Saudi mega-project commits to $50M investment in Web3 gaming firm Animoca

Saudi Arabia’s NEOM initiative has proposed a $50 million investment in the Web3 gaming and investment company Animoca Brands.

NEOM’s investment division has teamed up with Animoca to further Web3 projects in alignment with Saudi Arabia’s Vision 2030 strategy. 

According to an announcement on Tuesday, half of the $50 million investment will come through convertible notes with a capped conversion price of $4.50 AUS per share, while the other half will be used to acquire Animoca shares from the secondary market.

Animoca’s share price is likely listed in Australian dollars as the firm was once listed on the Australian Securities Exchange (ASX). It was delisted from the ASX in 2020 due to non-compliance issues, yet it still trades on the secondary market.

The finalization of the financing agreement for the convertible notes is contingent on agreed conditions being met.

Read more: Crypto funding: Web3 gaming, blockchain security in focus

Animoca Brands will collaborate with NEOM to develop Web3 business services for global use, focusing on technological growth in the Saudi capital Riyadh and the NEOM area. 

An Animoca Brands spokesperson did not reveal specific information regarding the projects they intend to undertake with the NEOM ecosystem, stating that the initiatives are still in the planning phase.

NEOM is an ambitious initiative launched by Saudi Arabia, and is designed to be a new-model international city and economic zone situated in the northwestern part of the country. 

The project’s vision is for the city to be a hub for innovation, technology and sustainable development, seeking to diversify the Saudi economy away from its traditional reliance on oil.

Investing in Web3 initiatives would align with NEOM’s vision of being at the forefront of technological innovation.

Read more: Busan to build urban blockchain and digital asset exchange

“We are honored and excited to partner with and receive investment from NEOM, one of the world’s most ambitious projects seeking to use innovation and technology to redefine how we live, work, and play,” Yat Siu, Animoca’s executive chairman, said in a statement.

“We have always referred to the growth of the Web3 ecosystem as the emergence of a new meta-nation, and now NEOM could well become the first region to fully harness the power of blockchain,” Siu added.

Saudi Arabia has earlier disclosed investments in about 40 US venture capital firms, many of which are involved in crypto, blockchain and Web3 ventures. 

Sanabil, associated with Saudi’s sovereign wealth entity, annually allocates about $2 billion to support businesses with innovative models. 

This fund has stakes in firms such as Andreessen Horowitz (a16z), Polychain Capital and Peter Thiel-backed Valar Ventures.

Telegram trading tool Unibot suffers exploit

Unibot, a well-known Telegram bot for Uniswap trading, suffered an approval vulnerability on Tuesday, resulting in a loss of tokens valued above $600,000.

A newly deployed contract was compromised, leading to the loss of several meme coins belonging to users. 

The firm pinpointed the problem as a “token approval exploit” from its new router, which led them to momentarily halt the router to address the issue.

“We experienced a token approval exploit from our new router and have paused our router to contain the issue,” the team said on X.

“Any funds lost due to the bug on our new router will be compensated. Your keys and wallets are safe.”

PeckShield initially detected the exploit, revealing that the attacker transferred the stolen tokens to Uniswap and moved the funds to crypto mixer Tornado Cash. 

The attacker appears to have exchanged the tokens for about 355.75 ETH, equal to around $640,000, according to the blockchain security firm. 

Meanwhile, analytics firm Scopescan pegged the size of the exploit at $560,000. 

While inquiries continue, Scopescan and Beosin recommended that impacted users revoke permissions for the compromised contract and move their assets to a safer wallet.

SlowMist, another security firm, stated that the attack was a result of missing essential parameter verifications, allowing the attacker to move tokens that users had authorized for the Unibot contract.

The UNIBOT token was last down nearly 30% at $44.01 as of 5:20 a.m. ET on Monday, data from Blockworks Research showed.

The team expects to provide a detailed update once the investigation is complete, with a Telegram admin mentioning a potential update in the upcoming 24 hours.

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UK Treasury reveals final blueprint for crypto, stablecoin governance

The UK Treasury unveiled definitive proposals for regulating cryptoassets and stablecoins on Monday.

The government intends to implement regulations in stages, beginning with the oversight of fiat-backed stablecoins for payment. 

The subsequent phase will address the wider cryptoasset sector, as outlined in two policy documents. 

These suggestions come after a consultation released in February about the upcoming financial services regulatory structure for cryptoassets in the UK.

Numerous companies and stakeholders actively participated in the consultation, offering insights to refine the government’s proposed approach.

“While most aspects of our proposals were well-received by the large majority of respondents, we have modified certain features of our future framework to take onboard the evidence presented,” Andrew Griffith, economic secretary to the Treasury, said in a statement. 

The Treasury aims to regulate fiat-backed stablecoins in two key areas: their use in payment systems and their issuance and storage within the UK, regardless of specific applications.

The suggested regulations will place specific fiat-backed stablecoins under the oversight of the Bank of England, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR). 

Together, they will work to reduce potential harm to consumers and address the conduct, financial stability and other risks associated with these stablecoins, especially when used for transactions.

The Treasury also detailed plans to regulate broader crypto-related actions, such as trading, custody and lending. This consultation suggested frameworks for market misconduct, as well as issuing and disclosing cryptoassets.

The government reiterated that it does not support regulating unbacked cryptoassets as gambling. This stance would ensure consistency with international standards and practices of key regions, including the EU, it said.

The Treasury plans to introduce secondary legislation promptly, aiming for early 2024, depending on the parliamentary schedule. This legislation will encompass activities from both phases.

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Thailand’s 4th-largest bank buys $103M stake in crypto exchange

Kasikornbank, also referred to as K-Bank, on Monday announced its acquisition of a majority stake in the parent firm of local crypto exchange Satang.

In a filing to the Stock Exchange of Thailand, K-Bank President Pipit Aneaknithi disclosed that the acquisition, worth 3.7 billion Thai baht ($102.8 million), was made through the bank’s fully-owned subsidiary, Unita Capital. 

Following the takeover, Satang will renamed to Orbix Trade Company Limited, the filing showed.

Operating in Thailand since 2017, Satang claims to be the country’s longest-standing crypto exchange.

According to the filing, Unita Capital has also established three new subsidiaries: Orbix Custodian for digital asset custody, Orbix Invest for digital asset fund management and Orbix Technology & Innovation Company Limited for blockchain infrastructure development.

K-bank ranks as Thailand’s fourth-largest bank in terms of assets, per Nikkei Asia. 

Established on June 8, 1945, the bank operates in commercial banking, securities, among other sectors.

In 2003, it transitioned from its former English name, Thai Farmers Bank, to its current name, mirroring its Thai pronunciation. 

With a presence in over 1,000 locations domestically, the bank also has overseas branches, primarily in China.

The bank’s crypto exchange acquisition comes about a month after it launched a $100 million tech venture fund focused on artificial intelligence, Web3 and deep tech startups.

Meanwhile, its competitor, Siam Commercial Bank (SCB), established a blockchain and digital asset subsidiary, SCB 10X, in early 2021, according to Ledger Insight.

Shortly after, SCB initiated a $600 million joint venture, the Global Disruptive Technology Venture Capital Fund, and rebranded the parent company as SCBx. 

SCB further pursued an over $500 million acquisition for a majority share in Thailand-based exchange Bitkub, but had to back out when local authorities called for changes from the exchange.

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StanChart’s Zodia Custody set to navigate Hong Kong’s crypto market

Zodia Custody, a crypto subsidiary of British bank Standard Chartered, is set to roll out its crypto storage services in Hong Kong, following the region’s recent introduction of a new licensing system. 

The expansion signifies the UK-based company’s growing presence in the Asia Pacific area.

