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CoinDesk Crypto

Ebang Launches Australia-Based Subsidiary, Seeks Approval for New Exchange

5 years 11 months ago

Nasdaq-listed bitcoin mining equipment manufacturer Ebang has set up a wholly owned subsidiary in Australia as part of its strategy to create a digital asset trading platform.

  • The company has applied for but not yet received an Australian financial services license, per a Thursday press release.
  • In June, CFO Chen Lei confirmed the Hangzhou-based company planned a cryptocurrency exchange that would strictly operate outside of China, as CoinDesk previously reported.
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Spanish Police Arrest Head of Billion-Dollar Crypto Arbitrage Platform on Fraud Allegations

5 years 11 months ago

Spanish National Police have arrested the operator of cryptocurrency arbitrage firm Arbistar 2.0 in a crackdown on the platform that researchers and investors allege to be a massive bitcoin Ponzi scheme.

  • Regional news outlet La Provincial reports operator Santiago Fuentes was taken into custody in Tenerife on Wednesday morning and was to have been formally charged with financial fraud and money laundering Thursday.
  • Fuentes’ site serves around 120,000 users who together have invested 40,000 in bitcoin ($520 million) into its arbitrage trading bot, blockchain investigations firm Tulip Research told CoinDesk, adding that Arbistar 2.0 has raised over $1 billion in bitcoin total.
  • Investors began to accuse the platform of fraud last month when Fuentes claimed a “computer error” had disabled trading bot withdrawals and wiped out more than a quarter of funds, Tulip Research said.
  • Tulip said it has linked some of Arbistar’s withdrawal activity to dark-net market Hydra. It called the platform’s frequent crypto returns (up to 1% daily) and limited withdrawal opportunities (only on weekends) elements of a “classic Ponzi scheme.”
  • Fuentes has previously denied allegations that Arbistar 2.0 is fraudulent or bankrupt.

The arrest should serve as a reminder to crypto investors of the value bitcoin’s traceable blockchain provides to investigators. While scammers can easily dupe unwitting investors with promises of high crypto returns, their use of bitcoin makes following the money easier.

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Philippines Central Bank Governor: No Digital Peso Before 2023

5 years 11 months ago

The central bank of the Philippines, Bangko Sentral ng Pilipinas (BSG), won’t be issuing a central bank digital currency (CBDC) anytime soon, according to a report by CNN Philippines. 

BSG Governor Benjamin Diokno told reporters during a press briefing on Thursday the bank wouldn’t pursue a CBDC for the duration of his term, which ends in 2023.

  • The announcement follows an exploratory study the central bank conducted into the viability of a state-backed digital currency. Diokno said much more work needs to be done before a digital peso can be issued. 
  • “Most central banks say they will not issue [a] CBDC in the next five years, so not within my term,” said Diokno, according to the report. 
  • CBDCs have received a lot of attention from central banks worldwide recently, and in the case of the Bahamas has actually released one, the sand dollar. The International Monetary Fund recently issued a report noting that while a CBDC may help some countries gain more control over their monetary systems, it would not qualitatively change the economic forces that determine international currency usage. 

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Blockchain Bites: Hodl Hodl’s No-KYC Bitcoin Lending, Voyager’s Token Merging M&A Deal, Crypto’s Reaction to PayPal

5 years 11 months ago

Hodl Hodl announced a P2P lending service, with no KYC requirements. Ant Group is continuing to research and release blockchain-based services. And what people are saying following PayPal’s crypto market entrance.

Top shelf

Bitcoin buys
Following a wave of institutional bitcoin buys, crypto custodian Hex Trust and multinational payments gateway Sia have partnered to provide an easier path for banks to hold digital assets. Announced Thursday, Hex Trust will offer custodial software to banks, through Sia, to enable them to hold bitcoin, security tokens and central bank digital currencies for their banking clients. Currently, Hex Trust works with three banks – Mason Privatbank Liechtenstein AG and two unnamed Asian banks. Hex Trust CEO Alessio Quaglini said the firm has 10 other banks that are exploring the custodian’s products.

Bitcoin DeFi?
Hodl Hodl, a non-custodial bitcoin exchange, is launching a lending product seeking status as “the first true bitcoin DeFi” product. Users will be able to borrow USDT, USDC, PAX or DAI stablecoins in a peer-to-peer fashion, without going through know-your-customer (KYC) procedures, leaving their bitcoin as collateral. Hodl Hodl’s Lend marketplace will not act as a custodian and won’t store bitcoin collateral, instead opting for a multisig setup where lender, borrower and Lend each get a key. The lender and the borrower will agree on the amount, time period, interest rate of the loan and the loan-to-value (LTV) ratio, which can be anywhere between 30% and 70%. Lend will take a 2% commission from each deal. 

Related: Bitcoin Hodlers Get a Lending Option With No KYC

Token merger
Voyager Digital, a publicly traded digital asset brokerage, has agreed to buy LGO, an institutional-focused crypto exchange. As part of the merger, which is awaiting regulatory approval, the companies will merge their two utility tokens, VGX and LGO, for newly minted tokens featuring decentralized finance (DeFi) functions such as community governance and staking at an initial interest rate of 7%. “We think this is really taking the old-school mergers and acquisitions to the token world, which hasn’t been done before,” Steve Enrlich, Voyager’s CEO said. Upon completion, Voyager will issue one million shares for the acquisition and operate in the European retail market with LGO’s Virtual Asset Service Provider registration.

Stablecoin interoperability 
Austria-headquartered Raiffeisen Bank International (RBI) is piloting an interoperability tool designed to connect tokenized fiat currencies (read: stablecoins) to multiple blockchains. The initiative will see the bank’s RBI Coin integrated with the Pantos blockchain interoperability tool from Vienna-based cryptocurrency exchange Bitpanda, according to a press release on Thursday. RBI Coin facilitates near-instant payments between banks and businesses. Raiffeisen hopes the proof-of-concept will eventually lead the banking industry to become “technology-agnostic in the field of fast-changing blockchain technologies.”

