tools that allow for more fine-grained ownership. Also, a decentralized autonomous organization (DAO) is coming to govern the whole application. “Fractional ownership of songs, books, other content is a no-brainer. One edition, lots of owners, uniqueness is king,” co-founder Joel Hubert told CoinDesk in an email.

This company created a DAO that built wrapped CryptoPunks, which made Larva Labs’ pioneering NFTs more fungible. Ark has subsequently created additional tools to enhance liquidity for the original non-fungible token, and probably deserves some credit for today’s white-hot CryptoPunks market. It is currently working on Blank.Art. “We will launch NFT projects that are appropriating financial concepts and themes for artistic purposes,” Ark’s Roberto Ceresia told CoinDesk in an email.

Mintbase is a platform that makes it easy to mint non-fungible tokens. It had an investment round recently led by Sino Global. Obviously it primarily enables users to mint on Ethereum, but the NEAR blockchain has gone out of its way to be compatible with the original smart-contract chain. Right now, Mintbase is launching a feature on NEAR that allows royalties on sales to be shared with up to 1,000 people. “That really is the fractional ownership part everyone is talking about,” COO Carolin Wend told CoinDesk.

This one enables community-owned index funds so that one token represents ownership in many NFTs. It has tokens for specific categories of NFTs and others that represent a spectrum of the market. “There are, however, many people out there that don’t have the time or knowledge to trade individual NFTs but would like exposure to NFT markets. These are the NFTX target users,” the firm wrote in January.

This protocol aims to enable any NFT to be wrapped or embedded with an ERC-20 token. So just in case there was any doubt an NFT had value, a user could wrap it with interest-earning tokens, such as the Aave tokens, and it would have value beyond any doubt. This is basically the same as what the forthcoming Aavegotchi game is doing. What will it mean for non-fungible and fungible assets to become roommates? Time will tell.

According to its white paper, “Zora provides a cryptographically enforced registry of media independent of any platform.” One of Zora’s creators, Jacob Horne, told CoinDesk in an email, “We’ve directly built the market into the NFT, and we’ve created a net new auction model specific to NFTs. Zora auctions are perpetual, anyone can bid in any currency, the owner can accept any bid.” If that sounds head-scratching, check out this new genre of poetry built with the help of the Zora team.

“Unifty is an NFT management system. Think of it as ‘the WordPress of NFTs,'” Markus Medinger of the Unifty team told CoinDesk in an email. Unifty has a marketplace coming with new features around copyright management and value drops, among others. The platform is somewhat unique in that it largely functions off Ethereum. “We already support xDai, BSC [Binance Smart Chain], Polygon [née Matic], Celo and Moonbeam Alpha. Multi-chain support is actually one of our expertise,” Medinger added.

This is an as-yet-unreleased project for crowdsourcing NFT appraisals. “The next step for financialization is solving the NFT price discovery problem in a capital efficient way,” CoinFund’s Jake Brukhman told CoinDesk.

A peer-to-peer trading project for NFTs, still in beta. Be careful!

This group is all over NFT financialization, from investing in the sector to building tools to make it more robust. It runs a decentralized exchange for NFTs, has its own approach to fractional ownership and also has products built for NFT security. The company is teasing a game now that promises to make DeFi more game-like. “Polyient Games is our decentralized ecosystem designed to drive forward NFT innovation, both internally and via third-party participation,” Craig Russo, one of the co-founders, told CoinDesk in an email.

The original DeFi players have not made a lot of noise directly around NFTs yet. Scott Lewis of DeFi Pulse is involved with NFTX and Aave invested in the video game that uses its tokens, Aavegotchi. “Aave community has enormous interest,” Stani Kulechov, CEO of the money market Aave, told CoinDesk in an email.

Normally this is the part of the post where we’d tell readers just learning about NFTs and DeFi that they should take a very small amount of ETH or stablecoins and just buy some little things and play around. None of this stuff really makes sense until a person tries it. Unfortunately, right now, it’s impossible for most people to spend a negligible amount of money in DeFi because transaction fees (“gas,” in Ethereum parlance) make everything expensive.

Layer 2 platforms are those that sit atop Ethereum and other blockchains, taking advantage of the underlying blockchain’s security while also allowing cheaper, faster transactions. NIFTEX’s Huber told CoinDesk he foresees layer 2 solutions being very important to this sector, but too little liquidity has moved onto any one layer 2 to make it worthwhile for an app like his to move there yet.

“Gas has really made it hard to enjoy the DeFi playground on ETH mainnet,” Marguerite deCourcelle of Blockade Games told CoinDesk. Blockade is in the middle of moving its users to the layer 2 now known as Polygon. “I think we’re about to see a lot more users and developers on L2,” she said.

