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China’s risky Bitcoin court decision, is Huobi in trouble or not? Asia Express

Man loses $10M after Chinese court rules Bitcoin lending is not protected by law, loads of Web3 founders get arrested, and Huobi rumors swirl.

Our weekly roundup of news from East Asia curates the industrys most important developments.

Chinese man’s $10M loss as court says Bitcoin lending not protected by law

A man in China’s Jiangsu province, identified as Mr. Xu, appears to be out of luck after a court ruled that his 341 Bitcoin loan ($9.9 million) to counterparty Mr. Lin is not protected by law according to local news reports on August 3.

Some time ago, Mr. Xu lent 341 Bitcoins to Mr. Lin after the latter approached him for a peer-to-peer loan. At the time, Mr. Xu lacked fiat funds, and so the parties settled on using Bitcoin for the borrowing through a written agreement. Shortly afterward, however, Mr. Lin defaulted on the loan, prompting Mr. Xu to sue in the Changzhou Zhonglou People’s Court. The case was dismissed. 

Chinese judge explains why the Bitcoin lending contract was invalid and therefore denied relief for breach of contract.
Chinese magistrate Ming Wang explains why the Bitcoin lending contract was invalid and therefore denied relief for breach of contract. (Screenshot)

In supporting the judgment, Ming Wang, vice-magistrate of the Changzhou Zhonglou People’s Court, told reporters that Bitcoin is a digital commodity that does not hold the same legal status as fiat currencies. Therefore, the asset can neither be subject to a legal enforcement action, enter circulation, or be used to ” award compensation.”

“The lender bears ALL risks [when lending crypto],” Wang warned. That said, in another ruling dated Nov. 29, the Hangzhou Internet Court wrote that digital assets such as nonfungible tokens are “online virtual property” that should be protected under Chinese law. 

Aside from outright ownership, all forms of cryptocurrencies and transactions are currently illegal in China. The country has been cracking down on private blockchain initiatives in favor of the Central Government’s efforts to promote centralized blockchain, such as via the digital yuan CBDC. 

China’s disappearing Web3 founders 

Just last month, Chinese cross-chain bridge Multichain was still one of the biggest in the DeFi sector. While its reputation took a hit due to the disappearance of its co-founder, Zhaojun He, the protocol still had around $1.5 billion in total value locked at the start of July.

Then on July 14, investors’ worst fears came true after Multichain developers revealed that Zhaojun had been arrested by Chinese police nearly two months prior. Because Zhaojun held discretionary control of Multichain’s entire server-based and private keys, they said the protocol had to be shut down.

But the question left many readers pondering, how does the arrest of a single individual lead to the shutdown of an entire enterprise and the disappearance of enterprise funds? One anonymous user in the Multichain Telegram chat claimed:

“Its become a total supply chain. Third-party tracking companies will supply leads to the police to take them into custody as long as the [Web3] co-founder is in China and has money. Where do you think the police’s case came from? Third-party tracking companies make at up to 10 figures [CNY] from such tipoffs.” 

While Zhaojun is currently detained without any revelation of the charges or any news whatsoever the Multichain funds supposedly “stuck” in the protocol are on the move. Blockchain security firms, such as Bitrace and PeckShield, have revealed that since Zhaojun’s arrest, assets stored on the Multichain bridge had been swapped for stablecoins and transferred out of the protocol. The move prompted stablecoin issuers such as Circle and Tether to freeze over $63 million of suspicious transactions linked to Multichain.

Multichain
A man alleged to be Multichain co-founder and CEO Zhao Jun (Telegram)

In a series of screenshots seen by Cointelegraph, exchanges such as Binance are also investigating stablecoin deposits to its platform linked to the Multichain incident. Meanwhile, whoever is making the transfers has appeared to smarten up as well, with swaps of users’ assets now being done through privacy coins as opposed to traceable assets.

Some observers theorize that the circumstantial evidence points to the Chinese police moving the coins. For starters, the In a similar incident, Wuwei Liang, brother of CoinXP co-founder Liang Liang, wrote in regard to the ongoing criminal proceedings against his brother and the firm:

The virtual currency involved in the case [seized from CoinXP by police] was transferred to other wallet addresses by the Wuxi Public Security Bureau, and 20 Bitcoins disappeared during the transfer process and have not been recovered so far.”

Liang Liang’s trial is ongoing and the blockchain executive is currently charged with “illegal solicitation of public funds and running a “multi-level marketing” scheme. The latter, by the way, carries the penalty of civil forfeiture of all personal and enterprise assets if convicted, and the trial is not going well.

The crackdown appears to have started with China’s own state-blockchain centralization efforts this year. On May 31, Cointelegraph reported that offices of the Chinese offshore-yuan stablecoin issuer CNHC had been raided by police. Its executive had been reportedly detained and like Multichain, no news has been heard from them since.

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Huobi in trouble once again Everything is just fine

If I could sum up with everything that goes on in blockchain from day to day using one phrase, it’d be “all is not, as it seems.”

On August 6, local news outlets in Hong Kong reported that senior executives of cryptocurrency exchange Huobi had been arrested by Chinese police. The exchange subsequently denied this as “fake news.” Chinese blockchain personality Justin Sun, the de-facto owner of the exchange, also labeled the news as fear, uncertainty, and doubt (FUD). 

But as Adam Cochran, partner of Cinneamhain Ventures, claimed on Twitter that Sun allegedly withdrew $60 million from the exchange after the news broke out. Cochran also claimed that some Huobi staff “are currently under criminal investigation,” citing an insider at Tron (Sun’s blockchain project) who has “first hand knowledge of the investigation.”

However, according to Sun, Huobi is doing just fine. On August 1, Sun claimed that the exchange generated more than $85 million in profits in Q2 2023, with $100 million in profits projected for Q3 2023. Pretty impressive, considering that the exchange suffered an internal revolt just earlier this year after the firm allegedly slashed a vast majority of employment benefits.

But anyway swirling rumors around Huobi may be behind its USDT reserves declining to less than $100 million from $630 million last month, while its total assets have fallen to $2.5 billion compared to $3.1 billion in the same period.

Huobi's total assets vs. inflows (DeFiLlama)
Huobi’s total assets vs. inflows (DeFiLlama)

Web3 Gamer: Zuckerberg’s metaverse losses, NFT game on Discord, Gods Unchained hot take

Instagram CEO Zuckerberg’s $40B metaverse losses, AI-powered NFT RPG on Discord, new Web3 eSports platform and a hot take on Gods Unchained.

Mark Zuckerberg tries to restore trust as metaverse losses cap $40B

Lets get business out of the way before getting to the fun part: Meta, the parent company of WhatsApp, Facebook and Instagram, is heavily involved in virtual worlds through its metaverse unit, Reality Labs. 

However, its investments have yet to pay off, with the metaverse company reporting collective losses of over $40 billion. 

Despite the losses, investors are optimistic about Meta CEO Mark Zuckerbergs long-term bet on the metaverse, sending the stock up 7% after hearing Zuckerbergs reasoning on the Meta Q2 2023 Earnings call.

Meta Stock Price
Meta’s stock price spiked to over $320 after Meta Earnings Call. (Google Finance)

Wall Street seems convinced by his arguments, which are backed by Metas improved overall business performance as the platform saw its revenue increase in the second quarter. Zuckerberg aims to cover metaverse costs with the growth from Metas family of apps, which has increased by $2 billion, making it just over halfway to covering the $3.7 billion loss from Reality Labs.

I can’t guarantee you that I’m going to be right about this bet. I do think that this is the direction that the world is going in.

The Meta CEO believes an immersive version of the internet will become the norm. He supported this statement with examples of trends such as smart glasses and immersive communication:

There are 1 billion or 2 billion people who have glasses today. I think in the future, they’re all going to be smart glasses. And all the time that we spend on TVs and computers, I think that’s going to get more immersive and look something more like VR in the future.

After the launch of Threads excitement over which faded after a short while but has been reignited Meta will reportedly release AI chatbots with human-like personalities with a focus on user retention.

Role-playing game combines AI and NFT on Discord

A new blockchain game is cooking for all the text-based role-playing game lovers out there. Alchemy: Battle for Ankhos will be running on Discord, using the platform’s familiar environment to host battles in a fantasy world.

Although this isnt an entirely new concept, with examples like Wordle, PokeMeow and Guess the Song, bringing along crypto and AI will surely spice things up.

The art style immediately conjures memories of Darkest Dungeon another turn-based RPG with roguelike mechanics. Four developers are building the game with the support of generative AI tools, including OpenAI and Midjourney. The Alchemy: Battle for Ankhos team utilizes Midjourney to create art, while OpenAI gives NPCs custom behavior. 