Ant’s efforts
Ant Group has unveiled a new blockchain-based service for copyright claims. Built on the AntChain network and using AI technology, the digital copyright platform allows creators to “quickly authenticate and verify a variety of original works,” the company said in a press release, by providing search tools, a method of analyzing for original content and a system of “unique digital copyright certification[s]” containing information about the work. These notarized, and “tamper-proof,” certifications could be submitted as evidence in copyright infringement and tort disputes. 

Most Influential 2020: Cast Your Vote
2020 has not been a good year by most metrics. There is no way to avoid this in a year-end retrospective.

Related: First Mover: The FOMO Takes Over as PayPal Play Sparks Bitcoin Rally to $13K

Every year, CoinDesk recognizes the “Most Influential” people working to expand cryptocurrency and blockchain’s reach. It’s a list of the 10 outsized individuals who have gone the furthest and done the most.

In this most unusual year, we need your help determining who should be named as Most Influential. Check out the list of the top contenders and cast your vote by Oct. 31.

Quick bites At stake

The middle ground?
In the wake of charges brought against BitMEX, a bitcoin derivatives exchange that operated for nearly its entire existence without know-your-customer (KYC) requirements, the topic of financial privacy and splinter economies has never been more heightened. 

In crypto, the privacy debate is often waged between originalists, who view these cryptographic monies as a means to transact, no questions asked, and the mainliners, who are willing to sacrifice some of crypto’s independence to reach the mainstage of the global economy.

CoinDesk’s Ian Allison explored this divide yesterday in an article rounding up reactions to PayPal’s crypto market entrance. In offering crypto trading and transactional services to a pool of 346 million users and 26 million merchants, the fintech giant will require full KYC and inhibit self-custody. 

“Yes, if you’re a pure libertarian, it’s not ideal. But being pragmatic about bitcoin’s trajectory and global adoption penetration rate, this certainly brings more options,” said Charles Hayter, CEO and co-founder of data site CryptoCompare.

PayPal is not alone. Deribit, the largest crypto options exchange by trading volume, recently decided to implement mandatory ID verifications by year’s end. Users will now be required to submit government-issued photo identification, as well as a proof of residence.

This follows on BitMEX’s announcement to accelerate its own planned KYC program. Charged by the U.S. government with facilitating unregistered trading, BitMEX said all of its customers would need to verify their identities by Nov. 5, three months earlier than the original deadline. 

Opposingly, today Hodl Hodl unveiled a product that will enable KYC-less, P2P lending, bucking the trend of payment and lending firms to require users to register using their real identities. 

While not a perfect analogy, perhaps one way this battle will shake out follows from reactions to the Financial Action Task Force’s “Travel Rule.” Coinciding with CoinDesk’s Consensus: Distributed conference, analysts assessed the knock-on effects of these anti-money laundering financial regulations on tools designed to eschew national borders and mandates. 

Speaking at a panel discussion, Bakkt President Adam White said most crypto companies will fall in line – though there will always be a contingent that stands apart. If that happens, there could be a viable “gray market” between the regulated and unregulated, verified and unverified, and KYC’d and non-KYC’d. 

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Lossless Lottery PoolTogether Opens Up to More Coins, More Prizes

5 years 11 months ago

Related: What the History of Headphones Says About the Internet’s Future

“No-loss lotteries are an underexplored and compelling alternative to high yield savings accounts. It’s a prime example of a use case that functions more elegantly on a blockchain vs. traditional financial infrastructure.”

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Bitstamp Names Gemini Alum Julian Sawyer as CEO

5 years 11 months ago

Bitstamp has hired former Gemini Managing Director for Europe Julian Sawyer as its new chief executive and moved founder Nejc Kodrič into a “non-executive role.”

  • Sawyer will oversee the company’s continued expansion of digital asset services and growth, Bitstamp said Thursday.
  • He has previously worked at Gemini, Starling Bank and Bluerock Consulting.
  • Kodrič, who founded the Europe-based crypto exchange in 2011, will stay on the board of directors.
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Justin Sun’s BitTorrent to Acquire Esports Platform for New Streaming Ecosystem

5 years 11 months ago

BitTorrent is going through another transformation.

Announced Thursday, the peer-to-peer platform plans to acquire blockchain-based esports streaming service DLive.tv, which will be migrated – along with existing BitTorrent services – into a newly formed entity, BitTorrent X.

DLive was selected as part of BitTorrents’ attempt to pivot its core business model into one that offers decentralized storage, data protocols and content distribution, according to a press announcement. 

Related: Market Wrap: Bitcoin Tests $12K; Ethereum Fees Fall to 3-Month Low

The esports streaming service boasts around 7 million active users and over 200,000 active content creators.

BitTorrent X’s services will be powered by the platform’s native BTT token, which was created shortly after the platform was acquired by Tron founder Justin Sun in 2019.

“BitTorrent X is the next step in establishing a truly decentralized internet,” Sun, also BitTorrent’s CEO, said in a statement. “In one big step, the BitTorrent X ecosystem may drive blockchain-related tools to billions of devices.”

Read more: BitTorrent Is Launching Its Own Cryptocurrency on the Tron Network

Legacy player

Related: Market Wrap: Bitcoin Regains $10.6K; High-Balance Ether Addresses Decline

BitTorrent was established in 2001 as a data-transfer protocol and quickly caught the attention of more than 2 billion users globally, as well as pricking the ears of big-tech names such as Twitter, Blizzard and Facebook.

Sun said he wants to leverage the platform’s brand awareness to position the platform as an ecosystem that “may drive blockchain-related tools to billions of devices.”

However, the acquisition by Tron of BitTorrent has not been without its controversies.

Back in August 2018, at least five senior employees of BitTorrent, including its general manager and head of marketing, left the company over concerns relating to the acquisition and the company’s direction.

The departures also related to issues of company culture and came but two months after the $120 million cash acquisition by a company registered solely to Sun known as Rainberry Acquisition, Inc.

See also: Coronavirus Second Order Effects and Improving on Bitcoin With BitTorrent Creator Bram Cohen

Sun and BitTorrent said they would unveil more about the new platform during a live event slated for November.

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DOJ’s Crypto Framework Is ‘a Complete Disaster’ for Digital Privacy Rights

5 years 11 months ago

The U.S. Department of Justice’s (DOJ) recent crypto enforcement framework is a threat to digital privacy rights, according to an attorney for the Electronic Frontier Foundation (EFF).

