CoinDesk Crypto

Bitcoin futures listed on the Chicago Mercantile Exchange (CME) have lost their shine in recent weeks, and that’s due in part to explosive growth in decentralized finance (DeFi), an analyst says.

• According to data source Skew, open interest or open positions in CME bitcoin futures fell to $345 million on Friday – the lowest level since May 4. The CME is considered synonymous with institutional activity.
• Open interest is down nearly 64% from the record high of $948 million on Aug. 17. On the same day, bitcoin’s price clocked a 12-month high of $12,476.
• Open position in bitcoin futures across all cryptocurrency exchanges stood at $3.6 billion on Friday, having peaked at $5.7 billion on Aug. 17.

• While futures open interest has subsided, the total value locked into the DeFi platforms has nearly tripled to $10.9 billion over the past two months, according to data provider DeFi Pulse.
• “Crypto money has gone into DeFi and yield farming, suppressing futures premium and making cash and carry trades unattractive for traditional/institutional investors,” Denis Vinokourov, head of research at London-based prime brokerage Bequant, told CoinDesk.
• As money began flowing into DeFi from the futures market in the second half of August, the spread between futures and spot prices, known as the “futures premium,” began falling.
• The premium on major exchanges declined from 12% to 2.5% in the second half of August and has remained sidelined near 7% ever since, per Skew data.
• The near-halving of the premium in August has likely kept traditional investors and institutions from putting money into futures over the past four weeks.
• That’s because returns on cash and carry trades, a popular strategy among institutions, dropped with the premium.
• Cash and carry trades involve buying an asset in the spot market and selling a futures contract when the latter is trading at a premium to the spot price.
• The strategy seeks to profit from the premium, which eventually converges with the spot price on the expiry date. The higher the premium, the higher is the reward on the carry trades and vice versa.
• Additionally, bitcoin’s 7.5% price drop seen in September, the biggest monthly decline since March, likely contributed to the decline in open interest on CME and other exchanges.
• “September’s decline in bitcoin has significantly affected short-term optimism in the market with Open Interest falling across all exchanges and derivatives products,” said Matthew Dibb, CEO of Singapore-based Stack Funds.
• “We expect that further enhanced selling pressure will lead open interest to sub-$3 billion levels seen in April,” Dibb said.
• Bitcoin is currently trading largely unchanged on the day at $10,688, according to CoinDesk’s Bitcoin Price Index.

Also read: Bulls Exit BitMEX Bitcoin Futures Market

Related Stories

• First Mover: Day in the Life of a Yield Farmer Means Part-Time Gig, Full-Time Risk
• Meet the Yield Farmers Plowing Cryptocurrency’s Riskiest Trend
• CEXs vs. DEXs: The Future Battle Lines
• Market Wrap: Bitcoin Rebounds to $10.5K; Stablecoin Market Cap ‘Goes Parabolic’

Eesti Pank, the central bank of Estonia, is undertaking a “multi-year” research project that will investigate the suitability of a blockchain-based digital currency to work alongside cash.

• In a news release Friday, Eesti Pank said the initiative will gauge the suitability of the KSI Blockchain, already “a core” part of the infrastructure of Estonia’s e-government system, in supporting a central bank digital currency (CBDC).
• The research will be carried out with assistance from Guardtime, an Estonian company that developed the KSI Blockchain, and The SW7 Group, a London-based business development and investment firm with a focus on innovative technologies.
• The work will further look at new payment solutions that might arise from the use of electronic identity and other Estonian e-government solutions, though it will be technology agnostic in its approach.
• Eesti Pank said the research is being instigated as user habits are already changing regarding payments, and to assist research on a possible digital euro announced last week by the European Central Bank.
• Estonia’s experience running a digital form of government “gives us good grounds for launching a project to explore the technological frontiers of digital money,” said Rainer Olt, head of the central bank’s Payment and Settlement Systems Department.
• Estonia joined the EU in 2004 and adopted the euro at the start of 2011.

Also read: Digital Euro Will ‘Protect’ Eurozone From Foreign Issuers, Says ECB Exec

Related Stories

• Italian Payments Giants Merging to Form New Entity That Will Dominate Local Market
• KuCoin CEO Says Suspects in $281M Hack Identified; Authorities on the Case
• What to Watch at ETHOnline, This Year’s Devcon
• Bitcoin Escrow Chief Pleads Guilty to Crypto Fraud, Also Ordered to Repay $7.4M

If your elected representative to the U.S. Congress has never heard of cryptocurrencies, how do you start telling them about it? Hoping to raise awareness, blockchain advocacy group Chamber of Digital Commerce’s Political Action Committee (PAC) wants to start by contributing $50 worth of bitcoin to the campaign of each congressperson. 

Announced Monday, the advocacy group said under its new “Crypto for Congress” initiative all members of the U.S. legislative body would receive campaign contributions in bitcoin. 

According to the group’s founder, Perianne Boring, this is an attempt to raise awareness and give congresspeople a chance to interact with blockchain technology and digital assets. In addition to the contribution, the Chamber’s PAC will also provide online training and a toolkit to help members of Congress engage with cryptocurrencies. 

• “One of the biggest challenges we’ve always had is people just really don’t understand what the heck it is we’re talking about,” said Boring. 
  
• She added that letting senior government officials interact with crypto assets through such an initiative could aid the group’s advocacy efforts for an industry that faces multiple public policy challenges such as taxation and regulatory jurisdiction.
  
• According to the group, once informed about the contribution, the representative’s campaign can either accept it, pass it on to a charity that accepts bitcoin (BTC) or just opt out. 
  
• “Crypto for Congress brings an opportunity for our entire Congressional community to join this generational shift in finance and technology,” said Rep. Tom Emmer (R-Minn.), chairman of the National Republican Congressional Committee (NRCC), in an emailed statement. Emmer is widely regarded as one of the most pro-crypto members of Congress.
  
• Boring added that all of the bitcoin being given away as contributions has been mined by its U.S. based tech partners, Core Scientific and Luxor. “We’re getting clean bitcoin that was mined here,” she said. 

Related: Digital Chamber Adds Mulvaney to Board of Advisers; Visa, Goldman Join Executive Committee

Read more: Digital Chamber Adds Mulvaney to Board of Advisers; Visa, Goldman Join Executive Committee

Related Stories

• HODLpac Enlists Winklevoss Twins, Brian Armstrong in Bid to Influence Crypto Policy in Washington
• Why High-Profile Defections Aren’t Libra’s Biggest Challenge
• Ex-CFTC Chair ‘Crypto Dad’ Giancarlo Joins Digital Chamber Trade Group

One is a Grammy Award-winning musician with lots of spare time. Another is a software engineer with nowhere to go during the pandemic. There’s also an editor for a data site and a fund manager who invests in digital assets. 

