In July, two venture capital funds raised more than $350 million to invest in cryptocurrency and blockchain startups.

The volume of investments in crypto startups has fallen for five consecutive quarters. But some venture capitalists are still making multi-million dollar bets on blockchain projects.

Fortune’s source said Polychain Capital, one of the most prominent venture capital firms in the cryptocurrency space. And has raised about $200 million in its fourth fund. This fundraising can be considered a positive signal for the industry. The event indicates continued investor interest, despite a period when the volume of funding has decreased for both startups and venture capital firms.

The event indicates the continuing interest of investors. And despite the period when the volume of funding has decreased for both startups. As well as for venture capital firms.

Founded in 2016 by Olaf Carlson-Wee – one of the first employees of the Coinbase exchange – Polychain Capital has quickly joined the list of leaders in the cryptocurrency venture capital market. The firm has invested in Coinbase, Uniswap, CoilnList, dYdX, Matrixport, Scroll and dozens of others.

According to Pitchbook, Polychain has raised three funds with $2.6 billion in assets under management, and while this amount is volatile due to the fact that some of the Polychain funds are held directly in a few liquid crypto stocks. Several services, such as CoinMarketCap or Messari, separately highlight Polychain’s portfolio. According to them, the company invests in bitcoin (BTC), Ethereum (ETH), Polkadot (DOT), Avalanche (AVAX), Cosmos (ATOM), Filecoin (FIL), Maker (MKR), Tezos (XTZ), Compound (COMP) and other assets.

Polychain has deployed most of the previously raised capital in 2022 and 2023, according to a Fortune interviewee.

And before starting to raise a fourth $400 million fund, which reporters have now learned about. As for the $200 million already raised, Polychain has signed new agreements with investors or partners to begin placing those funds. At the same time, the company will continue to attract new investors in order to raise the full amount.

The attraction of new financing was accompanied by a reorganization of Polychain’s team of about 25 people, about 15 of whom are engaged in market research. According to the interlocutor of the publication, three employees from the research group were dismissed. And another with a background in data science was hired. One of the general partners also left the company to start his own project.

According to Fortune’s source, Polychain will primarily consider Ethereum-based “second-tier” infrastructure solutions for investment. And such as Arbitrum or Scroll, as well as in projects such as EigenLayer.

According to Pitchbook, global cryptocurrency VCs raised just $1.7 billion in 12 funds in the first half of 2023.

In comparison, they raised $22.5 billion in 91 funds over the course of 2022. On the same day as the new fund raising from Polychain was announced. And Bloomberg reported that another cryptocurrency venture capital firm, CoinFund, raised $158 million to support early-stage crypto startups.

According to the company’s CEO Jake Bruchman. That for the new fund managed to attract more funds than originally planned. Investor interest in the fund was higher than expected.

The last year and a half in the cryptoindustry was held in the crisis. But during this time CoinFund managed to raise $550 million, Brukhman told reporters. The year 2022 was “extremely challenging,” he said. Part of the problem was that major players in the market became interested in cryptocurrencies at the stage of their growth. But they changed their minds about investing when they saw prices fall sharply.

The new investment fund CoinFund is also the fourth for the company. Under the previous funds, the company supported startups such as, for example, Dapper Labs (creators of the FLOW blockchain). Or the blockchain infrastructure service Blockdaemon. Funds from the new fund have already been partially invested in the startup Giza. And which deals with the implementation of artificial intelligence in smart contracts. And in the company Superstate, which plans to combine decentralized finance (DeFi) with mutual funds.

More investments

CoinFund plans to invest the raised funds in startups. Which are at the intersection of cryptocurrencies and artificial intelligence. Previously popular areas such as NFT are now not interesting to investors due to the market lull and capitalization decline of the largest projects.

Our experts note that CoinFund will also continue to invest directly in cryptocurrencies and tokens. And the company has an advantage here. When it comes to crypto market regulation in the US, there is uncertainty over whether cryptocurrency tokens are considered securities. And that was vividly demonstrated in the recent ruling by a judge in the US Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs. However, CoinFund is a registered investment adviser. And can make investments in securities, so even equating their portfolio crypto assets with securities shouldn’t pose a problem.

According to Alex Felix, CoinFund’s chief investment officer. That now about 90% of the company’s transactions are directly related to the purchase of cryptocurrencies and tokens. According to him, the company still believes that this industry can coexist with traditional finance in a regulated manner.

Our experts tell us how the record rise in Nvidia stocks and hype around AI affected prices of cryptoassets

Nvidia has become the first graphics processor manufacturer whose market capitalization has approached $1 trillion. Its devices have recently been used by cryptocurrency miners. But now the growth of the company’s shares is due to the growth of artificial intelligence technology.

