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PayPal has stopped working with controversial domain registrar and hosting service Epik, a company providing services to far-right groups.

• A report by Mashable on Saturday said Epik claimed in open letters that the PayPal block is due to “anti-conservative bias.”
• However, PayPal said it had ceased servicing the company over concerns about financial risk.
• Epik provides hosting for sites run by far-right organizations including Gab and the Proud Boys, a violent group U.S. President Donald Trump recently refused to condemn (though he later changed his mind).
• The firm has previously provided services for 8chan but eventually cut ties after it was used for posts by the perpetrator of a 2019 mass shooting in El Paso, Texas, the report said.
• A Mashable source “close to the situation” suggested that PayPal’s action may be over Epik’s digital currency, Masterbucks, that is used to pay for domain services and can be exchanged for U.S. dollars.
• The source said Epik had been touting the digital coin as a way to avoid certain taxes.
• A previous version (archived here) of the Epik website said Masterbucks has “tax advantages” for people “planning to dispose of domains in order to fund the development of other domains.”
• PayPal reached out to Epik a month ago to remedy the situation, according to letters to the payment firm posted on the domain registrar's blog.
• It asked questions about money transmission licenses, anti-money laundering, “offshore numbered accounts,” “cross‐border activities and law enforcement.”
• Epik called the questions “absolutely absurd and well outside of any knowledge or experience we have as a domain registrar,” and described the action as intended to “deplatform conservative voices.”

Also read: 93 Days Dark: 8chan Coder Explains How Blockchain Saved His Troll Forum

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The U.S. government is pursuing a civil forfeiture claim on more than 300,000 units of the tether (USDT) cryptocurrency after they were reported stolen in a hack earlier this year.

The funds, co-owned by Shixuan Cai and business partner Lin Jian Chen, were later frozen by operator Tether Ltd. after Cai reported the theft to the Los Angeles Police Department (LAPD) in April, court documents filed on Thursday show.

Now the U.S. government wants to finalize the legal seizure of those assets, saying they are in violation of section 1030 of the Civil Forfeiture code, for “fraud and related activity in connection with computers.”

Related: FBI Investigated Extortion Attempt Over Allegedly Negative Ripple Videos

Back in February, Cai purchased 300,900 USDT – a stablecoin linked to the price of the U.S. dollar – through the cryptocurrency exchange Binance. Cai then transferred those funds to a personal wallet co-owned and managed with Chen.

Just four minutes after Cai had transferred the tether from Binance to the personal wallet, the funds were transferred again, but without the business pair’s permission, to a wallet address ending in 8869.

Hours later the funds were split with two thirds (200,600 USDT) of the funds going to yet another wallet address ending in 44c2, while 100,301 USDT remained in the 8869 wallet.

Cai contacted Chen the following day attempting to uncover how the funds had been moved, learning Chen had recorded their private key, used for authorizing transfers from their wallet, in an Evernote account.

Related: Chinese Authorities Crack Down on Gambling Sites Using Tether Stablecoin

Evernote is a note taking and task management application that stores information on the cloud and is accessible across multiple devices owned by an individual, or individuals if shared.

Hackers masking their IP address through a virtual private network (VPN) found the wallet key in Evernote and conducted multiple intrusions between Jan. 26 and Feb. 5, Chen later learned.

The key was used to authorize the transaction from their personal wallet to the destination wallet ending in 8869. Cai reported the theft two months later on April 9 to both Tether Ltd. and the LAPD where the funds were temporarily frozen by Tether pending an investigation.

A week later, Special Agent Patrick Leighton of the U.S Secret Service (USSS) was contacted by a Tether representative who said an unidentified individual was requesting a lifting of the freeze on the USDT so that they could transfer the USDT to another cryptocurrency.

Leighton asked Tether to provide the unidentified individual’s contact details and request the individual to get in touch with the agent. Shortly after Leighton was contacted by an individual who identified himself only as “Kamil,” using the email address “qlYyq2t5iKIbBfxu@protonmail.ch.”

Kamil told Leighton the funds originally belonging to Cai and Chen were transferred to him by an unidentified business partner who in turn had received the funds from an undisclosed person in China.

The China-based individual was said to have asked Kamil to handle the transfer of Cai and Chen’s funds to purchase ether on the Kyber network because they were “not familiar with cryptocurrency.”

Kamil claimed he wanted to split Cai and Chen’s funds into equal amounts over three wallets and that he would receive 15% of the total funds for conducting the intended transactions on behalf of his partner.

No further details were provided to Leighton regarding the alleged partner, with Kamil claiming he had already destroyed evidence of his partner’s information.

By May, Judge Pedro Castillo of the U.S Central District Court of California issued a seizure warrant for the roughly 300,000 USDT and in June issued an order extending the time for the USSS to execute the warrant.

At that time, Tether Ltd. unfroze the stablecoin funds at the behest of the USSS before the warrant was executed and the funds transferred to a wallet controlled by the U.S. government.

The USDT shall remain in the government’s possession subject to the Court’s jurisdiction pending the U.S. government’s claim of fraud, court documents show.

The case is a reminder never to leave any wallet keys or recovery phrases stored online where they may be accessed by bad actors.

See also: Chinese Authorities Crack Down on Gambling Sites Using Tether Stablecoin

See court document in full below:

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A possible exploit in decentralized finance (DeFi) protocol Harvest Finance has sent the platform’s native token, FARM, tumbling by 65% in less than an hour, according to CoinGecko.