What these people have in common is an obscure side gig known as “yield farming,” a type of cryptocurrency trading and investing that didn’t really even exist until 2020. Yield farming is producing fixed-income-like returns that can, at least for brief stretches, provide annualized interest rates equivalent to percentages investors cannot find anywhere else. 

Yield farming, simply put, is when cryptocurrency holders sock digital assets like bitcoin (BTC) and ether (ETH) or dollar-linked tokens like tether (USDT) and dai (DAI) into blockchain-based, semi-autonomous lending and trading platforms in exchange for additional tokens as rewards. In the fast-growing subsegment of the crypto industry known as decentralized finance, or DeFi, yield farming offers a quicker and more lucrative way of making money than, say, parking extra dollars in a JPMorgan Chase savings account at a paltry 0.01% interest rate. 

Related: CEXs vs. DEXs: The Future Battle Lines

The yield farming DeFi boom started in June when the DeFi projects Compound and Aave launched. They were soon followed by Kyber, Balancer, and Yearn.Finance. More creative names like Spaghetti, Tendies and SushiSwap followed. 

Read more: What is Yield Farming? The Rocket Fuel of DeFi, Explained

Partly because cryptocurrency traders realized they could make so much money simply from using the protocols, the growth has been staggering: Since June, these systems have mushroomed eightfold, with a total of $11 billion of crypto collateral locked into them according to DeFi Pulse. According to the site DeFi Rate, it is possible to net an annual percentage yield of more than 53% APY staking crypto on lender Fulcrum  – and sometimes much more on new projects for those who get in early. 

But who are these yield farmers? Why have they flocked to this arcane corner of the digital-asset industry, and how did they learn how it all works? Is it a full-time or part-time endeavor? How insanely risky is all this?

Related: ‘Good Reason to Worry’: What the BitMEX Indictment Means for DeFi and Bitcoin, Feat. Stephen Palley and Preston Byrne

CoinDesk talked to several yield farmers to get their stories. 

THE ARTIST

André Allen Anjos, also known as RAC, is a music producer and recording artist with over 2 million monthly listeners on Spotify, winning a Grammy in 2015 for Best Remixed Recording.  “I discovered Ethereum around late 2016,” he said. 

In 2017, Anjos worked with the Consensys-backed Ujo Music to sell the first full-length album of music via Ethereum’s blockchain. Fans sent ether to a smart contract on the blockchain, and the album’s files were hosted on the decentralized interplanetary file system, or IPFS, a distributed storage system. 

Just as Anjos was getting involved with the crypto-verse, by 2018 cryptocurrency prices came crashing down. Interest in the space waned, but Anjos stuck with it. He learned about a DeFi project called MakerDAO and was quickly captivated by the concept of collateral locked into the software protocol to create dollar-linked stablecoins called dai (DAI). “That was my entry to what we call DeFi,” Anjos says. “At the time there wasn’t really a name for it.” 

The irregular schedule of a music-maker lends Anjos ample hours to explore yield farming. “I’m obviously a musician,” he said. “That’s what I do full time. Because of my job, my day-to-day is pretty loose. I can kind of do whatever I want.” That includes spending time on social media and reading up on new DeFi projects. “You pull up Twitter, and everyone’s freaking about Yams,” Anjos said, referring to one DeFi yield-farming project that exploded in popularity in August before quickly flaming out once a bug was discovered in the unaudited software protocol. 

Spend a few minutes chatting with Anjos and it gets deep into the weeds pretty fast. He’s fascinated by the stablecoin decentralized exchange Curve. “It’s a pool of stable tokens and it’s on a more efficient bonding curve.” 

Yield farmers like Anjos are able to reap trading fees from the exchange in return for providing their tokens as liquidity. Other cryptocurrency users can then borrow them to deploy in trades, or even engage in another round of yield farming. 

“Curve generates a fair amount of fees, which then go to the pool, which attracts more attention,” Anjos says. More recently, Anjos has become obsessed with a Curve copycat called Swerve; he recently Tweeted that while his traditional bank account reduced savings-account interest rates to zero, the project Swerve was offering 250% returns.

Anjos continues to think of ways to use DeFi in music. He recently sold 100 limited-edition tokenized cassettes called $TAPE of his newest album via Ethereum with help from a startup called Zora. “I think there’s a lot of opportunity to do something in music,” said Anos. “We’re sort of riddled with intermediaries. It’s kind of like the perfect use case.”

THE DAYTRIPPER

Arising early and firing up a MacBook Pro, a yield farmer who goes by “devops199fan” on Twitter checks his feed. He’s on the prowl for new ways to make money in DeFi. 

Finding the opportunities means spending a lot of time on Twitter. Devops199fan follows about 144 people ranging from Robert Leshner, founder of the DeFi lender Compound, to pseudonymous actors like himself such as Hasu, a researcher with almost 30,000 followers. Then it is over to the website Yieldfarming.info, which has a terminal-like user interface providing a wealth of resources. 

“At any given time, there are a bunch of different opportunities that are available,” devops199fan told CoinDesk via videoconference, speaking on condition that his real name not be used. “And then as time is going on, more and more opportunities are launching.” 

It’s still a part time gig. Devops199fan has a day job as a software engineer, and he doesn’t intend to quit, despite the fact that his profits from yield farming are becoming a more significant part of his income. The coronavirus pandemic and the associated lockdowns have meant work from home for devops199fan, and there are long hours in quarantine sequester for the pursuit, which he still considers a hobby. 

Devops199fan particularly likes a DeFi platform called Yearn.Finance, which directs users toward profitable opportunities by aggregating various projects and taking a cut in return. “It’s one of the coolest things to happen in DeFi,” according to devops199fan. 

THE TROOPAH

Cooper Turley was working as a writer and editor for the website DeFi Rate when the yield-farming craze hit. “I was just trying to figure out what the next trend in crypto is, sort of at the end of the bear market,” said Turley, also known Coopertroopah on Twitter. “The yield farming thing started coming to my attention with Synthetix when they were doing their liquidity trial,” he said, referring to a DeFi project that serves as an automated manufacturer of cryptocurrency derivatives.

Cooper said the amount of yield doesn’t matter when he’s plowing crypto into a project. 

“It’s more about the legitimacy of the farm that’s presented – basically the people who are either behind it or sort of the amount of time that was put into curating whatever the product is,” he said. 

Cooper usually spends a couple hours researching new projects to make sure they’re legit. Getting in at the beginning is key. 

“That’s kind of the weird nature of these opportunities popping up is that those first 24 hours are by far the most lucrative,” Cooper said. 

Most projects offer extra-juicy token rewards during the first few days. “So literally like getting in in that first hour or so can actually make a world of difference for what returns you’re getting on your capital,” he said. 

The nominal interest rates often look high, sometimes 1,000% or upward, because they’re only available for short spurts. “The reason why SushiSwap was so hot is because there were 10-to-one rewards for the first week,” he said. 

