CoinDesk Crypto

Buying volume is pushing bitcoin higher. Meanwhile, DeFi investors continue to seek places to park crypto for steady yield.

• Bitcoin (BTC) is trading around $10,730 as of 20:30 UTC (4:30 p.m. EDT). Gaining 0.50% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,550-$10,795
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price was able to cling to $10,700 territory, rebounding from a bit of a dip after the cryptocurrency rallied on Thursday. It was changing hands around $10,730 as of press time Friday 

Read more: Up 5%: Bitcoin Sees Biggest Single-Day Price Gain for 2 Months

Related: Voyager CEO Says Revenue Growth Accelerates 8-Fold as DeFi Trading Surges

Guy Hirsch, managing director and U.S. head for multi-asset broker eToro, points to fundamentals for a bullish bitcoin case.

He cites bitcoin’s mining hashrate and difficulty hitting all-time highs, along with heightened economic uncertainty in the face of rising COVID-19. “$11,000 is the only barrier to a parabolic run towards $12,000 or higher,” Hirsch told CoinDesk.

Neil Van Huis, head of institutional trading at liquidity provider Blockfills, said he is just happy bitcoin has been able to stay over $10,000, which he contends feels is a key price point.

“I think we’ve seen that test of $10,000 hold which keeps me a level-headed bull,” he said. 

Related: New Blockchain Program Aims to Counter Fake Viewer Data, Scam Ads

The last time bitcoin dipped below $10,000 was Sept. 9.

“Below $10,000 makes me worried about a pullback to $9,000,” Van Huis added.

The weekend should be relatively calm for crypto, according to Jason Lau, chief operating officer for cryptocurrency exchange OKCoin.

He pointed to open interest in the futures market as the source of that assessment. “BTC aggregate open interest is still flat despite bitcoin’s overnight price gain – nobody is opening new positions at this price level,” Lau noted.

Another indicator of expected calm is bitcoin swaps funding, which remains in negative or near zero territory – a signal derivatives traders are still hesitant to place bullish bets.

Lau said there would need to be positive funding rates in the derivatives market before another big price pop. 

“Until funding goes positive again, it’s hard to see us going much higher – for me that’s the best indicator of where we are at the moment,” said Lau. “Longs are being paid to open positions, so it confirms that there’s still a lot of hesitation at current price levels.”

Investors hunting for yield plow into dForce

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Thursday, trading around $355 and climbing 2.7% in 24 hours as of 20:30 UTC (4:30 p.m. EDT). 

Read more: Fintech Giant Plaid Has a Hidden Passion for DeFi

DeFi project dForce, a decentralized exchange, has seen its total value locked (TVL) almost double over the past 24 hours, from $58 million Thursday to over $108 million as of press time.

Jean-Marc Bonnefous, managing partner of Tellurian Capital, which invests in the DeFi ecosystem, says some investors should be wary of trendy projects cropping up in the ecosystem. 

“There’s a great pace of innovation, but in some cases, project releases are not even a minimum viable product,” he said. “So the chances for breaking are pretty high which implies a huge risk premium and high volatility for the tokens as we have seen over the last few weeks.” 

It’s possible, then, that crypto traders like dForce for parking assets while waiting for more exciting opportunities. According to the project’s website, dForce users are currently getting a 7% annual yield on the dai (DAI) stablecoin.

Other markets

Digital assets on the CoinDesk 20 are mostly green Friday. Notable winners as of 20:30 UTC (4:30 p.m. EDT):

• chainlink (LINK) + 10.6%
• stellar (XLM) + 7.1%
• 0x (ZRX) + 6%

Notable losers as of 20:00 UTC (4:30 p.m. EDT):

• ethereum classic (ETC) – 1.2%
• bitcoin sv (BSV) – 0.61%

Read more: OneCoin Investors Allege BNY Mellon Aided $4B Fraud

Equities:

• Asia’s Nikkei 225 ended the day up 0.51% on hopes fresh coronavirus-related stimulus from the U.S. will provide a boost to the global economy.
• Europe’s FTSE 100 closed in the green 0.34% as investors weighed the impact of rising COVID cases on the continent.
• In the U.S., the S&P 500 gained 1.8% as tech stocks led the index higher, including Apple up 3.7% and Microsoft in the green 2.8%.

Commodities:

• Oil was down 0.22%. Price per barrel of West Texas Intermediate crude: $40.05.
• Gold was in the red 0.24% and at $1,862 as of press time.

Treasurys:

• U.S. Treasury bond yields all fell Friday. Yields, which move in the opposite direction as price, were down most on the 2-year, dipping to 0.129 and in the red 8.3%.

Related Stories

• On-Chain Data Suggests Ether Investors Bought September Dip
• Bitcoin’s Bearish September Has Kneecapped Crypto ETP Activity: Report

Fintech giant Plaid has quietly added support for two DeFi applications, the IRS wants to know about your crypto holdings and data shows the total value of stablecoins has surpassed the $20 billion milestone. 

Plaid
Visa-owned fintech company Plaid, which connects traditional bank accounts to thousands of digital platforms has quietly added support for Dharma’s DeFi wallet and Teller Finance, a DeFi startup bringing unsecured lending to the Ethereum blockchain. CoinDesk’s Ian Allison got the scoop that Plaid’s head of UK, Keith Grose, is a believer in decentralized and open applications, even if it’s a cynical attempt for fintech to manage its own disruption. “I think it’s still a long way before DeFi becomes part of the main route for finance, but it’s a really exciting corner and one that personally I’m passionate about,” Grose told Allison. “We’re only scratching the surface…”

Tax policies
The U.S. Internal Revenue Service (IRS) is reportedly repositioning a question about crypto transactions that will make it harder for taxpayers to avoid declaring their holdings. According to a Wall Street Journal report Friday, the IRS is updating the 1040 income tax form for 2020 to require that all returnees check a box if they have transacted any crypto assets over the year – placing the question at the top of the document, rather than buried further down, the WSJ says. A law expert told the WSJ that the question would make it easier for the IRS to win cases if the taxpayer checks the “no” box and is later found to have held crypto. Half a world away, four Knesset members are seeking to ease Israel’s 25% capital gains tax on cryptocurrencies through draft legislation.

Related: Money Reimagined: Memes Mean Money

Bipartisan appeal
A new bipartisan-backed bill aims to clarify investment contract assets or digital tokens sold as part of a securities offering are separate and distinct commodities, not securities, CoinDesk’s Sandali Handagama reports. Introduced by Chairman of the National Republican Congressional Committee Rep. Tom Emmer (R-Minn.), the legislation would amend existing securities laws to exclude tokens from the definition of a security. Chief Policy Officer for the Chamber of Digital Commerce Amy Davine Kim, said tokens – issued by companies that register with the SEC – are the object of an investment contract and not necessarily a security. Rep. Michael Conaway (R-Texas), who joined Emmer in introducing the legislation, proposed a separate bill Thursday that could bring digital currency exchanges under a single federal framework.

