The Protocol: Side-Dealing Accusations Put Crypto VC Funding in Spotlight

In this week's blockchain tech newsletter, we're highlighting the firm Polychain's accusation against a former general partner over an alleged ethics breach, along with Ethereum co-founder Vitalik Buterin's speech in Brussels and Bitcoin's Saxony problem.

AccessTimeIconJul 10, 2024 at 5:40 p.m. UTC

The Ethereum Foundation's Vitalik Buterin drew more than 1,000 people into a room in Brussels at the EthCC conference, and CoinDesk's Margaux Nijkerk was on the scene. We've got that story plus lots of announcements emanating from Europe's biggest Ethereum-focused conference.

But one of the biggest blockchain stories making waves is the revelation (scooped by CoinDesk's Sam Kessler) that a prominent builder in the space has been accused by his former employer, the prestigious crypto venture-capital firm Polychain, of violating ethics policies by taking an undisclosed personal allocation of tokens from a project that raised funds from the firm. Read on.


  • Top picks from the past week's Protocol Village column: Combinder, Tezos, TON, Worldcoin, Union.
  • More than $20 million of blockchain project fundraisings: Rome, Dora, BOB, Term Labs.
  • Private equity firms are suddenly interested in bitcoin miners' data centers – thanks to AI.
  • The German state of Saxony is roiling the global bitcoin market with its apparent liquidation of seized BTC.

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Also please check out our weekly The Protocol podcast.

Network news

Ritual co-founder Niraj Pant

Polychain says Ritual co-founder Niraj Pant, an ex-general partner, broke its policies. (Ritual)

SIDE DEAL? Two months ago, the blockchain-development world was rocked by the news that Neel Somani, founder of the uber-modular blockchain project Eclipse, was stepping aside from his role in response to sexual misconduct allegations. Now, there's fresh accusations surrounding the project's fundraising. Crypto venture capital giant Polychain has accused Niraj Pant, a former general partner at the fund, of making a backroom deal with Eclipse that broke the fund's policies, a scoop by CoinDesk's Sam Kessler. According to three sources close to the situation and internal Eclipse documents reviewed by CoinDesk, Eclipse's Somani quietly allocated Pant 5% of a forthcoming Eclipse crypto token in September 2022 – just days after Pant directed Polychain to lead the company's $6 million pre-seed funding round. The allocation was eventually reduced to 1.33%, worth $13.3 million at the token's most recent fully diluted valuation in a private investment round. Pant insists the arrangement was completely kosher because it wasn't finalized until September 2022 – the month after Polychain had already invested in Eclipse. Under a copy of an agreement obtained by Kessler and signed by Somani, Pant's Psychological Operations Co. would receive a grant of Eclipse's tokens in exchange for "periodic teleconference sync meetings" as requested by Eclipse. Somani told his inner circle that the generous token grant was meant to incentivize Pant to secure Polychain's cash and the veteran VC's coveted endorsement, according to two people familiar with the matter. "Polychain's statement to CoinDesk grants a rare insight into the sausage-making process of the cozy world of crypto VC firms and the projects they fund," Kessler wrote. Snarky posters on the social-media platform X snickered ironically that they were "shocked" to learn that such practices might go on in the crypto fundraising scene.

Former President Donald Trump's Republican Party has officially adopted a platform that would seek to support cryptocurrency innovation, according to the document released Monday by the Republican National Committee. Separately, Multicoin Capital, one of the largest U.S. investment firms focused on cryptocurrency, is pledging up to $1 million to support Senate candidates with favorable views of the industry.

Residents of the small city of Granbury, Texas, have complained of suffering physical symptoms due to a "dull aural hum" emanating from a nearby Bitcoin mining facility that was "exceeding legal noise ordinances on a daily basis," Time reported. "A representative for Marathon Digital Holdings, the company that owns the mine, did not answer questions about health impacts, but told Time that it is working to remove the noisy fans from the site."

Blockchain games are "now emerging fully-cooked," writes David Z. Morris in a guest column: "That is, many are at least as enjoyable as games that have nothing to do with crypto." Another CoinDesk contributor, Jeff Wilser, examined the success of the tap-to-earn darling Hamster Kombat, a game launched on TON blockchain that has become so popular in Iran that the country's deputy military chief described it as part of the West's "soft war."

Ethereum co-founder Vitalik Buterin gave a keynote talk about hardening the Ethereum blockchain as a base layer, in front of a packed room full of an estimated 1,100 attendees, at a developer conference in Brussels on Wednesday. Buterin spoke at length during his presentation at the Ethereum Community Conference (EthCC) about the strengths and weaknesses of the largest smart-contracts blockchain and its sprawling ecosystem, including his concerns about transaction censorship, as well as a proposal to increase the “quorum threshold” from 75% to 80%. Buterin said he believes the strengths of the Ethereum ecosystem include that it is a “large and reasonably decentralized staking ecosystem,” and that it is a highly international and intellectual community. (Not sure if he's referring to Crypto Twitter?)

Vitalik Buterin speaks at the EthCC conference

Ethereum co-founder Vitalik Buterin speaks at the EthCC conference on Wednesday in Brussels (Margaux Nijkerk)

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

Schematic illustrating how Combinder works

Schematic illustrating how Combinder works (Combinder)

1. Combinder, a DePIN for energy data collection, unveiled an "AI-driven prototype of a Web3-powered energy nano-grid, built together with Nevermined & Valory, on behalf of Olas," according to the team: "Running on peaq, the layer-1 blockchain for DePIN and Machine RWAs, the prototype will demonstrate the viability of Web3-based nano-grid energy management involving AI agents – smart software pieces representing individual household devices. Leveraging real-world data to simulate the energy needs of an average household, the project team will build a physical nano-grid involving a plug-in green energy source and an AC unit."

