Category Archives: Web3, Decentralization, DAOs
New York Judge Rules Emojis Count as Financial Advice in Dapper Labs Court Case
CoinGeek | Steve Kaaru | Mar 2, 2023
Image: Pixabay/iamaliuyar
A New York judge has ruled that Dapper Labs, the creators of NBA Top Shot Moments, used the emojis to indicate a return on investment for investors.
- Dapper Labs is facing a class-action lawsuit from investors who claim that it violated securities laws through the sale of its NBA Top Shot Moments NFT collection. The company, whose fortunes have drastically turned amid the NFT sales dip, has been fighting to dismiss the lawsuit. One of its arguments hinged on social media promotions of the Moments collection.
- We all love to use emojis to express ourselves, but the next time you use a “to the moon” rocket ship emoji, beware, as you could be offering financial advice.
See: Kim Kardashian Pays $1.26M to the SEC in Penalties for Unlawfully Touting Crypto
- Ruling: As a former Securities and Exchange Commission (SEC) official revealed recently, a New York judge has ruled that the company offered investment advice using emojis on Twitter. In his 64-page ruling, Judge Victor Marrero of the Southern District of New York subjected the Moments NFT collection to the Howey Test. Under the third prong —a security is a transaction in which there’s an expectation of profit—Judge Marrero ruled that the company’s use of emojis led investors to believe they would make a profit by purchasing the NFTs.
- The emoji accusation has sparked the most heated debate within the digital asset industry and beyond.
- Tweets with emojis in question:
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Dapper Labs CEO in the Hot Seat with Toxic Culture, Extravagant Tastes, and Court Battle
The Block | RT Watson | March 1, 2023
Image: Zillow. $85 million Beverly Hills mansion Dapper Labs CEO Gharegozlou rented. Private jet travel and luxury accommodations were often marked down as "marketing" expenses.
Dapper Labs CEO and co-founder Roham Gharegozlou’s extravagant spending and habit of bullying employees, is said to have resulted in high employee turnover as the company struggled in a bear market.
- Goham Gharegozlou, CEO and co-founder of Dapper Labs, rose to prominence along with the once wildly popular NFT collection his company created, NBA Top Shot. Gharegozlou forged partnerships with an impressive list of stars like Michael Jordan, Will Smith, Ashton Kutcher and the National Basketball League. Dapper’s investor list was equally impressive, with Andreessen Horowitz, Google Ventures and Samsung all giving the startup money.
- It only took about three and a half years for Gharegozlou to guide Dapper to a staggering $7.6 billion valuation, much of it realized during a bull run that saw cryptocurrencies and NFT prices achieve record highs.
- 'Roped in by the highlife': With NBA Top Shot generating buzz, Gharegozlou started receiving calls from famous entrepreneur celebrities and top CEOs, said one person familiar with the matter. Two people said he could land a meeting with practically anyone he wanted.
- The CEO began to fly frequently on private jets that would generally cost between $60,000 and $100,000 per flight
- Gharegozlou routinely rented mansions whenever he traveled, including once renting a 12-bedroom, $85 million mansion in Beverly Hills that can cost $300,000 a month
See: NBA Top Shot NFT Case: Judge Says May Have to Register with Regulators
- Behind the scenes many of his company’s employees lived in fear of what they called the CEO’s erratic nature. Several employees also found the first-time CEO’s spendthrift ways imprudent, especially when the NFT market began to sour, Top Shot sales plummeted and layoffs at Dapper became common.
- Inside Dapper, much of the company was in turmoil. Senior leader exits were becoming commonplace, and those employees left behind were tired and frustrated. The CEO’s constant “bullying” and “public shaming” of employees only added to the fire, helping to stoke a toxic company culture.
- According to several former employees, the CEO’s frequent private jet travel, pursuit of celebrity partners and spending on luxurious accommodations, which at one point included a $85 million Beverly Hills mansion, had people questioning Gharegozlou’s priorities.
- Layoffs: Last week Dapper laid off 20% of its full-time staff. Four months earlier, it parted ways with 22% of its employees.