China & crypto
Ant Group has launched a cross-border trading blockchain platform, called “Trusple.” The Antchain-based trading platform will make it easier for small and medium-sized enterprises (SMEs) to sell their wares to clients overseas, by automating payments and order placements. Ant has partnered with the likes of Standard Chartered, Deutsche Bank and BNP Paribas to help “optimize” the process. Ant, a sister to Alibaba Group, is looking to raise a record $35 billion in a dual public listing. Meanwhile, Chinese state media have broadcasted a coordinated campaign declaring that “cryptocurrency has undoubtedly become the top performing investment” this year. CoinDesk’s Wolfie Zhou said while many are responding to the bullish signal others are concerned about the potential agenda behind the rare coordinated effort. 

a16z approval
Andreessen Horowitz’s (a16z) late-stage venture fund has received a green light from the U.S. Federal Trade Commission (FTC) for a transaction involving Coinbase. The VC giant’s $2 billion fund, Andreessen Horowitz LSV Fund I, L.P, received antitrust clearance from the FTC in a filing dated Sept. 22 involving “Coinbase Global, Inc,” Coinbase’s parent. CoinDesk’s Danny Nelson and Zack Steward report it is unclear whether the approval is for the fund’s previously disclosed purchase of shares in the cryptocurrency exchange or for a new purchase. Though, given Coinbase’s $8 billion valuation would represent nearly half of a16z’s $16.6 billion assets under management, it’s extremely unlikely the clearance is for an outright purchase.

Quick bites

• OneCoin Investors Allege BNY Mellon Aided $4B Fraud (Paddy Baker/CoinDesk)
• Russian Web Censor Tells Binance It's Been Blacklisted – Three Months Late (Anna Baydakova/CoinDesk)
• Canadian report finds those with low financial literacy more likely to own crypto compared to the highly financially literate (MK Manoylov/The Block)
• Hacker Saves $10 Million in Ethereum From Inevitable Theft (Liam Frost/Decrypt)
• Tron's Play for WBTC Shows Competition to Relieve Ethereum Congestion (First Mover/CoinDesk)

At stake

More questions?
Earlier this week stablecoin issuers received a reassuring message from some of the top U.S. financial regulators: parking your fiat reserves in banks is a-okay. 

Related: First Mover: Tron’s Play for WBTC Shows Competition to Relieve Ethereum Congestion

On Monday, the Comptroller of the Currency (OCC), under the U.S. Department of the Treasury, issued official guidance declaring that national banks and federal savings associations can hold reserve funds for stablecoin issuers. It was a signal for these issuers to continue what they already have been doing for years.

Indeed, the dollar-backed stablecoin market nearly quadrupled in size over the past year – from around $5 billion in September 2019 to around $20 billion currently – with much of that wealth backed by reserves held in bank accounts. Much of this growth has been driven by international demand for dollars as well as the increasingly sophisticated financial tools being built on top of public blockchain technology. Since its inception, however, the stablecoin market has existed amid regulatory ambiguity.

The new ruling, the first federal guidance issued regarding stablecoins, adds legitimacy to the booming market sector and paves the way for more banks to enter the ecosystem, say industry commentators. Still, it’s unclear whether the mandate will have any short-term significance. 

“If you don’t have guidance from the banking regulator about how banks can participate in those schemes – or arrangements, rather – that would limit growth. It paves the way for growth,” Jeremy Allaire, CEO of Circle said over Zoom. “But it doesn’t change the way Circle operates today.” 

Allaire isn’t alone in his thinking. “The letter indicates a positive sentiment coming from a top government agency,” Kristen Smith, founder of the Blockchain Association, a D.C. crypto advocacy group, said. “Will it have any major practical changes for the way fiat-backed stablecoins operate? Probably not.”

Market intel

$20B milestone
The total value of stablecoins has now surpassed $20 billion, reflecting the growing demand of investors looking to hedge their risks in both crypto and traditional markets amid the coronavirus pandemic. Data from Coin Metrics show that the total value of assets for all stablecoins breached the $20 billion mark Thursday, only a little more than four months after the number broke a $10-billion record in May. Stablecoins are digital tokens, the values of which are pegged to fiat currencies like U.S. dollars.

Mint wrappers
Three Arrows Capital completed the largest single issuance of new wrapped bitcoin tokens by any merchant, minting 2,316 WBTC through BitGo Thursday afternoon. The Singapore-based firm’s mint represents nearly 3% of the current wrapped bitcoin supply, just over 81,000 at last check. One week ago, Alameda Research set the previous record for most tokens issued in a single mint with 1,999 WBTC issued. Since January, the total supply of wrapped bitcoin has grown by over 13,000% from less than 600 WBTC, according to data from Dune Analytics, CoinDesk’s Zack Voell reports.

Tech pod

Private browsing
Privacy tech company Aleo has launched a data privacy-oriented blockchain and developer kit to make writing zero-knowledge proofs in web applications easy and scalable. CoinDesk’s Ben Powers reports the startup is releasing its first round of software tools to let developers write private applications for the web using a new programming language called Leo, as well as integrate these tools into pre-existing browsers’ functions. Aleo leverages zero-knowledge proofs (ZKPs), a cryptographic technique that allows two parties on the internet, such as an app and a user, to verify information with each other without sharing the underlying data related to this information.

Internet 2030

Jonathan Beller is Professor of Media Studies at Pratt Institute and member of the Economic Space Agency (ECSA) think-tank. His forthcoming book The World Computer: Derivative Conditions of Racial Capitalism will be published by Duke UP in 2021. This essay is part of the Internet 2030 series exploring the future of the digital economy. The essay excerpted below is part of CoinDesk’s ongoing Internet 2030 series exploring the future of digital technologies and cultures. 

Tokenization revolution
Now, in 2030, there is a global movement to redesign the convergence of communications and monetary media as post-capitalist economic media. 

The internet of the past has been clearly grasped as an extension of capitalism that turned everyone to workers in the social factory, who are paid in company scrip, while the real value was hoarded by shareholders. The “background monetization” of our words, images, locations, faces and metabolic processes was recognized as a key impediment to general emancipation and as a blockade against solving world historical problems including climate change. 

Indeed, some claimed (rightly from our perspective), that the economic logic of the internet in 2020 also prevented the possibility of adequately addressing the egregious forms of profitable oppression that come under various headings including “racism” and “sexism,” endemic to what was essentially racial capitalism. 

No longer, it had been decided by a growing number of Earthlings by 2030, will companies and governments strip us of our expressive power, our powers to create cultures, worlds and value(s). No longer will they devalue our lives in accord with their agendas. 

We will no longer alienate our “content” as property for someone else’s platform, we will no longer provide labor for someone else’s capital, we will no longer be a pawn in centralized sovereign governance that couldn’t care less about us. We refuse the psychopathology and megalomania that comes from having to assert ourselves by actively denying the real conditions of existence, conditions that inexorably convert our expression into murder.

In short, as one manifesto put it, “We will no longer serve as batteries for someone else’s matrix.”

CoinDesk’s “Internet 2030” series examines the future of the medium and what role blockchain and crypto will play in it with content and conversations on the future of the decentralized web. If you are interested in submitting an op-ed for the series, please reach out directly to daniel@coindesk.com.

Podcast corner

Borderless
CoinDesk reporters Nikhilesh De, Anna Baydakova and Danny Nelson have released the first episode of their new podcast, Borderless. The series explores the most important events happening in and out of crypto affecting the industry, through a global lens. In the first episode they dive into the FinCEN files, a collection of thousands of documents that show, banks, not crypto, are the main conduit for alleged financial crimes.

Who won #CryptoTwitter? Related Stories

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The super-charged trajectory of the cryptocurrency industry is translating to faster growth at the publicly traded digital-asset brokerage Voyager Digital, where revenue this quarter is tracking at an eightfold increase over the prior 12 months’ average pace. 

Voyager CEO Steve Ehrlich told CoinDesk in a Zoom interview that the company’s on pace for revenue of about $2 million during the fiscal first quarter that ends Sept. 30. That compares with $1.1 million during the fiscal year that ended in June.

The company’s shares, listed on the Canadian Securities Exchange, have rallied about 250% year, far surpassing the 49% year-to-date gains for the largest cryptocurrency, bitcoin (BTC), and 169% for No. 2 ether (ETH). 

