The startup formerly known as Nebulous has raised a $3 million funding round led by Paradigm with participation from Bain Capital Ventures, Bessemer Venture Partners, A.Capital, Collaborative Fund, Dragonfly Capital Partners, Hack VC, INBlockchain, First Star Ventures and others. 

The startup also rebranded, as Skynet Labs, to focus on promoting the namesake application hosting platform, which uses the token-fueled Sia network.

• Launched in 2014, the Boston-based firm has a staff of 11 and has raised over $9 million to date.
• CEO David Vorick said there are more than 100 applications and 10 web portals already using Skynet as a decentralized storage alternative, including the popular exchange Uniswap. Skynet launched in February 2020.
• “It’s just another means of accessing Uniswap, if Infura goes down people can still access the interface,” Vorick said, referencing Ethereum-friendly infrastructure options. “This offers the ability for anyone to run their own portal and get full trustless access to the network. If we turn off all our infrastructure tomorrow, Skynet still exists.”
• Paradigm partner Dan Robinson said in a press statement he’s keen to see decentralized storage lead to social networking without distinct silos, like YouTube and Twitter, adding, “The project has enabled a growing ecosystem of builders to quickly prototype censorship-resistant applications and interactive websites.”
• In reference to the Skynet app store that popped up following rumors that TikTok might get delisted from popular app stores, Vorick said, “This is a third-party app that comes from the community. … Quick responses to things like TikTok being banned don’t need to ask us for permission.”
• This rebrand comes nearly one year after the startup reached a $225,000 settlement with the U.S. Securities and Exchange Commission for an unregistered token sale in 2014. Skynet users now rely on Siacoin tokens if they run a full Sia node.

Read more: Sia Network Raises $3.5 Million From Bain Capital to Become Crypto Hulu

In an interesting consequence of Ripple Labs’ battle with the U.S. Securities and Exchange Commission (SEC), a Missouri man claiming to be a Coinbase client is suing the crypto exchange for selling the XRP token.

In a complaint filed in the Northern District Court of California, Thomas C. Sandoval, the St. Louis County-based plaintiff, alleges Coinbase knowingly sold XRP (-2.24%) as an unregistered security and gained commission on these sales.

The lawsuit, which seeks class action status, argues Coinbase violated California’s unfair competition laws by “[gaining] an unwarranted competitive advantage over digital asset exchanges that only sold commodities.”

“Coinbase sold a token called Ripple (hereafter referred to by its trading symbol: XRP), the value of which was entirely linked to the success or failure of Ripple Labs, Inc. (Ripple Co.) the company that created the token, and the managerial efforts of Ripple Co. executives. Investors in XRP, such as Plaintiff, reposed an expectation of profit in such managerial efforts by Ripple Co. executives and purchased the token in order to make money on their investment,” the complaint reads.

The SEC filed suit against Ripple Labs last week, claiming XRP is a security that Ripple has been selling for seven years without registering it or seeking an exemption, raising $1.3 billion in the process. As a result of the SEC action against Ripple, Coinbase said Monday it would suspend XRP trading on Jan. 19, 2021.

The lawsuit against Coinbase seeks unspecified compensatory damages, attorneys’ fees and other relief.

Anderson Kill partner Stephen Palley told CoinDesk he sees “a couple of issues” with this lawsuit. He said its allegations of fraud regarding unfair competition laws rest “on ‘information and belief,’ which is the legal equivalent of ‘I think so but am not really sure,’” Palley wrote in an email.

He added that Coinbase has “a pretty good record” of backing itself up in legal matters involving clients through the arbitration clause in its terms of service.

In the grand scheme of things, he concluded, Coinbase has more than client lawsuits to worry about with the SEC breathing down Ripple’s neck. 

“This is going to be hard fought in motion practice and will likely end up in private arbitration unless the court finds that a fairly narrow public policy exception applies,” he said about the Coinbase lawsuit. “I’d assess the risk here to Coinbase (and other exchanges) as quite a bit less than that from continuing to list an asset the SEC has targeted and face much more dangerous enforcement action risk.”

Coinbase has not responded to CoinDesk’s request for comment.

Digital currency prime broker Genesis is halting XRP trading and lending in light of the Securities and Exchange Commission’s lawsuit against Ripple.

According to an email sent to clients and shared with CoinDesk, the firm, which is owned by CoinDesk parent company Digital Currency Group, is suspending XRP (-2.24%) trading and lending.

Clients will have until Jan. 15 to sell XRP “as long as sufficient liquidity exists,” the email read, after which time Genesis will suspend trading and deposits in the token, although withdrawals will still be allowed. 

Ripple’s regulatory trouble is apparently driving the decision. The SEC is suing Ripple for what it’s calling a $1.3 billion unregistered security sale. Genesis’ “team is actively monitoring the evolving regulatory situation with XRP,” the email read.

For its XRP lending markets, the email said Genesis is calling all loans and that all fixed-term loans that mature on or after Feb. 1, 2021, have been called back or terminated.

Genesis’s XRP derivatives markets will continue trading. 

The announcement makes Genesis the latest in a host of crypto exchanges suspending XRP trading until the outcome of the lawsuit becomes clear. 

Genesis has not responded to CoinDesk’s request for comment.