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This New Service Plays Matchmaker Between Solo Miners, Big Mining Farms

5 years 11 months ago

A first-of-its kind service wants to play matchmaker between big-scale mining facilities and individual miners looking for a hosting setup.

Bitcoin mining company HASHR8 just launched its Compass platform, a search engine of sorts for individual miners to shop for a hosting facility to operate their mining hardware for them. While mining farms hosting solo miners’ machines is nothing new, Compass is the first service to create a product to sync miners with hosting providers.

The initiative was born from a drive to keep Bitcoin’s hashrate distributed, and that starts with making sure the smaller-time miners can stay competitive. 

Related: Market Wrap: Bitcoin Has Light Response to OKEx While Ether Options Traders Make Beacon Bets

Red more: Bitcoin Steady Above $11,400 as Hashrate Reaches New High

“We believe that everyone should have the ability to mine bitcoin. Nowadays the narrative is always that ‘bitcoin mining is only profitable for larger miners,’ which holds true because smaller miners cannot benefit from the same economies of scale. HASHR8 built Compass to kill that narrative,” HASHR8 COO Thomas Heller told CoinDesk.

Pointing bitcoin miners in the right direction

Compass curates a registry of verified mining facilities, which miners can query to search for facilities by region, energy price and hardware hosting minimums. Each mining farm’s profile also lists security features and whether it offers mining equipment for rent. Searchers have their choice of facilities from Canada, China, Iceland, Kazakhstan, Russia and the U.S.

Because they already had good working relationships, Heller told CoinDesk, HASHR8 reached out to the facilities currently listed on Compass to pioneer the program, but other mining farms can apply to be added, too. The hosts, not the solo miners, pay HASHR8 a fee for the service.

Related: First Mover: OKEx Private Key Snafu Sends Bitcoin Lower as China DeFi Rises

In addition to Compass, HASHR8 will also be launching Powerblocks this month. The service will allow individual miners to host a single device; in Heller’s view, this service gives “anyone an opportunity to start mining in a world-class facility.” 

Read more: How Bitcoin Mining Works

“We want everyone to have access to the same great hardware and the same low hosting rates, whether they have $2,000 or $200,000, to get started mining bitcoin,” Heller continued.

At a time when Bitcoin’s hashrate is soaring while its price is slogging along, miners are eking out profits as revenue per terahash rests at all time lows. Smaller miners have been especially hurt by this cash-flow squeeze. Heller said that before we can hope to make them competitive with larger miners, “the first step is to get them in the game” with feasible hosting options. 

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Bank of Spain to Weigh Digital Currency Design Proposals, ‘Implications’ Through 2021

5 years 11 months ago

Spain’s central bank is fast-tracking research on digital currency ‘s design and the economic implications of central bank digital currency (CBDC) introduction as per a four-year strategic plan released Friday.

  • CBDC researchers will “consider different design proposals” and analyze digital currency’s financial and systemic risks for Spain.
  • They will also study how “digital identification” relates to CBDC, the plan said.
  • This “priority” research will begin this year and carry through the end of 2021.
  • A member of the eurozone, the Bank of Spain cannot unilaterally introduce its own sovereign CBDC.
  • However, the European Central Bank is currently mulling a digital euro through committee work that includes Spanish central bankers. The future of that work will be determined in mid-2021.

See also: Digital Euro Within Decade ‘Very Likely,’ Says Finland’s Chief Central Banker

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Russian Metal Giant’s Tokenization Firm Expands to America

5 years 11 months ago

Atomyze, a tokenization startup by Russian mining and smelting giant Nornickel, is setting up shop in Greenwich, Conn., to sell tokenized metals in the U.S.

The company, whose legal name is Atomyze LLC, will become the second foothold for Nornickel’s tokenization ambitions. It will work in parallel another entity that will tokenize Nornickel’s metals, Tokentrust, which was launched in February in Switzerland. Atomyze does not currently have a presence in Russia. 

There are two use cases for metal-backed tokens, Nornickel CEO Vladimir Potanin told CoinDesk last year. First, industrial producers can use such tokens to flexibly modify their contracts for the delivery of the actual metals. 

Related: A Russian Company Is Opening a Mining Farm in the Arctic

Second, people interested in investing in the metal industry might use the tokens to bet on the prices of metals such as palladium, copper or nickel, instead of buying stock in companies like Nornickel. 

Both Atomyze and Tokentrust will use a Hyperledger Fabric-powered backend coded by Nornickel’s engineers together with IBM, and will issue tokens backed by the mining giant’s inventory. Legally, however, their operations will be separated, as each company will only serve users in the country in which it is based – at least initially.

Nornickel did not respond to questions as to why the U.S. and Switzerland will be the first two markets for Atomyze by press time. The large U.S. market has been lucrative for financial service firms in general, even though there can be regulatory hurdles.

In Russia, meanwhile, the regulatory situation is getting clearer. This summer, a new law regulating digital asset issuance was passed, and starting in January issuers registered with the Bank of Russia will be able to launch tokens in a centralized, permissioned way.  

Related: Bank of Russia Seeks Limit on Amount of Digital Assets Retail Investors Can Buy

Due to the regulatory differences in Switzerland and the U.S., the two firms will be issuing two distinct sets of tokens. At least in the initial phase, these tokens will not be interchangeable, said Jeanine Hightower-Sellitto, CEO of Atomyze LLC. She added that “Atomyze LLC was created with the vision of building the products that will be familiar and common for the U.S. market.” 

Hightower-Sellitto, a Wall Street veteran and former managing director of operations at the Gemini crypto exchange, was named CEO of the company in September to build a commodity-backed token market fully compliant with U.S. regulations. Before Gemini, Hightower-Sellitto worked at Nasdaq subsidiary International Securities Exchange (ISE) for 13 years.