According to reports surfacing early Monday, upwards of $25 million in value has been drained from Harvest Finance pools and swapped for renBTC (rBTC) by an unknown attacker. Other funds have been mixed through Tornado Cash, an Ethereum obfuscation software. Following the attack, investors appear to have pulled roughly $350 million from the site.

“We are working actively on the issue of mitigating the economic attack on the Stablecoin and BTC pools, and will update in this thread in realtime as soon as additional details are available,” the anonymous team behind Harvest Finance said in a tweet.

Related: ‘It’s This Really Precious Thing.’ Lex Sokolin on DeFi’s Next Chapter, and Frances Coppola on the End of Banks

The team further said the “economic attack” was made possible by manipulating stablecoin prices on Curve Finance, another DeFi protocol that Harvest Finance contracts interact with. 

The project’s admins claim to have withdrawn “100% of stablecoin and BTC curve strategy funds” to the vault and “are moving to block deposits to the Stablecoin and BTC vault,” the Harvest Team said in the project’s Discord at 4:45 UTC.

Harvest Finance did not return questions by press time.

The attack comes after DeFi analyst Chris Blec claimed Harvest Finance’s administrators held an “admin key that can drain funds” locked in the protocol’s contracts. It’s unclear at this stage in the exploit what role the admin key or the anonymous team behind the protocol have to do with the sudden drain in assets. Blec did not return a request for comment by press time.

Related: Market Wrap: Bitcoin Sticks Around $13K While Ether Locked in DeFi Dips

Harvest Finance had over $1 billion in total value locked (TVL) just prior to the possible exploit being unveiled. TVL has dropped to $673 million as of 5:00 UTC, according to DeFi Pulse. 

This is a developing story and will be updated when more is known.

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Virgil Griffith’s lawyer has filed a motion to dismiss the U.S. government’s charges that the Ethereum developer violated sanctions law by speaking at a North Korean cryptocurrency conference.

The motion, filed by attorney Brian Klein, claims the government’s late-2019 indictment of Griffith doesn’t “specify any alleged overt facts,” and contains no actual allegation of fact.

Griffith was arrested last November on charges he violated the International Emergency Economic Powers Act (IEEPA) and executive orders by going to North Korea and speaking during a crypto conference, where he allegedly taught government officials how to use the techology to bypass economic sanctions.

Related: OFAC Warns That Firms Helping Victims With Ransomware Payouts Risk Violating Its Rules

It’s the first sanctions case in a U.S. court involving cryptocurrency, and as such is likely to be closely watched. The results could hold a precedent for other cases the government might bring under the law, as the U.S. continues adding individuals and entities to its sanctions lists.

Read more: USA v. Virgil Griffith: What We Know (and Don’t) in the Bombshell Crypto Sanctions Case

Klein’s motion to dismiss claims that the President of the United States does not have the authority to prohibit the transmission of information, and that the Office of Foreign Assets Control (OFAC), the Treasury Department division overseeing sanctions enforcement, has “issued no regulations and published no guidance to clarify the definition of ‘services'” that are otherwise prohibited under executive orders.

“It appears that the government’s theory is that, by attending and speaking at a blockchain conference in Pyongyang, Mr. Griffith provided ‘services’ because he ‘provided the DPRK with valuable information on blockchain and cryptocurrency technologies, and participated in discussions regarding using cryptocurrency technologies to evade sanctions and launder money,'” the motion said.

Related: Iran Is Ripe for Bitcoin Adoption, Even as Government Clamps Down on Mining

According to Klein, Griffith only provided information that was already in the public domain.

The next step in the case is likely a government response to Klein’s motion.

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Bitcoin closed above $13,000 Saturday for the first time in over two and a half years following a week of positive news for the leading cryptocurrency.

• Bitcoin had last closed above $13,000 on Jan. 15, 2018, six weeks after bitcoin closed above $13,000 for the first time on its way to an all-time high of $19,892, according to Coinbase market data.
• Through late June and early July in 2019, bitcoin briefly traded above $13,000, revisiting that price level on Wednesday through Friday, but still failing to close above it.
• This week, news that PayPal is allowing its customers to buy and sell certain cryptocurrencies, along with recent investments in bitcoin by Square and MicroStrategy, has given the leading cryptocurrency a strong tailwind. Just yesterday, JPMorgan analysts wrote that bitcoin has “considerable upside potential.”
• Bloomberg Intelligence set $13,000 as a breakout price target for bitcoin in a July report that called the leading cryptocurrency a “caged bull”.
• Year to date, bitcoin has gained 82%.
• Bloomberg Intelligence Senior Commodity Strategist Mike McGlone, who authored the report, told CoinDesk in an email he was impressed by how bitcoin broke above $10,000 in late July and turned that level into support when it was revisited from the upside in early September.
• As for the future, bitcoin’s “fundamental and technical indicators remain positive,” McGlone said.

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Bitcoin closed above $13,000 Saturday for the first time in over two and a half years following a week of positive news for the leading cryptocurrency.

