Former Myntra chief’s fashion startup Virgio valued at $161 million in new funding

Fashion startup Virgio, co-founded by Amar Nagaram, former chief executive of Myntra, has raised $37 million in a new financing round as the young firm looks to build “a global fashion brand” from the South Asian market.

Prosus Ventures, Alpha Wave and Accel co-led Virgio’s Series A funding, valuing the one-year-old startup at $161 million (post-money). (Virgio says it was founded this year, but hasn’t disclosed its seed funding round.)

Virgio says consumers’ fashion preferences are changing rapidly and they are not satisfied with the incumbents’ offerings. It is attempting to solve this by streamlining design, manufacturing and purchasing processes in “real-time,” offering Gen-Z and late millennials a platform where they can discover and purchase the new trendy apparels.

Virgio offers a wide-range of selection in casual, party and ethnic wear. Each week it adds new selections and customers receive large discounts and free shipping.

The startup’s approach has prompted some to draw its model’s comparisons with the behemoth Shein.

“Traditionally, the fashion industry has operated on depth and discount models,” said Nagaram, founder and chief executive of Virgio, in a statement.

“At the core of Virgio is the tech foundation, which is always listening to evolving trends on social media platforms and predicting the demand for each trend. This is then fed into our agile and responsive supply chain to enable the trendiest, elegant and yet affordable line in near real-time. Thus, Virgio is pioneering the test and scale method, making runway fashion accessible and affordable for all consumers, while eliminating excess inventory for manufacturers,” said Nagaram, a Flipkart veteran who took over Myntra’s top job in 2019 before leaving the firm last year.

The startup says its full-stack approach is allowing it to condense the typical lead time of eight to ten months to just one month. Its eponymous app has already amassed over 100,000 downloads, it said. (On Sensor Tower, the app reflects very little metrics as it is still too small.)

“There is a large underserved market for branded apparel in India currently. For example, for women, only ~25% of fashion is branded apparel. The fashion industry in India is thus at an inflection point, driven by changing consumer preferences as a result of social media’s influence, an important Gen-Z characteristic to individualize as a form of expression, and the integration of social commerce with social media platforms,” said Ashutosh Sharma, Head of India Investments at Prosus Ventures, in a statement.

“We are confident in Virgio’s tech-first model and believe the startup’s expert founding team is uniquely positioned to capture a large opportunity in India’s fashion industry,” he added.

Scores of other entrepreneurs — including Mukesh Bansal, Kunal Shah, Binny Bansal, Bhavesh Agarwal, Vidit Aatrey, Saif Ali Khan, Sriharsha Majety, and Sameer Nigam — also invested in the round.

Former Myntra chief’s fashion startup Virgio valued at $161 million in new funding by Manish Singh originally published on TechCrunch

Twitter just banned prominent journalists who cover Elon Musk with no warning

On Thursday evening, Twitter suspended a number of prominent journalists on the platform without warning or explanation.

The situation followed the company’s decision to suspend the Twitter account of Mastodon, an open source social media alternative that’s built momentum since Elon Musk took over at the company. Twitter took action against Mastodon after the account linked to the Mastodon page of @ElonJet, a student-made bot that tracks the whereabouts of Musk’s private jet.

At least some of the accounts suspended had shared screenshots and observations about Mastodon’s suspension. Just prior to his suspension, Washington Post reporter Drew Harwell tweeted about Mastodon being kicked off the platform.

Former MSNBC host Keith Olbermann, The New York Times’ Ryan Mac, CNN’s Donie O’Sullivan, Mashable’s Matt Binder, and journalist Aaron Rupar were also suspended Thursday evening. Many of the reporters regularly covered Musk’s takeover of Twitter in recent months.

Rupar weighed in on his suspension on Substack, observing that while he did not know why his account was deactivated, he did share a link to the ElonJet Facebook account in the course of reporting on the subject. Through an alternate account, Mac shared the message he received from Twitter and noted that there was no warning before the permanent suspension.

