Issue #42

Market Overview

As of the time of writing (Monday 5pm), the total market cap of the crypto asset market is $US1.17T, down (-1.9%) from last week.

Below is the weekly performance of the top crypto and NFT assets. 

News Headline Highlights

• Tether will regularly allocate up to 15% of its net realised operating profits towards purchasing Bitcoin. These Bitcoin shall be considered on top of the minimum reserves assets that 100% back tether tokens. Based on its most recent first quarter attestation report, that would be over $200m worth of Bitcoin.
• Circle, the issuer of the second largest US Dollar stablecoin (USDC), has ditched Treasury bills that mature after May 31st to remove risk to their $30B assets from a potential US Government default. The move included rotating ~$9B into overnight repurchase (repo) agreements.
• Five ETF issuers filed to launch ether futures ETF on a US exchange in the last week in a race to be the first to list. Grayscale was the first issuer to act, filing on May 9 to launch the Grayscale Ethereum Futures ETF, followed by Direxion, Roundhill Investments, Bitwise and Valkyrie.
• Digital Currency Group missed a $630m payment it was meant to shell out to its subsidiary Genesis Global Capital earlier this month, according to a May 19 update to clients shared by crypto exchange Gemini.

 Crypto Asset Project Updates

• Ledger, the world’s largest hardware wallet provider, has come under fire over their new seed phrase recovery service. The new firmware update that allows encrypted seed phrases to be extracted from the device has raised concerns that Ledger can, with a firmware update, gain access to a user's private keys. 
• An attacker managed to get a malicious proposal passed by the Tornado Cash DAO, one that handed them complete control over its governance system.
• Lido Finance (LDO) passed a vote to activate withdrawals on Ethereum with v2 upgrade. Shortly after, insolvent crypto lender Celsius withdrew $781m of Lido staked Ether.
• Optimism (OP), a leading Layer 2 scaling platform for Ethereum, plans mainnet Bedrock upgrade for June 6.
• A bug in the decentralised finance lending protocol Aave (V2 on the Polygon network) has caused an estimated $110 million worth of user assets to become momentarily inaccessible. A fix has been proposed and is expected to be approved and implemented in the next week to return the protocol to regular functionality.
• Gala Games (GALA) completed its Version 2 upgrade last week along with an airdrop for all GALA Version 1 holders. The GALA v2 airdrop resulted in v1 holders receiving a 1:1 airdrop of the v2 token.

Regulation Station

• Hong Kong has launched an e-HKD pilot programme, with 16 companies to test digital currency for public use in shops and restaurants. 16 banks and payment companies, including HSBC, Standard Chartered and BOCHK. According to a statement by the Hong Kong Monetary Authority (HKMA), six use cases for the e-HKD are being tested: online payments; payments in shops and restaurants; collecting government payouts; tokenised deposits; tokenised asset settlement and Web3 trading and clearing.
• House Republicans Tom Emmer and Darren Soto introduced a bill to clarify the regulatory classification of digital assets and provide market certainty for innovators and clear jurisdictional boundaries for regulators.
• US Securities and Exchange Commission (SEC) Chairman, Gary Gensler, has pushed back on criticism that the SEC has not provided useful guidance for crypto companies looking to remain in compliance with federal law. Gensler continues to believe digital asset businesses are required to conform to already existing securities laws, commenting “It’s a false narrative that they are decentralised," he said. "They tend towards centralization, and you can find a website and a team of entrepreneurs around most of these.” Magnet quick take: When it’s not just crypto industry advocates, but US Government elected officials and members of your commission commenting on the lack of clarity or guidance, maybe Gensler should take the hint…

The Weekly Deal Room

• Metaco, a crypto custodian, has been acquired by Ripple for $250m.
• Auradine, a provider of web infrastructure solutions, raised $81m in a Series A co-led by Celesta Capital and Mayfield.
• River, a bitcoin technology and financial services company, raised $35m in a Series B led by Kingsway Capital.
• Cormint Data Systems, a bitcoin mining company, raised $30m in a Series A funding round co-led by its president.
• Story Protocol, a web3 metaverse infrastructure platform, raised $29.3m in a Seed Round led by a16z.
• Red Beard Ventures, a Web3 VC fund, closed a $25m funding round from a16z's Marc Andreessen and Chris Dixon, Web3 gaming giant Animoca Brands.
• Airstack, a web3 developer platform, raised $7m in a second pre-seed funding round led by Superscrypt.
• Azteco, a Bitcoin payments platform, raised $6m in a Seed Round led by Jack Dorsey.
• Hourglass, the first-ever marketplace to trade Time-Bound Tokens (TBTs), raised $4.2m in a Seed Round led by Electric Capital.
• Pyor, a specialist in digital asset data and insights, raised $4m in a Seed Round led by Castle Island Ventures.
• Larange Labs, a zero-knowledge (ZK) startup, raised $4m in a pre-seed funding round led by 1kx.
• Asymmetry Finance, a protocol for liquid staking derivatives, raised $3m in a strategic round from Ecco Capital, Republic Capital, GMJP and Ankr.