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Hacker Drains $500K From DeFi Liquidity Provider Balancer

6 years 3 months ago

“We were not aware this specific type of attack was possible.”

Decentralized finance (DeFi) liquidity provider Balancer Pool admitted early Monday morning it had fallen victim to a sophisticated hack that exploited a loophole, tricking the protocol into releasing $500,000 worth of tokens.

In a blog post, Balancer CTO Mike McDonald said the attacker had borrowed $23 million worth of WETH tokens, an ether-backed token suitable for DeFi trading, in a flash loan from dYdX. They then traded, against themselves, with Statera (STA), an investment token that uses a transfer fee model and burns 1% of its value every time it’s traded.

Related: Blockchain Project Kyber Unveils Date for Planned ‘Katalyst’ Protocol Upgrade

The attacker went between WETH and STA 24 times, draining the STA liquidity pool until the balance was next to nothing. Because Balancer thought it had the same amount of STA, it released WETH that equated to the original balance, giving the attacker a larger margin for every trade completed.

As well as WETH, the attacker performed the same attack using WBTC, LINK and SNX, all against Statera tokens.

See also: Hacker Exploits Flaw in Decentralized Bitcoin Exchange Bisq to Steal $250K

The hacker’s identity remains a mystery but analysts at 1inch exchange, a decentralized exchange aggregator, said the hacker had covered their tracks well: The ether used to pay transaction fees and deploy smart contracts was laundered through Tornado Cash, an Ethereum-based mixer service.

Related: DeFi Platform Opyn Launches Put Options on Compound Token

“The person behind this attack was [a] very sophisticated smart contract engineer with extensive knowledge and understanding of the leading DeFi protocols,” 1inch said in its blog post on the breach.

For its part, the team behind Statera batted away accusations that the protocol had either failed or been designed intentionally for this sort of attack to take place.

“We deeply regret, apologize and sincerely extend our condolences to all the victims of this attack,” Statera said in an official announcement.

The project added that it was not in a position to be able to refund the attacker’s victims.

See also: DeFi Project bZx Exploited for Second Time in a Week, Loses $630K in Ether

Balancer Pool will now begin blacklisting all transfer fee tokens, including Statera, McDonald said. As well as another audit, McDonald said the team would do more research into how the hack happened and whether similar vulnerabilities exist with other listed tokens.

The attack could not have come at a worse time for Balancer, which only released its own “BAL” governance token last week.

At press time, CoinGecko data shows BAL tokens trading at the $11 mark, down about 5% in the past 24 hours.

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CoinDesk

Hacker Drains $500K from DeFi Liquidity Provider Balancer

6 years 3 months ago

“We were not aware this specific type of attack was possible.”

Decentralized finance (DeFi) liquidity provider Balancer Pool admitted early Monday morning that it had fallen victim to a sophisticated hack that exploited a loophole, tricking the protocol into releasing $500,000-worth of tokens.

In a blog post, Balancer CTO Mike McDonald said the attacker had borrowed $23 million-worth of WETH tokens, an ether-backed token suitable for DeFi trading, in a flash loan from dYdX. They then traded, against themselves, with Statera (STA), an investment token that uses a transfer fee model, and burns 1% of its value every time it’s traded.

Related: DeFi Platform Opyn Launches Put Options on Compound Token

The attacker went between WETH and STA 24 times, draining the STA liquidity pool until the balance was next to nothing. Because Balancer thought it had the same amount of STA, it released WETH that equated to the original balance, giving the attacker a larger margin for every trade they completed.

As well as WETH, the attacker performed the same attack using WBTC, LINK and SNX, all against Statera tokens.

See also: Hacker Exploits Flaw in Decentralized Bitcoin Exchange Bisq to Steal $250K

The hacker’s identity remains a mystery, but analysts at 1inch exchange, a decentralized exchange aggregator, said they had covered their tracks well: the ether used to pay transaction fees and deploy smart contracts was laundered through Tornado Cash, an Ethereum-based mixer service.

Related: Trio of Bitcoin Tokens Lures DeFi Yield Farmers to New Pastures

“The person behind this attack was very sophisticated smart contract engineer with extensive knowledge and understanding of the leading DeFi protocols,” 1inch said in its blog post on the breach.

For its part, the team behind Statera batted away accusations that the protocol had either failed or been designed intentionally for this sort of attack to take place.

“We deeply regret, apologize and sincerely extend our condolences to all the victims of this attack,” Statera said in an official announcement.

The project added that it was not in a position to be able to refund the attacker’s victims.

See also: DeFi Project bZx Exploited for Second Time in a Week, Loses $630K in Ether

Balancer Pool will now begin blacklisting all transfer fee tokens, including Statera, McDonald said. As well as another audit, McDonald said the team would do more research into how the hack happened and whether similar vulnerabilities exist with other listed tokens.

The attack could not have come at a worse time for Balancer, which only released its own “BAL” governance token last week.

At press time, CoinGecko data shows BAL tokens trading at the $11 mark, down about 5% in the past 24 hours.

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CoinDesk

World’s Biggest Mining Firm Makes First Ore Trade on a Blockchain

6 years 3 months ago

Mining conglomerate BHP has completed its first trial trade of iron ore using blockchain technology.

As reported by Reuters on Monday, the roughly $14 million deal with Chinese metals giant Baoshan Iron & Steel Co Ltd. (Baosteel) was conducted on a platform created by Canada-based startup MineHub Technologies. The MineHub platform was used to process contract terms, exchange documents online and provide visibility and accountability along the supply chain. The transaction took place in June.

BHP Group is an Anglo-Australian mining, metals and petroleum multinational based in Melbourne, Australia, and is the biggest mining firm worldwide by market capitalization.

Related: Miners Are Sending Bitcoins to Exchanges Again – And That May Be Bearish

Given the mining industry’s dependence on paper-based legacy systems, the trial blockchain trade comes as BHP and Baosteel see a need for a shift to digital, the companies said.

“The bulk commodity industry needs a digital revolution to reduce physical documentation processes,” according to Michiel Hovers, sales and marketing officer at BHP.

BHP and MineHub said using blockchain would boost efficiency and transparency in statements, Reuters reported.

Baosteel is the Chinese state-owned listed arm of Baowu Steel Group Co. Ltd. The firm has not been shy of blockchain technology in the past, having previously completed what was claimed as the first yuan-denominated international letter of credit (LC) via the Contour platform in May. Contour is built on Corda technology from R3, the enterprise-focused blockchain software firm.

Related: Argo Buys $500K Worth of Zcash Miners as Bitcoin Revenue Shrivels

Canada-based MineHub Technologies told Reuters the BHP transaction was the first of many in a series involving its blockchain platform and comes at a time when bad actors have taken advantage of supply chain vulnerabilities during the coronavirus outbreak.

“Current pandemic events and fraud cases in the commodity trading industry are causing a step-change in the adoption of digital solutions,” said MineHub CEO Arnoud Star Busmann.

See also: IBM Takes 7% Stake in Trade Finance Blockchain Network We.Trade

Using Hyperledger’s Fabric blockchain, MineHub previously worked with IBM to develop capabilities to trace the data it uploads about the ore mining giant Goldcorp mines, including certification that the material was produced in a sustainable and ethical way.

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Many Bitcoin Developers Are Choosing to Use Pseudonyms – For Good Reason

6 years 3 months ago

“Here lies the huge irony in this discussion. Persistent pseudonyms aren’t ways to hide who you are. They provide a way to be who you are. You can finally talk about what you really believe; your real politics, your real problems, your real sexuality, your real family, your real self.”
— Engineer Kee Hinckley 

Fiatjaf is a pseudonymous Bitcoin developer in the Lightning community where he contributes to LNURL. He’s also working on Etleneum, his “centralized Ethereum” app that uses the Lightning Network for faster and more scalable bitcoin payments. Like many other bitcoin users, Fiatjaf doesn’t want to expose his real name to the whole world. He worries his bitcoin software projects could make him and his family a target for criminals. 

As a resident of Brazil, where the crime rate is unusually high, Fiatjaf is particularly concerned for his safety. “I think in Brazil criminals are greater than in other places,” he said. 

Related: Summer 2020 Is Funding Season for Open-Source Bitcoin Development

He also worries that if the price of bitcoin skyrockets, or “goes to the moon,” he could be painting a target on his back as a public figure in the Bitcoin space.

“Local criminals might want to take my bitcoin. They’d see my name and think, ‘Oh this guy is a local guy, not using any special precautions. He may be very rich because he’s using bitcoins.’” he said.

Though Fiatjaf doesn’t want to overreact to his safety concerns, he sees the threat of criminal activity in Brazil as enough of a potential peril to adopt a pseudonym as he carries out his work as a bitcoin developer. 

Fiatjaf is part of a larger trend that isn’t openly talked about much. He’s one of dozens of developers working in the Bitcoin sphere choosing to conceal their real names. 

Cypherpunk roots and pseudonyms

Related: US Homeland Security’s Tech Scouts Reissue Call for Blockchain Startups

This widespread pseudonymity makes sense seeing as Bitcoin’s culture puts so much emphasis on privacy. 

The great mystery of Bitcoin is no one knows the real identity of its creator, who went by the moniker Satoshi Nakamoto. He, she or they released the Bitcoin software in 2010, posted on the Bitcoin forums regularly until 2011 and then disappeared.

Nakamoto’s pseudonym set the tone for other Bitcoin developers to use fake names. 

