Blockfi, A Crypto Bank, Announces New Financing.

We’ve long been fans of crypto lending; we’ve made investments in two companies over the last two years, and are active in both borrowing and lending cryptocurrencies. We’ve now also invested in Blockfi, and this is our first equity investment in what is essentially a nascent, and regulated, crypto bank. Blockfi has been added to our portfolio page.

The round was announced late last week: $30 million raised in a Series B, following $18m in a Series A last year. Besides Arrington XRP Capital, investors in the round include Morgan Creek Digital, PJC, Akuna Capital, CMT Digital, Winklevoss Capital, Avon Ventures, Castle Island Ventures, Purple Arch Ventures, Kenetic Capital, Arrington XRP Capital and HashKey Capital.

The company is absolutely killing it, even in the largely moribund crypto markets over the last two years. Revenue is up 20x over the last year, and deposits grew from $250m in August 2019 to $650m today.

These guys are winning. Very happy to join their team!

See more coverage: Coindesk, Bloomberg, CoinTelegraph and The Block.

Notes On Upcoming Skale Token Sale On ConsenSys Activate

News broke this morning that our portfolio company Skale will partner with ConsynSys’ Activate platform to sell tokens via a dutch auction.

Importantly, purchasers will be required to stake purchased tokens, which should discourage participation from pure speculators hoping to flip tokens for an immediate profit.

Read more about the news on Decrypt, Coindesk, CoinTelegraph, The Block, FinanceMagnates, VentureBeat, Kyle Samani and Spencer Noon.

Read our previous post on Skale here.

Crypto Wars: A New Hope

Nakamoto.com, a new initiative founded by crypto investor and entrepreneur Balaji Srinivasan, launched quietly last Friday evening. There was no initial press coverage, just a series of tweets to announce the purpose of the new website and link to some of the initial posts.

.A battle quickly erupted on Crypto Twitter about the use of the Satoshi name for a website that includes authors that are not approved by the high priests of the bitcoin fundamentalist sect.

Regardless, Balaji’s initial post was a rallying cry for the future of crypto, and Bitcoin’s rightful place as the flag of a new wave of technology.

I think this is a much needed resource to help heal some of the senseless fighting in crypto today. Many outsiders see a lot of chaos in crypto, insane infighting that appears meaningless to newcomers but quickly demands that someone take a side. Pro BTC or anti-BTC (just saying “Pro-Bitcoin leads many to ask “WHAT Bitcoin do you mean!!!). Pro this alt coin or that one.

Healthy debates are wonderful and happen every day in crypto. But unhealthy debates, spectacularly dramatic, drown out the good conversations. Nakamoto appears to be an effort to bring together the more reasonable people in crypto to celebrate what’s good about the technology.

“That’s why we’re launching Nakamoto. We want to create a venue for quality technical, philosophical, and cultural writing that is of general interest to the crypto community as a whole, for beginner and expert alike.”

I’m a contributing writer to the site. My first post is titled It Will Take Years for Smart People to Understand Cryptocurrencies. You can read it here.

Anyone can write for the site. There is more information about contributing here.

Ethereum-Friendly Skale Raises Pile Of Money

Arrington XRP Capital participated in the just announced Skale funding round – some $17.1 million in total. You can read the details, soundbites and thoughtful quotes on the news sites. Here’s CoinDesk and TheBlock.

Yes, I’m a little salty today. I flew home last night on a redeye flight from New York. In coach. I was supposed to write about Skale at a designated time that coincided, I believe, with the exact moment on the flight where I, shuddering from cold, purchased two $5 blankets that I was told I was free to keep. When did we start having to buy blankets on flights? Will they install a credit card reader on the toilets next?

I’m convinced those bastard on Jet Blue turned the temperature down just to sell more blankets.

Anyway, I’ve had a solid 2 and a half hours of sleep now and I want to use my cheerfulness to explain why I think Skale is going to make us enough of a return that I will never, ever, have to fly coach again.

There are two reason. First, Skale has the best team I’ve ever seen. With the possible exception of any other founders I’ve invested in that happen to be reading this post, Skale has without a doubt the finest crypto team in the business. (I joke, but I’m serious. We invest in teams first, products second. It works).

Second, Skale can fix Ethereum. Even Joe Lubin, founder of Consensys, would admit this, and that’s why the venture arm of Consensys invested along side us.

If you are building in crypto, Skale might be an excellent partner and help you build things that actually work. And, well, scale. Mainnet is coming, soon, but you can test now.

Thank you, Skale, for including us in the round. Everyone wanted to invest, and we appreciate you finding room for us.

Arrington XRP Capital Welcomes Alex Shin, Former #Hashed Partner, As New Venture Partner

Many of you in the industry know Alex Shin well. He was a cofounder and partner at Seoul-headquartered #Hashed, one of the largest crypto venture capital and accelerator funds in the world.

Today we welcome Alex to Arrington XRP Capital as a Venture Partner. Alex will help us find new growth opportunities in Asia, the U.S. and the rest of the world.

Alex is American but speaks Korean natively and has lived in both San Francisco and Seoul for the last several years.

We are excited to work with Alex, helping us grow our footprint in Asia and beyond.

Our New Investment In Algo Capital

We are very pleased to join forces with Algo Capital, a new $200 million venture fund founded by David Garcia and Arul Murugan. We have invested in the fund, which will focus on the Algorand ecosystem.

