Investment Firm Arcane Crypto to Go Public via $33 Million Reverse Merger

Investment Firm Arcane Crypto to Go Public via $33 Million Reverse Merger

Arcane Crypto, a Norway-based investment company, said Thursday that it is planning to go public through a reverse takeover by Vertical Ventures, a publicly traded Swedish firm.

Vertical Ventures will buy Arcane Crypto for $33 million by issuing over 6.6 billion new shares. Each share cost $0.005 or half a cent, according to a statement released by the company on July 2.

Once the merger is completed, Arcane, which operates Arcane Research, will be listed on Nasdaq First North Growth Market, where Vertical Ventures currently trades. Owners of Arcane will own 92.5% of the shares in the merged entity while the remainder goes to Vertical Ventures.

Both companies have signed a letter of intent pending finalization of the transaction, which is expected to be completed in the second half of 2020. Shareholders and Nasdaq North will have to approve the deal first.

Torbjørn Bull Jenssen, chief executive officer of Arcane Crypto, said listing creates “massive potential” and “interesting opportunities” for the digital asset firm.

“By going public we will expand our toolbox and position our self for further growth. In addition, our ecosystem approach and infrastructure focus will benefit from the opening up to a wider investor Base, ” said Jenssen.

A reverse takeover or reverse merger involves the acquisition of a public company by a private company. Some private firms prefer this route of going public because it eliminates the long and complex process of stock exchange listing associated with an initial public offering.

Arcane is made up of six business units, including cryptocurrency payment technology, crypto and digital assets liquidity provision, crypto-fiat exchange as well as a hedge fund.

Shares of Vertical Ventures soared by as much as 50% on the reverse merger news filtered through on Thursday, but the stock is down 13.8% in early morning trading Friday.

What do you think about Arcane Crypto’s listing plans? Let us know in the comments section below.

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Localbitcoins 2019 Revenue Rises 10% to $29.6 Million Amid Increased Paxful Competition

Localbitcoins 2019 Revenue Rises 10% to $29.6 Million Amid Increased Paxful Competition

Peer-to-peer (P2P) crypto exchange Localbitcoins has reported that 2019 revenue rose 10% to $29.6 million from $27 million a year ago.

For the year, operating income fell 6% to $19.9 million from $21.2 million the year before. Localbitcoins did not provide detail about net profit.

The Finnish marketplace said about $2.8 billion in volume was traded from 15.6 million transactions.

Localbitcoins added 1.46 million new users last year, it stated. But stricter know-your-customer (KYC) requirements implemented in the last half of the year drove away some customers, both new and existing.

During the review period, the P2P exchange noted that the number of active users on the platform totaled 913,000. Chief executive officer Sebastian Sonntag commented:

2019 was an invaluable learning experience for us, as we implemented anti-money laundering and know-your-customer regulations…undesired activity was driven away from the platform and the implementation of KYC itself was a challenging process.

Sonntag expects that new users will continue joining the exchange in 2020. So far this year, new daily sign-ups have climbed 50% to 6,000 currently. In January, the figure averaged 4,000.

Localbitcoins has this year given up market share to competitor Paxful. According to data from Useful Tulips, Paxful became the top P2P exchange by trade volume last month, with about $25 million worth of bitcoin traded on the platform every week.

What do you think about Localbitcoins’ 2019 earnings? Let us know in the comments section below.

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Bitcoin Investors Pocketed 42% in Gains During the Second Quarter of 2020

Bitcoin Investors Pocketed 42% in Gains During the Second Quarter of 2020

The second quarter of 2020 was very profitable for bitcoin investors, according to data analytics firm Skew.

During the period, the top cryptocurrency climbed 42%, its fourth-best quarterly close since 2014. For the March quarter, the digital asset fell 10.6%, dragged by the massive Black Thursday crash. As a matter of fact, bitcoin declined in three successive quarters before Q2 2020.

In terms of price, bitcoin (BTC) soared from around $6,420 at the beginning of April to more than $9,140 at the end of June, Skew figures show. The coin has, however, struggled to break the psychological $10,000 level in a quarter in which Bitcoin underwent its scheduled supply cut.

Despite the sharp rise, this is not bitcoin’s biggest Q2 gain in the past seven years. Investors pocketed profits of 158% and 125% for the second quarters of 2019 and 2017, respectively. In 2016, Q2 gains came in at 62%.

According to Skew, third quarters have been historically more challenging for bitcoin. With the exception of “2017 vintage” when the BTC price surged 80%, thanks to that year’s phenomenal rally, and another 2.9% gain in 2018, Q3 performances have remained in the red for the last seven years.

While poor performance may not be valid for Q3 in all years, pundits expect 2020 to show little difference. That’s largely because BTC transaction volumes have not increased in recent days while it’s 60-day moving average has not improved.

There’s still optimism in some quarters, however, that Bitcoin’s third halving will lead to an increase in the price of the benchmark cryptocurrency in this quarter and beyond. A number of analysts’ predictions put BTC at a price of $20,000 by year-end.

At the time of writing, each BTC is trading at $9,191, down 0.16% over the last 24 hours, according to data from markets.bitcoin.com.

What do you think about bitcoin’s quarterly performance? Let us know in the comments section below.

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Bitcoin Miner Hut 8 to Add 275 PH/s of Mining Capacity With $8.3M Capital Raise

Bitcoin Miner Hut 8 to Add 275 PH/s of Mining Capacity With $8.3M Capital Raise

Hut 8 Mining Corp. has raised $8.3 million from the sale of 6% of its shares to investors. The Canadian bitcoin miner originally intended to raise $7.5 million from the sale, but it was oversubscribed.

Totonto Stock Exchange-listed Hut 8 issued about 5.8 million “units” at a price of $1.45 each. Each unit is comprised of one common share. From this, investors have the option to buy another share for $1.80 between now and December 2021.

The Alberta-based miner said funds from the offering will be used to upgrade its range of mining hardware including Application-Specific Integrated Circuit (ASIC) miners. The upgrade will add up to 275 petahash per second (PH/s) to Hut 8’s existing mining capacity of 952 PH/s.

Once installed, the new machines, which include “more efficient processing chips from Microbt” will also add 12.6 megawatts (MW) of power to the company’s current 107 MW maximum operating capacity.

“Hut 8 has been testing the Microbt equipment for the past three months in preparation of this upgrade… [we] expect to receive equipment between July and November 2020,” said the firm in a press statement.

In recent months, Hut 8 has seen the amount of bitcoin mined at its data centers in Canada decline. During the first quarter of 2020, the company extracted 1,116 BTC, down 54% from 2,405 BTC mined in the comparable year ago period.

The company blamed the decline on “the increasing network difficulty” which “impacted…production negatively with much fewer bitcoin mined.” For the March quarter, Hut 8 reported that its net loss widened to $8.4 million from $6.1 million a year earlier.

The Canadian miner is now hoping that its latest acquisition of more efficient mining equipment will help turnaround company fortunes, already facing a squeeze from the recent bitcoin supply cut event, which reduced the bonus paid to miners by 50% to 6.25 BTC per block.

Shares of Hut 8 are up 2% at CAD$1 (~$0.73) in Toronto trading on Tuesday. Over the last 52 weeks, the stock has reached a low of $0.37 and a high of $1.99.

What do you think about Hut 8’s bitcoin mining ambitions? Let us know in the comments section below.

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US Contract Miner Core Scientific Buys 17,600 Bitcoin Miners From Bitmain

US Contract Miner Core Scientific Buys 17,600 Bitcoin Miners From Bitmain

U.S. contract mining firm Core Scientific has agreed on a deal to buy 17,600 mining rigs from Chinese bitcoin hardware maker Bitmain Technologies Inc.

The company is buying Bitmain’s next-generation bitcoin (BTC) miner, the Antminer S19, it said in a statement on June 29. The miners will be fully installed at data centers operated by Core Scientific in the U.S. over the next four months, it added.

