CoinDesk Crypto

Goldman Sachs’ former Head of Digital Asset Markets is now head of strategy at Talos, a crypto-trading engineering firm, according to a published report.

• Justin Schmidt left Goldman late last year as the financial giant was preparing to offer investment vehicles for digital assets to clients, Bloomberg said, noting that Goldman took a stake in BitGo during Schmidt’s time there. 
• Talos, which is based in New York, provides technology to the financial world that supports digital assets trading from price discovery through settlement. It was founded a year and a half ago.
• Part of Schmidt’s remit will be to help the company expand internationally, the report said.
• With the move, Schmidt has become the latest Wall Streeter to leave a traditional finance firm to join one fully on the crypto side of things.

• Q1 2021: Institutional Growth Slows Down, Retail Ramps Up
• Japan’s BitFlyer Has a New President – Again
• Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says
• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report

Tokyo-headquartered global cryptocurrency firm bitFlyer has a new president – for the third time in two years. 

According to an announcement made by bitFlyer, the new president, Goldman Sachs alum Kuniyoshi Hayashi, replaced outgoing president Kimihiro Mine on March 30, 2021. 

bitFlyer is the leading digital assets exchange in Japan, with over 2.5 million users worldwide, and is licensed in Japan, the U.S. and the E.U.  

Related: Goldman’s Ex-Head of Digital Assets Joins Talos: Report

The firm first replaced its co-founder and president Yuzo Kano with Yoshio Hirako in January 2019. Five months later, president Hirako was replaced by Mine.

In addition to the appointment of Hayashi as the new president last week, bitFlyer also introduced two new members to the board of directors: Masaaki Seki was promoted to director, while Joel Edgerton, chief operating officer at bitFlyer USA, became the first non-Japanese director of the global firm. 

This latest change in management signaled instability within the firm, prompting Asian business publication Nikkei to observe that bitFlyer was wandering off course. 

But Edgerton told CoinDesk that the latest company reshuffle was part of bitFlyer’s larger strategy to go global, and that the timing for the changes was not random. 

Related: Q1 2021: Institutional Growth Slows Down, Retail Ramps Up

“In Japan, the fiscal year ends at the end of March. Whenever we make changes, it tends to be at this time… So the timing’s actually normal for us and discussions have been going on for quite a while internally,” Edgerton said. 

According to Edgerton, bitFlyer founder Kano stepped away in 2019 so that the firm could quickly respond to the regulatory changes taking place in Japan’s crypto space. 

The country’s financial authority FSA doubled down on regulations for crypto exchanges in 2018 after Japanese digital assets exchange Coincheck suffered the largest cryptocurrency hack in history, confirming that around $533 million was stolen from the exchange. Soon after the incident, the FSA temporarily suspended two crypto exchanges (including Coincheck) and expanded the team that handled exchange licensing.  

“The Japanese government started going to different cryptocurrency companies basically telling them, ‘okay, you guys need to be more like traditional finance companies, and you need to have this type of structure and regulations and controls in place.’ So we had to make a change to do that,” Edgerton said referring to the management shuffle in 2019. 

But now that the firm is licensed and fully compliant with local regulations, bitFlyer is looking to focus on expanding its global influence, Edgerton says. He added that bitFlyer’s hyperfocus on the Japanese market has created a strong crypto payments system in the country that can be used as a model elsewhere.  

“You can go into a bookstore in Japan, and get loyalty points linked to your bitFlyer account and crypto. You can also go into electronic stores and buy electronics using crypto in Japan. So these types of real-world use cases that are not really tied to trading, per se, are things we also want to roll out to the rest of the world,” Edgerton said.

The new president, Hayashi, a University of Tokyo graduate who worked at Goldman Sachs Japan has “international experience” according to Edgerton, which he says is a key point, adding that his own addition to the board of directors (as the first non-Japanese executive) signals how serious bitFlyer is about establishing itself as a global entity. 

Although Kano – also a University of Tokyo and Goldman Sachs alum – is no longer president of the firm, he remains chief executive officer of bitFlyer USA and chairman of the European branch of the company. 

• Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says
• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report

Just because bitcoin has quintupled in value over the past few months, that doesn’t mean the U.S. dollar is about to get knocked off its perch as the world’s leading currency, according to a top foreign exchange analyst.

For one thing, central banks around the globe own roughly $3.1 trillion worth of U.S. Treasury debt that is denominated in greenbacks, and so have little incentive to let the dollar lose power to a cryptocurrency, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

“What stands behind [the U.S. dollar] is something that the crypto space has not yet innovated and that is that central banks hold their dollars in Treasury bonds — not just in dollars but they have these Treasury bonds behind them,” Chandler said on CoinDesk TV’s “First Mover” show Tuesday.

Related: Japan’s BitFlyer Has a New President – Again

Chandler, whose storied career included stints as the top FX strategist at such leading financial institutions as Mellon Bank, HSBC and Brown Brothers Harriman, said his view is in line with those of regulators. He noted that Federal Reserve Chair Jerome Powell recently remarked that he sees cryptocurrencies as a potential substitute for gold.

But as a replacement for the dollar? Not so much.

“It doesn’t look like it’s really money,” said Chandler, “meaning a means of exchange, a store of value, and a unit of account.”

However, he said there’s one way he could change his mind.

Related: Former BitMEX CEO Hayes Surrenders to Face US Charges: Report

“For me, the smell test of all this will be when tax officials, when the IRS says, ‘Yes, you can pay your taxes in crypto.’ Taxes seem to be the origin of money in many ways,” said Chandler. “When the IRS or some other major tax authorities say you can pay your taxes in crypto, then I’ll believe it’s money.”

While Chandler doesn’t classify himself as a dollar bull, he doesn’t see it losing its top spot, notwithstanding a recent weakening in exchange rates against foreign currencies.

“We’re having a correction,” he said. “The third big dollar rally since the Bretton Woods [Agreement of 1944] is over, but I think you can have a cyclical decline of the dollar without it changing its fundamental position in the world economy.”

Although central banks in countries such as China may be looking at digitizing their currencies, not much would threaten the greenback’s position, according to Chandler.

On the one hand, “a digital central bank currency increases what we call ‘the C3’: command, control and communication,” he said. “It allows the Chinese government to better monitor the flows of money…. It will help curb tax evasion, for example. It will help curb the underground economy, which in some countries is very substantial. At the same time, it will help bank people who are not banked yet.”

