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Deribit Sees Record Bitcoin Options Volume as Activity in $36K Calls Surge

5 years 11 months ago

Daily volumes for bitcoin options have hit lifetime highs on crypto derivatives exchange Deribit due to increased activity in deep “out-of-the-money” (OTM) call options, or bullish bets.

  • The biggest cryptocurrency exchange by options volume has traded a record 47,000 bitcoin options contract in the past 24 hours with a notional value of more than $500 million. Also, the exchange registered the largest single trade of 8,000 contracts.
  • Call options expiring in January 2021 at strikes of $36,000 and $32,000 have contributed more than 40% of the total trading volume.
  • According to data source Skew, the $36,000 call option has seen 16,078 contracts change hands today, while the $32,000 call has registered a volume of 4,000 contracts.
  • “The originator(s) of these trades expects BTC to trade above the strike levels [$36,000] by the end of January 2020 and is willing to back this expectation with significant volume,” Luuk Strijers, CCO of Deribit, told CoinDesk in a Telegram chat.
  • However, the idea of bitcoin rising to levels above $32,000/$36,000 by the end of January appears somewhat farfetched, given the options market is currently assigning only a 14% probability of prices challenging record highs by the end of the first quarter.
  • It could be a volatility play. Trader(s) who bought call options at $36,000 and $32,000 may be anticipating a pickup in volatility before the January expiry. Volatility has a positive impact on option prices.
  • So far Friday, the highest volume has been seen in $36,000 calls expiring in January.
  • A call option gives the investor the right, but not the obligation, to buy the underlying asset at a predetermined price on or before a specific date. Meanwhile, a put option represents a right to sell.

Also read: Bitcoin Traders Can Now Bet on $40K Price With New Deribit Options

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Library of Congress Reports Surge in Crypto Law Searches

5 years 11 months ago

The U.S. Library of Congress’ law division has beefed up its cryptocurrency legal resources to meet a spike in demand for information on the topics.

  • The national library last week unveiled a crypto guide to help readers navigate the United States’ evolving regulatory treatment of cryptocurrencies and blockchain technology.
  • “Recent economic and geopolitical events” have fueled readers’ heightened search interest, wrote Law Librarian-in-Residence Louis Myers in his Oct. 22 blog post.
  • Myers’ guide includes a breakdown of relevant federal regulators, tips on trawling state law resources, links to “secondary sources” and to the library’s previous research on cryptocurrency regulation around the world.
  • Library staffers did not immediately answer CoinDesk’s questions regarding the size of the search spike.
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Swiss Arm of Russia’s Gazprombank Launches Institutional Bitcoin Offerings

5 years 11 months ago

Gazprombank, a bank from the fold of Russian energy giant Gazprom, is launching institutional cryptocurrency services in Switzerland.

  • In an announcement Thursday, the regulated Swiss arm of the bank said it has now received authorization from FINMA to launch the new services, initially to a limited number of clients.
  • Gazprombank (Switzerland) will later expand the offerings to more institutional and corporate clients, providing a custody service and bitcoin trading against fiat currencies.
  • More cryptocurrencies are expected to be added later.
  • “We expect digital assets to become increasingly important in the global economy and, in particular, for our current and potential clientele,” said the bank’s CEO, Roman Abdulin.
  • The bank said it applies “specially designed” due diligence procedures to add security and ensure compliance with Swiss anti-money laundering and know-your-customer rules.
  • Gazprombank, Russia’s third-largest by net assets, has been mulling a move into cryptocurrency services for some time, saying back in 2018 that it was planning a pilot before starting serve its wealthy clients.
  • Last year, the bank and its parent firm, Gazprom, also said they had built a blockchain platform for executing business contracts and that it would soon be used digitize the gas supply process.

Also read: The Crypto Firms Collaborating on a Swiss Franc Stablecoin

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First Mover: Bitcoin Heads for 24% October Gain as US Election Countdown Begins

5 years 11 months ago

Bitcoin was lower around $13,400 though on track to gain 24% in October, an impressive performance since U.S. stocks declined 1.6% on the month and gold slid 0.5%. 

“With the U.S. election just days away, we are going to have to be patient when it comes to headwinds lifting BTC to new multi-year highs,” Matt Blom, head of sales and trading for the cryptocurrency-focused financial firm Diginex, wrote in a note to clients. 

In traditional markets, European stocks fluctuated and U.S. futures pointed to a lower open. The dollar was steady in foreign exchange markets and 10-year U.S. Treasury yields rose 0.01 percentage point to 0.83%. 

Related: Bitcoin Traders Can Now Bet on $40K Price With New Deribit Options

“Our short-term risk appetite indicator is firmly in negative territory,” said Jean-Francois Paren, head of global markets research at Credit Agricole CIB, in a note to clients, according to Bloomberg News. 

Market moves

There’s an undercurrent in the crypto industry where true believers like to paint the future of money as less about, well, money than about truth and exposing the flaws and failings and abuses and wrongs of the traditional financial system and economy.

It’s not just about getting rich. It’s about reimagining the entire system, starting from scratch with state-of-the-art technology and fresh ideas, a complete reset. 

It’s also about convincing everyone else that the mission is worthy, perhaps inevitable – on the right side of history. 

Related: Market Wrap: Bitcoin Hits $13.6K; 500K ETH Options Pile Up for December

Such is the backdrop for the latest monthly letter from Dan Morehead, a former Goldman Sachs derivatives trader and hedge-fund manger who now runs the cryptocurrency investment firm Pantera Capital in San Francisco. 

The missive includes a clever table intended to demonstrate just how succinct, concise, laconic, crisp, efficient and compact Bitcoin founder Satoshi Nakamoto was when he penned the white paper that served as the intellectual, logical, economic and mathematical foundation for the original and still-largest blockchain-cum-cryptocurrency.