Some folks have asked so will try to answer here:
-This is the notification on my account.
-I was given no warning.
-I have no email or communication from the company about the reason for suspension.
-I report on Twitter, Elon Musk and his companies. And I will continue to do so. pic.twitter.com/Fz14nStH7U

— Silenced Ryan Mac (@MacSilenced) December 16, 2022

Some of the suspended accounts shared Mastodon and ElonJet’s Twitter handles as well as images of the tweet that appears to have gotten the former account suspended.

In light of Twitter’s reduced human moderation teams, it’s possible that automated systems enforcing Twitter’s brand new rules against accounts like @ElonJet were overzealous in this instance. But it’s at least as likely that this is a case of Musk directing the moderation process based on his own preferences — we just won’t know until someone at Twitter explains what’s going on.

Update:Musk just weighed in on the suspensions, characterizing them as intentional. “Same doxxing rules apply to “journalists” as to everyone else,” he tweeted in a reply.

Same doxxing rules apply to “journalists” as to everyone else

— Elon Musk (@elonmusk) December 16, 2022

TechCrunch has reached out to Twitter’s new head of trust and safety Ella Irwin for an explanation of why the accounts were not given the opportunity to delete the offending tweets, which is standard practice for many Twitter infractions. It’s worth noting that the policy these accounts violated, a prohibition against sharing “live location information,” is only 24 hours old.

This story is developing…

Twitter just banned prominent journalists who cover Elon Musk with no warning by Taylor Hatmaker originally published on TechCrunch

Twitters suspends Mastodon’s account, making a good case for Mastodon

A day after Twitter crafted a new policy to explain its decision to ban an account that tracks Elon Musk’s private jet, the fallout continues.

Twitter apparently suspended its open source competitor Mastodon from the service on Thursday afternoon. Just prior to its suspension, Mastodon (@joinmastodon) tweeted a link to the jet tracking account on its own service, according to archives.

Twitter/WaybackMachine

The now-banned Twitter account @ElonJet belongs to Florida student Jack Sweeney, who also operates a number of other flight-tracking bots that curate flight information from public data. Sweeney’s personal account was also suspended from Twitter along with many of the bots, including one that issued updates on Meta CEO Mark Zuckerberg.

In early November, Musk struck a different tone about the account but he’s since backtracked, adjusting Twitter’s platform policies in light of his personal preferences. “My commitment to free speech extends even to not banning the account following my plane, even though that is a direct personal safety risk,” he tweeted. That tweet is now accompanied by community notes explaining the @ElonJet saga.

Musk’s personal and political preferences have guided a number of Twitter policy decisions since the company’s hands-on new owner took over. While Musk initially declared that Twitter would allow any content that isn’t illegal, he’s since disallowed specific accounts for personal reasons.

Musk reinstated a wave of high profile Nazis and white supremacists earlier this month but drew the line at Sandy Hook conspiracy theorist Alex Jones, citing his personal experience of fatherhood.

On Mastodon, a federated, open source Twitter alternative, a single individual can’t set the rules for the whole platform. Mastodon’s servers — separate but open instances of the social network — are run by individuals who can set rules, but users can also decamp to a different server if they don’t agree with those choices.

Twitters suspends Mastodon’s account, making a good case for Mastodon by Taylor Hatmaker originally published on TechCrunch

Try ‘Riffusion,’ an AI model that composes music by visualizing it

AI-generated music is already an innovative enough concept, but Riffusion takes it to another level with a clever, weird approach that produces weird and compelling music using not audio but images of audio.

Sounds strange, is strange. But if it works, it works. And it does work! Kind of.

Diffusion is a machine learning technique for generating images that supercharged the AI world over the last year. DALL-E 2 and Stable Diffusion are the two most high-profile models that work by gradually replacing visual noise with what the AI thinks a prompt ought to look like.

The method has proved powerful in many contexts and is very susceptible to fine-tuning, where you give the mostly trained model a lot of a specific kind of content in order to have it specialize in producing more examples of that content. For instance, you could fine-tune it on watercolors or on photos of cars, and it would prove more capable in reproducing either of those things.

What Seth Forsgren and Hayk Martiros did for their hobby project Riffusion was fine-tune Stable Diffusion on spectrograms.