Also, privacy is a prevalent theme in Bitcoinland. The digital currency was born out of the cypherpunk movement, in which a loose worldwide group of cryptographers have promoted digital privacy and security technologies since the 1990s in hopes of bringing about positive social change.

Read more: Why CoinDesk Respects Pseudonymity: A Stand Against Doxxing

“Being able to minimize what other people know about you is literally the theme of the first paragraph of the Bitcoin white paper,” pseudonymous bitcoin researcher 0xB10C noted.

To try to meet that very goal, many bitcoin developers have devoted their research to improving Bitcoin’s privacy.

“Privacy should be a basic human right. As I am, in fact, a basic human of indeterminate detail, I would like to exercise that right,” said pseudonymous Lightning developer ZmnSCPxj, who receives funding from Square Crypto to work on Bitcoin development. On his website, ZmnSCPxj describes himself as a “randomly-generated Internet person.”

ZmnSCPxj is one of the most frequent posters to the Lightning mailing list, making several proposals (often related to improving privacy) and responding to others’ posts with criticism and other feedback.

Personal protection

Similar to Fiatjaf, many developers choose to use pseudonyms out of an abundance of caution.

Samourai Wallet, founded in 2015, allows users to make more private bitcoin transactions. The two co-founders of the wallet chose pseudonyms when they launched the wallet partly for “personal protection” reasons.

“What we’re doing is going to offend *someone*,” SW told CoinDesk. “That could be from competitors or angry people online who feel that we’re a threat, to — whoever.” 

Other developers worry that governments won’t like what they’re up to, fearing persecution or retribution for their involvement in an independent monetary system that challenges the status quo. While many governments have welcomed Bitcoin and blockchain technology as innovations, others have taken a critical view of the new technology.

Being able to minimize what other people know about you is literally the theme of the first paragraph of the Bitcoin white paper.

“There is always a possibility of Bitcoin becoming unpopular with some government, thus it is always safer to simply avoid possible conflicts with local governments by making it unclear who exactly I am,” ZmnSCPxj told CoinDesk.

“Alternately, it may become too popular, and the government might want to acquire more of it by other means,” he added.

Not everyone sees the government as a threat, however.

“I’m not paranoid enough to be afraid of the government. Google and Facebook already know my name and they can easily link my name with my pseudonym. So I’m not targeting them,” Fiatjaf said.

Building a standalone pseudonymous reputation

Developers gave other reasons beyond feeling threatened. For some, it’s a simple matter of keeping their private lives private.

“When I started working on Bitcoin I didn’t see the need for having my ‘real name’ attached to my work. I was working for a company totally unrelated to Bitcoin. They didn’t really need to know what I do in my free time. But it wouldn’t have been a problem if they knew,” 0xB10C told CoinDesk.

Now a well-respected developer in the space, ZmnSCPxj was initially worried about embarrassing himself when he started submitting his ideas.

“My initial reason [for using a pseudonym] was simply that I was concerned [about] making a massive mistake; thus ZmnSCPxj was originally intended to be a disposable pseudonym that could be abandoned in such a case. However it seems to have garnered a mostly positive reputation, so I have retained it,” he told CoinDesk.

Conversely, SW and TDevD wanted to use pseudonyms as they launched Samourai Wallet because the duo was already known in the Bitcoin world by their real names before they created their privacy-focused bitcoin wallet. 

“We didn’t want it to be about personalities or anything. A lot of us are known inside of the space, outside of the Samourai project. And we didn’t want it to be about our personal reputation. We wanted the project to stand on its own merits,” SW said.

Freedom to be who you are

For others, anonymity provides a sort of end run around exclusion in an industry that tends to be dominated by a typical demographic. In such cases, pseudonyms truly do provide a way to “be who you are.”

“[M]inorities of all kinds (economic, racial, communal, gender, etc) may not be confident in exposing identities easily traceable to their person, especially in contributing to communities where that minority is underrepresented,”  ZmnSCPxj said. 

Read more: Money Reimagined: Crypto’s Diversity Problem

“It is important to realize that the Earth is large and conditions in various points on it can vary tremendously, even in local social, governmental, or economic states, and habits and attitudes developed as protection against prejudices of local communities may prevent participation with the real identity even in online communities. But participation in online communities may be enabled by pseudonyms.”

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South Korean Government Turns to Blockchain Tech to More Securely Store Clinical Diabetes Data

6 years 3 months ago

The South Korean government wants to develop a blockchain registry to help analyze, anonymize and store clinical data for diabetes.

Blockchain startup Sendsquare has been selected by the government to develop a proof-of-concept project for the nation, which has around 3.6 million people with diabetes, the company announced on Friday.

The startup will team with clinical experts and practitioners from Seoul’s KyungHee University Medical Center to begin analyzing nine years-worth of diabetes clinical data previously collected by the center.

Related: Binance-Backed Blockchain Auditing Firm Partners With Hdac to Track Internet-of-Things Devices

“Storing and collaborating work across a large volume of data using centralized services has proven unwieldy and subject to issues of data loss, duplication and manipulation,” according to KyungHee Medical Center’s Professor Suk Chon.

Sendsquare’s blockchain “can help us to solve data storage problems, and in the long term help diabetes sufferers nationally,” the professor said in a press statement.

The project will take an estimated six months to complete with the initial objective to analyze the data working to anonymize it before finally implementing the data onto a registry which will be recorded on the FLETA blockchain platform.

See also: South Korean Central Bank Accelerates Digital Currency Pilot to Keep Up With Other Nations

Related: Base Layer Wars Heat Up With Another $12M Committed to AVA Labs’ Avalanche Blockchain

After the blockchain application has been developed, Sendsquare will seek independent verification from Korea’s Telecommunications Technology Association (TTA).

Sendsquare is a blockchain startup responsible for the development of the South Korea-based FLETA blockchain which was previously charged with building a proof-of-concept network for the nation’s healthcare system.

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Crypto Long & Short: What Trends in Volatility Could Mean for Bitcoin

6 years 3 months ago

By this stage, pretty much everyone knows that bitcoin’s volatility is well above that of equity markets. This is still true, even after the ructions of March.

What is less well-known is that the balance of power when it comes to volatility is shifting. Market data indicates that bitcoin markets are becoming less volatile, and equity markets more so. This seems to be unrelated to the crash in markets earlier this year. 

You’re reading Crypto Long & Short, a newsletter that looks closely at the forces driving cryptocurrency markets. Authored by CoinDesk’s head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week – with insights and analysis – from a professional investor’s point of view. You can subscribe here.

Related: Market Wrap: Bitcoin Still Stuck in a Rut, Trading Below $10K

Of course, it’s possible that this trend turns again. On the other hand, it could point to a broadening interest in bitcoin as an investment asset, as well as a new role for the cryptocurrency in portfolios.

Let’s look at the details.

It’s all relative

First, bitcoin’s volatility is currently below its 2019 average. Not so for the equity markets.

(Note: We calculate volatility by annualizing 30-day standard deviations. This smooths variations while still reflecting short-term trends and, as of mid-April, removes the effects of the March crash.)

Related: Blockstream’s Liquid Network Sent $8M in BTC Unsafely, Says Bitcoin Developer

Over the past month, BTC volatility has continued trending down, while S&P volatility has levelled off.

This could be a short-term anomaly. Or it could mean that the “standard” expected S&P 500 volatility is now at higher levels than before, while bitcoin’s is lower. 

The VIX index, which measures expected S&P 500 volatility using options prices, is currently almost three times higher than at the beginning of the year. 

Second, this shift is supported by activity in traditional market volatility instruments. Earlier this month, the Wall Street Journal reported on data from Cboe Global Markets data that showed more than a trillion dollars’ worth of derivatives tied to the VIX has traded this year, more than four times the figure a decade ago. It also cited figures from industry tracker Hedge Fund Research that points to a record $19.4 billion of assets in hedge funds that trade volatility. 

And earlier this week, the iPath Series B S&P 500 VIX Short-Term Futures exchange-traded notes (VXX) – the largest volatility ETN by far – had its second-largest daily inflow ever.

It doesn’t matter any more

When Fidelity Digital Assets released its survey earlier this month, in which institutional investors were asked about the barriers to investment in crypto assets, volatility was top of the list. 

With the narrowing of the differential, that barrier could disappear, or at least significantly diminish. It’s not just that bitcoin’s volatility seems to be trending down – if volatility overall is more acceptable, bitcoin’s swings could be seen as less of a negative. 

Indeed, many of today’s crypto investors see the heightened volatility as an advantage – where else are you going to get high potential returns?

What’s more, the strong growth in crypto derivatives gives professional investors more tools with which to hedge the volatility. The breadth of instruments available to crypto investors of all types is steadily widening, and the volume of open interest in bitcoin options heading into Friday’s expiry was more than six times its level at the beginning of the year.

In crypto as in traditional markets, options are not just used for hedging – they are also used to trade volatility, a further sign of the growing interest in the strategy.

Or does it?

Stepping back, it is curious that something that used to be a performance metric is now an investment philosophy. Volatility has moved from the realm of statistics to the realm of strategy. 

But now there’s an even bigger shift under way.

Volatility has traditionally been equated with risk. This makes sense – the greater the swings, the greater the chance you lose a lot.

But volatility is not the same as risk – it’s a historical performance metric. True, expected volatility derived from options pricing looks forward, but that measurement is based on data points that don’t claim to actually know what future volatility will be, let alone future risk. Especially in these uncertain times, where bad news lurks around every corner and capital flows can swell across oceans in nanoseconds, we may know what the volatility was yesterday and what is expected tomorrow, but we do not know what the actual risk is. 