• Bitcoin had last closed above $13,000 on Jan. 15, 2018, six weeks after bitcoin closed above $13,000 for the first time on its way to an all-time high of $19,892, according to Coinbase market data.
• Through late June and early July in 2019, bitcoin briefly traded above $13,000, revisiting that price level on Wednesday through Friday, but still failing to close above it.
• This week, news that PayPal is allowing its customers to buy and sell certain cryptocurrencies, along with recent investments in bitcoin by Square and MicroStrategy, has given the leading cryptocurrency a strong tailwind. Just yesterday, JPMorgan analysts wrote that bitcoin has “considerable upside potential.”
• Bloomberg Intelligence set $13,000 as a breakout price target for bitcoin in a July report that called the leading cryptocurrency a “caged bull”.
• Year to date, bitcoin has gained 82 percent.
• Bloomberg Intelligence Senior Commodity Strategist Mike McGlone, who authored the report, told CoinDesk in an email he was impressed how bitcoin broke above $10,000 in late July and turned that level into support when it was revisited from the upside in early September.
• As for the future, bitcoin’s “fundamental and technical indicators remain positive,” McGlone said.

• Hedge Fund Billionaire Tudor Jones Says Bitcoin Rally Only in ‘First Inning’: Report
• BitMEX Accelerates Mandatory ID Verification After Charges of Lax Anti-Money Laundering Controls
• ‘Garbage’ Market Data Is Holding Bitcoin Back: MicroStrategy CEO
• Crypto Long & Short: Coinbase’s ‘Apolitical’ Stance Isn’t Nearly as Simple as It Sounds

Bitcoin has proven itself to be a risk asset, not a safe haven, with “considerable” potential upside, according to a Friday note from JPMorgan’s Global Quantitative and Derivatives Strategy team obtained by CoinDesk.

Writing to clients in “Flows & Liquidity,” one of JPMorgan’s flagship publications, the authors said that characterizing bitcoin as a “risk” asset rather than a “safe” asset is “more appropriate” based on the leading cryptocurrency’s increased positive correlation with the Standard & Poor’s 500 Index since March.

Bitcoin’s function as a risk asset is “likely more of a reflection of a need for an ‘alternative’ currency rather than a need for a ‘safe’ asset or ‘hedge’.”

Related: Bitcoin in Retirement Accounts with Adam Pokornicky and Adam Blumberg

“To some extent, this is also true with gold,” the authors add, although the yellow metal’s volatility is notably lower than bitcoin’s.

How investors currently perceive bitcoin’s value implies that it could “compete more intensely” with gold as an “alternative” currency over the coming years, the analysts wrote. Bitcoin’s role as a gold competitor is amplified by Millennial investors’ interest in cryptocurrency, according to the note, and the inevitability of the younger investor demographic becoming “over time a more important component” of the investor universe.

Bitcoin’s market capitalization would have to increase by a factor of 10 before it could match the total private sector investment in gold, the author’s note, adding that “even a modest crowding out of gold as an alternative currency over the longer term would imply doubling or tripling of the bitcoin price from here.”

“In other words, the potential long-term upside for bitcoin is considerable.”

Related: Market Wrap: Bitcoin Pulls Back From $13K While Ether Falls on DeFi Cooling

Beyond Millennial investor interest, the note highlights the significance of corporate and legacy investor interest giving credibility to bitcoin as an investment vehicle. Specifically, PayPal’s Wednesday announcement of support for bitcoin and alternative cryptocurrencies (altcoins) is “another big step toward corporate support for bitcoin,” according to the note.

The authors also identify “strong growth” in institutional investor interest in bitcoin indicated by activity in CME futures and options markets. As of Thursday, for example, CME bitcoin futures markets quietly became the second-largest measured by open interest, overtaking BitMEX and Binance, two dominant crypto-only trading platforms.

Utility as a store of value isn’t the only catalyst for potential upside, however. According to the authors, the price of bitcoin and altcoins could appreciate significantly if adopted as means of payment. “The more economic agents accept cryptocurrency as a means of payment in the future, the higher their utility and value,” the note says.

Ultimately, even though bitcoin “looks currently overbought for the near term,” the authors reiterate that the potential long-term upside for bitcoin is “considerable.”

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News this week that R3 and IBM are working together raised eyebrows, because each entity has been on different and competing sides since the early days of enterprise blockchain.

From next month, the commercial version of Corda (the version big banks and the like are paying R3 for) will be made available via IBM’s LinuxOne servers, delivering a hybrid of on-premise and cloud offerings. R3 announced the news at its annual developer conference, CordaCon.

Blockchain tribalism – R3’s Corda competes with Hyperledger Fabric, the enterprise blockchain heavily backed by IBM – has been put aside in favor of commercial sense, it seems. IBM’s LinuxOne business is far bigger than its nascent blockchain concern, while many large banks that have vendor relationships with IBM use Corda.

Related: R3 Corda Network Set to Go DeFi With XDC Digital Currency

“This started an interesting conversation in IBM, where LinuxOne came to us and said they wanted to work with us,” Charley Cooper, managing director at R3, said in an interview. “If you’re a highly complex, heavily regulated industry, and you want the best technology but you want the name brands to take to your risk manager to say, ‘Trust us, we’re picking the best vendors,’ now they’ve got the best of both worlds.”

The enterprise blockchain space, which attempts to retrofit Bitcoin’s distributed ledger technology within the private settings of big companies, has evolved into three broadly separate camps: R3 Corda, Hyperledger and enterprise variants of Ethereum such as Quorum.

There has been some crossover between these tribes. IBM, for instance, has also experimented with other DLTs such as Hedera Hashgraph, and also with the Stellar blockchain, but the vast majority of Big Blue’s blockchain efforts are focused on Hyperledger Fabric, which is the basis of the IBM Blockchain Platform.