“Hayk and I play in a little band together, and we started the project simply because we love music and didn’t know if it would be even possible for Stable Diffusion to create a spectrogram image with enough fidelity to convert into audio,” Forsgren told TechCrunch. “At every step along the way we’ve been more and more impressed by what is possible, and one idea leads to the next.”

What are spectrograms, you ask? They’re visual representations of audio that show the amplitude of different frequencies over time. You have probably seen waveforms, which show volume over time and make audio look like a series of hills and valleys; imagine if instead of just total volume, it showed the volume of each frequency, from the low end to the high end.

Here’s part of one I made of a song (“Marconi’s Radio” by Secret Machines, if you’re wondering):

Image Credits: Devin Coldewey

You can see how it gets louder in all frequencies as the song builds, and you can even spot individual notes and instruments if you know what to look for. The process isn’t inherently perfect or lossless by any means, but it is an accurate, systematic representation of the sound. And you can convert it back to sound by doing the same process in reverse.

Forsgren and Martiros made spectrograms of a bunch of music and tagged the resulting images with the relevant terms, like “blues guitar,” “jazz piano,” “afrobeat,” stuff like that. Feeding the model this collection gave it a good idea of what certain sounds “look like” and how it might re-create or combine them.

Here’s what the diffusion process looks like if you sample it as it’s refining the image:

Image Credits: Seth Forsgren / Hayk Martiros

And indeed the model proved capable of producing spectrograms that, when converted to sound, are a pretty good match for prompts like “funky piano,” “jazzy saxophone,” and so on. Here’s an example:

Image Credits: Seth Forsgren / Hayk Martiros


https://techcrunch.com/wp-content/uploads/2022/12/funky_sax_to_piano.mp3

But of course a square spectrogram (512 x 512 pixels, a standard Stable Diffusion resolution) represents only a short clip; a three-minute song would be a much, much wider rectangle. No one wants to listen to music five seconds at a time, but the limitations of the system they’d created mean they couldn’t just create a spectrogram 512 pixels tall and 10,000 wide.

After trying a few things, they took advantage of the fundamental structure of large models like Stable Diffusion, which have a great deal of “latent space.” This is sort of like the no-man’s-land between more well-defined nodes. Like if you had an area of the model representing cats, and another representing dogs, what’s “between” them is latent space that, if you just told the AI to draw, would be some kind of dogcat, or catdog, even though there’s no such thing.

Incidentally, latent space stuff gets a lot weirder than that:

No creepy nightmare worlds for the Riffusion project, though. Instead, they found that if you have two prompts, like “church bells” and “electronic beats,” you can kind of step from one to the other a bit at a time and it gradually and surprisingly naturally fades from one to the other, on the beat even:

https://techcrunch.com/wp-content/uploads/2022/12/church_bells_to_electronic_beats.mp3

It’s a strange, interesting sound, though obviously not particularly complex or high-fidelity; remember, they weren’t even sure that diffusion models could do this at all, so the facility with which this one turns bells into beats or typewriter taps into piano and bass is pretty remarkable.

Producing longer-form clips is possible but still theoretical:

“We haven’t really tried to create a classic 3-minute song with repeating choruses and verses,” Forsgren said. “I think it could be done with some clever tricks such as building a higher level model for song structure, and then using the lower level model for individual clips. Alternatively you could deeply train our model with much larger resolution images of full songs.”

Where does it go from here? Other groups are attempting to create AI-generated music in various ways, from using speech synthesis models to specially trained audio ones like Dance Diffusion.

Riffusion is more of a “wow, look at this” demo than any kind of grand plan to reinvent music, and Forsgren said he and Martiros were just happy to see people engaging with their work, having fun and iterating on it:

“There are many directions we could go from here, and we’re excited to keep learning along the way. It’s been fun to see other people already building their own ideas on top of our code this morning, too. One of the amazing things about the Stable Diffusion community is how fast people are to build on top of things in directions that the original authors can’t predict.”

You can test it out in a live demo at Riffusion.com, but you might have to wait a bit for your clip to render — this got a little more attention than the creators were expecting. The code is all available via the about page, so feel free to run your own as well, if you’ve got the chips for it.