Washington-based Core Scientific did not provide details about cost, but the deal might come to a total of between $30 million and $42 million. Each S19 machine is currently selling at $1,785 while the newer S19 Pro is going for $2,407, according to the Bitmain shop.

Core Scientific said that the purchase is on behalf of its institutional customers and for its own use. It also claims the deal to be the largest acquisition of S19 BTC miners by a single blockchain hosting company.

Company president and chief executive officer Kevin Turner commented:

Core Scientific has received and begun testing the first of Bitmain’s newest ASIC miners, and has seen material success in increasing existing hashrate to achieve a 110 TH/s ± 3%.

Bitmain confirmed the deal in a blog post. The Antminer 19 series uses the latest generation of SHA256 Application-Specific Integrated Circuits (ASICs) from Bitmain, making it more energy-efficient compared to previous models from the Beijing-based entity.

According to F2pool, a large global bitcoin mining network, the Antminer S19 model generates up to $3.03 of profit each day. The Antminer S19 Pro, Bitmain’s latest offering, makes a profit of $4.12 per day. The figures are based on an average electricity cost of $0.05 per kilowatt-hour (kWh).

The Antminer S19 has a computing power or hashrate of 95 terahash per second (TH/s) and power efficiency of 37.5 joules per terahash (J/TH). The Pro version comes with 110 TH/s and a power efficiency of 29.5 J/TH.

Bitcoin miners have been forced to look for more efficient mining equipment since the supply cut event of May 11, which slashed miner revenue by 50% from 12.5 to 6.25 BTC per block. The United States appears to be upping its game on this front.

What do you think about Core Scientific’s ambitions? Let us know in the comments section below.

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‘Sophisticated’ Hacker Plunders $450,000 From Defi Protocol Balancer

'Sophisticated' Hacker Plunders $450,000 From Defi Protocol Balancer

Decentralized finance (Defi) protocol ​Balancer was on Sunday hacked for more than $450,000 worth of cryptocurrency.

In two separate transactions, an attacker targeted two pools containing Ethereum-based tokens with transfer fees – or so-called deflationary tokens.

Pools with Sta and Stonk tokens were affected by this exploit, Balancer, an automated market marker protocol, said on June 29.

The hacker made off with around 601 ether, 11 wrapped bitcoin (WBTC), 22,600 chainlink (LINK), and 61,000 synthetix (SNX) – altogether totaling more than $451,000.

According to an analysis by Dex aggregator 1inch.exchange, the attacker used a smart contract to automate multiple actions in a single transaction. First, the hacker obtained a flash loan of $23 million worth of ethereum from the crypto-lending platform Dydx.

The money was used to swap Weth to Statera (Sta), a so-called deflationary token, back and forth 24 times until the Sta balance was totally drained. With Sta, at least one percent of the token is programmed to burn with every transaction.

However, the Balancer pool apparently failed to account for this mechanism. So, the Sta balance declined by one percent every time the attacker made their 24 swaps. After this, the hacker exchanged 1 weiSta, or the equivalent of a billionth of a token, to Weth several times.

Due to Sta token transfer fee implementation, the pool never received statera, but still proceeded to release the wrapped ether regardless, said 1inch. The same step was repeated to drain WBTC, SNX, and link token balances from the pool, it added.

Finally, the attacker repaid the $23 million Dydx loan. Later, they converted the Sta tokens to Balancer pool tokens and eventually into ethereum via Uniswap, which was then cashed out.

1inch noted that the attack was carried out by a “sophisticated smart contract engineer” who is deeply knowledgeable about decentralized finance and its protocols.

Balancer claimed that “we were not aware this specific type of attack was possible, [but] we have consistently…warned about the unintended effects ERC20s with transfer fees could have in the protocol.”

To prevent future attacks, the platform said that it will start to add ‘transfer fee tokens to the UI blacklist similarly to what we have done for no bool transfer tokens.”

“We will be adding more documentation around the risks of how these pools work and how broken or maliciously designed tokens can potentially drain assets from a pool,” it added.

A number of Defi platforms have been hacked this year.​ In February, Bzx protocol was attacked twice while Maker lost around $8.3 million in March. Uniswap and Dforce were drained of $300,000 and $25 million, respectively, although this later amount was returned by the hacker in April.

What do you think about the Balancer pool hack? Let us know in the comments section below.

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Wirecard: Crypto Card Users’ Funds Locked as UK Regulator Suspends Subsidiary

Wirecard: Crypto Card Users' Funds Locked as UK Regulator Suspends Subsidiary

UK Financial Conduct Authority (FCA) on Friday suspended the license of Wirecard Card Solutions (WCS), a unit of troubled Wirecard AG, which is responsible for issuing Visa cryptocurrency debit cards.

It means some users of cards such as Crypto.com’s Mco visa debit card and Tenx’s visa debit card may not be able to access their funds for a time. Both the crypto-enabled cards are issued by the Newcastle-based WCS.

FCA said Wirecard Card Solutions “is no longer permitted to conduct any regulated activities” and “must not dispose of any assets or funds.” The regulator indicated that the decision was taken “in order to further protect customer money”.

“There are ongoing events in Germany concerning companies closely linked to Wirecard. Wirecard’s parent company, Wirecard AG based in Germany is currently the subject of law enforcement interest and insolvency proceedings,” said the FCA.

Cryptocurrency card operators Crypto.com and Tenx told customers that their funds were safe. Kris Marszalek, chief executive officer of Crypto.com, stated that the FCA had “effectively shut down Wirecard UK” and that European card users will no longer be able to use their cards.

“Our EU/UK cards will stop working today. All customers will receive 100% credit back to their crypto wallets within 48 hours,” Marszalek said.

“Separately, we’re working on transferring the card program to a new provider, so that we can resume the issuing of cards in the UK and Europe and allow existing and new customers to benefit from our card program again,” he added.

Tenx tweeted that ” [we] would like to make clear that all of our customer’s crypto and fiat balances are maintained by Tenx and not Wirecard…this issue has no impact on our operation.”

Wirecard Card Solutions said on its website that it “has temporarily suspended its electronic money issuing, card issuing and acquiring a business with immediate effect and until further notice.”

The company added that it is working to have the license restored by the FCA. Wirecard AG has faced a tumultuous week since it reported missing $2 billion from its accounts on June 18 and later admitting the cash did not exist at all.

Now, the German payments processor has filed for insolvency in the face of debts totaling nearly $4 billion. Its long-time CEO Markus Braun quit on June 19 before he was arrested only three days later on allegations of manipulating financial records. He’s out on $5.6 million bail.

Shares of Wirecard have since been suspended from the Frankfurt Stock Exchange after losing more than 90% in a matter of days.

What do you think about the impact of Wirecard’s collapse on the issuance of crypto debit cards?

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Wirecard $2 Billion Scandal: Firm Files for Insolvency, Ex-CEO Arrested, User Funds Safe

Wirecard $2 Billion Scandal: Firm Files for Insolvency, Ex-CEO Arrested, User Funds Safe

Scandal-hit crypto card issuer Wirecard AG, a firm that has filed for insolvency because of its missing $2.1 billion – but customer funds appear to be safe, for now.

The news comes just two days after former chief executive officer Markus Braun was arrested by German police on allegations of falsifying accounts and market manipulation. Braun, who quit as CEO on June 19, has since been released on €5 million ($5.6 million) bail.

In a brief statement Thursday, Wirecard said that its new management led by new CEO James Freis applied for insolvency at a court in Munich, Germany “due to impending insolvency and over-indebtedness”.

The Munich-based payments processor also said it had yet to reach a decision on whether or not to file insolvency proceedings for its subsidiaries such as Wirecard Card Solutions (WCS). WCS issues Crypto.com’s popular Mco visa card and Tenx’s visa debit card, both crypto-enabled cards. Revolut and Curve also get their cards from the firm.

