Centralized crypto exchange Gate.io has threatened legal action in response to rumors of imminent bankruptcy. Crypto community members have been speculating since May about a possible connection between Gate.io and the troubled cross-chain protocol Multichain.

“Legal proceedings will be initiated against people who cause panic among investors only with rumors and gossip, without relying on any concrete source,” reads a June 4 Twitter announcement originally written in Turkish.

Gate.io’s insolvency rumor surfaced after a series of events involving Multichain. The cross-chain protocol has been experiencing technical difficulties since May 24 when a node issue delayed transactions. ​​A few days later, Multichain’s team disclosed it couldn’t contact its CEO to access the servers and resolve the problem, fueling previous rumors that the protocol’s leadership had been arrested and over $1.5 billion in smart contract funds seized by Chinese authorities.

Data from Blockchain analytics firm Arkham Intelligence on May 24 showed large inflows of Multichain token (MULTI) from Gate.io’s platform.

Gate.io first denied liquidity issues on May 31, claiming its operations were “running healthy” and that withdrawals were not an issue. Although Twitter and Telegram channels have been flooded with reports of traders withdrawing funds, the exchange’s trading volume appears to remain relatively steady in the past days.

At the time of writing, its native token GateToken (GT) trades at $4.29, a decline of 9.6% in the past seven days, shows data from CoinGecko. First founded in 2013 in the Cayman Islands, the exchange recently expanded to Hong Kong, Turkey, and Dubai.

Multichain’s ongoing issues prompted other crypto exchanges to take action. Binance suspended deposits for 10 bridged tokens on the BNB Smart Chain, Fantom, Ethereum and Avalanche blockchain networks on May 25. Transactions downtime also led the Fantom Foundation to remove 449,740 MULTI ($2.4 million) from liquidity on the decentralized exchange SushiSwap.

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At least $35 million worth of crypto assets have been stolen from Atomic Wallet users since June 2, according to an analysis from on-chain sleuth ZachXBT. The five largest losses account for $17 million.

According to Atomic Wallet on Twitter, the cause of the attack is being investigated. Reports have surfaced of tokens being lost, transaction histories being erased, and even entire crypto portfolios being stolen.

An independent investigation carried out by pseudonymous Twitter ZachXBT, known for tracing crypto stolen funds and assisting hacked projects, has found the largest victim lost $7.95 million in Tether (USDT). “Think it could surpass $50m. Keep finding more and more victims, sadly,” commented ZachXBT.

Atomic Wallet claims to have over 5 million users around the world. Cointelegraph spoke with a long-time Atomic’s client who is now a victim of the security breach. “I felt terrible because I am a cybersecurity expert by profession,” said Emre, a Turkish resident who lost nearly $1 million in crypto assets received from bug bounty programs. His stolen tokens include Bitcoin (BTC), Dogecoin (DOGE), Litecoin (LTC), Ethereum (ETH), USDT, USD Coin (USDC), Binance Coin (BNB), and Polygon (MATIC).

“They say they’re looking into it, but they don’t have anything concrete yet,” Emre continued. The funds held at Atomic Wallet were destined for the establishment of a cybersecurity firm in Turkey.

Atomic is a noncustodial-decentralized wallet, meaning users are responsible for assets stored in the application. As usual, its Terms of Service do not accept any liability for on-chain damages suffered by users. “Under no circumstances will Atomic Wallet be liable to you for damages arising out of the services exceeding $50,” says one excerpt.

There has been little information provided by Atomic Wallet to users so far. “Support team is collecting victim addresses. Reached out to major exchanges and blockchain analytics companies to trace and block the stolen funds,” Atomic’s team said in a tweet from June 4 — its second official communication.

Those contacting Atomic have been asked to answer over 20 questions about internet providers, use of virtual private networks (VPNs), and storage of seed phrases.

In Telegram’s community channels, some pointed out the exploit could have originated via an outdated dependency package. Dependency packages describe the relationship between activities to be performed within a program, including the order in which they should be performed, and the libraries needed to perform these activities.

The attack joins a growing list of crypto hacks. Most recent cases include Jimbos Protocol $7.5 million exploit and a malicious proposal that took over Tornado Cash’s governance in May. A Chainalysis report estimates that crypto hackers stole $3.8 billion last year, mostly through North Korean-linked attacks exploiting decentralized finance protocols.

Cointelegraph reached out to Atomic Wallet, but did not receive an immediate response. 

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Atomic Wallet has been apparently exploited, with users on Twitter reporting complete losses of their crypto portfolios. Atomic is a noncustodial-decentralized wallet, meaning users are responsible for assets stored in the application. 

“We have received reports of wallets being compromised. We are doing all we can to investigate and analyse the situation. As we have more information, we will share it accordingly,” said Atomic’s team on Twitter on June 3.

A number of users have commented on the post reporting losses, claiming funds were wiped out from their digital wallet app. On-chain sleuth ZachBTX, known for tracing stolen funds and assisting hacked projects, is taking part in the investigation. At the time of writing, it’s unclear how the attack was carried out. Atomic claims to have over 5 million users.

Twitter users have also reported that funds on the Atomic Wallet app have been stolen in the past. “This happened to my BTC 6 months ago with Atomic. They simply replied back to protect your pw, seed phrase, blah blah… I told them NOT even possible! All I do is use U to exchange and then move crypto out. My response to them, I will use U no MORE then! Now I was right!,” wrote a user in response to the post.

The attack joins a growing list of crypto hacks taking place every week. Decentralized Finance (DeFi) app Jimbos Protocol was exploited on May 28, resulting in a loss of 4,000 Ether worth around $7.5 million. Tornado Cash, a decentralized crypto mixer, was also recently hacked. On May 20, an attacker successfully granted 1.2 million votes to a malicious proposal, gaining full control of the protocol’s governance.

Crypto hackers stole an estimated $3.8 billion last year, mainly from North Korea-linked attackers and DeFi protocols, according to a Chainalysis report. Another analysis from TRM Labs reveals that while the number of incidents remained the same in the first quarter of 2023, the average hack size dropped to $10.5 million from nearly $30 million in the first quarter of 2022.

“Unfortunately, this slowdown is most likely a temporary reprieve rather than a long-term trend,” TRM Labs noted, warning that just a few large-scale attacks could tip the scales again.

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Cryptocurrency exchange Mercado Bitcoin was granted a payment provider license from Brazil’s central bank on June 2, according to local media reports. With the license, the company will launch its fintech solution MB Pay.

“The approval of the Central Bank is a crucial step, as it allows us to continue expanding our business and providing a better service to our customers,” said Roberto Dagnoni, CEO of 2TM, the parent company of Mercado Bitcoin.

As a payment institution, MB Pay can provide Brazilian users with certain digital banking services using crypto assets held on the exchange, such as investing in digital fixed income, staking, and other financial transactions. A debit card offering a crypto off-ramp for users is expected to go live soon.

Earlier this week, traditional local broker Guide Investimentos also announced a partnership with Mercado Bitcoin to enter the digital asset market.