Along with Hightower-Sellitto, Atomyze now has a few professionals who came from notable crypto and blockchain companies. They include Corey Wendling, former senior vice president of Paxos; Jan Hendrik Scheufen, former chief product officer of the Scotland-based blockchain firm Monax; and Lyon Hardgrave, who used to lead the blockchain oil trading startup Vakt.

Wendling told CoinDesk via a spokesperson he was attracted to Atomyze’s ambition to “disrupt and change the way commodities are traded by allowing customers to bring their own smart contracts and tokens to our platform.” 

“We are building a system that is flexible and highly customizable to be able to support many different types of assets,” Wendling said.

He added that, unlike the already existing tokenization platforms, Atomyze will take a more conservative, permissioned approach, which would give the customers more confidence about the platform’s security. This means new companies willing to issue tokens on the platform will not be able to use the technology independently but will need to work with Atomyze. 

Metal bits

The metals themselves – palladium, platinum, nickel, cobalt and copper – will be kept in a secure vault that is physically located in the U.S., Hightower-Sellitto said. The name of the vault provider is not public, nor are the names of the banks to be involved with Atomyze LLC. 

The contents of the vault will be audited by U.S.-based auditors to make sure the tokens are backed by the actual metals on a 1:1 basis, Hightower-Sellitto said. 

She said that, at the moment, Atomyze is beginning to work on its money transmission and trust licenses in the U.S., and planning to launch in late Q1 of 2021. 

Hightower-Sellitto hopes to see institutional investors like macro funds, hedge funds, endowments and accredited investors among Atomyze’s clients. Investing in metals themselves is different from investing in the stock of metal-producing companies, as this way investors can bet on the performance of entire industries as opposed to particular companies.

“You can invest in the car companies, you can invest in Tesla but there is a lot of noise in Tesla stock. So if you want to invest in the electric car market itself as a directional perspective you could invest in components of the electric car batteries,” Hightower-Sellitto said.

The tokens, which will be tradeable on Atomyze’s own platform, will not qualify as securities, Hightower-Sellitto said, and the company hasn’t had any communications with the U.S. Securities and Exchange Commission about them. This is because every token will be backed by actual metals, so the customers will participate in spot commodities transactions, Hightower-Sellitto said.

“It’s important for our product to be fully deliverable. No customer wants to enter into the spot transaction and then find out they actually are trading a product that is regulated as a swap of another kind of derivative,” she said.

Nornickel CEO Vladimir Potanin told CoinDesk in an October 2019 interview that tokenized metals would attract both industrial consumers and investors who don’t need actual palladium or nickel but would like to bet on their prices.

Swiss-based Tokentrust’s board includes Alexander Stoyanov, the managing director of Nornickel’s subsidiary Global Palladium Fund.

Global Palladium Fund will be the first issuer on Atomyze, Hightower-Sellitto said, but in the future the platform can also become a marketplace for other asset-backed tokens and more issuers might want to use it. 

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Mt. Gox Rehabilitation Plan Deadline Extended Yet Again, This Time to Dec. 15

5 years 11 months ago

Mt. Gox’s rehabilitation trustee Nobuaki Kobayashi announced Thursday an extension to the submission deadline for a rehabilitation plan for the bankrupted exchange, the latest in a long list of deadline extensions.

  • The trustee is working on the rehabilitation plan, according to a notice published Thursday. But “matters that require closer examination” made it “necessary to extend the submission deadline.”
  • The deadline has been extended multiple times, with the most recent extensions happening in November 2018, April 2019 and this past March.
  • Now the deadline is set for Dec. 15.
  • In a status report filed Oct. 7, the trustee wrote, “It should be noted that the deadline may be further extended.”
  • Mt. Gox declared bankruptcy in 2014 after hackers stole 850,000 bitcoins from its servers.
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Digital Euro Within Decade ‘Very Likely,’ Says Finland’s Chief Central Banker

5 years 11 months ago

Bank of Finland Governor Olli Rehn told Reuters Friday he believes a digital euro is “very likely” to debut in Europe in the next 10 years.

  • He was less certain on the European central bank digital currency’s (CBDC) eventual design, saying the European Central Bank (ECB) “will first analyse and experiment.”
  • A retail digital euro will be “supplementary to” cash; it will not replace it, Rehn said.
  • Europe’s CBDC specialists want to “work together with the private sector” on a digital euro, he said.
  • However, Rehn notably rebutted comparisons to the libra stablecoin backed by Facebook. He made clear, though, the ECB will work with the private sector on fitting the project to Europe.
  • The ECB is expected to decide next steps for the digital euro project in mid-2021.

See also: Inside the Estonian CBDC Experiment That Could Shape the Digital Euro

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Blockchain Bites: OKEx Freezes Withdrawals, DeFi Audits Queue, Nigeria Urges Crypto Adoption

5 years 11 months ago

OKEx has frozen withdrawals, audit firms are experiencing a backlog of DeFi projects and the Trump administration is examining DLT for national defense.

Top shelf

Audit (back)logs
Crypto code audit firms say they are swamped with decentralized finance (DeFi) projects. Three of the most well-regarded auditors in the space – OpenZeppelin, Quantstamp and Trail of Bits – told CoinDesk’s William Foxley they are all booked until at least Q1 2021. For example, Quantstamp’s Juliano Martinez said the “high volume” of applicants has led to his company “rejecting lots of projects.” The months-long backlog comes amid a sharp pullback across the $11 billion DeFi market, with most tokens down 19% over the last 30 days, according to Messari.

