Mt. Gox CEO claims innocence, but how will the courts rule?

The two-and-a-half year Mt. Gox trial is nearing an end, and former CEO Mark Karpelès is sticking to his guns, denying the embezzlement and manipulation charges levied against him.

A Brief Recap

Mt. Gox was the world’s largest bitcoin exchange, at one point boasting between 70-80 percent of the world’s trading volume. Because of this, the exchange held tremendous sway over crypto markets in their earlier years.

Though the exchange had fallen victim to hacks on several occasions, it suffered its final blow in February 2014 when an unnamed attacker or attackers allegedly managed to get away with nearly 850,000 bitcoin. Within weeks, Mt. Gox was declared insolvent and filed for bankruptcy protection in both Japan and the United States.

The exchange later found 200,000 bitcoin on an old digital wallet.

Though the details of the hack remain vague, some online theories suggest the company never held the total amount of bitcoin that it had claimed.

Bitcoin’s Biggest Trial

In 2015, Mark Karpelès was officially charged in Japan for embezzling coins from the exchange and artificially inflating trading volumes.

Though Karpelès isn’t accused of being involved in the hack that took down the exchange and subsequently led to a 2-year bitcoin bear market, the ex-CEO has been charged with manipulating data on the exchange and stealing funds that were to be used in the growth and development of the business.

The trial, which began in July 2017, has revealed some startling details about the business, however.

First and foremost, an exchange between then-owner Jed McCaleb and Karpelès reveals that Karpelès purchased the exchange with as much as 80,000 bitcoin already missing-in-action, with McCaleb suggesting that Karpelès could essentially sneak the coins back into the operation before it became a problem.

The trial has also confirmed the existence of a “Willy Bot,” or automated trading bot, which could have been used to artificially inflate bitcoin trading prices on the exchange.

Though Karpelès’ defense claims that this bot was used “for the good of the company,” and was not illegal, and that hackers were responsible for the fraudulent trading that resulted in increased upward pressure on bitcoin prices, only the ongoing trial will be able to put an end to this mystery.

Could This Happen Again?

Karpelès’ trial is scheduled to wrap up in March 2019., but it’s clearly had an impact on the markets and the community.

Exchanges are now held to extremely high standards of security and accountability, though some bad actors are still making waves. In 2018 alone, over $700 million has been lost from hacks on exchanges, including the Canadian MapleChange ‘hack’ which many have called an exit scam.

Even with stricter regulations, attacks and scams do happen and will likely continue to happen for some time no matter how seriously a company takes its security.

Always do your due diligence and trade at your own risk!

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Japan regains bitcoin crown as trading volume soars

Japan is making major moves in the cryptocurrency world, with new legislation aiming to pave the way for a more supportive and secure regulatory backdrop to ensure that consumers are protected from exchange hacks.

The framework, proposed by the Financial Services Agency of Japan (FSA), comes in response to several high-profile attacks earlier in 2018, resulting in the collective loss of over $540 million.

The draft highlights several key issues, including a note requiring exchanges to hold assets “equal to or more than the amount equivalent to the currency and repayment funds.” This mandate will ensure that if an attack does take place, consumers will receive compensation for lost funds.

The proposition also aims to add restrictions to ‘deemed dealers,’ or companies which are awaiting regulatory approval. The new rules would forbid companies stuck in the regulatory limbo from advertising or soliciting with the purpose of acquiring new customers. The draft would also prevent companies from listing new coins. Currently, there are three businesses – Coincheck, Lastroots and Everybody’s Bitcoin – which are poised to be impacted by this regulation.

In addition to the new security measures, the FSA also stressed the importance of working with other companies within the industry to ‘self-regulate,’ encouraging crypto firms to join the Japan Virtual Currency Exchange Association (JVCEA), an accredited collective working to get a handle on the industry from within.

The proposal comes as other notable Japanese lawmakers are pushing for even more supportive regulatory measures, including lower taxes and exemptions for inter-crypto trades.

The Yen Surpasses the USD in Trading Volume

While regulatory speculation has taken much of the limelight in Japan over the past couple of months, trading volume in Japanese yen has been climbing quietly behind the scenes.

As of Monday morning, the yen accounts for 47 percent of the total bitcoin market, beating out the U.S. dollar which maintains approximately 44 percent of the market share.

“It seems that Japan lives months or years ahead of the rest of the world,” explained Michael Ou, CEO of CoolBitX, a mobile cold storage hardware wallet for cryptocurrencies, explained, adding “While news of government intervention makes headlines, private companies in Japan are also working hard to improve the crypto market: here are more than a dozen Japanese cryptocurrency exchanges. With a growing number of Japanese businesses accepting cryptocurrencies as payment, and with many startups in Japan’s thriving tech scene, it’s fair to guess that continued investment will inspire continued innovation.”

The World’s Top Currency

With trade war woes and a stock market crash looming, the U.S. dollar has lost its footing against the yen in recent months.

The climb has been fueled by a strong Japanese economic outlook and inflows of investors betting on the currency as a safe haven asset. Stephen Innes, head of Asia trading, Oanda, explained, “The global equity market rout has been driving sentiment in the currency markets. I don’t see any significant rebound in risk sentiment yet.”

Backed by a strong national currency and supportive regulation, it’s clear to see why Japan is leading the crypto charge.

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Blockchain developers: The most desirable resource in tech

With blockchain technology poised to up-end virtually every industry on the planet, from global resource distribution to big finance, it’s safe to say that developers who are experts in blockchain tech are highly sought after.

In fact, according to the new U.S. Emerging Jobs Report from Microsoft-owned Linkedin, developers and engineers specializing in peer-to-peer distributed ledger platforms have surged by 330 percent this year, miles ahead of any other profession.

In a distant second, growing by over 120 percent this year, as the demand for machine learning engineers.

Like blockchain developers, A.I. engineers were wanted most in San Francisco and New York.

Linkedin’s study reveals similar findings to Hired, a tech-focused firm that helps clients recruit candidates, which noted that, despite falling crypto prices and a lower amount of bitcoin and cryptocurrency related gigs, blockchain jobs were soaring. And so were the salaries.

Unsurprisingly, the report named software engineering as the position with the most openings in U.S. markets. With over 80,000 positions available, knowing how to code can make someone very desirable in the job market.

So how much do these jobs pay?

According to the Hired report, blockchain jobs are now on par with A.I. engineers, reaching as high as $175,000, sometimes even higher. And compared to the average tech worker salary, even in San Francisco, which clocks in at around $142,000, demand is so high that the number is likely to continue rising.

Mehul Patel, CEO of Hired, explained, “There’s a ton of demand for blockchain,” adding “Software engineers are in very short supply, but this is even more acute and that’s why salaries are even higher.”

Who’s hiring?

Unsurprisingly, already-established tech giants such as Microsoft, Oracle, IBM, Visa, Mastercard, Accenture, and Facebook are leading the charge, but startups and smaller private companies becoming increasingly competitive.

Armed with venture capital and, in some cases, crowdfunding, smaller players are able to offer up a pretty penny for the right talent.

But even then, the right talent may be hard to come by.

While there are nearly 20 million software developers in the world, there are only a handful of dedicated blockchain engineers, though that number is steadily climbing.

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The Razer SoftMiner scheme is not what it seems

Razer, the iconic gaming computer brand, recently launched a new ‘loyalty’ program, allowing users to download an application that will utilize their computer to mine ZCash while their system remains idle.

The application provides users with the opportunity to earn rewards in the form of “Razer Silver,” a closed-system points scheme that can only be spent within the Razer ecosystem.

Razer Silver holders can use the points to purchase hardware, games and gift cards from the Razer store.