Nakamoto needed just 3,192 words for the blueprint, or less than a tenth of the book of Genesis from Hebrew and Christian sacred texts. The number is half as many as it took to pen the U.S. Constitution and about 1% of Adam Smith’s seminal Wealth of Nations.

Blockchain for Dummies, a dumbed-down instructional book on blockchain, needed 20 times as many words to explain the technology as Nakamoto’s white paper. 

But aside from pointing out the elegant genius of bitcoin’s (possibly?) pseudonymous founder, the essential crypto viewpoint is one of trying to look at the world in just the right way. According to Morehead, the following chart offers a key reminder that as global economies bounce back from the coronavirus-triggered lockdowns earlier this year, the loss of output remains severe:

The point was to illustrate the lack of context for Thursday’s U.S. government report that the world’s largest economy surged 33% in the third quarter, as the lockdowns eased. To put it in market terms, it was perhaps the biggest dead-cat bounce in world history, measured in dollar terms. 

With the economy in shambles, the thinking goes, massive stimulus will be needed from the government and Federal Reserve, eventually debasing the dollar and pushing up prices for bitcoin. (Deribit, the biggest cryptocurrency options exchange, just listed a contract that allows traders to bet on a price rally to $40,000 next year, triple the current price.) 

Morehead wrote in the letter that a recent rush into bitcoin by big players like PayPal, MicroStrategy and Paul Tudor Jones might ultimately give more big players cover to follow. 

This isn’t about greed, or the future of money. It’s about right and wrong, or rather who’s right, and who’s wrong.  

“A movement doesn’t succeed because of its initial leader,” Morehead wrote. “Rather, it’s the first follower and the subsequent followers who make it work. The more who join in, the less risky it is to take part in it. Those who were on the fence before, have fewer excuses as the movement grows.” 

For anyone wondering, Pantera’s full monthly newsletter clocked in at about 3,130 words. For what it’s worth. 

Bitcoin Watch

While the market environment is currently not conducive for bullish price action in bitcoin, the cryptocurrency is unlikely to see a meteoric fall, according to analysts.

“Given the upcoming U.S. elections, and meltdown in the legacy markets, traditional investors will maintain a risk-off mindset,” trader and analyst Nick Cote told CoinDesk in a Telegram chat.

Some observers say the U.S. could face a constitutional crisis if Democratic candidate Joe Biden wins by a thin margin and President Donald Trump tries to cast doubt on the results. The election uncertainty, coupled with coronavirus resurgence in the U.S. and across Europe, has triggered risk aversion in stock markets this week and applied brakes to bitcoin’s price rally.

The anti-risk mood could prevail at least till Nov. 3. As such, Patrick Heusser, senior cryptocurrency trader at Crypto Broker AG, is calling for caution on the part of short-term speculators. “I am expecting an increase in volatility and would be careful with setting stop losses too tight,” Heusser said. “Traders should maintain a low risk profile right now.”

Bitcoin is currently trading in the red near $13,300, representing a 1% drop on the day. Should the risk aversion in traditional markets worsen, the cryptocurrency may revisit support at $12,500-$12,000.

“If prices were unable to hold the bullish throwback [bull market pullback] to $12,200-$12,000, the focus would shift to next major support levels at $11,100 and $10,800,” Cote said.

That said, a price crash looks unlikely, as major central banks are already printing massive amounts of fiat money, and the cryptocurrency is currently backed by a strong bullish narrative of increased institutional participation. 

Besides, if there are widespread lockdowns and renewed economic slowdowns, central banks are expected to step in with additional stimulus, fueling inflation fears and boosting demand for bitcoin, according to Cote.

All things considered, dips in bitcoin could be short-lived.

On the higher side, the June 2019 high of $13,880 is the immediate resistance, followed by the next daily resistance block at $15,800-$16,000. There are large offers near $14,000 on cryptocurrency exchange Bitfinex, according to Heusser.

– Omkar Godbole

Token Watch

Bitcoin (BTC): Cryptocurrency’s price rally spurs increase in transactions just as end of China’s rainy season prompts bitcoin miners to pare back, creating congestion and pushing up transaction fees to the highest in 28 months.  

Bitcoin Cash (BCH): Crypto exchange OKEx, still paralyzed by founder’s arrest, details plans for how to handle November hard fork.

Uniswap (UNI): Uniswap’s $40M governance vote closes on Halloween and some holders fear for price. 

Harvest Finance (FARM): DeFi yield aggregator boosts bounty to $1M from $100K for information leading to return of $24M in funds siphoned via this week’s exploit.  

Ripple (XRP): Blockchain payments firm put $9.3M into partly-owned remittance giant MoneyGram in 3Q. 

Analogs The latest on the economy and traditional finance

ECB signals further stimulus ahead to prop up struggling economy (WSJ) 

Central banks were net sellers of gold in third quarter for first time in decade as prices neared record (Bloomberg) 

Small-cap stocks buoyed by bets on Biden-led stimulus (WSJ) 

Swiss bank Credit Suisse targets share buyback up to $1.6B even with loan-loss provisions running at 8 times the 10-year average (WSJ) 

Sales of $5M-plus homes in New York’s The Hamptons quadruple in third quarter as rich New Yorkers flee city (WSJ)  

Exxon Mobile to slash 15% of global workforce, including 1.9K jobs in U.S., as anemic economy dents oil demand (WSJ) 

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ETH Gobbles Up Larger Share of Genesis Loan Book as Trading Firms Feast on DeFi Summer

5 years 11 months ago

Decentralized finance (DeFi) reshaped Genesis Capital’s portfolios over the summer.

The firm, owned by CoinDesk parent company Digital Currency Group, saw the share of bitcoin in its loan portfolio drop as a percentage of total loans. The share of ether loans increased by five percentage points to 12.4% of the loan book quarter-over-quarter. (To be clear, loans across asset classes increased quarter-over-quarter but ETH loans now take up a larger slice of the pie.)