“I think just cycling into new farms as they pop up and sort of getting that first window has proven to be the most lucrative opportunity for the vast majority of these products,“ he added.

THE FUND MANAGER

Even professional cryptocurrency investors are getting into yield farming. Jake Brukhman is managing partner of the five-year-old digital-asset investment firm CoinFund, which puts money directly into various crypto projects but also yield farms. 

As of September, according to Brukhman, about 20% of CoinFund’s liquid portfolio was devoted to yield farming and liquidity mining. 

“The liquidity profile of tokens is now significantly better than it was a few years ago,” said Brukhman, a Brooklynite who has been following and investing in crypto for well over half a decade. “A few years ago, it was very hard to get a token listed on a centralized exchange,” he added. 

Now, liquidity is easy: Any Ethereum-based token can easily be listed on a number of decentralized exchanges. The trend has provided a foundation for the growth of yield farming. 

Brukman defines yield farming as “optimizing yield across many yield opportunities, sometimes by stacking them on the same capital.” 

In March 2018, CoinFund launched Grassfed Network for what it called “generalized mining strategies,” defined as “crypto economic games implemented by decentralized protocols that users can play to earn cryptocurrency-denominated compensation.” Essentially, it was an early iteration of yield farming. Even the most die-hard yield farmers will acknowledge that it all does feel like a big game, played with digital tokens but with real-money equivalents. 

Brukhman is a fan of decentralized exchanges like Balancer because providing liquidity in return for fees charged on the exchange is the best yield farming play on the market today – also known as liquidity mining. 

When Brukhman talks about yield farming, it’s with a casual, matter-of-fact stream of DeFi lingo that almost obscures the fact that none of this really even existed until recently. “Anyone can go on the supply side of these protocols and provide liquidity for some of these assets,” he said. “With Uniswap version 2 it’s only two assets per pool. With Balancer, you can provide up to eight assets per pool.” 

It’s all part of the job.

THE RISK FACTOR

While this may seem very ephemeral, yield farming could result in promising developments in the cryptocurrency ecosystem. Nonetheless, each yield farmer told CoinDesk the same thing: This stuff is really, really risky. 

“I’m sure there’s all kinds of risks that we don’t really know,” said the musician Anjos. 

Perhaps the most foreboding warning came from Cooper Turley: “I see this as incredibly risky – f*cking mad risky,” he said. 

And while the early returns were perhaps great, the cryptocurrency market is entering an uncertain fourth quarter. 

Farmer beware.  

CoinDesk’s invest: ethereum economy is a fully virtual event Oct. 14 exploring the ramifications for investors of the sweeping changes underway within the Ethereum ecosystem. Learn more.

Related Stories

• What to Watch at ETHOnline, This Year’s Devcon
• Bitcoin News Roundup for Oct. 2, 2020

Nexi, Italy’s biggest payments provider, is to merge with rival SIA, creating a group with an estimated 70% share of the local market.

• According to Reuters, the firms announced the expected merger Monday, saying the new group is likely to bring in 1.8 billion euros ($2 billion) in annual revenue.
• As well as eclipsing Italian rivals, the new group is planned to expand across Europe.
• Merger talks have been ongoing for at least 18 months – held up by disagreements over valuation and governance of the new group, Reuters said.
• The new group will handle around 120 million payments cards and manage payments for some 2 million merchants.
• The Italian government, which has an indirect stake in SIA through Cassa Depositi e Prestiti (an investment bank dating back to 1850), will end up owning roughly 25% of the new group.
• Nexi will own around 70% of the new entity after the merger.
• Italy is behind other nations when it comes to digital payments infrastructure, but the coronavirus pandemic is helping drive change in the nation.
• As long as certain conditions are met, the merger is expected to be completed by next summer, seeing the creation of a company with an expected market value of over 15 billion euros.

Also read: Digital Euro Will ‘Protect’ Eurozone From Foreign Issuers, Says ECB Exec

Related Stories

• OFAC Warns That Firms Helping Victims With Ransomware Payouts Risk Violating Its Rules
• Estonia’s Central Bank to Research if Blockchain Can Support a Digital Euro
• KuCoin CEO Says Suspects in $281M Hack Identified; Authorities on the Case
• Every Credit Card a Tribe, Every Crypto Coin a Scaling Debate

Nexi, Italy’s biggest payments provider, is to merge with rival SIA, creating a group with an estimated 70% share of the local market.

• According to Reuters, the firms announced the expected merger Monday, saying the new group is likely to bring in 1.8 billion euros ($2 billion) in annual revenue.
• As well as eclipsing Italian rivals, the new group is planned to expand across Europe.
• Merger talks have been ongoing for at least 18 months – held up by disagreements over valuation and governance of the new group, Reuters said.
• The new group will handle around 120 million payments cards and manage payments for some 2 million merchants.
• The Italian government, which has an indirect stake in SIA through Cassa Depositi e Prestiti (an investment bank dating back to 1850), will end up owning roughly 25% of the new group.
• Nexi will own around 70% of the new entity after the merger.
• Italy is behind other nations when it comes to digital payments infrastructure, but the coronavirus pandemic is helping drive change in the nation.
• As long as certain conditions are met, the merger is expected to be completed by next summer, seeing the creation of a company with an expected market value of over 15 billion euros.

Also read: Digital Euro Will ‘Protect’ Eurozone From Foreign Issuers, Says ECB Exec

Related Stories

• Estonia’s Central Bank to Research if Blockchain Can Support a Digital Euro
• KuCoin CEO Says Suspects in $281M Hack Identified; Authorities on the Case
• Every Credit Card a Tribe, Every Crypto Coin a Scaling Debate
• What to Watch at ETHOnline, This Year’s Devcon

Bitcoin’s 180-day volatility dropped to its lowest mark since November 2018, reaching a 23-month low of 0.028 on Sunday, as the market was mostly unfazed by a week of unsettling news.

• Bitcoin (BTC) started to stumble through Thursday and Friday after the U.S. Commodities and Futures Trading Commission and Department of Justice leveled charges against BitMEX’s founders and President Donald Trump tested positive for COVID-19.
• But both news items resulted in a less-than-five-percent drop for the leading cryptocurrency, continuing a period of uncharacteristic calm in a frequently volatile and fickle market. 
• According to data from Coin Metrics, bitcoin volatility has dropped 43% in the past 30 days.
• Many traders have stayed bearish through the weekend as indicated by perpetual futures funding rates on leading derivative exchanges OKEx, BitMEX, and Huobi.
• Funding rates on all three exchanges turned decidely negative Friday as traders took on an increasing amount of short positions, according to data from Skew, with negative rates continuing through the weekend.
• As the market digests a lot of news all at once over a quiet weekend, some buyers moved to start reversing earlier declines, pushing BTC above $10,640 early Sunday morning, up 2.5% from last week’s low of $10,375.