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The project, which was one of the five winners in Solanas NFT Showdown, will allow players to mint their assets from in-game menus without any blockchain knowledge. According to the games creative director, Alex Finden, nearly every asset earned or purchased in-game will be optionally mintable.

A new challenger: Web3 gets a new esports platform

Professional Dota 2 player Erik Tofu Engel, who has won over $400,000 from various esports tournaments, has recently expressed interest in the Web3 stage. 

Short for electronic sports, esports is a growing industry with an audience of more than half a billion people on the global stage in 2022, with expected growth to $1.87 billion in revenue by 2025. With these numbers, it is no wonder Web3 players are competing to enter the space.

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Crypto gaming startup Ultra also heard the call and announced the launch of an esports tournament platform built on its own blockchain network called Ultra Arena. The platform, which will launch on Aug. 8, will allow players and brands to organize tournaments and leagues with NFTs and platform tokens as prizes. 

Ultra Arena will support popular Web2 games, including League of Legends, Counter-Strike: Global Offensive, Overwatch 2 and PUBG, along with games already available on its PC game store, Ultra Games.

Hot Take: Gods Unchained

One of the oldest and most popular free-to-play Web3 games, Gods Unchained, found its way into my playlist with its recent release on the Epic Games Store.

The turn-based card game distinguishes itself from frontrunners of the genre with its Web3 elements, presenting the cards as tradeable NFTs and hosting a player-focused community marketplace.

Along with cosmetic items such as card backs and trinkets, cards can be bought and sold in the marketplace, providing true ownership to the players. There are also card packs, which can be bought using the GODS token.

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The game features beautiful animations and a slick art style in general, but lag in gameplay and in menus often overshadow the graphics. Gods Unchained draws heavy inspiration card game genre classics, most notably Blizzard Entertainments Hearthstone.

The usual mana, strength and health mechanics are all there, with the addition of Gods, which are like Heroes from Hearthstone. Gods have their own abilities, which you can choose at the start of the match.

After booting the game up and trying to play the first mission out of three in the tutorials, a bug appeared which prevented me from completing the mission, so I decided to concede the in-game button for surrendering with the intention of restarting the mission.

The game returned to the menu and awarded me the completion rewards for the first mission. So, I thought, Huh, maybe that was the last step of the mission and the game registered it as complete.

Then came the second mission, which was completed with no issues. On the third mission, another bug appeared. I tried waiting, clicking on every possible option and, with nothing else to do, had to concede. In front of me was the menu with completion rewards.

After that, I played a few casual and ranked games, and all went smoothly without any problems.

Web3 Game Gods Unchained Gameplay
Gameplay from Gods Unchained. (Gods Unchained)

In conclusion, the game could use some work. It does not present the seamless experience of Hearthstone or introduce new mechanics like Marvel Snap. Considering it has been five years since its initial release, and there are unfixed bugs in the tutorial missions, it feels like the developers arent really concerned with user experience. Hopefully, they can fix these issues in their upcoming mobile release.

If you are a fan of the genre and a crypto enthusiast, it is worth taking a look at. Otherwise, you are better off playing Magic: The Gathering, Hearthstone, Marvel Snap or Legends of Runeterra.

More from Web3 gaming space:

Axie Infinity creator Sky Mavis partnered with CyberKongz to enrich the Ronin platform. 

Solana-based NFT game Aurory will integrate Ethereum scaling technology Arbitrum using its SyncSpace system.

Web3 gaming guild Yield Guild Games announced an extended collaboration with Polygon Labs to provide enhanced support to partner games developed on the Polygon network, including popular titles like The Sandbox and Crypto Unicorns.

Hasbro will collaborate with Xplored, the company behind the Teburu digital board game system, to experiment with integrating smart-sensing technology, AI, and dynamic multimedia.

Rumble Racing Star developer Delabs Games raised $4.7 million in seed funding for development on Polygon.

Solert Games will launch “Game of Thrones” star Hafthor Bjornsson endorsed Legends at War on the Avalanche blockchain.

Mobile tower defense strategy game EF Defense is set to launch on the Ethereum scaling network, Immutable zkEVM.

6 Questions for Simon Davis of Mighty Bear Games

Mighty Bear Games CEO Simon Davis — AKA “Papa Bear” — gave us a look inside his Web3 gaming studio, and his thoughts on the future of gaming.

Simon Davis is the co-founder and CEO of Mighty Bear Games, a multiplatform game developer in Southeast Asia creating accessible multiplayer experiences in Web3.

Davis has spent almost two decades working in the gaming industry, but he never planned to actually work in this field.

Before crypto, he was a professional guitarist who made ends meet by playing in metal bands and cover bands and by teaching guitar. But after his money dried up one summer, he scored a six-week gig as a professional game tester and he’s never looked back.

Mighty Bear Games' Simon Davis' guitar collection
Davis ever-growing guitar collection. (Simon Davis)

During his time in the gaming industry, Davis has held management and product lead positions at gaming companies including King Digital Entertainment, Ubisoft, Bigpoint, AKQA, Empire Interactive, and Laughing Jackal. 

In 2017, Davis teamed up with some friends and fellow industry veterans to launch Mighty Bear Games in Singapore, where they intended to focus on creating traditional games before pivoting to blockchain in 2022. And in 2023, the firm launched an open beta for Mighty Action Heroes, its first Web3 gaming title.

Davis, who also goes by “Papa Bear,” said every Mighty Bear employee receives a “bear title.” Some of Papa Bear’s employees include “Arty Bear,” “Bear-Abel,” “Excel Bear,” and “Bear McNumbers.”

Why the pivot to blockchain gaming?

I was lucky enough to kind of get into Bitcoin by accident in 2015, so Ive been in the space for a few years. In 2021, I started playing with NFTs, and Im lucky enough to be also based in Southeast Asia, so I could see firsthand what was happening with Axie [Infinity]. I think, for me, as someone who lived through the transition to free-to-play, it felt very much like a moment, kind of like when Farmville came out on Facebook. 

I think that for live service titles [games like Fortnite, League of Legends and Apex Legends], a dominant business model is going to emerge to revolve around player-owned and operated economies. Because I dont believe you can have virtual worlds without digital property rights, essentially.

And I think that does enable a lot of new things that were really starting to scratch the surface on. So, I think that really was the pull factor.

What format do you think serves as the best way to attract users to blockchain gaming?

The Mighty Bear Games team
The Mighty Bear Games team. (Simon Davis)

I think mobile gaming is going to be the dominant platform because of geography. You see this if you look at the charts for the countries that have a great slope of interest in crypto or Web3. They tend to be countries where existing payment rails are not super developed.

People are largely unbanked in places like Indonesia and Brazil. These markets are mobile-first. Like, people in the Philippines and India are not necessarily using high-end PCs. 

So, you need to go where the users are. And this is a bit of a spicy take, but this is why Im very bearish on people making super HD high-end Web3 games because its just not where the markets are today. So, you see a lot of these teams raising, like, mega bucks to make console-quality titles, but if no one can play them, then they arent going to do very much.

What do you think the current hurdles are for large-scale blockchain gaming adoption?

A lot of people talk about it in terms of silver bullets, right? Like, Oh, we need one good game, or like, We need to solve the wallet problem. I dont think its any one of those things. I actually think it is just a lot of lead bullets, a lot of small things that need to happen. 

What Ive experienced today is still pretty terrible, and scary, like social recovery. And its starting to become a thing, but that needs to become a lot easier.

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I just think, in general, it needs to be as easy and as brainless to use as a Web2 experience. And so I think there is an inherent conflict today with how people think about Web3, you know. They say things like, Oh, you need to educate the users, or, Train people to hold their private keys.

But you know, my mom doesnt want to hold her own private keys. She does all her trading on Crypto.com. We need to make it essentially idiot-proof so anyone can do it.

I think were still quite a long way away, but I am seeing meaningful improvements, actually. Im seeing products that are going to go to market next year which are going to help a lot. 

I dont know how old you are, but Ive just turned 40 this year. I remember in the 90s setting up a home internet connection on dial-up. It took me two days of calling technical support and someone telling me like configs. I was having to go in and change manually and stuff. And now, you know, we solved that, right? And then, the internet became a mass market, and then people could just put a CD in their computer, and it just worked. I think we need to get to that stage.

Mighty Action Heroes. (Game website)

Do you think the bad rap blockchain/NFT gaming gets is a big issue? 

Its funny because gaming got a pretty bad rap in the 90s. You know, everyone was talking about how games were making children violent. There was a big moral panic, just like there was in music a few years before.

But I think that when you start to get these things in peoples hands and experience them, perceptions change. I do think a lot of the reputation that we have in crypto and Web3 is deserved. There are a lot of bad actors exploiting the lack of regulation, but the things that excite me: Ive seen some games, for example, that allow players to earn small amounts of Bitcoin, And this sort of things retention numbers are very strong, like the initial metrics are very promising. And I think thats a really nice use case.