However, “I’m still not convinced that because you can have a digital chip on your cell phone that really only works in the Chinese system, that can take your digital RMB and buy something, like in the United States, or buy or settle or even trade with” a digital yuan, he said. “It’s possible at some point in the future, but it doesn’t seem likely anytime soon.”

Thus Chandler said he’s “not sure how much of a race this is or how urgent it is. It doesn’t look like Fed officials, while they are studying it, I don’t see them wanting to necessarily be the first mover.”

Nonetheless, “I think also there’ll be a two-pronged system, at least the way the U.S. and Western Europe are conceiving it, where you’d have the digital currency not really disintermediating banks; they’ll strengthen banks.”

• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation
• Chart of the Day: Altcoins in Charge as Bitcoin Dominance Nears 2-Year Low

Former BitMEX CEO Arthur Hayes surrendered to U.S. authorities in Hawaii to face charges he failed to take proper steps to safeguard the cryptocurrency exchange he co-founded from being used for money laundering, according to a published report.

• Hayes surrendered six months after prosecutors in New York accused him and his BitMEX co-founders of conspiring to get past U.S. laws requiring the implementation of money-laundering controls, Bloomberg said in its report.
• Hayes was released on $10 million bond pending court proceedings in New York, the report said.
• According to court documents released last month, the surrender was planned for April 6.
• Last October, BitMEX and co-founders Hayes, Samuel Reed and Ben Delo were charged by the U.S. Department of Justice with violating the Bank Secrecy Act and conspiracy to violate the act.
• Each charge faces a maximum sentence of five years in prison.

• Japan’s BitFlyer Has a New President – Again
• Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation
• Chart of the Day: Altcoins in Charge as Bitcoin Dominance Nears 2-Year Low

• Bitcoin (BTC) was trading around $58,246.41 as of 20:00 UTC (4 p.m. ET). Slipping 1.31% over the previous 24 hours.
• Bitcoin’s 24-hour range: $57,421.85-$59,484.20 (CoinDesk 20)
• BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians.

Recently, bitcoin’s price movements have been, well, less exciting than the triple- and sometimes quadruple-digit-percentage gains witnessed in alternative cryptocurrencies, or “altcoins.” 

The No. 1 cryptocurrency has traded in a narrow range between $56,552 and $60,102 over the past week, while ether, the native token of the Ethereum blockchain, has climbed more than 20% to a new all-time high over $2,100.

But in the past couple weeks, traders in bitcoin derivative markets have been ratcheting up their bets on future gains. 

Related: Japan’s BitFlyer Has a New President – Again

The annualized futures premium rate – a gauge of bullish bets – has averaged 22% to 25% on retail-focused derivatives exchanges like FTX, BitMEX, Deribit and Binance. That compares with about 13% on the Chicago-based CME exchange, which tends to be more focused on institutional investors.  

An increased futures premium – the spread between futures prices and spot-market prices – indicates that more retail traders are looking at upside exposure of the market despite bitcoin’s relatively flat performance lately.

“Traders are expecting higher prices and taking on long positions,” Bendik Norheim Schei, head of research at Arcane Research, told CoinDesk.

But with the increasing bullishness comes a higher risk of a snap-back: the bitcoin market experienced a total $27.5 billion worth of long position liquidation during the first quarter of 2021, reflecting the huge amount of leverage in the markets built up as the largest cryptocurrency rallied into the new year, as noted by Arcane Research in its weekly newsletter on April 6.

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

“It is always concerning when these futures premiums climb too high, indicating an overly confident and leveraged market,” according to Arcane. “This usually leads to rounds of liquidations and sharp pullbacks, so traders should consider de-risking in this current environment.”

• Ether (ETH) trading around $2,114.60 as of 20:00 UTC (4 p.m. ET). Climbing 0.44% over the previous 24 hours.
• Ether’s 24-hour range: $2,045.40-$2,151.25 (CoinDesk 20)
• Ether trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

Ether and other altcoins continue to outperform bitcoin. The No. 2 cryptocurrency by market capitalization has traded above $2,000 since it claimed a new all-time high a day ago.

Ether’s latest rally “follows Visa’s announcement that transactions can be settled using USD Coin (USDC), a stablecoin powered by the Ethereum blockchain,” Simon Peters, crypto analyst at eToro, wrote in an email.

“Meanwhile, large volumes of Ether are increasingly being locked into DeFi projects and the ETH 2.0 deposit contract,” Peters added. “This reduces the supply in circulation while announcements like Visa’s increase demand, thereby pushing prices higher.”

As of April 6, more than 10 million ether are locked in decentralized finance, up from about 7 million 90 days ago, according to DeFi Pulse:

At the same time, blockchain data site Glassnode shows that nearly 4 million ether has staked on Eth 2.0:

Other digital assets on the CoinDesk 20 are mostly in green Tuesday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

• xrp (XRP) + 27.95%
• ethereum classic (ETC) + 17.19%
• omg network (OMG) + 15.23%
• litecoin (LTC) + 9.45%
• chainlink (LINK) + 8.2%

Read More: XRP Rises Above $1 for First Time Since March 2018, Despite SEC Shadow

Notable losers:

• orchid (OXT) – 8.05%
• eos (EOS) – 2%

Equities:

• Asia’s Nikkei 225 closed in the red 1.3%.
• The FTSE 100 in Europe was up by 1.28%.
• The S&P 500 in the United States closed nearly flat, down 0.097%.

Commodities:

• Oil was up 1.19%. Price per barrel of West Texas Intermediate crude: $59.35.
• Gold was in the green 0.81% and at $1742.24 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Tuesday, dipping to 1.654%.

• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Cryptocurrency exchange Coinbase saw a whopping 117% quarter-over-quarter increase in monthly transacting users, the firm revealed Tuesday in its voluntary earnings report.

All those users helped Coinbase rake in $1.8 billion over the quarter, driving a net income of approximately $730 million to $800 million, according to a new filing that comes ahead of the company’s Nasdaq listing next week.

All the numbers point to a business riding high as interest in cryptocurrency tracks upward with the price of bitcoin, ether and other leading assets.

