CoinDesk Crypto

Dapper Labs, the team behind popular non-fungible token (NFT) game CryptoKitties, announced Tuesday it will release two cat characters inspired by the rock band Muse under its partnership with the Warner Music Group. 

According to a press statement emailed to CoinDesk, the two digital cats, one of which will be signed by band members, are inspired by Muse’s album “Simulation Theory,” which was released in November 2018. 

• “For some, the concept of a purely digital item is still unusual, but for many fans who love engaging with stickers and filters, these items are just another tool for self-expression,” said Tiago Correia, senior manager of Global Digital Business Development at Warner Music, in the emailed statement. 
  
• According to Dapper Labs CEO Roham Gharegozlou, “It’s like buying a T-shirt at a concert.” He added that while he likes collecting album covers, that experience is hard to recreate when everything is digital; these collectibles could be a possible way to re-capture it.
  
• Dapper Labs also recently announced it has raised $12 million in a funding round led by National Baskedball Association stars including Spencer Dinwiddie and Andre Iguodala. While all of the firm’s cryptokitties were built and “live” on Ethereum, Gharegozlu said the firm is currently building a bridge to bring them over to its own blockchain called Flow. 

Related Stories

• The NFT Game That Makes Cents for Filipinos During COVID
• NFTs Are Boring; Here’s How to Make Them Fun
• Bison Trails Now Supports ‘Flow’ Blockchain From CryptoKitties Maker Dapper Labs
• NBA’s Spencer Dinwiddie, Andre Iguodala and More Join Dapper Labs $12M Funding Round

Digital asset management firm CoinShares said Tuesday it is adding a real-time audit feature to the crypto exchange traded products issued by subsidiary XBT Provider. 

According to a press statement emailed to CoinDesk, investors will be able to access audit reports for XBT’s bitcoin, ether, litecoin and XRP products. CoinShares said it has partnered with U.S. based accounting firm Armanino to provide these reports and be the “first asset manager to offer real-time audit capacity,” on its crypto ETPs.

• The entirety of CoinShares’ assets will be “independently verified 48 times a day,” or every 30 minutes, said Richard Nash, the firm’s chief operating officer, in the emailed statement. 
  
• According to Nash, one of the remarkable things about integrating the real-time audits is it will “utilize the technology that also underpins the assets,” he said.
  
• Noah Buxton, director of Armanino’s blockchain and digital asset practice, explained the real-time audits depend on a set of agreed-on procedure’s being hardcoded into the system which when executed allow the generation of said audit reports every 30 minutes. 

Related Stories

• From Enron to Wirecard: How Blockchain Tech Could Have Helped
• Nomura-Backed Crypto Custody Venture Launches After 2 Years in the Works
• CoinShares Hires WisdomTree Exec as Company Plans Expansion Outside UK
• Fidelity-Backed Fireblocks in Talks With Potential Wall Street Clients Following EY Accreditation

One of Asia’s first digital bonds has been piloted in Singapore – opening the door for more such issuances using distributed ledger technology (DLT).

• International bank HSBC, Singapore Exchange (SGX), and Singapore government-owned investment firm Temasek said Tuesday their pilot for the DLT-based bond – first mooted last November – had been successful.
• Per an announcement, S$400 million (around $294 million) worth of 5.5-year corporate bonds from Olam International – one of the world’s largest coffee bean, rice and cotton suppliers – were issued on SGX’s digital asset platform.
• SGX said the pilot showed DLT could streamline issuances and minimize settlement risk in the Asian bond market.
• The Asian Development Bank estimated in March that the region’s local currency bond market was worth approximately $16 trillion last December, up 12.5% on the year before.
• The digital bond used smart contracts to codify rights and obligations, as well as its maturity, into the bond itself.
• An on-chain payments solution from HSBC was also used to facilitate settlement in multiple currencies, as well as to transfer funds to Olam International.
• Olam, which is listed on SGX, has held back a further S$100 million (roughly US$74 million) in the digital bonds for issuance at a later date.
• SGX plays host to one of Asia’s largest bond markets and says it has issued over a $1 trillion in debt securities so far.
• Lee Beng Hong, the SGX senior managing director responsible for the pilot, said the exchange is now moving to fully digitalize corporate bond issuances on its platform.
• It’s unclear whether other issuances are already in the pipeline.

See also: South Korea’s Central Bank Is Building a New Blockchain System for the Bond Market

Related Stories

• Singapore’s Central Bank Backs New Code of Practice for Crypto Companies
• The Bond Market Is the Truth Teller No One Heeds, Feat. George Goncalves
• Singapore May Extend Crypto Regulation to Include Overseas Activities
• Accenture, HSBC, Seba Bank Among Bank of France’s Eight CBDC Finalists

Ether (ETH), the second-largest cryptocurrency by market value, jumped to two-year highs on Tuesday, taking its year-to-date gains to 260%.

• The native cryptocurrency of the Ethereum blockchain, ETH was trading at $470 at press time – a level last seen in July 2018.
• Prices are up more than 100% this quarter alone, according to CoinDesk’s ether price index.
• As ether rose by 10% in the past 24 hours, bitcoin added 3% and is currently trading near $11,940.
• Other prominent coins from the CoinDesk 20, like XRP, Stellar XLM, litecoin, bitcoin cash, and Chainlink’s LINK token, have all rallied by 2%-5% in the past 24 hours.

• “Ethereum’s price increase shows it is one of the main altcoins leading the market,” Simon Peters, an analyst at multi-asset investment platform eToro, told CoinDesk in an email.
• Investors may be entering the crypto market via ether and decentralized finance protocols rather than bitcoin, which served as a gateway to crypto markets during the 2017 bull run, Peters said.
• On-chain metrics suggest ether’s price rally has legs.
• To start with, exchange deposits – the number of coins held in exchange addresses – declined to 17.99 million ETH on Monday, the lowest level since March 11, according to data source Glassnode.

