Staking technology provider Kiln raises $17 million in rare crypto funding round

https://techcrunch.com/2024/01/18/staking-technology-provider-kiln-raises-17-million-in-rare-crypto-funding-round/

2023 hasn’t been the best year for crypto companies. According to PitchBook data, VC investments in crypto companies are down by 68% in 2023 compared to 2022. To be fair, crypto companies still raised $9.5 billion. But that’s a small number compared to 2022, the year during which crypto companies raised $30 billion. And yet, […]

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Katie Haun believes now is a good time to invest in crypto

https://techcrunch.com/2023/09/21/katie-haun-believes-now-is-a-good-time-to-invest-in-crypto/

Nearly two years ago, Katie Haun left Andreessen Horowitz and raised two crypto funds totaling $1.5 billion. And then… a crypto market crisis happened. At TechCrunch Disrupt, she looked back at what happened over the past couple of years and confirmed that she’s still very optimistic about the future of crypto. When Katie Haun was […]

a16z’s Arianna Simpson believes crypto will be just fine, thank you for asking

https://techcrunch.com/2023/09/19/a16zs-arianna-simpson-believes-crypto-will-be-just-fine-thank-you-for-asking/

If the crypto investment craze of 2021 could be defined with one investor name, that would be Andreessen Horowitz — or a16z for short. The well-known VC firm has raised over $7.6 billion for its crypto funds. And yet, crypto isn’t doing so well this year. As TechCrunch’s Jacquelyn Melinek wrote earlier this summer, crypto funding […]

Crypto wallet ZenGo launches pro subscription with additional security features

https://techcrunch.com/2023/07/24/crypto-wallet-zengo-launches-pro-subscription-with-additional-security-features/

Cryptocurrency mobile wallet ZenGo has introduced a handful of new features combined with a new premium subscription called ZenGo Pro that costs $20 per month. This new, optional subscription brings additional security features for users who have a lot of crypto assets or who are really concerned about security in general — basic accounts remain free and the app has also been redesigned.

As a reminder, ZenGo is a self-custodial wallet that uses multi-party computation. Unlike Metamask, a ZenGo wallet can’t be recovered using a seed phrase. This is important if you want to avoid phishing attempts. And unlike centralized exchanges like Coinbase, ZenGo doesn’t control your cryptocurrencies.

If you want to initiate a transaction from your ZenGo wallet, all parties need to approve the transaction. In that case, the secret share stored on your device and the secret share stored on ZenGo’s server are required.

If you lose your phone or it stops working, you can recover your ZenGo wallet on a new phone using the recovery file that is stored in one of your online cloud storage account, such as iCloud Drive or Dropbox. You also need to confirm the action from your email inbox and scan your face — more on that later.

And things have been working well for ZenGo as the company managed to attract more than one million downloads. Overall, ZenGo users have processed more than $1 billion in transaction volume.

“But what we’ve learned over the years is that there were plenty of use cases for which security had not been solved,” co-founder and CEO Ouriel Ohayon told me.

“What we’ve decided to do is launch a suite of security services called ZenGo Pro, which is a paid subscription that brings these innovations to all blockchains. This could be solved by certain services on certain blockchains, but in our case it’s bundled.”

Biometric withdrawal protection and legacy transfer

In particular, ZenGo has identified two pain points that are rarely tackled by crypto wallets. First, what happens if someone steals your phone? As The Wall Street Journal already reported, if someone has access to your phone and knows your passcode, they can easily steal money from your financial apps and ruin your digital life.

With ZenGo Pro, users can enable another layer of security for outgoing transactions. When you first create your ZenGo wallet, the company scans your face and stores a 3D scan of your face. This isn’t FaceID — it uses FaceTec’s software technology for that feature.

ZenGo Pro users can require a face scan for outgoing transaction. This way, even if your roommate knows your passcode, they can’t empty your wallet behind your back. And if you’re trying to send money to a scam, ZenGo will also warn you with a new risk assessment system (a so-called “web3 firewall”).

Second, ZenGo is going to introduce a legacy transfer feature in the coming weeks. “The problem with inheritance is simple. What happens if you die — physically or digitally?” Ohayon said. “There are extremely costly solutions involving lawyers or notaries.”

With ZenGo Pro, the company wants to create a software solution that is easier to set up. A user can invite someone they trust to become their legacy contact. The other person should install ZenGo first. Both users will then get a shared secret that they can store on an online storage service like Dropbox.

After a pre-defined inactivity phase, crypto assets are automatically transferred to the legacy contact. The maximum inactivity setting is 24 months without opening the app at least once.

