Bitcoin Whales Mopped Up 450,000 BTC During Crypto Winter

When the crypto winter came, it caused a ripple effect that numerous companies still feel to this day. However, it would seem that it also provided incentives for multiple institutional investors to ramp up their investments.

In a report published earlier this week, blockchain and cryptocurrency research firm Diar revealed that Bitcoin “whale” wallets have been able to accumulate up to 450,000 Bitcoin (BTC) over the past nine months, particularly during crypto winter.

Crypto Winter

For better reference, “whales” is the term used to reference individual- and sometimes, corporations- who own significant portions of a cryptocurrency. Diar describes whales as investors who hold between 1,000 to 10,000 BTC in custody.

However, the report does exclude Coinbase-controlled addresses because, as the firm notes, the crypto exchange was behind the creation of some of these whale wallets when it overhauled its cold storage system.

As the report notes, these individuals hold over 26 percent of the total BTC in circulation- worth a reported $36 billion. For better comparison, the firm notes that as of August 2018, when Bitcoin held the same $8,000 price tag that it hovers around today, these whales held just under 20 percent of the total currency supply.

Crypto winter spurred institutional investments

It’s worth noting that Bitcoin continued to crater in the months following August, reaching its lowest point of about $3,200 on December 25. However, even the crypto winter hasn’t stopped these whales; within that time, they’ve gone on to accumulate an additional 7 percent of the total Bitcoin supply.

These private, non-institutional cryptocurrency investors have been holding Bitcoin at massive rates, but as the firm explains, they’ve not been keeping their assets on exchanges.

Diar writes, “Bitcoins held by major addresses – mostly of which are exchanges – have seen an exodus of over 300K Bitcoins since the start of 2018. At peak, these addresses held 750,000 more Bitcoins than they do today, 21% of the total circulating supply versus 16% today.” The research firm notes that over 100,000 Bitcoins have moved into this bracket, amounting to about 40 percent of the Bitcoins minted this year alone.

It added, “Since the start of the bear market in January 2018. Since then, 955k Bitcoins have been minted through inflation as a reward to miners. For the same period, firm size addresses have slurped up half the new market supply.”

Over 300 Investors hold 33 percent of Ether

The trend isn’t just peculiar to BTC. Earlier this month, cryptocurrency intelligence firm Chainalysis published a report which revealed that just 376 individuals hold a staggering 33 percent of the total Ether (ETH) in circulation.

The report, which was titled “The Economic Impact of Whales on the Market,” defined “whales” as the top 500 shareholders within the crypto industry. However, in a way somewhat similar to Diar, Chainalysis also excluded crypto wallet providers, exchanges, and other asset-dealing service providers from its analysis.

Chainalysis claimed that 124 services make up for the top 500 ETH shareholders, while the remaining 376 were individual investors. These individuals were reported to control 33 percent of the world’s ETH supply; down from the 47 percent reported in 2016.

However, the report did also point out that these whales only account for 7 percent of the currency’s economic activity.

In part, the report reads, “Whales consistently hold 25-40% of the circulating supply of Ether, but only account for between 5% and 18% of economic transaction volume. This is because most of the whales (~60%) are holding their assets or not regularly trading with exchanges.”

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Report Exposes Security Vulnerabilities in WalletGenerator’s Key-Generation Process

According to a report published by Harry Denley, a security researcher for wallet provider MyCrypto, there has been a mismatch in the security keys used by paper wallet creator WalletGenerator. The post revealed that WalletGenerator had been deploying faulty codes as far back as August 2018, before patching the bug on May 23, 2019.

Wallet Generator

Deterministically-generated keys

The report clarified that ideally, the site should have an open-source code that is available on GitHub, and the keys generated on the website’s live version should be generated randomly.

However, after testing the live code, certain discrepancies were noticed between the public and private keys- most significantly, the fact that the platform was handing out identical private keys to multiple users.

Denley and his team of researchers went on to test the website using the “Bulk Wallet” generator, and they discovered that after 1,000 key-generation efforts, the GitHub version of the site returned 1,000 unique keys. However, the keys returned by the live code were just 120. These results were sustained, even after the team changed their VPNs and browsers used to run the test.

Move your funds now

The researchers decided to contact WalletGenerator about the potential vulnerability, and while the latter didn’t seem interested in their claims, Denley noted that the problem seemed to have been patched.

Denley went on to recommend that all WalletGenerator users who created their wallets after August 17, 2018, should move their funds to other platforms for the security of their funds, adding that while it seemed that the issue had been rectified, there’s always a possibility of it being re-introduced. At press time, WalletGenerator is yet to issue a statement on the issue.

While a report such as this could serve as an indictment of paper wallets, it’s worth noting that hardware wallets- their chief alternatives- aren’t so secure as well.

Ledger exposes Trezor

Earlier this year, hardware wallet provider Ledger published a report where it detailed vulnerabilities in the devices manufactured by Trezor, one of its chief competitors. According to the study, the vulnerabilities were discovered by Attack Lab, a department at the firm which launches attacks on devices owned by the company and its competitors to identify weaknesses.

Ledger revealed issues with the Trezor One and Trezor T wallets, such as the presence of a backdoor protocol, which would allow would-be imitators to make fake, malware-infested devices. Other vulnerabilities include the possibility of stealing confidential information right from Trezor’s devices, as well as sub-standard counter-attack measures contained in the crypto library of the Trezor One device.

In a rebuttal statement, Trezor pointed out that none of the weaknesses discovered by Ledger were critical to the hardware wallets themselves. According to the company, it was impossible for any of the vulnerabilities to be exploited remotely, as the would-be attackers would require “physical access to the device, specialized equipment, time, and technical expertise.” Trezor pointed out the result of a survey done in association with crypto wallet Binance, which revealed that 66 percent of users believe that remote wallet attacks are the main problem.

In addition, Trezor highlighted that a $5 wrench attack– a form of theft where a user is compelled to disclose his password- can’t be prevented by the manufacturer’s hardware barriers. Regardless, the probability of attacking a Trezor wallet is still relatively small.

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Wall Street Veteran: Bitcoin is Better Investment Option than S&P 500

On Wednesday, Mark Yusko, founder, and partner at Morgan Creek Capital Management, made an appearance at CNBC: Fast Money, where he laid out his claim that Bitcoin is a much better investment option than traditional stocks as of this point.

Yusko is actually quite popular in the stock industry, particularly for correctly predicting the sell-off in stock that occurred in 2018. In this interview, he expressed his belief that the stock market is already witnessing another bear market, and things could get considerably worse as time goes on.

As a result, he went on to endorse Bitcoin (BTC) as a surer investment portfolio at the moment.

Bitcoin Price Gain

Speaking on his conclusion, he added, “I even wear my Bitcoin tie today for you guys. I was on this show back in December when it was $3100, and you said, ‘What do you think?’ I said, ‘Look. We’ve issued the Morgan Creek Digital crypto challenge, we will take Bitcoin over the next 10 years, starting on January 1st, and we will take anybody who wants to take the other side.’ It was a $1 million charity bet, just like the Buffett style bet. We got no takers.”

Pomp’s Bold Claim Pays Off

The bet that Yusko was referring to is the “Buffett Bet 2.0,” which was issued by Anthony “Pomp” Pompliano, his partner at Morgan Creek Capital, last year. While speaking with CNBC in December, Pompliano announced the challenge, saying that he was willing to wager $1 million on the fact that Morgan Creek’s basket of digital assets would outperform the S&P 500 over ten years, starting from January 1, 2019.

He famously invited anyone who was willing to stand on the other side of such a bet, saying that it would most likely be someone bullish on the S&P 500, or who believes that cryptocurrencies are worthless.

Yusko’s Right Again

In the latest interview, Yusko went on to point out that not taking that bet turned out to be the best thing for any would-be takers, as “while BTC is already up over 100 percent this year, the S&P is only up 14 percent.” Yusko’s comments were surely not wrong.

BTC held a price of $3,744 as of January 1, while its unit price at press time is pegged at $7,601. That’s an increase of 103 percent (according to data from CoinMarketCap).

On the flip side, the S&P 50 closed at 2,510 points on January 1, while the closing value as at May 22 was 2,856, marking a growth rate of 13.8 percent since the turn of the year (per data from the CNBC Index). If you thought about betting against Pomp, you’d be pretty much in the hole already.

After pointing out this disparity, Yusko added, “I think going forward from here, even over the next year, over the next 10 years, it’s not going to be close. Bitcoin is a great diversifying asset, it has a very low correlation, it should be in anybody’s portfolio.”

Morgan Creek’s Crypto-Loving Partners

Pompliano recently had to come out to make a point about cryptocurrencies. Last Tuesday, he was a guest on CNBC’s Squawk Box, where he engaged in a somewhat heated argument with Kevin O’Leary, chairman of investment firm O’Shares ETFs

O’Leary wasted no time in trashing Bitcoin, going as far as calling is “garbage” and “useless.” Despite the noticeable uptick in its prices last week, Bitcoin didn’t seem to impress the investor. He questioned the value of Bitcoin, claiming that it is “basically a digital game” without any intrinsic value.

In his defense, Pompliano pointed out that that Bitcoin was going through a bit of a rough start, just as it is with every other disruptive technology in the world. He added that currencies work with a “belief system,” and BTC is functioning as money.

“So, for the US dollar, the only reason you and I use it is because we believe it has value. So I give you a dollar, and you give me a good or service in exchange. Bitcoin has value because the two people who exchange it believe it has value. And what we’re seeing is the volume, look at people using it,” he confirmed.

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Firefox Latest Update Comes with a Cryprojacking Prevention Tool

Earlier this week, open-source Internet browser Firefox released a browser upgrade called Firefox Quantum, which according to a blog post by the company, is much faster and could put an end to the persistent issue of cryptojacking. The company’s blog post, which was published on Tuesday, revealed that Firefox Quantum comes with a new privacy toggle which helps users protect their computers against cryptojacking bots.

Firefox

“Based on recent testing of this feature in our pre-release channels last month, today’s Firefox release gives you the option to “flip a switch” in the browser and protect yourself from these nefarious practices,” the post reads.

