US Congressional Watchdog Quietly Reveals DLT Prototype Development

The U.S. legislative branch’s supreme auditor has created two job positions with responsibilities including the development and exploration of blockchain.

The United States Government Accountability Office’s (GAO) Innovation Lab posted ads for job positions to develop “use case prototypes” for blockchain technologies in late-March.

GAO is the supreme audit institution of the U.S. government and provides evaluation and investigative services for Congress.

GAO to explore prototype applications for DLT

The two positions seek an ‘Interdisciplinary Computer Engineer/Computer Scientist’ and an ‘Interdisciplinary Assistant Director, Computer Scientist/Engineer’ to explore “emerging technologies” including blockchain.

Both roles will be overseen by GAO’s Science, Technology Assessment, and Analytics (STAA) Team’s Innovation Lab.

The listings show that the lab is creating a unit to “[i]dentify, develop, test, and evaluate use case prototypes for emerging technologies” including “digital ledger (blockchain),” machine learning systems, Internet of Things (IoT), and virtual and augmented reality technologies.

Through the lab’s work, the agency hopes to “determine the most promising solutions and approaches which, if successful, could profoundly change the business of audit, investigations, and program evaluation for the future GAO.”

GAO warms to blockchain

GAO launched the STAA Team to explore emerging technologies at the end of January — with the body comprising the first new office opened by GAO’s in two decades.

In September 2019, the agency published a brochure asserting that distributed ledger technologies (DLT) “could fundamentally change the way government and industry conduct business” — signposting GAO’s interest in blockchain months ago. 

The report noted improved transparency, reduced labor costs, and data quality among the opportunities offered by blockchain. 

GAO also emphasized the wide applicability of DLT across many critical sectors, including supply chain and logistics, news, energy, and healthcare.

Q3 Crypto Ponzi Victims File Class Action Lawsuit Against Wells Fargo

The victims of an alleged $35 million crypto Ponzi are suing Wells Fargo for failing to enforce reporting requirements on an employee accused of co-masterminding the scam.

Q3 Investment Recovery Vehicle (Q3IRV), an entity representing the more than 100 victims of the alleged $35 million Q3 Ponzi scheme, has filed a class-action lawsuit against Wells Fargo Advisors.

The suit accuses Wells Fargo of failing to inquire into the activities of an employee accused of co-masterminding the scam.

The plaintiffs assert that the Wells Fargo subsidiary failed to make appropriate inquiries into its financial advisor James Seijas — as per the firm’s policy mandating employees to regularly report activities relating to outside interests.  

Crypto Ponzi victims sue Wells Fargo for vicarious liability

Q3IRV is seeking damages and interest for vicarious liability for the actions and omissions of Seijas.

The plaintiffs assert that Wells Fargo did not inquire into Siejas’ role at Q3 while he operated the scheme, despite the firm’s policies for employees:

“Wells Fargo Advisors’s policies and procedure required employees to regularly report to Wells Fargo Advisors concerning work they did outside the scope of their employment…"

The lawsuit emphasizes that as Seijas touted himself as an investor working on behalf of Wells Fargo while he was an employee of the firm, “the acts and omissions described herein were committed in his capacity as an agent for Wells Fargo Advisors.”

The lawsuit also names Wells Fargo Advisors in counts of unjust enrichment, negligence and fraud.

Seijas worked at Wells Fargo Advisors for five years

The lawsuit alleges that Siejas, alongside fellow co-founders Quan Tran — a certified general surgeon, and Michael Ackerman — a former UBS securities employee, formed the Q3 Trading Club in 2017. 

Q3 purported to pool investors funds to trade crypto assets using a proprietary algorithm, promoting the scheme to physicians on social media, including a Facebook group called “Physicians Dads’ Group.”

The suit alleged that, after raising upwards of $1 million, Q3 became a limited partnership and expanded to take in $33 million from 150 investors across the United States.

Q3IRV claims that only $10 million the funds raised were invested in virtual currencies, with over $10 million being diverted to the trio: 

"Despite Defendants' representation to potential and existing Q3 Investors that their virtual currency trading was highly successful and that Q3 Investors were free to withdraw the profits earned in their accounts after one year, Defendants did not trade virtual currencies successfully and most of Q3 Investors' money was misappropriated or lost in trading."

Q3’s operators also diverted $4 million in purported licensing fees for access to their proprietary algorithm into their personal bank accounts, according to the plaintiffs.

Steem Soft Forks to Freeze 17.6M Tokens Held by Former Witnesses

Steem has again taken aim at the blockchain's former validators, executing a soft fork to freeze 17.6 million tokens associated with its previous witnesses.

Tensions between Steem (STEEM) and the Hive (HIVE) community continue to escalate, with Steem executing a soft fork to freeze up to 20 accounts owned by the network’s former witnesses.

The frozen accounts hold 17.6 million STEEM, worth approximately $3.2 million and equating to nearly 5% of Steem’s total supply.

On April 4, the soft fork was proposed in a Steemit post authored by the new account "softfork2288."

In response to the purported “uncertain threat that the leaders and main influencers of [Hive] represented to the Steem Blockchain,” the fork sanctioned roughly “no more than 20 accounts “ that meet three criteria:

“Accounts that ran the version 0.23 during the Hardfork on Steem and were still in the Top 20 rank, shortly before the Hardfork. Accounts that proxied or directly voted to more than 10 witnesses running the version 0.23 on the Steem Blockchain during the hardfork with high influence. Accounts directly associated with operating these accounts.”

Hive leaders accused of posing existential threat to Steem

The author states that community support for the soft fork is needed in order to “protect” Steem, with the post taking aim at the former top Steem witnesses.

The user emphasizes that 50% of the witnesses were “running a hostile version 0.23” of Steem prior to the hard fork being executed, warning:

“If that status had been kept that way, it could have resulted in breaking the Steem Blockchain, because these witnesses would not work anymore for the Steem Blockchain directly after the Hardfork.“

“As top consensus witnesses, the duty and task would have been to maintain the integrity of the Steem Blockchain but it was decided to abandon the chain they promised to protect,” the post asserts.

Hive fork excludes Sun

On March 20, Hive hard-forked off from Steem after weeks of growing tensions following Tron founder Justin Sun’s purchase of Steemit Inc and 20% of STEEM supply in February.

The new fork would airdrop HIVE tokens at a 1:1 ration to all STEEM holders with the exception of the 20% founders reward acquired by Sun.

HIVE crashed 50% in one hour

On April 6, the price of HIVE suddenly plummeted 50% over one hour.

After consolidating at approximately $0.175 for roughly one week with daily volume steadily hovering between $30,000 and $50,000 on Bittrex, record 24-hour volume of over $350,000 led to a crash down to $0.087. 

HIVE/USD 4-Hr Chart

HIVE/USD 4-Hr Chart. Source: TradingView

HIVE is trading for $0.125 as of press time. The suspiciously timed dump has driven the price of HIVE below the value of STEEM for the first time since the hard fork — with Steem currently trading for $0.175.

Blockchain Firms Team Up on Private Coronavirus Testing App

Genobank has partnered with Telos to develop an app facilitating private coronavirus testing.

Genobank, a blockchain project seeking to offer consumers ownership and control over their DNA data, is preparing to launch an app on EOS-based blockchain platform Telos to assist people in accessing anonymous coronavirus testing.

According to a recent announcement from the Telos Foundation, the app will also allow users to share that information with healthcare organizations.

The open-source app, Agerona, stores the test data on the Telos blockchain, with Genobank to introduce a token that enables information sharing. The app is expected to launch this month.

Privacy concerns could hinder health efforts

Some authorities have expressed concern that undocumented workers and individuals living in a country without permission could avoid treatment or diagnosis over worries that they would be arrested or deported. 

Angerona will facilitate purchases from partner test suppliers. Users can scan a unique barcode on each test to associate the results with an anonymous account on Telos controlled by the user.

Test kits can then be sent to a partner lab for analysis, with results anonymously uploaded to the Telos blockchain. If provided, the data will include the user's country and postcode to track the spread of the coronavirus.

For Geobank chief executive Daniel Uribe, the project principal mission is to provide people with a way to access coronavirus tests privately and securely.