Related: Japan’s BitFlyer Has a New President – Again

For example:

• Active users on Coinbase jumped from 2.8 million in the fourth quarter of 2020 to 6.1 million in the first quarter of 2021.
• Verified users – or the total number of people with Coinbase accounts – increased from 43 million at the end of 2020 to 56 million at the end of Q1 2021.
• Trading volumes topped $335 billion.
• Total assets on Coinbase’s platform increased from $90 billion to $223 billion, nearly a 150% increase quarter-over-quarter.

Showing how solidly Coinbase has cemented itself at the center of the current bull run, some $122 billion of those assets were from institutions.

On the retail side, the company will be adding more assets and giving people more access to decentralized finance (DeFi) applications, Coinbase CEO Brian Armstrong said during Tuesday’s earnings call.

On the institutional side, the company will continue to build out its prime brokerage offering and use its Bison Trails acquisition to create what Armstrong called the “Amazon Web Services for crypto.”

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

The exchange also gave three financial scenarios for the rest of 2021.

In a “high” performance scenario, Coinbase would average 7 million monthly users if the crypto market capitalization grows throughout the rest of the year. In a “mid” scenario, the exchange would average 5.5 million monthly users if the market capitalization is flat. In a “low” scenario, the exchange would average 4 million if the market turns into something like the 2018 bear market.

“For the last two years we’ve seen average net revenue per [monthly transacting user] range between $34 and $45 per month,” Coinbase CFO Alesia Haas said on the call. Haas said she expects the average net revenue per user to reach new records in 2021.

Coinbase’s new cohort of stock analysts were particularly keen on user metrics, as CoinDesk reported earlier today.

“The first quarter more than doubled monthly users sequentially and revenue followed three times higher than the previous quarter,” James Friedman, senior fintech research analyst at Susquehanna International Group, told CoinDesk after Coinbase’s earnings call, adding:

“How do you have users doubling and growth three times that? It happens because volume per user also increased. That’s the increase in the price of bitcoin.”

• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Shares of Chinese Bitcoin mining machine manufacturer Ebang fell sharply on Tuesday following a report from Hindenburg Capital that claims the firm misled investors about investment allocations.

A lengthy report from Hindenburg Capital alleges that, of the roughly $375 million the mining machine manufacturer raised from investors since going public in June 2020, some $103 million went toward “bond purchases linked to its U.S. underwriter.”

Shares of Ebang were down over 15% on the news.

Related: Japan’s BitFlyer Has a New President – Again

The report also claims that the company “directed $21 million to repay related-party loans to Ebang Chairman/CEO Dong Hu’s relative.” Additionally, the report says that its mining machine business is faltering, only producing 6,000 machines in the first half of 2020.

To shore up its mining business (or, as Hindenburg put it, to “pivot the story”), Ebang launched a cryptocurrency exchange called Ebonex yesterday.

Ebang did not respond to CoinDesk’s request for comment by press time.

Hindenburg took out a short position following its research, the report discloses, and the firm attempts to use Ebang as an example of caveat emptor for Western investors jumping at publicly traded crypto stocks before doing their due diligence.

• Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says
• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Trading card company Topps is poised to take non-fungible tokens (NFT) to Wall Street as a publicly traded firm via a special purpose acquisition company (SPAC) merger with Mudrick Capital.

The 80-year-old company, in which Mudrick led a $250 million investment at a $1.3 billion valuation, has long sold baseball cards and other physical collectibles, but on Tuesday its new investor, Jason Mudrick said he’s betting on the digital front: through the buzzy market for NFTs.

Topps plans on chasing that upside aggressively. Closing its deal during a booming market for crypto collectibles, it told investors in a Tuesday presentation the company will reinvest in blockchain and NFTs as a “growth accelerator.”

Related: Japan’s BitFlyer Has a New President – Again

The card company anticipates pushing more content through the blockchain pipeline, expanding NFT distribution across marketplace partners like Wax and OpenSea and integrating NFTs into more collector experiences through 2021. 

“Digital currently represents 6% of Topps’ revenue,” said Joel Belfer, a financial analyst at Guggenheim who writes about sports card markets for industry newsletter Mint Condition. “It’s not a big part of their business, but I think Mudrick is going to try to accelerate their digital offering.”

Topps reported $567 million in total sales during 2020. For context, Dapper Labs’ NBA Top Shot steamrolled through over $500 million in NFT sales in its first 10 months.

Topps began carving a niche in the early innings of the NFT craze through a Garbage Pail Kids partnership with the Wax platform. That tie-up continues: Last week it dropped a Godzilla-themed NFT card pack on Wax that generated at least $500,000 in revenue within hours.

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

Mudrick told Institutional Investor he wants Topps to monetize the secondary market for NFTs. Because NFTs have no physical form they can theoretically be restricted to private blockchain platforms where their movement is restricted, and their secondary sales essentially taxed. 

Dapper Labs follows this model – it takes a 5% cut of each moment sale – though other leading marketplaces exist on the fee-heavy wilds of the Ethereum blockchain, competing for block space with major lending markets.

Back in meatspace, collectors, some perhaps angry at their mothers for ditching the card-stuffed shoebox they claim was worth millions, have poured six-figure sums into throwback cards during the pandemic. 

Bringing a blockchain-sanctioned secondary market to digital collectibles could position Topps to take on a major new revenue stream. After all, Dapper Labs recently raised $305 million from splashy investors to seize the moment.

Read more: Michael Jordan Joins $305M Investment in Firm Behind NBA Top Shot

Topps’ top brass told investors the company has been investing in digital for more than a decade, in part through pre-NFT digital collectible platforms like MLB-licensed Topps BUNT. It is unclear how popular that walled-garden project is among baseball fans. (Blockchain data sites like Evaluate.market lay bare the value of NBA Top Shot moments in real-time.)

Topps’ foray into blockchain and NFTs is barely a year old, however.

“Ending up as a leader in this area will still require quite a bit of vigilance and investment but we like our head start,” Topps Executive Chairman Andy Redman said during the presentation. He said the blockchain initiatives pair well with the company’s efforts in e-commerce, “further cementing our position in the sports ecosystem of the future.”

But Belfer, the card analyst, said Topps won’t be able to simply carry its existing physical collectible licenses with major leagues like MLB or NFL into the digital world. The company will likely have to broker new digital-specific business deals, as Dapper Labs did with the NBA.

That could be an expensive proposition, he said.

