CoinDesk Crypto

While tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion’s share of stablecoins in circulation, two smaller rivals are trouncing it in crypto’s hottest market this year, decentralized finance (DeFi).  

Measured by the total value locked in six of the most popular DeFi protocols – Compound, Maker, Uniswap, Curve, Aave and Balancer – USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. That’s according to data compiled by Flipside Crypto as of Oct. 19. 

USDC and DAI have market caps of $2.74 billion and $608 million, respectively. Yet, unlike on centralized exchanges, where tether is the go-to stablecoin in dollar-based crypto trades, USDC and DAI seem to have found their niche as the preferred stablecoins in decentralized trades.

Related: With COMP Below $100, a Look Back at the ‘DeFi Summer’ It Sparked

In an interview with CoinDesk, Jeremy Allaire, peer-to-peer payments company Circle’s co-founder, attributed USDC’s success in DeFi to his company’s early efforts in building relationships with the DeFi communities. The fact the two companies that co-founded USDC’s governing Centre consortium, Circle and crypto exchange Coinbase, are both registered financial entities in the United States may also have something to do with USDC’s recent upturn. According to Allaire, USDC is preferred by institutional investors for being “safe, trusted and regulated.”

Read more: Total Stablecoin Supply Nearly Doubled in Q3, Adding Record $8B

Authorities around the globe are giving more direction on how cryptocurrencies should be used and regulated. In late September, for instance, the U.S. Office of the Comptroller of the Currency (OCC) published its first regulatory guidance for stablecoins, clarifying that national banks can provide services to stablecoin issuers in the U.S. 

“Having guidelines creates more certainty, which makes mainstream market participants ready and willing to engage in it,” Allaire told CoinDesk.

Related: Uniswap’s First Governance Vote Ends in Ironic Failure

In contrast to USDC, dai is a decentralized stablecoin that in theory does not have a centralized issuer and is censorship-resistant. Niklas Kunkel, the head of backend services at MakerDAO, told CoinDesk DAI’s decentralization core has made it more popular than most of its competitors. He sees its decentralization as a good thing for regulators. 

“One advantage you have from a decentralized stablecoin is that everything is completely transparent,” Kunkel told CoinDesk in an interview. “So from a regulatory point of view, this is almost like their dream scenario, right? Because they can see exactly how many dai are in existence and in circulation and they can see in real time.”

“Dai is not the antithesis to regulation and regulator,” he added. “If anything, it’s the opposite.”

For stablecoin king tether, more than a few market participants question whether it is as transparent as the company claims. Tether the company has been battling multiple lawsuits accusing it of not properly backing its currency with collateralized reserves. Tether has declined to answer CoinDesk’s questions on the lawsuits. However, in an email, Chief Technology Officer Paolo Ardoino called tether “the most stable and liquid stablecoin.”

That assertion is challenged by at least some of its competitors. 

Read more: ‘No Other Option but More Collateral’: The Short- (and Long-) Term Fixes for Dai’s Broken Peg

“Tether is not fully backed with dollars and there is very little transparency into their reserves,” the head of strategy at Paxos, Walter Hessert, wrote in an email response to CoinDesk. “That’s ok for some crypto traders because there are very liquid markets today. However, mainstream investors and institutions prefer stablecoins they can trust.”

According to Tether’s website, its USDT stablecoin is backed by cash and equivalents “and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.” 

Paxos’ stable of stablecoins, including Paxos standard token (PAX), Binance USD (BUSD) and Huobi (HUSD), are all approved by regulators and are fully backed on a one-to-one basis with U.S. dollars, according to Hessert.

Tether’s first-mover advantage may have been the leading reason for its overall dominance, but even in Asia, which has historically driven demand in USDT, traders are beginning to turn to other stablecoins for liquidity.

“We have seen a lot of guys in Asia are starting to trade more BUSD and USDC instead of tether,” Darius Sit, co-founder of Singapore-based crypto trading firm QCP Capital, told CoinDesk in an interview. “USDC is more fungible, meaning that it can be exchanged one to one anytime. The spread is tighter.”

The total stablecoin supply in the third quarter nearly doubled from the second quarter, and the total market capitalization of stablecoins has also breached $20 billion at press time, according to data from CoinGecko. That’s still relatively smaller than what’s found in traditional finance, a fact giving optimism to many in the stablecoin business hoping to overtake tether. 

“When you think about the size of dollar money markets, it’s like four trillion” dollars, Allaire said. “So clearly, tokenized dollars that are used in a really wide variety of applications should be eventually [worth] hundreds of billions or even trillions of dollars.”

Related Stories

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The Central Bank of the Bahamas has officially launched its national digital currency.

The first of its kind in the world to have been fully deployed, the sand dollar is a digital version of the Bahamian dollar.

Issued by the country’s monetary authority as a central bank digital currency (CBDC), the announcement of the launch came via a tweet on Wednesday.

Related: The US Risks Getting Left Behind on CBDCs

The project is designed to bring more “inclusive access to regulated payments and other financial services,” per the central bank’s FAQ.

CBDCs have been a hot topic this year; China, for instance, appears to be close to launching its digital yuan, which in recent days has seen its biggest public trial. Others, like the U.S., Russia and the EU are looking into their respective CBDC launches.

As reported by CoinDesk, the first phase of the Bahamas roll-out sees private-sector players such as banks and credit unions readying compliance checks for personal and enterprise wallets to support the sand dollar.

The digital wallets will be secured with multi-factor-authentication security and will be mobile-based, servicing the 90% of the population with smartphones.

Related: CBDCs Mean Evolution, Not Revolution

Underserved communities of the Caribbean nation are the primary target for the initiative, which the bank said would reduce financial service delivery costs and boost transactional efficiency. The country is an archipelago with hundreds of islands, placing limits on traditional infrastructure.

The Sand Dollar is backed 1:1 to the Bahamian dollar (BSD), which, in turn, is pegged to the U.S. dollar.

See also: Australian Central Bank Sees ‘No Strong Public Policy Case’ for CBDC

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Mode Global Holdings PLC, a London Stock Exchange-listed company, has announced plans to make a “significant purchase” of bitcoin as part of its treasury investment strategy.

