Robinhood Receives Investigative Subpoena from SEC Over Crypto Business

Robinhood Markets, the popular brokerage known for its commission-free trading, has recently disclosed that it received an investigative subpoena from the United States Securities Exchange Commission (SEC) in December 2022. The subpoena was related to its cryptocurrency listings, custody services, and platform operations. This came after several major cryptocurrency trading venues and lending platforms filed for bankruptcy earlier in the year, including FTX, Three Arrows Capital, Voyager Digital Holdings, and Celsius Network. The SEC’s inquiry into Robinhood’s crypto business is aimed at obtaining information necessary to decide whether to pursue legal action against the company.

This is not the first time Robinhood has been under scrutiny for its crypto business. In April 2021, the California Attorney General’s Office issued subpoenas seeking information about Robinhood’s crypto trading platform, business and operations, custody of customer assets, and coin listings. In August 2021, the New York District of Financial Services fined Robinhood’s crypto division $30 million for failing to invest the proper resources and attention to develop and maintain a culture of compliance. Additionally, the Massachusetts Securities Division scrutinized Robinhood in August 2021 for allegedly targeting inexperienced investors.

The investigative subpoena from the SEC highlights the regulatory challenges faced by the crypto industry, as regulators seek to clamp down on fraud and protect investors. The SEC has been increasingly active in pursuing companies that violate securities laws in the crypto industry. For example, in December 2021, the SEC filed a lawsuit against Ripple Labs, alleging that its XRP token was an unregistered security.

Robinhood’s crypto business has been growing rapidly, and the company has added several new cryptocurrencies to its platform in recent years. However, the regulatory scrutiny and fines imposed on the company have raised concerns about the company’s compliance culture and its ability to navigate the regulatory landscape. The company has stated that it is committed to complying with all applicable laws and regulations and is working to improve its compliance infrastructure.

In conclusion, the recent investigative subpoena from the SEC is a reminder of the challenges faced by the crypto industry and the importance of compliance in the sector. Robinhood’s crypto business is under scrutiny, and the company must continue to invest in compliance infrastructure to ensure that it is meeting regulatory requirements. As the crypto industry continues to evolve, regulatory scrutiny is likely to increase, and companies must be prepared to navigate this complex landscape.


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Digital Currency Group Reports Over $1 Billion Loss Due to 3AC Collapse

Digital Currency Group (DCG), a cryptocurrency venture capital conglomerate, has reported losses of over $1 billion in 2022. The losses were primarily due to the collapse of Three Arrows Capital (3AC), a crypto hedge fund that DCG had invested in, and falling cryptocurrency prices.

According to DCG’s Q4 2022 investor report, the losses were mainly caused by the impact of 3AC’s default on Genesis, DCG’s lending arm. Genesis filed for Chapter 11 bankruptcy in late January, as it was 3AC’s largest creditor, having loaned the now-bankrupt hedge fund $2.36 billion. 3AC filed for bankruptcy in July 2022.

DCG’s fourth-quarter losses came to $24 million, while revenues came in at $143 million. Full-year revenues for DCG came in at $719 million, with total assets of $5.3 billion. DCG’s cash and liquid holdings amounted to $262 million, and its investments, such as shares in its Grayscale trusts, amounted to $670 million. The remaining assets were held by divisions of its asset management subsidiary Grayscale and DCG’s Bitcoin (BTC) mining business, Foundry Digital.

DCG’s equity valuation came in at $2.2 billion, with a price per share of $27.93, which the report said was “generally consistent with the sector’s 75%-85% decline in equity values over the same period.” However, the company said it “hit a milestone” with the restructuring of Genesis.

In February, DCG proposed an agreement that would see its equity share in Genesis’ trading entity contributed and all Genesis entities brought under the same holding company, with its trading entity sold off. DCG would also exchange an existing $1.1 billion promissory note due in 2032 for convertible preferred stock, and its existing 2023 term loans with an aggregate value of $526 million would be refinanced and made payable to creditors.

According to a Genesis creditor, the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for those owed money by the firm.