“People have the right to know if they have the coronavirus without violating their privacy,” Uribe states.

Agerona project garners contributors in four countries

While Genobank and Telos initially partnered to develop the testing service for use in the United States, the project now has contributors in the United Kingdom, Israel and Iran — with hopes to expand into more jurisdictions.

The project is slated to develop a "mobile app for users, a processing interface for laboratories, a privacy-ensuring blockchain architecture, and sourcing and logistics solutions for low-cost COVID-19 tests and processing.”

Agerona plans to soon launch an experimental feature in which artificial intelligence-based diagnostic tools are used to analyze sound clips of people coughing.

Coronavirus pandemic showcases data-sharing features of DLT

Distributed ledger technologies (DLT) has seen many applications in the arena of data sharing and aggregation amid the global coronavirus relief efforts.

On March 27, blockchain platform Algorand launched its ‘IReportCovid’ survey app. The platform encourages respondents both healthy and sick to take the test repeatedly as their symptoms change to track the spread and symptomatic tendencies of the virus. 

Each individual must respond from a single IP address. Algorand soon plans to release data analysis tools to allow public examination of the aggregated data.

The Chinese central government has also used blockchain to track and aggregate medical data.

Poloniex Enters Controversial IEO Space With Tron-Only Platform

Poloniex has announced it will launch a Tron-powered initial exchange offering platform called LaunchBase.

Poloniex revealed its forthcoming Tron (TRX)-powered initial exchange offering (IEO) platform on April 5.

Projects seeking to conduct their offerings on Poloniex’s LaunchBase platform face the stipulation of issuing tokens in exchange for TRX, and will be considered on a “first-come, first-serve” basis.

Poloniex announces Tron-powered IEO platform

Poloniex asserts that LaunchBase is intended “to help quality blockchain projects grow and further develop their ecosystem,” stating that it will “offer professional advice and guidance” to assist partner projects.

In addition to agreeing to raise funds in TRX, partner projects will be subject to “eligibility and screening requirements.” Entities located in “certain jurisdictions” may not be eligible due to regulatory considerations.

Poloniex states that more details regarding LaunchBase will be disclosed in the coming days.

Just to conduct first offering through LaunchBase

The first project slated to conduct an IEO with Poloniex is a Tron-based stablecoin lending platform called Just (JST).

Just is a decentralized lending platform where users can stake TRX to generate the USDJ stablecoin — which can be used to pay for interest, maintenance, and other activities. 

On Twitter, Tron founder, Justin Sun, described Just as building a decentralized finance (DeFi) lending and governance protocol.

Sun was among a consortium of Asian investors who purchased Poloniex in October 2019. Poloniex is the 15th-largest crypto exchange by volume.

IEOs face criticism over token allocations

IEO’s have emerged as an alternative to initial coin offerings (ICOs) where the issuing exchange handles considerations including regulation, marketing, and market making in exchange for a significant share of a token’s distribution.

Many projects launched through Binance’s Launchpad platform have been criticized for their token distribution allocations and centralization.

Only 19% of Matic Network's (MATIC) total supply was allocated for distribution through its IEO on Launchpad. 11 months after its IEO, the top 100 MATIC wallets hold 98.62% of supply.

Harmony (ONE) launched on the platform the following month — issuing just 12.5% of its total sale to the public. Today, 99.47% of Harmony’s supply is held in ust two wallets.

In July 2019, Wink (WIN) went on to issue just 5% of its supply via Launchpad IEO.

Waves Lets Users Bet on Spread of COVID-19 For Charity

Waves Exchange hosts a tokenized parimutuel betting pool allowing users to speculate on the weekly number of confirmed COVID-19 cases.

Waves has launched a macabre campaign to purportedly raise money for COVID-19 relief. The platform has created a tokenized parimutuel betting pool where users can speculate on whether the global number of confirmed coronavirus cases has risen or fallen within a given week.

On April 3, Waves announced the ‘charity campaign,’ ostensibly in support of “organizations and funds in need of financial aid in fighting the global COVID-19 pandemic.”

Waves launches tokenized COVID-19 prediction market

Waves.Exchange users can now purchase ‘COVID-DWN’ or ‘COVID-UP’ tokens to speculate on whether the number of globally confirmed coronavirus cases increases or decreases within a seven day period.

Tokens are purchased in exchange for the stablecoin, Neutrino Dollar (USDN). All USDN used to purchase the tokens are then locked in escrow before ultimately being distributed to holders of the winning token at the end of each week.

The charitable component to the parimutuel pool is that “winners will be granted valuable prizes or can share their winnings for charity purposes,” and “all additional proceeds of the campaign will be donated to non-profit organizations.”

Data on the number of confirmed COVID-19 cases will be provided through oracles from the Data Repository by Johns Hopkins CSSE — which receives from the World Health Organization (WHO) in real-time.

Crypto developers leverage coronavirus as a marketing tool

While the crypto community has quickly created a plethora of engaging and meaningful initiatives in response to the coronavirus pandemic, a handful of actors have sought to invoke COVID-19 for marketing purposes.

On March 23, HashCash Consultants announced its upcoming ‘Corona Fund Index Cryptocurrency’ — a token backed by nothing which purports to mirror the performance of an inverse S&P 500 exchange-traded fund (ETF).

During February, developers from 4Chan launched ‘CoronaCoin’ — an ERC-20 token with a supply corresponding to the world’s population that will undergo a burn every 48 hours according to the number of COVID-19 fatalities.

Stellar to Match XLM Donations to Six Non-Profits During April

The Stellar Development Foundation will match public donations up to a maximum of 1.9 million XLM.

The Stellar Development Foundation is matching donations in Lumens (XLM) made to six non-profits during April, including the Tor Project — the team behind ‘The Onion Router’ anonymizing browser.

Donations will be matched up to a total of 1.9 million XLM (roughly $79,300), with the foundation launching the initiative by donating 100,000 XLM ($4,200) to each of the charities 

Stellar to match donations to Tor Project

On April 4, the Tor Project announced that the Stellar Development Foundation had pledged to match all XLM donations on a 1:1 basis this month.

Sarah Stevenson, fundraising director for Tor Project, tweeted that 20% of its individual donations come in the form of cryptocurrencies.

While Tor has accepted Bitcoin donations since 2013, the platform did not support alternative cryptocurrencies until March 2019. 

Since then, the Tor Project has also accepted the contribution of eight altcoins including Bitcoin Cash (BCH), Dash (DASH), Ethereum (ETH), Litecoin (LTC), Monero (XMR), Stellar Lumens (XLM), Augur (REP) and Zcash (ZEC).

XLM donations matched for six non-profits

In addition to Tor, the Stellar Development will match donations to Unicef France, Freedom of the Press, Heifer International — an entity working to fight hunger by supporting small-scale agricultural producers, and Watsi — a group focused on building technology to streamline healthcare financing, and Women Who Code — an organization devoted to encouraging women to engage with the technology sector.

“There is no better time than now to dig deep and magnify the Stellar community’s impact on these nonprofits,” Stellar urges, adding: “They leaned out for us to use our new technology and now it's time for us to lean in for them.”

Crypto firms match coronavirus donations

A number of charitable initiatives targeting the coronavirus pandemic have seen crypto firms match public donations in recent weeks.

At the end of March, Binance launched the #CryptoAgainstCOVID campaign to purchase and distribute medical supplies to coronavirus hotspots with an initial donation of $1 million and pledge to match public contributions up to a further $1 million.

On March 14, Ethereum-based developer crowdfunding platform, Gitcoin, pledged to match donations toward projects comprising public health initiatives in its current round of grant funding.

Darknet Market to Permanently Ban Vendors Preying on COVID-19 Fears

Monopoly Market has announced it will ban vendors who use the COVID-19 pandemic as a marketing tool.

Dark web marketplace, Monopoly Market, has taken a stand against scammers claiming to sell cures and treatments for COVID-19 on its platform.

On other darknet platforms, listings are rife with coronavirus keywords — with vendors selling everything from narcotic cocktails marketed as ‘coronavirus vaccines,’ to coronavirus-infected blood and saliva.