And yes, if the user dies and the ZenGo Pro subscription can’t be renewed because the payment method doesn’t work anymore, ZenGo will still transfer the assets after the inactivity phase.

In the future, ZenGo also plans to add additional features to its pro subscription. Paid users can also reach out to customer support more easily. The legacy system will be improved as well with the ability to add several contacts and define a split.

“Most wallet companies have business models that have shown their limits – including Ledger and including us until now. How do you create a revenue stream that is recurring, that is predictable, that aligns interests with the user interests without artificially trying to add fees here and there?” Ohayon said.

And this is key to understanding ZenGo Pro. Many crypto companies generate more revenue when there is more trading activity. This creates some seasonality and it can be more difficult to survive during crypto winters.

That’s probably also the reason why ZenGo has secured additional fundings from new and existing investors — but the company isn’t sharing the amount raised other than “millions of dollars.” Yat Siu, the CEO of Animoca Brands, is investing in the crypto wallet for the first time.

“Because creating a wallet is expensive. Here, we bring an innovative business model that enables us to create a recurring, sustainable model controlled by the wallet company,” Ohayon said.

Social trading app Shares receives EU stock trading license

https://techcrunch.com/2023/06/29/social-trading-app-shares-receives-eu-stock-trading-license/

Fintech startup Shares has raised $90 million for its stock trading app. And yet, the service is only available to people who live in the U.K. But that’s about to change as the company has received a couple of authorizations from French regulators. With EU passporting rules, Shares could also expand to other European countries.

As a reminder, Shares lets you trade stocks with no minimum trade size. The company offers fractional shares, which means that you can start investing with as little as £2. It competes with other neobrokers that try to make stock investment more accessible, such as Freetrade in the U.K., Bitpanda and Trade Republic in Europe.

But what makes Shares different from other mobile trading apps is that there’s a social twist. Shares lets you follow your friends and comment on their trades. Users can also create private chats and subscribe to communities of more experienced investors. So far, Shares has managed to attract 150,000 users in the U.K.

Shares just received the accreditation to operate an investment service in France from the ACPR (Autorité de contrôle prudentiel et de résolution), France’s financial regulator. And the company plans to take advantage of this license sooner rather than later as it plans to launch Shares in France starting next month. At first, you’ll need an invitation to create an account though.

France’s financial markets regulator (Autorité des marchés financiers) also recently granted the PSAN status to Shares — the startup is now officially a digital assets service provider in France, meaning that it will be able to handle crypto trades as well.

“We are very pleased to receive these authorizations: PSAN registration for cryptocurrencies, and PSI license for trading in stocks and ETFs. This is the reward of an extremely rigorous team effort, of which we are extremely proud. Shares is now regulated by the French regulator and this marks a decisive step in our journey, and allows us to announce our EU launch in July by invitation to our first members,” co-founder and CEO Benjamin Chemla said in a statement.

As you can see, today’s news is going to pave the way for future market expansions in the European Union.

Image Credits: Shares

Social trading app Shares receives EU stock trading license by Romain Dillet originally published on TechCrunch

Bitpanda’s crypto exchange separates from Bitpanda and secures $33 million

https://techcrunch.com/2023/06/28/bitpandas-crypto-exchange-separates-from-bitpanda-and-secures-33-million/

Fintech startup Bitpanda is splitting into two companies as Bitpanda Pro — the company’s cryptocurrency exchange — is going to become its own independent company called One Trading. As part of this move, One Trading is also raising $33 million (€30 million) in funding.

Peter Thiel’s Valar Ventures is leading the funding round with participation from MiddleGame Ventures, Speedinvest, Keyrock and Wintermute Ventures.

Bitpanda is a popular consumer trading app that has raised hundreds of millions of dollars and attracted millions of users in Europe. While the company started as a crypto broker and exchange, it then added the ability to buy and sell stocks, ETFs, precious metals like gold and commodities.

More recently, the company has been partnering with other fintech startups so that they can offer stock and crypto trading in their own apps. For instance, Lydia and N26 both selected Bitpanda as their white-label trading partner.

In addition to these trading products designed for retail investors, Bitpanda has been running its own crypto exchange called Bitpanda Pro. This service is designed for institutional investors who handle large orders or businesses that want to trade using bots and the company’s API.

And that’s the part of the business that is becoming its own company called One Trading. Going forward, Bitpanda is still going to offer crypto trading — but it will act as a broker, not an exchange. A crypto exchange manage trades between different users while a broker acts as an intermediary between customers and different markets.

