You've been served

Welcome back. Did you hear the noise about that trade last week—when a whale casually bet on Ether sliding below the $400 mark by June? That’s some serious hedging. If you want to brush up on your own hedging skills (mega hot takes optional), check out Coinsider’s free Short to Hedge Guide to make your portfolio airtight.

Today: Surprising numbers on Web3 investments, a lethal blow to Celsius customers, and Twitter madness. Let’s go.

—Angelina

Gaming Gets the Web3 Bag

What bear market? Web3 startups raised $7.2 billion in 2022, according to Metaverse Post’s year-end report—that’s $4.8 billion more than in 2021, when the candlesticks were green and the money was loose.

Here’s where it gets crazy: Beating out investment in the metaverse, AI, social networks, and infrastructure, the category that sucked up the most investor money in web3 was *drum roll please* gaming. Gaming companies raised a total of $4.5 billion and racked in some 63% of all money invested in web3 last year.

This stat is wild—let me explain. From an outsider’s perspective, gaming and web3 seem like a perfect fit. In reality? The broader gaming community has outright rejected blockchain-based games for two reasons:

1. The core pitch of many web3 games is still “play our game to earn money.” Most players are there for the tokens, not for the game itself.

2. Many web3 games are built around pay-to-win mechanisms (“buy this NFT to level up”). And where’s the fun in that?

Nevertheless: Hiding web3 functionality (such as NFTs) in games is a great way to onboard crypto newbies to the blockchain—often without them even knowing it. The key here is to go about it like Reddit did with its Collectible Avatar NFTs—by avoiding the tendency to slap the words web3 or crypto on everything and instead focusing on user experience.

Web3 games will likely be more successful because they’re actually fun, not because they’re designed to make VCs money or prop up a token.

The bottom line? Gaming could be a major theme of the next bull run given all the investment in the space—that is if the follow-through of all that funding prioritizes entertaining gameplay > web3 buzzwords. Angry Birds with collectible pig NFTs? I’m totally here for it.

A Hard Blow to Celsius Customers

We’re all guilty of blindly hitting that “I agree” button on the terms of service pop-up page. But paying more attention to the fine print could spare us some headaches…or full-blown migraines, in the case of Celsius customers.

A federal judge made it clear last week that customers of the bankrupt lender don’t have much of a chance of recovering their crypto. He ruled that:

• All $4.2 billion of customer deposits in Celsius’ interest-bearing Earn program belong to Celsius, not its users. The assets are now considered part of the company's bankruptcy estate.

• Celsius can sell $18 million worth of stablecoins in customers’ Earn accounts to fund its administrative costs for the next several months.

The judge reasoned that Celsius’ terms of service made it clear that users were signing over their assets to the lender when depositing crypto in Earn accounts.

Pushback: Beleaguered creditors don’t think that Celsius’ terms of service were as “unambiguous” as the court does. They’ve also alleged that former Celsius CEO Alex Mashinsky previously made misleading promises that account holders were in full possession of their assets.

Zoom out: The ruling suggests that customers of other insolvent platforms have little hope in fully recovering their funds. It all comes back to “not your keys, not your coins.” Not in the mood for sleuthing through boring terms of service? Self-custody is always an option.

This Really Happened

Imagine reading this headline to your great great grandparents: Three Arrows Capital (3AC) founders Kyle Davies and Su Zhu got served…on Twitter.

After 3AC went bust last year, the hedge fund’s founder duo laid low. But following FTX’s collapse, they’ve become pretty chatty on Twitter. Because 3AC’s liquidators couldn’t reach Davies and Zhu in person, they tried their luck on Twitter—and tagged them in a tweet with the copy of a subpoena.

The takeaway? If you happen to be the CEO of a bankrupt crypto company, maybe delete the Twitter app from your phone.

In other news:

• This Belgian MP converted his entire yearly salary to crypto in an experiment to raise awareness for Bitcoin.

• “Godfather” malware is targeting hundreds of crypto projects—and regulators are worried.

• Will the “Motorverse” make boring car rides history?

• The DOJ seized nearly $500 million worth of Robinhood shares that once belonged to SBF.

• Crypto payments firm Wyre is limiting customer withdrawals. Could this be the bear market’s next victim?

And that’s what you need on your radar today in crypto. Who would you like to see get served on Twitter next? Reply to let us know. See you back here on Friday!