The Blockchain Monitor

Home | The Blockchain Monitor

core/paragraph

• <a href="#Digital">Digital Asset Platforms Expand Across Payments, Art and Sports Industries</a> • <a href="#Blockchain">Blockchain Supply Chain Initiatives Announced Across Industries</a> • <a href="#Crypto">Crypto Exchange Faces Multistate Enforcement Action over Yield Products</a> • <a href="#DOJ">DOJ and Manhattan DA Bring Enforcement Actions for NFT and Crypto Fraud</a> <a href="#DeFi">• DeFi Network Hacked for over $600 Million in Cryptocurrencies</a>

Digital Asset Platforms Expand Across Payments, Art and Sports Industries

By <a href="https://www.bakerlaw.com/LaurenBass">Lauren Bass</a>

Last week a fintech company reportedly teamed with a local digital asset exchange in the Philippines to develop a blockchain-based solution for cross-border remittances. According to reports, the partnership aims to increase the speed and lower the costs for Filipino marketplaces and consumers to send and receive money internationally.

In related news, a multinational financial services corporation has reportedly launched a pilot program to help digital creators enter and thrive in today’s growing NFT (non-fungible token) marketplace. According to a press release, the goal of the one-year immersion program – geared toward entrepreneurs working in art, music, fashion and film – is to help create a “global cohort of digital creators and empower them through product strategy mentorship.”

After making a splash during the commercial breaks for a major American football game, a global cryptocurrency exchange is reportedly setting its sights on European fútbol. According to a press release, the company will serve as the “exclusive cryptocurrency trading platform sponsor of Qatar 2022” with benefits that include “significant branding exposure both within and outside the tournament’s stadiums.” This sponsorship is the latest of many high-profile partnerships for the platform, including MMA, basketball, ice hockey and other entertainment properties.

And speaking of fútbol, a multinational auction house has reportedly partnered with one of Europe’s premier clubs to debut a collection of NFTs on the auction house’s metaverse platform. According to reports, the collection will feature unique digital artwork inspired by the team’s players, and ownership of an NFT will allow fans entry into exclusive community forums, virtual hangouts and other fan-centric activities. A portion of the proceeds from all NFT sales will be donated to the club’s charitable foundation.

For more information, please refer to the following links:

core/list

Blockchain Supply Chain Initiatives Announced Across Industries

By <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>

According to a recent press release, the “London Bullion Market Association (LBMA) and the World Gold Council (WGC) are collaborating to develop and implement an international system of gold bar integrity, chain of custody and provenance” and will launch a pilot phase that will use blockchain technology to “register and track [gold] bars, capturing the provenance and full transaction history.” In a related announcement, a major global consumer products firm and a major global software firm will pilot a blockchain-based platform to allow the consumer products firm to “trace its global palm oil resources, making sure that the origins of this raw material are transparent and sustainably verified.”

In other supply chain developments, SIMBA Chain, a blockchain development firm, announced plans to pilot a blockchain-based platform to “build a Local Health Alert System to conduct contact tracing and data analysis on-chain, translating real-time public health indicators into future demand signals to develop predictive capabilities for supply chain needs.” According to a press release, the initiative is spearheaded by a “national digital manufacturing and cybersecurity institute and supported by a $6.25 million award from the National Institute of Standards and Technology (NIST), part of the U.S. Department of Commerce.”

In the maritime supply chain, the two major providers of blockchain tracing systems for cargo containers each announced new initiatives. According to reports, the TradeLens platform has been adopted by the Costa Rican customs authority “to review containerized shipment events and transportation documents, including bills of lading.” And the Global Business Shipping Network announced its expansion into Europe with Cargo Release, its blockchain-based tracing system, beginning a pilot with the Port of Rotterdam in the Netherlands.

A recent report predicts that the blockchain supply chain market will “grow from USD 253 million in 2020 to USD 3,272 million by 2026, at a Compound Annual Growth Rate (CAGR) of 53.2% during the forecast period.” Among other things, the report notes the “growing need for supply chain transparency and rising demand for enhanced security of supply chain transactions” as factors driving market growth.

Crypto Exchange Faces Multistate Enforcement Action over Yield Products

By Alex Karambelas<a href="https://www.bakerlaw.com/VeronicaReynolds"></a>

Voyager Digital (Voyager) is facing scrutiny by securities regulators in at least seven states, according to reports this week. Voyager reportedly received orders to show cause and cease and desist orders from regulators in New Jersey, Alabama, Oklahoma, Texas, Kentucky, Vermont and Washington. At the center of the regulatory action is Voyager’s yield-bearing cryptocurrency accounts, known as “Earn Accounts,” offered through its “Earn Program.” According to reports, the state regulators believe that these accounts constitute unregistered securities. The coordinated regulatory action comes just over a month after BlockFi Lending, a cryptocurrency lending platform, reached a $100 million settlement with state and federal regulators for failing to register a similar product as a security.