If the games go onto layer 2, the financial apps are sure to follow shortly.

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

Members of Congress on Thursday will discuss whether and how cryptocurrencies and decentralized systems may be used to fund domestic terrorism.

The House Financial Services Committee’s Subcommittee on National Security, International Development and Monetary Policy published additional details about its hearing on domestic terror financing late Wednesday, including witness testimony. While cryptocurrencies won’t be the sole fundraising method discussed, their inclusion may indicate lawmakers are giving crypto similar importance as more traditional funding methods, as well as new-but-established tools such as PayPal.

Other government officials have likewise drawn a connection between terrorism and cryptocurrencies recently. Treasury Secretary Janet Yellen has said she is concerned by crypto use by extremists, while members of Congress on the House Select Committee on Intelligence want more information on how extremists might have used streaming platform DLive, a unit of BitTorrent that is tied to the Tron Foundation, which rewards streamers in crypto, to raise or transfer funds using crypto.

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The hearing, titled “Dollars Against Democracy: Domestic Terrorist Financing in the Aftermath of Insurrection,” was first announced at the beginning of February, but a hearing memo and witness list weren’t published until Tuesday evening. The hearing was originally planned for Feb. 23, but was rescheduled to Feb. 25 last week. 

Lecia Brooks, executive director of the Southern Poverty Law Center, said in her written testimony that encrypted and decentralized tools are being increasingly used by far-right extremists, especially after they were expelled from more centralized social media and financial technology platforms.

“Not surprisingly, boosted by this new mission and purpose, streaming donations shot through the roof, and some DLive streamers received nearly $44,000 from donations during November and December alone. Some of those same individuals ended up being featured by House impeachment managers as key perpetrators of the violence on January 6 when they once again used DLive to livestream the events inside the Capitol and on the grounds,” she said.

Daniel Rogers, the co-founder and chief technical officer of the Global Disinformation Index, also noted in his written testimony that cryptocurrencies were one tool being used by extremists. 

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

The hearing webpage listed four proposed bills aimed at boosting the powers of the Financial Crimes Enforcement Network (FinCEN), the U.S. money laundering and terrorist financing watchdog. 

Three of the bills don’t mention crypto specifically, but would allow FinCEN to freeze the financial assets of any individuals arrested on rebellion or insurrection charges, provide classified information to employees of private financial institutions, and require the agency to create educational materials for government agencies on how extremists can use public benefits for fraudulent purposes.

The final proposed bill, titled “The Domestic Terrorism Financing Study Act,” would commission a Government Accountability Office (GAO) study into how crowdfunding platforms, social media and virtual currencies are used to finance illicit activities. 

This information could then be used to see how financial institutions and U.S. agencies could track or limit illicit financing. 

Read more: State of Crypto: The US Government Keeps Mentioning Terrorism

The act also mentions a transfer of 13.5 bitcoin from a French blogger to wallets linked to far-right figures in the U.S.

To be clear, neither the hearing memo nor the proposed bill singles out cryptocurrencies specifically as a tool used solely for terror purposes, but rather includes them among a list of digital and financial tools. 

The SPLC’s Brooks likewise recommends that the Biden administration study how technologies could be used to “detect and prevent online financial harms while preserving human rights.”

“This is especially critical as we anticipate a gradual move to a more decentralized technology landscape that, as we discussed earlier, presents many more challenges for tracking and stopping financial abuse,” she said. 

Brooks also recommends that the U.S. central bank increase the number of cryptocurrencies included in its Federal Reserve Economic Data (FRED) data service, as well as the type of data collected. At present, FRED includes pricing data for only five assets, but that could be expanded to include transaction data and information on wallet companies, mixing services and mining platforms. 

The government should not create a new criminal domestic terrorism statute, she said, adding that such a law could harm civil rights. 

The hearing will be livestreamed here starting at 10 a.m. ET.

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

Large investors look to be accumulating bitcoin at relatively bargain prices in the wake of the cryptocurrency’s recent pullback.

That’s the suggestion of outflows of the cryptocurrency from institution-focused Coinbase Pro exchange, which rose to over 13,000 BTC, worth roughly $650 million, on Wednesday. The figure represents the largest movement of bitcoin off the exchange in three weeks, according to data shared by the blockchain analytics firm CryptoQuant.

“The outflow went to multiple custody wallets, indicating U.S. institutional investors are still buying bitcoin on the dip,” Ki Young Ju, CEO of CryptoQuant, told CoinDesk. “I think it’s a bullish signal.”

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The exchange’s custody wallets are directly integrated with its over-the-counter (OTC) desk. Institutions typically transact over-the-counter to avoid influencing spot market prices. Hence, outflows from Coinbase Pro that end up in its cold wallets for custody are taken to represent institutional activity.