Topps declined to answer CoinDesk’s questions.

• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Investment flows into cryptocurrency funds jumped fivefold last week to $106 million, rebounding from a five-month low, according to a new report from the digital-asset manager CoinShares.

The prior week had seen the fund flows dry up to about $21 million, the lowest since October, as sideways trading action in bitcoin (BTC) and other digital-asset markets failed to inspire buyers.

The latest week’s tally wrapped up a record quarter for crypto fund flows, at $4.5 billion, some 11% higher than in the final quarter of 2020, according to CoinShares.

Related: Japan’s BitFlyer Has a New President – Again

That pace represented a slowdown from the prior quarter’s growth of 240%, potentially indicating waning interest or indecision among digital asset investors – or maybe just the difficulty of increasing off a bigger base. CoinShares cautioned against drawing conclusions.

• “It is not indicative of a slowing trend, as quarterly growth rates tend to be highly varied,” wrote CoinShares.
• Bitcoin products garnered the majority of last week’s inflows, around $83 million, versus about $20 million for Ethereum (ETH) products.
• “Assets under management (AUM) for both active and passive digital asset investment products are now at an all-time high of $59 billion.”
• Active investment managers (strategies that adjust portfolio weightings based on market conditions rather than following an index) make up a decreasing amount of total AUM, to 1.5% of total AUM during the first quarter versus 3.6% in Q4 2020.
• That shift might reflect increasing demand for “passive” investment vehicles like trusts and exchange-traded funds, which aren’t yet approved for trading in the U.S. but have garnered substantial interest in other countries, including Canada.

• Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says
• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Chinese online lottery company 500.com (NYSE: WBAI) has acquired Bee Computing, a Hong Kong-registered maker of Bitcoin mining machines, for $100 million, according to an filing Monday with the U.S. Securities and Exchange Commission. 

500.com, which changed its name to BIT Mining Limited in March, has been quietly shifting its focus from its struggling online lottery business to bitcoin mining over the last four years. The company accelerated that transition late last year amid bitcoin’s historic bull run, making it one of many publicly traded companies trying to profit for bitcoin’s rising price. 

It is now one of the few large-scale companies in the crypto-mining business after acquiring the third-largest mining pool, BTC.com, and three mining farms under its Loto Interactive unit. The company is venturing into the business of making mining machines with the latest deal, which comes at a time when mining companies are in short supply of those machines.

Related: Japan’s BitFlyer Has a New President – Again

BIT Mining said Bee Computing has worked with MTK, which is the largest chip designer in Asia, to make a seven-nanometer chip for bitcoin mining. Taiwan Semiconductor Manufacturing Co. (TSMC) will supply the chips, according to Yufei Jiang, CEO of Bee Computing. 

Jiang said Bee Computing has received backing from some of the most influential companies in the semiconductor industry. MTK invested $9.5 million in a Series B round, and Taiwan-based ASE Group, which is the leading semiconductor assembly and test company, invested $3 million in the same round.   

Bee Computing’s current miner model’s performance is similar to Bitmain’s T17, which tends to have higher energy consumption than Bitmain’s S17 but is less powerful than Bitmain’s latest model S19. 

Jiang said Bee Computing’s research and development slowed down during the bear market a few years ago but the company can pick up the pace with new capital from BIT Mining. 

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

BIT Mining is set to invest $30 million in Bee Computing’s research to develop better 7-nm chips for bitcoin mining and higher quality miners for ether and litecoin. Jiang said the company would be able to test new chips by October. 

Crypto miners use the application-specific integrated circuit (ASIC), which is an integrated circuit chip, to mine cryptocurrencies such as bitcoin. The 7-nm figure refers to the size of the transistor. The smaller the component is, the more you can fit into a piece of silicon and the more powerful the mining machine becomes, making the chip one of the most sought-after components for any major bitcoin miner maker. 

To put that into context, leading crypto mining machine maker Bitmain’s latest model uses 7-nm chips. Designing stable and high-performance chips for mining machines is very costly and challenging even for some big players in the semiconductor industry, according to Jiang. 

While Bitmain is studying new models that use 5-nm chips, it may prove to be difficult to manufacture these because TSMC would make most of the chips for car makers or cellphone companies such as Apple. 

Bee Computing produces much less annually than Bitmain does, because of the fixed number of 7-nm chips TSMC allocates to each maker of mining equipement. In the near future, Bee Computing plans to provide all the new mining machines to BIT Mining until it has a surplus to sell. 

BIT Mining had disclosed that it purchased $8.5 million worth of mining machines in February from Bee Computing. 

According to the purchase agreement, BIT Mining will pay Bee Computing $35 million in stock by the end of the second quarter this year and send the other $65 million worth of stock after the acquired company manages to produce a certain number of 7nm ASIC bitcoin mining machines as well as make higher performance bitcoin, ethereum and litecoin mining machines. 

BIT Mining officially announced its strategic shift to bitcoin mining in December. In February, the company bought the crypto mining mining pool business, BTC.com, from Bitdeer Technologies, which was majority owned by Bitmain’s former chief executive Jihan Wu. It has purchased at least $14 million in mining machines in an all-equity deal. 

Combined with the existing mining pool services provided by BIT Mining’s subsidiary Loto Interactive, the company would be one of the largest mining pools in the world, according to data from BTC.com. 

Loto Interactive has three big data centers in the crypto mining hub Sichuan province in central China because of Sichuan’s rich hydropower in the summer. Loto Interactive previously only provided venues and maintenance services, rather than buying mining machines and profiting from mining cryptocurrencies. The company has started running its own miners early this year. 

If a company only operates a mining site for miners to make a profit, it does not have much exposure to crypto’s prices, It would face more price-related risks and could stand to profit more if it starts to buy mining machines and run them in its own mining sites. 

Tsinghua Unigroup is BIT Mining’s holding shareholder, but it remains unclear how the Chinese semiconductor conglomerate is involved in the company’s businesses.

• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Coinbase is getting ready for the spotlight.

The cryptocurrency exchange based in San Francisco (but not) is voluntarily reporting its first-quarter earnings Tuesday at 4:30 p.m. ET ahead of a much-anticipated public listing on Nasdaq slated for April 14.

In advance of the COIN ticker going live, analysts are eager to discover Coinbase’s user growth numbers over the past quarter. 