Users can’t, however, access the cryptocurrency their computers mined for the company.

The new application stems from a partnership with GammaNow, a blockchain-based application geared towards gamers with a lot of downtime.

Like Razer’s points-scheme, Gamma harnesses the power of users’ PCs to mine cryptocurrencies, providing them with rewards in exchange for the service.

On Gamma’s website, the company lists a number of popular games for which users can receive rewards. From League of Legends to Counterstrike, and even some of Blizzard’s biggest hits, users can receive loot boxes, points, and other in-game bonuses by cashing in their rewards points.

But Is It Worth It?

Short answer:

No.

Slightly longer answer:

Gamma’s application, from which Razer’s is based, is very GPU-intensive. Because of this, users’ computers will be active, despite the presumed ‘idle’ mode. This means an increase in electricity usage and additional wear-and-tear on their system.

It is marketed towards gamers with strong PCs, who likely don’t mind additional electricity usage or hardware stress, but the reality is that the costs do add up.

One Twitter user broke down the maths:

According to the calculations, users would be operating at a loss of $2.66 per day.

Breaking Down The Rewards

In Gamma’s case, users receive in-game rewards, such as loot or other bonuses, in exchange for their efforts.

But the points earned aren’t exactly generous for what users are giving up.

With a top-tier machine, running the application for approximately 24 hours, users can expect to get between 450-500 points per day. To put this into perspective, it costs 10240 Gamma Points to purchase what is the equivalent of $10 worth of “Riot Points” – a League of Legends in-game currency.

This means users would have to keep the application active for roughly 20 days to receive $10 in in-game credit.

And Razer’s SoftMiner isn’t much better.

In fact, it may be even less reasonable.

On Razer’s website, its specialty gaming keyboard, the “Razer Huntsman Elite”, valued at approximately $200, will cost users a whopping 280,000 Razer Silver.

By Razer’s own estimates, suggesting a return of up to 500 points per day with a top-tier rig and high-speed internet connection, users would have to spend over 560 days with their computers in idle mode (read: mining mode) to ‘earn’ that reward.

Worse still, Razer Silver is not redeemable after one year.

The bottom line here is this: If you’re really set on getting a new fancy Razer keyboard, you would be better off simply turning your computer off for 75 days than trying to rack up some Razer Silver. And your prized gaming rig will thank you for it.

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Bear market weighs on Bitcoin miners

The Bitcoin rout has claimed many victims, from everyday investors to medium-sized miners. But now, even some of the industry’s biggest names are being forced to face the music.

Bitmain Cuts The Fat

Bitmain, which has cautiously been working to gather its strength in recent months for an IPO push, has recently announced that it will be closing the doors of its Israeli development center.

“The crypto market has undergone a shake-up in the past few months, which has forced Bitmain to examine its various activities around the globe and to refocus its business in accordance with the current situation,” said Gadi Glikberg, Bitmain’s Vice President of International Sales and Branch Manager at the development center.

Launched in 2016, the Israeli facility focused on the development of blockchain solutions, the Connect BTC mining pool, and artificial intelligence for the Sophon project, a chip used in security, surveillance, super computers and data centers.

According to Israeli business publication Globes, the company’s 23 development center employees will be let go, though there is no word on the future of the projects the team was managing.

Bitmain’s shuttering of its development center, caused by current market conditions and mounting regulatory pressure, has cast a shadow over the future if its IPO ambitions.

Though Bitmain may still have a chance to tackle the challenges ahead, other miners may not be so fortunate.

Canaan Fails To Renew IPO Application

Last week, the deadline for Canaan’s IPO application came and went, surpassing its six-month lifespan, according to the Hong Kong Stock Exchange.

No official statement has been released regarding the choice to let the application lapse, but Hong Kong-based independent investment banking expert Philippe Espinasse offered a possible explanation, “This often happens because of issues related to due diligence and disclosure, or because of market conditions when the valuations expected by legacy shareholders are at odds with what investors are prepared to pay.”

Though Canaan’s application has lapsed, Hong Kong Stock Exchange rules allow a little leniency, leaving a three-month window for applicants to re-submit their paperwork as a ‘continuance’ of the original letter.

Despite this window, however, few expect Canaan to resubmit anytime soon.

The Clock Is Ticking For Ebang

Like Bitmain and Canaan, Ebang International Holdings, the world’s second largest mining equipment producer, had filed the paperwork for a now-uncertain IPO.

Ebang, for its part, is running out of time. With a deadline as soon as December 24th, it’s looking increasingly likely that the mining giant will follow in Canaan’s footsteps and allow the application to lapse.

Jasper Lee, managing director at eToro in Shanghai explained: “There is a very high chance that Ebang’s IPO application will lapse,” adding “Fundamentally, there is no big difference between Canaan and Ebang. If Canaan couldn’t respond to questions regulators have had, I don’t see how Ebang would be able to do so.”

Bear Market Woes Persist For Miners

Though financial disclosure is a rare occurrence in the world of bitcoin miners, the general assumption is that the three companies are being forced to adjust their valuations as a result of the downturn in crypto markets.

Additionally, there are larger regulatory factors at play, which some market analysts suggest could also be impacting the miners’ decisions.

Zennon Kapron, founder of Shanghai-based Kapronasia noted, “If it is a conscious decision by the government to let it lapse, then it is certainly not very positive for Bitmain or Ebang to succeed in their listing,” adding “Those are bitcoin mining companies which are somewhat controversial. Getting an approval is never going to be easy. So the fact that there is a delay is not entirely surprising.”

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Asia’s wealthiest entrepreneurs embrace blockchain tech

Recently, a group of some of the most promising entrepreneurs in Asia gathered in Singapore to learn more about blockchain technology and its potential use cases for their own enterprises.

Despite Bitcoin’s massive decline over the past month, interest in blockchain is still growing, and some of the brightest minds in business still see a lot of potential in its adoption.

The group of some of Asia’s wealthiest are looking to join the likes of JPMorgan, Bank of America, WalMart, Apple and other major companies exploring the blockchain space.

The invitation-only event, sponsored by Forbes Asia, “Deciphering Blockchain For Business,” featured young and old attendees from all over the continent, eager to learn more about the technology.

Supply Chain Management

One speaker,  Anderson Tanoto, director of the $18 billion Royal Golden Eagle (RGE) manufacturing conglomerate, explained the benefits of using blockchain technology in supply chain management.

RGE, for its part, is aiming to move its palm oil supply chain onto a blockchain, citing better security, efficiency, and transparency. Though RGE is leading this charge, the company is part of a larger consortium, the Sustainability Assurance & Innovation Alliance, which together controls over half the world’s supply of palm oil and plans on following suit.

“There are two herds of people in blockchain. Those who want to get rich off crypto, and those who want to change the world with blockchain. I would like to associate myself with the second group,” Tanoto explained.

Smart Cities

Though the primary focus of the conference centered around business applications, one speaker jumped on top of the benefits for governments embracing the new tech.

Janil Puthucheary, Singapore’s senior minister of state at the ministry of communications and information and the ministry of transport, is a driving force behind Singapore’s Smart City initiative, and believes that blockchain technology is a vital tool in making that idea a reality.

Puthucheary noted several industries, specifically, which stand to benefit from blockchain adoption, including healthcare, transportation and finance. Additionally, Puthucheary highlighted specific security benefits that blockchain tech brings to the table.

He went on to say that the country’s cybersecurity experts were working with government organizations to explore the benefits of the tech to track resources and cut back on “human error.”

“Blockchain is not inherently secure, by itself,” said Puthucheary, adding “No tech is. But it does have some properties that could ensure a higher degree of securities with few resources.”