Crptojacking works in different ways. One popular way is through phishing emails which install the cryptomining code on your system. Once installed, the scripts use your computing power to mine cryptocurrencies. The other means is through a web browser. This happens when hackers inject a script into an ad or on multiple websites. Once the victim visits the site, their system becomes infected

In order to combat the cryptojacking issue, Mozilla (the company behind the Firefox browser) partnered with Disconnect, an online privacy protection company, to develop a crypto mining blocker for Firefox Quantum. When a user switches the feature on, prospective cryptojackers would be unable to launch their bots and take advantage of the user’s computer power for their mining gains.

The addition of a cryptojacking-blocker was initially announced by Mozilla last year. In addition to that, Firefox Nightly 68 and Beta 67 versions, which were both launched earlier this year, also have the cryptojacking protection feature as well.

Curbing Cryptojacking Bots

The menace of cryptojacking is one that has plagued crypto investors and web browsers. For most of these businesses, sanitizing users on the risks associated with cryptomining and publishing regular updates has been their way of curbing the issue.

Mozilla had warned its users about the increasing popularity of cryptojacking bots in the past, explaining that some websites have the ability to deploy scripts which launch crypto mining software on a user’s computer without the user’s consent or awareness. As this software continues to increase in popularity, so does the attacks.

In the 2018 Mid-Year Update published by integrated security management firm Skybox Security, it was revealed that cryptojacking contributes to about 32 percent of cyber attacks for the first half of 2018.

Fewer Attacks in 2019

However, it also seems that they might have ceded this majority to ransomware and hackers. Last month, cybersecurity firm MalwareBytes revealed in a report that there has been a sharp decline in consumer-targeted cryptojacking since the turn of the year.

The report claimed a 40 percent decrease in consumer malware detections, although cryptojackers could have turned their focus on businesses. Higher processing power means a shorter time to mine cryptos. Firefox is not leaving anything to chance, either way. Starting with Firefox Quantum, the company expects cryptojackers to have things a bit difficult.

Other forms of cyber attacks are being addressed as well. Last month, global payment processor PayPal was awarded a patent for a new technique of combating ransomware attacks by the U.S. Patent and Trademark Office.

Essentially, this technique will detect the original copy of a piece of content that has been corrupted by ransomware. It copies this content and makes it available to the user, even while a modified version of it might be locked away.

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Months After they Were Stolen: Cryptopia Funds Are Still On the Move

New Zealand exchange Cryptopia might have been hacked almost 5 months ago, but new information continues to unfold. Cryptopia’s hack is particularly interesting, thanks in no small part to the numerous details and developments that have come out since the event itself.

Now, there’s a new twist to the seemingly never-ending tale. The funds have been transferred again.

Cryptopia Hack

Tokens on the move

Following the liquidation order and the halt that was put on all trading activities on the platform, it was recently reported that the hackers who stole funds from the New Zealand-based crypto exchange had begun moving funds into separate wallets.

The discovery was made by CoinFirm, a cryptocurrency tracking, and analysis firm. It started with a tweet from AMLT Token & Network, in which it was revealed that some of the ETH tokens stolen from Cryptopia still remains on the attacker’s address.

Following that tweet, CoinFirm added that 10 ETH tokens (worth about $2,510 as at press time) had already been moved from the address and into addresses housed on some major exchanges- including two which were found to have been linked with Huobi.

Grant Blaisdell, an official at CoinFirm, said, “The Cryptopia hacker moved 30,790 ETH (~$7.67M) from the last red address to the yellow one which is a new address of the hacker as of May 20, 2019, at 01:43:57 AM +UTC. The yellow address still has got 29,770 ETH.”

In addition to those addresses, two other addresses were reported to have received a total of 1010 ETH (worth $253,510 as at press time), while 10 ETH was sent to what seems like an address on Japanese exchange Huobi, before making their way to a Huobi hot wallet.

Millions moved in January

For a quick recap, Cryptopia was hit with two separate hacks back in January 2019. In a tweet on January 15, the exchange revealed that it had been the victim of a “security breach” the day before, and that “significant losses” had already been incurred as a result of the breach.

While the extent of the losses was still unknown, a tweet from Whale Alert revealed that 19,391 Ether (ETH) tokens (worth about $2.4 million at the time) were transferred suddenly to a wallet.

A separate tweet by the firm also revealed that 48 million Centrality (CENNZ) tokens (worth $1 million at the time) were transferred without authorization as well.

The hackers came back for more

However, despite multiple investigations and efforts to retrieve users’ funds, little progress was made

Then, on January 20, a report by blockchain data analysis firm Elementus revealed that a second raid on Cryptopia had resulted in the theft of ETH and ERC 20 tokens worth about $16 million.

The report, which was titled “Some overdue transparency on the Cryptopia attack,” revealed that the hackers’ second raid affected a total of 17,000 wallets on the exchange.

It also claimed that the unsanctioned token transfers were effected from two separate hot wallets; one held ETH, while the other supposedly held other tokens listed on the exchange.

However, the firm also noted that the report only considered transfers effected on the Ethereum blockchain. When the number of tokens taken from other blockchains is considered, there’s a high probability that the funds stolen would have been much higher.

Concluding, Elementus noted that while the hackers had been working double-time to move their loot to various exchanges- such as Binance, Bitbox, and Huobi– and cash them out, a large percentage of the funds- about $15million- had not been withdrawn at that time.

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Report: Trading Volumes on the Rise on Centralized Exchanges

Cryptocurrency companies looking to steal some bragging rights finally have something to make reference to, as a new report has provided an insight into some of the exchanges, derivatives, and assets that had impressive results in April.

Per reports from crypto data analyst CryptoCompare, in its April 2019 Exchange Review, trading volumes for the top crypto-to-crypto platforms increased by 57%, while the monthly volume for fiat-to-crypto exchanges increased by 85%. Some of the exchanges leading the pack include Bithumb, Upbit, and Bitfinex—who is entangled in a legal battle with New York regulators.

Day Trading Cryptocurrency

iFinex withstands legal issues

The report from CryptoCompare revealed that both Bitfinex and Tether Limited are doing quite well for themselves; much to the pleasure of iFinex, the handler and parent company of both institutions.

Bitfinex was able to climb up to third place amongst fiat-to-crypto exchange by monthly trading volumes, beating names such as Coinbase, Bitstamp, and Kraken. With $6.7 billion, it trailed only Bithumb ($17 billion) and Upbit ($8.7 billion). Tether (UDT), the stablecoin developed by Tether Limited, also held firmly to its place amongst fiat-backed currencies, as the report revealed that BTC-USDT trading represented 78.9% of total trading volumes (across fiat or stablecoin).

The BTC-USDT trading pair was also reported to have made up for a staggering 97.9 percent of Bitcoin-to-stablecoin trading as well. For a little over three weeks now, Bitfinex and Tether Limited have been in a legal battle with the Office of New York’s Attorney General (ONYAG).

It all began with a filing from the ONYAG, which claimed that Bitfinex was able to tap into its Tether reserves to misappropriate as much as $850 million and use these funds to cover up an unreported hack or some other form of mismanagement by Crypto Capital, its payment processor.

Both organizations have made a legal filling of their own, with each one singing pretty much the same song all through. The ONYAG believes that an investigation into the operations of all parties is required in a bid to protect their customers, and the office already called for an injunction to stop Tether and all “affiliated parties” from accessing their reserves.

At the same time, both Tether and Bitfinex have claimed that such an investigation is simply beyond the ONYAG’s legal authority. While a resolution to this case is still largely anticipated, it would seem that both companies were able to leave April with their stats unscathed. It’s still uncertain how they both will fare in May.

GBIT’s comeback rolls on

Another significant finding was that the Bitcoin Investment Trust (GBIT), which was created by Grayscale Investments is growing in popularity. According to CryptoCompare, GBIT ranked second amongst Bitcoin institutional derivatives, as it saw a 239 percent increase in average daily volumes of $29.7 million.

This trailed only the Bitcoin futures offering from American financial services company CME Group, whose average daily volume was pegged at $256 million, marking an even more impressive 263 percent increase.

Grayscale recently reported that it had seen a massive influx of institutional investors over the past quarter. Inflows from hedge funds into the GBIT were reported to have increased by 2400 percent, as the Trust went from holding less than $1 million to $24 million within a quarter.

However, while Grayscale seems to be soaring, the CME Group has been struggling of late. The company reported a 17 percent fall in net income over Q1 2018, as its earnings stood at $497 million.

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World Bank and CommBank Launch the First Blockchain-Based Bond

On May 15, the World Bank published a press release which stated that it had partnered with the Commonwealth Bank of Australia (CommBank) to enable blockchain-based secondary market bond recording.

The secondary trading project was performed on the Blockchain Operated New Debt Instrument (bond-i), a platform based on the Ethereum blockchain. It was reportedly developed by CommBank’s Blockchain Centre of Excellence at the CommBank’s Innovation Lab in Sydney as part of the global banking institutions mission to explore and build on the potential of distributed ledgers.

World Bank

A year in the works

Just last year, the World Bank issued the bond-i, claiming that it was created, allocated, and managed with the use of blockchain technology.

At the time, CommBank was the sole arranger of the bond. It ended up making the World Bank a staggering AUD 110 million ($81 million), thanks to the contribution of investors such as financial services company Northern Trust Bank, the New South Wales (NSW) Treasury Corporation, and QBE Insurance Group Limited, Australia’s largest global insurer.

The press release at the time, stated that the World Bank made $50 – $60 billion in yearly bond issuances every year in its bid to improve global market sustainability and mitigate poverty. The bond was further described as a milestone that would help put them in a much better position to advise countries on the risks and opportunities of disruptive technologies, especially concerning the institution’s Sustainable Development Goals.

The World Bank sees the bond as the first step in the process of moving bond transactions from manual procedures to faster and quicker automated ones.

Lots of love and potential for more projects

Per the recent release, the World Bank declared that since bond-i was launched, both the project and the Bank have gotten support from numerous players within the global financial and technology sector.

Sophie Gilder, Head of Experimentation & Commercialization, at the CommBank’s Innovation Labs, said, “There is a growing recognition that blockchain technology can deliver a superior digital market for raising capital and then managing and trading securities, so we are working with our strategic partners to realize that vision. Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”

The World Bank’s pursuit of understanding

The World Bank does seem to be heavily invested in pursuing a deeper understanding of blockchain technology. Earlier this year, a report published on The Financial Times revealed that the World Bank and the International Monetary Fund (IMF) had come together to launch a private blockchain network as a means of studying the technology and its potential.