According to the lender’s report, this was mainly due to liquidity mining on DeFi protocols such as Compound, Aave and Uniswap. DeFi interest rate arbitrage drove Genesis clients to borrow ETH and stablecoins to “lever up liquidity mining strategies,” the company wrote. 

Related: Uniswap’s $40M Governance Vote Closes on Halloween and Some UNI Holders Fear for Price

“We haven’t seen it to this degree,” CEO Michael Moro said of previous quarters’ ETH-to-BTC ratio. “As a percentage, BTC loans just didn’t grow fast enough to keep up with the other coins.”

The clients who are lending their assets out through Genesis are high-net-worth individuals, hedge funds, family offices and other asset managers, and they generate returns of 5% to 13% on those loans, Moro said.

Firms that borrow from Genesis are hedge funds, quantitative trading firms, crypto exchanges, other crypto lenders and crypto operating companies such as bitcoin ATM firms. 

Active loan originations at the firm increased by 50% to $2.1 billion in the third quarter, which was less than the 118% quarter-over-quarter increase that Genesis saw at the end of the second quarter because the second quarter increase had come after the March Black Thursday crash. The lender also saw a record $5.2 billion loan originations in the latest quarter, more than doubling the $2.2 billion for loan originations in the second quarter.

Related: Harvest Finance Boosts Bounty to $1M for Information Leading to Return of Exploited Funds

Read more: Genesis’ Crypto Lending Rebounds in 2Q; Firm Acknowledges Unsecured Loans 

The firm is also soon launching an institutional lending API for exchanges and other firms that want to offer yield on crypto deposits to their retail customers. The first exchange to use the service will be DCG-owned Luno, and there are five or six other exchanges in the pipeline, Moro said.

Total trading volume in the third quarter was $4.5 billion, down from $5.25 billion in the second quarter but up by 285% from the third quarter last year. Around 90% of spot trading transactions and 30% of spot trading volumes happen through Genesis Prime’s smart-order routing engine, Moro said.

Read more: Genesis Trading Buys Crypto Custodian Vo1t in Bid to Become Prime Broker

The firm is also aiming to offer agency trading or aggregated access to exchanges with passthrough execution, from about a dozen exchanges.

Genesis also saw $1 billion in derivatives trading total volume, which was up from $400 million in the second quarter. 

In the near future, Genesis also plans to offer capital introduction for family offices seeking crypto hedge funds that have the strategies, fee structure and asset exposure to fit their investing needs. 

Read the full report:

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FTX Raises ‘TRUMP’ Futures Margins as Price Suggests Lower Expectations of Election Win

5 years 11 months ago

Cryptocurrency derivatives exchange FTX is increasing the margin requirements on its TRUMP and other President 2020 futures contracts.

Announced Friday, the exchange said it is upping the initial margin requirement to $0.50, meaning traders must put up that amount to acquire 1 short TRUMP contract. The change comes in on Saturday at 12:30 UTC.

Conversely, users wishing to go long TRUMP require $0.36, which is also the current price of the futures contract.

Related: FTX Launches Bitcoin Pairs for Top Stocks Like Amazon, Apple and Tesla

The pricing suggests traders are factoring in President Donald Trump’s chances of reelection come Nov. 3, when the U.S. heads to the polls and, by their estimates, the odds look to be dropping.

FTX outlines on its website that, ignoring fees, inefficiency and spread, the price of one TRUMP contract equals the president’s expected chances of reelection. Therefore, if users believe there’s a 52% chance of the president’s reelection then the contract should trade for $0.52.

TRUMP contracts expire at $1 if Donald Trump wins the election and at $0 should he lose.

The price of the other President 2020 contracts should also roughly equal the probability the corresponding candidate wins the general election, the exchange said.

Related: Hxro, FTX Target Retail Crypto Traders With Simplified Options Product

The price of the BIDEN contract at press time is $0.65, up 0.31% on the day.

See also: FTX Launches Bitcoin Pairs for Top Stocks Like Amazon, Apple and Tesla

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Huawei’s Mate 40 Phone to Ship With Digital Yuan Wallet

5 years 11 months ago

China’s digital yuan looks closer than ever to launch with the news that Huawei will be supporting the central bank digital currency (CBDC) on an upcoming range of phones.

  • Announced on Huawei’s Weibo channel Friday, the Mate 40 line of devices will feature a built-in hardware wallet with “hardware-level security, controllable anonymous protection, and dual offline transactions,” the tech giant said.
  • It’s the latest sign that the CBDC, developed by the People’s Bank of China, is likely to be technically ready for launch.
  • In recent weeks, a public trial in the city of Shenzhen saw 10 million digital yuan given away to residents in a kind of lottery.
  • Users could spend any winnings with a smartphone app at thousands of stores already set up with point-of-sale devices that can handle the digital currency.
  • The Mate 40 was announced in October and will be the latest flagship from Huawei, along with the Pro and Pro Plus models, according to TechRadar.
  • A release date is still unclear, but prices are expected to start at just over $1,000.
  • It’s also not clear if devices shipped to other regions will sport the CBDC wallet.

Also read: China’s Digital Yuan Blurs the Lines Between CBDCs and Crypto

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Bitcoin Traders Can Now Bet on $40K Price With New Deribit Options

5 years 11 months ago

Crypto derivatives exchange Deribit has listed bitcoin options contracts that allow traders to bet on a potential price rally to $40,000 next year.

  • Options at a $40,000 strike price expiring in March 2021 and June 2021 went live on Deribit early on Friday, as noted by research firm Skew.
  • In effect, the new contracts will allow market participants to express a long-term bullish view on bitcoin.
  • They will appeal to traders expecting a price rally to above $40,000 on or before the above expiries.
  • Options are derivative contracts that give the buyer the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a predetermined price on or before a specific date.
  • The new contracts come at a time when bullish expectations are high due to rising institutional participation and mainstream adoption.
  • So far today, Deribit, the world’s largest crypto options exchange by trading volume, hasn’t registered any activity for the $40,000 options.
  • Bitcoin is currently trading at $13,290, representing an 85% gain on a year-to-date basis.