On Tuesday, May 30, price of Nvidia stocks skyrocketed to a historic high. In its quarterly report, the company said that the proliferation of artificial intelligence technology is translating into record sales. And its net income for the quarter was markedly higher than what analysts had predicted.

Nvidia’s developments have spread in the video game industry, the field of professional visualization. As well as in the field of high-performance computing and the automotive industry. In this case, Nvidia’s onboard computers are used as the basis for unmanned cars. The company supplies technology to major market players such as Apple, Microsoft, Alibaba and Amazon.

In late 2006, Nvidia allowed third-party developers to use the processing power of its graphics processing units (GPUs) not only for graphics optimization but also for other purposes. Nvidia processors are good at a lot of simultaneous calculations. And in this they noticeably lose to central processors, the leading manufacturer of which is Intel.

Notable success of Nvidia outside of the video game industry has brought the company mining cryptocurrencies. And where the GPU has also proven its effectiveness. In 2020, amid rising prices for Bitcoin and other cryptocurrencies, Nvidia surpassed Intel in market value. And its quotes continued to rise, reaching a record high of almost $330 per stock at the end of 2021.

Demand for Nvidia graphics cards was supported by miners. Who assembled cryptocurrency mining farms based on the Proof-of-Work (PoW) algorithm from the devices. The most profitable of these has always been Ethereum (ETH). But last September, developers planned to move it to Proof-of-Stake (PoS). After that, the need for mining to issue new coins disappeared. And miners were forced to switch to much less profitable coins or refused to mine cryptocurrencies using GPUs in principle.

The fall in excitement around video card mining, as well as the collapse of the crypto market last year, brought down Nvidia’s stocks. But now the wave of AI has reawakened investor enthusiasm. Since the beginning of the year, the company has increased its market share by $220 billion. By comparison, Ethereum has a market capitalization of $228.3 billion. Nvidia stock is up 165% in 2023 alone. Nvidia’s capitalization now stands at $939.3 billion, which brings it closer to the $1 trillion mark.

AI and cryptocurrencies

On May 28, Nvidia unveiled several technologies related to artificial intelligence at Computex 2023. Among them is the Avatar Cloud Engine service. Which allows you to give the intelligence of side characters in video games. As well as the DGX GH200 supercomputer for generative AI, the Spectrum-X platform for cloud providers. And the MGX architecture for creating metaverse and a few others.

The flow of news around Nvidia has also affected the cryptocurrency market. Project tokens, which aggregators categorize as “artificial intelligence,” rose in value in less than a week. And some of them showed up to 60% growth. An example of such an asset was the AKT token of the Akash Network project. The developers position it as an open network for trading computing power.

The most capitalized assets in the category also benefited from positive news from Nvidia. The token of the SingularityNET project (AGIX), “the first decentralized artificial intelligence marketplace.” Which runs on the Cardano blockchain, rose in value by 10%. Fetch.ai (FET), a coin platform with machine learning algorithms, gained more than 6% in less than a week. And the OCEAN token used by the Ocean Protocol data economy project rose nearly 9%.

Similar trends took place in the market at the beginning of the year amid the mass spread of chatbots with artificial intelligence ChatGPT. Which still enjoys notable popularity, including in the cryptocurrency community.

Largest crypto asset in AI category

The largest crypto-asset in the AI category is the Render token (RNDR) of the Render Network project from OTOY. Its capitalization exceeds $900 million and it is traded on leading cryptocurrency exchanges. And its price has risen almost seven-fold since the beginning of the year.

OTOY provides cloud-based graphics rendering solutions. These are used by visual effects creators, artists, animators, designers, architects and engineers, according to the company’s website. Its products, which also involve AI. The company Meta also uses them.

As part of the Render Network project, OTOY developers have modified the code of their cloud computing platform for GPU rendering. And they did it so that RNDR tokens could be used to pay for the service, thus creating demand for the asset.

In 2021, OTOY released the Octane X Classic rendering app on the App Store. And which also uses Render Network technology. Also getting the project into Apple’s app store was a successful marketing move for RNDR. The token has risen more than 60 percent since May 13. This happened when The Wall Street Journal’s sources reported. That Apple would unveil a mixed reality headset at the WWDC 2023 event in early June. This was largely contributed to by a number of speculations that. That the device could, in theory, also use some of the Render Network’s developments.

Our experts note that in general, the coins of blockchain projects, which in one way or another involve artificial intelligence. Since the beginning of the year proved to be the group of the most successful in terms of crypto-assets investment. Along with tokens of the management of liquid stacking services.