Shares of Wirecard were suspended from the Frankfurt Stock Exchange ahead of the insolvency filing. The stock has tumbled more than 90% since news of the missing billions broke out on June 18. Wirecard owes its creditors, which include fifteen German banks, around $3.9 billion

Filing for insolvency means a business is unable to pay its debts on time. It suggests that the company may require court protection to allow it more time to set up alternative payment arrangements.

Meanwhile, Wirecard’s downfall does not appear to have a direct material impact on users’ funds, at least for now. That’s because the concerned crypto cards are pre-funded and funds are held by Wirecard Card Solutions, an entity with its headquarters in the UK, its own board of directors, and regulated by that country’s financial authorities. WCS is licensed to issue virtual cards.

While WCS is a unit of Wirecard AG, its accounts are separate from the parent company’s. Observers say the biggest problem for crypto card companies “if Wirecard struggles is that not many issuers are willing to issue crypto-related cards.”

Both Crypto.com and Tenx have said that customers’ funds have not been affected by the unaccounted for $2.1 billion. “Debit cards issued by Wirecard for Crypto.com are fully prefunded,” said Crypto.com chief executive officer Kris Marszalek.

“These client fiat funds are held by an EMI institution regulated by UK FCA in segregated client accounts. The funds are held at another bank (not Wirecard) as required by the FCA,” he added.

In another tweet on Thursday, Marszalek reiterated the safety of users’ money while promising that “in case any of the services provided by Wirecard are disrupted, you will receive a fast 100% credit back to your crypto wallet.”

German police have since opened a criminal investigation into Wirecard’s alleged cosmetic accounting practices.

What do you think about the unfolding drama at Wirecard? Let us know in the comments section below.

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Bitcoin Price Dump: Miners Start Selling 9,000 BTC, Possibly Opening Bear Cycle

Bitcoin Price Dump: Miners Start Selling 9,000 BTC, Possibly Opening Bear Cycle

Bitcoin miners on Tuesday transfered nearly 3,000 bitcoin, worth around $28 million, directly into exchange wallets. Several thousand others were likely moved via over-the-counter (OTC) deals.

Direct exchange transfers represent the largest flow of bitcoin (BTC) from miners to such platforms in over a year, according to Glassnode data.

The bulk of the volume of 2,650 BTC was sent to Bitfinex exchange, it said. Miners moving funds to crypto exchanges en masse usually indicates intent to sell.

The large transfers coincided with a sharp drop in the price of bitcoin on Wednesday, falling 4% in 24 hours to about $9,300 from over $9,700.

Previous largescale miner transfers to exchanges have been preceeded by a sharp drop in the value of bitcoin, opening a bear cycle. It is not yet clear whether the latest transactions will have a similar effect.

Glassnode data excludes over-the-counter deals – trades that are common with Chinese mining pools. However, figures from elsewhere show that bitcoin miners may have started selling much larger amounts of the top cryptocurrency.

According to Cryptoquant, an on-chain monitoring service, more than 9,000 BTC valued at around $86 million moved on Tuesday, much of it possibly through OTC trades because the bulk transfers did not correspond with similar increases in exchange balances.

Miners last moved such a significant amount of bitcoin on December 26, 2019, an amount of 14,800 BTC, it said. Mining pools Poolin and Haobtc accounted for the biggest share of the latest transfers, sharing up to 7,100 of BTC transfers between them.

“There has been a big spike in miner outflows overnight, I’m expecting a whole lot of selling, starting real soon,” crypto analyst Cole Garner tweeted. “This is probably an OTC deal, since the flows don’t appear to be going to an exchange,” he added.

At the time of writing, bitcoin is trading at $9,273, betraying optimistic crypto community expectations of a rise above $10,000, the level thought as key to sparking a major price rally.

What do you think about miners transferring bitcoin to exchanges? Let us know in the comments section below.

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83% of Bitcoin Addresses Currently Profitable, Says Glassnode

83% of Bitcoin Addresses Currently Profitable, Says Glassnode

At least 83% of existing Bitcoin addresses are currently in a state of profit, according to Glassnode.

That’s a 43% increase since bitcoin’s precipitous crash on March 12, now known as the ‘Black Thursday.’ At the time, only 45% of all the BTC addresses were profitable – a low for 2020.

Per the new data, the highest proportion of addresses in profit this year reached 89% on June 1, when the price of bitcoin rose above $10,400, it’s highest level in nearly four months.

Bitcoin investors are, however, not as profitable as they were a year ago. As the BTC price peaked at around $13,900 for 2019, addresses in gain spiked to 95% on June 26.

The latest Glassnode figures may bode well for the long-awaited bullish breakout, as they indicate bitcoin is not overbought, just yet. A reading above 95% usually indicates the opposite.

Chainalysis has also published new analysis showing that the majority of bitcoin investors hold their coins for the long-term, suggesting that appetite to sell is not as strong, even though profit-taking can still happen.

The crypto analytics firm said over 60% of all the 18.6 million BTC mined is held for long-term investment while only 19% or 3.5 million bitcoin is actively traded on exchanges throughout the world.

Bitcoin has repeatedly tried to breach $10,000 since the block reward halving on May 11, succeeding on few occasions, but the breakouts never lasted, as strong resistance set-in. Traders consider $10,000 a key level for a bullish upswing.

At Press time, the benchmark cryptocurrency is trading at $9,677, up 0.93% over the last 24 hours, according to data from markets.bitcoin.com.

What do you think about the percentage of profitable Bitcoin addresses? Let us know in the comments section below.

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New Zealand Police Seize $91 Million From Russian Bitcoin Exchange Operator

New Zealand Police Seize $91 Million From Russian Bitcoin Exchange Operator

Police in New Zealand confiscated NZ$140 million ($91 million) from Russian bitcoin exchange operator Alexander Vinnik.

Vinnik is the alleged owner of the collapsed BTC-e exchange. The funds were seized from bank accounts held by Canton Business Corporation, a New Zealand-registered company managing the exchange.

Police said on Monday it is the biggest seizure in the history of the force. Vinnik is accused by U.S. prosecutors of laundering billions of dollars for criminal syndicates through the platform. He denies the charges.

He was arrested in Greece in 2017 while holidaying with his family on U.S extradition orders. Vinnik was later extradited to France, where he remains in jail.

New Zealand police commissioner Andrew Carter said the seized funds are “likely to reflect the profit gained from the victimisation of thousands, if not hundreds of thousands, of people globally as a result of cyber-crime and organised crime.”

Carter alleged that BTC-e exchange operated without anti-money laundering controls and policies, allowing criminals to launder illicit funds through the bourse.

He added that the New Zealand Police worked closely with the U.S. Internal Revenue Service (IRS) “to address this very serious offending.” Police are planning an application to the High Court to forfeit the impounded funds.

In France, Vinnik is charged with counts of aggravated money laundering, extortion, conspiracy, and data manipulation. When his case ends in France, he is expected to be sent back to Greece, then the U.S., and later to Russia.

What do you think about the New Zealand police’s BTC-e bank raid? Let us know in the comments section below.

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Wirecard CEO Quits as Crypto Card Firm Reveals Missing $2.1 Billion Does Not Exist

Wirecard CEO Quits as Crypto Card Firm Reveals Missing $2.1 Billion Does Not Exist

Wirecard chief executive officer quit as the crypto card payments firm revealed that the €1.9 billion ($2.1 billion) missing from its accounts may not exist.

CEO Markus Braun resigned on June 19, after nearly 20 years at the helm. James Freis has been appointed interim chief executive, the German company said on Friday.

Wirecard said a search for the missing billions at two large Philippine banks during the weekend hit a cul de sac. The central bank of the Philippines noted that there was no record of the money entering the country’s financial system.

And both Bdo Unibank Inc and the Bank of the Philippine Islands denied any association with the firm, suggesting any supposed links between the entities and Wirecard may be part of attempted fraud, Bloomberg reported.

“The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist,” Wirecard said in a statement on Monday.

