Currently Relevant: Edition #26

Welcome to Currently Relevant, THE RELEVANCE HOUSE’s regular roundup curating the best of news, views, and stories from the blockchain, crypto, and Web3 space.

This month: Visa is facing a major anti-trust lawsuit that could shake up the payments industry; Caroline Ellison given light 2-year sentence for role in FTX collapse; Solana partners with Google to make Web3 games easier to develop; 3 major Swiss banks launch tokenized deposits trial; Bitpanda becomes official European partner of the NFL; Nike abandons NFTs on its SWOOSH gaming platform; and all the latest funding news including Celestia Network’s $100 million haul.

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Payments giant Visa hit with US antitrust lawsuit 

For years, Web3 advocates have criticized traditional payment platforms like Visa and Mastercard for using their centralized position to hinder competition and charge higher transaction fees. Now, they have an unexpected ally: the Biden administration. 

The US Department of Justice announced recently that it has filed an antitrust lawsuit against Visa. The payments company is accused of neutralizing potential rivals like PayPal, Apple and Square by offering them highly lucrative partnership contracts which stipulated that they could not develop competing services. The lawsuit quotes Visa’s CFO as saying “everybody is a friend and partner. Nobody is a competitor… The only issue is to figure out how to make it worth their while to partner with us.” 

In addition to the “carrot” of partnership agreements, the payment network is also alleged to have threatened potential rivals with punitive fees on Visa transactions unless they agreed to engage in exclusionary practices. For example, Square launched and then quickly axed a payments service called Cash Drawer in 2016 after Visa threatened to impose higher fees and other penalties on its transactions.

Visa processes over 70% of the US debit card payments by volume, making it almost three times the size of its closest rival Mastercard, which disclosed in April that it is also being investigated by the DoJ on antitrust grounds. It is too soon to say whether the case will have a major impact on driving digital asset adoption, but with firms like PayPal and BlackRock becoming active in the stablecoin space alongside the crypto native players, the ramifications could be significant.

Source: Visa

Crypto clash: Crypto.com takes on the SEC

Crypto.com has filed a lawsuit against the US financial regulator, the Securities and Exchange Commission (SEC). The suit alleges that the SEC has “expanded its jurisdiction beyond statutory limits”. Furthermore, the suit takes issue with an SEC rule that classifies almost all crypto trades as securities transactions, while classifying bitcoin and ether transactions differently. Crypto.com maintains that this distinction is arbitrary and “unlawful”. 

The lawsuit comes after the SEC issued the exchange with a so-called Wells Notice, which is a formal notification that the regulator is considering taking legal action. Earlier this year, Consensys sued the SEC in similar circumstances. The suit was later dismissed by a Texas court after the SEC dropped its investigation. However, in July the SEC sued Consensys on separate grounds, alleging that MetaMask staking products meet the definition of an unregistered securities sale.

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Trading secrets for freedom: Caroline Ellison sentenced to 2 years for FTX fraud

The former CEO of the crypto hedge fund Alameda Research, Caroline Ellison, has been sentenced to two years in prison by a US court for her role in the collapse of FTX. Ellison had initially faced up to 110 years of incarceration for charges such as fraud and money laundering, but was handed down a heavily reduced sentence after cooperating with prosecutors and striking a plea deal. Elisson had been in a relationship with FTX founder Sam Bankman-Fried prior to its collapse, but testified against him during his trial. The judge noted her “remarkable” cooperation but said that it should not amount to a “get out of jail free card" for her crimes.

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Solana and Google partner to bridge the gap traditional and Web3 games

Solana Labs has collaborated with Google Cloud to make it possible for developers with no prior blockchain coding knowledge to integrate Web3 components such as NFTs and digital assets into games built on traditional platforms. The API, known as GameShift, makes Web3 components such as wallets, tokenized assets and on-chain marketplaces directly available in the Google Cloud Marketplace. A key focus is accessibility, with wallets linked to each gamer’s email address and in-game transactions carried out via credit card. The initiative is part of an ongoing extended partnership between Solana and Google.

Source: Google Cloud

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Paypal settling invoices with PYUSD stablecoin

The US financial technology company Paypal has revealed that it now settles invoices with consultancy company EY using its native stablecoin PYUSD. The transactions, which are facilitated by Coinbase, are executed through SAP, PayPal’s core enterprise resource planning (ERP) software. PYUSD is backed by dollar deposits, treasuries and other cash equivalents. The use of the stablecoin allows for near-instant, 24/7 settlement of invoices. 

The announcement follows on from a separate Binance partnership deal in 2022 which enabled select Google Cloud customers to pay for services in crypto. 

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Swiss banks trial tokenized deposits  

Three Swiss banks, UBS, PostFinance and Sygnum, are collaborating in a trial of tokenized deposits. During the trial phase which will last until late 2025, the participating banks will use the system as the basis for processing interbank payments and settling financial transactions. Tokenized bank money holds the promise of enabling instant and automatic settlement of financial transactions 24/7. While the current trial only involves three banks, a stated aim of the project is to enable “frictionless” entry to others at a later date.

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Touchdown in Berlin: Bitpanda teams up with the NFL

Bitpanda has continued its focus on sports sponsorships by striking a deal to become the NFL’s European partner. The partnership will allow Bitpanda to advertise at the NFL game to be played in Berlin in November and grants the Austrian exchange the right to execute co-branded digital campaigns with the NFL throughout the current season. This is not the first major sports sponsorship for the exchange, which is also the official crypto partner of German football giants Bayern Munich.

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Nike ditches NFTs for in-game fashion

Nike is changing the focus of its gaming hub, .SWOOSH, to move away from NFT collections towards gaming experiences and in-game wearables. In January, Nike issued instructions to existing customers on how to transfer their digital collectibles from the platform to external wallets. 

In future, gamers will purchase Nike-branded in-game apparel that will be linked with exclusive physical products, but they will no longer be NFT-based. When the .SWOOSH platform launched, it offered Polygon-based NFTs. The new generation of products, however, will be linked to the user’s Nike account directly and will connect with compatible games. 

This could be a matter of Nike focussing its Web3 efforts in one place. The sportswear giant will presumably continue to release NFTs through RTFKT, the virtual sneaker company it acquired in late 2021. Since then, it has been behind some interesting limited-edition “phygital” goods that combine NFTs with real-world merch, such as the auto-lacing Nike RTFKT Cryptokicks iRLs pictured above. Nike recently had a change at the top, appointing Elliott Hill as its new CEO, who takes over the role from John Donahoe, who had presided over most of Nike’s Web3 initiatives. Industry watchers will be following with interest to see what Hill’s plans are in the space.

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Funding round-up

• Celestia Network, which bills itself as a modular blockchain focused on scalability and interoperability, has raised $100 million in a round led by Bain Capital Crypto.
• The early-detection Web3 security startup Hyperactive has announced the closure of a $16 million Series A round  led by Quantstamp.
• Hemi Network, a layer-2 that spans Bitcoin and Ethereum, has raised $15 million to finance its development in a round led by Binance Labs, Breyer Capital and Big Brain Holdings.
• The layer-1 network and platform for “optimistic rollups” Initia has closed a Series A round worth $14 million ahead of its mainnet launch. The round was led by Theory Ventures.