Our experts tell us what you need to know about the cryptocurrency division of venture capital firm Andreessen Horowitz. And what startups and technologies the company is allocating more than $7 billion to

The a16z crypto portfolio has dozens of crypto projects. And among them are both established players and startups that are still building infrastructure. The company’s early bet on Coinbase, the second largest crypto exchange, turned out to be one of the best in the history of venture capital funds. Though it came with very specific allegations of insider trading. The fund invested in leading decentralized exchange Uniswap, NFT marketplace OpenSea and large infrastructure blockchain project Alchemy.

This year, the company has led several multimillion-dollar investment rounds for various crypto projects. Among them, for example, is a $25 million round by Here Not There Labs. Which is developing the Towns protocol for group chat rooms. And which are blockchain-based and use end-to-end message encryption.

A recent nearly $30 million investment round closed the Story Protocol project from the developers of the Radish Fiction app, which was bought out by Korea’s Kakao. Andreessen Horowitz’s cryptocurrency division also led the round. Although it had previously invested $10 million in the project. A $40 million round led by the fund was also completed by blockchain game developer CCP Games.

Probably the main crypto-investment of the company this year was the project LayerZero.

Its developers, led by a16z, closed a $120 million round, after which the valuation of the company behind it, LayerZero Labs, jumped to $3 billion. The total amount of venture capital investment in the project. Which creates an infrastructure for exchanging data between ecosystems that are isolated from each other. And built on different blockchains, exceeds $250 million.

Other projects in the fund’s portfolio with more than $100 million in investments include Optimism, Aleo, Matter Labs (developer of the zkSync solution) and several others. From the last two, as well as from LayerZero, the cryptocurrency community expects to launch tokens. And to conduct airdrops following the example of Arbitrum. Or the same Optimism, but none of the companies have yet announced plans to issue their own assets.

Problems and failures

Despite its scale and strong market position, a16z faced problems in 2022, as did the entire cryptosphere. In October, The Wall Street Journal sources reported that the value of the company’s cryptocurrency fund fell 40%. And that’s noticeably more than other avenues. This was recorded even before the general collapse of the crypto market. Which was triggered by the bankruptcy of the FTX exchange.

Some of the fund’s biggest investments probably didn’t justify themselves. Among them is Helium, a mobile WiFi hotspot startup. In April, the company announced it was moving its infrastructure from its own blockchain to the Solana network. And the HT token trades only on second-tier crypto exchanges. And judging by the price movement, it’s not much in demand.

Another example from our experts is Dfinity. It’s a project that was rebranded as Internet Computer. Which raised $100 million from a16z in 2017. But it did not actually produce any product. And investor funds were invested mainly in a marketing campaign. However, given the success of other projects in the fund’s portfolio. And the financial return from investing in them will surely be able to outweigh the losses from unsuccessful investments.

The hacker who took control of Tornado Cash gave up control of this protocol. But used it to disguise the funds withdrawn in the attack

The hacker who seized control of cryptomixer Tornado Cash gave up control of the service. But he used the protocol to launder digital tokens from the attack. That’s what Bloomberg writes, citing data from research firm Nansen.

The Tornado Cash project was attacked on the morning of May 20. The attacker was able to gain full control of the cryptomixer’s control. He issued 483,000 native tokens of the TORN protocol. And that gave him a majority vote in the control system.

On May 26, the hacker offered to call off his attack and return control to the Tornado Cash community. But while the protocol was under his control, he exchanged most of his tokens for Ethereum coins. And then laundered about $900,000 in them through Tornado Cash.

Our experts note that the price of TORN was around $6.4 before the hack. By May 29, it was down to $4. According to CoinMarketCap, the token has fallen in price by 37% since the hack, and by 10% in the last 24 hours.

Scammers took advantage of market participants’ interest in meme cryptocurrencies on “bitcoin pizza day”

Scammers earned tens of thousands of dollars on “bitcoin pizza day. In doing so, taking advantage of market participants’ interest in meme-based cryptocurrencies. The creators of several holiday-themed tokens absconded with the assets of gullible investors.

On May 22, the cryptocurrency community celebrated the 13th anniversary of the first purchase for bitcoins. It happened in 2010, when computer developer Laszlo Heinitz bought two mushroom pizzas for 10 thousand BTC.

According to Dextools, the capitalization of tokens BTCPizza, BPizza, PizzaDay and EthPizza. Which were created during the last week, at their peak reached about $150 thousand.

