CoinDesk Crypto

Binance’s internal data security team aided Ukrainian cyber cops in busting an alleged cryptocurrency money laundering operation in June, according to a joint press release published Tuesday.

• Ukrainian authorities say the unnamed group distributed ransomware, washed hacker funds to the tune of $42 million and built a robust darknet laundering network during its two-year run.
• Three suspects were arrested in late June 2020. At the time, the Ukrainian Cyber Police force said it seized $200,000 in computer equipment, weapons, ammunition, cash and “digital evidence” linking the trio to the two-year laundering campaign.
• On Tuesday, Cyberpolice confirmed Binance had a hand in cracking the alleged ring. Department Chief Oleksandr Hrynchak cited the cryptocurrency exchange’s fraud detection tactics and crypto tracing techniques in a press release.
• Binance’s in-house “Sentry” division worked with blockchain analytics firm TRM Labs to detect and then identify the group, the exchange said in a statement.
• The laundering bust appears to be Binance’s first successful collaboration under its “Bulletproof Exchangers” initiative to detect and disrupt illicit crypto actors. Binance said it “allocated additional resources” to the ongoing anti-laundering project earlier this year.

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• Elliptic Adds Monitoring Support for Binance Chain and BNB
• Chainlink Up Nearly 1,000% Since ‘Black Thursday’ Crash

Institutional crypto exchange LGO has joined up with transaction platform Fireblocks to speed up deposit times and enhance clients’ trading experience.

• LGO announced Tuesday it had joined Fireblocks’ Deposit Acceleration Program.
• Crypto exchanges have to load digital assets onto the platform before they begin trading: a process that can take anywhere between ten minutes to 24 hours to complete, depending on network congestion and how quickly miners confirm transactions.
• This has a clear opportunity cost as traders can’t exploit fleeting arbitrage chances or liquidity margins.
• As the name suggests, Fireblocks’ Deposit Acceleration Program speeds up the process – allowing exchanges to load assets onto their platforms in real-time.
• LGO CEO and co-founder Hugo Renaudin said the program was a way for their institutional clients to better position their trading capital efficiently and securely.
• Crypto derivatives exchange FTX joined the program as soon as it launched last month.

See also: Elliptic Teams With Fireblocks to Automate Security and Compliance in Crypto Industry

Related Stories

• Elliptic Adds Monitoring Support for Binance Chain and BNB
• Bitcoin Holding Sentiment Strongest in Nearly Two Years
• Chainlink Up Nearly 1,000% Since ‘Black Thursday’ Crash
• Game Show Winner Loses $39K in Bitcoin Facebook Scam

Price point

Bitcoin (BTC) was flat after jumping on Monday to a new 2020 high above $12,400. 

Analysts are now speculating whether the largest cryptocurrency can hold the higher ground. The latest move up came on high volume, and it was a “convincing break,” Denis Vinokourov, head of research for the crypto prime broker BeQuant, told CoinDesk. Monday’s high was just 11% off the 2019 peak of $13,880.  

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

Related: Bitcoin Holding Sentiment Strongest in Nearly Two Years

Elsewhere, prices for the recently-and-strangely-launched Curve DAO token slid 26% on Monday, even as total value locked into the affiliated Curve Finance protocol rose above the $1 billion mark. That’s a five-fold increase over the past week, in the latest episode of this year’s frenzy in decentralized finance, or DeFi.   

Market moves

Suddenly, It’s Not Just Bitcoiners Who Think the Dollar’s Going Down

By Bradley Keoun 

Related: Market Wrap: Bitcoin Cracks $12.4K; DeFi Crosses $6B Locked

As the news broke in recent days that Warren Buffett’s Berkshire Hathaway had bought shares in a gold miner, commentators immediately began to wonder if the billionaire investor might be betting against the U.S. economy or the dollar. 

Bitcoin analysts and investors wondered why it took him so long, given the trillions of dollars of money pumped into the financial system this year by the Federal Reserve to help fund the ballooning U.S. national debt.  

“The money printer working overtime is obviously causing Buffett and his board grave concern,” Mati Greenspan, of the foreign-exchange and cryptocurrency research firm Quantum Economics, wrote Monday. “While Buffett is perhaps not so sure how to react to a world that no longer values bonds and government debt, others are sure.”

There’s a growing sense among members of the cryptocurrency community that their longstanding assessment of the traditional financial system as unsustainable is finally gaining traction among Wall Street experts and mainstream investors. If the concerns spread, it might buoy prices for bitcoin, which many digital-asset investors view as an inflation hedge similar to gold.

Goldman Sachs, which in May of this year panned bitcoin as “not a suitable investment,” hired a new head of digital assets earlier this month and acknowledged rising interest in cryptocurrencies from institutional clients. The firm warned in July that the U.S. dollar was at risk of losing its status as the world’s reserve currency. 

Dick Bove, a five-decade Wall Street analyst who now works for the brokerage firm Odeon, wrote last week in a report that the U.S. dollar-ruled financial system could come to an end amid challenges from a possible multi-currency system, which include digital currencies. 

“The case for bitcoin as an inflationary hedge and sound investment is being articulated with crystal clarity by influential people outside of our crypto bubble,” the digital-asset analysis firm Messari wrote last week. Buffett didn’t return a call for comment.  

Dollar dominance on the wane?

Whether or not bitcoin and other cryptocurrencies are the answer, there’s little on the horizon that might turn investors away from the gnawing sense that U.S. finances are becoming more precarious. 

Goldman Sachs economists predicted in an Aug. 14 report that the Federal Reserve will pump $800 billion more into financial markets by the end of this year, followed by another $1.3 trillion in 2021.

According to Bank of America, there’s a risk investors might shift their “portfolio allocation out of U.S. dollar assets” to position for the “erosion of the hegemony of the dollar as a reserve currency.” 

“A constitutional crisis is one dynamic that could potentially accelerate the process of de-dollarization,” they wrote, noting that November’s presidential election might be “fiercely divisive” and “contested.” 

According to the bank, a recent survey of fixed-income money managers showed nearly half of respondents expect foreign central banks to decrease their reserve holdings of dollars and dollar-denominated assets over the next year. 

