Another day, another “crypto bank” in the spotlight! Today we check Celsius Network (CEL-USD) competitor BlockFi… New products shipping to Polygon (MATIC-USD)… And the latest cybersecurity news from the New Digital World.
Keep an eye on BlockFi
First, FTX (FTT-USD) extended a $250 million line of credit to BlockFi. Nine days later – rumored – FTX is looking to buy BlockFi outright.
Zac Prince, CEO of BlockFi quickly denied that his “crypto bank” is set to be sold at the $25 million “fire sale” price that was reported by CNBC.
How could we even talk about $25 million? After all, at this time last year, BlockFi was valued at $5 billion!
Here is the context: A call for investors leaked last week – with a PLOT revelations from inside baseball on BlockFi.
For one thing: when FTX extended the line of credit, the deal gave FTX an option to take it over — which would “effectively eliminate all existing BlockFi shareholders.” So on the investor call, a partner at Morgan Creek Digital said he was “making calls all day” to work out a counteroffer.
But wait! There is more.
BlockFi had to act quickly to pull itself together $1 billion in Bitcoin (BTC-USD) that he had loaned to failing crypto firm Three Arrows Capital. (Plus $330 million in warranty.)
It seemed to have succeeded… But BlockFi should not be off the hook:
When Morgan Creek offered $250 million to buy 51% of BlockFi — countering FTX’s $250 million line of credit — it was implied it was worth less than $500 million. Again, a significant drop of $5 billion last June.
The Morgan Creek guy also seemed to hint at 80% or even 85% layoffs coming at BlockFi. They had already laid off “about 20%” on June 13.
Why it matters: BlockFi had $8 billion in assets under management as of June 2. It’s not as much as Celsius that caused all these problems ($12 billion in May). But it’s not nothing. Hopefully, these behind-the-scenes deals will be done soon to save “crypto banks”.
Polygon delivers 2 more launches in 2 weeks
Sure it’s nice to see Polygon (MATIC-USD) ship products… While other the projects are making headlines because their leader fled the country, liquidated funds and could bring in the repo man for their superyacht.
Yesterday: Polygon launched its new modular blockchain on a “testnet”: Polygon Avail.
“Avail’s goal is to provide a shared security layer for the Web3 world”, as the “base layer for thousands of chains [with] bridges without trust” between them. You can read all about how it works (and what problems it fixes) in Polygon’s announcement. Because it is modular and not “monolithic” like Ethereum (ETH-USD), it can actually evolve!
Last Wednesday: The developers released “the first iteration of Polygon ID”, which is a bit like the “Sign in with Google” feature we often get on Web 2.0 sites – except it’s actually private.
Wouldn’t it be great to verify our identity online without give all our data to a company? Crypto developers say they can do this with “zero-knowledge proofs,” which is what Polygon ID uses. First up: Polygon ID for Decentralized Autonomous Organizations (DAOs) – how many blockchain startups operate these days.
On the “good public relations” front: Polygon also has a lot of climate initiatives in the works lately. Apparently, it provides technologies to reforest the Indian subcontinent, and it has achieved carbon neutrality.
And the latest project to launch on Polygon – called Reneum – allows companies to buy “renewable energy credits” (from solar, wind or hydroelectric projects) to offset their own “dirty” operations. The credits correspond to Reneum’s upcoming RENW crypto token.
At the end of the line : Polygon seems to behave more like… you know… a big tech company than a crypto sibling’s vanity project.
This is the type of organization that institutions and high net worth individuals can consider and see as a “real investment”. Maybe that’s why: “MATIC sharks and whales have been in a pretty big accumulation trend for about six weeks” since (at least) June 22, according to blockchain analysts at Saniment.
Looks like North Korean hackers have struck again
Crypto-hack news junkies will recall that Harmony (UN-USD) was taken for $100 million last Friday. Yes, this was another bridge hack, where exchanging cryptos through blockchains turned out to be… less than secure.
Now crypto-forensic investigators from Elliptic say, “There are strong indications that North Korea’s Lazarus Group may be responsible for this theft.” Elliptic lays out the evidence in its new report.
The thieves try to launder the money, of course. But Elliptic said its software traced the crypto to specific Ethereum wallets anyway. Now exchanges and companies can “detect all incoming funds from the Horizon Bridge Hack” – and refuse to accept stolen crypto.
Often, hackers will accept “ransom” funds from the compromised blockchain and return their crypto to them. But would North Korea want to do that? Already, Harmony had to increase the “ransom” from $1 million to $10 million.
Meanwhile: There are also ethical ways for hackers to collect “bounties”. And that’s what Livepeer (LPT-USD) now goes.
Like many blockchain projects, Livepeer is launching a new bug bounty program. If a friendly “white hat” hacker spots a bug that could affect the “video streaming experience [or] infrastructure” on the Livepeer platform, they will earn a small reward. If the “white hat” detects a bug in the smart contracts under his video network, he can earn a lot more.
Repayment: When the hacks are not prevented by these bounty programs… You just have to hope that the project pays you back.
Axie Infinity (AXS-USD) has just brought its Ronin bridge back online after the $625 million hack. The bad news is that even its long-time investor, Delphi Digital, took the opportunity to cash in on its investment. Once at $95 million, Delphi only had $9 million in Axie (now recovered), as that of the block principal investigator spotted tuesday.
The good news is that Sky Mavis, the braintrust behind Axie Infinity, says it’s now being refunded to all users affected by the March hack. Binance (BNB-USD) came with a major help. First, Binance opened its bridge to Ronin (RON-USD) in April (so users can opt out). Then he provided about $150 million worth of Packed Ethereum (WETH-USD) to the reimbursement fund.
Naturally: Axie also announced new security measures for Ronin, such as a “circuit breaker” system and withdrawal limits. I hope EVERYTHING crypto startups sit back and see what metrics they could copy now!
Listen Now: New Podcast Episode
“It’s time to refocus on the underlying infrastructure layers that [tokens and Web3] possible and really think about how we make crypto more resilient,” said Meltem Demirors of leading European crypto investor CoinShares on Cointelegraph yesterday.
We couldn’t agree more. And that same day, our very own Charlie Shrem had the founder of Pocket Network (POKT-USD), Michael O’Rourke, on his Untold Stories podcast.
O’Rourke argues that DeFi is “weathering the storm much better than its centralized counterparts” and shares what Pocket Network has learned from a wild year of “exponential growth and adoption.”
You’ll also hear the pros and cons of popular money-making tools, like liquid staking. Click here to listen now.
As of the date of publication, Ashley Cassell had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines. To get more news from The New Digital World delivered to your inbox, click here to subscribe to the newsletter.