Big Blockchain

With blockchain technology finally maturing, it’s clear that Big Business is taking note.

Already, major enterprises are using functioning blockchains to improve supply chains, settle contracts and improve the efficiency of financial transactions.

BBVA, one of the world’s most influential financial institutions, has been on the forefront of the push in the financial world, hitting landmark after landmark in its applications. From corporate loans to international payments, BBVA has carved out a path for blockchain tech in Big Finance.

Big Oil is joining the race, as well. More recently, BP and Shell, two of the world’s energy “Supermajors” , officially launched a brand new blockchain platform with Vakt Global based on JPMorgan’s Quorum Blockchain. The platform aims to replace old paper-based contracts and to automate some of the more tedious processes in contract settlement and oil trading.

With the accelerated adoption of blockchain technology, it’s clear that, despite the fall in crypto prices, this new tech is well on its way in reshaping business as we know it.

 

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Gold-backed crypto OneGram defies bear market and moons

OneGram, the only Sharia Law-compliant cryptocurrency project that is also entirely backed by gold supplies, doesn’t seem to follow the BTC-centric price action. At press time, crypto exchange Huulk.com lists OGC at $303, which means that the coin has gained $261 in value in the past week alone. The amounts are the result of a conversion, as Huulk only presents prices in euro and the numbers are 262.24 and 226.18 respectively.

The market performance of OGC, a project which in late October has received an award for being the best Islamic fintech product, appears to defy the rest of the cryptocurrency market. While most of the market calls for capitulation while seeking means to cut losses, OneGram Coin shows strong and unexpected bullish tendencies.

This is even more good news for a project which seems to be on a winning streak: in the last couple of weeks, OneGram founder Ibrahim Mohammad has been awarded Fintech Leader of the Year, while The World Islamic Finance has bestowed the fintech product with the People’s Choice Award. Crypto Insider has covered both these accomplishments in a previous press release.

Whether or not the bull run will continue for OGC is only a matter of speculation. As always, you shouldn’t take good news as financial advice and make sure you only invest what you can afford to lose. However, it’s strange to see 2017 gains in 2018, after long months when all major cryptocurrencies bled. Can this be the merit of a gold-backed currency since it creates a greater sense of trust to investors? Guess only time will tell. Until then, we can only watch in awe how market trends get defied.

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Iranian Bitcoin sanctions set new precedent

Last week, the U.S. Treasury Department of Foreign Assets Control (OFAC) targeted two bitcoin addresses, announcing that the wallets associated Iranian citizens Ali Khorashadizadeh and Mohammad Ghorbaniyan had been added to the Specially Designated Nationals sanctions list.

The sanctions, which are the first of their kind, are part of a wider move to track and restrict movements in the digital space involving money laundering and cybercrime.

Additionally, the OFAC noted that the agency would be looking into exchanges who facilitated transactions by these individuals, stating “We are publishing digital currency addresses to identify illicit actors operating in the digital currency space. Treasury will aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies and weaknesses in cyber and AML/CFT safeguards to further their nefarious objectives.”

The cause for the sanctions, according to the OFAC, was that Khorashadizadeh and Ghorbaniyan were involved in malicious SamSam ransomware attacks.

In addition to the sanctions placed on Khorashadizadeh and Ghorbaniyan, it is noted that two others, Faramarz Shahi Savandi, and Mohammad Mehdi Shah Mansouri had been officially charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit fraud related to computers, and other counts accusing them of intentionally damaging protected computers and illegally transmitting demands related to protected computers.

The SamSam ransomeware has impacted over 200 victims to date, including hospitals, corporations, universities and government facilities.

In an interview with CoinDesk Ghorbaniyan explained, “I didn’t know the SamSam criminal activities were associated with the bitcoins I received from these two customers and I’m honestly still not sure if these two people are behind the SamSam crimes.” Adding, “I do a standard know-your-customer (KYC) procedure. And there’s no reason to be suspicious of my customers once they do KYC.”

Sanctions Set a New Precedent

Though Khorashadizadeh and Ghorbaniyan were targeted for potential involvement in criminal activities, the U.S. Treasury Department’s move sets a new precedent in the crypto-sphere.

With Iran currently reeling from wider economic sanctions from the U.S., and bitcoin usage on the rise in the Middle-Eastern country, it is possible that these actions could be the first of many. And the consequences for exchanges caught in the crossfire could be severe.

“As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers, and other providers of digital currency services harden their networks against these illicit schemes,” explained Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence.

U.S. Department of Homeland Security Takes Aim at Privacy Coins

In addition to the push to crack down on illicit bitcoin transactions, authorities are also looking at ways to reign in privacy coins such as Monero and Zcash, according to a new PreSolicitation.

“A key feature underlying these newer blockchain platforms that is frequently emphasized is the capability for anonymity and privacy protection. While these features are desirable, there is similarly a compelling interest in tracing and understanding transactions and actions on the blockchain of an illegal nature,” the PreSolicitation states.

The notice suggests that the U.S. Department of Homeland Security is considering the development of a forensics tool which will allow the agency to monitor, track and identify users of a number of privacy coins, much like Chainalysis has done with the Bitcoin blockchain.

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Maduro raises the price of ‘el petro’ despite no functioning wallet

Late last week, Venezuela’s President Nicolas Maduro ordered a hike in the value of the country’s state-sponsored cryptocurrency ‘el petro.

In an announcement on Thursday, President Nicolas Maduro ordered that the price of one petro be increased from 3,600 sovereign bolivars to 9,000. This move came with a 150 percent wage hike, the sixth such hike of the year as the Venezuelan economy continues its disastrous negative spiral.

“The arrival of Christmas is very exciting, so this corrective measure comes as a gift for large working families,” Maduro said.

There is growing suspicion, however, that the world’s first state-sponsored cryptocurrency still does not exist.

Venezuelan economist Leonardo Buniak explained, “When the president decrees that a petro is worth 9,000 Bs.s, what he is saying is that the petro is not a cryptocurrency but a debt title that is predetermined, [which] cannot be mined. It is impossible to think that it is a cryptocurrency when its value is not given by the interaction between supply and demand.”

El Petro: The Crypto that Never Was

The petro, which was officially rebooted at the beginning of last month, struggled at the starting line once again, with underwhelming interest, a broken wallet, and very interaction with the blockchain.

And now, a month later, nothing has really changed.

The wallet is still broken, meaning the only way to actually ‘purchase’ the crypto is to go to the headquarters of Sunacrip, the operator of the blockchain, to purchase a physical certificate that will supposedly entitle owners ‘real’ petro when the wallet issues are sorted.

Even if users were able to send and receive petro, however, there are currently no significant exchanges offering, or planning to offer, the cryptocurrency.

But petro’s troubles aren’t limited to its lack of wallet availability.

There’s still no public code for the platform, meaning confirmation of its existence is practically impossible. Additionally, there are no charts reflecting confirmations, hashrate or network activity, making it difficult to verify the health of the platform.

Crypto Transactions on the Rise

Despite petro’s troubles cryptocurrency transactions in Venezuela are on the rise.

According to data from Coin Dance, bitcoin transactions hit record levels, with over 2.35 billion sovereign bolivars traded in the week ending on December 1st.

Trading volume in Venezuela has seen significant growth in 2018, with sharp boosts coming in relation to economic announcements from the government.

Regardless of the fall in value, Bitcoin, in particular has become a hedge against further inflation of the country’s national currency.

Other cryptocurrencies, as well, are becoming more widespread, especially in Caracas, Venezuela’s capital city.

CEO of Dash Core Group Ryan Taylor noted a wave of adoption in the country, explaining, “We are seeing tens of thousands of wallet downloads from the country each month,” adding, “Earlier this year, Venezuela became our No. 2 market, even ahead of China and Russia, which are, of course, huge into cryptocurrency right now.”