It may not sound outlandish to bitcoin bulls. 

Bitcoin watch

By Omkar Godbole

Bitcoin rose 3.2% on Monday to about $12,300, confirming an ascending triangle breakout on the daily chart. 

The pattern resumes the uptrend from July lows under $9,000. The focus now is on resistance at $13,200 (July 2019 high) and $13,800 (June 2019 high).

“The market is looking at the 2019 high, and that’s the level to watch,” Joel Kruger, a currency strategist at LMAX Digital, told CoinDesk in a Twitter chat.

The on-chain data is supportive of continued gain in bitcoin. For instance, the balance of coins held on cryptocurrency exchanges sank to 21-month lows on Monday, indicating a strong holding sentiment in the investor community. 

The bullish momentum looks strong as the cryptocurrency’s recent gains have been accompanied by increased miner supply. According to crypto data company ByteTree’s miner’s rolling inventory (MRI) figure, miners have run down inventory by selling more than what they mined over the past five weeks. In other words, buyers have been able to absorb extra miner supply. 

From a technical analysis perspective, the bullish bias would be invalidated if prices dropped back below $12,000 on Tuesday.

Token watch

OMG (OMG) gets boost from blockchain backup: Rising congestion  on the Ethereum blockchain is spurring interest in crypto projects that might speed traffic on the network. Prices for OMG, the token for the OMG network – a “layer-2” scaling solution for Ethereum transactions – rose by more than 70% over the past weekend, according to data source CoinGecko. It reached as high as $3.30 earlier on Monday and then quickly fell below $3. The OMG network uses a protocol called Plasma to scale up Ethereum transactions. Market participants are looking for OMG to “spreadhead layer-2 solutions,” said Denis Vinokourov, head of research at the London-based digital asset firm BeQuant.

Orchid Protocol (OXT) takes off even though it’s not a DeFi token: Prices for Orchid, the native token to a blockchain project that enables private internet browsing from Orchid Labs, hit an all-time high at $0.84 over the past weekend, up fivefold from a March low, according to CoinGecko. Barstool Sports’ David Portnoy, who claimed to have at least $1 million worth of bitcoin after meeting last week with the Winklevoss twins of the Gemini cryptocurrency exchange, tweeted earlier Monday that he has invested in OXT. “I’m now in on the shitcoin $oxt,” Portnoy wrote on Twitter, with a hashtag of “#pump.” The Orchid project previously raised $43 million for its token sale, as reported by CoinDesk. Its major investors included big names such as Andreessen Horowitz and Blockchain Capital.

Ethereum Classic (ETC) facing delisting? The Malta-based OKEx said it may consider delisting Ethereum Classic from trading on its exchanges after it lost approximately $5.6 million of ETC from two recent 51% attacks. It won’t be an easy decision to make, Chief Executive Officer Jay Hao told CoinDesk, considering that OKEx has the highest trading volume of ETC among crypto exchanges. The impact of the two attacks on ETC’s prices, however, have not been significant: ETC’s price was still at around $7 on Monday, little changed from the week before the attacks first took place on Aug. 1.

– Muyao Shen

Analogs

The Federal Reserve is propping up the junk-bond market.

Economist says the “real recession has yet to emerge.”

George Soros says market sustained by expectation of more stimulus.

Bond market appears to believe Fed won’t fight inflation.

China regulator says Fed money printing erodes U.S. dollar, financial stability.

Japan’s economy shrinks most on record.

Tweet of the day What’s hot

Bitcoin DeFi May Be Unstoppable: What Does It Look Like? (CoinDesk)
One of the quietest yet best-funded bitcoin companies in the world is gearing up to enter the 2020 decentralized finance bull run. 

‘Link Marines’ Are Making an Obscure Cryptocurrency Red Hot (Bloomberg)
Chainlink’s meteoric rise to fifth place in market value is this year’s crypto success story, driven mostly by exuberance over DeFi yield harvesting.

Top Bitcoin Mining Pools See 15% Hashrate Drop Amid Continuous Rainstorms in China (CoinDesk)
Major Chinese bitcoin mining pools are each seeing daily hashrate drops of between 10% and 20% following continuous rainstorms in Sichuan.

– Sebastian Sinclair

Related Stories

• OKEx Mulls ETC Delisting After Losses From Two 51% Attacks
• Bitcoin Surges Past $12,000 to New 2020 High

Elliptic has added Binance Chain and its native payments token BNB to its monitoring platform, becoming only the second blockchain analysis company to do so.

• Starting Tuesday, Elliptic’s automated compliance, wallet monitoring and transaction tracing tools can all tap into Binance Chain activity.
• Binance executives said they seek to bolster BNB adoption by expanding the token’s monitoring network. More coverage means more transparency means regulatory clarity, or so the thinking goes.
• U.S. regulators appear to agree. In late July, the Securities and Exchange Commission inked a deal with competing firm CipherTrace specifically for its tracing products’ coverage of BNB “and all tokens on the Binance Network.”
• Elliptic also plans to roll out support for BEP2 tokens issued on Binance Launchpad, according to Chief Scientist Tom Robinson.
• “By adding support for the Binance Chain we now have the capability to add BEP2 tokens to our platform, and so BEP2 assets will be prioritized for coverage like any other” asset, Robinson told CoinDesk.

See also: Chainalysis Says Bitcoin Scammed From Twitter Users Is ‘On the Move’

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Bitcoin exchange reserves have fallen to a 21-month low, a possible sign investors are feeling bullish about the shape of the market.

• Glassnode data shows the number of bitcoins held in exchange addresses fell by 0.83% to 2,610,278 BTC on Monday – the lowest level since Nov. 24, 2018.
• Investors tend to move digital assets from their wallets and onto exchanges when they lose confidence in the current price movement so they can easily sell them.
• In the days leading up to the Black Thursday sell-off, when bitcoin crashed by 40%, exchange balances surged by 2% to a high of 2,947,555 BTC.
• But bitcoin has since surged to a 13-month high of $12,400 on Monday and is currently up 200% from the $3,867 low it fell to five months ago. 
• As such, exchange balances are down 1.4% over the past week, and nearly 3% in the last month. Balances were down more than 11% from the March 13 high at press time.