The more we attempt to quantify risk and to harness it for portfolio improvement, the more we lose touch with what it really means. And the more we actively seek it, the more it could spread throughout the system, introducing a systemic weakness that could hurt many. 

The cryptocurrency world has long embraced risk. Ferocious creativity and the potential for staggering loss have been part of the DNA of the industry since the beginning. In other words, long-term crypto investors are used to this, and anyone who comes into the sector hopefully does so with his or her eyes open. 

In regulated traditional markets, however, volatility is still a relatively misunderstood phenomenon, especially in these untethered markets. It may be creeping into the general vocabulary, and may even become a more entrenched aspect of portfolio construction, but most of those handling it do not have the experience of more seasoned traders.

Yet volatility is not a bad thing. In this low-yield environment, it can produce necessary returns unavailable in low-volatility alternatives. Managed with skill, it can provide the outperformance many fund managers need. And with the right tools, it can form a part of even conservative investment strategies. 

Changing roles

This could influence the role that crypto assets have in broad portfolios. One of the prevailing narratives of recent times has been bitcoin’s role as a hedge against market risk – if things go badly in the economy and the stock market, the reasoning goes, bitcoin will benefit from being seen as an alternative to a wobbly fiat system.

Yet so far this year we have seen that narrative falter when faced with general turmoil and uncertainty.

Perhaps a new narrative is emerging. Bitcoin is volatile, yes, but so are a lot of other more mainstream investments that populate even conservative portfolios. And the volatility differential seems to be narrowing – this might continue. If so, bitcoin could become less a market hedge and more a volatility diversifier. As more investors embrace volatility, they will hopefully do so with a variety of tools. 

You’ll have heard the saying: “They can pull the carpet out from under your feet, or you can learn to dance on a moving carpet.”

Anyone know what’s going on yet?

The relentless and alarming climb in the number of COVID-19 cases in the U.S. and elsewhere seems to have spooked the markets a bit this week … but just a bit. The threat of walking back the tentative reopening enjoyed in some areas is denting confidence in the consumption recovery that the market was bewilderingly assuming was just around the corner. On the other hand, there’s a lot of fresh money apparently waiting in the wings, and it has to go somewhere. 

As we’re pulling out our alphabets to get a handle on what’s ahead, what do you think: a V, a W, a swoosh or a flipped square root sign? I personally favor the ampersand. It feels less linear.

True to recent form, bitcoin acted like a risk-on asset this week, reflecting broader market skittishness by almost twice breaking its monthly lows. Meanwhile, correlation with the S&P 500 is, well, not exactly stable.

CHAIN LINKS

As the chess pieces move around the board of financial regulation and prosecution, various possible scenarios are playing out. One is especially intriguing: If current chairman of the SEC Jay Clayton is confirmed to become the new U.S. Attorney for the Southern District of New York, President Trump will likely appoint one of the remaining SEC commissioners as acting chair until Clayton’s successor is confirmed. This could well be Hester Peirce, known for her pro-innovation stance on crypto oversight and for her public dissent on the dismissal of a recent bitcoin ETF proposal. TAKEAWAY:  This is all still in the realm of speculation, but it could end up being a significant turning point in crypto regulation.

The European Union is preparing a new regulatory regime that could include stricter requirements for crypto assets, including stablecoins. TAKEAWAY: Greater regulation is resisted by many in the crypto industry as it can stifle innovation. Most investors would welcome it, however, as it brings greater clarity and acceptance. And, let’s face it, it’s inevitable as cryptocurrencies grow in popularity. The increased attention from the regulators of one of the world’s principal economic blocs is a strong sign that crypto assets are being taken seriously at the highest levels.

The New York Department of Financial Services (NYDFS) will consider issuing conditional licenses under which startups would be allowed to partner with existing licensed entities to begin operations in the Empire State, and it has signed a Memorandum of Understanding with the State University of New York allowing fledgling prospective licensees to experiment with use cases under the school’s supervision. TAKEAWAY: This is a significant change for the BitLicense regime, long criticized for being too onerous and restrictive. More importantly, this shift could usher in a new season of innovative crypto services in one of the world’s largest financial centers. 

Commodity markets veteran Chris Hehmeyer, CEO of Hehmeyer Trading + Investments,is rebranding his firm to reflect its growing involvement in the crypto markets. TAKEAWAY: This is significant – Hehmeyer Trading has been a fixture of the commodities trading scene since 2007, and the pivot of such a legacy name into crypto markets sends a signal to other traders that this is where the “new” markets are. Hehmeyer has been trading crypto assets for a couple of years now, and has spoken publicly about them on several occasions, but this marks a deeper commitment to the evolution of the industry.

According to sources, PayPal plans to roll out cryptocurrency buying and selling to its 325 million users, possibly within the next three months. TAKEAWAY: The numbers alone point to how big the impact could be – PayPal’s user base is almost as large as the entire population of the United States. What is even more intriguing is the possible reasons for PayPal’s strategy shift. Could it be the significant revenue competitor Square is earning on its crypto platform?

LibertyX plans to enable cash purchases of bitcoin at 20,000 locations, including at 7-Eleven, CVS and Rite Aid stores. And Australians can now purchase bitcoin at post offices. TAKEAWAY: This significant jump in the number of onramps does not necessarily mean that retail investors will start buying bitcoin in droves; it does, however, make it a lot easier for those that want to try it out with small amounts. Going even further, just seeing the purchase points at highly frequented and trusted retail sites is likely to entrench the public’s awareness of bitcoin, and acceptance of its legitimacy. 

Cryptocurrency exchange Bitstamp shared some charts framing bitcoin’s role as a store of value. TAKEAWAY: Is bitcoin a store of value? There’s data for and there’s data against. The most compelling data against is bitcoin’s lack of correlation with gold. Is that the right metric to look at?  

Coin Metrics looked into whether Coinbase’s announcements of possible listings has an impact on the asset prices.The outcome? Less than you would expect. TAKEAWAY: I have questioned this practice before – surely an announcement of a potential listing , something that might increase liquidity of an asset (and therefore, in theory, its value), can be construed as price manipulation? Coin Metrics showed that the price movements after announcements of potential listings is largely influenced by the market mood at the time. 

Kaiko took a close look at bitcoin options market metrics, concluding that the options market has recently showed clear signs of maturity in terms of costs and trading behavior. TAKEAWAY: The recent growth in open interest and trading volumes in bitcoin options has attracted attention from market participants, who see it as a symptom of greater crypto market maturity overall. It is also a sign of deeper professional involvement, as heavy options volumes are a sign of deep pockets and high stakes. Also, more options products are coming to market, which should continue to enhance investor demand as the array of potential use cases and configurations broadens. 

The net flow of bitcoins into miner addresses dropped on Tuesday into sharply negative territory, according to crypto data source Glassnode, reaching the lowest level since June 2019. Another metric shows that nearly all of the net outflow was to exchanges, which some are interpreting a bearish signal, given the accumulating sell pressure. TAKEAWAY: On the other hand, miners usually only sell when they believe the market can handle the orders. Furthermore, miners traditionally use OTC traders to move large blocks, so there may be something else going on here. And, as the chart shows, strong net outflows don’t always presage price dips. But, given that volumes are relatively low compared to previous weeks, this is worth keeping an eye on. 

Barça Fan Tokens, listed as $BAR, went on sale on Monday, and reached its cap of $1.3 million within two hours. TAKEAWAY: This is more significant than it may seem. I’ve written before about how soccer club tokens can be a gateway into asset innovation for a mainstream audience – this news shows that where there is genuine interest, the underlying technology will not be a barrier. I doubt very much that the buyers were mainly crypto enthusiasts.

Also worth reading:

Podcast episodes worth listening to:

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Matic Network Aims for 80% Token Lockup in New Staking Program

6 years 3 months ago

Matic Network announced Sunday that the first iteration of its staking solution was now live.

Launched in stages, direct staking will initially be restricted to the Matic Foundation, the non-profit behind the Ethereum-based scaling solution, which will stake tokens on users’ behalf, the company said in a press release.

The Matic Network is a dapp-ready sidechain designed to take some of the heavy lifting off the bottleneck-prone Ethereum network. It claims it can handle anywhere between 4,000 to 10,000 transactions per second – on par with the likes of EOS and TRON that bill themselves as scalable alternatives.

Related: Matic Launches Mainnet Aiming to Bring More ‘Firepower’ to Ethereum

Matic is keen to encourage users to stake and claims early birds could make up to 120% in annual returns. For comparison, Tezos, another staking token, currently offers users annual returns of about 6-7%.

Users who delegate tokens to the Foundation in the early stages will also have the opportunity, at some point, to become a network validator in their own right.

See also: Staking Will Turn Ethereum Into a Functional Store of Value

In the next phase, Matic plans to roll out staking to external validators. The project says it has already secured the backing of several “high profile” entities, including the Indian IT consulting firm Infosys.

Related: Implosion: MATIC Erases Four-Week Rally in Just Two Days

Overall, Matic has already allocated 1.2 billion tokens, 12% of the total supply, to keep the staking program going for the next five years. But it hopes commitments from other token holders will take this number up to 70-80% within a year.

Matic launched its mainnet at the start of June; the staking program only went into testnet on June 15.

See also: A Digital Art Project Might Have an Answer to the Woes of Staking Centralization

Infosys, which is listed both in India, as well as on the Nasdaq, announced it would join Matic as a validator about a month ago. The consulting giant has dipped its toes into the space before: it built a blockchain-based trade platform in 2018.