One Trading CEO Joshua Barraclough, who was already in charge of Bitpanda Pro, said in an email that Bitpanda and Bitpanda Pro are “separating so that they can build out a market leading product for sophisticated retail and institutional customers, with the right focus and investment to be successful. Bitpanda continues to operate, but no longer has an exchange or institutional OTC business.”

Splitting the company also means that Bitpanda won’t face as many regulatory challenges as One Trading. For instance, One Trading plans to offer derivatives, which are risky financial assets.

Similarly, in the U.S., crypto companies like Coinbase and Binance are facing lawsuits for securities law violations. While the regulatory landscape seems more stable in Europe for now, things could change in the future. Isolating Bitpanda from the crypto exchange activities seems smart to guarantee Bitpanda’s long-term prospects.

So far, Bitpanda Pro hasn’t been the most active crypto exchange. As of this writing, CoinMarketCap reports that the platform has facilitated $634,000 in transaction volume over the past 24 hours. As a comparison, Binance and Coinbase have handled more than $8 billion and nearly $1 billion in transaction volume respectively.

One Trading hopes that it can improve liquidity with recent infrastructure improvements. “We aim to become a utility for large liquidity providers to exchange unlimited amounts of risk under a membership model instead of pay-per-trade and have low fees and deep books for retail with a number of liquidity protections,” Barraclough said in a statement.

“We will then start listing more products with appropriate controls and vetting as we move into derivatives. Above all we want a regulated, institutional-grade platform where people feel safe to trade with unique product options,” he added.

It’s going to be interesting to see if there is any significant change in transaction volume in the coming weeks.

Bitpanda’s crypto exchange separates from Bitpanda and secures $33 million by Romain Dillet originally published on TechCrunch

Arrington Capital-backed group to acquire Celsius assets

https://techcrunch.com/2023/05/25/arrington-capital-backed-group-to-acquire-celsius-assets/

Following a bankruptcy process, the assets of the failed crypto lender Celsius Network are about to be acquired by a consortium called Fahrenheit. Behind this name, you will find a group of bidders led by investment firm Arrington Capital.

The other members of the consortium are crypto mining firm US Bitcoin Corp., Proof Group, Steven Kokinos and Ravi Kaza. As the name suggests, Arrington Capital is led by Michael Arrington, the founder of TechCrunch. Michael Arrington left TechCrunch in 2011.

There were two other bidding rivals — NovaWulf and the Blockchain Recovery Investment Consortium that involved Winklevoss-owned crypto exchange Gemini Trust.

The plan is to distribute Celsius’ liquid assets to account holders. As for illiquid assets, such as institutional loan portfolio, mining business and alternative investments, they will be managed by a new management team.

According to the court filing, Fahrenheit will receive $35 million per year in management fees while Celsius creditors will still own 100% of the equity of the new crypto entity.

As a reminder, Celsius Network filed for bankruptcy back in July 2022. At its peak, Celsius was one of the largest cryptocurrency lenders and reached a valuation of $3.25 billion.

After the collapse of Terraform Labs, the company behind the Terra USD (UST) and Terra (LUNA) cryptocurrencies, Celsius faced a bank run on its assets. At some point, it had to pause all customer withdrawals and file for bankruptcy. The company claimed that it had anywhere between $1 billion and $10 billion in assets and liabilities and worked with more than 100,000 creditors.

More recently, New York Attorney General Letitia James filed a lawsuit against Alex Mashinsky, co-founder and former CEO of Celsius Network. Among other things, the AG office said that Celsius had risky investment strategies and made “false and unsubstantiated promises.”

“We are very pleased that our competitive auction process produced a positive result for customers, including, most prominently, hundreds of millions of dollars in lower management fee savings and increased liquid cryptocurrency distributions to Celsius’ customers,” David Barse and Alan Carr, members of the Special Committee of the Board, said in a statement. “We appreciate the robust interest that the Celsius platform has received from competing bidders and look forward to working with Fahrenheit to expedite the restructuring and distribute recoveries to creditors.”

In the coming weeks, a new chapter 11 bankruptcy plan will be filed. It will be subject to bankruptcy court approval. If that doesn’t pan out for some reason, Blockchain Recovery Investment Consortium’s offer (which involves Gemini Trust) will be the backup bid.

