CoinDesk Crypto

With Galaxy Digital now working on an educational course for financial advisers, founder Mike Novogratz told CoinDesk he hopes it will help finally kick-start the institutional use of bitcoin, and turn around the asset manager’s fortunes.

Novogratz, a Wall Street veteran, loves a compelling narrative. “Bitcoin specifically is a story about adoption,” he said a few minutes into our call. “And the next big group that’s going to adopt bitcoin as a store of value, as a digital gold, are the financial advisers.”

Earlier this week, Galaxy Digital announced it had partnered with the educational arm of CAIS, a financial product platform that specializes in connecting institutional investors – financial advisers, hedge funds, private equity – to alternative investments and products.

Related: Binance Launching Crypto Exchange in the UK

The tie-up will see Galaxy provide educational content about crypto to wealth managers and financial advisors. Although the course will offer material on the broader digital asset space, as well as on the emerging market infrastructure, it will revolve around bitcoin.

It’s a “really sweet partnership,” Novogratz said. Galaxy can make bitcoin’s investment case directly to the strata of society that controls most of the country’s wealth. “CAIS is spectacularly situated to help us educate them and then connect with them to sell our products.”

See also: Galaxy’s Novogratz: XRP Will ‘Underperform Immensely Again This Year’

Indeed, going back to the narrative, Novogratz has long believed institutional involvement was the natural next step for crypto. While it may have started out as a “retail-driven, people’s revolution,” he predicted institutions would always get involved as the asset class grew in size.

Related: Custody Battle Pits Institutional Boomers Against Crypto Upstarts

Novogratz saw a gap. As a crypto merchant bank, Galaxy offers clients asset management and advisory services; it uses its own capital to trade and invest in the space. It would become the bridge, allowing traditional capital to flow into the nascent crypto space.

While Galaxy got off to a flying start, such as a high-profile investment into Block.one, the bank’s performance over the past two years has been anything but spectacular.

My mom told me money doesn’t grow on trees, and right now it’s growing on trees.

In fact, Galaxy has failed to turn a profit since its launch: it lost a whopping $272.7 million in its first full year of operation. It rode the market rebound in the summer of 2019, but still lost $97 million in Q4 2019. Losses stemming from the its trading arm have wiped out its other revenue streams. A pear-shaped investment into WAX, a gaming token, for example, lost the firm as much as $47 million

In order to keep itself going, Galaxy has been forced to shrink its workforce by 15%. But it may not be out of the woods yet. The bank warned earlier this year that the coronavirus outbreak would likely contribute to a further hit to revenue.

Novogratz is confident, however, that institutions can help turn his company’s fortunes around. It has taken longer than expected, he admits, but says he has this “intuition” that there’s “going to be a big [institutional] take up in the next six to 24 months.”

See also: Binance Launching Crypto Exchange in the UK

What makes him so sure? It’s all about the narrative, he said.

“We would not be having this conversation if, you know, [the U.S.] budget deficit was going from 4% to 2% and everything looked hunky-dory,” he said. “In one week after the coronavirus crisis started, the [Federal Reserve] did more QE than it did in the entire 2008-2009 episode.”

“My mom told me money doesn’t grow on trees, and right now it’s growing on trees,” he said.

Novogratz belongs to the school of thought that sees bitcoin ultimately becoming the digital equivalent to gold: a store of value, uncorrelated to the traditional markets. As such, this darkening macro backdrop is “fantastic” for the story of bitcoin.

The smart money is buying bitcoin as a macro hedge, Novogratz said. Paul Tudor Jones, he says, is a perfect example of a well-known figure from the traditional space, who has seen the narrative and has begun allocating bitcoin to his fund. And that could open the flood gates for other institutions.

Indeed, it does feel like institutional investors are getting more interested in bitcoin. Last Month, Fidelity found that 80% of those surveyed found the asset class appealing. The likes of Coinbase, Gemini and BitGo are racing to launch prime brokerages for an institutional crowd.

“The drumbeat from the financial advisory committee on wanting to learn more about bitcoin and blockchain has been increasing,” said Matt Brown, founder and CEO of CAIS.

See also: Bakkt, Galaxy Digital to Offer Bitcoin Trading, Custody Solution for Institutions

Which brings us back to why Galaxy is getting involved in CAIS. Novogratz said most of the content they plan to use had already been developed over the past three years. It had been collecting dust till last week. When they had tried to publish it before, institutions simply weren’t interested.

Novogratz says now is the perfect opportunity to use his course to proselytize about bitcoin and drive home the narrative that bitcoin is the new gold. “This education piece is selling the story,” getting institutional investors comfortable with the asset so they’ll potentially encourage other institutions to do the same, he said.

Crucially, it will also provide Galaxy with the opportunity to connect with thousands of financial advisors who, between them, control more than a trillion dollars in wealth.

Looking back, Novogratz realizes Galaxy Digital, as a bridge for institutions into crypto, came too early. “Quite frankly,” he said, “the consumer business was the easier play.” Even now, businesses such as exchanges, wallets, and platform providers, which cater for a retail audience, are, in his mind, still performing best in crypto.

But by talking to investors about the “bitcoin story,” Novogratz wants to be a key part of a sea change. His partnership with CAIS, he said, could be the “first big leg of more traditional capital coming into the space.”

“It’s taken longer to get there than I thought it would, but it feels like we’re finally through the starting line and starting to gain some pace.”

See also: Custody Battle Pits Institutional Boomers Against Crypto Upstarts

But, CoinDesk asked, what happens if bitcoin doesn’t become this great institutional asset? If, after educating financial firms about crypto for a whole year, few roll their sleeves up and get involved?

“If very few hedge funds get into the space, then my company’s going to suck,” Novogratz said. Galaxy can keep investing in businesses and trading crypto, “but the real core of what we’re trying to is build this connectivity to institutions. If they don’t come, you know, we’re a little shit out of luck.”

• Bakkt, Galaxy Digital to Offer Bitcoin Trading, Custody Solution for Institutions
• Number of Institutions Buying Crypto Futures Doubled in 2020: Fidelity Report

It’s hard to pick just one stunning fact about the market suddenly created by the issuance of Compound’s COMP token.

Since Monday, when the governance token started being released to users of the decentralized lending platform, the total value locked (TVL) on Compound has broken $200 million for the first time, according to DeFi Pulse, and it’s decisively on its way to $300 million. At $283 million as of press time, the prior all-time high for Compound’s TVL occurred Feb. 23 when it reached $183 million.

The question, of course, is why. 

Related: Polkadot Is Latest Blockchain to Explore Redeemable Bitcoin Tokens

This has been a wild week in decentralized finance (DeFi) as users scramble to earn the daily rewards of COMP, currently priced at $123, according to data site CoinGecko. As previously reported by CoinDesk, users are depositing one token (usually USDC) and borrowing another (usually USDT), because Compound emits fresh COMP every day to both lenders and borrowers. 

In many cases, borrowers turn around and convert the borrowed USDT to USDC in order to repeat the operation and maximize their COMP earnings. 

Read more: COMP’s Sudden Growth Has Swamped a DEX Dealing Only in Stablecoins

From 12:00 UTC to 13:00 UTC on Thursday, Compound’s TVL shot up $50 million.

Related: First Mover: Compound Has Been a DeFi Darling. Its New Token Is Priced Accordingly

It’s not unfair to say the DeFi market has been completely overtaken by Compound this week. A few relevant data points:

• Coinbase Pro announced Thursday it will list COMP next week. CoinDesk has not been able to confirm yet whether or not this is Coinbase’s fastest listing to date. Coinbase invested in Compound’s $8.2 million seed round in 2018.
• More than 10% of the total supply of USDC, the stablecoin created by Circle and Coinbase, is currently locked on Compound.
• The total amount of tether (USDT) on Compound is up almost 8,000% since June 11, noted crypto investor Spencer Noon, who also added a note of caution. 
• CoinFlip, which runs a bitcoin ATM network in the U.S., announced Thursday it would list USDC on its machines, partly due to COMP-related demand, a spokesperson confirmed to CoinDesk.
• Every day since its initial release, COMP has had more volume on the stablecoin exchange Curve than any day prior, though it has slowed down since Tuesday evening.
• Compound is the only DeFi market besides MakerDAO to break $200 million in TVL, according to DeFi Pulse. 

As long as the token’s price remains above $100, the effective market cap of COMP is over a billion dollars, though it should be noted that this price is skewed by the fact that so little of the supply is actually liquid. 