“While there’s some sort of tribalism within the blockchain community, it’s not so in the broader technology community,” said Cooper. “They’re not tribal, they want to see if they can deliver for clients. And if they can, the flavor of blockchain is not a concern for them.” 

Related: Block.one Debuts Big-Business Version of EOSIO Blockchain

R3, while also being a member of Hyperledger, is known to be a scrappy contender when it comes to closing commercial transactions.

Times have changed, said HACERA CEO Jonathan Levi, one of the original engineers working on Hyperledger. The market is moving very fast, and these business networks are becoming specialized, he said.

“R3’s decision to leave the table and to build their own ecosystem on one framework, helped them move a lot faster,” said Levi, referring to the early days with IBM, Intel, Cisco, R3, Fujitsu and others around the engineering whiteboard.

“This is a great moment for our friends R3 and the Corda ecosystem, and for some of IBM’s customers who rely on mainframes,” he added. “I believe that we will see more multi-party systems that rely on open standards and provide more optionality and security by having multiple vendors involved.”

Hyperledger Executive Director Brian Behlendorf said that IBM’s services unit offering support for R3’s product is not unlike its support for Oracle databases or Microsoft operating systems.

“This is yet one more example of what we’ve been saying since our inception, which is that the enterprise blockchain space is really big and will continue to be served by more than one protocol,” Behlendorf told CoinDesk via email.  

There is support for Corda in four different Hyperledger projects, said Behlendorf, pointing specifically to Hyperledger’s interoperability layer, Cactus, which offers an integration toolkit between Hyperledger Fabric, Corda, Quorum and Hyperledger Besu-based networks.

“Congrats to R3 for their continued commercial success, it helps all of us in the enterprise blockchain space,” Behlendorf said.

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Bitcoin has pulled back from 2020’s highs while ether slips as DeFi cools off.

• Bitcoin (BTC) trading around $12,919.97 as of 20:00 UTC (4 p.m. ET). Slipping 1.36% over the previous 24 hours.
• Bitcoin’s 24-hour range: $12,731.06-$13,192.25.

Bitcoin’s price had a minor pullback Friday after hitting fresh new 2020 highs that put it above $13,000 in the past week. However, analysts and traders said they were not surprised at all by the recent moves. 

Read More: Active Bitcoin Addresses at Highest Since 2017’s $20K Price Record

Related: Ethereum 2.0 Deposit Contract Release Kicked Back Until November

An immediate sell-off by long-time bitcoin holders when prices hovered around $13,000 could be why bitcoin struggled to maintain its rally, according to on-chain data site Santiment.

Bitcoin’s dormant circulation, which tracks the activity of bitcoin that were previously unmoved for at least one year, has recorded the biggest spike since Feb. 7, 2020, Santiment’s data shows.

“A renewed activity of long-term BTC investors often means increased price volatility up ahead,” Dino Ibisbegovic, market analyst at Santiment, told CoinDesk. “Similar spikes – particularly during price rallies – have typically earmarked periods of price consolidation or short-term corrections in the past.”

Darius Sit, founder of Singapore-based QCP Capital, told CoinDesk the market may expect further pullback over the weekend, noting that the TD Sequential indicator has been able to signal a reversal for bitcoin prices.

Related: Active Bitcoin Addresses at Highest Since 2017’s $20K Price Record

On the other hand, growing open options interest may support a pricing floor for bitcoin above $12,500, said Guy Hirsch, managing director of U.S. for eToro, in an email to CoinDesk. 

“That price point has long been seen as the glass ceiling that needed to break for BTC to make any significant moves upward,” Hirsch said. “Given the positive sentiment off the back of yesterday’s PayPal news, I would not be surprised to see bitcoin challenged and move back past $13,000 in the near future.”

Additionally, significant institutional interest in cryptocurrency has continued to grow. That is evidenced by the fact that this week the tCME, an exchange predominantly led by institutional participation, has surpassed both Binance and BitMEX to be the second-largest bitcoin futures platform by number of open contracts.

Read More: CME’s Rise in Bitcoin Futures Rankings Signals Growing Institutional Interest

“The PayPal news is the bright and shiny object this week, but it is just the tip of the iceberg,” Matt Hougan, global head of research at Bitwise Asset Management, told CoinDesk. “Behind the scenes there has been a sea change in the attitudes of institutional investors, broker-dealers and financial advisers toward crypto in the past few months.”

“We’re in a legitimate bull market right now,” he added.

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Friday trading around $409.05 and slipping 1.78% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

Priced in bitcoin, the token started to reverse some of the gains made mid-Thursday when ETH/BTC spiked 4% in two hours, down 2% from the daily high and trading at 0.0317 BTC per ether and continuing the downward trend since the week’s open for bitcoin-based trading pair.

Ether’s decline against bitcoin may signal a continued cooling of alternate cryptocurrencies (altcoins). Taking to Twitter, leading markets data provider Skew noted ether’s downward trend, asking rhetorically, “Altseason on pause?”

Decentralized finance (DeFi) led the summer’s surge in altcoin returns, and plummeting decentralized exchange (DEX) trading volumes corroborate a potentially significant waning of speculative interest in altcoins, especially DeFi-focused assets. The 30-day trailing volume for leading DEXs is down 41%, according to data from Dune Analytics.