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SEC boss pours cold water on Bitcoin ETF hopes

The cryptocurrency community has been eagerly awaiting the approval of a Bitcoin ETF since early November, when U.S. regulatory agencies were supposed to officially announce a decision on a number of submissions that had been in the pipeline for months. However, now it appears that traders may have to wait a bit longer.

On Tuesday, SEC chief Jay Clayton voiced concerns over the security and legitimacy of Bitcoin and cryptocurrency exchanges at the Consensus Invest Conference in New York City, “What investors expect is that trading in the commodity that underlies that ETF makes sense and is free from the risk of manipulation,” adding, “It’s an issue that needs to be addressed before I would be comfortable.”

Tools of the Trade

Traditional exchanges have built-in safeguards to prevent manipulation. For instance, if a company was expecting major news or regulatory developments that would impact their business, trading of that particular stock may be halted briefly. Additionally, trading may be halted if a single stock’s price surged or dropped by more than 10 percent in less than a five-minute period.

Many exchanges also utilize sophisticated technology to receive early warnings on market manipulation and insider trading, allowing compliance teams to take action before significant damage is done. These features currently do not exist in the vast majority of cryptocurrency exchanges.

Though these tools do not reign in the markets completely, they do offer a major leg up on manipulators that crypto exchanges need to embrace before being taken seriously, at least according to the SEC.

Security is Another Concern

Another major concern Jay Clayton mentioned was security, stating, “We’ve seen some thefts around digital assets that make you scratch your head.”

Clayton went on to say that reputable custody of assets was of significant importance, and despite major financial players such as Goldman Sachs, Fidelity, and more already entering the space, custody offerings need to be ” improved and hardened.”

Because cryptocurrencies exist in a different realm that true securities, however, ensuring the safety of digital assets to the satisfaction of regulators and naysayers may be an uphill battle.

In 2018 alone, there has been nearly $1 billion in cryptocurrencies stolen from consumers, startups and exchanges. This number is increasingly worrying, especially as cryptos fight tooth and claw for mainstream acceptance.

The SEC Does Not Speak With One Voice

Though Jay Clayton remains the big boss of the regulatory agency, not all high-level officers agree with him, keeping hope for a Bitcoin ETF alive and well.

Commissioner Hester Pierce, who made crypto-headlines after taking a stand against the rejection of the Wiklevoss ETF in July, voiced her opinion on crypto regulation in a recent podcast called “What Bitcoin Did.

Though Pierce stands firm on the regulatory front, she believes that Bitcoin, in particular, is ready for its chance in the sun, disagreeing with the SEC’s stance that the asset was not “ripe enough, respectable enough, or regulated enough to be worthy of our markets.”

Despite her support for a Bitcoin ETF, however, she did voice concern over the crypto-market at large, noting, “Just because you are calling something Crypto does not mean you can ignore the rules we have had in place for years… but I do think we also need to be willing to open the doors a little bit wider for innovation.”

And her concerns are valid. With SEC led crypto lawsuits on the rise, there are very real risks in investing in such a young market.

Conclusion

Though the idea of an SEC approved Bitcoin ETF may be on the back burner for now, it’s clear there is progress being made.

Regulatory authorities are being particularly cautious, but not outright dismissing the idea, which can be seen as a positive thing for the community as a whole.

Of course, these hurdles will have critics who will suggest that traditional markets are far from what the SEC envisions for crypto markets, but in the end, that could give this new tech an edge, ultimately ushering in a new era of finance.

One thing is clear, however, for better or worse, the crypto space needs to clean up its act before it goes mainstream.

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Bitmain faces lawsuit for allegedly cryptojacking customers

Bitmain is in hot water once again, facing a $5 million class action lawsuit from customers who allege the firm was using its hardware to mine crypto without customers’ knowledge.

On November 19th, plaintiffs accused the mining firm of using its devices to mine cryptocurrency for its own benefit while customers set up the product. The lawsuit names over 100 class members, and totals over $5 million, though the exact fine is still under fierce debate.

One of the complaints reads, “Until the complicated and time-consuming initialization procedures are completed, Bitmain’s ASIC [Application-Specific Integrated Circuit] devices are preconfigured to use its customers’ electricity to generate crypto currency for the benefit of Bitmain rather than its customers.”

Lead plaintiff Gor Gevorkyan notes that he had purchased a mining unit and faced significant difficulties configuring the device, and alleges that “During this time, the ASIC devices were pre-configured to mine and deliver crypto currency to Defendant. Also during this time, the ASIC devices operated at full power mode, consuming a substantial amount of electricity at Plaintiffs’ expense.

These new allegations only add to Bitmain’s troubles, however.

Bitmain Remains Resilient

From misleading financials in its pre-IPO round to reporting investors that didn’t exist, Bitmain was hit with a whirlwind of bad press back in August, though the company has made drastic moves to clean up its act.

Since the pre-IPO meltdown, Bitmain has underwent a boardroom shakeup, opened up shop in Washington State and even released a new top-of-the-line mining unit, all in the face of plummeting bitcoin prices.

Despite this, however, the new lawsuit and collapsing bitcoin sentiment is still weighing on the company’s bottom line.

After losing a reported $700 million in the second-quarter of 2018, many speculated that the company’s Q3 financials would be even worse. And Q4 results are likely to follow, thanks to the collapse of the crypto market.

Decreased Demand

According to Mao Shixing of F2 Pool, the world’s third largest mining pool, between 600,000 and 800,000 miners, including a large portion of miners from Bitmain, have halted operations in the past several weeks due to a lack of profitability.

“It’s hard to calculate a precise number of miners connected to us that had unplugged. But we saw over tens of thousands of them [shut down] in the past several days based on conversations we had with larger farms that we are in regular contact with,” he explained, adding, “This is what’s happening among miners in China.”

These estimates reflect data from blockchain.info, which measures a number of statistics from the world’s largest blockchain. Since early November, the network’s hashrate has fallen from 52 million tera hashes per second to approximately 41 million TH/s.

Not all is lost for miners looking to stay in the game, however. Thanks to Bitcoin’s dynamic difficulty adjustments, things make be looking up sooner rather than later.

Shixing explained, “The change of bitcoin’s mining difficulty normally has a lag of about 14 days [following hashrate change]. After this wave of shutdowns, those players who opted to stay in may have a better life.”

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SEC led crypto-related lawsuits are on the rise

According to legal analytics firm Lex Machina, cryptocurrency related lawsuits are up over 300 percent this year, with over 45 legal cases opened in the first half of the year. The report also highlights the ongoing crackdown from the SEC on initial coin offerings, with the regulatory agency accounting for up to 30 percent of this year’s legal battles.

In November alone, the SEC targeted EtherDelta, a decentralized trading platform for Ethereum tokens, as well as two crypto-companies, AirFox and Paragon, for raising capital through the sale of their tokens without registering them as securities. The two ICOs, which raised $15 million and $12 million respectively, were ordered to return funds to all investors, register their offerings as securities, and pay fines of up to $225,000.

Despite Washington’s fire-at-the-hip approach, however, regulators have given a number of crypto-companies the opportunity to retroactively register their offerings as securities. Additionally, the report notes that ICOs are getting off easy compared to traditional banking institutions for the same charges. For instance, the “wealth management” arm of Bank of America, Merrill Lynch, has taken a $1.25 million hit for selling unregistered securities back in March.

The SEC Draws a Line in the Sand

Last week, the SEC also released a statement, drawing clearer regulations in relation to the cryptocurrency space.