Related: Japan’s BitFlyer Has a New President – Again

“We need to know what their assumption is about monthly active users and revenue per user,” James Friedman, senior fintech research analyst at Susquehanna International Group, told CoinDesk. “The bears will argue that this is a trading company … there are only 80 million stock brokerage accounts in the U.S. and 20% of those people trade less than once a year.”

The fourth quarter of 2020 was the first time Coinbase had as many active monthly users (2.8 million) as it did in the first quarter of 2018 (2.7 million), said Friedman. As of the close of 2020, the exchange touted 43 million registered users.

Since the bulk of the company’s transactional revenue comes from retail users, the most relevant financial metric to look out for will be how many verified users have made the jump to being monthly transacting users – users that have an account versus those that are trading regularly. 

Coinbase noted several times in its prospectus that the company’s growth correlated with the price of bitcoin. According to CoinDesk Research, bitcoin had a 100% return in Q1 2020 and a market capitalization that surpassed $1 trillion for the first time in its history. 

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

“We’re hoping to get a better picture of how bitcoin’s price is correlated to user growth,” Arca research analyst Alex Woodard said. 

With only 1,100 staffers at Coinbase, the firm’s margins are wide, even with Arca modeling a 50% increase in general administration/customer service costs in the first quarter.

“We’re [still] seeing an operating margin of 75%,” said Arca COO Michael Dershewitz. 

One issue where the exchange has been tight-lipped is on future projections for the spread between institutional trading versus retail trading, Arca’s Woodard added. 

Coinbase will likely address its growth in prime brokerage and other subscription services that can serve the exchange in a bear market and how it plans to grow its international customer base, which is small compared to its U.S. user count. 

On the institutional side, Coinbase has confirmed that it serves MicroStrategy and One River – with others clients such as Tesla and hedge fund giant Paul Tudor Jones dribbling out in press reports.

Beyond Coinbase’s first-quarter earnings call, analysts will also struggle to determine what will drive the price of the Coinbase stock when it does list, Friedman said. 

If a bitcoin ETF is not approved by the time it lists, Coinbase’s stock could be seen as a proxy bitcoin ETF – similar to MicroStrategy’s stock. Therefore, the price of COIN stock could be decoupled from the business’ fundamentals. 

“If looking for synthetic exposure to bitcoin, it will probably be the purest play to do it outside of [Grayscale Bitcoin Trust],” Woodward said. “This is a much purer bet on crypto than a MicroStrategy.”

• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Bitcoin’s hashrate – a way to measure the total power consumption and mining output of the network – has topped a new all-time high.

The current mean hashrate of the Bitcoin network is 179.4 exahashes per second, according to data from CoinMetrics.

Ethan Vera, the CTO of North American mining firm Luxor, told CoinDesk that the all-time high comes during a scramble for the semiconductor chips that power ASICs, along with a scramble for the machines themselves.

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“The run up in Bitcoin price paired with a shortage on ASIC chips has caused mining economics to turn favourably to miners, with many miners running at 85%+ mining margins,” he said.

“Miners are trying to get their hands on every machine possible, and even ASICs  launched in 2014 are profitable. All of Luxor’s clients have all of their rigs plugged in and hashing including their oldest machines. There is little to no idle hashrate out there.”

Building on Vera’s comments, the all-time high is partly driven by previously backordered ASIC shipments finally reaching their North American buyers. Bitcoin’s mining industry has enjoyed surging growth over the past year, as big players continue to finance bulk orders of ASIC miners to the tune of the tens of thousands of units.

This all-time high is partly driven by previously backordered ASIC shipments finally reaching their North American buyers. Bitcoin’s mining industry has enjoyed surging growth over the past year, as big players continue to finance bulk orders of ASIC miners to the tune of the tens of thousands of units.

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

The hashrate high also comes in spite of Bitcoin’s recent 6% upwards difficulty adjustment (mining “difficulty” is a self-referencing score wherein 1 indicates the easiest mining conditions; Bitcoin’s current difficulty is 23.1 trillion). 

Bitcoin has fallen roughly 2% today and is trading just above $58,000.

Updated Tuesday, April 6, 2021, 21:05 UTC: Added a graph with Bitcoin’s hashrate.

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A popular bitcoin market indicator known as the “kimchi premium” is signaling a retail frenzy in South Korea historically observed when prices are peaking. 

But this time might be different, analysts say – possibly the result of the dramatic growth and maturation witnessed in cryptocurrency markets over the past few years.  

The kimchi premium represents the difference between bitcoin’s price on South Korean exchanges and the going rate on other global trading venues. The reasons for the discrepancy are complicated, but they ultimately stem from trading limitations unique to the country’s exchanges and the existence of domestic capital controls. 

Related: Japan’s BitFlyer Has a New President – Again

Historically, spikes in the Korean premium have taken the wind out of the bull runs, according to data tweeted by Arcane Research analyst Vetle Lunde. The metric peaked at 47% in January 2018 and 63% in May 2017, just prior to market corrections, but it’s also marked tops at minor price peaks at 6.5% in November 2018 and 8.5% in June 2019.  

Lately, the premium has risen to 18%, the highest since February 2018, according to data source CryptoQuant. 

And although bitcoin prices have doubled this year, the Korean spread shows no signs of peaking yet and it’s impossible to say whether the premium is about to reach a top, or if will continue increasing. Besides, South Korea is no longer the crypto heavyweight it was during the last major market cycle in 2017-18. 

“The Korean market contributed to 7.9% of the worldwide crypto trading volume in 2017,” Ki-Young Ju, CEO of the South Korea-based CryptoQuant, told CoinDesk in a Telegram chat.  “Now it accounts for less than 2%.” 

Related: Crypto Won’t Be Money Until IRS Accepts It for Taxes, Top Forex Strategist Says

“Hence, an eventual collapse of the premium is unlikely to have a significant impact on the broader market,” Ju said.

Bitcoin fell over 49% in one month after the kimchi premium peaked on Jan. 8, 2018, and remained in a bear market till the end of the year. The cryptocurrency suffered notable price drops following peak premiums observed in mid-November 2018 and at the end of January 2019.

And while the previous crypto fever in South Korea was primarily fueled by investors belonging to the age group of 20 to 30, the latest frenzy has seen equal participation from Koreans in their 40s and 50s, as discussed last month by The Diplomat, a magazine covering politics, society and culture in the Indo-Pacific region.