In addition to the private blockchain, both institutions were also alleged to have developed an asset, and while it wasn’t called a cryptocurrency, it sure looked and functioned like one.

The report called the asset a “Learning Coin,” and claimed that it was based on their joint blockchain network. However, while it seemed like a cryptocurrency, the report maintained that it was fundamentally different.

For one, the asset isn’t tied to any known fiat currency, and it doesn’t have any monetary value. It was reported to only be intended for use within the World Bank and the IMF as a tool for their staff to help uncover more about blockchain technology, with an emphasis placed on its underlying feature with digital assets.

As such, the con and all its properties would only be accessible to World Bank and IMF staff.

Both institutions were also said to have developed an app to help accompany the use of the Learning Coin. It was reported to be a research-assisting tool, which would help provide and develop learning apparatus like videos, research papers, and presentations.

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Ryuk’s Prominence is Driving Increased Crypto Ransomware Profitability

Earlier this week, cryptocurrency ransomware manager Coveware published a report on its official blog, revealing a staggering 90 percent increase in the incidence of ransomware payouts in the first quarter of 2019.

For easier reference, ransomware is a form of computer malware that takes control of a host computer and leaves the user locked out. All access to the computer is completely cut off, and information stored on the computer’s hard disk remains inaccessible till a ransom is paid.

Ransomware

Things are getting worse. Blame Ryuk

The report, which the company claimed was based on standard, real-time data, touched on the costs involved in a ransomware attack. The recovery costs (including any ransom paid to the attacker in order to avert the hack) and downtime costs (losses suffered as a result of the attack, usually measured in missed revenue opportunities and time lags).

Coveware’s analysis went on to reveal that the average ransom paid to ransomware attackers was pegged at $12,762 for the first quarter in 2019. This figure represents an 89 percent increase from the $6,733 reported in the company’s Ransomware Marketplace Report for Q4 2018.

The increase was mainly attributed to the rise in popularity of ransomware such as Ryuk, Iencrypt, and Bitpaymer; three of the recent malware developed and deployed in attacks on large corporations.

Richer victims, larger loot

The average ransomware downtime (the time needed to decrypt ransomware) increased to 7.3 days in Q1 2019. This is about 15 percent higher than the 6.2 percent reported in Q4 2018. Essentially, this means that ransomware attackers deployed more difficult-to-decrypt malware in 2019. The estimated downtime costs per ransomware per company was also revealed to be $65,645.

The report revealed that Dharma, GandCarb, and Ryuk were the three most popular types of ransomware. However, the emphasis was laid primarily on Ryuk, as it has seen the highest increase in adoption levels amongst the top three. Decryption difficulty was pinned to be the single most prevalent cause of increased downtime, and Ryuk was highlighted to be one of the most challenging ransomware to decrypt.

The professional services industry (which includes companies such as accounting agencies and law firms) was reported to be the most commonly-attacked ransomware victim. Even though they hold some highly valuable information (case files, tax records, account and banking details, settlement terms, etc.), these firms were reported to be notorious for under-investing in It security infrastructure. So, they’ve become easy prey for ransomware attackers.

The average company size of ransomware victims increased from 71 employees in Q4 2018 to Q1 2019. This increase, as well as the estimated downtime cost, was also attributed to increases in Ryuk adoption. The ransomware is known for attacking mid-market and large enterprise with more capital and higher employee counts.

PayPal raises some hope

However, while all of this paints a gloomy picture for cybersecurity, there seems to be hope on the horizon.

Earlier last month, global payment processor PayPal filed a patent with the United States Patent and Trademark Office (USPTO) for a product which will help with the real-time detection of ransomware. The patent’s filing described a “technique for ransomware detection and mitigation,” and it will primarily detect the original copy of files and content on the host computer’s hard drive and collect the information.

With the product, a user targeted in a ransomware attack would still have access to the original copy of the content, even if the ransomware already blocked access to the “altered version.” As the product hasn’t been released to the public yet, it is impossible to tell how it will fare against ransomware such as LockerGoga, Ryuk, and Dharma—the main culprits responsible for the increased profitability of ransomware attacks.

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Facebook’s Latest Hiring Spree Stirs More Speculation About its Cryptocurrency

Facebook’s hiring spree continues as speculation about its digital currency continue to rise. The social media giant has reportedly tapped two former members of the executive at crypto exchange Coinbase, both of whom will now serve as compliance officers.

Facebook

More Pros heading to Facebook

The first Facebook hire is Mikheil Moucharrafie. Mikheil worked at Coinbase for about four years, holding positions such as Risk Manager, Compliance Manager, Support Analyst and Quality Assurance Tester, and Anti-Money Laundering (AML)/ Bank Secrecy Investigator.

He shared the news of his departure via a post on his LinkedIn account about three weeks ago, stating that he’d take a vacation before returning to work. Going by the current description on his profile, it would seem that his leave was a rather short one, as he now works as Compliance Officer at Facebook.

In addition to Moucharrafie, the social media giant also hired Jeff Cartwright. Cartwright is a compliance and regulations expert, who worked at Coinbase for 5 years. In that time, he held roles such as the Head of Internal Audit, Compliance Manager, and Director of Regulatory Risk and Examinations.

However, before he joined Coinbase, Cartwright had also picked up some valuable industry experience, working at audit firm KPMG, financial service provider American Express, and banking institution Goldman Sachs as an AML expert.

According to his LinkedIn profile, Cartwright will be working as a Policy and Compliance Manager at Facebook. Both men are widely expected to help implement and maintain the highest safety and compliance standard at the company, especially as its rumored digital asset seems to be nearing launch.

Facebook’s Superstar Blockchain Team

Facebook’s blockchain efforts, although kept mainly under the radar, have been documented extensively. David Marcus, the former President at payment processor PayPal, was hired by the company to serve as the head of its Messenger platform.

However, last May. Marcus was reassigned by the company to head its new blockchain research team. As he was also a former member of the board at Coinbase, the company deemed it fit to entrust him with the role.

Since Marcus’ appointment, however, Facebook has gone on a blockchain hiring spree. The company posted five job openings for blockchain developers on its LinkedIn account, with titles such as growth product manager, business operations manager, software engineer, data scientist, and product manager.

The company also opened a vacancy for a Lead Commercial Counsel, who will guide the rollout of new blockchain and crypto-related offerings. With all of these hires, Facebook has been beefing up its blockchain team, and it is hoped that its rumored digital asset will be worth the wait.

The rationale for the hires is also quite understandable. A company of Facebook’s size launching a digital asset is a massive development by all standards, and given the company’s user count, it is only expected that all hand will be on deck to ensure safety and regulatory compliance.

The Privacy War

Given its history with information handling and user privacy, it’s only right for anyone to be concerned.

On May 9, the United States Senate Committee on Banking, Housing, and Urban Affairs wrote an open letter to Facebook’s CEO Mark Zuckerberg, asking about how the company was looking to handle privacy concerns with its cryptocurrency project, which it dubbed “Project Libra.”

Questions raised by the Committee included how the asset will work, the company’s existing privacy measures, the type of customer information in its possession, the company’s level of correspondence with financial regulators as regards the asset, and whether they had shared any information with “unaffiliated third parties.”

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Tron’s CTO Abandons Ship to Start a New Blockchain Company

Lucien Chen, co-founder and Chief Technical Officer of blockchain firm TRON (TRX), has announced that he will be leaving the firm.

Chen announced his resignation from the firm in a Medium post titled “Why should I rebuild a new TRON?”. According to the post, Chen decided to leave the company because the network itself has somewhat deviated from the original purpose.

Everything is different

His post reads, “Because of the irreconcilable contradiction between us, TRON is no longer the original TRON. The reason for leaving is very simple. As a technical man, I feel very sad that the TRON has departed from the faith of ‘decentralize the web’.”

While Chen’s period with the company has seen its currency grow into one of the largest in the world by market capitalization (per data from CoinMarketCap). However, notwithstanding, Chen states that he needs to leave because the platform has become excessively centralized.

Centralization problem

Chen pointed out the fact that there’s a centralized voting problem in TRON’s Delegated Proof-of-Stake (DPOS) consensus and Super Representative node. He highlighted that there are some nodes which have more votes, even though their voter counts are significantly lower. He added, “. Therefore, the vote of ordinary retail investors has completely fallen. The total number of TRX in TRON is 100 billion, while the total number of votes for the super representatives is just less than 8 billion.”

He also repeatedly highlighted that TRON’s relation with the Internet has changed, as the company itself seemed to have deviated from the purpose of the blockchain. Apart from its excessive centralization, he believed that the company’s technology platform- which he helped build- is still not able to cater to any real-world applications.

In part, he said, “Even the community is organized under centralization. No diverse voices in TRON ecosystem. The whole project has developed into a monetary tool without any “decentralize the web” spirit.”

The sentiment here is pretty simple; the fact that everyone on the platform seems to agree with how it is being operated isn’t a sign of diversity.

TRON is no longer about innovation

Take the Bitcoin Cash (BCH) hard fork (as well as all the other hard forks that can be traced to Bitcoin itself ) as an example. These hard forks led to versions of Bitcoin that were “ideal” in the eyes of their developers. Essentially, Chen believes that Justin Sun, TRON’s CEO, has focused more on making money with the platform that actually fostering innovation.

Yet another deviation from the objective of the blockchain. Going forward, Chen revealed that he would be working on his own blockchain, which he dubbed the Volume Network (VOL). Chen touted his network, claiming that it will be a truly decentralized blockchain project. Chen claimed that through the VOL, he would be able to achieve true decentralization by implementing the mining methods with the least threshold.

He said, “At present, the high threshold of ASIC and the high price of GPU make many people hesitate to mine. This kind of project, which eliminates subsequent players from entering the market, is unsustainable. I want miners and newcomers to use a new generation of hard drive mining method, and still get a safe and reliable digital currency while storing ‘useful’ files.”

He also described the network as a community project, stating that he took $1 million with him and a $30,000 valuation to pilot the community and attract more users as time goes on. The news of Chen’s departure didn’t seem to affect the value of TRX much, as it was still trading slightly above where it began for the week. However, for all the hype that Chen has placed on the VOL, it is sure worth keeping an eye on it to see how it performs.