In the cease-and-desist proceedings of AirFox and Paragon, the SEC highlighted several key issues which other potential cryptocurrency companies should follow.

In what has generally been considered the ‘new-normal’ this year, the SEC reinforced its position that most ICOs are essentially securities offerings and must comply with traditional securities laws, including registering the tokens, and clarifying information about the company, the securities it is offering, and the product itself. Though there are some potential exemptions, it’s becoming clear that very few, if any, crypto companies will qualify for special treatment.

In a statement from the SEC, the agency notes, “market participants must still adhere to our well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated form or using new technologies, such as blockchain.”

The SEC also underlined new expectations for exchanges, including smart contract-based decentralized exchanges, stating, “A platform that offers trading in digital asset securities and operates as an “exchange” (as defined by the federal securities laws) must register with the Commission as a national securities exchange or be exempt from registration.”

Though the crackdown seems harsh, it does provide better insight into what the SEC expects from ICOs and cryptocurrency companies moving forward.

The Changing Face of ICOs

Security Token Offerings, or STOs, have become somewhat of a buzzword this year, with many blockchain and crypto companies rolling back their ICO plans in favor of a new, more compliant STO.

STOs, like normal securities, offer investors the opportunity to take ‘ownership’ over what a particular offering represents, such as equity, real estate or derivatives in addition to bringing greater liquidity to markets.

In addition to bridging the gap between traditional finance and the crypto-space, STOs offer enhanced credibility to the cryptocurrency space, subjecting companies to a new process of approval before they are able to begin selling their offerings. This move, in particular, stands to benefit the space, which has become bogged down with schemes and scams, products that do not live up to what they claim, and flat out thievery.

With the Wild West of crypto funding coming to an end, however, the ‘little guy’ arguably takes another hit in the world of traditional finance. Because the SEC requires would-be investors in “riskier” pre-sale rounds to be ‘accredited,’ retail investors often miss major opportunities to get in on offerings at extremely low-price points.

Whether this move into a more regulated space will be good for cryptocurrency markets remains to be seen, but one thing is certain, ICOs are changing and there are serious consequences for those trying to skirt the rules.

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Without SWIFT, Iran turns to crypto

On November 5th, the United States put into effect the harshest round of sanctions on Iran to date, scaling back Tehran’s ability to do business with foreign entities significantly.

As a result of these sanctions, and mounting pressure from the U.S., Society for Worldwide Interbank Financial Telecommunication (SWIFT), the international payments facilitator, has cut off services to the country’s Central Bank. Though SWIFT is a Belgium-based company, some of its biggest clients are in the United States, making it exceedingly difficult not to take American threats seriously.

U.S. Treasury Secretary Steven Mnuchin explained that SWIFT’s move was “the right decision to protect the integrity of the international financial system.”

The sanctions, which were part two of the U.S. campaign stemming from the withdrawal from Joint Comprehensive Plan of Action (JCPOA), have been met with criticism from other world powers.

China and Russia, for their part, have stated that they will continue to do business with Tehran, buying and selling goods in euros instead of dollars.

European countries, however, are largely reliant on SWIFT, and without it, lack a sustainable means to make or receive payments from Iran.

Leading up to the latest round of sanctions, however, both the European Union and Iran had proposed two wildly different solutions to this conundrum.

A New SWIFT

Germany has been the most vocal about the new sanctions, with Heiko Maas, German foreign minister saying: “Europe should not allow the US to act over our heads and at our expense. For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system.”

France’s Finance Minister, Bruno Le Maire, joined the call to action, stating: “With Germany, we are determined to work on an independent European or Franco-German financing tool which would allow us to avoid being the collateral victims of U.S. extra-territorial sanctions, adding “I want Europe to be a sovereign continent not a vassal, and that means having totally independent financing instruments that do not today exist.”

Though little progress has been made towards a SWIFT alternative, it’s clear that the European Union is getting fed up with U.S. overreach in the geopolitical space and getting more aggressive in its plans to move away from the U.S. dollar and U.S. controlled payment instruments.

Germany is also facing off against the U.S. over Russian plans to build a new natural gas pipeline, which the U.S. has repeatedly threatened to sanction, suggesting instead that the EU purchase more expensive LNG from American sources.

Iran Turns To Crypto

On the other side of the table, Iran is scrambling for its own solutions.

Despite its harsh stance against bitcoin and other cryptocurrencies in the past, Tehran has announced that it will be moving forward with plans to create its own state-sponsored cryptocurrency, much like Venezuela’s el petro.

The Informatics Services Corporation (ISC) has already developed the country’s new rial-backed currency, however hurdles still remain.

Due to the complexity of the endeavor, the still-unnamed digital rial requires the approval from the country’s Central Bank.

Seyyed Abotaleb Najafi , CEO of the ISC explained: “In order to realize renovation and create new infrastructure in our banking system, banks’ back end processes which is still in paper and traditional way should be changed and evolved.”

Conclusion

The value of the Iranian rial has already plummeted, along with its crude oil production, leaving both the citizens of the country and buyers of Iranian crude caught between a rock and a hard place.

The need for a solution is palpable and it’s becoming increasingly clear that the U.S. is unwilling to back down from its sanctions ploy.

While the EU scrambles to figure out its own solutions on the matter, Iran is rushing to complete and approve its state-sponsored cryptocurrency, which still requires a willingness from other parties to accept.

Iran risks running into the same problems as Venezuela’s el petro in this regard. President Maduro’s coin has yet to have any real impact on global trade, and due to its numerous failures, is unlikely to ever truly take root.

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Google, Target ‘verified’ Twitter accounts hijacked to promote bitcoin scam

Google and Target are the latest to fall victim to malicious actors who hijack official ‘verified’ Twitter accounts in order to promote a “Bitcoin Giveaway Scam.”

On Tuesday, November 13th, both the Target and Google G-Suite ‘verified’ Twitter accounts were compromised and used to promote a scam advertising the giveaway of free bitcoin in the latest of a string of hacks focusing on leveraging high-profile businesses to take advantage of less-savvy Twitter users.

Though Google has yet to release a statement on the matter, Target commented immediately saying, “Early this morning, our Twitter account was inappropriately accessed. The access lasted for approx. half an hour & one fake tweet was posted during that time about a bitcoin scam. We have regained control of the account, are in close contact with Twitter & are investigating now.”

As with many similar instances in recent weeks, both tweets were promoted as advertisements, allowing the hackers to reach a wider audience. The tweets also stated that the two businesses would finally accept cryptocurrency payments.

The History of the Twitter Giveaway Scam

Earlier this year, it was reported that a similar scheme, the “Eth Giveaway Scam” had resulted in the loss of $4.3 million worth of cryptocurrency.

Scammers would often pose as industry leaders, such as Warren Buffet or John McAfee and even official exchanges in order to mislead Twitter users into sending them ether. This was typically done by asking for a small amount of the cryptocurrency, promising to send back a significantly larger cut.

One scammer even made $5,000 in one night posing as Elon Musk, while another made 30 ether from one victim by posing as Erik Voorhees.

These types of scams have led to notable figures such as Vitalik Buterin to add phrases like “Non-giver of Ether” to their alias to help ensure the community does not fall victim to the ruse, but the latest onslaught of hacked ‘verified’ accounts highlights a more worrying issue.

A ‘Verified” Scam

Twitter issues a comforting blue checkmark to larger companies and celebrities to prevent would-be impersonators from damaging their reputation or misleading a particular audience, but the practice seems to be falling short in recent months.

From the G-Suite and Target accounts, to another recent scheme wherein malicious actors took control of the Capgemini Australia verified account to pose as Elon Musk, it’s becoming increasingly difficult to tell what is real.

