Building Institutional-Grade Products For Bitcoin’s Adoption

Philippe Bekhazi of XBTO Group discusses building a large, diversified Bitcoin company.

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Philippe Bekhazi has combined his areas of expertise, finance and technology, to create XBTO Group, one of the world’s largest and most diversified participants in Bitcoin and across cryptocurrency-based finance.

“With Bitcoin, you don’t have to trust anyone with money,” Bekhazi said. “It just is what it is. It’s an equation, that everyone’s looking at, and everyone’s protecting, and it cannot be changed. And it’s global in nature. It’s like that one language everybody speaks. And that’s really powerful.”

Founded in 2015, XBTO is active in market making, OTC trading, venture capital, mining and more. You may not have heard of XBTO before, but you’ve probably used its services without even realizing it. In this episode of the “Bitcoin Magazine Podcast,” Bekhazi explained how he got into Bitcoin, the ways that XBTO is involved in the Bitcoin space, how the larger cryptocurrency space has evolved in recent years, and ways to continue to push Bitcoin and Bitcoin companies into the mainstream.

“Bitcoin is only ten years old, and we want to see Bitcoin succeed, and we need that volatility to get places, right?” he asked. “It needs to grow fast to reach as many people as possible, because that’s it’s promise, right? A billion dollar asset, it’s nice, but it doesn’t really do anything if you think about what it could do for the world. So, I think we’re getting places, and that’s a good thing.”


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Here Comes the NFL Version of NBA Top Shot

Dapper Labs, the firm behind NBA Top Shot, is ready to announce a marketplace for National Football League NFTs, according to Sports Business Journal, which cited anonymous sources.

The NFL and the NFL Players Association will receive equity in Dapper Labs as part of the deal. According to Sports Business Journal, the digital licensing revenue generated for the players’ union by the deal will be second only to EA Sports, maker of the popular “Madden” video games.

Dapper Labs receives some credit for reviving NFTs, tokens that work as deeds of ownership to real or digital assets. Though Dapper was behind the first major NFT project—Ethereum-based digital collectibles CryptoKitties—it has since moved into sports trading cards. After launching NBA Top Shot in 2020, its has expanded to the WNBA and, more recently, Spanish football with a La Liga collaboration.

Earlier this month, it revealed it had raised $250 million in a funding round led by Coatue, with backing from Andreessen Horowitz and others; it’s now valued at $7.6 billion—$5 billion more than it was after a March funding round.


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CFTC hits Kraken with $1.25M in fines over alleged illegal offering

The United States Commodity Futures Trading Commission, or CFTC, is ordering crypto exchange Kraken to pay more than a million dollars in civil monetary penalties related to allegations the exchange is violating the Commodity Exchange Act.

In a Sept. 28 statement, the CFTC said U.S.-based crypto exchange Kraken — operating under the name Payward Ventures — has failed to register as a futures commission merchant and is illegally offering margined retail commodity transactions in digital assets. The order requires the exchange to pay a penalty of $1.25 million and “cease and desist from further violations of the Commodity Exchange Act,” the law under which the CFTC derives much of its enforcement power on commodities and futures trading.

“This action is part of the CFTC’s broader effort to protect U.S. customers,” said Vincent McGonagle, the CFTC’s acting director of enforcement. “Margined, leveraged or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

The CFTC’s case alleges that Kraken “offered margined retail commodity transactions in digital assets” to ineligible U.S. customers from June 2020 to July 2021. Kraken has since changed its policy on margin trading, but until June 2021 customers needed to close or settle their positions within 28 days. According to CFTC, these actions represented the company operating illegally as the transactions did not occur on a designated contract market.

“If repayment was not made within 28 days, Kraken could unilaterally force the margin position to be liquidated,” alleged the CFTC. “Kraken could also initiate a forced liquidation if the value of the collateral dipped below a certain threshold percentage of the total outstanding margin. As a result, actual delivery of the purchased assets failed to occur.”

Related: US crypto exchange Kraken eyeing public listing in 2022

The enforcement action is seemingly small compared to the size of a major crypto exchange like Kraken — some estimates put the company at a $10 billion valuation, with the monetary penalty representing 0.0125% of that value. In contrast, the CFTC and Financial Crimes Enforcement Network fined crypto derivatives exchange BitMEX $100 million in August.

Dan Berkovitz, current CFTC commissioner and soon to be Securities and Exchange Commission general counsel, has previously described the former’s enforcement actions in the crypto space as “aggressive,” but also said the agency was “not necessarily looking for more authority without more resources.” Berkovitz will be leaving the CFTC in October while U.S. President Joe Biden has tapped Kristin Johnson and Christy Goldsmith Romero to fill two of the empty commissioner seats at the agency.