Monopoly Market to ban vendors using coronavirus as ‘marketing tool’

On April 2, dark web journalist, Eileen Ormsby, tweeted a screenshot posted by Monopoly Market’s operator that threatened permanent bans against vendors “caught flogging goods as a ‘cure’ to Coronavirus.”

“We have class here,” the post states.“You do not, under any circumstances use COVID-19 as a marketing tool. No Magical Cures, no silly fucking mask selling, toilet paper selling. None of that bullshit.” Monopoly Market also warns buyers:

“You are about to ingest drugs from a stranger on the internet — under no circumstances should you trust any vendor that is using COVID-10 as a marketing tool to peddle tangle/already questionable goods.”

Darknet markets rife with coronavirus listings

While Monopoly seeks to stamp out listings targeting coronavirus, vendors on other platforms are competing to capitalize on the public’s fears.

In addition to fake coronavirus antidotes and vaccines priced for hundreds of dollars, packs of surgical and N95 masks are being sold worldwide for an exorbitant premium. 

President Donald Trump’s recent statements concerning the potential for the drugs chloroquine and hydroxychloroquine have resulted in a similar emergence of listings for the anti-malarial drugs — despite experts warning that there is an absence of peer-reviewed evidence demonstrating their effectiveness in treating or preventing COVID-19.

A report published by The Independent shows listings for boxes of chloroquine priced at $200 each.

Some dark web entities push back against exploiting COVID-19

On March 19, cyber threat research company Digital Shadows published a report examining the reactions from the dark web community to the coronavirus pandemic.

The report concluded that while many cybercriminals have sought to “capitalize on fear and uncertainty surrounding the COVID-19 pandemic,” the firm also “observed some atypical discussions from users,” — including “discouraging other users from profiting off the pandemic,” “expressing solidarity with countries affected,” and “providing health and safety information.”

On March 18, cybersecurity publication, BleepingComputer, reported that only two of seven ransomware operators contacted by the outlet had stated that they would not target hospitals during the coronavirus pandemic. 

This past week, Cointelegraph reported that IT professionals from 65 countries had banded together to fight ransomware targeting hospitals.

Both Crypto Derivatives and Spot Markets Post Record Volume in March

Crypto exchanges saw record trade in March, with the global market crash driving all-time highs for both spot and derivatives trading.

CryptoCompare has published its monthly report analyzing the trade activity on crypto exchanges.

The record-breaking crash of March 12 and 13 drove new all-time volume highs in both the spot and derivatives markets.

March 13 sets record for daily spot trades

The report states that March 13 produced the single greatest volume in the history of crypto assets — with all exchanges and markets producing $75.9 billion in trade activity over 24 hours.

$54.3 billion of 71.5% of trades came from ‘Lower Tier’ exchanges, while ‘Top Tier’ exchanges generated $21.6 billion in volume.

Despite Binance and OKEx representing the largest share of volume throughout the crash generally, the majority of trades throughout the first 60 minutes of the crash occurred on Bitfinex, followed by Coinbase, OKEx, and Bitstamp.

Monthly crypto derivatives volumes tag $600 billion

Crypto derivatives produced a new all-time high of $600 billion in monthly trade during March — a monthly gain of 5%.

The combined volumes of OKEx, BitMEX, Huobi, and Binance’s derivatives markets totaled $514 billion or 86% of the entire market.

The report notes significant growth from newer entrants derivatives platforms, with Binance and FTX growing from 14% of total trade in January to 22% last month.

Stablecoin volume see large gains amid crash

The record crash unsurprisingly drove record demand for stablecoins — fulfilling their original promise of providing a semi-orderly means through which traders can exit crypto without causing bank runs on crypto exchanges during periods of wild volatility.

Monthly Bitcoin (BTC) conversions into Tether (USDT) tripled during March, while Bitcoin trades for USD Coin (USDC) rose by 71%.

Trade between BTC and Paxos Standard Token (PAX) grew by a whopping 1,550%. Bitcoin trade volume for USDC and PAX now exceeds that of Euro and Korean won pairings respectively.

Bitcoin trade into USD and JPY grew by 170%, and 130% respectively

While exchanges specializing in both spot and derivatives for crypto assets saw record trade during March, institutional trade fell by almost half.

Chicago Mercantile Exchange (CME)’s futures saw a 44% drop in monthly volume from $13.1 billion in February to $7.36 billion in March.

Ripple Funds Blockchain’s Disruption of the Legal Industry

Cointelegraph spoke to Ripple’s University Blockchain Research Initiative to find out about Australian law school’s new blockchain course.

A new blockchain course offered by the Australian National University (ANU)’s law school commenced this year with support from Ripple’s University Blockchain Research Initiative (UBRI).

Cointelegraph spoke to Lauren Weymouth, the senior manager of the UBRI’s University Partnerships Program, and Scott Chamberlain, the academic running the curriculum, to find out more about how blockchain can disrupt the legal industry and the partnership between the ANU and UBRI.

Chamberlain will be working alongside the developer behind the Toast XRPL Wallet, Richard Holland, to develop and deliver the course.

ANU law school launches blockchain course

Chamberlain states that the first unit will explore legal issues and theory surrounding distributed ledger technologies (DLT) and smart contracts. “The real fun begins in semester two,” Chamberlain states, continuing: 

“Students take what they have learned and develop a whitepaper outlining how they would use the ‘Lex Automagica’ technologies to deliver a ‘Justice Dividend’ — a significant and sustainable improvement in the ability for a large number of people to know and enforce their legal rights and obligations in an affordable, timely, and consistent way.”

‘Lex Automagica’ is the name that Chamberlain gave to “the concept of using a combination of technologies to automate law and regulation — to remove the middlemen as far as possible.” The project is run out of the ANU’s law school in Canberra.

UBRI provides $1 million in funding to ANU and Lex Automagica

In 2018, Chamberlain reached out to UBRI to explore implementing Lex Automagica using Codius — Ripple’s platform for hosting smart contracts and programs. Lex Automagica would become part of UBRI’s initial intake. In February 2019, UBRI pledged $1 million toward research and developing courses examining the implications and applications of blockchain technologies for law.

Laren Weymouth of UBRI states that the program “first connected with Scott in May 2018, when he reached out to Ripple's business development department to start discussions about a leading Australian university that was developing legal apps for the XRP Ledger using Codius. His timing perfectly coincided with Ripple launching UBRI, and we officially welcomed Australian National University (ANU) into the program shortly after.” 

“ANU is among the few partners researching the application of blockchain in law, so we look forward to watching their progress unfold to help address the pain points that exist in legal processes today,” she adds.”

Ripple believes DLT can fix ‘broken processes’ in legal system

Weymouth states that UBRI believes “blockchain has the potential to help simplify the broken processes that exist in the legal system today.” 

“For example, imagine a world in which legal disputes could be resolved without having to engage the courts? This could be achieved through the advancement of smart contracts, which ANU and other law schools we partner with - such as UPenn Law, Rutgers Law, and Berkeley Law - are looking into, alongside policy and regulation.“

UBRI to expand global footprint

Weymouth states that since launching in 2018, the UBRI has come to include more than 35 university partners and distribute more than $50 million in funding. 

She describes the initiative’s funding as “strictly philanthropic and unrestricted,” emphasizing that “there are no strings attached” and university partners “are free to allocate the funds however they see fit.” 

“Our only requirement is they pursue research and innovation in blockchain, which can be applied across a variety of subject matter areas including law,” she adds.

Weymouth states that UBRI is looking to expand its global footprint, noting partnerships inked in 2019 with Kyoto University and the University of Tokyo in Japan, as well as the National University of Singapore. 

Looking forward, the initiative hopes to engage institutions in Thailand, Peru, Abu Dhabi, South Africa, and Canada.

Former Google Engineer Claims to Hack Zip File Containing $300,000 in BTC

A former Google software engineer claims to have cracked a zip file containing $300,000 after being contacted on LinkedIn.

Michael Stay, a former software engineer with Google and the current CTO of smart contract and decentralized application (Dapp) firm, Pyrofex, claims to have successfully hacked a zip file containing the private keys to over $300,000 in Bitcoin (BTC).

In a blog post, Stay says that his journey began when he received a message from “a Russian guy” on LinkedIn about six months ago.