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Experienced Crypto Investor Loses Life Savings of $1.5 Million in High Yield Bitcoin Scam

A local Jersey investor has been scammed of his life savings to the tune of $1.5 million, per reports from the Jersey Evening Post. According to the post, the man- whose name wasn’t provided- was promised as much as 1500 percent returns on his investment. Such returns, given his investment, would have made him a killing. Of course, it’s understandable that he would have fallen for such a scam.

Jersey

Even experience doesn’t count

According to the post, the man was scammed over an 18-month period, being gradually milked out of his entire life savings. However, while substantial crypto scams such as this are definitely not news, one thing that seems to distinguish this case from a host of others like it is that the victim, in particular, was said to be an “experienced” investor. The fact that he was swindled out of $1.5 million in a scam, even with all of his experience, is certainly ironic.

You’d think that an experienced investor would recognize the qualities of a scam (such as the overly high rate of returns in this case). However, it is also possible that skilled con artists could find a way to work around the safeguards that experience could have instituted in the minds of investors as well.

The victim was reportedly contacted by the scammers after he went online to find out more about Bitcoin. The organization claimed to be operating out of Norwegian territory, although investigators later found evidence of them moving money across various banks all over the world. The scammers tricked this victim into believing that they were offering legitimate Bitcoin-based investments, and over the aforementioned time frame, they continued to trick him into making additional investments.

To add further anguish, investigators from the U.K.’s National Crime Agency reported that there is a slim chance that they will recover the funds he lost. The publication noted that a report on the scam was issued by the Jersey Fraud Prevention Forum the forum encouraged locals of the island to be increasingly vigilant as regards cryptocurrency scams; especially any which might promise excessively high returns.

Mike Jones, the Director of Policy and Risk at the Jersey Financial Services Commission, said, “Following this Islander’s huge loss, we are warning local residents to be extra vigilant when investing in cryptocurrencies or any investment that seems too good to be true and promises high returns with no risk. Always get independent advice from a professional, and make sure the company you’re dealing with is legitimate.”

CFTC issues Warnings on Crytpo Investments

Last month, the United States Securities and Exchange Commission (SEC) and the Commodities and Futures Trading Commission (CTFC) issued a warning to existing and potential crypto investors, encouraging them to be more vigilant in their choice of investment schemes.

In a press release published on April 24, both agencies stated that they’ve come to recognize the rise of crypto scams in which con artists disguise as legitimate cryptocurrency trading businesses and advisory firms, and go on to receive funds from unsuspecting investors with the prospect of investing in crypto-related businesses.

In the release, the watchdogs provided six prominent red flags for illegitimate investment schemes, further encouraging investors to conduct the proper due diligence on any potential investment scheme before releasing funds to it.

The red flags included guaranteed high investment returns, unsolicited offers, jargon-filled documents, and overly complicated terms, continued pressure to invest as soon as possible, and the terms of the deal sounding too good to be true. Both agencies concluded by urging potential crypto investors to check the Investor.gov site to look up the license of any investment operators in the government database. Any vestment that isn’t registered and listed on here is most likely a scam.

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Court Orders a Look Into Craig Wright’s Bitcoin Holdings

In a new twist to an old case, Craig Wright, Chief Scientist at blockchain research and development firm nChain and the self-acclaimed Bitcoin (BTC) creator Satoshi Nakamoto, has been ordered by a federal court to list all of his public Bitcoin addresses.

Last week, the United States District Court of the Southern District of Florida issued an official order telling Wright to provide a list containing all of his public BTC addresses. The order is coming as part of an ongoing case between Wright and the estate of David Kleiman, a deceased computer scientist who, at a point, was a partner of Wright’s.

Litigation

Kleiman v. right: A recap

The Kleiman v. Wright case is one that has been going on for about a year now. Wright was sued by Ira Kleiman, David Kleiman’s brother, who claimed that the scientist stole over 1.1 million BTC tokens (worth about $5.6 million at the current rate) and intellectual property when he worked with David. As at the time the suit was filed, the tokens were worth about $5 billion.

David Kleiman and Craig Wright admittedly worked for a brief period. However, when Kleiman died from Methicillin-resistant Staphylococcus aureus (MRSA; a bacterial infection) in 2013, Wright approached his family and offered to help them to liquidate the deceased’s Bitcoin holdings.

The Kleiman family, led by Ira, requested in their February 2018 suit, that Wright should provide fair compensation for all of the intellectual property he stole from them, as well as a substantial portion for the BTC tokens he took as well.

Wright filed a motion to get the entire case dismissed, with his attorney arguing that it was a “thinsoup of supposition, speculation, conflicting allegations, hearsay and innuendo.” The scientist’s attorneys also dismissed the case as no more than an attempted shakedown designed to steal Wright’s fortune and intellectual property.

However, the motion was denied by a South Florida District Court judge. In its documents, the court claimed that the plaintiff’s claim for conversion was sufficient, and thus, “survives Defendant’s Motion to Dismiss.”

What this order entails

The new court order illustrates some of the plaintiff’s requests. The family asked the court to force Wright to reveal all the public Bitcoin addresses in his possession as at December 31, 2013, make him identify all of the tokens that were sent to a particular blind trust back in 2011, and provide relevant documents related to the trust in question.

In addition, Kleiman’s family also asked the court to order Wright to identify the trust’s current and past trustees. This, as the order states, will help in conducting further depositions of Wright as regards the Bitcoin tokens in his possession.

According to the order, Wright had previously filed a motion to keep information regarding his Bitcoin holding sealed. However, citing general policies of accountability and disclosure, the court rejected Wright’s motion.

Now, Wright has until 5:00 pm EST on May 8 to identify the blind trust in question, as well as provide information concerning its whereabouts and both its past and present trustees. A deadline of 5:00 pm EST on May 15 was also set for Wright to produce all of the trust’s transaction records, “including but not limited to any records reflecting the transfer of Bitcoin into the blind trust in or about 2011.”

All wrong, no Wright

This case’s progression continues a contentious year for Wright, as Bitcoin Cash SV (BSV) a digital asset which he promotes and favors, has been delisted from a number of popular crypto exchanges, including Binance and Kraken.

Following Wright’s behavior and public dispute with Hodlnaut (a Twitter user who criticized Wright for claiming to be Satoshi Nakamoto), BSV has continued to receive little appreciation from the crypto community. At press time, the currency is trading at $52.43, down 3.07 percent over the last 24 hours (per data from CoinMarketCap).

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Report: Facebook is Pitching its Crypto Stablecoin to Potential Investors

The rumors concerning Facebook’s reported development of its cryptocurrency are back, along with financial details. Per a Wall Street Journal report, the social media giant Facebook is now in talks with partners, as it seeks to seal investments for the rumored digital asset.

Citing familiar sources close to the company, the Journal reports that Facebook is discussing with tech firms and financial service providers like VISA, First Data Corp and MasterCard about investing in the stablecoin, which for now has been dubbed “FB Coin.”

Facebook Blockchain

The Journal’s post also added, “Facebook is also talking to e-commerce companies and apps about accepting the coin, and would seek smaller financial investments from those partners.”

A timeline: Facebook reaches another milestone

As stated earlier, rumors about the stablecoin have been swirling for some months now. The first report of Facebook’s entry into the crypto space was reported by Bloomberg on December 21. The news outlet had claimed that Facebook’s new digital currency would help facilitate crypto-based transfers within its suite of messenger apps- including Messenger, WhatsApp, and Instagram.

The FB Coin, if introduced, could meet the needs of a market comprising of approximately 2.7 billion people.

While the company didn’t make any official statement at the time, Bloomberg quoted anonymous sources who confirmed that it was working on a plan to develop the asset.

As part of its plans,  Facebook went on a hiring spree to beef up its blockchain team. The Palo Alto-based company hired David Marcus, former President of payment processor PayPal, to head its blockchain research team. The tech company was also reported to have discussed its plans with major crypto businesses.

A report by the New York Times, which cited anonymous sources close to the company, claimed that Facebook had advanced its development plans for the “FB Coin” and was now speaking with major cryptocurrency exchange platforms about listing the stablecoin.

Opportunities lie ahead

In light of this new report, it would seem that Facebook is making giant strides with its cryptocurrency. Developing the currency shouldn’t be particularly challenging, given the company’s reach, pedigree, and extensive resources.

As regards listing, the company is also expected to go through that wall unscathed. Most crypto exchanges will list any asset, as long as its meets certain criteria for legitimacy and can comply with industry operation standards.

Again, given Facebook’s pedigree, this shouldn’t be too difficult. The company remains the most popular social media site- and one of the most valuable companies in the world by market capitalization. Its foray into the crypto space will be a massive boost to the nascent industry, and exchanges will be chomping at the bid to list the “FB Coin.”

It’s also worth noting that the aforementioned David Marcus, Facebook’s Head of Blockchain Research, used to be a board member at crypto exchange Coinbase. While he vacated his position due to his current appointment, it wouldn’t be far-fetched to assume that he could be an instrumental player in brokering a potential listing agreement between Facebook and Coinbase for listing the “FB Coin.”

Tread with caution

However, it is also worth noting that Facebook’s history of regulatory compliance might be a sore spot with this project and its listing. In recent times, crypto exchanges have been swift to delist assets which- or whose developers- have behaved in an “unsavory” matter.

Still, it’s expected that exchanges will see a potential “FB Coin” listing as more of an opportunity, even with the social media giant’s checkered history with regulatory compliance.

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London Stock Exchange’s CEO Sees a Future with Blockchain Technology

Nikhil Rathil, Chief Executive Officer of the London Stock Exchange (LSE), has come out to voice his opinion on blockchain technology, which he believes should be adopted extensively as a means of issuing settlements and securities.

Speaking in an interview with news site CNBC, Rathil claimed that adopting blockchain technology in the issuance and settlement processes is a possibility in the future, going on to confirm that certain developments in the fields have intrigued the 300-year old stock exchange body.

“You can certainly see distributed ledger technology having an application in the issuance process. I can see that technology being used in settlement too,” he told the network.

He pointed out that the organization has noticed some strategic moves being made by rival exchanges, and they were monitoring all of these developments to see which ones succeed in gaining adoption from the market and the general public.

By rivals, he was referring to Switzerland’s SIX exchange, which has been quite proactive in the blockchain industry. The Swiss exchange which sees a daily turnover of $5.18 billion with a market capitalization of over $1.67 trillion will run a pilot blockchain integration for its imminent digital asset trading platform SDX soon.

