Blockchain This Week – Grayscale Sues SEC, 3AC Crisis, Harmony’s $1M Bounty, Facebook Tests NFT, Gray Glacier

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Grayscale Sues After SEC Rejects Its ETF

Earlier this week, the US SEC rejected Grayscale Investments’ application to convert its Grayscale Bitcoin Trust into an ETF, stating insufficient provision to prevent investors from fraud. In response, Grayscale CEO Michael Sonnenshein announced his decision to challenge the SEC’s decision in the United States Court of Appeals for the District of Columbia. Meanwhile, asset management firm VanEck has filed a new application with the SEC for its spot market Bitcoin ETF. 

3AC Crisis Deepens

First, crypto broker Voyager Digital followed up on its promise and issued a default notice in its attempt to recover the bitcoin and USDC it had loaned to the beleaguered Singapore based crypto hedge fund, Three Arrows Capital (3AC). Next, the Monetary Authority of Singapore (MAS) issued a notice, reprimanding 3AC for giving false information. 3AC, it claims, did not reveal the changes in shareholding when it changed the management of its fund to its recently opened British Virgin Islands entity. Meanwhile, a court in the British Virgin Islands has ordered 3AC to be liquidated and has assigned Teneo Restructuring to assist with the proceedings.And all of these culminated with 3AC filing for Chapter 15 bankruptcy

Voyager Halts Withdrawals

Another fallout of the 3AC crisis is the crypto lender Voyager Digital. Struggling to maintain liquidity after 3AC failed to return the $661 million it had loaned, the crypto broker has suspended withdrawals, trading, and deposits. It said it is exploring “strategic alternatives” to preserve the value of its platform and has hired Moelis & Company and the Consello Group as financial advisors and Kirkland & Ellis LLP as legal advisors.

Harmony Offers Bounty as Hackers Launder the Loot

Last week, the Horizon bridge of Harmony Protocol was exploited, and the thieves made away with $100 million in WETH, AAVE, SUSHI, DAI, USDT, and USDC, which they swapped with Ether. The Harmony team offered a $1 million reward for information that could help recover the funds. Meanwhile, the hackers have managed to send around $36 million of the stolen tokens to the mixing service Tornado Cash. At the same time, blockchain analytics firm Elliptic has uncovered that the culprits might be North Korea based Lazarus Group.

Facebook Begins NFT Testing

Meta is rolling out Polygon and Ethereum based NFTs on Facebook for a selected group of creators from the US, as per Meta’s product manager Navdeep Singh. Facebook, reportedly, will soon add support for NFTs on Solana and Flow.

Gray Glacier Update

This week Ethereum network rolled out a new upgrade – Gray Glacier – that will delay the “difficulty bomb” by 700,000 blocks or about 100 days. This upgrade, which intends to push back “The Merge,” occurred at block 15,050,000. 

FTX Closes Deal With BlockFi

Crypto exchange FTX has closed a deal with crypto lender BlockFi that values BlockFi at up to $680 million. It includes an option for FTX US to acquire BlockFi at a maximum price of $240 million. FTX has also topped up its prior loan of $250 million to $400 million.

Polkadot’s Imminent Governance Upgrade

Polkadot’s Gavin Wood announced the imminent launch of Governance version 2 (Gov2) on Polkadot’s sister network Kusama, following the final professional audit of its code. Gov2 will remove preferential entities such as the Polkadot Council and Technical Committee from the governance network. 

OpenSea Warns Customers

NFT marketplace OpenSea reported that an employee of its email vendor Customer.io misused their privileges to download and share the email addresses of OpenSea users and newsletter subscribers. In light of this breach, OpenSea has warned customers of possible phishing attacks.

Banxa Cuts 30% of Its Workforce

Banxa, a crypto payments firm based out of Australia, announced that it is laying off 30% of its staff, reducing the headcount from 230 to 160. In a letter to his employees, Banxa’s CEO Holger Arians, wrote that such actions are imperative at the moment to reduce costs so that the company can succeed over the long run.

Crypto Downslide Resumes

This week, several prominent cryptocurrencies saw a decline in their prices, with bitcoin falling below $19,000 and ether nearing $1,000. Other currencies such as solana and BNB also slumped. The slow DeFi market, renewed fears of inflation, and the recent Fed rate hike are considered likely causes.

MicroStrategy and El Salvador Buy The Dip

Business analytics firm MicroStrategy revealed this week that it has bought 480 bitcoins for about $10 million between May 3 and Jun 28. Now the company holds 129,699 bitcoins. Meanwhile, El Salvador has doubled down on its bitcoin commitment and added 80 more bitcoins, while President Nayib Bukele opines bitcoin is the future.

Crypto.Com Revises Crypto Rewards Program

Crypto exchange crypto.com has removed 15 cryptocurrencies, including dogecoin, Shiba Inu, tezos, and flow from its crypto earn rewards program. At the same time, it has added Zilliqa, fantom, and NEAR to the list. It has also modified reward rates for five stablecoins – TGBP, TAUD, TCAD, TUSD, and USDP.

Anchorage Launches Ethereum Staking

Anchorage Digital announced its Ethereum staking service for institutions this week. The crypto firm plans to keep the crypto from institutions such as banks in cold storage and thereby protect it from hot wallet risks.

Coinbase Adds Solana Staking Rewards

Crypto exchange Coinbase has enabled its users to earn a yield of up to 3.85% by staking their Solana tokens via their Coinbase accounts in the Solana network. The returns are higher than staking Ether where users can earn 3.675% staking rewards.

Coinbase Selling Data to ICE?

The watchdog group Tech Inquiry has obtained a contract signed between Coinbase and the US Immigration agency ICE that seems to indicate that the crypto exchange’s analytics program, Coinbase Tracer, will provide geo tracking data and transaction history of crypto users. Coinbase,  while denying this allegation, claims that the data shared is sourced from publicly available data and does not include any personal information of Coinbase users.

Goldman Sachs Downgrades Coinbase

Goldman Sachs has downgraded the crypto exchange Coinbase from neutral to sell and lowered its price target from $70 to $45. Following this announcement, Coinbase shares fell over the week to a low of $44.54 before a slight recovery. Goldman Sachs analyst Will Nance also considers that the recent downsizing of 18% of the workforce and rescinding offers are not sufficient, and further cuts are needed.

EU Finalizes Crypto AML Rules

The European Union finalized the AML rules that aim to prevent crimes perpetrated using crypto. These rules require crypto service providers to collect and store information regarding crypto users and also hand over the information to authorities as requested. The regulations, however, do not impose these requirements on private, unhosted wallets.

Gucci Invests in SuperRare DAO

Italian fashion brand Gucci has partnered with NFT marketplace SuperRare and has acquired $25,000 worth of RARE tokens to join the SuperRareDAO. With this investment, Gucci is launching “Vault Art Space,” an exhibition that will showcase NFT artworks by 29 artists.

HTC’s Metaverse Phone

HTC has launched HTC Desire 22 Pro, its first “Viverse” phone. The phone comes preloaded with apps that enable users to access their crypto and NFTs from the phone. It also allows people to buy NFTs from a digital marketplace and create their own virtual space.

Napster Launches Crypto Token 

Music streaming company Napster is set to launch the $NAPSTER token on Algorand, the date of which is yet to be announced. Meanwhile, it has released a lite paper, which outlines its plan to build its music streaming ecosystem on blockchain.

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