Reddit is also a great example, right? They put NFTs in the hands of huge numbers of people. A lot of people didnt even realize they were interacting with NFTs. So then they had their first taste, and yeah there are some stats that have come up, and not a huge amount of them have transacted on-chain.

But I actually dont think thats such a bad thing. If people are not dumping the assets on day one, I dont see that as a negative. So, I think onboarding through stealth is pretty good.

What kind of adoption metrics are you looking for with your games?

So, people talk about installs and sign-ups its just a vanity metric. For me, Im interested in how many people are coming in every day, how regularly theyre coming back, and what the growth curve of that looks like initially.

And then once we do the mobile launch [of Mighty Action Heroes], which will be around August/September, how well are we doing on attracting non-crypto-native people into the game as well? That will be very interesting, and to see how they play together. Its a different angle, but its one that Im pretty bullish on.

What are some ideas or tech upgrades that could help blockchain gaming?

ERC-6551 tokens. 

Essentially, they give a smart contract account or a smart contract wallet to a 721 [token]. So, you know, a traditional NFT would be a JPG with some metadata attached. But essentially, the JPG or the asset, whatever that is, is then bound to a smart contract. 

And this is pretty cool because it means that assets can communicate directly with each other. So NFT to NFT, without using MetaMask. And it could also be compatible with other smart contract wallets. 

I think the really cool thing is that, essentially, your asset becomes a wallet and can have its own logic as well. So you could have a base character in a game as the 6551 token, and then all the clothes or the items or everything that that character has, the kind of sub-assets, can change within, each with its own logic.

As a game developer, you start thinking of how your characters could evolve and how you can attach new assets without updating the core.

Then as a dev, I think its really good for reputation management as well. Like, if you did a soulbound version, you could have achievements, proof-of-work, proof-of-play, social identity. I think its pretty cool. […] Its more secure because its not just an asset within a wallet like it is on smart contracts with its own private key.

Journeys: Hervé Larren on Bitcoin, Apes and the psychology of ‘blue-chip’ NFTs

Hervé Larren’s crypto journey has taken him from luxury goods to Bitcoin mining and back full circle to the world of “blue-chip” NFTs.

During a period of hyperinflation in 2013, my Venezuelan mother asked me to send money to Caracas, the countrys capital, Herv Larren recalls. However, bank transfers were not possible between the two countries. 

Busy with work in New York, he told a friend that he planned to fly to Caracas carrying cash for his mother and return the same day. Why dont you just send Bitcoin? his friend asked, which quickly led to a change of plans as Larren made his first Bitcoin transfer.

My first crypto transaction, in 2013, was to wire Bitcoin from the U.S. to Venezuela. Due to the economic collapse, there was no functioning banking system between these two countries.

Switching from a career with luxury goods company LVMH Mot Hennessy Louis Vuitton, Larren co-founded a large-scale crypto mining operation and worked with Grayscale to bring crypto assets to old-school investors. He later became a key adviser to ApeCoin and the first person to bid a million dollars for a nonfungible token.

From old to new

We were reporting to Nicolas Sarkozy, and he was coming to our meetings, Larren recalls of his time as the head of a high school student council in Neuilly-sur-Seine, the wealthiest old-money suburb of Paris, where he grew up. 

Sarkozy served as the local mayor for 20 years before becoming the president of France. Larrens mother from Venezuela was a TV host and the first Latina model signed by the LOreal cosmetics brand. His French father imported wine to Canada,  where a third of the population is French-speaking.

In the late 90s, Larren began undergraduate business studies at Montreals Concordia University. In 2019, Concordia labeled him The Blockchain Maven as part of a 50 Under 50 alumni distinction. Upon graduation, he got a job at Mot Hennessys New York office, where he worked on brand development of the firms Hennessy cognac brand in the United States.

Larren worked on his MBA at Columbia University part time while at LVMH, graduating in 2010 and entering the venture capital world with Peak Ventures, which was involved in tech companies including Twitter. It was Larrens first experience in the technology sector, which he describes as very different from the old-world, intergenerational luxury goods industry.

Larren quickly moved to accept Bitcoin at an e-commerce business he was involved with, a company that helped charities raise money by partnering with celebrities. In 2015, he formed crypto mining firm Global Crypto Ventures, which grew into an operation of nearly 3,000 machines composed primarily of Bitmain Antminer S9 miners in Las Vegas and Texas, where the cost of infrastructure and electricity was cheaper. 

Larren at his mining facility. (Herv Larren)

Grayscale Digital Large Cap Fund 

While speaking at the 2017 World Technology Forum in New York, Larren met Digital Currency Group CEO Barry Silbert, who was talking right after him about the Grayscale Bitcoin Trust, through which retail investors could get exposure to Bitcoin through their brokerage. He was also working on a new investment vehicle called Grayscale Digital Large Cap Fund (GDLC), which represented a weighted portfolio of cryptocurrencies, including Ether, MATIC, ADA and SOL, in addition to Bitcoin. 

As a publicly traded investment instrument, it would require approval by the Securities and Exchange Commission. One relevant matter would be to ensure that the fund could buy its digital assets from a trusted source, preferably from within the United States. Larrens mining firm was an ideal source, and having a ready buyer for mining proceeds made business smoother.

This opportunity represented Larrens first foray into crypto beyond Bitcoin, and it attracted me to a new space.

Working with the SEC was no easy task, Larren recalls. It was a nerve-racking process. Though the company was very confident about getting approval, there was a lot of uncertainty because no such investment trust had been approved previously.

However, the GDLC was approved, expanding the potential pool of crypto investors. Though many in the industry continue to preach the not your keys, not your coins mantra, Larren argues that just as with stocks, owning Bitcoin and other crypto assets through a financial instrument instead of on an exchange or cold-storage device is preferable for most of the public.

There is less risk of being hacked or losing access to keys, and regulated funds must meet stringent security policies and often carry insurance. He also notes that they are easier to manage on a portfolio basis, particularly regarding taxation and being more straightforward for accountants to understand.

Will BlackRocks Bitcoin ETF be approved?

These advantages make it easy to see why heavyweights of the financial industry see an opportunity in offering Bitcoin investment vehicles accessible to retail investors. One of these is BlackRock, which recently applied to launch a Bitcoin spot exchange-traded fund in the United States.

BlackRock offers the credibility to convince the SEC that the Bitcoin market can be operated safely and has much to offer investors, Larren says optimistically. He expects that with BlackRocks track record of 575 approved ETFs versus one denial, it will soon come online, with similar products expected in other markets.

I think it would lead to an automatic rise in Bitcoins price. I think many people are on the sidelines waiting for clarity, and thats a step in Bitcoins institutional adoption.

For a very long time, Grayscale had a premium on its shares compared with the price of Bitcoin, Larren notes, explaining that the security, certainty and convenience meant that more conservative investors were historically willing to pay more per BTC. BlackRocks ETF is unlikely to hold a large premium, which would serve to make the market more efficient.

All roads in Decentraland lead to Beeple

Larren first heard about the metaverse through Decentralands initial coin offering in August 2017. They were selling 90,000 pieces of NFT land in the metaverse, he recalls, adding that he felt a proximity to the projects Argentine founders due to South Americas shared currency issues. My first NFT purchase was actually buying my name in the metaverse, he says, recalling how he spent 100 MANA to name his avatar.

He was also given a piece of land on which to build the Airvey art gallery, where Larren placed various NFTs for sale. When Christies announced it would auction Beeples Everydays piece in its first-ever NFT auction in March 2021 a story previously covered by Magazine the auction house contacted the Airvey gallery to invite bids.

I wanted to be the first person in the world who bid seven figures on an NFT.

Well that escalated quickly was Beeples only comment when Larrens bid for $1 million came through, representing the first volley in a bidding battle that would see an anonymous buyer later revealed as Vignesh Sundaresan, also known as Metakovan, beat Tron founder Justin Sun with a record-setting bid of $69 million.

Beeple posted his reaction to the $1 million bid on Instagram.

Bored Apes design ApeCoin

With a newfound passion for NFTs, Larren joined Horizen Labs in 2021, months before the firm began discussions with Yuga Labs, a small company where four founders were working on an NFT project involving monkeys.

Yuga contracted Horizen Labs to create ApeCoin, a large allocation of which was distributed to holders of Yugas NFT collections including Bored Ape Yacht Club, Mutant Ape Yacht Club and Bored Ape Kennel Club via massive airdrop. 

We did everything from the white paper, tokenomics, to listing on exchanges. In less than 20 minutes, it became an $8 billion project, Larren says, referring to the tokens undiluted market cap, now about $2 billion. In addition to the launch, Larren notes that Horizen Labs designed the tokens staking mechanism, which will see 100 million tokens distributed to the community over three years.