Chief executives warming up to crypto

Rathil’s comments were similar to those of Christine Lagarde, a Managing Director of the International Monetary Fund (IMF). Speaking with CNBC at the 2019 Spring Meetings of the World Bank Group and the IMF in Washington, D.C. on April 10, the IMF Chairwoman praised the efforts of blockchain technology and other technological innovations, placing particular emphasis on their efforts to impact the stability of the global financial system.

Rathil and Lagarde certainly weren’t lying; there have been some notable integrations of crypto into the world of traditional finance in recent times. For instance, despite its CEO Jamie Dimon, a well-known critic of cryptocurrencies, banking giant JPMorgan Chase recently released the JPM Coin to help its customers speed up the processing of transactions.

However, while his statements definitely did show that he is in support of the promotion of adopting progressive innovations in the FinTech space, the stock exchange chief executive was also quick to counsel restraint in the adoption of these technologies as well, adding that a little bit of caution is required due to the advent of some “extreme manifestations” in the crypto space.

His cautions are for good reasons. Since the crypto industry started receiving attention, there has been an upsurge in the rate of hacks, theft, and identity manipulation. On April 30, cybersecurity firm CipherTrace released a report claiming that about $356 million was lost to crypto-related hacks in 2019 alone. The firm predicts that if things continue to move at this pace, 2019 should see about $1.2 billion in total funds lost to crypto hacks.

For proper comparison, researchers from CipherTrace did also project $1 billion in funds lost for 2018. Going by the firm’s findings, asset security remains a sticking point in the adoption of blockchain and its related concepts.

Given how much LSE manages, moving away from the traditional way of operating and switching to the blockchain is a move that might prove too risky for an institution of its sheer size and volume.

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Hackers Used Microsoft Email Addresses to Steal Users’ Crypto Funds

Crypto hackers have turned their attention to Outlook, MSN and Hotmail—three email services owned by tech giant Microsoft. According to a report published on tech news media Vice on April 30, multiple cryptocurrency holders, who were affected by a recent hack, have alleged that the hackers also stole their crypto holdings.

Trouble started when hackers gained access to the account of a customer support employees at Microsoft. Citing an Email from a Microsoft spokesperson, a separate report by TechCrunch revealed that the criminals found it easy to access customer accounts using the login details of the tech company’s login details. What they found was a treasure trove of data which was used to siphon users’ crypto funds.

Cryptocurrency Hack

Complaints from all corners

A Dutch tech forum carried the complaint of a victim, named Jevon Ritmeester, who alleged to have lost 1 Bitcoin (BTC) (worth about $5,200 as at press time) to the attack.

According to Ritmeester, he tried logging into his account on Kraken and upon finding that his account wasn’t accessible, he found that there were several “login changes” notifications in his Email trash compartment. He also found that all Emails that mentioned Kraken were automatically moved to his trash folder. For most crypto investors who haven’t activated a two-factor-authentication (2FA), once a password reset is sent to the mail, the funds are as good as gone.

Ironically, Kraken only just announced that it would be initializing 2FA last month, so it couldn’t have been so difficult for the hacker to have gained access to his Kraken account.

Reddit, a separate forum, also carried various complaints of victims who experienced similar situations. For instance, a user known as Shinatechlabs claimed to have lost “25,000” worth of digital assets as a result of the breach, but he declined to provide further details on how or when it happened.

Microsoft seemed to have missed it

To paper over the cracks, Microsoft did what large corporations do best. They issued a statement to calm fraying nerves. Microsoft sent an initial Email to the affected users, assuring them that critical information was safe. The company noted that, while the hackers got hold of the Email addresses, folder names, Email subject lines, and the Emails that they communicated with, Email content- including login credentials, passwords, and attachments- were out of their reach

However, events that happened since then have shown that this is contrary to the case.  The issue of keeping cryptocurrencies safe online is one that keeps investors and crypto exchanges awake all night. One security measure that is highly recommended is the 2FA, which requires the investor to retrieve a passcode sent to their phone before they can access their cryptocurrencies. The recent cases of sim swapping have shown us just how easy it is to bypass that measure. For a lot of people, storing their funds in a cold wallet with strong private keys is secure enough—not anymore.

The blockchain bandit

On April 23, security consulting firm Independent Security Evaluators (ISE) published a report about the “blockchain bandit,” a cybercriminal who had so far been able to steal up to 44,744 Ether (ETH) tokens by guessing weak private keys. While one might think that guessing a private key correctly is a “one in a million” move, ISE reported that this criminal had been able to guess about 735 private keys, all of which gave him unrestricted access to the accounts of his victims.

Adrian Bednarek, a Senior Security Analyst at the firm, reported that he came across the criminal by accident. He pointed out that as opposed to accessing these accounts by brute hacking, the criminal simply generated faulty random numbers and looked for faulty code.  From there, Bednarek noticed that some of the wallets that were linked to the private keys recorded large debit transactions into a single address.

He predicted that the hack could have resulted from a defect in the underlying codes of the software used in generating them. However, it could also be possible that the hacker used some of the most common passphrases (such as 12345, 0000, abc123, etc.) on multiple private keys and somehow, got lucky.

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Finnish Regulator Assumes Oversight of Local Crypto Companies

Finland’s Financial Supervisory Authority (FIN-FSA) has published an announcement which confirms that it would now be overseeing the registration and operations of the country’s crypto sector. In its announcement, the financial regulator clarified that going forward, it would be in charge of registering all cryptocurrency wallet providers, exchange platforms, and issuers that want to operate within its borders.

Finland

AML laws will take full effect

The watchdog also pointed out the Act on Virtual Currency Service Providers, new legislation that will take effect in the country as from May 1. The new Act was drafted based on the Fifth Anti-Money Laundering (AML) Directive of the European Union. EU’s directive was drafted and implemented in July 2018, establishing a framework and oversight of crypto-based companies within the EU, with the intent of mitigating the use of cryptocurrencies for terrorist financing and money laundering purposes.

In a press release announcing the new AML framework, the EU wrote:

“The 5th Anti-Money laundering directive also increases the cooperation and exchange of information between anti-money laundering (AML) and prudential supervisors, including with the European Central Bank.”

However, FIN-FSA clarifies that successful registration at the national level, even under the new legal framework, doesn’t give a company the right to provide similar services in other EU countries on the basis of registration granted in a member state.

Comply or pack out

Finland’s financial watchdog is not playing around. The agency wants all crypto-based firms to comply with these rules or face the consequences. It has a broad definition of crypto companies, which includes but not limited to those that concern the segregation of assets belonging to service providers and clients, the storage and protection of clients financial assets, and heeding all AML/CFT rules.

To prevent any confusion, the regulator says it would be convening a briefing with all organizations within the crypto industry on May 15.

The briefing will be held at the auditorium of the Bank of Finland in Helsinki, where the regulator is expected to provide information relating to registration deadlines, procedures to follow, as well as timelines for each procedure.

Exchanges are making adjustments

Last month, international peer-to-peer crypto change platform LocalBitcoins announced via a blog post that it would be supervised by the FIN-FSA henceforth. In its announcement, the Helsinki-based crypto exchange revealed that the Finnish Parliament had drafted new legislation that would provide regulatory clarity to cryptocurrencies in the country. The exchange claimed that adopting all of these laws would help boost the public’s perception off cryptocurrencies, while specifically improving Bitcoin’s “standing as a viable and legit financial network.”

In addition to that, the exchange pointed out that it would be developing tools and safeguards to improve its level of compliance with security regulations. The company pointed out that it launched a new account registration process, which would make it easier for new customers to find suable trading partners. It also informed its customers that it would be working on a more robust identity verification process.

An all-inclusive FinTech industry

As stated by LocalBitcoins, regulation by the FIN-FSA will surely improve the public perception of cryptocurrencies and crypto-related organizations. It will also improve the collaboration between crypto-based organizations and traditional financial service providers in the country.

Earlier this year, news platform Bloomberg reported that Parsos Oy, a Finnish crypto wallet and service provider, was on the verge of collapse after various banks reportedly declined to conduct business with it. According to the report, various leading banks in the country, including the OP Group, Saastopankki, S-Bank, and Nordea Bank AB, closed Parsos Oy’s accounts with them, as they were concerned about conducting business with a company in Finland’s then-unregulated crypto market and the prospect of violating any AML law.

Public recognition will help stem instances such as this and provide a proper framework for companies in both sectors going forward.

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So Much for The World’s First Bitcoin Real Estate Project: Aston Plaza in Dubai

It might be a while before you can purchase your home with any cryptocurrency at all. British news agency The Times reported on April 28 that the Aston Plaza in Dubai, a popular Bitcoin-based real estate development project, will be putting its operations on hold, until further notice.

The real estate project cost a reported £250 million ($325 million), and it was developed by Scottish fashion designer and parliamentarian Baroness Michelle Mone, and her partner Douglas Barrowman, a Scottish investor and the Chairman of the Knox Group of Companies.

Aston Plaza

A smooth start

The couple launched the real estate project back in 2017, touting it as the first housing project where tenants could pay in Bitcoin. At the time, Barrowman had explained to CNBC on why they chose the cryptocurrency, describing Bitcoin as an emerging trend that would one day become a more mainstream means of investment.

Barrowman had said:

“I’ve been invested in the crypto world for the last couple of years really, and it’s a sector I’ve watched grow and emerge. So, I see it coming to that stage where the early adopters are giving way to a more mainstream application of cryptocurrency, and therefore it’s a logical extension to take land and buildings and effectively offer people the opportunity to pay in cryptocurrency or Bitcoin rather than just fiat currency.”

At its launch, Mone and Barrowman promised to complete construction by the summer of 2019, saying that they would be offering 150 out of the 1,300 apartments on the project to investors who could pay in Bitcoin. The couple reported to Business Insider in February 2018 that they had successfully sold 50 of the apartments already. Speaking with the financial news medium, Mone claimed that some buyers bought two apartments each, while one person even bought as many as ten.

As at the time of the sale announcement, the properties that were on offer ranged from simple studios, priced at $130,000 a piece (roughly 15.5 BTC as at then) to two-bedroom apartments that went for $380,000 (about 45 BTC). The project’s website shows that studios and two-bedroom apartments are now being offered for as low as 9 BTC.

However, the site also points out that the listing prices are pegged to the value of BTC to the US Dollar as at January 8, 2018, which means that 9 BTC would amount to roughly $147,000 (as opposed to its value of $48,780 at press time.