The New Jersey Bureau of Securities (BOS) was among the state regulators to issue a cease and desist order against Voyager this week. In its order, the BOS alleges that Voyager has accumulated approximately $5 billion in cryptocurrency and digital assets through its Earn Program. The BOS goes on to allege that while payments to Earn Program investors are characterized as “rewards,” Voyager merely uses the term “rewards” as a stand-in for “interest.” The order further alleges that Voyager’s Earn Accounts are not registered with any securities regulatory authority, are not exempt from registration and are not protected by federal programs designed to protect investors. The order, which becomes effective April 29, 2022, will not preclude Voyager from paying interest on existing Earn Accounts or refunding principal to existing Earn Account investors.

In a statement released this week, Voyager stated that it was engaged in ongoing communications with state regulators to understand the state orders and clarify statements it believes are inaccurate. “Voyager is firmly convinced that its Earn Program and the Voyager Earn Accounts are not securities and intends to demonstrate its position and defend it as necessary and appropriate,” the company said.

DOJ and Manhattan DA Bring Enforcement Actions for NFT and Crypto Fraud

By <a href="https://www.bakerlaw.com/JordanRSilversmith">Jordan R. Silversmith</a>

This week the Department of Justice (DOJ) announced charges against two defendants in an NFT fraud and money laundering scheme. According to the criminal complaint, the two individuals face charges of conspiracy to commit wire fraud and conspiracy to commit money laundering in connection with a million-dollar scheme to defraud purchasers of NFTs advertised as “Frosties.” According to a DOJ press release, “[<ins>r]</ins>ather than providing the benefits advertised to Frosties NFT purchasers<ins>[,</ins> <del>[</del>the defendants] transferred the cryptocurrency proceeds of the scheme to various cryptocurrency wallets under their control.” In a quote from the press release, a U.S. attorney said the defendants “promised investors the benefits of the Frosties NFTs, but when it sold out, they pulled the rug out from under the victims, almost immediately shutting down the website and transferring the money.” The two defendants face maximum sentences of 20 years in prison for each count.

In another recent press release, the DOJ announced that a Nevada man admitted and pleaded guilty to laundering funds for BitClub Network, a $722 million fraudulent cryptocurrency scheme. The man pleaded to one count of conspiracy to commit money laundering and one count of aiding in the preparation of a false tax return. The man further admitted to controlling bank accounts associated with BitClub Network and to directing transfers to and from the accounts exceeding $50 million.

In a third enforcement action, the Manhattan district attorney announced the indictment of an individual for “operating a global money laundering business that enabled at least 7 clients, who engaged in a wide-range of criminal activity, to use Bitcoin anonymously to hide and obscure their illegal proceeds.” According to a press release, the individual “converted more than $2.3 million into Bitcoin and more than $380,000 worth of Bitcoin into U.S. dollars, using a rotating set of accomplices … to open bank and cryptocurrency exchange accounts to launder criminal proceeds.” Several of the man’s clients have also been charged for criminal activity uncovered by the district attorney’s investigation.

DeFi Network Hacked for over $600 Million in Cryptocurrencies

By <a href="https://www.bakerlaw.com/JoannaFWasick">Joanna F. Wasick</a>

As announced by developers earlier this week, hackers absconded with 173,600 ETH (currently worth around $585 million) and $25.5 million worth of USDC following a major hack of Ronin, an Ethereum sidechain built to support the play-to-earn game Axie Infinity. Specifically, five of nine validators on the Ronin network were reportedly attacked, allowing the hackers to drain funds from the Ronin bridge, which serves to move funds between blockchains. The hack reportedly occurred on Wednesday, March 23, but wasn’t discovered until the 29th. Per the announcement, the majority of the funds are being held in a specific Ethereum address, which is now flagged. Ronin says it is now working with the government to identify and prosecute these criminals, in what is being called the biggest hack ever in the DeFi space.

<a href="https://www.coindesk.com/tech/2022/03/29/axie-infinitys-ronin-network-suffers-625m-exploit/">Axie Infinity’s Ronin Network Suffers $625M Exploit</a>

Digital Asset Platforms, Blockchain Supply Chain Initiatives Grow; Enforcement Actions Target Crypto Yield Products and Fraud; DeFi Hacked for $600M