Try ‘Riffusion,’ an AI model that composes music by visualizing it by Devin Coldewey originally published on TechCrunch

Daily Crunch: Major tech firms partner with Linux Foundation to support open map data development

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

The TC crew are a bunch of bookworms. Alex collected the top reads from 2022. Haje’s favorite was “A Deadly Education” (Naomi Novik’s first book in the Scholomance trilogy), which incidentally was recommended by both Alex and Amanda, which was how he found out about the books in the first place. Meanwhile, Christine was unable to put down “Blue Ticket” by Sophie Mackintosh. Get down to your local indie bookstore and sniff some freshly printed wood pulp!

In non-book news, there’s a bushel of stories from TechCrunch for ya! — Christine and Haje

The TechCrunch Top 3

Does anyone else miss paper maps?: A gaggle of companies, including Meta, Microsoft, AWS and TomTom, have partnered with the Linux Foundation to form the Overture Maps Foundation to do a few things: develop interoperable open map data and knock Google’s map dominance down a few pegs. Paul has more.
Another tool to decipher Salesforce: Too much data, not enough time. Thankfully there is Sweep, a new no-code config tool that can make the data in Salesforce more usable. The company raised $28 million to put companies back in control of their own data, Kyle writes.
Going Backstage: Paul also has a story on how Spotify is planning to monetize its open source Backstage project via premium plugins.

Startups and VC

Dakotah Rice, founder of Poolit, tells Mary Ann, “2023 will be a fantastic year in all likelihood for venture and private equity. It’s kind of like you’re starting from a new base.” The company raised millions to turn accredited investors into LPs in VC and private equity funds.

Ventures Platform, a Pan-African early-stage venture capital firm, has closed its fund at $46 million as it looks to double down on “category-leading” companies across the continent, Tage writes. Most of its limited partners in the first close were primarily African based, which was a deliberate effort.

And we have five more for you:

Is it a bird? Is it a plane?: Kirsten reports that Zipline now is the national drone service provider for Rwanda.
A SaaSy hotel lobby: Ingrid covers Mews’ $185 million fundraise for its SaaS-based hotel management platform.
Rough times in VC land: Connie reports on the frustration and anger that erupted as SPV platform Assure dumps users at the curb ahead of holidays.
Support direct to customers: Kate reports that Plugo, an e-commerce support platform for D2C brands in Southeast Asia, picks up a $9 million Series A.
Armored AI: Protect AI lands a $13.5 million investment to harden AI projects from attack, Kyle reports.

Which Instagram ad placement is more cost-effective: Reels, Feed Posts or Stories?

Image Credits: Jonathan Knowles (opens in a new window) / Getty Images

Consumer-facing startups are spending more on platforms like TikTok and Instagram to reach customers, but which ad products offer the best return?

In a case study based on Instagram campaigns for a site that facilitates bookings for freelance beauty professionals, digital marketer Angelina Liparteliani looked at Instagram Reels, Feed Posts and Stories.

Her highly detailed breakdown includes examples of the ads used in various campaigns, the process she used for optimizing creative materials, and a cost-per-click analysis that shows how she reduced CPC from $1.51 to 17 cents.

“Definitely don’t chase trends,” advises Liparteliani. “Diversify your ad strategy, test different ideas and don’t give up if your ad doesn’t show results right away.”

Three more from the TC+ team:

Lighting the fuse: Alex wonders if China’s venture capital market can help it reignite growth.
AI attracts dollars: Companies — and VCs — continue to invest in AI despite market slowdown, reports Kyle.
Where’s the beef: Christine explores that while cultivated beef companies tout sustainability, will they also lead to marketability?

TechCrunch+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription!

Big Tech Inc.

Jacquelyn got a scoop that Coinbase created an asset recovery tool for unsupported Ethereum-based tokens. If you just went “Huh?” we’ll let her explain: “In the past, if you sent assets not supported by Coinbase to a user’s address on the exchange, you’d get a message saying the assets were successfully delivered on-chain, but they didn’t actually go to the receivers’ wallets.” Coinbase supports hundreds of cryptocurrencies, but there are thousands that it doesn’t. ERC-20 tokens are one of them, and the crypto exchange found like 4,000 of them sent to its ledger. Fortunately, it now has a way to help customers recover them.