Bitcoin grants
Coinbase is sponsoring at least two Bitcoin Core developers with its new Crypto Community Fund. The San Francisco-based exchange announced the grant program Thursday, after years of pushback from the crypto community that Coinbase was profiting from bitcoin’s open-source nature without paying in. Direct contributions to and review of Bitcoin Core, contributor tooling, Bitcoin libraries and testing improvements are all applicable to the grant program. Coinbase would not reveal the size of the fund but did say in an emailed statement that it hopes to increase the fund over time. 

Related: Money Reimagined: How Ethereum 2.0’s ‘Lock Up’ Will Drive DeFi Innovation

DLT defense
The Trump Administration has included “distributed ledger technologies” (DLT) in its strategy for preserving America’s technological supremacy over China and Russia. DLT is one of 20 focus areas on the National Security Council’s “critical and emerging technologies” shortlist, released Thursday. The NSC’s strategy calls for investing in, developing, adopting and promoting the priority technologies, which also include AI, data science, quantum computing and “space technologies,” weapons of mass destruction mitigation technologies, and others.

Election 2020
The Associated Press has teamed up with Wikipedia alternative Everipedia to preserve the 2020 U.S. election results. More than 7,000 state and national election race calls will be recorded on Everipedia’s EOS-based platform. Once a race is called, that information is entered into another internal AP system. Everipedia will pull the final declaration from an API and record it on its own ledger, permanently storing what AP sees as the final result. That said, race calls themselves will be recorded on the Ethereum blockchain and Chainlink will serve as intermediary between the AP data and Everipedia.

Digital Nigeria
Nigeria’s federal government is reportedly developing an ambitious plan to facilitate national crypto adoption with the vision of creating a “Digital Nigeria.” According to an early draft of the strategy framework obtained by local publication Technology Times, the country’s Federal Ministry of Communications and Digital Economy and the National Information Technology Development Agency (NITDA) have partnered to develop a blueprint for national blockchain adoption. Nigeria’s mission is to drive adoption of the technology in public administration, leading to improved efficiency, transparency and accountability, according to the document. 

Quick bites At stake

Everything OK?
Crypto’s reaction to news of one of the industry’s most active spot and derivatives exchanges, OKEx, pausing withdrawals has been decidedly muted. 

Related: First Mover: OKEx Private Key Snafu Sends Bitcoin Lower as China DeFi Rises

Friday morning local time, the Hong Kong-headquartered (but Malta-based) trading platform announced it has suspended all cryptocurrency withdrawals indefinitely. One of the necessary signatories, OKEx co-founder Mingxing “Star” Xu, had been taken into police custody.

Bitcoin dropped approximately 3% on the news. Most other large-cap cryptos also fell. 

OKEx CEO Jay Hao said over Weibo the key holder’s cooperation with officials was due to a “personal issue” and the investigation would not affect the business. The exchange clarified hours later, “funds are safe and all other functions on OKEx are unaffected.”

Approximately 200,000 bitcoins – worth some $2.3 billion – are currently held in OKEx wallets, according to Glassnode. The company claims on its website to serve millions of customers in 100 countries.

Star – taken into custody a week ago for unknown, though supposedly “personal” reasons – being out of touch prevented withdrawal authorization from being completed. “We will resume digital assets/cryptocurrencies withdrawals immediately once the concerned private key holder is able to authorize the transaction,” the exchange wrote.

The incident draws parallels to last year’s collapse of QuadrigaX, a Canadian exchange that held its and customer assets in cold storage protected by a single key setup. That signatory has died under mysterious circumstances, leading to an ongoing effort to return assets to their owners. 

“Read between the lines – OKEx has a single point of failure in their key management architecture, and it’s currently failing,” Jameson Lopp, CTO of Casa, tweeted. He added later, “Either they have a distributed redundant setup as claimed on their security page OR there is a single key holder whose disappearance halts spending.”

Others have noted OKEx previously boasted of its contingency plans put in place for such scenarios.

In either case, with approximately 1.1% of the total circulating BTC supply currently frozen, market analysts remain cool-headed.

“I don’t think BTC will necessarily dive from here; the fund flow may look for venues that are based in countries with clearer regulatory stance and policy outlook,” Denis Vinokourov, head of research at London-based prime brokerage Bequant, told CoinDesk’s Omkar Godbole.

That said, larger macro forces are likely at play, including a devastating U.S. unemployment report Thursday, slipping stocks and whipsaw U.S. stimulus talks.

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Coinbase Received Over 1,800 Law Enforcement Information Requests in the First Half of 2020

5 years 11 months ago

Coinbase received more than 1,800 request for information from law enforcement in the first half of 2020, largely in the form of subpoenas, the company announced Friday in a new transparency report.

The San Francisco-based cryptocurrency exchange released the information in its first-ever transparency report. Earlier this year, digital rights advocacy group Electronic Frontier Foundation (EFF) requested the exchange be more transparent in how it handles authorities’ requests for users’ private financial data.

In addition to the criminal information requests, Coinbase received a number of civil or administrative requests from government agencies, for a total of over 1,900 requests.

Related: Coinbase’s Global Marketing Head Latest to Join Mass Exit

More than 1,100 of the requests came from agencies in the United States and 441 came from the United Kingdom. The majority of the requests came from the U.S. Federal Bureau of Investigation (FBI).

“As a financial institution with a duty to detect and prevent prohibited activity on its platform, we respect the legitimate interests of government authorities in pursuing bad actors who abuse others and our platform,” the company wrote in a blog post. “Yet we do not hesitate to push back where appropriate, even when it is inconvenient or costly to do so. That’s why each request we receive is handled by a team of experienced specialists in accordance with set procedures to confirm the validity of the request and narrow or object to requests that are overly broad.”

The move comes a month and a half after the Electronic Frontier Foundation, a digital rights nonprofit organization, called on the leading U.S. exchange to be more transparent about how it handles private user financial data.