Related Stories

• Binance, Gemini, Kraken So Far the Winners From BitMEX’s Legal Woes
• ‘Good Reason to Worry’: What the BitMEX Indictment Means for DeFi and Bitcoin, Feat. Stephen Palley and Preston Byrne
• Bulls Exit BitMEX Bitcoin Futures Market
• Bitcoin News Roundup for Oct. 2, 2020

KuCoin CEO Johnny Lyu tweeted that the South Korean crypto exchange has found what he described as the “suspects” of last month’s hack that resulted in the theft of $281 million in cryptocurrencies.

• “After a thorough investigation, we have found the suspects of the 9.26 #KuCoin Security Incident with substantial proof at hand,” Lyu said in the tweet. “Law enforcement officials and police are officially involved to take action.”
• In addition, Lyu said another $64 million of stolen assets have been recovered from “suspicious addresses,” bringing the total value of recovered assets to $204 million since Oct. 1.

Read more: KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto

Related Stories

• What to Watch at ETHOnline, This Year’s Devcon
• Bitcoin Escrow Chief Pleads Guilty to Crypto Fraud, Also Ordered to Repay $7.4M
• Coinbase Reportedly Warns Some UK Users It’s Handing Their Details to the Taxman
• Ripple Wins US Patent for New Oracle-Based Smart Contract Design

Securities and Exchange Commission (SEC) Chairman Jay Clayton said the regulatory body’s open to the idea of a tokenized exchange-traded fund (ETF), according to a report by Decrypt.

• “We’re willing to try that: our door is wide open,” the report quoted Clayton as saying in a webinar yesterday with the Digital Chamber of Commerce.
• While Clayton’s statements expressed a willingness to explore the idea of tokenized stocks, the report also noted recent actions by the regulatory body that the day those ideas becoming reality is still a ways off.

Related Stories

• Judge Rules Kik’s Token Sale Violated US Securities Law
• SEC Alleges Big-Talking Florida Crypto Investor Defrauded Clients of $6.8M
• SEC Orders Salt Lending to Offer Refunds to Investors in Its $47M ICO
• SEC Seeks Trial of Swedish National Over Alleged Fraud That Took $3.5M in Crypto

Companies can’t become “apolitical” overnight.

According to multiple Coinbase workers, the plan to offer a clean exit for mission-dissenting staffers has been in the works for six months. So far, at least three people in the 1,200-person firm have taken the severance package, one of these sources told CoinDesk on Friday.

In the past week, Coinbase CEO Brian Armstrong published a blog post discouraging politics in the office and offered a severance package for employees who disagreed with a new mission statement. According to three employees, who all spoke with CoinDesk on the condition of anonymity, Armstrong and other managers at the San Francisco-based crypto exchange said in company-wide meetings that they had been planning this move for six months.

Related: Coinbase Reportedly Warns Some UK Users It’s Handing Their Details to the Taxman

Armstrong began to plan for the company’s new position after several Coinbase engineers closed their laptops one day over the summer after Armstrong wouldn’t say “black lives matter” externally amid social unrest over police killings of unarmed black men and women. 

Armstrong recently clarified in company meetings that he could say “black lives matter” (lowercase) and admit to societal injustice but not “Black Lives Matter” (uppercase) and associate himself with the social movement for racial equity. On the day of the walkout Armstrong tweeted:

Another source familiar with the company’s inner workings said the policy was rolled out in response to polarizing political conversations happening in all-company Slack channels and other venues rather than the walkout itself.

Employees are still allowed to have political conversations in non-general channels created by employees, this source added.  

Blog-post politics

Related: Twitter’s Dorsey Calls Out Coinbase CEO for Ignoring Users’ ‘Societal Issues’

One employee said Armstrong could have avoided controversy if he had communicated the company’s new direction only internally. (Employees learned of the decision a week prior to the public blog post, staffers said.) 

“I think that if he was trying primarily to communicate this to employees and had consulted and listened to really anyone who might be sensitive to the concept of selling this to his employees, this could have blown over and turned into something banal and corporate,” the employee said.

Still another employee said that the timing of the policy’s release was bad. It came at the end of the third quarter, amid rumors of the firm going public, and after a Louisville grand jury failed to charge police officers for murder in the controversial killing of Breonna Taylor.

“I don’t think it was targeted at Black Lives Matter in general,” the employee said of the blog post and new company mission. “We just have a lot of projects we need to get done.” 

Multiple employees said the company has distanced itself from employees by moving questions in all-hands meetings to messaging platform Slido after the summer walkout. In a companywide “ask-me-anything” held Thursday, Armstrong and company leadership explained that the new direction doesn’t mean that Coinbase is going after employees that dissent.

“Everyone reaffirmed in the AMA that they do support the blog post but were walking back some of the more extreme implications that might come with being an apolitical company and reaffirmed the commitment to diversity and employee support,” one employee said. “What people might imagine – whether the company is going to be crushing all internal discourse or ejecting employees with strongly held political beliefs – isn’t going to happen.” 

It is unclear what punishments employees might face should they not abide by the new decision. That said, leadership has made it clear that the rules around non-work discussions are loose so long as they’re not tied directly to politics. 

In response to employees asking if they could make a #spaghetti-monster-for-president Slack channel, leadership said that would be fine, these employees said.

Related Stories

• Coinbase Offers Severance Package to Employees Unsatisfied With ‘Apolitical’ Mission
• Coinbase Launches 5% Staking Rewards for Cosmos’ ATOM

Bitcoin has performed well in the face of a bleak news cycle while stablecoin assets in the crypto ecosystem continue to grow.

• Bitcoin (BTC) trading around $10,515 as of 20:00 UTC (4 p.m. ET). Slipping 0.44% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,362-$10,667
• BTC above its 10-day moving average but below the 50-day, a sideways signal for market technicians.

Bitcoin’s price stumbled in the early hours of Friday, falling to as low as $10,362 on spot exchanges such as Coinbase around 5:00 UTC (1 a.m. ET) before rising to $10,515 as of press time. 

Despite the continuous stream of negative news this past week, the crypto markets have remained resilient, according to Zachary Friedman, chief operating officer of brokerage Global Digital Assets. 

Related: Bulls Exit BitMEX Bitcoin Futures Market

“If we look back, we have seen a hack of Kucoin, a major BitMEX lawsuit and even trouble in the traditional markets through the announcement that [U.S. Pres. Donald] Trump contracted COVID-19,” Friedman said. “Historically, these three collective events would have sent markets reeling. This shows that the market is increasingly filled with more bullish investors [who] believe in the fundamentals.”

Bitcoin’s dip to $10,362 Friday is its lowest price point since Sept. 24, well before the recent torrent of bad news began and perhaps a sign of the world’s oldest cryptocurrency’s capacity to recover quickly.

Jean-Baptiste Pavageau, a partner at crypto quant trading firm ExoAlpha, anticipates some increased volatility ahead. “Liquidity is a key metric for professional traders,” said Pavageau. “While BitMEX witnessed sometimes unusual price behavior on its exchange, it would not be surprising to observe more of these spikes and crashes while the liquidity dries-up.” 

