Blockchain Bites: Dorsey Challenges Coinbase, Nasdaq Lists Diginex, Ethereum Miners Profit

The Australian government is investing big in modern technology, Nasdaq saw its first crypto exchange operator listing and revenues are surging for Ethereum miners amid increased network activity. 

Top shelf

Australia modernizes
Australia will commit A$800 million (US$575 million) to invest in digital technologies as part of its coronavirus recovery plan, Prime Minister Scott Morrison announced Tuesday. The federal plan will see US$256.6 million for a digital identity solution, $419.9 million to fully implement the Modernising Business Registers (MBR) program, $22.2 million for small businesses training to utilize digital technologies and two blockchain pilot programs totalling $6.9 million. “The Plan supports Australia’s economic recovery by removing out-dated regulatory barriers, boosting the capability of small businesses and backs the uptake of technology across the economy,” Morrison said in the announcement. 

Nasdaq launch
Blockchain services firm Diginex has become the first crypto exchange operator to list on Nasdaq. The stock went live Thursday morning under the EQOS ticker symbol, a nod to the firm’s EQUOS.io trading platform. CoinDesk’s Nathan DiCamillo reports Diginex’s back-door listing came through a merger with a special-purpose acquisition company (SPAC). Diginex CEO Richard Byworth said he expects a mix of global retail and institutional investors to buy shares. Over time, he expects the majority of Diginex shareholders to be U.S. investors because of the Nasdaq listing.

Dorsey responds
Twitter CEO Jack Dorsey tweeted his disapproval of Coinbase CEO Brian Armstrong’s mission statement to keep his company free and clear of politics. Dorsey argued that by the very act of being a crypto exchange, Coinbase was always already engaged in politics. “Bitcoin (aka ‘crypto’) is direct activism against an unverifiable and exclusionary financial system which negatively affects so much of our society. Important to at least acknowledge and connect the related societal issues your customers face daily. This leaves people behind,” Dorsey tweeted. Armstrong made waves this week – in and out of crypto – when saying Coinbase, and its employees, should keep work and activism separate. 

Election predictions
Putting stake to their claims, many crypto-political gamblers have cast their vote predicting who might win the contentious U.S. presidential election. CoinDesk markets editor Lawrence Lewitinn looked at the data following this week’s first presidential debate and found many are betting incumbent President Donald Trump will lose in November. While bettors on decentralized betting platforms like Augur and futures markets on FTX aren’t as bullish on the challenger, former Vice President Joe Biden, he does have the odds. “Thus what’s true at the time of publication can change on a dime. It is now fewer than five weeks until Election Day. Buckle up!” Lewitinn warns. 

Mining profits
HIVE Blockchain has reported its best-ever quarter, as the mining firm raked in record fees from the frenzied activity in decentralized finance (DeFi) over the summer. The Toronto-listed mining company released its unaudited results Thursday, saying it mined a total of 32,000 ether (ETH) and 121,000 ethereum classic (ETC) in the second fiscal quarter ending Sept. 30. Per CoinDesk’s price data, that comes to nearly $11.8 million for mining ether, and a further $664,000 for ethereum classic – approximately $12.4 million at time of writing. The figures represent a near 30% increase from the 25,000 ETH that HIVE mined in the first quarter and a 50% increase in the same quarter in 2019.

Stealth launch
In the latest effort to smooth a path for buttoned-up investors, Talos, an institutional-grade conduit to the crypto ecosystem, is emerging from stealth mode to serve brokers, custodians, exchanges and over-the-counter (OTC) trading desks. The platform started out in 2018 and is backed by an impressive list of investors including Autonomous Partners, Castle Island Ventures, Coinbase Ventures and Initialized Capital. Over the past year or so, Talos has been quietly onboarding a core group of capital market participants, so that the platform can make its debut in a revenue-generating state.

Quick bites

• Thirst Traps Explode on NFT Platforms, With Predictably Controversial Results (Leigh Cuen/CoinDesk)
• A Black Hole in Uniswap V2’s Front-End Router Is Draining the Value of Tokens (Alessandro Mario Lagana Toschi/Medium)
• Chainlink Founder Explains How He's Making $1bn of WBTC More Secure (Robert Stevens/Decrypt)
• Nine (Bullish) Bitcoin Predictions for Final Months of (Awful) 2020 (First Mover/CoinDesk)
• Dapper’s NBA Top Shot Launches Out of Beta With Samsung Galaxy Store Deal (Jaspreet Kalra/CoinDesk)

At stake

SEC action
Wednesday, a U.S. judge ruled Kik’s $100 million token raise was in violation of securities laws. This is essentially the denouement to a year’s long battle between the Canadian messaging app and the U.S. Securities and Exchange Commission (SEC). Though Kik will have an opportunity to appeal. 