Zodia Custody’s CEO Julian Sawyer said that Hong Kong’s crypto demand, which is primarily from institutions rather than retail users, aligns well with the firm’s offerings, CNBC reported on Sunday.

Having already established operations in Singapore, Japan and Australia, Hong Kong completes the company’s expansion throughout the Asia Pacific, he said.

Blockworks has reached out to Zodia Custody for comment.

Zodia Custody is owned by Standard Chartered, Northern Trust and SBI, and is registered with regulatory authorities in the UK, Ireland and Luxembourg.

Launched in Dec. 2020, it aims to deliver crypto custody solutions for institutional and corporate clientele, tapping into the banking know-how of Standard Chartered and Northern Trust to maintain compliant digital asset management and storage.

It operates separately from Zodia Markets, a digital asset exchange and brokerage also backed by Standard Chartered.

Since Hong Kong regulators introduced their licensing program, there’s been a surge in digital asset operators, including exchanges, looking to establish a presence there. 

Following a significant scandal involving the JPEX crypto exchange, which reportedly impacted over 2,000 individuals, Hong Kong’s central bank and securities regulator have strengthened crypto regulations

The updated rules now stipulate that certain virtual currencies can only be accessed by professional investors.

Earlier this year, Bloomberg reported that Beijing is quietly backing Hong Kong’s efforts to emerge as a digital asset center, with officials monitoring crypto industry progress. 

Currently, OSL Digital Securities and Hash Blockchain are the only licensed virtual asset trading platforms in Hong Kong.

Zodia Custody is said to be in talks with Hong Kong’s central bank and securities regulator about becoming regulated in the region, per CNBC.

The company intends to adopt a step-by-step approach, initially offering a select range of cryptocurrencies to clients in Hong Kong.

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Yuga Labs awarded $1.6M in landmark Ryder Ripps NFT case

NFT artist Ryder Ripps and his business associate Jeremy Cahen are ordered to pay $1.57 million to Bored Ape Yacht Club creator Yuga Labs for their satirical NFT collection.

In an Oct. 25 court order, US District Judge John Walter said that making the defendants give up their profits would stop them from continuing to step on the Yuga Labs’ trademarks.

In May 2022, Ripps and Cahen launched the Ryder Ripps Bored Ape Yacht Club (RR/ BAYC) collection, a set of NFTs closely resembling Bored Apes, which Ripps claimed were promoting Nazi symbols.

In June that year, Yuga sued Ripps and his colleague, accusing them of producing and selling imitation NFTs that undermined the worth of the original pieces. By April 2023, the court granted Yuga injunctive relief along with monetary damages.

Yuga asserted it was a calculated move to inflict damage on the NFT project by causing consumer uncertainty over the association between the RR/BAYC NFTs and the genuine BAYC.

However, the defendants claimed their creations were a form of “appropriation art,” designed to draw attention to Yuga’s supposed engagement in spreading “racist, neo-Nazi, and alt-right messages and symbols,” pushing Yuga to own up to its conduct.

Despite their claims during trial that their RR/BAYC NFT collection was meant to parody or critique Yuga’s BAYC series, the court said that evidence clearly shows they merely used the BAYC Marks to develop an NFT collection directing to the same images as Yuga’s NFTs.

Furthermore, even after Yuga initiated legal proceedings to assert its trademark rights, Ripps and Cahen didn’t cease their marketing or promotion of their RR/BAYC NFT series, the order said.

The court concluded that Yuga Labs will be award $1.37 million from the defendants’ profits, an additional $200,000 in statutory damages and an undetermined amount covering legal fees. 

Yuga Labs must submit all billing records and documents supporting its claim for attorneys’ fees and costs by Nov. 1.

In a further win for Yuga Labs, the judge issued a permanent injunction against Ripps and Cahen, prohibiting the defendants from further infringing activities. They were directed to hand over control of two domain names and two X accounts.

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Crypto security firm offers to recover ex-Ripple CTO’s bitcoin fortune

Stefan Thomas, the former CTO of Ripple, holds 7,002 bitcoins, currently valued at $244 million, in a hard drive he can no longer access because he misplaced the digital keys.

The programmer received these bitcoins in 2011 as payment for an educational video he created about bitcoin, only to lose the access code later that same year.

Crypto security specialists at Unciphered have now thrown Thomas a potential lifeline. 

The firm penned an open letter to him on Oct. 25, claiming they have the technical ability to outsmart Thomas’s “IronKey,” the encrypted USB device, and help him gain access to his bitcoin fortune.

Years ago, Thomas misplaced the paper containing his IronKey password, a device that permits only 10 attempts before permanently encrypting its contents. 

After fruitlessly trying eight of his go-to passwords, he’s down to his last two guesses. 

The drama gained attention in 2021, following a New York Times article detailing how the programmer had just two shots left to reclaim his crypto stash.

Unciphered has claimed it successfully recovered data from an IronKey similar to Thomas’s, also notably accomplishing this feat for digital culture publication Wired. 

They utilized a “secret cracking technique” over months, permitting them more than the standard 10 attempts, Wired reported.

Pooling their resources, the company’s founders reportedly assembled a team called Project Everest, comprising roughly 10 members, including staff and external advisors. 

Notably, several team members had previously sharpened their skills at the National Security Agency or similar high-profile government entities.

Unciphered is keeping its research methods and the specific technique used to bypass the IronKey’s guess limit under wraps, citing the potential risk associated with exposing such vulnerabilities. 

The firm says this secrecy is necessary since the outdated IronKey models they breached can’t be updated and might still hold sensitive data.

Thomas has so far declined Unciphered’s help, per Wired. 

Blockworks has reached out to the former Ripple CTO for comment.

He is said to have already struck a deal with two other cracking teams — cybersecurity firm Naxo and independent researcher Chris Tarnovsky — promising them a reward for unlocking the drive. 

Yet, Naxo’s progress remains uncertain, and Tarnovsky is waiting for some payment from Thomas to continue.

Despite no success so far from the two parties, Thomas appears to be sticking to his original pact, giving the initial teams more leeway before seeking new aid.

“It’s possible that the current team could decide to subcontract Unciphered if they feel that’s the best option. We’ll have to wait and see,” Thomas told the outlet.

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World Bank rolls out first digital bond issuance on Euroclear

The World Bank has initiated the first issuance of digital securities on Euroclear’s newly launched Digital Securities platform.

Euroclear’s Digital Financial Market Infrastructure (D-FMI), a platform based on distributed ledger technology, facilitates the establishment, issuance and settlement of international securities digitally, all under English law, according to a Tuesday press release.

The World Bank said it has raised 100 million euros ($105.9 million) from the three-year digital bond, dedicated to backing its sustainable development projects, with the bond making its debut on the Luxembourg Stock Exchange.

The bond’s release involved Citi overseeing the issuance and payment processes, TD Securities serving as the dealer and Euroclear Bank functioning as the Central Securities Depository for the issuer. 

R3, the developer behind the platform, said that the Corda permissioned blockchain was used for the bond issuance.

The World Bank first experimented with blockchain bonds in 2018 by raising around $73 million.

Other experiments with blockchain-based bond issuance, such as those by Société Générale, have used public Ethereum.

Asset tokenization is transforming finance by making transactions more efficient and reducing costs through digital processing. 

It democratizes investment by breaking down high-value assets into purchasable tokens, thereby broadening market access. 

This process enhances liquidity, turning illiquid assets like real estate or art into easily tradable forms. Additionally, it transcends geographic restrictions, creating a round-the-clock global market and facilitating smoother international transactions.

“The integration of DLT in asset issuance is a critical step forward in the evolution of our ecosystem’s digital capabilities, as we continue to deliver on our goal of becoming a fully digital and data enabled Financial Market Infrastructure,” Lieve Mostrey, Euroclear’s CEO, said in a statement.