• In a press release on Wednesday, the fintech group said it will convert up to 10% of its cash reserves into the cryptocurrency as part of a long-term strategy to “protect investors’ assets from currency debasement.”
• With interest rates in the U.K. at a record low of 0.1%, Mode said it would also seek to diversify away from low-interest money market instruments to maximize the value of returns from its recent initial public offering.  
• “Faced with the challenges of COVID-19 and with U.K. interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of bitcoin has only increased,” said Jonathan Rowland, Mode’s executive chairman.
• “Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy,” he added.
• With the news, the company follows MicroStrategy and Jack Dorsey’s Square in deciding to place a portion of their treasury reserves into bitcoin.
• MicroStrategy put $425 million into bitcoin, according to a series of disclosures, while Square invested $50 million.
• Mode said it recognized the potential of bitcoin as “a reliable store of value and an attractive investment due to the asset’s asymmetric risk/reward attributes and safe haven status.”
• The firm did not disclose a cash value of the bitcoin allocation.

Read more: MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M

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Mode Global Holdings PLC, a London Stock Exchange-listed company, has announced plans to make a “significant purchase” of bitcoin as part of its treasury investment strategy.

• In a press release on Wednesday, the fintech group said it will convert up to 10% of its cash reserves into the cryptocurrency as part of a long-term strategy to “protect investors’ assets from currency debasement.”
• With interest rates in the U.K. at a record low of 0.1%, Mode said it would also seek to diversify away from low-interest money market instruments to maximize the value of returns from its recent IPO.  
• “Faced with the challenges of COVID and with UK interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of Bitcoin has only increased,” said Jonathan Rowland, Mode’s executive chairman.
• “Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy,” he added.
• With the news, the company follows Microstrategy and Jack Dorsey’s Square in deciding to place a portion of their treasury reserves into bitcoin.
• MicroStrategy put $425 million into bitcoin, according to a series of disclosures, while Square invested $50 million.
• Mode said it recognized the potential of Bitcoin as “a reliable store of value and an attractive investment due to the asset’s asymmetric risk/reward attributes and safe haven status.”
• The firm did not disclose a cash value of the bitcoin allocation.

Also read: MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M

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Cryptocurrency traders showed significantly less enthusiasm as bitcoin traded at $12,000 Tuesday compared to when bitcoin reached the same level nearly two months ago, based on futures funding rates from multiple exchanges.

• When bitcoin traded near $12,000 throughout August, finally reaching the key level mid-month, funding rates for perpetual futures turned acutely positive across leading derivative exchanges, reflecting the market’s bullishness.
• As bitcoin revisited $12,000 Tuesday, however, funding rates reacted differently, staying flat or turning negative, indicating a lack of the same bullishness two months ago.
• A mechanism unique to perpetual futures contracts, funding rates are set by the market and vary over time as traders put on and take off positions. When the market is bullish, funding rates turn positive, and traders taking long positions pay short sellers. When the market is bearish, funding turns negative, and short sellers pay.
• Funding rates across Binance, Bitfinex, BitMEX, and Deribit futures markets started turning negative Saturday and Sunday as bitcoin started trading above the low $11,000 levels, according to data aggregated by Glassnode. As bitcoin tapped $12,000 Tuesday, rates stayed negative or went flat.

• A string of negative news over the past few weeks may be to blame for the markets less-than-bullish sentiment, according to Aditya Das, cryptocurrency market analyst at Brave New Coin, who said he thinks some traders may have been “spooked” and closed their long positions or put on shorts.
• Funding on FTX and Huobi similarly stayed negative throughout the week’s entire opening rally, according to data aggregated by Skew.
• Futures traders on OKEx, the largest derivatives exchange by open interest, in fact became increasingly bearish Tuesday amid bitcoin’s rally. The exchange’s ratio of long to short positions steadily dropped from 0.79 at Tuesday’s open to 0.67 at last check, as short sellers outnumbered bitcoin bulls.
• Despite the lack of bullishness from futures traders, traditional market asset allocators and crypto-market investors are still actively “redenominating” into bitcoin, according to Kyle Davies, co-founder of Three Arrows Capital, continuing what he calls “the story of Q3 2020.”
• Davies told CoinDesk, “We generally see this kind of spot-led move precipitate a period of speculation.”

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BitMEX, which has been charged by the U.S. government and a regulator with facilitating unregistered trading, has accelerated its mandate for all customers to verify their identities by Nov. 5, three months earlier than its original deadline of early February.

Stronger identity verification requirements is an industry trend, said Ben Radclyffe, commercial director of the exchange’s parent company 100x Group, in an interview with CoinDesk. BitMEX’s decision to move the deadline from February 2021 to November 2020 follows this trend and internal plans the exchange has worked on for “over a year with a considerable amount of resources dedicated to this.”

In August, the famously freewheeling bitcoin derivatives exchange announced mandatory identity verification. Less than two months later, charges were filed against the exchange by the U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) and as a result nearly 30% of its bitcoin balance were withdrawn by clients.

Related: ‘Garbage’ Market Data Is Holding Bitcoin Back: MicroStrategy CEO

Under the accelerated timeline, by 0:00 UTC on Nov. 5, all BitMEX traders and affiliates identities must be verified before increasing or opening new positions. By Dec. 4., all accounts must be verified in order to process withdrawals from the exchange. After Dec. 4, BitMEX will begin to close unverified accounts, Radclyffe told CoinDesk.

“Well over 50% of BitMEX’s current trading volume comes from verified accounts,” said Radclyffe, representing the trading activity of tens of thousands of accounts.

“The industry’s KYC-free are coming to a close,” said 100x’s chief compliance officer, Malcolm Wright. BitMEX’s accelerated identity verification deadline along with other corporate initiatives, including an internal anti-money laundering working group, are efforts by 100x, according to Wright, to become an industry leader in identity verification initiatives.

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Bitcoin’s price passed $12,000 for the first time since September as Ethereum fees dipped.

• Bitcoin (BTC) trading around $11,910 as of 20:00 UTC (4 p.m. ET). Gaining 1.8% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,673-$12,058
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price continued to make gains Tuesday following Monday’s steady price appreciation. The world’s oldest cryptocurrency breached $12,000 around 17:00 UTC (1 p.m. ET), going as high as $12,058 before settling in at $11,910 as of press time. 

The last time bitcoin was over $12,000 was back on Sept. 1, according to Bitstamp spot pricing. (CryptoCompare, using index-weighted pricing, puts it at Aug. 19.) David Lifchitz, chief investment officer at ExoAlpha, says bitcoin could hit $12,500 at some point soon but will face a struggle. “The real resistance level is around $12,500-ish, so until a meaningful breakout above that level, nothing is done, $12,000 is just a psychological level.”

Related: How Strong Is Bitcoin’s Push Above $12,000?