And we have five more for you:

Breaching into the void: Zack has more information on what LastPass is saying — and what it’s not saying — about its recent data breach notice.
Get your beauty on: Alex Perez-Tenessa, a former Prime Video executive, launched the video shopping app Trendio to feature all things beauty e-commerce, Aisha writes.
Do you want that slice triangle or square?: Rita reports that Lucid is poised to enter China’s crowded EV market after seeing a number of open positions in Shanghai advertised on LinkedIn.
If you’re still not scared off by crypto…: PayPal and MetaMask have something for you. The companies are uniting to create an integration that will make it easier to buy crypto, writes Romain.
Shhhhhh: Microsoft-owned GitHub is now making its secret scanning service available for all public GitHub repos for free, Frederic writes.

Daily Crunch: Major tech firms partner with Linux Foundation to support open map data development by Christine Hall originally published on TechCrunch

Tesla Powerwall customers in Texas can now sell their electricity back to the grid

Elon Musk’s plan to “operate as a giant distributed utility” is creeping towards reality.

First, Tesla piloted a “virtual power plant” in California, where Powerwall home battery owners were invited to sell electricity back to the grid at peak times to mitigate brownouts. Soon after, the automaker expanded the effort into Australia and Japan, and next it’s coming to Texas — with a twist.

On Thursday, the company announced Tesla Electric, an electric plan exclusively offered in parts of Texas where retail choice is available, like Houston and Dallas. The product turns Tesla into a retail electric provider in the Lone Star state, and allows Powerwall owners to sell some of their excess electricity back to the grid, with Tesla as the go-between.

Crucially, this product is invite-only.If you own one of Tesla’s big batteries and have a home in a deregulated part of Texas, you’ll “see a banner appear on your Powerwall home page in the Tesla app,” Tesla said.

Tesla Electric builds on its vision to grow well beyond automaking, however other car makers are also toying with this idea, including GM, which is working with solar seller SunPower; and Toyota, which said today that it is teaming up with a utility in Texas.

Tesla’s energy business has seen some highs and lows this year. In July, Tesla said its solar business had notched its best quarter in several years. Four months later, a report from Electrek said that Tesla had recently canceled some of its solar reservations and laid off workers in the department.

Tesla Powerwall customers in Texas can now sell their electricity back to the grid by Harri Weber originally published on TechCrunch

Sun King, a provider of solar energy products in Africa and Asia, expands Series D to $330M

Sun King, a provider of off-grid solar energy products in Africa and Asia, has secured a $70 million equity investment led by LeapFrog Investments. It’s an extension of the $260 million Series D round the solar company announced this April, which was led by BeyondNetZero, the climate investing venture of General Atlantic and M&G Investments’ Catalyst and Arch Emerging Markets Partners. Thus, Sun King has closed its Series D round at $330 million and as a result, raised over $550 million in debt and equity since its inception.

Many African households and communities cannot access affordable and reliable solar technology, limiting their ability to generate their electricity and reducing their reliance on grid-based power. Direct-to-consumer, pay-as-you-go (PAYG) solar distribution networks are offered by businesses like Sun King, enabling households and individuals to get electricity on the cheap.

Sun King asserts to be the largest of this kind globally. According to the company, it has delivered solar energy to 165,000 homes per month across eight African countries — and in Kenya, where it has operated for over a decade, over 1 in 5 people use its product for light and power, accounting for 22 million Kenyans served to date. On a much larger scale, Sun King pointed out that since its founding in 2007 by chief executive officer Patrick Walsh and Anish Thakkar, its products have provided light and power to 95 million people throughout its African and Asian markets, including Cameroon, Mozambique, and Togo, three countries it recently expanded into.The solar energy company has also provided more than $500 million in solar purchase finance through a network of over 20,000 field agents, 36% of whom are women.

“We are proud that LeapFrog is investing in Sun King to expand access to energy with renewable solar power,” said Thakkar. “LeapFrog brings a wealth of experience meeting the needs of customers in the countries where we are working to make solar energy solutions easily accessible to everyone.”