• Exchange balances have also reduced by over 5% in the past four weeks.
• “Investors are holding onto ether as a value holder during times when inflation is on the rise,” Glassnode tweeted. 
• Investors typically move coins off exchanges to their own wallets when they expect prices to rally.
• Additionally, the recent price gains look to have been fueled by strong hands.
• “The top 100 non-exchange addresses have increased bags by +8.2% in just 35 days – a bullish sign,” blockchain analytics firm Santiment tweeted Monday.
• The options market, too, is biased bullish on ether with the one-, three- and six-month put-call skews hovering below zero, according to data provided by the crypto derivatives research firm Skew.
• That’s a sign of call options, or bullish bets, drawing higher prices than puts, or bearish bets.

• Put-call skews have declined sharply today with ether’s rise to fresh two-year highs above $450.
• Markets now expect ether to face increased volatility over the next four weeks, with one-month implied volatility increasing from 77% to 91% early Tuesday.

Also read: First Mover: Ether Price Swings Make Bitcoin Look Tame as DeFi Speculation Spreads

Related Stories

• Market Wrap: Bitcoin Over $11.7K; Uniswap Passes $500M in Daily Volume
• US Stocks Closing on Bigger August Gain Than Bitcoin
• Market Wrap: Bitcoin Climbs to $11.5K With Record Amount in DeFi
• First Mover: Binance’s Shrinking Trading Spreads and Bitcoin’s Jackson Hole Fizzle

A long-running lawsuit alleging the Tezos initial coin offering (ICO) – that raised $232 million in 2017 – was an unregistered securities sale has been settled.

• The Swiss-based Tezos Foundation, as well as the project’s founders, Arthur and Kathleen Breitman, agreed Friday to pay $25 million in cash to settle the case.
• The presiding judge ratified the settlement agreement – which was first proposed in March – the same day.
• The complaint, a class action for those who invested in the Tezos ICO, alleged defendants violated U.S. securities law by hosting an unregistered sale.
• Allegations were first brought against the Tezos Foundation in late 2017 – months after the ICO concluded.
• Crucially, the settlement means the court has not ruled on whether the Tezos ICO was an unregistered securities sale.
• In a separate filing, lead plaintiff Trigon Trading argued settlement actually saved both parties, and the court, much work determining the regulatory status of token offerings, like Tezos, and whether they counted as securities sales.
• Per Friday’s order, the plaintiff’s attorneys will take more than $8.5 million, a third of the total settlement, in fees and expenses.
• Save small awards to the lead plaintiff, Trigon Trading, and other key figures, the remaining $16.5 million will be divided between those who invested in the Tezos ICO and made a monetary loss.
• Those who gained from their investment, through selling at a profit or staking (dubbed “baking”) their XTZ tokens will not be able to claim damages.
• Trigon described the $25 million settlement as an “excellent result” for Tezos investors.

See also: Tezos Foundation Offloaded Millions of Dollars Worth of Bitcoin in 2019: Report

Read the order here:

Related Stories

• Market Wrap: Bitcoin Over $11.7K; Uniswap Passes $500M in Daily Volume
• Market Wrap: Bitcoin Hits $11.8K; Ethereum Gas at All-Time High
• Market Wrap: Bitcoin Dips to $11.6K, ETH Options Predict Price Below $400 by End of Year
• A Former Beauty Queen Raised $12M to ‘Revolutionize’ Cannabis. The Courts Can’t Find Her

The U.S. Office of the Comptroller of the Currency (OCC) is forging ahead with a long-in-the-works plan to offer national banking charters to payment firms that don’t take deposits, but not everybody is happy.

• According to a Tuesday report by Politico, Acting Comptroller of Currency Brian Brooks is spearheading the move that would empower payment firms to operate across state lines with a single set of consolidated rules.
• The charter would simultaneously enable such firms to expand their financial service offerings and avoid having to apply for licencing in each state individually.
• Brooks told Politico the OCC would be ready by Tuesday to begin processing applications for the charters, which could potentially include companies like Paypal and Coinbase.
• Brooks is a former executive of the U.S. cryptocurrency exchange Coinbase, having served as chief legal officer from September 2018 until his departure to the OCC – a position he has held for three months.
• “I can supervise the payments activities of JPMorgan, but I can’t supervise the payments activity of Square,” Brooks said in Politico’s report, referring to Twitter founder Jack Dorsey’s payments platform. “That seems really weird to me.”
• A spokesperson from the OCC told CoinDesk all charter applications would be made public with a comment period, but said they were not yet aware of any specific applications from payment firms.
• The role of the OCC is to regulate, supervise, and provide a charter for national banks and federal savings associations operating in the U.S.
• Brooks said the OCC was “satisfied” it doesn’t need a new regulation or statute to move ahead with its decision.
• However, the news has sparked outrage among traditional banks, credit unions and elsewhere, per Politico’s report.
• “A few months into his service in an acting capacity, a bank regulator (and former cryptocurrency lawyer) pushes ahead with a legally dubious plan to give tech companies banking charters,” tweeted Graham Steele, director of the Corporations and Society Initiative at Stanford Graduate School of Business.
• The New York Department of Financial Services (NYDFS) has previously won the backing of a judge in blocking the OCC’s plan for the “Fintech Charter” (first proposed in 2016) in the state.
• Linda Lacewell, superintendent of the NYDFS, retweeted Steele’s comment and pointed out that OCC’s appeal of the ruling is still to take place.
• U.S. states believe the OCC is stepping outside its remit in offering the new charter, according to Margaret Liu, deputy general counsel at the Conference of State Bank Supervisors.
• Such issues haven’t put off Brooks, who told Politico he saw the OCC’s role more as a regulator of services than entities.

See also: Following OCC Letter, Some US Banks Appear Open to Providing Crypto Services

Related Stories

• Coinbase Adds Marc Andreessen as Board Observer, Replacing Chris Dixon
• ‘Gasless’ Technical Update Brings USDC One Step Closer to Venmo
• Coinbase Taps Marcus Hughes as New Eurozone Chief
• Barclays’ Former Russian Bank Has Issued a Token-Collateralized Loan

Leading cryptocurrency derivatives exchange BitMEX has launched a mobile trading app in 140 countries, the exchange told CoinDesk.

