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Airbnb Co-Founder Backs $22 Million Funding for Crypto Dealer SFOX

A cryptocurrency dealer setting out to provide trading services for institutional investors has closed a Series A funding round of $22.7 million.

Called SFOX, the platform announced on Thursday that its new equity financing was led by Tribe Capital and Social Capital, and has backing from Airbnb co-founder Nathan Blecharczyk, Y Combinator, Danhua Venture Capital, Digital Currency Group and more.

Founded in 2014, SFOX operates as a trading hub for institutional investors, high-net-worth individuals and family offices. The firm helps these high volume traders fulfill their buy and sell orders by executing them through its integrations with different cryptocurrency exchanges.

SFOX aims to minimize the impact of high volume trading on the cryptocurrency market, while boosting trading liquidity – “one of the most significant barriers to institutional cryptocurrency adoption,” according to Arjun Sethi, co-founder and partner at Tribe Capital.

SFOX claims in the announcement that it has facilitated over $9 billion in transaction volume so far, and reports a 12-fold growth in client numbers already this year.

With the new funding, SFOX said it is working on rolling out crypto-asset management services, in addition to the existing trading facility. It also plans to increase manpower and expand to more geographic regions in the coming 12 months. 

SFOX’s chief executive Akbar Thobhani – who was previously head of growth and business development at Airbnb – said the plan is a response to increasing interest from clients in a greater level of exposure to cryptocurrency assets.

Thobhani commented:

 “We continue to observe sustained and increasing demand from institutions that want to include cryptocurrencies as part of a diverse portfolio but are reluctant to do so because of uncertainty and volatility.”

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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'Keep NEO One!' Investors Protest a Proposal to Make Crypto Coins Divisible

Tokens on the blockchain protocol neo may be indivisible – but it’s becoming apparent that its community is not.

Perhaps ironically, it’s the very notion of indivisibility that has proved contentious to the coin’s investors and users in recent weeks. More specifically, a Github proposal to change the structure of the NEO token – one of two tokens native to the network (GAS is the second) – has the project’s token holders up in arms.

Authored by neo co-founder Erik Zhang, the post ideates a new economic model for the upcoming version (3.0) of the neo software, one the developer team hopes will better incentivize active participation in the network, but that will also see the NEO token become divisible.

It’s the latter change that has many network stakeholders in a frenzy.

One Discord user described the idea of making NEO divisible as “just plain dumb,” while others worried about its potential impact on NEO and GAS prices, saying:

“Divisible NEO is big BS, I would never vote for that. Price will go to trash if they do that.”

But Da Hongfei, another co-founder of neo, said the proposal illustrates a system that can overcome the “technical constraints” of the blockchain, like slow transaction speeds, while setting the stage for loftier goals, like the decentralization of the network’s governance process.

Previously called Antshares, neo was founded in 2014 with the goal of creating an enterprise-grade blockchain designed for digital assets, identity and smart contracts. After raising more than $3.7 million during an initial coin offering (ICO) and launching its live blockchain, or mainnet, in 2016, the project has scored significant interest, even being referred to as “China’s ethereum” at points.

As of today, however, it’s established a name for itself, and its tokens are valued at over $2 billion. Nonetheless, the co-founders believe the architecture of the network needs to be reworked.

According to Hongfei, the NEO token is currently indivisible for technical reasons that relate to its twin token model.

“NEO is kind of like the stake of the network; GAS is designed as a utility,” he told CoinDesk.

In practice, this means token holders use NEO to do things like voting for the network nodes that produce blocks and validate transactions as part of the project’s delegated byzantine fault tolerant (dBFT) consensus mechanism. GAS, on the other hand, is used to pay for the execution of services on the platform, such as smart contracts.

Every time GAS is consumed on the platform, it is redistributed to all token holders. Because GAS is currently redistributed to all token holders proportionally to their NEO holding ratio, Hongfei says NEO cannot be divisible.

But this mass redistribution scheme is one thing the team behind the project would like to adjust when it next upgrades the protocol.

While reconfiguring the platform’s economic model could be overlooked as mere technical minutia, it has become a flashpoint for other issues within the neo ecosystem – namely the platform’s ongoing challenge maintaining investor trust and its founder’s promise to relinquish at least some of its power to token holders.

Empty polls and blackholes

According to Hongfei, restructuring neo’s incentives system would tackle two hazards posed by the existing model.

For one, the current scheme does not incentivize inactive participants on the network (namely, those that do not vote in node elections) to become active. These users receive valuable GAS regardless of whether they vote or not.

And that could throw a wrench in the project’s plan to “decentralize,” which is dependent on users partaking in governance, Hongfei said.

“We need incentives for NEO token holders to vote for neo consensus nodes,” he said.