Read More: BitMEX Moves $337M in Bitcoin Ahead of First Withdrawals Since Charges

Related: Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin

Indeed, BTC/USD open interest on BitMEX, a measure of liquidity on derivatives exchanges, has dropped since the revelation of its legal troubles, going from $589 million just prior to the news Thursday to $461 million as of press time, a 21% decline.

As open interest on BitMEX wanes, investors are increasingly moving bitcoin to other exchanges. At one point, an outflow of over 11,000 BTC went to other exchanges at 01:00 UTC Friday, including 4,786 BTC to Binance, 3,899 BTC to Gemini and 989 BTC to Kraken, according to data analysis firm CryptoQuant.

“It’s going to be a volatile couple of weeks,” added Mostafa Al-Mashita, vice president of trading for Global Digital Assets. “I would not be surprised to see another ‘black swan’ event in the next two months, although bitcoin’s price action has been surprisingly bullish considering the news,” 

Volatility in bitcoin is positive news for options buyers, and that market has 34,100 BTC in bets placed for expiration on Oct. 30.

The options market for October expiration provides some probabilities for bitcoin’s future price, as traders see a 63% chance of bitcoin over $10,000, a 50% chance over $10,500 and a 36% chance of $11,000 per 1 BTC.

“It’s a tough market at the moment, up one minute and down the next,” said Rupert Douglas, head of institutional sales for crypto brokerage Koine. “I still think there are risks to the downside. Markets don’t like uncertainty and we’ve sure got that until early November.”

Stablecoins over $20 billion

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday trading around $344 and slipping 2% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ethereum 2.0 ‘Dress Rehearsal’ Gets a Second Shot With Zinken Testnet

The total market capitalization of stablecoins has grown from $2.6 billion at the start of 2019 to $20 billion by late September. Tether (USDT), at $16 billion, leads the way, with U.S. dollar coin (USDC) in second at $2.5 billion followed by TrueUSD (TUSD) with a $507 million market cap.

A yield farmer who chooses to go by the handle devops199fan believes stablecoins provide an important role as an increasing market for stable assets strengthen the decentralized finance, or DeFi, ecosystem. “The stablecoin market cap is starting to go parabolic,” said devops199fan. “I think we’re just getting started. In DeFi specifically, we’ve only scratched the surface of what’s possible in terms of financial primitives and systems.”

Other markets

Digital assets on the CoinDesk 20 are mostly in the red Friday. One winner as of 20:00 UTC (4:00 p.m. ET):

• tron (TRX) + 0.27%

Notable losers as of 20:00 UTC (4:00 p.m. ET):

• tezos (XTZ) – 6%
• bitcoin sv (BSV) – 5.7%
• chainlink (LINK) – 4.3%

Read More: Decentralized Exchange Volume Rose 103% in September 

Equities:

• Asia’s Nikkei 225 ended the day in the red 0.67%, dragged down by losses in the materials and mining sectors.
• Europe’s FTSE 100 closed in the green 0.39%, rebounding from an early sell-off as president Donald Trump’s positive coronavirus news affected the market.
• In the United States the S&P 500 fell 0.70% as investor concerns about a coronavirus resurgence pushed down stocks.

Commodities:

• Oil was down 4%. Price per barrel of West Texas Intermediate crude: $36.97.
• Gold was flat, in the red 0.14% and at $1,902 as of press time.

Treasurys:

• U.S. Treasury bond yields were mixed Friday. Yields, which move in the opposite direction as price, were up most on the 30-year, up to 1.479 and in the green 1.3%.

Related Stories

• Market Wrap: Blame BitMEX as Bitcoin Dumps to $10.4K; Record Month for Ethereum Fees
• Total Stablecoin Supply Nearly Doubled in Q3, Adding Record $8B

U.S. regulatory authorities on Thursday brought a series of civil and criminal charges against BitMEX. Since then more than 41,000 bitcoin were withdrawn from the Seychelles-based crypto exchange. Where did it go, triggering a brief market sell-off? Data shows much of it went to competitors Binance, Gemini and Kraken.

• As of Oct. 2 01:00 UTC, 11,257 BTC moved from BitMEX to these exchanges: 4,786 BTC to Binance, 3,899 to Gemini and 989 to Kraken, according to data provided by CryptoQuant.

• BitMEX’s bitcoin outflow to these exchanges could show traders are putting a higher priority on better compliance with regulations or better-leveraged bitcoin trading products.
• Gemini, the U.S.-based and Winklevoss brothers-owned exchange is known for strict “know-your-customer (KYC)” procedures.
• Binance, the leading crypto exchange by spot trading volume, has surpassed BitMEX, becoming the No.1 crypto exchange in 24-hour bitcoin futures trading volume.
• San Francisco-based crypto exchange Kraken is the first cryptocurrency firm in the U.S. to become a bank, after its application for a special purpose depository institution (SPDI) charter was approved by regulators on the Wyoming Banking Board.
• Failure to implement proper KYC rules is among the charges against BitMEX by the U.S. Commodity Futures Trading Commission (CFTC).
• Once the leading crypto derivatives exchange, BitMEX’s market share has waned, with many other venues offering a variety of bitcoin derivatives trading instruments.

Related Stories

• ‘Good Reason to Worry’: What the BitMEX Indictment Means for DeFi and Bitcoin, Feat. Stephen Palley and Preston Byrne
• Bulls Exit BitMEX Bitcoin Futures Market
• Bitcoin News Roundup for Oct. 2, 2020
• Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin

Bitcoin miners generated an estimated $328 million in revenue in September, down 11% from August, according to Coin Metrics data analyzed by CoinDesk.

• The moderate decrease in revenue came as bitcoin (BTC) stumbled through September, closing the month down 8% after gaining over 25% through July and August.
• Revenue estimates assume miners sell their BTC immediately.

• Network fees brought in $26 million in September, or just over 8% of total revenue, down 2 percentage points from fees comprising 10% of revenue in August.
• Notably, fees as a percentage of total revenue continues a strong upward trend since April after the block subsidy halving in May.
• Increases in fee revenue are important to sustain the network’s security as the block reward decreases every four years.

• Bitcoin’s average transaction fee bounced between $1 and $5 through September.
• As some cryptocurrency traders are rotating funds from altcoins and stablecoins into BTC, miners can have hopes for a higher BTC price and subsequent revenue growth through October.

Related Stories

• Record $166M Ethereum Fees Last Month Were 6 Times Bigger Than Bitcoin’s
• Canaan Shares Dipped Only 2% in Q3 in Fourth Straight Quarterly Drop
• MicroBT Sets Up First Offshore Bitcoin Miner Factory to Expand US Market Share
• Iran Is Ripe for Bitcoin Adoption, Even as Government Clamps Down on Mining

Belarus is cracking down on reporters.