Tokenized Real Estate Investments

The reason for Aston’s suspension is still unknown. However, that isn’t to say that other companies aren’t doing their bit to revolutionize the real estate market. Last week, Smartlands, a British blockchain firm, announced that it would be launching its platform in a matter of weeks.

The Smartlands platform would provide liquidity in the real estate market by allowing developers to issue tokens that are linked to a specific property. The tokens can be bought and traded both on the platform and in a secondary crypto market.

The company’s announcement, which was published on April 26, gave users an overview of how the platform will work. Smartlands’ CEO Arnold Nauseda also noted that the tokens would allow investors to hold a fraction of a building’s equity. Investors get their returns in the form of rent, and on property sales.

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Brazilian Police Accidentally Discover Money Laundering Bitcoin Mining Farm

By CCN.com: A report published in local Brazilian news outlet Zero Hora has revealed that Brazilian police have made an arrest in connection with a suspected crypto money laundering scheme. An accidental discovery The report, which was published on April 23, claims that the State Department of Drug Trafficking (Denarc) in Porto Alegre, Rio Grande do Sul came upon a house where cryptocurrencies were being mined as they were on the trail of a suspected drug trafficker. Given that Bitcoin mining isn’t particularly popular in the region, the police went into the house, and a cursory search revealed 25 solitary

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Crypto Detective Firm Chainalysis is Now Snooping into 10 Cryptocurrencies

By CCN.com: Blockchain analysis and compliance firm Chainalysis wants to provide its users with the ability to perform investigations and keep tabs on ten popular digital assets, including Bitcoin, Ether and Binance Coin. In a post published on its official blog on April 24, the New York-based blockchain firm announced that it is expanding monitoring tools and the scope of its Chainalysis Reactor and Chainalysis KYT (Know Your Transaction) analytics tools. Real-time monitoring Chainalysis is a high-profile blockchain intelligence firm which provides various technologies that help organizations monitor the flow of cryptocurrencies on multiple blockchains and track any transaction suspected

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Suspected Drug Lab Operator & Crypto Money Launderer Arrested in Brazil

Police in Brazil has apprehended a suspect who is believed to have operated a clandestine drug lab, laundering the proceeds using cryptocurrencies.

According to a local report published on April 23, the State Department of Drug Trafficking (Denarc) in Porto Alegre, Rio Grande do Sul was able to trace a Bitcoin mining lab to a small house, while officials were on the trail of the suspected drug trafficker. The police considered the sighting unusual, as they found 25 separate cryptocurrency mining rigs at the site.

Illegal electricity and a suspicious operation. Grounds for an arrest?

The rigs reportedly ran 24 hours a day, operating on sophisticated hardware and software estimated to be worth about 250,000 reals (about $63,000).

The police claimed that the man who assumed responsibility of the mining equipment argued that he had rented the place and was running the Bitcoin mining shop as a business investment. The man denied involvement in any criminal activity in that area, pointing out that his “investment” was completely legal. However, he was charged for stealing and the illegal use of electric power in the vicinity.

Mining

Police at the Clandestine Mining Operation. Source

His equipment was also seized, as the officers suspected that they might have been smuggled into the country from China. Police also suspected that the man might have been a lookout or an illegal drug trafficking organization. Beyond the mining equipment and irregular electricity supply, the report claimed that they also found a firearm with an erased serial number, as well as a motorbike with cloned number plates.

A translated statement from Adriano Nonnenmacher, a police officer who was part of the raid, read, “The flat is well-hidden. We are going to investigate further. Everything points to a Bitcoin mining operation. They could be exchanging the money and use it to fuel drug trafficking. There’s also the possibility that they are using the funds derived from drug trafficking to buy Bitcoin.”

Manhattan busts its first crypto drug operation

Earlier this month, the Manhattan District Attorney’s Office indicted a group of people who were allegedly running their own illegal drug trafficking scheme and laundering money through Bitcoin as well. The individuals- named Chester Anderson, Jarrette Codd, and Ronald Maccarty- were indicted by Manhattan District Attorney Cyrus Vance Jr., the United States Secret Service, the United States Homeland Security Investigations (HIS), and the U.S. Postal Inspection Service (USPIS).

According to a press release published by the Manhattan D.A.’s Office on April 16, the individuals were suspected of running stores o the Dark Web, shipping “hundreds of thousands” of counterfeit drug tablets.

A raid conducted by authorities resulted in the recovery of 500 glassines of fentanyl-based heroin, 420,000 to 620,000 tablets of alprazolam, as well as gamma-hydroxybutyric acid (GHB), ketamine, and methamphetamine.

The alleged traffickers reportedly sold the drugs to customers across 443 states in the U.S., laundering $2.3 million in BTC by using preloaded debit cards and withdrawing their fiat currency at various ATMs. They are set to be arraigned before a New York State Supreme Court, with charges leveled against them including first-degree money laundering, as well as fourth and fifth-degree conspiracy.

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Brave Launches Ads Program but is it Sustainable?

Per a notice published on its official website, decentralized browser Brave has announced the launch of Brave Ads, a program that rewards its users for sticking around to watch promotional ads and videos. According to the notice, users of the browser’s latest version can opt-in to the Brave Ads program and watch “privacy-preserving ads.”

Brave Ads

Promising Results

Brave is an ad-blocking web browsing platform that was developed by Brendan Eich, former CEO of Mozilla and the developer of the JavaScript programming language.

The company will reward users who participate in the program with a 70 percent revenue share on ads viewed. The rewards will be distributed in the form of Basic Attention Tokens (BAT), a digital asset developed by the company and which can be used by users for various purposes.

The company notes that the brave Ads program allows customers to surf the web, support their favorite content developers, and earn rewards, all while keeping control of their privacy. Speaking on the launch, Eich said, “With Brave Ads, we are launching a digital ad platform that is the first to protect users’ data rights and to reward them for their attention. Brave Ads also aim to improve the economics and conversion of the online advertising industry, so that publishers and advertisers can thrive without the intermediaries that collect huge fees and that contribute to web-wide surveillance.”

The Value of BAT Rewards

At the end of every monthly usage cycle, users who view ads will receive their BAT rewards, which, for now, can be given to their most viewed websites or given to their favorite content developers on various platforms. In addition to that, Brave stated that it is “working on an option to let users withdraw BAT from their wallets for personal use, converting their BAT to local fiat currency through exchange partners.”

In an interview with TechCrunch, Eich said Brave has been reportedly testing the ads since January, with over 40 percent of desktop users already opting in to the program.

Brave also announced that it has partnered with The Giving Block to provide ad inventory and test use cases to non-profit and charity organizations that partner with the latter. The program, which already has notable participants like The Human Rights Organization, will present its users with messaging as an incentive to tip the organization via the Brave Rewards program.

Is it Viable?

As interesting as all of these sound, the Brave Ads platform does have some issues to contend with. For one, there’s the question of the ads themselves. The prospect of gaining tokens as rewards is still not enough to convince people to view ads; especially rewards with little to no practical use.

Eich admitted to TechCrunch that a vast majority of users who opted in back in January did so because of the anonymous browsing feature, which is the bedrock of the Brave browser. He also admitted that BAT is still not of much value to people, claiming that some users prefer to give it back.

Charitable as it seems, this purpose doesn’t sound sustainable. The platform will need to incentivize its prospective users, and frankly, charity-driven tokens simply won’t cut it.

Another issue with the ads is the run time. It’s still unclear how long users would have to watch ads if they intend to get a considerable amount of the BAT, but it’s highly unlikely that people will want to sit for so long do nothing but watch ads. Still, the mission here is to bring a fundamental change to the business model of most web-based companies. If the company can make the BAT much more valuable, then this launch could have benefits for all parties involved.

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Bittrex Clears the Air on the Flagged North Korean Users on its Platform

In a statement posted on its Twitter account on April 22, popular cryptocurrency exchange Bittrex has debunked the claims from the New York State Department of Financial Services (NYDFS) that it has North Korean users trading on its platform.

The NYDFS through the Executive Deputy Superintendent for Banking Shirin Emami, had published an op-ed where she pointed out that an examination of Bittrex’s accounts revealed the existence of at least two users based in North Korea.

North Korea Crypto

She noted:

“More may exist. At least one North Korean account was active into 2017. At least two Iranian accounts were still active in the Bittrex system when DFS examiners visited Bittrex in 2019, and potentially usable.”

However, in its tweet, the exchange offered a reason as to why the regulator’s examiners could have thought these users were North Korean. The tweet acknowledged the allegations from the NYDFS over the constitution of traders on its platform. However, after it examined the accounts flagged by the state regulator, it informed the latter that the same accounts had been investigated back in 2017.

In part, the statement from the exchange reads:

“South Korean residents mistakenly selected North Korea in our country dropdown menu, but we determined through country identification, physical, and IP addresses that ALL were from South Korea.”

No Approval for Bittrex

The entire situation started earlier this month, when the NYDFS denied the virtual currency license application that Bittrex had put forth, on the grounds that the exchange had failed to implement the best controls and policies as regards Anti-Money Laundering (AML), Office of Foreign Assets Control (OFAC) and Know Your Customer (KYC) standards.

Bittrex had applied for the BitLicense a permit required for crypto businesses to operate in New York since August 2015, although it had also continued to operate under the terms of “safe harbor,” with the permission of the NYSFDS. In a letter sent to Bittrex on April 10, the regulator pointed out that it had issued various compliance notices to the exchange and assisted it in a bid to “address continued deficiencies and to assist Bittrex in developing appropriate controls and compliance programs commensurate with the evolving nature of the sector.”

After various deficiencies in Bittrex’s security were found, the regulator had a team of examiners conduct a review of the exchange’s operations at two of its offices. Per the review’s results, the exchange failed to demonstrate that it would “conduct business honestly, fairly, equitably, carefully, and efficiently.”

Following the denial of the exchange’s application, the NYDFS gave Bittrex a 24 hours window to cease all of its business operations in the state and 14 days to submit a letter indicating that it had completely shuttered its operations in the state as well.

Bittrex Fights Back

Initially, Bittrex published a press release responding to the denial of its BitLicense application.

The release, which was published on the same day its application was denied, conveyed the exchanges disappointment at the regulator’s decision, as well as its belief that the imposition of this licensing requirement “harms rather than protects” crypto investors and customers based in New York.