“It was a complete disaster for privacy and anonymity and civil liberties in the cryptocurrency space,” said Marta Belcher, special counsel to the digital rights advocacy group.

The framework, released earlier this month, details the U.S. government’s approach to crimes committed using cryptocurrencies, but also appears to define some broad policy positions on crypto and crypto exchanges more generally. Belcher, who is an attorney with Ropes and Gray and an outside counsel to Protocol Labs, said the framework released earlier this month raises many concerns about privacy rights, pointing to language on peer-to-peer exchanges, mixers/tumblers and “anonymity enhanced cryptocurrencies” (privacy coins). 

Related: What the History of Headphones Says About the Internet’s Future

In Belcher’s view, there are a number of legal concerns with the crypto enforcement framework as laid out by the DOJ’s Cyber Digital Task Force. Language in the framework would appear to have implications for individuals sending cryptocurrencies to one another, as well as exchangers offering transactions as a service.

The enforcement framework even had a section on mixers and tumblers, noting that entities qualifying as money services businesses are subject to the BSA or “similar international regulations.”

Encryption

The DOJ’s arguments against cryptocurrencies are similar to those made against encryption, another law enforcement boogeyman. The DOJ, alongside other members of the “Five Eyes” intelligence alliance plus India and Japan published a statement calling for backdoor access to encrypted messaging services and other systems last weekend. 

The statement reflects law enforcement agencies’ “fundamental discomfort” with any technology that could allow for private interactions, said Jake Chervinsky, general counsel at Compound Finance. 

Related: Binance-Backed Privacy Mavens Release Tokenomic Lynchpin: ‘Proof-of-Relay’

The enforcement framework is “making exactly the same argument you’ve seen being made for decades about encryption,” Belcher told CoinDesk. “These are the exact same arguments that are against encryption and they’re coming from the exact same place as the fight against encryption.”

Read more: Startup Aleo Wants to Help You Use the Internet Without Sacrificing Data Privacy

The intelligence agencies claim backdoors in encrypted protocols and systems would make it easier to identify and prosecute crimes committed using privacy-protecting tools (including cryptocurrencies).

This statement ignores the technical realities of building strong encryption, he noted.

“The Five Eyes [coalition continues] to overlook a few basic points about encryption: first, that strong encryption itself enhances public safety and prevents crime by protecting people and their data; second, that it’s impossible to build backdoors into encrypted systems without creating extraordinary new cybersecurity risks; and third, that cryptography tools are increasingly open-source and can’t be easily cabined or controlled at their request,” he said.

Many cryptocurrency companies and developers, for example, wouldn’t be able to comply with the backdoor requests because of this open sourcing, he said.

P2P exchangers

According to the DOJ’s crypto framework, a P2P exchanger is considered a money services business, which means it is required to abide by recordkeeping and reporting requirements as defined by the Bank Secrecy Act (BSA) and other regulations if they buy or sell convertible virtual currencies. 

The framework defines individual exchangers as individuals who provide crypto transaction services to others, but Belcher believes it could be used to apply to two individuals who just transact between each other – not just individuals acting as service providers.

“Individual exchangers – as well as platforms and websites – that fail to collect and maintain customer or transactional data or maintain an effective AML/CFT program may be subject to civil and criminal penalties,” the framework said, referring to anti-money laundering/combating the financing of terrorism regulations.

The distinction is between “software providers” and “service providers,” Chervinsky said. Software providers, which compose a large part of the crypto industry, deploy decentralized protocols and publish open-source projects that the writers cannot control or modify. Service providers, on the other hand, offer “permissioned, proprietary platforms” that the operators can control. 

Read more: The US Crypto Enforcement Framework Is a Warning to International Exchanges

In Belcher’s view, the crypto framework puts both individuals who write code for peer-to-peer transactions as well as those who use this code at risk for enforcement actions. 

“There’s liability on people using these exchanges in order to exchange cryptocurrencies anonymously with others,” she said. “To say I can’t send you cryptocurrency using a script, you and I can’t transact with each other directly in a peer-to-peer way without that data being collected somewhere by a third party is a complete affront to privacy and civil liberty.”

Individuals can easily conduct similar transactions using cash, she said. “No one questions that I can hand you money without there needing to be a written record of that.”

Privacy protections

The framework also took aim at privacy coins and other tools to obfuscate transactions, like mixers and tumblers. Belcher said it is wrong to focus on whether privacy coins can be compliant with the BSA and other laws.

Cryptocurrencies could potentially transfer the privacy protections that come from cash transactions and shift them online, she said.

“The thing that is so important for me is that you can transact anonymously and you can take the protections of cash and you can transfer that to the online world,” she said. 

“The idea that merely by exercising your right to transact anonymously is indicative of you committing a crime is wrong in my view.”

Read more: FinCEN: Stablecoin Issuers Are Money Transmitters, No Matter What

The U.S. government followed the framework with its first enforcement action against a bitcoin mixer just 11 days later, when the Financial Crimes Enforcement Network (FinCEN) fined Larry Dean Harmon, the alleged operator of a mixer, $60 million for his operations. 

However, that particular case doesn’t have major implications for mixing software more generally, said Carlton Fields attorney Andrew Hinkes on Twitter. 

“The facts here are egregious and ghastly. A service provider that profits from software that provides money transmission services must comply, must keep records, and must report. Plain as day, and should be obvious by now,” he wrote, pointing to various facts in the case, including the operator’s boasting of transaction privacy for customers, transactions conducted for Iran-affiliated accounts and payments facilitated for at least one child exploitation site. 

Chervinsky agreed, noting that Harmon was treated like a service provider, not a software provider.

Financial censorship

It’s possible the DOJ’s framework can help contribute to financial censorship, an ongoing issue within the U.S., Belcher said.

Traditional payments giants surveil and censor a number of transactions, including innocuous ones that might upset certain sensibilities. 

“There are all these examples of a kinky bookstore or a nonprofit that supports LGBT fiction getting their accounts shut down by Visa and Mastercard, and also famously things like WikiLeaks that then turn to cryptocurrency when they can’t be served by the financial intermediaries that are censoring that,” she said.

These transactions aren’t illegal, Belcher noted.