- Court battle over securities laws: Dapper also now finds itself in the midst of a court battle to determine whether the company violated securities laws by selling NBA Top Shot Moments NFTs without the standard registration and disclosures which is applied to other investment contracts.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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10 Most Innovative Companies in 2023: Blockchain, Crypto, Metaverse, Web3
Fast Company | Connie Lin | March 2, 2023
Image: Fast Company
In a tumultuous year for crypto and the metaverse, companies such as Roblox, Nike, the Ethereum Foundation, and DressX made real inroads in digital currency, virtual goods, and more.
- Cryptocurrency may have rocketed into the stratosphere during the pandemic, but in 2022, it came crashing back down to Earth. Millions of people lost billions in the implosions of Terra-Luna, then Celsius, then FTX. With the industry’s dead weight cut loose, some crypto advocates saw a chance for the truly innovative ideas buried amid the rubble to soar.
- Of course, that meant reimagining what the future of Web3 might look like as companies race to settle crypto’s wild west—including the metaverse, a nebulous concept that many have linked to Web3’s growth as our lives continue to get more digital.
- Roblox, DressX, and Emperia gave us glimpses into that still-uncharted territory, with successful forays in digital currency, avatar fashion, and virtual shopping experiences.
- Nike staked its claim among Web3 hypebeasts by channeling sneakerhead culture into its CryptoKicks NFTs.
- And LinksDAO brought golf onto the blockchain with a decentralized “country club” for players to connect across the globe.
See: Anthony Di Iorio Unveils Web3 Blockchain Hardware and Game Theory Project: Andiami
- Meanwhile, other companies set out to address the industry’s pitfalls.
- Chainalysis used its forensic prowess to hunt down crypto funds stolen through hacks and scams, and
- Ledger engineered a smarter hardware wallet to keep your money safe offline.
- The Ethereum Foundation worked to mitigate crypto’s climate impact with a tech upgrade dubbed the Merge, and
- The Hundreds clapped back at the industry’s spotty track record on creator royalties with a reworked smart contract system that makes sure artists get their dues.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Bank of Canada Paper: Fragility of DeFi Lending
BoC | Jonathan Chiu, Emre Ozdenoren, Kathy Yuan, Shengxing Zhang | Feb 22, 2023
This finding highlights the difficulty of achieving stability and efficiency in a decentralized environment without a liquidity backstop.
- We develop a dynamic model of decentralized finance (DeFi) lending that incorporates two/these key features:
- 1) borrowing and lending are decentralized, anonymous, overcollateralized and backed by the market value of crypto assets where contract terms are pre-specified and rigid; and
- 2) information friction exists between borrowers and lenders.
See: Bank-Issued Deposit Tokens Emerge and JP Morgan Sees Them Going DeFi
- We show that flexible updates of smart contracts can restore equilibrium uniqueness.
- We identify a price-liquidity feedback: the market outcome in any given period depends on agents’ expectations about lending activities in future periods, with higher price expectations leading to more lending and higher prices in that period.
- Given the rigidity inherent to smart contracts, this feedback leads to multiple self-fulfilling equilibria where DeFi lending and asset prices move with market sentiment.
- We show that flexible updates of smart contracts can restore equilibrium uniqueness.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Binance Accused of Copying Idea for Bicasso from Steemhunt’s Chatcasso
CryptoSlate | Christian Nwobodo | Mar 3, 2023
Illustration via CryptoSlate
Binance allegedly copied the idea for "Bicasso" from Steemhunt's "Chatcasso"- an AI product that won the BNB Chain hackathon of December 2022.
- Bicasso: Leading crypto exchange Binance launched the beta version of Bicasso on March 1. The AI product was designed to allow users to easily turn their images and texts into NFTs using AI technology.
See: NBA Top Shot NFT Case: Judge Says May Have to Register with Regulators
- Korea-based Steemhunt has accused Binance of stealing their product idea for Chatcasso to launch the exchange’s AI product- Bicasso.
- Chatcasso won first place in the BNB hackathon and received the winning price of $5,000. “We were ecstatic, to say the least. We thought our hard work paid off, and that we had a great product foundation we could keep building on. But it seems like Binance had other plans,” ggoma said.
- Credit to Steemhunt? Members of the crypto community have expressed dissatisfaction over Binance’s approach to launching Bicasso. Some Twitter users said that Binance should have at least given due recognition and credit to the team before copying their idea.