Also read: Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

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UK Police Find no Crime in Alleged $3M Crypto ‘Staking’ Scam

5 years 11 months ago

Investors who say they lost hundreds of thousands of pounds in an alleged cryptocurrency fraud have had no luck persuading the police that there was in fact a crime committed.

According to an investigation by the Metro newspaper published Tuesday, a number of investors said they had invested in a cryptocurrency project called Lyfcoin on promises of hefty returns, but had not received their money back.

According to the allegations, investors were told to make staking commitments for five months to receive a 100% return, but as the period was ending they were told they’d have to extend to 12 or 24 months. Staking is a way of supporting some blockchain networks and earning rewards by committing funds for a period of time.

Related: Tether Froze $300K of Stablecoin Hacked After Victims Left Wallet Keys in Evernote

While it’s not alleged by the newspaper that Lyfcoin itself is a fraudulent scheme – though investors likened it to the multi-billion dollar OneCoin scam – investors who spoke to Metro.co.uk said they had been encouraged to invest by individuals claiming to be involved with the project.

The group says it lost around £100,000 ($130,000) in investing in the coin and estimates that up to £2.5 million ($3 million) could have been lost in the U.K. in total.

They allege that an individual named Sakhi Rezaie recruited people for the alleged pyramid scheme, showing presentations, holding Zoom seminars and inviting potential investors to his Birmingham office. Payments to stake the token were sent to Rezaie’s bank accounts and not to an official Lyfcoin account, they said.

Rezaie has claimed he was merely an investor in the crypto project, Metro said. However, the newspaper was shown WhatsApp chats and proof of payments to his account in the name of M.K. Brothers Ltd by an investor who lost £36,500 to the scheme.

Related: FBI Investigated Extortion Attempt Over Allegedly Negative Ripple Videos

The investors further allege that there were several “ringleaders” in the U.K.

After payments were made, Rezaie “ignored” queries from investors about selling their stakes, they claim.

The lyfcoin token had been touted as having a value of $1.60, but investors say they later found that it is not traded on most exchanges and in effect had a value of “zero.” They were not provided with a wallet or tokens, they said.

One investor made a report to U.K. reporting organization Action Fraud, which Metro said passed it on to the West Midlands Police. This spring, he signed a contract – seen by the Metro – with Rezaie promising to drop the case and apologize on social media in return for monthly payments of roughly £5,000 ($6,470). He claims to have received only one payment.

The investor said he managed to claw back £18,500 of the £36,000 he put in after warning members of a Lyfcoin WhatsApp group about the alleged fraud.

West Midlands Police dropped the case, however, saying none of the evidence provided took the case “further forward” and in a later statement to the Metro said “no offenses had been committed.” Fourteen investors are still pushing authorities to investigate the scheme.

Also read: OneCoin Investors Allege BNY Mellon Aided $4B Fraud

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Advising the Advisers: ‘On Purpose’ Podcast Live Taping Party

5 years 11 months ago

As a financial adviser, you might feel pressured to know every answer to your clients’ portfolio needs. But you’ve got some burning questions about digital assets like bitcoin.

Now’s your chance to ask: On Purpose podcast host and Onramp Invest CEO Tyrone Ross invites the public to CoinDesk’s first podcast live taping party and AMA on Wednesday, Nov. 3. 

Attendees will be part of the experience and get to ask frank questions to Ross and his guests Adam Pokornicky, COO of Digital Asset Investment Management; Andy Edstrom, financial adviser and investor at WESCAP Group; and Sunayna Tuteja, head of digital assets at TD Ameritrade; as they raise the big questions for financial advisers in a jargon-free, transparent discussion.

Related: Mirage Recovery: What ‘Record’ GDP Growth Tells Us About the Economy

Pokornicky, Edstrom and Tuteja, who are also speaking at CoinDesk’s Bitcoin For Advisors event for registered investment advisers Nov. 9-10, are experts in the digital asset class in the context of how it fits in the realm of portfolio management, including understanding bitcoin’s value proposition in the macro context, preparing against its volatility and how to fold it into retirement accounts.

Podcast taping attendees will also be fast-tracked for approval to attend Bitcoin For Advisors after applying separately here.

Register for On Purpose’s live taping party:

By registering, you agree to receive marketing communications and possibly appear in the podcast episode, which will be published on the CoinDesk Podcast Network and YouTube. If you can’t see the embed, register here.

‘On Purpose’ Podcast Exclusive Live Taping

Related: Bitcoin News Roundup for Oct. 29, 2020

Wednesday, Nov. 4, 2020 | 12 p.m. ET

Guests

Adam Pokornicky, COO of Digital Asset Investment Management

Andy Edstrom, financial adviser and investor at WESCAP Group

Sunayna Tuteja, head of digital assets at TD Ameritrade

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Ripple Keeps Pumping Funds Into MoneyGram

5 years 11 months ago

Remittance firm MoneyGram continues to receive millions in “market development fees” from its investor, blockchain payments firm Ripple.

  • According to MoneyGram’s financial results for Q3 2020 posted Thursday, Ripple handed over $9.3 million over the period.
  • After $0.4 million in “transaction and trading expenses,” MoneyGram saw a net benefit of $8.9 million.
  • The payment is the latest since Ripple, which provides several payments products aimed at financial institutions, invested $50 million in the money sender in November 2019.
  • In Q2 2020, MoneyGram received $15.1 million for the same stated purpose.
  • Previously, MoneyGram has described the market development fees as compensation for providing liquidity to Ripple’s On-Demand Liquidity (ODL) network – its payments product using the XRP cryptocurrency to send money across borders.
  • MoneyGram also received $16.6 million in Q1, and a total of $11.3 million in H2 2019.
  • All in, Ripple has funded the firm to the tune of over $52 million for providing ODL liquidity.
  • Back at the start of 2018, MoneyGram became one of the biggest firms to publicly say it was piloting XRP in its remittance services.