Wirecard CEO Quits as Crypto Card Firm Reveals Missing $2.1 Billion Does Not Exist
Former Wirecard chief executive officer Markus Braun. The CEO resigned on June 19, and James Freis has been appointed interim chief executive at the firm.

On Thursday, the company revealed it could not locate $2.1 billion cash from one of its trust accounts. It accused a third party of providing “spurious cash balances” to auditor Ernst & Young, which refused to sign off the accounts after discovering the scandal during a routine audit. The missing funds were supposed to be held in accounts at two Asian banks.

In the latest statement, Wirecard also stated that it is withdrawing its unaudited financial results for 2019 and the first quarter of 2020. The payment processor said it was continuing “constructive discussions” for a financial lifeline with lenders, including an existing $2.2 billion loan that is due to expire at the end of this month.

Wirecard is also considering several potential plans to prevent the company from going under, including cost cuts, the restructuring of its operations, and selling or shutting parts of the business.

Analysts say there’s a risk that Visa and Mastercard might cancel their licenses with the German warm because of the missing cash. Wirecard has licenses with Visa, Mastercard, and JCB International, through which Wirecard’s banking unit issues its cryptocurrency debit card.

“The big question is whether they retain the Visa and Mastercard licensees. Without those they have no business,” Neil Campling, an analyst at Mirabaud, told Bloomberg. Both Visa and Mastercard have not commented on the matter.

Wirecard’s stock market valuation has plummeted to $3.3 billion from $26.6 billion when it listed on the Frankfurt Stock Exchange two years ago. The company’s shares have plunged more than 75% since news of the missing billions broke out on Thursday.

What do you think about the unfolding scandal at Wirecard? Let us know in the comments section below.

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Only 3.5 Million Bitcoin Is Traded Worldwide; Majority of BTC Held Long-Term as Digital Gold, Says Chainalysis

Only 3.5 Million Bitcoin Is Traded Worldwide; Majority of BTC Held Long-Term as Digital Gold, Says Chainalysis

Only 3.5 million bitcoin or 19% of total circulating supply is actively traded throughout the world, while the rest is being held long-term by investors, according to a new report by crypto analytics company Chainalysis.

Per the report, nearly 18.6 million bitcoin (BTC) has been mined as of June 2020. Of this, around 60% BTC is held by entities – either people or businesses – that have never sold more than 25% of the bitcoin they’ve ever received. Chainalysis labeled this BTC supply as “held for long-term investment.”

Another 20% of the existing bitcoin supply has not moved from its current set of addresses in five years or longer – what Chainalysis called “lost bitcoin”. The remainder – 3.5 million of all mined BTC – is used for trading, primarily between exchanges.

“The data shows that the majority of bitcoin is held by those who treat it as digital gold: an asset to be held for the long term,” said Chainalysis in the report published this week. “But this digital gold is supported by an active trading market for those who prefer to buy and sell frequently,” it added.

Only 3.5 Million Bitcoin Is Traded Worldwide; Majority of BTC Held Long-Term as Digital Gold, Says Chainalysis
Image via Chainalysis.

The report observed that bitcoin being held for long-term investment will become important as a source of liquidity because of more people who are looking to trade the top cryptocurrency, which is becoming scarce following the recent supply cut of May 11.

Chainalysis found that throughout 2020, a total of 340,000 people are actively trading BTC every week. There two types of traders, retail and professional, it said. Retail traders are those who deposit less than $10,000 worth of bitcoin on exchanges at a time. However, they account for 96% of all inflows to exchanges per week.

Professional traders make up only 4% of active traders – or around 39,000 transfers weekly. However, they control market liquidity, accounting for 85% of all the US dollar value of bitcoin sent to exchanges, according to the report.

“Because of this, professional traders are the most significant contributors to large market movements, such as those seen during bitcoin’s dramatic price decline in March as the Covid-19 crisis intensified in North America,” said Chainalysis.

On average, about 1.8 million BTC, worth $14.4 billion, has been transferred via exchanges per week so far this year.

What do you think about the small amount of Bitcoin actively traded? Let us know in the comments section below.

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Ernst & Young Launches Application to Help US Crypto Investors With Tax Filings

Ernst & Young Launches Application to Help US Crypto Investors With Tax Filings

Ernst & Young (EY) has introduced a new application that helps U.S. cryptocurrency traders calculate and file their taxes with ease.

The EY Cryptoprep app, a Software as a Service (SaaS) web-based crypto tax engine, helps users calculate crypto-related gains and losses that have to be reported on Form 8949, a form used to report sales and exchanges of capital assets.

According to a June 18 statement from EY, one of the four largest accounting companies in the world, the engine offers step-by-step guidance through the crypto tax process. Users of the application, which supports major digital assets, can connect it to various exchanges to collect data about all their transactions.

EY Cryptoprep will then aggregate and reconcile the data before applying the relevant tax rules to produce an account of crypto capital gains or losses. Afterward, a completed Form 8949 for all applicable years is issued. The app also enables users to submit amended returns for past tax liabilities, not only the current year.

Ernst & Young vice-chairperson for tax services Marna Ricker claimed the firm is responding to increasing demand.

“Our clients increasingly hold and trade crypto assets, creating the need for an innovative solution to address the evolving complexity around filing crypto taxes. The EY Foundry, our internal corporate venturing unit, created EY Cryptoprep to modernize the crypto tax accounting process,” said Ricker.

This is not the first offering from EY targeting digital financial assets. The firm unveiled an auditing software for cryptocurrencies called EY Blockchain in April 2018. EY Crypto-Asset Accounting and Tax, a tool that facilitates accounting and tax calculations for crypto transactions, targeted at both institutional and retail investors, was launched last year.

“EY Cryptoprep expands our innovative portfolio of successful new digital businesses,” said Chirag Patel, Ernst & Young foundry leader, in the statement.

The Internal Revenue Service deadline for tax returns is July 15, 2020.

What do you think about the EY crypto tax calculation tool? Let us know in the comments section below.

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Bitcoin Whale Transfers $2.2 Billion Worth of BTC for Just $7

Bitcoin Whale Transfers $2.2 Billion Worth of BTC for Just $7

Whale alert reports that a so-called whale has transferred the equivalent of $2.24 billion in bitcoin for less than $7.

In a series of tweets on Friday, the crypto tracking tool said the bitcoin (BTC) whale sent a total of 241,500 BTC in seven successive transactions within one hour.

Each transaction, made separately to unknown wallets, contained between 27,000 and 40,000 BTC. Some of the sending and receiving wallet addresses were used more than once. Altogether, six wallets were involved in the transaction.

According to the transaction data, each transfer cost around 0.0001 BTC or just $0.93, giving a total of about $6.51 for the seven transfers.

By contrast, banks would charge an arm and a leg to send a huge amount of money like that. Big money transfers through banks may attract fees of up to 1% or more of the amount being sent, per transaction.

“This (referring to the last 27,635 bitcoin transaction) and other recent large #BTC transactions are likely the change of the transactions,” Whale Alert explained.

“Change occurs when the output of a transaction is used as the input of another transaction. This output “must be spent in its entirety. Sometimes the coin value of the output is higher than what the user wishes to pay. In this case, the client generates a new bitcoin address, and sends the difference back to this address.”

The $2.24 billion comes as the price of BTC fell 0.97% over the past 24 hours to $9,374, according to data from markets.bitcoin.com. The top cryptocurrency has seen a tumultuous week, in which it sniffed the key $10,000 level before a rapid decline to $8,900 and then back up to above the $9,000 zone again.

Also, the number of whales with 1,000 bitcoin or more in their wallets has climbed to 1,882 from around 1,650 in January. It is the highest the numbers have reached in nearly three years, Glassnode reported in a new analysis on June 15.

What do you think of the Bitcoin network transfer fees? Let us know in the comments section below.