To recap, 2,880 COMP tokens are released to borrowers and lenders on Compound each day. Only 9,231 of the 4.2 million set aside for community members have been released so far, according to the Compound website. 

Read more: First Mover: Compound Has Been a DeFi Darling. Its New Token Is Priced Accordingly

Haseeb Qureshi, managing partner of Dragonfly Capital, put the long-term prospects of Compound and the short-term reality of its governance token into context in an email to CoinDesk Thursday:

“Given that COMP represents a potential claim on future interest paid, as more collateral onboards to Compound, this should make COMP more valuable as more lenders/borrowers show up. (In the short term though, most of COMP’s price fluctuations are a function of the tiny float. Think Zcash early days. I wouldn’t read too much into the current price.)”

• COMP’s Sudden Growth Has Swamped a DEX Dealing Only in Stablecoins
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Cryptocurrencies should be regulated more stringently, a VMWare security executive told U.S. lawmakers, citing a rise in cybercrime during the pandemic.

The focus of Tuesday’s hearing, hosted by a House Financial Services subcommittee, was criminal activity around financial services during the COVID-19 lockdowns, when bad actors online are targeting people who are unemployed or working from home. But crypto made an appearance, with lawmakers questioning witnesses about its potential uses in fraud or organized crime.

Tom Kellermann, head of cybersecurity strategy at publicly traded software company VMWare, told lawmakers that virtual currencies need stronger oversight. There has been an increase in the number of security breaches and thefts at digital currency exchanges, which cybercriminals used to launder stolen money, he said.

Related: ‘Snake Oil and Overpriced Junk’: Why Blockchain Doesn’t Fix Online Voting

“In addition to organized crime, extremist organizations are also known to use alternative payment systems for operational purposes and to raise funds. Many of these payment systems and cryptocurrencies offer true or relative anonymity. This raises the necessity of increased regulation of digital money,” Kellermann said during his opening remarks. 

He urged the House members to pressure their Senate colleagues to pass a bill that would revise requirements related to anti-money laundering and counterterrorism financing laws. He also suggested charging the Financial Stability Oversight Council, a monitoring body of the Treasury Department, with the responsibility of creating a framework for regulating cryptocurrencies and developing guidelines for strong protections against money laundering as well as cyber threats to those marketplaces.

In his testimony, Kellermann claimed social media platforms are rife with advice on “regarding jihadists’ potential use of Dark Wallet, a bitcoin wallet that provides anonymity.”

The use of capital letters in his written statement suggests he was referring specifically to Dark Wallet, one of the earliest anonymizing bitcoin wallets. That project appears to have been inactive for some time; the last code update was made in 2016, according to its GitHub page.

Related: US Fed Chair Says Private Entities Should Not Help Design Central Bank Digital Currencies

Later, Kellermann and Rep. Anthony Gonzalez (R-Ohio) used the phrase in a seemingly generic sense, to refer to anonymizing services.

See also: US Lawmaker Proposes Legislative Groundwork for National Blockchain Strategy

“You also talk about Dark Wallet as a platform where jihadists can avoid your customer regulations and launder money,” Gonzalez said to Kellermann. “My question is, do we technologically, do we have the ability to shut down something like a dark wallet? Is that technologically possible?”

“I wouldn’t be an advocate of let’s say, shutting it down,” Kellermann replied. 

Instead, he said he would challenge the developers of the platforms to be able to freeze assets associated with anything that has been proven to be part of a criminal or terrorist conspiracy, when called upon. 

“I think the FBI, Secret Service and the intelligence communities do have the capacity to do more interesting things. But then again, I’m just a watcher on the wall, sir, I don’t have that much expertise vis-à-vis dark wallets,” Kellermann said. 

Rep. Brad Sherman (D-Calif.), who once said Libra could be worse than 9/11, expressed concerns about cryptocurrency-based fraud. 

Many scams identified by the North American Securities Administrators Association (NASAA) during the pandemic potentially involved cryptocurrency investments, he said. In his view, the Securities and Exchange Commission (SEC) has resisted identifying cryptocurrencies as securities. 

“I believe that the lack of SEC registration requirements makes cryptocurrencies attractive to those who have investment scams,” Sherman said.

He went on to ask Amanda Senn, NASAA representative and chief deputy director of the Alabama Securities Commission, what Congress can do to correct a system where investors aren’t protected. 

“We have a regulatory framework for investments in cryptocurrency,” Senn responded, referencing a state-level campaign focused on educating investors about initial coin offerings (ICO) and online scams. 

“I do believe that particularly the state can be more proactive in preventing types of fraud that are prevalent,” Senn said. 

Kellermann said fintech companies must be given clear incentives to guard against intrusion and learn anti-money-laundering protocols outlined by the Bank Secrecy Act. 

He suggested that funds seized in cybercrime, including those involving cryptocurrencies, should be redirected through a forfeiture fund to strengthen cybersecurity. 

“Given that 50% of all crimes now have a cyber component, it’s high time that we follow the money to create an international forfeiture fund,” Kellermann said.

Gonzalez asked how such a fund could become a reality. 

“We need to [incentivize] developing countries to play ball with us,” Kellermann responded. 

See also: This Is What a Productive Congressional Blockchain Hearing Looks Like

Giving governments a percentage of the forfeited assets in an investigation can motivate nations to take a stronger position on cybercrime, he said.

An international fund would be the best option considering most cyberattacks against the U.S. originate elsewhere, he added, suggesting that the Bank of International Settlements, the central bank of central banks, might be well suited to this task. 

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The Washington Examiner published an excerpt of John Bolton’s new book detailing a dramatic scene in which President Trump told Treasury Secretary Mnuchin to go after bitcoin before tackling trade with China.

This news follows a report from the Drug Enforcement Administration (DEA) showing how the agency failed to properly oversee crypto investigations, and Fed Chair Jerome Powell’s statement that a “digital dollar” should be investigated. Here’s the story:

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Related: First Mover: As US Stocks Defy Economic Gravity, Bitcoiners Shudder at March Memory

Who Watches the Watchdogs?
The DEA failed to adequately police its undercover agents’ handling of cryptocurrency, according to the U.S. Department of Justice’s Office of the Inspector General (IG). “The DEA’s management of virtual currency-related activities was insufficient due to inadequate headquarters management, lack of policies, inadequate internal control procedures, insufficient supervisory oversight and lack of training,” the IG wrote. Elsewhere, President Donald Trump ordered Treasury Secretary Steve Mnuchin to focus on a clampdown on bitcoin over negotiating a trade with China, according to an excerpt from former National Security Advisor John Bolton’s new book.

Officials Weigh In
Federal Reserve Chair Jerome Powell, speaking before the House Financial Services Committee, said the idea of a digital dollar should be taken seriously, adding later, “this is something that the central banks have to design… The private sector is not involved in creating the money supply, that’s something the central bank does.” Elsewhere, Chris Giancarlo, former chair of the U.S. Commodity Futures Trading Commission, said XRP is more like an alternative currency than a security. He argued Ripple Labs hadn’t violated any U.S. securities regulations and should have the same legal status as bitcoin or ether. Halfway across the world, Russia’s Ministry of Justice criticized a new draft bill prohibiting crypto operations in the country, a week after the Ministry of Economic Development also opposed it. The bill is believed to be the brainchild of the country’s central bank, which has a prohibitive approach to crypto. 

Missing Funds
A district judge has denied two requests for subpoenas filed by iFinex, in its bid to track $850 million in user funds seized by authorities after bank accounts held by its payment processor, Crypto Capital, were frozen. It appears the subpoenas were filed in the wrong district. Elsewhere, Wirecard AG, a German payment processor and an issuer of Crypto.com and TenX debit cards, is unable to locate 1.9 billion euros (over $2 billion) worth of cash balances on its trust accounts, after an EY audit. The firm said a third party may have added “spurious” balances “in order to deceive the auditor,” The Block reports. Finally, a new report shows that cryptocurrency is not a significant trend in terror financing in the Middle East. However, a new round of U.S. sanctions aimed at Syria may tip the scales in favor of experimentation.

Platform Growth
Polkadot has announced a proof-of-concept token redeemable for bitcoin (BTC). Designed by Interlay, the system will lock BTC on the Bitcoin blockchain and mint a PolkaBTC token on Polkadot, in effort to boost the interoperability of the network. Elsewhere, the South Korean soccer association K League announced a licensing agreement with the blockchain enabled fantasy soccer platform Sorare to enable fans to collect and trade digital tokens representing league players and use them to play fantasy soccer games run by the firm. 