Sun King claims to be profitable and has grown its business by 95% year-over-year since the initial Series D investment nine months ago. We stated in April that a large portion of the initial investment would be used to expand its PAYG solutions and introduce larger setups capable of powering appliances like refrigerators and scale the business’ presence. This extension, which includes $38 million of additional primary investment, will capitalize on this effort. The extension also has an additional secondary investment which will be used to exit all of Sun King’s prior institutional investors completely, the company said in a statement.

Sun King’s founders will continue to hold voting control. Aspart of the deal, LeapFrog, which in May invested in African fintech giant Interswitch, joins Sun King’s board, which now includesGeneral AtlanticandM&G Investments, as well as Prabha Sinha, the company’s first investor.

“Sun King is leading the way in providing sustainable, safe and reliable electricity access to emerging consumers in Africa and Asia. The company’s off-grid solar systems will be vital in filling the growing electricity accessibility gap and ensuring these emerging countries avoid the carbon dioxide emissions and detrimental health impacts that result from energy sources like diesel generators, wood burners and kerosene,” said Karima Ola, partner at LeapFrog Investments.

Through innovative payment models, Sun King ensures that consumers don’t bear the upfront cost of a clean energy transition, allowing them to leapfrog directly to less carbon-intensive consumption. We are pleased to be partnering with Sun King for the next stage of their impressive growth journey.”

Sun King, a provider of solar energy products in Africa and Asia, expands Series D to $330M by Tage Kene-Okafor originally published on TechCrunch

Juno raises millions to provide family-first healthcare from Inglewood to Harlem

Even after billions of venture capital raised and invested into the digital health space, it’s still difficult to access quality healthcare. And while that may raise questions on if a scrappy startup has a fighting chance at fixing things, to entrepreneur Akili Hinson, it just means that Juno needs to be even smarter about the neighborhoods it targets.

Hinson, Juno’s founder and CEO and a physician by trade, is building a healthcare model that offers in-person care in diverse neighborhoods across the country. The startup’s modern take on a health care visit means that it competes with heavyweights such as One Medical and CityBlock Health. But that hasn’t stopped investors from recently leading a $12 million Series A in the startup, a round co-led by Serena Ventures and NEXT ventures.

The proof might be in the focus. Hinson explained that CityBlock Health focuses exclusively on patients who are eligible for Medicaid and Medicare, who tend to be some of the sickest patiences in the healthcare system; while One Medical, on the other end of the spectrum, shows up as a sort of exclusive membership program often paid for by employers. Juno wants to be for people who don’t fit into either category, which it thinks is 99% of the population.

“Our approach is to be open access and to create additional products for folks who want an extra dose of convenience, savings and support,” Hinson said, adding that Juno is more focused on offering family care at scale. In action, that means Juno works to provide services from pediatrics to OBGYN. “What that means is, unlike an exclusive membership model, anybody can come in and get their care… from all walks of lives in these neighborhoods.” The company also offers higher acuity services, such as X-Rays.

To be truly open access, and also offer everything from adult primary care to same-day care, comes with its costs – ergo why so many companies aiming to offer a one-stop shop have to raise nine-figure rounds. Juno recently began offering additional plans that range between $20 to $50 a month for families who want more convenient experience, such as night and weekend appointments or better savings. Its challenge will be scaling this service, beyond its brick and mortar locations, in a way that makes its newfound venture backers happy.

With new capital under its belt, Juno is looking to expand its team and services into East Atlanta, Greenwood, and Inglewood.

‘We don’t think like you should have to click 35 times just to understand what your vital signs were at your last appointment or to see your labs,” Hinson said. “The Juno story is much more about technology being an enabler for excellent care – I wouldn’t even call us a digital health company, we’re a high-tech enabled healthcare service.”

Juno raises millions to provide family-first healthcare from Inglewood to Harlem by Natasha Mascarenhas originally published on TechCrunch

SBF’s handcuffs aren’t loosening up anytime soon

Welcome back to Chain Reaction.

If you’re reading this, I’m willing to bet you probably weren’t arrested this week and are now sitting in a Bahamian jail. But, you know who was arrested and is sitting in a Bahamian jail right now? Yep, FTX’s former CEO, Sam Bankman-Fried.