Related: On-Chain Data Suggests Ether Investors Bought September Dip

Ehrlich said in the interview that he’s perfectly happy having investors buy Voyager’s shares as a play on the cryptocurrency industry’s growth. Stockholders, he said, don’t have to delve into the nuances of individual tokens, given the industry’s notorious history of extreme price volatility.  

“You’re getting access to the digital crypto markets but you’re getting it through a publicly traded company that is trading on behalf of their customers,” Ehrlich said. 

Ehrlich said some of Voyager’s growth in the quarter has come from investors seeking quick gains from the fast-moving arena of decentralized finance, or DeFi, where programmers are using blockchain technology to build automated networks for lending and trading. It’s a business that aspires  to challenge traditional Wall Street firms with a cheaper and potentially more equitable model.

But he acknowledged that the DeFi tokens can be complicated and require “education” efforts. The tokens often represent little-tested projects in hardly-established markets. Prices for Kyber Network’s KNC token, traded on Voyager, have plunged 41% in the past month, though they’re still roughly five times where they started the year. 

Related: Bitcoin’s Bearish September Has Kneecapped Crypto ETP Activity: Report

“We saw people kind of reallocate a little bit out of the DeFi and a couple other tokens” amid a sell-off in the sector this week, he said. 

Ehrlich said Voyager has no plans to put any of the company’s corporate treasury into cryptocurrencies. Such a move was announced recently by publicly traded Microstrategy, which said it steered at least $425 million into bitcoin. 

“Our investors want us to be that agency broker,” Ehrlich said. “They want us to be the one that executes the trade in microseconds for customers, not making bets on coins one way or another.”

He added that he has encouraged some corporate executives wary of following Microstrategy’s bitcoin play to consider converting their cash into USD Coin’s dollar-linked USDC stablecoins, which can be deposited at Voyager for a 9.5% interest rate. 

Related Stories

• First Mover: Tron’s Play for WBTC Shows Competition to Relieve Ethereum Congestion
• Up 5%: Bitcoin Sees Biggest Single-Day Price Gain for 2 Months

The first time he was SIM-swapped in 2018, Haseeb Awan took it on the chin and hoped it wouldn’t happen again. Then came the second incident. Then the third. Then the fourth. After the last swap, Awan stopped trusting his mobile provider to keep his account safe and took matters into his own hands: He started his own cell service company. 

It was a major pivot from his former day job running the BitAccess Bitcoin ATM network, a company he co-founded and which, incidentally, made him a prime target for SIM-swapping.

His new venture, Efani, is dedicated to stopping a problem that is all-too-prevalent for cryptocurrency users – a problem which most mobile carriers, as evidenced by Awan’s own problems, have failed to adequately address.

What is SIM swapping?

Related: Most Attacks on Cybersecurity Firm’s Decoy Servers Aimed at Mining Crypto: Report

Sim swapping is a socially engineered hack wherein an attacker ports a victim’s phone number onto a SIM card they control. To hijack a mobile account, an attacker may impersonate a victim to convince a customer service representative to swap the number to the new SIM card. In more elaborate cases, a SIM swap may occur as an inside job or by way of bribing a customer service rep.

These socially engineered attacks have become an all-too-common problem in the Bitcoin and cryptocurrency realm, particularly for its higher-profile personalities. Typically, SIM swappers will target cryptocurrency users with the hope of accessing their exchange accounts through text-message, two-factor authentication. 

Perhaps the most famous example of this attack vector comes from Michael Terpin, who lost some $24 million from a SIM swap, prompting a $220 lawsuit against AT&T. Plenty of other cryptocurrency users have fallen prey to such attacks and subsequently had their exchange accounts drained of funds. The 2020 Twitter hacker was even part of a syndicate that orchestrated SIM swaps.

Read more: Judge Dismisses $200M Damages Claim in AT&T Crypto Hack Lawsuit

Efani: A cybersecurity firm that provides telecom services

Related: Judge Dismisses $200M Damages Claim in AT&T Crypto Hack Lawsuit

Awan is on the long roster of crypto SIM swap victims, which is why he founded Efani in 2019.

The company operates a bit like a mobile virtual network operator. It uses the network infrastructure of Verizon, AT&T and T-Mobile to service its customers. But it only relies on this infrastructure to provide cell coverage. Everything else for the $99/month plan, from data management to customer service, is managed in house according to Efani’s own practices. 

“Our focus is cyber security. Other companies are telecom providers which have other companies provide security for them. We are a cybersecurity firm that provides telecom services.”

According to Awan, most mobile providers only require a phone and account number to make changes to an existing plan. They also give users the option to set a PIN, but even this layer of protection can be bypassed if the hacker is savvy enough. More difficult to control still are bribes and inside jobs.

11 layers of defense

Efani’s solution to this problem? Making it so damn difficult to make changes to an account that an attack is virtually impossible. 

“You cannot make a change for your account by calling customer service,” Awan told CoinDesk. “Even if you call in, they are not authorized to make any changes. For something like changing a SIM card, you may have to go through 11 layers of authentication.”

Those 11 layers of authentication are the maximum number of verification methods available to Efani users, while every account has a minimum of 7 authentication steps when a user wants to  replace their SIM card. These verifications involve providing the last four digits of the credit card on file, phone number, SIM card number, and other information.

“We have made it so rigorous that it eliminates any chance of SIM swapping. Most people give up after the second or third authentication step,” Awan said.

Read more: Social Engineering: A Plague on Crypto and Twitter, Unlikely to Stop

Perhaps the most important feature – and the last step for authorizing a change to an account – involves notarizing a letter of intent. Each user must visit a notary public to authorize a change to their service, and this notary is verified by Efani’s legal team.

Even after this final step, a 7-day “cool-off” period goes into effect before the new SIM card can be activated. And it can’t be any old SIM card bought at your local convenience store, either; Efani sends each account holder two encrypted SIM cards when they sign up with the service, and only the backup is authorized to carry the user’s number if the old card is lost.

Old tricks, new dogs

On top of these measures, Efani conducts background checks of all employees, requires multi-employee authorization to make account changes and stores customer information in server silos to keep data segregated. Additionally, customer names and phone numbers are kept separate.

Efani’s plans are also insured up to $5 million by Lloyd’s of London for any theft or data breach that may occur through Efani’s services.

Awan, who bootstrapped the company with his own finances, said that it’s profitable and on track to hit 7 figures in revenue this year. About a third of its clients are cryptocurrency users, he said, adding that the rest are typically high profile individuals, including professional athletes for the L.A. Lakers and San Francisco Giants, other celebrities and a fair number of lawyers. 

When asked what can be done to “fix” the current state of SIM swapping (without starting a competing business), Awan was pessimistic about the capacity for change in legacy providers. Most customer service employees, who are contractors to begin with, “are not sophisticated enough to understand the threat level.”

Moreover, changing something that affects so few customers anyway is probably not on their radar, especially considering it would require a complete overhaul of their processes.

“I don’t think this problem will be solved by any carrier. Changing the current system would require updating the system and processes for every mobile account in America and this is not easy to do,” Awan said.

“The second problem is that the carriers want to believe this is not an issue. It affects probably 1% of the population. It’d be like saying, “Ok, every car sold in the U.S. comes with bulletproof glass.”

Related Stories

• Social Engineering: A Plague on Crypto and Twitter, Unlikely to Stop
• Indian Users Almost 5 Times More Likely to Encounter Crypto Hacking: Microsoft Report

Blockchain-enabled video network Theta has partnered with Chainlink to help push back on video advertising scams, the likes of which often pop up promoting “cryptocurrency giveaway” dupes. 