Boston Consulting Group forecasts that by 2030, the global industry for tokenizing illiquid assets could expand to $16 trillion, accounting for 10% of the world’s gross domestic product.

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Binance reportedly behind new Hong Kong crypto exchange pursuing license

Binance appears to be the driving force behind a recently launched crypto exchange in Hong Kong.

South China Morning Post reported on Wednesday that the exchange HKVAEX was established in Hong Kong as an independent entity under BX Services Limited.

Despite not having similar names or a publicly acknowledged connection, they share resources, the report said, citing sources.

Notably, Binance and HKVAEX’s logos bear resemblance, and Binance’s official accounts, along with CEO Changpeng Zhao, are among HKVAEX’s few followers on social media platform X.

Stanley Fung, now at the helm of HKVAEX, served as the chief of Huobi’s Hong Kong operations until Nov. 2022, according to LinkedIn. His departure coincided with crypto entrepreneur Justin Sun’s entry into Huobi’s management.

Binance’s services itself are not available in Hong Kong, and establishing an autonomous entity within the city could provide a strategic foothold in the market.

Binance and HKVAEX didn’t return Blockworks’ request for comment by press time.

Since Hong Kong regulators introduced their licensing scheme earlier this year, there seems to be increasing enthusiasm among digital asset entities to establish operations in the region.

Alvin Kan, head of Asia at Sei Labs, earlier told Blockworks that Asia is set to emerge as a significant expansion zone for the Web3 sector. He noted that regulatory developments in the US have amplified opportunities outside the country.

Binance, launched in 2017 in Shanghai, has mostly been quiet about its own plans to seek a license in Hong Kong.

In contrast, SCMP reported that HKVAEX is gearing up to apply for a virtual asset license in Hong Kong.

In a company-managed Telegram group, HKVAEX said that it operates as an “independent crypto exchange” in Hong Kong, separate from Binance, but that it sources liquidity from Binance. 

Despite HKVAEX’s insistence on independence and having its own tech team, SCMP highlighted multiple instances of collaboration between the two companies in Hong Kong this year, such as a promotional campaign where Binance was referred to as a “partner” in incentivizing opening an HKVAEX account.

Binance has encountered a series of regulatory challenges this year.

In May, Binance exited Canada following new regulations around stablecoins and restrictions placed on crypto exchanges.

In the US, sweeping lawsuits from the Commodities Futures Trading Commission and the Securities and Exchange Commission targeted Binance, its CEO Changpeng Zhao and related entities.
Several top officials have departed Binance following the SEC’s legal actions against the company.

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Worldcoin rotates reward token scheme

Crypto-based digital identity provider Worldcoin will transition operator rewards from USDC stablecoins to its WLD tokens starting next month.

Worldcoin had used USDC-based rewards as a temporary measure following its launch, a phase that’s now concluding. 

Issuing operator rewards in WLD will add to the increasing circulation of its native token.

The WLD token debuted with a modest circulating supply of slightly over 100 million WLD, the team said in a blog on Sunday. Its max supply is 100 times higher at 10 billion.

“This was due to the goal of creating a network of as many human beings as possible. To achieve this, the majority of the WLD token supply will be given to new and existing users in the form of user grants over the years to come,” it added.

Blockworks has reached out to Worldcoin about the criteria used for compensating orb operators.

Since its launch on July 24, the WLD token’s circulating supply has increased from roughly 100 million to over 134 million, representing 1.34% of the total. 

This rise is due to over 800,000 Orb-verified users claiming about 34 million WLD in free grants.

As of Oct. 22, the circulating supply of WLD includes 100 million tokens used for loans to market makers, around 34.3 million tokens given out as user grants and a little portion earned as operator rewards, the team said.

WLD’s circulating supply is expected to decrease on Oct. 24 because the market makers are due to return up to 25 million WLD from their initial 100 million WLD loan, as their agreement terms change.

They can choose to buy some tokens, but any amount not purchased will be deducted from the current supply, leading to a reduction.

The tokens are not available for use, purchase or access in the US.

Worldcoin was founded by tech entrepreneur Sam Altman, with the goal of creating a universal basic income system. 

The project uses a device called the “Orb” to scan individuals’ irises, with the aim that each free crypto grant goes to a unique person. 

These scans are conducted by operators who manage the Orbs, helping distribute Worldcoin globally by verifying human identity, an essential step in establishing a unique digital wallet for everyone, while curbing fraud.

The idea is to provide a form of financial equality and broad access to digital assets. However, the method — gathering biometric data — had sparks privacy concerns. 

Despite Worldcoin’s reassurances that it does not store any personal data after verification, critics worry about potential data breaches or misuse of sensitive iris information.

The project is currently facing global scrutiny, with regulators worldwide being apprehensive regarding the company’s handling of personal and biometric data.

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Hong Kong strengthens crypto oversight and imposes tighter controls

Hong Kong’s central bank and securities regulator have tightened crypto regulations after a major scandal allegedly affecting more than 2,000 victims.

The revamped guidelines mandate that specific virtual currency offerings will now be exclusively available to professional investors.

In a joint blog on Friday, the Securities and Futures Commission and the Hong Kong Monetary Authority highlighted that certain risks associated with virtual asset-related products may be too complex for retail investors to grasp.

For instance, an overseas virtual asset (VA) non-derivative exchange traded fund (ETF) would typically be classified as a complex product, suitable only for professional investors.

The authorities also emphasized that intermediaries need to verify clients’ understanding of investing in virtual assets or related products before proceeding with any transactions.

Additionally, intermediaries must confirm that clients possess the necessary financial stability to shoulder the risks and potential losses associated with trading in VA-related products.

Some VA-related derivative products available on SFC-approved exchanges are authorized for retail investors in certain areas, according to the blog.

These products, like VA futures contracts and certain VA funds, are regulated, making them safer for everyday investors.

Because these are overseen by the rules, there’s clearer pricing and less chance of market tricks, the authorities said. These products are available to all investors, not just professional ones, because they’re seen as more secure and transparent.

Any exchange-traded VA-related derivatives, even those on a specified exchange, are viewed as complex products unless they match the types listed as non-complex on the SFC’s website.

Intermediaries already serving non-qualified corporate and individual investors in VA dealings must update systems to meet new standards, with a three-month transition period. Those planning to start or expand VA services need to comply before proceeding.

The updated guidelines come as authorities look to address the fallout from Hong Kong-based crypto exchange JPEX, embroiled in a $200.7 million scandal and massive enforcement crackdown, which lured investors with promises of returns as high as 20%.

The platform ceased withdrawals amid regulatory warnings, leaving many, including those who invested life savings, in dire straits.

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Binance’s euro services make a comeback after Paysafe setback

Binance has partnered with new entities for euro transactions following the cessation of services by its former fiat collaborator, Paysafe.

Users have already started transitioning to the new services, the company announced on Thursday.

A Binance spokesperson said the exchange has brought on partners including TrueLayer, Nuvei and a number of card acquirers.

Truelayer is a fintech firm enabling financial transactions through its open banking API platform. Nuvei is a global payment tech company specializing in solutions to enhance and simplify digital transactions worldwide.

The new partners are providing services like depositing and withdrawing euros through Open Banking and SEPA/SEPA Instant, as well as trading euros for cryptocurrency, according to a statement.

They also support buying and selling crypto with bank cards and using fiat balances.

Founded by Changpeng Zhao in Shanghai in 2017, Binance has grown to be a prominent player in the crypto arena. But it has garnered considerable scrutiny from regulators, as authorities intensify efforts to combat alleged money laundering activities.