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Crypto Card Issuer Wirecard Missing $2.1 Billion Cash, Company Shares Plunge 62%

Crypto Card Issuer Wirecard Missing $2.1 Billion Cash, Company Shares Plunge 62%

About 1.9 billion euros ($2.13 billion) worth of cash is missing from one of Wirecard’s trust accounts and the crypto debit card provider cannot as yet account for the money, the company reported on Thursday.

In a statement, the major German payment processor blamed “spurious” cash balances provided by a third party with the aim of deceiving the auditor, Ernst and Young, which discovered the scandal during a routine audit.

“There are indications that spurious balance confirmations had been provided from the side of the trustee … in order to deceive the auditor and create a wrong perception of the existence of such cash balances or the holding of the accounts for to the benefit of Wirecard group companies,” said the firm.

Wirecard, which issues cards that support crypto payments to platforms such as Crypto.com and Wirex, said it is investigating the matter in close cooperation with the auditor. The amount missing equals 25% of the funds on the company’s balance sheet.

As a result of the issue, Wirecard has now delayed publishing its annual report and financial statements for 2019, initially scheduled for Aug. 4. “If certified annual and consolidated financial statements cannot be made available until June 19, 2020, loans made to Wirecard AG amounting to approximately EUR 2 billion can be terminated,” it said.

Shares of Wirecard fell as much as 62% or 65 euros to 40 euros in Frankfurt trading on Thursday after news of the missing billions broke out. In the last 52 weeks, the stock price has reached a high of 159 euros and a low of 30 euros.

What do you think about Wirecard’s missing billions? Let us know in the comments section below.

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Wisdomtree Files ETF With 5% Bitcoin Exposure Amid SEC Resistance

Wisdomtree Files ETF With 5% Bitcoin Exposure Amid SEC Resistance

Wisdomtree has filed for a commodity fund with 5% exposure to bitcoin, in a fresh attempt to bring an exchange-traded fund (ETF) backed by the benchmark cryptocurrency to the market.

According to a filing with the U.S. Securities and Exchange Commission (SEC), the fund is targeting to invest mainly in energy, industrial metals, precious metals, and agriculture commodities primarily through futures contracts.

If approved, the Wisdomtree Enhanced Commodity Strategy Fund will also put up to 5% of its net assets in cash-settled bitcoin (BTC) futures traded on the Chicago Mercantile Exchange (CME), the world’s third-largest regulated BTC futures market.

While that makes BTC a small fraction of the fund’s total investment portfolio, it can still make a significant impact within a market desperate for a product that helps retail investors gain bitcoin exposure, without actually owning any coins.

“The fund will not invest in bitcoin directly,” notes the filing of June 16. Wisdomtree is an asset management company operating out of New York. It manages more than $60 billion worth of assets.

The firm’s new hybrid application will once again test the SEC’s appetite for a bitcoin-backed exchange-traded fund. Until now, the regulator has repeatedly rejected pure bitcoin ETF proposals from Bitwise, Gemini and Wilshire Phoenix citing possible manipulation of the bitcoin market, custody issues and a lack of central control among other factors.

Meanwhile, institutional interest in BTC continues to grow, with demand for CME bitcoin futures and the open interest reaching a record high of nearly $500 million in May. Billionaire fund manager Paul Tudor Jones last month also expressed interest in bitcoin futures, claiming to have 2% of his assets in the cryptocurrency.

What do you think about the Wisdomtree ETF? Let us know in the comments section below.

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IRS Tells Couple With $7 Million in Bitcoin to Liquidate Crypto Assets and Pay off Tax Debt

IRS Tells Couple With $7 Million in Bitcoin to Liquidate Crypto Assets and Pay off Tax Debt

The Internal Revenue Service (IRS) has won a case in which it demanded that a Maryland couple liquidate their bitcoin to pay-off a $1.1 million tax debt.

Alexander and Laura Strashny proposed to the IRS to pay their 2017 tax liability, generated from non-crypto activities, in installments over a six-year period.

But after seeing the Strashny’s $7 million cryptocurrency fortune, the tax collector rejected the proposal, insisting that the couple sell a part of their bitcoin and immediately settle the debt in full.

The case was heard in a tax court in the state of Maryland on June 11. More taxes await the couple in the likely event it sells crypto to pay-off the debt. Bitcoin investors in the U.S. are taxed on profits generated from buying and selling of digital financial assets.

The ruling “shows how your cryptocurrency holdings could work against you in applying for an installment plan with the IRS and how – contrary to popular belief – regulators have oversight over your cryptocurrency portfolio,” said Shehan Chandrasekera, tax expert at Cointracker.

According to court papers, the Strashnys filed a 2017 tax return on time, but did not pay the $1.1 million tax charge, inclusive of penalties. In July 2018, the couple proposed to the IRS to pay-off their huge tax bill over six years.

To qualify for the installment plan, a taxpayer must also furnish the IRS with details about their source of income, personal assets, including cryptocurrency, as well as monthly expenses. So, the Strashnys filed a Collection Information Statement, also known as Form 433-A, for this purpose.

It is on this Form that the couple revealed its $7 million crypto cache. In addition to annual wages of $200,000, the Strashnys were also pocketing $19,000 each month from their digital assets investment. Now the IRS hit the family with a formal threat of seizure of wages and properties, as it waited for a response on the installment proposal The tax collector demanded full payment on time.

Eventually, the Strashnys requested a hearing. The tax court ruled that the couple was in a good financial position to pay off the $1.1 million tax debt by liquidating the crypto stash or borrowing U.S. dollars against the virtual currency.

“The outcome of this court case shows how cryptocurrency is not immune from regulatory oversight,” explained Chandrasekera.

“One might question why the cryptocurrency holdings were reported on Form 433-A in the first place. This IRS form is signed by the taxpayer under penalty and perjury. If the large holding of cryptocurrency were omitted from the form, this would have been a fraudulent filing and the consequences could have been much harsher,” he added.

What do you think about the IRS crypto liquidation tax demand? Let us know in the comments section below.

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Bitcoin Whale Population Spikes to 1,882 – Highest Level in Three Years

Bitcoin Whale Population Spikes to 1,882 - Highest Level in Three Years

The number of so-called whales with 1,000 bitcoin or more in their wallets has climbed to 1,882 from around 1,650 in January. It is the highest the numbers have reached in nearly three years.

Whales may be defined as the Bitcoin ( BTC) community’s own version of the ‘deep state’, with the ability to swing prices up or down.

According to a new market report by Glassnode, the number of investors with large bitcoin holdings is approaching levels last seen in September 2017, when the price of the top cryptocurrency raced towards $20,000, its all-time-high.

Bitcoin Whale Population Spikes to 1,882 - Highest Level in Three Years

The first time whale numbers reached similar levels was in March 2016, when BTC traded under $420. Then, the number of large-scale bitcoin holders touched 2,000, said the analytics firm in its ‘The Week-on-Chain’ report published June 15.

“The price of BTC is now more than 20x higher than it was when we first saw this many whales, implying that more wealth is being held by whales,” Glassnode noted.

“However, the average balance held by each whale has decreased during this period, such that whales actually hold less BTC now than in 2016, and less wealth (in USD terms) than in 2017,” it added.

The news comes as the price of BTC plunged to $8,900 on June 15 – the first time the coin traded below $9,000 in weeks. Analysts attribute the decline to whale action, with the known longtime hodlers liquidating the equivalent of $30 million in longs on Hong Kong-based digital asset exchange Bitmex.

At the time of writing, bitcoin had recovered to $9,558, up 4.9% over the last 24 hours, according to data from markets.bitcoin.com. At this price, a whale wallet with 1,000 BTC will be holding more than $9.5 million.

What do you think about the growing bitcoin whale population? Let us know in the comments section below.

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Ethermine Mining Pool Cashes in Its $2.6 Million Ethereum Fee Windfall

Ethermine Mining Pool Cashes in Its $2.6 Million Ethereum Fee Windfall

Ethermine will now proceed to distribute its $2.6 million bonanza from a series of bizarre ethereum transactions last week after the fund’s owner failed to make a valid claim.