Software engineer contacted on LinkedIn regarding paper from 2000

The Russian had read a paper authored by Stay in 2000 describing a technique that he had used to successfully attack zip files.

“He had read that paper I’d written 19 years ago and wanted to know if the attack could work on a file with only two files, Stay writes, adding: “A quick analysis said not without an enormous amount of processing power and a lot of money.”

“Because I only had two files to work with, a lot more false positives would advance at each stage. There would end up being 273 possible keys to test, nearly 10 sextillion. I estimated it would take a large GPU farm a year to break, with a cost on the order of $100K. He astounded me by saying he could spend that much to recover the key.”

Zip file contained keys to $300,000 in BTC

The files contained the private keys to what had been roughly $12,500 in BTC when the Russian purchased the coins during 2016. “Now they were worth upwards of $300K and he couldn’t remember the password,” says Stay.

“Luckily, he still had the original laptop and knew exactly when the encryption took place. Because InfoZip seeds its entropy using the timestamp, that promised to reduce the work enormously—”only” 10 quintillion—and made it quite feasible, a matter of a couple of months on a medium GPU farm.” 

We made a contract and I got to work,” he adds.

After several months of testing, including the discovery of a bug in his GPU farm, Stay claims to have cracked the file and returned the private key to the Russian.

Sophisticated Mining Botnet Identified After 2 Years

Cointelegraph spoke to Guardicore’s Ophir Harpaz regarding the recently identified crypto mining botnet Vollgar.

Cybersecurity firm, Guardicore Labs, revealed the identification of a malicious crypto-mining botnet that has been operating for nearly two years on April 1.

The threat actor, dubbed ‘Vollgar’ based on its mining of the little-known altcoin, Vollar (VSD), targets Windows machines running MS-SQL servers — of which Guardicore estimates there are just 500,000 in existence worldwide.

However, despite their scarcity, MS-SQL servers offer sizable processing power in addition to typically storing valuable information such as usernames, passwords, and credit card details.

Sophisticated crypto-mining malware network identified

Once a server is infected, Vollgar “diligently and thoroughly kills other threat actors’ processes,” before deploying multiple backdoors, remote access tools (RATs), and crypto miners.

60% were only infected by Vollgar for a short duration, while roughly 20% remained infected for up to several weeks. 10% of victims were found to have been reinfected by the attack. Vollgar attacks have originated from more than 120 IP addresses, most of which are located in China. Guardicore expects most of the addresses corresponding to compromised machines that are being used to infect new victims.

Guidicore lays part of the blame with corrupt hosting companies who turn a blind eye to threat actors inhabiting their servers, stating:

“Unfortunately, oblivious or negligent registrars and hosting companies are part of the problem, as they allow attackers to use IP addresses and domain names to host whole infrastructures. If these providers continue to look the other way, mass-scale attacks will continue to prosper and operate under the radar for long periods of time.”

Vollgar mines or two crypto assets

Guardicore cybersecurity researcher, Ophir Harpaz, told Cointelegraph that Vollgar has numerous qualities differentiating it from most cryptojacking attacks.

“First, it mines more than one cryptocurrency - Monero and the alt-coin VSD (Vollar). Additionally, Vollgar uses a private pool to orchestrate the entire mining botnet. This is something only an attacker with a very large botnet would consider doing.”

Harpaz also notes that unlike most mining malware, Vollgar seeks to establish multiple sources of potential revenue by deploying multiple RATs on top of the malicious crypto miners. “Such access can be easily translated into money on the dark web,” he adds.

Vollgar operates for nearly two years

While the researcher did not specify when Guardicore first identified Vollgar, he states that an increase in the botnet’s activity in December 2019 led the firm to examine the malware more closely.

“An in-depth investigation of this botnet revealed that the first recorded attack dated back to May 2018, which sums up to nearly two years of activity,” said Harpaz.

Cybersecurity best practices

To prevent infection from Vollgar and other crypto mining attacks, Harpaz urges organizations to search for blind spots in their systems.

“I would recommend starting with collecting netflow data and getting a full view into what parts of the data center are exposed to the internet. You cannot enter a war without intelligence; mapping all incoming traffic to your data center is the intelligence you need to fight the war against cryptominers.” 

“Next, defenders should verify that all accessible machines are running with up-to-date operating systems and strong credentials,” he adds.

Opportunistic scammers leverage COVID-19

In recent weeks, cybersecurity researchers have sounded the alarm regarding a rapid proliferation in scams seeking to leverage coronavirus fears.

Last week, U.K. county regulators warned that scammers were impersonating the Center for Disease Control and Prevention and the World Health Organization to redirect victims to malicious links or to fraudulently receive donations as Bitcoin (BTC).

At the start of March, a screen lock attack circulating under the guise of installing a thermal map tracking the spread of coronavirus called ‘CovidLock’ was identified.

Govt. Pauses SEC Suit Against $30 Mln ICO Amid Parallel Investigation Concerns

An SEC lawsuit against the alleged operators of a fraudulent ICO has been halted amid parallel investigation concerns.

Prosecutors have paused a United States Securities and Exchange Commission (SEC) lawsuit against the alleged operators of a $30 million fraudulent ICO amid concerns that proceedings may impact the integrity of a parallel investigation into the defendants.

The United States attorney’s office for New Jersey intervened in the case on April 2.

SEC suit paused amid integrity concerns over the parallel investigation

The SEC action against defendants Boaz Manor, Edith Pardo, and the associated companies CG Blockchain Inc and BCT Inc has been halted to maintain the integrity of parallel criminal investigations into the pair’s scheme.

The prosecutors argued that the stay is needed to prevent the accused from obtaining information under the broad rules of civil discovery that would otherwise be unattainable under the narrow scope of criminal discovery.

“A civil litigant should not be permitted to proceed simultaneously with an overlapping criminal matter, because 'the similarity of the issues [leaves] open the possibility that [the defendant] might improperly exploit civil discovery for the advancement of his criminal case,’" the government stated.

The SEC charged Boaz Manor, his business associate, and two companies, CG Blockchain Inc. and BCT Inc. SEZC, with violating federal anti fraud and securities registration provisions of the federal securities laws during January.

While Pardo was arrested and later released, Manor remains at large. However, both individuals’ respective legal representation have consented to the staying of the complaint. The complaint was filed on Jan. 12.

From hedge fund embezzlement to ICO fraud

From 2014 until 2018, the pair allegedly made a series of misrepresentations regarding CG Blockchain’s operations — including fraudulently claiming 20 hedge funds were paying leasing fees to the firm for a non-existent product called ComplianceGuard. 

The pair are also believed to have lied about Manor’s criminal background — with Manor having served a four-year prison sentence for siphoning $106 million from a now-defunct Canadian hedge fund that he had co-founded.

In August 2017, CG Blockchain launched an initial coin offering (ICO) to purportedly fund a product that the same 20 hedge funds had supposedly agreed to use. The ICO ended eight months later after absorbing roughly $30 million in crypto and fiat.

7 Crypto Firms Targeted by 11 Lawsuits in New York

Seven major crypto exchanges and issuers are facing 11 new class-action lawsuits that were filed in a New York federal court on Friday.

Seven crypto companies have been targeted by 11 lawsuits that were filed in a New York federal court on April 3.

The suits were filed by Roche Freedman — the same law firm representing the estate of the late Dave Kleiman in the ongoing dispute with self-proclaimed Satoshi Nakamoto, Craig Wright.

Eleven lawsuits target seven crypto companies

The eleven putative class action suits name dozens of parties including cryptocurrency exchanges Binance, KuCoin, BiBox, and BitMEX and parent company HDR Global Trading Limited, and alleged crypto issuers Block.one, Quantstamp, KayDex, Civic, BProtocol, Status, and the Tron Foundation. 

Many of the company’s principals are named, including several leading figures in the crypto sector such as Changpeng Zhao, Dan Larimer, Vinny Lingham, and Brendan Blumer.

Crypto firms accused of wholesale securities violations

The lawsuit alleges that numerous exchanges have sold unlicensed securities without broker-dealer licensing and engaged in market manipulation. 

The plaintiffs also argue that many token issuers selectively withheld information from investors to ensure that it would not be apparent the tokens comprised securities until well after the token sale.