Paysafe started distancing itself from the exchange back in May this year. This move compelled Binance to suspend deposits and withdrawals in British pounds until a new banking partner was secured. By September, Paysafe stopped processing euro deposits as well.

This shift occurred while the exchange was under investigation by US regulators in addition to facing inquiries from authorities in the UK, Japan, Italy, Singapore, Netherlands, Canada and Thailand.

Earlier this year, Binance declared plans to reduce its activities in Europe, concentrating on “fewer regulated entities.” Consequently, the company withdrew from Germany, the Netherlands and Cyprus due to issues with licensing.

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Ethereum co-founder Joseph Lubin faces new legal fight over employee equity

Several former Consensys employees have sued co-founder Joseph Lubin, alleging he deprived them of their stock awards’ value.

The lawsuit, filed Thursday, accused Lubin of allegedly luring highly skilled professionals into leaving stable jobs with the vision of building a “crypto Google” and assuring them significant rewards for their risk. 

This promise, the plaintiffs claimed in the lawsuit, went unfulfilled, leading to their legal action. The complaint was filed Friday in a New York state court.

The lawsuit claims Lubin attracted the early employees with the promise of a solid stake in Switzerland-based Consensys AG, but allegedly didn’t follow through. 

“The idea was that Consensys — and its projects and [intellectual property] — would be owned by all employees. Especially early employees,” lawyers for the plaintiffs wrote.

Lubin allegedly drained the core assets from the original Consensys hub, funneling them into a new entity called Consensys Software (CSI), still under his control. 

This maneuver effectively sank the value of the shares belonging to this initial team, rendering them almost worthless, according to the lawsuit.

“Yet Lubin did not bring over many of his early employees—the Plaintiffs here—as equity holders in the new company. Instead, they continued to hold shares in the far less valuable entity that had been stripped of its assets,” the lawsuit said.

This plan is said to have included perks for JPMorgan, securing the bank a board position and a stake in the new entity.

Playing a “pivotal part” in Lubin’s strategy, JPMorgan, through its then-blockchain lead Umar Farooq, allegedly engaged in months of discussions with Lubin ahead of the scheduled transfer of assets, the suit said.

Blockworks has reached out to JPMorgan for comment.

Read more: New York AG sues DCG, Gemini and Genesis in ‘sweeping lawsuit’

The lawsuit bears resemblance to an earlier Swiss court case that wasn’t successful for the ex-employees, a Consensys spokesperson told Blockworks.

“Plaintiffs now believe their meritless claims stand a better chance of yielding a pay day if they game US courts and entangle Consensys Software and other unrelated parties in litigation,” they added.

“We fully expect that the plaintiffs, who were never employees of Consensys Software, will soon find this gambit is another fruitless attempt to enrich themselves from the success of others.”

The plaintiffs seek to secure damages from Lubin and Consensys in an amount to be determined at trial.

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New crypto developers are leaving too soon: Electric Capital

The crypto industry is struggling to keep new developer talent engaged, according to data from early-stage venture capital firm Electric Capital.

At the same time, the firm found that today’s developer pool is 66% larger than it was during the bear market three years ago — despite experiencing a 27% decline over the past year. 

Fewer new developers are entering the space because not as many people are giving crypto a try, the VC firm said in a blog published Wednesday.

This suggests a complex landscape, where growth and interest in development are present but some face waning enthusiasm. 

“Developers who left crypto recently were newcomers who worked in crypto fewer than 12 months and were only responsible for around 25% of all code commits,” the firm said in an October update.

The report, which defined developers as having left the field if they hadn’t contributed any code for two months, shed light on a downward trend.

Image Source: Electric Capital

The firm’s post contended that monthly new developer numbers fell sharply from about 5,200 in November 2021 to just 1,700 in September 2023. 

Adding to this, the findings highlighted a division in contribution history. 

Those developers who bowed out after July 2023 were responsible for about 25% of historical code commits, or additions a developer makes to the source code of a software project.

In contrast, the ones who stayed active past that point have been significantly busier, making up 75% of the code contributions. 

Additionally, developers active after July 2023 were found to code on more days.

Read more: New Starknet version offers ‘unprecedented increase in capacity,’ co-founder says

The report separately identified Ethereum layer-2 developer Starknet as leading in terms of monthly active developers, hosting 517 contributors and experiencing 4% growth annually.

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Crypto holdings of banks must be public by 2025: Basel watchdog

A group of international banking regulators have proposed that major institutions disclose their exposure to crypto assets by 2025.

The Basel Committee on Banking Supervision (BCBS) released draft guidelines on Tuesday featuring standardized disclosure templates.

The committee said that by adopting common templates for banks’ crypto asset activities, it would boost market discipline and minimize the knowledge gap between banks and market participants.

“Under the proposals, banks would be required to disclose qualitative information on their activities related to crypto assets and quantitative information on exposures to crypto assets and the related capital and liquidity requirements,” the committee said in a statement.

“Banks would also be required to provide details of the accounting classifications of their exposures to crypto assets and crypto liabilities,” the group said.

Although the standards set by the Basel Committee function more as “recommendations,” member nations — part of the Bank for International Settlements (BIS) — tend to integrate these standards into their own regulatory systems to a certain extent.

Read more: Like crypto or not, central banks need to prepare, BIS innovate head says 

The Basel committee has opened the floor for comments on the proposal until Jan. 31, 2024, and plans to enforce the rules starting Jan. 1, 2025.

The latest move follows Basel’s establishment of new rules in Dec. 2022 regarding the capital reserves banks must maintain for various crypto assets. 

The committee recommended standards for limiting a bank’s dealings in specific crypto assets. These include stablecoins, tokenized traditional assets and unbacked cryptocurrencies, where the exposure should not surpass 2% and ideally should stay below 1%.

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Lido Finance drops Solana staking after DAO decision

Lido Finance, known for its liquid staking solution, will no longer accept new staking requests for Solana tokens. This comes after Lido token owners voted in large numbers to pause the service.

After many discussions on the Lido DAO forum, the token holders chose to gradually end the use of the protocol on Solana.

“After much discussion and a vote by Lido DAO members, it was decided that the best course of action would be to wind down Lido on Solana,” the team said in a blog on Monday.

“Whilst this decision was difficult in the face of numerous strong relationships across the Solana ecosystem, it was deemed a necessity for the continued success of the broader Lido protocol ecosystem,” they added.

The decision to phase out Lido on Solana occurred following a proposal submitted to the Lido DAO by the development team, P2P Validator, in early September. 

This proposal detailed the successes, obstacles and potential future of Lido on Solana.

The P2P team laid out two distinct paths for consideration. One option proposed keeping Lido on Solana running, with Lido DAO’s financial support. This plan called for $200,000 every quarter for development, $600,000 per year for marketing and $100,000 for customer support, totaling $1.5 million over the next 12 months.

The other option was to simply end, or “sunset,” Lido on Solana, taking the project in a different direction.

Since taking over, the P2P team spent around $700,000 on Lido on Solana, earned $220,000 and faced a loss of $484,000, according to the proposal’s author, Yuri Mediakov.

More than 92% of the Lido community voted to end the product rather than keep it going, according to a vote that closed on Oct. 5.

Read more: Rebuilding trust: Solana’s roadmap after a challenging year

Those holding stSOL, Lido’s tokenized version of staked Solana (SOL), will continue to receive network rewards throughout the sunsetting process. Support for the Lido on Solana Frontend will end on Feb. 4.

Solana’s native token SOL has dropped over 21% in the last 12 months, and last traded around $24.41 on Tuesday, according to data from Blockworks Research.

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Crypto VC challenges persist, but Q3 brings hope with $1B raised

Venture capital funding for crypto startups remains challenging after a tumultuous year, but signs of improvement are emerging.