The latest pickup in outflows is a sign that institutions remain undeterred by the recent price pullback and are confident about cryptocurrency’s long-term prospects.

Bitcoin tanked from record highs above $58,000 to $45,000 early this week in a typical bull market correction. The cryptocurrency has largely traded the range of $48,000 to $51,500 in the past 24 hours, according to CoinDesk 20 data.

Spikes in outflows from Coinbase Pro have consistently marked interim bottoms (the end of price pullbacks and the start of reversals higher) throughout the cryptocurrency’s four-month bull run from $10,000 to $58,000. If history is a guide, bitcoin could soon begin the next leg higher.

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

On a more cautionary note, Federal Reserve Chairman Jerome Powell assured markets of continued monetary stimulus on Tuesday and Wednesday. So far, however, that has failed to put brakes on the rally in U.S. bond yields. Notably, the 10-year Treasury yield has now jumped to a fresh 12-month high of 1.45%, according to data source TradingView.

Also read: Planning to Short Bitcoin? Better Check China’s ‘Tether Premium’ First

A continue rise in yields could stabilize stock markets, inviting selling pressure for bitcoin, as noted by trader and analyst Alex Kruger.

At press time, the cryptocurrency is changing hands near $51,863, representing a 2.2% gain over 24 hours.

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

The world’s first ether exchange-traded fund (ETF) may be on the way, after CI Global Asset Management filed a preliminary prospectus in Canada on Thursday.

• In an announcement, the firm said its proposed “CI Galaxy Ethereum ETF” would be the first ETF in the world to invest directly in ether, the native cryptocurrency of the Ethereum network.
• If approved, the ETF would trade on the Toronto Stock Exchange (TSX) under the ticker “ETHX.”
• Galaxy Digital Capital Management LP will act as the ether sub-adviser and execute trading on behalf of the ETF. 
• ETHX will invest directly in ether with its holdings priced using the Bloomberg Galaxy Ethereum Index, owned by Bloomberg Index Services.
• “Ethereum is the leading candidate to be the base layer of Web 3.0, and ether is a growth asset that provides investors exposure to the explosion of decentralized applications,” said Mike Novogratz, chairman and CEO of Galaxy Digital, in the announcement.
• The ether ETF may have a reasonable chance of being approved. Last week, two bitcoin ETFs were listed in Canada.
• CI Global also recently filed a preliminary prospectus for a bitcoin ETF, which would also be in in partnership with Galaxy Digital.

Read more: CoinShares Launches Physically Backed Ethereum ETP With $75M in AUM

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• Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others
• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

Crypto exchange Coinbase is officially going to become a publicly traded company.

Its Form S-1 has been published by the U.S. Securities and Exchange Commission (SEC), clearing the way for its much-anticipated direct listing on Nasdaq. 

The move caps a seven-month effort by the exchange to go public. Rumors first emerged Coinbase was exploring a direct listing on a U.S. stock exchange last summer, though the company didn’t confirm the news until December. 

Related: DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees

At the time, the exchange only announced it had confidentially filed its Form S-1 with the SEC. Coinbase didn’t confirm it was looking to list its Class A shares directly until last month.

The publication of Coinbase’s S-1 provides the first public view of its financial performance and how it intends to use the funds it raises. 

“We expect our operating expenses to increase significantly in the foreseeable future and may not be able to achieve profitability or achieve positive cash flow from operations on a consistent basis, which may cause our business, operating results, and financial condition to be adversely impacted,” the firm stated in the filing, adding:

“For instance, although we generated net income of $322.3 million in 2020, we incurred a net loss of $30.4 million in 2019.”

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

Coinbase also confirmed that it is using Goldman Sachs, J.P. Morgan Securities and Citigroup to “assist us with respect to certain matters relating to our listing.”

Other key details include compensation for CEO Brian Armstrong, who took home $59.5 million in 2020 all told.

“We have applied to list our Class A common stock on the Nasdaq Global Select Market under the symbol ‘COIN,'” Coinbase wrote.

According to the Wilson Sonsini Goodrich & Rosati law firm, a pricing committee determines the public price of the stock after an S-1 is deemed effective, but trading may not begin until the day after the form is deemed effective.

The company was expected to go public at a $100 billion valuation based on private secondary market trading at the end of last week. The prior week’s trading put Coinbase’s presumed valuation at $77 billion.

The exchange disclosed Thursday that it has been putting crypto assets, including bitcoin, on its balance sheet since it was founded in 2012.