Lifchitz said that while the price level is notable, it could lead to bitcoin staying in a sideways pattern around this level similar to when it crossed $10,000. “Bitcoin, having held above $10,000 for more than two months in a row, was a bullish sign, even if it had been trading sideways in a $2,000 range.”

Nevertheless, the last time bitcoin traded below $10,000 on the spot market was back on Sept. 9. This piece of data appears to be bolstering some investors’ faith. 

“We continue to break the record each day for the longest streak a bitcoin trades above $10,000, so overall investor confidence is growing I think,” said Michael Gord, chief executive officer of trading firm Global Digital Assets. 

Read More: Crypto-Friendly Signature Bank Raked In $4B in Deposits in Q3 2020

Related: Bitcoin Price Breaches $12K for First Time Since August

Bill Noble, cryptocurrency strategist for analysis firm Token Metrics, said momentum is shifting from Ethereum-based decentralized finance, or DeFi, to bitcoin. “ETH and DeFi are watching BTC awaken like a sleeping giant,” he said. “The BTC move to $12,000 is sending the altcoin universe scrambling for cover.” 

Bitcoin dominance, a metric that calculates the cryptocurrency’s share versus other assets on the market, has been trending up since the start of October. The last time dominance was at this level was at the end of August. 

“Although there is positive sentiment around BTC, bull runs usually lead to a bear market in alt coins,” noted Melvis Langyintuo, a market strategist for the San Francisco-based cryptocurrency exchange OKCoin.

Market conditions may mean DeFi discounts could develop for traders, Token Metrics’ Noble noted. “A BTC move above $12,000 could result in a DeFi dip that could be bigger than most expect,” he said. “Any such move could be a golden opportunity to pick up the survivors of the DeFi shakeout at discounted prices.”

Ethereum fees get cheap – for now

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Tuesday trading around $369 and slipping 2.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Validators Drop Off Ethereum 2.0 Testnets as Mainnet Release Looms

On Saturday, Oct. 17, the daily average fee on the Ethereum network hit a three-month low, at 0.00246199 ETH. That’s a level not seen since July 12 when the average was 0.00211437 ETH. Fees, which are trending back up from Sunday’s low, are required on Ethereum to send transactions, including to smart-contract based DeFi platforms.

Jean-Marc Bonnefous, managing partner of Tellurian Capital, an investment firm that has followed cryptocurrencies since 2014, said deflation of DeFi hype is causing fees to go down. “Gas fees are lower as the recent enthusiasm for DeFi tokens, [decentralized exchanges] and [automated market makers] has hit a wall for now,” Bonnefous told CoinDesk. 

If DeFi heats up again, expect higher fees, Bonnefous added. “We could be in for a few weeks of consolidation before another push higher for DeFi tokens, which will most likely see gas costs flaring again. The problem of high gas fees won’t go away without structural enhancements.”

Other markets

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

• tron (TRX) + 0.64%

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

• chainlink (LINK) – 8.6%
• zcash (ZEC) – 8.2%
• 0x (ZRX) – 7.2%

Read More: Uniswap’s First Governance Vote Ends in Ironic Failure

Equities:

• The Nikkei 225 in Asia closed in the red 0.44% as Japanese regulators plan to conduct an exchange review after a technical glitch shut down the market Oct. 1.
• The FTSE 100 ended the day flat, in the green 0.07% as new coronavirus infections in Europe hit a new high on Monday.
• In the United States the S&P 500 gained 1.2% as progress towards a fiscal stimulus deal in the face of rising coronavirus cases boosted investor optimism.

Commodities:

• Oil was up 2%. Price per barrel of West Texas Intermediate crude: $41.49.
• Gold was in the green 0.32% and at $1,909 as of press time.

Treasurys:

• U.S. Treasury bond yields were mixed Tuesday. Yields, which move in the opposite direction as price, were down most on the two-year bond, dipping to 0.145 and in the red 5.2%.

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House Speaker Nancy Pelosi said she was “optimistic” about a coronavirus pandemic relief deal after the Trump administration made concessions on coronavirus testing and tracing ahead of a Tuesday evening deadline to reach an agreement, the Financial Times reported.

• Why this matters to the crypto world:
  
  1. Because the price of bitcoin and equities have been strongly correlated in recent months. Because the stimulus package would be a boost for stock markets, it could also provide a lift to the price of cryptocurrencies.
  
  2. Crypto investors have been betting all year that the flood of government and central bank spending to fight the pandemic-caused economic slowdown will eventually lead to inflation, which would also be beneficial for cryptocurrencies.
  
  3. All the stimulus is calling into question the independence of the U.S. Federal Reserve, which in the interest of preventing economic ruin in the short term has been basically printing money with abandon, leaving itself open to criticism about the mountain of debt these spending sprees is creating.
• Meanwhile, Pelosi (D-Calif.) said in a Bloomberg Television interview that progress was being made on “key provisions” and legislative language is being drafted.
• Senate Majority Leader Mitch McConnell (R-Ky.) said the Senate will take up the stimulus package if Pelosi and Treasury Secretary Steven Mnuchin reach an agreement and the resulting measure passes the House, Bloomberg reported.
• McConnell didn’t say whether he’d back the measure. Several GOP senators are backing a much smaller package. The White House has proposed a $1.8 trillion stimulus package while the House Democrats are holding out for $2.2 trillion.

Read also: Pelosi, Mnuchin Edge Closer to a Stimulus Deal; Agreement Won’t Guarantee Passage

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The curtain has fallen on DeFi Summer – not that the sector is done, but the wild buzz seems to be.

The changing of the seasons is marked by Compound’s governance token, COMP, falling below $100 early Tuesday. COMP kicked off the yield farming craze way back in June as a new mechanism for luring assets onto what is now the sixth-largest decentralized finance (DeFi) platform, and the first to briefly topple MakerDAO as the industry leader.

COMP has been hovering right around $100 since a big drop on Oct. 6 brought it down close to our arbitrary threshold, and it’s finally lost that sweet third order of magnitude.

Related: Uniswap’s First Governance Vote Ends in Ironic Failure

Compound Labs founder Robert Leshner declined to comment for this story.

How DeFi got here

After Compound’s June surge, things started to get interesting as DeFi’s money legos began stacking up.

First introduced on Ethereum by Synthetix in July 2019, “liquidity mining” is what inspired this summer’s boom. The prospect of giving people a fresh new token above and beyond normal returns on deposits quickly drove COMP up higher than anyone had seemed to anticipate. On June 21, COMP reached its zenith at $372. 