Bibox Token (BIX), Eos (EOS), Bancor (BNT), Status (SNT), Quantstamp (QSP), Kyber Network (KNC), Tron (TRX), Funfair (FUN), Icon (ICX), OmiseGO (OMG), ETHLend (LEND), Aelf (ELF), TomoChain (TOMO) and Civic (CVC) are among the crypto assets that the plaintiffs argue comprise securities.

Proceedings expected to move slowly 

Several non-US defendants will need to be served via the Hague Convention due to their location outside of the United States. Disruptions to the judicial system resulting from the COVID-19 panic will also have an impact.

The case is likely to invoke familiar discussions surrounding the jurisdiction of the court in ruling against parties based outside of the U.S., discourse concerning the efforts of exchanges and token issuers to exclude U.S. residents from their platforms and offerings, and whether the crypto assets in question comprise securities.

BIS Calls for Central Bank Digital Currencies Amid Coronavirus Pandemic

Amid growing concerns regarding the transmission of COVID-19, the Bank of International Settlements is pushing for digital currencies.

The Bank of International Settlements (BIS) has issued a report arguing in favor of central bank digital currencies (CBDCs) and digital payments amid the COVID-19 pandemic.

The bulletin published by the BIS, a 600-member international financial institution representing the central banks of 60 countries, urges central banks to consider developing CBDCs in light of concerns regarding the spread of coronavirus through existing payment methods.

BIS warns of COVID-19 transmission via credit card terminals

The report notes a significant negative change in consumer attitudes regarding the use of cash in response to the World Health Organization’s (WHO) warning regarding the spread of COVID-19 via banknotes.

While the BIS echoes WHO’s concerns, the report asserts that the risk of coronavirus transmission through contact with credit card terminals and PIN pads is even greater:

“Scientific evidence suggests that the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads.”

Demand for cash falls in the U.K.

The report notes that “in past crises, demand for cash has often increased, as consumers have sought a stable store of value and medium exchange.”

While the BIS identifies a recent increase in the circulation of cash in the U.S., the report notes that current data does “not yet paint a uniform picture” — with ATM withdrawals falling in the United Kingdom.

In the medium term, the report predicts that the outbreak could “lead to both higher precautionary holdings of cash by consumers and a structural increase in the use of mobile, card and online payments.”   

CBDCs could exclude unbanked and elderly

BIS anticipates that the current climate could lead to central bank operated payment infrastructures such as CBDCs quickly gaining prominence.

However, the report emphasizes the need for CBDCs to be designed to withstand a wide variety of shocks — “including pandemics and cyber attacks.”

Despite advocating for a central bank digital currency, the BIS warns that a move away from cash as a generally accepted means of payment “could open a ‘payments divide’ between those with access to digital payment and those without” — likely having a “severe impact on unbanked and older consumers.”

SEC Alleges Minority Communities Targeted By Bottled Water Scam

A former Christian pastor targeted his African-American parishioners with fake investments in ‘the first black-owned alkaline water company.'

The United States Securities and Exchange Commission has charged a former pastor and his wife for stealing $500,000 through a trio of fraudulent businesses, including a cryptocurrency offering purportedly backed by a bottled water business.

According to a complaint filed on April 2, the pair also sold fake shares in their struggling water business, Teshuater, in addition to conjuring up a non-existent Bitcoin (BTC) mining outfit to dupe investors in Houston, Texas.

Former pastor offers 1,400% returns overnight

The complaint alleges that Larry and Shuwana Leonard “targeted investors in the African-American community by promising oversized returns on various investments related to Teshua”, a business that bottled and distributed alkaline water.”

The SEC asserts that the former Christian pastor “capitalized on his background as ‘a man of the cloth’ to gain investors’ trust,” and began defrauding investors during Spring 2017.

In the 45-year-old pair’s first scheme, “worthless ‘stock certificates’ that did not actually convey ownership interest in Teshuater” were issued in exchange for roughly $291,000. Investors were promised “short-term investment returns of up to 3,000 percent” over just a few days.

The SEC states that Teshuater “earned little-to-no profit since its inception,” and was touted to investors as “the first black-owned alkaline water company.”

Leonard launches TeshuaCoin offering

A further $170,400 was accumulated from the sale of TeshuaCoin, a cryptocurrency that the couple claimed was backed by the sales of the Teshuater company. The Leonards had targeted a $20 million raise through the cryptocurrency.

Larry claimed to divert investors’ funds into a “high-yield, short-term Bitcoin-mining program” that did not exist — generating a further $25,500.

The crypto scams were promoted through social media, with the pair conducting Facebook Live webcasts purportedly on the topic of “wealth generation for the African-American community.”

More than $500,000 stolen from parishioners

By December 2018, the scheme raised $500,000 from over 500 investors total, issuing “materially false and misleading statements” regarding how investors’ funds would be used.

The stolen funds were commingled with Teshuater and other businesses operated by the Leonards, before being spent on a combination of personal expenses and other business activities.

None of the investment contracts issued by the pair or the Teshua company were registered with the SEC. The pair are not licensed to issue securities.

The SEC is seeking a permanent injunction, the disgorgement of all ill-gotten gains plus prejudgement interest, and civil penalties against the pastor and his wife.

Voyager Onboards 40,000 Circle Invest Customers

Voyager has completed its acquisition of Circle Invest after onboarding 40,000 customers.

Crypto trade service firm, Voyager Digital Canada, has completed its acquisition of Circle’s retail-facing investment app.

On April 3, Voyager announced it had onboarded Circle Invest’s more than 40,000 accounts onto its platform — excluding residents of New York, North Carolina, and Alaska. Voyager now reports a user base of more than 200,000 in total.

Circle Invest was sold in exchange for a 4% stake in Voyager in February.

Voyager onboards Circle Invest clients

Voyager offers commission-free trading on 34 crypto assets and USD.

The firm will continue to offer Circle Invest’s collections feature — allowing customers to purchase baskets of assets grouped by common attributes and weighted by market cap.

Users can also earn interest between 2% and 6% interest on Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Dash (DASH), Bitcoin Cash (BCH), the firm’s native Voyager Token (VGX), and stablecoins USD Coin (USDC), Tether (USDT), and True USD (TUSD).

Voyager is licensed as a Money Service Business with the U.S. Financial Crimes Enforcement Network (FinCEN) and is publicly traded on the Canadian Securities Exchange.

FinCEN mandates that Voyager must hold Circle Invest’s Know-Your-Customer (KYC) data for five years after account closure.

Circle sheds subsidiary amid focus on stablecoin

Voyager’s purchase of Circle Invest was announced in February.

The news comprised the third major asset Circle has sold in 12 months — following the firm’s sale of crypto exchange, Poloniex, to investors in October 2018, and the sale of its over-the-counter (OTC) trading desk, Circle Trade, to Kraken OTC in December 2019.

Speaking to Cointelegraph, a Circle spokesperson indicated that the sales are part of Circle’s push to focus more on its stablecoin, USDC. They stated: “It’s clear that there’s more interest than ever before in stablecoins and central bank digital currencies, in part because significant global technology companies like Facebook and major economies like China have advanced plans for creating digital currencies.”

The sales were accompanied by layoffs. Circle removed 30 positions, which accounted for 10% of its workforce, in May 2019, before culling a further 10 positions in December 2019.

CFTC Requests Default After Failing to Find $147M Bitcoin Ponzi Operator

The CFTC has pushed for a default ruling after failing to locate the alleged director of a $147 million crypto Ponzi scheme.

The United States Commodity Futures Trading Commission (CFTC) has requested that the alleged founder of the crypto $147 million Ponzi scheme Control-Finance be declared a default.

On April 3, the CFTC filed for a ruling of default after Control-Finance’s alleged founder and director, Benjamin Reynolds, did not respond to the regulator’s complaint.

CFTC unable to locate Reynolds after 10 months

The CFTC’s complaint was filed during June 2019 — alleging that Reynolds misappropriated at least 22,858 BTC from more than 1,000 customers from May 1, 2017.

In January 2020, the SEC requested additional time to locate Reynolds amid an ongoing investigation in South Korea.