On June 11, the miner, a unit of Bitfly, received the record fee in a transaction involving just 350 ether (ETH), or $86,000. It was the second such fee paid by the same person to transfer a small amount of ETH in as many days.

After freezing payment for some days, Ethermine has exhausted its patience. The mining pool will now share the $2.6 million among the different miners under its wing as a reward for processing the transaction.

“As the sender of the transaction … has not contacted us after four days [we] have made the final decision to distribute the tx fee to the miners of our pool,” Bitfly tweeted on June 15. “Given the amount involved we believe four days is sufficient time for the sender to get in touch with us,” it added.

Several pretenders have come forward to claim ownership of the transaction, but none fit the bill. They all failed “to produce a valid signature of the sending account,” said the company.

According to Bitfly, the money will be distributed as per a miner’s hashrate “snapshot we took at the time block 10241999 was mined by our Ethermine pool.” Miners can expect to receive up to five days of fees from just this one $2.6 million transaction.

On Twitter, some people protested that four days was too short a period to wait, encouraging a longer timeframe, perhaps a month, to give the owner sufficient time to make a claim. But the ethereum miner dug its heels in, declaring never to repeat such favors in future. Bitfly thundered:

We are a mining pool and not an arbiter of the ETH network. In order to avoid such discussions in the future, we will be immediately distributing any block reward independent of its size.

Sparkpool received the first $2.6 million on a $134 transfer. The mining pool stated at the time of the transaction that it was investigating the matter, promising “a solution in the end.” It is not yet clear if a “solution” has been found, or that, like Ethermine, Sparkpool will also pocket the fees.

The Chinese miner has, however, previously repaid a user half of the 2,100 ETH accidentally paid as fees in a 0.1 ether transfer.

Information emerged late last week that the two record-fee transactions may have been the work of hackers blackmailing an exchange.

What do you think about Ethermine’s decision to pocket the high ETH fees? Let us know in the comments section below.

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Wilshire Phoenix Files Publicly-Traded Bitcoin Trust to Challenge Grayscale’s $3.4 Billion Dominance

Wilshire Phoenix has filed to launch a publicly-traded trust called Bitcoin Commodity Trust (BCT) – putting the firm in direct competition with Grayscale Investments’ $3.4 billion bitcoin trust (GBTC).

According to the June 12 filing with the U.S. Securities and Exchange Commission (SEC), the New York-based investment company will offer up to 80,000 shares at a maximum $25 per share.

Wilshire Phoenix, which has had an exchange-traded fund (ETF) application rejected by SEC in the past, aims to raise $2 million from the sale, which “will be used to purchase bitcoin (BTC).”

An unnamed company spokesperson is, however, quoted elsewhere suggesting the actual number of shares to be sold is yet to be finalized.

“The shares will provide investors with exposure to bitcoin in a manner that is accessible and cost-efficient without the uncertain and often complex requirements relating to acquiring or holding bitcoin,” said the firm.

The filing notes that the trust “will have no assets other than bitcoin”, although it “may hold U.S. dollars for short periods of time” for buying and selling of BTC, fees and payment of redemptions.

Bitcoin custody will be with Fidelity Digital Asset Securities and dollars will be held by Umb Bank. As per the filing, bitcoin held will only be insured against theft above $100 million, while cash is covered under the Federal Deposit Insurance Corporation.

If approved, Wilshire Phoenix’s BCT could place it in competition with Grayscale Investments Bitcoin Trust (GBTC), which has 365,000 BTC worth $3.35 billion, at current market prices, under management.

The Bitcoin Commodity Trust proposes management fees of only 0.9% per year compared to GBTC’s 2%. And while Wilshire’s shares are redeemable, this option is not available for investors of Grayscale, which states on its website that it “does not currently operate a redemption program and may halt creations from time to time.”

Wilshire Phoenix has previously sought approval for a bitcoin ETF that was rejected by the SEC in March. The exchange-traded fund proposed to hedge BTC against U.S. Treasury Bills. The idea was that an ETF would help retail investors gain bitcoin exposure at low-cost.

The SEC has turned down several applications for a bitcoin ETF, including Bitwise and Gemini proposals, leaving no local option for U.S. based investors.

However, Sweden’s Bitcoin One Tracker, an exchange-traded note, provides U.S. investors with a chance to trade BTC-based instruments. The security has been trading on the Nasdaq Stockholm exchange since 2015 and offers quotes in U.S. dollars.

In the Wilshire Phoenix filing, the company says each BCT share represents bitcoin ownership. The shares will be “quoted on Otc Markets Group, Inc.’s Otcox Best Marketplace.”

What do you think about the Wilshire Phoenix publicly traded bitcoin fund? Let us know in the comments section below.

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Estonia Revokes 500 Crypto Firms’ Licenses After $220 Billion Money Laundering Scandal

Estonia Revokes 500 Crypto Firms' Licenses After $220 Billion Money Laundering Scandal

Estonia has canceled 500 cryptocurrency firms’ licenses, about 30% of the total, as part of a crackdown on illicit financial flows following a $220 billion money-laundering scandal involving Danske Bank.

Regulators are concerned that bitcoin exchanges and other crypto companies might be liable to using their platforms to facilitate illegal transfers, Bloomberg reported.

Madis Reimand, who heads the Estonian Financial Intelligence Unit (FIU), indicated that the clampdown was a pre-emptive strike aimed at cleaning up the crypto industry. He notes that the idea is not to cripple the sector, but rather tighten regulations to prevent risks associated with money laundering.

To date, the FIU has shut down companies that failed to start operations in the Baltic state within six months of getting a license.

“This is a first step in tidying up the market, allowing us to take care of the most urgent issues by permitting operations only for companies that can be subjected to Estonian supervision and coercive measures,” Reimand said.

The moves come after Danske Bank, Denmark’s biggest lender, was accused of facilitating $223 billion of laundered money through a small Estonian branch. Europe’s biggest money-laundering scandal has left egg on the face of Estonian authorities, forcing them to turn attention to crypto firms, a sector considered high risk.

Until now, Estonia has been a haven for virtual currency companies. The north-eastern European country was among the first on the continent to liberalize crypto in 2017, licensing more than 1,400 entities in a space of three years.

But regulators have become stricter, in an effort to curtail international risks related to money laundering. The Estonian parliament recently passed a law that makes it difficult to obtain a crypto license.

According to the new regulations, permits will now be issued after three months at a cost of €3,300 ($3,715). Previously, it took 30 days to obtain the same license for €300. Cryptocurrency outfits registered in Estonia will also need to incorporate in the country or open an Estonian branch of a foreign firm.

Reimand warned that over 50% of the remaining 900 digital asset companies may lose their licenses “as they have no operations in Estonia and their managers are outside the country.”

What do you think about Estonia’s clampdown on crypto companies? Let us know in the comments section below.

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Ethereum’s $5.2 Million Fee Scandal Explained: Exchange Held to Ransom by Hackers

Ethereum's $5.2 Million Fee Scandal Explained: Exchange Held to Ransom by Hackers

Hackers are holding an unnamed crypto exchange to ransom after an alleged cyber-attack forced the Ethereum blockchain to facilitate two separate transactions at a cost of $5.2 million in fees, new information suggests.

The hackers may have gained access to the exchange’s funds but failed to transfer the money into their own wallets because of a security setting that demands multiple passwords to process a transaction.

Now they have turned to blackmail, trying to arm-twist the concerned platform into paying a ransom, according to Ethereum (ETH) co-founder Vitalik Buterin.

Explaining the suspicious transactions, Buterin tweeted on June 12 that: “Hackers captured partial access to exchange key; they can’t withdraw but can send no-effect txs with any gas price. So they threaten to ‘burn’ all funds via tx fees unless compensated.”