In a statement to CoinDesk, Bharat Gupta, a senior principal at the company’s consulting arm, said it hopes that validating a proof of stake network will give the firm first-hand knowledge to develop and launch its own “privacy-oriented public blockchain-based solutions.”

Sandeep Nailwal, Matic’s co-founder & COO, told CoinDesk Infosys had only put a nominal stake in – just enough to be a validator.

Both Matic and Infosys refused to reveal just how big this stake is.

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Vanguard to Go Live on Symbiont’s Blockchain Platform for Foreign Exchange in Q3 2020

6 years 3 months ago

Mutual fund giant Vanguard has completed another blockchain pilot that aims to change the risk profile of foreign exchange (FX) transactions.

The Valley Forge, Pa.-based investment firm ran the pilot on Symbiont’s Assembly blockchain with participation from State Street, BNY Mellon and investment firm Franklin Templeton. Vanguard and Franklin Templeton acted as dealer banks and State Street and BNY Mellon acted as counterparty banks as well as custodians, said Symbiont’s foreign exchange lead, Joe Ziccarelli.

Symbiont believes the foreign exchange platform will go into production in the third quarter of 2020, Ziccarelli said.

Related: Vanguard Ran Its Digital Asset-Backed Securities Pilot in 40 Minutes

“The pilot has helped to prove out some of the capabilities that address areas of uncompensated risk in collateral-linked instruments like FX forward contracts,” Melissa Kennedy, a Vanguard spokeswoman, said in an emailed statement. “Over the next twelve months, we will continue to build out capabilities on the platform with our partners.”

The FX announcement follows a digital asset-backed securities pilot Vanguard announced the completion of earlier this month. The FX pilot’s completion also shows that the Assembly blockchain could quickly become a viable option for many large enterprises engaged in FX, Ziccarelli said.

Read more: Mutual Fund Giant Vanguard Wraps Phase 1 of Digital Asset-Backed Securities Pilot

According to Ziccarelli, the pilot proves a use case for Assembly that applies to all foreign exchange contracts including swaps and outrights, which is a FX transaction where two parties agree to buy or sell a certain amount of currency at a predetermined rate in the future.

Related: Mutual Fund Giant Vanguard Wraps Phase 1 of Digital Asset-Backed Securities Pilot

Buy-side and sell-side firms use foreign exchange for hedging and speculative purposes. The market is governed by contracts that serve as credit agreements which specify how the over-the-counter (OTC) market should exchange the collateral used for these transactions.

The calculations and collateral movement often take two or three days to process.

“[Currently] you are two or three days removed from being protected against the sort of underlying credit risk that’s associated with those transactions,” Ziccarelli said. “Now you can be protected in as soon as the last calculation period.”

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Vanguard’s Blockchain Platform for Foreign Exchange Will Go Live in Q3 2020

6 years 3 months ago

Mutual fund giant Vanguard has completed another blockchain pilot that aims to change the risk profile of foreign exchange (FX) transactions.

The Valley Forge, Pa.-based investment firm ran the pilot on Symbiont’s Assembly blockchain with participation from State Street, BNY Mellon and investment firm Franklin Templeton. Vanguard and Franklin Templeton acted as dealer banks and State Street and BNY Mellon acted as counterparty banks as well as custodians, said Symbiont’s foreign exchange lead, Joe Ziccarelli.

Symbiont believes the foreign exchange platform will go into production in the third quarter of 2020, Ziccarelli said.

Related: Vanguard Ran Its Digital Asset-Backed Securities Pilot in 40 Minutes

“The pilot has helped to prove out some of the capabilities that address areas of uncompensated risk in collateral-linked instruments like FX forward contracts,” Melissa Kennedy, a Vanguard spokeswoman, said in an emailed statement. “Over the next twelve months, we will continue to build out capabilities on the platform with our partners.”

The FX announcement follows a digital asset-backed securities pilot that Vanguard announced the completion of earlier this month. The FX pilot’s completion also shows that the Assembly blockchain could quickly become a viable option for many large enterprises engaged in FX, Ziccarelli said.

Read more: Mutual Fund Giant Vanguard Wraps Phase 1 of Digital Asset-Backed Securities Pilot

According to Ziccarelli, the pilot proves a use case for Assembly that applies to all foreign exchange contracts including swaps and outrights, which is a FX transaction where two parties agree to buy or sell a certain amount of currency at a predetermined rate in the future.

Related: Mutual Fund Giant Vanguard Wraps Phase 1 of Digital Asset-Backed Securities Pilot

Buy-side and sell-side firms use foreign exchange for hedging and speculative purposes. The market is governed by contracts that serve as credit agreements which specify how the over-the-counter (OTC) market should exchange the collateral used for these transactions.

The calculations and collateral movement often take two or three days to process.

“[Currently] you are two or three days removed from being protected against the sort of underlying credit risk that’s associated with those transactions,” Ziccarelli said. “Now you can be protected in as soon as the last calculation period.”

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CoinDesk

Market Wrap: Bitcoin Still Stuck in a Rut, Trading Below $10K

6 years 3 months ago

After the largest options expiry in history, bitcoin ended its fifth week of bouncing around the $9,000s price range.

Bitcoin (BTC) was trading around $9,180 as of 20:00 UTC (4 p.m. ET), slipping almost 1% over the previous 24 hours.

At 00:00 UTC on Friday (8:00 p.m. Thursday ET), bitcoin was changing hands around $9,300 on spot exchanges such as Bitstamp. After putting in the Friday high of $9,291, bitcoin failed to rally from Thursday’s sell-off to $8,990 from $9,650 and continued to trade hands between $9,000 and $9,200.

Related: Blockstream’s Liquid Network Sent $8M in BTC Unsafely, Says Bitcoin Developer

Trading volume on Thursday was only slightly lower than Wednesday, the two largest trading days for Coinbase spot bitcoin volume at $126 million and $124 million respectively. For Friday, volume on Coinbase is at $84 million, according to Skew.

Friday’s slight drop in volume is unsurprising given its price action since early Thursday. In addition to the large bitcoin options expiry, Thursday is statistically the most volatile weekday with the largest trading volume, according to research by cryptocurrency data firm Market Science. Friday volume and volatility generally tapers off, leading into a quiet weekend for the crypto market.

See also: A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock

Bitcoin continues to outperform the S&P 500, and is 21 percentage points higher for the year to date over the leading equities index. But the tight correlation between bitcoin and traditional markets is unlikely to break anytime soon. “Bitcoin will likely remain highly correlated with stocks until a more stable environment is established,” said Joseph Todaro, managing partner at Blocktown Capital.

Related: A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock

To some analysts, the bellwether cryptocurrency’s inability to break above $10,000 signals a potential loss of bullish momentum. After multiple attempts, Bitcoin not breaking $10,000 “shows how weak it is at the moment,” said João Leite, lead analyst at cryptocurrency research firm Blockfyre, speaking of buying interest in bitcoin. 

Meanwhile, major stock indices are mostly down on Friday. 

The Nikkei 225 of publicly traded companies in Japan opened 0.6% higher than Thursday’s close and gained almost 0.4% during Friday’s trading hours. The index’s gains come despite U.S. markets’ fears over an ongoing spike in coronavirus cases. 

The FTSE 100 index in Europe dropped roughly more than 1% from its daily open at the time of publishing. Since Monday, the index dropped roughly 2 percent. 

The U.S. S&P 500 index fell more than 2% on Friday at the time of publication. A recent surge in coronavirus cases in many states is likely the cause for the market giving back gains from Thursday, when the index climbed 1.3 percent. 

See also: Summer 2020 Is Funding Season for Open-Source Bitcoin Development

Ether, (ETH) the second-largest cryptocurrency by market capitalization, was up down 1.5% Friday, trading around $229 and after dropping 10% in 24 hours on Wednesday and staying below $235 on Thursday, according to trading on BitMEX. 

The ether sell=off and relatively flat price action in the second half of the week could be the beginning of a correction amidst the on-going speculative fervor over “yield farming” in the decentralized finance ecosystem of cryptocurrency applications. 

According to Darren Lau, market research analyst at CoinGecko, it seems like “everyone is making money right now, and it has been easy.” But to him, it’s getting “too easy” and a correction could be imminent.

It could be more than a price drop, however, Lau added. If the “yield farming” trend fades as the price of ether drops, “how many farms are going to collapse too,” he asked. Answering his own question, Lau said he expects “a bigger chain reaction than Black Thursday” due to the close interlocked nature of every decentralized finance application.

Other markets

Digital assets relevant to decentralized finance investors were mostly higher on Friday. Augur (REP) climbed 3%, synthetix (SNX) climbed 3.3%, nexo (NEXO) climbed nearly 5% and 0x (ZRX) climbed more than 6 percent, according to market data from Messari. All price changes were as of 20:00 UTC (4:00 p.m. ET).

See also: The COVID-19 E-Commerce Boom Hasn’t Trickled Down to Bitcoin, Despite Advantages

In commodities, gold recovered to a daily gain 0.15% after dropping more than 1% during afternoon trading hours. The yellow metal is trading around $1,768 as of 20:00 UTC (4:00 p.m. ET). 

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DeFi Platform Opyn Launches Put Options on Compound Token

6 years 3 months ago

Decentralized finance (DeFi) protocol Compound saw its governance token, COMP, skyrocket in price when it launched last week. Now, decentralized options marketplace Opyn has launched put options on COMP that will provide a safety net of sorts by helping holders mitigate some of the risk should COMP’s fortunes take a turn for the worse in the next few days.  

