Galaxy Digital Sells Stake in Block.one

Galaxy Digital, founded by former hedge fund manager Michael Novogratz, has received $71.2 million after selling its shares in Block.one, according to reports on May 21st.

According to the announcement, Galaxy Digital accepted a tender offer on its ordinary shares in Block.one, closing the transaction on Monday.

Galaxy Digital has reported the sale of its shares, claiming it generated a 123% return on its realized investment and following the transaction, its remaining shares in Block.one “will no longer maintain a material investment position.

Galaxy Digital and Block.one had partnered up in a joint venture in 2018 to invest $325 million into the EOS ecosystem. Block.one is the main development company behind the EOS protocol.

The crypto merchant bank received $71.2 million in the deal, relinquishing its material investor position. Such labelling usually means a position of more than $100 million. However, the company stated that it takes multiple factors into account to determine whether a position is material.

Michael Novogratz, CEO and founder of Galaxy Digital, has stated that the acceptance of the tender offer was a decision made in order to rebalance and appropriately diversify its portfolio as a result of the shares substantially outperforming other areas. He further added that this development does not mean the end to Galaxy’s partnership with Block.one.

According to the Novogratz, both companies will continue to work on other projects such as the Galaxy EOS VC Fund, which primarily backs startups that are developing applications on the EOS blockchain network.

We continue to work closely with Block.one as a key partner across a number of our business lines, including the Galaxy EOS VC Fund, which invests in companies building on the EOS.IO protocol, and remain excited about the EOS.IO protocol,” he said in a statement.

Meanhwile, in July of last year, Block.one received financing from a number of big-name investors such as PayPal co-founder Peter Thiel and Bitmain co-founder Jihan Wu.

Galaxy Digital’s exit comes as part of Block.one’s buyback program of 10 percent of its company shares.

According to a report from Bloomberg, Block.one’s shares repurchase offer is valued at around $2.3 billion, up nearly 66 times from what it was valued at back in 2017 at the funding round. Currently, the repurchase price for the buyback is approximately $1,500 per share, whereas during the 2017 funding round it was offered at $22.5 per share.

The report further revealed that Block.one had about $3 billion in assets including cash and investments at the end of February, according to data sent by Block.one sent to shareholders and the news outlet. In addition to that, Block.one owns as many as 140,000 Bitcoin (BTC).

SEC Delays VanEck ETF Proposal Seeking Public Comments

The U.S. Securities and Exchange Commission (SEC) has again postponed making a decision on the VanEck, SolidX, and Cboe joint proposal bitcoin exchange-traded fund (ETF) proposal.

The proposal was filed in January and was delayed in March. In a new document filed Monday, the SEC stated that it was in the process of establishing proceedings on whether to approve or disapprove a proposed rule change that would allow the VanEck SolidX Bitcoin Trust to issue and list its shares on the New York Stock Exchange (NYSE).

Currently, the commission is seeking more comments from public on the proposed ETF as they have received only 25 comments so far. The deadline to submit comments is due 21 days from when the order is published and rebuttal to the comments are due 35 days after the publication.

Following this, the new deadline for the SEC to make its decision has been set up for August 19th , and it could be delayed one more time for a final deadline of October 18th, according to attorney Jake Chervinsky.

Originally, the bitcoin ETF proposal was first filed with the SEC last year, however due to the U.S. government shutdown it was withdrawn in January this year. VanEck/SolidX refiled the proposal later that month, only to receive a delay notice for March 29th. Similarly happened to the proposal filed by Bitwise Asset Management with NYSE Arca.

The commission has postponed making any decision on the two proposals so far this year, with the latest delay on Bitwise’s proposal coming on May 14th. Following this news, the VanEck/SolidX proposal joins the long list of failed attempts to get an ETF approved by the SEC.

Meanwhile, the commission has issued several extensions and rejections on ETF proposals, citing concerns that the proposals did not meet and satisfy SEC standards to prevent fraud, market manipulation, financial crime, liquidity amongst others.