Responding to the SEC’s motion to summary judgment – where the regulator can ask to conclude a trial based on “undisputed material facts,” rather than engaging in a trial – U.S. District Judge Alvin Hellerstein found Kik’s “token distribution event” (TDE) satisfied the three prongs of the Howey Test. 

CoinDesk’s Nikhilesh De reports that initial coin offerings (ICOs) and token sales have been treated as unregistered securities sales for the most part by the SEC. 

Kik became a champion for crypto freedoms when challenging the SEC’s claims that its kin ICO – which the company pursued in lieu of VC backing – was an unregistered securities offering. The firm’s CEO Ted Livingston took a gamble, selling off his messaging business in 2019 and going all in on kin.

“We are getting sued by the SEC. We are going to go to court to fight them. We believe they are wrong,” Livingston told CoinDesk in 2019. Several times, and in different ways, he asserted: “It’s not that we did something wrong. It’s that we did it first.”

In a statement, Livingston said he was “disappointed in this ruling,” and that the company is considering its options, including a potential appeal.

Preston Byrne, a CoinDesk columnist and Anderson Kill lawyer, tweeted: “Tl;dr the court shredded Kik. Don’t f*** around with tokens in America.”

Notably, in a separate action, the SEC has ordered Salt Lending to offer investors refunds for its 2017 ICO. Salt has agreed to settle the action and will pay a $250,000 civil penalty to the Commission in the next 10 days.

Market intel

Crash for cash
Bitcoin faced selling pressure in September as the U.S. dollar rose against major currencies for the first time in six months. The cryptocurrency fell by over 7% over the period – the biggest monthly percentage decline since March, according to CoinDesk’s Bitcoin Price Index, when prices fell by nearly 25% as the coronavirus-induced crash in the global equity markets triggered a global dash for cash, sending the dollar higher. Bitcoin’s latest monthly decline is again accompanied by an uptick in the greenback.

Eth revenues
Ethereum miners earned over six times more in fees compared to those working on Bitcoin in September. Glassnode data shows Ethereum’s total transaction fees stood at an all-time high of $166 million for the month – far more than the $26 million taken in Bitcoin fees. Fee revenue on Ethereum first outpaced Bitcoin’s in June, the same month decentralized lender Compound released its governance token and kick-started the DeFi mania, CoinDesk’s Paddy Baker reports. 

Op-ed

Common cause
Matt Luongo, founder of Thesis, writes that Bitcoiners who stack sats and people who use decentralized finance share common cause. “Bitcoiners who stack sats should take a hard look at the decentralized finance (DeFi) platforms seeing explosive growth on Ethereum. While the optics may call to mind the wild speculation of 2017, the truth is that much of the growth in DeFi is driven by the same sound money principles as stacking,” he writes. 

Internet 2030

Amy Webb, a quantitative futurist and founder of the strategic foresight firm Future Today Institute, thinks the world can, indeed, get worse. In an interview with CoinDesk, as part of the Internet 2030 series, she lays out her vision for the world where big tech only gets bigger. The conversation has been excerpted below. 

Do you see a genuine way out through distributed technologies that may give people control over their own data? 

I worry about people who never update their passwords – should we entrust them to manage sensitive data? There are complex questions about data hygiene, data governance, compliance, risk. Distributed tech solutions solve some of our problems, but not all.

Few people have an understanding of how data are collected, by whom, for what purpose. There are lots of organizations proposing some kind of “ownership” model, where we individually would “own” our data. What does that mean? 

I want consumers to be much better aware of what data they are generating – that includes the digital emissions they’re releasing without realizing it. Think of all the metadata being generated by our connected devices, the ambient sounds in our homes and offices, our movements and gestures. All of those digital emissions, plus the PIIs collected now by contract tracing apps and biometric scanning systems – I mean, we’re swimming in data. 

What might the cultural or political effects be of an ever-greater consolidated and extractive web? 

We talk about privacy a lot, and journalists certainly write a lot of stories about data sharing, privacy and consolidation within the tech sector. But when it comes to everyday consumers and business leaders, it just doesn’t seem like these are priority issues. We’ll feel the effects when there is litigation, new policy or sweeping policy enacted.

Have an idea for what the future of the internet will look like, reach out to daniel@coindesk.com.

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