Seems like the majority of the headlines have been on SBF and FTX lately — and for good reason. This week’s chatter was surrounded by his anticipated testimony at the U.S. House Financial Services Committee’s hearing on FTX’s collapse, which he never spoke at because he was arrested the night before.

After being denied bail, SBF is being held in the Bahamas Department of Correctional Services in the prison’s max security infirmary with five other inmates in a “dorm-style setting,” according to The Nassau Guardian. And don’t worry, Bahamas’ acting commissioner of corrections Doan Cleare said SBF is in “good spirits” and that the prison is no longer infested with rodents.

Now we can all sleep soundly tonight.

If someone forwarded you this message, you can subscribe on TechCrunch’s newsletter page.

this week in web3

Here are some of the biggest crypto stories TechCrunch has covered this week.

SEC, CFTC and SDNY attorney’s office charge FTX’s Sam Bankman-Fried with defrauding investors

The U.S. Securities and Exchange Commission (SEC) has officially charged disgraced FTX founder Sam Bankman-Fried (aka SBF) with defrauding investors, it revealed on Tuesday morning following his arrest in the Bahamas. The SEC said in a press release that in addition to being charged with fraud regarding equity investors in FTX, he’s also being investigated regarding other securities law violations — and noted that there are ongoing investigations pending against others involved as well. The SEC isn’t the only one getting a hand on this ball, however: Both the Southern District of New York’s attorney’s office and the Commodity Futures Trading Commission (CFTC) also filed charges against SBF in “parallel actions.”

US attorney says ‘we are not done’ charging individuals for FTX collapse

Multiple U.S. government agencies held a press conference Tuesday afternoon regarding the indictment of FTX’s former CEO, Sam Bankman-Fried. When asked whether the entities will bring charges against other individuals allegedly involved in the FTX collapse, Damian Williams, the U.S. attorney for the Southern District of New York, said during the event, “I can only say this: Clearly, we are not done.”

FTX’s new CEO, John Ray, details crypto exchange’s downfall in US House testimony (TC+)

As mentioned above, the U.S. House Financial Services Committee held a hearing Tuesday morning focused on FTX’s collapse. John J. Ray III, FTX’s CEO of four weeks, sat as the only witness for the hearing as SBF made an appearance in a Bahamian court for his arraignment. The four-hour hearing covered a lot of ground and left many questions unanswered, but several parts stood out from Ray’s testimony. Given that we presume you couldn’t catch the entire session live, feel free to crib off of our notes.

PayPal and MetaMask team up to make it easier to buy crypto

PayPal is primarily known as an online payment method. But the company wants to become an easy way to get started with cryptocurrencies. In that regard, ConsenSys, the company behind MetaMask, announced that it would add an integration in its crypto wallet so that users can buy cryptocurrencies using their PayPal account.

Coinbase launches asset recovery tool for unsupported Ethereum-based tokens

Coinbase, the second-largest crypto exchange globally, has launched a new tool to help its customers recover more than 4,000 unsupported ERC-20 tokens sent to its ledger, the company exclusively told TechCrunch. “ERC-20 token” is technical terminology for any cryptocurrency created using the Ethereum blockchain. While Coinbase supports hundreds of cryptocurrencies, there are thousands that it doesn’t. The ERC-20 self-service asset recovery tool allows customers to recover different kinds of tokens sent to a Coinbase address.

the latest pod

Chain Reaction’s first season ended earlier this month and we’ll be bringing new content back in the New Year.

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

follow the money

Aztec Network raised $100 million in a round led by a16z to build an encrypted blockchain
Nillion raised over $20 million to build a non-blockchain decentralized network
Crypto insurance firm Evertas raised $14 million in a Series A
Forum3 raised $10 million to help companies build web3-enabled loyalty rewards programs
Web3 licensing protocol Spaceport raised $3.6 million in a pre-seed round

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

SBF’s handcuffs aren’t loosening up anytime soon by Jacquelyn Melinek originally published on TechCrunch

The battle over gig worker status is heating up

The fight over whether gig workers are independent contractors or employees has been heating up this week on both state and federal levels. The stakes? A once disruptive business model could soon be disrupted itself.