Read more: The Web Wasn’t Built for Privacy, but It Could Be

A cashless society is effectively a surveillance society in this respect, she said.

Actual crimes committed using cryptocurrencies should be prosecuted, and it’s a benefit to the crypto community when they are, she said. 

The DOJ report included dozens of examples of crimes that were committed using or at some point touching on cryptocurrencies, including several recent high-profile cases. 

However, blaming cryptocurrencies for their use in crimes does not make sense, she said.

“I think they’re missing that cash has always been used to facilitate illegal activity,” she said. “We don’t blame Ford when one of its cars is used as a getaway vehicle in a bank robbery.”

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Hedge Fund Billionaire Tudor Jones Says Bitcoin Rally Only in ‘First Inning’: Report

5 years 11 months ago

Paul Tudor Jones II, a billionaire pioneer of the modern hedge fund industry, said he’s even more bullish on bitcoin and lauded the “intellectual capital” behind the leading cryptocurrency in a Thursday interview on CNBC.

  • Jones said he has been “surprised” by the “enormous contention of really, really smart and sophisticated people who believe” in bitcoin and work to see it adopted as a store of value, a group that Jones referred to as the “great intellectual capital” behind bitcoin.
  • “I like bitcoin even more now than I did then,” Jones said, referring to his May appearance on the show when he announced a single-digit percentage portfolio allocation to bitcoin. “I think we’re in the first inning of bitcoin.”

Read also: PayPal Embraces Crypto, Igniting Market as Mainstream Adoption Inches Closer

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Franklin Templeton Joins Series A Round for Crypto Custodian Curv

5 years 11 months ago

Curv, a provider of cryptocurrency custody infrastructure, has been backed in an extended Series A funding round by investment firm Franklin Templeton and fintech-focused VC firm Illuminate Financial Management.

  • The two new investors join companies such as CommerzVentures, Coinbase Ventures, CoinDesk parent firm Digital Currency Group, Team8 and Digital Garage in the round, Curv announced Thursday.
  • An updated raise total was not disclosed, but as of July 1, $23 million had been placed in the startup’s coffers.
  • Curv offers cloud custody services based on multi-party computation technology to “safely transfer, store and manage any digital asset on any blockchain or DLT,” according to the announcement.
  • “Curv … eliminates the concept of private keys through multi-party computation, allowing for blockchain transaction signing in a secure, distributed way to protect against cyber breaches and insider collusion,”  said Joe Boerio, EVP and chief risk and transformation officer at Franklin Templeton.
  • While the Series A was closed in July, Curv co-founder and CEO Itay Malinger said the new investors had sought to join the round soon after.
  •  “The addition of Franklin Templeton is a barometer of the traditional industry’s shift into digital assets,” he said.
  • Last November the investment firm tapped Curv to help safeguard its shares by building a transaction signing and management system for its fund.
  • Franklin Templeton (ticker: BEN) is a New York-listed global investment firm founded in 1947.
  • At the close of 2019, the company held $698 billion in assets under management. 

Also read: Fidelity, Vanguard, Schwab Funds Have Been Loading Up on Crypto Mining Stocks

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Bequant Adds Services to Its Crypto Prime Brokerage Offering

5 years 11 months ago

Crypto prime broker Bequant is offering separately managed accounts (SMAs) so its institutional clients can manage investment strategies in one place, the company announced Thursday. 

SMAs as a financial service have been widely used by asset managers who work for institutional investors such as high-net-worth individuals and mutual funds.

“SMAs provide an independent transparent vehicle for institutional investment,” said Alex Mascioli, Bequant’s head of institutional services. “The infrastructure to provide them was there. Offering them now is basically all about our legal team and being able to formulate the product.”

Related: Institutional Crypto Platform Talos Emerges From Stealth Mode

SMAs give investors a daily view into their accounts versus the monthly statements typically provided by hedge funds.

Read more: Behind ‘Prime Broker’ Buzzword Lies a Complex Strategy Game for Crypto Firms

Stepping back, prime brokers are facilitators for financing and trading for deep-pocketed institutional investors.

While the digital asset space doesn’t currently have a lot of prime broker options, several crypto firms including Coinbase, BitGo and Genesis Trading have announced in recent months their plans to build prime brokerage wings.

Related: Bequant, Now in Crowded Prime Brokerage Race, Adds Signature Bank Integration

In a bid to keep its savvy clientele happy, Bequant also added cryptocurrency derivatives trading. The move lets fund managers find market-neutral strategies within those new SMAs, said CEO George Zarya. 

Bequant is connected to 11 sources of liquidity currently including HitBTC, Binance, OKEx, Huobi, Bittrex, Bitifnex and Deribit, with plans to add one more by year’s end.

Adding derivatives means the firm has finished integrations with derivatives-only exchanges like Deribit and expanded its use of spot and derivatives exchanges like Binance, Zarya added. The other four sources of liquidity are unnamed over-the-counter (OTC) trading desks.

Read more: Bequant, Now in Crowded Prime Brokerage Race, Adds Signature Bank Integration

Bequant also announced Thursday an instant transfer functionality, allowing clients to move funds from one exchange to another in seconds versus the half-hour or so it would take on-chain, Zarya said.

“That allows for more efficient collateral management and more trading opportunities,” he said. 

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CoinDesk

Bitcoin Hodlers Get a Lending Option With No KYC

5 years 11 months ago

Hodl Hodl, a non-custodial bitcoin exchange, is launching a lending product. The exchange claims it will be “the first true bitcoin DeFi” (decentralized finance) product.

Starting this month, bitcoiners can borrow USDT, USDC, PAX or DAI stablecoins in a peer-to-peer fashion, without going through know-your-customer (KYC) procedures, leaving their bitcoin as collateral for a period ranging from one day to one year.

The launch is following a larger crypto lending boom that took off in 2018, when venture-backed companies like Genesis Capital and BlockFi came to market. Genesis boasted $1.4 billion in active loans this August and BlockFi CEO Zac Prince told CoinDesk the company had $1.75 billion worth of crypto assets under management in October. 

Related: Crypto Options Exchange Deribit to Require ID Verification for All Users by Year End: Report

Both firms offer fiat loans backed by cryptocurrency collateral to retail borrowers and crypto loans to institutional investors. The market still has room for newcomers, Prince believes. “I think the space overall still has tons of opportunity, and the more smart folks building things with user value creation in mind the better.”