The second hazard is more theoretical and involves what neo calls “blackhole addresses,” or wallets to which owners have lost their private keys.

Hongfei explained that it is possible that “GAS will gradually be redistributed to those blackhole addresses and theoretically if the time is infinite, it is possible that all gas or almost all gas will go to that address.”

In the model proposed for neo 3.0, GAS would be sent to a pool instead of being immediately redistributed to all token holders. Once in the pool, GAS would be distributed over time exclusively to token holders that partake in voting for consensus nodes.

The new distribution method would also remove the technical barrier that requires NEO to be indivisible, Hongfei continued.

Unhappy investors

One possible outcome of making the token divisible is that it could become more accessible to investors in the event of a price increase.

However, the prospect of such a significant change to the project’s economic model has left the neo community disgruntled. And even Hongfei isn’t convinced that changing NEO’s design is a good idea.

“My personal opinion is [for NEO] to remain indivisible,” he said. “The price of one NEO token is about $30, that’s not really a lot of money. I don’t think people really need to vote like a fraction of $30.”

Despite the impact the proposal could have on investors’ token holdings, their capacity to influence the design of neo 3.0 is limited. While Hongfei said that plans to alter the platform are still “under discussion, nothing is all set,” neo does not intend to allow token holders to vote on the proposed changes.

“Currently the official channel is to discuss it on Github and many developers [and] users are posting their opinions of 3.0 and everyone is listening to that,” he told CoinDesk.

But in the end, only five core developers (one of which is Erik Zhang) will decide what neo 3.0 looks like.

And according to Hongfei, that’s because it’s the developers who understand all the technical nuances of the blockchain.

“Voting is a quite tricky system. If you ask people to vote on things they don’t understand, the result won’t be good,” Hongfei told CoinDesk. “Blockchain is a system that involves a lot of value; we don’t want to make it too complicated. Complicated software will usually have complicated security issues.”

But the community seems to disagree, as one Discord user wrote:

“If there is to be voting in neo, wouldn’t voting on something as substantial as making NEO divisible make sense? Why don’t they create a voting contract to allow people to vote on it? Otherwise, it’s just a totalitarian decision anyway, and anything that follows is suspect.”

Waiting on decentralization

The revelation that neo will exclude token holders from this process is likely to raise eyebrows, particularly because the platform recently came under fire for another decision executed with limited community input.

The team claimed it had “elected” the first privately-held consensus node to the network several weeks ago. But in practice this meant that the Neo Foundation, which is comprised of Hongfei and Zhang, voted for one candidate – neo-funded developer collective City of Zion (CoZ).

Nonetheless, the foundation claimed that the event was a step toward gradually handing over power to token holders, and continues to maintain that the process was an election. And that’s because, Hongfei claims, token holders could have voted in the election, theoretically.

“Currently in neo’s client or node software people can vote as they wish. But there are really very few people that know how to do it,” he said, adding: “We didn’t advertise it.”

He also argued that token holders could have campaigned to be consensus nodes, or at least, “it’s almost possible now.”

But according to Hongfei, the current consolidation of power within the platform is all part of the plan.

“We don’t think we can be decentralized at this early stage,” he said.

The development of neo 3.0 is expected to take at least a year. In the meantime, neo is expected to elect other privately operated consensus nodes, with Dutch telecommunications company KPN projected to be the next candidate.

Speaking to the network’s planned decentralization, Hongfei said that it will come “after a few years when the protocol is more stable.”

However, what that means is anyone’s guess, as Hongfei continued:

“We don’t have like a technical definition of stable, but what we are sure of is currently it’s not.”

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Thomson Reuters Adding 50 Crypto Assets to Finance Data Feed

Canada-based information and news provider Thomson Reuters is to track a number of crypto assets on one of its desktop finance feeds, thanks to a newly inked partnership with market data aggregator CryptoCompare.

Under the deal, CryptoCompare will collate order book and trading data for 50 crypto tokens sourced from “trusted” exchanges to be provided to investors through Thomson Reuters’ Eikon platform.

According to a press release from Thomson Reuters, the added data will provide institutional investors with “reliable insight” into the crypto asset market, enabling them to predict asset price movements with “a high degree of probability.”

Sam Chadwick, Thomson Reuters’ director of strategy in innovation and blockchain, commented:

“Despite the decline in the price of many of the leading cryptocurrencies during 2018, we continue to see increasing demand from our customers for pricing coverage of the major names. … This partnership puts pricing data for this emerging market alongside other asset classes, giving our customers a more comprehensive trading view in Eikon.”

The firm added that it has been engaged with CryptoCompare since the startup took part in a blockchain hackathon hosted by Thomson Reuters in September 2016.