During July 2019 the regulator had attempted to serve Reynolds at two addresses associated with the scheme’s director, later learning from Control-Finance investors that the accused may be situated in Korea. 

The CFTC simultaneously filed a notice of voluntary dismissal without prejudice against Control-Finance.

Ponzi scheme does away with $147 million

The CFTC’s complaint alleges that Control-Finance claimed to divert customer funds to the trading operations of its expert employees while diverting new depositors’ funds to the scheme’s previous investors to create the illusion of profits and build hype. 

The firm constructed a pyramid scheme around a purported affiliate program, which was promoted on Twitter, Facebook, and YouTube. In September 2017, Control-Finance removed its website, ceased making affiliate payouts, and deleted advertising content from social media.

While claiming that customer funds would be returned during the following two months, the pair were the scheme was liquidating the 22,858 BTC in its possession for roughly $147 million.

Control-Finance sought to launder the funds through thousands of transactions, with the BTC ultimately arriving at wallets held with Canadian crypto exchange CoinPayments.

150-Year-Old Chinese Gas Company Ramps Up Blockchain Adoption

A 150-year-old Chinese utility provider will ramp up blockchain adoption in partnership with VeChain and ENN Energy Holdings.

Chinese energy company, Shanghai Gas, announced an expansion of its blockchain efforts following a successful trial partnership with supply chain management blockchain firm, VeChain (VET), on March 31.

Shanghai Gas, founded in 1865, is owned by utility services company, Shenergy Group — which claims to occupy more than 90% of Shanghai’s gas market. The firm has an annual supply of over 8 billion cubic meters.

Shanghai Gas expands blockchain adoption

Shanghai Gas’ trial used distributed ledger technology, or DLT, provided by VeChain to comprehensively monitor its supply chain and identify opportunities for efficiency savings and reduced operational costs.

The expanded partnership will see Shanghai Gas build “a trust-free ‘Energy-as-a-Service’ ecosystem” in partnership with VeChain and electricity provider ENN Energy Holdings.

ENN generates electricity for 17 provinces, more than 16 million residential dwellings, and nearly 100,000 industrial customers. The firm has a market cap of $85 billion.

Pilot concludes after 16 months

The three companies have participated in the Blockchain-Enabled LNG (Liquified Natural Gas) Solution pilot together since November 2018.

The pilot was found to have “significantly eliminate[d] information barriers in the supply chain, contribute[d] to a transparent product process, and provide[d] a reliable database for LNG risk management.”

Blockchain in energy to see $35B in investment by 2025

DLT is increasingly seeing adoption from the energy industry, with a recent report estimating that applications for blockchain technology within the energy sector will drive year-over-year investment growth at a rate of 82%.

If the forecast is accurate, blockchain would represent nearly 2% of the entire $1.85 trillion industry by 2025.

Amid Widespread Privacy Coin Delistings, Bitstamp Considers Zcash Support

Bitstamp may announce first new listing in nearly three years, with the exchange contemplating support for seven new crypto assets.

Bitstamp, one of the longest-running active cryptocurrency exchanges, is considering launching a batch of new crypto asset listings.

Curiously, Bitstamp is contemplating support for Zcash (ZEC), despite an increasing number of exchanges seeking to distance themselves from privacy coins due to associated regulatory risks.

Bitfinex considers first new listings in 3 years

On March 31, Bitstamp announced it is “actively exploring” support for seven crypto assets, including two stablecoins and one privacy coin.

The prospective listings comprise Basic Attention Token (BAT), Ethereum Classic (ETC), Stellar Lumens (XLM), Paxos Standard (PAX), 0x (ZRX), USD Coin (USDC), and Zcash.

Exchanges abandon privacy coins

In 2019, updated money laundering guidelines from the Financial Action Task Force, or FATF, comprised the catalyst for a spate of privacy coin delistings.

During August 2019, leading U.S.-based exchange Coinbase announced that it would no longer offer support for Zcash custody and pairing for customers based in the U.K.

In September, South Korean exchanges, OKEx and Upbit, announced they would cease support for several privacy coins including ZEC, Monero (XMR), and Dash (DASH); crypto assets described as “the three anonymous siblings” by Japanese regulators.

BitBay also dropped XMR in November 2019.

Users may see signs of prospective listings on Bitstamp

The exchange notes that consideration of the prospective listings will involve “strict technical, safety and compliance reviews, as well as regulatory approval in certain jurisdictions.”

Bitstamp adds that users may notice “signs of engineering work” related to the crypto assets under consideration, adding: “We cannot guarantee that this will result in any new listings and it does not disqualify any other assets from being monitored for possible support at Bitstamp.”

Should Bitstamp support a new crypto asset, it will be the exchange’s first new listing since Bitcoin Cash in 2017, and the first listing introduced by NXMH — the Belgium-based investment company who acquired Bitstamp in October 2018.

Huobi Charity to Distribute $50,000 in Native Tokens in Indonesia

Huobi is launching a charity initiative to support Indonesia’s fight against coronavirus.

Huobi’s charity arm has announced an initiative to distribute aid to assist Indonesia’s fight against COVID-19.

Huobi Charity will distribute aid in partnership with the Indonesia-China Association of Economic, Social and Cultural Cooperation (ICAESCC) to make monetary contributions, donate medical supplies, and leverage blockchain technology to assist healthcare organizations.

Huobi launches coronavirus charity initiative in Indonesia

To provide immediate relief, Huobi Charity will donate roughly $50,000 in Huobi Token (HT) to ICAESCC for the purchase of medical supplies for hospitals.

Ciara Sun, Huobi Group’s vice president of global business, emphasized that the coronavirus pandemic is impacting “everyone in every corner of the world, regardless of industry, socioeconomic status, or nationality.”

On March 31, Indonesia closed its borders to foreigners after a study released by the University of Indonesia warned that the country could see 240,000 deaths by the end of April if no action is taken. The study estimated that varying degrees of intervention could reduce the number of deaths to between 12,000 and 48,000.

“For the sake of the healthcare workers on the front lines and the millions of lives at risk, we need a concerted effort so we want to invite the broader blockchain and crypto communities to join us in our fight against COVID-19,” Sun added.

Huobi Indonesia builds online donation portal

Huobi’s Indonesian subsidiary has also developed an online portal for fiat and crypto donations to ICAESCC.

Huobi Indonesia is slated to work with ICAESCC to administrate and promote the platform, and distribute medical supplies. The portal is available in English, Chinese, and Indonesian.

Huobi Charity plans to launch a similar initiative in New York — which now has more than 83,000 confirmed COVID-19 cases.

Huobi doubles down on Indonesia

Indonesia is the fourth-most populous country in the world and boasts the largest economy in Southeast Asia.

Huobi Indonesia is one of just three national subsidiaries operated by Huobi Global, alongside exchanges targeting South Korea and Russian respectively.

Despite producing relatively low trade volume when compared to Korea and Russia, Huobi Charity’s initiative highlights the importance of the Indonesian market to the exchange.

Huobi Indonesia comprises the second-largest Indonesian exchange by volume — generating roughly $2.25 million in trade from 29 pairings over the past 24 hours.

Brazilian Regulators Create DLT Platform for Screening Politicians

Four Brazilian financial regulators are teaming up to aggregate data using blockchain technology to streamline the screening of politicians and corporations.

Four of Brazil’s financial regulatory institutions are collaborating to build a streamlined blockchain-based data-sharing platform to perform background checks on political representatives and corporations.

The platform, dubbed PIER, was developed by Brazil’s central bank Banco Central do Brasil (BCB). The platform saw initial participation from the BCB, the Brazilian private insurance superintendent, and the local securities regulator to inform its database. 

Brazil’s social security supervisor is set to soon participate in the program too. The Brazilian government is also contemplating incorporating data collected by the country’s judiciary, trade boards, and international financial bodies into the PIER system.

Brazilian regulators use DLT to streamline data

Daniel Bichuette, the deputy head of the BCB’s financial system organization department, describes the streamlining of inter-departmental data as “drastically reducing" the time to evaluate the financial background of an entity.

Institutions querying the PIER database are able to quickly access data "from punitive processes and restrictions from companies and administrators,” an entity’s “history of performance in the financial system” — including technical capacity and organization conduct, and “information on the participation of individuals and legal entities in the share capital and shareholding control.”