The nation’s government, led by President Alexander Lukashenko, whose election was mired in controversy and has not been recognized by the European Union, announced Friday it was canceling the press accreditations for all foreign journalists immediately. The move comes as Belarus continues blocking its citizens from accessing local media websites, including the Belarusian branch of Radio Free Europe/Radio Liberty, in the wake of a massive, three-day internet outage and weeks of protests over the Aug. 8 election.

Now, some media outlets are fighting back. To make their mobile apps more resilient, some Belarusian news organizations are using NewNode, a decentralized file-sharing service by the California-based startup Clostra, which basically runs on the same principle as torrents. This means users store bits of content on their devices, sharing them with others in a peer-to-peer fashion.

Related: How a Hacker Launched a Decentralized Network to Track Internet Censorship

This story is much bigger than Belarus because Internet censorship is a global phenomenon. While governments around the world are getting more skilled at blocking online content, local activists and media are experimenting with new forms of resistance.

‘Self-healing network’

The principle behind NewNode is that if one user can’t access a website but another one can, they can connect to each other and exchange available data like torrent clients do. But it won’t help if there is a total internet shutdown, or if the entire mobile network is down. 

This makes the technology applicable in places like Belarus, whose Internet shutdown wasn’t absolute. Even the most severe internet outages were a result not of  “unplugging” of internet connections but rather of a bottleneck created by intense traffic filtration by the government. 

“Devices will connect to one another automatically and build a network and use it to help one another get content using whatever means of Internet access exist. It’s a distributed self-healing network that automatically scales with the number of devices,” explains Stanislav Shalunov, CEO of Clostra.

Related: Belarus Nonprofit Helps Protestors With Bitcoin Grants

NewNode is in its infancy now, and the company does not disclose the number of its users worldwide. But when over 800,000 new users in Belarus joined in one month since the election, it was a notable uptick for the company. Before the election, Clostra counted only 10 NewNode users in Belarus. Now Belarus is the largest user base for NewNode, Shalunov said. 

“We grow fastest when we can solve the biggest problems, and the shutdowns in Belarus were very significant,” he said.

Before Clostra, Shalunov worked at BitTorrent, and later co-founded another rebel communications startup, Open Garden, the company behind the messaging app FireChat. Firechat, which uses Bluetooth and WiFi to connect mobile phones into an off-line network, took off during the Hong Kong protests in 2014. NewNode uses these two plus the usual mobile internet. 

Clostra’s core team also includes former BitTorrent architect Greg Hazel and Blockstream VP of engineering Ben Teitelbaum.

Belorusian media learned about NewNode by “word of mouth,” the executive director of Clostra, Marina Feygelman, told CoinDesk, and because app stores were classifying the app as a VPN. During the internet shutdowns, VPN services surged in popularity in Belarus as people were looking for ways to stay online, and tools like VPNs and proxies helped trick the traffic filtering software employed by the government.  

Testing regime

According to Shalunov, there are currently about two dozen media publications worldwide using NewNode for their mobile apps, although most of them prefer not to publicize this fact.

“We’ve been developing our app for people in the countries where the authorities are blocking us,” said Arkady Pildes, senior product manager at Radio Free Europe/Radio Liberty. The company recently released its mobile app with NewNode built in, he said. 

Radio Liberty’s app is using both NewNode and Psyphon, a proxy that became extremely popular in Belarus during the post-election internet outage. The app can use either NewNode or Psyphon tech, depending on which can provide a faster and more efficient connection, Pildes said, and the switching happens automatically. 

NewNode is far from a perfect solution. The tech can create excessive mobile traffic for  users who are relaying data to others, putting financial pressure on them if they aren’t using unlimited internet plans, Pildes said. 

Another possible caveat is that a Bluetooth connection requires users to reveal their locations. Radio Liberty decided this could be unsafe for its Belarus users, so it did not use that option for its app. 

Tut.by, an independent Belarusian news publication whose website users were affected by the post-election internet outage, is now using NewNode tech for its new mobile app. The app on Android has been downloaded over one million times in Google Play, according to Mikita Puzik, Tut.by’s product manager.

Related Stories

• Venezuela Blocks Access to Coinbase and Remittance Service MercaDolar
• Russia Is Blocking Bitcoin-Related Websites Again

Cryptocurrency traders look to be unwinding long positions in bitcoin perpetual futures listed on crypto derivatives exchange BitMEX, which has been charged by regulators with facilitating illegal transactions in the U.S.

• On Thursday, the U.S. Commodity Futures Trading Commission (CFTC) filed civil charges against the exchange while the Department of Justice (DOJ) filed criminal charges accusing four founders and executives of BitMEX of evading rules designed to stop money laundering.
• Since the announcements, BitMEX has witnessed an outflow of more than 40,000 bitcoins, currently worth more than $422 million, according to data provided by the blockchain intelligence firm Chainalysis.
• Open positions in BitMEX futures have declined by more than 22% from $592 million to $460 million since the CFTC and DOJ announcements and are down more than 50% from the high of $1 billion seen on Sept. 1.

• According to data source Skew, the annualized rolling three-month perpetuals (futures without expiry) basis has declined from 6% to 1.84% in the past 24 hours.
• Basis refers to the difference between the futures price and the spot price.
• Essentially, the BitMEX futures premium has declined from 6% to 1.84% in the past 24 hours. In other words, long positions are being squared off.
• Futures usually trade at a premium to spot prices, and the net buying pressure for futures determines the premium.

• The differential between the premium offered by other exchanges and BitMEX has widened over the past 24 hours.
• That indicates increased urgency among traders to move their bullish leveraged positions away from BitMEX, which could be in for a long, drawn-out battle with the U.S. regulators.
• “BitMEX, with over $70 billion monthly turnovers, has enough resources to keep on fighting with the CFTC and DOJ engaging with the best lawyers in the industry. They have announced their denial of allegations already, and this might turn into a quite long battle,” said Alex Melikhov, CEO and founder of Equilibrium and the EOSDT stablecoin.
• However, BitMEX’s market share has been on the decline.
• “Open interest is declining since the beginning of September, and the relevance of BitMEX is getting smaller and smaller,” Patrick Heusser, senior cryptocurrency trader at Zurich-based Crypto Broker AG, told CoinDesk in a Twitter chat. 

Also read: BitMEX Moves $337M in Bitcoin Ahead of First User Withdrawals Since US Charges

Related Stories

• ‘Good Reason to Worry’: What the BitMEX Indictment Means for DeFi and Bitcoin, Feat. Stephen Palley and Preston Byrne
• Bitcoin News Roundup for Oct. 2, 2020
• Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin
• BitMEX Moves $337M in Bitcoin Ahead of First User Withdrawals Since US Charges

Ethereum’s annual developer conference, ETHOnline, kicks off Friday afternoon. Instead of hopping from city to city like past Devcons, catch the latest Ethereum updates from your laptop at home.