As Gucci and TAG Heuer began accepting ApeCoin as a form of payment, Larrens luxury contacts came calling back.

I spent a week with Chanels team at a castle in the English countryside, educating them on all aspects of Web3, including MetaMask and NFT drops. Larren observes that as he moved from the most successful physical goods company, LVMH, to the most successful digital goods company, Yuga Labs, the thought process was the same.

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He describes metaverse real estate and PFPs, which include Yugas famous monkey pictures, as fitting into a broad category of consumer NFTs that are purchased by individuals in a way not dissimilar to luxury goods. Indeed, he notes that many of LVMH founder Bernard Arnaults children heirs of the worlds second-richest man are actively dabbling in them.

Larren overlooking the Horizen Labs office floor in Milan. (Elias Ahonen)

People want to feel that they are part of an exclusive community with like-minded individuals, he explains, relating the concept sold in luxury boutiques and exclusive events the world over. In the case of Yugas NFTs, he argues that there is value for many people in being members of a group that shares similar cultural references, whether it being digital or at concerts, referring to events like ApeFest, the next of which will take place in Hong Kong in November.

Can an ape JPG really be a blue-chip NFT?

NFTs that gain mass appeal as recognizable status symbols are often labeled as blue chip among the NFT community, a nod to a term typically referring to reliable stocks and originally derived from poker, where blue chips are traditionally the most valuable. 

Its a brand-building element as recognition of industry and buyers. Supply is far less than demand, and there is a strong fan and collector base. In traditional art, Picasso and Jean-Michel Basquiat are blue chips, he explains, noting that Bored Apes and CryptoPunks hold such a position within the PFP hierarchy.

The price is a result of the value that has been created. When you go to a Louis Vuitton store, the price is nowhere to be seen.

Holding a BAYC can make sense because you can stake it to earn tokens, and it can act as a financial instrument because you can borrow against it, he notes, naturally enough, considering his company designed the staking mechanism. 

Larren poses in Milan with images of NFTs, including a Bored Ape and an Otherside land plot. (Elias Ahonen)

There are blue chips in other categories as well, such as metaverse land, he adds, cautioning that its value, like traditional real estate, will depend on the income generated with it. 

This is because, in his opinion, people will not remain interested in vast spaces of empty metaverse land but rather in spaces that are built up and useful, like his art gallery. Traditional real estate involves buildings the same will be true of metaverse land.

Where might we look for the next crop of blue chips?

Im now passionate about building on top of Bitcoin with BRC-20s and Ordinals, Larren explains, hinting that something big is in the works. For him, the coming metaverse is a place and time when your digital life is more important than your physical life and where digital image matters more than physical image. In this new environment, he believes that the Bitcoin chain, with its newfound capability to host NFTs, will hold a key position as a central pillar.

In Web3, you need to anticipate how consumer taste will evolve and what the market will want in the next six months.

China’s blockchain satellite in space, Hong Kong’s McNuggets Metaverse: Asia Express

China launches world’s first blockchain satellite into space, meanwhile, McDonalds Hong Kong brings McNuggets into the Metaverse.

Chinese blockchain Sputnik’s maiden voyage

A Chinese satellite has become the first in the world to carry a blockchain imaging and screening system into orbit. 

According to local news outlet Red Star News on July 22, the Tai’an Star Era 16 was successfully launched into orbit from the China Jiuquan Satellite Launch Center. Developed by NationStar Aerospace Technology Co., the satellite features a visual blockchain on-orbit certificate storage system dubbed ‘ADAChain’ (not related to Cardano) developed in-house by NationStar. Researchers wrote: 

“The [ADAChain] can realize functions such on-orbit visual blockchain multi-signature authentication, on-orbit video visual broadcasting, and on-orbit visual remote sensing data storage certificate confirmation.”

The purpose of the satellite’s voyage is to “obtain rich spectral information on the surface of the target area,” in the fields of “precision agriculture, water resources management, mineral resource investigation, environmental monitoring, and emergency safety.” Blockchain technology will also assist in achieving the goals of “high spatial resolution, high spectral resolution, and high temporal resolution” in such satellite imaging. 

The Tai’an Star Era 16 blockchain satellite Launch (RedStar News)

Digital Yuan CBDC expands to Hong Kong 

The Bank of China’s Hong Kong subsidiary has allowed individuals in the Special Administrative Region (SAR) to utilize the digital yuan central bank digital currency (e-CNY CBDC) for retail shopping. 

According to a July 20 report, over 200 merchants, such as shopping centers, pharmacies, convenience stores, and electronic stores have accepted the e-CNY CBDC as a means of payment from shoppers originating in Mainland China. The e-CNY CBDC is currently not available to Hong Kong users. 

As a SAR, Hong Kong maintains separate political, economic and social institutions from Mainland China. Advocates have previously called for the Hong Kong government to issue its own Hong Kong Dollar CBDC to compete with the likes of Tether (USDT) and USD Coin (USDC). Similarly, Chinese President Xi Jinping has emphasized the importance of CBDCs as a means of settling international trade in local currencies.

Terraform Labs struggles to get back on its feet

“Every time we would make a little progress, there would be some accusation or something that would derail us,” said Terraform Labs’ interim CEO Chris Amani in a Twitter Space on July 20. 

According to Amani, the arrest of the entity’s co-founder and former CEO Do Kwon in Montenegro has essentially shattered all momentum that the ailing network is trying to reestablish. In May 2022, the $40 billion Terra Luna (LUNC) ecosystem collapsed due to the implosion of its algorithmic stablecoin TerraUSD (USTC). Shortly afterward, Kwon created the Terra 2.0 (LUNA) ecosystem. The three tokens have a combined market cap of $1.3 billion at the time of publication. 

Do Kwon
Do Kwon faces charges in a variety of countries.

In its next phase, Amani says that nine projects built on the combined Terra Luna ecosystem are scheduled to launch within the next few months. None of the projects will reportedly issue their own tokens. In addition, Amani warned that the projects face stiff competition from other layer-one projects due to lacking a Luna Foundation Guard or protocol treasury for financial support. 

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South Korean crypto lender shuts down amid criminal proceedings

South Korean crypto lender Delio says all of its company and customers’ assets have been seized in a raid conducted by prosecutors on July 18.

In the July 22 announcement, Delio announced it would pause all interest payments to users effective immediately after the asset seizures made it impossible for the company to continue normal operations. In June, the crypto lender suspended all withdrawals and deposits on its platform, citing exposure to counterparty and fellow South Korean crypto lender Haru Invest, which in turn suspended all transfers due to an issue with a “consignment operator,” B&S Holdings. 

Haru Invest is currently undergoing bankruptcy proceedings. Meanwhile, Delio is one of the largest crypto lenders in South Korea, with around $1.5 billion in customer Bitcoin (BTC), Ether (ETH), and altcoin deposits. Since June 30, the firm has been under investigation by the country’s Financial Services Commission on allegations of fraud, embezzlement and breach of trust.

The firm previously stated that it would enable the withdrawal of users’ assets without stating a specific timeframe. However, similar to the Multichain saga, it is unlikely the company can do so when customers’ assets have been seized as part of criminal proceedings.

In a July 23 blog post, Haru Invest CEO Hugo Lee wrote that B&S Holdings’ assets have also been seized by authorities and that the company is currently trying to recover the funds. All of the firm’s operations have been suspended, and the company is scheduled to liquidate its remaining assets in phases. Haru Invest currently has more than 80,000 users.

Indonesia’s national crypto exchange goes live

A national cryptocurrency exchange operated by the government of Indonesia will be the only legal venue for trading crypto assets in the Southeast Asian country. 

In a July 20 statement from the country’s Commodity Futures Trading Supervisory Agency, also known as Bappebti, the exchange is currently open for spot trading, with future plans to expand its offering to cryptocurrency futures and derivatives. All cryptocurrency exchange registered within the country could join the national exchange, which serves as a clearing house to ensure transactions abide by relevant regulations. 

Despite official support, Islamic organizations in Indonesia have previously deemed the use of cryptocurrency to be haram, or forbidden, for Muslim users. That said, there is no consensus from Islamic scholars regarding the matter. 

McDonald’s launches McNuggets Metaverse in Hong Kong

On the 40th anniversary of the introduction of chicken McNuggets, McDonald’s Hong Kong is partnering with Sandbox to launch a namesake metaverse to celebrate the occasion.

Dubbed “McNuggets Land,” the metaverse will allow users to interact with McNuggets-themed gaming characters and avatars. Randy Lai, CEO of McDonald’s Hong Kong, commented: 

“Rooted in Hong Kong for 48 years, McDonald’s has always strived to deliver innovative experiences and Happy Moments. To celebrate the 40th anniversary of Chicken McNuggets, we are excited to collaborate with The Sandbox to provide fun-filled Web3 Metaverse game experience.”

