Blur Sails Past OpenSea
Weekly News Recap: 🎙️ New pod with Emily Parker on Asia, 🌊 OpenSea loses marketshare to Blur, ☃️ Coinbase layers up for winter, 🙅 Dapper Labs gets denied, and more!
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Is Asia Going to Lead the Next Bull Run?
As the SEC and other US regulators keep cracking on crypto, the other side of the world seems to be doing the exact opposite.
This week, Hong Kong announced plans to allow retail trading of crypto assets, such as Bitcoin and Ether.
On this Friday episode of Unchained, Emily Parker, executive director of global content at CoinDesk, said that China was actually “never out of the [crypto] game” and that they never intended to stamp out of crypto entirely.
She also argued that Japan is the most slept-on story in crypto, given how advanced the regulatory environment is in the country.
“Japan is just an example of a country where for a while regulation looked too strict and it looked really unfriendly, but now they're sort of reaping the benefits of their approach,” she said.
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Weekly News Recap
Blur Leaves OpenSea in Its Wake
Upstart NFT marketplace Blur overtook category leader OpenSea in transaction volume this week, ending its long-time dominance. Over 80% of NFT trading volume occurred on Blur, dwarfing OpenSea’s 13%.
Blur officially launched last fall, but its February 14 governance token airdrop helped boost trading to frothy levels and put pressure on OpenSea.
The project’s pseudonymous founder, Pacman, also revealed his real name, Tieshun Roquerre, after appearing on The Chopping Block this week. He told The Block, “We focus on the NFT natives first and from there we can expand, similar to how Binance expanded downmarket and broadened the offering.”
Blur, however, faces obstacles. On-chain data suggests that wash trading could have helped generate that high trading volume. A more recent analysis shows that 25% of Blur’s total volume comes from 50 traders. Compare that to OpenSea, where the top 250 NFT traders make up 11% of volume.
For now, OpenSea maintains a larger user base, even though it admits it’s lost some customers since Blur came around. “In October, we started to see meaningful volume and users move to NFT marketplaces that don’t fully enforce creator earnings,” tweeted OpenSea last Friday as it moved to an optional royalty model. “Today, that shift has accelerated dramatically despite our best efforts.”
OpenSea is taking steps to regain dominance. In addition to restructuring royalties, it is temporarily eliminating its marketplace fee. Blur, meanwhile, is doubling down on its strategy. It’s planning to distribute another 300 million BLUR tokens for “Season 2.”
In related news, Bitcoin Ordinals continue to garner interest. On Wednesday, Bitcoin mining company Luxor bought OrdinalHub, a Bitcoin NFT marketplace.
Coinbase Optimistically Jumps Into Layer-2 Wars
Coinbase is looking for creative ways to generate interest in crypto — and increase revenue. The crypto exchange announced Thursday that it has launched a testnet for its own layer-2 network, Base. Eventually, this blockchain, which is built using Optimism’s open source software and could be extended to include Solana, could serve as a hub for scores of decentralized applications. Check out Unchained’s video on the announcement for more information.
There’s plenty of demand for Ethereum scaling solutions — and for rollups in particular. On Tuesday, for the first time, a layer-2 has posted more transactions than Ethereum, with Arbitrum taking the mantle.
Meanwhile, users of proof-of-stake sidechain Polygon got a scare on Wednesday when several nodes temporarily fell out of sync and the Polygonscan block explorer stopped updating.
In related news, Ethereum’s Shanghai-Capella upgrade will be rolled out on the Sepolia test network by the end of February before launching it on mainnet in March.
As for Coinbase, its foray into layer-2s reflects a desire to create an onramp to the exchange. On Tuesday, it reported a $557 million net loss in the fourth quarter of 2022, despite beating analysts’ revenue expectations. Though quarterly transaction revenue was down 12%, the exchange pointed to lower crypto prices as a culprit. On a positive note, subscription revenue and staking revenue were both up.
Top Shot Basketball NFTs May Be Securities, Judge Rules
A federal judge on Wednesday denied Dapper Labs’ motion to dismiss a lawsuit alleging its NBA Top Shot NFTs are unregistered securities. The class action could represent a significant hurdle for how digital collectibles are bought and sold.
While Dapper argued that it’s fundamentally selling digital versions of a basketball card, the judge wasn’t so sure. Using the Howey Test, a method for determining what constitutes an investment contract, District Judge Victor Marrero found that “purchasers’ fortunes were tied to the overall success of Dapper Labs.”
If the company can’t convince him otherwise, he may rule them to be securities. Dapper Labs has until March 15th to respond.
Binance Separates Reserves From Customer Tokens
Last month, Binance admitted it had accidentally been storing some customer funds with the collateral backing its B-tokens. Binance on Wednesday said it had implemented a “semi-automated” process to prevent this from happening again. It theoretically allows Binance employees to intervene in case the reserves are at risk.
Binance, the top crypto exchange by trading volume, mints 97 different types of tokens. These B-tokens are wrapped versions of, say, Bitcoin, meaning you can swap your BTC for BTCB and use it on Binance’s bespoke blockchain.