Also read: Ripple to Invest in Japan’s SBI Subsidiary MoneyTap

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Uniswap’s $40M Governance Vote Closes on Halloween and Some UNI Holders Fear for Price

5 years 11 months ago

Should users who interacted with Uniswap through a third-party interface be entitled to the free UNI tokens other users received on Sept. 17?

That’s the question at the center of a dispute currently taking place in Uniswap governance channels. The second-ever proposal to come before the Uniswap community would distribute airdropped UNI tokens to another 12,619 addresses, ahead of a second proposal set for nearly 27,000 addresses.

As of this writing, over 20.7 million UNI have been voted in favor of the proposal and more than 714,000 have been voted against. The vote closes on Oct. 31 at roughly 8:00 AM UTC.

Related: Harvest Finance Boosts Bounty to $1M for Information Leading to Return of Exploited Funds

While the vote may look extremely lopsided at the moment, the proposal will fail if less than 40 million UNI vote, establishing a quorum. The key obstacle to passage is probably reaching that threshold. 

The decision is widely interesting enough to the crypto community that it’s inspired a betting market on Polymarket, which currently leans toward the pitch for further UNI distributions failing.

If both proposals succeed, however, an additional 15,679,200 UNI would be distributed from the existing treasury, worth approximately $40.6 million, at the current price of $2.59 per UNI. Of that, 5,047,600 UNI would be redistributed from the treasury in phase one.

400 UNI, 40,000 more times

When the company behind Ethereum’s leading automated market maker, Uniswap, announced its governance token, UNI, in September, it surprised everyone by giving away 400 UNI to all wallets that had ever even used the decentralized application. Directly, that is.

Related: ‘Flash Loans’ Have Made Their Way to Manipulating Protocol Elections

At the time, each airdrop was worth well over $1,000.

Read more: Uniswap’s Distribution Is Built on Something That Can’t Be Forked: Actual Users

As a governance token, each UNI can be used to vote on decisions about changes to the dapp and also on expenditures from the Uniswap treasury, which has a supply of 430 million UNI or 43% of the initial supply.

The proposal under consideration now, and the one that will follow, concerns giving the airdrop to people who missed out on the gravy train through a technicality.

These individuals interacted with Uniswap using third-party software that enabled the transaction, touching Uniswap by way of a proxy contract. That made each of their wallets invisible to Uniswap itself. As the proponents of the proposal have argued: If decentralized finance (DeFi) is about money legos, what message does it send if only users of the base lego get the free crypto?

The current proposal centers on users who interacted with Uniswap via 10 different dapps – the largest being MyEtherWallet (MEW), Argent and Dharma, in that order.

Phase two involves users who interacted with Uniswap via decentralized exchange (DEX) aggregators. Five DEX aggregators represent 26,598 accounts, with the largest by far on the Kyber Network.

Lots of talk

The idea of a retroactive airdrop was raised almost as soon as UNI was announced by Nadav Hollander, CEO of DeFi portal Dharma. Hollander has said that as soon as people started receiving UNI, Dharma users began saying they were missing out.

“Ultimately the crux of the argument we are making is that the status quo has sort of negatively punished developers who took risks building on top of Uniswap,” Nadav Hollarnder of Dharma said during a group discussion hosted by Chris Blec, on his YouTube show, Thought Bubble.

In a Twitter thread, Uniswap founder Hayden Adams acknowledged the team was aware that some users might feel left out. That’s why Uniswap decided to leave future decisions about further distributions to UNI holders, Adams said, in part because it is hard to distinguish actual users from the many bots who also use Uniswap at a remove.

Additionally, there’s no way to know how many users of the 15 applications listed on the governance proposals may have already received the airdrop because of interacting with Uniswap directly through another wallet.

SpankChain CEO and MolochDAO summoner Ameen Soleimani wrote on the Uniswap forum that the proposal illustrates what a dangerous time-suck governance disputes can become.

“The outcome is also fairly zero-sum,” Soleimani wrote, adding: 

“1) it doesn’t create any wealth for UNI holders, it 2) takes UNI from the treasury that could be spent on other things and 3) gives it to folks who will likely sell it, probably having a small negative price impact.”

The debate has caused an emerging class of protocol politicians to weigh in on the matter.”I would like to see this gigantic stimulus package-like situation, where we are going to fund 15 or 20 different projects, to be reframed like a development grant on an individual basis,” one such blockchain populist, Hiturunk, leader of the Penguin Party, said during the call with Hollander.

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OKEx, Still Paralyzed by Founder’s Arrest, Details Plans for Bitcoin Cash Hard Fork

5 years 11 months ago

Cryptocurrency deposit withdrawals are still suspended at the OKEx exchange following a founder’s recent arrest, but officials with the Malta-based company are moving ahead with other matters, including planning around an upcoming hard fork on the Bitcoin Cash blockchain.