Related: Blockchain Bites: River’s Rise, Canada’s CBDC and Bitcoin’s Whales Post-Halving

Quarterly Slump
Chinese bitcoin miner manufacturer Ebang estimates it incurred a net loss of $2.5 million on a revenue of $6.4 million for Q1 2020. In an SEC filing ahead of the company’s proposed public listing, Ebang said revenue grew 6.1% annually, while incurring $5.9 million in cost of revenues, in addition to other operational expenses. Ebang is applying to list on the Nasdaq exchange and anticipates its IPO launch price will be between $4.5 and $6.5 for each of the 19.3 million Class A ordinary shares offered, for a market value of around $800 million.

Grants
Crypto exchanges OKCoin and BitMEX recently partnered to provide a $150,000 grant to Bitcoin Core contributor Amiti Uttarwar, an alumna of Coinbase and Xapo, to build out privacy features. Elsewhere, the Ethereum Foundation followed up on its 2019 gift to the United Nations Children’s Fund (UNICEF) this week with a second cryptocurrency donation. UNICEF said the fund is accepting applications from startups in emerging markets to receive investments via this second donation of roughly 1,125 ether (~$262,000). So far, UNICEF has invested crypto in nine startups in Mexico, India, Turkey, Bangladesh and Cambodia. Finally, Binance has joined an Indian tech industry association to help set best practices in the Indian crypto market. The Internet and Mobile Association of India helped overturn the nation’s crypto banking ban earlier this year.

Movers & Shakers
Alistair Milne orchestrated an intentional brute force attack on a wallet holding 1 BTC. Dropping hints on social media to each word in a 12-word seed phrase, an attacker was able to guess the remaining clues, inside the period, after the eighth hint dropped. (Decrypt) Elsewhere, JPMorgan nabs former Gemini executive to work on wholesale payments innovation. (The Block) Crypto.com, a Hong Kong-based exchange, has announced its entrance into the Bitcoin derivatives market. (Decrypt)

Is Bitcoin Undervalued?
Bitcoin is trading near $9,450, up nearly 47% this quarter and 145% from the low of $3,867 observed on March 13. Despite the rise, bitcoin’s Mayer multiple – the ratio of the cryptocurrency’s price to its 200-day moving average – currently stands at 1.15, according to MayerMultiple.info. A below-2.4 ratio indicates the cryptocurrency is undervalued.

Crypto’s Convergence
Ajit Tripathi, CoinDesk columnist and an executive director at Binance, said the worlds of crypto, fiat and finance are converging. “A new way of thinking about money, banking and economics has inspired banks and regulators to take a fresh look at whether or how the monetary system is working for society at large. As the pace of digital assets and fiat systems coming together accelerates, I hope a world will emerge where customers have greater financial freedom, wider choice and increased access to capital, payment systems and investments than they have today,” he said. 

What Satoshi Understood
Nathaniel Whittemore is joined by The Crypto Dog for a conversation about pseudo-anonymity, global digital nomadism and the trader’s mindset. 

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Former German blue-chip Wirecard has said a quarter of its total balance sheet is missing after “spurious cash balances” were provided to its auditor, EY.

In an explosive statement Thursday, the Munich-based card issuer, said a total of €1.9 billion ($2.1 billion) could not be accounted for and that some members of the company had purposefully filed false or misleading statements “in order to deceive the auditor and create a wrong perception of the existence of such cash balances.”

Wirecard admitted the accounting hole was roughly a quarter of the company’s total balance sheet.

Related: Crypto.com Rolls Out Visa Card to 31 European Nations

A former poster child of the German tech scene, Wirecard has been heavily scrutinized over supposed irregularities in its accounting practices. The company was accused last year of fraudulently inflating sales and profit figures, and that it was using client funds held in escrow accounts to boost cash balances.

Wirecard’s share price has tanked. At press time, shares traded at the €36 (~$40) mark, down 70% since Wednesday. The credit card issuer had once been one of Germany’s most prestigious companies, even surpassing Commerzbank with a €24.6 billion( ~$27.6 billion) market valuation in September 2018.

Lionel Barber, former editor-in-chief of the Financial Times, said on Twitter that Wirecard was turning into a German version of the Enron scandal.

See also: BitPay Launches Prepaid Crypto Mastercard for US Customers

Related: Crypto.com Lands Record $360M Insurance Cover for Offline Bitcoin Vaults

Wirecard subsidiary Wirecard Card Solutions branched out into crypto when it became the issuer for crypto payment card providers Crypto.com and TenX. Wirecard had also partnered with TON Labs, the developer house behind Telegram’s blockchain. A court document also claimed Wirecard’s COO participated in the $1.7 billion token sale in 2018.

It’s unclear if Crypto.com, which only rolled out is payment card in Europe last month, is planning on switching its card issuer. CoinDesk reached out for comment but hadn’t heard back by press time.

Wirecard had already delayed the release of its audited financial statements and Thursday was supposed to be the final publication date. Today’s news has now pushed this back indefinitely. The delay means creditors will be able to pull up to €2 billion (~$2.2 billion) worth of loans as of Friday.

Wirecard’s board is now working “intensively” with EY “towards a clarification of the situation.”

• Crypto Holders Still Face Issues Reporting Tax Liabilities, Survey of CPAs Finds
• Users See ‘Buying Opportunity’ in Coronavirus Market Downturn, Says Crypto.com

Algorand’s blockchain platform has been selected by the official online body of chess to record the ratings and titles of players.

In an announcement on Thursday, Algorand said it will record FIDE Online Arena World Chess players’ data and provide a transparent platform where participants can view game information that’s updated in real time.

FIDE Online Arena is the federation’s internet server that is solely responsible for official digital tournaments and world championships in which players earn international ratings and titles.

Related: Tezos and Algorand Latest to Integrate Tech for Anti-Money Laundering Compliance

See also: Algorand Blockchain Chosen as Underlying Tech for Marshall Islands’ Digital Currency

“It’s exciting to continue bringing innovation to chess,” Ilya Merenzon, CEO of World Сhess, said in the press release. “The advent of digital games on the internet made chess more popular than before, and now we can’t wait to further explore blockchain innovation for digital chess.”

Algorand’s public ledger will be used to store game results as well as verify player ratings in a format that aims to provide activity free from fraud or manipulation. World Chess will also use Algorand’s blockchain platform to develop rewards and incentives for the chess community via internal currency and blockchain-based betting.

“This historic moment brings the blockchain community one step closer to mainstream adoption, as a widely popular competitive game like chess leverages distributed ledger technology to serve as the official record for trust of millions of online chess players and fans,” said Sean Ford, COO of Algorand.

Related: Algorand and Blockstack Are Building a Multi-Chain Smart Contract Language

Founded in 1924, FIDE is the governing body of the sport of chess and regulator of international chess competitions.

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Algorand’s blockchain platform has been selected by the International Chess Federation (FIDE) to record the ratings and titles of players.

In an announcement on Thursday, Algorand said it will record FIDE Online Arena World Chess players’ data and provide a transparent platform where participants can view game information that’s updated in real time.

FIDE Online Arena is the federation’s internet server that is solely responsible for official digital tournaments and world championships in which players earn international ratings and titles.

Related: Tezos and Algorand Latest to Integrate Tech for Anti-Money Laundering Compliance

See also: Algorand Blockchain Chosen as Underlying Tech for Marshall Islands’ Digital Currency

“It’s exciting to continue bringing innovation to chess,” Ilya Merenzon, CEO of World Сhess, said in the press release. “The advent of digital games on the internet made chess more popular than before, and now we can’t wait to further explore blockchain innovation for digital chess.”

Algorand’s public ledger will be used to store game results as well as verify player ratings in a format that aims to provide activity free from fraud or manipulation. World Chess will also use Algorand’s blockchain platform to develop rewards and incentives for the chess community via internal currency and blockchain-based betting.

“This historic moment brings the blockchain community one step closer to mainstream adoption, as a widely popular competitive game like chess leverages distributed ledger technology to serve as the official record for trust of millions of online chess players and fans,” said Sean Ford, COO of Algorand.

Related: Algorand and Blockstack Are Building a Multi-Chain Smart Contract Language

Founded in 1924, FIDE is the governing body of the sport of chess and regulator of international chess competitions.