Coinbase isn’t the only crypto company looking to go public. Bakkt, a subsidiary of Intercontinental Exchange (which is also the parent company to Nasdaq rival New York Stock Exchange) is expected to go public on the NYSE through a merger with VPC Impact Acquisition Holdings, a special-purpose acquisition company. A search of NYSE’s listing directory did not show Bakkt Holdings at press time.

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

The 97-year-old vice chairman of Berkshire Hathaway dismissed bitcoin during a Q&A session Wednesday, calling it “too volatile” to be considered a global medium of exchange.

At the Daily Journal’s annual meeting hosted by Yahoo Finance, Charlie Munger was asked by a member of the audience what he saw as the biggest competitive threat to U.S. banks over the long term.

The question, centered on the potential technological disruption from the likes of Amazon and Apple Pay, digital wallets and bitcoin, prompted Munger to respond that he did not know how the payments system would evolve.

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The Berkshire executive said, though, he didn’t think bitcoin would end up as the world’s medium of exchange, calling it an “artificial substitute for gold.”

“Since I never buy any gold, I never buy any bitcoin,” Munger said. “I recommend other people follow my practice.”

The Daily Journal Corporation – the U.S. publishing company chaired by Munger – has equity stakes in Bank of America and U.S. Bank.

“I do think that a properly run bank is a great contributor to civilization and that the central banks of the world like controlling their own banking system and their own money supplies,” he said.

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

Munger then went on to paraphrase an Oscar Wilde quote on fox hunting, saying bitcoin reminded him of those who buy the nascent asset class as “the pursuit of the uneatable by the unspeakable.”

Multiple questions relating to bitcoin were posed during the almost two-hour-long session. Asked whether his opinion on cryptocurrencies had remained the same or if the Daily Journal would consider bitcoin as an asset on the balance sheet, similar to Tesla’s recent investment, Munger summarily dismissed the possibility.

“No, we will not be following Tesla into bitcoin,” he said.

See also: Veteran Investor Bill Miller Says Bitcoin Is Cash’s ‘Rat Poison’

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

Sorare, a platform that provides digital soccer collectibles in collaboration with big-name teams, has raised $50 million in Series A funding to grow its community and launch a mobile application.

• In an emailed announcement Thursday, Sorare said the funding round was led by venture capital firm Benchmark, which backs Twitter, Uber and Snap.
• Other investors include Accel Partners; soccer stars Rio Ferdinand, Oliver Bierhoff and Antoine Griezmann; entrepreneur Gary Vaynerchuk and Reddit co-founder Alexis Ohanian.
• Sorare said it is taking fans into a “new era of online football fandom” with its blockchain technology-backed digital collectibles.
• These are represented as non-fungible tokens (NFTs), with over ​120 soccer clubs​ including Juventus having launched tradable digital cards on its platform. 
• ​“​As world football has shifted from local supporters to global fanbases, football fans are looking for new ways to be connected to the game, the players and other fans,” said Gerard Piqué​,​ ​strategic adviser at Sorare.

Read more: FC Barcelona Footballer Invests $4.3M in Fan Token Platform Sorare

• DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees
• Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others
• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

CNBC-TV host Jim Cramer thinks videogame retailer GameStop (GME) – the firm at the heart of the recent WallStreetBets-led retail trading frenzy – should buy bitcoin.

With GameStop shares up by 100% and closing at $91.71 in the final hours of trading on Wednesday, Cramer tweeted: “GME–issue one billion dollars in stock, Buy one billion in bitcoin and watch your stock go to $430…”

MicroStrategy, Square, Tesla and others have recently been buying bitcoin as a hedge against inflation and a devaluing dollar. Cramer previously endorsed MicroStrategy’s bitcoin treasury reserve and said he wouldn’t bet against CEO Michael Saylor, whom he called a “gunner.”

Related: DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees

Earlier this month, GameStop’s stock price rose sharply as groups of retail traders led by Reddit group r/WallStreetBets bought its stock and others that were being shorted by hedge funds. When the Reddit group started buying, the stocks went up and some short sellers lost billions of dollars. On Tuesday, it emerged that GameStop CFO Jim Bell – referenced in Cramer’s tweet – had resigned for reasons not disclosed by the company.

In another tweet over the latest GME price rise, Cramer added, “This is so wild west […] The SEC must be having a fit!!!”

Read more: Jim Cramer Thinks ‘Every’ Corporate Treasurer Should Be Thinking Bitcoin

• Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others
• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

Cryptocurrency exchange Coinbase revealed that it has held bitcoin and other crypto assets on its balance sheet since its founding in 2012.

