Hello everyone, and welcome back to Chain reaction. Last week, we discussed $4.5 billion in new crypto funding from a16z. This week, we’re talking about the arrest that has everyone in the NFT space sweating bullets. If you want to get this delivered to your inbox every Thursday afternoon, you can sign up on the TechCrunch newsletter page.
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crimes of the future
The crypto space has moved so fast in the last two years that builders generally seem to believe that the existing rules do not apply to them. Well, after years of legal action at a snail’s pace, it seems that US prosecutors are starting to feel it’s time to challenge that perception. This week, the US Attorney’s Office in the Southern District of New York arrested and charged a former OpenSea executive who used his position to lead NFT projects that were to feature on the home page. From the market. Community members discovered his actions by tracking his activity on public blockchains. I would have loved to rant about this during the podcast, but the news broke while we were recording, so I’ll leave you with some thoughts here. The arrest was practically a huge shock to people in the NFT space who generally believed that Nate Chastain had acted unethically but that it couldn’t be “insider trading” because NFTs weren’t securities. This is a framework held by many, including Chastain’s boss at OpenSea, who fired him. “I think there was a misunderstanding of this as insider trading. We do not consider NFTs to be financial assets, so that does not apply. That is a very specific term for something very specific,” OpenSea Devin Finzer told Decrypt in September. There are a lot of people who read very closely the SDNY press release, which claims that it specifically accused Chastain “of wire fraud and money laundering in connection with a scheme to commit insider trading in non-fungible tokens.” Notably, they describe NFTs as “digital assets” later in the release. Also, it’s worth reiterating that this is the Justice Department, not the SEC, charging him, though it’s the Bureau’s Securities and Commodity Fraud Task Force handling this case. Now why don’t crypto people want NFTs to be classified as securities? Well, there is a lot of existing regulatory guidance there, and most feel that it would fundamentally change the industry if NFTs were unilaterally subject to securities law; It would certainly raise the barrier to entry for creating NFTs and reduce much of the experimentation that’s going on in the space right now. Another big reason why it would be bad for NFTs to be treated as securities is that it would mean that many people have been doing illegal things for a long time. The NFT space made it through this latest crypto bull run without any significant regulation being applied to it. As NFT volumes begin to show signs of slowing, there are fears that more regulation is just around the corner.
the last pod
What’s happening? Anita is here to give you a preview of the latest episode of our Chain Reaction podcast, where we unpack the latest web3 news, block by block for the crypto-curious. This week, we talk about Coinbase’s new approach to what can be one of the most anxious aspects of corporate life: the performance review. Our colleague, Amanda, wrote about how the crypto exchange is trying to emulate Ray Dalio’s hedge fund, Bridgewater Associates, by allowing employees to give each other feedback and ratings in real time. Is this part of technology’s descent into a Black Mirror-esque reality? Tune in to hear our thoughts. We also recap two recent crypto comeback stories, one from the founder and CEO of OnlyFans, who left the company after trying to ban sexually explicit content from the platform, and another from the architect of highly unstable stablecoin Terra. . Our guest this week was Outdoor Voices founder Ty Haney, who shared details about his switch from athleisure to crypto with his new venture, Try Your Best. Haney broke the news on our podcast that the startup just secured its second round of institutional funding. Subscribe to Chain Reaction on Apple, Spotify, or your alternative podcast platform of choice to stay up to date with us every week.
follow the money
Where startup money moves in the crypto world: New York-based enterprise blockchain startup Digital Asset has received a strategic investment of undisclosed size from Japanese banking giant SBI Holdings. InfStones, a blockchain infrastructure provider, raised $66 million in a round led by SoftBank and GGV. Indian music NFT startup FanTiger pocketed $5.5 million for its seed round led by Multicoin Capital. LivingCities, a metaverse-focused social startup co-founded by Foursquare founder Dennis Crowley, raised $4 million in seed funding led by DCVC. Zimbabwe’s FlexID received an undisclosed amount of funding from Algorand for its blockchain-based identity system for the unbanked. Web3 augmented reality gaming company Jadu has raised $36 million in funding for its Series A led by Bain Capital Crypto. VillageStudio raised $2.3 million in a round led by Animoca Brands for its NFT-based Playken avatars. Web3 Payments API Merge raised $9.5 million in seed funding led by Octopus Ventures. GoSats, an India-based bitcoin rewards platform, raised $4 million in a pre-Series A funding round from investors including Y Combinator, Accel and Gossamer Capital. DAO management platform Utopia Labs closed a $23 million Series A led by Paradigm.
the week on web3
It was an unusually quiet week on web3, and our team members in the US took some time to enjoy the rare uneventful long weekend. Still, some big personalities made waves in the space, for better and for worse. OnlyFans founder Tim Stokely is turning to crypto after leaving the company last December following controversy over his push to ban sexually explicit content from the platform. Anita wrote about the new “family-friendly” NFT venture she is launching with another former OnlyFans executive that will allow people to buy, sell, and trade virtual cards with influencers and celebrities. NFT platform OpenSea had fired Nate Chastain, its chief product officer, in September after he was accused of running blue-chip operations on the platform. Now, he has been arrested and charged with insider trading; Lucas has the details.
added analysis
Here are some of this week’s crypto analyzes you can read on our TC+ subscription service (written by TC’s Jacquelyn Melinek): VC funding for crypto projects fell in May, but many investors remain bullish. Cryptocurrency venture capital has fallen month-over-month from April to May, but many investors aren’t worried. “For investors like us, it’s time to buy,” Stan Miroshnik, partner and co-founder of 10T Holdings, told TechCrunch. The pace of capital deployment could be more measured as investors and founders become more calculated, but venture capitalists will still see a great deal of activity, Miroshnik said. Although there may be a gloomy sentiment in the digital asset markets, true crypto funds will continue to invest heavily, Saurabh Sharma, chief investment officer at Jump Crypto, told TechCrunch.As cryptocurrencies become more mainstream, can they remain decentralized?Whether it is first-time cryptocurrency buyers or people who are learning more about NFTs, Bitcoin, and the crypto ecosystem in general, there has been a global rise in cryptocurrency awareness. But as it gains momentum, regulators around the world will continue to monitor the space more closely, but the headline speaks for itself: what does this mean for the future of cryptocurrencies? Several founders and industry executives weighed in.Veteran bitcoiner Dan Held says this ‘crypto winter’ won’t be as harsh as othersAs crypto markets remain bearish, some longtime market participants, like Dan Held, director of growth marketing at crypto exchange Kraken, are not worried. Although there is a lot of talk of a crypto winter circulating in the community, Held said that the sentiment for this current market cycle is different. While he, and many others, have persisted through major market cycles over the years, the narratives have changed a lot, thanks to more prominent institutional players and huge amounts of capital pouring into the space.
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