Read more: First Mover: Compound’s COMP Token More Than Doubles in Price Amid DeFi Mania

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

The governance token’s runaway success led other dapps to follow suit, such as with the multi-token pool maker Balancer, the non-fungible token (NFT) marketplace Rarible and others.

But events would quickly become comical in ways they only can in crypto. 

First, a prominent automated market maker (AMM) would have its governance token accidentally released early, then vegetable coins would take over everyone’s imagination and the final drama would introduce vampirism and a convoluted exit scam.

Ultimately, leading AMM Uniswap would release its governance token, UNI, with its own liquidity mining scheme. 

“I personally consider UNI issuance is the peak of this farming movement,” Primitive Ventures’ Dovey Wan told CoinDesk in an email.

Endless summer

The takeaway from DeFi Summer for Wan is the power of the fair launch narrative that was kicked off by Yearn.Finance. Yearn had already been a tool to optimize returns when COMP was first released, but the excitement engendered by yield farming sparked a lot of innovation.

Yearn’s creator, Andre Cronje, created the YFI governance token and urged liquidity providers to earn it rather than buy it. Setting aside no pre-mine for himself, this sent already hyped-up yield farmers into overdrive.

Read more: What Is Yearn Finance? The DeFi Gateway Everyone Is Talking About

“The biggest value of this hype is bringing the fair launch back to the game,” Wan wrote. “The fundraising or bootstrapping liquidity mechanism itself, through farming, quickly gains mindshare and adoption. This will definitely bring value to the industry as an alternative to the previous VC presale game.”

Other observers are taking a similarly long view on the sector’s staying power.

“It’s obvious to anyone who studies this space that DeFi has major structural advantages compared to CeFi,” Spencer Noon, an investor at DLT Capital, told CoinDesk in an email. “This is because, among other factors, protocols don’t have employees, physical locations, or incur other expenses that traditional finance companies do.”

In a provocative twist, the final rays of DeFi Summer coincided with U.S. enforcement actions against crypto exchange BitMEX that cast a new light on the benefits of decentralization.

“If we look at the big picture, the recent indictment from DOJ on BitMEX is another alert why we need a true decentralized finance alternative where it can have minimal exposure to potential regulatory haul,” Wan wrote, who added that bubbles are moments for innovation and adoption. 

Read more: What Is Yield Farming? The Rocket Fuel of DeFi, Explained

Even as DeFi Summer cooled, the coin that kicked it all off held onto value as the narrative it had launched moved on. It wasn’t until Sept. 4 that COMP would sink below $200.

But Kain Warwick, of Synthetix, the firm that first birthed liquidity mining into the crypto lexicon, is undeterred by the cooling of 2020’s DeFi buzz.

He believes that underneath it all, an actual industry has been proven out. 

“[Decentralized exchange] volumes and usage as well as [total value locked] are still 10x+ up from earlier in the year. So while the irrational exuberance has been tempered we are still directionally in a good place in terms of traction,” Warwick said, adding:

“At some point we need to transition from hype to reality. The big difference between this cycle and the previous one is that the reality is here and it is sustainable.”

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Bitcoin (BTC) prices rallied Tuesday, briefly trading above $12,000 for the first time in more than two months.

• The cryptocurrency traded around $12,034.70, up 2.57% over the previous 24 hours, before settling back to $11,94628, up 2.26%, at press time.
• The 24-hour price range for bitcoin: $11,672.69 – $12,047.10.
• The rally was highly anticipated by the market after the largest cryptocurrency by market capitalization had a six-day streak of gains last week.
• Before breaking above $12,000, bitcoin prices had to overcome a large number of sell orders slightly below that level.
• “Bitcoin has been on a steady rise over recent weeks, driven partly by the news of Square’s $50 million bitcoin buy, and perhaps more substantially because of recent comments from U.S. Federal Reserve Chairman Jerome Powell regarding CBDC adoption in the U.S.,” Simon Peters, analyst at investment platform eToro, said in an email, referring to central bank digital currency.
• “I am encouraged that this isn’t a sharp move, which is usually a function of stop-loss trades,” Vishal Shah, founder of Alpha5 told CoinDesk, citing limited leverage and suppressed bitcoin futures curve. “It feels like a more genuine move.”
• The last time bitcoin prices hit the $12,000 level was Aug. 17, according to data from CryptoCompare.
• As for what happens next, the market will have to wait to see how the price will react at the $12,000 level, according to Peters, adding that prices “haven’t convincingly stayed above the threshold this year.”
• “Before investors look to the next bull run, we need to see the price remain above $12,000 for an extended period of time,” he added.
• Other coins from the CoinDesk 20 including ether, lumen, monero and dash were down between 2% and 4.9% in the past 24 hours.

UPDATE 18:15 UTC: Adds that bitcoin price retreated back below $12,000.

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Kik and the U.S. Securities and Exchange Commission (SEC) have proposed settling their dispute over a 2017 token sale with a $5 million fine.

The proposed joint settlement, which also enjoins the Canadian firm against future U.S. securities law violations, still needs approval from presiding federal District Court Judge Alvin K. Hellerstein, according to public court documents. If approved, the settlement would cap off a yearlong legal fight between the two.

Kik must give the SEC 45 days’ notice on any transactions related to its Kin token treasury under the proposal. That notice order expires three years after the judgment takes effect. CEO Ted Livingston declined to comment.

Related: Indian Trade Finance Startup Raises $3.7M in Token Sale Led by Arrington XRP

A similar lawsuit filed by the securities regulator against messaging platform Telegram saw that firm’s blockchain project, the Telegram Open Network, abandoned before it could launch.

But Kik’s proposed settlement has a critical difference from Telegram’s ill-fated TON outcome: it would not destroy the defendant’s tokenized dreams. Mandating that Kik notify the SEC of any kin sales within the next three years is the settlement’s only effect.

The settlement would tie up a legal bout that only 20 days ago appeared to be heading toward a resounding loss for Kik.

Kik originally announced it hoped to fight the SEC in court, potentially creating a precedent for how token sales might be treated under U.S. securities law. However, it backed away from a jury trial request in March, and lost a motion for summary judgement last month.

Related: SEC Will Be Forced to Give Crypto Guidance Despite Bureaucracy, Risk Avoidance: Peirce

At the time, a judge ruled that Kik’s issuance of Kin was an investment of funds in a joint enterprise that sought to boost the token’s price, satisfying the prongs of the Howey Test, a U.S. Supreme Court case used as a precedent for evaluating whether assets are securities.

