The Daily: China's local govts quietly sell off seized digital assets, Coinbase warns of signs 'crypto winter' is coming and more

The following article is adapted from The Block’s newsletter,  The Daily , which comes out on weekday afternoons.

Happy Wednesday! Gary Gensler this morning gave his first interview since leaving the SEC — and crypto still seems to be living rent-free in his head, as the former chair told CNBC the industry is "99% or 100%" based on sentiment, not fundamentals.

In today's newsletter, China's local governments sell off their seized crypto, Coinbase Institutional warns of signs that "crypto winter" is coming, Auradine raises $153 million in Series C funding and more.

Meanwhile, the U.S. Secret Service combats a $4.3 million Ethereum "approval phishing" scam with the aid of Canadian officials.

Let's get started.

China's local governments quietly sell seized crypto to refill public coffers

Chinese local governments are quietly selling off crypto assets seized from illicit activities to raise funds despite a crypto ban on the mainland, according to Reuters.

• Amid a slowing economy, authorities are reportedly using local tech firms like Shenzhen-based Jiafenxiang to sell crypto via offshore markets, converting the proceeds into yuan.
• Reuters found that at least $408 million worth of crypto has been sold this way on behalf of local governments in Jiangsu province since 2018, including the cities of Xuzhou, Hua'an and Taizhou.
• While it is illegal for individuals to trade crypto, operating a business that assists the government in selling digital assets remains legitimate — attracting a growing number of participants.
• However, legal experts warn this workaround could lead to corruption due to the lack of transparency in private crypto sales.
• Despite the mainland ban, which contrasts Hong Kong's ambition to become a crypto hub, China remains the world's second-largest known state bitcoin holder, with at least 190,000 BTC in government custody, according to Bitcoin Treasuries data.
• The legal handling of crypto is now a recurring topic in China's judicial system, with top courts and scholars holding dedicated seminars on the treatment of the asset class.

Coinbase warns of signs 'crypto winter' is coming

Coinbase Institutional has flagged signs of a new "crypto winter," or bear market in the traditional world, with most digital assets trading below their 200-day moving averages and the total crypto market cap (excluding bitcoin) falling 41% since December — back to April 2022 levels.

• Venture funding also remains 50–60% below the 2021-2022 cycle peak, limiting new capital inflows, especially into altcoins, Head of Research David Duong said.
• "With equities struggling, the path to recovery for crypto remains challenging even with the idiosyncratic tailwinds from the regulatory environment," he added, amid extreme negative sentiment following Trump's recent tariff turmoil and the potential for further escalation.
• However, while this warrants a defensive stance in Duong's view, he argued that crypto prices may still be able to find a floor in mid-to-late Q2 — setting up for a better Q3 this year.

US-based Bitcoin miner manufacturer Auradine raises $153 million

California-based miner manufacturer Auradine raised $153 million in an oversubscribed Series C round to fuel its bitcoin mining and AI infrastructure growth as dominant Chinese players come under pressure from Trump's import tariffs.

• The round was led by StepStone Group, with participation from Samsung Catalyst Fund, Qualcomm Ventures and MARA Holdings, among others, and was structured as $138 million in equity and $15 million in venture debt, CEO Rajiv Khemani told The Block — bringing Auradine's total funding to over $300 million.
• With the fresh capital in place, the company plans to grow its 100-person headcount, doubling down on its U.S.-engineered Teraflux bitcoin miners while launching AuraLinks AI to build networking tech for AI data centers.
• Khemani declined to disclose the company's valuation but noted that Auradine expects to be EBITDA-positive within the next few quarters, with an annualized revenue run rate of over $150 million.

Semler Scientific files $500 million offering to buy more bitcoin amid DOJ settlement

Nasdaq-listed healthcare tech firm Semler Scientific has filed with the SEC to raise up to $500 million through one or more securities offerings , with plans to use part of the funds to buy more bitcoin alongside general corporate purposes.

• Since adopting its bitcoin strategy in May 2024, Semler has accumulated 3,192 BTC, valued at approximately $266 million.
• Meanwhile, Semler reached a tentative $29.75 million settlement with the U.S. Department of Justice over alleged False Claims Act violations tied to Medicare-related device marketing.
• The company has also secured a loan agreement with Coinbase, allowing it to borrow against its bitcoin holdings to help fund its agreement in principle with the DOJ.

RAY jumps 8% as Raydium rolls out pump.fun competitor 'LaunchLab'

Solana's largest decentralized exchange Raydium has rolled out LaunchLab , a token creation platform directly integrated with its liquidity pools, in a move seen as a direct counter to pump.fun's switch from the DEX to its own PumpSwap AMM last month.

• Pump.fun was previously a major contributor to Raydium's revenue until the memecoin factory launched PumpSwap, which has already surpassed $31 billion in volume.
• Raydium's RAY token jumped 8% following the announcement, likely fueled in part by LaunchLab's built-in mechanism to use 25% of transaction fees for RAY buybacks.

In the next 24 hours

• The ECB's latest interest rate decision is due at 8:15 a.m. ET on Thursday — a 0.25% cut is forecast. U.S. jobless claims figures follow at 8:30 a.m.
• The ECB has a press conference scheduled for 8:45 a.m. U.S. Federal Reserve Vice Chair Michael Barr is due to speak at 11:45 a.m.
• Astar and ApeCoin are set for token unlocks .

Never miss a beat with The Block's  daily digest  of the most influential events happening across the digital asset ecosystem.