Following today’s announcement, the SEC has reiterated these concerns:

“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,” and “to protect investors and the public interest.”

The SEC’s repeated delays in sanctioning a bitcoin ETF may reflect its lack of confidence in the maturity of the crypto market. As such, the regulator has turned down at least 10 ETF proposals to date and it has yet to approve one.

In response to the repeated delays, VanEck digital asset strategy director Gabor Gurbacs has stated that “we continue the hard work towards better-regulated, safer and more liquid digital assets markets. Bitcoin is too big to ignore.”

Blockstream Launches Security Token Platform

Blockchain infrastructure firm Blockstream has announced the launch of its security token platform – called Liquid Securities. The news was announced in a press release at CoinDesk’s Consensus conference 2019 on May 15th.

According to the release, the new Liquid Securities platform is presented as a solution for businesses to issue security tokens on the Liquid Network. It is the first product Blockstream has launched alongside with its Liquid Network sidechain.

Launched in October 2018, the Liquid sidechain is an auxiliary network built on Bitcoin, with the goal to enable low-fee, low-latency transfers between exchanges as well as offer better built-in privacy.  The announcement explains that the Liquid Network is a settlement network connecting cryptocurrency exchanges, market makers, brokers, and other financial institutions.

Blockstream has always promoted the potential for digital asset issuance on the sidechain, a possibility which has been now granted as Liquid Securities is joined by multi-blockchain issuance platform TokenSoft, investment platform BnkToTheFuture, United States-based bank Zenus Bank and game development studio Pixelmatic in a collaboration.

Blockstream Chief Security Officer Samson Mow has stated at the press conference that whilst businesses are willing to issue tokenized securities, he strongly believes that platforms such as Ethereum are not the right choice due to their scalability, privacy and reliability limitations. He further claimed that Blockstream’s platform would be better suited for such uses:

Now, with the launch of Liquid Securities, businesses can quickly issue Liquid-based security tokens with the click of a button, and establish sophisticated rulesets to conform to their regulatory requirements with no engineering experience required.”

The Liquid Securities platform will provide users with a graphical user interface where they can set the legislative criteria that their tokens must comply. This information is then integrated into smart contracts on the Liquid Network. In other words, token issuers don’t necessarily need any technical or programming know-how to issue a security token on Liquid Securities.

The platform comes with a variety of issuer controls for tailoring a token to each user’s specific use case. They can, for instance, choose to manage tokens through Liquid Securities’ API or outsource this job to one of Liquid’s partners if it’s too difficult.

This is big for Liquid, to move from something that is used by exchanges toward a more advanced financial network,” Allan Piscitello – director of product management at Blockstream – stated in an interview.

Piscitello further added that one of the benefits of Liquid Securities includes having an asset that is both verifiable and auditable but also private. When issuing a token on Liquid, a company can keep specific details (like supply, allocation, etc.) private whilst allowing a trusted third party to audit operations. This means that enterprises don’t have to trade off privacy for transparency to stay compliant with regulations, all while leveraging “one of the most secure blockchain networks in the world,” according to Piscitello.

Microsoft Unveils Development of ION – A Decentralized Identity Network

Microsoft revealed that it is building a decentralized identity (DID) network on top of the Bitcoin network.

Announced in a blog post, the layer known as the Identity Overlay Network (ION) is based on a set of open standards developed in collaboration with the Decentralized Identity Foundation. Microsoft is one of the partners of the Decentralized Identity Foundation.

The project aims to deal with how underlying networks communicate to each other. The goal is to make user names obsolete. Instead of logging into Facebook, email or any other application with a username, users can use a digital decentralized ID (DID) instead. In this case, ION handles the decentralized identifiers, which control the ability to prove the user owns the keys to this data.

Individual ION nodes on the secondary network will be responsible for keeping track of these DIDs and inscribing them into the Bitcoin blockchain for attestation.