DCG declared on November 1, 2021, that its valuation was more than $10 billion, following the sale of $700 million worth of shares to companies like Alphabet Inc., Google’s parent company. However, the recent losses have brought its valuation down significantly.

The collapse of 3AC and Genesis’ subsequent bankruptcy filing has had a major impact on DCG’s financials. The company will need to continue to navigate the volatile cryptocurrency market and work towards resolving its outstanding liabilities to regain investor confidence.


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Majority of American Adults Believe Financial System Favors Powerful Interests, 20% Own Cryptocurrency

A recent survey conducted by Morning Consult and commissioned by Coinbase has revealed that the majority of American adults believe that the global financial system unfairly favors powerful interests. The online survey, which was conducted in February 2023 and included responses from over 2,000 American adults, found that 80% of respondents felt that the financial system is not fair to all, and that it favors those with powerful interests.

The survey also found that 67% of respondents called for a major overhaul or major changes to the current financial system. The findings suggest that many Americans are dissatisfied with the current system, and believe that it needs to be reformed in order to better serve the needs of ordinary citizens.

Interestingly, despite recent negative news about cryptocurrency and the crypto market, the survey found that 20% of respondents own cryptocurrency, and nearly a third plan to buy, sell or trade cryptocurrency in the next year. These numbers have remained consistent over the past year, indicating that recent market turmoil may not have shaken retail investor confidence in crypto in America.

The survey provides important insights into the perception of the global financial system and how it is viewed by United States adults and crypto investors. It highlights the need for major changes to the financial system in order to address concerns about fairness and equality, and suggests that the crypto market is still viewed as a viable investment option by many Americans.

It is worth noting that the survey was commissioned by Coinbase, a leading crypto exchange, which may have influenced the results. However, the findings are consistent with other surveys and studies that have shown a growing dissatisfaction with the current financial system and a growing interest in cryptocurrency as an alternative investment option.

Overall, the survey provides valuable insights into the current state of the financial system and the crypto market, and suggests that major changes are needed in order to address the concerns of ordinary citizens and ensure a more equitable and fair system for all.


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Bored Ape Yacht Club Creators Launch Bitcoin NFT Collection

Yuga Labs, the creators of Bored Ape Yacht Club (BAYC), have announced a new collection of non-fungible tokens (NFTs) called TwelveFold. The collection features 300 tokenized computer-generated artworks on Bitcoin, with each artwork representing a base 12 art system localized around a 12×12 grid. Yuga Labs designed the collection to explore the relationship between time, mathematics, and variability using the Bitcoin blockchain. The TwelveFold collection is set to go up for auction later this week.

Yuga Labs explained the concept behind TwelveFold in an accompanying blog post, saying the collection is an allegory for the cartography of data on the Bitcoin blockchain. The post further explains that satoshis are the smallest individually identifiable units of a Bitcoin and that an inscribed satoshi can be located by tracking when that satoshi was minted in time via the Ordinal Theory protocol.

The move to launch a new NFT collection on Bitcoin comes amidst falling search interest for NFTs, as indicated by Google Trend data. However, NFT trading volume data from February suggests that the market is still strong, with $997.14 million worth of global NFT sales for the month.

In other news, the Golden Key NFT, won by Twitch streamer Mongraal in a Dookey Dash competition hosted by Yuga Labs, has been sold for 1,000 Ether to Adam Weitsman, BAYC NFT hodler and CEO of scrap metal shredding company Upstate Shredding. The Golden Key is bound to unlock something special from Yuga Labs, although the specific details have not yet been revealed.

Polygon Foundation, the nonprofit organization behind Ethereum layer 2 scaling network Polygon, has partnered with South Korean multinational conglomerate Lotte Group to host the firm’s NFT projects. The partnership will see Lotte’s avatar-based NFT project BellyGom ported over to Polygon from the Klaytn network and rebranded as BellyGom season two. The NFTs offer hodlers benefits relating to Lotte’s product and service lines, such as shopping discount coupons and hotel vouchers. The move adds to Polygon’s growing list of partnerships with major brands such as Starbucks, Adidas, Adobe, and Prada. Lotte intends to develop its Web3 initiatives in partnership with Polygon, aiming to expand its NFTs to a global audience and develop “a new NFT business model rather than simply issuing NFTs.”