Announced on Friday, the solution to counter scam-ads uses video performance data from Theta’s network to assign a “reputation score” for each streamer based on their viewership. Generated using Google’s big data solution, BigQuery, the score is then broadcast onto the Ethereum network using Chainlink’s oracles where advertisers can examine it while deciding to whom to give ads. 

• In a press statement emailed to CoinDesk, Theta said using this solution could help advertisers better identify which streams receive more unique human visitors and help filter out  fake viewership data generated through the usage of click-farms and bots. 
  
• Theta’s video sharing network is built on a model which rewards network participants for transmitting content to other users by using their spare bandwidth and computing resources. Earlier in May, Google announced it had signed-on as a network validator for Theta. 
  
• According to the emailed statement, the data transmitted by Chainlink onto the Ethereum blockchain can also be used to automate contractual agreements between advertisers and content providers using smart contracts.
  
•  Theta also said that the solution is currently live on the its testnet and the network is targeting a public roll out for the end of this year or Q1 2021.

Related Stories

• Market Wrap: Bitcoin Hits $10.7K; Options Market Likes Sub-$360 Ether
• Market Wrap: Bitcoin Drops to $10.2K; Scaling Solution xDai Doubles in Value Locked
• Market Wrap: Bitcoin Clings to $10.4K; Ether in Smart Contracts Highest Since 2016
• Market Wrap: Bitcoin Dips to $10.1K, Ether Drops to $330 on Sell-Off Session

SoluTech, a defunct blockchain firm whose initial coin offering (ICO) raised $2.4 million, has settled fraud and securities violations charges with the U.S Securities and Exchange Commission (SEC).

The SEC slapped SoluTech and its co-founder, 24 year-old Nathan Pitruzzello with fines and a cease-and-desist order for conducting its unregistered 2018-2019 ICO of the SCRL token in an administrative filing published Friday.

• The order described how SCRL would “eventually be usable” with SoluTech’s “blockchain data management solution” mainnet called Scroll Network (SoluTech folded in October 2019.).
• But SCRL was an unregistered security, the regulator ruled, as SCRL’s 100 investors had a “reasonable expectation” of profiting from the SoluTech’s efforts – a critical prong of the Howey test.
• Additionally, Pitruzzello “recklessly misrepresented” his fintech’s history of revenue generation and existing client base to boost investments in his ICO, the order said. The SEC determined SCRL’s sale therefore constituted a fraud.
• Under the terms of the settlement, Pitruzzello promised the SEC to never again host a digital asset security offering, though he will be allowed to buy and sell on his own behalf. He also must pay a $25,000 fine.
• SoluTech pledged to destroy its SCRL in 30 days or less and work to block further trading on secondary markets within the next 10 days.

Related Stories

• Hong Kong Reportedly Picks ConsenSys for Digital Currency Pilot Project
• Bitcoin’s Bearish September Has Kneecapped Crypto ETP Activity: Report
• OneCoin Investors Allege BNY Mellon Aided $4B Fraud
• IRS May Make It Harder to Avoid Declaring Crypto on Tax Returns

Ether‘s recent price drop has failed to deter investors from accumulating the cryptocurrency, on-chain data indicates.

• The second-largest cryptocurrency by market value was trading at $345 on Friday at 15:20 UTC. This represents a 20% decline on a month-to-date basis. Prices reached two-year highs above $480 on Sept. 1.
• While the cryptocurrency has suffered a double-digit price pullback, the number of ether held by top non-exchange addresses has increased by 8% to 27.79 million from 25.54 million, as per data provided by the blockchain intelligence firm Santiment.
• The total amount of ether held by non-exchange addresses has increased by 20% since mid-July.

• “Accumulation during the price drop shows investor confidence in the cryptocurrency’s long-term prospects is strengthening,” Nicholas Pelecanos, advisor to NEM Ventures, an investment arm of the NEM blockchain ecosystem, told CoinDesk in a LinkedIn chat.
• Pelecanos expects the trend to continue as the decentralized finance (DeFi) boom shows no signs of slowing down.
• The total value locked in the DeFi applications rose above $9 billion earlier this month, an increase of more than 1,400% year-to-date, according to data source DeBank.
• Ethereum’s blockchain dominates the DeFi space, and big investors often self-custody ether on decentralized lending/borrowing platforms to generate additional returns rather than just hold.
• Ether has rallied by 168% so far this year, while bitcoin, which underwent its third mining reward halving in May, has gained 48%.

Also read: Five Years In, DeFi Now Defines Ethereum

Related Stories

• Voyager CEO Says Revenue Growth Accelerates 8-Fold as DeFi Trading Surges
• Bitcoin’s Bearish September Has Kneecapped Crypto ETP Activity: Report
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• Up 5%: Bitcoin Sees Biggest Single-Day Price Gain for 2 Months

When Twitter and Square CEO Jack Dorsey spoke at the virtual Oslo Freedom Forum 2020 on Friday, he said blockchain technology is the future of Twitter. 

“Blockchain and bitcoin point to a future, point to a world, where content exists forever,” Dorsey said. “We’re not in the content hosting business anymore, we’re in the discovery business.”

In short, Dorsey expects the nonprofit Blue Sky to create an open Twitter protocol, which users can contribute to and access data from instead of a centralized service where the social media platform hosts content on its website. 

Related: Messaging Giant LINE Launches Token Reward Program

“[Blue Sky] is a completely separate nonprofit from the company [Twitter],” Dorsey said. “We’ll focus on becoming a client of it so we can build a compelling service and business where anyone can access and anyone can contribute.”

Read more: Jack Dorsey Announces New Twitter Team: Square Crypto, but for Social Media

He added the nonprofit is still looking to hire at least five roles, tasked with creating a public blockchain platform.

“You see this most fundamentally in bitcoin and in blockchain,” Dorsey said, describing the shift from centralized service providers to diverse network participants. “The keys will be more and more in the hands of the individual.” 

Related: IoT Startup Helium Floats New Hardware Device for Mining Its HNT Crypto Tokens

As for Bitcoin Twitter, as it exists today, Dorsey broadly spoke to the importance of safeguarding users’ identities, which may be the key to healthy discourse. Plus, Twitter’s staff are amping up reliance and machine-learning tools to help identify non-authentic user behavior, aka propaganda. 

“I appreciate the difference between anonymity and pseudonymity,” he said. “Pseudonymity is built identity. … We want to protect that,” he said.

The appearance comes after the now-infamous Twitter hack of July 2020, when the platform suffered its most prominent attack in years. A 17-year-old hacker is still being tried for multiple fraud charges in Florida for infiltrating some of the world’s most prominent accounts and soliciting bitcoin payments.

“Security is not anything that can ever be perfected, it’s a constant race,” Dorsey said. “The more we’re giving the individual the keys, the safer we’re going to be.”

Related Stories

• US Space Force Enlists Blockchain Firm to Deploy Hack-Proof Data Defenses
• Twitter Tightens Security Ahead of US Presidential Election

A boom in decentralized finance (DeFi) has turbo-charged returns for Pantera Capital’s bitcoin and mixed cryptocurrency hedge funds this year.

From Jan. 1 to Aug. 31, Pantera’s bitcoin (BTC) fund gained 61%, its digital asset fund 168%, its initial coin offering (ICO) fund 323% and its long-term ICO fund 270%, thanks in large part to Yearn Finance’s YFI, Terra’s LUNA, Polkadot’s DOT, Flexa’s AMP and Ampleforth’s AMPL DeFi-related tokens, according to an investor letter sent out last week. Year-to-date, the funds have outperformed the S&P 500 stock index, as well as index and hedge funds.