The creators of BPizza, after the token reached a capitalization of $100k, imposed a 100% sales tax on the coins. This was done to prevent investors from selling them. Issuer EthPizza disabled token sales when the asset’s capitalization reached nearly $40k.

BTCPizza is now labeled as a Honeypot – where fraudsters prescribe in the token’s smart contract the ability to withdraw coins only to certain wallets. PizzaDay plummeted in value to zero after a spike in value followed by a rapid series of sales.

Our experts noted that the desire of investors to buy tokens with no fundamental value. And all this followed a rapid and significant rise in the market capitalization of the meme cryptocurrency Pepe in just a few weeks. Investors are hoping to get lucky, buying tokens that could collapse in value at any moment. And then they complain that they were scammed and media didn’t warn them that it was dangerous. So once again we warn you that you can lose 100% of your investment in such projects.

The FBI warns that scammers attract people to work overseas, promising high salaries. Upon arrival, they take away passports and force them to participate in scams related to digital currencies.

The U.S. Federal Bureau of Investigation (FBI) has warned of false job postings. Which are offered by scammers to lure people to work abroad and force them to participate in cryptocurrency scams.

According to the FBI, scammers post false job ads on social media. As well as on Internet job sites, inviting people to work in Southeast Asia. Jobs related to tech support, call centers or beauty salons are offered. Applicants are offered good wages, various benefits, travel, lodging, and meals.

Upon arrival, passports are taken away from people. And then they are forcibly held, intimidated and forced to participate in international cryptocurrency fraud schemes. Thus effectively holding them in slavery.

At the same time, victims are told that they must pay mounting debt for travel. As well as accommodation and food, and sometimes sell people to other criminal groups. People are also intimidated by threats to turn them in to local law enforcement.

Our experts point out that those looking for work abroad are advised by the FBI to be wary of strange wording in job postings. As well as offers with unusually high salaries and benefits. Also, when moving to another country, tell relatives and friends the details of the new place of work.

Worldcoin has not yet been launched, but scammers have already figured out how to cheat the identification system

The Worldcoin token was supposed to launch within the next few weeks. But fraudsters have already figured out how to cheat the system, The Block reports. The project from ChatGPT creator Sam Altman is being forced to change security measures.

According to the developers’ plans, the Worldcoin token will be issued to users. Who have been identified by iris scanning. The technology scans the eye and creates a digital World ID for the user based on that. Which can be used “in a wide range of everyday applications without revealing identity,” the company said. More than 1.7 million people have already signed up for the project.

On May 18, the Chinese publication BlockBeats, reported that the residents of China, where people can not register. to get Worldcoin tokens, buy iris scans made in Cambodia and Africa for as little as $30. A Worldcoin spokesman acknowledged the incidents. But stressed that the problem was limited to “a few hundred cases.”

“Through continuous threat monitoring and awareness, the Worldcoin team uncovered suspicious activity where people were encouraged to create a World ID, which was then sent to a third party,” they said.

Worldcoin has taken a number of steps to try to address the problem. And including “adjusting the initial in-person registration process” and implementing dynamic and static QR codes.

The illegal sale of IDs will also be able to prevent them from being returned to the user via a repeat eye scan, the developers believe. However, earlier Worldcoin claimed. About not storing iris scans to exclude the risks of losing confidential data.

The company admitted that despite all these precautions. They don’t fully protect the system from fraudsters’ attempts to circumvent the “one person, one proof” principle.

Our experts note that solving these problems will require innovative ideas in the development of mechanisms and attribution of social relationships.

Ledger, a company that makes hardware cryptocurrencies, said it had always been able to install firmware on the devices that would allow customer passwords to be extracted. This message was later removed

Protecting its new product, hardware cryptocurrency wallet maker Ledger caused a scandal in the cryptocurrency community. With its statement that it has technically always been able to get users’ keys giving access to their crypto-assets.

“Don’t worry about us holding a gun to your head the whole time. And see? It’s not like you’re dead, so there’s no problem with us continuing to hold a gun to your head,” Ledger commented on Ledger’s social media statements.

The company soon deleted its message. But it had already made its way around the web. Ledger later wrote that her words were misunderstood. And there are layers of protection and control in the firmware of its devices to ensure that no hacker (even internal) can introduce malicious firmware.

In response to this, one user noted that when he bought a Ledger device, he was not buying “layers of control”. He was simply buying a cold wallet in which the seed phrase could not leave under any circumstances. Never before has a real-time company ruined its reputation like this, another commenter stated.

