Andreessen Horowitz (a16z) — prominent venture capital fund led by Ben Horowitz and Marc Andreessen — announced Thursday the close of its third crypto venture fund, a $2.2 billion fund that the firm says is the largest of its kind.
The new “Crypto Fund III” will be co-led by Chris Dixon and Katie Haun.
“The largest crypto fund ever raised to date, Crypto Fund III is a validating moment for the ecosystem and another sign that crypto becoming an ever more mainstream part of our financial infrastructure,” the firm said in a press release.
Rumors of Andreessen Horowitz (also known as a16z) raising a mega-fund have appeared in various reports in recent months. The Financial Times reported in April that the California-based investment firm would be raising $1 billion for a crypto fund. In late May, tech blogger Eric Newcomer wrote that the firm was raising $2 billion.
A source familiar with the raise now told The Block that interest came mostly from limited partners in the firm’s previous crypto funds, which have seen large returns. a16z netted more than $440 million from selling Coinbase stock soon after the exchange made its public markets debut on Nasdaq, according to CoinDesk.
a16z’s mandate in crypto has been broad, ranging from decentralized finance (DeFi) to bitcoin applications to so-called Web 3, or a decentralized version of the internet. The firm’s portfolio includes Dapper Labs, Celo, Uniswap, and Near.
“This fund allows us to find the next generation of visionary crypto founders, and invest in the most exciting areas of crypto,” Dixon and Haun wrote in a blog post. “We invest in all stages, from early seed-stage projects to fully developed later-stage networks.”
In addition to securing more than $2 billion to invest in crypto, a16z’s crypto business has been hiring aggressively. It has made a number of key hires including Anthony Albanese, who joined the firm last year from the New York Stock Exchange. Albanese is now being promoted to chief operating officer of a16z crypto.
The firm also hired Bill Hinman, a former director at the Securities and Exchange Commission, who once said ether (ETH) is not a security, and Rachael Horowitz, a veteran Silicon Vally communications strategist who previously was the top communicator at Coinbase, also recently joined. Horowitz has also held positions at Twitter, Google, and Facebook.
Additional new hires include policymaker Tomicah Tilleman, who is joining the firm as global head of policy after serving as a senior advisor to President Joe Biden.
“As with any new computing movement, crypto has endured a variety of challenges and misconceptions,” Dixon and Haun said. “That’s why we are also bringing together heavy-hitters across several functions to help translate “crypto” to the mainstream.”
The announcement of Crypto Fund III follows a flurry of recent activity in crypto venture investing. Despite the slump in coin prices, investors have been raising large sums of cash to pour into new crypto startups.
Framework Ventures recently announced a $100 million new fund to invest in DeFi. Blockchain Capital, meanwhile, recently announced a new $300 million fund with backing from tech giants PayPal and Visa.
Data from The Block shows investors poured more than $8.8 billion into startups during 2021, compared with 3.07 billion in all of 2020.
Crypto Money Laundering Down by 29% in 2023
According to recent findings from blockchain research firm Chainalysis, cryptocurrency money laundering activities experienced a significant downturn in 2023, dropping by 29% compared to the previous year.
In the report released on Thursday illicit funds laundered through cryptocurrency exchanges plummeted from $31.5 billion in 2022 to $22.2 billion in 2023.
Chainalysis attributed this decline to a general reduction in both legitimate and illicit crypto transaction volumes throughout the year.
The research platform highlighted that centralized exchanges remained the primary destination for funds originating from illicit sources, a trend that has persisted over the past five years.
However, there was a notable shift in the distribution of illicit funds, with an increasing proportion flowing into decentralized finance (DeFi) protocols.
The report suggested that this shift was influenced by the transparency inherent in DeFi platforms, making them less favorable for concealing the movement of funds compared to traditional exchanges.
Furthermore, Chainalysis noted changes in the methods used for laundering illicit cryptocurrency.