• According to a blog post Thursday, the company plans to maintain its crypto exposure and aims to use that experience to assist other companies that wish to do the same.
• The blog adds that Coinbase has executed “nine- and ten-figure trades” for some of the world’s largest institutions.
• The news comes after major listed firms including Tesla and MicroStrategy have disclosed bitcoin treasury investments over recent months.
• The disclosure also comes as Coinbase, which facilitated Tesla’s purchases, is preparing for a public listing in the U.S.

See also: How Coinbase Is Worth $100B

• DeFi Exchange 1Inch Expands to Binance Smart Chain Citing ETH Gas Fees
• Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others
• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

The leading blockchain industry body in Australia has ejected retail-focused cryptocurrency project Qoin from its membership list, but it’s not clear why.

According to a Feb. 19 notice from Blockchain Australia (BCA), it issued a summons to Qoin on Jan. 29, asking Qoin to respond.

BCA said that, after reviewing Qoin’s response and the “circumstances of the matter,” it terminated the project’s membership, meaning that Qoin must cease using of the Blockchain Australia logo and name in connection with its business or promotional activities.

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BCA aims to “advance the adoption of blockchain technology throughout Australia,” according to its website. It also provides members operating in the local industry an air of legitimacy.

When asked for specific reasons behind BCA’s decision to remove its membership, Qoin chief marketing officer Andrew Barker told CoinDesk the firm had not received “any extra documentation pinpointing any example.”

A “formal” public response to the notice posted Wednesday by Qoin, though, alleges the notice from BCA included “false allegations” around “communication and disclosures” on the project’s website.

“The timing … aligns with the emergence of false and misleading comments … made by certain antagonists on social media platforms including a previous board member,” Qoin said in the post.

Related: Anchorage, Newly Cleared as US Crypto Bank, Raises $80M From A16z and Others

Some reports have suggested that the former BCA board member is Nuggets News CEO Alex Saunders, who alleged in a tweet that Qoin is the “biggest crypto scam” in Australia two days before BCA’s notice was served.

Barker said that, while “some have drawn that conclusion,” because of the timing of the notice and because of Saunders’ prior role, Qoin did not know that “as a fact.”

“We considered this notice a premeditated attack against Qoin,” the project alleged in its post. It also claimed that during the period of its response and the final notice “no questions were raised” nor “updates given” by BCA.

Barker further alleged BCA had chosen to edit out three lines of the document that was forwarded to Qoin in the notice that was made public. He would not disclose the lines, saying the BCA should provide them.

See also: Australia’s Blockchain Ecosystem Needs More Support From Regulators, Says Industry Body

Qoin said it will “vigorously” defend any statements and actions made by outside parties that it considers “factually incorrect, slanderous and defamatory” to its brand. Barker said Qoin is currently talking to a “number of advisories.”

CoinDesk attempted to contact both the BCA and Saunders for further comment, but did not receive a reply by press time.

• Mt. Gox Creditors to Vote on Draft Rehabilitation Plan
• Coinbase Paid CEO Armstrong $60M in 2020 – Including $1.8M for ‘Personal Security’

German fintech firm Solarisbank is building on its regulated crypto custody service with a brokerage and trading API.

Solarisbank, which provides Sumsung among other companies with a range of APIs for digital banking and payments, announced Thursday it will offer fiat-to-crypto trading and instant settlement from within its custody solution. 

“We started with custody and now the next step is the brokerage API,” Julian Grigo, managing director at Solarisbank Digital Assets, said in an interview. “Our B2B customers will be able to get a bank account, store crypto and with the brokerage API, they can swap or exchange their fiat money to bitcoin or other cryptocurrencies.” 

Related: Nvidia Estimates Ethereum Miners Contributed 2%-6% of Q4 Revenue

Custody is the first step into crypto for large regulated firms, which has been happening recently with the likes of BNY Mellon and Standard Chartered making announcements. Germany is one of the few places to offer a special crypto custody license via the financial regulator BaFIN. This has driven a hotbed of innovation with firms like Solarisbank and custody provider Finoa leading the pack.

There’s a strong pipeline for crypto services, said Grigo, pointing to non-crypto businesses tapping into the world of digital assets. 

“We are building the rails for the institutional or the retail investor,” he said. “We see this in the U.S. with Square, or in the U.K. with Revolut. What’s happening globally is also happening in the German market, and we definitely see this demand.”

Thanks to a close partnership with Luxembourg-based exchange Bitstamp, Solarisbank is touting “in-custody” brokerage and instant settlement. U.K.-based BCB Group (which also works with Bitstamp) offers a similar instant settlement network with banking from ClearBank.

Related: Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral

This type of blockchain-enabled instantaneous swapping of crypto and fiat completely avoids the sorts of vagaries seen in the recent case of Robinhood and GameStop.