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The Ethereum Foundation followed up on its 2019 gift to the United Nations Children’s Fund (UNICEF) this week with a second cryptocurrency donation. 

UNICEF crypto portfolio manager Cecilia Chapiro said the fund is now accepting applications from startups in emerging markets to receive investments via this second donation of roughly 1,125 ether (ETH), or $262,000 at press time. 

“We are still looking for big donors … also from a technical expertise perspective, we’re always matching our startups with mentors in the space,” said UNICEF blockchain lead Christina Lomazzo. “We’ve not received any more bitcoin, beyond what we got from the Ethereum Foundation [in 2019].” 

Related: Colombian Government and WEF Weigh Public Ethereum in Bid to Fight Corruption

There’s no set number, but Chapiro expects to find five to 10 attractive startups for equity-free investments worth $100,000 each. The fund is in talks with other prospective donors, but so far none that could be named for this article.

Read more: How the Ethereum Foundation Got UNICEF to Embrace Blockchain

“When we are going through a global crisis we decided to make a new round of investments to help mitigate the effects of the COVID-19 crisis,” Chapiro said. “It’s the first time we’re doing a call for applications where we’re doing funding in both USD and crypto.” 

According to a press statement, the fund is especially keen to invest in projects that “enable decentralized deal-making, for example through decentralized marketplaces” that “enable people to use, earn, and hold cryptocurrencies,” or “collect, aggregate and validate datasets for blockchain oracles.”

Related: Ethereum Logged Its Busiest Week on Record

So far, UNICEF has invested crypto in nine startups in nations including Mexico, India, Turkey, Bangladesh and Cambodia. Many of the projects from this first round, which may receive a second investment, focused on communication networks. 

For example, the 10-person startup StaTwig in India, founded in 2016, received a government contract to develop a blockchain-based app for tracking rice deliveries in low-income areas. 

“We’re creating the supply chain layer as a base layer, one of the requirements from the government is that we use Ethereum,” said StaTwig co-founder Sid Chakravarthy. “The program benefits 128 million people. … There are close to 2,000 retail shops that get rice from these meal houses.” 

Read more: UNICEF Launches Cryptocurrency Fund to Back Open Source Technology

He estimated 250,000 people benefitted from or relied on this application, even if indirectly. He said receiving the investment from UNICEF was the startup’s first time using cryptocurrency. It has received ether and now plans to run an Ethereum node.

“We’re also looking at vaccine supply chains,” Chakravarthy said. “This program didn’t start just because of the virus, in developing countries you have subsidized food programs.” 

Because of the pandemic, poverty is an even bigger problem because many people are out of work. Nonprofit organizations and governments around the world are exploring a variety of blockchain solutions during the pandemic. 

Rakib Islam is another such recipient, founder of W3 Engineers in Bangladesh since 2009. There are now roughly a dozen employees, out of a total of 100, working on a blockchain project for peer-to-peer messages that include coronavirus emergency updates. 

“We want to help the communities in emerging markets handle COVID-19 more effectively,” Islam said. “[Apple and Google] contact tracing isn’t very useful if the community doesn’t have connectivity.”

W3 Engineers also received an investment from Ethereum Classic Labs, $150,000 in fiat, so the team uses both Ethereum and Ethereum Classic blockchain solutions to develop its messaging app. This app was built for people who don’t have access to SIM cards or decent WiFi. Instead, Islam said, the Android mobile app relies on mesh networks and points tallied via an ERC-20 token. 

See also: Bootstrapping Mobile Mesh Networks With Bitcoin Lightning

“The refugees don’t have any tender, any currency, and they don’t have any way to make money because they must stay within the camp. … We thought we should offer a type of point system,” Islam said, describing how the messaging app was developed with feedback from some of the Rohingya refugees in Bangladesh. “Every user, we’re using them to be a node and the role of the phone is to transfer data through them, even if I don’t have an internet connection I can be transferring the information and making a large mesh network.”

Meanwhile, in Cambodia, UNICEF crypto recipient David Wilkie is working on a like-minded communications startup called Somleng. Wilkie described the project as “an open-source cloud communications platform which is currently being used in Africa and Southeast Asia to deliver voice messages to communities affected by COVID-19.”

He added the startup doesn’t plan to run an Ethereum node and doesn’t have a plan yet for how to use cryptocurrency. The funding, however, will enable further development throughout 2020. 

As such, UNICEF’s Chapiro emphasized the fund seeks to invest both fiat and crypto in selected startups. 

“Each company will receive up to $100,000 in USD and on top of that they will receive bitcoin or ether,” she said.  

Her colleague Lomazzo added the fund is especially interested in startups that “protect user data” and include diverse teams.

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President Donald Trump ordered Treasury Secretary Steve Mnuchin to focus on a clampdown on bitcoin over negotiating a trade with China, former national security adviser John Bolton reportedly claims.

In a terse exchange about imposing sanctions and tariffs with China, Trump reportedly told Mnuchin: “Don’t be a trade negotiator,” ordering him instead to: “Go after bitcoin [for fraud].”

“If you don’t want me on trade, fine, your economic team will execute whatever you want,” Mnuchin retorted. The exchange comes from an excerpt from Bolton’s new book, obtained by the Washington Examiner.

Related: Polkadot Is Latest Blockchain to Explore Redeemable Bitcoin Tokens

The conversation is said to have happened in May 2018, around the time investors were cheering bitcoin on after it rose 33% against the dollar. It’s unclear from the excerpt what specifically led Trump to order Mnuchin to crack down on bitcoin and whether the two men had been talking about cryptocurrencies beforehand.

At the time, there had also been a lot of speculation about what U.S. regulators were going to do about crypto. At CoinDesk’s Consensus event that year, industry figures were calling for greater clarity from regulators. Representatives from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) said they wanted to avoid “hindering” innovation.

See also: US Financial Crimes Watchdog Preparing ‘Significant’ Crypto Rules, Warns Treasury Secretary Mnuchin

Trump made his own thoughts on bitcoin abundantly clear last summer.

Related: Bitcoin Still Undervalued After Q2 Rally, Price Metric Shows

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he tweeted. “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….”

But Mnuchin, one of the longest-serving members of the Trump administration, has taken a more measured approach. He may have no plans to buy bitcoin but does not have a problem with digital asset initiatives, such as the Libra project, as long as they adhere to U.S. regulations.

Bolton’s book, “The Room Where It Happened,“ is scheduled for release on June 23. The Justice Department has filed a lawsuit against Bolton and has urged the court to stop the release claiming it contains classified information.

• Market Wrap: Bitcoin Flat at $9.4K but Investors Are Holding On
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Crypto traders are homing in on a pattern that’s becoming weirdly familiar: Stocks fall, bitcoin falls; the Federal Reserve makes a new stimulus announcement, stocks rise, bitcoin rises. 

No one knows exactly how a second wave of coronavirus infections might affect traditional or digital-asset markets. Some analysts argue that better preparation and existing restrictions mean the effects could be more muted. In order to minimize disruption, governments might move quickly to isolate outbreaks, rather than resorting to further large-scale lockdowns. 

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: Bitcoin Still Undervalued After Q2 Rally, Price Metric Shows

But the action in markets last week might have provided glimpse of how things would play out in the event that the contagion came back – or even if doubts emerged about the prospects for an economic recovery. 

Stocks and bitcoin tumbled last week amid concerns the number of cases is rising and as the Federal Reserve warned a full economic recovery isn’t likely for at least three years. 

Markets recovered quickly, partly due to an announcement of fresh stimulus from the Federal Reserve. But cryptocurrency analysts say the episode shows bitcoin might tumble anew if traditional markets swoon again.  

“Should a second wave hit this year, bitcoin will likely continue moving in correlation with the overall market,” Jonathan Leong, CEO of BTSE exchange, said in comments to First Mover.

Related: Blockchain Bites: River’s Rise, Canada’s CBDC and Bitcoin’s Whales Post-Halving

Cases are rising around the globe as the coronavirus spreads through the herd of humanity. 

After more than 50 days without a reported case, health authorities in Beijing reported 36 new cases on Saturday, believed to have been carried in on imported salmon sold at a local market. City officials shut down surrounding neighborhoods, and major supermarkets pulled salmon from shelves.

Daily records of new cases have also cropped up some U.S. states that have started reopening, including Florida, Texas and Arizona.

In France, where President Emmanuel Macron declared a “first victory” against the illness and reopened cafes and restaurants, he has warned the pandemic could easily return.