Now, Hodl Hodl is trying to introduce “true P2P lending in bitcoin.” Hodl Hodl CEO Max Keidun told CoinDesk: “Almost all (if not all) existing lending platforms are centralized, require KYC, don’t allow you to play by your own rules.”

Keeping those keys

Unlike existing crypto lending services, Hodl Hodl’s Lend marketplace will not act as a custodian and won’t store bitcoin collateral. Instead, the borrowers will lock their bitcoins in two-out-of-three multisig escrows for the time of the loan, and get it back when they pay back the stablecoins they borrowed. To release the funds from escrow, a transaction will need to be signed by two keys.

All stablecoin transactions will happen outside of the platform, Keidun said.

Related: BitMEX Accelerates Mandatory ID Verification After Charges of Lax Anti-Money Laundering Controls

There is no option to borrow or lend fiat money on Lend. The platform’s goal is “to eliminate fiat-related risks for its clients, which is impossible using a middleman such as a bank,” according to the Terms and Conditions draft shared with CoinDesk.

This approach is not widespread, nor is building DeFi products on the Bitcoin blockchain. Roderik van der Graaf, founder of Lemniscap, a venture fund that recently invested in Hodl Hodl, said it’s no surprise: “Bringing complex financial use cases to a constrained and secure ecosystem like Bitcoin’s is not an easy feat – which is evidenced in the lack of projects currently offering such use cases in production.”

P2P arrangements

The lender and the borrower will agree on the amount, time period, interest rate of the loan and the loan-to-value (LTV) ratio, which can be anywhere between 30% and 70%. Lend will take a 2% commission from each deal. When the two parties agree on the terms, each will get one key from the multisig, with Lend holding the third one. 

That third key, held by the platform, will come into play if there is a dispute between the two parties, in which case Lend will act as an arbiter and release the funds to the party that proves itself right. Or, if the price of bitcoin goes down, the collateral value depreciates and the borrower fails to fix it, Lend will use the third key to liquidate the collateral, which is, to release it to the lender and close the loan. 

The Lend team will be monitoring the price of bitcoin on exchanges like Coinbase, Huobi, Binance and Bitfinex and notify borrowers that their LTV ratio is approaching the threshold and they need to top up their collateral. 

If Hodl Hodl sees the LTV in a loan is rising above 75%, the borrower will get a first alert, followed by two margin calls if they fail to add collateral or repay part of the loan to get the LTV ratio back to the agreed level. 

At 90% LTV, Hodl Hodl will force liquidation of the collateral and release bitcoin to the lender, said Maria Geiko, COO of Hodl Hodl. If the bitcoin amount locked in escrow is greater than the debt, the difference will go back to the borrower.

Stefan Jespers, Belgium-based bitcoin advocate known as WhalePanda on Twitter, invested in Lend last fall and believes the project can ride the DeFi wave launched recently by the Ethereum community, but this time with bitcoin. 

“If you have some stablecoins laying around that you aren’t using, it’s a nice way to make some extra money with it. And you know beforehand what the interest rate will be. With most other products on the market, those rates can change frequently, here it’s locked for the entire duration,” Jespers said.

American turn

Unlike Hodl Hodl itself, which says it’s not serving clients from the U.S., Lend will be available globally, including to American bitcoiners, though not immediately. For the first two weeks, Keidun said, U.S. customers won’t be able to use Lend. “It’s a technical thing, we need to tweak settings on the backend,” Keidun said. 

Gabriel Shapiro, partner at the Belcher, Smolen & Van Loo law firm, told CoinDesk that a multisig approach practised by Hodl Hodl is currently in the “gray area” under the existing regulation in the U.S., as the law does not currently say anything about such specific situations. 

However, the fact that the platform is adjudicating disputes and determining which party the money should go to might potentially make it look like a money services business in the eyes of the Financial Crimes Enforcement Network (FinCEN), Shapiro said: “They are playing an essential role in the transmission.”

Over the past years, U.S. regulators have been coming after crypto businesses that served American users without following the rules that a mainstream financial business would follow, including obligatory KYC/AML checks and licensing procedures. The latest high-profile victim is BitMEX, a major crypto derivatives exchange.

Keidun believes that not touching fiat money or holding custody of clients’ funds puts the exchange beyond the FinCEN supervision. When asked what Hodl Hodl would do if FinCEN does not agree with this approach, Keidun said they would leave the U.S. market.

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CoinDesk

First Mover: The FOMO Takes Over as PayPal Play Sparks Bitcoin Rally to $13K

5 years 11 months ago

Bitcoin (BTC) was higher, following through on the upside after Wednesday’s 7.4% jump to a new 2020 high. It was the biggest single-day increase in almost three months. 

The surge past $12,000, with prices now around $13,000, came after the consumer payments giant PayPal (PYPL) announced it would allow its 346 million customers to hold bitcoin and other cryptocurrencies, and to use the digital assets to shop at the 26 million merchants on its network. 

“Traders are now eyeing for BTC to test the $14,000 long-term resistance from 2019, which we believe should be breached in the coming months ahead,” Lennard Neo, head of research for the cryptocurrency-focused structured-products firm Stack Funds, wrote early Thursday in a report. 

Related: Forget Ethereum, DeFi Is Being Built on Bitcoin

In traditional markets, European indexes slid and U.S. stock futures pointed to a lower open as lawmakers in Washington failed to agree on a new economic stimulus package as data showed a rising number of coronavirus cases. 

Market Moves

The official confirmation Wednesday that PayPal is pushing into cryptocurrencies (reported months ago by CoinDesk’s Ian Allison) ignited a fresh rally in prices for bitcoin, already seen as one of the world’s top-performing asset classes this year. 

And it might be the fear of missing out, or FOMO, that now pushes bitcoin prices even higher.

“Big moves can trigger periods of pure FOMO,” Matt Blom, head of sales and trading for the publicly traded cryptocurrency financial firm Diginex, wrote Thursday. “Sophisticated traders are definitely aware of the opportunity.” 

