Monthly Review
Sep 26, 2023

Monthly Review - February 2022

Monthly Review - February 2022

Executive Summary

Despite the war waging between Russia and Ukraine, February saw an honorable struggle towards recovery, with Bitcoin’s increasing by 8.3% since last month and Ether by 10.4%. In this report, we’ll delve deeper into the geopolitical impact on not just the price performance of crypto-assets but also the adoption of the wider blockchain technology. February has also been a busy month for DeFi in the US, with crypto lending protocols hanging at the edge of their seats after BlockFi was fined $100M. This monthly review will discuss the developments in this space as well as the attacks and arrests that happened on the back of crypto heists that occured years ago and whose culprits are just being unveiled. We will conclude our report by listing down the multinational brands that have announced their eagerness to tap into the NFT industry and larger metaverse.

Geopolitics and Adoption

Russia and Ukraine are at war and have triggered a refugee crisis. In these distressing times, we want to highlight the humanitarian consequences. Over 400 have been killed from the Ukrainian side, and at least 500 from the Russian, since the invasion on February 24. It comes by no surprise that the ongoing conflict crashed the markets – cryptocurrencies and stock futures included – with the exception of Oil which surged by over 30%. Russia is Europe’s main supplier of gas and it also exports metals as well as wheat, along with Ukraine. The world stands in fear of what this conflict in correlation with these facts can mean to the global economy which is already struggling with inflation and a supply-chain crisis.

Following the invasion, the Russian ruble dropped by almost 30% and equity providers are deeming the country’s stock market “uninvestable” and are considering – if not already in effect – removing Russian listings from their indexes altogether. Moreover, the EU, US and their allies have agreed to cut off a number of Russian banks from the main international payment system, SWIFT; a system Russia heavily relies on for its oil and gas exports.

Similarly, the EU will freeze the assets of President Vladimir Putin of Russia and his foreign minister, Sergey Lavrov — while President of the EU Commission, Ursula von der Leyen, proposed to paralyze the assets of Russia's central bank. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed expansive economic measures, in partnership with allies and partners, that target the core infrastructure of the Russian financial system. Nonetheless this measure does not hold immediate effect, deemed controversial by many Americans, as there is a 30-day period.

Sources: Yahoo Finance, CoinGecko

In addition, while the Russians hoarded at the border of Ukraine before the invasion, they made way for a crypto-native use case beyond payments. A crypto project that now has almost 9M files uploaded to document the ongoing crisis. Describing itself as a global, permanent hard drive built on the blockchain, Arweave is a decentralized storage protocol designed to provide scalable and permanent on-chain data storage in a sustainable manner. This use case shows how important crypto-native cloud storage will be especially in light of geopolitical conflicts and tyrannical regimes who have a habit of rewriting history around their agendas.

Moreover, a javascript tool has been developed to fetch news from a variety of sources on the Russo-Ukrainian conflict and to automatically upload them on Arweave’s growing archive. At, our thesis has been that the use cases of blockchain technology and Web 3 tools materialize especially in the wake of geopolitical conflicts. We have laid out our thesis on Arweave in the fifth issue of our State of Crypto, of which you can get a copy here.

The silver lining is the unprecedented worldwide financial support from people to the Ukrainian government received through crypto payments, mainly Bitcoin and Ether. In the same vein, RELI3F, a web3 initiative launched to provide global humanitarian aid. According to Elliptic, the Ukrainian government – and NGOs providing support to the military, have raised $24.6 million through more than 26,000 cryptoasset donations since the start of the Russian invasion. However, there were some random NFTs, which could be viruses, sent to the ETH address. Important to make sure the Ukrainian government doesn’t touch them. Large amounts raised like those become honey pots, especially in the context of this cyberwar.

Prior to the invasion, on February 8, Russia agreed to amend existing laws recognizing crypto as a form of currency. The agreement comes as a sharp U-turn from Bank of Russia’s proposal to ban miners and several other crypto operations over concerns that they could endanger the country’s financial system. Ironically, crypto has appeared to serve both sides of the conflict which is essentially a living proof that crypto doesn’t have bias in its DNA and is rather a neutral technology.

However, contrary to popular belief, Russia will most likely resort to CBDCs to evade the sanctions it has been accruing ever since the invasion. CBDCs would make more sense for governments like Russia, easy to control and surveil as opposed to distributed crypto-assets that are fully traceable. Not to mention the platforms these crypto-assets are traded on, one legal action against a given group of users can force exchanges such as Kraken for example (like we saw in Canada this month) to freeze accounts and crypto wallets. As our Director of Research Eliezer Ndinga puts it, this conflict will accelerate the Russian CBDC developments and coalition with the digital yuan through the Belt and Road Initiative.

February has also witnessed further adoption outside of the Russo-Ukraine conflict.

  • Word is out that the world’s biggest asset manager, BlackRock, is gearing up to offer crypto trading to its investor clients. Allegedly, the company will enable investors to borrow using crypto collateral. Trading should occur on the portfolio management system Aladdin, which stands for: Asset, Liability, Debt and Derivative Investment Network.
  • Singapore’s largest bank, DBS, is working on expanding its cryptocurrency exchange beyond its current investor base of institutional clients, by enabling instant online deposits and transactions without relying much on banking intermediaries.
  • The UAE is also allegedly in its final steps towards licensing virtual assets service providers (VASPs), which is said to take place by the end of Q1. This comes in an effort to attract the world’s biggest crypto companies to the Emirates’ economy.