Arrington Capital-backed group to acquire Celsius assets by Romain Dillet originally published on TechCrunch

Ripple acquires crypto custody startup Metaco for $250 million

https://techcrunch.com/2023/05/17/ripple-acquires-crypto-custody-startup-metaco-for-250-million/

Ripple has announced that it has acquired Metaco, a cryptocurrency custody company based in Switzerland, for $250 million in cash and Ripple equity. With this move, Ripple will expand its offerings as it will now be able to custody, issue and settle any type of tokenized asset.

“Metaco is a proven leader in institutional digital asset custody with an exceptional executive bench and a truly unmatched customer track record,” Ripple CEO Brad Garlinghouse said in a statement. “Through the strength of our balance sheet and financial position, Ripple will continue pressing our advantage in the areas critical to crypto infrastructure. Bringing on Metaco is monumental for our growing product suite and expanding global footprint.”

Ripple is the company behind the Ripple payment protocol that uses XRP as its native cryptocurrency. Ripple has been working with traditional finance companies so that they can integrate crypto and blockchain into their infrastructure. While Ripple and XRP are technically separate entities, Ripple still owns a large amount of XRP tokens.

In 2020, Ripple and its team faced a lawsuit from the U.S. Securities and Exchange Commission due to the nature of XRP token sales. The SEC argued that XRP is a security and it should have been registered with the commission. It’s worth noting that Ripple and a handful of executives generated more than $1.38 billion from sales of the XRP token.

With today’s announcement, Ripple is diversifying its activities. Metaco has been working with institutional customers to provide them several enterprise-grade solutions, such as custody, orchestration, trading and more.

Following today’s transaction, Metaco will continue to operate as an independent brand and business unit — but Metaco now has a new owner. It could indicate that Ripple wants to use its balance sheet to build a portfolio of cryptocurrency-focused companies and bounce back from the SEC feud.

Ripple acquires crypto custody startup Metaco for $250 million by Romain Dillet originally published on TechCrunch

Zealy is an achievement system for web3 communities

https://techcrunch.com/2023/04/03/zealy-is-an-achievement-system-for-web3-communities/

Meet Zealy, a French startup that you may already know under the name Crew3. Zealy helps web3 (and web2) companies engage with their communities by giving them tasks that they can achieve in exchange for various rewards.

The company just changed its name to Zealy, which indicates a larger focus beyond web3 companies. Last year, the startup raised $3.5 million in a funding round led by Redalpine. Other investors included Connect Ventures, Aglaé Ventures, Kima Ventures, Purple, STATION F, Founders Future, Pareto Holdings and several business angels from The Sandbox, POAP, DFNS, Starton and Pianity.

“Zealy is an action layer on top of every application,” co-founder and CEO Mathis Grosjean told me. Companies use Zealy in combination with a Discord server, a subreddit or any kind of community home to create gamified tasks for the most enthusiastic community members. Tasks include creating user-generated content, boosting something on social networks or coding a web page.

They relay those tasks to their community so that they can complete them before, during or after a product launch for instance. Companies can use it for a new NFT drop, a physical event or a major product release.

The reason why a product like Zealy exists is that many companies are already implementing gamified tasks for their communities. But they use products like Google Forms and relay those tasks in a Discord channel. It’s a manual process, and Zealy wants to automate those use cases.

“We help companies onboard, educate, entertain and grow their communities without spending too much money, and in a scalable manner,” Grosjean said. Fredrika Lindh and Alexis Aftalion are the two other co-founders of the company.

But why would users want to complete those tasks? Zealy customers can grant rewards for certain tasks. For instance, users could get a special status on a Discord server, get digital assets, merch and more.

If these competitions work well, community members might want to complete as many tasks as possible to climb the leaderboards. Companies using Zealy can even leverage this data to identify the most engaged users in their communities.

Clients can create community sprints with a leaderboard that resets after a few weeks. In many ways, Zealy works a lot like video game achievements and online ladder ranking systems.

When it comes to bringing new users to the platform, Zealy clients mostly bring their own communities to the service. That’s why the startup already has quite a few users — its 700,000 monthly active users have completed 100 million tasks so far.

While Zealy originally focused on web3 projects, the startup realized that more traditional companies could use a community tool like Zealy to improve their community strategy. For instance, Renault and PMU have been using the service. Overall, 2,000 companies have tried the platform.

“In the current market, every company in the world will potentially try to become a community-led company,” Grosjean said. And the Zealy team hopes that their startup has a shot at becoming the operating system for community-led companies.

