Animoca to invest $30 million in crypto app hi

https://www.theblock.co/post/241643/animoca-to-invest-30-million-in-crypto-app-hi

Animoca Brands, the Hong Kong-based web3 investment firm, today announced a strategic partnership with hi, a startup that bills itself as a web3 super app.

As part of the deal, Animoca said it will invest $30 million in hi — though it added that definitive terms are yet to be agreed.

Hi, which holds digital assets licenses in Lithuania and Italy, currently offers both exchange and digital banking-like services for crypto and fiat. Close to 3.5 million people have signed up to the service, hi claimed in today’s announcement.

Hi last year announced a debit card that could be customized with avatars in the form of NFTs — the first of which are due to ship this quarter. Animoca said in today’s announcement that it reckoned its hundreds of portfolio companies could benefit from the feature.

Proof-of-personhood

The pair of web3 firms will also work together to arm developers with what they call a “unique-human authentication mechanism,” using hi’s proof-of-human identity tools. The plan comes just days after Worldcoin, the proof-of-personhood project co-created by Sam Altman, finally launched its token.

Yat Siu, co-founder and executive chairman of Animoca Brands, said in a statement, “As part of this partnership we will collaborate with hi on its continued development of the hi App and the hi Protocol to drive positive impact for the broader Web3 ecosystem.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Accounting firm BDO found nothing amiss in controversial FTX Europe deal

https://www.theblock.co/post/241227/bdo-ftx-europe-deal?utm_source=rss&utm_medium=rss

Accountancy group BDO found nothing amiss in FTX’s $376 million swoop to acquire Digital Assets AG (DAAG), the Swiss startup that was later rebranded FTX Europe.  

In excerpts of a lengthy report reviewed by The Block, published in April 2022 as part of the acquisition process, BDO wrote that the deal “reasonably represents fair value.” That contrasts sharply with the view FTX Trading took in a recent complaint.

FTX Trading, under the management of bankruptcy veteran John Ray, has filed a flurry of lawsuits in recent weeks as part of a campaign to claw back funds it claims were distributed with reckless abandon while the failed exchange business was still under the control of alleged fraudster Sam Bankman-Fried. 

In one recent example, FTX Trading sued insiders at the collapsed crypto exchange’s European unit — claiming former CEO Bankman-Fried had significantly overpaid for it, in part because of his allegedly close ties with DAAG executives Patrick Gruhn, Robin Matzke and Brandon Williams, who are the subjects of the complaint. 

The bankrupt crypto group’s new management framed the deal as one of many “dubious investments” that Bankman-Fried and lieutenants Caroline Ellison, Gary Wang and Nishad Singh financed using misappropriated funds. 

Conversely, BDO’s report suggests it was “consummated in an arm’s length basis by knowledgeable, unrelated parties.” 

Little more than a business plan

A spokesperson for FTX Trading said of BDO’s assessment, “The April 2022 ‘valuation report’ simply assumes that the purchase price reflected fair value because it was ‘arms-length,’ and one cannot, of course, presume the fairness of a fraudulent transaction from the fact that it took place.”

They also reiterated some of the key points of the complaint, adding that FTX Trading has filed suit to recover more than $320 million “wrongly paid to the defendants by FTX at the direction of Sam Bankman-Fried to acquire a company, the purported value of which came from a license obtained after the transaction for just over $2 million.” That figure refers to the €2 million that Matzke and Gruhn paid to acquire K-DNA Financial Services Ltd., a licensed Cyprus investment firm.

Besides that license, FTX Trading alleges that Bankman-Fried and his colleagues paid more than $376 million for little more than “a ‘business plan.’”

BDO didn’t respond to multiple requests for comment about the assessment. DAAG declined to comment. 

Auditors flee crypto

The lack of due diligence performed by investors and acquirers in the crypto sector has come under close scrutiny following the collapse of FTX and a host of other heavily hyped startups last year. 