In the case of the Capgemini scheme, hackers even hijacked an army of politicians and businesses to help promote and re-tweet the fake Elon Musk’s giveaway thread.

Even without the ‘verified’ tag, scammers are getting more and more creative and outrageous in their promotion of these schemes – with some even calling out other scammers to promote their own scam!

Rule of Thumb

Just like anywhere else on the internet, it’s always important to stay vigilant, even on Twitter.

Remember, no one from an exchange, wallet provider or otherwise is ever going to ask you for your private keys, and if they do, it’s likely a scam.

Additionally, “if it’s too good to be true, it probably is,” especially if it involves sending someone else money first.

And finally, no, Elon Musk isn’t going to give you bitcoin, ether, or dogecoin. I promise.

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Decentralizing a billion-dollar virtual industry

In-game virtual transactions were one of Satoshi Nakamoto’s original visions when creating Bitcoin, but it is the Ethereum blockchain that is really taking that idea to the next level with Decentraland, an open-world VR platform that will allow users to create their own reality.

Though Decentraland has still not officially launched, crypto-enthusiasts and real estate speculators alike can already bid for virtual plots of land within the game’s limited space.

And these auctions are going exceedingly well.

So far, over $28 million in LAND, non-fungible parcels by which the world is divided, has been auctioned off in the game’s ERC20 based token, $MANA. And now, in a partnership with Ripio, an Argentina-based peer-to-peer crypto lending network, users will be able to purchase LAND using credit.

In these crypto-mortgages, users can put a 10-percent down payment on the market value of the ‘property’ and wait for a lender to claim the request. Once that happens, a smart contract is generated and if a borrower doesn’t pay up, the virtual land reverts to the lender. But be weary of the interest, as RCN rates go from some 28 percent to as high as 78 percent!

Big Shoes to fill

Video games have come a long way since cracking open boxes in Mario Bros or chasing rings in Sonic the Hedgehog. With the introduction of MMORPGs, in-game economies have become robust and exceedingly complicated, with players trading their virtual fortunes for items or resources to gain an edge on the competition.

In the early days, it was fairly rare to trade real money for in-game currencies, as most of these transactions were against the games’ terms of service. But, naturally, capitalism took over, and ambitious digital capitalists created both a new kind of workforce and profitable enterprises centered around the sale of in-game currencies.

From gold farming in games like World of Warcraft or Dark Ages of Camelot to complex third-party currencies which could be bought to make peer-to-peer purchases, players made a fortune selling gold, unique items, and what essentially translated to their own time to gather these resources.

The Birth of an Industry

Online stores like Internet Gaming Entertainment (IGE), which was founded by Brock Pierce in 2001, and boasted $500 million in annual volume at its peak, paved the way for a bustling currency-services industry.

IGE, for its part, even gained the attention of Goldman Sachs, which bought a stake of the company for $60 million before Pierce was pushed out and replaced with Trump’s ex-right-hand-man, Steve Bannon.

Besides online-stores, however, savvy entrepreneurs also made a killing on different exchange platforms where users could come together to buy an intermediary currency to trade for in-game items.

The most notable of these were The Virtual World Exchange (VirWox), an exchange allowing users to buy and sell Linden Dollars, a currency used in the game Second Life, and D2Jsp, a forum that provided users with the opportunity to buy its own currency “forum gold” to trade with other users for in-game items, mostly within Diablo 2.

Billions Hanging on a Thread

With the influx of real cash into virtual markets, a series of perplexing questions arose. In-game cyber-brothels, gambling dens, mafia-like ‘griefers’ and even virtual stock market fraud has made both the companies that created the games and even some of the players rethink their relationships with these virtual worlds.

There’s a lot on the line, after all.

On VirWox alone, over $1 billion has been traded for Second Life’s Linden Dollar currency, but that’s only a small fraction of the world’s virtual markets.

In the virtual universe of Entropia, property sales have surged, with one company even buying “Planet Calypso” for over $6 million.

Justifying the purchase, Corey Redmond, the president of SEE Virtual Worlds, noted, “The Entropia Universe and virtual worlds in general are extremely lucrative. Calypso alone has had over $428 million processed in player-to-player transactions in 2010.”

Other notable sales in the Entropia Universe include a $625,000 nightclub and a $335,000 crystal palace.

What’s In Store For Decentraland?

Though Decentraland is certainly not the first virtual platform to gain the attention of speculators and would-be digital capitalists, it is the first completely decentralized platform, meaning no specific company could pull the plug.

While Entropia and Second-Life both boast bustling economies and some notably high-priced properties, they’re both run by a single entity, meaning that the $6 million in-game planet purchase could vanish if MindArk, the company behind the game, decided to call it quits.

Decentraland is also cooperating with other blockchain-based gaming platforms, such as Axie Infinity, a collectables game featuring player-vs.-player battles.

With a string of positive news surrounding Decentraland, the game’s cryptocurrency, $MANA, has surged by over 38 percent over the past month, jumping to a market cap of over $100 million.

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Tech giants launch blockchain identification pilot

Accounting giant Deloitte and Chicago-based identity management firm Attest have announced their cooperation in a plan to offer blockchain identification  for government clients, according to a press release.

Attest already has two digital identification services on the market, its basic wallet and enterprise level wallet. The tools allow consumers to protect and securely share personal data with governments and businesses. But with Deloitte’s expertise in the blockchain world, the new partnership could be the beginning of a new world of digital identity.

Cab Morris, co-founder and CEO of Attest noted, “Combining government’s robust identity verification infrastructure with a platform engineered for security, privacy and scale can also unlock tremendous value for both citizens and businesses outside of government. A government-issued digital identity has the potential to reduce costs and risk for businesses in all industries, while also providing citizens with greater security, privacy and control over personal data.”

Marc Mancher, principal, Deloitte Consulting LLP, and government and public services practice’s automation service business leader, explained further, “Blockchain requires a digital credential and in government, requiring a digital credential gets complicated pretty quickly,” adding, “Attest brings a set of solutions to help address this issue of digital credentials, making the use of solutions that require that digital identity more appealing technology for government clients.”

Though Deloitte and Attest are targeting government clients in their latest blockchain identification pilot, they’re certainly not the first tech giants to jump onto the idea.

IBM’s Blockchain Identification

In late October, IBM and Visa also revealed their intentions to create a business-to-business system for blockchain payments.

The project, called B2B Connect, will create a digital identity for financial institutions, allowing them to make secure cross boarder payments. Utilizing the Hyperfabric Ledger framework, the system will reportedly tokenize vulnerable data, including bank details and account numbers.

“B2B Connect’s digital identity greatly reduces the opportunity for fraud that might otherwise exist with checks, ACH and wire transfers today, while also helping companies remain compliant as part of the regulated financial ecosystem,” Kevin Phalen, global head at Visa Business Solutions, explained.

The Pros and Cons of Blockchain Identification

Blockchain identification offers a number of solutions to the growing challenges of an increasingly connected world. It can reduce fraud, provide a more secure digital landscape for online purchases and interactions, and even help create a new start for migrants or refugees who may not have an ID.

But it also opens up a whole world of other, more sinister, possibilities. Do we really want our governments to be able to keep *that* close of an eye on us? With blockchain technology, every transaction is auditable, traceable, and trackable.

There are already concerns of unfair taxation policies, and a digital identity on the blockchain could make that inescapable.

While the benefits are clear, there must be some thought in place about how we will handle the full spectrum of problems that might arise before jumping right into this new tech.

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Venezuela’s “el Petro” stumbles at the starting line…again

Venezuela’s controversial state-sponsored cryptocurrency, the ‘Petro,’ is back…kind of. And it’s already starting to feel like a case of déjà vu.