• Announced Tuesday morning, the product launch comes two weeks after BitMEX’s first-ever identity verification requirement was announced earlier in August.
• Built completely in-house, the mobile trading product closely matches the desktop experience and is already up and running.
• Analytics show some accounts are already trading exclusively on the app, according to Ben Radclyffe, commercial director for the exchange’s parent organization, 100x Group.
• The legendary “trollbox” chat widget is not included in the current version of the mobile app, however, according to Radclyffe.
• He assured CoinDesk that its inclusion is planned for future updates.
• BitMEX is the largest bitcoin derivatives exchange by open interest, according to Skew, with $1.01 billion in open contracts at last check.

Also read: BitMEX to Mandate ID Verification for All Traders as Maverick Exchange Ends Wild Ways

Related Stories

• Five CoinMarketCap Executives Depart Binance-Owned Firm
• Someone Just Lost $16M in Bitcoin by Using a Malicious Install of the Electrum Wallet
• DeFi Is a ‘Complete Scam,’ Says Controversial Entrepreneur Craig Wright
• Cryptocurrency Earned From Carrying Out Microtasks Is Taxable, Says IRS Memo

The Tor Project, the nonprofit group behind the privacy-focused Tor browser, launched the Tor Project Membership Program Monday in a bid to increase the diversity of funds in their budget. The nonprofit laid off a third of its staff in April amid the economic fallout from the coronavirus pandemic.

• Members can join at a variety of tiers. Founding members include Avast, DuckDuckGo, Insurgo, Inc., Mullvad VPN and Team Cymru, all companies focused on privacy or cybersecurity.

• “For a while, we have been thinking about how to continue to increase the diversity of funds in the Tor Project’s budget and, more importantly, how to increase unrestricted funds,” said Tor Project Executive Director Isabela Bagueros. “This is a type of funding that allows us to be more agile with software development of Tor and other tools.”

• Members of the program gain access to the Tor Project’s “Onion Advisors” group, who can help integrate Tor into their products as well as answer questions about the Tor Project’s areas of expertise, such as privacy or circumventing censorship. 

• Whether it’s creating an .onion address for a member’s site, setting up the Onion-Location feature for an .onion site (which lets users navigate domains more easily) or integrating applications into the Tor network, these Onion Advisors can help, according to Bagueros.

• “We decided to create a program inspired by what Tor is based on, community,” said Bagueros. “Our goal is to build a supportive relationship between our nonprofit and private sector organizations that use our technology or want to support our mission.”

Read More: Start9 Labs Pitches a Private At-Home Server. And It Works

Related Stories

• Crypto Bank Hopeful Bitcoin Suisse Raises $48M in First-Ever Round
• Binance Labs Leads $1M Seed Round in Crypto Tor Alternative HOPR
• Start9 Labs Pitches a Private At-Home Server. And It Works
• Factom’s Two Employees Press On Despite Investor’s Call to Liquidate

MountX Real Estate Capital has licensed transfer agent Vertalo to design and launch tokens for at least 15 digital real estate projects in Mexico and Canada through 2020 and early 2021, the firms announced last week. 

According to a press statement, this is the third of four planned deals by Vertalo’s real estate division (VRE), launched this past June, that focuses on the tokenization of real estate assets. Vertalo is one of the few transfer agents – Securities and Exchange Commission-registered record keepers – in the crypto industry.

Real estate tokenization once looked like an extremely popular blockchain use case that promised to disrupt the global real estate market, with crypto firms like AlphaPoint and Harbor launching initiatives to put real estate assets on a blockchain. However, investors didn’t immediately take to the new promise of trading tokenized pieces of properties on a public ledger.

Related: Canadian Exchange Shakepay Gets Cold Wallet Insurance to Protect Customer Funds

See also: tZERO Plans to Support Trading of Aspencoin Ski Resort Digital Security 

One problem was that issuers had to get tokens out to increase liquidity, while institutions wanted to see liquidity before they changed their operations. Multiple deals have fallen apart as a result, including Harbor’s partnership with the real estate division of Chicago-based DRW Holdings.  

Vertalo co-founder and CEO Dave Hendricks told CoinDesk the 2018 “hype cycle” for real estate tokenization was about two years ahead of the implementation of the technologies needed to make it a reality. 

According to Hendricks, although tokenization of real estate had been possible for three years, the alternative trading systems (ATS) and exchanges that could trade these digital debt instruments had not received regulatory approval. 

Related: Crypto Derivatives Exchange BitMEX to Block Ontario Traders

“Another missing piece was the digital transfer agent – like Vertalo – that could manage the shareholder data for proper record keeping purposes,” Hendricks said. 

Now, 2020 has seen a rekindled interest in the sector. In February, commercial real estate platform Red Swan partnered with token platform Polymath to tokenize $2.2 billion in real estate assets. In April, Vertalo signed a deal with trading platform tZERO to tokenize a real estate portfolio worth $300 million.  

See also: Tokensoft Teams With Signature Bank to Launch Real Estate Security Token Platform

VRE’s new partnership with MountX will facilitate direct investments in Class-A residential properties located in Canada. MountX will be conducting multiple issuances: initial deals will only be promoted to Latin American investors, and eventually expand to include U.S. and Canadian markets. According to the statement, through the digital tokens, investors will be able to directly access their equity and asset information. 

“The international aspect of this deal highlights the limitless potential of issuing digital equity of real estate assets,” the statement said.

Traditionally, many real estate offerings are marketed quietly to insiders, but MountX’s work with Vertalo broadens access and improves the chances that a retail investor can invest in or offer their properties on the MountX platform, Alec Beckman, director of business development at Vertalo told CoinDesk.

“Real estate is something that not many people have been able to invest in before. You have to know or get connected with a real estate general partner, or understand how to build a portfolio yourself,” Beckman said.