“It’s quite depressing to see some brokers in the crypto ecosystem copying and repeating this batched delivery of the real assets, like the old T+2 delivery of the stock market into the crypto market,” Gigo said. “But the blockchain never sleeps, and so we have instant settlement within our platform.”

• US Central Bank Explains ‘Preconditions’ for a Digital Dollar
• Serbian Man Indicted for Embezzling $7M Through Fraudulent Crypto Schemes

Nvidia says Ethereum mining activity contributed very little to its Q4 2020 revenue.

Although it lacks “the ability to accurately track or quantify” the end uses of its graphic processing units (GPUs), Nvidia CFO Colette Kress said the company estimates that between $100 million and $300 million—a “relatively small portion”—of Q4 revenue came from Ethereum miners buying GPUs to use in their mining equipment.

Nvidia reported a total of $5 billion in revenue for the Q4, implying mining sales represented 2%-6% of total.

Related: Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral

Ethereum’s hash rate has grown 124% in the past year, according to data from Coin Metrics, in tandem with the general cryptocurrency market’s rally. This has driven demand for Nvidia’s GeForce RTX 3060 graphics card, much to the dismay of the company’s gaming customers. In the future, though, miner-contributed revenue for Nvidia is likely to come from purchases of another of the company’s products.

Nvidia earlier this week said it’s altering its GeForce RTX 3060 graphics card to limit its own efficiency if the card detects it’s being used for Ethereum mining, a move designed to ensure GPU supply is available to gamers. “We would like GPUs to end up with gamers,” Kress said on the company’s earnings call Wednesday.

To serve the mining community, the company is launching Cryptocurrency Mining Processors (CMPs), which are “optimized to improve Ethereum mining” and will give the company “more visibility” into the share of revenue contributed by cryptocurrency miners, Kress said.

Nvidia plans to sell its new CMPs to industrial Ethereum miners and expects the mining-specific product to generate roughly $50 million in revenue during its first quarter of sales. Nvidia also plans to quantify miner revenue contributions in all future quarterly earnings reports.

• US Central Bank Explains ‘Preconditions’ for a Digital Dollar
• Serbian Man Indicted for Embezzling $7M Through Fraudulent Crypto Schemes
• TokenInsight: 2020 Cryptocurrency Spot Trading Annual Report

Hours after U.S. Federal Reserve Chairman Jerome Powell declared 2021 to be a pivotal year in consulting the public on the digital dollar, his underlings issued a paper describing what that consultation might look like.

In a Wednesday FEDS Notes, Fed Reserve Senior Counsel Jess Cheng, Payments Specialist Angela N. Lawson and Technology Lab Manager Paul Wong said the onus would be on broadly engaging the public regarding the pros and cons of a U.S. central bank digital currency (CBDC). 

Privacy issues, ease of use, security access and delivery mechanisms should all be on the table as Fed officials work to “sharpen” a digital dollar with the public’s help, the paper said. 

Related: Nvidia Estimates Ethereum Miners Contributed 2%-6% of Q4 Revenue

And any consultation should likewise include as broad a cross-section of the U.S. population as possible. 

“Engaging with individuals and businesses and consulting with consumer groups, community organizations, and business associations to understand the use case for a CBDC will help in the decision whether to issue a CBDC and its potential design,” the authors wrote.

Think tanks and academia could also play a supporting role, they said. 

The authors also outlined the basic “preconditions” essential to the Fed’s deliberations on how to proceed. 

Related: Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral

The Fed would need to clearly understand what a possible CBDC would be used for, the notes said. The technology used would also have to support the CBDC across different conditions while providing 24/7 instant settlement, secure transfer of assets and resilience. 

Feedback should be drawn from “end users of various ages, geographic locations, payment habits, and financial literacy in the design and testing of a CBDC could help sharpen the basic features of a viable CBDC arrangement,” the note stated.

Its authors admitted a CBDC could grant the central bank “unprecedented” access into the financial goings-on of its users if designed to allow the most “granular transaction information” to shine through. 

“This close linkage between money and data contrasts with physical banknotes, which do not carry with them transaction data that can be connected to a specific person and their history of financial dealings,” the note said.

Congress would have to authorize the Federal Reserve to issue a general-purpose CBDC, the note said. Fed Chairman Powell echoed this view in testimony before the House Financial Services Committee Wednesday, telling lawmakers the Fed would need “legislative authorization.”

Any digital dollar would be controlled as a centralized project by the Federal Reserve, though the actual nodes would be distributed, said James Cunha, a senior vice president at the Boston branch of the U.S. central bank.

The Boston Fed has been evaluating different technology platforms, including blockchain tools, with the MIT Digital Currency Initiative to determine what platform would be best suited to supporting a digital dollar.