Friday’s segments are free online here. The conference continues every Friday including October 9, 16, 23 and 30. Each day focuses on one area of interest for Ethereum developers and investors such decentralized finance (DeFi) or scaling Ethereum. 

A hackathon with up to $100,000 in prizes also begins today and concludes Oct. 22.

Related: Bitcoin Escrow Chief Pleads Guilty to $3.25M Crypto Fraud

For anyone so inclined, here’s what CoinDesk is watching today:

• 12:30 EDT: Rediscovering Ethereum’s Opportunities w/ Aya Miyaguchi
• 13:30 EDT: Eth1 + Eth2 = Ethereum w/ Danny Ryan
• 14:00 EDT: Coding an automated market maker (AMM) with Marek Kirejczyk and Bartek Rutkowski
• 19:00 EDT: Scaling Ethereum in 2020 and Beyond with Vitalik Buterin

Related Stories

• Coinbase Reportedly Warns Some UK Users It’s Handing Their Details to the Taxman
• Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin
• Ripple Wins US Patent for New Oracle-Based Smart Contract Design

BitMEX is in hot water with the CFTC and DOJ. Thursday, a dual agency operation levied charges against the derivatives exchange and several employees for facilitating unregistered trading and violating the Bank Secrecy Act. 

Elsewhere, another European financial head has intimated the need for a “digital euro,” Atari’s cryptocurrency has a sale date and Venezuela built a national stock exchange on Ethereum. 

Top shelf

BitMEX’s big mess
The U.S. Commodity Futures Trading Commission (CFTC) and federal prosecutors are charging crypto trading platform BitMEX with facilitating unregistered trading and other crimes. Further, several executives and employees have been charged with violating the Bank Secrecy Act, with one in custody. BitMEX CEO Arthur Hayes remains at large. It is uncertain how this may affect the crypto industry, though it appears traders took it in stride in intraday trading. More than 32,200 BTC (19% of the exchange’s total funds, worth around $337 million) moved off BitMEX before the exchange’s set withdrawal time at 13:00 UTC, according to data source Glassnode.

Related: Money Reimagined: Trump, Crypto and Fairer Taxes

Digital euro
An executive at the European Central Bank (ECB) has said a future digital euro initiative could save the eurozone from relying on digital currencies issued by foreign entities. In a post on Friday, ECB executive member Fabio Panetta, formerly head of the Italian central bank, said the envisioned aim of a central bank digital currency (CBDC) would be to “preserve the public good that the euro provides to citizens.” The statement comes as the ECB moves to trademark the phrase “digital euro.” Though, officially, it should be said the central bank is only studying the idea, without committing to issuing a CBDC.

Babel’s leverage
Leaked recordings of a private conversation suggest crypto lender Babel Finance leveraged some user funds to long bitcoin and faced potential default risks during this year’s Black Thursday market crash in March. Seven audio files first emerged online that appear to be parts of a longer in-person conversation between Babel co-founder Del Wang and an unknown person. The company disputes this claim. Babel is primarily a savings and loan operation that, according to the recordings, also placed leveraged bets on BTC’s price. Using $750,000 raised from Neo Growth Capital (NGC) and another $4 million as deposits, also from NGC, Babel began taking out positions in early 2019, when the price dropped to $3,000, betting it could reach as high as $18,000, CoinDesk’s Wolfie Zhao reports. Things got messy this year, when a coronavirus-led panic crashed the crypto markets.

Atari coin
The Atari Group, the company behind such classic video games as Pac-Man, will begin publicly selling its Atari Token (ATRI) cryptocurrency in early November. ATRI is a self-styled entertainment industry payment method in the form of an ERC-20 token atop the Ethereum blockchain. It has been in the works since at least early 2018. Crypto casinos, “blockchain games” and the video game distribution platform Ultra.io will be among the utility token’s earliest use cases, said Atari’s blockchain subsidiary, Atari Chain. The token will list on Bitcoin.com and Atari’s own crypto exchange at the close of the public sale.

National and decentralized
Venezuela has launched a “decentralized” national stock exchange built atop the Ethereum blockchain. Enabled under a new law listed in the country’s Official Gazette on Tuesday, the exchange comes as part of new measures announced by Pres. Nicolas Maduro in a bid to sidestep tough U.S. sanctions. A draft of a wider “Anti-blockade Law for National Development and the Guarantee of Human Rights,” aimed to give the government tools to “defeat all mechanisms of persecution and international blockade,” was also announced Tuesday in a speech to the country’s National Assembly. The news comes soon after Venezuela legalized the cryptocurrency mining industry.

Quick bites

• Malta Disputes Crypto Arbitrage Hub Arbitly's Registry Claims (Danny Nelson/CoinDesk)
• DeFi Degens Hit Hard by Eminence Exploit Will Be Partially Compensated (Colin Harper/CoinDesk)
• How CoinGecko went from CoinMarketCap challenger to DeFi investor (Yogita Khatri/The Block)
• IRS bets $1M Monero transactions are traceable (C Sephton/Modern Consensus)
• Coinbase wants to reject politics. It should already know how risky that is. (David Z. Morris/Fortune)

At stake

Related: Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin

Are DEXs better off?
The sudden takedown of BitMEX, an institutional part of centralized crypto trading, raises questions about the viability of decentralized exchanges (DEXs).

CoinDesk’s Will Foxley reports the value proposition of decentralized platforms is that they are – at least in theory – wholly owned by their communities, rather than their investors or a C-suite of executives.

However, they are founded by real, live humans who are subject to the whims of law enforcement agencies. Are they next?

It seems like BitMEX’s takedown was wholly its own doing, by allegedly serving U.S. customers without proper authorization from the CFTC, and eschewing proper know-your-customer (KYC) requirements up until earlier this year. 

But without a figurehead like Chief Executive Arthur Hayes, can the same accusations be leveled against platforms like Uniswap – which create open markets without regulatory oversight that anyone can enter?

“For DeFi builders it might be relevant to have from the start a clear path towards decentralized governance similarly what Ethereum and Bitcoin is today, where there is no centrally controlled entity governing these protocols by design. In the end also remember who you are building for and make safe products for all stakeholders,” Stani Kulechov, co-founder of the Aave DeFi money market, told CoinDesk.

Others, like Robert Leshner, founder of DeFi lending platform Compound, even suggested regulators might find virtue in DeFi. Though time will tell.

For now, there could be apparent security in the limited size of the DEX subsector. The $11 billion DeFi market pales in comparison to the larger centralized exchange (CEX) market, Foxley notes. But the gap is closing.

CoinDesk’s Zack Voell reports September volume on DEXs recorded its third consecutive month of doubling. Aggregate trading volume on decentralized exchanges reached $23.6 billion in September up from $11.6 billion in August.