Currently 99% of private real estate capital is raised under the Reg D exemption, which means it is only available to accredited investors, Beckman said, adding that digital assets will give accredited investors a chance to participate in real estate investment opportunities.

Beckman also said Vertalo is working on a digitization project that would allow overseas and non-accredited investors the opportunity to invest in real estate assets. 

Related Stories

• VC-Backed Crypto Exchange Mexo Launches in Latin America
• Lending Protocol Aave Eyes Tokenized Mortgages With Launch of V2

Mining equipment manufacturer Canaan Creative reported a 2Q net loss of $2.38 million, or 10 cents a share, less than half the size of Q1’s $5.64 million loss, or 24 cents

• Revenue rose more than 160% to $25.2 million from $9.6 million in Q1.
• The largest expenses during Q2 were general and administrative, accounting for $4.19 million, or 48% of the firm’s $8.8 million quarterly operating expenses.
• Shares of the company, currently worth $314 million, jumped nearly 15% during morning hours to set a daily high of $2.29 on Monday. Overall August, however, shares have dropped 23 percent.
• On Friday, Canaan closed only its second weekly gain during the third quarter, closing less than 1% above its open on Aug. 24. In mid June, Canaan shares plummeted to all-time lows of $1.76 one month after the third bitcoin halving.
• Monday’s filing also shows that as of June 30, Canaan had cash and cash equivalents worth $22.2 million, down 40% from $37.3 million at the end of Q1. The company cited an increase in short-term investments for the lower cash on hand.
• Canaan declined to issue guidance for the coming quarter due to the uncertainty caused by the economic downturn.
• The Hangzhou, China-based company has only traded on the Nasdaq since November 2019 after abandoning plans to IPO on the Hong Kong Stock Exchange. Since its listing, Canaan shares have dropped nearly 85 percent.

A replay of the company’s conference call will be accessible through Sept. 8 by dialing the following numbers:

International: +61-2-8199-0299
United States: +1-646-254-3697
Hong Kong, China: +852-3051-2780
Replay PIN: 3977618

Related Stories

• Protection Over Profit: What Early Mining Patterns Suggest About Bitcoin’s Inventor
• Energy Giant Equinor to Cut Gas Flaring With Bitcoin Mining: Report
• Bitmain, Ebang Among 21 Bitcoin Mining Farms Stripped of Energy Perks in Inner Mongolia
• Miners’ Bitcoin Holdings Reach Two-Year High to Almost 2M

Bitcoin is trending upward and volume on decentralized exchange Uniswap is soaring to an astounding new high.

• Bitcoin (BTC) trading around $11,724 as of 20:00 UTC (4 p.m. ET). Gaining 0.61% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,575-$11,784
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Read More: Huobi and OKEx Battle for Supremacy in China

Bitcoin jumped as high as $11,784 on spot exchanges like Coinbase on Monday. Adding fuel to the fire was the derivatives market; short sellers were liquidated on BitMEX during bitcoin’s rise Monday. In one hour, $6.6 million in buy positions were automatically triggered, the crypto equivalent of a margin call for traders going short.

Related: Protection Over Profit: What Early Mining Patterns Suggest About Bitcoin’s Inventor

The Federal Reserve’s decision to let inflation run while keeping interest rates low is helping boost crypto, Darius Sit, managing partner of QCP Capital, told CoinDesk. 

“The market was looking to the Powell speech to see if there’d be any hawkish indications – clear plans to end liquidity injection and cheap money,” Sit said. “There was no sign of hawkishness so the party has resumed.” 
Sit noted the continued decline of the U.S. Dollar Index, which measures the greenback versus a basket of global currencies. The index continues to drop, down 0.12% Monday and hitting fresh lows for 2020.

Crypto stakeholders are watching the equities market. Rather than a hedge, some still consider bitcoin a “risk-off” asset whereby traders will unload BTC if the broader stock market dumps. 

Read More: US Stocks Closing on Bigger August Gain Than Bitcoin

Related: Huobi Futures to Launch Options Trading This Week, Joining Throng Challenging Deribit

“The S&P has been up almost 8% in the month of August so it will be interesting to see what bitcoin does when the market pulls back,” said Michael Rabkin, head of institutional sales at crypto liquidity provider DV Chain. “With bitcoin still being a fairly newer asset, there is a risk that it can sell off when the market does,“ he said. 

Read More: Someone Lost $16M in Bitcoin by Using a Malicious Install of Electrum Wallet

Traders continue to have a plethora of opportunities in the crypto market, and decentralized finance, or DeFi, continues to captivate many, said John Willock, CEO of digital asset liquidity firm Tritum. 

“The big run over the weekend was highly concentrated in DeFI assets built on top of the Ethereum network, such as YFI and COMP,” Willock said. “This looks like a perfect storm of high optimism for these protocols and recent innovations introduced that are proving they have long-term value.” 

Uniswap crosses $500M in daily trading

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Monday, trading around $437 and climbing 3% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: DeFi Is a ‘Complete Scam,’ Says Controversial Entrepreneur Craig Wright

The daily volume of decentralized exchange Uniswap hit $560 million Sunday. Uniswap’s daily trading volume is surpassing centralized exchanges such as Coinbase, which had $433 million the past 24 hours. Uniswap has over $10 billion total volume traded, according to Dune Analytics. 

“I think there is no denying that DeFi is a thing,” said George Clayton, managing partner at Cryptanalysis Capital. “Traders are spending over $400,000 per day in gas fees on Uniswap alone,” he added.

However, there continues to be a caveat with all of this DeFi frenzy, added Clayton – the Ethereum network needs to scale in order to successfully meet this increasing demand. “Maybe centralized exchanges’ days really are numbered,” he said. “But not until the scaling issue is solved. Maybe Cosmos can do it with an Ethereum bridge.”