Related: Crypto adoption is booming, but not in the US or Europe — Bitcoin Builders 2023

Mercado Bitcoin’s fintech rollout had been planned for 2021, but was delayed due to the regulator’s approval process. The development came on the same day as Mercado Bitcoin was ordered to return over 2,182 BTC (~$59.3 million as of writing) back to a group of investors alleging that a co-founder and former executive had withheld funds in a fabricated hack in 2013.

A vibrant demand for digital solutions and a population of nearly 214 million have drawn crypto firms to the Latin America country. Binance has previously ranked Brazil among its top global markets. Its local partner, Latam Gateway, was also granted a payment provider license in the country on May 19.

Other crypto exchanges licensed as payment providers in Brazil include Crypto.com and Bitso.

Coinbase is also expanding operations in the country. Since March, the American exchange has partnered with local payment providers to offer crypto purchases, as well as enable deposits and withdrawals in the local currency.

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Just over six months after FTX’s dramatic collapse, the crypto industry can finally begin analyzing the effects of the debacle. The quick ripple effect to other crypto businesses drained liquidity from the industry and prolonged the crypto winter, with Silvergate Bank, BlockFi and Genesis Global Capital among those hit by the exchange’s collapse.

FTX’s bankruptcy has also affected the crypto regulatory landscape, with authorities cracking down on firms — employing controversial methods in some cases — to avoid a deepening blend of traditional finance with cryptocurrencies.

Companies that closed their United States operations citing regulatory pressure in the past months included Bittrex, Nexo and Unbanked, to name a few. Coinbase CEO Brian Armstrong said this week that China stands to benefit most from restrictive crypto policies in the U.S., but only time will tell if this is true.

Companies are also reviewing their business operations due to increased regulatory scrutiny. In response to crypto firms being debanked, Binance has even considered buying a bank in the past months, said its CEO Chanpeng Zhao. Now, the crypto exchange is gearing up for a layoff that will boost its compliance and regulatory capabilities.

While the industry digests the recent events, FTX’s new management claims FTX 2.0 could be launched as soon as next year, hopefully in time to join the club of crypto companies striving to remain in business after November 2022.

This week’s Crypto Biz also looks at Tether’s Bitcoin (BTC) mining operations in Latin America, Tabi’s funding round and Nvidia’s efforts to power the next generation of artificial intelligence (AI) machines.

Buying a bank won’t solve crypto’s debanking issue — Binance CEO

Binance is unlikely to buy up any banking institutions, but it plans to make minority investments in financial institutions that will “hopefully influence them to be more crypto-friendly,” commented Zhao on the growing worry of crypto companies being debanked. The collapse of several U.S. banks in 2023 has prompted concerns that the pool of crypto-friendly banks is shrinking. Former key banking partners, Silvergate, Silicon Valley Bank and Signature Bank, have all capitulated this year. The exchange is also reportedly exploring a solution to reduce counterparty risk by allowing institutional clients to keep their trading collateral at a bank instead of on the crypto platform.

Tether moves into Bitcoin mining in Uruguay

Stablecoin issuer Tether has announced it will launch Bitcoin mining operations in Uruguay in collaboration with a local licensed company. According to Tether, the venture would utilize renewable energy sources aimed at “sustainable” Bitcoin mining and planned to hire additional team members. The mining announcement followed Tether’s plan to “regularly allocate up to 15%” of its profits into BTC purchases. Tether cited Uruguay’s capability of generating 94% of its electricity from renewable sources like wind, solar and hydropower, and its reliable grid. Job listings on its website also suggested expansion into South Africa and Brazil.

Nvidia introduces AI supercomputer to create ChatGPT successors

Nvidia continues to push forward in the race to develop AI tools and applications as the company revealed plans to release more products. Its CEO Jensen Huang recently unveiled a new AI supercomputer platform called DGX GH200 that will aid tech companies in developing successors to the popular AI chatbot ChatGPT. Big Tech firms such as Microsoft, Meta and Alphabet are anticipated to be among some of the pioneering users of the supercomputer equipment. Also developing its own AI chip is Microsoft, which claims it intends to deal with the rising costs of development for in-house and OpenAI projects.

BNB NFT marketplace Tabi raises $10 million in angel funding

Nonfungible token (NFT) marketplace Tabi, previously known as Treasureland, has completed a $10 million angel funding round seeded by venture capital firms Animoca Brands, Draper Dragon, Hashkey Capital, Infinity Crypto Ventures and Youbi Capital. Along with NFT trading and launchpad features, Tabi converts users’ on-chain activities into “experience points,” which can be exchanged for future airdrop rewards and earnings. The protocol also contains a gaming platform aggregating blockchain game transactions and entertainment. Funds will be primarily used to develop Tabi’s gaming ecosystem and construct an on-chain identity protocol.

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Digital asset infrastructure provider Taurus is stepping up its tokenization efforts in Europe through a full integration with the Polygon blockchain, the company announced on June 2. 

The move comes three months after Taurus raised $65 million in a funding round, and will allow its clients to automatically issue digital securities. Taurus claims to have over 25 clients across nine countries, including Arab Bank Switzerland, CACEIS Bank, Crédit Agricole, Credit Suisse, Deutsche Bank, Pictet, Swissquote, Vontobel.

A Taurus spokesperson told Cointelegraph that debt, funds, and structured products are among the most popular assets for tokenization, though the demand varies depending on local regulations. Picking Polygon was a “natural choice to benefit from the Ethereum network,” it continued.

“The tokenization of real-world assets is a no-brainer at the root of the idea. The challenge is and always has been to build sufficiently advanced infrastructure to enable it,” Colin Butler, global head of institutional capital at Polygon Labs, said in a statement.

A tokenization process involves converting something tangible or intangible into a digital token. Tokenizing tangible assets such as real estate, stocks, or art is possible. It is also possible to tokenize intangible assets such as loyalty points and voting rights, as previously reported by Cointelegraph.

Asset tokenization is one of the trends driving the blending of traditional finance with Web3 solutions across Europe. The United Kingdom’s central bank is exploring ways in which tokenized assets will interact with bank money, non-bank money, and central bank money, according to its deputy governor Sir Jon Cunliffe in February. It may also be possible in the near future for tokenized transactions to be synchronized with the British central bank’s real-time payment system, Cunliffe said. In Germany, banks are slowly embracing crypto solutions, mostly through tokenization-related products and services for institutional investors.

Taurus secured a $65 million Series B fund led by Credit Suisse in February, joined by several other institutional investors, including Deutsche Bank, Pictet Group, Cedar Mundi Ventures, Arab Bank Switzerland, and Investis.

At the time, the company said the capital would be used for growth strategy in three primary areas: recruiting engineering talent, security and compliance, as well as expanding sales in Europe, the United Arab Emirates, Americas and Southeast Asia.

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Binance users in Australia now have a narrowed pool of options to purchase cryptocurrencies amid the ongoing global debanking of crypto businesses. Since 5:00 p.m. local time on June 1, fiat on-ramps and off-ramps by bank transfers have been halted in Australia. The suspension includes trading for Australian dollar (AUD) pairs. 