Related: Back at $13K: Bitcoin Unfazed by Profit Takers After Rise to 2020 High

The FOMO instinct might be especially strong as the coronavirus-infected economy relegates Wall Street stock and bond traders to hoping for trillion-dollar stimulus packages just to keep asset prices from falling.

“Markets are pretty aggressively priced,” said George Pearkes, global macro strategist at Bespoke Investment Group, told Bloomberg News. 

Bitcoin appears to get uplift from new stimulus announcements, since many cryptocurrency investors see it as a hedge against inflation. But digital assets also get the benefit of the doubt as a new technology that might revolutionize the financial industry, or as a form of payment that might find adoption from Argentina to Nigeria. 

“This coalescing of fintech and bitcoin is yet another bullish development for investors,” Zac Prince, CEO of the crypto lender BlockFi, told CoinDesk in an email.

With just a couple months left in 2020, the largest cryptocurrency is on track to outperform – by far – pretty much every other major traditional asset class, from stocks to bonds to gold. It would be the second year in a row that’s happened. 

Bitcoin prices, which doubled in 2019, are now up 80% so far this year. That compares with 6.3% for the Standard & Poor’s 500 Index of large U.S. stocks and a 27% increase for gold. 

PayPal’s announcement, and bitcoin’s ensuing rally, garnered ink from mainstream financial publications including Bloomberg News, the Financial Times and MarketWatch.

“It’s the sheer scale of PayPal’s reach that is attracting the headlines,” Jason Deane, an analyst for the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote in a report. “This could well go down in history as a watershed moment, the point at which bitcoin goes properly mainstream.” 

Such speculation might just be hype, sheer folly, a bubble mentality. Or it might be inevitable. Or all of the above. 

– Bradley Keoun

Bitcoin Watch

Bitcoin’s price rally looks overdone, as per technical indicators. However, these metrics often trap investors on the wrong side of the market and are unreliable.

The cryptocurrency jumped to 15-month highs above $13,200 on Wednesday after online payments giant PayPal added support for bitcoin and other cryptocurrencies. At press time, bitcoin is trading near $13,000, representing a 20% gain for the month.

The 14-day relative strength index (RSI) is now hovering above 70, indicating overbought conditions. The RSIs on the 4-hour and hourly charts also show the price rally is overdone.

But other measures show that the latest price level might have staying power.

Data extracted from the Bitcoin blockchain show a surge in inflows to cryptocurrency exchanges, typically a sign that sellers are queuing up to sell. According to the blockchain intelligence firm Chainalysis received a total of 106,519 BTC on Wednesday, the highest daily inflow since Oct. 2.

Even so, prices are holding up, signaling there’s also a strong bid from interested buyers. It’s not unprecedented: A similar spike in inflows was observed Sept. 4, but the cryptocurrency rallied to 15-month highs. 

All things considered, the price rally is likely to continue.

– Omkar Godbole

Read More: Above $13K: Bitcoin Unfazed by Profit Takers After Rise to 2020 High

Token watch

Zcash (ZEC): Partnership between tokenizer Tokensoft and custodian Anchorage leads to wrapped zcash (WZEC) that can be used on Ethereum blockchain and deployed in DeFi protocols.

Ethereum Classic (ETC): Multiple 51% attacks against the network has led to the latest fix called MESS, but critics say it’s not enough.

Litecoin (LTC): PayPal’s decision to support litecoin on its platform may sit at odds with the community, but it has helped boost its value over the last 24-hours.

What’s hot

Digital-asset brokerage Voyager Digital agrees to buy French crypto exchange LGO, will issue 1M shares (currently around 50 cents each) for the acquisition and undertake token merger (CoinDesk)   

DeFi yield-farming platform Harvest Finance doubles total collateral value locked to $704M in one week, unseating decentralized derivatives exchange Synthetix (CoinDesk)

Popular cryptocurrency options exchange Deribit will require all users to be ID verified before end of year (CoinDesk)

Crypto exchange Kraken officially restarts trading operations for Japanese customers (CoinDesk) 

U.S. commodities-market regulator issues advisory to brokers on how to look after users’ digital currencies in segregated accounts, part of “holistic framework” (CoinDesk)

Nigerian bitcoin peer-to-peer trade volume grows amid rising tensions over alleged police corruption, as locals look for easy ways to send remittances and shelter savings from inflationary domestic currency (CoinDesk):

Analogs The latest on the economy and traditional finance

More than 5,000 job cuts at Hong Kong airline Cathay has left local real estate market reeling (Bloomberg)

U.S. stimulus package unlikely to pass before Nov. 3 election, Goldman Sachs says (CNBC) 

Mere prospect that the Federal Reserve might intervene in bond markets is keeping U.S. Treasury yields close to historic lows (Bloomberg)

More than half of all small- and medium-size businesses in Europe are fearful for their survival in next 12 months (Reuters)

Alibaba to buy more than a fifth of fintech giant Ant Group’s potentially $35B IPO (Bloomberg)

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CoinDesk

Back at $13K: Bitcoin Unfazed by Profit Takers After Rise to 2020 High

5 years 11 months ago

The bitcoin (BTC) market looks to be shrugging off increased selling pressure from profit takers after prices surged this week.

  • On Wednesday, bitcoin jumped over 7% to hit 15-month highs above $13,000 after payments giant PayPal announced support for cryptocurrencies.
  • Cryptocurrency exchanges tracked by blockchain intelligence firm Chainalysis received a total of 106,519 BTC on Wednesday – the highest daily inflow since Oct. 2. A similar spike was observed on Sept. 4.
  • That could be a concern for bulls, as flows to exchanges often precede sell-offs.
  • “The pick up in exchange inflows indicates some investors rushed to liquidate their holdings (take profit) in the rising market,” Philip Gradwell, chief economist at Chainalysis, told CoinDesk over WhatsApp.
  • However, there’s reason to believe that any higher levels of sales were absorbed Wednesday, as bitcoin’s trade intensity (a measure of how many times an inflowing coin is traded) jumped to a two-month high of 5.8. That’s more than double the 90-day average.
  • Each of the 106,519 bitcoins sent to exchanges yesterday was traded on average 5.8 times, meaning the market had capacity to absorb the sales.
  • “While people are taking advantage of high prices, they are being outweighed by buyers,” Gradwell said.
  • As such, the ongoing price rally looks to have legs. Bitcoin is currently trading around $13,020, having witnessed a pullback from $13,230 in the past 12 hours, according to CoinDesk’s Bitcoin Price Index.
  • So far today, about 30,000 BTC have been transferred to exchanges, Gradwell noted.
  • Going forward, there’s likely to be no shortage of buyers amid the optimism generated by PayPal’s move into crypto services and increasing institutional participation.
  • “2020 is fast becoming the year of crypto acceptance and we see 2021 as the year of mainstream adoption,” Constantin Kogan, managing director at Wave Financial Group, told CoinDesk in an email.
  • Bitcoin will maintain “a strong bullish trend and rise beyond $14,000 by the year-end,” he said.