The EFF said Coinbase should detail the number of requests it receives as well as how it approaches these requests through the use of transparency reports.

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Reginald Fowler May Reopen Plea Talks in Crypto Capital Case

5 years 11 months ago

Alleged “shadow banker” Reginald Fowler may be headed back to the plea bargain table in a second attempt to resolve criminal finance charges stemming from Bitfinex-linked firm Crypto Capital.

  • The ex-National Football League investor had balked at prosecutors’ February demand for $371 million in forfeiture, blowing up early talks to settle unlicensed money transmission charges.
  • But Law360 reported Thursday that Fowler’s counsel is “open to again exploring” a plea deal over the original charge and a new one: wire fraud.
  • Prosecutors allege Fowler ran illegal banking services through Crypto Capital. The payments processor once serviced crypto exchanges Bitfinex, QuadrigaCX and CEX.io. 
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Crypto Traders Bet on US Election as FTX Prediction Markets Hit Record Volumes

5 years 11 months ago

Cryptocurrency traders are placing last-minute bets on the outcome of the 2020 U.S. presidential election, pushing volume on FTX’s prediction markets to record highs and drawing new users to the crypto derivatives exchange.

  • In the first two weeks of October, monthly trading volume for the TRUMP and BIDEN markets eclipsed prior high set in March when the coronavirus public health and economic crisis brought the Trump Administration and prospects of his reelection to the fore of nearly every news cycle, domestic and international. 
  • Known for its cutting-edge cryptocurrency futures products, FTX has benefited from this non-crypto offering as well. The markets have served as a “surprisingly strong” funnel for new users, CEO Sam Bankman-Fried told CoinDesk in a private message.
  • Both markets represent 22% of referral traffic to FTX, according to data from web analytics service Similar Web, the largest share of any FTX referrer, thanks to links and data posted to electionbettingodds.com.
  • Though the betting is on the outcome of the U.S. presidential election, anyone who could cast an actual vote for either candidate on Nov. 3 is excluded from the action in FTX’s markets because the exchange’s services are not available in the United States.
  • With the election less than three weeks away, the TRUMP market commands nearly double the volume of its counterpart, the BIDEN futures contract.
  • Even though volume for each election market is relatively small compared to similar offerings on other betting sites, the market behavior aligns fairly well with larger election prediction markets.
  • For example, PredictIt shows a lead for former Vice President Joe Biden ($0.65) over President Donald Trump ($0.40) similar to FTX’s Biden ($0.65) lead over Trump ($0.36). 
  • Bankman-Fried told CoinDesk he is “looking into” building more of these non-crypto markets in the future. But his team “might need to build out some more support for them” before launching new offerings.
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Nigerian Banks Shut Them Out, so These Activists Are Using Bitcoin to Battle Police Brutality

5 years 11 months ago

As protests surge through Nigeria in response to police brutality, one enclave of protestors has turned to bitcoin as a financial lifeline during turbulent times. 

The Feminist Coalition’s bank account was shuttered this month after its involvement in the End SARS protests came to light, according to a person familiar but unaffiliated with the group who asked to be identified as Emma (a pseudonym). End SARS is a movement in Nigeria to abolish the Special Anti-Robbery Squad (SARS), a subdivision of the police force with a track record of abusing and harassing citizens.

Read more: Unconfiscatable? Using Bitcoin to Resist Police Extortion in Nigeria

Related: Nigeria Is Developing Strategies for National Blockchain Adoption

Cast out of the traditional system, the Feminist Coalition is now raising donations in bitcoin.

The #EndSARS protests

The Feminist Coalition was founded in July with a mission to “champion equality for women in Nigerian society with core focuses of education, financial freedom, and representation in public office.”

With the outbreak of protests against police brutality this month, the group has concentrated on providing medical care, legal aid and even funeral funding for those participating in the peaceful demonstrations.

Since the protests surfaced in the beginning of October, 10 Nigerians have died at the hands of police, according to CNN.

Related: Bitcoin in Africa: FastBitcoins Partners With Flexepin to Expand Global Footprint

As of Oct. 16, the Feminist Coalition has collected a total of 69,891,637.15 naira (a couple bucks shy of $185,000), 15,443,280.00 of which ($40,000) has been deployed to aid 128 protests across the country, according to the coalition’s website.

Bitcoin and censorship-resistant fundraising

All of this fundraising attracted the attention of authorities, though, and they were shut out of Flutterwave, the payments platform and something of a virtual bank they used to process donations. (At press time, Flutterwave had not returned CoinDesk’s request for comment).

That’s when they turned to alternatives.

“Quite a few members of the group work in tech,” so they made the decision to use bitcoin as another payment option, said Emma.

They started by using Sendcash, a platform which converts bitcoin payments into naira and then deposits these funds into a recipient’s Nigerian bank account. The service is intuitive and highly useful, but it carries the risk that banks will almost certainly sniff out the source of the Feminist Coalition’s funds and shut down its accounts again.

The coalition no longer uses Sendcash because of this likely outcome. But they still accept bitcoin: Alex Gladstein, the Chief Strategy Officer of the Human Rights Organization, set them up with a BTCPay Server. Emma called the self-hosted payment process “a safer wallet” compared to other options. 

Read more: Human Rights Foundation Funds Bitcoin Privacy Tools Despite ‘Coin Mixing’ Legal Stigma

Because it operates obliquely to the banking system, the censorship-resistant payment portal is an essential tool for the Feminist Coalition’s fundraising, Gladstein told CoinDesk. 

“I would say BTCPay is important because it protects the privacy of donors and prevents the government from easily figuring out what service the protestors are using to cash out their bitcoin into naira,” he said.

Since adding the BTCPay bitcoin donation option on Oct. 14, the coalition has amassed roughly 3.14 BTC (~$36,000).