• The price rises come despite bitcoin looking increasingly overbought on the weekly chart relative strength index (RSI) – an indicator that helps traders recognize the signs of overbought and oversold markets.

• eToro analyst Simon Peters told CoinDesk: “Lower BTC spot exchange balance indicates a current holding mentality among investors, I see this as being pretty bullish.”

See also: First Mover: As Wall Street Goes Topsy-Turvy, Crypto Traders Are Bullish as Ever

Related Stories

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• First Mover: Bitcoin Passes $12K, Dollar Worries Grow, OMG Jumps, Portnoy’s Orchid #Pump
• Market Wrap: Bitcoin Cracks $12.4K; DeFi Crosses $6B Locked
• Bitcoin Surges Past $12,000 to New 2020 High

The rally in data oracle coin Chainlink means it is now nearly 1,000% up on where it was when markets tumbled during the Black Thursday sell-off.

• After bottoming at a near-year low of $1.79 on March 17, LINK tokens have been within a few cents of the $20 boundary in the past few days.
• CoinGecko data shows LINK hit $19.54 in the past 24 hours – 983% above its mid-March price. It hit its all-time high of $19.84 on Sunday.
• The price rise has been accompanied by a surge in investor enthusiasm: searches for Chainlink on Google are at an all-time high and its trading volumes have soared past that of bitcoin’s.
• Media owner and latter-day trader David Portnoy has spurred the hype on further after reportedly buying $50,000 worth of LINK at the weekend.

• Some are concerned. Mati Greenspan, the founder of analyst firm Quantitative Economics, told CoinDesk the euphoria surrounding Chainlink was a worrying sign some investors may be getting in over their heads.
• “Kids bragging on social media about getting their parents’ and grandparents’ retirement funds into this [is] usually a good sign that the top is near,” he said.
• At press time, LINK tokens were down 10%, trading just above $17.

See also: Link Price Surges 32% to Overtake Bitcoin Cash as 5th-Largest Crypto by Market Cap

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A former winner of the game show Deal or No Deal has been scammed out of his retirement savings after investing in bitcoin through an ad on Facebook.

• According to a Daily Record report on Tuesday, Scottish retiree Graeme Garioch was defrauded of £30,000 (US$39,400) by a phony investment company.
• The former railway worker, who appeared on Deal or No Deal in 2007, clicked on a Facebook ad from a company called OMC Markets.
• Interested in investing ahead of his retirement, Garioch agreed to invest after speaking to a company representative who claimed they were in London but were actually based in Bulgaria, according to the report.
• Garioch deposited a total of £29,000 (US$38,090) into a bitcoin wallet and signed a waiver denying him access to his funds for six months.
• The scammers also convinced Garioch to give them access to his bank account, supposedly so they could make bitcoin trades on his behalf.
• After doubling his money, Garioch tried to pull out his funds in March 2019 but was told he needed to pay a further £6000 (US$7,880) in fees, to which Garioch complied.
• Shortly after Garioch’s funds were completely drained and OMC Markets ignored Garioch’s email requests demanding an explanation.
• “Facebook needs to do more,” Garioch said who was planning on buying a house with his investment earnings, “you cry inside.”

See also: Google, Twitter and Facebook Face $600M Lawsuit Over Crypto Ad Bans

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Binance’s charity arm is donating to the victims of the Aug. 4 explosion that rocked the city of Beirut, Lebanon’s capital.

• Binance’s Beirut Relief Fund campaign has committed $20,000 in donations to the victims of a devastating explosion that claimed the lives of over 150 people and injured 5,000 more.
• Binance will donate $10,000 directly to Beirut victims with a further dollar-per-dollar amount in crypto matched for each donation it receives, up to a total of $10,000.
• According to a company blog post on Tuesday, Binance Charity lead Helen Hai said the organization would “work closely with local partners to help improve conditions and livelihoods.”
• On Aug. 4, 2,750 metric tonnes of a highly explosive chemical used in agricultural fertilizers exploded, wreaking havoc and displacing some 300,000 people.
• Immediately following the blast, a group of Lebanese expats residing in Europe quickly mobilized to raise relief funds with crypto. The effort was conceived as a way to bypass Lebanon’s banking crisis.

Read more: Bitcoiners Launch Cryptocurrency Relief Fund Following Beirut Explosion

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• Grayscale’s Bitcoin Cash and Litecoin Trusts Begin Trading Publicly

Major Chinese bitcoin mining pools are each seeing daily hashrate drops of between 10% and 20% following continuous rainstorms in Sichuan.

China’s southwestern Sichuan province, a mountainous region that is estimated to have over 50% of Bitcoin network’s total computing power, has been hit by heavy rainstorms since last week, which peaked over the last two days.

The heavy rainstorms have caused electricity outages in parts of the region as hydro-plants stop generating power to help discharge the floods. Some counties are also experiencing telecommunication and internet breakdowns, said Kevin Pan, CEO and co-founder of PoolIn.

Related: PayPal Co-founder, DCG-Backed BTC Mining Firm Layer1 Accused of Patent Infringement

As result, impacted bitcoin mining farms in the region are forced to unplug from the network for the time being. It’s not clear when the situation will prove as the rainstorms are still ongoing.

Data from BTC.com shows the world’s top four bitcoin mining pools – that is PoolIn, F2Pool, BTC.com and Antpool, all based in China – have each seen their hashrates drop between 10% and 20% over the last 24 hours. The computing power connected to these four pools accounts for around 50% of the Bitcoin network’s total.

Pan said in a Weibo post Tuesday China time that in addition to mining farms being forced to unplug due to electricity and internet disruptions, some have also proactively paused operations ahead of time and evacuated their on-site staff in advance for safety precautions.

According to the Xinhua News Agency, the accumulated rain volume in a dozen most-impacted cities in Sichuan between Aug. 10–15 alone has already surpassed the average August monthly volume in any year’s record.