Zealy is an achievement system for web3 communities by Romain Dillet originally published on TechCrunch

Crypto wallet company Ledger raises another $108 million

https://techcrunch.com/2023/03/30/crypto-wallet-company-ledger-raises-another-108-million/

French startup Ledger has added more money to its Series C funding round. The company designs and manufactures so-called hardware wallets to secure crypto assets. In 2021, the company raised €356 million ($385 million at today’s exchange rate). And the company is adding another €100 million ($108 million) in new funding.

This is an extension round as the valuation of the company isn’t changing — €1.3 billion ($1.41 billion at today’s exchange rate). In the current funding environment, raising at the same valuation is already quite impressive.

Once again, the company has managed to line up a long list of investors. New investors in the company include True Global Ventures, Digital Finance Group and VaynerFund. Some existing investors are also investing in Ledger once again, such as 10T, Cité Gestion Private Bank, Cap Horn, Morgan Creek, Cathay Innovation, Korelya Capital and Molten Ventures.

Ledger’s main products are hardware crypto wallets that offer a high level of security. The company’s current devices are shaped like USB keys and feature a tiny screen to confirm transactions on the device.

Hardware wallets are secure by design because the private key of the crypto wallet never leaves the device — it is stored in a certified secure chip. When you want to send some crypto tokens, you have to use another device like a computer or a smartphone. When you enter the public address of the recipient in the Ledger Live app, you have to validate the transaction with the private key. That’s why you need to turn on your Ledger wallet and confirm the transaction.

When you first boot up your Ledger device, the company asks you to write down a 24-word recovery phrase on a piece of paper. You should then store this recovery phrase in a safe place as it allows you (or someone else) to recover your wallet in case you lose your Ledger wallet.

And it’s true that having a secure wallet doesn’t prevent scams. In July 2020, Ledger discovered a data breach of personal information stored in an e-commerce and marketing database. It led to phishing campaigns with scammers trying to obtain recovery phrases.

To be fair, other wallets have been targeted by similar phishing campaigns. For instance, MetaMask users should never share their wallet seed phrase for the same reason. Some companies are moving away from this single point of failure by switching to other recovery methods, such as Argent and ZenGo.

Ledger’s flagship product is the Ledger Nano S Plus. It’s the most recent iteration of the Ledger Nano S. It has a small black-and-white display, two buttons and a USB-C port to plug the device to your computer and turn it on. It costs $79.

Ledger also sells the Ledger Nano X. It looks a lot like the Ledger Nano S Plus, but it has a built-in battery and a Bluetooth chip. This way, users can connect a Ledger Nano X to a smartphone using Bluetooth.

More recently, the company unveiled the Ledger Stax. Designed in partnership with Tony Fadell, this high-end wallet costs $279 and features a large E Ink display similar to a Kindle display. Just like other Ledger wallets, you can use it to sign transactions. But users will also be able to manage NFT collections.

The display wraps around the body of the device, which means that the name of the wallet remains visible even if you stack Ledger wallets — crypto millionaires often have multiple Ledger devices to separate assets across several wallets.

As it’s an E Ink display, the name of the wallet remains visible even when the device is turned off or the battery is empty. The company expects to ship the first Ledger Stax devices to its customers at some point in the next two months.

Ledger has sold 6 million devices since its inception in 2014. And that trend isn’t slowing down as the FTX debacle showed once again that your crypto assets could disappear overnight if you leave them on a crypto exchange. The company sold one million device between June 2022 and February 2023.

In addition to this hardware business that is performing really well, the company also offers enterprise solutions to secure crypto assets with governance and treasury management features. The enterprise platform also offers some DeFi and NFT management features.

Ledger also generates revenue from Ledger Live. The company offers staking opportunities and integration with third-party products. But the company’s main products remain its hardware wallets as Ledger estimates that it secures 20% of cryptocurrencies and 30% of NFTs worldwide.

Crypto wallet company Ledger raises another $108 million by Romain Dillet originally published on TechCrunch

Flagstar Bank to buy some Signature Bank assets, but not crypto operations

https://techcrunch.com/2023/03/20/flagstar-bank-to-buy-some-signature-bank-assets-but-not-crypto-operations/

Flagstar Bank, a subsidiary of New York Community Bancorp, has signed a takeover agreement with U.S. regulators for some of Signature Bank’s assets and loans. Earlier this month, after Silicon Valley Bank’s customers all tried to withdraw their funds at the same time, Signature Bank was the second victim of a bank run.

Both banks were shut down by regulators. The Federal Deposit Insurance Corporation (FDIC) then established bridge banks so that depositors could access their funds as quickly as possible. Over the past few days, the FDIC has been trying to sell the assets and find potential buyers.

“The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bridge Bank, National Association, by Flagstar Bank,” the FDIC said in a statement this weekend.