However, support for the idea of a digital dollar, whether blockchain-based or not, seems to be growing. Treasury Secretary Janet Yellen said earlier this week “it makes sense” for central banks to consider issuing their own digital currencies. 

“Too many Americans don’t have access to easy payments systems and banking accounts, and I think this is something that a digital dollar, a central bank digital currency, could help with,” she said at a New York Times conference on Monday (while also dismissing Bitcoin as being an inefficient system for payments).

Wednesday’s paper dropped just after a Fedwire outage that saw banks unable to transfer funds. Some crypto exchanges were unable to process ACH transactions during the outage.

Nathan DiCamillo contributed reporting.

• Serbian Man Indicted for Embezzling $7M Through Fraudulent Crypto Schemes
• TokenInsight: 2020 Cryptocurrency Spot Trading Annual Report

A Serbian man has been charged in an indictment filed Tuesday for embezzling $7 million from U.S. investors through two fraudulent cryptocurrency platforms.

• According to the indictment, Kristijan Krstic, 45, was the founder of “Start Options” and “B2G,” two digital-asset investment platforms, which fraudulently induced U.S. investors to purchase securities in the form of investment contracts.
• Start Options purported to provide cryptocurrency mining and trading services, while B2G claimed to be an “ecosystem” for the exchange of B2G tokens, cryptocurrency and fiat money.
• The money invested by users was laundered through a Philippines-based account and digital currency wallet.
• $7 million was then transferred to Krstic via a promoter in the U.S. at which point he stopped responding to communications, tweeting that “the time has come to find new challenges and opportunities.”
• Krstic had previously communicated with investors using the alias “Felix Logan” and the Twitter handle “@felixlogan_cfo”.

See also: Serbian Man Extradited to US After Being Indicted in $70M Crypto Fraud

• Nvidia Estimates Ethereum Miners Contributed 2%-6% of Q4 Revenue
• Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral
• US Central Bank Explains ‘Preconditions’ for a Digital Dollar
• TokenInsight: 2020 Cryptocurrency Spot Trading Annual Report

Bitcoin has reversed its biggest two-day loss since March 2020, as prices returned to as high as above $51,000 on Wednesday after the derivatives market calmed down from an over-leveraged condition.

• Bitcoin (BTC) trading around $49,119.46 as of 21:00 UTC (4 p.m. ET). Gaining 3.17% over the previous 24 hours.
• Bitcoin’s 24-hour range: $47,032.52-$51,445.67 (CoinDesk 20)
• BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians.

Bitcoin’s heavy losses earlier this week represented a retreat from price levels that some analysts characterized as euphoric. 

But as prices stabilized around $49,000 on Wednesday, signs emerged that some of the excessive leverage had been wrung out of the market, implying the potential for a fresh more to the upside, analysts said. 

Related: Nvidia Estimates Ethereum Miners Contributed 2%-6% of Q4 Revenue

The cost to fund bitcoin perpetuals swaps trades – a common way of betting on price movements in cryptocurrency markets, similar to futures contracts changes – have returned to “neutral territory,” according to the analysis firm Arcane Research. Prices even briefly traded above $51,000 on Wednesday after dipping below $45,000 on Tuesday.

Trading volumes on major exchanges have subsided following a furious level of activity in the past two days, with some $20 billion changing hands Monday and Tuesday on eight major exchanges tracked by CoinDesk. By late Wednesday, volume had registered just  $4 billion.

On the technical charts, Wednesday has been an “inside day” for bitcoin, meaning the price range is completely within the bounds of prior day’s high-low range, according to Katie Stockton, a technical analyst for Fairlead Strategies.

“This preserves the pullback despite the $50,000 threshold having been cleared,” Stockton said. “It appears that there is a short-term risk to the latest breakout point at the January high just below $42,000, which would be a natural support level.”

Related: Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral

Also supporting bitcoin’s quick recovery from the sell-off is rising demand from investors who bought the price dip, expecting long-term gains. 

“Bitcoin has rebounded from yesterday’s sell-off, with both retail and institutional investors using the fall in prices to add to their positions,” Simon Peters, crypto asset analyst at multi-asset investment platform eToro, said, citing Square’s new $170 million investment in bitcoin.

MicroStrategy, the business intelligence company led by CEO Michael Saylor that recently has become better known for its bitcoin holdings, said Wednesday it has bought another $1.03 billion worth of the cryptocurrency.

“With yet more endorsements from leading figures in the world of finance and technology, the direction of travel longer-term is clear – bitcoin and its peers are here to stay and are getting more integrated in our lives,” Peters said. “This bodes well for future prices.”

Not just in the West. The demand in bitcoin has increased in China, evidenced by the rising price of dollar-pegged stablecoin tether (USDT) denominated in Chinese yuan since last week,on over-the-counter trading desks.