Related: Mining Firm Hut 8 Reports 28% Drop in Q2 Revenue Following Bitcoin Halving

Further, one major highway that leads to Sichuan’s mountain area, where most of the mining farms are located, is shutdown due to severe floods and mudslides.

Meanwhile, Bitcoin’s last three-day and one-day average hashrate has dropped to around 123 and 110 exahashes per second (EH/s), respectively. These numbers are down over 3% and 10%, respectively, from the seven-day rolling average around 127 EH/s, which is still at an all-time high.

The monsoon season in China every year brings abundant rain and thus excessive hydropower resources especially in the country’s southwestern regions, including Sichuan and Yunan. Such energy excess leads to cheap electricity prices that have been attractive to Bitcoin miners.

But over the years, the unpredictable weather also caused floods and mudslides, which resulted in bitcoin mining farms halting operations temporarily or even being completely destroyed.

Read more: The 2020 Rainy Season Is Tougher Than Ever for China’s Bitcoin Miners

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Investors suing chipmaker giant Nvidia for allegedly misreporting the size of its crypto mining-related revenue have complained it is now trying to block key evidence from a former employee.

• The group of shareholders said Thursday that Nvidia’s lawyers had gotten the former employee, dubbed “FE 5,” to “disavow” several key statements and were now pushing for the whole testimony to be thrown out of court.
• Having first brought charges in December 2018, the lawsuit alleges Nvidia downplayed the quantity of graphics cards – specifically GeForce GPUs – it was selling to cryptocurrency mining operations in order to buoy up the stock price.
• Nvidia has denied the accusations, claiming plaintiffs “cherry-picked” the data.
• FE 5 gave evidence for an amended complaint in mid-May that appeared to show the chipmaker’s executive team, including founder and CEO Jensen Huang, was regularly updated with figures of GeForce GPUs being bought by crypto miners.
• FE 5 was head of Nvidia’s consumer marketing in South Asia for five years until 2019.
• Nvidia’s lawyers informed plaintiffs in June they had identified and contacted FE 5, who had responded saying he/she had spoken under the misapprehension it was for research into the semi-conductor industry and not as evidence for a trial against the company.
• Plaintiff’s lawyers said they had clearly identified themselves from the start, and argue FE 5 is now giving these allegedly false statements out of fear Nvidia could retaliate against her/him.
• Plaintiffs are calling on the court to strike down Nvidia’s motion to dismiss evidence partly on the basis federal courts have rejected attempts by defendants to discredit the testimony from former employees in the past.

See also: AMD-Backed Blockchain Project Amassing 20K GPUs but Won’t Say Why

Read the motion here:

Related: Capital One Files Patent for AI That Would Slice, Dice Social Media to Find Crypto Trading Picks

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Bitcoin made a major gain Monday while investors have locked over $6 billion in crypto into various DeFi services.

• Bitcoin (BTC) trading around $12,332 as of 20:00 UTC (4 p.m. ET). Gaining 4.1% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,774-$12,485
• BTC slightly above its 10-day and 50-day moving averages, a bullish signal for market technicians.

The world’s largest cryptocurrency by market capitalization opened the week with higher-than-normal volume pushing bitcoin to as high as $12,485. For some market observers it was only a matter of time before it happened. 

Read More: Bitcoin Surges Past $12,000 to New 2020 High

Related: Grayscale’s Bitcoin Cash and Litecoin Trusts Begin Trading Publicly

“Bitcoin has been trading in a $11,000-$12,000 range for two weeks or so,” said Darius Sit, managing partner of Singapore-based QCP Capital. “It has been consolidating, threatening to break past $12,000, so this is not too surprising,” he added. 

Thus far in August, Coinbase’s daily average bitcoin volume has been $182 million, but on Monday volume was at $245 million as of press time. “Unlike last week, today’s attempt to break through the $12,000 level carried enough momentum to make a convincing break, sending BTC all the way to the $12,500 area,” said Denis Vinokourov, head of research for crypto brokerage BeQuant.

William Purdy, an options trader and founder of analysis firm PurdyAlerts, says the derivatives market is showing where traders think bitcoin’s price will be in the future as the cryptocurrency trends upward. “I think what is most interesting right now is how clear the upcoming expected price targets for bitcoin are via the option open interest,” he told CoinDesk, adding, “$12,000, $13,000, $14,100 and $16,000 are the spots with the greatest open interest, so the price is likely to settle on these as upcoming support/resistance.” 

Read More: Bitcoin DeFi May Be Unstoppable: What Does It Look Like?

Related: Bitcoin Surges Past $12,000 to New 2020 High

Of note is how traders view price movements of ether (ETH) relative to bitcoin. 

“Ether was largely a bystander Monday, mimicking the surge higher instead of being the driving force behind it,” BeQuant’s Vinokourov said. “This is suggesting a growing unease towards the current valuation.” Skyrocketing Ethereum transaction costs were among the reasons for this sentiment, Vinokourov noted. 

Read More: DeFi Frenzy Drives Ethereum Transaction Fees to All-Time Highs

Ether options bearish

Ether, the second-largest cryptocurrency by market capitalization, was up Monday trading around $438 and climbing 1.9% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Huobi Launches Consortium of DeFi Providers and Platforms

The total value locked in decentralized finance, or DeFi, crossed the $6 billion threshold over the weekend, and it is currently up to $6.4 billion Monday. Over half of the value locked is in just three DeFi services: Maker ($1.51 billion), Aave ($1.15 billion) and Curve Finance ($1 billion).

Jean-Marc Bonnefous, managing partner for Tellurian Capital, which has been investing in crypto projects since 2014, says some of this DeFi frenzy seems to be proceeding unchecked, and warned that caution is needed. 

“Some of these DeFi applications are going to market too quickly and without even testing the code. That is highly risky,” he said to CoinDesk. “There will be a flight to quality towards those protocols that have sound operational foundations and also real added business value.” 

