The perception is that Democrats tend to be more anti-crypto than Republicans. But this year, a whole slew of Democratic Congressional candidates are challenging that image.
On Unchained, the two candidates discuss how the problems in the traditional financial system and with campaign fundraising showed them the potential in crypto, how they square their pro-crypto stance with their environmental concerns, and why they feel that dismissing crypto would go against their desire to represent their potential constituents.
Be sure not to miss the episode to also hear how being pro-Web3 has impacted their campaigns.
Cross-chain bridge Wormhole, which enables users to transfer tokens, data or smart contract instructions, across different blockchains, wasexploited on Wednesday for 120,000 wrapped ETH (wETH).According to Twitter user @tony_intern, the attacker was able to steal almost all of the Wormhole wETH, which accounts for 20% of the $1.6 billion in wETH locked into Solana. With Ethereum hovering around $2,600, the exploit is worth over $300 million and ranks as thesecond-largest hack in DeFi history, data from Rekt shows.
Wormhole is a cross-chain bridge, meaning Wormhole locks assets into a contract on one chain and mints a wrapped version of the asset onto another chain. According to Paradigm researcher Sam CZ Sun, the attackerspoofed a guardian signature and minted 120,000 ETH on Solana without having to bridge ETH in the first place. A “guardian” is a node that signs off on transactions between chains. By creating a fraudulent guardian signature, the attacker was able to mint wETH on Solana out of thin air and move the fake wETH to Ethereum in exchange for real ETH.
In the hours after the attack occurred, itappears the Wormhole team reached out to the hacker’s address to offer a $10 million white-hat bounty in exchange for returning the funds. As of press time, there is no update on this front.
Crypto started 2022 as a $2.2 trillion asset class,according to data from CoinMarketCap. Thirty-one days later, the market sat at $1.7 trillion – a 22% decline. Tokens that ended last year on a hot streak were particularly hit hard by the market correction, with 2021 darlings Terra and Solana down more than 40% on the month. Blue-chips Bitcoin and Ethereum were also hit hard in January,dropping roughly 20% and 25%, respectively.
Despite the drawdown, non-fungible tokens had a record month. In January, NFT marketplace volume hit all-time high of $6.75 billion – doubling last August’s previous record of $3.31 billion,data from The Block shows. OpenSea led the way, facilitating 60% of January’s NFT volume. However, LooksRare, an NFT marketplace that debuted on January 10th via a vampire attack of OpenSea, saw over $2 billion in volume on its platform. Solana NFTs also had a big month,surpassing $1 billion in historical volume, and Magic Eden, an NFT marketplace, did a record $300 million+ in January.
High NFT trading volume coincided with tons of mainstream adoption. Twitter implemented NFTs into profile pictures, and Reddit is testing a similar feature. YouTube and Meta are both rumored to be working on NFT products. In addition, celebrity adoption of NFTs was rampant, with Justin Bieber and Gwyneth Paltrow joining the Bored Ape Yacht Club community.
Last year, Joshua and Jessica Jarrett sued the IRS for a refund, claiming that they erroneously paid taxes on crypto staking rewards as if it were income. The lawsuit argues that staking income should not be treated as income until it is sold. This week, the IRS offered the Jarretts their refund without explaining the reasoning behind the refund, which also would mean that the IRS wouldn’t be setting a precedent. However, Joshua said they are not taking the refund,explaining, “I refused the offer, because I know that until my case receives an official ruling, I have no certainty they won’t try to tax me again.”
In essence, “Josh sued the IRS for clarity on taxation of new tokens created through staking. The IRS tried to pay him off to drop the suit. He turned down the money to continue the case & seek binding precedent for us all,”wrote the Blockchain Association’s Jake Chervinksy on Twitter.
According to CoinTracker’s Shehan Chandrasekera, if decided in favor of the Jarretts, the case would only set a precedent for proof-of-stake staking income (and would not cover interest, mining, or airdrop income).
Relatedly, Coinbase hasteamed up with TurboTax to allow users to convert state and federal tax refunds directly to crypto via the exchange.
Fidelity Digital Assets published a report this week titled “Bitcoin First,” arguing that Bitcoin is “fundamentally different” from other digital assets and would most likely be the winning cryptocurrency in a multichain or winner-take-all future.
“Bitcoin’s first technological breakthrough was not as a superior payment technology but as a superior form of money. As a monetary good, bitcoin is unique. Therefore, not only do we believe investors should consider bitcoin first in order to understand digital assets, but that bitcoin should be considered first and separate from all other digital assets that have come after it.”