Kik General Counsel Eileen Lyon said the SEC should create clear rules for the crypto industry, rather than publish “conflicting statements” and other non-binding forms of guidance in September.

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MicroStrategy CEO Michael Saylor strongly criticized widely distributed bitcoin markets data as “garbage” and said it severely misrepresents of his own experience with the market’s real liquidity after investing in bitcoin. 

In a live interview Tuesday with Hedgeye CEO Keith McCullough, Saylor said bitcoin volume is being reported at a wildly inflated $24.76 billion, referencing the current volume on Apple’s Stocks application. That number is similar to 24-hour bitcoin volume of $20.3 billion reported by CoinGecko. 

This data “ships to a billion devices in the world,” Saylor noted, referring to Apple. “It’s garbage.”

Related: JPMorgan Calls Square’s $50M Bitcoin Investment ‘Strong Vote of Confidence’ for the Cryptocurrency

“I know for a fact you can’t buy more than $35 million a day without people knowing, so there’s no freaking way there’s $24 billion trading,” Saylor explained, adding that he thinks bad data is “holding back bitcoin.” “It’s just awful.”

Estimates of what volume is “real” are “still all over the map,” said Galen Moore, senior analyst at CoinDesk Research. In January, Moore wrote that, for many cryptocurrency market participants, “data is a marketing tool instead of a revenue source,” and some exchanges are “exaggerating volumes in order to enhance their perceived liquidity.”

In a March 2019 report to the Securities and Exchange Commission (SEC), San Francisco-based Bitwise Asset Management found that approximately 95% of volume reported on popular cryptocurrency data aggregation websites is fake.

“Where can you find something so incredibly compelling that has such bad data around it relative to other assets?” Saylor asked rhetorically. 

Related: Crypto Long & Short: Coinbase’s ‘Apolitical’ Stance Isn’t Nearly as Simple as It Sounds

On a positive note, Saylor said he “love[s] the fact that the data is a little immature” since it represents “the pain and the work of being first or being early.”

Referring to high-quality markets data, Saylor said simply, “The market needs it.”

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Signature Bank’s deposits grew by over $4 billion. Non-profits have rejected bitcoin donations made from hackers. And a FinCEN investigation raises questions about bitcoin mixers and the Bank Secrecy Act. Here’s all the news people are talking about in crypto today.

Top shelf

Corporate DeFi?
R3’s open-source variation of its enterprise blockchain, Corda Network, will see the addition of a native cryptocurrency. The new coin, called XDC, will open the gates to build central bank digital currencies (CBDCs) and decentralized finance applications (DeFi) on the network. Programmed by the Cordite Society, a group of former bankers building decentralized tools, the XDC system will have compliance baked in to meet anti-money laundering (AML) standards, as every node represents a legal entity, CoinDesk’s Ian Allison reports. The Cordite Network is welcoming new members to vote on the rate of supply of XDC and other points of governance going forward.

Ironic outcome
Uniswap’s first voting process demonstrated the need to overhaul its governance system, Dharma CEO Nadav Hollander has said, following a “disappointing outcome.” The vote was over reducing the token threshold required to make and pass proposals on the protocol. Despite 98% of the votes cast being in favor of a proposed change, the total number needed for a successful vote fell short of the 40 million required by about 400,000. A successful vote would have seen this requirement drop by around a third. Hollander also said the vote “galvanized users to delegate in much higher numbers,” which was a “healthy outcome for Uniswap.”

Related: First Mover: Monero Leads Privacy-Coin Rally as Bitcoin Trips on Path to $12K

Dirty money
Robinhood-esque hackers who stole from corporations to give to charities have seen their donations rebuked. Members of the hacking group Darkside attempted to give bitcoin donations to two non-profits, Children International and The Water Project. The group used ransomware to steal from profitable companies with the intention of giving “some of the money” to charity, according to a BBC report citing a darknet blog. To make the donations, the cybercriminals used the service offered by The Giving Block, a U.S.-based project that converts donations into dollars for charities not set up to handle cryptocurrencies. “If the donation is linked to a hacker, we have no intention of keeping it,” Children International said.

CBDC platform
LINE Corporation, operator of the popular messaging app, is jumping into the CBDC game with a platform to allow central banks to develop digital currencies. The platform reportedly will help central banks develop customized, blockchain-based CBDCs by offering tools to issue digital tokens, tokenize assets and run decentralized applications (known as dapps). LINE is not alone. Mastercard recently released a platform allowing central banks to test how proposed digital currencies would work in real life. A LINE representative told South Korean newspaper Chosun that “major” Asian nations are already in discussions with the firm, though they could not disclose which ones.

Deposit growth
Deposits at crypto-friendly Signature Bank grew by $4.11 billion, an 8% increase, in the third quarter of 2020. Over the past year, deposits have grown by $15.28 billion, or nearly a 40% increase, according to the bank’s earnings release. Signature reports $54.34 billion in total deposits. “Crypto firms are often a rich source of low-cost deposits for the few banks that openly serve the sector. As such, analysts have paid close attention to deposit growth at Signature, Silvergate Bank and Metropolitan Commercial Bank,” CoinDesk’s Nathan DiCamillo reports.

Quick bites

• How Will Bitcoin Lead to More Freedom? (Jim Epstein/Reason)
• Closing Time for Bitcoin’s Iconic Room 77 – ‘And That’s OK,’ Says Owner (Colin Harper/CoinDesk)
• Polymarket Raises Massive $4 Million Round From Polychain, Naval Ravikant, Other Notable Investors (Rory Murray/Forbes)
• The Yield Protocol – which enables fixed-rate lending on Ethereum – is live (Mike Orcutt/The Block)
• Grayscale Bitcoin Products Underperform for Month: Report (Jeff Benson/Decrypt)

At stake

Bitcoin & the BSA
The executive behind the Helix and Coin Ninja bitcoin mixing services will pay a $60 million fine, following a Financial Crimes Enforcement Network (FinCEN) investigation that raises questions around the legality and future of these privacy-protecting tools. 

Related: Blockchain Bites: Filecoin Strike, Bitcoin Fees Fall, Coinbase Censorship

Bitcoin mixers are services designed to anonymize the source of funds. The U.S. financial watchdog hailed these civil charges as the “first” action against a bitcoin mixer. 

