What Zuckerberg’s Money Can’t Buy – TechCrunch

Welcome back to Chain reaction.

Last week we looked at Solana’s smartphone and the post-Apple tech industry. This week we look at web3 without Big Tech.

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no trillionaires allowed

Unlike other moonlit tech categories, it’s becoming increasingly clear that there isn’t a huge open space for Big Tech to decide the future of crypto.

Meta announced this week that it will shut down Novi crypto payment wallets in September. This pilot, which was only available in a handful of geographies, was the latest round of the company’s broadly ambitious Diem stablecoin plans and leaves the company without a clear path for the crypto game to expand beyond its current networks.

This failure came as no surprise, as Meta has been a punching bag for regulators for years, and this was most aggressively demonstrated in the derailment of their crypto ambitions, which ultimately led to the sale of its Diem assets and the exodus of its top talent. . Meta is not alone, many of the biggest tech companies with a $1T+ market cap (or at least those that were there a few months ago) have not made a blockchain play despite being ideally positioned. For some companies this may be ideological, but for others it is clear that the regulatory risks are too present for them to risk their other revenue streams.

Comparing crypto to other moonshots like AR/VR, it’s clear that the government generally has no idea how to regulate Internet social networking companies, while they have a pretty solid idea of ​​what they’re doing when it’s about throwing away financial instruments and vehicles. right buckets. Not having the support of this diversified tech market means that the lows may continue to drop quite low for crypto hopes that are tied to web3 ambitions. AR/VR has been in a dry spell for years, but with Meta spending the industry through the drought without a clear focus on current revenue, this is not an investment that GAFAM will be leaving web3 anytime soon.

While most of the crypto industry isn’t going to cry foul over the lack of Meta in the mainstream crypto toolkit, relying on the good fortune of financial firms that have bought entirely into crypto alone, that’s why the current flavor of crypto consolidation seems so chaotic. . This is likely to be a very turbulent year for the crypto industry, and the deep war chests of top tech companies won’t make life any easier for them.

the last pod

Last week while I was away, you listened to our talented colleague Jacqui Melinek. Well, he’s back. Big shout out to Jacqui, who stepped in when Lucas was sick this week to help me unpack some incredibly juicy but complex topics, including how all the DeFi down roads seem to lead to the same hedge fund.

Joining us as this week’s guest one of the most memorable founders I’ve met – Tux Pacific of Entropy crypto-custodial startup. Pacific is a trans, anarchist cryptographer who last month raised $25 million in seed funding from a16z and other VCs. They joined us to talk about what it means to raise venture capital as an anti-capitalist, and what they say is wrong with the way digital currencies are commonly held.

Subscribe to Chain Reaction Apple:, Spotify: or your alternative podcast platform to stay with us every week.

follow the money

Where are startup money moving in the crypto world?

  1. Echo3D: raised $5.5 million for cloud storage and AR/VR streaming led by Qualcomm Ventures.
  2. Web3 Scalable Protocol AltLayer: closed a $7.2 million seed round with Polychain as the lead investor.
  3. Crypto gaming company Cauldron Raised $6.6 million led by Cherry Ventures to build the Pixar of web3.
  4. Binance Labs has invested $3 million Magic squarecrypto app store.
  5. DeFi platform Incremental Labs raised $1 million in seed funding led by Dapper Labs.
  6. Crypto tax platform KoinX: brought in $1.5 million from angel investors, including Polygon’s Sandeep Nailwal.
  7. A game-focused layer two blockchain Oasis Raised $20 million in funding from private token sale investors including Republic Capital and Crypto.com.
  8. Size Xgaming company that raised $3 million in a funding round led by Coatue.
  9. Klang games Led by Animoca Brands and Kingsway Capital, it has raised $41 million for its Seed virtual world.
  10. A Singaporean metaverse startup Engine starter raised $5 million from True Global Ventures.

this week on web3

Anita here again, after a week off work during which I had some time to think about the strange cognitive dissonance that seems to be unfolding on web3. Valuations look miserable, crypto-lenders file for bankruptcy almost daily, and the overall industry is now worth just a third of what it was at its peak last year. but as Washington Post columnist Sebastian Mallaby points outthe same financial fate has befallen many other technologies that have continued to change the world since then.