“Through cryptocurrency and stock market transactions, South Koreans – young and old – are actively seeking to secure steady streams of passive income,” The Diplomat said. “Increasingly after COVID-19, both of these age groups seem to be alarmed by fears of monetary inflation followed by the government’s stimulus packages, skyrocketing real estate prices, and stagnating wages in the extremely competitive job market.”

So the latest uptick in interest in cryptocurrencies in South Korea might be more sustainable, not just speculative fervor.

Still, a minor pullback cannot be ruled out. 

At press time, bitcoin was changing hands near $58,000, down 2% on the day. Prices have been restricted to a narrow range of $55,000 to $60,000 since the end of March.

Executing a classic arbitrage strategy by buying bitcoin on western exchanges and selling the same on Korean exchanges at a relatively higher price is quite challenging. 

That’s because the Korean market is served by local exchanges that provide Korean won (KRW) fiat trading pairs, and local users do not trade cryptocurrencies using tether (USDT) or BTC most of the time, as per Binance Research. 

Therefore, a Korean wanting to “arb” the premium has to first buy a token with KRW that could be exchanged for USDT or other stablecoin, which then would be used to purchase bitcoin on a non-U.S. exchange. The tedious process doesn’t stop here. The bitcoin will have to be transferred back to Korean exchanges for liquidation.

“The relatively long transaction confirmation time, without hedging, leaves the arbitrageur exposed to price fluctuations during the transfer,” Binance research said in a Telegram message. 

Arbing the premium at currency prices looks even more challenging if we consider the country’s capital controls. “Ordinary investors in Korea are allowed to wire up to $50,000 to other countries per year,” CryptoQuant’s Ju said, adding that regulations prohibit Korean crypto exchanges from accepting overseas clients. 

Also read: Coinbase and Bakkt Are Behind Paul Tudor Jones’ Bitcoin Bets, SEC Documents Show

• Former BitMEX CEO Hayes Surrenders to Face US Charges: Report
• Blockchain Association Says It Will Join Fidelity, Coinbase and Square in Efforts to Shape Crypto Regulation

Signal, the private messaging app that saw a 4,200% increase in downloads in January, is launching a payments feature using MobileCoin (MOB). Signal founder Moxie Marlinspike has been an adviser to the project since 2018.

The goal of MobileCoin, which is based on Stellar blockchain technology, is to be able to work efficiently on mobile devices while also protecting users’ privacy. The launch of MobileCoin on Signal has long been rumored, dating back to Facebook’s Libra launch in early 2019.

MobileCoin stands out from a pack of messenger-native crypto coins – namely in that it has launched. Telegram’s TON was nuked by U.S. regulators; Facebook’s Libra (now Diem) remains in a state of near-completion.

Related: How and Where Did Paul Tudor Jones Make His Bitcoin Bets

At this time, the payment feature will only be available to users in the U.K., and only on iOS and Android. Desktop support is not included. 

“I’m terrified for Signal,” Matthew Green, a cryptographer at Johns Hopkins University who sits on the Zcash Foundation board told WIRED, adding: 

“Signal as an encrypted messaging product is really valuable. Speaking solely as a person who is really into encrypted messaging, it terrifies me that they’re going to take this really clean story of an encrypted messenger and mix it up with the nightmare of laws and regulations and vulnerability that is cryptocurrency.”

On the other hand, integrating privacy-oriented cryptocurrencies into relatively popular communications apps may give users an attractive onramp and interface to enter into the world of crypto.

Related: Several Stellar Nodes Go Offline, Team Says Network ‘Still Functioning’ Though Some Transactions Fail

In a blog post announcing the launch of the feature in beta, the company said users can link a MobileCoin wallet to Signal, send funds, receive funds, keep track of their balances and review transaction histories.

“As always, our goal is to keep your data in your hands rather than ours; MobileCoin’s design means Signal does not have access to your balance, full transaction history, or funds,” Signal wrote. “You can also transfer your funds at any time if you want to switch to another app or service.”

MobileCoin is currently only trading on FTX. 

• Blockchain Consultant Pleads Guilty to Extortion Charge
• Google’s Win for Open Source

Some of the nodes used to validate transactions on the Stellar Lumens blockchain went offline today, reportedly leading exchanges to halt withdrawals as certain transactions failed even as others got through.

Anton Cashchin, a managing partner at U.K.-based CEX exchange, sounded the alarm when he tweeted that “several validators” went offline, leading Binance, Bitfinex and Bitstamp to halt withdrawals.

Cashchin claimed that the outage disrupted transactions and exchange withdrawals, though Stellar issued a statement that “the Stellar network is still online, and transactions are continuing to be processed.”

Related: How and Where Did Paul Tudor Jones Make His Bitcoin Bets

“Around 1:00 AM PDT, the Stellar Development Foundation’s validator nodes and the SDF’s public Horizon API instance went offline … SDF’s engineering team is working to determine the cause and to resolve the issue, in addition to working with all Tier 1 validators on the network,” Stellar’s blog reads.

According to public data at block explorer Stellar Expert, the network is still processing transactions, though not at a normal rate. A block which was validated around the time nodes fell off the network showed more than half of the submitted transactions as failed, but the network appears to have recovered as newly-processed blocks indicate no failed transactions

Stellarbeat takes the pulse of the network’s node count. At press time, the website showed that more than half of Stellar’s usually active nodes are currently down.

At 6:59 AM ET, Bitfinex CTO Paolo Ardoino tweeted that XLM withdrawal were paused.

Related: Signal Messaging App Launches MobileCoin Payments Feature in Beta

Stellar’s team responded to CoinDesk’s request for comment with its official statement. It clarified that XLM transactions are being processed and the network is still up.

Nevertheless, XLM, the coin that underpins the Stellar network, fell from $0.58 to $0.51 on the news.

Notably, Coinbase is reportedly using XLM as part of its rewards debit card, which offers either 1% back on bitcoin or 4% in XLM, according to the Wall Street Journal.

This is a developing story and will be updated.

Updated April 6, 2021, 17:54 UTC: This article and headline was updated to include information about failed transactions on the Stellar network.