Digital assets on the CoinDesk 20 are all red Friday. The bigger losers as of 20:00 UTC (4:00 p.m. ET):

• Zcash (ZEC) – 6.16%
• Dash (DASH) – 5.46%
• XRP (XRP) – 4.09%

Read More: Five On-Chain Indicators Investors Should Follow: Chainalysis

Equities:

• The Nikkei 225 in Asia closed up 0.18% after the final U.S. presidential debate between Donald Trump and Joe Biden ended up much less chaotic compared with the first debate.
• The FTSE 100 also ended the day in the green 1.29% as Barclays beat market expectations by logging a strong third-quarter profit.
• In the United States the S&P 500 gained 0.34% as investors continue to focus on the econonic stimulus negotiations in Washington, D.C.

Commodities:

• Oil was down 2.13%. Price per barrel of West Texas Intermediate crude: $39.482.
• Gold was in the red 0.03% and at $1902.97 as of press time.

Treasurys:

• U.S. Treasury bond yields went down Friday. Ten-year yields, which move in the opposite direction as price, were down to 0.85.

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The Ethereum 2.0 deposit contract is a few weeks away at least, according to Ethereum Foundation researcher Danny Ryan.

Speaking Thursday on the Bankless podcast, Ryan said the deposit contract won’t go live until it receives a thumbs up on an audit of a critical crypto library, BLST, performed by cryptography audit firm NCC Group. 

“This library is critical to creating keys, signing messages. Critical, in early phases, [means] that if you use this library, they need to be secure; if you use it to generate your wallets, it needs to have good randomness; and if you are signing your deposits which have a signature associated, it needs to be correct,” Ryan said.

“Given that how critical this library is, and given that, if there is a fundamental error in this library we could f*ck some sh*t up in terms of genesis deposits, that is the blocker,” he said.

Related: Market Wrap: Bitcoin Pulls Back From $13K While Ether Falls on DeFi Cooling

Read more: Validators Drop Off Ethereum 2.0 Testnets as Mainnet Release Looms

Ethereum 2.0 core researchers are now expecting the deposit contract – a one-way Ethereum smart contract that holds staked ether (ETH) necessary for securing the new Proof-of-Stake (PoS) network – to be released in early to mid-November pending the audit’s findings, Ryan said. 

Ryan said researchers are still eyeing 2020 for the genesis block of the Beacon chain.

The new date comes after multiple client teams who spoke with CoinDesk signaled expectations for an October release of the deposit contract.

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Ripple Labs, the digital asset payment service provider tied to XRP, one of the five largest cryptocurrencies, was blackmailed at the height of crypto mania three years ago, CoinDesk has learned.

Documents obtained by CoinDesk through a Freedom of Information Act request show an unidentified individual emailed Ripple on Oct. 19, 2017, demanding 5 million XRP – then worth $1.1 million – in exchange for withholding videos it claimed portrayed the company in a negative light.

The Federal Bureau of Investigation’s (FBI) San Francisco and Canberra, Australia, offices investigated the extortion attempt from Oct. 23, 2017, to April 20, 2018, according to the documents, which do not describe the content in the videos or whether Ripple paid the 5 million XRP.

Related: Ken Kurson, Trump Family Friend and Ripple Board Member, Arrested on Cyberstalking Charge: Report

The case was closed after there was trouble tracking the extortionist down with just an email address, Internet service provider information and an IP address, a computer or a smartphone’s online fingerprint, the documents say.

Asked about the videos and payment request by CoinDesk, Ripple did not respond by press time and the FBI declined to comment.

The privately held company, co-founded in 2012 by Chris Larsen and Jed McCaleb, the competing Stellar virtual currency’s founder, is eyeing an initial public offering and was the subject of intense market speculation two years ago when the prices of XRP and bitcoin (BTC) shot up in tandem to historic highs.

The market frenzy put targets on the backs of high-profile cryptocurrency companies in 2018, a record-breaking year for exchange hacks and other crimes victimizing them.

Related: Ripple Eyeing Move to London Over XRP-Friendly Stance, CEO Says

Ripple is funded by Andreesen Horowitz, Google Ventures, Lightspeed Venture Partners, Pantera Capital, Accenture, CME Group and IDG Capital plus banks that have layered apps on top of its payment protocol including Santander, SBI Holdings and Standard Chartered.

CORRECT: UTC 20:30 Changes name of Ripple co-founder to Chris Larsen

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The Federal Reserve, the U.S.’s central bank, published a proposed rule change Friday asking about the recording requirements for money transfers involving virtual currencies.

According to the rule change proposal, the Fed and the Financial Crimes Enforcement Network propose modifying the thresholds at which banks must collect and store fund transfer information, reducing it from $3,000 to $250 for any transfers that go outside the U.S. The proposal would also widen the agencies’ definition of “money” to explicitly include cryptocurrencies.

The Fed is seeking public comment, due within 30 days of the proposal being published in the Federal Register, the formal logbook for the U.S. government. Individuals can provide feedback online or via email.

Related: FinCEN Fines Bitcoin-Mixing CEO $60M in Landmark Crackdown on Helix, Coin Ninja

According to the proposal, since the recordkeeping and travel rules were first introduced by the agencies, convertible virtual currencies (or CVC, an umbrella term which includes cryptocurrencies) have been introduced to the world, and while they lack legal tender status, they can still be used to conduct value transfers.

“Generally, CVCs can be exchanged instantaneously anywhere in the world through peer-to-peer payment systems (a distributed ledger) that allow any two parties to transact directly with each other without the need for an intermediary financial institution,” the document said. “However, in practice, many persons hold and transmit CVC using a third-party financial institution such as a ‘hosted wallet’ or an exchange.”