Obviously, the jury is still out on exactly what this downturn means for crypto, but one thing is clear to me when I look back at the industry’s recent, rapid rise and fall. We haven’t really “seen this before” as so many investors and ecosystem participants would have you believe. Two main things have changed since crypto’s previous declines, and both stem from crypto moving from an eccentric hobby to a mainstream, mainstream dinner table topic.

First, crypto companies are now much more interconnected than ever before, similar to traditional finance in 2008. Sam Bankman-Fried is the new Jamie Dimon, saving other companies left and right. Crypto lender Celsius’ suspension of withdrawals last month may be the industry’s Lehman Brothers moment. I can’t say I’m completely surprised that crypto markets have calmed down a bit, but there are a shocking number of parallels between tradfi’s most famous crisis and current crypto disasters. Even if the underlying technology remains, it’s still a defining disaster for the industry; let’s not forget that mortgage-backed securities and CLOs still exist despite the carnage of 2008.

The second big difference I see between this crypto crash and past similar events is that crypto isn’t so weird anymore. His journey into the mainstream brought a heavy dose of groupthink, evident in the clichéd, slang-like phrases we now hear over and over again.

They say we’ve “seen it before,” the crash is a “black swan event,” but don’t worry, “it’s still early days.” Crypto will eventually reach “mass adoption” and “the next billion users” as long as the founders keep at it because “the best time to build is during a downturn.”

I’m not saying I’m a crypto OG. In fact, I only started following it very closely during those sad lockdown days when many people were doing the same. But I often remember being much younger, listening with interest and wonder to my relative, who has an aversion to authority and mathematics, explain to me why blockchain could change the world. It makes me feel a little nostalgic for when crypto was a space filled with naysayers, outcasts, and truly independent thinkers. To me, that’s the most exciting thing about this space, so I say let’s keep crypto weird.

TC+ analysis

Here’s some of this week’s crypto analysis you can read on our subscription service TC+ (written by TC’s Jacqueline Melinek):

Crypto losses hit $670 million in Q2, up 52% ​​year-over-year
The second quarter of 2022 was one for the books in a tumultuous period I like to call market madness, and the evidence continues to pile up for the crypto markets. Q2 was full of massive crypto “losses” in the web3 ecosystem, with nearly 97% of them due to hackers, according to a new report.

Crypto trading volume drops in India as additional taxes hit investors
The Indian government on July 1 imposed a 1% tax deducted at source (TDS) on cryptocurrency trades above 10,000 Indian rupees, or about $127. The law has only been in place for a few days, but has already had a chilling effect on Indian digital asset markets. Increasing taxation may also serve as a further barrier to citizens wishing to trade cryptos as the potential for financial gain diminishes.

FTX policy executive says his ‘priorities haven’t changed’ amid market frenzy
As crypto markets continue to trend down, the world’s second largest crypto exchange, FTX, remains unscathed. “Our priorities have not changed,” Mark Wetjen, head of policy and regulatory strategy at FTX, told TechCrunch. “Markets will do what they do, but the reality is that the digital asset market and the digital asset ecosystem, we believe, is here to stay.”

SEC Bans Bitcoin ETFs Again What now?
The US Securities and Exchange Commission has rejected Bitwise Asset Management and Grayscale Investments’ bids for bitcoin spot ETFs. Shortly thereafter, Grayscale, one of the largest digital asset managers with nearly $20 billion in assets under management, filed suit against the SEC. But not everyone is convinced that the lawsuit will go in their favor…

Valkyrie CEO Says US SEC Sueing Bitcoin ETF ‘Unlikely to Succeed’
“The SEC’s rejection of Bitwise and Grayscale’s GBTC spot bitcoin ETF applications is not at all surprising, as it follows the same precedent other asset managers have endured,” Valkyrie Investments said on Twitter. CEO Leah Wald. “Suing the SEC is unlikely to succeed.” The SEC made it clear in its response that it sees the underlying holdings of futures and spot as fundamentally different, specifically because the former trades in a regulated market while the latter trades in unregulated markets, said Ryan Shea, crypto economist at Trakx. TechCrunch.

Thanks for reading. And again, you can subscribe to get it in your inbox every Thursday TechCrunch’s newsletter page.

I wish you a nice end of the week!

Lucas and Anita

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