Galaxy published research on Friday that revealed venture funds raised over $1 billion in the third quarter (Q3) of 2023, marking the first increase since declines started in the third quarter last year.

This suggests a potential reversal in the crypto VC ecosystem, following a challenging year in which venture capitalists faced a lack of enthusiasm from their investors for additional investments in the sector.

The number of new funds launched rose to 15 in Q3, up from 12 in Q2, but median and average fund sizes have notably decreased from their peak during the bull market, it said.

Although VCs have more capital to deploy, Q3 saw the lowest numbers in terms of both deals and total capital actually invested in the crypto industry since Q4 2020, the report showed.

The crypto and blockchain industry experienced a low point in capital invested in Q3, at $1.9 billion, marking a continued decline from the peak of $12 billion in the first quarter of 2022. The number of deals also hit a new low for this cycle, totaling only 376 transactions.

Investments in the crypto sector have been on a downward trajectory since hitting a peak in Q1 2022, primarily due to declining enthusiasm for digital assets and a series of scandals that tarnished the reputation of the industry.

Image Source: Galaxy Research

Companies founded in 2021 and 2022 led in terms of the number of venture deals during Q3 2023, according to the report.

US leads, but others close in

The US remains a major player in the crypto VC investment landscape, both in terms of deal count and capital invested. 

Yet, companies in other regions with more well-defined regulatory frameworks for the industry made substantial advancements in both these categories, Galaxy’s Alex Thorn and Gabe Parker said.

Crypto VC funding was primarily secured by companies in the US (34.5%), followed by the United Arab Emirates (23.5%), the UK (9.5%) and Singapore (6.2%).

Read more: Billionaire-backed Hong Kong crypto VC pours $100M into blockchain fund

In deal count, US-based companies accounted for 35% of all crypto VC deals, with Singapore (10.6%), the UK (7.9%) and China (4.7%) following closely behind.

AI-crypto overlap takes the spotlight in Q3

Trading, exchange, investing and lending startups received the most venture capital funding for the third straight quarter (32.5% of total investment), while Web3, NFTs, Gaming, DAOs and Metaverse startups came in second (14.2% of total investment) for the second consecutive quarter.

According to Galaxy, growing interest in Artificial Intelligence (AI) prompted the development of a fresh dataset that specifically identifies the intersection of AI and the crypto sector.

This new category revealed that startups focused on AI-related products secured more than $60 million in Q3 2023, accounting for 3.2% of the total venture capital investment during that period.

Web3 gaming, NFTs, DAOs and metaverse companies continued to lead in deal count, followed by trading, exchange, investing and lending firms, mirroring trends from Q1 and Q2 2023.

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Blockstream’s new service aims to make Lightning integration a breeze

Bitcoin infrastructure company Blockstream has made its Greenlight Lightning-as-a-Service (LaaS) solution available for global commercial use, starting Thursday.

LaaS refers to a model where a provider like Blockstream offers a managed Lightning Network infrastructure to developers and businesses. 

Greenlight was first introduced to developers in June as a concept where “your users hold their keys, while we take care of everything else.”

The service allows developers to integrate Lightning payments into their applications using Blockstream’s Application Programming Interface (API), eliminating the need to manage their own Lightning nodes, according to a blog.

This removes the need for in-depth Lightning protocol knowledge or the complexities of setting up a node, Blockstream said.

The Lightning Network itself acts as a layer-2 scalability solution atop the Bitcoin blockchain, enabling rapid and low-cost BTC transactions for users. Notable exchanges have already implemented Lightning payments, including Binance, Coinbase and Kraken.

Alternatively, developers had to choose between custodial and non-custodial solutions, each with trade-offs in convenience, security and technical expertise.

Blockstream said Greenlight aims to provide a middle ground by removing the barriers associated with both options without compromising on security, performance or functionality.

“By offloading labor-intensive node operations to Blockstream and integrating Greenlight with just a few API calls, companies can save on costs and free up valuable time to focus on meeting the needs of their users,” the company said in a statement.

Going the non-custodial route means developers can avoid the burden of securing user funds and dealing with regulatory costs and compliance requirements, it added.

To promote adoption of non-custodial Lightning solutions, Blockstream said it provides a free Greenlight plan tailored for enthusiasts and small businesses. 

This plan allows developers to create up to 1,000 on-demand nodes, with each node activating and staying operational as long as it’s in use by an end-user.

For larger enterprises requiring higher capacities, Blockstream offers customized pricing packages that include increased node limits and assurances of uptime and availability.

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DeFi protocol Platypus suffers second flash loan attack in 9 months

Platypus, the Avalanche-native StableSwap protocol, suspended all of its pools on Thursday after detecting a flash loan exploit on the DeFi platform.

PeckShield, the first to report on the platform attack, disclosed on Thursday that the exploit led to losses exceeding $2 million.

Blockchain security firm CertiK laid out the results of its own investigation, saying that two attackers had taken about $1.3 million worth of wrapped AVAX (WAVAX) and about $913,000 in liquid staked AVAX (sAVAX).

Playtypus is currently investigating what went down.

“The whole team is working & communicating with different parties to try to recover the funds from the contracts, identify the root cause of this exploit, and trace the identity of the hacker(s) right now. We will share the updates with the community soon,” a moderator wrote on the protocol’s Discord channel on Thursday.

Platypus is an automated market maker (AMM) protocol within the Avalanche blockchain, created with the primary goal of exchanging stablecoins.

The protocol raised $3.3 million in Dec. 2021 in a funding round led by now defunct crypto hedge fund Three Arrows Capital (3AC) and Defiance Capital.

The protocol suffered a separate exploit in February, losing more than $8.5 million. 

That incident was also a flash loan attack — where traders can instantaneously borrow cryptocurrencies without providing collateral and return them within the same transaction.

In that particular attack, the perpetrators exploited a vulnerability in Platypus’ native stabletoken’s USP solvency check mechanism, deceiving its smart contracts into believing that USP was completely backed.

As of September, the Platypus team recovered about 61.7% of the original losses incurred by its liquidity pools during the USP exploit. 

They tapped into a reserved treasury to initiate a second phase of compensation on Sept. 26, the team said on X.

Platypus said it would share additional updates on the latest exploit in time.

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UK sports committee wants football to tackle fan tokens, NFTs

The UK’s culture, media and sports (CMS) committee is advising the government to collaborate with NFT marketplaces to address copyright violations.

Comprising a group of MPs, the committee initiated an inquiry in Nov. 2022 to explore the impact of blockchain and NFTs on policy areas within their jurisdiction.

In a report released Wednesday, they pinpointed intellectual property risks as their primary concern during the investigation.

NFTs featuring art can infringe on artists’ intellectual property rights and are found on online platforms with limited ways to resolve and compensate for such issues, they said.

“Artists are at risk of seeing the fruits of their hard work pinched and promoted without permission while fraudulent and misleading adverts add an extra layer of jeopardy for investors involved in what is already an inherently risky business,” Caroline Dinenage, Conservative MP and Chair of the CMS Committee, said in a statement. 

“The government must make sure that everyone in the crypto chain is working to properly protect consumers and the rights of creators,” she added.

The committee noted that an opportunistic user might, for instance, use inaccurate information, like misattributing the creator of an artwork, potentially impacting the creator’s future ability to profit from the artwork.

To tackle this issue, they recommended establishing rules for online marketplaces, including NFT platforms, to safeguard creators, buyers and sellers from fake or illegal content.

The group is also worried that NFTs are being used in professional sports to generate extra income from global fans and, in some cases, as a substitute for fan interaction.

Fan tokens are created to boost fan interaction with sports teams or organizations. When fans buy these tokens, they gain access to various perks, rewards and chances to connect with their favorite teams or clubs in return.