In the last few days, three ETH transactions took place: a customer paid $2.6 million to send $134 worth of ether. Few hours later, the same individual transferred $86,000 of ETH for precisely the same fee. A third transaction by a different user paid $500,000 in fees, but it’s unrelated to the blackmail attack.

Until now, the deals have been explained away as either a bug, money laundering or tax evasion. Others suspect human error.

A new report, however, turns the scales. Focusing on the two $5.2 million transactions, Chinese crypto analytics firm Peckshield concludes that the extraordinary ethereum transfer ‘blunders’ are the result of “gas price ransomware attacks.”

Researchers explain how the hackers gained access to the exchange’s funds and servers through phishing, granting them permission to send money to trusted wallet addresses under the platform’s database, just not their own.

The multi-signature security setting on the platform prevented the thieves from making transfers to their own accounts, but there was a loophole that allowed them to transact to addresses that require single authorization.

So, they have weaponized their stolen authority, sending very small amounts at ridiculously high transaction fees, to force payment. According to the report, the hackers still have access to 21,000 ETH ($5 million) that “if the exchange does not give a certain ransom through other means, the hackers will further spend the money.”

In another tweet, Vitalik Buterin offered a different explanation. “Similar situations could happen in ‘scorched earth’ games, including scorched-earth vaults aka ‘Moeser-Eyal-Sirer’ vaults as well as scenarios where hackers can slash but not steal staked funds,” he said.

What do you think about this ongoing ethereum fees debacle? Let us know in the comments section below.

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Singapore’s Three Arrows Capital Buys 6% of Grayscale’s $3.5 Billion Bitcoin Fund

Singapore's Three Arrows Capital Buys 6% of Grayscale's $3.5 Billion Bitcoin Fund

Three Arrows Capital Ltd has bought a 6.26% stake of the $3.5 billion Grayscale Investment’s Bitcoin Trust.

According to a filing with the U.S. Securities and Exchange Commission (SEC), the Singapore-based crypto hedge fund snapped up the equivalent of 21 million shares of the Trust’s outstanding issued capital.

The shares are valued at a total of $227 million as of June 11 market prices. Each share traded at $10.80 on the over-the-counter marketplace.

In bitcoin (BTC) terms, Three Arrows’ stake represents around 20,000 BTC of the 365,000 BTC currently held by the Grayscale fund on behalf of investors. It is a fairly large acquisition by any single investor.

And once Three Arrows exceeded 5% equity holding in the Grayscale Bitcoin Trust, it became necessary under law to file a form known as Schedule 13G with the SEC. The form compels investors that purchase in excess of 5% of any class of a company’s shares to report to the securities’ regulator within 10 days of the acquisition.

“We are bullish on the Gbtc demand. Premium means inflows. There can be no premium without inflows,” Su Zhu, co-founder of Three Arrows Capital told an online crypto publication.

Grayscale, which owns around 2% of all the bitcoin in circulation, operates ten cryptocurrency investment products focused on institutional investors. With the Gbtc, institutional investors can gain exposure to BTC but without actually owning any coins

As of June 11, Grayscale had $4 billion worth of digital assets under management, its highest ever. Funds cover ethereum (ETH), bitcoin cash (BCH ), zcash, XRP, and more. The bitcoin fund is the largest of all, accounting for 88% of assets under management.

In recent months, Grayscale’s appetite for BTC has sharpened, as institutional interest in the pioneering cryptocurrency grows. The U.S. asset management firm bought more than a third of all the bitcoin mined between February and April 2020.

Grayscale also purchased 50% of all newly minted ETH, representing 1.1% of circulating ether, during the first four months of this year.

What do you think about the Three Arrows Capital acquisition? Let us know in the comments section below.

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Bitfinex Hackers Move Another $4.1 Million Bitcoin in Their Biggest Pay Day Yet

Bitfinex Hackers Move Another $4.1 Million Bitcoin in Their Biggest Pay Day Yet

Cyber-thieves from the Bitfinex hack of four years ago continue to cash out, this time transferring the equivalent of $4.1 million in bitcoin to an unknown wallet address.

Crypto tracking tool Whale Alert reports that hackers moved 416 bitcoin (BTC) on June 11. The funds, valued at $4.1 million at the time of the transaction, were sent in 20 separate transactions, each bearing between 15 and 33 BTC.

This is perhaps the biggest pay day yet for the hackers. When the stolen money first moved in June and August 2019, about 170 BTC and 300 BTC worth around $2.3 million and $2.7 million at the time, respectively, flowed.

More recently, the thieves last moved $800,000 or 77.64 bitcoin on June 2. Another transfer of 28.4 BTC valued at $255,000 was executed on May 22. The coins are likely sold to unsuspecting buyers off the market.

Ever carried out in small quantities to provide a false sense of security, the transactions are typically timed to coincide with every increase in the price of bitcoin. BTC spiked sharply on Wednesday to just under $10,000, but the benchmark cryptocurrency once again faced strong resistance at that key level.

The digital asset has since slumped nearly 6% to $9,331 over the last 24 hours, according to data from markets.bitcoin.com. Bitcoin has repeatedly struggled to scale past the $10,000 barrier since the May 11 supply cut event, also known as halving.

The point is regarded as key towards unlocking the long-anticipated bull run, something that has tended to come with every previous halving.

All the three transfers by the Bitfinex hackers over the past three weeks happened almost simultaneously with the BTC price threatening a rise beyond $10,000.

Hackers have chipped away at their multi-million-dollar stash since making off with 120,000 BTC from Hong Kong-based crypto exchange Bitfinex in 2016. Valued at $72 million at the time, that stash of bitcoin is worth over $1.1 billion at current prices.

What do you think about the Bitfinex hackers’ moves? Let us know in the comments section below.

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Speculation Rife as User Pays a Second $2.6 Million Fee in Ether Transaction

Speculation Rife as User Pays a Second $2.6 Million Fee in Ether Transaction

History repeated itself on Thursday, after the Ethereum blockchain processed another transfer with fees of $2.6 million – the second such unusual, record-fee transaction in 24 hours.

A user sent 350 ether (ETH), worth about $86,400 and paid 10,668 ETH, or $2.6 million, in transaction fees. The latest transaction was mined on block 10241999 by the Ethermine pool, a unit of Bitfly.

Notably, this is a transaction that originates from the same address, of the same customer who paid the same amount of fees yesterday to send just $134 worth of ethereum. Sparkpool mined the first transaction.

Data shows the same account is holding roughly $9 million worth of ether, meaning it could repeat the mistake three more times.

“We believe that this was an accident and in order to resolve this issue the tx sender should contact us…immediately,” tweeted Bitfly, on June 11.

Both Sparkpool and Ethermine have frozen the funds as investigations into the suspicious transactions continue.

But that has not prevented the crypto community from going into overdrive, with rampant speculation surrounding the mysterious successive deals.

One theory attributed the first transaction to an innocent mistake. Yet, others suspected underhand dealings, pointing to attempts at tax avoidance or money laundering.

But the fact that two different miners processed the two transactions pours cold water on this later assumption.

Alex Manuskin, researcher at digital asset wallet Zengo, seems to offer a more plausible explanation. Manuskin posits that the transactions may be the result of a bug.

“A possible explanation could be a mix in the bot code between the sent value and the gas price,” Manuskin was quoted as saying by industry publication The Block.

“This sender used to send a transaction every 1 minute or so, so this did not look like a human operator. Might be some sort of a trading bot, for some exchange, repeating the same operation,” he added.

In a tweet, Ethereum co-founder Vitalik Buterin appears to back Manuskin’s theory, suggesting that a protocol upgrade will improve the network and eliminate the need for users to set fees manually.

“Definitely a mistake. I’m expecting EIP 1559 to greatly reduce the rate of things like this happening by reducing the need for users to try to set fees manually,” he said.

What do you think about this repeat Ethereum record-fee transaction? Let us know in the comments section below.