On the state level, this week has seen developments in the Proposition 22 saga as companies relying on gig workers put forth a slew of arguments against last year’s ruling that the law was unconstitutional and therefore unenforceable. Prop 22, a California ballot initiative, passed into law in 2020, allowing app-based ride-hail and delivery companies to continue classifying gig workers as independent contractors rather than employees. In August 2021, Alameda County Superior Court Judge Frank Roesch found the law conflicts with the state Constitution by restricting the legislature’s ability to regulate workers’ compensation rules.

In response to Roesch’s ruling, the very same coalition of major gig companies — like Uber, Lyft, DoorDash and Instacart — that spent millions on advertising to convince Californians to vote for Prop 22 filed an appeal to overturn the court ruling. On Tuesday, they called the challenge to Prop 22 an “attack on voters’ direct democracy powers” and out of line with California’s legacy of “guard[ing] voter initiative powers and uphold[ing] their acts wherever possible.”

The rehashing of this issue comes as the public comment period for the U.S. Department of Labor’s proposed independent contractor rule comes to a close. The rule, put forward in October, would tighten Trump-era laws on worker classification, making it easier for contractors to gain full employment status if they are “economically dependent” on a company.

The scope of the proposal is limited to areas like minimum wage enforcement, which has been a sticking point among labor activists fighting for gig worker protections. Prop 22 advocates say that the law ensures workers earn 120% of their local minimum wage. Critics say that app-based companies only count the time spent actively driving to pick up and drop off a customer or deliver a meal as “active time,” which leaves out the hours drivers spend driving to busier areas or simply waiting online for a gig.

One study found that by only counting active time, gig workers in Massachusetts could earn as little as $4.82 per hour if a similar law were passed in the state. (This subminimum wage has been backed up by gig workers TechCrunch has interviewed in the past.) In June, a Massachusetts court voted to throw out the ballot proposal.

Despite Judge Roesch’s ruling, because of the appeal, Prop 22 has remained in effect throughout the year. The appellate court is required to make its decision within 90 days, but attorneys involved in the case think it’ll happen much sooner.

On the federal level, those following the public comment period expect a ruling on the employment status of gig workers in the U.S. any day. It’s not yet clear how a passing of the DOL’s rule would affect Prop 22, if California’s appellate court allowed the ballot initiative to stick.

What would employee-driven ride-hail even look like?

There’s a reason why companies relying on gig workers feel threatened by what could be a complete upheaval of their entire business models, so we can expect to see them continue to fight any changes through a variety of appeals and countersuits. In the background, some companies have made it a point not to rely on gig workers, perhaps sensing the way the legislative wind is blowing.

In New York City, Revel offers an all-Tesla, all-employee ride-hail service, which I’ve used and drivers have told me they love. Another on-demand ride-hail service that relies on employees is Alto, which operates in certain parts of Dallas, Houston, Los Angeles, Miami, San Francisco and Washington, D.C.

In Alto’s comment on the DOL’s ruling, the company pointed to the responsibility and costs it bears that its competitors shirk via the independent contractor model, like paying employees by the hour for all hours they spend driving, rather than only paying them for engaged time. Alto said that while this lowers competitors’ costs, it also encourages an oversupply of drivers on public roads leading to congestion and higher emissions.

“With independent contractor drivers, currently large-scale ride-hail operators intentionally over supply the market because it does not add to their costs and creates a ‘free’ (to the companies) consumer surplus through lower wait times,” reads the comment. “But, artificially lowering wait times with oversupply is unsustainable for drivers and leads to many making far less than minimum wage in the jurisdiction in which they work when measured on a total time (and not engaged time) basis.”

Alto called on the DOL to recognize the economic reality of the ride-hail industry — drivers are integral to ride-hailing as a business. Drivers’ work depends on the existence of ride-hail companies. Therefore, drivers are economically dependent on ride-hail companies, which puts them in the category of employees, according to Alto.

The battle over gig worker status is heating up by Rebecca Bellan originally published on TechCrunch

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