In the context of sports, the report suggested that employing fan tokens in football should not be considered a valid gauge of engagement, due to price instability and concerns raised by fan groups.

“The unique relationship between clubs and fans means that fan speculation on sport-based cryptoassets carries a real risk of financial harm to fans and reputational harm to clubs,” the report said.

The committee also urged the government to tackle deceptive or dishonest NFT advertising. 

They recommended a regulatory framework that mandates the entire advertising process to minimize potential harm to consumers arising from NFT marketing.

Recent UK regulations mandate that crypto companies must ensure their advertising is transparent, equitable and prominently displays risk notifications.

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Amazon and Immutable team up to advance Web3 gaming

Immutable has partnered with Amazon Web Services (AWS) to streamline blockchain gaming infrastructure for developers.

Teaming up with AWS allows Immutable to tap into valuable technical resources and support, boosting its capabilities in the blockchain gaming world, and simultaneously driving innovation and growth.

The blockchain gaming company, known for its Ethereum layer-2 scaling solution, will leverage a vast network of potential game studio collaborators through AWS, according to a Tuesday announcement.

Immutable has joined Amazon’s Independent Software Vendors (ISV) Accelerate Program, which offers support and advantages to partner with AWS sellers worldwide.

“This will allow Immutable to gain access to expert resources from AWS to help secure prospective customers and ultimately close deals with major game studios from around the world,” Immutable said.

An Immutable spokesperson described the ISV Accelerate Program as “very prestigious,” saying that members need to meet strict industry standards and undergo a thorough evaluation to be accepted.

To work with AWS, Immutable has to meet certain criteria, like signing a non-disclosure agreement, going through a business review and maintaining at least $350,000 in AWS revenue through the partner network over a year.

There’s typically no direct program fee, but organizations may need to invest in their software solutions on AWS.

“There’s no payment involved on either side,” the spokesperson told Blockworks. 

“This is a mutually beneficial collaboration for both Immutable and AWS. Both companies will work together to accelerate the mass adoption and development of Web3 gaming space, both from technical and commercial standpoints,” they added.

Read more: Crypto gaming needs to move beyond ‘just having collectibles,’ Argus Labs CEO says

Despite the collaboration, Amazon won’t have exposure to Immutable X’s native token IMX in any way.

Game developers utilizing Immutable will now be able to be part of AWS Activate, a program that provides technical assistance, referral opportunities, up to $100,000 in AWS credits and other resources.

“Today, Web3 gaming is one of the fastest growing sub-sectors of the blockchain industry and is already enjoyed by millions of gamers worldwide,” John Kearney, head of sales at AWS, said in a statement.

Read more: Press start to disrupt: Dappicom’s bid to reinvent Web3 gaming

AWS is best-known for its versatile cloud computing services. In the context of blockchain gaming, it provides adaptable infrastructure that enables game studios to efficiently manage varying user loads and in-game activities.

Ava Labs struck a partnership with AWS in January in an effort to accelerate blockchain adoption for enterprises, governments and institutions.

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WOO Network severs 3AC ties with share buyback

WOO Network has reached an agreement to repurchase the shares and tokens it previously sold to Three Arrows Capital (3AC).

3AC acquired these assets as part of WOO’s $30 million Series A funding round in Nov. 2021.

WOO announced the terms of its deal with Teneo, the liquidator overseeing 3AC’s bankruptcy, in a statement on Wednesday. The arrangement includes canceling 3AC’s shares and proportionally increasing ownership for all other shareholders.

WOO will send 20 million repurchased tokens, valued at about $3.4 million currently, to a burn address, according to the statement.

In late 2021, WOO secured $30 million in a Series A round with support from various companies, including Gate Ventures, QCP Capital and Capital.

3AC emerged as the largest investor in this round, acquiring both equity and 25 million WOO tokens. The remaining tokens were subject to vesting over the next 12 months.

WOO said it repurchased the shares and tokens as it obtained them at a discount, and that it eliminated any remaining ties with 3AC and its creditors.

A WOO spokesperson declined to disclose the details of the equity or purchase price, but told Blockworks it was glad to be past the situation “since the overhang was a potential red flag with many investors and institutions who were unclear on the potential impacts.”

“We are pleased to clear the uncertainty related to 3AC from the WOO ecosystem. We proactively collaborated with the liquidators to secure a fair deal to repurchase our shares and both vested and vesting tokens from 3AC’s estate,” WOO co-founder Jack Tan said in a statement. 

“We are looking forward to executing our mission without further distractions from the 3AC fallout,” he added.

Launched in 2019, WOO Network developed a wide range of products and services that cater to various segments, including retail, institutions and both centralized finance (CeFi) and decentralized finance (DeFi) solutions.

The network integrates CeFi and DeFi services to boost liquidity for participants in the cryptocurrency market.

Shortly after completing its Series A funding round, WOO secured a $12 million funding round in early 2022, with Binance Labs taking the lead.

Co-founders of defunct $10B hedge fund face market activity ban

3AC oversaw about $10 billion in assets as of March 2022, establishing itself as a significant player in the global crypto hedge fund space.

But it went bankrupt in July 2022 due to a mix of crypto market setbacks and a risky trading strategy that drained its funds, leaving it unable to handle debts.

3AC had numerous counterparties that were companies entangled in the firm’s financial struggles.

Both co-founders faced challenges since then, and their decision to keep their whereabouts undisclosed added to their complicated situation.

Singapore ultimately imposed a multi-year market activity suspension on both co-founders Su Zhu and Kyle Davies, effective since Sept. 13. 

Last month, Singapore authorities arrested Zhu, and he now faces four months in prison.

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Israel freezes Hamas-linked crypto accounts used for donations

Israeli police have seized cryptocurrency accounts used to collect donations for Palestinian Islamist group Hamas.

Hamas, which controls the Gaza Strip, launched a major surprise attack against Israel over the weekend, reminiscent of the 1973 Yom Kippur assault.

In retaliation, Israel launched heavy airstrikes on Gaza, causing widespread damage to neighborhoods. As of Wednesday, it’s estimated that over 1,000 people have died in Israel, while Gaza has seen around 900 casualties.

Israel Police’s Cyber Unit, along with the Ministry of Defense, the Israel Security Agency, and other national intelligence agencies, effectively blocked crypto accounts on centralized exchanges employed by Hamas to raise funds for their operations, according to a Tuesday announcement on X.

The Police’s Cyber Unit worked with UK law enforcement and froze another account held at  UK-based Barclays bank, which Hamas publicly disclosed for receiving donation funds, the statement said.

These funds were redirected to the state treasury with the support of crypto exchange Binance, the Times of Israel reported on Tuesday.

The exact amount of funds and number of crypto accounts seized was undisclosed.

“The Israel Police, Ministry of Defense, and other partners will continue the fight against terrorist financing and targeting the strategic financial assets of terrorist organizations,” police said.

Blockworks has reached out to Barclays and Binance for comment.

Though the use of crypto for funding terrorism is less common than fiat currency, Israeli Police found that Hamas began fundraising efforts using crypto accounts since Saturday’s attacks.

Tether made up bulk of past fund seizures

Blockchain intelligence firm TRM Labs, which says Hamas is the first terrorist organization to use crypto, in a recent report detailed findings on how the group received crypto.

GazaNow, a Gaza-based organization actively backing Hamas, has been seeking donations through a cryptocurrency address. This address, initially active in Aug. 2021, received a total of $800,000, with less than $5,000 received since the attacks on Saturday, according to the report.

Since early 2019, Hamas’ military arm, the Izz-Al Din-Al Qassam Brigades, has been exploring crypto as an alternative fundraising method for its military operations.