Adalberto Felinto da Cruz Júnior, the executive secretary of the central bank, described the partnership as having been a “particularly fruitful” endeavor that has paved the way for “important synergies” between the participating regulatory authorities.

Blockchain technologies reduce opportunities for corruption

Eduardo Weller, a software specialist with the BCB stated that using distributed ledger technology for PIER allows the use of “a decentralized, tested technology, whose native functionalities mean that there is no need to build the system from scratch.”

Weller emphasizes that digital signatures guarantee the “authenticity of messages exchanged"; the “integrity of data recorded,” and “eliminates a single point of failure [and] central entity that can defraud data.”

PIER has undergone roughly two years of development, having first been revealed by the central bank in June 2018.

Chinese Regulator Accuses Crypto Exchanges of Fraudulent Volumes

A Chinese financial regulator has warned domestic investors that off-shore cryptocurrency exchanges engage in manipulative practices.

The National Internet Finance Association of China (NIFA) warned investors that cryptocurrency exchanges located outside of the country are engaged in manipulative practices on April 2.

The People’s Bank of China (PBoC)-affiliated regulator cautioned investors that many off-shore exchanges wash trade to fake trade volume and engage in underhanded tactics to liquidate leverage traders.

NIFA cites an internal analysis of cryptocurrency markets that found more than 40 crypto assets produced trade volumes exceeding 100% of their total market capitalization, while a further 70 cryptocurrencies saw daily trade activity equal to more than 50% of their market cap.

The regulator states it has identified “massive trading volumes“ for numerous crypto assets despite many markets exhibiting a “relatively low price and small market values.”

NIFA accuses crypto exchanges both of tampering with volume data and operating bots to wash trade in a bid to create the illusion of “false prosperity.”

NIFA accuses exchanges of liquidating leverage traders

Further, NIFA accuses exchanges of intentionally shutting off their systems or staging outages to trap and liquidate leverage traders during times of peak volatility:

“After tricking investors into investing in crypto, some exchanges will manipulate the market through a range of trading techniques to take the investors’ assets.”

The regulator asserts that many of the exchanges fled off-shore after the PBoC’s crackdown on crypto exchanges in 2017. 

NIFA states that the exchanges evade authorities by frequently changing website domain names and server addresses, and by using a combination of online and offline transactions to obfuscate capital flows.

Binance takes cautious steps in China

Binance was one of the exchanges that left China in 2017. During November 2019, rumors that Binance may be seeking to open an office in China began to circulate

In March, Binance Academy launched a blockchain research institute in Shanghai — comprising the establishment of Binance’s first base of operations in China in over two years.

In January, Binance Charity committed to purchasing $1.4 million in medical supplies that would be donated to more than 300 hospitals and medical organizations in Chinese provinces at the epicenter of the COVID-19 pandemic — likely gaining goodwill with the central government.

As Hospital’s Crumble, Venezuela’s President Airdrops Petros to Doctors

As Venezuelan hospitals face widespread shortages, President Maduro is by airdropping Petro tokens to doctors.

Nicolas Maduro, a former bus driver and Venezuela’s sitting president, has announced a campaign to support his country’s medical staff amid the coronavirus pandemic by airdropping one Petro to each doctor.

The ‘Doctors of the Homeland’ initiative will see each Venezuelan doctor air-dropped one of the administration’s oil-backed Petro cryptocurrency tokens, as per an April 2 tweet published by a government official. 

Venezuela to issue Petro bonus to doctors

The tokens will be distributed using Venezuela’s ‘Patria System’ — a platform launched by the government to bypass the nation’s failing banking system and issue bonuses and subsidies using the cryptographic token.

Petro tokens are purportedly pegged to the price of one barrel of Venezuelan oil. Following a crash down to 18-year lows during March, the price of oil has bounced 20% in the past day to currently trade for roughly $27 per barrel.

Petro sees minimal adoption

While the Maduro administration claims that the Petro is worth roughly $60, popular trading platforms used by Venezuelans currently list the token for roughly between $20 and $26.

However, with Venezuelan monthly minimum wages equating to $3.61 plus $2.89 in food stamps, and doctors estimated to earn little more, one Petro could equate to several months of work. 

Venezuelan hospitals crumble

Maduro might have been better off handing the Petros directly to Venezuelan Hospitals, most of which are reportedly ill-equipped to cope with the coronavirus pandemic. An April 1 Vice report describing soap and disinfectant as “luxuries” at the Caracas University Hospital.

With the facility already experiencing shortages of protective equipment, many of its staff are expecting the hospital to quickly become overwhelmed as the number of confirmed COVID-19 cases grows.

“My fear is that we won’t have supplies next week when cases are expected to spike,” said the university’s head of infectious diseases, Maria Landaeta.

Crypto Friendly Laws Help Boerse Stuttgart’s App Top 100,000 Users

The crypto trading app of Germany’s second-largest stock exchange has reached 100,000 users in 14 months of operation.

The cryptocurrency trading app of Germany’s second-largest stock exchange, Boerse Stuttgart, exceeded 100,000 users on March 30 amid increasingly permissive regulations in the country.

The Bison app, which launched on Jan. 31st, 2019, has attracted a six-figure user base in just 14 months.

Bison users grow 40% during Q1 2020

Ulli Spankowski, the chief executive of Boerse Stuttgart Digital Ventures subsidiary and developer of the Bison app, Sowa Lab GmbH, notes that the milestone has been reached amid a 40% growth in users since the start of 2020. 

Boerse Stuttgart’s app supports Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP) trading. Bison plans to soon support Bitcoin Cash (BCH), and roll out a desktop application.

Bison is available to citizens domiciled in the European Economic Area and Switzerland. While most of the apps users are around 37 years old on average, Bison reports that they’ve had user activity from individuals aged from 18 to 91 years old.

New German regulations drive institutional interest

On Jan 1, 2020, Germany’s Federal Financial Supervisory Authority (BaFin) passed “new regulatory standards” to align with the European Union’s Fifth Anti Money Laundering Directive (5AMLD).

The new regulations mean businesses dealing with crypto assets are classified as financial services providers under Germany’s Banking Act, and require BaFin’s authorization. The new legislation also allows German banks to offer cryptocurrency products.

The strengthening of Germany’s crypto regulations has sparked the beginnings of a wave of institutional adoption, with 40 German banks filing applications seeking authorization to offer digital asset services by Feb. 7.

Philippine SEC Warns of International Ponzi Offering 300% Daily Returns

The Philippine SEC has warned of a fraudulent investment scam offering 9,000% returns through its ‘Bitcoin Revolution’ trading software.

The Philippines Securities and Exchange Commission (SEC) warned of a crypto Ponzi scheme targeting Filipino, Australian, and European investors on March 30.

The scheme, Bitcoin Revolution, comprises a classic Ponzi in which investors are offered exorbitant compounding daily returns on deposited funds.

Bitcoin Revolution claims to have software that produces trades with a success rate of between 88% and 95% — offering a path to seven-figure status over just 61 days. From an initial deposit of just $250, the scammer claims that investors can earn 300% per day or 9,000% per month.

Bitcoin Revolution brokers face 21 years in prison

The SEC warns that those who act as salesmen, brokers, dealers or agents of Bitcoin Revolution, including through online solicitation and recruitment, will face up to 21 years imprisonment and or up to $100,000 in fines alongside SEC sanctions.

The regulator asserts that Bitcoin Revolution is offering unregistered securities in the form of investment contracts to the public in blatant violation of Philippine securities laws. The scheme is not registered as a company with the SEC and does not have licensing from the Philippine central bank to operate with digital assets.

Ponzis use fake celebrity endorsements to advertise on social media

Like many ponzi schemes, Bitcoin Revolution is promoted on social media using fake celebrity endorsements and news stories.

At the start of March, a former employee blew the whistle on a Ukrainian Bitcoin investment scam with 200 employees. The scheme was operated by a firm called Milton Group, which occupied two floors of an office building in Kyiv. Once a victim had invested in the scheme, they would face an onslaught of phone calls pressuring them to make further deposits into the scam.