2. Trilitech, focused on the Tezos blockchain, announced what the team described as a "major development" – the introduction of Jstz (pronounced "justice"), a "smart rollup powered by JavaScript." According to the team: "The upcoming layer-2 rollup being built on Tezos will allow developers to use JavaScript and its vast resources. But more than just enabling the language itself, what sets Jstz apart is that it’s being designed to comply with standard JavaScript APIs, enabling builders to tap into a massive ecosystem of familiar, battle-tested JS tools and libraries." (Please see our recent story here on Tezos's plan for a "canonical rollup.")

3. A new project called TON Applications Chain (TAC) is building a layer-2 network for the TON Blockchain ecosystem, known for its affiliation with the popular messaging app Telegram. The project, which is backed by The Open Platform, an investor focused on the TON blockchain ecosystem, will rely on technology from the Ethereum-focused layer-2 developer Polygon, according to a press release. The team made the announcement on Tuesday at the Ethereum Community Conference (EthCC) in Brussels, Belgium.

4. Union Labs, the modular interoperability layer, has added support for Arbitrum, the leading layer-2 ecosystem by TVL, to connect Arbitrum Orbit chains with IBC-enabled blockchains, as well as other networks integrating with Union such as Polygon, Scroll and Movement. According to the team: "This integration will unlock unprecedented liquidity flow between IBC and the Arbitrum ecosystem. It will also see the reduction of the latency in optimistic cross-chain operations while maintaining the security and integrity of transactions in and out of the Arbitrum ecosystem."

5. The developer firm behind the Worldcoin protocol shared Tuesday that its upcoming layer-2 chain, World Chain, is now open for developers to use. This means that select developers can apply to build, test, and give feedback to Tools For Humanity, the developer firm behind Worldcoin, according to a press release shared with CoinDesk. World Chain has tapped Optimism’s OP Stack, a customizable toolkit that lets developers build their own blockchains using Optimism’s technology, to build out its own network.

Private Equity Giants Are Circling Bitcoin Miners on AI Allure

Private equity (PE) firms are finally seeing value in bitcoin (BTC) miners, thanks to the rising demand for data centers that can power artificial intelligence-related (AI) machines.

Even private equity firms that haven't necessarily done data centers before are evaluating the space," said Adam Sullivan, the CEO of one of the largest mining firms, Core Scientific (CORZ), in an exclusive interview with CoinDesk.

Core Scientific recently inked a 12-year, 200 megawatt (MW) deal with cloud computing firm CoreWeave for AI-related computing needs, with options to expand the capacity further.

Since the news broke about the deal, Core Scientific has received several approaches from tier-one private equity firms offering financing for further AI-related partnerships, Sullivan said.

Money Center


Rome co-founders Anil Kumar (right) and Sattvik Kansal

Rome co-founders Anil Kumar (right) and Sattvik Kansal (Rome)

  • Rome, a crypto startup project aiming to use Solana as an auxiliary network to provide services to layer-2 blockchains built atop Ethereum, emerged from stealth and announced it has raised $9 million of funding from top-tier investors. The financing was provided by Hack VC, Polygon Ventures, HashKey, Portal Ventures, Bankless Ventures, Robot VC, LBank, Anagram, TRGC, Perridon Ventures, as well as notable angels including Anatoly Yakovenko, Nick White, Santiago Santos, Comfy Capital, Austin Federa, Jason Yanowitz, according to a press release shared first with CoinDesk.
  • Dora, describing itself as "the unified search and action engine for the multichain world," announced the successful close of a $5.5 million early stage funding round. According to the team: "The round was co-led by Dragonfly Capital and Lemniscap, with participation from Robot Ventures, Ethereal Ventures, Maven11 and Arche Capital, alongside notable angel investors such as Movement Labs co-founder Rushi Manche and Fluent co-founder Dino Savonin."
  • BOB (Build on Bitcoin) unveiled a $1.6M strategic funding round led by Ledger Ventures and backed by prominent angels such as leaders at BlackRock, Aave and Curve.
  • Term Labs, the developer behind DeFi fixed-rate lending protocol Term Finance, closed a $5.5 million strategic funding round, bringing cumulative funding to date to $8 million, according to a press release. Electric Capital led the round, with Maelstrom (Arthur Hayes), Ava Labs Blizzard Fund, Arete Capital, Inception, Delta Blockchain Fund and others participating. Also joining the round were angel investors including founder and CEO Mike Silagadze, Paper Ventures founder Danish Chaudhry, Neoclassic Capital co-founder Steve Lee and Into The Ether Podcast co-host Eric Conner.

Deals and grants

  • Crypto trading firm and market maker Auros said in an exclusive interview with CoinDesk that its newly established venture capital arm plans to invest more than $50 million of its own capital in early-stage digital asset ventures in the next two years.
  • Decentralized education protocol Open Campus has announced a $1 million hackathon to promote decentralized app development on the EDU Chain.
  • Immunefi, an on-chain crowdsourced security platform, and the Ethereum Foundation have launched the first crowdsourced security audit contest, "to augment the security for the entirety of the protocol’s code," according to the team.

Data and Tokens

Regulatory, Policy and Legal


Edited by Bradley Keoun.


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Bradley Keoun

Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.