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Multinational Corporations Continue to File Trademarks in Web3, NFTs, and Metaverse

As the digital world continues to expand, multinational corporations have been increasingly turning to trademarks to stake their claim in the realms of Web3, NFTs, and the metaverse. Despite the recent downturn in related markets, companies such as General Motors, Lacoste, and Walmart have been actively filing trademark applications for their brands and products.

In February of 2023, General Motors filed for two new trademark applications for their Chevrolet and Cadillac brands, which cover downloadable digital media files containing collectible artwork, text, audio, and video that have been authenticated as nonfungible tokens. Similarly, French clothing giant Lacoste filed five trademark applications for “CHAMPS-ELYSEES,” which detail plans for NFTs, crypto transaction software, virtual clothing, stores for virtual goods, and virtual real estate services.

Even larger retail corporations such as Walmart have been getting in on the action, filing trademark applications for the “SamsClub” name and logo, which include plans for NFTs, blockchain software, virtual reality healthcare, cryptocurrency trading, brokerage, and financial services.

But it’s not just these well-known brands that are filing trademarks. In fact, pet food firm Pedigree, insurance company Nationwide, Irish distillers Jameson, French fashion giant Yves Saint-Laurent, and even the National Geographic Society have all filed trademark applications in January alone, covering Web3, NFTs, the metaverse, and crypto-related products.

Despite the recent bear market, there has been a record number of trademark applications for NFTs, metaverse, and crypto-related products in 2022, according to intellectual property lawyers. This suggests that even though the markets may be volatile, companies are still willing to invest in the digital future and secure their place in it.

As the digital landscape continues to evolve, it’s clear that trademarks will play a critical role in defining and protecting brand identities in the realms of Web3, NFTs, and the metaverse. And with multinational corporations leading the way in filing for trademarks, it’s likely that smaller businesses and startups will follow suit in order to stay competitive and relevant in these emerging markets.


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Solana CEO Denies Network Outages Caused by On-Chain Voting

Solana is a high-performance blockchain platform that has been gaining traction in the crypto space due to its fast transaction speeds and low fees. However, in recent weeks, the network has experienced several outages, causing frustration among users and sparking speculation about the cause of the issues.

One theory that gained traction on social media is that Solana’s on-chain voting system is causing the network to become clogged, leading to the outages. According to this theory, the high volume of validator messages and on-chain votes are overwhelming the consensus layer of the network, leading to delays and network downtime.

Anatoly Yakovenko, the founder and CEO of Solana Labs, has denied these claims, calling them “pure ignorance.” He explained that the on-chain voting system is a key part of Solana’s security and efficiency, allowing for high throughput and low fees while maintaining an exceptional level of security.

However, while Yakovenko denied the theory that the on-chain voting system is causing the outages, he did not provide a clear explanation for what is causing the issues. Commentators have pointed out that there is likely no singular cause of the network outages and that proof-of-stake systems like Solana require a lot of network communication to achieve validation.

Despite the lack of a clear explanation for the outages, Solana’s community appears to be growing impatient with the network’s performance issues. Some users have expressed concern that the frequent outages could damage the platform’s reputation and hinder its adoption.

Solana’s team has acknowledged the recent network issues and stated that they are working to improve the platform’s reliability. The Solana Foundation confirmed that the root cause of the recent 20-hour network outage is still not clear, but they are investigating the issue and taking steps to prevent similar incidents in the future.

In conclusion, while the cause of the recent network outages on Solana remains unclear, it is clear that the platform’s team is taking the issue seriously and working to address it. The debate around the role of on-chain voting in Solana’s performance highlights the challenges of building a high-performance blockchain platform that can scale to meet the needs of a growing user base. As the crypto space continues to evolve, it will be interesting to see how Solana and other blockchain projects tackle these challenges and continue to innovate.