A reward pool of 100,000 SAND tokens and 10,000 vouchers for McNugget perks will be distributed to participants. Since its entry into then British Hong Kong in 1975, the franchise currently operates 250 restaurants around the city, serving more than 1 million customers per day. 

The McNuggets Land Metaverse (Sandbox)

Web3 Gamer: Earn Bitcoin in Minecraft, BGA’s 50/50 gender split, Oath of Peak hot take

How to earn Bitcoin in Minecraft, Sega is half in/half out of blockchain games, BGA board’s 50/50 gender split, and more Web3 gaming news.

Minecraft gets the Bitcoin treatment

It seems like Minecraft has been around since the invention of computers, and there is a reason for that. Along with its official free updates, which provide extra content, the Minecraft ecosystem has an incredibly active community, helping it stay up to date. Thanks to the games open-ended gameplay, there is tons of community-built content available to enjoy.

Have you finished the standard content of the game? Then why not relive the industrial revolution with custom-built mods? Or enter a competition to see who can build a construction first against hundreds of others? There is a server for that. Pokemon in Minecraft? Pixelmon! 

And if you want to earn Bitcoin in Minecraft? Welp, you can even do that now.

Bitcoin integration for Minecraft with Satlantis and Zebedee partnership.
Players can earn Bitcoin in Minecraft with the partnership between Zebedee and Satlantis. (Zebedee)

A community-operated Minecraft server by the name of Satlantis has integrated Zebedees gaming tech that lets players earn Bitcoin by completing in-game quests inspired by real-life BTC mining. Players in the server can join in-game mining pools, collect ASICs (popular hardware tailored for Bitcoin mining) and increase their hash rate to win block rewards. What a cool way to educate traditional gamers on the basics of Bitcoin!

Players can withdraw their earnings to Zebedees app, where they can spend their gains on other games made by the company or move them to exchanges that support Bitcoins layer-2 Lightning Network.

Dont get your hopes up for buying a Lambo with your earnings from building pixelated wonders. The server will give out a total of 1 million satoshis equal to one hundred millionth of a BTC per week. Thats around $300 per week divided by God-only-knows how many people. While it isnt much, its a start that could become a trend. 

The Bitcoin-friendly integration is an unofficial one, and neither Satlantis nor Zebedee is affiliated with the Minecraft developer Mojang Studios. The studio itself is pretty down on Web3, having previously banned Minecraft NFT integrations. Time will show how this integration fairs against the ban.

Blockchain Game Alliance ramps up diversity efforts

Diversity is a surprisingly new topic in the world of video games. Most major publishers had not even released a diversity report as recently as 2021. In 2022 Activision Blizzard gave itself five long years to meet its goal of 50% women and non-binary employees.

Members of the Blockchain Game Alliance, a key organization promoting Web3 and blockchain gaming, voted to install a gender-balanced board, with three men and three women. And the newly elected BGA board of 2023 is made up of all new faces.

Blockchain Game Alliance 2023 board members
Blockchain Game Alliance 2023 board members. (BGA)

They are Leah Callon-Butler, director of consulting firm Emfarsis; Yasmina Kazitani, chief marketing and partnerships officer at Interverse; Christina Macedo, co-founder and chief operating officer at Ready gg; Hideaki Uehara, director of business development at Square Enix; Mariano Rubinstein, CEO and co-founder at Sura Gaming; and Alex Kosloff, head of business development at Altura.

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As an avid gamer, I will be watching with interest to see if the make-up of the new board can help progress and innovation across the Web3 gaming space.

Sega not a fan of P2E but developing a blockchain game

The makers of all-time favorite franchises Sonic and Yakuza have had an on-again, off-again relationship with blockchain technology. Sega announced plans for NFTs as play-to-earn (P2E) rewards last year. Later, they stepped off the gas after a backlash from fans, who considered the initiative a money grab.

This year, Sega is also walking both sides of the street. Shuji Utsumi, co-chief operating officer at Sega, called blockchain games boring and said the Japanese gaming giant wouldnt be using its biggest titles in blockchain gaming projects.

However, Sega has announced a partnership with Line Next to bring its classic games to GAME DOSI, a Web3-friendly blockchain gaming platform. In light of this announcement, Utsumi clarified that investing in Web3 projects is within the companys strategy but that they dont intend to be a Web3 company but rather a Web 2.5 one.

LINE NEXT signs memorandum of understanding with SEGA to develop game for GAME DOSI
LINE NEXT partners with SEGA to license and bring a classic game to the Web3 gaming platform GAME DOSI. (LINE)

As everyones aware, the mainstream gaming community is unenthusiastic about blockchain games and sees them as a temporary trend fueled by hype and speculation. Players are concerned about money grabs and the short lifespans of Web3 games, so its understandable Sega doesnt want to put its big titles in an area where it has little-to-no experience. 

While some skepticism is warranted, it doesnt mean blockchain technology wont ever find its footing in the gaming industry. Multi-billion-dollar tech companies are aware of the possibilities Web3 gaming brings and know the importance of getting in on the ground floor.

Segas decision to test the water with its smaller IPs is a thoughtful and measured approach that respects its legacy while navigating the uncharted terrain of Web3 gaming. 

Studios $15M funding from Binance Labs for Web3 dino game

Binances venture capital and incubator arm Binance Labs has invested $15 million in Web3 gaming startup Xterio. The company labels itself as a free-to-play-and-own game developer and publisher, meaning the games are free to play, and players are able to earn and keep NFTs. In August last year, it raised $40 million in funding from investors, including FunPlus, XPLA and now-extinct FTX Ventures.

Xterio seems to have a lot of experience on the gaming front, with Web2 gaming industry veterans on its founding executive team from companies including Ubisoft, Krafton and NetEase. There are 11 games in its repertoire, ranging from Age of Dino a massively multiplayer online 4X (explore, expand, exploit, and exterminate) strategy game that features dinosaurs to Overworld, a cross-platform sandbox RPG with anime-inspired graphics.

Xterio is developing an emotion engine for AI, with an aim to enhance player immersion by equipping game characters with realistic and dynamic emotional responses The Matrix and the whole AI takes-control scenario were way ahead of their time.

Web3 Game Overworld by Xterio
Overworld promotional art. (Xterio)

The company uses AI very actively as they host an AI toolkit for developers and are creating a digital companion game called AIpal which is entering its beta phase later this year.

Hot take Oath of Peak

The undeniable success of Genshin Impact a Chinese MMORPG with cute graphics and fast-paced action that was released on virtually every platform except Casio Scientific Calculator sparked off a trend of introducing every possible bit of Chinese mythology to Western audiences among developers. 

Oath of Peak
Oath of Peak promotional art. (Oath of Peak)

Oath of Peak, an action MMORPG game that diversifies with its Web3 elements, seems to capitalize on that itch. Available on iOS and Android platforms as a free download, the game offers an epic world thats easy to get familiar with, thanks to its cute graphics. 

Similar to other massively multiplayer games, players can pick from five different classes with fully customizable avatars. The game offers melee, assassin, ranger, mage and support characters nothing groundbreaking. 

With the recently-added English language support, it wasnt hard to find my way around the colorful island. After completing some quests, I realized one cool thing about the game: it doesnt shove its Web3 features at the player. Sure, the game has NFT monsters and a utility token thats exchangeable with in-game currency, but it doesnt become prominent until after players are invested in the game in terms of time and effort.

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If you are in the market to check some new games with familiar mechanics, its worth taking a look at Oath of Peak, now available globally via app stores or its APK. Itll only take 15-20 minutes for you to understand whether its a game for you or not anyway.

More from Web3 gaming space:

Eyeball Games, led by the team behind Miniclips 8 Ball Pool, has announced the launch of their blockchain-based mobile game, Eyeball Pool, on the Immutable platform in early 2024.

Polygon Labs president, Ryan Wyatt, is transitioning to an advisory role after over a year with the company. Polygons chief legal officer, Marc Boiron, will succeed Wyatt as the new CEO.

MetaGalaxy Land introduced the pre-alpha version of its metaverse platform, which utilizes Unreal Engine 5.

Major League Baseball became one of the first professional sports leagues to own a virtual world. Improbable, a metaverse tech firm, announced the new virtual space called “MLB virtual ballpark.”

Immutable has introduced OBS, its first Web3 racing game, as the latest addition to its game lineup.

Telescope Labs launched a comprehensive range of AI-driven solutions tailored for Web3 gaming, empowering gaming enterprises with the necessary resources to construct robust virtual economies.

Sweat Economy, a move-to-earn initiative, has revealed the introduction of Sweat Hero, an in-app game and NFT experience within their platform.

