Treasury Sanctions Crypto Tool Laundering For North Koreans | BlackRock Launches Bitcoin Private Trust

CRYPTO MIXER USED BY NORTH KOREAN HACKERS SLAPPED WITH SANCTIONS

On Monday, the U.S. Treasury forbade Americans to have any dealings with crypto mixer Tornado Cash, an Ethereum-blockchain platform that attempts to obscure the source of digital assets by pooling users’ funds and then allowing them to withdraw a randomized selection equal to their deposit. The Treasury stated that Tornado Cash facilitated the laundering of $455 million worth of digital assets stolen by Lazarus Group, North Korea’s state-sponsored hacking organization.

Tools like Tornado Cash are championed by privacy advocates, but they can also be used for evasive purposes such as money laundering. In this case it is not much different than the use of virtual private networks (VPNs) or The Onion Router (TOR), a privacy-enhancing relay layer on top of the internet that was actually created by the U.S. government. The dual nature of these technologies makes it difficult for law enforcement to find a balance between competing priorities of privacy and security.   

COINBASE’S STRUGGLES CONTINUE  

The largest crypto exchange in the U.S. on Tuesday reported a second-quarter net loss of just under $1.1 billion, or $4.98 a share, as sales fell more than had been expected and the company’s stock tumbled 6%. Coinbase recorded $802.6 million in revenue last quarter. That’s down 61% from the corresponding 2021 period and 35% less than the first quarter. Analysts had predicted revenue of $868.4 million and an adjusted per share loss only about half as severe as reported.

The beleaguered exchange has been hit hard in recent months by a confluence of declining cryptocurrency prices, regulatory pushback and investor uncertainty that has dragged its stock price down more than 55% since late March.

Source: Forbes Digital Assets, powered by Nomics.  Prices as of 4:00 p.m. on August 11, 2022.

BLACKROCK GIVES ANOTHER NOD OF CONFIDENCE TO BITCOIN

On Thursday, BlackRock launched a spot bitcoin private trust for U.S.-based institutional investors. The first for the world’s largest asset manager, the trust seeks to track the performance of the largest cryptocurrency by market value. “Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in a statement. Just last week, the company announced a partnership with crypto exchange Coinbase.

BLOCKCHAIN 50 SPOTLIGHT

Stone Ridge Holdings Group: In 2017, the financial firm that already owned a $13 billion asset manager, launched New York Digital Investment Group (NYDIG), a subsidiary aimed at helping institutional investors buy and hold crypto. Stone Ridge has since acquired about 20,000 bitcoin (worth $740 million at current prices) and in December NYDIG raised $1 billion from nine venture capitalists, including WestCap and Bessemer Venture Partners at a $7 billion valuation to further develop NYDIG’s institutional-grade bitcoin platform. Institutional clients include JPMorgan, Wells Fargo and Morgan Stanley; last year it cemented partnerships with banking software giants FIS and Fiserv.  

ELSEWHERE

Ethereum Just Pulled Off Its Final Test Run Ahead Of One Of The Most Important Events In Crypto [CNBC]

Ripple Labs Interested In Bankrupt Crypto Lender Celsius’ Assets [Reuters]

Regulators Weigh Asking Hedge Funds To Report Crypto Exposure [The Wall Street Journal] 

Michael del Castillo
Senior Editor 
Forbes Digital Assets

Nina Bambysheva
Reporter
Forbes Money & Markets

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