• Blockchain Consultant Pleads Guilty to Extortion Charge
• Google’s Win for Open Source

Michael Hlady, an associate at blockchain consulting firm Alchemist, pled guilty on Monday to conspiring to extort a startup company for millions of dollars in the cryptocurrency ether. He now faces up to 20 years in prison and a fine. 

According to a statement from the Department of Justice (DoJ), Hlady, who also goes by the name “Michael Peters,” appeared in federal court in Brooklyn and pled guilty before U.S. Chief District Court Judge Margo Brodie. 

Hlady and his co-conspirator, Steven Nerayoff, an early supporter of the Ethereum project and former advisor to Overstock’s tZero, allegedly issued threats to company executives, including threatening to destroy a startup if it did not agree to demands for additional funds and company tokens.  

Related: How and Where Did Paul Tudor Jones Make His Bitcoin Bets

In 2019 both Nerayoff and Hlady were arrested by the Federal Bureau of Investigation (FBI). In contrast to Hlady’s plea, Nerayoff has entered a plea of “not guilty” to extortion charges and is awaiting trial.

The victim company was a mobile-based start-up that issued ether as loyalty rewards for generating user traffic to its clients’ products and to raise capital. The firm had planned to conduct an initial coin offering (ICO) in November 2017. 

Nerayoff’s firm was tapped to advise the startup in July 2017. According to the DOJ, he began demanding larger than contractually agreed-upon ethereum payouts for his help with the company’s ICO that coming fall. 

On March 28, 2018, Hlady sent a text message to a company executive stating, in part, “I promise I will destroy your community” if the startup did not comply with the demands. 

Related: Signal Messaging App Launches MobileCoin Payments Feature in Beta

See also: Ether Price Jumps to All-Time High Near $2,100

The company under threat transferred 10,000 ETH to Nerayoff.

Commenting on the case, acting U.S. Attorney Mark Lesko said both Nerayoff and Hlady “used strong-arm tactics to shake down a startup company of cryptocurrency” and thanked the FBI for their work on the case.

“This office and its law enforcement partners are committed to protecting businesses from extortion in whatever manner it is perpetrated,” said Lesko.

• Several Stellar Nodes Go Offline, Team Says Network ‘Still Functioning’ Though Some Transactions Fail
• Google’s Win for Open Source

Publicly traded Canadian tech firm Fortress Technologies will work with Great American Mining (GAM), a North American mining company that converts stranded gas into bitcoin mining power, to launch an Environmental, Social, and Governance (ESG) “green” mining venture.

Under the agreement, Fortress will invest $15 million in mining equipment through Great American Mining in the hopes of capturing 180 peta hashes a second (PH/s) in four months (Fortress currently produces roughly 20 PH/s). 

“I believe the future of Bitcoin mining will need to be environmentally conscious, seeking out stranded energy sources and repurposing waste and emitted gases to productively secure the Bitcoin blockchain, and that both investors as well as the Bitcoin mining community will place a premium on companies who pursue this kind of forward-thinking activity,” Fotress Chairman Roy Sebag said in a press release.

Related: How and Where Did Paul Tudor Jones Make His Bitcoin Bets

“Our board felt that Great American Mining had the best operational team, and a practical solution in place, which lined up with our own vision for the future of Bitcoin mining,” Fortress CEO Aydin Kilic told CoinDesk.

Discussion over Bitcoin’s energy consumption has resurfaced during the current market cycle, with some saying that new U.S. institutional investors will want “green” bitcoin that isn’t mined in sanctioned countries or China.

Still, those worried about the energy that Bitcoin consumes don’t always consider that 35-76% of Bitcoin energy appetite is fed by renewables, and almost all of these power sources lie outside major population centers where the power is “stranded” and couldn’t otherwise be used.

Great American Mining supplies oil and gas producers with mining rigs that convert otherwise flared or vented natural gas into hashpower. 

Related: Signal Messaging App Launches MobileCoin Payments Feature in Beta

If all the stranded gas in the U.S. were used for mining, then “all of the vented/flared gas in the U.S. converted to electrical power would yield approximately 7.4 GW (gigawatts), which in turn represents about 50-70% of the total power converted by the Bitcoin network currently,” the press release states.

Great American Mining and Fortress’ venture comes at a time when Bitcoin miners (especially in the U.S.) are receiving new shipments of hardware to rev up their hashrates. Marathon Patent Group, for example, plans to rollout more than 100,000 ASICs (application specific integrated circuits) by February 2022.

The surge in mining activity saw Bitcoin mining become more challenging than ever after the latest difficulty adjustment.

Updated Tuesday, April 6, 2021, 16:12 UTC: Additional comments from Fortress CEO Aydin Kilic and a change that corrects a misattributed quote.

• Several Stellar Nodes Go Offline, Team Says Network ‘Still Functioning’ Though Some Transactions Fail
• Blockchain Consultant Pleads Guilty to Extortion Charge

Cryptocurrency startup Atani has completed a $6.25 million seed funding round, the company announced Tuesday.

• The Madrid-based startup is a non-custodial platform offering trading and portfolio monitoring on 22 different exchanges, including Coinbase Pro, Binance and Bitstamp.
• The platform also provides a tax-reporting tool, which generates an automatic report valid in over 30 countries.
• The funding round was led by early Flywire investor JME Ventures and included participation from Conexo Ventures, Encomenda Smart Capital and Lanai Partners.
• The funding will be used to build out additional features for advanced users such as API trading.
• Atani’s total funding now sits at $7 million following $750,000 pre-seed funding in May 2019.

• How and Where Did Paul Tudor Jones Make His Bitcoin Bets
• Signal Messaging App Launches MobileCoin Payments Feature in Beta
• Several Stellar Nodes Go Offline, Team Says Network ‘Still Functioning’ Though Some Transactions Fail
• Blockchain Consultant Pleads Guilty to Extortion Charge

A new coin has begun swimming in the privacy coin pool. Iron Fish ($IRON), which protects transactions using zk-SNARKs, is launching its public testnet today, the culmination of nearly two years of building. Anyone can now run and mine a full Iron Fish node.

With $5.3 million in funding behind it from the likes of Electric Capital, Slow Capital, Juan Benet and Balaji S. Srinivasan, Iron Fish is betting there is still a demand for privacy coins in a crowded market. 

An allusion to the power of cryptography to protect and defend, the name Iron Fish comes from the U.S. Navajo Code Talkers who, in World War II, used it as a codename for a submarine.