  • The BCH hard fork expected Nov. 15 is a result of a blockchain update proposal in August from a group known as Bitcoin Cash ABC (BCH ABC), led by Amaury Sechet.
  • Among other changes, Sechet and his team plan to introduce a new “Coinbase Rule,” which requires 8% of mined BCH to be redistributed to Bitcoin ABC as a means of financing protocol development.
  • This change is, however, opposed by Roger Ver, executive chairman of mining pool Bitcoin.com and the Bitcoin Cash Node (BCHN).
  • “Diverting part of the #BitcoinCash block reward to pay a single development team is a Soviet style central planner’s dream come true,” Ver wrote in a tweet. “Please stop.”
  • OKEx said Oct. 28 in a post on its website that in the event of a successful fork, holders of BCH will receive two new assets, BCH ABC and BCHN.
  • “After the fork is completed, we will refer to the trading prices of the forked currency pairs on major exchanges and select the chain with the higher price to inherit the BCH name. The tokens of the other chain will be airdropped to users’ funding accounts at a 1:1 ratio.”
  • Futures and perpetual swaps on BCH will “follow one of the forks,” according to the document. 
  • “In principle, the underlying asset of the post-fork contracts will be the more expensive post-fork asset, determined by the post-fork spot market on various major crypto exchanges,” it added.
  • As of press time, of the last 1,000 blocks mined on Bitcoin Cash, about 70% have signaled support for BCHN, and only 0.2% for Bitcoin ABC, according to data from Coin Dance.
  • OKEx CEO Jay Hao told CoinDesk in a Telegram message that the two groups “hold very different ideas about the proposed miner tax.”
  • “OKEx understands that in the blockchain space, core developers have differences of opinion over the best way to fund development, growth, continued innovation, and future direction,” Hao said. “Of course, it’s always preferable when an agreement can be reached and a change implemented via a soft fork.”
  • All withdrawal activities on OKEx remain suspended after the exchange said earlier this month that a holder of a private key needed to authorize withdrawals had been out of touch while “cooperating with a public security bureau in investigations.”
  • The Chinese news source Caixin reported that an OKEx founder, Mingxing “Star” Xu, had been taken into police custody.
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Market Wrap: Bitcoin Hits $13.6K; 500K ETH Options Pile Up for December

5 years 11 months ago

Bitcoin’s price is turning bullish as ether options traders accumulate half a million of ETH options for December expiration.

  • Bitcoin trading around $13,519 as of 20:00 UTC (4 p.m. ET). Gaining 2.6% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $13,105-$13,649
  • BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

The price of bitcoin moved upward Thursday, going as high as $13,649, according to CoinDesk 20 data, and settling around $13,519 as of press time. 

Read More: Bitcoin’s Options Market Sees Just 6% Chance of $20K Before Year’s End

Related: Bitcoin Transaction Fees Rise to 28-Month High as Hashrate Drops Amid Price Rally

Often when other asset classes like stocks sell off, as they did on Wednesday, bitcoin drops. “It would not be the first time bitcoin’s price action falls in line with traditional markets as a general sell-off occurs,” said John Willock, CEO of Tritium. “However, it is also totally reasonable for BTC to experience this level of pullback.” 

Yet, on Thursday equities fared better, particularly in the United States.

Read More: FTX Launches Bitcoin Pairs for Top Stocks Like Amazon, Apple and Tesla

Constantin Kogan, a partner at crypto fund-of-funds BitBull Capital, sees no reason why the world’s oldest cryptocurrency can’t go higher in the near term. “Bitcoin is heading for $13,800 resistance and 2019 all-time highs,” Kogan told CoinDesk. “It might break $13,800.”

Related: The Global Macro Case for FA Allocations to Bitcoin With Kevin Kelly

Taking a look at the bitcoin futures market, open interest has picked up, going to levels not seen since August. 

“We are almost at new highs for open interest for all BTC futures – $5.4 billion right now,” noted Jason Lau, chief operating officer for San Francisco-based cryptocurrency exchange OKCoin. “With many new positions being opened, it suggests the market is still bullish at these prices,” Lau added.

“That said, there are a considerable amount of order book ‘asks’ in the $14,000 region for bitcoin,” Lau said. “Bitcoin should close above that level on a weekly or monthly basis to confirm it is acting as support.”

Ether options in December pile up

The second-largest cryptocurrency by market capitalization, ether was up Wednesday trading around $389 and climbing 1.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The amount of open interest on ether options for December expiration hit 500,000 ETH, worth $195,500,00 as of press time, as traders make bets on the dynamics of the Ethereum network.

Vishal Shah, an options trader and founder of derivatives exchange Alpha5, noted that a lot of ether options bets seem bearish. “It looks like there’s some strong ETH put buying going on into the year end mainly around the mid-low $200s,” he said. Indeed, data aggregator Genesis Volatility shows strikes amassing around the $200-$280 price points.

“I think people are buying the downside for some reason,” Shah added. “It definitely throws water on the narrative that Ethereum 2.0 would create a supply shock in Ethereum 1.0 due to the initial lock-up – perhaps it is something else, but it’s definitely hard to glean any bullish implications.”

Other markets

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

Notable losers:

Read More: The Graph Raises $12M in GRT Token Sale; Teases Mainnet Launch 

Commodities:

  • Oil was down 2.8%. Price per barrel of West Texas Intermediate crude: $36.31.
  • Gold was in the red 0.34% and at $1,869 as of press time.

Treasurys:

  • U.S. Treasury bond yields climbed Thursday. Yields, which move in the opposite direction as price, were up most on the 10-year, jumping to 0.830 and in the green 7.3%.

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Leaked Docs Reveal How Binance Dealt With US Regulations: Report

5 years 11 months ago

Cryptocurrency trading colossus Binance Holdings Limited created a corporate plan for profiting from the U.S. market while avoiding the country’s regulatory scrutiny, Forbes reported Thursday, citing a 2018 document it obtained.