The report observed a significant rise in funds being channeled through cross-chain bridges from addresses associated with stolen funds.
Also, there was a notable increase in funds originating from ransomware attacks being directed towards gambling platforms and bridge protocols.
In terms of concentration, the report highlighted that 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each, collectively receiving $3.4 billion in illicit funds in 2023.
This represents a considerable increase compared to 2022 when only 40 addresses received similar amounts.
The findings underscore evolving trends in cryptocurrency laundering and signal a growing sophistication in illicit financial activities within the digital asset space.
Regulatory bodies and law enforcement agencies continue to grapple with emerging challenges posed by crypto-related crimes as the landscape evolves.
Binance Reaffirms Commitment to Fraud-Free Trading Amid Nigeria’s Currency Concerns
In response to growing concerns about exchange rate manipulation in Nigeria, Binance, one of the world’s leading cryptocurrency platforms, has issued a resolute statement reaffirming its commitment to maintaining a fraud-free trading environment.
The announcement comes amidst reports of heightened tensions regarding the devaluation of the Nigerian currency and suspicions of illicit activities on digital asset platforms.
Binance emphasized its dedication to providing users with a market-driven, transparent, and manipulation-free platform.
The company stressed its unwavering responsibility to safeguard users against fraudulent behavior and ensure the integrity of the trading ecosystem.
Binance asserted that any users found engaging in malicious or manipulative activities would face swift removal from the platform in line with its zero-tolerance policy for market manipulation.
The cryptocurrency exchange also highlighted its ongoing investment in enhancing processes and tools aimed at preventing fraudulent practices.
Measures include setting upper limits for advertisements, implementing rigorous ad screening procedures, and increasing deposit requirements for merchants posting ads.
As industry leaders, Binance reiterated its commitment to working closely with stakeholders to promote innovation while prioritizing user protection.
The platform assured users of its adherence to strict global security protocols across all products and services offered.
Binance’s statement underscores its proactive stance in addressing concerns related to market manipulation, emphasizing transparency, accountability, and the preservation of market integrity in Nigeria’s evolving cryptocurrency landscape.
Meanwhile, there were unconfirmed reports that the Nigerian government is considering blocking Binance and other cryptocurrency platforms amid concerns over alleged forex market manipulation and illicit financial activities.
Nigeria Mulls Blocking Binance, Crypto Platforms Over Forex Manipulation
Nigeria’s government is contemplating the drastic step of blocking Binance and other cryptocurrency platforms amid concerns over alleged forex market manipulation and illicit financial activities.
According to officials familiar with the matter, the move comes as the Nigerian currency experiences an unprecedented depreciation to an all-time low of N1,800 against the dollar in the parallel market.
Presidential and regulatory sources have cited reports indicating that currency speculators and money launderers are exploiting platforms like Binance to orchestrate criminal activities, which are believed to be contributing to the naira’s weakening.
Binance, a prominent digital assets platform, facilitates peer-to-peer transactions, allowing users to advertise their interest in buying or selling currencies.
Despite a warning issued by Nigeria’s Securities and Exchange Commission (SEC) in September 2023, cautioning against Binance’s operations as illegal, the platform continued to operate, drawing significant patronage, especially among urban youths and suspected speculators and money launderers.
Officials have raised concerns not only about economic sabotage but also about national security implications as these platforms are reportedly used by criminal groups for activities such as ransom payments.
Law enforcement sources have described the exploitation of digital asset platforms as a sophisticated scheme against the Nigerian economy, involving the manipulation of forex values through fake deals to influence market dynamics.
A senior executive at the Central Bank of Nigeria (CBN) emphasized the troubling trend of the naira’s depreciation, attributing it to artificial devaluation caused by speculative sites like Binance.
The potential ban on Binance and other crypto firms could follow actions taken by other countries like Malaysia, France, and Malta, which have implemented restrictions on such platforms due to similar concerns.
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