The risk has spurred some cryptocurrency analysts to start asking how bitcoin might perform if conditions took a turn for the worse.   

The memories are still fresh of the sell-off on March 12, now known as “Black Thursday,” when the Standard & Poor’s 500 Index of large U.S. stocks tumbled almost 10%, and bitcoin fell 39%. 

Rapid pledges of trillions of dollars of liquidity injections by central banks helped to put a floor under markets. By mid-May, central banks and governments had injected roughly $15 trillion into the global economy. Both bitcoin and U.S. stocks recovered.   

Over the past week, the pattern returned. From last Thursday through Monday, the S&P 500 fell by nearly 7% and bitcoin tumbled, too.

The markets rebounded after the Federal Reserve announced Monday it would start buying individual corporate bonds as part of an expanded program that might eventually reach $750 billion of total assets. The Bank of Japan (BoJ) also announced it was ready to pump an additional trillion dollars’ worth of yen into local companies. 

“The latest demonstration of seemingly unlimited central bank support drowned out the worrying news,” Michael Mackenzie wrote in his Market Forces newsletter for the Financial Times.

For the past several months, bitcoin and U.S. stocks have shown a weak but persistent correlation. 

Mati Greenspan, founder of the foreign-exchange and cryptocurrency research firm Quantitative Economics, wrote Tuesday in an email to subscribers that the question of whether bitcoin will crash with stocks “keeps coming up lately.”

“The clearer it gets that we may be in for further pain in the stock markets, the more people want to know if bitcoin will again participate in a multi-asset sell-off,” he wrote. 

Investors are likely to be “a lot more prepared” for a second crash, he said, and there’s a possibility that a “bout of extreme volatility could break the correlation” between bitcoin and stocks. 

“Of course, it’s only a theory,” Greenspan said. 

BTC: Price: $9,434 (BPI) | 24-Hr High: $9,557 | 24-Hr Low: $9,240

Trend: Bitcoin continues to defend key support and may challenge the $10,000 market in the short term. 

The leading cryptocurrency by market value is currently trading near $9,440, having defended the ascending (bullish) 50-day moving average (MA) support at $9,375 early on Thursday.

Sellers have repeatedly failed to establish a strong foothold below the 50-day SMA in the last week. So far bitcoin has not been able to capitalize on the dip demand, or seller exhaustion, seen below the average support. 

The range play, however, could soon end with a breakout on the higher side, according to bullish developments on the three-day chart.

To start with, the 50- and 100-candle MAs have produced a bull cross for the first time June 2016. Back then, the confirmation of the bullish crossover had accelerated the preceding uptrend. Similarly, bitcoin broke into a bull market in the October 2015 following a bull cross of the same two averages. 

In addition, the cryptocurrency created a classic long-tailed bullish hammer candle in the three-days to June 17, marking a strong dip demand near support at $8,876. That level marks the 23.6% Fibonacci retracement of the rally from $3,867 to $10,429.

With the three-day chart reporting bullish patterns, technical traders may enter the market, lifting prices higher. The immediate resistance is seen at $9,566, followed by $10,000. On the downside, the Fibonacci support at $8,876 is the level to beat for the sellers. 

• Number of Bitcoin ‘Whales’ Has Risen by 2% Since Halving
• First Mover: Compound Has Been a DeFi Darling. Its New Token Is Priced Accordingly

The latest blockchain to announce a token redeemable for bitcoin (BTC) is Polkadot. 

It’s only a proof-of-concept at this point and Polkadot is running but not usable yet, but a company called Interlay has designed a model under a Web3 Foundation grant for locking BTC on the Bitcoin blockchain and minting what it’s calling PolkaBTC on Polkadot. 

If Polkadot does prove to be a meeting place for different blockchains, then the interoperability project will have to touch the original crypto asset, and that’s bitcoin.

Related: Trump Told Treasury Secretary to ‘Go After’ Bitcoin, Bolton Book Reportedly Claims

“Bitcoin is the asset with the most liquidity and hence we believe there is a natural demand for BTC on platforms that offer DeFi products and other features that are not natively supported in Bitcoin,” Alexei Zamyatin, CEO of Interlay, told CoinDesk in an email. Interlay works to make decentralized finance (DeFi) products interoperable. 

The model deployed has similarities to the model Keep used in launching its tBTC system. A smart contract on Polkadot controls a key to a wallet on the Bitcoin blockchain and verifies its contents using simplified payment verification (SPV). That wallet is collateralized with Polkadot’s native token, DOT, which the initial design sets at 200%, though this could change. Once it verifies that the BTC is present in the wallet it controls, it issues PolkaBTC equivalent to the amount deposited.

Read more: Makers of Keep Protocol Raise $7.7M to Bring Trustless BTC to DeFi

It’s important to note here the proof-of-concept describes how it would be done, not who would do it. Different entities would be able to set up vaults to issue PolkaBTC, earning income as the tokens are issued and redeemed. 

Related: Bitcoin Still Undervalued After Q2 Rally, Price Metric Shows

This also makes it a marked contrast from, for example, wBTC on Ethereum, which is entirely under the centralized control of BitGo, as the sole custodian and issuer.

Once a PolkaBTC is created, that new token can be used throughout the Polkadot network and any holder of PolkaBTC can redeem it for actual BTC at any time. The BTC locked on Polkadot is monitored by the BTC-Relay announced by Interlay in April.  

A key difference between BTC on Polkadot and on Ethereum is that Polkadot is building it ahead of the use cases. There are no DeFi products as yet ready to enlist PolkaBTC for uses such as lending or collateral. 

“While Etheruem is without question the market leader, there are quite a few projects on Polkadot that are preparing to offer DeFi products,” Zamyatin noted. He listed Katal, which will enable selling future cash flows, and Acala, a stablecoin platform that could use PolkaBTC as a form of collateral. 

Interlay is itself going to create a derivatives platform on which PolkaBTC could be useful.

That said, using wBTC as the main example of the original cryptocurrency on another chain, without a real use case the market showed relatively little interest in bridging the two chains. 

Looking at BitGo’s record of supply verifications, the wBTC supply hovered between 100 and 600 before wBTC was accepted as a form of collateral on MakerDAO on May 3, 2020. Since then, it has consistently been over 1,000, with a current supply of 4,095 wBTC. 

If the Interlay model proves to work well, it can be extended beyond Polkadot. 

“Both the design and code underlying the BTC-Parachain can be reused to bridge other blockchains such as Zcash with only minor modifications,” Zamyatin said.

• Market Wrap: Bitcoin Flat at $9.4K but Investors Are Holding On
• The Truth About Bitcoin and Hezbollah in Lebanon

Bitcoin remains a bargain despite having carved out solid gains in the second quarter, according to one price metric. 

At press time, the cryptocurrency is trading near $9,450 – up nearly 47% so far this quarter and has gained 145% from the low of $3,867 observed on March 13, according to CoinDesk’s Bitcoin Price. 

Despite the recent rise, bitcoin’s Mayer multiple – the ratio of the cryptocurrency’s price to its 200-day moving average – currently stands at 1.15, according to MayerMultiple.info. 

Related: Trump Told Treasury Secretary to ‘Go After’ Bitcoin, Bolton Book Reportedly Claims

A below-2.4 ratio indicates the cryptocurrency is undervalued. Once the ratio rises above that level, it indicates that bitcoin may be overbought and a speculative bull frenzy has set in. That often leads to a price bubble and a subsequent crash. 

For instance, the ratio rose above 2.4 on Dec. 1, 2017, following which bitcoin doubled in value to $20,000 in just two weeks only to fall back to $12,000 on Dec. 22. Similarly, an above-2.4 ratio marked market tops in April 2013 and December 2013. 

So, with the ratio currently down more than 50% from the key 2.4 level, the path of least resistance for bitcoin appears to be on the higher side – more so, as bitcoin’s Mayer multiple is still below its lifetime average of 1.44. 

The ratio has been higher than the current level of 1.15 nearly 52% of the time, as noted by Mayer Multiple’s twitter handle. “This is a good time to stack sats,” tweeted Ecoinometrics, a bitcoin analysis company, referring to satoshis, small divisions of a bitcoin.

Related: First Mover: As US Stocks Defy Economic Gravity, Bitcoiners Shudder at March Memory

Simulations performed by Mayer Multiple’s founder Trace Mayer show that in the past an investor would have achieved better results by accumulating bitcoin when the ratio was below 2.4.