Also read: PayPal Embraces Crypto, Igniting Market as Mainstream Adoption Inches Closer

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CoinDesk

Ant Unveils Blockchain Product as Group Approved for World’s Biggest IPO

5 years 11 months ago

Ant Group continues to roll out blockchain-based platforms, announcing a way for content creators to protect their copyright on Thursday.

  • Built on its AntChain network and using AI technology as well as blockchain, the digital copyright platform allows creators to “quickly authenticate and verify a variety of original works,” the company said in a press release.
  • These can include musical scores, videos, images, articles and essays.
  • After loading a work to be protected onto the platform, it first checks that the content is the only version within its database.
  • If so, a “unique digital copyright certification” containing information about the work and a notary stamp is created.
  • Ant Group said these “tamper-proof” certifications could be submitted as evidence in copyright infringement and tort disputes.
  • The copyright platform offers users search tools allowing them to monitor and flag potential copyright infringement, and can also potentially save creators compared with traditional copyright registration and certification services, Ant said.
  • The announcement comes as the group receives final approval from Hong Kong’s stock exchange for what is slated to be the world’s biggest-ever IPO.
  • The Financial Times said Wednesday that the green light sets off final preparations for the dual listing in Hong Kong and Shanghai, set to raise a massive $30 billion.
  • Owned by billionaire Jack Ma, the group is now said to be worth $318 billion according to analysts cited by the FT.

Also read: Ant Group Claims 100M Digital Assets Are Uploaded to Its Blockchain Daily

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CoinDesk

Raiffeisen Bank Bringing Blockchain Interoperability to Its Stablecoin Project

5 years 11 months ago

Austria-headquartered Raiffeisen Bank International (RBI) is turning to technology that will allow its tokenized fiat currency to connect to multiple blockchains.

  • The initiative will see the bank’s RBI Coin integrated with the Pantos blockchain interoperability tool from Vienna-based cryptocurrency exchange Bitpanda, according to a press release on Thursday.
  • Unveiled in May, RBI Coin is a tokenized version of national currency, often called stablecoins, aimed to facilitate more reliable and near-instant payments between banks and businesses.
  • Currently a pilot project, the bank partnered with Polish-British fintech firm Billon to use its distributed ledger technology for the e-money solution.
  • Bitpanda said Pantos comes as the result of over 2.5 years research with the ​Technical University of Vienna, and is designed to allow token projects to avoid being restricted to any one blockchain.
  • Raiffeisen will deploy the tech as a proof-of-concept trial initially, allowing the banking industry to become “technology-agnostic in the field of fast-changing blockchain technologies,” according to the announcement.
  • “The Pantos technology plays an integral role in making the tokenization of assets a reality within our banking group by bringing in the interoperability aspect thus allowing for even more extensive and flexible use cases for banking customers,” said Christian Wolf, head of Strategic Partnerships & Ecosystems at Raiffeisen Bank International.

Also read: Austrian Bank Raiffeisen Enlists in R3 Blockchain Consortium

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CoinDesk

Kraken Relaunches Crypto Trading in Japan After Two-Year Break

5 years 11 months ago

U.S.-based crypto exchange Kraken is once more letting Japanese residents fund their accounts and trade crypto on its platform.

  • Announced Thursday in a company blog post, Kraken said the move comes as the start of a larger push to expand its services within the APAC region.
  • The exchange first said it was reopening for Japan’s market in September.
  • The company had shuttered its local services after the Coincheck exchange’s $530 million hack in 2018 spooked local regulators into clamping down on cryptocurrency trading activity.
  • As part of the conditions for re-entry, Kraken completed registration as a crypto asset exchange service provider under Japan’s Payment Services Act on Sept. 8.
  • “In today’s challenging economic environment, more people are turning to cryptocurrencies to hedge against volatile markets,” said David Ripley, Kraken’s chief operating officer, in comments on the relaunch.
  • For users completing Kraken’s onboarding process, spot trading is now open for bitcoin (BTC), ether (ETH), XRP (XRP), bitcoin cash (BCH) and litecoin (LTC).
  • Crypto deposits in these cryptocurrencies have been restored, as have domestic Japanese yen deposits and withdrawals via SBI Sumishin Net Bank.
  • Users can trade via crypto-to-crypto or yen-to-crypto trading pairs.

See also: Kraken Becomes First Crypto Exchange to Charter a US Bank

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CoinDesk

Eyeing EU Banks, Hex Trust Teams With SIA on Crypto Custody

5 years 11 months ago

Multinational payments firm Sia is partnering with cryptocurrency custodian Hex Trust to help its European banking clients hold digital assets.

“When you have one bitcoin, it’s not a big problem, but when you start adding 10, 20 or 100, you have a treasury and you have to decide where to store this,” said Daniele Savarè, SIA’s innovation and business solutions director. “We are discussing digital custody needs with banks in Europe.” 

Following MicroStrategy’s purchase of $425 million in bitcoin, Square’s $50 million bitcoin investment and PayPal’s support of crypto buying and selling on its platform, SIA hopes to prepare its bank clients for a presumptive wave of increased interest in crypto investing, Savarè said. 

Related: Signature Bank Gains $1B Deposits in Q3, With Notable Growth From Stablecoin Issuers

The firm is also helping banks manage and safekeep security tokens and central bank digital currencies, he added.