Signature Bank was a smaller financial institution than Silicon Valley Bank. As of December 31, 2022, Signature Bank had $110.4 billion in total assets and total deposits of $82.6 billion. The bank mostly served corporate clients, such as real estate companies, law firms and cryptocurrency companies.

So what is Flagstar Bank getting? “Today’s transaction included the purchase of about $38.4 billion of Signature Bridge Bank, N.A.’s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion,” the FDIC said. In the coming days, the 40 branches of Signature Bank will be rebranded as Flagstar Bank branches as well.

The FDIC is keeping a significant portion of Signature Bank’s assets — approximately $60 billion in loans, bonds and other assets. If the agency can’t find any buyer, it will just hold those assets for the time being.

Flagstar Bank also confirmed that the transaction doesn’t include any digital assets, crypto-related assets or deposits. In particular, many crypto firms relied on Signet, a payments system that worked 24/7 and was used by crypto companies for on-ramps and off-ramps. Signet isn’t part of the deal.

That part of Signature Bank was likely the most unstable part of the financial firm. While the FDIC managed to find a buyer for many of Signature Bank’s activities, Bloomberg says that crypto-related deposits will be returned to customers directly. Other crypto assets are still up for sale.

Read more about SVB's 2023 collapse on TechCrunch

Flagstar Bank to buy some Signature Bank assets, but not crypto operations by Romain Dillet originally published on TechCrunch

After SVB failure, regulators close crypto-friendly bank Signature Bank

https://techcrunch.com/2023/03/13/after-svb-failure-regulators-close-crypto-friendly-bank-signature-bank/

Signature Bank is the second casualty of the ongoing banking crisis in the U.S. The New York-based financial institution stopped operating abruptly on Sunday — customers will be made whole. Regulators said that Signature Bank also caused a systemic risk and could threaten the U.S. banking system. In other words, the government is stepping up to protect the economy.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” the U.S. Treasury Department, the FDIC and the Federal Reserve said in a joint statement. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

Signature Bank had 40 branches across New York, California, Connecticut, North Carolina and Nevada. As of December 31, 2022, the bank had $110.4 billion in total assets and total deposits of $82.6 billion.

The financial institution provided banking services to real estate companies, law firms but also cryptocurrency companies — around 30% the bank’s deposits came from the crypto industry.

That crypto angle is the reason why Silicon Valley Bank and Signature Bank became intrinsically connected. As the SVB implosion started unfolding on Friday, the crypto industry grew increasingly concerned about the financial stability of their banking partners.

In particular, Circle became the subject of headlines as people discovered that it is one of the most important clients for SVB because of USDC, a popular stablecoin managed by Circle.

USDC is pegged to the U.S. dollar on a 1:1 basis. It is designed to be backed through reserves consisting of a mix of cash and short-term U.S. Treasury bonds. Essentially, when Circle issues a new USDC, it stores one USD in a bank account as collateral.

Circle held a portion of its backing capital at SVB. “$3.3 billion of the ~$40 billion of USDC reserves remain at SVB,” the company wrote on Twitter. Everything will be fine for these assets stored at SVB as the Federal Reserve announced that depositors will have access to all of their money on Monday morning.

But Signature Bank became a collateral casualty as the bank was also victim of a bank run — many companies tried to withdraw their assets at the same time. That’s because many clients had more than $250,000 and the FDIC insures assets up to $250,000 per customer. Moreover, Signature Bank’s customer pool wasn’t diversified enough so it became impossible to operate normally.

The closure of Signature Bank will also create some technical challenges for crypto companies as the bank operated Signet, a payments system that worked 24/7 and was used by crypto companies for on-ramps and off-ramps. The company worked with Circle, Coinbase, OKX and others.

But at least customers will be able to access their funds on Monday. The FDIC established a bridge bank that will open its doors on Monday — depositors and borrowers will automatically become clients of this bridge bank.

Read more about SVB's 2023 collapse on TechCrunch

After SVB failure, regulators close crypto-friendly bank Signature Bank by Romain Dillet originally published on TechCrunch

Tweed is a crypto wallet API to add a web3 flavor to any web service

https://techcrunch.com/2023/03/09/tweed-is-a-crypto-wallet-api-to-add-a-web3-flavor-to-any-web-service/

Meet Tweed, a startup coming out of stealth today that has been working on a white-label cryptocurrency wallet and payment solution. With Tweed, companies can generate wallets for their users so they can buy, hold, send and spend crytpo assets without any technical knowledge.