Read More: YAM’s Market Cap Falls From $60M to Zero in 35 Minutes

Other markets

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

• litecoin (LTC) + 8.9%
• 0x (ZRX) + 8.3%
• xrp (XRP) 7.7%

Read More: Litecoin Gets Bullish Speculation, at Last, as Upgrade Approaches

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

• tezos (XTZ) – 6.2%
• eos (EOS) – 1.1%
• iota (IOTA) – 1%

Read More: BitMEX to Mandate ID Verification for All Traders

Equities:

• Asia’s Nikkei 225 ended the day in the red 0.82% as data indicated Japan has experienced a record contraction in its economy in the past year.
• In Europe, the FTSE 100 closed in the green 0.61% as gains in mining stocks sent the index higher.

• The United States’ S&P 500 gained 0.40% as the consumer discretionary and mining sectors made gains on Monday.

Read More: Pantera Tells SEC Its Crypto Fund Has Raised Nearly $165M

Commodities:

• Oil is up 1.4%. Price per barrel of West Texas Intermediate crude: $41.81.
• Gold was in the green 2.1% and at $1,985 as of press time.

Read More: Lending Protocol Aave Eyes Tokenized Mortgages With Launch of V2

Treasurys:

• U.S. Treasury bonds were mixed Monday. Yields, which move in the opposite direction as price, were down most on the 10-year in the red 3.3%.

Read More: Blockchain VC Firm SPiCE VC Taps Coinbase for Digital Asset Custody

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• First Mover: Litecoin and Mimblewimble, Ether Futures, Chainlink, Curve

Capital One has moved to patent an artificial intelligence platform capable of turning the internet’s 24/7 cryptocurrency informational overload into actionable trading recommendations. 

• Capital One’s “credibility analysis engine” would sort through and analyze price speculations from Telegram, Twitter and Reddit crypto influencers; hacking news; regulatory headlines; YouTube videos; protocol blog posts and more, according to the Aug. 13 patent application.
• This AI-backed engine would then weigh these signals against historical trends and source track-records to generate a “market trend prediction” for the cryptocurrencies, the filing said.
• The result: a “personalized trading decision” for cryptocurrencies that users could opt to execute on the platform, according to the application.
• “It would be impossible for human traders to track,” digest, decipher and trade on the entire breadth of cryptocurrencies intelligence alone, Capital One said in the application.
• Capital One did not immediately respond to CoinDesk questions on what it plans to do with its AI credibility engine or if the platform is already in use. 

Read more: eToro Launches Crypto Portfolio Weighted by Twitter Mentions

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• ING Bank, Rolls Royce Join Alliance to Promote Blockchain Education

OKEx has confirmed a loss of approximately $5.6 million in Ethereum Classic (ETC) from two recent 51% attacks and is considering removing ETC from its exchanges.

Yet, as the cryptocurrency exchange with the highest trading volume of ETC, OKEx acknowledged that removing ETC from trading would not be an easy decision to make, according to Jay Hao, chief executive of the exchange.

“Given ETC’s popularity and standing, we are not rushing into delisting,” Hao told CoinDesk in a Telegram message on Aug. 17. “However, they need to implement significant upgrades to the network to reduce the chances of another 51% attack happening.”

Related: Ethereum Classic’s Terrible, Horrible, No Good, Very Bad Week

The Malta-based cryptocurrency exchange reimbursed all the lost ETC in full to its customers as part of its user-protection policy, according to a report published by OKEx on Saturday, and all deposits and withdrawals of ETC have been suspended due to the attacks.

Read more: Ethereum Classic’s Terrible, Horrible, No Good, Very Bad Week

“We know that it is impossible to prevent a 51% attack on any decentralized exchange, but we also do not want to foot the bill for ETC’s security vulnerabilities that have made it particularly susceptible to attack(s),” said Hao.

Continued vulnerability

The recent 51% attacks on Ethereum Classic first occurred on Aug. 1 with total double-spending of $5.6 million worth of ETC. The second attack took place just five days later, losing about $1.68 million worth of ETC. 

Related: Crypto Long & Short: 51% Attacks and Open-Source Value

A 51% attack on a blockchain refers to a situation where one or more miners try to gain control of more than half of the mining power of the network. Compared with blockchains such as Bitcoin that have much a higher hashrate, blockchains with lower hashrates including Ethereum Classic are “more vulnerable” to this type of attack, according to OKEx’s report.

Read more: Crypto Long & Short: 51% Attacks and Open-Source Value

“It is evident that this breach in the blockchain’s secure functioning was due to a common problem with the Proof-of-Work (PoW) blockchains that have low global hashpower,” the report said. “… [T]his is certainly not limited to Ethereum Classic, which experienced a similar attack just last year. Other blockchains, such as Bitcoin Gold (BTG), have suffered such attacks in the past.”

Liquidity, and targeting OKEx

The exchange said in its report its only involvement in the attacks was the attackers used OKEx to purchase and trade ETC. This claim was a rebuttal to an analysis by blockchain analytics firm Bitquery, which alleged those wallets the attacker(s) used belonged to OKEx.

“As for why the attacker(s) chose OKEx in particular to purchase and trade their ETC, the most likely reason is liquidity,” the exchange said. “OKEx provides excellent ETC liquidity, seeing some of the largest ETC transaction volumes in the industry. This just means that the attacker(s) likely calculated that they would be able to relatively easily and promptly trade large amounts of ETC on OKEx.”

Similar to other exchanges, OKEx said it will increase the confirmation times for ETC deposits and withdrawals in the future.

The fate of Ethereum Classic has remained in question since the attacks. For now, 51% attacks are a reality for low-cap cryptocurrencies, ETC Coop Executive Director Bob Summerwill told CoinDesk, but options such as an emergency hard fork to a different hashing algorithm could help avoid future attacks.

Read more: OpenEthereum Supported 50% of Ethereum Classic Nodes. Now It’s Leaving the Project

OKEx also revealed its hot wallet system, providing more transparency about the depositing and withdrawing process on its hot wallet system.

According to a chart provided by OKEx in its report, 95% funds at OKEx are stored in its cold wallet and about 5% funds are stored in its hot wallet system, which has deployed both online and semi-offline risk management systems.

“This attack has been educational for us,” Hao said. “We learned that our robust hot wallet system worked exactly as designed but we also found some ways to improve it and are still working on this. Communication and cooperation are key in [the crypto] space and these are missing currently from our relationship with ETC, which is why we continue to see what their next moves will be.”