What happened with “El Petro”? 

Originally “launched” in early February, Venezuela’s state-sponsored cryptocurrency has been a point of controversy since its inception.

In its initial state, Venezuelan President Nicholas Maduro announced that the oil-pegged-coin was to be used to skirt U.S. sanctions. Part of this announcement mentioned that the cryptocurrency project had raised over $735 million shortly after release. The true details, however, remained limited at best.

The original whitepaper, published in Spanish, noted that the cryptocurrency was to be built on the Ethereum blockchain. But after some reconsideration, a newly-released English-language whitepaper revealed that it would be built on the NEM infrastructure. Neither blockchain contained a real version of the PTR.

In addition to the whitepaper confusion, it quickly became apparent that it was impossible to actually purchase the cryptocurrency, as the website was not operating as intended.

In the months following these events, Maduro made every attempt to spur the adoption of his creation, from offering massive discounts on Venezuelan crude oil to pleading with members of the Organization of Petroleum Exporting Countries (OPEC) to participate.

Despite his efforts, however, not a single government publicly stated that they would be using the cryptocurrency. And according to multiple publications, Venezuelans weren’t fond of using the coin either.

However, despite the lack of a cryptocurrency, supporters or adopters, Maduro doubled down on his dream. He pegged a newly released ‘bolivar soberano”, a currency which effectively slashed five zeroes from the bolivar, to the Petro.

The launch of the bolivar soberano led to chaos within the country, leaving citizens scrambling to exchange notes, and eventually leading the government to cap ATM withdrawals at 10 bolivar soberanos (about US$0.15) per day.

The currency confusion also led to numerous scams, with merchants and customers alike looking to take advantage of the situation.

Expectations vs. Reality

In early October, Nicolas Maduro finally announced that the second round of Petro sales would begin on November 5th, with revitalized claims that the state-sponsored cryptocurrency would usher in a new era of financial freedom for Venezuelans.

Additionally, Maduro released an order stating that Venezuelans would be required to purchase passports and other government services with the cryptocurrency.

Leading up to the latest release of the Petro, Maduro claimed that over 100 countries had expressed interest, and that the cryptocurrency would be available to buy, sell, and trade on at least 6 major exchanges almost immediately upon its release.

So far, the exchanges listing the cryptocurrency are little-known and fairly new, with most created just this year, including Afx Trade, Bancar, Cryptia, Criptolago, Amberes Coin, and Cave Blockchain – a far cry from Binance and Huobi which were among the ‘major exchanges originally promised.

Despite the apparent lack of interest from major exchanges, Venezuela is moving full-speed-ahead with its plans to legitimize el Petro.

So what’s new this time around?

Maduro created his own blockchain! Kind of…

When exploring the protocol and whitepaper, some Reddit users were quick to reveal that the diagram highlighting how the blockchain works was taken directly from the development documentation of Dash.

The Reddit gang also did some more digging, uncovering the exact command list used in el Petro’s wallet (at least while it lasted) had also been lifted from another project.

petro

Additionally, though el Petro has officially hit the streets, users seem to be having mixed experiences downloading and using the wallet, much less actually purchasing the cryptocurrency.

The original version of the wallet which the Reddit users accessed is no longer online and, until last week, the download “file” was simply an empty folder called “wallet.”

Today, however, it appears there’s no wallet at all, as users receive a pop-up message which promises that the wallet is coming soon…

petro fail

In addition to its revamped infrastructure, the Petro is no longer pegged to just oil. Now, the price of one Petro is based on a complicated mixture of oil, diamonds, gold and iron, according to the whitepaper. It should also be noted that there are no clear figures of the country’s true reserves of gold, diamonds, or iron.

Exit Scam or just bad execution?

Maduro’s Petro v2 rollout has left a lot to be desired once again. But is it an exit scam or are they just having trouble launching in this new endeavor?

The regime is doing everything in its power to legitimize the new cryptocurrency, from forcing citizens to pay for passports with it to pegging their fiat currency to it. However, even Venezuelans are having trouble believing that it will ever be successful.

Gabriel Negrín, a journalist for Kryptoguia based in Venezuela noted, “The situation with el Petro is more complicated than it seems. The official launch was delayed a couple of times; wallets seem nonexistent and the blockchain shows quite rare movements. In addition, even though we have said that the oil price has been reflected (currently at 68.55 $ approx), they decided to leave it fixed at $60.”

Gabriel added, “They forced the banks to place the balance in Bolívares and in Petro, nevertheless this is clearly symbolic since you cannot transform your money to Petro through the exchange platform; In addition, there is no convertibility of Petro to BTC or other cryptocurrencies.”

Another skeptic, Twitter user JesusLara, attempted to purchase the cryptocurrency for himself, only to be turned away without any coin. He then investigated the blockchain explorer, finding that only 91 Petro, totaling approximately $5,500 had been exchanged in the 5 days since launch, between only 30 ‘real’ buyers.

While it’s still difficult to confirm what’s exactly happening behind the scenes given the lack transparency of the regime, it’s clear that Petro v2 may already be heading down the same path as its predecessor.

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North Korea’s $571 million crypto hacks are just the tip of the iceberg

In a new report released by Group-iB, a cybersecurity intelligence agency, it has been revealed that 65 percent of the $882 million in cryptocurrency stolen from exchanges ends up in North Korea.

With sanctions from the United States and Europe continuing to weigh on Pyongyang, North Korea has reportedly turned to cryptocurrencies to generate additional revenue.

According to the report, North Korean hackers have stolen as much as $571 million since January 2017, making up nearly 5 percent of the country’s GDP.

The report notes that many of the attacks are tied directly to neighboring countries Japan and South Korea, including the $534 million hack of Japan’s CoinCheck, which has only recently resumed operations.

North Korea

(Source: Group-iB)

Though just a few of the attacks that have occurred over the past two years have actually been tied to a specific criminal organization, South Korea expects that North Korean hacker groups are likely responsible for many more.

The three branches of the DPRK’s hacking ecosystem

First, and most well-known, is the Lazarus Group, the supposed state-sponsored hacker group responsible for the Sony Motion Pictures hack, and according to some, the WannaCry attack which infected over 200,000 computers across 150 countries.

Lazarus has widely been blamed for many of the attacks associated with the North Korea’s cybercrime wave, but FireEye suggests that there may be two other groups which are casually flying under the radar.

FireEye believes that there are two groups that are specifically focused on cyber-espionage, targeting infrastructure, media outlets and the general population – the Lazarus Group and TEMP.Hermit – and one other group which is responsible for financial crime – APT38.

Similar toolsets and even overlaps in coding have linked the three groups to one another, offering a surprising insight into how organized and complicated the North Korean government’s efforts might be. The FireEye report also uncovers how precise and patient the groups are in their attacks.

North Korea

(Source: FireEye)

With these tools and techniques, FireEye noted that the first activity from APT38 could be traced all the way back to 2014, the same time that Lazarus first hit the scene. And North Korea’s attacks are much further reaching than originally thought, directly targeting infrastructure and organizations in at least 12 countries.

North Korea

(Source: FireEye)

Conclusion

While many of the exact details of the three organizations tied to Pyongyang remain scarce at best, it’s becoming abundantly clear that North Korea possesses a deep understanding of technology.

Last year, FireEye also reported the country had started mining cryptocurrencies around the same time sanctions on coal trade were enacted, suggesting that the regime could be using their most abundant natural resource to generate revenue despite the economic measures weighed against it.

Additionally, South Korean media outlet, Yonhap News, notes that there has been a significant uptick in cryptojacking activity, most likely tied to North Korea’s hackers.

While the DPRK has fallen out of favor with many international news outlets in recent months, it’s clear the country is still very active behind the scenes.