The startup raised a $4 million seed round last summer with Accel leading the round. Communitas Capital Partners, Zero Knowledge Venture and angel investors, such as Sorare CEO Nicolas Julia, Mike Vaughan, Ameet Patel and Cristóbal Conde are also participating.

Tweed targets web 2.0 companies that want to add a web3 component to their service. For instance, if you run a marketplace, you could use crypto wallets so that users can send and receive tokens. Or if you are a gaming studio, you may want to turn in-game items into NFTs.

Tweed is an application programming interface that can be integrated into your existing product. Users can create a wallet without having to switch to another product or without a browser extension.

“That goes back to the main problem in the space right now. The user experience remains the top problem in any company, brand, platform tapping into the web3 space. You can’t expect people to have a wallet or to go and download one and come back to the platform,” co-founder and CEO Michelle Latzer told me.

Behind the scenes, Tweed wallets are self-custodial wallets. Users who rely on Google’s social login feature don’t have to remember their private key as it is tied to their Google account. Users can also choose a password to unlock the so-called ‘recovery kit’.

After that, Tweed’s wallets are compatible with the Ethereum, Polygon and Tezos blockchains. Users can store both NFTs and tokens in those wallets.

In addition to this wallet infrastructure, Tweed also offers payment integrations. This way, users can top up their wallets or buy NFTs with a payment card. Tweed is also working on offramps to receive fiat to a bank account.

Using an embedded web3 infrastructure product like Tweed means that you don’t have to take care of KYC or other regulatory concerns. Users are in charge of their crypto assets, and Tweed handles the fiat-to-crypto infrastructure.

Interestingly, Coinbase also unveiled its wallet API this week. There are many similarities between the two products so it will come down to execution. But it also means that Tweed is definitely onto something interesting.

Tweed is a crypto wallet API to add a web3 flavor to any web service by Romain Dillet originally published on TechCrunch

Revolut reports first full year of profit

https://techcrunch.com/2023/03/01/revolut-reports-first-full-year-of-profit/

The all-in-one fintech app Revolut has released its annual report for 2021. While 2021 ended more than a year ago, this report includes some significant figures as the company nearly tripled its revenue between 2020 and 2021. Because of this explosive growth trajectory, the company reached profitability for the first time.

Revolut’s financial success starts at the top of the funnel. At the end of 2021, Revolut had more than 16 million customers, representing a 46% increase compared to 2020.

Revolut’s core product is an account to send, hold and receive money combined with a payment card. While Revolut has yet to obtain a banking license in the U.K. (its home country), the company now has a full banking license in Lithuania.

It can use this license across the European Economic Area through passporting rules, which means that Revolut could be considered as a bank in Europe. In addition to these basic banking features, the company offers a ton of fintech products — but more on that later.

First, let’s look at the big figures and convert them to dollars using today’s exchange rate:

  • In 2021, Revolut generated $769 million (£636 million) in revenue vs. $266 million (£220 million) in 2020.
  • In 2021, Revolut reported a net income of $31 million (£26 million) vs. a net loss of $270 million (£223 million) in 2020.
  • Gross margin also jumped from 33% to 70% between 2020 and 2021.

“We have achieved our first full year of profit and shown that we can accelerate customer growth, at scale, and grow revenue across all of our product lines,” Revolut co-founder and CEO Nik Storonsky said in the release. “In 2021 we were granted a full banking licence from the European Central Bank and welcomed millions of new customers. We also launched several new products and saw more activity from our customer base.”

Everything is moving up and to the right. In other words, things are looking great at Revolut right now. That’s why the company managed to raise a $800 million funding round at a $33 billion valuation in the middle of 2021.

Generating revenue from crypto trading and other fees

Revolut’s revenue comes from multiple sources. While customers can create an account for free, users have to pay some fees for some money management services. The most enthusiastic customers can also choose to pay for a premium subscription plan to waive some fees and access additional features.

On top of that, Revolut generates revenue from interchange fees. Every time a Revolut users pay for something with a card, merchants have to pay some card transaction fees. These fees are split between the merchant’s bank, the card scheme (Visa or Mastercard for example) and the card issuing bank (Revolut in that case). While Revolut only gets a tiny fraction of the transaction amount, it can add up when you have millions of customers.

Revenue can be broken down in three big pillars:

  • Cards and interchange represent 23% of total revenue ($180 million/£149 million).
  • Subscriptions represent 17% of total revenue ($129 million/£107 million).
  • Foreign exchange and wealth services represent 55% of total revenue ($421 million/£349 million).