The shutdown of deposits and withdrawals is tied to previous developments impacting Binance in Australia. In February, Binance’s local derivatives arm abruptly notified its users that certain positions and accounts would be closed for those who didn’t meet the requirements to be considered wholesale investors.

Under the law, a wholesale investor is an experienced investor with the capital to invest in high-quality assets, which usually entails higher risks. This type of investor may also be called an institutional or accredited investor. To be classified as a wholesale investor in Australia, one should have net assets of at least $2.5 million or an annual gross income of at least $250,000.

After Binance winded down non-compliant accounts, local regulators launched a “targeted review” of the exchange’s local derivatives operations. On April 6, the Australian securities regulator canceled the Binance Australia Derivatives license.

A few weeks later, in May, Binance Australia announced it had suspended AUD services after its local payment services provider Zepto was instructed to do so, ceasing all deposits and bank transfer withdrawals.

At that time, a spokesperson from Zepto told Cointelegraph that its partner Cuscal instructed the company to “offboard Binance.” In a separate statement, Cuscal said it was only “protecting Australians from financial crimes and scams.”

Since then, Binance Australia has been seeking a payment provider. In the United States, Binance.US faced a similar challenge as former partners Silvergate and Signature Bank were shut down amid the banking crisis earlier this year.

“We are working hard to find an alternative provider to continue offering AUD deposits and withdrawals to our users,” a spokesperson from Binance told Cointelegraph in a statement, adding that users in the country can still buy and sell crypto using credit or debit cards and peer-to-peer trading continues to operate as usual. Additionally, AUD balances remaining in accounts have been converted to Tether (USDT).

The ongoing cross-border debanking of crypto firms has prompted Binance CEO Changpeng “CZ” Zhao to consider buying a bank, he revealed during an interview.

Although some have warned risks still exist, Australian-based cryptocurrency exchanges have lined up to mitigate contagion fears following the recent events. “That is reflective of the regulatory environment that we operate in or in this case, the absence of a regulatory environment,” noted BTC Markets CEO Caroline Bowler.

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Cross-chain protocol Multichain revealed on May 31 that its team has been unable to contact its CEO, Zhaojun, fueling rumors that the protocol’s leadership may have been arrested in China amid ongoing technical issues. 

“The team has done everything possible to maintain the protocol running, but we are currently unable to contact CEO Zhaojun and obtain the necessary server access for maintenance,” noted a Twitter thread. As reported by Cointelegraph, the protocol has experienced technical problems over the past week, with transactions delayed across multiple cross-chain bridges without a clear explanation.

According to rumors circulating on Twitter, the Chinese police arrested Multichain’s team and confiscated $1.5 billion in smart contract funds. Cointelegraph reached out to Multichain but did not receive an immediate response. As of now, the rumors remain unconfirmed.

Based on Multichain’s tweet, some protocols were affected by problems on the Router5 node, which supports connections between chains. Having been unable to contact the CEO and lacking permission to address the issue, the team suspended services for over 10 chains, including Kekchain, Public Mint, DynoChain, Redlight Chain, Dexit, Ekta, HPB, Onus, Omax, Findora and Planq.

“In order to protect the interests of our users, we have decided to suspend the corresponding cross-chain service for the affected chain on the UI,” noted the protocol’s team.

On Twitter, crypto community members pointed out that Multichain’s inability to access the server and solve the problem shows the protocol is a “backward step” from decentralization.

In response to the ongoing issues without clear explanations, Binance suspended deposits for 10 bridged tokens on the BNB Smart Chain, Fantom, Ethereum and Avalanche blockchain networks on May 25. The unexplained downtime also led the Fantom Foundation to remove 449,740 MULTI ($2.4 million) from liquidity on the decentralized exchange SushiSwap. Blockchain analytics firm Lookonchain reported $3 million worth of MULTI outflows related to smart money accounts last week.

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A fresh headcount reduction is coming to crypto exchange Binance, which is reportedly planning to lay off 20% of its workforce in June. The job cuts come after the company said earlier this year it would not lay off any employees.

According to the exchange, the decision is not a downsizing but rather a resource reallocation. “As we prepare for the next major bull cycle, it has become clear that we need to focus on talent density across the organization to ensure we remain nimble and dynamic,” a spokesperson told Cointelegraph.

On Twitter, Binance’s chief strategy officer Patrick Hillmann hinted the reorganization is meant to address growing regulatory pressures targeting the crypto space:

“Regulators in almost every major market are also working overtime to provide greater clarity for their expectations of the industry and the asset class more broadly, which is putting even more pressure on orgs to adapt or fall by the wayside.”

Also, according to Hillmann, a precise number of layoffs has yet to be determined. “Like previous exercises, this will be done after several teams (including HR, Risk, and Operations) finalize that talent density audit,” he continued. 

At the time of writing, Binance’s career page shows 326 open positions spanning several departments and locations. During the latest bull market, Binance’s headcount grew from approximately 3,000 to nearly 8,000, with staff located across Europe, the Americas, the Middle East, Africa and Asia.

In March, a Binance spokesperson told Cointelegraph that the company was seeking to fill over 500 roles by the end of June: “As of today, we are actively hiring for more than 500 roles with the goal of filling them by the end of H1 […] We are not planning any layoffs.” Moreover, in January Binance CEO Changpeng Zhao said the firm was planning for a hiring spree in 2023, increasing its headcount between 15% and 30%.

Crypto community members quickly reacted to the news, reviving Zhao’s previous tweets about crypto exchange layoffs.

Binance has been facing an unprecedented regulatory landscape. The U.S. arm of the crypto exchange was reportedly struggling to find a new bank partner to serve as a fiat on-ramp and off-ramp for clients after the closure of Silvergate and Signature Bank.

To keep its global status in this environment, the exchange has been acquiring locally regulated entities, including deals in Singapore, Thailand, and Japan most recently.

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Bitcoin may be the answer to combat cybersecurity threats driven by artificial intelligence, such as deepfake, said Michael Saylor, executive chairman of MicroStrategy, during a recent interview with Kitco News.

Saylor illustrated his views using social media accounts created by robots as an example. According to him, billions of fake accounts are behind a digital “civil war” in today’s society, stirring up hatred among real users of digital platforms.

“The risk in cyberspace is I can spin up a billion fake people, and I can create a civil war by having the fake Republicans hate on the fake Democrats, or the real Democrats. Having the fake Democrats hate on the real Republicans,” said the tech executive when discussing how artificial intelligence and other next-generation technologies will make deepfake cheaper and harder to detect.

According to Saylor, who has over 3 million Twitter followers, he receives nearly 2,000 fake followers every day. “I literally saw in a matter of one hour, 1500 bot accounts got scrubbed off my account, and they were bots. So, we can no longer live with that status quo,” he continued. The executive believes the solution for deepfake and other digital trust issues lies in decentralized identities (DIDs).