The returns also tipped the ICO funds’ life-to-date returns over 0% again and skyrocketed the bitcoin fund’s life-to-date return further from 10,162% to 16,361%. The tilt shows how bitcoin tends to be correlated with alternative cryptocurrencies, called altcoins, and how some investors are bouncing back from the 2018 and 2019 cryptocurrency market downturn with investments in DeFi.

Related: Ex-Pantera Partner’s New Crypto Fund Is ‘Not for the Faint of Heart’

DeFi is a catch-all term for a variety of advanced financial applications for cryptocurrencies, from lending to derivatives to insurance, that have flourished in 2020. Most of the action takes place on Ethereum, the second-largest blockchain, which unlike Bitcoin was designed from the outset to run complex computations enabled by self-executing financial contracts.   

“We’ve been positioning the funds towards decentralized finance,” Joey Krug, co-chief investment officer with Dan Morehead, wrote in Pantera’s September 2020 investor letter. “We started acquiring these types of assets some years back, and it’s exciting to see the DeFi space gaining momentum.”

ICO déjà vu

Centralized cryptocurrency exchanges have now been rushing to list DeFi-related coins, and total value locked into assets on decentralized cryptocurrency exchanges have shot up overnight from next-to-nothing to over $13 billion in September, according to data site DeFi Pulse.

Read more: Binance, Huobi, OKEx Have FOMO for DeFi

Related: New Bitcoin Options App Raises $4.7M in Round Led by Pantera Capital

The explosion in DeFi is reminiscent of three years ago when newfangled digital assets issued through ICOs lined investor pockets as they saturated cryptocurrency markets and gripped speculative mania. Some of the DeFi coins popping up today, like Chainlink’s LINK token, were originally promised during those ICOs tailored to bootstrapping projects and startups. Other DeFi coins, like cryptocurrency collateral system MakerDAO’s MKR token (also traded by Pantera funds), were sold in private investor rounds.

“Projects are going to market with live products that actually work (with cash flows or potential for cash flows) and with generally much higher quality teams than in 2017,” Pantera Capital went on to explain in the letter. “There’s finally a resurgence in the ICO market.”

Pantera Capital did not respond officially to requests for comment.

Stronger hedge fund returns

The recovery in the four Pantera funds is remarkable considering that the four Pantera Capital funds suffered tremendously in 2018 and 2019 when cryptocurrency markets imploded, with the exception of the bitcoin fund in 2019. In 2018 then in 2019, the bitcoin fund lost 75.6% then made back 87.7%; the digital asset fund lost 87.2% then 1.9%; the regular ICO fund lost 83.1% then 23.5%; and the long-term ICO fund lost 9.6% in both years. 

According to cryptocurrency exchange analytics website CoinGecko, peak market capitalizations had deflated between 35% and 100% before 2020 for most tokens, with some facing regulatory enforcement actions.

Read more: Ex-Pantera Partner’s New Crypto Fund Is ‘Not for the Faint of Heart’

Trading started in November 2017 in the Pantera digital asset fund, July 2017 in the regular ICO fund, and December 2017 in the long-term ICO fund. By the end of 2017, as cryptocurrency prices surged, the regular Pantera ICO fund was returning 347.6% and the long-term Pantera ICO fund was returning 6%. That year alone, the Pantera bitcoin fund, which began passively buying and holding BTC in July 2013, and later the splinter currency bitcoin cash (BCH), returned 1,565%, yielding the fund’s highest life-to-date return yet of 25,000%. 

Now, the life-to-date returns are 144.4% in the regular ICO fund and 216.3% in the long-term ICO fund. The Pantera digital asset fund’s life-to-date return still lags, down 27.1% historically, but marks an improvement from losing almost all its money, having sunk by 72.8% in total value by the end of December. The Pantera ICO funds were also returning negatively by then, having fallen 42.2% in life-to-date value in the regular ICO fund and 14.5% in the long-term ICO fund. 

Deep DeFi pockets

The clawback may be due not only to Pantera Capital holding DeFi tokens that happen to be launching in a boom time, but also to the leverage it has in holding large amounts of them, magnifying their returns.

Pantera Capital is one of the largest investors, if not the largest, in Polkadot’s first token sale that raised $144.63 million, earlier investor materials from April 2018 have indicated. The Polkadot blockchain raised $43.3 million in a second token sale in July, and the Polkadot token itself, purchased by investors at $14, has been trading below $7 since the blockchain went live in August.

Pantera Capital is confirmed in the April 2018 materials to also have been the largest investor in the Origin decentralized data-sharing protocol’s token sale, until new investors blurred the leading position, along with 17 other token sales for decentralized technologies, including for Kyber, Icon, OmiseGo, 0x and Enigma, in which it had the highest discount. These 18 token sales have raised at least $10 million each, adding up to over $500 million. 

Read more: Origin Debuts OUSD, a Stablecoin That Works Like a Savings Account

The digital asset fund’s holdings also include Ethereum’s native cryptocurrency ether (ETH); XRP, the digital asset closely associated with the startup Ripple; the privacy coin zcash (ZEC); and the Brave web browser’s basic attention token (BAT). Soon, the ICO funds will also trade NEAR decentralized application protocol and Filecoin decentralized file-sharing tokens.

Financial filings say Pantera’s crypto-asset funds manage over $195 million together and let investors cash out on their $100,000-plus bitcoin investments daily and alternative coin investments monthly. Including its venture funds, Pantera Capital manages assets of about $448.3 million. 

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Ethereum workshop ConsenSys said it has been chosen by the Hong Kong Monetary Authority (HKMA) to assist in Hong Kong and Thailand’s cross-border central bank digital currency (CBDC) pilot.

• ConsenSys said in a Friday announcement it will “work on the second implementation stage” of those countries’ Project Inthanon-LionRock CBDC alongside consultancy PricewaterhouseCoopers and Forms, a Hong Kong fintech.
• A joint effort by HKMA and the Bank of Thailand, Project Inthanon-LionRock is examining if, where and how distributed ledger technology (DLT) might enhance cross-border payments between commercial banks.
• Inthanon-LionRock’s third phase wrapped in December 2019 with the development of a workable CBDC prototype. Project leads determined CBDC could indeed make cross-border payments more efficient but did not specify concrete next steps.
• HKMA did not immediately confirm the partnership. Further details were not available by press time.

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Bitcoin’s bearish price performance this month has prompted investors to pull out of some crypto derivatives products, with trading volumes taking a nosedive as a result.

• A CryptoCompare report published Thursday shows volumes for cryptocurrency-based exchange-traded-products (ETPs) have fallen to a fraction of what they were in August.
• Average daily volumes have fallen 75% from $186.5 million in mid-August to just $48 million by the middle of September, the firm wrote.

• The slump was experienced across the board with product providers in both Europe and North America, including Deutsche Boerse XETRA, feeling the pinch.
• August had been a record month for crypto derivatives generally, as CoinDesk reported at the time.
• CryptoCompare’s report doesn’t include volumes from products that run on unregulated derivative providers, such as BitMEX or Binance.

• Market leader Grayscale saw volumes for its Bitcoin Trust fall to just $40 million a day (pictured above).
• Its Ethereum and Ethereum Classic products have lost nearly 65% of their value since June, something CryptoCompare puts down to waning interest among investors.
• Grayscale is part of Digital Currency Group, CoinDesk’s parent company.
• Crypto derivatives track the price performance of selected digital assets, usually bitcoin, through a product that’s tradeable on regulated stock exchanges.
• As such, they are popular with investors who want to gain exposure to the digital asset market through a traditional instrument.
• Constantine Tsavliris, CryptoCompare’s head of research, told CoinDesk investors may have been put off as bearish market sentiment grew.
• In the first week of September, bitcoin fell from $12,000 to $10,000, but has since recovered to trade around $10,613 at press time, according to CoinDesk data.
• But negative feelings still pervade the market. The Fear and Greed Index, a consolidated sentiment tool for digital assets, is currently at 46, suggesting traders are still mildly bearish.
• “ETP investors generally invest long-term, and therefore the recent drop in price combined with a generally bearish market has likely encouraged more cautious trading activity,” Tsavliris said.