The addition of the new data feed comes after Thomson Reuters in May launched a “sentiment” feed for bitcoin – a service that uses AI to analyze over 400 sources of data, scouring news articles and social media posts in search of actionable insights for investors.

That feed was expanded in mid-June to cover sentiment data for 100 different cryptocurrencies.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Neo (NEO) Best Opportunity to Step in, Latest News

With the market slightly reversing in prices after the experienced losses for the past few weeks, this could be the best moment to not let the train go by. For many the present token movement could equal to loss, however for others it represents a perfect window to get themselves involved. And with all the crypto-altcoins making major movements in the industry, there are plenty of options out there.

 NEO Potential

When the coin prices are dropping, most turn to the technological strength that sleep behind the cryptocurrencies. As altcoins are doing major infrastructure/network development, traders are turning their eyes towards as opposed to Bitcoin. Still, the lead impacts the prices the most.

During the bullish trend in the crypto sphere that occurred in December 2017, and in the early month of this year (February 2018), the price of NEOincreased considerably at $187 and its market cap at that time was about $5 Billion. The crypto held its momentum towards Bitcoin’s price downtrend, thus, falling to a price tag of $144 by late February.

It is important to keep in mind that only in the last seven days the total market cap has increased from $250 bil to $275 bil. The price of NEO is at $35.95 against the US Dollar. If everything goes well for the second part of the year, this is the moment to go in.

Source: coinmarketcap

NEO Latest

NEO recently began the election of a City of Zion consensus node into its mainnet. However, this occurrence serves as the avenue for the decentralization of its blockchain network.

To have it clear, the above mentioned City of Zion are an independent group made of translators, designers and developers with a global reach that have teamed up to back up NEO core and the network as a total.

“We have to be very careful with decentralization of the consensus nodes, because the protocol of NEO is evolving very fast. We need those consensus nodes to act very quickly to upgrade, and if there is a bug or a security issue, we need them to respond very quickly. So we’re doing the decentralization process slowly, gradually and very carefully.” – Founder of NEO – Da Hongfei

160 teams are competing to develop the most engaging gaming applications based on the NEO blockchain network.

The competition, run by NewEconoLab, is trying to make the network famous among game developers and the gaming community. According to its rules, all games must be open-source and NEO-blockchain based, with assets, behavior data and game logic being put on the chain. Registration opened in May.

 The rebranded Antshares – NEO is in a similar position as various successful Chinese firms as it aims to be a platform for a smart economy through its NEP-5 tokens. Very-ecosystem impacting were various ICOs that were executed on the platform like Deepbrain Chain, Qlink and Ontology. It runs on the Byzantine Fault Tolerant consensus function, by which it is targeting to offer solutions for the Byzantine Generals Problem.

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Crypto Tycoon Resigns From Blockchain Fund After Alleged Defamation

Li Xiaolai, a noted cryptocurrency investor and early bitcoin evangelist in China, has resigned from his role as managing partner of the $1 billion Hangzhou Xiong’An Blockchain Fund after alleged defamatory comments were made against him.

The sudden departure comes as the result of an ongoing internet feud between Li and Chen Weixing, a venture capitalist who in recent months has made a series of hostile comments in public against the investor.

Li announced his resignation on his Weibo account on Monday night, saying he made the decision in order to preserve the reputation of the government-backed blockchain investment fund launched in April of this year.

He wrote:

“The series of defamations from Chen Weixing against myself has brought material and negative impacts on the reputation of Xiong’An Blockchain Fund. … To let the Hangzhou government continue its push for blockchain development, I will resign from my role as a managing partner.”

As previously reported by CoinDesk, back in June, Chen openly described Li as a “fraud” and a “tumor” of the cryptocurrency industry. He later alleged that Li owed a group of investors 30,000 bitcoin that he had collected in 2013 for an investment fund, but could not repay since he had gambled away the assets.

Li later responded with detailed explanations to each of Chen’s accusations, but the spat did not end there. Things soon sparked off again as an obscenity-laden recording of a private meeting between Li and several individuals was leaked through social media on July 3, stirring up controversy within the Chinese cryptocurrency community.

In the 50-minute chat, recorded in January, Li took aim at various individuals and companies within the industry, calling Qtum’s co-founder Shuai Chu a “spin doctor,” Binance exchange a “cheating” platform and Softbank a “stupid fool” for investing in Ripple.

Chen went public again following the audio leak, accusing Li of being a “foul-mouthed liar.” He further questioned the legality of the Xiong’An Blockchain Fund, asking whether the local government has indeed allocated the apparently promised 30 percent of the funds.