Wolf Of All Streets worries about a world where Bitcoin hits $1M: Hall of Flame

Former globe-trotting DJ Scott Melker — The Wolf Of All Streets — worries about the circumstances leading to Bitcoin topping $1 million.

Scott Melker is the host of The Wolf Of All Streets Podcast and author of The Wolf Den newsletter.

If I tweeted about a small cap [crypto] of some sort right now, the price would probably change by like 50%, says Scott Melker, better known to his 904,800 Twitter followers as The Wolf Of All Streets.

Melker says he takes this responsibility seriously and wont share tweets that might impact the market but this makes Twitter a lot more boring from his end. In fact, Melker declares that Twitter stopped being fun when he reached 100,000 followers.

Thats when I went through a phase of a real love-hate relationship with Twitter because thats when I guess 10% of the people who respond to comments were trolling at any given time.

All you can really post to 900,000 followers is Bitcoin and inspirational quotes because everything else will land you in hot water. 

Tweet

After graduating from Penn State University with an Anthropology degree in 1999, Melker tried his hand at a million other things finding the most success in his 20-year stint as a DJ.

Shortly after finishing university, he also started his own magazine in Philadelphia called 101 Magazine, focusing on street culture and city vibes.

It caught the attention of a huge magazine called Frank 151, which acquired it, and Melker became the editor-in-chief of both. 

During that time, he had the opportunity to attend insane parties and rub shoulders with legendary acts like the Wu-Tang Clan and Outcast.

The music industry led him to try crypto trading in the first place.

I just happened to look into crypto because there was a bunch of DJs trading it, he says.

He first started trading on the Gemini crypto exchange in 2016 and recalls buying Bitcoin to send it to another exchange, Bittrex, so he could buy Ethereum and Ripple. ETH was under 20 bucks back then, he notes in a cheeky humble brag.

Rather than some lofty higher purpose, he says the main attraction was making cold hard cash.  

I was really just trading, trying to make money to support a new family; it had nothing to do with what Bitcoin was or what the asset class was.

Tweet

What led to Twitter fame?

Melker initially started stacking up followers when he was trading the market well and posting about it on Twitter. At that point in time, his content was 100% charts and trades. 

Tweet

However, Melker didnt want his account to be based on trades because its fickle.

So, he transitioned toward a more holistic approach to his content within the crypto industry.

I would love to tell you there was some strategy that I took to grow my account, but it was always just me doing whatever I enjoyed doing the most at any given time.

Melker has observed a direct correlation between his follower growth and the performance of the crypto market.

During previous bull markets, he has experienced an insane influx of daily followers. 

There was a time when I was getting a hundred thousand [followers] in two months, he says.

Melker used to literally respond to everybody who commented on his tweets or messaged him, but that ship has now sailed.

Thats like a full-time job, and then you just get to the point where you literally cant open all your DMs anymore, he says.

But its best not to refer to him as an influencer.

I hate the term influencer because, to me, Im just a student of crypto, and its something Im passionate about and want to learn more about.

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What type of content do you do?

Melkers content revolves around crypto news and keeping people up-to-date with whats happening in the market.

He likes to share his take on whats important, and whats kind of noise and not signal.

[My content includes] all the lessons that Ive learned in my streams and podcasts, but I would say its generally educational/informational content about this market.

Melker emphasizes the overwhelming pressure he faces whenever he decides to fire off a tweet, considering how many followers he has amassed on Twitter.

Twitter is like a movie where you throw a grenade in a room and walk away, and theres a huge explosion behind you. Thats how I feel every time I send a tweet now, Melker says.

Tweet

Extreme beef: Gary Gensler

Melker is not a fan of United States Securities and Exchange Commission Chair Gary Gensler. 

He admits that his Twitter is filled with many angry tweets against Gensler. 

I literally contributed to aggressively getting #firegarygensler trending on Twitter, he declares.

Tweet

He explains that his problem with Gensler is his recent regulatory actions, which he perceives as a massive overcorrection targeting crypto firms. 

He believes that it stems from a sense of embarrassment over the fact Gensler was meeting with Sam Bankman-Fried before the collapse of FTX and didnt realize he was a fraud.

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Spicy beef: ZachXBT

ZachXBT, a pseudonymous on-chain researcher, accused Melker of pumping and dumping shit coins to his followers in 2021. It was a troubling time for Melker, who received threats and became the target of white-hot anger.

Melker vehemently refuted the claims and announced he would steer clear of tweeting about projects with small market caps altogether.

Melker says he doesnt want his audience to get the wrong idea and prefers to focus on the educational stuff. He reiterates that he was passionate about trading altcoins, but says it can be difficult to navigate the boundaries of what you should and shouldnt talk about as your following grows.

You dont just show up with 900,000 followers one day and understand what you can and cannot tweet about.

Tweet

Price predictions?

Theres nothing that makes you look dumber than a price prediction, Melker states. He should know, given he took an optimistic swing at predicting Ethereum would hit five figures in 2021.

However, he is bullish on Bitcoin hitting six figures in the next bull run.

I think the next cycle would be somewhere between 100 (thousand) and 250 (thousand), he declares. 

But Melker believes that after that, the market will see another huge decline before it hits half a million.

Then we drop down to 60 (thousand), and its boring forever. Then, we pop up to half a million, like we continue these four-year cycles.

However, Melker doesnt want to live in a world where Bitcoin is a million dollars.

The faster it happens, the worse the world is, Melker says.

Because if Bitcoin goes to a million dollars. It means that everything else has exploded, including the United States dollar, and were living in some Mad Max dystopian future.

Where you and I are those guys without faces painted going to gas town, fighting off the enemies, he describes, referring to the 2015 movie Mad Max: Fury Road.

But maybe in a couple of decades.

I would like to see Bitcoin at a million dollars in 20 years, following reasonable cycles, he adds.

Multichain saga screws users, Binance fires 1,000 staff: Asia Express

The Multichain saga includes secret arrests, a suspicious exploit, and one man allegedly in control of $1.5B. Plus, Binance fires staff.

Decentralized Web 3 cross-chain router allegedly under control of one-man

Imagine a system where all your money is controlled by one man and his family and when there is cause for concern, the propaganda machine immediately goes ‘brrr’ to put on a facade that everything is just fine despite some alarming withdrawls. Sounds more like a one party state? No, welcome to blockchain, specifically, Multichain. 

Multichain
A man alleged to be Multichain co-founder and CEO Zhao Jun (CryptoRank)

On July 14, Chinese decentralized cross-chain bridge protocol Multichain announced that it would cease operations after three years. The reason? The only person allegedly holding the private keys to over $1.5 billion in users’ crypto stored on Multichain was its co-founder and CEO Zhao Jun and later, his sister (name unknown). Both were arrested by Chinese police but it’s still not clear why. 

Zhao Jun was reportedly arrested as early as May 21, but it appears that Multichain staff did not want you to know that… until now, when one discrepancy after another made it impossible to bury the truth. 

The whole ordeal started on or around May 24, when Multichain users reported that funds had not arrived for nearly 72 hours after being sent. Admins immediately responded that the delay was due to a backend node upgrade “taking longer than expected,” and that “all affected transactions will arrive after the upgrade is complete.”

“Most routes are working as usual, as some routes (Kava, zkSync, Polygon zkEVM) are temporarily suspended. All affected transactions will arrive after the upgrade is complete. We sincerely apologize for the inconvenience caused.”

At that time, some users were already aware of CEO Zhao Jun’s arrest by Chinese police. In response, co-founder Alfred Xu decided to step in to quash the “rumors” and save users from “disinformation,” writing in the protocol’s Chinese Telegram channel: “Currently all team members are safe and sound; the main operations are proceeding as normal.”

Despite assurances, worries turned into a full-blown panic on May 25 when local news outlet PANewsLab reported that CEO was unreachable. This time, it was fellow co-founder DJ Qian who stepped in and assured that “user assets and staff are safe.” However, Qian also confirmed Zhao Jun’s disappearance. For the next month, Multichain continued to promote its cross-chain protocol. 

Multichain 2

Fast forward to July 7, users began noticing over $100 million in unauthorized withdrawals from Multichain’s Fantom Ethereum bridge, along with funds from other sidechains. Around $65 million in Tether (USDT) and USD Coin (USDC) were frozen by their issuers, Tether and Circle, after the transactions led to widespread fear that Multichain was hacked. Some security experts began to suspect that the hack may be an inside job. 

Chainalysis
Movement of Multichain users’ USDC assets by the ‘hacker’ (Chainalysis)

According to Multichain: 

“User assets locked on the MPC addresses were transferred to unknown addresses abnormally. Login information from an IP address in Kunming was found on the cloud server platform, along with a series of operations transferring funds from the MPC addresses.”