A decentralized identity is a self-owned, independent identity that enables trusted data exchange. In other words, it is a way to verify and control an online identity and personal information.

“If someone wants to launch a billion Twitter bots, that’s going to cost them a billion transactions […]. By combining the power of cryptography with the power of a decentralized crypto network like Bitcoin, we can bring cost and consequence into cyberspace,” he explained.

Saylor’s Microstrategy is one of the companies working on encrypted signatures for social users and corporate solutions. The CEO of Open AI, Sam Altman, is also developing technology for proof of personhood with his crypto project, Worldcoin. To build decentralized identification tools, the company closed a $115 million fund round last week.

Similarly, layer-2 protocol Polygon launched a decentralized identity solution in March. Powered by zero-knowledge proofs (ZK proofs), it uses cryptographic techniques to allow users to verify their identity online without having their sensitive information passed or potentially stored with a third party. The product came out nearly a year after announcing its development.

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The market dominance of stablecoins pegged to the United States dollar has undergone some changes over the past year. While most of them are in a downward trend, Tether (USDT) has climbed back to its all-time high, data from CoinGecko shows.

In the past 12 months, Circle’s USD Coin (USDC) has seen its market share decline from 34.88% to 23.05% at the time of writing. Market participation of Binance USD (BUSD) plunged from 11.68% to 4.18% in the same period, while Dai (DAI) held its participation rate at 3.66%, down from 4.05% in May 2022.

Tether’s USDT is moving in a contrasting trend. The stablecoin market dominance currently sits at 65.89% from 47.04% one year ago. Its market capitalization soared to $83.1 billion, while the USDC market cap dropped to $29 billion from its $55 billion peak.

In a recent interview with Bloomberg, Circle CEO Jeremy Allaire blamed the crypto crackdown by the United States regulators for the stablecoin’s declining market capitalization. The current environment in the United States appears to be beneficial for Tether.

The U.S. banking crisis led to USDC depegging in March as reserves worth $3.3 billion were stuck at Silicon Valley Bank, one of three crypto-friendly banks shut down by regulators. Despite Circle’s assurances, the market quickly responded to the news, causing USDC to depeg from the dollar.

With the growing connection between the crypto space and traditional finance, stablecoins have become increasingly popular. A report released recently by the European Systemic Risk Board highlighted the need for more transparency in the digital assets market, specifically for stablecoin reserves.

Tether has been heavily criticized for lacking transparency over the past years. Owned by Hong Kong-based iFinex, the crypto firm was fined $18.5 million in 2021 by the New York Attorney General’s Office for allegedly misrepresenting the fiat backing for its reserves. As part of the settlement, the stablecoin issuer was also required to provide greater financial transparency.

Tether’s leadership has fought back against the negative allegations on Twitter. Additionally, the company is seeking to reduce its exposure to the banking system following the collapse of Silicon Valley Bank. Its latest audit report shows Tether pulled over $4.5 billion out of banks in the first quarter of 2023, leading to a “substantial reduction” in counterparty risk amid the ongoing global economic uncertainty.

The company also boosted its U.S. Treasury bills to a new high of over $53 billion, or 64% of its reserves. Combined with other assets, USDT is now backed by 85% cash, cash equivalents and short-term deposits, according to the report.

A similar move has been made by Circle. The stablecoin operator reportedly adjusted its reserves to mitigate risk in the face of macroeconomic uncertainty, and no longer holds Treasuries maturing beyond early June.

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Rumors suggesting that Grand Theft Auto 6 will incorporate cryptocurrencies surface every once in a while, fueling expectations that the highly awaited game may incorporate digital assets as rewards for players, nonfungible tokens (NFTs) as in-game goods, or even as part of the storyline’s humor.

The most recent speculations in the crypto community emerged last week on Twitter, but so far, there’s no indication that Rockstar Games, publisher of the Grand Theft Auto franchise, plans to jump into Web3. Cointelegraph looked at the latest rumors and facts about the possibility of an upcoming crypto GTA.

Play-to-Earn is no longer seen as an efficient business model

Play-to-earn (P2E) games allow users to earn cryptocurrencies by playing games. The business model, however, has been deemed as unsustainable, despite the excitement over blockchain-based games.

During the NFT.NYC in April, game publishers and developers highlighted that the industry is exploring alternatives to replace the P2E business model amid the crypto prices downturn.

“It’s a model that is not sustainable at all,” said Chase Freo, CEO of gaming platform OP Games during a panel at the event, giving the example of Axie Infinity’s shift in some of its flagship titles.

During the panel discussion, Paul Flanagan, the head of business development at CM Games, an Estonian mobile game developer, voiced his opinion on the core issue surrounding P2E models. He described them as “zero-sum” and highlighted their resemblance to Ponzi schemes. Flanagan mentioned that while branding sponsorship could potentially serve as a viable revenue source, its effectiveness in practice remains to be seen.

According to Statista, Grand Theft Auto 5 has sold over 180 million units worldwide since 2015, making it one of the most successful game titles ever released. Based on estimates on the revenue of Rockstar’s parent company Take-Two Interactive, over $8 billion has been generated by the franchise over the last decade. Considering these figures, Grand Theft Auto has been a profitable title so far. Shifting to a P2E model would be a risky venture for Rockstar.

Rockstar’s NFT ban

Last November, Rockstar updated its website to make clear that fan-operated servers for Grand Theft Auto 5 could no longer utilize crypto assets, specifically NFTs.

A fan-operated server allows modifications to a PC game and interaction between players. As for Grand Theft Auto, some servers implemented NFTs to give players ownership of in-game goods, such as cars and weapons. Rockstar’s ban was a setback to fans hoping for NFTs in the franchise.

Lastly, the franchise is known for its humorous style. Many crypto enthusiasts believe that the next Grand Theft Auto could include crypto elements in its narrative, which would justify the years of rumors about the game taking a crypto approach. 

Cointelegraph reached out to Rockstar regarding the rumors, but did not receive an immediate response. As of now, the company has neither denied nor confirmed GTA6’s crypto status. The title is expected to be released in 2024.

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After five years out of the Japanese market, crypto exchange Binance has begun the process of establishing a new and fully regulated subsidiary in the country. The move follows the acquisition of the regulated crypto exchange Sakura Exchange Bitcoin (SEBC) in November 2022. 

As part of the deal, SEBC will cease its current services by May 31 and reopen as Binance Japan in the coming weeks. Users of the exchange’s global platform in the country will have to register with the new entity. The migration will be available after August 1, 2023, and will include a new identity verification process (KYC) to comply with local requirements.

Any remaining funds on the SEBC exchange will be automatically converted to Japanese yen and transferred to users’ bank accounts beginning in June, Binance previously disclosed.

With a narrowing regulatory landscape, the exchange’s strategy for expanding its global reach has been to acquire local regulated entities. Binance made a similar move in Singapore in 2021, in Malaysia in 2022, and in Thailand most recently. In Japan, it shut down operations in 2018, after failing to obtain an independent license from local regulators.