Bigger than Bitcoin

As CoinDesk has reported previously, Nigerians are no strangers to how the Bitcoin system lets them move money in the shadows of the legacy financial system.

Some Nigerian expats, for instance, use the Paxful exchange to send remittance funds back home, while others use bitcoin to trade directly with China. 

More germane to the recent protests against police brutality, others have even used Bitcoin as an unconfiscatible bank account to avoid police shakedowns for cash. As though they see the writing on the wall, the Nigerian government is also spinning up a digital version of the naira.

Still, Emma said that bitcoin is “not popular among the masses yet at all. There are large barriers mostly in terms of education. However, a lot of young Nigerians are now starting to adopt cryptocurrency and it’s growing across the population.” 

Further, the Feminist Coalition’s successful fundraising using bitcoin sheds “some positive light on cryptocurrency,” she says, and promotional efforts by Binance in Nigeria are also softening Bitcoin stigma in the country.

Of course, Bitcoin is only one tool in Nigeria’s fight for civil rights – it is not a cure – all for its citizens. What’s really needed is concrete reform.

Read more: Nigerians Are Using Bitcoin to Bypass Trade Hurdles With China

Nigerians have been protesting as far back as 2016, Emma said, for SARS’ abolition and for police reform. It wasn’t until the most recent bout of unrest beginning in October that the government acquiesced to the protestors’ demands and formally disbanded SARS.

To many Nigerians, though, this is merely political theatre, and they expect SARS abuses to migrate to one of the new task forces that the government is forming to take its place. That’s why the protests haven’t stopped, Emma said, “because [Nigerians] want to see actual change in terms of police reform.”

With SARS now abolished, though, the protesters’ something-of-a-victory has left Emma hopeful. Not necessarily that things will immediately change, but that the Nigerian people, collectively, are beginning to “wake up” to the government’s abuses.

There’s more activity now than ever pressing for change, she said, and that’s something to be thankful for.

“We’re very tired of the lies and deceit, and there’s a widespread consciousness and awakening among young Nigerians right now that many are saying they’ve never seen before. I know I’ve never seen it before and I’m so relieved that it’s finally here.”

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OKEx Denies Investigation of Founder Star Xu Is Related to Money Laundering

5 years 11 months ago

OKEx is denying that the ongoing inquiry of its founder is related to an anti-money laundering investigation.  

“We are not at liberty to discuss any matters that are under investigation but can reveal that it is not related in any way to AML or to OKEx,” a spokesperson from the exchange told CoinDesk. 

The exchange informed its users it would suspend crypto withdrawals at 03:00 UTC on Friday and claimed a key holder, later revealed to be OKEx founder “Star” Xu, was out of touch and cooperating with the police for a personal issue. 

Related: First Mover: OKEx Private Key Snafu Sends Bitcoin Lower as China DeFi Rises

The exchange might have violated anti-money laundering regulations with more than 800 accounts and large amounts of money involved in the case, state media Security Times reported, citing unnamed sources. 

“As a Malta-based company, OKEx constantly strives to meet compliance in all jurisdictions in which we operate,” the exchange’s spokesperson said. 
In January, the People’s Bank of China announced a sweeping inspection on money laundering activities from non-banking institutions soliciting transaction data once they are found to have violated related regulations.

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First Mover: OKEx Private Key Snafu Sends Bitcoin Lower as China DeFi Rises

5 years 11 months ago

Bitcoin (BTC) fell 2% Friday, the most in three weeks, after the market was spooked by the announcement that the cryptocurrency exchange OKEx had suspended withdrawals because founder Mingxing “Star” Xu was reportedly taken into police custody. 

The executive is the holder of a private key needed to authorize withdrawals, and that became impossible since he was out of touch, the exchange wrote in a notice published early Friday morning. Officials with OKEx, which is based in Malta but led by Chinese executives, said the issue involved a personal matter, not the exchange and shouldn’t affect ongoing business. 

Traders said the price impact might be short-lived. “I don’t think this news colors BTC the wrong way as much as it does the venue,” Vishal Shah, a trader and founder of the Alpha 5 exchange, told CoinDesk.   

Market moves

Related: OKEx Denies Investigation of Founder Star Xu Is Related to Money Laundering

Decentralized finance, or DeFi, is one of the hottest trends in the crypto industry. So it’s not surprising the DeFi craze would find its way to China, which has an active cryptocurrency community despite government restrictions on trading and token sales.

Chinese startups are playing a crucial role in the DeFi boom with highly localized and nimble adaptations of western projects as well as a marketing apparatus that is laser-focused on Chinese crypto communities, industry watchers say. 

From July through the middle of October, the number of searches for DeFi has soared on China’s social media platform WeChat. It has almost doubled during this period of time, according to WeChat Index, a data analysis tool that includes keyword searches, articles and forwards in WeChat moments. 

Major Defi projects such as NEST, DForce and YFII, all with huge Chinese followings, have raised millions of dollars in the span of a few weeks and topped the TVL ranking on DeFi Pulse.

China often has a reputation for adapting western products to local markets, or in some cases mimicking them. Compound alleged China-based DForce “stole” its code and Chinese liquidity mining site YFII cloned another foreign-based project, Yearn.Finance (YFI).

“Admittedly, many Chinese projects copy code from western DeFi pioneers such as the liquidity leader Yearn.Finance and decentralized exchange UniSwap,” Nervos co-founder Guoning Lü told CoinDesk. “However, Chinese companies are making innovations in localizing the original products and that is what makes DeFi products more popular in the country.” 

– David Pan

Read More: How the DeFi Craze Made Its Way to China

Bitcoin watch

Bitcoin is down but not out and unlikely to see a price crash due to the announcement that the digital-asset exchange OKEx had suspended withdrawals.