The document pointed to illicit transactions conducted using cryptocurrencies, such as North Korean hacking team Lazarus Group’s efforts to steal crypto, as examples of poor behavior using these new tools.

Recently, a large number of Suspicious Activity Reports (SARs), which banks file to report potentially illegal or suspicious financial transactions, were leaked, revealing that while the federal agency might store this data for years or decades, it doesn’t always take action against banks or entities that might be violating U.S. law.

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The Securities and Exchange Commission said it accepted a settlement offer by Vortex Blockchain Technologies to have its registration revoked for failing to file any periodic reports with the commission since Dec. 31, 2019.

Vortex, which is incorporated in Nevada and headquartered in Des Moines, Iowa, is “a crypto asset holdings company with diverse interests and applications spanning the entire breadth of the crypto universe, in both software and hardware spheres,” according to a description on the company’s website.

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Ken Kurson, a board member of payments firm Ripple and the co-founder of cryptocurrency website Modern Consensus, was arrested Friday and charged with cyberstalking in connection with his divorce, the New York Times reported. 

Kurson, who is a close friend of President Donald Trump’s son-in-law, Jared Kushner, is accused of sending threatening messages to several people, the Times said.

There is also evidence Kurson engaged in installing software on someone’s computer to monitor keystrokes, and reporting false accusations to someone’s employer, the complaint reads, according to the Times.

Related: Ripple Eyeing Move to London Over XRP-Friendly Stance, CEO Says

The accusations reportedly came to light during a routine background check of Kurson for a board seat on the National Endowment for the Humanities. 

Kurson served as editor-in-chief of the New York Observer when Kushner owned it.

A request for comment from Ripple was not immediately returned.

• Ripple Donates $10M to Mercy Corps for Increasing Financial Inclusion
• Ripple’s Larsen Says US Risks Losing Stewardship of Global Financial System to China, Disses SEC
• Ripple Enters Lending With XRP Credit Lines to Fund Global Payments

Chinese officials are cracking down on tether trades. The CME bitcoin futures exchange is heating up, signalling institutional interest. And Kik’s kin token will continue development following a $5 million SEC settlement. 

Ripple, across the pond
Ripple CEO Brad Garlinghouse has given more insight on the company’s possible move away from the U.S., saying the legal status of the XRP cryptocurrency is key. Talking to CNBC Friday, Garlinghouse said his blockchain payments infrastructure company could potentially relocate to London, where the nation’s regulator “clarified” that XRP is not a security and is used like currency. Ripple is currently engaged in a U.S. legal dispute with investors who claim XRP is an illegally issued security. The Securities and Exchange Commission has not been clear on the issue. Switzerland, Singapore, Japan and the United Arab Emirates are also on the table for potential headquarters.

Tether crackdown
Chinese authorities, including the nation’s central bank, have arrested 77 suspects and shuttered three gambling sites said to have “whitewashed” illicit funds using the tether (USDT) stablecoin. Announced over WeChat, the PBoC’s Huizhou office said the suspects had laundered 120 million yuan ($17.95 million) obtained through illegal online gambling activity, in part through USDT. In July, several crypto over-the-counter (OTC) traders were detained in order to assist with state investigation efforts involving illegal economic activity. It is “illegal to open casinos and participate in gambling online,” the PBoC said. “Don’t be curious and lucky. Any ‘disguise’ can’t escape high-pressure supervision.”

Related: First Mover: As Bitcoin Tops $13K, Analyst Explains How Blockchain Gives Clues on Next Move

Institutional interest
The Chicago Mercantile Exchange (CME) has become the second-biggest bitcoin futures platform by number of open contracts, signaling institutional interest. As of Thursday, bitcoin futures contracts worth $790 million were open on the CME, according to data source Skew, topping 15% of the total global open interest. “The CME’s rise is predominantly led by institutional participation, as most entrants from that segment are prohibited from dealing in unregulated derivatives listed on retail platforms such as BitMEX and Binance,” said Matthew Dibb, co-founder of Stack Funds. This happens as rival options exchange BitMEX targets DeFi-focused futures listings, including yearn.finance (YFI). 

Whopping buy
Grayscale Investments has added $300 million worth of cryptocurrencies to its balance sheet in a single day, CEO Barry Silbert tweeted late Thursday evening. The additional sum brings the total held under management to $7.3 billion. “The move comes at a time when the hype surrounding PayPal’s foray into the crypto markets has drawn additional attention from big-name investors including Paul Tudor Jones II,” CoinDesk’s Sebastian Sinclair reports, and follows on the digital asset manager’s best quarterly results to date announced last week. (Grayscale is CoinDesk’s sister firm, both owned by Digital Currency Group, of which Silbert is a founder.)

Kicking back?
Kik’s $5 million Securities and Exchange Commission settlement won’t kill kin, the non-profit behind the token announced. The “cloud of uncertainty has dissipated,” the Kin Foundation claimed in a blog post. With Kik’s remaining treasury and Kin’s reserves, project leaders intend to continue “active development” of the open-source Kin SDK, the new Code wallet and a switch to the Solana blockchain. The foundation also alleged the SEC isn’t considering Kin a security and the judge didn’t find the token in violation of securities laws. Therefore, Kin “should be free to trade on exchanges.”

Most Influential 2020: Cast Your Vote
2020 has not been a good year by most metrics. There is no way to avoid this in a year-end retrospective.