Related: Japan’s crypto Anti-Money Laundering measures to start in June

According to a notice on its website, the exchange will not provide derivative services in Japan. Binance’s global version will not accept new derivative accounts from users in the country.

Additionally, residents in Japan using the global platform will not be able to increase or open new options positions after June 9. Pending orders will be canceled, and existing positions must be closed before June 23, said the exchange. Binance Leveraged Tokens will not be available for trade or subscription.

“In the future, we plan to continue to enrich our service offerings in Japan and will work closely with regulators to possibly provide derivatives services in a fully compliant manner,” the company wrote.

Japan was one of the first nations to introduce crypto regulations. The local laws contributed to the speedy recovery of funds in February at FTX Japan, a subsidiary of the now-bankrupted crypto exchange FTX. Japan’s regulations requires crypto exchanges to separate client funds from other  assets.

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Another centralized exchange (CEX) bites the dust, with Hotbit announcing it will close operations due to adverse business conditions. As is common among CEX collapses in recent months, the crypto firm mentioned FTX, the ongoing banking system crisis, and even a probe, as reasons for its cash flow problems.

Also facing a tough time is wallet provider Ledger. The company decided to postpone its controversial recovery service amid community backlash. Security reputation is critical for a crypto wallet provider, but Ledger’s dilemma may be beyond a public relations crisis. The recovery service was also a path toward subscription services, which could generate recurring revenue for the wallet provider. The feature is now postponed until most of its code is open-sourced, said Ledger.

In challenging times, there are also opportunities for others. Honk Kong is advancing its plans to become a crypto hub, with over 150 crypto firms waiting for approval to operate as virtual assets trading platforms in the city.

This week’s Crypto Biz explores Hotbit’s closure, Hong Kong’s licensing of crypto firms, Bitstamp’s acquisition by Ripple and Ledger’s branding crisis.

Hotbit exchange halts operations, urges users to withdraw funds

Crypto exchange Hotbit is winding down operations, urging users to withdraw funds by June 21. According to an announcement, Hotbit’s operations have deteriorated since an investigation of a former team member took place in August 2022. Authorities believe a former management employee was involved in a project that violated criminal laws. The probe forced the exchange to halt business for weeks. Hotbit’s cash flow was also impacted by the FTX collapse and the banking crisis — incidents that resulted in a continuous outflow of funds from centralized exchanges, said the firm. The announcement was followed by phishing links pretending to be the official Hotbit website on Google. 

Ledger key recovery service paused amid backlash, will open-source code

Ledger’s public relations nightmare took a new turn this week, leading the company to pause its recovery service tool amid ongoing community backlash. Disclosed on May 16, the Ledger Recover feature would allow users that lost their private seed phrase to get it back via an optional function. Earlier in the week, Ledger’s CEO Pascal Gauthier confirmed that private seed phrases of users using the service could, in theory, be handed over to governments if they were to be subpoenaed. In response to concerns, the firm is accelerating efforts to open-source most of its codebase, including core components of its operating system and Ledger Recover, which is postponed until after this process is completed.

Hong Kong to open crypto exchange access for retail users, but there’s a catch

Hong Kong has taken another step toward building its reputation as a crypto hub. Earlier this week, its Securities and Futures Commission announced that virtual assets trading platforms would soon be licensed to serve retail investors. Compliance guidelines will include asset custody safety requirements, cybersecurity standards and segregation of client assets. Further measures to protect investors may involve enhanced token due diligence and regular disclosures. The legal framework was approved by local legislators in December 2022, seeking to give cryptocurrency exchanges the same market recognition as traditional financial institutions. Providing regulatory clarity for crypto firms has been part of Hong Kong’s strategy in attracting businesses and positioning itself as a Web3 city.

Ripple acquires Pantera’s stake in Bitstamp

Digital payment network Ripple took a minority stake in the crypto exchange Bitstamp in the first quarter of 2023. Galaxy Digital advised on the deal, according to a transcript of Galaxy’s shareholder conference call on May 9. Ripple acquired shares previously owned by Pantera Capital, a United States-based digital asset investment firm. It is unclear how much Ripple paid for the acquisition or how the deal was structured. Founded in 2011, Bitstamp was one of the first crypto exchanges to offer digital assets transactions. Based in Luxembourg, the company serves clients in over 100 countries.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

Chinese Bitcoin mining company Canaan reported slight improvements in some of its financial metrics in the first quarter of 2023. The progress, however, is still far behind where it was last year in this period.

According to an unaudited report posted on its investor relations page, Canaan’s net loss was at $84.4 million in Q1, lower than its $91.6 million net loss in the previous quarter. The net loss represents a major reversal compared to the same period of 2022, when the firm reported a net income of $65.1 million.

Diluted net loss per American depositary share (ADS) in the first quarter of 2023 was $0.51 from $0.55 in the previous quarter, while diluted net earnings per ADS in the same period of 2022 stood at $0.38. According to Investopedia, an American depositary share, or ADS, is an equity share in a non-U.S. company, held by a U.S. depositary bank and available for purchase by investors.

The company claims to be expanding operations despite the ongoing bear market and associated drop in earnings. 

The quarterly results were impacted by several factors, including low market demand that hindered product revenue, the ongoing crisis in the banking system, and the slow recovery of Bitcoin’s (BTC) price. Revenue in Q1 totaled $55.1 million, against $58.3 million last quarter, and $201.8 million in the same period of 2022.

“In the first quarter of 2023, we experienced a further contraction in our sales revenue, due to the industry-wide reduction in selling prices, and unforeseen delays in payment and shipment following a series of U.S. bank failures. In addition, our mining business encountered difficulties that postponed the increase of our installed hash rates,” said Canaan’s chief financial officer James Cheng in the report, claiming the revenue results “fell short” of expectations.

Related: Ripe for the squeeze? Bitcoin mining stocks remain under attack from short sellers

A revenue breakdown shows $44.1 million coming from products revenue, and $11.1 million from mining activities, as well as $300,000 revenue other revenues. Income generated from mining activities rose 3.3% from $10.7 million in the fourth quarter of 2022, and represents a 130.2% increase from $4.8 million during the same period of 2022.

Costs linked to mining operations include electricity and hosting, as well as equipment depreciation and amortization.

The total operating expenses in the first quarter of 2023 were $38.1 million, compared to $60.8 million in the fourth quarter of 2022, and nearly equal to the same period last year, when it also stood at $38 million. “We managed to narrow our operating loss by 31.4% from the last quarter,” noted Cheng.

The report shows a decrease in investment in research and development. Canaan spent $19.1 million in the first quarter, compared to $33.4 million in the previous period. The decline was due to one-off US$14.3 million research and development expenditures for the A13 series products. In the same period of 2022, the company committed $15.1 million in R&D.

Cryptocurrency assets held by Canaan as of March 31, 2023, totaled 623 BTC, worth $13.4 million, according to the report. Cash and cash equivalents were at $72 million, compared to $101.6 million as of Dec. 31, 2022.