It was also said to be the first time the U.S. Department of Justice explicitly called bitcoin mixing a “crime,” casting a shadow on any service that obscures bitcoin’s publicly accessible path, CoinDesk’s Danny Nelson reported.

Prosecutors allege Harmon ran the unregistered money services business Helix from 2014 to 2017, conducting 1,225,000 transactions for customers and is “associated with virtual currency wallet addresses that have sent or received over $311 million.” From 2017 on, prosecutors say Harmon provided money transmission services via Coin Ninja.

Each of these transactions are said to be in violation of the Banking Secrecy Act. Prosecutors also said Harmon had a responsibility to file suspicious activity reports and systemically flouted U.S. money laundering laws.

“If you’re in the crypto space you’re about to become as familiar with the BSA as you think you are with the 33 and 34 acts and the Howey test,” Stephen Palley, a partner in the Washington, D.C. office of Anderson Kill, tweeted. “Each one of these violations is a separate violation of the BSA.  That is why the penalty is so massive.”

“The max penalty is $209,144,554. That’s a gobsmackingly enormous number because BSA non-compliance is heavily penalized and because FinCEN really really wants you to comply and really really wants you to be in pain if you don’t comply,” Drew Hinkes, an attorney with Carlton Fields, tweeted.

Harmon also faces criminal proceedings in U.S. federal court.

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The Takeaway:

• Deposits at crypto-friendly Signature Bank grew by $4.11 billion in the third quarter, an 8% increase from the previous quarter.
• Over the past year, deposits have grown by $15.28 billion or nearly a 40% increase, according to the bank’s earnings release. Signature reports $54.34 billion in total deposits.
• Crypto firms are often a rich source of low-cost deposits for the few banks that openly serve the sector. As such, analysts have paid close attention to deposit growth at Signature, Silvergate Bank and Metropolitan Commercial Bank.

The $1 billion in deposit growth from digital asset banking at crypto-friendly Signature Bank was driven in part by the bank holding the dollars backing stablecoins, CEO Joseph DePaolo said on a third-quarter earnings call Tuesday.

Prominent stablecoins like USDC, PAX and TUSD are backed by actual dollars held in bank accounts. While it’s unclear which stablecoin issuers Signature is serving, the statement by DePaolo is the first time the bank has said it’s banking such firms.

Related: Around 100 Italian Banks Are Officially on a Blockchain

For years, Signature has been one of the handful of banks to offer accounts where crypto firms could securely hold fiat. The New York-based bank competes with California’s Silvergate Bank and other institutions for low-cost crypto deposits by offering an Ethereum-based payments platform called Signet, which rivals the Silvergate Exchange Network as a fiat on-ramp. The bank also extended around 40 Paycheck Protection Program (PPP) loans to firms in the crypto space this year.

Signature’s disclosure Tuesday comes after the U.S. Office of the Comptroller of the Currency published new guidance in September clarifying that national banks could hold fiat for stablecoin issuers. 

Read more: SEC, OCC Issue First Regulatory Clarifications for Stablecoins

By the numbers

The banking team at Signature that focuses on crypto companies added the same amount of new deposits it produced in the second quarter. DePaolo attributed the back-to-back billion-dollar quarters to clients becoming used to Signature’s presence in the space.

Related: JPMorgan’s Blockchain Lead Is Now in Charge of Ethereum-Based Interbank Information Network

“The clients we’re bringing on board were hesitant at first,” he said. “They wanted to see that we were going to stay in the business.”

The $1 billion added in Q3 made up a quarter of the bank’s $4.11 billion new deposits, an 8% increase.

Around 30% of Signature’s $54.34 billion in total deposits, or $16.2 billion, are non-interest-bearing, which usually accounts for crypto-industry deposits. Signature’s cost of deposits increased slightly to 66 basis points from 56 basis points in the second quarter.

Crypto firms are often a rich source of low-cost deposits for the few banks that openly serve the sector. As such, analysts have paid close attention to deposit growth at Signature, Silvergate Bank and Metropolitan Commercial Bank.

Read more: Signature Bank Gave Dozens More PPP Loans to Crypto Firms Than Previously Reported

UPDATE (Oct. 20, 16:49 UTC): Adds additional information from Signature’s Q3 earnings call.

Related Stories

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If testnet participation is any indication, Ethereum 2.0 validators are itching for the real thing as the network kickoff looms.

Only 36% of the necessary 66% participants needed to secure the Medalla testnet have stuck around, according to beaconcha.in. 

That’s echoed by the more recent Zinken testnet, which has just under the 66% needed to function properly as of Monday, according to beaconcha.in. Those testnets – meant to practice the launch of Eth 2.0’s Phase 0 this fall – launched in September and October, respectively.

Related: First Mover: Monero Leads Privacy-Coin Rally as Bitcoin Trips on Path to $12K

“Medalla has entered a finality issue again due to user confusion around which testnet they should run. Unfortunately, many users had abandoned Medalla for Zinken,” Prysmatic Labs team lead Preston Van Loon told CoinDesk in a message.

Read more: Ethereum 2.0 ‘Dress Rehearsal’ Gets a Second Shot With Zinken Testnet

Proof-of-Stake (PoS) blockchains are similar to political elections: Depositors of coin holdings act as politicians and every transaction must be voted on in what is called validation. Moreover, enough politicians need to show up for the vote to count in what is termed “finality.” Neither Medalla or Zinken currently have enough votes to do so.

The low testnet participation rates are mirrored by rhetoric from Eth 2.0 developers who say they are ready for Eth 2.0’s Phase 0 to begin. For example, ConsenSys Eth 2.0 developer Ben Edgington called on developers to release the deposit contract in a CoinDesk Op-Ed last week.

Related: First Mover: ‘Blue Wave’ in US Senate Could Mean Flood of Stimulus for Bitcoin

In a blog, Edgington further said he is “expecting news about the deposit contract any day now” and that client teams were basically “good to go.”

Related Stories

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Blockchain startup Unstoppable Domains and oracle network Chainlink have launched a new feature allowing individuals or entities with blockchain domains to authenticate themselves using their Twitter accounts.

• Announced Tuesday, the Twitter authentication service lets .crypto domain holders verify address ownership via the MyEtherWallet app.
• The feature is powered by Chainlink oracles, which connect each .crypto address from Unstoppable Domains to a public Twitter username.
• The firms said the Twitter authentication could help stem crimes in cryptocurrency payments such as phishing hacks.
• The verification is confirmed on-chain, where users are visually notified over whether the recipient they are sending funds to is legitimate.
• “It’s time to remove fraudulent practices from blockchain payments,” said Kosala Hemachandra, MyEtherWallet founder. “Adding your Twitter handle to your blockchain address provides a missing layer of transparency to make crypto safer.”