Hamas initially experimented with crypto fundraising by seeking bitcoin donations through its Telegram channel, later transitioning to direct fundraising on its website,, TRM Labs said.

In recent years, Israel’s National Bureau for Counter Terror Financing (NBCTF) has consistently taken action against Hamas’ utilization of cryptocurrencies.

Among these entities are Gaza-based businesses like Dubai Co. For Exchange, al-Muhtadon, al-Mutahadun For Exchange, and al-Wefaq Co for Exchange. The majority of the seized funds were in the form of Tether tokens on the Tron network, according to TRM Labs.

As a centralized stablecoin issuer, Tether has administrative control over USDT, which it can exercise in response to law enforcement requests. About 50% of all USDT is on Tron, data from DefiLlama shows.

Reuters reported in May that the Israel anti-terror finance squad halted some 190 Binance accounts that the government alleged had connections to both the Islamic State and Hamas.

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Trader Joe’s grocery chain sues DEX of the same name

American supermarket chain Trader Joe’s is pursuing legal action in California to resolve a trademark dispute with a crypto platform that bears a strikingly similar name.

On Oct. 5, the chain filed a lawsuit against a crypto platform called “Trader Joe” and its co-founder Cheng Chieh Liu, alleging that they intentionally chose a name similar to the supermarket’s.

Lawyers for the chain stated that the decentralized exchange (DEX) created a narrative around a fictional “Trader Joe,” closely associating with the supermarket’s brand.

They further contested the crypto firm’s logo, which features an image of “Trader Joe” wearing a red cap, the primary color of the grocery’s chain brand.

Red is also the dominant color of the Avalanche layer-1 blockchain where the DEX was first launched.

As per the lawsuit, co-founder Liu is a Chinese citizen residing in Singapore who registered the disputed domain name,

In the lawsuit, Trader Joe’s contests the crypto company’s use of a name deemed “confusingly similar.” 

This name was found on the platform’s primary website, an app accessible through the Apple App Store, as well as on platforms like X, YouTube, Reddit, Github, LinkedIn, Substack, CoinMarketCap, Telegram and Discord.

When confronted, the defendants attempted to conceal their origin story in an attempt to gain an upper hand in legal proceedings regarding the domain, according to the lawsuit. 

The plaintiff asserts that exposing the actual story would undermine the crypto firm’s case and any legitimate claim to the domain.

“Defendants neither sought nor received Trader Joe’s permission to name their platform after Trader Joe’s,” the lawsuit said, adding that they instead sent them cease-and-desist letters and received no response.

Trader Joe, launched in 2021 by an anonymous team, operates as a non-custodial exchange protocol on the Avalanche blockchain (initially a SushiSwap fork), according to Token Terminal.

Liquidity providers deposit funds into Trader Joe and, in exchange, earn trading fees from traders, referred to as supply-side fees.

Trader Joe’s claimed that the crypto firm’s employees use aliases not only externally but also within the company.

The plaintiff additionally alleged that the crypto platform’s use of the “Trader Joe” branding is enabling them to derive commercial benefits from the well-known trademark and broader reputation of the grocery chain.

“Obscuring their identities both from outsiders and each other in day-to-day business dealings evidences an intent to avoid detection, subvert legal process, and operate free of legal consequence,” they said.

Blockworks has reached out to Trader Joe XYZ’s for comment.

Trader Joe’s supermarket chain requested the court to issue an order compelling the crypto firm to cease using variations of its name in their business operations. 

It also seeks ownership of the pertinent domain names and any additional damages to be determined through legal proceedings.

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Gemini exchange taps veteran fintech exec in India expansion

Crypto exchange Gemini has appointed a head of operations for its Indian subsidiary following a $24 million investment to expand operations there.

Sachin Ranglani, who has extensive experience in the tech sector, joined as Vice President and India Head in September, according to his LinkedIn profile.

He previously worked as senior vice president of product management at Indian fintech Paytm for three years, and gained experience at Uber, Amazon and Infosys.

Gemini’s Asia Pacific CEO, Pravjit Tiwana, announced in September that the company’s engineering center in Gurgaon, situated near India’s capital Delhi, will have a major impact on fueling the company’s growth in the coming years.

The Gurgaon branch, currently employing over 70 individuals, anticipates increasing its staff to exceed 100 by the close of 2023, Tiwana told Financial News in an article published on Tuesday. 

He added that this figure is projected to reach 200 by the end of 2024.

The Gurgaon team is responsible for tasks related to compliance, data pipelines, warehousing, security, and payments. 

They are actively looking to add software engineers, technical product managers, people operations and talent acquisition staff, finance, support and compliance positions.

On its website, Gemini says: “we have deep respect and admiration for India’s tradition of engineering excellence and view India as a hotbed for bar-raising technology talent.”

“Our Gurgaon office will be the second largest Gemini engineering hub behind the United States and complements our existing offices in the United States, the United Kingdom, Ireland, and Singapore,” it added.

The company also said that its spot and derivatives crypto trading products are ready to serve both retail and institutional customers in India.

Gemini’s entry into the Indian market aligns with its expansion strategy in Singapore, where it aims to grow its workforce to over 100 employees by next year.

“We believe that APAC will be a great driver of the next wave of growth for crypto and Gemini,” Gemini has said.

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Upbit updates cold wallet policy in bid to thwart hackers

Crypto exchange Upbit has started using more cold wallets after dealing with more hacking attempts since 2020.

Hackers reportedly attempted to breach crypto exchange Upbit about 160,000 times in the first half of 2023 alone.

This data, which reveals more than double the number of infringement attempts in the first half of 2021, was shared by Dunamu — the operator of Upbit — with South Korean lawmaker Rep. Park Seong-jung, a member of the National Assembly’s Information and Communications Technology (ICT) committee, Yonhap News reported on Monday.

Dunamu reported a substantial rise in hacking attempts on the exchange, surging from about 8,400 in the second half of 2020 to 159,061 in the first half this year. 

Upbit — among the top 20 crypto exchanges by spot trading volume — is believed to have incurred losses of 58 billion won (equivalent to $42.8 million) due to a hacking incident in 2019. 

Following this event, Upbit implemented preventive measures, such as distributing its operating hot wallets, effectively averting any subsequent cyber breaches, according to Yonhap.

In an effort to enhance security further, Dunamu announced its intent to increase Upbit’s cold wallet proportion to over 70% and adopt new procedures for operating hot wallets, designed to make them safer.

Hot wallets are generally considered more vulnerable to hacking and online threats because they are connected to the internet, whereas cold wallets are shield private keys from the risks associated with the online environment.

Rep. Park noted that the increasing frequency of hacking incidents targeting virtual asset exchanges, both domestically and internationally, is a growing concern.

He added that he feels the Ministry of Science and ICT has a vague role in overseeing these exchanges, and emphasized the importance of the Ministry taking proactive steps to address the issue. 

Specifically, he called for the Ministry to carry out simulated security tests and assess the information security landscape to better prepare for cyberattacks, particularly in the context of frequent hacking attempts on virtual exchanges.

The cryptocurrency industry is still relatively young and lacks comprehensive regulation in many jurisdictions. This lack of oversight can attract bad actors who believe they can operate with relative impunity.

Immunefi recently reported that the crypto industry lost $1.4 billion to hacks and fraud so far this year, with $685.5 million lost in the third quarter alone.

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Canada relaxes strict stablecoin rules, introduces conditions

Canada’s securities regulators have offered clarity around their provisional strategy for the trading of stablecoins, which they refer to as value-referred cryptoassets.

The Canadian Securities Regulators (CSA), an organization of provincial and territorial regulators across the country, acknowledged the potential utility of stablecoins for Canadian clients on Friday.