Ether (ETH), the second-largest cryptocurrency by market capitalization, was higher on Wednesday, trading around $1,605.26 and climbing 5.55% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Ether continues to trade in sync with bitcoin and the correlation between the two cryptocurrencies  has strengthened since Friday.

Meanwhile, ether is still overbought on the technical charts, indicating that further sideways or “choppy” price action is expected in the coming months, said Fairlead Strategies’ Stockton.

Digital assets on the CoinDesk 20 are mostly in green Wednesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

• chainlink (LINK) + 12.65%
• cardano (ADA) + 11.1%
• algorand (ALGO) + 10.39%
• ethereum classic (ETC) + 9.05%
• omg network (OMG) + 8.33%

Notable losers:

• cosmos (ATOM) – 1.97%

Equities:

• Asia’s Nikkei 225 closed in the red 1.61% amid losses on tech stocks, which are sensitive to rising yields.
• The FTSE 100 in Europe closed in the green 0.5% after investors became more optimistic about a post-pandemic economic recovery.
• The S&P 500 in the United States was up by 1.14% Wednesday, as Federal Reserve Chairman Jerome Powell reassured investors of his intention to maintain low interest rates.

Commodities:

• Oil was up 2.55%. Price per barrel of West Texas Intermediate crude: $63.24. 
• Gold was in the red 0.12% and at $1802.94 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield climbed Wednesday jumping to 1.384%.

• US Central Bank Explains ‘Preconditions’ for a Digital Dollar
• Serbian Man Indicted for Embezzling $7M Through Fraudulent Crypto Schemes

Ethereum scaling solution Optimism will launch its mainnet this coming month after announcing a major investment from Andreessen Horowitz (a16z) that closed in November.

“We’ve spent a great deal of time looking at various approaches and teams building Layer 2s, and today we’re thrilled to announce we are leading a $25 million Series A investment in Optimism,” a16z’s Chris Dixon and Arianna Simpson wrote Wednesday. “Optimism’s exceptional team, carefully designed developer experience, major scaling benefits, years of research and testing, and full composability made it the obvious choice.”

Optimism is among a small cohort of firms looking to boost Ethereum’s famously choked throughput. The startup was initially planning on rolling out a testnet in March, although decentralized finance (DeFi) exchange Synthetix already began on-boarding the tech stack in January.

Related: Nvidia Estimates Ethereum Miners Contributed 2%-6% of Q4 Revenue

“As a result of being able to hire this kind of talent, we will be launching arbitrary contract deployment on mainnet in March instead of public testnet,” Optimism said in blog post Wednesday. The startup added seven new members to the team as well, including talent from Coinbase, Handshake and Casa.

Earlier today, DeFi venue dYdX announced it was building on StarkWare’s ZK-Rollups, a competing solution for boosting the number of transactions a blockchain can handle.

Optimism did not return a request for comment by press time.

Update (Feb. 24, 23:45 UTC): Adds information on Optimism‘s mainnet launch and the purpose of the funding round.

• Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral
• US Central Bank Explains ‘Preconditions’ for a Digital Dollar
• Serbian Man Indicted for Embezzling $7M Through Fraudulent Crypto Schemes

The U.S. Federal Reserve has restored access to its real-time settlement system for central bank money. 

The outage affected wire transfers that were in the process of being settled or already in the queue. During the outage, cryptocurrency exchanges including Gemini, Kraken and Coinbase were seeing delays in some transactions. Those problems should now be resolved.

“The Fedwire Funds Service, Fedwire Securities Service, and National Settlement Service have resumed processing and are operating normally,” the central bank wrote in an updated note. “The Federal Reserve Banks have taken steps to help ensure the resilience of the Fedwire and NSS applications, including recovery to the point of failure.”

Related: Nvidia Estimates Ethereum Miners Contributed 2%-6% of Q4 Revenue

This kind of failure is very rare for bankers to experience.

“Maybe it’s happened to us twice in 11 years,” Steve Schnall, CEO of Manhattan-based Quontic Bank said. 

Read more: Outage at the Fed Delays Bank Wire Transfers, Affecting Crypto Exchanges

For Quontic, a separate banker’s bank with direct access to the Fed was able to handle its wires during the downtime, Schnall said. 

Related: Arcane Research: Banking on Bitcoin – The State of Bitcoin As Collateral

“I’m not sure if many or all have such a relationship,” Schnall said. “The bigger banks wouldn’t need [a correspondent bank] as they typically have direct access to the Fed.”

• US Central Bank Explains ‘Preconditions’ for a Digital Dollar
• Serbian Man Indicted for Embezzling $7M Through Fraudulent Crypto Schemes