See Coindesk: Arrington XRP Backs Fund’s $200 Million Raise for Algorand Blockchain

We join our friends at the Algorand Foundation, Neo Global Capital, Eterna Capital, GSR, Cognitive Blockchain, Rokk3r, Wibson, 11-11 Ventures, DG Ventures, Winslow Strong, Invermaster and other investors in supporting this new fund.

Algo Capital only takes commitments in Algos, much like our own XRP-only policy. We are very excited to be investors in the new fund, and look forward to co-investing in new blockchain projects with them in the future.

Additional coverage:

The Block: Bakkt investor backs $200M VC fund focused on Algorand blockchain

Finance Magnates: Algo VC Fund Raises $200M to Promote Algorand Blockchain

Yahoo Finance: Arrington XRP Backs Fund’s $200 Million Raise for Algorand Blockchain

BusinessWire: Algo Capital Closes Algo VC Fund at $200 Million

hypepotamus: ATLANTA-BASED VCS RAISE $200M BLOCKCHAIN FUND

Blockchain News: Algo Capital Closes Algo VC Fund at $200 Million – Doubling Expected $100 Million

Ron Palmeri Joins Arrington XRP Capital

Ron Palmeri is a seasoned silicon valley entrepreneur and investor. Today we welcome him to the Arrington XRP Capital team.

I first met Ron shortly after launching TechCrunch nearly 15 years ago. At the time he was a partner and cofounder at Minor Ventures, an early incubator and fund that launched a slew of amazing startups. Companies he helped start include Grand Central (which later became Google Voice) and Open DNS.

Ron later started and invested in more companies, including most recently Layer, a communications infrastructure company that was recently acquired.

That acquisition was lucky for us because it made Ron, an incredible leader and mentor, available to us. He has joined as a strategic advisor and consultant. We’ll keep him as long as we can, either until I convince him to join full time as a partner, or he goes off to start his next operating company.

Follow Ron on Twitter @Ronp.

DefendCrypto.org Launches To Help KIN And Others Fight The SEC

We’ve all watched KIN and others fight the SEC over how the U.S. government classifies their tokens. And while we often (always) bicker amongst ourselves about every detail of every coin and protocol out there, nothing can bring us together as well as a common enemy. The SEC is out of control, and hurting our industry with indecision.

That’s why we stand behind KIN and others fighting the SEC. Today KIN launches DefendCrypto.org to help spread information about their legal challenges, and request financial assistance from the community.

KIN has set aside $5 million for their legal defense fund and Coinbase will host the fund. You can contribute directly at defendcrypto.com. Anything left over after their case will be used to help other companies fighting the SEC.

Arrington XRP Capital will be donating to the KIN fund. We urge you to help them as much as you are able, and to spread the word.

Thank you.

Additional links about this:

Fred Wilson

The Block

CoinDesk

Our Investment In Dekrypt Capital

Our investment thesis at Arrington XRP Capital is to invest in great people and great projects. It really is that simple, and sometimes that means we invest in our “competitors” – other funds making investments into crypto-focused companies and projects.

We’ve made three investments in other funds to date – Ausum Ventures last year, one confidential investment (per the request of the fund), and most recently, Dekrypt Capital. More investments into other crypto-focused funds will come in time.

Why Dekrypt Capital? It’s all about the people. Jon Allen, Howard Wu, Ronen Kirsh and Jack Baumruk are the Dekrypt partners. They are among the most respected people investing in crypto projects today.

In 2011 they were mining Bitcoin.

In 2014 they invested in the Ethereum ICO.

In 2015 they helped develop Zcash, the first untraceable token with zero-knowledge proofs.

In 2016 they created Blockchain at Berkeley.

In 2017 the SEC spoke for the first time at a blockchain conference hosted by Dekrypt.

And in 2018 they hosted the first San Francisco Blockchain Week, with over 4,000 attendees.

Howard’s background in cryptography and various papers he has written such as DIZK and ZEXE have positioned him as one of the leaders in the zero knowledge proof domain.

They were co-investors in about half our deals last year, so we already knew they made some great investments. Like us, they aren’t shy about traveling and have made investments in fifteen companies in five countries.

They don’t publicize themselves much (a refreshing change in this industry), they have spectacular credentials, and bend over backwards to assist the companies they invest in. Actually, they help anyone that asks, even if they haven’t invested. When someone reaches out to them, they say yes, and help all they can.

Here’s an example of how helpful they are. Earlier this year we were expanding our team (eventually merging with another firm). We reached out to many people in the industry for assistance in finding good people. Ronen and Jon quickly came back to us with two amazing candidates out of Berkeley. Their deep ties to Blockchain at Berkeley helped us immensely.

Dekrypt has been in the blockchain space for a long time and will continue to be in the blockchain space for a long time. They have a builder’s mentality and the companies we have co-invested with them say that they are very engaged. Being helpful to your companies is perhaps the best way to advertise yourself – people talk, and being a force for good is a good reputation to have.

Their focus is on early stage projects. They have deep technical backgrounds and close ties with the developer communities which allows them to help their companies solve technical challenges as well as build out their team as they scale.

Dekrypt focuses on privacy preserving technologies and believe there are massive potential applications ranging from scalability, interoperability and obviously privacy. Like us, they believe this thesis is being validated and will continue to grow in importance.

They raised $20 million last year to start the fund, and they are now raising additional capital, as we did in late 2018. We made the investment last month and are proud to be doing business with them.