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SEC Charges Founder of a16z, Sequoia-Backed Crypto Startup with Fraud

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short stack of gold coins, with one standing on edge

The founder of the once-hyped cryptocurrency startup BitClout is in trouble. On Tuesday, The SEC has charged BitClout founder Nader Al-Naji committed fraud and an unregistered securities offering, claiming he used an alias to avoid regulatory scrutiny while raising greater than $257 million in cryptocurrency.

BitClout, a decentralized social media platform, was founded by notable corporations like a16z, Sequoia, Chamath Palihapitiya’s Social Capital, Coinbase Ventures, and Winklevoss Capital. Many of these notable investors were involved in the corporate’s roughly $7 million seed round, with Sequoia investing $1 million and a16z $3 million, based on sources near the seed round on the time.

The SEC grievance alleges that Al-Naji, known by his online pseudonym “DiamondHands,” told investors that proceeds from the platform’s token, BTCLT, wouldn’t be used to pay him or employees. However, the SEC alleges that he spent greater than $7 million on personal expenses, comparable to a Beverly Hills mansion and gifts for his family. Al-Naji didn’t reply to a request for comment. A source near Al-Naji said the mansion was used for business purposes, and a number of other BitClout employees lived there and hosted company-sponsored events at the house.

The grievance is the newest for an organization that has been no stranger to controversy since its inception. When it launched in 2021, BitClout was imagined to be a social cryptocurrency exchange where users bought and sold tokens based on people’s reputations. It created a stir and drew criticism by acquiring 15,000 profiles from the corporate then often known as Twitter and assigning crypto tokens to celebrities. It essentially created an exchange for celebrities, with the value of the tokens rising and falling based on how popular the person was.

The public – and legal – response was swift. Brandon Curtis, co-founder of cryptocurrency firm Rio Network, Al-Naji hit with a stop and desist letter stating that BitClout used his image without consent. Lee Hsien Loong, former Prime Minister of Singapore, even filed public appeal asking for his BitClout profile to be deleted. “This is misleading and was done without my consent,” he wrote on Facebook.

At the time, many wondered why such a well-respected company would back such a polarizing idea. Sources near the corporate explained that Al-Naji had gained goodwill in cryptocurrency circles from his previous company, Basis. In 2018, the Princeton graduate raised a staggering $140 million to create a stablecoin. However, shortly after, Al-Naji realized that the regulatory environment was too inhospitable to cryptocurrencies and decided to return the cash, based on the source. According to an individual near Al-Naji, investors got back about 93 cents on the dollar.

So in early 2021, when Al-Naji approached investors with a brand new idea, they were willing to present him a second likelihood. According to sources near the corporate, Al-Naji raised his seed round on a broad presentation of a decentralized social media platform, and not using a concentrate on the social stock market. But then, in April, Al-Naji quietly planned to check a stock feature by locking it away behind a password-protected website. The password was quickly leaked, and the feature went viral, suddenly becoming an enormous point of interest for Al-Naji. That upset several investors, based on multiple sources. The company eventually went back to its original presentation, focusing as a substitute on its DeSo Blockchain, a blockchain “built specifically for decentralizing social networks,” based on the BitClout website.

Still, within the wake of the scrapping scandal, many tech giants publicly defended BitClout. Investors like a16z’s Andrew Chen, Michael Arrington, and angel investor Shaan Puri poured 1000’s into buying tokens on the platform. Chen Sent on BitClout a few month after launch, writing about how the app takes a “really interesting approach” by incentivizing users with financial rewards. And in a post by Shaun Maguire of Sequoia Capital, investor praised Al-Naji’s “groundbreaking vision” and called BitClout “instantly electrifying.”

The polarization between those indignant about being “traded” on BitClout without their consent and people defending the startup was made much more complicated by the incontrovertible fact that there was no CEO to talk to on behalf of the corporate. Al-Naji’s hidden identity is one of the important thing elements of the SEC grievance, which alleges that he made BitClout seem like “there was no company behind it… just coins and code,” while allegedly raking in thousands and thousands of dollars in profits, the commission said.

“Al-Naji attempted to circumvent federal securities law and defraud investors by mistakenly believing that being ‘fake’ decentralized generally confuses regulators and stops them from pursuing you,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in an announcement released by the SEC. “He is patently mistaken.”

Sequoia and a16z declined to comment.

While Al-Naji has yet to talk out on the allegations, he has previously expressed confidence in his company’s legal foundation. At an event in late 2021, he reflected on his previous cryptocurrency company and the way he spent $10 million on lawyers. The lawyers, he said, taught him every little thing he could about securities and cryptocurrency law—lessons he took with him to BitClout. “I learned a lot,” he said. “And I think we did it right this time.”

This article was originally published on : techcrunch.com
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MIT Develops Recyclable 3D-Printed Glass Blocks for Construction Applications

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MIT develops recyclable 3D-printed glass blocks for construction

The use of 3D printing has been praised as an alternative choice to traditional construction, promising faster construction times, creative design and fewer construction errors, all while reducing the carbon footprint. New research from MIT points to an interesting latest approach to the concept, involving the usage of 3D-printed glass blocks in the form of a figure eight, which may be connected together like Lego bricks.

The team points to glass’s optical properties and “infinite recyclability” as reasons to pursue the fabric. “As long as it’s not contaminated, you can recycle glass almost infinitely,” says assistant professor of mechanical engineering Kaitlyn Becker.

The team relied on 3D printers designed by Straight line — is itself a spin-off of MIT.