Related: Blockchain Bites: Hodl Hodl’s No-KYC Bitcoin Lending, Voyager’s Token Merging M&A Deal, Crypto’s Reaction to PayPal

Every year, CoinDesk recognizes the “Most Influential” people working to expand cryptocurrency and blockchain’s reach. It’s a list of the 10 outsized individuals who have gone the furthest and done the most.

In this most unusual year, we need your help determining who should be named as Most Influential. Check out the list of the top contenders and cast your vote by Oct. 31.

• DOJ’s Crypto Framework Is ‘a Complete Disaster’ for Digital Privacy Rights (Nikhilesh De/CoinDesk)
• A Guide to Circles, the Project Bringing UBI and FOMO to Ethereum’s xDai Sidechain (Brady Dale/CoinDesk)
• Deadmau5 Livestream Kicks Off Audius Launch Event (Adriana Hamacher/Decrypt)
• Crypto firms have granted millions to Bitcoin developers in recent months. Here's why (Yogita Khatri/The Block)
• Aerospace marketplace VeriTX turns to Algorand to get its supply chain soaring (Adrian Zmudzinski/Modern Consensus)

What’s immaterial?
In the buzz around PayPal’s announcement to extend crypto trading and transaction services to a third of a billion users, the fintech giant’s negative role in bringing bitcoin to national attention may have been elided. 

Last night, Bitcoin OG Jameson Lopp, tweeted, “9 years ago PayPal paved the way for proving Bitcoin’s value to the world when they shut down WikiLeaks’ account.”

In what was called “potentially the most significant attack on WikiLeaks” at the time, PayPal, then one of the principle means of moving money online, froze the German foundation’s account. This action was a wake up call for some about the dangers of web censorship. 

Satoshi Nakamoto, when creating Bitcoin, had been thinking about financial freedom and the power that banks and payment processors have to revoke it, based on their own contingent, ever-changing and unequally-applied “terms of service.” 

Of course, some of Nakamoto’s last words to early Bitcoin advocates were to resist using bitcoin to fund Wikileaks. He thought the network was too young and fragile to incur the government and public scrutiny that would result from supporting a bank-blocked organization.

It’s with some irony that PayPal has reentered the picture. As reported, the firm’s crypto services will be fully-custodial, fully-KYC’d and will fall under its terms of use. 

So why enter? CoinDesk’s Danny Nelson reported yesterday that Morgan Stanley analysts believe the cryptocurrency community will likely benefit more than PayPal’s bottom line from the services. 

The move “should expand crypto acceptance online, which to date has stalled at 1% of the top 500 internet retailers,” wrote the Morgan Stanley analysts. While the services will “likely [be] immaterial to earnings.”

With rumor saying PayPal is also exploring purchases of cryptocurrency companies including bitcoin custodian BitGo, the question of what is good for crypto becomes more urgent.

• First Mover: The FOMO Takes Over as PayPal Play Sparks Bitcoin Rally to $13K
• Blockchain Bites: PayPal’s Play, Mode’s Bitcoin Buy, CoinDesk’s Most Influential Needs Your Vote

MineSpot, a company previously unknown in the crypto mining industry, said it is opening a 160-megawatt mining venue in the middle of Siberia that would be the largest mining farm in Russia.

The venue is located near the Boguchany Dam in East Siberia, in the town of Kodinsk. It will occupy the building and land of a boiler house that used to serve the dam construction site by providing heat to workers building the dam. The construction of the dam, initiated during the late Soviet era, was completed in 2015; the Boguchany Dam is now one of the major hydropower plants in Russia. 

Potential clients of the farm would include both bitcoin and ether miners, said Adam Aushev, co-founder of MineSpot, so the venue will host both SHA-256 application-specific integrated circuits (ASICs) and graphics processing units (GPUs). 

Related: Digital Ruble ‘Promising,’ Pilot Likely in 2021, Says Bank of Russia Chief

Like many other farms in Russia, MineSpot is working as a “mining hotel,” meaning it hosts its clients’ mining machines and charges them for electricity and tech support. It can also purchase ASICs on behalf of its clients, ordering them directly from a manufacturer in China such as Bitmain, Innosilicin or others, and organizing delivery so clients don’t have to manage the logistics themselves. 

With 160-megawatt power capacity, MineSpot is going to become a new competitor to the mining farms already working in the neighboring Siberian cities of Irkutsk and Bratsk, which also rely on hydropower, but from another dam. MineSpot, however, will be the largest one, exceeding the size of the current leader, BitRiver, which has already put ASICs in more than half of its 130-megawatt farm in Bratsk. 

Local logistics might make it more challenging for MineSpot than for its older peers. Aushev admits that it’s not easy to transport ASICs to the site. The road leading from Krasnoyarsk, the nearest large city and transportation hub, to Kodinsk is partly paved with stones, which makes miners worry about their mining machines getting there in one piece. 

“A couple of contracts have already fallen through because of the logistics issues,” Aushev said.

Related: Filecoin Network Upgrade Goes Live, Miners Claim 25% Block Rewards

He is nonetheless optimistic about the firm’s future. Aushev said he plans to get 10 megawatts of MineSpot’s power capacity booked by the end of the year. 

• Digital Ruble Could Be Tool Against Sanctions, Bank of Russia Says
• FIL Miners Force Filecoin to Speed Up Token Rewards Following Mainnet Launch

China’s central bank has included the digital yuan in the latest version of a proposed banking law, giving more legal clarity to the regulation of its national virtual currency. 