“We’re excited to launch @compoundfinance COMP put options! You can protect yourself if COMP falls to $150 or lower before July 3rd,” Opyn’s official handle tweeted early Friday. Several hours later, Universal Market Access (UMA) announced it is creating the ability to synthetically short COMP on its decentralized platform. Opyn closed on over $2 million in funding this past week.

A put option is a derivative contract that gives purchaser the right but not the obligation to sell the underlying instrument at a predetermined price on or before a specific date. Meanwhile, call options represent a right to buy, With options, traders can make bearish or bullish bets at various price levels called strikes that expire in different months.  

Related: Coinbase Lists Compound’s COMP Token for Retail Crypto Traders

Opyn is offering a put option on COMP at the strike price of $150, which will expire on July 3. 

How it works

A put option with a $150 strike can be bought by paying a U.S. dollar-denominated premium, currently $3.76. In return, the purchaser will receive oTokens, which represent the right to sell COMP on or before expiry at $150. oTokens can be bought and sold on an exchange like Uniswap at any time before expiry.

Meanwhile, the option seller offering insurance will deposit 150 USDC, a dollar-backed stablecoin, as collateral to ensure there is no liquidation risk.

Read more: Coinbase Lists Compound’s COMP Token for Retail Crypto Traders

Related: Trio of Bitcoin Tokens Lures DeFi Yield Farmers to New Pastures

The put option on COMP is an American-styled option, meaning the buyer can exercise their right to sell COMP at $150 anytime before July 3. European options can be exercised only on expiry. 

While exercising the put option, the purchaser will send oTokens back to Opyn along with COMP (because oToken is the “right to sell COMP at 150”) and will receive 150 USDC in return. 

As such, one could say the put option essentially represents the right to sell COMP and buy USDC. 

In such an instance, the max loss for the buyer is the premium paid, which is the maximum money the seller can make. “Keep the entirety of your premium as well as your collateral as long as the asset stays above the strike price until expiry,” Opyn tweeted. 

Even if COMP’s price drops to single digits or even zero, the holder of the put option would still be able to sell COMP at $150. 

Speculation

“Opyn’s put option can be used by traders who do not hold COMP but want to speculate on the DeFi token,” Anton Cheng, developer at Opyn.

A trader with a bearish view on COMP can just buy put options at the available strike price of $150. If COMP drops, the oTokens will appreciate in value and traders can liquidate them on Uniswap. 

Read more: Some Numbers That Show Why Yield Farming COMP Is So Seductive

At press time, COMP is trading at $250, according to Opyn.co. The governance token went live for trading on June 18 and traded near $80 on the first day. In the following three days, its price surged by 500% to $380, triggering a frenzy in the DeFi space. 

Such strong rallies are often followed by sudden price pullbacks. Savvy investors, therefore, may buy the newly launched put option on COMP to cap downside risks.

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Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over)

6 years 3 months ago

The future of the U.S. federal securities regulator, and perhaps the direction of cryptocurrency policy, is up in the air.

Last week, President Donald Trump announced his intention to nominate Securities and Exchange Commission Chairman Jay Clayton to the post of U.S. Attorney for the Southern District of New York, asking Congress to approve the one-time corporate lawyer to become one of the nation’s most powerful financial crimes prosecutors.

If – and that is a big if – he is confirmed to become the new U.S. Attorney for the Southern District of New York, the president will likely appoint one of the remaining SEC commissioners as acting chair until Clayton’s successor is confirmed.

Related: AML Bitcoin Founder Claims DC Lobbyist Jack Abramoff, US Government Are ‘Extorting’ Him

Traditionally, the acting chair is the senior-most commissioner who belongs to the same party as the president, said Jerry Brito, Executive Director of industry advocacy group Coin Center. 

In this case, that would be Commissioner Hester Peirce, known to many as “Crypto Mom” for her open-minded stance on the technology. 

In other words, there is a possible timeline ahead where three of the top U.S. financial regulators – the SEC, the Commodity Futures Trading Commission and the Office of the Comptroller of the Currency – would be headed by industry-friendly faces. Already, CFTC Chairman Heath Tarbert has taken steps to bring some regulatory clarity to crypto, approving ether futures and defining certain regulatory questions. Acting Comptroller Brian Brooks, who began the year at Coinbase, proposed a federal payments charter for crypto exchanges just weeks into his then-deputy role. 

Calm down, though. “Possible” does not mean “probable.” It does not mean “likely.” And it sure doesn’t mean “guaranteed.”

Related: New York Regulator Adds 3-Strike Rule for BitLicense Applicants

For one thing, Clayton’s nomination is contentious, and he might well not be confirmed to the new role, for reasons explained below. 

Further, the succession pattern Brito described is “not automatic,” he said. “There’s no rule that makes it automatic. That’s just custom.” 

It is also possible Commissioner Elad Roisman could get the nod. Commissioner Allison Herren Lee, a Democrat, is unlikely to become acting chair, owing to her party affiliation.

At stake is the potential future for crypto regulation. Clayton has at various points in time expressed concerns about market manipulation and maturity, security and consumer protection. Peirce, in contrast, has advocated for a more relaxed approach, and has come out in favor of exchange-traded funds (of which Clayton’s SEC most definitely is not) and a safe harbor for crypto token projects to build before having to consider securities laws.

D.C. Drama

U.S. Attorney General William Barr announced June 19 that Clayton would take over for the now-former U.S. Attorney, Geoffrey Berman, who Barr said was stepping down. Berman immediately announced he was not stepping down, to which Barr responded that President Trump had fired him, to which the president said he hadn’t. 

Ultimately Berman resigned on June 20.

A spokesperson for Clayton did not respond to a request for comment. However, Clayton said during previously scheduled congressional testimony he did not believe the nomination process would distract him from running the SEC.

He said he put his name forward for the U.S. Attorney role around June 12, a week before Barr announced the nomination, but that he would remain “fully committed” to the SEC until the Senate moved on his nomination.

“It was entirely my idea. It’s something I’ve been thinking about for several months as a continuation of my public service,” he said. “It’s a position that’s very attractive to me.”

Seth Bloom, a longtime general counsel to the U.S. Senate Judiciary Committee’s Antitrust Subcommittee, told CoinDesk that Democratic senators are unlikely to approve moving Clayton’s nomination to the Senate floor. 

It’s “very unlikely” Clayton is confirmed, he said. The sentiment was echoed by two other Washington, D.C., insiders, one of whom pointed out there are few legislative days left before this year’s presidential election. 

“We’re not talking a lot of days before the election,” said one lobbyist, who works with lawmakers and asked for their identity to be withheld. “Congress isn’t going to be in town very much. It’s July and some of September.”

If Trump wins the election, then “we can have a real conversation around that.”

Blue slip

Clayton’s nomination might also be held up by the Senate’s “blue slip” practice. 

Traditionally, when a candidate is nominated to a position requiring U.S. Senate confirmation, the senators representing the position’s home state turn in blue slips expressing an opinion of the candidate to the committee overseeing the initial process, in this case the Senate Judiciary Committee.

“The senators aren’t likely to turn it in, they already said they wouldn’t,” Bloom said, referring to New York’s Chuck Schumer and Kirsten Gillibrand, both Democrats. “The nomination is stymied right now unless they can convince Schumer and Gillibrand to turn in those slips.”

Another D.C. insider said Senate Judiciary Committee Chair Lindsey Graham (R-S.C.) could ignore the blue slip tradition, but he has already said he wouldn’t and doing so “would be highly controversial.”

Clayton hasn’t even been formally nominated. While Barr said the president intends to nominate the SEC chair, the White House still needs to prepare the paperwork. 

Typically the White House conducts a background check in preparation for formally nominating a candidate, though this might be easier given Clayton was vetted for his SEC role, the insider said.

Other objections could include the fact that Clayton has never been a prosecutor, though he told Congress he oversees more than 1,000 enforcement agents at the SEC. 

Chester Spatt, a professor of finance at Carnegie Mellon and former chief economist at the SEC, told CoinDesk that Clayton does have experience managing complex financial issues and large teams dealing with these issues, both traits he could apply to running the U.S. Attorney’s office.

What if?

Back to the SEC: In the (by no means guaranteed) scenario where Clayton vacates the chairmanship, a full-time successor would need to be confirmed by the Senate, after being nominated by the president. 

Only one of the existing commissioners can be named acting chair; the president cannot designate a non-commissioner, such as an SEC staffer, to the post.   

“Whether he’ll nominate someone in the near term while [Clayton’s] nomination is pending is unclear to me,” Carnegie Mellon’s Spatt said. 

He told CoinDesk past and present commissioners and senior officials are likely places to look for a nominee to serve as the new chairperson, though that isn’t a formal requirement. 

Clayton himself was not an SEC staffer or commissioner prior to his nomination as chairman, Spatt noted. 

“There could be somebody who’s … running a securities practice in a law firm, or who has a major leadership role in a Wall Street firm or who has experience at the [Federal Reserve],” he said. “These are all places that would be natural places for a president to try and identify a potential chair.”

Brito noted Peirce had recently been renominated for a second term at the Commission, meaning she will have to be confirmed regardless. If she happens to be named Chair after her Commissioner confirmation hearing, she will likely have to sit for a second hearing.