Read More: Ethereum Classic Hit by Third 51% Attack in a Month

Other markets

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

• cardano (ADA) + 7.6%
• tron (TRX) + 5.4%
• nem (XEM) + 4.8%

Read More: Five CoinMarketCap Executives Depart Binance in Mass Exodus

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

• zcash (ZEC) – 5%
• chainlink (LINK) – 3.8%
• tezos (XTZ) – 2.6%

Read More: Coinbase Adds Marc Andreessen as Board Observer, Replacing Chris Dixon

Equities:

• In Asia the Nikkei 225 ended the day up 1.1% as Warren Buffett announced Berkshire Hathaway purchased 5% of each of the top five Japanese conglomerates.
• In Europe, U.K. trading was on holiday. Germany’s DAX index closed in the red 0.61% as investors were cautious due to coronavirus surpassing 25 million cases globally.
• The United States’ S&P 500 lost 0.22% as bank stocks dragged the index lower due to lower yields in the Treasury market.

Read More: What Changes at the Fed and the SEC Mean for Crypto

Commodities:

• Oil is down 0.26%. Price per barrel of West Texas Intermediate crude: $42.80.
• Gold was in the green 0.28% and at $1,969 as of press time.

Read More: Someone Lost $16M in Bitcoin by Using a Malicious Install of Electrum Wallet

Treasurys:

• U.S. Treasury bond yields slipped Monday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 3%.

Read More: Cryptocurrency Earned From Microtasks Is Taxable, Says IRS Memo

Related Stories

• First Mover: Huobi Takes On OKEx in Futures, Opening New Front in ‘Chinese’ Rivalry
• US Stocks Closing on Bigger August Gain Than Bitcoin

The whistleblower from defunct cryptocurrency firm Bitsonar has reappeared after going missing for three days in Kyiv, Ukraine, saying law enforcement faked his kidnapping – and murder – to foil a genuine attempt on his life.

Yaroslav Shtadchenko went missing last Thursday, with video evidence suggesting he had been abducted. He contacted CoinDesk on Monday afternoon local time, saying that he was safe. He said that the Security Service of Ukraine (SSU) had staged the event after his murder had been ordered. 

SSU reported Monday that it had used such tactics to foil an attempted contract killing, with an agent posing as a hitman to fool the would-be client, though the law enforcement agency did not name anyone involved.

Related: Whistleblower Kidnapped in Ukraine After Accusing Crypto Firm of Exit Scam

Read more: Whistleblower Kidnapped in Ukraine After Accusing Crypto Firm of Exit Scam

The announcement is the latest bizarre twist in a cautionary tale about crypto investment schemes. Investors in Bitsonar have been trying to recoup millions of dollars worth of digital currency from the platform since February.

“It was not a kidnapping, but a special operation, as it turned out. I didn’t know about it,” Shtadchenko told CoinDesk. He said he was taken into a minivan on his way home by a group of men, who explained once they were in the car it was an elaborate ruse. (In the video, he appears to be genuinely terrified as men push him into the vehicle.)

His lawyer, Yuriy Demchenko, confirmed his client was safe and that the SSU staged the crime to arrest a man who ordered the killing. The SSU did not share his name, Demchenko said.

Elaborate setup

Related: South Korean Crypto Exchange Coinbit Seized Over Allegations of Massive Wash Trading

Shtadchenko’s “kidnapping” occurred just days after he announced he would be contacting law enforcement agencies in different countries to report his allegation that the founder of Bitsonar, Alexander Tovstenko, absconded with some $2.5 million of investor money. Shtadchenko gave interviews, published information about the firm and called for investors to unite and pursue legal action. 

The SSU issued a press release (warning: link contains disturbing content) on Monday saying it “prevented the contract killing of an IT businessman.” The details of the case are consistent with Shtadchenko’s account:

“The officers of the special service established that a resident of Kyiv was looking for a killer to kill a business partner. The client had a conflict with the victim due to joint transactions in a well-known company that dealt with cryptocurrencies and has some features of the so-called Ponzi scheme. The attacker priced the life of the partner at five thousand U.S. dollars.

Law enforcement officers imitated the disappearance and then murder of the victim in the Holosiivskyi district of Kyiv, after which they reported his execution.”

The press release contains a photo of Shtadchenko with a simulated bullet hole in his head. The photo was provided to the fake hitman’s would-be client in exchange for the second part of the reward, the SSU wrote.

The agency also published a video of agents detaining the man who allegedly ordered the killing. The man’s face is blurred in the video, which shows a pile of cash he was about to pay to the “hitman.” The operation took place in Odessa, a seaside resort in Ukraine.

According to Demchenko, staging a killing allows the SSU to charge the suspect with a more serious crime: a completed contract killing instead of an assassination attempt. 

The SSU has done this in the past: in 2018, Russian journalist Arkady Babchenko was reportedly killed in Kyiv, but later the SSU said it staged the shooting and prevented an assasination attempt. 

Bitsonar attracted investors from the U.S., Canada, U.K., Denmark, Norway, Netherland, Finland and other countries, reaching them in part via YouTube influencer videos. In February, the firm froze withdrawals, and on Aug. 6, Bitsonar’s website went down.

Related Stories

• Australian Conman Extradited Over Alleged Fraud Involving $1.2M in Bitcoin
• Binance Credited With Helping Take Down Ukraine Crypto Laundering Group

TeraExchange LLC, a wholly owned subsidiary of Tera Group Inc., was reinstated as a swap execution facility through a Commodity Futures Trading Commission (CFTC) order on Monday. 

• According to the press release posted on the CFTC website, TeraExchange was deemed dormant by the regulator in 2019 after it saw no trading activity in the three years following registration. 
• An early entrant into the bitcoin derivatives market, TeraExchange had been granted a full registration to offer a bitcoin forwards contract and run a bitcoin price index in May 2016. 
• According to the CFTC’s release on Monday, there are currently 19 swap execution facilities registered with the regulatory body, including the newly reinstated TerraExchange’s. 