Magazine: $3.4B of Bitcoin in a popcorn tin — The Silk Road hacker’s story

United States President Joe Biden expressed opposition to a debt ceiling agreement with Republican leaders that would allegedly benefit crypto traders. Attending the Group of Seven (G7) Summit, Biden reportedly classified Republicans’ proposed terms as “unacceptable” during a press conference.

“I’m not going to agree to a deal that protects wealth tax cheats and crypto traders while putting food assistance at risk for nearly 1 million Americans.”

The alleged protections for crypto traders refer to tax-loss harvesting. According to the Washington Post, there’s an ongoing discussion between the White House and Republican leaders about blocking the mechanism for cryptocurrency transactions.

Crypto tax-loss harvesting is a strategy that investors use to reduce their overall tax liabilities. It involves selling a cryptocurrency at a loss to offset capital gains from crypto profit. To claim a loss, the assets must be sold, and the proceeds must be used to purchase a similar asset within 30 days before or after the sale. The mechanism is also available for stocks and other assets.

Related: US debt ceiling crisis: Bullish or bearish for Bitcoin?

Along with ending tax-loss harvesting for crypto, the White House pitched Republicans a similar proposal that bars investors from deferring taxes on real estate swaps. Both the changes would add about $40 billion in tax revenue for the U.S. government.

Republicans reject the proposals, a source told the Post. House Speaker Kevin McCarthy claims the U.S. debt rise is a “spending problem, not a revenue problem,” citing the Biden administration’s excessive spending during the pandemic. Meanwhile, the White House blames the debt issue on tax cuts from previous administrations, claiming revenue has been significantly affected by tax reductions.

Republicans want to close the deficit with $4.8 trillion in spending cuts, which would directly affect federal agencies’ budgets. If Congress fails to raise the debt ceiling, the U.S. could default as early as June 1. Biden will reportedly speak with McCarthy on the phone during his flight from Hiroshima to Washington, D.C.

In effect since 1917, the debt ceiling is the limit Congress has set on how much money the federal government can borrow to pay bills.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Banks want to reduce exposure to crypto businesses, just as crypto businesses are seeking to reduce exposure to the ongoing banking crisis. Tether’s latest audit report shows that the stablecoin issuer withdrew over $4.5 billion from banks in the first quarter to reduce counterparty risk following Circle’s troubles during the collapse of Silicon Valley Bank.

The past few days also brought a change in the winds to Ripple’s battle with the United States Securities and Exchange Commission (SEC), with a motion from the securities regulator to seal some records rejected by a U.S. judge. The move has been viewed as a victory for Ripple, which considers the documents key evidence in its costly dispute with the regulatory agency.

This week’s Crypto Biz explores Tether’s first quarter audit, Ripple’s partial victory against the SEC, Worldcoin fundraising and Ledger’s controversial recovery service.

Court victory for Ripple as judge denies SEC motion to seal Hinman docs

A motion from the U.S. securities regulator to seal records of internal deliberations has been denied in a move seen as a win for Ripple and the crypto community. The SEC filed the motion on Dec. 22, 2022, to seal internal emails, text messages and expert reports after a speech from its former director William Hinman claimed Ether (ETH) — the native token of the Ethereum blockchain — is not a security. Ripple considers the speech a key piece of evidence in its ongoing legal battle with the SEC, which alleges that sales of Ripple’s XRP (XRP) token violated U.S. securities laws. Ripple has spent over $200 million defending itself against SEC allegations.

Tether boasts of its financial stability after strong profits, money moved out of banks

Stablecoin operator Tether pulled over $4.5 billion out of banks in the first quarter of 2023, leading to a “substantial reduction” in counterparty risk, the company said in its latest audit report. The market capitalization of its Tether (USDT) stablecoin grew from $66 billion to over $82 billion in the same period. The company boosted its U.S. Treasury bills to a new high of over $53 billion, or 64% of its reserves. Combined with other assets, USDT is now backed by 85% cash, cash equivalents and short-term deposits. Owned by Hong Kong-based iFinex, Tether has fought negative allegations about its finances. The company was fined $18.5 million by the New York Attorney General’s Office for misrepresenting the fiat backing for its reserves in 2021. 

Crypto community reacts to Ledger wallet’s secret recovery phrase service

Ledger’s latest feature has sparked discontent among the crypto community. Known as Ledger Recover, the company’s retrieval solution for hardware crypto wallets offers a safeguard in case users lose their seed phrase. However, the concept has enraged many in the crypto community, including security specialists. The service employs a technique where the user’s seed phrase is divided into three encrypted fragments, each sent to different external entities. These entities will be able to reconstruct the encrypted keys. The community brought up Ledger’s data leak in 2020, which exposed users’ email and mailing addresses, and phone numbers. Some believe the recovery service put a backdoor into seed phrases. 

OpenAI CEO in ‘advanced talks’ for $100M Worldcoin funding

The bear market is not holding back Worldcoin funding. The company co-founded by OpenAI CEO Sam Altman is reportedly in “advanced talks” to secure $100 million in funding for Worldcoin — a project to create a global, collectively owned cryptocurrency. Worldcoin is preparing to launch its blockchain protocol and commence recording transactions within “the next six weeks” after operating in beta. Recently, it launched its own gas-free crypto wallet for verified humans.

Before you go: How will lower interest rates benefit Bitcoin?

Cointelegraph analyst and writer Marcel Pechman explains how lower interest rates in the U.S. will ultimately benefit Bitcoin (BTC) and the cryptocurrency market. Pechman also dives into Argentina’s economic crisis: Along with hyperinflation, the Latin American country saw its local currency, the peso, decline by 70% in the past few years, boosting the demand for U.S. dollars, gold and Bitcoin.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

As the hype around Bitcoin (BTC) has faded, institutional investors and portfolio managers have begun looking at the major cryptocurrency as a “serious venue” to invest in, claims Fred Pye, CEO of 3iQ, Canada’s first Bitcoin fund issuer.

In an interview with Cointelegraph during the Bitcoin 2023, Pye spoke about Canada’s advanced regulation for crypto trading, and how it has been drawing investors to the digital assets market.

According to Pye, fund managers and institutional investors running diversified portfolio assets are looking for alternative investment strategies amid a global inflationary environment and macroeconomic challenges.

“The FOMO in Bitcoin is gone. It’s all moved over to AI [artificial intelligence]. So now the institutions and the proper portfolio managers, the people that are responsible for running diversified portfolios, are now starting to take a look at Bitcoin as a serious venue.”

It is not just about maximizing profits, says Pye. For institutional investors, crypto use cases will be a growing trend in the next few years. “The theme for 2024 going forward is definitely use cases. So, we’ve got this beautiful technology, now let’s put that beautiful technology to work,” he stated.

Regulatory challenges for institutional adoption have been around for a while, but Canada has notably taken the lead on launching crypto ETFs in North America, given the U.S. Securities and Exchange Commission’s reservations towards the crypto space.

Related: Crypto adoption is booming, but not in the US or Europe — Bitcoin Builders 2023

ETF refers to the exchange-traded fund that is a portfolio of assets whose shares are traded on a stock market. They blend the characteristics and potential benefits of mutual funds, stocks and bonds.

