$4T State Street Launches Crypto ETFs

FBI: $5.6B Crypto Fraud | Strange Cardano Incident

Marco Manoppo & Karon Pangestu
September 11, 2024

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Good Morning.

I’ll be in Singapore next week, just like 98.3% of the people in our space. At first, I thought we were in a stagnating, maybe even bearish-leaning market environment; but I’m clearly off the mark as the Marquee club in MBS is booked for 5 straight days.

In Today's Email:

What Matters: State Street enters the arena 🤝
Case Study: Strange incident on Cardano 🔍️
Governance & Features: Particle’s universal accounts 🌍️

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Narratives: Fantom ecosystem might see a resurgance with Andre’s latest blog post.

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WHAT MATTERS

State Street's and Galaxy's Crypto ETFs Go Live

Galaxy

State of play: State Street Global Advisors and Galaxy Digital have partnered to launch three new actively managed ETFs offering exposure to both blockchain companies and crypto tokens through futures and other ETFs.

In July, both firms sought SEC approval for the ETFs, aiming to offer exposure beyond spot bitcoin ETFs.
Galaxy Digital had previously launched a spot bitcoin ETF with Invesco.
Anna Paglia, the CBO of State Street believes digital assets and blockchain will transform financial markets.
The funds began trading on Tuesday under the ticker symbols DECO, HECO, and TEKX.
DECO and HECO provide exposure to crypto via ETFs and futures, with HECO additionally managing volatility using options.

What’s next: The launch of these ETFs will likely intensify competition in the digital asset investment space, potentially driving further product development and lower fees for investors.

Why it matters: This is State Street’s first significant move into the crypto markets. The firm manages $4T in assets.

Our take: BTC and ETH will continue to trade differently compared to the rest of the altcoin markets as we have more of these regulated products.

For builders and investors: The bar for the operational skills necessary to manage altcoin liquidity and market dynamics are much higher these days, and will only continue to rise in future cycles.

CASE STUDY

Strange Incident On Cardano

Source: Laurence

Credits to Laurence for the original tweet

Laurence reports a strange incident on Cardano, highlighting @Avg__Enjoyer’s findings on an issue involving the Cardano network, which led to an investigation into unusual activity.

The report outlines a transaction involving an SOL-to-ADA bridge via SimpleSwap that revealed odd behavior on the Cardano blockchain, specifically involving the address vx7j28.

Transaction Details:

A freshly created Cardano wallet (α) received ADA after a user bridged SOL to ADA using SimpleSwap.
The user transferred ADA from wallet α to a Vespr wallet (β), but the transaction was delayed, possibly due to network stress.
Two minutes later, vx7j28, an enterprise-type address flagged as typically used by exchanges, sent ADA to wallet α. This address held ~70.61M ADA at the time.

The ADA received by wallet α from vx7j28 was bridged back to Solana, making it seem like a "doubler" where ADA was received twice. This prompted the investigation, as it appeared unusual.

The vx7j28 address has been highly active, with over 10,000 transactions in 12 days, handling nine figures in USD.
It appears on Cardano's rich list and has received substantial amounts from the largest addresses on the network.
SimpleSwap denied ownership of vx7j28, but the address's behavior is suspicious. It doesn't act like a spam contract but sends real ADA value.

Laurence speculates that either a reorg or network stress may have caused a re-honoring of a bridge transaction, leading to this odd edge case.

There's also a possibility of it being a whale's random act, though it’s unlikely given the accumulation of over $1M in the last two days.
Multiple parties, including IOG and SimpleSwap, were involved, but no clear resolution was reached.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

FBI: Crypto Fraud Losses Surge 45% in 2023

FBI Cryptocurrency Fraud Report

The FBI reported a 45% increase in crypto-related losses in 2023, totaling $5.6B from over 69,000 complaints.

Crypto made up 10% of financial fraud complaints and half of the total losses.
Older individuals (60+) filed the most complaints, with investment scams being the most common.
The FBI highlighted that the promotion of crypto as an investment has made consumers, especially those unfamiliar with the technology, vulnerable to fraud.
The agency also warned of rising fraud linked to crypto kiosks and labor trafficking scams tied to false job ads.
Additionally, the CFTC alerted about scams on dating and messaging apps.

FEATURES & GOVERNANCE UPDATE

Particle Network’s Universal Accounts Goes Live

Particle Network has announced the launch of Universal Accounts, a new product aimed at simplifying the Web3 experience for users.

Universal Accounts will function as a single address that allows users to manage all their assets across different blockchains.
Universal Accounts eliminates the need to manage multiple private keys and simplifies the process of interacting with dApps.
Universal Accounts will allow users to send, receive, and convert cryptocurrencies across different blockchains from a single location.
Particle Network is launching Universal Accounts in two phases: Early Access and Public Beta.
The Early Access phase started on September 9th, 2024.

Other notable feature updates:

Sei onboarded fastUSD.
Euler has launched its v2.
Solayer now supports bbSOL.
Arbitrum has launched Stylus on mainnet.
Polygon has upgraded from MATIC to POL.
GMX has introduced GMX Liquidity Vaults (GLV).

QUICK BITES

Paxos sets to expand to Arbitrum.
Nansen acquires staking firm StakeWithUs.
Polygon and Fabric unveil custom zK chips.
tZERO secures approval to custody digital assets.
Indodax faces a $15M loss from an apparent exploit.
Ethereum stablecoin volume hits record $1.46 trillion.
EigenLayer introduces the EigenLayer Security Model.
Paypal and Venmo integrate ENS for crypto payments.
SEC's crypto fines surpass $7.4B after Terraform penalty.
Harris' winning odds rose on Polymarket after the debate.
Caroline Ellison’s attorneys claim jail time is unnecessary.
Aave DAO proposes to add cbBTC on Ethereum and Base on V3.

NOTEWORTHY READS & MEME

0xLouisT’s read on the deaf ETH L2 debate.
Our Network’s read on the Polygon mega issue.
Andre Cronje’s read on credit scores, DeFi, and Sonic.

Calling this now: Kamala is going to open the debate by saying that L2s are parasitic to the L1 and Trump is going to counter that L2s extend the utility of ETH as money and the roadmap is working and the moderator is going to be like hey guys what the fuck is going on right now
— Gwart (@GwartyGwart)
9:56 PM • Sep 10, 2024

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.