“That doesn’t tell you anything about whether that makes her more or less likely to be appointed by the President to chair so don’t read anything into that but that’s just a fact that she’s going to go through her confirmation again in the next couple weeks,” Brito said.

(Also, it’s actually possible the president doesn’t have the legal authority to name the SEC chair, but it’s just now accepted as tradition, tweeted Coin Center Director of Research Peter Van Valkenburgh after looking into how that role came about.)

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AML Bitcoin Founder Claims DC Lobbyist Jack Abramoff, US Government Are ‘Extorting’ Him

6 years 3 months ago

The founder of the AML Bitcoin project claims the U.S. government is “extorting” him after he was indicted on money laundering and wire fraud charges.

The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) filed lawsuits against Rowland Marcus Andrade on Thursday, claiming he misled investors while raising funds for a 2017 and 2018 initial coin offering (ICO) for AML Bitcoin, a crypto token that was supposed to be designed to be compliant with anti-money-laundering (AML) and know-your-customer (KYC) regulations. 

Alongside Andrade, notorious D.C. lobbyist Jack Abramoff was also indicted, though he has already pled guilty and faces potential jail time, according to Bloomberg. 

Related: Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over)

In a video interview Thursday night, Andrade told CoinDesk the charges were bogus and that he is a “victim of government corruption.” 

“Abramoff was working with the government and tried to get me to sell my company for $100 Million,” Andrade wrote in a direct message from the @AMLBitcoin Twitter handle. “Then they demanded that I pay Abramoff $40M dollars so he could spread the wealth,” he wrote. “If I had no technology that is completed right now and trading, then why were they trying to force me to sell it? This is just an attempt by the government to destroy my company since I refused to play ball.”

Read more: DOJ Indicts Founder of Anti-Money Laundering Bitcoin Project for Money Laundering

The project went live earlier this year, he said, pointing to LBank Exchange, which appears to be trading the token. Andrade further claimed the U.S. government is trying to create its own cryptocurrency based on the AML Bitcoin project, pointing to his legal filings for evidence.

Related: Sovrin Foundation Sheds All Paid Staff in Tale of a Token Issuance Gone Wrong

“The U.S. government is now trying to create there [sic] own compliant digital currency based off my technology and they clearly see me as a threat,” he said. (While there are private efforts currently underway to create a U.S. central bank digital currency, i.e. a digital dollar, the government itself has yet to publicly advocate for a tokenized version of the greenback.)

$5.6M raised

The SEC claimed Andrade raised $5.6 million from 2,400 investors, falling well short of the $100 million he originally tried to raise.

About $1 million of this came from a single investor, identified by the DOJ as “Victim One.” In a court filing related to a separate but ongoing case, Andrade claims the U.S. government manufactured the victim. 

“It was the government who contacted ‘Victim One’ and suggested to him that he had been defrauded,” the filing said. 

CoinDesk spoke with Victim One on Thursday. The money manager confirmed he was informed of the allegations by the Federal Bureau of Investigation, but said he “was a victim of fraud.”

A friend introduced him to the project and his employer was not involved, Victim One told CoinDesk, requesting anonymity due to concerns about professional blowback. He also confirmed he was unaware of the fraud allegations against AML Bitcoin until the FBI called him.

Victim One  indicated he might pursue civil charges against Andrade at some future point.

‘Victim of corruption’

For his part, Andrade was defiant.

“The SEC and the DOJ have the evidence already that proves my innocence. That is why in various filings I had no choice but to make the documents public,” Andrade wrote in one of many DMs, referring to a separate, ongoing case. “This was aggravating the DOJ because I was ripping there [sic] case apart. I am the victim of government corruption and we will fight this.”

He told CoinDesk he had reached out to the SEC’s FinHub division, the regulator’s fintech division that acts as a point of contact for startups, to confirm his token was not a security. He said the regulator did not respond.

“I did not care [if] they said we were a security because I was willing to make any changes the SEC required,” he said. “Instead of helping, they took my documents and came after me.”

Read more: FBI Used Bitcoin Trail to Catch Russian Rapper Accused of Money Laundering

According to the March DOJ filing, U.S. officials had previously filed to seize “one parcel of real property” owned at least in part by Andrade and his wife.

Andrade also claims he was “the victim of corruption” in a response to that complaint, and laid out an elaborate, conspiratorial interpretation of events involving Abramoff, former U.S. Representative Dana Rohrabacher (R-Calif.) and Jared Kushner (U.S. President Donald Trump’s son-in-law). 

The filing alleged federal investigators are attempting to force Andrade to target “bigger political based targets,” including Abramoff and Rohrabacher, in an effort to somehow influence the 2020 presidential election.

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Blockstream’s Liquid Network Sent $8M in BTC Unsafely, Says Bitcoin Developer

6 years 3 months ago

Bitcoins stored on the Liquid Network were temporarily able to be seized by network moderators Thursday night. The potential vulnerability in the Bitcoin sidechain’s security parameters was discovered by Summa founder James Prestwich.

Liquid – a network developed and overseen by Blockstream and meant to move bitcoins around more quickly than the Bitcoin blockchain – moved 870 bitcoins that had been stuck in a queue since June 11 waiting to be processed.

Occurring Thursday at 17:19 GMT, the holders of the network’s emergency two-of-three multisig wallet had potential access to the funds for about one hour, according to Prestwich. The transaction was processed normally, using the network’s 11-of-15 multisig method.

Related: A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock

“This was not a normal operation. If anyone says it is, they are wrong. It directly contradicts [Liquid’s] docs and public statements,” Prestwich said in a private message.

At current prices, the transaction is valued at roughly $8 million.

“This is a known issue caused by an inconsistency between the timelocks used by Liquid’s functionary [hardware security modules] and the functionaries themselves,” Blockstream Marketing Director Neil Woodfire told CoinDesk in a private message. “Despite the issue, the funds are always safe.”

Woodfire said that “recent growth in the Liquid Network” and coordination plans caused by the coronavirus pandemic have led to difficulty in updating firmware relating to the timelocks. Those updates should be implemented by Q4 2020, he said.

Related: Australia Post Now Lets Customers Buy Bitcoin at Over 3,500 Outlets

Added Prestwich:

“To be secure, these systems must operate reliably and on-spec. In this case the Liquid federation did neither. As a result, Blockstream’s administrator backdoor activated, and Liquid security became dependent on trusting the company.”

How Liquid works

Liquid operates as a sidechain to the Bitcoin network. It uses a one-to-one pegged token called L-BTC to move funds around more quickly than the regular network, which is overseen by a federation of select nodes. 

Those nodes are typically hosted by large over-the-counter (OTC) trading desks or crypto exchanges. Each transaction, moreover, must be signed by 11 of 15 representative bodies. Liquid currently has 44 federation members such as BitMEX, Ledger and Xapo. 

When bitcoin moves onto Liquid, it goes through a “pegging” process where bitcoin is stored in a secure wallet moderated by the federation. LBTC is created and redeemed when bitcoin is deposited. The process reverses when bitcoin is withdrawn.

An emergency caveat does exist when bitcoins have not moved from a wallet for 30 days. In that case, a two-of-three multisig approval is activated in order to preserve the network. This is done to protect Liquid in the case of greater than one-third of the federated parties being severed from the Liquid Network.

According to Liquid’s technical documentation:

“If one-third or more of the network is ever unable to continue operating, the network would stall and the funds held would be locked up forever. To avoid this, all funds held by the Liquid Network are also accessible by a set of three emergency keys when the network has been non-functional for thirty consecutive days.”

Prestwich disclosed the security error publicly because the funds were never at risk of being openly stolen by a hacker, but only by those overseeing the emergency wallet. Those holders remain anonymous.

Whether or not this has happened in the past remains an open and pertinent security question, Prestwich added.

Preswich is also the co-founder and currently an advisor to Keep, which recently launched a wrapped-bitcoin token known as tBTC.

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Blockchain Bites: Crypto.com Refunds, Sovrin’s Layoffs and AML Bitcoin’s AML Issues

6 years 3 months ago

New York officials have instituted a three-strike rule for crypto firms applying for the BitLicense, the Sovrin Foundation is now fun by volunteers and Aussies can now buy BTC at their post office. Here’s the story:

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Top shelf

Watchdogs Snarl
New York’s financial watchdog has warned crypto companies their BitLicense applications could be thrown out after “three strikes” of failing to address deficiencies highlighted by the regulator. Meanwhile, the European Union is preparing a new cryptocurrency regime that could include stricter requirements for “global stablecoin” projects such as Libra. Finally, the DoJ and SEC have filed charges against the founder of “AML Bitcoin,” a crypto which claimed to include anti-money laundering protections. AML Bitcoin’s founders are known for (erroneously) claiming the National Football League rejected an AML Bitcoin advertisement for being too controversial.

Related: Blockchain Bites: Rethinking Libra, Craig Wright and Something Smells Fishy in Blockchain

Tidy Endings?
The Sovrin Foundation, a U.S.-based umbrella organization that oversees the development of blockchain-based digital identity standards, or self-sovereign identity (SSI), laid off nine full-time and six part-time employees in March, officially becoming a volunteer-run operation. Sovrin works with the likes of IBM, Cisco and T-Mobile, and was unable to complete a fundraising campaign that started before the COVID-19 crisis hit. Elsewhere, CEO Kris Marszalek said Crypto.com will refund 100% of customer funds as the Financial Conduct Authority (FCA) suspended the activities of Wirecard Card Solutions, a subsidiary of the Wirecard Group, which filed for insolvency on Thursday after admitting last week to be missing $2.1 billion. Funds will be refunded within 48 hours.