This article was originally published on : techcrunch.com
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Introducing the Next Wave of Startup Battlefield Judges at TechCrunch Disrupt 2024

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Announcing our next wave of Startup Battlefield judges at TechCrunch Disrupt 2024

Startup Battlefield 200 is the highlight of every Disrupt, and we will’t wait to search out out which of the 1000’s of startups which have invited us to collaborate can have the probability to pitch to top enterprise capitalists at TechCrunch Disrupt 2024. Join us at Moscone West in San Francisco October 28–30 for an epic showdown where everyone can have the probability to make a major impact.

Get insight into what the judges are in search of in a profitable company as they supply detailed feedback on the evaluation criteria. Don’t miss the opportunity to learn from their expert insights and discover the key characteristics that result in startup success, only at Disrupt 2024.

We’re excited to introduce our next group of investors who will evaluate startups and dive into each pitch in an in-depth and insightful Q&A session. Stay tuned for more big names coming soon!

Alice Brooks, Partner, Khosla Ventures

Alicja is a partner in Khosla’s ventures interests in sustainability, food, agriculture, and manufacturing/supply chain. She has worked with multiple startups in robotics, IoT, retail, consumer goods, and STEM education, and led mechanical, electrical, and application development teams in the US and Asia. She also founded and managed manufacturing operations in factories in China and Taiwan. Prior to KV, Alice was the founder and CEO of Roominate, a STEM education company that helps girls learn engineering concepts through play.

Mark Crane, Partner, General Catalyst

Mark Crane is a partner at General Catalysta enterprise capital firm that works with founders from seed to endurance to assist them construct corporations that may stand the test of time. Focused on acquiring and investing in later-stage investment opportunities equivalent to AuthZed, Bugcrowd, Resilience, and TravelPerk. Prior to joining General Catalyst, Mark was a vice chairman at Cove Hill Partners in Massachusetts. Prior to that, he was a senior associate at JMI Equity and an associate at North Bridge Growth Equity.

Sofia Dolfe, Partner, Index Ventures

Sofia partners with founders who use their unique perspective and private understanding of the problem to construct corporations that drive behavioral change, powerful network effects, and transform entire industries, from grocery and e-commerce to financial services and healthcare. Sofia can also be one of Index projects‘ gaming leads, working with some of the best gaming corporations in Europe, making a recent generation of iconic gaming titles. He spends most of his time in the Nordics, but works with entrepreneurs across the continent.

Christine Esserman, Partner, Accel

Christine Esserman joined Acceleration in 2017 and focuses on software, web, and mobile technology corporations. Since joining Accel, Christine has helped lead Accel’s investments in Blackpoint Cyber, Linear, Merge, ThreeFlow, Bumble, Remote, Dovetail, Ethos, Guru, and Headway. Prior to joining Accel, Christine worked in product and operations roles at multiple startups. A native of the Bay Area, Christine graduated from the Wharton School at the University of Pennsylvania with a level in Finance and Operations.

Haomiao Huang, Founding Partner, Matter Venture Partners

Haomiao from Venture Matter Partners is a robotics researcher turned founder turned investor. He is especially obsessed with corporations that bring digital innovation to physical economy enterprises, with a give attention to sectors equivalent to logistics, manufacturing and transportation, and advanced technologies equivalent to robotics and AI. Haomiao spent 4 years investing in hard tech with Wen Hsieh at Kleiner Perkins. He previously founded smart home security startup Kuna, built autonomous cars at Caltech and, as part of his PhD research at Stanford, pioneered the aerodynamics and control of multi-rotor unmanned aerial vehicles. Kuna was part of the Y Combinator Winter 14 cohort.

Don’t miss it!

The Startup Battlefield winner, who will walk away with a $100,000 money prize, can be announced at Disrupt 2024—the epicenter of startups. Join 10,000 attendees to witness this breakthrough moment and see the next wave of tech innovation.

Register here and secure your spot to witness this epic battle of startups.

This article was originally published on : techcrunch.com
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India Considers Easing Market Share Caps for UPI Payments Operators

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phonepe UPI being used to accept payments at a road-side sunglasses stall.

The regulator that oversees India’s popular UPI rail payments is considering relaxing a proposed market share cap for operators like Google Pay, PhonePe and Paytm because it grapples with enforcing the restrictions, two people accustomed to the matter told TechCrunch.

The National Payments Corporation of India (NPCI), which is regulated by the Indian central bank, is considering increasing the market share that UPI operators can hold to greater than 40%, said two of the people, requesting anonymity because the knowledge is confidential. The regulator had earlier proposed a 30% market share limit to encourage competition within the space.

UPI has change into the most well-liked option to send and receive money in India, with the mechanism processing over 12 billion transactions monthly. Walmart-backed PhonePe has about 48% market share by volume and 50% by value, while Google Pay has 37.3% share by volume.

Once an industry heavyweight, Paytm’s market share has fallen to 7.2% from 11% late last yr amid regulatory challenges.

According to several industry executives, the NPCI’s increase in market share limits is more likely to be a controversial move as many UPI providers were counting on regulatory motion to curb the dominance of PhonePe and Google Pay.

NPCI, which has previously declined to comment on market share, didn’t reply to a request for comment on Thursday.

The regulator originally planned to implement the market share caps in January 2021 but prolonged the deadline to January 1, 2025. The regulator has struggled to seek out a workable option to implement its proposed market share caps.

The stakes are high, especially for PhonePe, India’s Most worthy fintech startup, valued at $12 billion.

Sameer Nigam, co-founder and CEO of PhonePe, said last month that the startup cannot go public “if there is uncertainty on regulatory issues.”

“If you buy a share at Rs 100 and value it assuming we have 48-49% market share, there is uncertainty whether it will come down to 30% and when,” Nigam told a fintech conference last month. “We are reaching out to them (the regulator) whether they can find another way to at least address any concerns they have or tell us what the list of concerns is,” he added.

This article was originally published on : techcrunch.com
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