In explaining the rationale behind ION, the blog post added:

“We believe every person needs a decentralized, digital identity they own and control, backed by self-owned identifiers that enable secure, privacy preserving interactions. This self-owned identity must seamlessly integrate into their lives and put them at the center of everything they do in the digital world.”

Microsoft claims its approach also deals with the throughput issues, as public blockchains would have speed issues in a world where DIDs being used. The company says its network layer will be able to achieve tens of thousands of operations per second.

Microsoft aims to create an ecosystem where “billions of people and countless devices can securely interact over an interoperable system built on standards and open-source components.”

To that scope, Microsoft wants to cooperate with open-source contributors so ION can publicly launch on the Bitcoin mainnet in the coming months. While Microsoft has been behind the development, it’s open source and anyone can run a node.

According to the post, several companies have shown interest in running ION nodes, including Bitcoin hardware and security firm Casa and internet security company Cloudflare.

ION is not Microsoft’s first blockchain initiative. Earlier this month, it released a new Azure Blockchain Development Kit for the Ethereum blockchain, with Starbucks implementing this service to track coffee production.

HTC Will Release Mobile Device Capable of Running a Bitcoin Node

Taiwanese electronics company, HTC, has revealed recently that it will be releasing a new smartphone – The EXODUS 1s – that will include advanced blockchain capabilities. In addition to built-in key storage and wallets, the new smartphone will include a full Bitcoin node, allowing users to directly interact with the largest blockchain network just by using their phones.

Following this news, HTC marks the biggest step yet seeking to integrate mobile technology with blockchain technology and cryptocurrency.

According to the press release, Phil Chen – HTC’s first Decentralized Chief Officer – has explained that the full node capabilities integrated within the new phone will allow app developers new opportunities to connect directly to decentralized networks, which are more resistant to censorship and capable of giving users more control and privacy over their money and their identity.

Chen has stated that the new phone had been designed with the goal “empower the user.” Respectively, the EXODUS 1s will be the first smartphone to ever to have full node capabilities. He further noted:

 “We gave users the ability to own their own keys, and now we’ve gone one step further to allow users to run their own full node. We are democratizing access to the technology for a free world. Full nodes are the most important ingredient in the resilience of the Bitcoin network and we have lowered the barrier to entry for any person to run a node.

Running a full node is the only way Bitcoin (BTC) can be used in a trustless way. This way one can know for sure that all the rules of BTC are being followed; for instance, that no BTC are spent not belonging to the owner, that no coins were spent twice etc. Full nodes are currently the most private way to use BTC as well as the most secure as they do not suffer from many attacks that affect lightweight wallets.

At the moment, there are only about 9,000 active bitcoin full nodes verifying blockchain transactions. According to Chen, each node includes the entire bitcoin history going back to the first transaction and requires as much as 200 gigabytes of storage, increasing at a rate of about 60 gigabytes a year. The new device will support a lighter version of the full node that requires just 10 gigabytes of storage, however each phone will be equipped with an extra SD card designed to support complete full-node services. Notably, the full nodes do not enable bitcoin mining, however the company said it may happen in the future.

Similarly to the Exodus 1, the new phone comes with a built-in hardware wallet, known as the Zion Vault, which stores cryptocurrency keys in a trusted execution environment, thereby allowing users to easily own and spend cryptocurrencies without exposing them to malicious content.

In contrast to the original Exodus, the new version of the phone will enable developers to build a wide range of decentralized applications on top of Zion, which supports Bitcoin, Ether and Litecoin, using the newly open-sourced developer kit.

In addition to that, the 1s will include Qwant – an internet search engine that doesn’t track searches or filter results, and like its predecessor, it will offer a social key-recovery system that doesn’t rely on a bank or other central authority.

The new device is expected to launch by third quarter, and whilst it has yet to be confirmed, the price will range between $250- $300. Customers can purchase the phone with Bitcoin, Ether, Litecoin or other supported currencies.