See also: Japanese Financial Giant SBI Holdings Launches Short-Term Crypto Derivatives

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Chinese bitcoin miner manufacturer MicroBT is looking to grab a bigger slice of the U.S. market by setting up its first overseas production center.

The company said on Friday that it has partnered with New York-based Foundry Digital LLC and a Southeast Asian company in order to improve supply chain efficiencies for North American buyers of its flagship bitcoin mining equipment.

The Southeast Asian listed company – which MicroBT declined to name – is contracted to produce and deliver MicroBT’s WhatsMiner equipment to U.S. investors, who would otherwise pay an additional 25% tax if they receive shipments directly from China due to U.S. tariffs.

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

The strategy is similar to that adopted by Beijing-based Bitmain, which contracts a production factory in Malaysia responsible for overseas manufacturing and shipments.

As part of the deal, Foundry, a subsidiary of Digital Currency Group (DCG) that provides miner financing and procurement for institutions in North America, will be the first to receive new batches of MicroBT’s WhatsMiner M30S equipment produced in the Southeast Asian facility.

DCG, which wholly owns CoinDesk, previously said it plans to invest more than $100 million into its Foundry business through 2021 to provide loans to bitcoin mining clients as well as buying equipment for them in bulk.

“With our collaboration and MicroBT’s upgraded production capabilities, we look forward to continuing to facilitate the timely procurement and delivery of the latest generation bitcoin mining hardware for our clients, who are institutional cryptocurrency miners in North America,” said Mike Colyer, CEO of Foundry.

Related: Marty Bent on Why Bitcoin and Big Energy Are Unlikely Allies

The move also underscores MicroBT’s effort to keep challenging Beijing-based Bitmain’s dominance in the bitcoin miner market, both domestically and overseas.

MicroBT managed to boost its market share by selling some 600,000 WhatsMiner units worth more than $500 million in 2019. This coincided with Bitmain’s ongoing internal turmoil, which has caused notable production and shipment delays.

“The Foundry team’s in-depth understanding of the mining business and regional expertise have already helped us in making the initial tests of this new supply chain a success,” said MicroBT’s COO Jiangbing Chen. “We will continue working closely with Foundry to provide the highest quality of machines and after-sale services to our customers in North America.”

Also read: Jihan Wu Regains Upper Hand in Bitmain Co-Founder Fight

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Compared with the traditional financial system, the cryptocurrency industry is evolving fast. Technologists are experimenting with the vast-reaching potential of blockchain. And regulation is typically immature, inconsistent and unevenly applied across international borders, allowing entrepreneurs to move fast and break things, as it were. 

But there’s also no shortage of competition. The latest example comes from CoinDesk’s Ian Allison, who reported Thursday that Tron, the three-year-old blockchain headed by Justin Sun (the crypto executive who paid $4.5 million to have a meal with Warren Buffett), has entered into a strategic alliance with custody specialist BitGo to accommodate wrapped bitcoin (WBTC) tokens.

Wrapped bitcoin is a tokenized version of the largest cryptocurrency, reformatted so it can move easily on a non-Bitcoin blockchain. It’s become popular among users of the Ethereum blockchain partly because traders can deposit the tokens in various decentralized finance or “DeFi” applications to receive juicy interest rates. Bitcoin doesn’t pay interest or dividends, a fact that sometimes draws comparisons to a “pet rock.” So DeFi is one of the main places that holders of bitcoin can go to make money off their holdings, aside from the usual speculative price gains.

Related: Bitcoin’s Bearish September Has Kneecapped Crypto ETP Activity: Report

As documented recently by CoinDesk’s Will Foxley and Zack Voell, tokenized versions of bitcoin, including WBTC, now total more than $1.1 billion. Just Thursday, the cryptocurrency fund Three Arrows minted some 2,316 WBTC tokens, the largest-ever single issuance, for use on the Ethereum blockchain, Voell reported. Later in the day, Sam Bankman-Fried, CEO of the crypto fund Alameda, tweeted an Ethererum blockchain data scan suggesting that a new transaction had occurred to break that record. 

The past few months’ explosion in DeFi, with the debut of automated trading platforms like Uniswap and copycat SushiSwap, has jammed the Ethereum network with congestion, driving up transaction fee rates and prompting rival blockchains to offer competing venues for developing new applications. 

Now Tron apparently wants a piece of the thriving DeFi business. “Our new strategic alliance with Tron creates even greater opportunities for users to expand to other chains and tokenize their BTC,” BitGo CEO Mike Belshe said in a statement. That means “transacting at a lower cost and faster speed.” 

There is so much more development and activity taking place on Ethereum that DeFi traders are unlikely to decamp en masse to Tron. But it’s good for the industry that they have the option.  

Bitcoin Watch

Related: Up 5%: Bitcoin Sees Biggest Single-Day Price Gain for 2 Months

Bitcoin’s 5% gain on Thursday confirmed its biggest single-day percentage gain since July 27. 

While the recovery from weekly lows near $10,200 has been impressive, the immediate bias remains neutral. That’s because the cryptocurrency has yet to violate the three-week trading range of $10,000 to $11,000.

A big move could happen soon, since the one-month implied volatility has declined to 44%, the lowest level in nearly two years, according to data source Skew. In the past, an implied volatility of 50% or below has consistently paved the way for violent price action. 

The gauge is now closing on the record low of 35% seen just ahead of the big crash from $6,000 to $4,500 seen in the second half of November 2018. 

– Omkar Godbole

Token Watch

Ether (ETH): Traders might be using options market to hedge price risks of ether locked in DeFi liquidity pools.  

Bitcoin (BTC): Options open interest hits record $2.1B with notional value of $1B set to expire Friday, potentially triggering volatility. 

Wrapped Bitcoin (WBTC): Three Arrows Capital mints 2,316 of the Ethereum-ready tokens, single largest issuance.    

Avalanche (AVAX): Tokens in smart-contract platform (and Ethereum competitor) shoot up to $4 each, providing fast paper profit for investors who bought in just two months ago at 85 cents each in a $42M fundraise, Messari says.

Uniswap (UNI): Users claim 78% of existing UNI supply in first week, though Glassnode Insights op-ed argues that transition toward token-based governance via the UNI token falls far short of true decentralization. 

What’s Hot

China Central Television publishes three-minue news clip highlighting that “cryptocurrency has undoubtedly become the top performing investment” among global assets (CoinDesk)

U.S. Internal Revenue Service makes it harder for taxpayers to avoid declaring cryptocurrency assets — by putting a question front and center on 1040 form (CoinDesk)

European Commission proposes to turn cryptocurrencies into regulated financial instruments, while warning that stablecoins will be subject to stringent checks (CoinDesk)

New U.S. bill would bring crypto exchanges under single federal framework, treat digital currencies similar to commodities (CoinDesk)

Paul Brodsky leaves Pantera to start hedge funds aimed at volatility plays, says bitcoin too energy-intensive to offer massive investor upside. (CoinDesk)

Russia’s Ministry of Finance wants citizens to report their crypto wallet details, news source RBK reports (CoinDesk)

First crypto exchange with no trading fees launches in Middle East (CoinDesk)

OCC guidance on stablecoins might not accelerate “slow burn” of adoption (CoinDesk)

Analogs The latest on the economy and traditional finance

U.S. jobless claims unexpectedly increase to 870K as Pantheon says “labor market is stalling” (CNBC/Pantheon)

Racial inequality cut U.S. GDP by $16T over past two decades due to discrimination (CNBC)

ECB hands banks $203B in cheap cash to boost lending (Bloomberg)

Federal Reserve governor Lael Brainard said to be Biden’s choice for Treasury secretary, Bloomberg says (CoinDesk)

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Bitcoin (BTC) is taking a breather after Thursday’s sharp rally that took prices back above a widely tracked technical line.