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Nightmare Come True: User Pays $2.6 Million in Transaction Fees to Send $134 of Ether

Nightmare Come True: User Pays $2.6 Million Transaction Fees to Send $134 of Ether

A record ethereum transaction fee has been paid today: $2.6 million to transfer $134.

The user probably mixed up the fields on the value of the transfer and the fee, eventually paying 10,668 ETH in fees, or $2.6 million, on a transaction mined by Sparkpool.

A nightmare come true, the customer sent 0.55 ether, worth $133.95, according to a record of transactions broadcast on the Ethereum (ETH) network. The money was sent to an address on the South Korean crypto exchange Bithumb.

The funds may be lost forever. Most blockchains are built to prevent transactions from being reversed once the sender confirms it.

Moreover, the fee may have since been distributed to the different miners under Sparkpool as a reward for processing transactions.

Sparkpool said in a tweet on June 10: “We are further investigating the incident of unusually high tx fee…There will be a solution in the end.”

The Chinese miner has previously repaid a user half of the 2,100 ETH accidentally paid as fees in a 0.1 ether transfer.

There is suspicion of underhand dealing, with some members of the Ethereum community alleging manipulation of the transaction by Sparkpool, or that it was an attempt at evading tax, or money laundering.

In general, the average ETH transaction fee is up more than 637% since January, as the network became congested due to a high number of transactions passing through it.

Transactional errors are not uncommon in the crypto industry, but they don’t often come as big as the latest ether gaffe. In 2017, someone paid 50 bitcoin (BTC) in transaction fees to send just under 10 BTC.

Some analysts suggest that blockchain networks should be able to reject transactions if the fee exceeds the average highest fees of the previous 10 blocks mined, just in the same way, say, the Bitcoin blockchain rejects fees that are too low.

What do you think about errors in cryptocurrency transactions? Let us know in the comments section below.

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Loophole in U.S. Tax Law Could Allow Bitcoin Traders to Write off Unlimited Losses

A loophole in the U.S. tax law could allow qualified bitcoin traders to write off unlimited losses from their trading activities, according to an expert from crypto tax platform Coin Tracker.

Traders, defined by U.S tax collection agency Internal Revenue Service (IRS) as people who trade substantially, regularly and continuously, are allowed a maximum capital loss deduction of $3,000 per year. Excess losses are indefinitely carried into future years.

However, Coin Tracker head of tax strategy Shehan Chandrasekera demonstrates in a recent Forbes column that cryptocurrency traders can use a tax election called the “475(f) election” to go beyond the default limit in any single year.

“The good news is that the 475(f) election allows traders to deduct crypto trading losses without being subject to the $3,000 annual limit,” Chandrasekera notes. By activating the election, traders can also write off unrealized losses at the end of the year “leading to potential tax savings”, the accountant adds.

Individuals who want to benefit from this specific tax dispensation should apply to the IRS within 75 days from the start of the year they intend to operate as such. Traders currently pay taxes on profits generated from buying and selling BTC.

The disadvantage is that those who qualify for the election are subject to “a higher ordinary income tax rate compared to the long term capital gain tax rates that casual investors pay. Traders are required to pay [the higher tax rate] even if there aren’t any unrealized gains at year end.”

Chandrasekera warns that the applicability of 475(f) tax election to cryptocurrency is not straightforward as it is only applicable when one deals with “securities” and “commodities.” IRS defines cryptocurrencies as “property”, leaving the applicability of the election for bitcoin traders unclear.

“With that said, bitcoin and some crypto derivatives are treated as “commodities” by the Commodity Futures Trading Commission (CFTC) so 475(f) election for those instruments is much clearer than other instruments,” Chandrasekera explains.

Clarity on the definition is pending. The American Institute of Certified Professional Accountants advocates that IRS make the election applicable to crypto traders and relevant parties.

What do you think about the 475(f) tax election? Let us know in the comments section below.

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London’s ETC Group to List Centrally Cleared Bitcoin ETP on Deutsche Börse’s Xetra

A UK-based financial services company will list a centrally cleared bitcoin exchange-traded product (ETP) on Deutsche Börse’s Xetra electronic trading market later this month.

In a statement released on June 9, Etc Group said the contract, known as Bitcoin Exchange Traded Crypto (BTCE), tracks the price of BTC and is 100% physically backed by the cryptocurrency.

One BTCE is equivalent to 0.001 bitcoin, less fees, it said, allowing the holder of each unit of the derivative a claim on a specific amount of bitcoin.

Redeemable in either BTC or cash, the ETP will be distributed and marketed on a platform operated by Hanetf, a European Union-approved private issuer of exchange traded funds.

“With BTCE, we are transporting bitcoin into the fold of mainstream, regulated financial markets,” Bradley Duke, chief executive officer of Etc Group, said in the statement, without giving a date on the planned listing.

“Investors get the benefits of trading and owning bitcoin through a regulated security while having the optionality of redeeming bitcoin if they choose,” he added.

German’s Federal Financial Supervisory Authority (BaFin) approved BTCE in March, according to the firm. It says that for every unit of the ETP, “there is bitcoin stored in regulated, institutional-grade safe” – identified as the Bitgo Trust Company.

Securities brokers or banks assume custody of BTCE bought through their desks on behalf of investors. The company claims that its new product will be able to draw liquidity from “many fragmented crypto exchanges” because of its centralized nature.

“BTCE…is supported by a network of world-class Authorised Participants (APs) and Market Makers experienced in cryptocurrency markets as well as the ETP markets. The APs ensure on-exchange liquidity and tight spreads, enabling traders to purchase in all sizes without having to worry about market impact,” explained the firm.

What do you the about Etc Group’s bitcoin exchange-traded product? Let us know in the comments section below.

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Not So Private: 99% of Zcash and Dash Transactions Traceable, Says Chainalysis

Not So Private: 99% of Zcash and Dash Transactions Traceable, Says Chainalysis

Chainalysis says it can track 99% of transactions involving Zcash, and almost all of Dash’s – coins that both fancy themselves as private and untraceable.

Now, that’s because the majority of users do not utilize the optional privacy-enhancing features available on the two blockchains, it said in a June 8 blog, announcing support for the two cryptocurrencies.

By tracking the privacy coins – digital assets whose primary purpose is to hide financial transactions from unwanted attention – Chainalysis has made it easy for law enforcement agencies to do the same.

“Dash and Zcash allow users to conduct transactions with greater privacy, but that doesn’t mean they provide total anonymity,” asserted the U.S.-based crypto analysis company.

For example, only 0.9% of transactions processed on the Zcash (ZEC) network allow for maximum privacy, even with enhanced cryptography.

“…even though the obfuscation on Zcash is stronger due to the zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of Zec activity,” said the firm.

On Dash, Chainalysis is more ruthless. It says calling the cryptocurrency “a privacy coin is a misnomer.”

The percentage of Dash transactions that constitute actual transfers of funds using Privatesend, the asset’s privacy feature, is less than 0.7%, the company found.

“…from a technical standpoint, Dash’s privacy functionality is no greater than Bitcoin’s…In fact, independent wallet software provides more advanced forms of Coinjoin that are being used with major cryptocurrencies not labeled as privacy coins, such as bitcoin, bitcoin cash, and litecoin,” it states.

This is not the first time that privacy coins have been debunked. Researchers from Carnegie Mellon University have found that 99. 9% of Zcash and 30% of Monero – another so-called privacy coin – transactions were traceable.

Moreover, the majority of Dash and Zcash usage is already for non-privacy purposes. According to studies by the Rand Corporation, of the cryptocurrency addresses mentioned on the dark web, less than 0.2% were for either of the two virtual currencies.

Dash and Zcash account for roughly $1.5 billion of reported daily trading volume. Dash dropped 0.36% to $77.78 over the past 24 hours and Zcash fell 0.68% to $52.10, according to data from markets.bitcoin.com.

What do you think about privacy coins not being private? Let us know in the comments section below.

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