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MyAlgo warns users of ongoing wallet exploit

MyAlgo, a popular wallet provider for the Algorand (ALGO) network, has issued a warning to its users amid an ongoing exploit that has resulted in the theft of an estimated $9.2 million worth of funds. The company has advised users to withdraw funds from any wallets created with a seed phrase due to the vulnerability of such wallets to the exploit. While the company is uncertain about the cause of the recent wallet hacks, it has encouraged everyone to take precautionary measures to protect their assets.

According to a tweet by MyAlgo, a targeted attack was carried out against a group of high-profile MyAlgo accounts, which has seemingly been conducted over the past week. The self-titled “on-chain sleuth,” ZachXBT, has outlined in a tweet that the exploit has pilfered over $9.2 million, with crypto exchange ChangeNOW able to freeze around $1.5 million worth of funds.

The exploit primarily affects users who had mnemonic wallets with the key stored in an internet browser, according to MyAlgo. A mnemonic wallet typically uses between 12 and 24 words to generate a private key. The vulnerability of such wallets to the exploit has been highlighted by the Algorand-focused developer collective, which released a report that eliminated multiple possible exploit vectors such as malware or operating system vulnerabilities. The report determined the “most probable” scenarios were that the affected users’ seed phrases were compromised through socially engineered phishing attacks or MyAlgo’s website was compromised, leading to the “targeted exfiltration of unencrypted private keys.”

John Wood, chief technology officer at the Algorand Foundation, has confirmed that around 25 accounts were affected by the exploit. He added that the exploit “is not the result of an underlying issue with the Algorand protocol” or its software development kit.

MyAlgo has stated that it will continue to work with authorities and conduct a thorough investigation to determine the root cause of the attack. The company has advised its users to take precautionary measures and to withdraw funds from wallets created with a seed phrase.

In conclusion, the ongoing exploit has resulted in the theft of millions of dollars worth of funds from the Algorand network. The vulnerability of mnemonic wallets with the key stored in an internet browser has been highlighted, and users are advised to take precautionary measures to protect their assets. MyAlgo and other relevant authorities are working to investigate the attack and determine its root cause to prevent future incidents.


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Bitcoin Core Developer Luke Dashjr Calls Out Misleading NFT Auction

Bitcoin has gained immense popularity over the years as a decentralized digital currency that allows people to transfer money without the involvement of any third party. It has been around for over a decade now, and many developers have contributed to the Bitcoin codebase to make it what it is today. Luke Dashjr is one such developer who has been involved in the development of Bitcoin since its early days.

Dashjr is known for his contributions to the Bitcoin Core software, which is the reference implementation of the Bitcoin protocol. He has been involved in the development of Bitcoin since 2011 and is one of the few original core developers of the Bitcoin project. He has also been involved in the development of other cryptocurrencies and blockchain-related projects.

Recently, Dashjr took to social media to call out an auction site that had used his name and code without his consent to create and sell a misleading NFT. NFTs or non-fungible tokens are unique digital assets that are stored on a blockchain. They are often used to represent digital art or collectibles.

Dashjr revealed in a tweet that a non-fungible token featuring a picture of code he wrote was sold at an auction site for 0.41 Bitcoin or roughly $9,500. The NFT was advertised as his code in the listing and presented to the public for sale and profit. However, Dashjr clarified that he was not involved in the creation or sale of the NFT and had not given consent for his name or code to be used.

Dashjr went on to explain that he had not been the first Bitcoin developer to have his name or work used in this way. He stated that third parties were marketing his name and his code for their own monetary gain without his consent. Dashjr further revealed that the winner of the auction eventually contacted him and he had to inform them that he was not involved with the sale.

Dashjr claims that an individual, either the seller or the auction site, had reached out and offered him a donation of 90% of the auction proceeds, which he declined. Dashjr’s tweet has since received a lot of attention on social media, with many people expressing their support for him.

The incident highlights the issue of intellectual property in the world of blockchain and cryptocurrency. As the industry continues to grow and evolve, it is important for developers to protect their work and ensure that it is not misused for someone else’s financial gain. It also underscores the need for greater awareness and education on the part of buyers and sellers in the cryptocurrency market.