Canadian regulators have approved several crypto ETFs in the past years, including Bitcoin and Ether (ETH) products from 3iQ, Purpose Investments and Evolve Funds Group, attracting millions of dollars to their crypto products.

“They’ve never been mispriced,” said Pye about running regulated digital assets ETFs in Canada, adding that “there’s no difference about running a Bitcoin ETF than running a gold ETF. We track the price of Bitcoin identically. They’re low fees, and it works. […] We can cipher trace where the Bitcoin comes from, so we’re only purchasing clean Bitcoin. And I think these are all the characteristics that people are concerned about.”

Canada’s latest initiative towards digital assets relies on a public consultation about a central bank digital currency (CBDC), with the local monetary authority asking what features the country’s citizens want to be included in a potential digital Canadian dollar. Canadians’ consultation results are expected to be published later this year.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Latam Gateway, the payment provider for Binance in Brazil, has been granted a license by the country’s central bank to operate as a payment institution and electronic money issuer on May 19, according to local media reports.

Brazil is among Binance’s top global markets, the exchange said in a previous announcement.

Latam Gateway helps foreign companies to operate in Brazil by providing on/off ramps with the Brazilian real. According to the company’s website, Binance is the only crypto client in the country. Other relevant clients include gaming-related companies such as Codashop, Moedaz and Game Hollywood.

Binance and Latam Gateway have been partners since June 2022, following the termination of Binance-Capitual’s collaboration in the country. 

A market with nearly 214 million people has attracted crypto companies to Brazil. In January, Binance and Mastercard teamed up to launch a prepaid crypto card in the country, allowing residents to make purchases and pay bills with over 14 crypto assets through real-time crypto-fiat conversion. Cardholders are required to comply with Know Your Customer (KYC) standards.

Related: Crypto adoption is booming, but not in the US or Europe — Bitcoin Builders 2023

Also expanding operations in the country is Coinbase. Since March, the exchange has partnered with local payment providers to offer crypto purchases, as well as enable deposits and withdrawals in the local currency. Coinbase has been in the country since 2021, when it established a tech hub to offer crypto services to Brazilians.

Brazil’s regulatory authorities are also paying attention to crypto firms. Binance is reportedly being investigated for allegedly helping clients evade a stop order on cryptocurrency derivatives investments.

In 2020, the Brazilian Securities and Exchange Commission issued a stop order on crypto derivatives. Futures contracts are considered securities under local law, regardless of the nature of the underlying assets.

According to documents from the local probe, Binance’s platform displayed instructions for Brazilian users to change their language settings in order to access the Binance’s Futures section. Additionally, the SEC said there was extensive Portuguese-language content available without a restriction notice for Brazilian users. Canadian and American securities regulators have conducted similar investigations against the crypto exchange.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Argentinians can now purchase dairy produce with the USDT stablecoin at the Central Market of Buenos Aires — one of the largest movers of fruits and vegetables in Latin America. The move was enabled by a partnership between the stablecoin issuer Tether and on-/off-ramp platform KriptonMarket. 

The collaboration will provide companies the ability to accept and pay bills with USDT, as well as pay a percentage of employee salaries with the stablecoin. The Central Market supplies over 12 million people per month and is home to over 500 wholesale companies, according to the city of Buenos Aires. It also employs over 2,000 people.

The partnership will also reduce intermediation costs as well as give users a payment option pegged to the United States dollar and is therefore less susceptible to market fluctuations, said Tether in a statement shared with Cointelegraph. 

Crypto adoption is booming in Argentina thanks to hyperinflation and its fiat peso devaluation. April’s inflation rate rose to 108.8% year-over-year in the Latin American country, remaining at its highest level since 1991 after rising 104.3% in March. On May 15, the Argentine central bank elevated its benchmark interest rate to 97%, but tight monetary policy does not appear to be bold enough to curb price escalation.

“With the continuing devaluation of their nation’s currency, the people of Argentina need solutions to pursue their own financial freedom. If we are able to contribute to the well-being of an entire country through the state-of-the-art technologies provided by the blockchain, we will be one step closer to ending the fight against financial discrimination,” said Paolo Ardoino, chief technology officer of Tether.

In a recent interview with Cointelegraph, Daniel Fogg from IOV Labs, the foundation behind smart contract platform Rootstock, said that emerging markets are leading the way in crypto adoption, as people look to cryptocurrencies as a safe haven against macroeconomic shocks. “For me, if you want to look at the future of what I hope crypto will become, it exists today in Turkey, Colombia, Nigeria, Argentina. It doesn’t exist today in the United States or the U.K.,” he noted.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

A combination of more hash rate coming online from mining plants and a price protection approach is shielding Bitcoin (BTC) mining firm Marathon Digital Holdings (Nasdaq: MARA) through the bear market, told Cointelegraph its CEO Fred Thiel. 

In an exclusive interview during the 2023 Bitcoin Conference in Miami, Thiel disclosed the strategy behind Marathon’s figures in the first quarter of 2023, where the firm reduced its net loss from $12.9 million ($0.12 per share) from Q1 2022, to $7.2 million ($0.05 per share) this year.

Marathon is offsetting lower Bitcoin prices with production increasing. It reported a quarterly record of 2,195 BTC mined over the first three months of the year, worth above $60 million at the time of writing. “We are now operating at somewhere of 14.0 [Exhash/second (EH/s)] hash rate, which is two times more than where we were at the end of last year,” said Thiel about the 74% increase in production, claiming Marathon should achieve 23.0 EH/s in hash rate in the coming months.

Last year’s crypto winter added another pressure on Bitcoin mining companies. In December, Core Scientific filed for Chapter 11 bankruptcy, while Greenridge received a $74 million debt restructuring lifeline from New York Digital Investment Group to survive amid Bitcoin’s value decline.

Although Bitcoin’s price also affected its quarterly results, Marathon managed to reduce its debt in March amid the banks collapsing in the United States. The mining firm paid off a term loan with Silvergate Bank, freeing up the 3,132 Bitcoins held as collateral for the loan. At that time, Marathon said the move would eliminate $50 million worth of debt and reduce its annual borrowing cost by $5 million.

Related: Contagion engulfs Bitcoin miners as bear market continues

Marathon’s strategy also included efforts to protect assets from market downturns. According to Thiel, Marathon deployed capital raised in the past years buying rigs at the peak of the market with price protection, tying its debt to Bitcoin’s value.

“As the pricing came down in the market, our pricing was adjusted all the way down. What that meant is we had first looked essentially at the latest technology, which means that our fleet is going to be the most energy-efficient fleet in the industry. The average flee across the industry is about 43, 44 joules per terahash. Our fleet is at 24 joules per terahash, so almost half the energy.”

Marathon is also investing in foreign partnerships. Earlier in May, the company announced a joint venture with digital assets’ infrastructure Zero Two to create a large-scale Bitcoin mining facility in Abu Dhabi, with two mining sites combining 250-megawatt capacity.