Protection from critics

Ledger tried to protect its new lost key recovery tool Ledger Recovery, announced on May 16, from criticism from the cryptocurrency community with its firmware statements. The tool allows you to create a backup copy of a seed phrase. And that will help restore access to the Nano X cryptocurrency wallet in the event that a secret phrase is lost.

The new service breaks the seed phrase into three fragments. Which in encrypted form store three different sides. As Wired reported in February. Those firms would be crypto company Coincover, Ledger itself. And backup service provider EscrowTech.

If a key is lost, the owner of the wallet will have access to its backup by authenticating themselves. The Ledger Recover service will be paid for and voluntary.

The Ledger tool has been very badly received by the cryptocurrency community. The main complaint of users is that the company positioned its cold wallet as a way to autonomously store cryptocurrencies. That is, access keys could only reside on it and not be allowed to leave it.

By adding the ability to upload keys, albeit in encrypted form, Ledger set a precedent. Which completely contradicts its initial claims. According to critics, the new tool reduces the security of the device, making it vulnerable to scammers.

“This is a terrible idea, do not enable this feature,” wrote Polygon Labs Director of Information Security Mudit Gupta.

Also Ledger says this backup option will be popular. That’s because the possibility that assets could become inaccessible simply because a key is lost is a deterrent to investing in cryptocurrencies.

“That’s what future customers want. It’s a way for the next hundreds of millions of people to really move to cryptocurrencies,” Ledger CEO Pascal Gauthier was quoted by CoinDesk.

Our experts point out that at the end of March it became known that Ledger attracted funding of up to $100 million. Gauthier said that the company will use the funds received to develop its business, expand its network of distributors. As well as increasing production and improving products.

A blockchain analyst warned about a fake page of the HitBTC platform, on which scammers use phishing links to empty users’ cryptocurrency wallets

Hackers stole more than $15 million in various cryptocurrencies through a fake website. Which mimics the HitBTC cryptocurrency exchange page. This was reported by a blockchain security analyst at SlowMist. According to the company, scammers are stealing various cryptocurrencies, including bitcoin, Ethereum and USDT. They do this through a fake website that looks similar to the original exchange portal.

Analyst identified and published four cryptocurrency addresses of the attackers. He also explained that he discovered three ways in which hackers gain access to users’ wallets on this site.

The fake page may prompt users to verify the wallet’s connection. After a user clicks the Confirm button, hackers gain access to USDT tokens.

The second option was to go to the page for depositing funds, which is identical to the real page on the exchange. But in the field for the deposit address entered data hackers. In this case, they rely on the fact that the information in the standard fields will not be double-checked by the account owner.

In the third case, the scammers take advantage of the fact that the sidebar to sign the transaction on the site pops up automatically. And with the data already completely filled in, which are also usually not double-checked. When the user clicks on the transaction confirmation button, the hackers gain access to the assets.

Our experts point out that in February of this year, hackers spoofed the website of a major cryptocurrency conference. Where they offered users to connect MetaMask wallets and make a transaction that debited funds. To promote their site, the scammers even paid for advertising on Google. And rose to second place in search for a while.

Insider who pleaded guilty in a case related to cryptocurrency trading on Coinbase. He and his partners made $1.5 million by buying tokens before listing them on the cryptocurrency exchange

Former Coinbase manager Ishaan Wahi was sentenced to two years in prison for insider trading in cryptocurrencies, Reuters reports. The charge against him was filed last July. And last February, he pleaded guilty and was named in court as the first insider. Who pleaded guilty in a case involving cryptocurrency trading.

While working at Coinbase from June 2021 until April 2022, Wahi provided his brother Nikhil and their acquaintance Samir Ramani with confidential information. This information contained data about cryptocurrencies scheduled to be listed on this exchange.

Based on the information received from Ishaan Wahi, Nikhil Wahi and Ramani worked together to trade 55 different crypto-assets shortly before their listing on Coinbase. The scammers were able to make about $1.5 million from this.

Ishan and Nikhil Wahi were arrested on July 21; Samir Ramani was not reported to have been arrested. Nikhil Wahi pleaded guilty last September. And earlier this year, he was sentenced to ten months in prison.

At the May 9 court hearing, Wahi said he made a huge mistake “that will haunt him for the rest of his life.” At the same time, the assistant prosecutor noted that Wahi’s behavior was not a one-time mistake, his actions were committed over the course of ten months at Coinbase.

Our experts note that the prosecutors insisted that the defendant be imprisoned for more than three years. And the defense asked the court to sentence him no harsher than that of Nikhil Wahi. Judge Loretta Preska eventually sentenced Nikhil Wahi to two years in prison. He will now be sent to Fort Dix Federal Correctional Institution in New Jersey.