It pointed out that the capitalization requirements set by the NYDFS were significantly higher than those of any other state. According to the exchange, the requirements were based on a pre-existing “hot wallet vs. cold wallet” storage formula, which failed to consider Bittrex’s range of assets, as well as the risks of moving assets from hot to cold storage regularly.

The exchange also highlighted that it screens every new customer to find out if they’re Specially Designated Nationals (SDNs; entities and vessels which U.S. companies and citizens are prohibited from engaging in business with) are properly screened), and it also tracks SDN updates from the OFAC.

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10 Years: Santa Clara Judge Passes the First SIM Swapping Sentence in America

A Santa Clara judge has sentenced a college student to 10 years in prison after he was found guilty of stealing millions in crypto assets through SIM swapping.

In what’s seen as the first official conviction of a crypto SIM swapping scam in the United States, Joel Ortiz, a 21-year-old student of the University of Massachusetts, was giving a 10 year prison sentence by Judge Edward Lee of the Santa Clara County’s District Attorney’s Office.

Jail

Ortiz was described as being a “prolific” SIM swapping scammer, whose judgment highlights an individual scam carried out by Ortiz, where he stole $5.2 million from an unnamed cryptocurrency investor from California.

The Magic of SIM Swapping

SIM swapping might be a new and relatively unpopular trend amongst crypto scammers, but as is with the case of Ortiz, it does have a potential to be quite lucrative. Primarily, the entire operation relies on the perpetrator’s convincing and manipulation techniques.

The hacker contacts the telecoms provider of the target victim’s SIM card and using the personal details he has about the target, will persuade the telecom operators to transfer the victim’s number from the current SIM to a separate one in the criminal’s possession.

Upon the successful SIM transfer operation, the service provider will send saved financial and Internet-related passwords to the new SIM card. This could include two-factor authentication entries, wallet passwords, verification codes, and much more.

Information stored on high-security and high-traffic domains, such as Email addresses, social media accounts, and cryptocurrency exchange accounts and wallets, are usually the targets of SIM swappers. Ortiz was charged in Santa Clara back in 2018 on 28 counts of alleged violations, including multiple computer-related violations and crimes associated with information law.

At the time, a police report revealed that he had duped over 20 people, with a lot of just over $5 million in digital assets.

He was eventually sentenced to 10 years in jail on February 1, although formal sentencing was just being set at the time.

Another Sim Swapper awaiting Trial

While Ortiz is the first SIM swapping sentencing to be formally carried out in the United States, he’s not the only person to be charged for the crime.

A document published on the Manhattan District Attorney’s website describes the case of Dawson Bakies, a 20-year-old tech whiz from Columbus, Ohio, who used the same SIM swapping technique to defraud multiple people off thousands of dollars in cryptocurrencies.

According to the details of the document, a grand jury in the state of New York had charged Bakies with a 52-count charge, including but not limited to identity theft, grand larceny, and computer tampering. The indictment alleges that Bakies targeted over 50 victims across the country, all of whom weren’t chosen at random.

Speaking on Bakies’ charge, Cy Vance, Manhattan’s District Attorney, said:

“Today, my office is putting the small handful of sophisticated ‘SIM Swappers’ out there on notice. We know what you’re doing, we know how to find you, and we will hold you criminally accountable, no matter where you are.”

Amongst many of the allegations leveled against Bakies, he was said to have stolen about $10,000 in cryptocurrencies from three Manhattan residents. However, a report by the New York Post alleges that his entire scam operation, which ran for no more than ten days, raked in about $500,000.

Local law enforcement found a personal computer and an iPhone, which contained multiple password recovery messages, during a raid of his apartment last year. While digging through his laptop’s hard drive, investigators discovered a file, titled “Hacker Shit,” which included the names of people he already attacked- as well as the three aforementioned Manhattan residents.

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Rakuten Opens Selective Registration for Its Cryptocurrency Wallet

Japanese e-commerce platform Rakuten has begun processing applications for account opening on Rakuten Wallet, its newly-launched crypto wallet platform, per an official release.

In the release, Rakuten, which is seen by many across the industry as the Japanese equivalent of Amazon, stated that it would now be offering cryptocurrency trading services on the Rakuten Wallet, as it is speculated to be targeting a new frontier in crypto adoption. The wallet service will be launched later in June, but registration is now open to specific users, not the general public.

Rakuten

Got a Rakuten bank Account?

To be eligible, Rakuten’s announcement states that only users who are members of the Rakuten Bank, one of the institutions that form a part of the Rakuten Group, can register for the crypto wallet.

Users who have accounts with the bank can simply sign up to the wallet with the use of a web application. On the flip side, non-members would have a slightly more tedious road to registration and approval, including additional authentication layers and processes.

In addition to that, it should be noted that the wallet’s sign up page states that it only supports withdrawals and deposits to and from the Rakuten Bank. Essentially, this means that people who don’t have accounts with the bank might not be able to enjoy the wallet’s services, for now.

A Long Time Coming

In accordance with the Payment Services Act that is in effect in Japan, Rakuten received a license to operate a cryptocurrency exchange in March. Rakuten’s wallet is expected to be registered with the Financial Services Agency (FSA), through the Kanto Local Financial Bureau.

The Rakuten Wallet itself used to be known as Everybody’s Bitcoin, an exchange platform that the former acquired in August 2017 for a fee of 265 million yen ($2.4 million).

At the time, the e-commerce giant had noted that it recognized the role of crypto-based payments in its industry, predicting that “offline retail and in P2P payments will grow in the future.”

The release stated, “Rakuten Wallet will contribute to the sound growth of the market as a virtual currency exchange company and will further enhance security and provide enhanced services so that more customers can use it safely and with confidence.”

Rakuten rebranded Everybody’s Bitcoin last month, as it took over the exchange’s operation completely.

Easier User Experience

The company also announced that it has set up an interactive and intelligence-enabled chat service that ensures a response to customer queries and requests round the clock.

The e-commerce giant will also be launching a smartphone app that allows customers to make transactions to and from their trading accounts. In addition to that, the app would enable Rakuten’s customers to engage in real-time crypto asset trading.

The launch of Rakuten’s crypto exchange is expected to help in boosting the mass adoption of digital assets. Apart from the simple crypto trading service, it is possible that customers who are making purchases via the e-commerce site will be able to make their payment directly from the Rakuten Wallet.

This integration will help improve customers’ experience on the site, and make for even more seamless transaction and retail activities.

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The World Bank & IMF Floats a Joint Private Blockchain Network & Cryptocurrency

A recent report by the Financial Times has revealed that the World Bank and the International Monetary Fund (IMF) have collaborated to launch a private blockchain network, which will enable “explorations and experimentations” into Distributed Ledger Technology (DLT).

In addition to that, both institutions have reportedly created a digital asset, dubbed the “Learning Coin,” based on their joint blockchain network.

The report claims that the Learning Coin was created as a tool to aid the institutions in their effort to better understand blockchain technology, including its function as an underlying technology for crypto assets.

Lagarde

However, while the asset does seem like it is a cryptocurrency, the Financial Times stresses that it isn’t exactly one. For one, the currency doesn’t have a monetary value, and it isn’t tied to any known fiat currency.

In addition to that, the coin is only intended for use by IMF and World Bank staff as they pursue “a deeper knowledge” of blockchain technology. As such, the coin, as well as all of its properties and uses, will only be accessible within both institutions.

An App and a Reward System

Also, an application was also reported to have been developed by the institutions, and it is expected to accompany the Learning Coin’s use. The app would help staffers with research efforts, and it will support learning materials and content such as presentations, informational videos, and blog posts.

Staff at both institutions were said to be earning Learning Coin tokens whenever they reach laid-out educational milestones in their blockchain experimentation and exploration efforts. Also, while the coin still doesn’t have any real-world or monetary value, workers at the institutions are said to be working on how employees can redeem their tokens in exchange for certain “rewards.”

Both Institutions seem to be fans of the Blockchain

The news is coming less than a week after Christine Lagarde, the Managing Director of the IMF, stated that new and emerging technologies such as blockchain technology are having impacts on the stability of the global financial system. Lagarde’s expressed this sentiment while in an interview with news outlet CNBC at the 2019 Spring Meetings of the World Bank Group and the IMF in Washington D.C. on April 10.

As part of her comments, the French policymaker had stated:

“I think the role of the disruptors and anything that uses distributed ledger technology, whether you call it crypto assets, currencies or whatever — and it’s far from the Bitcoins we used to talk about a year ago — that is clearly shaking the system.”

She pointed out that central banks and financial regulators all over the world have recognized the potential of blockchain-based technologies to transform how the global financial system operates. Last year, Lagarde also encouraged the exploration of Central Bank Digital Currencies (CBDCs). In a speech at the Singapore FinTech Festival on November 14, Lagarde called for an increased issuance of CBDCs, pointing out a decrease in the demand for physical cash and the growing appeal for digital money.

The IMF Chief also stated that major crypto assets are “vying for a spot in the cashless world, constantly reinventing themselves in the hope of offering more stable value, and quicker, cheaper settlement.” Also, last summer, the World Bank launched the first global blockchain-based bond settlement, raising $81 million in the process. The bond, which was handled by the Commonwealth Bank of Australia (CommBank), had additional investors, including Northern Trust, the NSW Treasury Corporation, QBE Insurance, among others.

In an official statement, CommBank stated that it was handling the bond with its own private Ethereum blockchain, and the Microsoft Corporation has reviewed its security and architecture.

The two-year bond, which was dubbed the Blockchain Operated New Debt Instrument (BONDI, in reference to Sydney’s famous Bondi Beach), was viewed as a first step towards moving bond transactions from manual processes to cheaper and faster-automated ones.

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Is this the End for Bitcoin SV? Price Plummets Following Controversy & Delistings

Binance has officially announced that as from next week, it will no longer offer withdrawals or trading options for Bitcoin SV (BSV), per a post on its official blog.

In the post, the exchange pointed out that it will delist and stop offering trading on all available trading pairs of BSV, a currency which was only created last year November, after Bitcoin Cash had forked.

Bitcoin SV

Possible End for BSV?

In the announcement, Binance claims it routinely reviews tokens listed its platform to ensure that “every asset continues to meet the high level of standard that we expect.” The company asserts that a delisting action, such as this, will only be made necessary after an asset has gone through a thorough review, as they believe delisting is the only way to protect their users.