That said, the Mayer multiple is a technical analysis tool and its accuracy in predicting undervalued/overvalued conditions is not guaranteed.

See also: First Mover: As US Stocks Defy Economic Gravity, Bitcoiners Shudder at March Memory

And expecting past performance to hold consistent for future performance is risky as market conditions change. For instance, bitcoin’s correlation with the equity markets has strengthened this year and the cryptocurrency may suffer sharp losses if stocks crash on renewed coronavirus fears. 

However, on-chain activity is supportive of the bullish picture painted by the Mayer multiple. The number of bitcoin whales or entities holding more than 1,000 coins recently rose to 1,844, the highest level since November 2017, as noted on Wednesday. 

Retail interest, too, is at record highs, as tweeted by Ciara Sun, head of global business and markets and vice president at cryptocurrency exchange Huobi. 

The continued accumulation of bitcoin by both retail and large investors indicates confidence in the long-term bullish narrative surrounding bitcoin. Whether that confidence is justified, only time will tell.

Disclosure: The author holds no cryptocurrency at the time of writing.

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Chinese bitcoin miner manufacturer Ebang estimates it incurred a net loss of $2.5 million on a revenue of $6.4 million for Q1 2020.

The financial disclosure was posted Wednesday in an update to the firm’s initial public offering (IPO) prospectus filed with the Securities and Exchange Commission (SEC). The filing means Ebang is now a step closer to becoming the latest publicly traded bitcoin miner manufacturer in the U.S.

In the amended F-1 form, Ebang said it has now applied to list on the Nasdaq exchange and anticipates its IPO launch price will be between $4.5 and $6.5 for each of the 19.3 million Class A ordinary shares to be offered in total.

Related: JD.com Subsidiary Rolling Out Privacy Tech From Blockchain Firm ARPA

With that range, Ebang would command a market value of around $800 million and is targeting a raise from $86 million to $125 million – generally in line with the company’s initial plan published in April.

Read more: Why Miner Maker Ebang’s US IPO Raises More Questions Than Answers

If successful, the Hangzhou, China-based company will become the second bitcoin miner maker traded in the U.S. after Canaan, which made its Nasdaq debut last November and raised $90 million with an offering of $9 per per share. But since then, Canaan’s stock has been on a downward trend and recently hit a record low below $2.

Also disclosed in the updated prospectus are Ebang’s “estimated preliminary unaudited” financial results for Q1 2020. The firm said it made $6.4 million in revenue with 6.1% growth year-on-year – primarily due to a better bitcoin mining outlook in the first three months in 2020 compared to the same period last year.

Related: Bitcoin Mining Difficulty Makes Biggest Jump in 29 Months

Yet, the firm said it recorded $5.9 million in cost of revenue, in addition to other operational expenses, which in total led to a net loss of $2.5 million for the first three months of the year.

Read more: Bitmain’s Power Struggle Takes Toll on Customers as Co-Founder Halts Shipments

For the same period, Canaan, which has a bigger bitcoin miner market share than Ebang, reported a net loss of $5 million even though it had cut the price of its mining hardware by more than half around bitcoin’s halving event and the COVID-19 pandemic that has disrupted global supply chains.

Ebang’s IPO update also comes amid rising geopolitical tension between China and the U.S., which is casting a shroud of uncertainty over Chinese companies that are already listed or seeking to list in the U.S.

In Ebang’s initial prospectus in April, the firm said its independent auditor was not fully inspected by the Public Company Accounting Oversight Board (PCAOB), a U.S. non-profit auditing watchdog, as it requires “the approval of the Chinese authorities.”

“This lack of PCAOB inspections in [China] prevents the PCAOB from regularly evaluating our independent registered public accounting firm’s audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections,” Ebang said.

At the time, there was heightened regulatory interest in placing tougher rules on foreign companies listed in the U.S. with regard to granting PCAOB approvals and providing U.S. regulators routine access to the audit reports of Chinese firms.

But discussions around the issue have become more serious over the last month, with the U.S. senate unanimously passing a bill that would require the SEC to ban the trading of any company whose auditors haven’t been inspected for three years by the PCAOB, according to a May 20 report from The Wall Street Journal.

Read more: Bitcoin Mining Difficulty Makes Biggest Jump in 29 Months

While public companies listed in the U.S. are by law required to have their auditors inspected by the PCAOB, the push for the watchdog and the SEC to have routine access to the audit files of Chinese companies listed in the U.S. have largely failed, the report said.

However, the issue has attracted attention again following the scandal of U.S.-listed Chinese Starbucks coffee rival Luckin, which reported in April that much of its $310 million 2019 sales numbers were fabricated by its senior executives. The bill now needs approval by the House of Representatives to become law.

• Bitmain’s Power Struggle Takes Toll on Customers as Co-Founder Halts Shipments
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Crypto exchanges OKCoin and BitMEX recently partnered to sponsor a prolific open-source Bitcoin Core contributor, Amiti Uttarwar.

Uttarwar is an alumna of Coinbase, the bitcoin custody startup Xapo and the Chaincode Labs residency. Over the past two years, she’s quickly become one of the industry’s most sought-after developers. According to Chaincode residency organizer Adam Jonas, Uttarwar’s work is focused on improving the privacy of bitcoin transactions.  

“She is redesigning transaction rebroadcasts to prevent spy nodes from being able to map IP addresses to transaction broadcasts,” Jonas said, describing Uttarwar’s work involving internet protocols. 

Related: Coda Protocol Sets Aside $2.1M in Tokens for Development Grants

Read more: Where to Find Bitcoin’s Rising Stars

Bitcoin Core contributor Gleb Naumenko, who also received a grant from BitMEX, estimated Uttarwar is now one of roughly 21 full-time Bitcoin Core developers with funding, out of 57 full-time developers, focused on open-source bitcoin projects at companies such as Lightning Labs and Blockstream. 

“Only the most responsible users understand the importance of ‘roads’ and support their development,” Naumenko said, describing public goods Bitcoin funding. “I see many benefits in responsibility-based, non-forcible dev funding. It turned out that by 2020 we have several responsible ecosystem members like that.”

The 2020 grant for Uttarwar, worth roughly $150,000, will allow her to continue working on privacy tech related to bitcoin. 

Related: Market Wrap: Bitcoin Is Still Up 30% in 2020 After a Bumpy Week

“Backing independent developers continues to be a priority for us as we seek to contribute to the long-term success and proliferation of the Bitcoin network,” OKCoin CEO Hong Fang said in a statement. 

In the same press statement, which estimated only 40 developers are focused on bitcoin full time, BitMEX CTO Sam Reed added that “funding important work like Amiti’s improves the functionality of Bitcoin Core for everyone.”

Read more: Why a Startup You’ve Never Heard of Is Now Sponsoring a Bitcoin Core Developer

“Her recent work adjusting how Bitcoin Core rebroadcasts unconfirmed transactions has improved Bitcoin’s privacy, a critical aspect of the protocol,” Reed said. 

In addition to the main privacy-tech project, Uttarwar said she is also working to improve the ability to test peer-to-peer connections, plus spending “a lot of time reviewing pull requests, mentoring people and educating people on technical fundamentals” with blog posts and comics. 

“The way I spend my energy and priority is being involved in Bitcoin Core. Beyond that I’m just excited about bitcoin and I like sharing the things I’ve learned with people,” she said. “It’s about what I uniquely can offer.” 

She’s been working to reduce the leak of identifying information during bitcoin transactions. This isn’t necessary for bitcoin to function because leaked information is seen as waste. 

“I want to continue making bitcoin more robust, more private and more scalable,” she said.

• BitMEX
• Latest Bitcoin Core Code Release Protects Against Nation-State Attacks

Cryptocurrency exchange Bitfinex has suffered a minor blow in its hunt for millions of dollars that went missing two years ago.

Bitfinex’s parent firm, iFinex Inc., is seeking to trace $850 million in user funds seized by authorities in four different countries after bank accounts held by its payment processor, Crypto Capital, were frozen in August 2018.

iFinex applied for subpoenas in Colorado, Arizona and Georgia in April, but the U.S. District Court of Georgia recently denied its request due to filing errors.

Related: Coinbase Open Sources Technical Standard to Streamline Token Listings

According to a court ruling filed June 8, Magistrate Judge Alan J. Baverman said the bank iFinex is trying to subpoena merged with another financial institution and is now based in North Carolina. As such, the Georgia court does not hold jurisdiction over the exchange’s petition.