Ethereum Classic’s price was $7.49 as of press time, up by 4.12% over the past 24 hours.

Related Stories

• Ethereum Classic Attacker Successfully Double-Spends $1.68M in Second Attack: Report
• Market Wrap: Bitcoin Breaks $11,800; Ether Options Market Explodes

Grayscale Investments’ Bitcoin Cash Trust (BCHG) and Litecoin Trust (LTCN) crypto products are set to begin trading publicly on over-the-counter markets after receiving DTC eligibility Monday.

• The twin funds provide institutional (and now retail) investors exposure to their namesake cryptocurrencies: bitcoin cash ($5.8 billion market cap) and litecoin ($4.3 billion market cap).
• Grayscale has fashioned its growing family of crypto trusts as a gateway for investors who lack the technical know-how or risk tolerance to hold coins themselves. (Grayscale is a subsidiary of Digital Currency Group, CoinDesk’s parent firm.)
• Prior to the announcement, Grayscale reported accredited investors already held 6,028,000 BCHG shares and 2,500,800 LTCN shares through private placement deals.
• Those shares can now trade publicly as long as their institutional buyers’ one-year hold period has been met.

Related Stories

• Huobi Launches Consortium of DeFi Providers and Platforms With MakerDAO, Compound
• First Mover: Litecoin and Mimblewimble, Ether Futures, Chainlink, Curve
• ING Bank, Rolls Royce Join Alliance to Promote Blockchain Education
• Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High

Bitcoin has risen past the key $12,000, exactly a week after it temporarily spiked past the key milestone.

• CoinDesk data shows bitcoin shot up at about 13:30 UTC, initially to $12,100, before jumping up again to just over $12,400 by 16:00 UTC, a 4.74% rise on the day.
• While Bitcoin is now at a new 2020 high, it still has some way to go before it beats last year’s high of $13,800 and still further off from the all-time high of just under $20,000 set in December 2017.

• Following three months of ultra-low volatility, bitcoin shot up at from roughly $9,100 to over $11,000 in late July, before briefly spiking past $12,000 on Aug. 10.
• Bitcoin had been continuously flirting with that milestone over the past seven days, coming as close as $11,990 late on Aug. 14.

See also: Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High

Related Stories

• Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High
• Bitcoin DeFi May Be Unstoppable, What Does It Look Like?
• Ex-Prudential Securities CEO Calls Bitcoin a ‘Safe Haven’
• Crypto Long & Short: The Surprisingly Sunny Outlook for Crypto Hedge Funds

More bitcoins were tokenized than mined this Sunday, decentralized finance is coming to the Bitcoin system and a former Prudential Securities CEO thinks crypto is a safe bet. 

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

Bitcoin’s DeFi
DG Lab recently open sourced its proposal for a decentralized finance (DeFi) product leveraging the Bitcoin blockchain. Bitcoin is a growing part of the DeFi ecosystem, built primarily on top of Ethereum, as a tokenized asset. A number of firms including Bison Trails, Crypto Garage and Blockstream are all working on solutions to create a Bitcoin-specific DeFi ecosystem that wouldn’t use representatives of bitcoin, but enable traders to do tasks directly with bitcoin, CoinDesk’s Leigh Cuen reports. 

Related: First Mover: Litecoin and Mimblewimble, Ether Futures, Chainlink, Curve

Fund Rising
Pantera Capital’s Pantera Venture Fund III has more than doubled in size since it launched in 2018. The fund brought in $164.7 million in private placements from around 200 investors, according to a Form D filing with the Securities and Exchange Commission (SEC) Friday. Pantera had originally hoped to raise $175 million for Venture Fund III and said in March of last year it had crossed the $160 million milestone.

Aave’s Wave
Decentralized money market Aave has released specifications for version two of its protocol as the project eyes $1 billion locked under contract, according to DeFi Pulse. Aave will partner with real estate tokenization firm RealT to bring home mortgages to DeFi. RealT did not return questions for comment by press time. As reported by CoinDesk, Aave announced plans to transition to a fully autonomous and decentralized protocol through its “genesis governance” and Aave Improvement Proposals (AIP) scheme.

Crypto Accounts
Crypto payments startup Wyre is offering savings accounts that provide interest on crypto. Announced Friday, Wyre’s client list includes crypto custody firm Casa, wallet provider BRD and traditional enterprises such as banks. The new product’s interest rates are meant to be more stable than interest rates at crypto lenders because Wyre will manage funds between MakerDAO, Compound and two centralized crypto lenders, said Jack Jia, Wyre’s vice president of business.

Ball’s Rolling
The former Prudential Securities CEO and current CEO of Sanders Morris Harris, George Ball, suggested bitcoin is “a safe haven” asset. In a recent interview with Reuters, Ball, once a self-defined opponent to blockchain, said crypto looks “very attractive” both in the long term and short term. “The government can’t stimulate the markets forever.”

Quick bites

• ING Bank, Rolls Royce join alliance to promote blockchain education (CoinDesk)
• 15 Ways to stay sane while trading crypto (CoinDesk)
• Bitcoin was the second-most-popular asset on TradingView after Tesla stock last month (The Block)
• How an anti-meme coin joke backfired into a $1.2 million meme coin (Decrypt)
• Meet a freelance cypherpunk developer in Africa (CoinDesk)

At stake

Related: Money Reimagined: How a Dangerous Idea Could Work

DeFi is a small part of the total Ethereum ecosystem, though it’s sending ripples throughout the larger crypt-verse. 

According to DeFi Pulse, the total value locked in the leading DeFi applications is around $6.34 billion, a fraction of Ethereum’s $47.8 billion market cap. 

On Friday, CoinDesk’s Omkar Godbole reported Ethereum’s derivatives markets are booming – largely in response to DeFi. Open interest in futures, or total value of outstanding contracts, rose to a record high of $1.73 billion on Friday, according to data source Skew, surpassing a previous high of $1.45 billion set 10 days earlier. 

“The DeFi boom looks to be powering gains in ether,” said John Ng Pangilinan, managing partner at Singapore-based Signum Capital.