Then, last Friday, Li announced through his WeChat channel that he had filed a lawsuit with a local court in Hangzhou accusing Chen of defamation. He went on to say that Chen has no knowledge of blockchain and can only make his name by defaming others.

Chen responded on Weibo that he believes the lawsuit will turn out to be his chance to take on Li in court and calling for “victims” to join him.

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Amid Crypto Bear Market, Attention Turns to Small-Time Investors

“It’s all being bought by retail.”

Speaking at CB Insights’ Future of Fintech conference Wednesday, Nasdaq president and CEO Adena Friedman hit on a theme almost everyone at the event echoed: the central role normally marginal figures – small-time investors and millennials in particular – play in the cryptocurrency market (as well as financial technology or “fintech” more broadly).

During the first day of the conference in New York City, Friedman spoke about retail investors – who she called “Mr. and Mrs. 401(k)” – and their interest in crypto tokens created via initial coin offerings, or ICOs, a funding mechanism that exploded in late 2017 and early 2018.

And while Freidman expressed “real concerns about transparency” and the fear that ICOs could “take advantage of people,” she acknowledged that the technology opens up access to the early-stage investments, particularly now that IPOs are subject to so many rules that she said “no longer serve a purpose … or protect investors.”

Even though IPOs are a big source of revenue for Nasdaq, Freidman said of ICOs:

“You want to make it so that retail has access to great companies.”

Still, quite a bit of ambivalence was displayed about the fundraising mechanism, made popular by ethereum’s ERC-20 standard but now available in several different forms on many different blockchains.

Even as a conservative Republican with inclinations toward light regulation, Mick Mulvaney, the acting head of the Consumer Financial Protection Bureau (CFPB), raised the frightening prospect of no oversight at all – speculating on what would happen if Mt. Gox “became a regular occurrence.”

However, he went on to recognize that the application of old laws and regulations to cryptocurrency could produce “an absurd or unintended result,” which the CFPB wants to avoid.

Retail will be fine

Still, several speakers noted that retail investors will need both help and protection in interacting with the high-risk, high-reward ICO market.

These are not wealthy investors, after all, who the SEC treats – in Friedman’s words – “like big boys, big girls.”

In contrast, Vlad Tenev, co-CEO of Robinhood, the millennial-focused, mobile-only investing platform, expressed no hint of high-minded concern for retail investors. These small-time traders are Robinhood’s “bread and butter,” he said unapologetically.

The app started out offering commission-free trades in equities, followed by options – commonly regarded as high-risk investments – and then, in January, added bitcoin and ether to the investment options. In May, the company raised $363 million in a Series D to build the “largest crypto platform.”

This move into crypto – which is currently available to people in 16 states – came after large numbers of users began requesting that Robinhood list cryptocurrencies, Tenev said, making no mention of agonizing over how best to protect this group of investors.

If anyone should be worried about their financial futures, it is the stock brokerages and cryptocurrency exchanges that charge high fees, he continued, adding:

“If you look at cryptos, people are paying exorbitant fees right now – four, five percent per transaction – and it’s very similar to brokerage before we came in and lowered fees dramatically.”

Robinhood’s small-fry millennial customers, he seemed to be saying, are too smart to pay those kinds of fees.

Don’t mention the bears

And yet, what went mostly unsaid at the conference was telling.

Bitcoin prices have waltzed off a cliff since hitting nosebleed highs around $20,000 in December 2017. According to CoinDesk’s Bitcoin Price Index, the cryptocurrency is trading for around $6,750 at the time of writing – down more than two-thirds from its all-time high.

But no one seemed particularly eager to talk about the pain this bear market might have caused retail investors. Friedman and Mulvaney hinted at it in the abstract but made no mention of the fact that many retail investors are nursing steep losses right now.

At the same time, speakers and attendees sometimes appeared to salivate over the goldmine that millennials and other small-time investors represent. Soon the younger generation will be worth trillions of dollars, a CB Insights researcher pointed out in one presentation.

And Tenev boasted that over a million people signed up to Robinhood’s waiting list to trade cryptocurrency within the span of a few days – this at the very height of the recent mania. He also mentioned that equity trades on the platform are often in the “tens or hundreds” of dollars – in other words, implying that its users are hardly wealthy (though maybe they’re just cautious).

As such, it was perhaps easy for some to come away from the conference with the same see-sawing misgivings that Mulvaney and Friedman seemed troubled by.

While some ask why regular people shouldn’t be able to access potentially lucrative crypto opportunities, the space is rife with half-truths, sketchiness and outright scams, and in turn, another question presents itself: should often-inexperienced investors be expected to fend for themselves? These questions aren’t likely to go away soon.

But this new asset class, Robinhood’s Tenev said: 

“Has staying power, significant staying power.”

Future of Fintech conference image via CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.