  • The leaked presentation outlines a “Tai Chi entity” that would funnel revenue to Binance through a web of corporations without exposing its parent to the financial regulator’s microscope, according to the Forbes article, which included a screenshot of a slide but not the entire deck.
  • When asked for comment, a Binance spokesperson directed CoinDesk to tweets by exchange chief Changpeng “CZ” Zhao. He called Forbes’ reporting bunk and asserted that Binance follows all local laws, including those in the U.S. “Anyone can produce a ‘strategy document’, but it does not mean Binance follows them,” said CZ, adding that the slide deck was produced by a third party, not his company.
  • U.S. affiliate Binance.US operates under a corporate structure similar to the “Tai chi” network, according to Forbes. Binance.US chief executive Catherine Cooley has long refused to discuss Binance.US’s ownership.
  • Binance in June 2019 unveiled plans to launch a U.S. exchange registered with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. The exchange updated its terms of service the following day to bar U.S. users from accessing Binance’s global hub.
  • Forbes said the Tai Chi document calls for “strategic” virtual private network (VPN) usage to sidestep the Securities and Exchange Commission and New York State Department of Financial Services and warns Binance employees against working in the U.S. to mitigate “enforcement risks.” Forbes additionally claims the document contains a “detailed strategy for distracting” U.S. regulators.
  • Binance used to be based in Malta, but its headquarters location has been something of a mystery for most of this year. CZ has been cagey on the matter in public appearances.
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Harvest Finance Boosts Bounty to $1M for Information Leading to Return of Exploited Funds

5 years 11 months ago

Decentralized finance (DeFi) protocol Harvest Finance has upped its bounty from $100,000 to $1 million for information leading to the return of $24 million in siphoned funds taken in an exploit Monday.

According to the Harvest Finance Twitter and Discord account, the anonymous Harvest Finance team is offering the bounty for “tracking down” the attacker and returning the funds.

A $50 million flash loan from Uniswap was used Monday on Harvest Finance to sway the price of USDC and USDT pools. Harvest Finance’s pricing feeds – based on Curve Finances stablecoin pools in this case – were manipulated by the flash loan leading to traders suffering large amounts of “impermanent loss” (where token prices change momentarily against investors).

Related: ‘Flash Loans’ Have Made Their Way to Manipulating Protocol Elections

The exploit led to the project’s total value under lock (TVL) dropping 70% from $1 billion to $296 million, according to DeFi Pulse.

Read more: Harvest Finance: $24M Attack Triggers $570M ‘Bank Run’ in Latest DeFi Exploit

The Harvest Finance team implied it knew the identity of the attacker who is “well-known in the crypto community” and who left “a significant amount of personally identifiable information,” according to the project’s Discord.
Harvest Finance did not return questions for comment.

The anonymous developer team is currently administering returning $2.5 million in stablecoins given back to the developer contract. The team is also weighing releasing an IOU reserve pool that extracts value from the protocol to reimburse haircut traders, according to announcements in the project’s Discord channel.

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‘Flash Loans’ Have Made Their Way to Manipulating Protocol Elections

5 years 11 months ago

Flash loans can be used for more than just siphoning funds out of poorly put-together decentralized finance (DeFi) protocols.

That’s one lesson investors can learn from Israel-based startup BProtocol’s manipulation of flash loans to sway election results on DeFi legacy project MakerDAO earlier this week.

According to the MakerDAO community forum, on October 26, BProtocol borrowed 13,000 MKR tokens worth some $7 million through a flash loan from derivatives platform dYdX swapped for MKR on lending platform Aave. Voting with the flash-loaned MKR tokens enabled BProtocol to speed up desired election results for its project built on MakerDAO.

Related: All-In on DeFi: Why the Days of Centralized Exchanges Are Numbered

The “attack” was less an attack than yet another unexpected consequence of flash loans, a crypto-first product that made its debut in early 2020 with DeFi platform Aave.

Read more: Everything You Ever Wanted to Know About the DeFi ‘Flash Loan’ Attack

Flash loans enable an in-the-know trader to amass mad leverage behind a trade by providing a temporary loan that must execute and settle in one block space. Here – and perhaps for the first time – BProtocol borrowed millions of MKR tokens to sway a protocol election and hand back the money in one block.

Other DeFi degens have used flash loans to perform what is commonly known as an oracle attack. In these situations a project’s funds are at risk due to poor project infrastructure – typically, shoddy pricing feeds. This happened last Sunday with $1 billion protocol Harvest Finance, which had prices for its stablecoin pools swayed by a flash loan, resulting in a haircut for Harvest traders.

Flash votes

The ability to use flash loans to exploit governance events is fairly new, however. Holders of MakerDAO’s governance token typically decide how the platform changes. 

Related: Huobi Beefs Up Venture Arm With Former DragonFly Partner Leading DeFi Investments

But here BProtocol showed that if there are enough MKR tokens up for borrowing on DeFi markets, a flash loan can be used by just about anyone to sway Maker’s election results. All someone needs to do is wait to be last in line at the ballot and drop in the borrowed tokens, BProtocol CEO Eitan Katchka said in a WhatsApp call.

Katchka added he thinks the Maker Foundation was aware of the unlocked door BProtocol went through with its flash loan, and that the outcome of the vote would have likely been the same.

He said the team had been waiting extra days to be whitelisted for using MakerDAO’s pricing oracles and had become “curious” after months of studying Maker’s infrastructure to see if the flash loan was possible. So they decided to play a bit.

Read more: MakerDAO’s Embrace of Centralized Stablecoins Offers Risks and Rewards

Now MakerDAO community members and the Maker Foundation are considering options for “disincentivizing large MKR Holders from providing MKR Liquidity on Lending Platforms and AMM Platforms” until MakerDAO can blacklist votes using flash loans, according to the MakerDAO forum. 

In lieu of comment, the Maker Foundation pointed CoinDesk to a community forum discussion from October 6 on limiting the use of flash loans for governance procedures.

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Audius, the ‘Decentralized Spotify,’ Is Moving Part of Its Service to Solana Blockchain

5 years 11 months ago

Decentralized music app Audius announced Thursday it will migrate its content management system over to Solana’s high-speed blockchain from an Ethereum sidechain operated by the POA Network that runs on a set of trusted validators.

Audius occupies a similar space to popular music players like Pandora or Spotify, but it allows artists to set their own terms. It also lets other developers make use of its underlying content. Audius reports strong recent growth in users, currently boasting 800,000 active users and over 150,000 tracks available for streaming.  