In conclusion, Luke Dashjr’s experience with the misleading NFT auction serves as a cautionary tale for developers and investors alike. It underscores the importance of respecting intellectual property rights and highlights the need for greater transparency and accountability in the cryptocurrency market. As the industry continues to mature, it is important for all stakeholders to work together to create a more equitable and sustainable ecosystem.


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Ethereum Testnet Successfully Upgrades for Upcoming Shanghai Hard Fork

The Ethereum community is eagerly awaiting the upcoming Shanghai hard fork, which is expected to take place on the mainnet in March. In preparation for this event, the Ethereum blockchain’s Sepolia testnet underwent a successful upgrade on February 28th. The upgrade, dubbed “Shapella”, was designed to simulate the upcoming fork and test its functionality.

One of the most significant changes in the Shapella upgrade is the ability for validators to withdraw their staked Ether (stETH) from the Beacon Chain back to the execution layer. Previously, validators needed to stake a minimum of 32 ETH to validate on the Ethereum blockchain. However, with this upgrade, validators will now be able to withdraw rewards in excess of 32 ETH and continue validating. Those who wish to fully withdraw their staked ETH can take all 32 ETH plus rewards and cease validating.

The successful implementation of the Shapella upgrade on the Sepolia testnet is an encouraging sign for the Ethereum community, as it indicates that the upcoming Shanghai hard fork will likely proceed smoothly on the mainnet. However, before the hard fork can go live on the mainnet, it must first be released on the Ethereum Goerli testnet.

The Goerli testnet is an important testing ground for Ethereum upgrades, as it allows developers to test new features and upgrades in a sandboxed environment before deploying them on the mainnet. The release of the Shapella upgrade on the Goerli testnet is expected to commence in March, giving developers ample time to test the upgrade and ensure its compatibility with the Ethereum ecosystem.

Overall, the successful upgrade of the Sepolia testnet for the upcoming Shanghai hard fork is a promising development for the Ethereum community. With this upgrade, validators will have more flexibility in managing their staked ETH, which will ultimately lead to a more efficient and secure network. As the Ethereum ecosystem continues to evolve and grow, the community can look forward to more exciting upgrades and developments in the future.


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Bitcoin Depot Converts Crypto ATMs to Software

Bitcoin Depot, a leading provider of physical Bitcoin ATMs and kiosks, has announced the successful conversion of all its 7,000 crypto ATMs to a software-based offering powered by BitAccess. The software conversion drive came after Bitcoin Depot acquired majority equity in BitAccess in November 2022. With this strategic move, Bitcoin Depot aims to increase its market share and reduce operational costs while addressing the declining trend in the crypto ATM market.

The decision to convert physical crypto ATMs to software-based offerings is a response to several challenges facing the industry. For one, geopolitical tensions and revenue decline have forced some ATM providers to shut down operations, reducing the overall number of crypto ATMs worldwide. Additionally, the high cost of annual software licensing fees has become a burden for ATM operators, especially in a market with decreasing demand.

By vertically integrating its hardware and software, Bitcoin Depot’s software-based offering eliminates the need for annual software licensing fees, which previously accounted for $3 million in annual operational costs. The software-based offering is expected to be more efficient and cost-effective, making it an attractive option for both ATM operators and customers.

Bitcoin Depot’s move to software-based offerings comes at a time when the market for crypto ATMs has seen a decline in installations since July 2022, according to data from Coin ATM Radar. The decline is likely due to several factors, including increased regulatory scrutiny, competition from online trading platforms, and the ongoing effects of the COVID-19 pandemic. Despite these challenges, Bitcoin Depot remains committed to expanding its reach and providing reliable, convenient, and secure access to cryptocurrencies.

In addition to its software conversion drive, Bitcoin Depot has also revealed plans to go public in 2023 via an $885 million deal with a special-purpose acquisition company. This move is expected to provide additional funding and support for the company’s growth and expansion efforts.

In conclusion, Bitcoin Depot’s conversion of its physical crypto ATMs to software-based offerings is a significant step towards reducing operational costs and increasing efficiency in the crypto ATM market. By vertically integrating its hardware and software, Bitcoin Depot is well-positioned to capitalize on the growing demand for cryptocurrencies and provide innovative solutions for ATM operators and customers alike.


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