The whistleblower claimed that the scheme netted $70 million in 2019, scamming investors in Australia, New Zealand, and the United Kingdom. The company promoted themselves through fraudulent news stories on Facebook, which detailed how local celebrities had earned a fortune through crypto trading.

Ark’s 1 Million Token Grant Fund Drives Community Innovation

Interoperable blockchain project Ark is receiving proofs-of-concept from developers only one week after launching its one million ARK grant program.

Interoperable blockchain project Ark (ARK) designated one million ARK valued at roughly $150,000 toward its new development grants program on March 24.

While the grant program was launched one week ago, Ark’s Strategic Partnerships Manager, Ray Alvarez, told Cointelegraph that it has already received proofs-of-concept from developers.

The program exclusively funds “proposals involving technical deployments and usage of [the] ARK technology stack.”

The applications include standalone applications and plugins, including development contributing to Ark’s decentralized private messaging application, desktop wallet, and transaction plugins.

In addition to sparking development for specific applications, Alvarez states that the program is also intended to “foster a collaborative environment between developers and spark participation from developer communities worldwide.” 

Alvarez notes that Ark has received multiple applications both from within the Ark community and developers from other projects. He adds that the project is currently “reviewing more applications within the program to see if we can assign funding.”

Looking forward to the rest of 2020, Alvarez states that Ark has “an extensive release plan,” including the launch of “ARK Core 3.0, One-Click ARK Deployer, Redesigned products including ARK Wallets, ARK Marketplace, Core Consensus Update, ARK Enterprise, ARK Dex, and more.”

Crypto development grants programs drive innovation

On March 31, open-source payments network Celo (cGLD) revealed it had allocated $700,000 in funding to 16 startups from seven countries in the first round of approvals for its grants program.

To combat COVID-19, Celo grant recipient and Ethereum development grant platform Gitcoin, announced that it had pledged at least $50,000 in funding toward blockchain-based public health initiatives on March 14.

‘Breakthrough’ as Lightning Uses Web’s Forgotten Payment Code

Lightning Labs believes its new protocol can redefine online payments by making use of a long forgotten HTTP status code.

Lightning Labs has published its draft specification for Lightning Service Authentication Tokens (LSAT) — a protocol standard that promises to redefine online payments through employing a little known HTTP status code.

According to a March 30 blog post authored by Lightning Labs CTO Olaoluwa Osuntokun, LSAT facilitates automated logins and payments using cryptographic credentials — doing away with the current system of credit cards, usernames, and passwords.

LSAT leverages 402 error code

Osuntokun states that the LSAT protocol leverages the “widely underused” HTTP 402 ‘payment required’ status code. 

The 402 error is returned when a user attempts to access a web page that they have not paid for. Wikipedia reports the code is “reserved for future use” and that it was originally intended to be used by a digital payment system, despite no form of digital cash existing when the specification was drafted.

Crypto commentator Marty Bent called it a ‘huge breakthrough’, writing:

“When the Internet was originally designed, specifically HTTP, the architects envisioned that there would be a native payments layer built into the system. However, at the time, there was not a suitable digital cash system in existence that made this easy. Thus, the HTTP 402, or ‘Payment Required’ status code has practically never been used.”

LSAT will spur a ‘new web’

Osuntokun asserts that LSAT will power a “new web” in which “cryptographic bearer credentials” are purchased by users to access services — doing away with the current system of email addresses and passwords for accessing content online:

“In this new web, credit cards no longer serve as a gatekeeper to all the amazing experiences that have been created on the web. LSATs enable the creation of a new more global, more private, more developer friendly web.”

Bent agrees the potential is “massive”. “LSAT turns very manual processes into automatic API calls made by wallets, mobile apps, browsers, and extensions,” he wrote. “If brought to fruition and widely adopted, this will provide an incredible amount of utility for developers and users alike.”

Alongside LSAT, Lightning Labs is launching ‘Aperture’ — described as “an HTTP 402 LSAT reverse proxy” that can be used to “upgrade an existing web resource or API to make It LSAT-enabled, creating a portal from the existing web to the new Lightning-native web.”

New York Judge Says Telegram Can’t Distribute Grams Outside U.S. Either

A New York judge has ruled that his preliminary injunction prevents Telegram from distributing tokens to investors based outside of the United States.

A New York judge has ruled that the injunction barring Telegram from issuing its Gram tokens extends to all entities in the United State and overseas.

On April 1, U.S. District Judge P. Kevin Castel, responded to the encrypted messaging firm’s request for clarification as to the scope of the court’s March 24 preliminary injunction. He denied Telegram’s move to distribute tokens to the non-US-based participants of its 2018 initial coin offering (ICO).

Approximately $1.27 billion of the funds raised to finance the development of the Telegram Open Network (TON) came from overseas-based investors

Judge Castel sides with SEC 

The court sided with the arguments laid out by the U.S. Securities and Exchange Commission (SEC) in response to Telegram’s request for clarity.

Judge Castel said that Telegram made no argument against the application of the preliminary injunction in its appeal and said the proposed form of the injunction — which would see Telegram prohibited from “delivering Grams to any person or entity” — had been known to the firm since October 2019.

Court rejects Telegram’s bid

The court was unconvinced by Telegram’s claims that it could “implement safeguards” to prevent U.S-based investors from being able to access its Gram tokens. 

The judge noted that Telegram failed to demonstrate how the safeguards would comprise lawful modifications to its 2018 Gram Purchase Agreements. The court added that “the TON Blockchain was designed and is intended to grant anonymity to those who purchase or sell Grams,” asserting that “any restriction as to whom a foreign Initial Purchaser could resell Grams would be of doubtful real-world enforceability.”

The judge also highlighted that Telegram’s proposals were made long after pre-injunction discovery had ended, preventing the SEC from being able to challenge the efficacy of the provisions offered by the firm.

Community may launch TON anyway

The TON community has suggested that it may launch the network itself despite the court’s ruling — with representative Fedor Skuratov telling Cointelegraph that “the community was ready for this scenario” on March 26.

According to Skuratov, “no one can prevent the launch of TON by any other entity, person, or community, because TON is a decentralized open-source solution.”

Skuratov added: “Already, there are two different test networks, and within the community, there is at least one group planning to launch.”

Nigeria Becomes Eighth African Nation to Welcome Bitcoin ATMs

Nigeria, Africa’s largest economy and largest source of Bitcoin trading volume on the continent, has welcomed its first Bitcoin ATM.

Africa’s largest country has welcomed its first Bitcoin ATM.

Blockstale BTM, the company that installed the ATM in the Dazey Lounge and Bar in Lagos state, plans to launch more than 30 more terminals across Nigeria.

“Despite all the legal uncertainties about cryptocurrencies in Nigeria, Nigerians happen to be the highest crypto traders in Africa,” Blockstale’s chief executive and founder, Daniel Adekunle, told local media on April 1. 

Adekunle developed his Bitcoin ATMs in partnership with a tech firm based in Shenzhen, China.

Nigeria welcomes Africa’s 15th Bitcoin ATM

Despite being home to the largest trade volume in Africa, Nigeria is the eighth country in the continent to host a Bitcoin ATM — with Blockstale’s comprising the 15th in Africa.

According to CoinATMRadar, South Africa is home to seven crypto ATMs, Ghana hosts two, and Botswana, Djibouti, Kenya, Uganda and Zimbabwe each have a single terminal.

With Nigeria comprising Africa’s largest economy and population, the country’s first Bitcoin ATM may be a signpost for broader adoption across the continent. Coinstale’s terminal is only the second Bitcoin ATM in West Africa.

Nigerian LocalBitcoins volume drops after KYC overhaul

Recent weeks have seen roughly 220 Bitcoins, or $1.38 million worth, of peer-to-peer (P2P) trade between BTC and Nigerian Naira on LocalBitcoins.

However, Nigerian LocalBitcoins has dropped by roughly 50% since the P2P platform strengthened its KYC requirements during September 2019.

Nigerian ‘Bitcoin’ searches top Google Trends

Nigeria also consistently tops Google searches for ‘Bitcoin’ — driving nearly twice the traffic as the second-ranked country, Austria, according to Google Trends.

Three of the top five ranked nations for ‘Bitcoin’ searches are African — with South Africa and Ghana ranking third and fifth respectively.