Abu Dhabi was picked due to its asymmetric energy market, in which the energy capacity needed to meet summer demand is left untapped during winter, said Thiel. “They don’t have to fund out the government’s coffers to subsidy electricity, because now Bitcoin is going to subsidize that.”

Magazine: $3.4B of Bitcoin in a popcorn tin — The Silk Road hacker’s story

Democratic presidential candidate Robert F. Kennedy Jr. (RFK) will be the first presidential candidate in United States history to accept campaign donations with Bitcoin, making his first appearance as a presidential candidate at the crypto conference. He praised the cryptocurrency as a “symbol of democracy and freedom” during the event. 

“Today we show the world the power and the durability and the flexibility of Bitcoin. […] Almost everyone in this room is aware of the link between Bitcoin and democracy and freedom. […] They’re passionate because of the deep representation of a deep need that we have for liberty and democracy, and the promise that this innovation has to guarantee those virtues.”

The candidate — who is challenging Joe Biden — has been sharing his libertarian views about cryptocurrencies on Twitter. In a post on May 3, RFK stated that “crypto technologies are a major innovation engine,” adding that the United States is hobbling the industry and driving “innovation elsewhere.” 

This is a developing story, and further information will be added as it becomes available.

Mass crypto adoption is already taking place around the world, but not in the United States or Europe, nor does it have Bitcoin as a flagship asset for mainstream acceptance. According to Daniel Fogg of smart contract platform Rootstock, the increase in adoption is instead ongoing in emerging markets, where cryptocurrencies are offering solutions to people’s everyday problems. 

In an interview with Cointelegraph’s Joe Hall at the Bitcoin Builders Conference, in Miami, Fogg spoke about Bitcoin pragmatism, adoption worldwide and how emerging economies are shaping the future of the crypto space.

According to Fogg, emerging markets are leading the way of crypto adoption for one major reason —- countries that have significant macroeconomic challenges. In his view, many people’s first meaningful digital banking experience will be happening in emerging markets on crypto rails in the coming years.

“People on the streets have a pressing need to protect their income, to get access to U.S. dollars to get a loan. […] We’re seeing these massive shifts. For me, if you want to look at the future of what I hope crypto will become, it exists today in Turkey, Colombia, Nigeria, Argentina. It doesn’t exist today in the United States or the UK.”

Fogg believes the crypto space is evolving through two major crypto use cases. One is centered around decentralized finance solutions for people seeking outsized return and alternative investments opportunities. Another use case involves people acquiring stablecoins pegged to the United States dollar for savings and daily payments in economies dealing with inflation, devaluation, and other monetary problems.

“I think there’s a kind of bifurcation in what DeFi could become, advanced DeFi, which is a lot of what I think the usage in America and Europe will be […], and then every day DeFi, which is what you’re going to see in emerging markets every day.”

Emerging markets offer “scale opportunity” to retail finance, said Fogg, adding that developing DeFi products for these areas is a key strategy for Rootstock and its sister company IOV Labs. Speaking about Bitcoin pragmatism, Fogg highlighted that although Bitcoin is a remarkable innovation, Bitcoin alone is simply not enough. As told by Fogg, the crypto space doesn’t yet have an established use case for billions of users, and it may take years to achieve that:

“In many cases, we think they’re paying, saving, borrowing, lending, retail finance, etc. But there are many other use cases as well. We have to experiment our way there. And if we are held back by a traditional conservative mindset around what Bitcoin could be, I think that’s to the world’s detriment.”

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Cross-chain messaging protocol LayerZero and security platform Immunefi have teamed up to launch a $15 million bug bounty program. 

The program offers a maximum reward of $15 million for anyone identifying a vulnerability at the highest severity level. According to its terms and conditions, rewards are based on Immunefi Vulnerability Severity Classification System and paid according to vulnerability impact. 

LayerZero is an omnichain interoperability protocol that allows developers to interact with contracts across blockchains. In bug bounty programs, ethical hackers are rewarded for finding and reporting application vulnerabilities and bugs.

To be considered for a reward, bug reports must include a proof-of-concept (PoC) demonstrating an end-effect on assets-in-scope. Explanations and statements are not accepted as PoC and code is required, according to the eligibility criteria.

Critical smart contract vulnerabilities reported on Ethereum, BNB Chain, Avalanche, Polygon, Arbitrum, Optimism and Fantom pay a minimum of $250,000, or 10% of the assets’ value at risk at the time of reporting. The payout for critical vulnerabilities starts at $25,000 for all other chains. Non-critical rewards are based on internal criteria.

Bounty hunters are also required to comply with Know Your Customer (KYC) standards, such as submitting a copy of their passport or government ID and proof of address, as well as being screened by the United States Office of Foreign Assets Control (OFAC).

According to Immunefi, over 1,248 reports have been processed since its inception in 2020, totaling $65,918,994 in crypto bounties paid as of December 2022.

Other software companies offering thousands of dollars in bug bounties include Microsoft, Intel, and OpenAI. Microsoft offers a maximum payout of $250,000 for critical bugs. Intel’s bug hunters can earn rewards up to $100,000, while OpenAI offers rewards up to $20,000 for exceptional discoveries.

Magazine: Should crypto projects ever negotiate with hackers? Probably

Ethereum core developers rolled out patches for Prysm Labs and Teku clients as a response to two Beacon Chain finality issues within a 24-hour period. The Beacon Chain serves as the consensus layer for the Ethereum network. 

On May 11, Ethereum developers reported that the Beacon Chain was experiencing problems confirming transactions. Although new blocks were able to be proposed, an unknown issue prevented their finalization. The outage lasted around 25 minutes. A similar issue took place on May 12, preventing block finalization for over an hour.

Finality was unable to be reached for 3 and 8 epochs, said the Ethereum Foundation in a statement shared by an Ethereum consultant on Twitter. The issue “appears to have been caused by high load on some of the Consensus Layers clients, which in turn was caused by an exceptional scenario.”

Although the network was unable to finalize, live and end users were able to transact on the network thanks to client diversity “as not all client implementations were affected by this exceptional scenario.”

Client diversity relates to the number of software clients available to network validators. Greater diversity among clients means a more robust and secure network.

Both Teky and Prysm have released upgrades that implement optimizations to prevent beacon nodes from consuming excessive resources.

A similar issue took place on March 15, resulting in a delay in the Goerli testnet version of Ethereum’s “Shapella” upgrade, which was successfully deployed on April 12. Ethereum’s pre-existing proof-of-work chain merged with the Beacon Chain on Sept. 15, 2022, enabling the network’s transition to proof-of-stake consensus mechanism, which is faster and less energy-intensive.

Memecoin’s recent trading hype has increased Ethereum’s activity and staking rewards rates. According to on-chain data, Validators earned $46 million in the first week of May, or 24,997 Ether, a 40% increase over the previous week’s income of $33 million, when 18,339 ETH were distributed as rewards.

Magazine: Here’s how Ethereum’s ZK-rollups can become interoperable