Moreover, for reasons unknown, iFinex named Citibank in its petition rather than the intended SunTrust bank which merged with Branch Banking and Trust Company to form Truist Bank in December 2019.

“[It] appears that Applicant … has filed its petition in the wrong district. Even if Applicant had shown that SunTrust Bank still exists and is headquartered or otherwise ‘resides’ or ‘is found’ in this district, the petition would still be due to be denied as the proposed subpoena is addressed not to SunTrust Bank (or Truist Bank) but instead to Citibank,” Judge Baverman wrote.

The missing funds were first made public by the New York Attorney General’s office which alleged that Bitfinex lost the $850 million and later used a secret loan from affiliated stablecoin issuer Tether to secretly cover the shortfall.

Related: Kraken Launches Crypto Exchange Service in Australia

See also: New York Attorney General Calls Bitfinex’s Legal Stance ‘Deeply Perverse’ in New Filing

In addition to filing its petition in the wrong district and naming the wrong bank, iFinex also failed to present relevant supporting evidence to the court. Lastly, the judge concluded that a lack of clarity on the time frame of the subpoena meant it was “unduly intrusive and burdensome.”

However, a federal judge did grant iFinex’s application in Arizona in April and the third subpoena filing in Colorado, for a different bank was granted last month.

The applications follow on from an initial subpoena request in October 2019, filed in California, where the exchange sought testimony from a former TCA Bancorp executive about Crypto Capital’s accounts. This subpoena was later granted.

See the Georgia court ruling in full below:

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Russia’s new draft bill prohibiting crypto operations in the country has again suffered a less-than-glowing review from an arm of government. 

The nation’s Ministry of Justice opposed the draft new regulation Tuesday, a week after the Ministry of Economic Development also criticized it. The bill was introduced by lawmakers in March but is broadly believed to be the brainchild of the country’s central bank, which has a prohibitive approach to crypto. The proposal met some harsh reviews from Russia’s crypto community after being unveiled.

According to Russian newspaper Izvestia, Deputy Minister of Justice Denis Novak prepared the ministry’s comment for the draft bill, criticizing the proposal’s inconsistency. 

Related: Mauritius Releases Guidance for Regulated Security Token Offerings

The ministry’s press office confirmed to CoinDesk he wrote the response, adding his feedback was sent to the Digital Economy think tank, which is working with the government on policy issues.

See also: Russia’s Supreme Court Makes ‘Landmark’ Vote With Blockchain System From Kaspersky Lab

The bill sets out that Russians should not be able to use the nation’s infrastructure to conduct any operations with cryptocurrency, but individuals are allowed to inherit coins or accept them as the result of a counterparty’s bankruptcy process.

Crypto can also be seized like any other type of property with a court warrant. 

Related: India’s Rumored Crypto Ban May Be Overblown, Say Industry Pros

The justice ministry pointed out, though, it’s not clear what courts would be able to do with confiscated crypto. Normally, marshals would sell seized property at auctions, but if all crypto transactions are illegal in Russia this wouldn’t be possible.

Instead, the ministry suggests choosing a government body that will be allowed to help Russians sell crypto abroad. 

In the meantime, the draft bill’s sponsor, lawmaker Anatoly Aksakov, told the news agency TASS the part of the bill regarding digital securities is ready to be passed and will go through a final hearing soon. The part about prohibiting crypto transactions, including additions to Russia’s penal code for infractions, needs more discussions, Aksakov said. 

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Binance, the world’s largest cryptocurrency exchange by trade volume, has joined the Indian tech industry association that helped overturn the nation’s crypto banking ban earlier this year.

The cooperation between Binance and the Internet and Mobile Association of India (IAMAI) is an early step in implementing industry best practices in the Indian crypto market, according to a press statement. India’s crypto sector has rapidly emerged after the lifting of a de facto ban in March 2020. Binance is now a member of the IAMAI’s crypto committee.

The IAMAI is a not-for-profit trade body of digital businesses operating within the country. Its role is to “expand and enhance the online and mobile value-added services sectors,” according to the body’s website.

Related: Binance Launching Crypto Exchange in the UK

Notably, the IAMAI led the petition that sought to overturn a crypto banking ban imposed by the country’s central bank in April 2018. The Supreme Court ruled in favor of the crypto industry in March 2020.

Read more: After Court Victory, Indian Exchanges Gear Up for Crypto Trading Surge

“We warmly welcome Binance as a member of the Crypto Asset Committee of IAMAI,” Gaurav Chopra, vice president of IAMAI, said in a press release.

“Given their hands-on experience of regulatory compliance in various countries, we are excited to work with Binance and other industry players in developing a constructive policy framework for crypto assets in India, helping other exchanges operate in India compliantly and developing a strong framework to foster innovation while managing potential risks,” Chopra added.

Related: India’s Rumored Crypto Ban May Be Overblown, Say Industry Pros

IAMAI says it intends to work with regulators and policy-makers to build a sustainable policy framework for cryptocurrencies in India.

However, the announcement comes just days after rumors that India might be considering a new ban on crypto operations.

Read more: India’s Rumored Crypto Ban May Be Overblown, Say Industry Pros

“Binance is honored and excited to join IAMAI and contribute our part in shaping the Indian blockchain industry for sustainable growth and development,” said Binance CEO Changpeng “CZ” Zhao. “We hope to further accelerate the progress of blockchain adoption in India and are committed to working with IAMAI on an innovation-led and progressive framework for digital assets and blockchain.”

Binance has been busy of late, announcing the launch of its services in the U.K. on Wednesday. Binance’s U.K. exchange is expected to go live this summer.

Last November, Binance acquired Indian crypto exchange WazirX.

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Fans of South Korean professional soccer will now be able to collect and trade digital tokens representing league players and use them to play fantasy soccer games run by the firm Sorare. 

The South Korean soccer association K League announced a licensing agreement with the blockchain enabled fantasy soccer platform on Wednesday. The agreement gives Sorare the right to include over 400 players from the league’s upper division onto its platform, which currently includes players from prominent teams like Juventus, Atletico Madrid and Napoli, according to a press release. 

Based in Paris, France, Sorare uses the Ethereum blockchain to generate unique digital cards, representing players which can be traded by users. Upon joining, a user is given a random set of five cards which they can use to  build a team and participate in weekly league competitions. Users have the option of buying tokens representing other players to improve their team and – depending on how the soccer players perform in real life – may receive rewards in Ether or more trading cards. 

Related: North Korean Hackers Ramp Up Efforts to Steal Crypto Amid Coronavirus Pandemic

According to Sorare CEO Nicolas Julia, the firm’s fantasy soccer platform currently has about 3,000 monthly active users that can choose to play with players from over 100 different soccer clubs. He also said  that the company generated about $200,000 in sales last month.

“Collecting and engaging with your favorite football (soccer) players is part of the initiative to attract more people into following the K League,” said K league, in the press release.

Although betting on online sports is illegal in South Korea, Sorare said that the firm’s fantasy soccer is not betting because there is no financial sacrifice users have to make. 

“Sorare is more like a mixture between trading cards and fantasy football,” Julia said. He added that users may choose to buy cards to improve their team, but they can play for free and a bad performance from the player would not mean that they lose money. 

Related: South Korean Central Bank Accelerates Digital Currency Pilot to Keep Up With Other Nations

Sorare said using the Ethereum blockchain ensures the authenticity and scarcity of digital player tokens. The scarcity is what makes the tokens valuable and likely to appreciate in value if a player performs well. One of the digital tokens issued for soccer player Cristiano Ronaldo is currently valued at over €14,000 on sorare’s website. 

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XRP is more like an alternative currency than a security, argues the former chair of the U.S. Commodities Futures Trading Commission (CFTC).

In an op-ed for the International Financial Law Review, Chris Giancarlo, who was chairman of the CFTC until last year, argued Ripple Labs hadn’t violated any U.S. securities regulations and that the third-largest crypto by market cap should have the same legal status as bitcoin or ether.

“XRP should not be regulated as a security but instead considered a currency or a medium of exchange,” he wrote with Conrad Bahlke of international law firm Willkie Farr & Gallagher. They said XRP doesn’t hit any of the “prongs” of the Howey Test – a landmark case that defines what is considered a security in the U.S.