Related: How and Where Did Paul Tudor Jones Make His Bitcoin Bets

“Iron Fish is a new privacy-focused cryptocurrency where every transaction is private, using the strongest privacy mechanism known today based on zero-knowledge proofs,” Elena Nadolinski, CEO of Iron Fish, told CoinDesk exclusively in an email. “As we continue to add features, Iron Fish will become a shielded layer for many assets, even ones on different chains, and provide a platform for true digital cash (via fully private stablecoins).”

Iron Fish uses zk-SNARKs, a type of zero-knowledge proof. A zero-knowledge proof (ZKP) is a cryptographic technique used to prove and verify a statement without revealing the underlying data. Essentially, zk-SNARKs shield Iron Fish users’ balances and user identities. 

“In Iron Fish, zero-knowledge proofs allow you to make a transaction without revealing your balance, or the recipient, or even who you are — instead, there’s a cryptographic proof accompanying an encrypted transaction that simply proves you have enough funds to cover it,” said Nadolinski. “In contrast, Bitcoin or Ethereum transactions are a permanent ledger of all your transactions in plaintext.” 

Iron Fish also uses the Sapling protocol, developed by Zcash, for constructing and verifying shielded transactions in the context of a blockchain.

Related: Signal Messaging App Launches MobileCoin Payments Feature in Beta

“I believe that over the next few years, zk-SNARKs and privacy technologies will unlock previously inconceivable design spaces,” said Jill Carlson, a principal at Slow Ventures. “Elena has a pragmatic vision for how to get there. Iron Fish promises to fill the digital cash void that crypto has so long promised to us.” 

Nadolinski said she wants developers, cryptographers and crypto enthusiasts to come join the Iron Fish discourse. This is in part why Iron Fish uses a modern, easily extensible codebase to whichg anyone can contribute, according to Nadolinski. Iron Fish uses Rust coding language for the cryptographic aspects and Typescript for everything else. 

“Iron Fish makes it easy for developers to work with zero-knowledge in crypto,” said former Coinbase CTO Balaji Srinivasan. “This is no small feat and due to Elena’s engineering prowess and that of her team.”

There are already large privacy coin projects on the cryptocurrency scene, such as Monero and Zcash, as well as improvements being actively developed to make Bitcoin more private. 

Nadolinski said despite there being a huge demand for privacy, no privacy coin has “won” yet. 

In a blog post announcing the Iron Fish testnet launch, she notes that in 2021 alone, the private messaging app Signal saw installs skyrocket after Whatsapp announced changes to its terms of service around data use. Encrypted email service ProtonMail saw a threefold rise in usage and privacy-focused search engine DuckDuckGo’s growth has “become exponential.”

A page on the Iron Fish website compares its privacy features to other cryptocurrencies like zcash, grin and bitcoin. 

“Existing privacy coins all have drawbacks on privacy, accessibility or both,” said Nadolinksi.  “Iron Fish does not compromise on privacy, while [being] fully focused on making it accessible/easy to use and expanding it to support multiple assets and bridges to other chains, and provide a platform for true digital cash.”

Iron Fish also enters the scene amid a rash of privacy coins being delisted, but Nadolinski remains unconcerned. 

“We’re bringing the same expectations around financial privacy that you have in the analogous world to crypto,” she said. “Regulatory concern with privacy coins arises from the myth that law enforcement won’t be able to catch bad actors. But just like in the real world when law enforcement would go acquire records when a suspicion of a crime occurs (e.g. acquire bank records for an organization or individual), so can law enforcement go to an exchange or other crypto-issuing body and acquire ‘view keys’ for an account (which Iron FIsh supports).”

These “view keys” give the holder read-only access to all activity associated with that particular account. Iron Fish (and other privacy coins) also support encrypted memo fields facilitating compliance with the FATF rule (Travel Rule) for Virtual Asset Service Providers (VASPs) by allowing them to keep a record of information for the reason behind transfers.

Nadolinski stresses that, compared to other cryptocurrencies, privacy coins give users an experience more similar to the one they would have in the real world when it comes to privacy expectations.

“Privacy coins have a bad case of bad marketing, that they are something nefarious and only to be used for illegal activity, but that’s not true,” she said. “Take doors on houses or passwords for bank accounts, both of which are precautions most people take even though they might say they have nothing to hide.”

• Several Stellar Nodes Go Offline, Team Says Network ‘Still Functioning’ Though Some Transactions Fail
• Blockchain Consultant Pleads Guilty to Extortion Charge

COTI has received $500,000 from cFund, marking the first investment made by the venture fund backed by Cardano, the network behind the current seventh-largest cryptocurrency by market capitalization.

The $20 million cFund was launched in July of last year, a joint venture between Cardano builder IOHK and Los Angeles-based Wave Financial. The aim of the fund is to grow the Cardano ecosystem, which has not kept pace with the whopping growth of its native ADA token.

Both teams have worked together in the past, resulting in COTI creating the first version of ADA Pay in 2019. COTI will upgrade that for the Shelley mainnet, expected to be released on the Cardano network over the coming weeks, said COTI CEO Shahaf Bar-Geffen.

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The cryptocurrency space can be thought of as a collection of tribal factions with fiercely held allegiances. Cardano and ADA, created by Ethereum co-founder Charles Hoskinson, stands outside the crypto canon and has endured ribbing from Bitcoin and Ethereum supporters alike who claim nothing much is really being built on Cardano.  

“There are a lot of new chains out there like Polkadot and Binance Smart Chain and so on, and they all more or less target the same crypto audience to do DeFi better and all of that,” Bar-Geffen said, referring to the $51 billion decentralized finance sector. “Rather than just doing just another faster or better version of Ethereum with the same DeFi projects on top, Cardano is trying to work with governments, specifically in developing countries in Africa and South America.”

For his part, IOHK’s Hoskinson said in a statement that the COTI investment is a step towards deepening the relationship between the projects. 

“COTI has been a great partner across several projects already, and we plan to leverage their advanced fintech architecture to enable future finance applications on ADA,” Hoskinson said.

• Coinbase, Fidelity, Square Form Crypto Lobbying Group
• Crypto Options Exchange Deribit Launches Bitcoin Volatility Index
• CME Group to Launch Micro Bitcoin Futures in May