• On Thursday, bitcoin jumped almost 5% to levels above $10,750, confirming its biggest single-day gain since July 27, according to data source Coin Metrics.
• With the move, the cryptocurrency found acceptance above the 100-day moving average at $10,448, which was breached to the downside earlier this week.
• So far, however, the sharp recovery from weekly lows near $10,200 has failed to draw stronger buying pressure.
• At press time, bitcoin is trading near $10,680, representing a 1% decline from the high of $10,789 observed during Thursday’s U.S. trading hours.

• The market has been a little lacking direction in recent weeks, with prices largely stuck in the $10,000 to $11,000 range since Sept. 4.
• John Ng Pangilinan, managing partner at Singapore-based Signum Capital, sees a bullish revival occurring above $11,000.
• “A stronger rally would materialize if prices rise above $11,000,” Pangilinan told CoinDesk. “I would buy on a breakout above the psychological hurdle.”
• The odds, however, may be stacked in favor of the bears, as dollar liquidity in international markets is beginning to tighten, as tweeted by macro analyst David Belle.
• As such, the dollar may extend recent gains against other currencies, putting downward pressure on the cryptocurrency.
• “A break below the early September low of $9,800 would open the doors to $8,000,” Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk.
• A big move may happen soon, as bitcoin’s one-month implied volatility has declined to 44% – the lowest level in nearly two years, according to data source Skew.
• In the past, an implied volatility of 50% or less has paved the way for violent price action.

• Currently, implied volatility closing on the all-time low of 35% seen ahead of the mid-November 2018 crash.

Also read: Market Wrap: Bitcoin Hits $10.7K; Options Market Likes Sub-$360 Ether

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Bank of New York Mellon (BNY Mellon) has been accused of playing a “central role” in the $4 billion Ponzi scheme OneCoin, just days after the publication of the so-called FinCEN Files.

Accusing it of “turning a blind eye” and “laundering” approximately $300 million for the scheme, investors Donald Berdeaux and Christine Grablis have added one of America’s oldest banks to an existing class-action lawsuit seeking damages against OneCoin and its key figures, including founder Ruja Ignatova, who disappeared in late 2017.

The plaintiffs, who together invested approximately $1 million into OneCoin, say that while BNY Mellon processed payments for OneCoin in May 2016, and even referred to it as a possible “Ponzi/pyramid scheme” in an internal investigation that December, it didn’t file a suspicious activity report (SAR) with the Financial Crimes Enforcement Network (FinCEN) until February 2017.

Related: IRS May Make It Harder to Avoid Declaring Crypto on Tax Returns

“Accordingly, BNY Mellon knowingly participated in, or was complicit in, laundering OneCoin’s criminal proceeds,” the filing reads.

Plaintiffs accuse BNY Mellon on one count of aiding and abetting fraud, as well as one count of commercial bad faith.

In a statement, a BNY Mellon spokesperson said the bank took “its role in protecting the integrity of the global financial system seriously” but, by law, would not comment on any SAR it may have filed with the U.S authorities.

The bank declined to comment on the allegations.

Related: Ant Launches Business Trade Blockchain in Run-Up to $35B IPO

See also: US Moves to Seize $400M From Convicted OneCoin Money Launderer

The amended suit comes days after news source BuzzFeed released thousands of normally secret SARs reports flagging suspect transactions with the authorities.

One particular transaction in 2016 saw $30 million wired from an account belonging to a British Virgin Islands-based company, to BNY Mellon, who then credited it to an account in Hong Kong. While the transaction was allegedly a loan for the purchase of an oilfield, emails seized by the authorities show the loan was never repaid and that $10 million was actually withdrawn by one of the OneCoin founders.

U.S. authorities have already testified, in a separate case, to say that they believe this loan was an example of proceeds from the OneCoin sale being laundered.

Ignatova’s brother, Konstantin, was dropped from the class-action filed by Berdeaux and Grablis last month after the two sides reached a settlement.

Read the amended complaint below:

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Russian internet censorship agency Roskomnadzor blacklisted Binance in June, but apparently only made the cryptocurrency exchange aware of its decision today.

• Binance Russia director Gleb Kostarev notified followers on Facebook Friday that Roskomnadzor had added the exchange’s domain to its list of prohibited websites.
• The reason, according to Kostarev, was that Binance had been caught publishing information about how to buy and sell bitcoin, which is apparently an offense in Russia.
• “Not sure if we should laugh or cry,” he said.
• While cryptocurrencies are officially recognized as taxable property in Russia, the Ministry of Finance has recently made moves to put crypto trading under harsh supervision.
• Russian news agency RBK said a court had already approved Roskomnadzor’s motion to block Binance on June 2.
• “Issuance and usage of bitcoins are fully decentralized, and there is no way to regulate it by the government, which contradicts the current Russian law,” the court decision reads.
• In a Kafkaesque twist, Kostarev told CoinDesk that Binance wasn’t notified about the court’s decision or even aware of its existence until today.
• Roskomnadzor also banned access to a bitcoin wallet, Metbea.
• Kostarev said that Binance is looking into contesting the prohibition.

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Several Chinese state-owned media have made coordinated reports describing cryptocurrencies as the year’s top performing investment.

• China Central Television (CCTV), the country’s top broadcaster, published a three-minute news clip on Friday that highlighted crypto assets have soared by 70% this year so far.
• The report added that “cryptocurrency has undoubtedly become the top performing investment” among various global assets.
• CCTV’s clip followed the state-owned news agency Xinhua, which published an online article Thursday entitled “Cryptocurrency is this year’s ‘No. 1 asset.'”
• The same article first appeared on the Thursday print version of Cankaoxiaoxi and was a summarized translation of an article from Bloomberg on Tuesday.
• Cankaoxiaoxi is one of the longest running state media that selectively translates news reports from foreign sources, including those that are normally blocked by China’s Great Firewall.
• The CCTV clip immediately drew wide attention from the Chinese crypto community.
• Many started sharing the clip on WeChat news feeds as a bullish signal since the unusual neutral-to-positive tone is seemingly at odds with China’s stance that crypto speculation could undermine financial stability.
• Such a rare and coordinated effort also sparked some to wonder what the real intention and nuance might be, since state-owned media in China typically carry political agendas.
• Citing Bloomberg’s index, CCTV said the yield of crypto asset has this year surpassed that of gold, which has risen only 20%.
• The broadcaster said various countries’ economic stimulus plans following the coronavirus pandemic and the recent mania for decentralized finance contributed to the surge of values in cryptocurrencies.
• However, it also cautioned that the risks for retail investors still remain high given crypto assets’ volatility.

Also read: China Sees Advantages in Being First on New Digital Currency ‘Battlefield’

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The U.S. Internal Revenue Service (IRS) is about to deploy a simple trick to make it far harder for taxpayers to avoid declaring their cryptocurrency assets.

• According to a Wall Street Journal report Friday, the Internal Revenue Service plans to reposition a question on the 1040 income tax form for 2020 that will require all returnees to check a box if they have transacted any crypto assets over the year.
• An IRS draft of the 1040 shows that the question placed near the top of the form will likely read: “At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?”
• The question was included on the form for 2019, but was placed in a part of the document that not all returnees had to fill out, the WSJ says.