The exchange also pointed out that before it goes on a delisting action, it considers factors such as the quality and level of the asset’s development, responsiveness to its requests o due diligence, and “any evidence of fraudulent or unethical conduct.”

The exchange concluded by saying that it will continue to support withdrawals of BSV until 10:000 am UTC on July 22.  From then on, the currency would no longer be available for any financial transaction on its platform.

The delisting action is coming just a few days after Changpeng Zhao (CZ), Chief Executive Officer of Binance, made a threat to carry out this exact action. In a tweet from his account, CZ had warned that Binance would delist BSV if Craig Wright, the developer of the currency, refused to desist from his aggressive behavior on Twitter.

Other Exchanges Followed

Shortly after the Binance delisting tweet, other exchanges started following suit. The first was Kraken which ran a poll asking their followers if they should also delist BSV, the result so far is a resounding 72% in favor.

Next up, was Erik Voorhees, founder of Shapeshift who also said they will delist within 48hours.

At the time of writing, Bitcoin SV is down 21% in the last 24 hours, if more exchanges join in the delisting of the coin, it could spell trouble for BSV from which it will have a very hard time recovering.

Craig Wright: Controversial Figure

Craig Wright has- on multiple occasions- stated that he is Satoshi Nakamoto, the creator, and founder of Bitcoin (BTC).

Wright has been in the news recently, as he offered a $5,000 reward in BSV to anyone who had information on the identity of Hodlnaut, a Twitter user who mainly gained popularity for starting the Lightning Torch Network, Lightning Network-based crypto humanitarian platform.

Hodlnaut, whose Twitter account has now been deleted, found himself (or herself, as the case may very well be) as the subject of the entrepreneur’s ire after directly accusing him of falsely claiming to be Satoshi Nakamoto and calling him a fraud.

In addition to Hodlnaut, Wright also issued legal notices to a few of his detractors, including Peter McCormack, the host of popular podcast channel “What Bitcoin Did,” who has publicly claimed that Wright is not Nakamoto.

In response to Wright’s bounty, numerous members of the crypto community began a campaign to protect the entity of Hodlnaut, including changing their Twitter profile names and display pictures to that of the anonymous user. Since Hodlnaut’s account wasn’t verified, it would be impossible for anyone actually to find him (or her).

Still, the Twitter cryptoverse didn’t stop there. They began the #WeAreAllHodlnaut campaign in a bid to show solidarity with the embattled user. In addition to that, they showed extensive support to CZ and called on other popular crypto exchanges to delist BSV as well, with the #DelistBSV hashtag.

It would seem that the requests are beginning to gain traction. On its Twitter account, popular exchange Kraken conducted an online poll on whether or not it should delist BSV as well. As of this writing, the poll has gotten 5,264 votes, of which 77 percent voted in the positive.

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Bitcoin Price Has ‘Already Bottomed Out’ in Retail-Driven Crypto Market: Research

By CCN: In case there was any doubt, the bitcoin price has found a bottom. Binance has released a comprehensive research report on the state of the crypto market, finding that the worst for crypto is probably over, which suggests it’s onward and upward for prices from here. That’s good news for investors and everyone who would like to see blockchain technology take off. “Having emerged from a period of the highest internal correlations in crypto history, the data may support the notion that the cryptomarket has already bottomed out,” the Binance report states. Binance also published a recent report in

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SEC Cracks Whip, Drops ‘Blockchain’ from ETFs for Misleading Investors

Crypto winter or not, the U.S. Securities and Exchange Commission (SEC) is cracking down on products that could mislead investors eager to gain exposure to bitcoin – or at least the technology behind it. The regulator has begun pressuring fund providers that offer so-called “blockchain ETFs” to remove the word “blockchain” from the fund names. Bloomberg reports that the SEC already asked at least two companies, Reality Shares and Amplify, to scrub the word “blockchain” from their blockchain-focused ETFs. Don’t Mislead the Public Asset manager Reality Shares launched its fund last year. The ETF gives investors exposure to the blockchain market

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BitMEX CEO Confirms Planned Launch of a Crypto Options Platform

Popular cryptocurrency exchange platform BitMEX wants to expand into the derivatives products sector. Speaking on April 12 in an interview with analyst Luke Martin on the Venture Coinist Podcast channel, Arthur Hayes, co-founder and Chief Executive Officer of BitMEX, spoke on various subjects on his entrepreneurial journey and how BitMEX plans to stay relevant in the dynamic crypto space.

BitMEX Review

In the interview, Hayes gave glowing remarks on Bitcoin, and its role on the exchange’s success over the past few years. He pointed out that BitMEX only takes Bitcoin as collateral, which allows the exchange to process transactions without third-party or human interventions and as thus, can easily onboard customers within minutes.

A Crypto Options platform in the works

Hayes revealed that the company is in the preliminary stages of developing a cryptocurrency options trading platform. When questioned on the timeline for the launch of the platform, Haynes said that BitMEX will “probably have our own options platform in 12 to 18 months.”

Trading options are financial derivatives that give investors the opportunity to hedge their positions on a specific asset. More specifically, a trader can use an option to purchase or sell a stated amount of an asset at a specific price in the future.

Bitcoin-enabled Stock Investments

Hayes also announced that BitMEX is investing in a new startup that allows people to invest in popular Nasdaq and S&P 500 stocks using their Bitcoin holdings, while also eliminating any Bitcoin-USD risk. Speaking on the startup’s modus operandi, Hayes said:

“You’ll send Bitcoin. They’ll FX it into Dollars, and allow you to buy a swap. When you want to leave, you’ll sell the swap, get Dollars back, and then you can get your Bitcoin.”

Hayes noted that the Bitcoin-backed product would provide a bridge between the emerging markets and the “most liquid and notable indices in the world.”

Founded in Hong Kong 2014, BitMEX has grown to become especially popular among Asian investors and traders. As of this writing, the exchange is ranked 3rd among exchanges in the world by reported volume, with $1.065 billion traded over the past 24 hours.

No additional Coins for now

Also, the CEO fielded questions about one of the most-asked questions about BitMEX’s operation; whether or not they will be adding another crypto asset to their catalog.

However, while there are tons of new in-house tokens being listed by various crypto exchange platforms, the exchange has been notably fixed on keeping a tight-fisted approach to the token listing. Currently, BitMEX’s list of cryptocurrencies includes Bitcoin (BTC), Bitcoin Cash (BCH), XRP, and Litecoin (LTC). In the podcast, Luke asked Hayes whether BitMEX would be adding any other digital assets to its listing.

Hayes answered in the negative for now, stating that derivatives will require a sufficient amount of liquidity in the spot market. He pointed out that if BitMEX should simply list a random coin, the market makers wouldn’t be able to hedge the risks, noting that Binance (another crypto exchange platform), already has a wide variety of coins where market makers want to price a derivative. According to him, a case such as this will make the exchange spread too wide, and this scenario won’t be suitable for the exchange’s clients.

“From a client perspective, it’s a terrible experience, I’m treating a leveraged product that has a wider spread, then the underlying on the spot market and I’m just increasing my risk of getting liquidated. And that’s something that we don’t want to do.”

Hayes said that when his company decides to add a new product, they would like for market makers to make “good type prices” for their clients. He pointed out that this same reason is why BitMEX won’t have as many coins in its listing as Binance does.

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American Lawmakers to the IRS: Get Your Act Together on Cryptocurrency

Even though the cryptocurrency market came close to a trillion dollars in market cap during the last bull run, the United States’ Internal Revenue Service has still not clarified their stance on how cryptos should be taxed.

The last time the IRS issued guidance on cryptocurrencies and how they were to be taxed was in 2014, an eon in the rapidly changing sector, and even that dictum was vague and ambiguous.

In response to this, twenty-one bipartisan lawmakers have drafted a letter which they hope will force the IRS to clarify its position on cryptocurrencies and how they should be taxed.

IRS Blockchain

The Letter

The letter, which was drafted to IRS Commissioner Charles Rettig, can be well summarized in two sentences, “there is still substantial ambiguity on a number of important questions about the federal taxation of virtual currencies. We urge the IRS to issue more robust guidance clarifying taxpayers’ obligations when using virtual currencies.”

While the cryptocurrency ecosystem has been slandered in the past as a haven for tax dodgers, the truth is that a majority of crypto users want to stay on the right side of the law and pay their taxes. However, they can’t do that if they don’t know what to pay.

Taxing Cryptocurrency Forks

On a list of three issues that the twenty-one lawmakers deemed urgent, the third was, “the tax treatment of forks for taxpayers that use virtual currencies, such as the 2017 hard fork of the Bitcoin blockchain.”

When Bitcoin split into Bitcoin Cash, it left a lot of investors with a coin that they hadn’t paid for. How should a coin which a person receives for free be taxed? There is obviously nothing in the history of taxation to cover an event like this and unless the IRS releases new guidance on the topic there is no sure way to know the proper amount to pay.

Determining Cost Basis

Further, the lawmakers urged the IRS to clarify its position on a cost basis. Cost basis is the price at which an asset is purchased and it determines how much tax a person needs to pay when they sell.

Currently, the IRS says that an investor must determine cost basis in a, “a reasonable manner that is consistently applied.” This is very ambiguous. What does “a reasonable manner” mean? What if an investor’s idea of “a reasonable manner” is different than the IRS’ understanding of it?

This proved to be an especially important topic with the lawmakers as they said, “there is particular urgency in resolving the ambiguity around basic questions of how taxpayers should calculate and track the basis of their virtual currency holdings.”

The IRS Response

While the letter was only recently sent and a response cannot yet be expected, the IRS has proven to be uncooperative in the past. In the fall of 2018 Kevin Brady, the chairman of the House Ways and Means Committee, sent a similar letter to the IRS. He never received a response.

Of course, clarity on how cryptocurrencies should be taxed is not the only problem the IRS must contend with. In the United States, crypto is classified as a property which means that taxes must be paid on every single transaction, even if a person is just buying a sandwich. This is clearly untenable and if the laws are not revised, it’s going to push cryptocurrency innovators out of America to other countries with more friendly regulations.

It’s hard to say why the IRS has proven so recalcitrant about issuing helpful cryptocurrency taxation guidelines, whether they don’t understand blockchain or just don’t like it, but if they don’t clarify their position on how it should be taxed everybody loses.

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