Due to high gas fees and slow block times on Ethereum, it appears to be porting season in the dapp space. We previously reported on Terra, Kin and USDC moving onto Solana. Similarly, the automated market maker and pooled assets manager Balancer has been incentivizing efforts to help it offer services on other networks, such as Oasis and NEAR. 

Related: The Graph Raises $12M in GRT Token Sale; Teases Mainnet Launch in 30-60 Days

In an announcement shared with CoinDesk in advance, the Audius team wrote:

“Given our need to utilize a high-performance blockchain today, Solana’s growing set of 182 validators (as of this writing) combined with a battle-tested architecture gives our community the confidence that Audius’s catalog can scale at ease, a crucial component of our path to mainstream adoption.”

Notably, when Kin announced its move to Solana in June, it also announced an incentive arrangement with Solana that would unlock grants of SOL tokens for each million users Kin brought in over a 24-month period.

Audius CEO Roneil Rumburg declined to disclose the exact arrangement with Solana, stating that it was primarily a technical consideration. However, he wrote to CoinDesk in an email, “There’s an agreement between the two teams that involves technical support, deliverables for support, and incentives. … Solana will help Audius have the best user experience possible.”

Related: Ocean v3 Brings Wave of Data Monetization Tools to Ethereum

Audius node operators and artists use the AUDIO token to stake, allowing for different functions on the network. Staking and governance functionality will remain on Ethereum.

However, the higher-throughput needs required by actually hosting, finding and streaming music will port over to Solana, which boasts extremely low transaction fees and millisecond block times. Audius expects the migration to happen in three phases, wrapping up in the second quarter of 2021. 

The Audius app is available on iOS and Android app stores and on the web. The company behind the platform has raised $9.8 million to date, according to Rumburg, over two rounds. The first in 2018 was led by General Catalyst and Lightspeed; the second in 2020 was led by Multicoin and Blockchange.

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US Charges Stanford Crypto Group Director With Defrauding His Former Employer – the Fed

5 years 11 months ago

The executive director of Stanford’s Future of Digital Currency Initiative, Lawrence Rufrano, is facing federal wire fraud charges following a disability benefits fraud investigation by his former employer, the Federal Reserve.

  • Prosecutors allege Rufrano hid employment at two law firms, three companies and a university while also collecting long-term disability benefits from the Federal Reserve System for five years after departing due to a “purported” mental illness.
  • CoinDesk found at least two of Rufrano’s jobs intersected with cryptocurrency and the blockchain ecosystem. He directed Stanford’s digital currency group and also advised Factom, a now-defunct protocol development firm. Rufrano is also listed as an adviser to Christopher Giancarlo’s Digital Dollar Project.
  • The Stanford Future of Digital Currency Initiative researches “all forms” of digital currency with the aim of standardizing their technicals and engaging government stakeholders, according to its current website. It boasts Ripple and IBM as corporate sponsors. Rufrano last appears as its executive director in an Oct. 25 cached version of the website.
  • Rufrano also led the Stanford School of Engineering’s Advanced Financial Technologies Lab. He managed that AI-focused program’s relationships with banks and fund managers, according to the criminal complaint.
  • Stanford did not immediately return questions regarding its ties to Rufrano.
  • An Oct. 21 criminal complaint suggests Rufrano also assisted an unnamed law firm on matters related to blockchain and initial coin offerings. He received over $18,000 a month for advising that firm on fintech, the complaint said.
  • Rufrano was released Wednesday on a $25,000 bond.
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Bitcoin Transaction Fees Rise to 28-Month High as Hashrate Drops Amid Price Rally

5 years 11 months ago

The cost of doing transactions on bitcoin is surging while the network suffers its worst congestion in nearly three years.

As of Wednesday, the mean fee per transaction, or the average transaction cost, was 0.00086764 BTC, the highest since June 2018, according to data source Glassnode. In dollar terms, the average transaction fee was $11.66. 

Average fees in bitcoin terms have increased by 573% in the past 12 days alongside the cryptocurrency’s price rally from $11,200 to $13,800.  

Related: The Global Macro Case for FA Allocations to Bitcoin With Kevin Kelly

“Bitcoin mempool [memory pool] is back in focus in the wake of rising transaction volumes, causing congestion in the network and consequently driving fees higher,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant, told CoinDesk. 

Mempool is the collection of unconfirmed transactions. When bitcoin transactions are executed, they are first sent to the mempool, where they wait for approval by miners. Bitcoin miners can process only 1 megabyte (MB) worth of transactions per block mined roughly every 10 minutes. 

When the blockchain experiences a rise in traffic, it causes delays and a backlog of transactions. As demand outstrips supply, miners increase their revenue by prioritizing transactions with higher fees. That, in turn, forces other users to offer higher fees to avoid long waiting times. 

Network congestion is usually seen during price rallies. As noted earlier, bitcoin has chalked out a significant rise over the past 12 days. During that time frame, network congestion, as measured by the total number of unconfirmed transactions in the mempool, worsened by 1,800%.

Related: First Mover: Bitcoin Falls as COVID-19 Surges, ECB’s Lagarde Steps Up, US GDP Hits 33%

As of Tuesday, there were 121,340 unconfirmed transactions in the mempool with a total block size of 66.8 MB. According to data source blockchain.com, that’s the highest level since the bull market frenzy of December 2018.

Hashrate drop contributes to congestion

The recent slide in bitcoin’s hashrate looks to have played a big role in causing network congestion along with a general price-driven pickup in activity. In other words, the mining power dedicated to approving transactions and mining blocks has gone down amid the price rally, boosting waiting times and network congestion. 

The seven-day moving average of bitcoin’s hashrate has declined from 146 exahashes per second (EH/s) to 120 EH/s.

In other words, the mining power available to approving transactions and mining blocks has gone down amid the price rally, boosting waiting times and network congestion.

With the end of the rainy season in China’s Sichuan province, a mining hub, some miners may be shifting to other areas with cheap hydroelectricity sources, causing a drop in the hashrate.

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