Blockchain Bites: Hedge Fund Down, Banana Bets and the Twitter Hack Fallout

Another crypto hedge fund is winding down, Huobi launched a new unit to invest in DeFi and the Twitter hacker is reportedly a bitcoin millionaire.

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Fund Down
Neural Capital, a crypto hedge fund, has closed, having lost half its money since launching in 2017. Three people familiar with the matter said the fund’s crypto-assets were liquidated in December and the fund is in the process of refunding leftover money to investors, a process taking longer than expected. At its height, Neural Capital managed over $13 million from over 40 investors, including Greylock partner Joshua Elman and Expa partner Hooman Radfar. It joins several funds founded in 2017 that have announced closures in 2020, including Adaptive Capital, Prime Factor Capital and Tetras Capital.

Banana Fund
U.S. prosecutors are seeking to return $6.5 million in bitcoin to victims of the “Banana.Fund” crowdfunding project, which the government described in court papers as a Ponzi scheme. In a forfeiture suit against the cryptocurrency account storing the funds, prosecutors allege Banana.Fund’s unnamed administrator admitted to investors his project had flopped, promised to return $1.7 million to them and then failed to do so. The operator then pivoted to a laundering and refund scheme that ultimately resulted in the U.S. Secret Service’s (USSS) seizure of 482 bitcoin (BTC) and 1,721,868 tether (USDT), court documents show.

Twitter Hacker
The 17-year-old thought to be behind the recent Twitter hack reportedly owns more than $3 million worth of bitcoin. The alleged hacker, Graham Ivan Clark, stands accused of 17 counts of communications fraud, 11 counts of fraudulent use of personal information, one count of breaking into an electronic device and another for organized fraud. His bail was set at $725,000. Federal officials are also charging Nima Fazeli and Mason John Sheppard with aiding in the “intentional access of a protected computer” and conspiracy to commit wire fraud and money laundering, according to criminal complaints published Friday.

DeFi Lab
Crypto exchange operator Huobi Group is forming a new fund to invest tens of millions of dollars of its own capital in the decentralized finance (DeFi) space. Huobi Group said in an announcement Monday it has launched a new business unit called Huobi DeFi Labs to manage the fund. The group will focus on research, investment and incubation of DeFi-related projects, and has brought on former banker Sharlyn Wu to lead the initiative.

Hacker Effects
A Spanish cryptocurrency payments app and card issuer has admitted it won’t be able immediately to repay users affected by Friday’s $1.4 million hack and has offered a compromise instead. Madrid-based 2gether said Sunday it hadn’t been able to find the funds to reimburse all users the €1.2 million stolen by hackers – 26.79% of the firm’s total funds – on Friday evening. The firm has offered to reimburse investors in native 2GT tokens at the issuance price of just under $0.06. “We can assure you, with a great deal of chagrin, that if we could face this theft with our own funds, we would,” the announcement reads.

Tokenized BTC
The supply of tokenized bitcoin grew more than 70% in July. More than 20,000 BTC (~$225 million) are now tokenized using Ethereum-based protocols. Wrapped Bitcoin (WBTC) represents over 76% of the total tokenized bitcoin supply with over 15,500 BTC tokenized. The total supply grew by roughly $96 million in July, following June’s record growth.

Dex Volume
July trading volume on decentralized exchanges set its second consecutive record high, rising 174% from June, according to data from Dune Analytics. Aggregate trading volume on decentralized exchanges reached $4,32 billion in July, up from $1.52 billion in June. 41% of July’s volume came from Uniswap, on which traders speculate on assets ranging from “a better Bitcoin” to a coin named after fried chicken.

Value Judgments
Crypto is inherently disruptive. In this week’s Crypto Long & Short newsletter, CoinDesk’s Galen Moore asks whether decentralization – and its attendant change making – creates or destroys value within the crypto space. “The “Robinhood Effect” may represent a threat to crypto from stocks, which also seem to now trade unencumbered by fundamentals, via onramps that broaden access,” he writes. 

DeFi Defines Ethereum
DeFi Dad, an organizing member of the Ethereal Summit and Sessions and DeFi super user, thinks Etheruem has found a narrative it can latch onto. “Five years ago, you could argue Ethereum was attempting to do too much. Even two to three years ago, that was still a valid hypothesis, with stagnant adoption,” he writes. 

Bitcoin, Sex and Feminism
Chaturbate is among the few traditional porn sites that has integrated crypto in a meaningful way. COO Shirely Lara joins CoinDesk’s Leigh Cuen for an in-depth discussion about bitcoin, sex and feminism.