See also: Winklevoss-Owned Gemini Now Provides Custody for .Crypto Blockchain Domains

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Bitcoin (BTC) was gaining for a fourth straight day, approaching the $12,000 price threshold the cryptocurrency failed to hold in August when it last rallied past that level. 

“The market has started to move again,” the Norwegian cryptocurrency-analysis firm Arcane Research wrote Tuesday in a report. 

In traditional markets, U.S. stock futures pointed to a higher open as investors bet U.S. lawmakers could reach agreement on a new stimulus bill.

Market moves

Related: Validators Drop Off Ethereum 2.0 Testnets as Mainnet Release Looms

Privacy coins like monero (XMR) and zcash (ZEC ) are suddenly in vogue – despite regulators’ efforts to crack down on them. 

These digital tokens, which come with features allowing users to obfuscate their identities and hide the amounts transferred, have surged in value this year. Monero’s price has nearly tripled in 2020, and zcash has doubled. According to the data firm Messari, a group of 21 digital assets with anonymity-enhancing features has gained 142% this year, compared with bitcoin’s 60% gain. 

The bullish market tone comes even as U.S. Internal Revenue Service recently hired blockchain analytics firms Chainalysis and Integra FEC to develop transaction tracing tools for monero and other protocols used to obscure identities. And the U.S. Department of Justice earlier this month published an extensive report on its enforcement framework for digital assets, citing the use of anonymity-enhancing cryptocurrencies as a risk to anti-money-laundering programs and efforts to combat terrorism finance.

Some cryptocurrency analysts say the jump in prices for privacy tokens might just be coincidental, a function of speculation on the part of traders keying off price-chart patterns or algorithms. But it might be that traders think privacy tokens will occupy a key spot in fast-developing, international digital-asset markets and payment systems – precisely because so many users don’t want to transact business under the glare of monitoring by governments, banks or exchanges. 

Related: Bitcoin Closes on $12K but a Wall of Sell Orders Awaits: Analyst

“Cryptographers and researchers are always going to be one step ahead on privacy,” Riccardo “Fluffypony” Spagni, one of the Monero network’s maintainers, told CoinDesk in an interview.

In other words, the regulatory inquiries could turn out to be net positives for monero.

“It gets visibility in the market,” David Jevans, CEO of blockchain forensics firm CipherTrace, told CoinDesk in a telephone interview. “People should be able to pay for day-to-day expenses without having to fear hitting regulators’ radar and provide identity proofs.”  

– Omkar Godbole

Read More: Cryptographers Are Always Going to Be ‘One Step Ahead’ of Regulators: Monero’s Spagni

Bitcoin watch

The path of least resistance for bitcoin is to the higher side. 

The cryptocurrency jumped more than 2% Monday, confirming a descending triangle breakout. The pattern indicates the rally from the Oct. 8 lows near $10.,500 has resumed. 

Open interest in bitcoin futures listed on the Chicago Mercantile Exchange, which is considered synonymous with institutional interest, jumped over 20% to a seven-week high of $624 million Monday, validating the bullish breakout on technical charts. 

Further, macro factors look to be aligned in favor of the bulls. The likes of the European Central Bank and the Reserve Bank of Australia are expected to ramp up monetary stimulus over the next two months – a long-term positive development for the perceived store of value assets like bitcoin and gold. Traditional markets are pricing additional inflation-boosting U.S. fiscal stimulus.

But a number of big sell orders appear positioned around $12,000, which could make it harder for bulls to engineer a quick move past that mark. 

As such, the focus has shifted to resistance located at $12,476 (August high). On the downside, the Oct. 16 low of $11,200 is the level to target for the bears. 

– Omkar Godbole

Read More: Bitcoin Closes on $12K But a Wall of Sell Orders Awaits: Analyst

Token watch

Filecoin (FIL): Decentralized file-storage protocol releases token rewards in advance after crypto miners rebel against “unfair” economic model. 

Binance (BNB): World’s largest cryptocurrency burns 1.1% of supply of its BNB exchange tokens, fourth-highest ever. 

Uniswap (UNI): Vote to reduce quorum fails to garner quorum.

Curve DAO (CRV): Decentralized stablecoin-swapping platform’s tokens hit fresh all-time lows.

What’s hot

Bloomberg analyst Mike McGlone says bitcoin “has a history of adding zeroes,” sees tether’s market capitalization eclipsing ether’s next year. (Bloomberg Intelligence) 

Corporation-focused R3’s Corda Network gets new “regulation-friendly” digital currency, XDC, calling it a “next-generation bitcoin or XRP.” (CoinDesk)

Federal Reserve Chair Powell says it’s more important to get digital dollar right than to be first. (CoinDesk) 

A Puerto Rico-based bank founded by gold bug and long-time bitcoin skeptic Peter Schiff is under investigation over suspicions it facilitated tax evasion for “high-risk” clients. (CoinDesk)

Analogs The latest on the economy and traditional finance

European investors rattled as number of new daily coronavirus reaches record high. (CNBC)

International money managers bet on Biden victory in U.S. presidential election to spur gains on non-U.S. assets, weaken dollar. (Reuters)

U.S. investment bank behemoth Goldman Sachs reaches deal with U.S. Department of Justice to pay more than $2B for role in Malaysia 1MDB scandal. (Bloomberg)

Investing legend Bill Miller calls Federal Reserve’s inflation-averaging policy the “most significant” change in U.S. monetary policy in 40 years. (CNBC) 

Tweet of the Day Related Stories

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Decentralized privacy protocol HOPR is releasing “proof-of-relay” (PoR), the lynchpin of its incentive mechanism that ensures payments go to users that help shuffle data traffic among other nodes on the network.

HOPR had already invited participants to test the network, resulting in 500 or so nodes joining. Wednesday’s launch of the HOPR Basòdino testnet is the first time the complete protocol plus PoR will be made available, said the startup’s CEO, Sebastian Bürgel.

“To draw some analogies, most people have heard of proof-of-work [PoW] or proof-of-stake [PoS], which are mechanisms to protect blockchains and guarantee integrity,” Bürgel said in an interview. “In a similar fashion, when relay nodes in HOPR are doing work, which is relaying packets, they’re providing a proof to the network, and for providing the proof they get rewarded in HOPR tokens.”