In line with this understanding, the CSA announced on Friday that it may permit trading of specific stablecoins tied to the value of a single fiat currency, known as fiat-backed cryptoassets, subject to certain terms and conditions.

The temporary terms and conditions, influenced in part by feedback from participants in the Canadian cryptocurrency market, aim to tackle investor protection issues associated with stablecoins.

These terms stipulate that the stablecoin issuer must uphold an “appropriate reserve of assets” with a qualified custodian, for the benefit of cryptoasset holders. 

Additionally, both the stablecoin issuer and the crypto trading platforms that provide these stablecoins must disclose specific information regarding their governance, operations and asset reserves to the public.

In February, the CSA prohibited cryptoasset trading platforms from facilitating the purchase or deposit of stablecoins without obtaining prior regulatory consent.

Furthermore, it set a 30-day ultimatum for unregistered crypto trading platforms operating within Canada, urging them to either commence registration or cease operations in the country.

Subsequently, in May, crypto exchange Binance announced its decision to exit the Canadian market, citing the country’s stablecoin regulations and limitations on investor activity as reasons behind the move. Other notable exits included Bybit, OKX, Paxos, dYdX and Bittrex.

Blockworks has reached out to Binance for comment on the CSA’s latest move.

Although the CSA’s stance on cryptocurrencies seems to have softened, it did issue a distinct warning.

It stressed that, while trading in certain stablecoins may be allowed to continue, Canadian investors should exercise caution as these investments carry inherent risks and should not be regarded as equivalent to fiat currencies.

“The fact that an asset satisfies these interim terms and conditions should not be viewed as an endorsement or approval of the asset, nor give any indication that the asset is risk-free,” it added.

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New task force in Hong Kong set to monitor crypto exchanges

A newly established working group will closely monitor cryptocurrency exchanges in Hong Kong in the wake of the JPEX scandal.

Hong Kong’s security regulator and the police force have together launched the group to coordinate monitoring and investigating illegal activities related to virtual asset trading platforms (VATPs).

The working group was formally created following a meeting between the two agencies on Sept. 28, according to a statement released Wednesday. 

Members will include representatives from units including the Hong Kong Police Force’s Commercial Crime Bureau, Cyber Security and Technology Crime Bureau, as well as the Securities and Futures Commission’s enforcement division and intermediaries division.

The primary goals of this group include exchange of information regarding potentially illicit activities and violations within VATPs. 

Additionally, the group aims to establish a mechanism for evaluating risks associated with suspicious VATPs and improving cooperation in investigative efforts.

“The implementation of the new platform between the police and the SFC is instrumental to fast-tracking of vital intelligence exchange and joint collaboration in responses to the challenges arising from VATPs, so as to better protect the general public of Hong Kong,” Eve Chung, Assistant Commissioner of Police (Crime), said in a statement.

Last month, Hong Kong’s Securities and Futures Commission unveiled initiatives aimed at improving investor education and the distribution of information regarding VATPs. 

The action came in response to a major crypto scandal in Hong Kong that affected over 2,000 individuals. 

These measures were introduced as part of the regulator’s investigation into JPEX, a crypto trading platform linked to what is being referred to as one of the largest fraud cases in the country.

At the end of September, there were nearly 2,400 victims who incurred losses exceeding HK$1.5 billion ($191 million). 

Before the JPEX scandal came to light, the SFC had cautioned investors about unlicensed cryptocurrency platforms involved in “improper practices.”

The agency also expressed concerns that some VATPs claiming to have applied for licenses might not be adhering to legal and regulatory requirements of the new regime.

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Crypto investors still active in China, many allocating over $100k: Bitget

Despite an on-again-off-again de facto ban imposed by Beijing, individuals in China continue to deal with cryptocurrencies.

A recent study conducted by crypto derivatives exchange Bitget across 20 countries found that China displayed the highest level of engagement with cryptocurrencies. 

Conducted from May 2023 to Aug. 2023, the research engaged over 1,500 participants from countries including Europe, China, Japan, South Korea and Turkey.

The report published on Thursday revealed that 18% of investors based in China allocated funds ranging from $50,000 to $100,000, while an additional 19% invested amounts between $100,000 and $500,000 in cryptoassets.

This insight into their trading activity backs the notion that some portion of China’s population is ignoring Beijing’s ban imposed in Sept. 2021.

China effectively said no to crypto transactions, committed to eliminate digital asset mining and labeled services from offshore exchanges as illicit financial activity. 

Despite all that, some traders found ways to keep trading using over-the-counter platforms and offshore exchanges.

Nonetheless, the crypto trading ban has had a significant impact. 

In a recent report, Chainalysis pointed out that East Asia has seen a notable decline in crypto activity, with diminished trading volumes observed in both Hong Kong and China when comparing data from 2021 and 2022.

The report underscored a substantial reduction in crypto transaction volume in China.

From July 2022 to June 2023, China reported a total of $86.4 billion in crypto transaction volumes, far lower than the nearly $225 billion recorded during the same period in the previous year.

Contrasting investment habits across surveyed countries

In contrast to China, users in Europe, Turkey, and South Korea demonstrate relatively lower levels of engagement in terms of the amounts they invest.

Bitget’s findings indicate that 51% of European users, 49% of Turkish users, and 46% of South Korean users allocated their investments within the range of $1,000 to $10,000.

The study also found that gender plays a role in financial goals. In South Korea, 49% of female users and in Japan, 41% of female users invest in crypto to improve their financial situation, compared to 45% and 30% for males, respectively. 

Additionally, around 27% of female investors in Turkey and the US were found to use crypto to fund their children’s education.

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Hong Kong Stock Exchange debuts ‘blockchain-based’ settlement system

The operator of the Hong Kong Stock Exchange (HKEX) has launched an upgraded settlement platform for Stock Connect, which links the exchanges of Shanghai and Hong Kong, modernizing its system of handling transactions.

HKEX’s improved platform, called Synapse, will integrate smart contracts through the use of DAML (Digital Asset Modelling Language), a specialized programming language launched by Digital Asset in 2016. DAML is tailored to standardize and streamline post-trade procedures.

Using a language like DAML for smart contracts can help clearing agencies like HKEX update and make their settlement processes better. 

It is a way to modernize and improve the exchange’s settlement processes by automating tasks, reducing risks and increasing efficiency and transparency.

Synapse makes settlement processes faster and more transparent, benefiting asset managers, brokers, custodians and clearing participants by allowing real-time data syncing to handle higher trade volumes efficiently, HKEX said in a statement released Wednesday.

“This technology-empowered platform will not only improve post-trade efficiencies, but will, over time, build a better, stronger ecosystem, supporting both market growth and investor growth strategies,” Glenda So, co-head of markets at HKEX, said in a statement.

The clearinghouse said that in the first half of 2023, daily trading volume for Northbound Stock Connect averaged RMB 109.3 billion ($15.1 billion), marking a 5% rise from the previous year and a 50% jump compared to 2020 levels.

Synapse, offered as an opt-in service, is designed to support institutional investors participating in Northbound Stock Connect, which involves trades settled in Renminbi by both local and overseas investors, allowing them to easily handle post-trade operations across varying time zones.

HKEX did not elaborate on precisely how a blockchain is used in Synapse, who operates the nodes or how many there are. Blockworks contacted the exchange for clarification.

Similar efforts have used permissioned ledgers based on proof-of-authority consensus.

Other financial exchanges have explored the use of blockchain to enhance their efficiency. 

However, the Australian Securities Exchange (ASX) last year halted its blockchain system development, which was aimed at modernizing its outdated settlement layer, after three years of effort.

Meanwhile, the London Stock Exchange Group has developed a new digital markets venture, potentially positioning itself as a front-runner among prominent exchanges in embracing blockchain for trading of conventional financial assets.

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