Related: Free Transactions Invite Systemic Attacks on Blockchains, Researchers Find

According to Giancarlo and Bahlke, XRP was never marketed as a security, nor were investors promised any returns; the token has a very specific use case for liquidity and settlements; Ripple has never offered holders any rights of ownership or share of the profits. There is, he argues, no investment contract or formal relationship that exists between Ripple Labs and XRP token holders.

See also: Ripple Sues YouTube for Allowing ‘Scams’ That Promise Free XRP

But the linchpin in his argument appears to be that there’s a divergence between how Ripple has defined XRP and what token holders themselves actually use it for.

“Ripple has repeatedly emphasized the functionality of XRP as a liquidity tool and a settlement mechanism,” Bahlke write, but there are plenty of investors who use XRP as a means of payment or just buy it hoping its value will increase.

Related: Ripple Says XRP Lawsuit Fails to Show CEO Committed Fraud

There is no “commonality” that exists between investors, they continue. People who hold XRP hold it for multifarious reasons, unlike a security where the reasons for holding it are much more clear-cut.

As such, the fortunes of XRP investors aren’t tied to XRP in quite the same way as they would be with a security token. Some could benefit directly from XRP’s dollar-value staying low, others would want it to always remain high.

“[G]iven the juxtaposition between XRP’s intended use as a liquidity tool, its more general use to transfer value and its potential as a speculative asset, XRP holders who utilize the coins for different purposes have divergent interests with respect to XRP,” according to the authors.

That makes it very similar to other cryptocurrencies such as bitcoin and ether, both of which have been classified as definitely not securities by the Securities and Exchange Commission (SEC). Bitcoin is supposed to be used as electronic cash, but many use it as a store of value; ether was intended as “gas” to power a distributed network, but there are scores of investors who also use it as an alternative form of money.

“The fact that certain parties may acquire XRP with the hope that it may appreciate in value cannot be dispositive as the same is equally true of a large number of bitcoin and ether speculators,” Giancarlo said.

Just like bitcoin and ether, XRP should be classified as a token that comes with utilities, which are both defined in its white paper and have also emerged over time. “The increased adoption of XRP as a medium of exchange and a form of payment in recent years, both by consumers and in the business-to-business setting, further underscores the utility of XRP as a bona fide fiat substitute.”

See also: Mysterious Company Files New Lawsuit Over Ripple’s $1.1B XRP Sale

The article has raised a few eyebrows For one thing, Giancarlo didn’t head the regulatory authority that determined what did and didn’t count as a security. Others were also quick to point out the law firm where he now works has Ripple as a client.

Jake Chervinsky, general counsel at decentralized lender Compound, said the article was pretty much irrelevant. “There are only two opinions about XRP’s security status that matter: those of the courts & the SEC. Everything else at this point is noise,” he tweeted.

There are also one or two relatively unsatisfying arguments. Chief among them is how Giancarlo explains away the fact Ripple still controls the vast majority of the XRP supply: the 6 billion tokens it controls directly and the 49 billion held in an escrow account.

“Even though Ripple holds a large stake of XRP in escrow and funds its operations through the sale of XRP (as well as the sale and licensing of software), this is no different than bitcoin or ether miners selling mined tokens or the Ethereum Foundation using its ether holdings to develop and support the Ethereum architecture.”

On the other hand, there is no miner or other single entity in the Bitcoin or Ethereum ecosystems that controls as much of the total supply as Ripple Labs. There also isn’t just one entity responsible for issuing new bitcoin or ether into circulation, as there is with Ripple, which sticks to its tight schedule of putting one billion tokens up for sale every month.

Conflating Ripple’s sale of XRP with that of mining, therefore, feels a bit strong.

See also: Ex-CFTC Chair Christopher Giancarlo on Why He Launched Digital Dollar Project

As for Ripple not promising XRP investors any return on investment, there’s a court case rumbling on at the moment that accuses Ripple of doing just that.

The plaintiff in that case says remarks made by Ripple CEO Brad Garlinghouse, where he said he was “very, very long” on XRP, proves Ripple had promoted the tokens as an investment opportunity – more like an unregistered security than a “bona fire fiat substitute.”

• XRP
• Ex-CFTC Chair Chris Giancarlo Joins Swiss Effort to Fund COVID-19 Relief Projects

A languid Wednesday in traditional markets affected bitcoin as well although it’s been a steady six weeks where the world’s first cryptocurrency outperformed most traditional assets. 

Bitcoin (BTC) was trading around $9,265 as of 20:00 UTC (4 p.m. ET), slipping 1.3% over the previous 24 hours. 

At 00:00 UTC on Wednesday (8:00 p.m. Tuesday ET), bitcoin was changing hands around $9,500 on spot exchanges such as Coinbase. It then dipped 1.6% to as low as $9,348. The price is now below its 10-day and 50-day moving averages — a bearish signal for market technicians who study charts — but with little action, it looks to be going nowhere for the time being.

Related: US Fed Chair Says Private Entities Should Not Help Design Central Bank Digital Currencies

“The price of bitcoin managed to get only up to $9,600 Tuesday. Now fiat reigns,” said Constantine Kogan, crypto fund-of-funds BitBull Capital. 

Read More: Polychain Capital, Square Crypto’s Steve Lee Invest in Bitcoin Broker

In fact, since the start of May the price of bitcoin has only appreciated 5.6% overall. It’s a relatively sleepy performance when compared to the oil market, which has had a wild 2020. A barrel of crude has gained over 90% since the beginning of May. 

Oil is flat Wednesday, down 0.39% and priced at $37.71 as of press time.

Related: The Truth About Bitcoin and Hezbollah in Lebanon

Uncertain economic times still motivate cryptocurrency traders and investors to remain steadfast in their investment thesis on bitcoin. “I am personally not negative on bitcoin and my view is based on several ingredients that have not changed or improved my outlook,” said Henrik Kugelberg, an over-the-counter cryptocurrency trader based in Sweden. 

One element Kugelberg points to is the debasing of the U.S. dollar. Since 2000, the number of dollars in circulation has jumped over 240%, from $565 billion to almost $2 trillion, according to Federal Reserve data. 

Other cryptocurrency advocates echo the same long-term outlook – that holding bitcoin is much better than owning traditional assets such as equities. Bitcoin is still up over 30% so far this year. Major global stock indices are either lower or just about even in 2020, and have been in negative territory since the middle of February. 

George Clayton, managing partner of alternative asset fund Cryptanalysis Capital, says continued fiscal stimulus is just an attempt to push equities above the 0% return level, but with major long-term side effects on the value of U.S. dollar. 

Read More: Number of Bitcoin ‘Whales’ Has Risen by 2% Since Halving

“A $1 trillion stimulus plan to build bridges, roads and rural 5G broadband that the Trump Administration is mulling over is perhaps the only piece of major legislation that stands a chance of passing both houses of Congress,” Clayton said. “It would be far more inflationary than the $500 billion in aid funneled to corporations that seems to be propping up stock markets.” 

The Nikkei 225 of publicly traded companies in Japan closed the day flat, down 0.56% as real estate and transportation stocks dragged the index down. 

The FTSE 100 index in Europe ended trading up 0.91% as energy stocks made gains. 

The U.S. S&P 500 index lost 0.36%, dragged down by the retail and travel sectors.

Digital assets on CoinDesk’s big board are mixed Wednesday. Ether (ETH), the second-largest cryptocurrency by market capitalization, is trading around $228 and slipped 2.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The rise of tether on Ethereum since 2019 has shifted fee distributions on the network. With $5.7 billion of tether on Ethereum, the stablecoin has taken over fees paid by ERC20 contracts and even the network token itself, ether, according to data aggregator Glassnode.

The biggest cryptocurrency winners on the day include cardano (ADA) up 2.1%, iota (IOTA) in the green 1.3% and nem (XEM) gaining 1%. Significant losers include dogecoin (DOGE) down 3.2%, bitcoin SV (BSV) in the red 2.3% and qtum (QTUM) down 2.2%. All price changes were as of 20:00 UTC (4:00 p.m. ET).

Read More: Compound Has Been a DeFi Darling. Its New Token Is Priced Accordingly

Gold is trading flat as the yellow metal climbed 0.16%, trading around $1,728 for the day. 

U.S. Treasury bonds slipped Wednesday. Yields, which move in the opposite direction as price, were down most on the 10-year, in the red 4.2%.

• Number of Bitcoin ‘Whales’ Has Risen by 2% Since Halving
• Ex-Bitcoin Dev Settles Defamation Suit Over Sex Assault Claims