DeFi is also helping set records on Bitcoin. On Sunday, more bitcoins were tokenized for use on Ethereum than were created by the Bitcoin protocol. 

About 900 bitcoins are mined per day, while 1,043 more bitcoins were tokenized through wrapped bitcoin, CoinDesk’s Zack Voell reported. The amount of tokenized bitcoin has shot up to nearly 31,000 bitcoins, up from 3,000 in mid-May.

Market intel

Hashing Through?
Bitcoin traded below $12,000 over the weekend. The cryptocurrency had consolidated below this critical resistance despite reaching a record hashrate of 129.03 tera hashes per second (TH/s), CoinDesk’s Omkar Godbole reports. Some argue an increasing hashrate is a bullish price signal because it causes miners to hold rather than sell bitcoin, thereby raising the price floor. At press time, Bitcoin had crossed the $12,000 level. 

Tech pod

Litecoin’s Lift
Litecoin is gearing up for a network upgrade that will integrate the privacy protocol Mimblewimble. The upgrade is supposed to help shield the identities of holders of senders and recipients of litecoin tokens while also improving the network’s ability to handle more transactions. A testnet of Mimblewimble, in the works for almost a year, is targeted for the end of September.

Op-ed

CBDC Circles
Carmelle Cadet, founder and CEO of EMTECH, thinks central bank digital currency (CBDC) development will depend upon open protocols, private experimentation and APIs to gain traction. “The tradeoffs between control, interoperability and infinite user experience customization are complex. But there is precedent for dealing with this sort of complexity. Banks have partnered with fintechs to address the market’s need for consumer convenience,” she writes. 

Hedge Your Bet?
Crypto hedge funds are underperforming blue-chip cryptographic assets such as bitcoin and the S&P 500. Yet, Noelle Acheson, CoinDesk’s head of research, sees a sunny outlook for crypto hedge funds. “Investing in a crypto hedge fund instead of directly in the market is going to be a more attractive option for many investors even if the returns are slightly lower, because using a vehicle run by seasoned management is probably safer than direct market participation. Investors don’t have to worry about custody, best execution and liquidity crunches,” she writes in the latest Crypto Long and Short newsletter. Subscribe here to get it in your inbox.

Podcast corner

Asteroid Mining?
On Long Reads Sunday, Nathaniel Whittemore asks the question: Is asteroid mining really our best argument for bitcoin over gold? 

Who won #CryptoTwitter? Related Stories

• Blockchain Bites: Ripple’s Rebuff, DeFi’s ‘Degens’ and China’s CBDC
• Blockchain Bites: Coinbase’s Loans, Ethereum’s Fees, YAM’s Bug

Singapore-based crypto exchange Huobi has launched a new consortium with MakerDAO and Compound to promote decentralized finance (DeFi).

• Announced Monday, the Huobi initiative, dubbed the Global DeFi Alliance, is an international collection of DeFi service providers and platforms.
• The consortium has also been set up in conjunction with DeFi price oracle network Nest and decentralized margin and derivatives exchange dYdX, bringing the total members to five.
• The alliance’s aim is to promote DeFi research and development, establish universal protocol standards and facilitate cross-border collaboration between Asia and Europe as well as the U.S.
• Huobi’s chief investment officer, Sharlyn Wu, said DeFi in crypto marked the “first attempt in human history” to build a modern financial system void of credit risk.
• Wu also said more work needs to be done to fill “gaps” between centralized financial institutions as well as uniting the various communities across Asia and the western world.
• The sharing of standards is an opportunity to create “fair, efficient, transparent, safe and globally accessible financial markets,” said Compound founder Robert Leshner.
• Leshner also said sharing standards and best practices can help the industry design ready-made products for mainstream adoption.
• In the months ahead, founding members of the alliance hope to admit more players to its consortium including wallets, protocols, security companies, investment firms among others.

See also: Huobi Hires Former Banking Giant Executive to Lead New DeFi Fund

Related Stories

• Grayscale’s Bitcoin Cash and Litecoin Trusts Begin Trading Publicly
• ING Bank, Rolls Royce Join Alliance to Promote Blockchain Education
• Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High
• Pantera Tells SEC Its Crypto Fund Has Raised Nearly $165M

Blockchain venture capital firm SpiceVC announced Monday that Coinbase Custody has agreed to serve as its digital asset custodian for the firm’s Spice token. 

• In a press announcement emailed to CoinDesk, the venture capital firm said the partnership with Coinbase will help investors reliably store and withdraw their Spice tokens. 
  
• Some of the firms in which SPiCE VC has invested include Bakkt, INX and Lottery.com.
  
• In a recent announcement, Coinbase said it’s going to offer bitcoin-backed loans to customers in the United States. Capped at $20,000 per customer, the bitcoin-backed loans carry an interest rate of 8 percent for a repayment period of a year or less. 

Related Stories

• Sequoia-Backed Band Protocol Token Starts Trading on Coinbase
• Coinbase to Offer Bitcoin-Backed Loans to US Customers
• Appeals Court Backs Coinbase in Bitcoin Gold Fork ‘Breach of Contract’ Lawsuit
• Coinbase Exits Industry Lobbying Group in Protest Over Recent Unspecified ‘Decisions’

Price Point

Bitcoin was mostly subdued over the weekend, staying in its recent range between $11,000 and $12,000. Ether, trading around $430, is looking to extend a run of four straight weeks of gains during which prices have nearly doubled. 

In traditional markets, U.S. equity futures and European stocks advanced after China’s central bank pumped about $100 billion into the country’s banking system.

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

Market Moves

Related: Litecoin Gets Bullish Speculation, at Last, as Upgrade Approaches

Hope Springs Eternal for Underperforming Litecoin as Mimblewimble Nears – By Omkar Godbole

The cryptocurrency litecoin (LTC) is often referred to as the silver to bitcoin’s gold. This year, litecoin investors would have been better off staying in the analog world: While bitcoin (BTC) has gained twice as much as gold, litecoin has only recently caught up with silver.

Some investors now foresee a rally developing in litecoin prices, with a key upgrade looming and signs that activity is increasing on the  blockchain network.