The company’s previous system for backing BUSD, which is issued by its partner Paxos, failed and, at least once, more than $1 billion in collateral went missing. Last week, the Securities and Exchange Commission and the New York Department of Financial Services put pressure on Paxos to stop minting BUSD. Paxos has severed its relationship with the crypto exchange. It now says it’s having a “constructive discussion” with the SEC.
If all that weren’t enough, Binance USD very briefly lost its peg compared to the DAI stablecoin Wednesday. It dropped to $0.20 on the exchange before immediately going back to $1.
Voyager’s Sale to Binance.US in the Balance as Creditors Fight Over FTX Loan
This week, creditors of Voyager Digital seemed ready to back a plan to sell the bankrupt crypto lender to Binance.US when the Federal Trade Commission filed an objection with the bankruptcy court. The agency is investigating Voyager Digital about what it alleges were “deceptive and unfair marketing of cryptocurrency to the public.” The SEC followed suit, alleging that some transactions required as part of the proposed Binance.US deal, particularly those involving Voyager’s token VGX, could violate securities law.
Meanwhile, Voyager’s creditors approved the plan, which could result in them recovering around half of their assets. But that’s if all goes according to plan. They have subpoenaed former FTX CEO Sam Bankman-Fried over FTX’s attempts to get back a $446 million loan repayment from Voyager. No surprise that Voyager creditors would rather have it in their pockets. Lawyers for SBF called the subpoena “procedurally deficient” because it was delivered to his mother.
SBF Gets Hit With More Indictments
U.S. officials filed new charges against the former FTX chief, including bank fraud and the unlawful operation of an unlicensed money transmitter. SBF was already facing nine charges, including wire fraud and conspiracy to commit securities fraud. The count is up to 12.
In support of its bank fraud allegation, the government said that when opening a bank account, SBF, “falsely represented to a financial institution that the account would be used for trading and market making.” It alleges the account was instead used to receive and transmit customer funds.
He also faces a modified charge on his political involvement. Prosecutors allege he and his conspirators made corporate and committee contributions in the names of others.
Last Friday, Bloomberg reported that FTX’s former director of engineering, Nishad Singh, is expected to plead guilty to fraud charges.
More FTX Fun and Games
The FTX saga continues to take down investors. Galois Capital, a cryptocurrency hedge fund which had half its capital trapped on FTX, unwound all of its positions this week. Galois investors are set to do slightly better than their Voyager counterparts: Galois says they will get back 90% of their funds…that aren’t on FTX.
Crypto lending firms weren’t the only ones left holding the bag after Terra and FTX collapsed. According to the Bank of International Settlements, investors in emerging economies took the biggest losses.
On a related note, funds that buy distressed assets are purchasing FTX bankruptcy claims for 15 to 20 cents per dollar in private OTC markets. According to an FTX creditor quoted by CoinDesk, buyers are likely eyeing a recovery of 50 cents on the dollar within the next five years.
Speaking of CoinDesk, the crypto outlet’s Ian Allison and Tracy Wang won a prestigious Polk Award for their work. The George Polk Award Committee said, Allison’s and Wang’s three winning stories “brought young Sam Bankman-Fried and his supposed $32 billion crypto currency empire crashing down in just 10 days.”
More Crypto Layoffs Hit the Sector
Following the lead of Coinbase, ConsenSys, and other crypto companies, Polygon Labs laid off around 100 employees on Tuesday, or 20% of its workforce. Polygon representatives, maker of the popular Ethereum sidechain, insist its treasury is healthy. They say it has $250 million and 1.9 billion of its native MATIC tokens, which trade for well over $1.
Messari, which aggregates and analyzes blockchain data, is cutting 15% of its workforce. CEO Ryan Selkis told CoinDesk on Thursday that while the company will continue hiring for some open roles, it needs to restructure.
Australia-based crypto gaming firm Immutable also announced layoffs of 11% of its workforce to improve its cash position. According to Immutable, which earned unicorn status last year, it has $280 million on hand, equivalent to about four years of spending at current levels.
On a slightly different note,The Information reports that eight employees have left venture capital firm Paradigm within the last five months, including two of its six investment partners and four of its 13 engineers. The crypto-centric VC firm had invested $278 million in FTX. It subsequently wrote the value of that investment down to zero.
OneCoin’s CryptoQueen May Have Been Murdered
The FBI has been hunting Ruja Ignatova, better known as the “CryptoQueen,” since 2017. It added her to its Ten Most Wanted List after she co-founded the OneCoin ponzi scheme and allegedly made off with $4 billion from victims. Ignatova has thus far eluded authorities and hasn’t been seen in five years. New evidence suggests a potential reason: She might have been killed back in 2018.
This evidence comes from documents recently acquired by the Bureau for Investigative Reporting and Data, a Bulgarian news outlet. BIRD claims that a Bulgarian drug kingpin put out a hit on Ignatova and that she was killed on a Greek yacht in November 2018. Prior reporting from the BBC suggested OneCoin might have been affiliated with Eastern European mobsters. Ignatova, who was born in Bulgaria, may have been hiding out with the wrong people.
Fun Bits
This week, Tim Berners-Lee, creator of the World Wide Web, made some disparaging comments about crypto. Ginny from Unchained has some commentary about that.
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