The People’s Bank of China is soliciting public comments for the draft of Laws of People’s Republic of China on PBOC until Nov. 23, according to its statement on Friday. 

The proposed law recognizes the renminbi in both physical and digital form. The new version will essentially also clear the way for the digital yuan to be the one and only official yuan-pegged token in mainland China. 

Related: Chinese Authorities Crack Down on Gambling Sites Using Tether Stablecoin

“To prevent risks associated with virtual currency, any other legal entity or individuals can not issue or sell tokens to replace the circulation of Renminbi.,” according to article 22, section 3 in the document. 

Read more: First Users Not Impressed by China’s Digital Yuan: Report

The revision would take a toll on one of the biggest crypto-related businesses in China since many Chinese investors conduct crypto-to-crypto trading with stablecoins. Tether, one of the largest crypto companies, has a yuan stablecoin.

• Police Brutality Is Global, So Is Bitcoin
• Hong Kong ‘Exploring’ Collaboration With China on Digital Yuan: Finance Chief
• First Users Not Impressed by China’s Digital Yuan: Report

Active user participation in Bitcoin’s network has accelerated to levels last seen in December 2017, when the cryptocurrency printed record highs near $20,0000.

• The number of active entities, or clusters of addresses controlled by a single network participant, jumped to 388,697 on Thursday, the highest since Dec. 9, 2017, according to data source Glassnode.
• The metric has more than doubled in the past five days alongside bitcoin's rally from $11,350 to $13,300.
• “It shows active participation in bitcoin is growing,” a spokesperson for FCA-regulated crypto index provider CF Benchmarks told CoinDesk.
• “Against the backdrop of PayPal’s announcement this week, it makes a lot of sense that interest in bitcoin is once again intensifying to heights not seen since late 2017,” Odeluga added.
• Online payments giant PayPal announced support for bitcoin, ether, litecoin and bitcoin cash earlier this week, propelling bitcoin and wider crypto market higher.

• The cryptocurrency’s price lags on-chain metrics such as active entities and hash rate.
• While the count of active entities is closing on the record high of 411,127 reached on Dec. 9, 2017, the cryptocurrency’s price is still down 53% from the lifetime high of $20,000.
• Meanwhile, the seven-day rolling average of bitcoin’s hashrate, or the measure of the mining power dedicated to the blockchain, rose to a record high of 146 exahashes per second earlier this month.
• Continued rise in network’s usage could accelerate the price rally.
• “When there’s greater usage, there’s more demand for the cryptocurrency, and that drives the price up,” Philip Gradwell, chief economist at the blockchain intelligence firm Chainalysis, told CoinDesk.

• First Mover: As Bitcoin Tops $13K, Analyst Explains How Blockchain Gives Clues on Next Move
• CME’s Rise in Bitcoin Futures Rankings Signals Growing Institutional Interest
• Market Wrap: Bitcoin Sticks Around $13K While Ether Locked in DeFi Dips
• First Mover: The FOMO Takes Over as PayPal Play Sparks Bitcoin Rally to $13K

MOSCOW – Russia’s central bank might pilot its own central bank digital currency (CBDC) at the end of 2021, said the Bank of Russia’s head, Elvira Nabiullina, during an online press conference on Friday. 

“We view this project as promising, it fits into the concept of the digital economy [currently being built in Russia]. We want to evaluate the balance of risks and advantages of such a project before we proceed,” Nabiullina said.

Answering a question from CoinDesk, the central bank executive said the pilot would be carried out with a limited set of users and “might be possible at the end of next year.”

Related: A New Company Claims It’s Opening the Biggest Mining Farm in Russia

The Bank of Russia is currently receiving feedback on its report on the digital ruble published earlier in October, Nabiullina added. The decision whether the digital ruble will be actually launched, as well as whether it will use the blockchain technology, is up for discussion, the report indicated. 

Read more: Digital Ruble Could Be Tool Against Sanctions, Bank of Russia Says

Addressing some of the details of the possible CBDC, Nabiullina said it’s also not yet decided if transactions will be transparent to observers. She stressed, however, that “maximum trust and maximum confidentiality” are key goals for the project. 

The digital ruble, if issued, will not replace or push out other forms of money, physical cash and electronic payments, however. “People will decide for themselves which kind of money for which kind of purposes they want to use,” Namiullina said. Additionally, dedicated financial education programs should be offered to help people understand how to use the digital ruble. 

Related: Philippines Central Bank Governor: No Digital Peso Before 2023

“People and enterprises want fast, convenient, almost immediate payment transactions,” Nabiullina said.

Among the main challenges for the digital ruble, she named the need of robust cybersecurity and the potential feature of the offline use. The Bank of Russia is considering making the digital ruble available offline as well as via the internet, however, there are currently no feasible technological solutions for this, Nabiullina said.

According to the report, the digital ruble will stimulate innovation and competition in the financial sector and help ensure funds allocated to government-backed projects are not misappropriated. 

Read more: Central Bank of Bahamas Launches Landmark ‘Sand Dollar’ Digital Currency

In a later comment to the media, the central bank said the digital ruble could help diminish the dependence of the Russian economy on the U.S. dollar and the threat of the future sanctions on Russia.

The authority is collecting public feedback on the digital ruble report until Dec. 31. An evaluation will follow and and feed into the decision on whether to proceed with a launch. The final decision will only be made after the pilot, the report said.

• Central Bank of Bahamas Launches Landmark ‘Sand Dollar’ Digital Currency
• The US Risks Getting Left Behind on CBDCs