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CoinDesk | Cam Thompson | Mar 1, 2023
Binance Releases AI-Powered NFT Generator "Bicasso"
See: Generative AI: A Primer On Canadian AI and IP
- Bicasso is similar to AI art platforms such as DALL-E or Midjourney, where users can type in a creative prompt to produce a unique image or upload an image for the tool to adapt. Users can then mint their images as NFTs on Binance’s native BNB chain.
- “You can turn your creative visions into NFTs with AI,” Binance CEO Changpeng Zhao said on Twitter. “Give it a try and show me what you make with it.”
Here’s a fun new #Binance AI product called #Bicasso 🎨
You can turn your creative visions into NFTs with AI. Give it a try and show me what you make with it.
Beta version live now, limited to 10k mints.
➡️ https://t.co/QeQS7oh9uH pic.twitter.com/22Dllhg2sP
— CZ 🔶 BNB (@cz_binance) March 1, 2023
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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IMF 9 Point Action Plan for Crypto Asset Treatment: Recommends Against Legal Tender Status
Reuters | Marc Jones | Feb 23, 2023
Image: Unsplash/Dmitry Demidko
The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies such as bitcoin legal tender status.
- The global lender of last resort said its Executive Board had discussed a paper, "Elements of Effective Policies for Crypto Assets," that provided "guidance to IMF member countries on key elements of an appropriate policy response to crypto assets."
- The top recommendation was to "safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status."
See: IMF Magazine: Money Revolution in the Age of Crypto and CBDCs
- The IMF had hit out at El Salvador in late 2021 when the central American country became the first to adopt bitcoin as legal tender, a move that has since been copied by Central African Republic.
- Other advice on Thursday's list, which comes as G20 decision makers meet in India, included guarding against excessive capital flows, adopting unambiguous tax rules and laws around crypto assets, and developing and enforcing oversight requirements for all crypto market actors.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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6 Phases of Web3 Product-Market-Fit
Cointelegraph | Nitin Kumar | Feb 28, 2023
Image: Freepik/starline
The concept of Web3 product-market fit is crucial for the success of decentralized applications and platforms in the Web3 ecosystem.
- Web3 platforms can begin their product-market fit journey with the distribution of utility tokens via airdrops or bounties creating a community-operated workforce. Permissionless product innovation, leaderless movements (e.g., Bitcoin) and faceless branding are more nuanced than Web2 traditionalists would care to understand.
- There are six broad and overlapping phases to achieve product-market fit, with key outcomes being the desirability, viability and economic feasibility of the product:
- Progressive decentralization: This is a term coined by Andreessen Horowitz and it talks about three phases: product-market fit by drawing the right initial users even during the time the product is controlled by the founding team, incentivizing more users by turning them into a community and eventually turning operational control and decision making to the community.
- Establish utility: Discovering and establishing utility takes time, experimentation and an iterative process. Early community members prototype use cases and dApps and engineer some utility into the tokens, driving initial growth. When platforms, products or protocols emerge from the early stages, foundational elements of utility must prove themselves and can be measured through various KPIs such as total value locked, developer activity, etc.
See: Tencent’s Finally Marching into Web3
- Momentum: Once the utility is established, it needs to be accelerated. For example, expanded uses cases such as collateralization, flash loans, burning, etc., through adding vectors of token programmability. Some have activated a variety of momentum vectors (e.g., DeFi, gaming, DAOs, etc.), attracting different types of developers who can add multifaceted programmability and utilities for adding momentum.
- Network effect Alpha (Metcalf's law) are the moat of any platform or protocol; they strengthen and accelerate functionalities around the thesis and narratives. Network effects (Metcalfe’s Law) such as more users and more usage
- Network effect beta (Reed’s Law): A strong foundational narrative and functionality will create a thriving ecosystem to manifest Metcalfe’s Law, but if the ecosystem’s value is compelling, they spawn their own ecosystems
- Economic flywheel: Once the power of Metcalfe and Reed’s laws come together, it jumpstarts the economic flywheel which can create exponential growth for the platform or protocol. The more value created by community and ecosystems (dApp development, marketing, core development, etc.), the more the demand for platform usage, development and potentially even higher token prices.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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