Market intel

Coronavirus scare
The cryptocurrency and Asian stock markets sold off early Friday after U.S. Pres. Donald Trump announced he and his wife had tested positive to COVID-19. In a tweet on Friday, Trump said he and First Lady Melania Trump had begun their quarantine process. Bitcoin is also down by 1.9%, having fallen from $10,678 to around $10,400, at press time. The Australia ASX All Ordinaries fell  1.35%, while the S&P 500 futures fell about 2% on the news. “We will get through this TOGETHER!,” Trump tweeted.

Internet 2030

Self sovereign identity
In today’s internet, most of us have made the Faustian bargain of trading agency for convenience. We trust Facebook with our log-in credentials to countless other sites, the photos of our family, the contents of our private messages, and troves of personal details that can be repackaged, exploited, and weaponized – in just one tiny example, arguably tipping the 2016 election to Donald Trump.

But most of us make that Faustian bargain. We hold our nose and click. We feel that unless we want to be an online hermit, there really is no choice. 

But what if we “owned our data,” meaning that instead of trusting the Googles and Facebooks with our precious data – a resource more valuable than oil – we are the custodians of our data, and we only share it when we choose, in certain contexts, and perhaps we can sell it or license it?

“You’re re-democratizing the internet,” says Drummond Reed, chief trust officer of Evernym, one of the organizations trying to make SSI a reality. “You’re pushing the power, literally, out to the peers.” Reed is no Pollyanna, and he doesn’t expect the Facebooks to vanish in the next decade, but he predicts that “we will see a pretty dramatic reshaping of the power distribution.”

Okay, but what would that actually mean from a user experience? SSI can be an abstract concept, making even Bitcoin look simple and easy to explain. It’s tough to visualize or appreciate.  So for this scenario, we’ll envision some ways that SSI – and ownership of your data – would change your (online) life. 

Welcome to a better internet.

Have an idea for what the future of the internet will look like, reach out to daniel@coindesk.com.

Who won #CryptoTwitter? Related Stories

• Blockchain Bites: Dorsey Challenges Coinbase, Nasdaq Lists Diginex, Ethereum Miners Profit
• First Mover: Nine (Bullish) Bitcoin Predictions for Final Months of (Awful) 2020

The head of bitcoin escrow company Volantis pleaded guilty in New York on Thursday to bilking an investor of over $3 million. He also settled parallel commodities fraud charges.

Jon Barry Thompson, 49, admitted in Manhattan federal district court that his crypto companies – Volantis Market Making LCC and Volantis Escrow Platform LLC – never followed through with a promised $3.25 million bitcoin buy for one unnamed customer in the summer of 2018.

• Thompson admitted to misrepresenting his companies’ bitcoin custody, control, purchasing practices and risk exposure in order to secure the customer’s funds.
• He then wired the cash to a third party without first receiving the bitcoin, as he had promised the customer he would.
• But the bitcoin never materialized and the customer’s funds were never returned.
• Thompson could face a maximum 10-year prison term. His sentencing is scheduled for Jan. 7, 2021.

Thompson also settled charges brought by the Commodity Futures Trading Commission (CFTC) on Thursday. A newly filed consent order requires him to pay $7.4 million in restitution to two victims, permanently bars him from bitcoin trading, and compels him to cooperate with the CFTC in any future investigations.

• Thompson’s pledge to cooperate may pay immediate dividends.
• In mid-September, SDNY prosecutors filed charges against two individuals who allegedly defrauded $3 million from the “principal” of Volantis bitcoin escrow in June 2018.

Related: What to Watch at ETHOnline, This Year’s Devcon

Read more: Two Charged With Duping Investors Out of $5M With Bogus Bitcoin-Buying Brokerage

Related Stories

• Coinbase Reportedly Warns Some UK Users It’s Handing Their Details to the Taxman
• Ripple Wins US Patent for New Oracle-Based Smart Contract Design
• BitMEX Moves $337M in Bitcoin Ahead of First User Withdrawals Since US Charges

The head of bitcoin escrow company Volantis pleaded guilty in New York on Thursday to one count of commodities fraud for bilking an investor of over $3 million.

Jon Barry Thompson, 49, admitted in Manhattan federal district court that his crypto companies – Volantis Market Making LCC and Volantis Escrow Platform LLC – never followed through with a promised $3.25 million bitcoin buy for one unnamed customer in the summer of 2018.

• Thompson admitted to misrepresenting his companies’ bitcoin custody, control, purchasing practices and risk exposure in order to secure the customer’s funds.
• He then wired the cash to a third party without first receiving the bitcoin, as he had promised the customer he would.
• But the bitcoin never materialized and the customer’s funds were never returned.
• Thompson could face a maximum 10-year prison term. His sentencing is scheduled for Jan. 7, 2021.

Thompson also settled charges brought by the Commodity and Futures Trading Commission on Thursday. A newly filed consent order requires him to pay $7.4 million in restitution, permanently bars him from bitcoin trading, and compels him to cooperate with the CFTC in any future investigations.

• Thompson’s pledge to cooperate may pay immediate dividends.
• In mid-September, SDNY prosecutors filed charges against two individuals who allegedly defrauded $3 million from the “principal” of Volantis bitcoin escrow in June 2018.

Related: What to Watch at ETHOnline, This Year’s Devcon

Read more: Two Charged With Duping Investors Out of $5M With Bogus Bitcoin-Buying Brokerage

Related Stories

• Coinbase Reportedly Warns Some UK Users It’s Handing Their Details to the Taxman
• Ripple Wins US Patent for New Oracle-Based Smart Contract Design
• BitMEX Moves $337M in Bitcoin Ahead of First User Withdrawals Since US Charges

Coinbase has told some of its users it is passing their details onto the U.K. tax authority, HMRC.

• As first reported by Decrypt, the popular crypto exchange emailed some users saying that as part of a deal with HMRC, it must provide records on customers who had received more than £5,000 ($6,500) during the 2019-2020 tax year.
• The email appears to have been only sent to users the exchange believed crossed that threshold; it encourages them to reach out to their accountants or tax advisers.
• The notice comes over a year after HMRC first requested crypto exchanges send over information on U.K. residents who had moved money on their platforms.
• Per the email, Coinbase said HMRC had originally requested records on its customers between 2017 and 2019, but a compromise limited the data to customers using digital assets to receive greater amounts.
• In the U.K., cryptocurrencies count as an investment asset and are subject to capital gains tax, which for high-income earners can come to approximately 20% on gains.

See also: UK Government Moving to Restrict Cryptocurrency Promotions

Related Stories

• Ripple Wins US Patent for New Oracle-Based Smart Contract Design
• BitMEX Moves $337M in Bitcoin Ahead of First User Withdrawals Since US Charges
• Digital Euro Will ‘Protect’ Eurozone From Foreign Issuers, Says ECB Exec
• Venezuela Rolls Out Ethereum-Based Stock Exchange to Help Skirt US Sanctions