Related Stories

• Interactive Brokers to Pay $38M in Settlement Over AML Lapses
• CFTC Chair: ‘A Large Part’ of Financial System Could End Up in Blockchain Format
• CFTC Seeks Industry Advice on Blockchain Applications
• SEC, CFTC Hit Crypto App Abra With $300K in Penalties Over Illegal Swaps

Three men accused of passing themselves off as pastors to get churchgoers and other investors to put money into what prosecutors say was a $28 million Ponzi scheme have been indicted by a federal jury in Maryland. 

According to the indictment unsealed on Friday, Denni Jali, a South African citizen who used to live in Maryland, together with Maryland residents Arley Ray Johnson and John Erasmus Frimpong, persuaded people to invest in a cryptocurrency and foreign-exchange trading fund they ran. 

Instead of investing it, the three men allegedly used the money to fund their extravagant lifestyles, the indictment notes. 

• “They used the victims’ hard-earned money for luxury cars, private jets and family vacations while the victims ended up with false promises,” said FBI Special Agent in Charge Jennifer Boone, in the press release posted on the DOJ’s website. 
• While those looking to defraud people have often used complex financial products as cover, behavior like what is alleged to have occurred here highlights how a key part of democratizing any financial market is ensuring consumers have better information about what they’re buying.
• According to the indictment, the three men marketed their firm, 1st Million, as a wealth management and financial literacy firm and attracted investors by hosting events at expensive venues and attending church-sponsored events.
• 1st Million allegedly offered contracts guaranteeing investors would have monthly rates of return ranging from 6% to 35% of their initial investments “regardless of market volatility,” according to the indictment.
• Jali left the United States in May 2019 but was later arrested in South Africa, according to the DOJ’s press release. According to court documents, Frimpong was arrested in Maryland and, as reported by the Associated Press, Johnson is expected to surrender to authorities today. 
  
• The Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission  also filed civil actions against the accused pseudo-pastors on Friday. 

Related Stories

• Binance and Oasis Labs Launch Alliance to Combat Crypto Fraud and Hacks
• Inside a Crypto ‘Ponzi’: How the $6.5M Banana.Fund Fraud Unravelled
• Wanted Wirecard Exec Said to Be Sheltered by Secret Service in Russia
• Third Centra Tech Founder Pleads Guilty to ICO Fraud

Huobi Futures, the crypto derivatives unit of Huobi Group, said Monday it will offer trading in bitcoin options starting Tuesday, aiming to meet a surging demand from traders to hedge against risks in cryptocurrency markets.

• Options contacts on bitcoin (BTC) will be available for trading, starting from 10:00 UTC on Sept. 1, according to a press release. 
• Huobi’s options will be quoted in tether (USDT), a dollar-backed stablecoin.
• The exchange will offer weekly, bi-weekly and quarterly options contracts. Option purchasers will be able to exercise their right to buy or sell only on expiry.
• A call option represents a right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell.
• “Options will give users a robust set of tools to execute more sophisticated trading strategies,” said Ciara Sun, vice president of global business at Huobi Group.
• Huobi’s decision to launch bitcoin options comes at a time when institutional participation in the cryptocurrency is growing and bitcoin is increasingly taking cues from traditional markets and central bank decisions.
• Currently, Deribit is the largest bitcoin options exchange by open interest and daily trading volume. The exchange accounts for more than 85% of total options trading volume of $136 million, according to data source Skew.
• Other exchanges competing for a share of bitcoin options trading include CME, LedgerX, Bakkt and OKEx, according to Skew.

Related Stories

• First Mover: Huobi Takes On OKEx in Futures, Opening New Front in ‘Chinese’ Rivalry
• US Stocks Closing on Bigger August Gain Than Bitcoin
• Someone Just Lost $16M in Bitcoin by Using a Malicious Install of the Electrum Wallet
• Huobi and OKEx Battle for Supremacy in China

Signature Bank gave out dozens more small business PPP loans to crypto firms than previously known, Ethereum Classic has suffered another 51% attack and a digital yuan wallet went live and disappeared this weekend.

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

Third attack
The Ethereum Classic blockchain suffered its third, and worst, 51% attack in a month Saturday evening. Spotted by mining company Bitfly, the attack reorganized over 7,000 blocks, or two days’ worth of mining, compared to 3,693 and 4,000 blocks in the first two attacks, CoinDesk Zack Voell reports. ETC Cooperative, a foundation supporting the network’s development, said it was “aware” of the attack and “working with others to test and evaluate proposed solutions as quickly as possible.” FTX will reconsider its ETC perpetual futures contracts, CEO Sam Bankman-Fried told CoinDesk, following actions earlier this month by OKex and Coinbase to consider delisting ETC and extending confirmation times for the cryptocurrency, respectively. ETC Labs, recently announced it would implement additional security features.

Related: First Mover: Huobi Takes On OKEx in Futures, Opening New Front in ‘Chinese’ Rivalry

Crypto loans
Signature Bank extended about $20 million to roughly 40 firms in the digital asset space under the federal Paycheck Protection Program (PPP), dozens more than was previously reported. CEO Joseph DePaolo would not name nor confirm the number of firms receiving PPP loans, though he said the bank’s crypto PPP loan volume was due to other banks serving crypto not having the resources to offer the same kind of program. Previously, CoinDesk reported that at least $30 million had been extended to crypto companies by several banks including JPMorgan Chase, Silicon Valley Bank, Cross River Bank and others. Signature loaned a total $1.9 billion, roughly .55% of the entire $350 billion that was disbursed, through the emergency relief program.

Backdoor hack
An Electrum wallet user claims to have lost 1,400 bitcoin (~$16.2 million) after installing an older version of the software from a malicious source, CoinDesk’s Sebastian Sinclair reports. In a Sunday Github post, pseudonymous user “1400BitcoinStolen” said they downloaded a version of the wallet and installed a security update pop-up that triggered a transfer of the user’s entire BTC balance to an address in the possession of a hacker. Electrum allows anyone to “run their own servers or use servers that they trust,” according to another Github user seemingly associated with Electrum. If users download a version from a different source than Electrum and don’t check signatures, they may “install a backdoor.”