Grants & Partnerships
Nearly half a dozen companies have announced new grants for open-source bitcoin contributors and projects since the coronavirus crisis began, from exchanges such as Kraken and OKCoin to the Human Rights Foundation. Grants are generally around $150,000 each. Wasabi Wallet-maker zkSNACKs Ltd is the latest to join the cohort by donating 1 bitcoin to the HRF’s Bitcoin Development Fund. Meanwhile, in a collaborative effort between Australia Post and Bitcoin.com.au, customers will now be able to use the Post Billpay feature to purchase bitcoin and other cryptocurrencies, using cash or cards, at over 3,500 post offices across the country.

Bitcoin Mining
Consumer advocacy group Public Citizen is trying to stop Canadian firm DMG Blockchain from plugging its bitcoin mining rigs into the American power grid. DMG Blockchain has been aggressively expanding its cryptocurrency mining capacity in recent months by tripling its fleet of ASIC and applying for permission to export U.S. electricity, writing that its 15 megawatt mining operation will grow to 60 megawatts in the next year. 

Message Received
Telegram will pay $18.5 million and notify the SEC if it plans to issue any sort of digital currency in the next three years in a proposed settlement, effectively ending a six-month court fight. The messaging platform will be responsible for a $1.22 billion disgorgement offset by $1.19 billion paid as “termination amounts.”

Quick bites
  • Synthetix is the latest “DeFi plot” for yield farming
  • CoinList will distribute Filecoin tokens after its August mainnet (The Block)
  • There’s been a P2P crypto exchange flippening (The Block)
  • A U.K. artist is selling his art collection for bitcoin and other cryptocurrencies (Decrypt)
  • Uber will “deprioritize” its finance-related projects, including Uber Money and a digital wallet (Bloomberg)
Market intel

Related: Blockchain Bites: BitLicense at 5, Lawsky’s Fallacy and Hehmeyer’s Pivot

Bitcoin Narrative Deflated
New Federal Reserve data shows a 78.6% chance of entering a U.S. deflation – the highest since 2008 – putting a pin in the narrative that bitcoin’s price will soar as an inflationary hedge. Some bitcoin optimists suggest the cryptocurrency would appreciate in a deflationary environment – if its adoption as a medium of exchange rises, as discussed in April. This is because deflation boosts the purchasing power of the monetary unit. For this reason, the U.S. dollar tends to appreciate during deflationary bouts.

Exchange Spreads
Trading U.S. dollars for bitcoin can have fairly different order sizes and spreads depending on the exchange, and no two are alike. Average order sizes over the past week were quite varied, CryptoCompare found. Orders on Bitstamp averaged $3,424.11, the highest of major dollar to bitcoin (USD/BTC) pair exchanges. ItBit was second to Bitstamp at $2,874.17, with Kraken at $2787.68. Gemini’s average was in the middle of the pack at $1,438.31, followed by Coinbase at $1,113.15. Bitfinex was lowest, with an average order totaling $342.09. The average order of the six exchanges was $1,996.58.

How to Value Bitcoin: Bitcoin Days Destroyed (live webinar)
How to place a value on bitcoin? Its data are unfamiliar territory for many investors. Nearly half of investors in a recent survey said a lack of fundamentals keeps them from participating. 

In a 30-minute webinar July 7, CoinDesk Research will explore one of the first and oldest unique data points to be developed by crypto asset analysts: Bitcoin Days Destroyed. 

We’ll be joined by Lucas Nuzzi, a veteran analyst and a network data expert at Coin Metrics. Lucas and CoinDesk Research will walk you through the structure of this unique financial metric and demonstrate some of its many applications. Sign up for the July 7 webinar “How to Value Bitcoin: Bitcoin Days Destroyed.”

Podcast

Bitcoin Only Matters Because the Game Is Rigged
The Let’s Talk Bitcoin! hosts gather to discuss the big picture problems facing our world that make things like bitcoin distinctly appealing.

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Coinbase Lists Compound’s COMP Token for Retail Crypto Traders

6 years 3 months ago

The COMP token may have been around for less than two weeks, but it’s already been listed on both Coinbase’s retail and Pro platforms.

The San Francisco-based exchange said in a blog post Thursday the token had been made available on Coinbase.com and via the firm’s Android and iOS apps.

“Coinbase customers can now buy, sell, convert, send, receive or store COMP. COMP will be available for customers in all Coinbase-supported regions, with the exception of New York state,” the exchange said.

Related: A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock

COMP was listed on Coinbase Pro, the exchange’s professional trading platform, on Monday, in what was one of the fastest Coinbase listings to date following the launch of a digital asset.

Predictably, the COMP price, which had been meandering downwards since a sharp drop on Tuesday, got a 20% kick from the news.

Just before the Coinbase announcement, the token was trading at just above $210 – down 40% from where it started the week at something like $350. At the time of writing, COMP was just under the $250 mark.

COMP has been making headlines since its inauspicious launch less than two weeks ago metamorphosed into a triple-figure rally. After an initial listing price of $80 on Monday, June 15, COMP broke the $100 mark Thursday before its price doubled again in the space of 24 hours.

Related: First Mover: In the Cryptocurrency Markets, No Two Exchanges Are Alike

So far, COMP’s all-time high has been the $372 it reached last Sunday.

See also: This Startup Is Forking Compound to Make Hiring More Efficient

However, the launch hasn’t been without issues. COMP is a governance token, awarded freely to both lenders and borrowers to incentivize people to use the platform as much as possible. It didn’t take long for traders to realize they could just borrow against themselves to receive free tokens.

Automated market maker Curv told CoinDesk at the time that users were lending one USD stablecoin against another, repeating the process up to 30 times to maximize their COMP allocation.

Earlier this week, some analysts also highlighted that traders were buying COMP tokens from spot markets together with COMP perpetual swaps – futures without expiry – on derivatives exchange FTX, to accelerate price increases further.

“The relatively large size of the COMP Perpetual Swap market, it would be profitable to buy the Perp and then buy spot in significant enough size to move the price, amplifying gains in the Perp and squeezing the shorts,” said Tony Sheng, a principal at Multicoin Capital, in a blog post on Wednesday – the same day the COMP price tumbled to $200.

See also: Some Numbers That Show Why Yield Farming COMP Is So Seductive

Of course, 48 hours is a long time in crypto. With the news of the Coinbase listing, COMP has rebounded and its market cap now stands at $680 million, according to CoinGecko.

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A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock

6 years 3 months ago

A popular narrative argues the massive stimulus programs from the Federal Reserve, launched to counter a coronavirus-induced recession, could hyperinflate the economy and fuel a major rally in bitcoin. 

However, that bullish theory, which suggests the cryptocurrency would be viewed as a hedge asset in dire economic times, has been dealt a blow by recent data from the U.S. central bank.

Recent data from the Fed shows inflation is likely to remain absent for some time and, in fact, the probability of the U.S. economy slipping into deflation is rising.

Related: Australia Post Now Lets Customers Buy Bitcoin at Over 3,500 Outlets

There’s now a 78.6% chance of deflationary pressure for the U.S – the highest since 2008, according to St. Louis Fed’s deflation risk monitor. As tweeted by Ritvik Carvalho, a financial data correspondent at Reuters, the Fed’s favored inflation measure (below right) – the core personal consumption expenditure – has also declined to an eight-year low of 1%.

Inflation refers to a sustained increase in the general price level of goods and services. Its opposite, deflation is characterized by a general decline in prices for goods and services, and is typically accompanied by a rise in unemployment. 

Since the beginning of the coronavirus crisis in early March the Fed has injected an unprecedented amount of liquidity into the system to help the economy absorb shocks arising from the virus outbreak and ensure financial market stability. Its balance sheet size has expanded by over $3 trillion over the past 3.5 months. 

Crypto analysts are convinced that the massive money injections would boost inflation and bode well for bitcoin. That’s in part based on the cryptocurrency’s reducing pace of supply, which drops by 50% every four years via a process called the “halving.”

Related: Market Wrap: Bitcoin Tests $9K as Market Struggles With Uncertainty

Also read: Bitcoin’s Halving Is Nothing Like Quantitative Tightening

“As we’ve closely monitored the market in the wake of recent economic policy decisions, we’ve seen that the crypto asset class is not only resilient, but that interest is surging as the monetary stimulus has caused investors to look to $BTC as a potential hedge against inflation,” Grayscale Investments, one of the leading digital asset management companies, recently tweeted. (Grayscale is a unit of CoinDesk parent Digital Currency Group.)

Legendary fund manager Paul Tudor Jones also recently disclosed a small bitcoin position to help protect against a rise in inflation.

But with the Fed data and market-based measures of long-term inflation expectations also suggesting a low chance of a rise in inflation over the next five years, the odds of bitcoin witnessing an inflation-driven bull market look weak. 

So if the U.S. is, in fact, facing deflation, what does it mean for bitcoin?

Some observers suggest the cryptocurrency would appreciate in a deflationary environment – if its adoption as a medium of exchange rises, as discussed in April. This is because deflation boosts the purchasing power of the monetary unit. For this reason, the U.S. dollar tends to appreciate during deflationary bouts.

There’s also evidence institutional participation in the bitcoin market is increasing. As a result, some of the increasing money supply may find its way into the bitcoin market. In that case, the cryptocurrency could rise in the long term despite low inflation or deflation. 