While the first items are quite easy to understand, the last one includes quite a few Revolut services. Revolut started as a seamless foreign exchange app combined with a multi-currency card. Revolut charges at least 0.5% in exchange fees above a certain limit for free users. For everyone (including paid users), there are additional fees when you exchange money on the weekend or when you are exchanging an uncommon currency.

Revolut also lets you trade cryptocurrencies, stocks and commodities like gold and silver. For these financial products, Revolut charges some significant fees — between 1.49% and 1.99% for crypto transactions, between 0.5% and 1.5% for precious metals.

2021 was a special year with a crypto boom that led to a spike in crypto transactions as well as some renewed interest from retail investors for stocks. Remember, 2021 started with the GameStop short squeeze on WallStreetBets.

While 2022 might not look as dramatic as 2021, Revolut already shared a short preview of last year’s numbers. In 2022, the company’s revenue increased once again to more than $1 billion (£850 million). It’s a 30% increase, which is much lower than the 189% increase in 2021. And yet, many large-scale startups would be quite happy with a 30% revenue jump. Revolut now has 27 million customers.

Now, it’s time to stabilize the business as Revolut failed to release its financial statements on time. If the company wants to go public in the coming years, it will have to improve its internal processes. That would also help when it comes to obtaining a banking license in the U.K.

Revolut reports first full year of profit by Romain Dillet originally published on TechCrunch

NBA Top Shot creator to face lawsuit around securities status

https://techcrunch.com/2023/02/23/nba-top-shot-creator-to-face-lawsuit-around-securities-status/

Dapper Labs, the company behind many popular NFT collectible projects, will face a lawsuit accusing it of selling unregistered securities. In particular, the company has developed popular NFT game NBA Top Shot and one of the original NFT collectible game CryptoKitties.

A class-action lawsuit was first filed against Dapper Labs in 2021. The company filed a motion to dismiss the lawsuit before trial. And yet, as Coindesk spotted, U.S. District Judge Victor Marrero denied the request, which means that the case will go forward.

If you’re not familiar with NBA Top Shot, users can go to the website to buy digital cards that represent NBA ‘Moments’ — those are short video clips of memorable moments. They can then buy and sell some of their cards to other players. The value of these digital collectibles can go up and down over time.

Each digital card is registered as a unique token on a blockchain. While other NFT-based games like Sorare rely on the Ethereum blockchain, Dapper Labs has decided to develop its own private blockchain called Flow. The company said that this new blockchain is optimized for scalability and practical use cases.

“The Flow Blockchain uses ‘Proof of Stake’ validation to allow the business to scale more efficiently. Dapper Labs also created a token, FLOW, which miners would be able to stake to validate transactions.” Marrero wrote in his decision.

And this is key to understanding the current lawsuit. In his conclusion, Marrero distinguishes NBA Top Shot’s Moments from other types of NFTs.

“Not all NFTs offered or sold by any company will constitute a security, and each scheme must be assessed on a case-by-case basis,” he wrote. (And Moments shouldn’t be considered as securities either as the lawsuit has yet to to take place.)

So what makes Moments different from other NFTs? And what makes Moments different from physical sports trading cards? The fact that Moments can only be traded on the Flow blockchain means that Dapper Labs has some control on the value of those Moments.

“The NBA Top Shot Terms of Use also states that Moments have no intrinsic or inherent value outside the Flow Blockchain. […] It follows that, if, hypothetically, Dapper Labs went out of business and shut down the Flow Blockchain, the value of all Moments would drop to zero. That is the critical causal connection that other collectibles cases lack, and which is alleged here,” Marrero wrote.

Even if NBA Top Shot users try to sell their Moments, they have to go through the official secondary marketplace. “Ownership of the Moments, the price paid for the Moments, and the transfer and sale of the Moments in the Marketplace are all recorded on only the Flow Blockchain. Dapper Labs does not recognize and does not endorse Moments being sold or traded outside of the Marketplace,” Marrero wrote.

In September 2021, Dapper Labs raised a $250 million funding round with Coatue leading the investment. At the time, the company reached an impressive $7.6 billion valuation. While NFT sales have dropped quite drastically in recent months, the company managed to attract more than a million users and generate hundreds of millions of dollars in transaction volume. The company takes a cut on newly minted NFTs, marketplace transactions and cash-out transactions.

Even if not all NFTs are created equally, the case will have some wide repercussions across the industry — especially for companies using private blockchains.

NBA Top Shot creator to face lawsuit around securities status by Romain Dillet originally published on TechCrunch