Bitcoin users spend a record $2.4 million on fees for a divided block

Here are some of the major developments from the world of crypto over the past few days.
some of the major developments from the world of crypto
some of the major developments from the world of crypto

Bitcoin users spent a record $2.4 million in fees to secure space on the 840,000th block, marking the fourth-ever Bitcoin halving event. On April 20, Bitcoin miner ViaBTC produced the block, triggering the protocol that reduces miner rewards by 50% from 6.25 BTC to 3.125 BTC per block.

Block 840,000 quickly became the most sought-after piece of digital real estate in Bitcoin's history, with users spending a total of 37.67 BTC on fees. The record-breaking expenses were attributed to users rushing to record and carve rare satoshis on the halving block. Much of this activity stemmed from the launch of Casey Rodmarmor's new Runes Protocol, which went live at the same time as the halving. Similar to BRC-20s, Runes leverages the Bitcoin network and pays fees in Bitcoin to create new tokens.

A total of $3.82 million in fees, excluding miner subsidies, was spent on the five blocks following the halving, according to aggregated data from Bitcoin mining pools were also competing to mine the first "epic" satoshi, the smallest possible denomination of Bitcoin, on the halving block. Amidst the chaos, pseudonymous trader Hsaka posted a meme that summed up much of the wider sentiment towards the halving event - a brief moment of celebration followed by an immediate return to business as usual.

IRS releases draft of 2025 digital asset reporting form for US taxpayers

The United States Internal Revenue Service (IRS), the country’s tax service, has released a draft of its new Form 1099-DA “Digital Asset Proceeds from Broker Transactions” for reporting income from digital asset transactions. The form is expected to come into use in 2025 for reporting in 2026. A broker will prepare Form 1099-DA for every customer who sells or exchanges digital assets. Brokers include kiosk operators, digital asset payment processors, hosted wallet providers, unhosted wallet providers and others, per the form.

The form asks for token codes, wallet addresses, and blockchain transaction locations. Under the rule proposed in August 2023, cryptocurrencies, nonfungible tokens and stablecoins are reportable. The crypto community weighed in on the proposed reporting requirements after they were announced. The Blockchain Association said the rule contains fundamental misunderstandings about the nature of digital assets and decentralized technology. Tax experts have also posted their comments on the web.

According to crypto tax and accounting service Ledgible, reporting decentralized finance, where there may not be an intermediary to fulfill the reporting requirements, will be especially challenged by the new rule. It could also significantly increase brokers’ administrative burden, as many process very large numbers of transactions. Taxpayers who underreported their crypto income in previous years may be caught when they report their taxes in 2025. The IRS is continuing to accept comments on the draft form.

Cryptocurrency users suggest dropping lawsuit against Sam Bankman-Fried to pursue FTX influencers

A group of cryptocurrency users has reached an agreement with former FTX CEO Sam Bankman-Fried as part of a class-action lawsuit filed in Florida. In an April 19 filing in the United States District Court for the Southern District of Florida, plaintiffs who sued FTX influencers in 2022 announced they had reached a settlement with Bankman-Fried.

According to the filing, the plaintiffs recognized the expense and length of proceedings should they continue to pursue judgment against SBF, opting to use some of the information presented at his criminal trial to continue their case against FTX promoters. Subject to court approval, the settlement would resolve the lawsuit between SBF and crypto users seeking recourse for losses during the fall of FTX. The plaintiffs proposed the settlement on March 28, when Bankman-Fried was sentenced to 25 years for felony charges.

The plaintiffs in the lawsuit proposed that Bankman-Fried assist in prosecuting FTX influencers and aid in victim recovery through documents and testimony provided during his criminal trial. The lawsuit, first filed in November 2022, shortly after FTX filed for bankruptcy, was consolidated into its present form in June 2023. The Moskowitz Law Firm, behind many crypto-based class-action lawsuits, represented the plaintiffs. Bankman-Fried’s lawyers filed notice to appeal the former FTX CEO’s conviction and sentence on April 11.

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