 

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Coinbase raises $300 million following IPO rumors

In a blog post released this morning, Coinbase has announced that it has raised $300 million in its latest funding round at a valuation of $8 billion.

The equity raise, led by Tiger Global Management, with participation from Y Combinator Continuity, Wellington Management, Andreessen Horowitz, Polychain and others, is its first since 2017.

The announcement noted that the company will be using the funds to accelerate adoption, expand their crypto offerings, build new utility applications for the space, and make it easier for institutions to participate.

Asiff Hirji, President and COO of Coinbase explained in the post, “ We see tremendous promise in crypto to build the next great phase of the internet (often referred to as Web 3), which has the power to put control back in the hands of consumers, unleash a new era of innovation, and offer greater access to economic opportunities to more people around the world.”

Hirji added, “We see Coinbase’s growth as validation that the ecosystem will only continue to grow in size, influence and impact — ultimately ushering in a more open financial system for the world.”

Fortune also hinted at another potential fundraising round which would offer an additional $200 million or more in common stock.  Fortune’s source explained, however, that round would be used specifically to allow employees and early investors to cash in their shares and would not contribute to the overcall capital raised by the company.

Is Coinbase really preparing to go public?

The cash raise reinforces rumors of Coinbase’s intentions of going public with an $8 billion valuation recently teased by CNBC’s Ran Neuner.

Though Coinbase has not confirmed idea of an IPO, moves into the institutional space, including its high-profile acquisition of Keystone Capital, which allowed the company to become a regulated broker, suggest the company is getting particularly serious about participating in Wall Street happenings.

Additionally, Coinbase is poised to post over $1.3 billion in revenue in 2018, according to documents reviewed by Bloomberg, placing it among some of the world’s top startups. Though the company is set to post only $90 billion in revenue in the third quarter, it is aiming to wrap up the year with a strong finish, estimating that 80 percent of the revenue will come from consumers, 15 percent from institutional clients and 5 percent from undisclosed sources.

It’s not the first round of rumors of a Coinbase IPO, either.

Last December, Asiff Hirji noted, “It is certainly in the interest of our investors…and the most obvious path of Coinbase is to go public at some point, but there’s a lot for us to do between now and then, whenever that date is.”

So, I guess the real question here is: has Coinbase done what they needed to do to go public?

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Visa, Mastercard and the future of cryptocurrencies

Despite previously dismissing cryptocurrencies as a tool for fraud and criminal activity, Mastercard and Visa appear to be warming up to the idea.

In a patent application – application 20180308092– filed Thursday, October 25th, it appears that Mastercard is looking to apply the principles of fractional reserve banking to crypto assets, or as the credit card giant phrased it, “blockchain currencies.”

The move, which seems counterintuitive to many in the crypto space, would allow Mastercard to use cryptocurrencies in a similar fashion to fiat currencies, wherein only a fraction of deposits are backed by actual assets.

Could Mastercard Create A Crypto Credit Network?

In its application, Mastercard describes a growing desire for anonymity and security in financial transactions, but suggests that currently, blockchain technology is not yet efficient enough to maintain the security of the payee while traditional fiat transactions are.

In the application, Mastercard wrote:

“There is a need to improve on the storage and processing of transactions that utilize blockchain currencies. Existing payment networks and payment processing systems that utilize fiat currency are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems. In addition, existing payment systems are often configured to perform complex calculations, risk assessments, and fraud algorithm applications extremely fast, as to ensure quick processing of fiat currency transactions. Accordingly, the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.”

The application went on to describe what will likely be a cryptocurrency credit card network, utilizing both crypto assets and fiat currency.

Though patents for projects that never materialize are filled frequently, the move by Mastercard, which previously cited crime and fraud as a reason to not use cryptocurrencies, could suggest the company is opening up to the new asset class.

Visa CEO Chimes In

In an interview with former hedge fund manager and notorious crypto skeptic, Jim Cramer, Visa’s CEO, Al Kelly, weighed in on the subject of cryptocurrencies.

Cramer, who once claimed that the ‘sun was setting’ on the crypto space, asked Kelly if cryptocurrencies posed a threat to Visa’s payment empire. Kelly responded, saying, “Certainly not in the short to medium-term in any way, as I think that [the market needs to actually believe] that crypto is moving from being a commodity to really being a payment instrument.”

Kelly did mention, however, that if cryptocurrencies were to take off, that Visa would, of course, adapt.

“If we have to go there (cryptocurrency), we will go there, but right now, its more of a commodity than a payment vehicle.”

Conclusion

While neither Visa nor Mastercard have made any major moves to integrate cryptocurrencies into their operations just yet, Mastercard’s patent application suggests that such a move could be on the horizon.

Growing institutional interest in the space has dominated the conversations surrounding the health of the industry in 2018, but the technological advancements cannot be ignored either.

With new off-chain solutions for Bitcoin, mainnet launches of competing blockchains, and improvements on other established cryptocurrencies, the crypto-space is still has a lot of promise, despite depressed prices.

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How universities will spark the next crypto boom

Renowned universities Cornell, Stanford, MIT, Yale and more are now offering courses on cryptocurrency and blockchain technology, suggesting that the latest generation of college attendees aims to be more than just dabblers in the space.

Professors teaching the courses cite blockchain technology’s potential to transform the future of any number of industries, but especially finance and economics.

Kevin Werbach of the University of Pennsylvania explains how blockchain courses could fit into a student’s curriculum, “In order to understand blockchain well, you actually need to learn a bunch of subjects that we already teach in the university – things like economics and finance and law and distributed systems in engineering.”

With interest growing, some high-profile guests are even contributing to the curriculum of major universities.

Kathryn Haun, a partner at Andreessen Horowitz and Stanford alum, teaches a course called “Cryptocurrency”, while Balaji Srinivasan, former CEO of Earn.com and current CTO at Coinbase, offers a course on development.

On the other side of the U.S., Tadge Dryja co-author of the Lightning Network whitepaper and former CTO of Lightning Labs, teaches “Cryptocurrency Engineering and Design” alongside Neha Narula the director of the Digital Currency Initiative at MIT.

And interest in cryptocurrencies and blockchain tech is showing no signs of slowing top universities.

Emin Gün Sirer, Associate Professor of Computer Science at Cornell, explained, “Usually, when you have five to a dozen students in such a class, you’re teaching a popular class. If was interesting to see that level of interest… “

Universities investing in the crypto space

David Swensen, Yale’s chief investment officer of the university’s $29 billion endowment fund, is betting on cryptocurrency and blockchain with new investments in Andreessen Horowitz’s $300 million crypto fund and Coinbase co-founder Fred Ehrsam’s Paradigm project.

Though it’s safe to say that crypto only accounts for a small part of Swensen’s investments, the head nod from Yale’s “in-house” Warren Buffet has clearly had a ripple effect, sparking other universities to follow Yale’s lead.

In addition to Yale, other universities such as MIT, Harvard, Dartmouth, and the University of North Carolina have all dumped a bit of cash into crypto investment funds.

The Information journalist, Jon Victor, noted, “A move by endowments into funds that will directly bet on cryptocurrencies signals a major shift in investor sentiment toward the asset class, in the same way that institutions over the past decade became more willing to invest in private tech companies. Backing from such closely watched institutions could help validate cryptocurrencies, which are still considered too risky by many institutional investors.”

Conclusion

With some of the top universities in the United States diving into the crypto-sphere, it’s likely that others will follow.

It’s clear that millennials are leading the crypto-revolution, and with positive sentiment growing louder, we will definitely be seeing more classes, and more high-profile investments – in the same way we saw universities dive into tech stocks years ago.

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