SIA eyes BTC

Milan-based SIA is a multinational company that often serves as a gateway to European payments. In early October, Italy’s largest payments processor, Nexi, announced it would acquire SIA in a €4.6 billion ($5.4 billion) stock deal that will close in 2021. The company also provides the network infrastructure for a system running Italian interbank transfers on R3’s Corda.

Through SIA, Hex Trust plans to offer European banks the software to custody digital assets on behalf of their customers. Hex Trust will also act as a sub-custodian for banks that don’t want to directly offer the service, said Hex Trust CEO Alessio Quaglini. 

Read more: This Liechtenstein Bank Can Now Custody Crypto

Related: Around 100 Italian Banks Are Officially on a Blockchain

Currently, Hex Trust works with three banks – Mason Privatbank Liechtenstein AG and two unnamed Asian banks. Quaglini said Hex Trust has 10 other banks that are exploring the custodian’s products.

In April of this year, Hex Trust also partnered with R3 to offer the consortium’s banking clients another option for issuing security tokens.

Going forward, SIA will be the primary distribution partner for Hex Trust to offer digital-asset services to banks in Europe, Quaglini said. 

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CoinDesk

Collider Labs Raises $1M to Invest in Blockchain Startups

5 years 11 months ago

Collider Labs has raised $1 million to be invested in early-stage blockchain and cryptocurrency startups.

In an announcement Thursday, the venture builder said the raise had brought on board several notable limited partners including Efficient Frontier CTO Alon Elmaliah and Follow [the] Seed Founding Partner Andrey Shirben.

Collider provides funding and liquidity and actively participates in building up startups alongside their communities and founders, according to the firm’s founding partner, Avishay Ovadia.

Related: O(1) Labs Raises $10.9M More for Lightweight Mina Protocol

The company is actively seeking to invest in early-stage blockchain and crypto startups globally, with a focus transparency, privacy and “fairness.”

Collider “is a venture builder that somewhat resembles an accelerator” Ovadia said. With some “key characteristics” that differentiate it from a typical accelerator.

Venture builders, also known as startup studios, pair with early-stage startups and utilize their own ideas and resources to, if all goes according to plan, construct viable enterprises.

According to Ovadia, Collider forms partnerships with founders, invests in teams and works alongside them as what he calls “Investors in Residence.”

Related: UK-Listed Firm Mode Putting Up to 10% of Cash Reserves Into Bitcoin

See also: Boardroom Raises $2.2M for Blockchain Governance Toolset

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CoinDesk

Voyager Agrees to Buy LGO Markets and Merge 2 Firms’ Tokens

5 years 11 months ago

Two cryptocurrency trading firms are merging, and in a rare twist, so are their tokens.

Voyager Digital, a publicly traded digital asset brokerage with offices in New York, has agreed to buy LGO, a French crypto exchange primarily serving institutional investors, as the company expands to Europe.

The transaction requires regulatory approval, which the parties said they expect to receive by the end of this year, along with the token swap. The value of the deal will depend on the value of Voyager’s shares, and the firms’ tokens, at closing; at current prices, it would be in the low seven figures.

Related: PwC Report Points to Banner Year for Crypto M&A and Fundraising Deals

As such, this deal is dwarfed by this year’s blockbuster crypto M&A deals such as Binance’s acquisition of CoinMarketCap, estimated to be worth $400 million, and FTX’s $150 million deal to acquire Blockfolio.

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

What makes this deal unusual is that the two companies’ utility tokens, VGX and LGO, will be swapped into newly minted tokens featuring decentralized finance (DeFi) functions such as community governance and staking at an initial interest rate of 7%.

“We think this is really taking the old-school mergers and acquisitions to the token world, which hasn’t been done before,” Steve Enrlich, Voyager’s co-founder and chief executive officer, told CoinDesk.

Related: Italian Payments Giants Merging to Form Entity That Will Dominate Local Market

Upon completion, Voyager, which is publicly listed on the Canadian Securities Exchange, will issue one million shares for the acquisition and operate in the European retail market with LGO’s Virtual Asset Service Provider registration with the French Financial Markets regulator (AMF). All activities will be conducted under the Voyager brand and LGO will discontinue its institutional services on Oct. 31. Shares of Voyager closed at C$0.67 ($0.51) on Wednesday. 

Read More: Voyager to Pay Interest on DeFi Tokens to Gain Brokerage Clients

Hugo Renaudin, co-founder and chief executive officer of LGO, told CoinDesk that the French company made the deal after it decided to shift its focus from institutional clients to increasing value for its token holders.

“The key decision-maker is what will bring the most value to our tokens,” Renaudin said. “So we have this token. We have token holders and they’re mostly retail [clients].”

LGO launched an initial coin offering (ICO) in February 2018, according to its website, which raised 3,600 bitcoin (worth about $36 million at the time). The company’s white paper shows that 60% of the tokens were distributed through a pre-sale process, while 20% of the supply went to LGO’s founders and advisors.

At its peak in April 2018, the LGO token’s market cap was nearly $40 million, according to data from CoinMarketCap. On Wednesday, that value was calculated to be $1.5 million. 

Renaudin told CoinDesk that the company’s other option would have been focusing on better serving its institutional clients, which means its spot exchange would have to provide new and exotic derivatives products. After consideration, he said that the team had decided to change its focus to retail customers instead.

The merger comes during a time of regulatory crackdown on crypto derivatives trading around the globe. Popular crypto derivatives exchange BitMEX was charged by the U.S. Commodity Futures Trading Commission (CFTC) with facilitating unregistered trading activities, while in the UK, the Financial Conduct Authority (FCA) has banned crypto derivatives for retail consumers.

This is not the first acquisition by Voyager, which went public in early 2019 in a reverse merger with the shell of a Canadian mineral exploration company. Previously, it acquired wallet startup Ethos.io for about $4 million.

Read More: Voyager CEO Says Revenue Growth Accelerates 8-Fold as DeFi Trading Surges

Voyage’s revenue in the most-recent fiscal quarter, which ended Sept. 30, surged to about $2 million, compared with $1.1 million during the fiscal year ending in June.

“We are becoming the financial service firm of the future, which means I will look at acquisitions that can add products, customer assets to the platform, or tokens and other communities that can be accretive to what we are trying to do,” Enrlich said. “And adding these pieces together we are going to either do it organically or through more acquisitions.”

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