Crypto Payment Products and NFT Initiatives Launch; Crypto Market Data Published; DOJ Brings Charges Alleging Cryptocurrency Ponzi Scheme

In this issue:

New Crypto Payment Products Launch, Reports Publish Crypto Market Data

A recent press release announced that MetaMask, the popular Ethereum (ETH) Network crypto wallet provider, will integrate its self-custodial wallets with a major U.S. fintech firm. According to the press release, the integration will allow U.S. MetaMask users to purchase ETH from the fintech firm within the MetaMask wallet application. The press release includes instructions on how to access the new feature using the MetaMask mobile app. In other payments news, according to recent reports, Bermuda-based Jewel Bank has launched a stablecoin, Jewel USD (JUSD), that will be backed 1-to-1 by U.S. dollar reserves. JUSD reportedly will be launched on the Polygon Network.

A major U.S. bank recently published research on the “Dynamics and Demographics of U.S. Household Crypto-Asset Use.” The research reports four key findings: (1) Most crypto users made their first transactions during spikes in crypto-asset prices; (2) Usage of crypto is broader and deeper for men, Asian individuals, and younger individuals with higher incomes; (3) Crypto holdings for most individuals are relatively small, but almost 15 percent of users have net transfers of over one month’s worth of pay to crypto accounts; and (4) Most individuals who transferred money to crypto accounts did so when crypto-asset prices were significantly higher than recent levels, and those with lower incomes likely made purchases at elevated prices relative to higher earners. The research also found that approximately 13 percent of the U.S. population has held cryptocurrency at some point, up from 3 percent prior to 2020.

A major U.S. cryptocurrency exchange recently published its Transparency Report, which seeks to “provide customers with data about requests for their information that [the exchange] receive[s] from government agencies and law enforcement” and “provide some insight into law enforcement and regulatory trends around the world.” Among other things, the report cited: (1) the exchange received 12,320 total law enforcement requests during the reporting period, representing a 66 percent increase from the prior period; (2) 57 percent of requests were from foreign law enforcement agencies; (3) 80 percent of requests were from the U.S., U.K., Germany, and Spain; (4) six countries increased their number of requests by over 100 percent from the prior period; and (5) the overwhelming majority of requests received both globally and in the U.S. were from law enforcement agencies in connection with criminal enforcement matters. Separately, the same exchange announced that its prime broker platform recently completed SOC 1 Type 2 (SOC 1) and SOC 2 Type 2 (SOC 2) examinations.

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NFT Initiatives Launched by Marketplace and Watch Manufacturer

In a recent press release, Magic Eden, a Solana-based nonfungible token (NFT) marketplace, announced the launch of a tool allowing creators to enforce royalties on their NFT collections “in response to recent royalty enforcement changes in the NFT landscape.” According to the press release, “[t]he Open Creator Protocol (OCP) is an open source tool built on top of Solana’s SPL managed-token standard” that allows royalty enforcement for new NFT collections that opt in. The press release further notes that “Magic Eden will enforce royalties on all collections who adopt the protocol and allow creators to ban marketplaces that have not enforced royalties on their collection.”

In other NFT news, according to recent reports, owners of Bored Ape Yacht Club (BAYC) NFTs are now able to display their NFTs on a one-of-a-kind watch made by a well-known U.S. watch manufacturer. Pre-sales of the watches reportedly went live at an invite-only launch party during Art Basel in Miami and are available until December 31.

In a final notable item, a recent survey of gamers found that respondents were five times more interested in games where they could earn bitcoin versus games where they could earn NFTs. The survey found that while some gamers are against NFT integration into games, gamers overall are more likely to play “Play-to-Earn” (P2E) games where they earn bitcoin than they are to play games where they earn NFTs.

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DOJ Brings Charges Against Founders of Alleged Cryptocurrency Ponzi Scheme

A recent press release from the U.S. Department of Justice announced fraud and money laundering charges “in two separate Indictments against the founders and promoters of two cryptocurrency Ponzi schemes known as IcomTech and Forcount (and later known as Weltsys).” According to the press release, “IcomTech and Forcount were both purported cryptocurrency mining and trading companies that promised to earn their respective victim-investors … profits in exchange for their purchase of purported cryptocurrency-related investment products,” but in reality, “both schemes were using [v]ictim funds to pay other [v]ictims, to further promote the schemes, and to enrich themselves.” According to the press release, “IcomTech and Forcount’s promoters siphoned off, in some cases, hundreds of thousands of dollars in [v]ictim funds, which they withdrew as cash, spent on promotional expenses for the schemes, and used for personal expenditures such as luxury goods and real estate.”

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