Crypto

Farcaster, Blockchain Social Media Startup, Raises $150M Led by Paradigm, a16z

Farcaster raises $150M led by Paradigm; Genesis reaches $2B settlement and $3B bankruptcy payout approved.

By Max Weldon

5/21, 12:56 EDT
Bitcoin / U.S. dollar
article-main-img

Key Takeaway

  • Farcaster, a blockchain-based social media startup, raised $150 million in funding led by Paradigm with participation from a16z and others.
  • The project, built on Ethereum and OP Mainnet, saw 350,000 paid sign-ups and a 50x increase in network activity since going permissionless.
  • Farcaster is hiring staff-level engineers to support its continued growth and development.

Farcaster's Major Fundraising Success

Farcaster, a blockchain-based social media project, has successfully raised $150 million in a fundraising round led by Paradigm, with significant participation from a16z, Haun, USV, Variant, and Standard Crypto. Founder Dan Romero announced the news, emphasizing that the funds will support Farcaster's development for many years. "This will support our work on Farcaster for many years to come," Romero wrote in an update on Tuesday. The project is also actively hiring staff-level engineers to bolster its team.

Built on the Ethereum blockchain and the OP Mainnet within the Optimism layer-2 ecosystem, Farcaster has seen substantial growth since going "permissionless" in October. The project has recorded "350,000 paid sign-ups and a 50x increase in network activity," according to Romero. He also highlighted the growing developer community, with hundreds of developers building on the protocol and an increasing number of apps and frames available for users.

Genesis' $2 Billion Settlement

In a landmark move, New York Attorney General Letitia James announced a $2 billion settlement with crypto lender Genesis. This settlement aims to repay defrauded investors and marks the largest settlement against a crypto firm in New York's history. Genesis, once a key player within the Digital Currency Group (DCG), filed for Chapter 11 bankruptcy protection in January 2023 following the collapse of FTX.

"This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice," said Attorney General James. She further emphasized the need for oversight and regulation within the cryptocurrency industry to prevent such detrimental losses. The settlement bars Genesis from operating in New York and establishes a Victims’ Fund for at least 29,000 New York residents who collectively invested over $1.1 billion through the Gemini Earn product.

The Securities and Exchange Commission (SEC) has also filed a suit against Genesis and its former partner, Gemini, over the unregistered offering and sale of securities. The bankruptcy court has approved a separate settlement to resolve this complaint. The restructuring plan includes a repayment plan for customers who have had tokens frozen on the platform since November 2022.

Genesis Bankruptcy Payout

Genesis Global Holdco LLC, the parent company of Genesis, has received court approval to distribute $3 billion in cash and crypto to its creditors, covering approximately 77% of customer claims. However, DCG, the parent company of Genesis, will not receive any payouts. Genesis filed for Chapter 11 bankruptcy in January 2023 due to significant losses from the collapses of Three Arrows Capital and FTX, with over $3.5 billion owed to its top 50 creditors.

Initially, the market was skeptical about the likelihood of customers being made whole and the speed of the bankruptcy proceedings. Bankruptcy claim marketplace Xclaim initially listed Genesis claims at 35% of their value in January 2023. As of today, Genesis claims for bitcoin or ether are trading between 97-110% for claims over $10 million, while claims under $1 million are trading for between 74-94%. Claims for fiat currency or stablecoins in Genesis accounts are trading between 89-91% for accounts worth between $1-10 million, and between 73-88% for claims under $1 million.

Management Quotes

  • Dan Romero, Founder of Farcaster:

    "This will support our work on Farcaster for many years to come."
    "There are hundreds of developers building on the protocol and a growing number of apps and frames for people to use."