Developers wrote that on July 9, Zhao Jun’s sister transferred the remaining assets from a router pool to wallet addresses controlled by her as an “asset preservation action.” Four days later, Zhao Jun’s sister was reportedly arrested by police (again it’s not clear why she was arrested). Because Zhao Jun and his sister were the only ones who had access to operational funds, users’ assets, Multichain servers, and even its website (which its own team is trying to shut down) “since inception,” the project’s own development team can no longer function.  

“Later, the team established contact with Zhaojun’s family and learned that all of Zhaojun’s computers, phones, hardware wallets, and mnemonic phrases were confiscated by the authorities.”

Unfortunately, the worst may still be yet to come for Multichain’s users

To this day, we don’t actually know why Zhao Jun was arrested, what he had been charged with, or any details regarding his case (and no, I don’t think Multichain will tell us either). However, under Chinese law, funds seized as part of a criminal investigation may be considered proceeds of crime, opening a pathway to possible seizure by the state. In that case, it would be an absolute tragedy, unlike Multichain’s decision to leave its entire keys and access in the hands of one (or two) person.TVL on the platform is now down to $139 million.

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Binance’s unusual anniversary gift to employees: Unemployment

On the sixth anniversary of the crypto exchange’s founding, Binance decided to give some its staff a gift to celebrate the occasion. However, most of the recipients wished they had never opened it. 

On July 14, Changpeng Zhao (CZ), Binance’s CEO, shilled the sixth year anniversary event, stating, “We will always do what we think is in users’ best interests. We will continue collaborating with regulators. We will also defend what we believe is right,” for the path ahead. The same day, the Wall Street Journal (WSJ) reported that the exchange had reduced its staff count by as much as 1,000 in recent weeks, out of a total count of 8,000 before the layoffs.

According to employees, the layoffs were focused on the global and customer service sectors, with reductions possible of up to one-third of its overall staff count due to ongoing reorganization. The WSJ labels an ongoing U.S. Department of Justice investigation as “the most enduring” challenge facing the exchange. 

In response, CZ wrote: 

“As we continuously strive to increase talent density, there are involuntary terminations. This happens in every company. The numbers reported by media are all way off. 4 FUD.”

The blockchain executive said that despite the layoffs, Binance is “still hiring.” On its website, the exchange currently lists 96 positions available at the time of publication. 

On July 17, the WSJ released a follow-up report claiming that the exchange had ceased employee reimbursements for items such as mobile phones, fitness and working from home, citing “current market environment and regulatory climate,” and the need to slash expenses. Binance is currently undergoing litigation with both the U.S. Securities and Exchange Commission and the U.S. Commodities and Futures Trading Commission on charges of offering unregistered securities and operating an unregistered exchange in the U.S. 

CZ

AI Eye: AI content cannibalization problem, Threads a loss leader for AI data?

The reason AIs will always need humans, religous chatbots urge death to infidels, and is Threads’ real purpose to generate AI training data?

ChatGPT eats cannibals

ChatGPT hype is starting to wane, with Google searches for ChatGPT down 40% from its peak in April, while web traffic to OpenAIs ChatGPT website has been down almost 10% in the past month. 

This is only to be expected however GPT-4 users are also reporting the model seems considerably dumber (but faster) than it was previously.

One theory is that OpenAI has broken it up into multiple smaller models trained in specific areas that can act in tandem, but not quite at the same level.

AI tweet

But a more intriguing possibility may also be playing a role: AI cannibalism.

The web is now swamped with AI-generated text and images, and this synthetic data gets scraped up as data to train AIs, causing a negative feedback loop. The more AI data a model ingests, the worse the output gets for coherence and quality. Its a bit like what happens when you make a photocopy of a photocopy, and the image gets progressively worse.

While GPT-4s official training data ends in September 2021, it clearly knows a lot more than that, and OpenAI recently shuttered its web browsing plugin. 

A new paper from scientists at Rice and Stanford University came up with a cute acronym for the issue: Model Autophagy Disorder or MAD.

“Our primary conclusion across all scenarios is that without enough fresh real data in each generation of an autophagous loop, future generative models are doomed to have their quality (precision) or diversity (recall) progressively decrease,” they said. 

Essentially the models start to lose the more unique but less well-represented data, and harden up their outputs on less varied data, in an ongoing process. The good news is this means the AIs now have a reason to keep humans in the loop if we can work out a way to identify and prioritize human content for the models. Thats one of OpenAI boss Sam Altmans plans with his eyeball-scanning blockchain project, Worldcoin.  

Tom Goldstein

Is Threads just a loss leader to train AI models?

Twitter clone Threads is a bit of a weird move by Mark Zuckerberg as it cannibalizes users from Instagram. The photo-sharing platform makes up to $50 billion a year but stands to make around a tenth of that from Threads, even in the unrealistic scenario that it takes 100% market share from Twitter. Big Brain Dailys Alex Valaitis predicts it will either be shut down or reincorporated into Instagram within 12 months, and argues the real reason it was launched now was to have more text-based content to train Metas AI models on.”

ChatGPT was trained on huge volumes of data from Twitter, but Elon Musk has taken various unpopular steps to prevent that from happening in the future (charging for API access, rate limiting, etc).

Zuck has form in this regard, as Metas image recognition AI software SEER was trained on a billion photos posted to Instagram. Users agreed to that in the privacy policy, and more than a few have noted the Threads app collects data on everything possible, from health data to religious beliefs and race. That data will inevitably be used to train AI models such as Facebooks LLaMA (Large Language Model Meta AI).
Musk, meanwhile, has just launched an OpenAI competitor called xAI that will mine Twitters data for its own LLM.

CounterSocial
Various permissions required by social apps (CounterSocial)

Religious chatbots are fundamentalists

Who would have guessed that training AIs on religious texts and speaking in the voice of God would turn out to be a terrible idea? In India, Hindu chatbots masquerading as Krishna have been consistently advising users that killing people is OK if its your dharma, or duty.

At least five chatbots trained on the Bhagavad Gita, a 700-verse scripture, have appeared in the past few months, but the Indian government has no plans to regulate the tech, despite the ethical concerns. 

“Its miscommunication, misinformation based on religious text,” said Mumbai-based lawyer Lubna Yusuf, coauthor of the AI Book. A text gives a lot of philosophical value to what they are trying to say, and what does a bot do? It gives you a literal answer and thats the danger here.” 

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AI doomers versus AI optimists

The worlds foremost AI doomer, decision theorist Eliezer Yudkowsky, has released a TED talk warning that superintelligent AI will kill us all. Hes not sure how or why, because he believes an AGI will be so much smarter than us we wont even understand how and why its killing us like a medieval peasant trying to understand the operation of an air conditioner. It might kill us as a side effect of pursuing some other objective, or because it doesnt want us making other superintelligences to compete with it.”

He points out that Nobody understands how modern AI systems do what they do. They are giant inscrutable matrices of floating point numbers. He does not expect “marching robot armies with glowing red eyes but believes that a smarter and uncaring entity will figure out strategies and technologies that can kill us quickly and reliably and then kill us.” The only thing that could stop this scenario from occurring is a worldwide moratorium on the tech backed by the threat of World War III, but he doesnt think that will happen.

In his essay Why AI will save the world,” A16zs Marc Andreessen argues this sort of position is unscientific: What is the testable hypothesis? What would falsify the hypothesis? How do we know when we are getting into a danger zone? These questions go mainly unanswered apart from You cant prove it wont happen!

Microsoft boss Bill Gates released an essay of his own, titled The risks of AI are real but manageable, arguing that from cars to the internet, “people have managed through other transformative moments and, despite a lot of turbulence, come out better off in the end.”

“Its the most transformative innovation any of us will see in our lifetimes, and a healthy public debate will depend on everyone being knowledgeable about the technology, its benefits, and its risks. The benefits will be massive, and the best reason to believe that we can manage the risks is that we have done it before.”

Data scientist Jeremy Howard has released his own paper, arguing that any attempt to outlaw the tech or keep it confined to a few large AI models will be a disaster, comparing the fear-based response to AI to the pre-Enlightenment age when humanity tried to restrict education and power to the elite.

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“Then a new idea took hold. What if we trust in the overall good of society at large? What if everyone had access to education? To the vote? To technology? This was the Age of Enlightenment.”

His counter-proposal is to encourage open-source development of AI and have faith that most people will harness the technology for good.

“Most people will use these models to create, and to protect. How better to be safe than to have the massive diversity and expertise of human society at large doing their best to identify and respond to threats, with the full power of AI behind them?”

OpenAIs code interpreter

GPT-4s new code interpreter is a terrific new upgrade that allows the AI to generate code on demand and actually run it. So anything you can dream up, it can generate the code for and run. Users have been coming up with various use cases, including uploading company reports and getting the AI to generate useful charts of the key data, converting files from one format to another, creating video effects and transforming still images into video. One user uploaded an Excel file of every lighthouse location in the U.S. and got GPT-4 to create an animated map of the locations. 