Related: Zcoin Employs Burn-and-Redeem Privacy Model, Offering Alternative to Coinjoins

All rewards gathered on the testnet will be made available when HOPR tokens launch on the live mainnet towards the end of this year, Bürgel explained. Users can now open and fund payment channels with xHOPR tokens and send messages that hop via one or more nodes before reaching their destination. If you act as a relay node, you’ll earn tickets, which can be redeemed for xHOPR, he said.

Read more: Binance Labs Leads $1M Seed Round in Crypto Tor Alternative HOPR

HOPR obscures internet communication from prying eyes by incentivizing a network of nodes to mix data packets with other traffic before sending them on. This makes it near-impossible for third parties like telcos or internet service providers (ISPs) to trace bits of metadata and work out who’s communicating with who.

As such, HOPR offers a blockchain-based internet protocol in the same vein as Tor (the onion router) or a virtual private network (VPN). In terms of crypto-focused efforts already out there, privacy startup Nym has a bitcoin incentive program for users to run its mixnet, and the Orchid protocol also offers a system based around Ethereum-compatible ERC-20 tokens as an incentive.  

Related: Cryptographers Are Always Going to Be ‘One Step Ahead’ of Regulators: Monero’s Spagni

Read more: Privacy Startup Nym Will Pay You in Bitcoin to Run Its Mixnet

The recent explosion of interest in decentralized finance (DeFi) has brought congestion to the Ethereum blockchain and with it skyrocketing transaction costs. HOPR gets around this by using a layer 2 scaling system on Ethereum called Matic chain. The latter removes punishing gas fees and enables high transaction throughput.

“Matic is the blockchain that we run our payment scheme on, because if we have 500 people that do a bunch of transactions and we had to pay them between a few dollars to $10 per transaction, that would be prohibitively expensive,” said Bürgel. “Matic allows you to settle for a fraction of a cent in seconds, as opposed to minutes on the Ethereum blockchain.”

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Privacycoin Zcoin is launching the privacy protocol Lelantus on its testnet today. Lelantus allows confidential and anonymous blockchain transactions with short verification times. Using a burn-and-redeem model, users are able to destroy coins of arbitrary amounts and to redeem new coins, such that there is no previous transaction history associated with them.

The burn-and-redeem model is an alternative to other privacy methods such as coinjoins or using other people’s transactions as decoys for possible sources and destinations. Instead, it allows you to destroy your coins and add them to a general pool of all the other coins that other users have destroyed.

“At any time in the future, you can submit a cryptographic proof that proves you destroyed/burnt coins without revealing which coin it was,” said  Zcoin Project Steward Reuben Yap in an email. “This proof, once accepted, will allow you to redeem coins that do not have any previous transaction history or linkages.”

Zcoin’s new Lelantus functions

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

Lelantus uses a one-out-of-many proofs cryptographic concept, which proves that you are one of the many people who burned the coins, without showing which coins you actually burned. It also lets users redeem partial amounts of coin when they want. Previously, users had to redeem the total amount of coin they burned when redeeming. 

Yap likens the Lelantus burn-and-redeem model to buying a ticket for a carnival ride. When you go to the turnstile, you just have to show a ticket. 

Read more: Cryptographers Are Always Going to Be ‘One Step Ahead’ of Regulators: Monero’s Spagni

“The ticket acts like a receipt of payment, but it doesn’t have to show that I was the person who paid for it or the exact bank notes that were used to purchase it,” said Yap. “The same principle is applied to the burn-and-redeem model for Zcoins. As long as my receipt checks out, I can redeem it for new coins.”

Related: Cryptographers Are Always Going to Be ‘One Step Ahead’ of Regulators: Monero’s Spagni

With the Lelantus protocol, and partial redemption, what this means is that a 24-hour ticket could be used for a few hours one day, none the next, and then the remainder the following day. 

“With previous burn-and-redeem systems such as Zerocoin and Sigma, if I burnt a 100 dollar note I had to redeem a 100 dollar note” said Yap. “Lelantus’ main innovation is that I can burn a 100 dollar note and redeem any amount that is smaller without revealing that it even came from the 100 dollar note.”

No trusted setup required for privacy focus

Lelatnus also requires no trusted setup. In cryptographic terms, a trusted setup creates a cryptographic system by generating certain initial parameters which will later be destroyed. It’s called a trusted setup because you must trust the person creating it to destroy said parameters. 

Read more: Privacy Startup Nym Will Pay You in Bitcoin to Run Its Mixnet

Using a trusted setup offers a point of failure and goes against the blockchain motto of “Don’t trust. Verify.”

“A compromised trusted setup in zero-knowledge proofs allows someone to forge the proofs, meaning that coins can be created out of thin air leading to hyperinflation,” said Yap. “In privacy coins where amounts are obscured, such inflation can also remain undetected.”

Lelantus 2.0 to come?

The mainnet launch of Lelantus is currently scheduled in four to six weeks, depending on testnet feedback.

“We’re already working on Lelantus 2.0 or Aura, which allows you to pass the right to redeem to someone else, and the amounts are hidden,” Yap added.  “You do not have to redeem the coins yourself, instead you can transfer that right which offers the very highest level of privacy.”

Zcoin was first launched in 2016 and is based on the Zerocoin protocol, which used zero-knowledge proofs to protect user transactions. It is not to be confused with Zcash, which is based on the Zerocash paper. While the Zerocoin paper and Zerocash paper have some overlap in authors and use zero-knowledge proofs, they rely on different cryptography, according to Zcoin. 

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Hackers who handed out cryptocurrency donations to charities are having a hard time in their bid to “make the world a better place.”

• According to a BBC report Monday, members of the hacking group Darkside showed proof of two charity donations, each for 0.88 bitcoin (worth around $10,400 at press time), in a blog post on the dark web.
• One of the non-profits, Children International, said it would not accept the funds.
•  “If the donation is linked to a hacker, we have no intention of keeping it,” it said.
• The second charity to receive a Darkside donation was The Water Project, which didn’t respond to the BBC.
• The hackers, who employ ransomware as the tool of their illicit trade, reportedly said in their post they only target large, profitable companies.
• “We think that it’s fair that some of the money the companies have paid will go to charity,” they said.
• The group is reported to have made millions from its illegal activities.
• To make the donations, the cybercriminals used the service offered by The Giving Block, a U.S.-based project that converts donations into dollars for charities not set up to handle cryptocurrencies.

Read more: Hodlers Can Donate Crypto to Charity to Minimize Tax Payments

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