Related: Bitcoin Price Dips 3% on OKEx News, Analysts Aren’t Too Worried

The cryptocurrency is currently trading near $11,300, representing a 2% decline on the day. Prices fell from $11,519 to $11,231 in the 30 minutes to 04:30 UTC, roughly in line with the timing of the exchange’s announcement, according to CoinDesk’s Bitcoin Price Index.

OKEx announced an indefinite suspension of withdrawals, saying one of its private key holders was cooperating with police in investigations and thus being out of touch. As per latest reports, that private key holder is the exchange’s founder, Mingxing Xu.

As such, the market sentiment may remain weak for some time, although a price crash looks unlikely.

“I don’t think BTC will necessarily dive from here,” Denis Vinokourov, head of research at London-based prime brokerage Bequant told CoinDesk. “The fund flow may look for venues that are based in countries with clearer regulatory stance and policy outlook.”

Besides, the cryptocurrency has recently absorbed bigger shocks like BitMEX’s indictment by U.S. regulators, President Donald Trump’s health scare and the fiscal impasse in the U.S.

With prices holding above the former resistance-turned-support of $11,200 (Sept. 18 high), the immediate bias remains bullish. The cryptocurrency could revisit Asian session highs above $11,500 as U.S. stock futures are point to a potential reversal of this week’s risk-off mood.

– Omkar Godbole

Token watch

USD coin (USDC): Dollar-linked stablecoin gets added to Stellar blockchain. 

Filecoin (FIL): Decentralized data-storage and content network starts long-awaited distribution of tokens following $200M initial coin offering in 2017. As of Friday, prices had stabilized around $55, for a market capitalization around $840 million, according to CoinGecko.   

What’s hot

Coinbase’s global marketing head latest to join mass exit (CoinDesk) 

Bittrex Global offers 3x leveraged digital tokens on bitcoin, ether and cardano. (Bittrex Global)   

Central-bank digital currencies could “accelerate the velocity of money” and have the “potential to become an inflation game changer,” bond firm DoubleLine says (DoubleLine) 

Block.one releases “EOSIO for Business” to target enterprise blockchain (CoinDesk) 

U.S. charges 6 with laundering Mexican drug cartel cash using crypto and casinos (CoinDesk) 

Analogs The latest on the economy and traditional finance

IMF’s Georgieva says U.S., China need to keep up coronavirus stimulus to speed economy’s recovery (Reuters) 

Carmen Reinhart, World Bank chief economist and author of “This Time is Different,” said there’s growing risk of a financial crisis (Bloomberg) 

French carmaker Renault draws down part of 5B euro government-backed loan (Reuters) 

Lingering coronavirus concerns hit investor sentiment for Asian traders on Friday (Reuters)

U.S. weekly jobless claims unexpectedly rise to 898K, versus expected 825K and pre-pandemic norm around 200K (Bloomberg):

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CoinDesk

Bitcoin Price Dips 3% on OKEx News, Analysts Aren’t Too Worried

5 years 11 months ago

Bitcoin’s price dropped earlier on Friday after crypto exchange OKEx suspended withdrawals, but analysts told CoinDesk they don’t think significant further losses are likely.

  • The top cryptocurrency by market value fell around 3% in the 30 minutes to 04:30 UTC, according to CoinDesk’s Bitcoin Price Index.
  • The move happened after OKEx announced an indefinite suspension of withdrawals due to one of its private key holders being out of contact with the exchange, reportedly because they are being held by police. 
  • While market sentiment may remain temporarily weak after the news, a price crash looks unlikely.
  • “I don’t think BTC will necessarily dive from here; the fund flow may look for venues that are based in countries with clearer regulatory stance and policy outlook,” Denis Vinokourov, head of research at London-based prime brokerage Bequant, told CoinDesk.
  • Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5, suggested the news may place the OKEx trading venue in a bad light but have little affect on bitcoin’s reputation.
  • Bitcoin has shown resilience to bigger negative news over the past few weeks.
  • The cryptocurrency quickly fell by $500 on Oct. 1 after U.S. regulators brought criminal charges against BitMEX, one of the biggest derivatives exchanges.
  • The slide, however, was short-lived and prices broke into bullish territory above $11,200 over the next weekend.
  • “In my opinion, prices will recover because the latest OKEx issue is not related to hacking or shutting down the exchange,” Ki Young Ju, CEO of South Korean analytics firm CryptoQuant, told CoinDesk in a Telegram message.
  • OKEx held 201,981 bitcoin in its wallets as of Thursday, according to Glassnode data.
  • Similar action may unfold over the next few days, though bitcoin is vulnerable to any stock markets drops over coronavirus fears.
  • At press time, bitcoin is changing hands near $11,324, representing a 1.6% decline on the day.

Also read: OKEx Suspends Withdrawals, Says Key Holder Not Available Due to Cooperation With Investigation 

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CoinDesk

OKEx Founder ‘Star’ Xu Held in Police Custody: Report

5 years 11 months ago

A founder of the OKEx cryptocurrency exchange is being held by police, according to Chinese news source Caixin.