• An expert on tax law told the WSJ that the question would make it easier for the IRS to win cases if the taxpayer checks the “no” box and is later found to have held crypto.
• Reporting crypto taxes in the U.S. is notoriously tricky and even the IRS has conceded things need to improve.
• An official told CoinDesk in July that some of the guidance published to date could be clarified and “is not ideal.”
• The IRS is working to keep up with the crypto industry, the official added.
• The more prominent placement of the crypto question for 2020 may be effective, the WSJ writes.
• The IRS previously added a similar question regarding taxpayers’ offshore bank accounts resulted in the IRS receiving over $12 billion in taxes.

Also read: Cryptocurrency Earned From Carrying Out Microtasks Is Taxable, Says IRS Memo

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Ant Group has launched a cross-border trading blockchain platform as it prepares for what could be the largest stock market flotation of all time.

• Ant said Friday that its new trade platform, called “Trusple,” will make it easier for small and medium-sized enterprises (SMEs) to sell their wares to clients overseas.
• Built on AntChain, Trusple automates key aspects of the payments process, such as order placement and tax liabilities.
• This makes cross-border trades feasible for entities that would otherwise struggle had they used legacy systems, according to the firm.
• Ant has partnered with the likes of Standard Chartered, Deutsche Bank and BNP Paribas to help “optimize” the process.
• The news comes as Ant continues to stoke up investor enthusiasm for its upcoming dual initial public offering (IPO) next month in Hong Kong and China’s tech-focused STAR Market.
• The company, a sister to Alibaba Group, is looking to raise a record $35 billion, surpassing the $29.4 billion Saudi Aramco raised last December.
• Ant – last valued at $200 billion – is best known as the operator of Alipay, one of the two primary payment apps used China.
• But the firm has an increasing presence in the cryptocurrency space: Chinese shipping giant Cosco has trialed AntChain to speed up the documentation process and Ant is believed to be one of the primary issuing partners for the upcoming digital yuan.

See also: Ant Group Claims 100M Digital Assets Are Uploaded to Its Blockchain Daily

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Visa-owned fintech enabler Plaid, which connects traditional bank accounts to thousands of digital platforms, including crypto exchange Coinbase, is quietly working with at least two decentralized finance (DeFi) startups.

Plaid’s head of UK, Keith Grose, a former Google wallet builder, has a vision for how crypto (and DeFi) will evolve in tandem with the fintech revolution his company is said to be driving.

The firm currently has integrations with Dharma, the Uniswap-friendly DeFi wallet with early backing from Coinbase and others; Teller Finance, the DeFi startup looking to bring unsecured lending to the Ethereum blockchain; and potentially others.

Related: Stablecoins Hit $20B Milestone, a Nearly 300% Year-to-Date Surge

Open banking and DeFi may occupy quite different levels of digitization’s evolutionary ladder, but Grose sees a “common democratizing thesis” when it comes to accessing and using financial assets. 

“I think it’s still a long way before DeFi becomes part of the main route for finance, but it’s a really exciting corner and one that personally I’m passionate about,” Grose told CoinDesk.

Still, nobody would deny DeFi is a stretch for regular fintech. Systems that are completely open to anyone, and where participants’ identities are essentially hidden behind a wallet address, present problems in today’s digital world. But people in Silicon Valley or Wall Street aren’t stupid, they attempt to manage their own disruption, and to some extent even buy into it. Take for example the way enterprise has tried to embrace blockchain, or perhaps the lengths Visa went to in acquiring Plaid. 

Read more: This DeFi Group Wants to Bring Maturity to the Yield Farming Craze

Related: ConsenSys-Incubated Startup Releases In-Browser Atomic Swap Wallet for DeFi

Armed with a widely-used API and a huge $5.3 billion exit earlier this year thanks to Visa, Plaid has become instrumental in opening up consumer finance by allowing transaction data to be shared with third-party fintech platforms. 

But persuading banks to open up to fintech is just the beginning, says Grose, who sees crypto as a next logical step.

‘Scratching the surface’

“We’re only scratching the surface of what open banking can do because it only covers payment accounts,” Grose said. “I think a key thing is to be able to allow people to access and use their crypto assets in tandem with more traditional budgeting applications, payment applications. There’s no reason why, longer-term, your Coinbase account or your Compound wallet could not be included in that so you can track it and use it across many other traditional applications.”

In Grose’s personal opinion, “protocols like Compound that provide an APY on crypto assets have been a long time coming and are a really exciting and super interesting step because that’s when you start to get the point of having the financial ecosystem and the whole space for lenders.”  

Another area that excites Grose is decentralized derivatives exchanges like the Andreessen Horowitz-backed dYdX.

“What you’re starting to see, for better or for worse, are some aspects of traditional, high-tech trading firms coming to the retail investor on the DeFi side,” Grose said. “There’s danger in that. But I think ultimately, there are interesting democratization aspects to it as well. Can the average person access financial tools in the future that have traditionally been quite hard to access as a retail investor?”

Streamlining DeFi

The practicalities of what Plaid can do, even providing a holistic view of all your assets with real-time data flowing in and out of a crypto trade you just made, for example, remains poles apart from DeFi, which combines the idea of decentralized exchange (DEXs) with crypto lending, adding a steroid shot of token drops to drive liquidity.

But in the future, a fintech plumbing company like Plaid could play a role in making access to realms like DeFi less daunting, said Howard Krieger, CEO of digital asset lending platform Residual.

“For someone to use DeFi, they have to go through a series of trust exercises before they can participate,” said Krieger. “A company like Plaid can eliminate a whole bunch of risk because they hold information and have the ability to plug different parties together; if Plaid has already verified who I am, that KYC/AML requirement goes away. So I can see where a plumbing company like Plaid could streamline a lot of back-office processes.”

Read more: Uniswap Users Have Claimed $560M-Worth of UNI Tokens in a Week

Indeed, the reason Plaid has had an explosive impact, said Grose, is that in order to build applications like Venmo, Robinhood and Coinbase, you need to be able to easily connect bank accounts, authenticate and transfer funds – and building a slick user experience around this is essential.

“When you think about what will be needed for DeFi to take off, a lot is around the user experience and making this accessible to people who are not really deep in crypto,” Grose said. “I think you’re going to see roles for players like us, helping the ecosystem develop longer-term because one of the things holding back DeFi is that it is still a lot of work to actually get up and running. You have to go quite deep into a knowledge base to really get started.”

Cambrian swamp

It’s hard to see how DeFi’s pseudonymous clusters of lenders and borrowers might cross-pollinate traditional fintechs like Funding Circle or SoFi, which rely on knowing as much as possible about counterparties on the platform. 

“That’s definitely a difficulty,” Grose said. “If everything is hidden behind the wallet address, that’s completely against the regulation you have to have, in terms of doing lending on any sort of institutional or traditional scale. At some point, there will have to be bridges built there.”

But as a recent opinion piece on CoinDesk points out, nobody knows what will crawl onto land and evolve from crypto’s Cambrian swamp. 

Read more: Banks Are Toast but Crypto Has Lost Its Soul

For Paul Brody, blockchain lead at EY and co-founder of Ethereum-based Baseline Protocol, the priority is getting DeFi going with privacy so enterprises can use it.

“I hope that’s where DeFi is headed,” said Brody. “Right now, as a consumer product, all this yield farming, SushiSwapping is interesting but not useful. The purpose of financial markets is to allocate capital for productive use. I’m not sure that’s happening here.”

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