Yuan wallet?
A public version of a digital yuan wallet quickly went live and was disabled this weekend, CoinDesk’s Wolfie Zhou reports. Around noon on Saturday local time, users of China Construction Bank (CCB), one of the big-four state-owned commercial banks, had access to a DCEP (digital currency, electronic payment) wallet feature via the bank’s mobile app. The wallet was registered with a phone number associated with their bank accounts and could be linked with their bank funds. It is unclear when CCB opened up the service, but news of the feature quickly spread Saturday among the Chinese cryptocurrency community and media, before being disabled. In app searches for “digital currency” now display: “This function is not yet officially available to the public. Please wait patiently.”

Micro taxes?
Crypto microtransactions worth less than $1 are taxable events, according to a U.S. Internal Revenue Service (IRS) memo. Responding to a request for clarification from the tax agent’s own Small Business/Self Employed Division, the IRS senior technician Ronald Goldstein said cryptocurrency “acts as a substitute for real currency” and considered property for federal income tax purposes. One might imagine it’s like reporting cash tips. Examples of microtransactions include crypto rewards earned from downloading an app and leaving a positive review; downloading games and reaching particular milestones; completing online quizzes; or registering accounts with various online services.

Quick bites

• DeFi Is a ‘Complete Scam,’ Says Controversial Entrepreneur Craig Wright (Sebastian Sinclair/CoinDesk)
• Rep. Davidson: DeFi ‘gets at the heart’ of debate on financial regulation (Michael McSweeney/The Block)
• Maria Bustillos on Tokenizing Journalism, the Death of Civil and Rise of Brick House (Daniel Kuhn/CoinDesk)
• Money Reimagined: From COVID Generation to Crypto Generation (Michael Casey/CoinDesk)
• Chainlink Acquires Blockchain Oracle Solution From Cornell University (Will Foxley/CoinDesk)

At stake

Related: Blockchain Bites: Winklevoss’ Wild Prediction, Bitcoin Miners’ Horde, Ethereum’s ‘Critical Bug’

Warring exchanges
OKEx and Huobi are caught in a battle for supremacy in the crypto derivatives market, as well as a Chinese market said not to exist, CoinDesk’s Muyao Shen reports.

The battle began in 2018, when then-OKEx CEO Chris Lee defected to Huobi to become vice president of global business development. 

“There’s a natural friction between OKEx and Huobi,” Matthew Graham, chief executive officer of Beijing-based crypto consultancy Sino Global Capital, said. “While they have both pushed to enlarge their international footprints, they still prioritize their Chinese user base.” 

A regional turf war takes place in the context of crypto’s illegality. Officially, Huobi doesn’t acknowledge the Chinese cryptocurrency market exists: “There is not a market in China. That is not legal,” a representative said, though Huobi appears to be getting nearly a third of its website traffic from Chinese visitors, versus 14% for OKEx, according to a website tracker.  

However, other competitive fields are easier to quantify. OKEx is the world’s biggest crypto derivatives exchange, with outstanding contracts valued at $1.26 billion. Huobi trails with $1.25 billion in outstanding contracts. 

The close competition has led to novel derivative products from both exchanges – though some see the real prize as winning a favored position with the Chinese government.

Last year, President Xi announced China would “seize the opportunity” of blockchain, spurring increased testing of a digital yuan, the establishment of  an open blockchain-based services network and other digital infrastructure development.

On that count, Huobi might be one move ahead of OKEx: The Chinese branch of Huobi has joined the Blockchain-Based Service Network (BSN) Development Alliance, which aims to be one of the most influential infrastructure services providers in the country.

Market intel

August’s end
Bitcoin is eyeing an August gain for the first time in three years, but is lagging behind U.S. stocks for the month. The cryptocurrency is trading near $11,610 at press time, representing a 2.27% gain on a month-to-date basis, according to CoinDesk’s Bitcoin Price Index, while the S&P 500 is on track for a 7.25% gain this August. Bitcoin faced rejection at highs above 12,400 on Aug. 17 and has been restricted largely to a range of $11,100 to $11,800 ever since, CoinDesk’s markets reporter Omkar Godbole said. 

Tech pod

Web3 wallet?
Private key management specialist Torus unveiled a one-click Chrome and Brave browser extension to provide Web3 experiences. Called tKey, the product is a custom version of two-factor authentication (2FA), that enables single login for their wallet and could be used to secure other devices – like a mobile phone. At a high level, Torus splits and distributes sensitive data needed to construct a user’s private key between the user and nodes on the Torus network, which includes Binance, Ethereum Name Service (ENS), Etherscan, Matic Network, Ontology, Skale, Tendermint Core and Zilliqa, CoinDesk’s Ian Allison reports.

Op-ed

Profound shift
Last week, Chairman of the U.S. Federal Reserve Jerome Powell announced the central bank will allow inflation to run higher than its longstanding 2% target, without raising interest rates. CoinDesk’s Head of Research Noelle Acheson sees this as a profound shift in the role of the central bank, which might have repercussions for the crypto industry. “If 2020 teaches us one thing, it has to be that assumptions don’t last, and that we all need to be flexible. In a world where everything is undergoing a transformation, barriers come down faster. And, as uncomfortable as it may be, change is always an opportunity, especially when it comes from unexpected areas. In our industry, it’s what we’ve been hoping for,” she writes. 

Inflation solution
Frances Coppola, a CoinDesk columnist and author of “The Case for People’s Quantitative Easing,” thinks one way to increase inflation, which has consistently fallen below a targeted 2%, is to just give people money. “From beyond the grave, [John Maynard] Keynes sends a powerful message to today’s leaders. If you want inflation to rise, Mr. Powell, you need to get people spending. Announcing that you will permit prices to rise more quickly won’t achieve this. And neither will increasing the money supply, unless that money goes to people who are likely to spend it,” she writes.

Who won #CryptoTwitter? Related Stories

• Money Reimagined: From COVID Generation to Crypto Generation
• Blockchain Bites: What Rising Inflation Could Mean for Bitcoin and the US Dollar

Customers reported experiencing issues logging into Robinhood, Charles Schwab and multiple other trading platforms Monday morning, according to a flurry of tweets.