Many deep-pocketed investors, including the likes of Sequoia Capital and Temasek, were forced to write off hundreds of millions of dollars that they had invested in FTX. Andrew Wingfield, a partner at Proskauer Rose, the law firm, said the downfall of Bankman-Fried’s empire “serves as a powerful lesson for investors in the tech sector, underscoring the significance of conducting thorough due diligence before making financial commitments.” 

Yet fewer and fewer auditors appear willing to operate in the space.

In December last year, shortly after the collapse of Bankman-Fried’s empire, The Wall Street Journal reported that BDO was reconsidering its work for crypto companies. The company had signed off on reserves reports for Tether, the stablecoin issuer, not long before. 

BDO later walked away from a potential gig auditing crypto venture fund Shima Capital in March 2023 after a policy change that meant it fell outside the accountancy firm’s risk parameters.

French auditing firm Mazars, which had previously helped exchange giant Binance produce controversial proof-of-reserves reports, paused all work with crypto clients in December last year. 

Accounting firm Armanino, which audited FTX US, closed its crypto audit practice in December 2022. Members of its team spun out and started their own crypto auditing firm called The Network Firm, which has worked with TrueUSD (TUSD) and others.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Sam Altman’s Worldcoin launches token with more than two million sign-ups

https://www.theblock.co/post/241074/sam-altman-worldcoin-launches-token?utm_source=rss&utm_medium=rss

Worldcoin, the controversial crypto project co-created by Sam Altman, has today announced the launch of its WLD token — which it will distribute to more than two million people around the world.

The project is among the crypto sector’s most divisive. Its focus is on helping people prove their identity online with credentials verified in person by iris-scanning orbs. More than two million people — the bulk of them in the Global South — have already been verified, and all of them stand to receive their share of the WLD token today.

“It’s a really, really big day for the project on Monday,” said Tiago Sada, head of product, engineering and design at Worldcoin’s main developer, Tools For Humanity. “Hopefully, we will see a lot of people excited to visit the orbs that will start showing up in a bunch of different cities around the world.”

Today’s launch comes after multiple delays and lands at a precarious time for token issuers, with regulators in the United States growing increasingly aggressive towards operators in the sector. Worldcoin’s team has been careful to stress that its tokens will not be available in the U.S.

“There’s a lot of different components to the project,” Sada said. “We offer each of those where we can and where we feel quite confident that we’re being respectful of each country’s rules.”

In today’s announcement, Worldcoin promised to accelerate sign-ups by deploying orbs in more than 35 cities across 20 countries globally. The Block revealed in March that Worldcoin had signed a deal with contract manufacturer Jabil to ramp up production of the controversial devices. Sada said the number of orbs in circulation would increase from roughly 200 to around 1,500 by year-end.

People who have been verified by an orb will initially receive 25 WLD tokens, as well as periodic grants going forward. As of today, people will also be able to reserve tokens on the World App until they’re able to visit an orb, Sada said.

An investor deck prepared by Worldcoin in December 2022, the contents of which The Block reported previously, states that there will be a total supply of 10 billion WLD tokens, with 80% reserved for users, operators and the ecosystem, and 20% set aside for the Worldcoin team and its backers. 

The token launch comes after Worldcoin completed its migration to the OP Mainnet, a Layer 2 scaling solution, last week.

The age of AI 

Worldcoin co-founder Altman is simultaneously the CEO of OpenAI, creator of the wildly successful ChatGPT. In numerous blog posts and announcements, the Worldcoin team has framed the project as urgent in the context of the rapid rise of tools like ChatGPT and the implications they may have for the future of work.

In a written statement in today’s announcement, Alex Blania, CEO of Tools for Humanity, said, “In the age of AI, the need for proof of personhood is no longer a topic of serious debate; instead, the critical question is whether or not the proof of personhood solutions we have can be privacy-first, decentralized and maximally inclusive.”

The project and its backers have mooted a wide array of possible use cases for the protocol and its verified credentials, including in uncollateralized lending programs, for universal basic income models and even in the metaverse — virtual worlds underpinned by blockchain.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.