  • In a report on Friday, Caixin said it spoke to two individuals close to OKEx who indicated that Mingxing “Star” Xu had been taken by police at least a week ago and hasn’t been seen since.
  • The report isn’t clear exactly where this occurred; OKEx has a headquarters in Hong Kong while being officially based in Malta.
  • The report also doesn’t indicate why police are holding Xu.
  • The news comes soon after CoinDesk reported earlier on Friday that OKEx has suspended cryptocurrency withdrawals, citing the absence of an unnamed holder of the exchange’s private keys.
  • While the notice did say the individual is “cooperating with a public security bureau in investigations,” OKEx CEO and co-founder Jay Hao said on Weibo the issue is over a personal matter and wouldn’t affect the business.
  • Although Caixin’s report suggested Xu is the individual linked to the exchange’s withdrawal issues, another report from media source Mars Finance later in the day suggested otherwise.
  • Mars Finance sources said Xu may be being held to help an investigation into the backdoor listing of OK Group in Hong Kong in 2019 and is not related to the exchange’s withdrawal issue.
  • OKEx also said in a statement Xu has not been involved with OKEx for some time and works within the separate entities OK Group and OK Coin.
  • Mars Finance also said two executives who had been held along with Xu have been released on bail, though it isn’t clear which firm they are linked to.
  • Xu was previously held by police as part of a fraud investigation back in 2018, but was not arrested.
  • As the OKEx news broke Friday, cryptocurrency prices took a dive, with bitcoin dropping around 3% in half an hour.
  • Update (13:17 UTC, Oct. 16): This article has been updated with information from Mars Finance and OKEx, and the headline changed.

Also read: OKEx Suspends Withdrawals, Says Key Holder Not Available Due to Cooperation With Investigation

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CoinDesk

OKEx Founder ‘Star’ Xu Named as Key Holder in Police Custody: Report

5 years 11 months ago

A founder of the OKEx cryptocurrency exchange is being held by police, according to Chinese news source Caixin.

  • In a report on Friday, Caixin said it spoke to two individuals close to OKEx who indicated that Mingxing “Star” Xu, had been taken by police at least a week ago and hasn’t been seen since.
  • The report isn’t clear exactly where this occurred, however OKEx has a headquarters in Hong Kong, while being officially based in Malta.
  • The report also doesn’t indicate why police are holding Xu.
  • The news comes soon after CoinDesk reported earlier on Friday that OKEx has suspended cryptocurrency withdrawals citing the absence of an unnamed holder of the exchange’s private keys.
  • While the notice did say the individual is “cooperating with a public security bureau in investigations,” OKEx CEO and co-founder Jay Hao said on Weibo that the issue is over a personal matter and wouldn’t affect the business.
  • Xu was held by police as part of a fraud investigation back in 2018, but was not arrested.
  • As the news broke, cryptocurrency prices took a dive, with bitcoin dropping around 3% in half an hour.

Also read: OKEx Suspends Withdrawals, Says Key Holder Not Available Due to Cooperation With Investigation

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CoinDesk

US Charges 6 With Laundering Mexican Drug Cartel Cash Using Crypto and Casinos

5 years 11 months ago

The U.S. Department of Justice (DoJ) has charged six individuals over alleged involvement in laundering drug cartel funds using cryptocurrency.

  • On Thursday, the DoJ unsealed an indictment (filed on Sept. 24) at the U.S. Eastern District Court of Virginia against Xizhi Li, 45, Jianxing Chen, 40, Jiayu Chen, 46, Eric Yong Woo, 43, Jingyuan Li, 47, and Tao Liu, 45.
  • The DoJ alleges the six individuals were part of an organization that laundered “millions” for the Mexican drug cartels using casinos and front companies.
  • They are also alleged to have used foreign and domestic bank accounts as well as bulk cash smuggling to launder the funds.
  • Phone applications such as WeChat and WhatsApp are said to have been used by the group to communicate their illicit activity.
  • One of the six, Tao Liu, is alleged to have attempted to use wire transfers and cryptocurrency to bribe a U.S. Department of State official to create passports for entry into the U.S.
  • The six face up to 14 charges including conspiracy to commit money laundering, conspiracy to distribute cocaine, attempted identity fraud, and bribery.
  • Superseding a previous indictment, the latest charges result from an investigation spanning nearly four years.
  • Law enforcement looked into the relationship between foreign drug trafficking organizations and Asian money laundering networks in the U.S., China, and elsewhere, according to a DoJ press release.
  • Each of the six now faces a minimum of 10 years imprisonment with a maximum sentence of life behind bars.

See also: DOJ Warns of Possible ‘Oncoming Storm’ in Report Detailing Dangers of Terrorist Use of Crypto

Read the court document in full below:

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CoinDesk

Coinbase’s Global Marketing Head Latest to Join Mass Exit

5 years 11 months ago

Coinbase Global Marketing Head John Russ is leaving the U.S. cryptocurrency exchange – the latest in a host of departures over recent weeks.

  • Russ said in a tweet Wednesday that the decision came in response to Coinbase employees being asked to choose between accepting CEO Brian Armstrong’s enforced “apolitical” stance at the firm and going elsewhere.
  • In the summer, some Coinbase employees had protested internally, seeking a more public position on issues such as Black Lives Matter.
  • Armstrong pushed back saying the firm would focus solely on its financial mission and offering a severance package for employees unhappy with the position.
  • The former global marketing head joins at least 60 other employees in their departure from the exchange representing roughly 5% of the company’s headcount.
  • On Wednesday, Coinbase’s Chief Compliance Officer Jeff Horowitz also announced he would be stepping away from the company although it is not clear if he left over Armstrong’s missive.
  • Russ did not immediately return CoinDesk’s request for comment.

See also: Coinbase Senior Software Engineer Left This Week, Unclear if Departure Linked to New Policy

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CoinDesk

OKEx Suspends Withdrawals, Says Key Holder Not Available Due to Cooperation With Investigation

5 years 11 months ago

OKEx has suspended all cryptocurrency withdrawals indefinitely, saying one of the exchange’s key holders has “been out of touch” with the exchange because they are “currently cooperating with a public security bureau in investigations.” OKEx’ CEO later said the investigation is due to the key holder’s “personal issue.”

