Hello! Welcome back to Distributed Ledger, our weekly crypto newsletter that reaches your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch, and I’ll walk you through the latest in this bear market.
Find me on Twitter at @FrancesYue_ to send feedback, or tell us what you think we should cover. You can also reach me through email to share your personal stories with crypto.
Crypto in a snap
lost 1.7% over the past seven days, and was trading at around $22,559 on Thursday, according to CoinDesk data. Ether
dropped 3.3% over the seven-day stretch to around $1,599. Meme token Dogecoin
went down 1.8% while another dog-themed token, Shiba Inu
remained flat from seven days ago.
Source: CoinGecko as of Aug. 4
Source: CoinGecko as of Aug. 4
The crypto market suffered from two major exploits this week, further exposing risks in the fledgling industry.
Digital asset protocol Nomad, which allows users to transfer crypto across different blockchains, said it lost almost $200 million on Monday in a security hack.
Starting Tuesday, customers of several crypto wallets, including Phantom and Slope, saw a total of $4.5 million in digital assets evaporate from their online accounts,
Developers of the Solana blockchain, used by both Slope and Phantom, said on Wednesday the incursion may have started at Slope.
“During an investigation by developers, analytics companies, and security auditors, it appears that all affected addresses were at one point created, imported, or used in the Slope mobile wallet applications on iOS and Android (created and published by Slope Finance),” according to a statement by Austin Federa, head of communications at Solana Foundation.
“No core code related to Solana Labs, the Solana Foundation, or anything related to Solana protocol itself was involved in this attack,” according to Federa.
Federa recommended users to take action if they have generated seed phrases, or a group of words that allow access to a cryptocurrency wallet, from Slope, or have imported seed phrases or private keys into any Slope wallet.
Such users should transfer all digital assets to a hardware wallet, or generate a new seed phrase and transfer all assets to new wallets other than Slope, Federa said.
Raj Gokal, co-founder at Solana Labs, recently highlighted why it’s important for crypto protocols to go through code audits.
“I think every primitive for a parallel decentralized financial system has had enough time now to be proven out and have audited solutions that have also stood the test of time for many market cycles,” Gokal said in an interview with Distributed Ledger before the exploits happened.
Still, Gokal said he believes in the potential of emerging crypto products. “What we keep seeing is, big companies that try to move into crypto and turn their product experience into a web three experience and make a shift into web three, no matter how committed they are, it’s very slow. And I think independent builders have openings to create new products that are web creative and compete with these incumbents every day,” Gokal said. Web three is the so-called next generation of Internet.
BlackRock partners with Coinbase
Coinbase Global shares rallied Thursday after BlackRock Inc., the world’s largest asset manager, said it was partnering with the crypto exchange to offer direct access to bitcoin to some institutional clients.
Common clients of Coinbase
investment management platform Aladdin, will get access to crypto trading, custody, prime brokerage, and reporting capabilities, according to a statement Thursday.
In March, BlackRock’s chairman Larry Fink wrote in a letter to shareholders that the company is studying digital currencies, stablecoins and the underlying technologies as the firm has seen increasing interest from clients.
Hear from Mike Novogratz at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The Galaxy Digital CEO has ideas about navigating the crypto winter.
Michael Saylor drops MicroStrategy CEO role
A shake-up of MicroStrategy Inc.’s executive suite has crypto traders weighing the consequences for bitcoin as Michael Saylor drops his role as chief executive officer.
MicroStrategy said Tuesday that Michael Saylor would give up the CEO title and take on a new role as executive chairman, while the company’s president Phong Le will take on the CEO position starting Aug. 8. The transition was announced as MicroStrategy reported a net loss of $1.06 billion in the second quarter, including $917.8 million in digital asset impairment losses, as bitcoin price crashed.
Phong will manage overall corporate operations while Saylor will “focus more on” the company’s bitcoin acquisition strategy and related bitcoin advocacy initiatives, according to MicroStrategy.
As one of the most vocal bitcoin bulls, Saylor pushed forward MicroStrategy’s move to buy the cryptocurrency in bulk first in the summer of 2020 and later doubled down. The company has raised a total of $2.4 billion in debt to purchase the digital asset. As of June 30, it held about 129,699 bitcoins.
What does Saylor’s transition mean for bitcoin? I’ve written more about it here.
$300 million crypto Ponzi scheme?
The Securities and Exchange Commission on Monday said it charged 11 individuals over their roles in the creation and promotion of a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from retail investors.
The agency alleged that Forsage.io, a website that allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains, has operated as a pyramid scheme for over two years, with investors making money by enrolling others into the scheme. According to the SEC’s complaint, the platform allegedly used assets from new investors to pay earlier investors.
According to Forsage’s website, it is a “decentralized networking platform based on smart contracts.”
It is the SEC’s latest move in tackling alleged crypto-related frauds, after the agency in May nearly doubled the size of its newly renamed Crypto Assets and Cyber Unit.
Crypto companies, funds
Shares of Coinbase Global Inc. jumped 10.3% to $89.13 on Thursday, and they were up 43.2% over the past five trading sessions. Michael Saylor’s MicroStrategy Inc.
went down 1.2% Thursday to $309.85, while the shares went up 12.4% over the past five days.
Mining company Riot Blockchain Inc.
shares edged up 0.1% to $8.13 Thursday, and gained 9.8% over the past five days. Shares of Marathon Digital Holdings Inc.
rose 1.1% to $13.43, with a 1.7% gain over the past five days. Another miner, Ebang International Holdings Inc.
saw shares rally 4.5% to $0.50 on Thursday, for a 2.7% gain over the past five days.
shares lost 3.7% to $28.51. The shares lost 5.9% over the five-session period.
Shares of Block Inc.
formerly known as Square, advanced 2.8% to $90.53, contributing to a 21.1% gain for the week. Tesla Inc.
shares rose 0.3% to $925.15, up 9.8% over the past five days.
PayPal Holdings Inc.
declined 1% to $96.94, though the shares went up 13% over the five-session stretch. Nvidia Corp.
shares were up 1.8% to $192.32, looking at a 7% gain for the past week.
Advanced Micro Devices Inc.
shares rallied 6.1% to $104.08 on Thursday, with a 13.6% gain from five trading days ago.
Among crypto funds, ProShares Bitcoin Strategy ETF
slumped 4% to $13.94 Thursday, while its Short Bitcoin Strategy ETF
added 4% to $34.97. Valkyrie Bitcoin Strategy ETF
dropped 3.9% to $8.69, while VanEck Bitcoin Strategy ETF
traded 4.2% lower to $21.89.
Grayscale Bitcoin Trust
lost 3% to $14.08.
Bitcoin has already bottomed, has a fair value of $40,000, says Anthony Scaramucci (MarketWatch)
Billionaire Steve Cohen Exits Investment in Crypto Startup Radkl (Bloomberg)
$2B in crypto stolen from cross-chain bridges this year: Chainalysis (CoinTelegraph)
Virginia pension fund invests in crypto lending in bid to boost returns (Financial Times)