The upgrade is to add a “privacy protocol” known as Mimblewimble, which is supposed to help shield the identities of holders of senders and recipients of litecoin tokens while also improving the network’s processing capacity. A testnet of Mimblewimble, in the works for almost a year, is targeted for implementation by the end of September. 

Related: Market Wrap: Bitcoin Bounces to $11.8K as Ether Option Traders Go Bearish

And based on market data, it appears the looming addition is generating enthusiasm among users: Daily confirmed transactions on litecoin’s blockchain has more than doubled this year, reaching a 7-day average of 48,948 last week, the highest since February 2018, according to data source Glassnode. 

Litecoin backers hope the token’s added privacy features from the Mimblewimble upgrade will help attract users who otherwise might gravitate toward existing privacy coins like monero (XMR) and zcash (ZEC). Those tokens come with their own risks, such as the potential for holders to get diluted by new issuance. 

The speculation is the upgrade could help litecoin, which has gained about 50% this year to $63, catch up with bitcoin’s 64% increase. 

“Litecoin’s upcoming Mimblewimble upgrade has led to a spike in transactions and active addresses,” said Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index futures. 

For a longer version of this article online, click here. 

Bitcoin Watch

Although bitcoin appears stuck in a narrowing price range, investor interest in futures on the Chicago Mercantile Exchange (CME), a sign of increased institutional demand, continues to grow. 

Open interest on the CME, or the number of outstanding contracts, rose to a fresh record high of $864 million on Friday, topping last week’s record of $841 million, according to data source Skew. The CME has recently climbed in the ranks to become the third-largest bitcoin futures exchange by open interest. 

Growth in futures trading volume, however, has stalled over the past two weeks, which might actually be bullish: A combination of rising open interest and low volumes usually indicates investors are holding on to their positions. Typically when that happens, the market continues its prior trajectory, which in this case was up.  

So bitcoin could break out of the current price-consolidation pattern, represented by an ascending triangle on the daily chart, with a convincing move above $12,000. That breakout, if confirmed, would imply a continuation of the rally from July lows below $9,000 and open the doors for stronger gains. At press time, bitcoin is changing hands at $11,870 on major exchanges. 

– Omkar Godbole, Markets Reporter

Token Watch

Ether (ETH) futures hit new record – Investor interest in ether futures and options hit a new peak on Friday as the cryptocurrency’s price rose to 25-month highs. Open interest in futures or total value of outstanding contracts rose to a record high of $1.73 billion on Friday, according to data source Skew. Prices for the token have more than tripled this year to about $430. 

Chainlink (LINK) developers taking profits? – According to the website Trustnodes, Chainlink developers have sold some $40 million of link tokens this month. Trustnodes, citing its own analysis, said about 500,000 of the link tokens are getting sent every week to the cryptocurrency exchange Binance and other venues . The “oracle” token has become a darling in cryptocurrency markets in 2020 because of its perceived potential for fast-growing “decentralized finance” trading and lending systems. The token is up 10-fold this year, the top performance by far among digital assets with a market value of at least $1 billion. 

Curve (CRV) debuts early in another nutty DeFi moment – After the frenzy earlier this week in Compound’s COMP tokens and last week’s madness in YAM tokens, it’s anybody’s guess how the newest token from decentralized finance, or DeFi, will perform in its early days. In this case, the nuttiness has already begun: According to CoinDesk’s Colin Harper, an anonymous DeFi user late last week deployed Curve Finance’s Decentralized Autonomous Organization (DAO) and token smart contracts without the team’s permission . Following the deployment, Curve Finance tweeted it had “no choice but to adopt it,” saying in another tweet it appears “to be an acceptable deployment with the correct code.” Here’s what trading in the token looks like so far, per CoinGecko:

Tweet of the day What’s Hot

Bitcoins Are Being Tokenized Faster Than They’re Mined as DeFi Craze Continues (CoinDesk)
Since Sunday, 1,043 more bitcoins were tokenized through Wrapped Bitcoin than produced by bitcoin miners, as the Ethereum-based decentralized finance (DeFi) boom shows no signs of abating.

Enterprises Would Use DeFi, if It Weren’t so Public (Coindesk)
Decentralized finance is taking off, but few large companies are venturing into the space in pursuit of use cases.

Money That Rots Like Potatoes, Money That Rusts Like Iron, Hot Money And CBDCs (Forbes)
The concept of money with an expiry date to stimulate a flagging economy is not new, however, central bank digital currencies can also facilitate that role in a time of crisis.

As Traditional Economies Freeze, NFTs and DeFi Show Promise (Hacker Noon)
This year’s recession is one of the deepest on record. Could Non-fungible tokens and decentralized finance lead the way forward?

– Sebastian Sinclair, Reporter

Related Stories

• Newest DAO Project Was Thrown a Curve, but the Team Is Rolling With It Anyway
• Money Reimagined: How a Dangerous Idea Could Work

Banking giant ING Bank and luxury car and aerospace firm Rolls Royce are two of the household names joining an initiative to better promote blockchain education and research.

• Blockchain accelerator MouseBelt said Monday both Rolls Royce and ING, as well as Belgium brewer Anheuser-Busch InBev and margin-first trading platform Multi.io, have joined its Blockchain Education Alliance.
• The alliance brings industry figures, both from within and outside of the digital asset space, together to train and support student developers interested in building their own projects.
• Launched in October 2019, the initiative also tries to link corporate blockchain projects with researchers, students and new protocols.
• Mastercard, Stellar and the incubator arms of Binance and Ripple are some of the other companies that are part of the Blockchain Education Alliance.
• MouseBelt’s head of education, Ashlie Meredith, said many students will not return to university campuses this year because of the pandemic, meaning jobs and internships were of the “utmost importance.”

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

Related Stories

• Huobi Launches Consortium of DeFi Providers and Platforms With MakerDAO, Compound
• Bitcoin Price Holds Below $12K Even as Hashrate Hits All-Time High
• Pantera Tells SEC Its Crypto Fund Has Raised Nearly $165M
• Newest DAO Project Was Thrown a Curve, but the Team Is Rolling With It Anyway