All things considered, our thesis at is that increased adoption, be it inspired by conflict or competition, would give governments and institutions alike a better chance to learn more about crypto’s numerous use cases that fundamentally champion financial inclusion on the micro level, and on the macro, revitalize economies.

DeFi in the US

After months of scrutiny and back and forth, BlockFi reached a $100M settlement after agreeing to register its lending product Yield with the Securities and Exchange Commission (SEC). In response to this, another crypto lending project announced a few policy changes that would essentially stop paying interest for new deposits coming from US customers. Nexo “voluntarily” implemented changes to its Earn Interest Product in the US to comply with newly-announced guidance. We can definitely see other crypto projects based or selling their products to US customers making similar decisions in the near future to avoid conflict or nine-digit dollar fines.

In other news, Chairman of the SEC Gary Gensler continues to lobby against crypto during a speech he gave to an exclusive Democrats event, where he compared crypto advertisements flooding this month’s Super Bowl to the surge in subprime mortgages that led to the financial crisis of 2008. At, we view this as an unfortunate analogy that time has proven to be untrue; the limited supply of Bitcoin is one example and being a savior for troubled economies is another.

On the other hand, there were mainly two victories this month for the US crypto industry. In a new win for stablecoin issuers like Circle and Tether, on February 8 Congress rejected the Treasury’s suggestions to regulate stablecoin protocols like banks. There will still be, however, more discussions on regulation with regards to stablecoin issuers facing audits and making disclosures. The second win was celebrated by crypto miners and stakers which are to be spared by the Treasury Department from rules that would require digital-asset brokers to turn over information on their clients’ transactions to the IRS.

This attests to our thesis that grassroot lobbying for crypto rights is never in vain. These victories come after several months of hearings and testimonies before the Senate about stablecoins and debates at Congress discussing the definitions referred to within the bipartisan infrastructure bill proposed back in November by the Biden administration.

Attacks and Arrests

February started off with DeFi’s second-biggest exploit, snatching over $320M from Wormhole, a protocol that lets users move their tokens and NFTs between Solana and Ethereum. There are several incidents that serve as a further testament that crypto isn’t anonymous and therefore traceable and accountable.

On February 8, a duo behind a $4.5B Bitcoin heist were arrested in Manhattan. Investigators tied the couple with the 2016 hack that stripped crypto exchange Bitfinex off over a million Bitcoins. The couple were caught in action while attempting to launder the proceeds from the hack.

An investigation by crypto journalist Laura Shin points fingers at an Austrian programmer, and also a former CEO of a crypto project that went downhill, for stealing a whopping $11B worth of ETH back in 2016, an event that led Ethereum to do a hard fork.

A massive leak broke out on February 20, revealing that some of Credit Suisse’ clients are involved in torture, drug trafficking, money laundering, corruption among others. The Credit Suisse’s scandal proves that financial crime is not exclusive to crypto, while in fact crypto is far more transparent and illicit use cases represent 0.15% of the total traded volume. Regulators and policy makers start to realize the benefit of blockchain technology for law enforcement purposes. It shouldn’t come as a surprise to witness the illicit figures to plummet as the crypto industry continues to grow given, more governments will become sophisticated and rely on forensic firms to crack down on illicit activities. On the flipside, given blockchains’ transparency, authoritarian regimes could start to exert power over targeted users and entities — until privacy-enabled technologies like zero knowledge proofs reach mainstream adoption in the next 2 to 3 years.

On a Lighter Note: NFTs

Although the market took a downturn in the past month, institutional adoption is yet on the rise. Soon, while roaming the metaverse, users will be able to enter a virtual branch of McDonald’s, make their favorite McOrder and have it delivered to their doorsteps, instead of pausing their metaverse excursion and dialing the hotline for example. On February 4, the F&B giant filed for 10 trademarks with the US Patent and Trademark Office (USPTO) to offer actual goods as well as virtual through its virtual restaurant.

On February 10, the USPTO also received a regulatory filing from the New York Stock Exchange (NYSE) disclosing its intention to be a financial exchange for cryptocurrencies and NFTs that would compete with the likes of OpenSea and Rarible Inc. Moreover, the world’s largest stock exchange plans to roll out a branded cryptocurrency coupled with a marketplace to buy, sell and trade NFTs.

As part of its 2022 roadmap, YouTube revealed that it’s exploring NFTs and other Web 3 tools to cut down on fraud and promote further social engagement by offering more social viewing experience for gaming content. Shying away from giving any specifics to what their next steps would be, YouTube stated in a blog that it finds NFTs to be a compelling tool for both its creators and their audience; “a verifiable way for fans to own unique videos, photos, art, and even experiences from their favorite creators.”

Gucci also bought some virtual land on Sandbox to expand its online presence with the “Gucci Vault”, an online concept store, to create an interactive experience especially for its Gen Z customers. So far, Sandbox - which just launched its metaverse in late November - has generated over $350 million in aggregate LAND sales with nearly 80% coming in from last year.

Meta’s attempt at the metaverse is not looking good as the majority of US consumers say no to Meta owning metaverse data, 87% of respondents preferred a decentralized metaverse on a blockchain. This is a good indication that decentralized metaverse projects, like Sandbox and Decentraland, will thrive against their centralized counterparts which will sooner or later decline with the rise of the limitations of centralization.

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