Additionally, this week, during a conversation at MicroStrategy’s Bitcoin for Corporation’s conference, Christine Sandler, head of sales and marketing at Fidelity Digital Assets,revealed that the company started mining cryptocurrency and accumulating Bitcoin in 2014.
According to astatement on Monday, the Diem Association will begin the process of “winding down” over the next few weeks after a tumultuous three years. The announcement officially retires Diem (formerly Libra), Facebook’s stablecoin project. (Disclosure: I write a Facebook Bulletin newsletter.)
In Diem Group’s statement, CEO Stuart Levey revealed that Diem's demise was influenced by regulatory scrutiny. “In the United States, a senior regulator informed us [the Diem Association] that Diem was the best-designed stablecoin project the US Government had seen.” Levey added that it “became clear from our dialogue with federal regulators that the project could not move ahead. As a result, the best path forward was to sell the Diem Group's assets, as we have done today to Silvergate,” said Levey.
Silvergate Bank is purchasing the remains of Diem for $182 million. The digital asset-friendly bank partnered with the Meta project over a year ago to create a stablecoin pegged to USD in a last-ditch effort to revive the project. With its $182 million purchase, the bank said it will use Diem’s existing tech to enable a Silvergate issued stablecoin, which ithopes to do in 2022.
India plans to tax income earned from transacting with virtual digital assets at a rate of 30%. "There has been a phenomenal increase in transactions in virtual digital assets,” said India’s Finance Minister Nirmala Sitharaman. “The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.” Interestingly, neither crypto or NFTs were directly mentioned in the speech – instead, the term “virtual digital asset” was used.
The budget also provided a roadmap for the launch of a digital rupee. According to Sithamaram, a "digital rupee" will be "issued using blockchain and other technologies; to be issued by [the Reserve Bank of India] starting 2022-23. This will give a big boost to the economy."
Thailand alsoannounced crypto tax news, stating that it is abandoning plans to impose a 15% tax on crypto.
Despite the success of NFTs in January, many traditional companies entering the space have been facing intense criticism from environmentally-conscious fans. For example, this week, video game publisher Team17 reneged on its plans to launch an NFT collection based on the Worms video game franchise (which has sold over 75 million games in its lifetime).
“Team17 is today announcing an end to the MetaWorms NFT project. We have listened to our Teamsters, development partners, and our games’ communities, and the concerns they’ve expressed, and have therefore taken the decision to step back from the NFT space,” tweeted the company.
Team17’s statement came after its partner Aggro Crab condemned NFTs. “We believe NFTs cannot be environmentally friendly, or useful, and really are just an overall fucking grift,” wrote the firm before threatening to end its relationship with Team17 if its NFT plans weren’t canceled.
Other companies, like Discord and Ubisoft, have received similarly vociferous backlash from its fan base regarding NFT and crypto integrations.
On Thursday, GameStop unveiled a partnership with the Ethereum layer 2 solution Immutable X to launch its own NFT marketplace. (Disclosure: Immutable is a former sponsor of my show.) The two companies have set up a $100 million grant fund to support developers using the marketplace as part of the deal.
In related news, gaming company Ubisoft hasagreed to enter the Hedera Hashgraph ecosystem and operate a node while exploring the blockchain’s distributed ledger technology. This comes shortly after Ubisoft launched a Tezos-powered NFT platform for its games.
Another week, another series of huge fundraises.
FTX Trading Ltd., the Sam Bankman-Fried led firm, announced a $400 million Series C raise on Monday, valuing the company at $32 billion.In the past six months, FTX, thethird-ranked crypto exchange by CoinMarketCap, has brought in $1.8 billion in funding and has seen its valuation increase 75%. FTX.US recently announced a monster raise of its own at a valuation of $8 billion.
Phantom, the Solana-based crypto wallet,closed a $109 million Series B fundraising round that valued the firm at $1.2 billion. Paradigm led the round, with crypto powerhouses a16z, Variant Fund, Jump Capital, and DeFi Alliance, among others, participating. The raise coincides with Phantom’s release of its iOS app. The firm plans to double its headcount in the near future.
This week, the data visualization platform Dune Analytics also announced new funding led by Coatue, bringing in a memetic $69,420,000 and garnering a new valuation of $1 billion. The data firm plans to use the fund tobuild a community application programming interface (API) that will allow users to compare data across chains in a single query.
Additionally, the Financial Timesreports that Yuga Labs, the developers behind Bored Ape Yacht Club, are looking to raise at a $5 billion valuation from a16z.
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