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Cryptocurrency News: Leading the crypto news docket on Tuesday, a creator of metaverse avatars raised $56 million from a16z and celebrity investors. Meanwhile, investors turned more bullish on Ethereum than Bitcoin, at least for the time being. And in case you missed it, the FDIC sent cease-and-desist letters to five crypto companies.
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Bitcoin rebounded and is hovering just below $21,500 Tuesday afternoon after briefly falling below $21,000 yesterday. But BTC is still at it’s lowest level since the end of July. The world’s largest cryptocurrency tumbled all last week after nearly hitting $25,000 on July’s better-than-expected inflation report from earlier this month. But missed retail sales, Federal Reserve plans to continue rate hikes and central bank discussions over crypto risk and regulation wiped out those gains. Bitcoin has been trending higher. The currency gained 16.8% in July, it’s best monthly performance since October 2021. But it remains far below its November peak and the latest dips continue to cut into its rebound.
Ethereum recovered to $1,660 by market close Tuesday. Ethereum fell from $1,643 over the weekend but has steadily recovered from Monday’s low of $1,565 . ETH climbed last week and hit $2,000 – it’s highest level since late May – after successfully transitioning its Goerli network to proof-of-stake earlier this month. Goerli marked the final test network before the official merge to a PoS blockchain, which was expedited to September 15. But the price of Ethereum has fallen along with the recent dip in the broader crypto markets.
Scroll down for more cryptocurrency news and price updates.
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Ready Player Me, a creator of avatars for the metaverse, has raised $56 million in a funding round led by venture capital firm Andreessen Horowitz (a16z), Kevin Hart and social media influencers the D’Amelio family.
Ready Player Me develops personalized, 3-D avatars for use in multiple virtual worlds and video games. The company’s goal is to connect the metaverse through avatars, where players have one individual identity across all of their various forms of online entertainment. Kind of like in Steven Spielberg’s movie, Ready Player One.
a16z’ s GAMES FUND ONE and a16z crypto both participated in the round. Other participants include Roblox co-founder David Baszucki, Twitch co-founder Robin Chan, as well as Kevin Hart’s Hartbeat Ventures and the D’Amelio family.
Digital asset investments saw minor outflows totaling $9 million last week, according to CoinShares weekly fund flows report. There was little investor activity as volume only hit $1 billion, which is 55% off the average and second lowest for this year.
Investors have a slightly bearish view of bitcoin, which had its third consecutive week of outflows totaling $15 million. Meanwhile, things have turned around for Ethereum, which had $3 million poured into its investment products last week. Ethereum had $459 million in outflows from the beginning of the year through mid-June. But since that point, ETH has had 9 straight weeks of inflows totaling $162 million with its merge to a proof-of-stake consensus drawing closer.
On Friday, the Federal Deposit Insurance Commission sent cease-and-desist letters to five crypto companies regarding misleading statements about FDIC deposit insurance.
The FDIC says the companies falsely stated or suggested that certain crypto products and stocks held in brokerage accounts were FDIC-insured on their websites and social media feeds. The companies included FTX US, Cryptonews.com, SmartAsset.com, Cryptosec.info and FDICCrypto.com.
It’s illegal to imply uninsured products have FDIC protection as well as misrepresent the extent and manner of deposit insurance, the commission says. The FDI Act also prohibits companies from implying their products are insured by using FDIC in company names or advertising.
Following the letters, FTX CEO Sam Bankman-Fried tweeted, “Clear communication is really important; sorry! FTX does not have FDIC insurance (and we’ve never said so on website etc.); banks we work with do. We never meant otherwise, and we apologize if anyone misinterpreted it.”
Millions of dollars of Bored Ape Yacht Club, CryptoPunks and CloneX NFTs risk liquidation as BendDAO faces a debt crisis. BendDAO is a peer-to-peer lending service that allows users to borrow Ethereum against their non-fungible tokens.
Loans are typically 30% to 40% of a NFT collection’s floor price, or the minimum purchase price on the open market, and customers put up their NFTs as collateral. BendDAO calculates the health of the loan based on the floor price of an NFT collection and how much is still owed. If the floor price falls too close to the amount of the loan, it encroaches on a liquidation threshold and BendDAO will auction the NFT to recoup the debt.
BendDAO will automatically put collateralized NFTs up for auction if their “health factor” falls below 1.2, and could liquidate them completely if it falls below 1. In that scenario, borrowers have 48 hours to repay their loans or risk losing their NFTs. And it’s starting to play out.
The price of Bored Ape NFTs fell below 70 ETH in August from about 153 in May. Some crypto analysts estimate there are roughly $55 million worth of NFTs at risk of liquidation. Currently, there are dozens of Bored Apes, Mutant Apes and CloneX NFTs that have health factors under 1.2, according to BendDAO’s auction page. But a majority that defaulted have no bids. As things stand, NFT borrowers will need to pay 100% interest on their loaned ETH. And BendDAO is deciding on changing its terms to incentivize bids and make it easier to sell the defaulted NFTs.
Ethermine, the largest ethereum mining pool, will phase out operations with the company’s transition to a proof-of-stake consensus. The pool announced that it will no longer be possible to mine ethereum once the merge is completed on September 15 and the pool will switch to withdrawal-only mode to payout miners. Bitfly, which operates Ethermine, will not support any proof-of-work fork for the ethereum merge and recommends miners join another one of its pools, according to the company announcement.
FTX thrived during the onset of the crypto winter while so many projects are still struggling to survive. The cryptocurrency exchange’s revenue skyrocketed more than 1,000% in 2021, according to internal financial documents obtained by CNBC. FTX’s revenue grew to $1.02 billion last year from $89 million in 2020, and net income grew to $388 million from $17 million during the period.
FTX recorded $270 million in revenue for the first quarter of 2022 and is on track to hit $1.1 billion for the year. CEO Sam Bankman-Fried confirmed the numbers on Twitter, saying they’re in the “correct ballpark.”
Meanwhile, other crypto exchanges have faced heavy losses from the falling price of bitcoin and other cryptocurrencies. Coinbase recently posted a $1.1 billion loss for its second quarter, compared to $1.6 billion in net income the year prior.
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