See also: Why Global Deflation May Not Be Bad News for Bitcoin

In the shorter term, the scenario for bitcoin is looking somewhat uncertain. At press time, bitcoin is changing hands just over $9,200, according to CoinDesk’s Bitcoin Price Index. The cryptocurrency has spent the better part of the last two months trading a narrow range and may be facing losses after failing multiple times recently to leapfrog the important $10,000 hurdle. 

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First Mover: In the Cryptocurrency Markets, No Two Exchanges Are Alike

6 years 3 months ago

In the cryptocurrency markets, no two exchanges are alike. Even in major crypto exchanges, trading U.S. dollars for bitcoin can have fairly different order sizes and spreads, according to data compiled by aggregator CryptoCompare.

Average order sizes over the past week were quite varied, CryptoCompare found. Orders on Bitstamp averaged $3,424.11, the highest of major dollar to bitcoin (USD/BTC) pair exchanges. ItBit was second to Bitstamp at $2,874.17, with Kraken at $2787.68. Gemini’s average was in the middle of the pack at $1,438.31, followed by Coinbase at $1,113.15. Bitfinex was lowest, with an average order totaling $342.09. The average order of the six exchanges was $1,996.58.

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: Australia Post Now Lets Customers Buy Bitcoin at Over 3,500 Outlets

Average spreads between the highest bid offer and the lowest ask offer on an exchange order book also varied significantly. Data from CryptoCompare shows a few exchanges have a much larger daily price spread than others.

“This is derived from L2 order book data, without fee calculations, on top of this,” said Constantine Tsav, head of research for CryptoCompare. Level 2, or L2, order book data is a term for market information that includes the scope of bid and ask prices for a given asset, in this case USD/BTC.

Luxembourg-based Bitstamp, at $5.21 and New York-domiciled Gemini, at $2.38, have the largest average spreads in intraday trading, in this case CryptoCompare used a two-hour interval. Market spread is the gap between the highest bid and the lowest offer on the order book. Thus the gap is the difference between the price traders are willing to sell an asset and others are willing to buy an asset, and vice versa.

Chris Thomas, head of institutional trading for Swissquote Bank, doesn’t believe the spread discrepancy between some exchanges is bad – it just depends on the type of trader on the exchange. Traders looking to fill larger bitcoin orders on spot exchanges might choose Bitstamp, based on this data, since it has bigger average orders and wider spreads. Traditionally, traders look for tighter spreads.

Related: First Mover: What’s Going On With Bitcoin Derivatives?

“Whereas Bitstamp and Gemini have a relatively wide spread, the four other ones will use this to boast that they have the most liquidity and are ‘the best’ exchanges,” he said. “But they may only be prepared to support these very tight prices in very small sizes – for example, 0.25 or 1 bitcoin on both bid and offers.”

“One bitcoin on each side of the bid/ask is okay for retail, but it’s not ideal for institutional.”

Of course, traders aren’t just motivated to go to an exchange based solely on average order sizes and spreads.

A very fragmented marketplace exists for crypto exchanges in 2020, said Denis Vinokourov, head of research for cryptocurrency broker Bequant. “The tech stack across exchanges is not uniform,” Vinokourov told CoinDesk.“Some exchanges offer high frequency trading connectivity while others don’t, some are more retail focused than others; with segmented geographical focus, numerous legal jurisdictions and various approaches to fiat on-ramps.”

Maxime Boonen, CEO of liquidity provider B2C2, says a trader at that size really just needs to decide which exchange has the best fee structure. “Frankly all exchanges are more or less equal, the liquidity of the major cash exchanges is broadly the same for most intents and purposes.”

“The fees do vary, that’s important, depending on how much you intend to trade,” he added.

The increased use of derivatives in the crypto market is also seeing more professional traders move away from spot trading, Boonen said. “Derivative exchanges are more liquid than cash exchanges,” he said.

One of the reasons why order averages might seem so low is that many traders on these exchanges are just buying from time to time to hold (or “HODL”) bitcoin, Boonen told CoinDesk. “You can’t get physical bitcoin from derivatives exchanges, it’s not appropriate for HODLing.”

Tweet of the day Bitcoin watch

BTC: Price: $9,199 (BPI) | 24-Hr High: $9,333 | 24-Hr Low: $9,087

Trend: Bitcoin is flashing red at press time and may be heading for bigger losses in the short term. 

At press time, the cryptocurrency is trading around $9,200, representing a 0.5% decline on the day, according to CoinDesk’s Bitcoin Price Index. 

On the daily chart, the cryptocurrency looks to have found acceptance under the 50-candle moving average (MA), a bearish development. Meanwhile, on the three-day chart, the 5- and 10-candle moving averages (MAs) have produced a bearish crossover, while the relative strength index has dived out of a 60-day-long descending channel, signaling a bullish-to-bearish trend change. 

Some indicators, like the daily chart’s golden crossover and a bull cross of the 50- and 100-candle MAs on the three-day chart, do indicate the path of least resistance is to the higher side. These indicators, however, are based on backward-looking averages and often trap traders on the wrong side of the market.

Besides, technical traders have refused to step in over the past four weeks despite confirmation of the golden crossover. Such reticence is reflective of a weakening of bullish sentiment. 

All-in-all, the odds appear stacked in favor of a decline to support levels located at $8,630 (May 25 low) and possibly $8,300 (200-candle MA). On the higher side, $10,000 remains the level to beat for the bulls. 

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Crypto.com to Refund Clients as Wirecard’s Card Issuer Told to Cease Operations

6 years 3 months ago

Crypto.com has confirmed to CoinDesk it is moving to refund customers as the U.K. regulator orders Wirecard’s card issuer to cease all operations immediately.

Crypto.com CEO Kris Marszalek told CoinDesk they were refunding 100% of customer funds as the Financial Conduct Authority (FCA) suspended the activities of Wirecard Card Solutions, a subsidiary of the Wirecard Group, which filed for insolvency on Thursday after admitting last week to be missing $2.1 billion.

“We will rapidly proceed to credit the funds back to our users crypto wallets,” Marszalek said.

Related: Crypto.com’s Card Issuer Wirecard Files for Insolvency

All funds will be refunded in the next 48 hours.

The FCA ordered Wirecard Card Solutions to cease all regulated activities on Friday. The financial watchdog said it had stepped in to protect customer funds and would prevent the company from accepting or disposing of any more revenue.

While Wirecard Group is headquartered in Munich and is outside the FCA’s jurisdiction, Wirecard Card Solutions has its offices in Newcastle, in the north of England. Friday’s announcement affects all cards issued by Wirecard Card Solutions, including those belonging to Crypto.com and TenX users. Although it still isn’t clear what could happen, one possibility is that all Wirecard cards stop working.

Users will not be able to top up or transact with Crypto.com cards from later today.

Related: Bitcoin News Roundup for June 19, 2020

See also: Crypto.com Rolls Out Visa Card to 31 European Nations

Both Crypto.com and TenX kept quiet after Wirecard admitted last Thursday that its $2.1 billion accounting hole may have come from employees purposefully inflating company revenue.

Both companies assured customers that their funds were safe, as they were held by a separate financial institution, but representatives refused to say whether they were looking for another card issuer.

But Friday’s news has now forced their hands.

“We’ve been working on alternative solutions with our partners to make sure our customers can continue their cards and will provide an update on this in due course,” Marszalek said.

In a statement published just as CoinDesk went to print, Crypto.com said it was in the process of transferring its card program to a new provider.

TenX did not immediately respond to requests for comment.

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Australia Post Now Lets Customers Pay for Bitcoin at Over 3,500 Outlets

6 years 3 months ago

Australians can now pay for their bitcoin at outlets of one of the country’s oldest organizations, its postal service.

In a collaborative effort between Australia Post and Bitcoin.com.au, customers will now be able to use the Post Billpay feature to purchase bitcoin and other cryptocurrencies at over 3,500 post office shops across the country.

AusPost confirmed the news to CoinDesk via email on Friday.

Related: Market Wrap: Bitcoin Still Stuck in a Rut, Trading Below $10K

The postal service will accept cash and card payments for digital currency purchases made via Bitcoin.com.au, a cryptocurrency exchange based in Cremorne, Victoria.

See also: Kraken Launches Crypto Exchange Service in Australia

“This is a major milestone for digital currency in Australia and around the world. It proves that there are established businesses and organizations that want to learn about new technologies by doing, and not by blocking,” said the exchange’s CEO, Holger Arians.

Australia Post, formerly Postmaster’s General Department, is one of the country’s longest-running organizations, established as a private entity in 1809 with former convict Issac Nichols appointed as its first postmaster.

Related: Blockstream’s Liquid Network Sent $8M in BTC Unsafely, Says Bitcoin Developer

“Australia Post has for a long time played an important role in the community to make services accessible to all,” said Susan Nicholson, AusPost’s head of business and government financial services. “Post Billpay has been one of Australia’s most trusted bill payment methods for over 20 years, and we’re pleased to now provide the ability for bitcoin bills to be paid at a post office, which will come with a product enhancement that offers ID verification and real-time bill payment confirmation back to the biller.”

See also: Australian Woman Charged With Unlawfully Exchanging Over $3M in Crypto

According to the Australian Taxation Office, between 500,000 and 1 million residents of the country already own crypto assets. Bitcoin.com.au said it hopes to increase that number via its new collaboration.

“Our mission is to make bitcoin safe and easy for every Australian”, Arians added. “For many people, paying for bitcoin at an Australia Post office feels safer than transferring funds online – particularly for first-time buyers.”

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