  • Most of the top cryptocurrencies sold off on the news, with the price of bitcoin on OKEx dropping 3% in 30 minutes, touching $11,182 Friday morning, before starting to rebound to $11,300 at last check.
  • The key holder’s being out of touch prevented withdrawal authorization from being completed, the exchange wrote in a notice published early Friday morning.
  • Hours before the announcement, significant withdrawals of ether, tron and bitcoin were completed from known OKEx-affiliated addresses, as picked up by on-chain transaction monitoring service Whale Alert.
  • The exchange did not immediately respond to CoinDesk’s request for comment.
  • “OKEx’s other functions remain normal and stable and the security of your assets at OKEx will not affected,” the notice read. “We will resume digital assets/cryptocurrencies withdrawals immediately once the concerned private key holder is able to authorize the transaction.”
  • OKEx CEO Jay Hao claimed the key holder’s cooperation with officials was due to a “personal issue” and the investigation would not affect the business, according to a Weibo post.
  • Taking to Twitter, Hao indicated that non-crypto withdrawals should still be processing, claiming that all non-crypto or digital asset operations were unaffected.
  • The Malta-based exchange is the second-largest cryptocurrency derivatives platform by 24-hour volume, according to Skew.

Update (Oct. 16, 4:50 UTC): This article has been updated with information about coin withdrawals, price of bitcoin.
Update (Oct. 16, 6:12 UTC): This article has been updated with public statements from CEO Jay Hao.

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CoinDesk

Fed Chairman Powell to Speak About Digital Currencies Next Week at IMF

5 years 11 months ago

Federal Reserve Chairman Jerome Powell will speak next week as part of a panel on the future of cross-border payments at the International Monetary Fund’s (IMF) annual meeting.

  • Panelists will discuss “the benefits and risks of cross-border” digital currencies as well as their policy implications, IMF said.
  • The panel, which will be webcast, will start at 8 a.m. Eastern time on Monday.
  • Also on the panel will be: Agustín Carstens, general manager of the Bank for International Settlements; Nor Shamsiah, Governor of Bank Negara Malaysia; and Governor of the Saudi Arabian Monetary Authority Ahmed Abdulkarim Alkholifey, whose central bank is collaborating with the United Arab Emirates on a blockchain-based transaction platform.
  • It was not immediately known if Powell’s remarks will include his thoughts on a digital dollar.

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CoinDesk

Market Wrap: Bitcoin Tests $11.5K; Ether Futures Open Interest Flattens

5 years 11 months ago

Bitcoin is turning bullish Thursday while ether futures open interest sticks around $1 billion the past month.

  • Bitcoin (BTC) trading around $11,537 as of 20:00 UTC (4 p.m. ET). Gaining 1.5% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $11,249-$11,543
  • BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price is on the rise Thursday, moving from a mostly flat trend to hit as high as $11,543 on spot exchanges such as Bitstamp. It was changing hands at $11,537 as of press time. 

The move upward arrives as the world’s oldest cryptocurrency has struggled to stay above $11,500 since Oct. 13. Andrew Tu, an executive at trading firm Efficient Frontier, said this phenomenon, often known as “resistance” where traders take profits, creates sell momentum and holds back bitcoin from pushing higher.

Related: Is Crypto Converging With Public Markets?

“There is significant resistance past $11,400,” Tu told CoinDesk. “It may be that we fail to stay above $11,500 and begin to range from $10,500-$11,400.” With the exception of a quick bounce to as high as $11,730 on Oct. 13, bitcoin has been in $11,400-$11,500 territory most of the past week. 

“Looking back at 2020 so far, bitcoin is on a nice and steady walk upwards,” said Henrik Kugelberg, an over-the-counter crypto trader based in Sweden. “It is very fortunate that we have bitcoin to look at when most other macro things look gloomy, to say the least.” 

Read More: World’s Growing Stockpile of Negative-Yielding Debt a Positive for Bitcoin

BItcoin is trouncing traditional investment hedges such as gold and even silver. While gold is up 26% in 2020 and silver has gained 35%, bitcoin has climbed 57%.

Related: Nigeria Is Developing Strategies for National Blockchain Adoption

“There will always be plunges, bull runs and plateaus with bitcoin,” Kugelberg added. “But I am confident we have not seen all the effects of the amazing developments in and around bitcoin.” One of these developments has been the increasing number of publicly traded companies holding some bitcoin as a reserve asset, something Kugelberg sees as a bullish driver.  

Efficient Frontier’s Tu sees significant upside if bitcoin can get over the $12,000 price point. “If we do successfully break $12,000 we could see BTC sharply rise, as there are few historical resistance lines past this point,” he added.

Ether futures flatten

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Thursday trading around $378 and climbing 0.74% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: How the DeFi Craze Made Its Way to China

The ether futures market has stagnated in the past month, hovering around $1 billion in open interest per day after hitting record numbers on Aug. 15 and Sept. 1, when it briefly surpassed $1.7 billion. 

Vishal Shah, a crypto options trader and founder of derivatives exchange Alpha5, says the earlier open interest spike can be attributed to the decentralized finance, or DeFi, frenzy. 

“The way I look at that chart is by extracting out the mid-July to mid-September open interest change. That was the DeFi effect,” Shah said. “Now we are mostly tracking broader industry growth with some elements around Ethereum 2.0 keeping hopes high.”

Other markets

Digital assets on the CoinDesk 20 are mixed, mostly red Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

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

Read More: Filecoin Launch Finally Brings $200M ICO to Fruition

Equities:

Commodities:

  • Oil was down 0.28%. Price per barrel of West Texas Intermediate crude: $40.97
  • Gold was in the green 0.26% and at $1,906 as of press time.

Treasurys:

  • U.S. Treasury bond yields were mixed Thursday. Yields, which move in the opposite direction as price, were down most on the two-year, dipping to 0.139 and in the red 4%.
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