All killer, no filler AI news

Research from the University of Montana found that artificial intelligence scores in the top 1% on a standardized test for creativity. The Scholastic Testing Service gave GPT-4s responses to the test top marks in creativity, fluency (the ability to generate lots of ideas) and originality.

Comedian Sarah Silverman and authors Christopher Golden and Richard Kadreyare suing OpenAI and Meta for copyright violations, for training their respective AI models on the trios books. 

Microsofts AI Copilot for Windows will eventually be amazing, but Windows Central found the insider preview is really just Bing Chat running via Edge browser and it can just about switch Bluetooth on. 

Anthropics ChatGPT competitor Claude 2 is now available free in the UK and U.S., and its context window can handle 75,000 words of content to ChatGPTs 3,000 word maximum. That makes it fantastic for summarizing long pieces of text, and its not bad at writing fiction. 

Video of the week

Indian satellite news channel OTV News has unveiled its AI news anchor named Lisa, who will present the news several times a day in a variety of languages, including English and Odia, for the network and its digital platforms. The new AI anchors are digital composites created from the footage of a human host that read the news using synthesized voices,” said OTV managing director Jagi Mangat Panda.

AI Eye: AI’s trained on AI content go MAD, is Threads a loss leader for AI data?

The reason AIs will always need humans, religous chatbots urge death to infidels, and is Threads’ real purpose to generate AI training data?

ChatGPT eats cannibals

ChatGPT hype is starting to wane, with Google searches for ChatGPT down 40% from its peak in April, while web traffic to OpenAIs ChatGPT website has been down almost 10% in the past month. 

This is only to be expected however GPT-4 users are also reporting the model seems considerably dumber (but faster) than it was previously.

One theory is that OpenAI has broken it up into multiple smaller models trained in specific areas that can act in tandem, but not quite at the same level.

AI tweet

But a more intriguing possibility may also be playing a role: AI cannibalism.

The web is now swamped with AI-generated text and images, and this synthetic data gets scraped up as data to train AIs, causing a negative feedback loop. The more AI data a model ingests, the worse the output gets for coherence and quality. Its a bit like what happens when you make a photocopy of a photocopy, and the image gets progressively worse.

While GPT-4s official training data ends in September 2021, it clearly knows a lot more than that, and OpenAI recently shuttered its web browsing plugin. 

A new paper from scientists at Rice and Stanford University came up with a cute acronym for the issue: Model Autophagy Disorder or MAD.

“Our primary conclusion across all scenarios is that without enough fresh real data in each generation of an autophagous loop, future generative models are doomed to have their quality (precision) or diversity (recall) progressively decrease,” they said. 

Essentially the models start to lose the more unique but less well-represented data, and harden up their outputs on less varied data, in an ongoing process. The good news is this means the AIs now have a reason to keep humans in the loop if we can work out a way to identify and prioritize human content for the models. Thats one of OpenAI boss Sam Altmans plans with his eyeball-scanning blockchain project, Worldcoin.  

Tom Goldstein

Is Threads just a loss leader to train AI models?

Twitter clone Threads is a bit of a weird move by Mark Zuckerberg as it cannibalizes users from Instagram. The photo-sharing platform makes up to $50 billion a year but stands to make around a tenth of that from Threads, even in the unrealistic scenario that it takes 100% market share from Twitter. Big Brain Dailys Alex Valaitis predicts it will either be shut down or reincorporated into Instagram within 12 months, and argues the real reason it was launched now was to have more text-based content to train Metas AI models on.”

ChatGPT was trained on huge volumes of data from Twitter, but Elon Musk has taken various unpopular steps to prevent that from happening in the future (charging for API access, rate limiting, etc).

Zuck has form in this regard, as Metas image recognition AI software SEER was trained on a billion photos posted to Instagram. Users agreed to that in the privacy policy, and more than a few have noted the Threads app collects data on everything possible, from health data to religious beliefs and race. That data will inevitably be used to train AI models such as Facebooks LLaMA (Large Language Model Meta AI).
Musk, meanwhile, has just launched an OpenAI competitor called xAI that will mine Twitters data for its own LLM.

CounterSocial
Various permissions required by social apps (CounterSocial)

Religious chatbots are fundamentalists

Who would have guessed that training AIs on religious texts and speaking in the voice of God would turn out to be a terrible idea? In India, Hindu chatbots masquerading as Krishna have been consistently advising users that killing people is OK if its your dharma, or duty.

At least five chatbots trained on the Bhagavad Gita, a 700-verse scripture, have appeared in the past few months, but the Indian government has no plans to regulate the tech, despite the ethical concerns. 

“Its miscommunication, misinformation based on religious text,” said Mumbai-based lawyer Lubna Yusuf, coauthor of the AI Book. A text gives a lot of philosophical value to what they are trying to say, and what does a bot do? It gives you a literal answer and thats the danger here.” 

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AI doomers versus AI optimists

The worlds foremost AI doomer, decision theorist Eliezer Yudkowsky, has released a TED talk warning that superintelligent AI will kill us all. Hes not sure how or why, because he believes an AGI will be so much smarter than us we wont even understand how and why its killing us like a medieval peasant trying to understand the operation of an air conditioner. It might kill us as a side effect of pursuing some other objective, or because it doesnt want us making other superintelligences to compete with it.”

He points out that Nobody understands how modern AI systems do what they do. They are giant inscrutable matrices of floating point numbers. He does not expect “marching robot armies with glowing red eyes but believes that a smarter and uncaring entity will figure out strategies and technologies that can kill us quickly and reliably and then kill us.” The only thing that could stop this scenario from occurring is a worldwide moratorium on the tech backed by the threat of World War III, but he doesnt think that will happen.

In his essay Why AI will save the world,” A16zs Marc Andreessen argues this sort of position is unscientific: What is the testable hypothesis? What would falsify the hypothesis? How do we know when we are getting into a danger zone? These questions go mainly unanswered apart from You cant prove it wont happen!

Microsoft boss Bill Gates released an essay of his own, titled The risks of AI are real but manageable, arguing that from cars to the internet, “people have managed through other transformative moments and, despite a lot of turbulence, come out better off in the end.”

“Its the most transformative innovation any of us will see in our lifetimes, and a healthy public debate will depend on everyone being knowledgeable about the technology, its benefits, and its risks. The benefits will be massive, and the best reason to believe that we can manage the risks is that we have done it before.”

Data scientist Jeremy Howard has released his own paper, arguing that any attempt to outlaw the tech or keep it confined to a few large AI models will be a disaster, comparing the fear-based response to AI to the pre-Enlightenment age when humanity tried to restrict education and power to the elite.

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“Then a new idea took hold. What if we trust in the overall good of society at large? What if everyone had access to education? To the vote? To technology? This was the Age of Enlightenment.”

His counter-proposal is to encourage open-source development of AI and have faith that most people will harness the technology for good.

“Most people will use these models to create, and to protect. How better to be safe than to have the massive diversity and expertise of human society at large doing their best to identify and respond to threats, with the full power of AI behind them?”

OpenAIs code interpreter

GPT-4s new code interpreter is a terrific new upgrade that allows the AI to generate code on demand and actually run it. So anything you can dream up, it can generate the code for and run. Users have been coming up with various use cases, including uploading company reports and getting the AI to generate useful charts of the key data, converting files from one format to another, creating video effects and transforming still images into video. One user uploaded an Excel file of every lighthouse location in the U.S. and got GPT-4 to create an animated map of the locations. 

All killer, no filler AI news

Research from the University of Montana found that artificial intelligence scores in the top 1% on a standardized test for creativity. The Scholastic Testing Service gave GPT-4s responses to the test top marks in creativity, fluency (the ability to generate lots of ideas) and originality.

Comedian Sarah Silverman and authors Christopher Golden and Richard Kadreyare suing OpenAI and Meta for copyright violations, for training their respective AI models on the trios books. 

Microsofts AI Copilot for Windows will eventually be amazing, but Windows Central found the insider preview is really just Bing Chat running via Edge browser and it can just about switch Bluetooth on. 

Anthropics ChatGPT competitor Claude 2 is now available free in the UK and U.S., and its context window can handle 75,000 words of content to ChatGPTs 3,000 word maximum. That makes it fantastic for summarizing long pieces of text, and its not bad at writing fiction. 

Video of the week

Indian satellite news channel OTV News has unveiled its AI news anchor named Lisa, who will present the news several times a day in a variety of languages, including English and Odia, for the network and its digital platforms. The new AI anchors are digital composites created from the footage of a human host that read the news using synthesized voices,” said OTV managing director Jagi Mangat Panda.