• CoinDesk confirmed the degraded performance on Robinhood via the website’s status page. The popular retail trading platform posted a notice saying, “Some users are experiencing issues with delayed order status updates. These are display issues only, and should not impact order execution. We are working to resolve this as soon as possible.”
• Issues on TD Ameritrade and Charles Schwab have also been detected over the past few hours by downdetector.com.
• On Twitter, Charles Schwab said its website may be “intermittently inaccessible for some clients” due to “a technical issue” resulting in possibly longer-than-usual hold times.
• U.S. consumer protection agencies have received more than 400 complaints about Robinhood from its users during the first half of 2020, according to a Bloomberg report, roughly four times the amount of complaints filed about its competitors.

UPDATE (Aug. 31, 15:31 UTC): Adding comment from Charles Schwab.

Related Stories

• Robinhood Taps Former Fidellity, Wells Fargo Execs as Compliance Heads
• Japanese Financial Giant SBI Holdings Launches Short-Term Crypto Derivatives
• Binance’s Bitcoin ‘Bid-Ask Spreads’ Tighten as Cryptocurrency Markets Mature
• Barstool’s Dave Portnoy Is Bad at Trading Cryptocurrency

Five of CoinMarketCap’s (CMC) top executives, including the interim CEO, have left the cryptocurrency-ranking website only months after the firm’s purchase by Binance.

• The Monday departures includes interim CEO Carylyne Chan and executives Spencer Yang, Jeremy Seow, Jared Chin and Matthew Lippl.
• Binance plans to replace the all five with in-house staff but says CMC will maintain operational independence.
• Binance purchased CMC for an undisclosed sum in early April. Founder and CEO Brandon Chez departed soon thereafter, leaving Chan, who had joined CMC in 2018, as the interim chief.
• In a blog post announcing her departure, Chain said she hoped CMC will continue to uphold “its core values of transparency, integrity, non-censorship and accountability.” She also indicated that she and Chez may write a book about their experiences at CMC.

Read more: ‘They Have the Users’: Binance CEO Explains Why He Bought CoinMarketCap

Related Stories

• Someone Just Lost $16M in Bitcoin by Using a Malicious Install of the Electrum Wallet
• DeFi Is a ‘Complete Scam,’ Says Controversial Entrepreneur Craig Wright
• Cryptocurrency Earned From Carrying Out Microtasks Is Taxable, Says IRS Memo
• Japanese Financial Giant SBI Holdings Launches Short-Term Crypto Derivatives

Coinbase has added legendary investor Marc Andreessen of venture capital firm Andreessen Horowitz and Gokul Rajaram, a DoorDash executive, to its board of directors.

• Andreessen, whose tech-focused venture firm manages $12 billion, will operate as a board observer and Rajaram, who oversees Caviar, will become a board director, according to a Monday blog post.
• The pair replace outgoing board members Chris Dixon and Barry Schuler. Dixon, a board observer, was an early investor in Coinbase, and Schuler, the Series C director, will now become an observer too.
• The high-profile board additions bring major boardroom clout to the one of the most popular cryptocurrency exchanges in the U.S. and comes as Coinbase is reportedly considering going public.

Read more: Coinbase Plans First-Ever Investor Day Amid Talk It May Go Public

Related Stories

• ‘Gasless’ Technical Update Brings USDC One Step Closer to Venmo
• Coinbase Taps Marcus Hughes as New Eurozone Chief
• Blockchain Venture Capital Firm SPiCE VC Taps Coinbase as Digital Asset Custody Partner
• Sequoia-Backed Band Protocol Token Starts Trading on Coinbase

The Russian government wants to know what the country’s data centers are up to, and that includes cryptocurrency mining farms.

The Ministry of Digital Development, Communications and Mass Media has published a proposed bill for public feedback, which firstly provides a definition of precisely what counts as a data center.

The bill, if passed, would also obliges data centers within the nation to report their operations to the ministry’s supervising agency, the internet censor Roskomnadzor.

Related: DCG to Invest $100M in Bitcoin Mining Venture

According to the draft document, published on the government portal Friday, a data center is defined as an “object with its own infrastructure for hosting hardware providing storage, processing and access to data, with guaranteed levels of accessibility, security and management.”

An operator of a data center must provide the agency with information about the computing capacity of such a facility, how the data is stored, which services the center provides and at what cost.

In addition, the regulators wants to know about the land and buildings in which the data center is housed, even down to how many shelves it has and to what extent the shelves are filled, how it’s connected to the electricity grid and how it’s certified.

They know already

Igor Runets, CEO of Bitriver, one of the largest mining farms in Russia located in Siberia, believes the new rules will apply to miners and that, most likely, they will have to file a report every quarter.

Related: Russia Is Blocking Bitcoin-Related Websites Again

“The government needs this data to monitor the digital economy development. Right now, nobody is gathering information about data centers. On the other hand, including commercial information into such reports seems redundant,” Runets said.

The government already knows all the larger mining operators anyway, he said, as any farm consuming more than one or two megawatts of power can be detected by the electric grid operator.

See also: Putin Signs Russian Crypto Bill Into Law

Artem Kozlyuk, founder of RosKomSvoboda, a non-profit monitoring online censorship and surveillance practices in Russia, says that gathering such a massive amount of information about all the data centers in one place can potentially open them up to security threats.

“It can attract attention of people from the [foreign] intelligence services to criminal actors,” Kozlyuk said. The parameters for data storage, which are on the list to be reported, include sensitive information like hardware manufacturer, technical settings and software updates, he added.

“We all know how easily the data has been leaked from the government agencies over the recent years. Centralization of the sensitive information like this is an opening for illegal access,” Kozlyuk said.

Related Stories

• Moscow May Sell Footage From Public Security Cameras: Report
• Bitcoin Mining Facility With Room for 50,000 Rigs Set to Launch in Kazakhstan