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Australian Financial Watchdog Bans Local BitConnect Promoter for 7 Years

6 years 1 month ago

An Australian man has received a seven-year ban by the country’s financial watchdog for his involvement with BitConnect, an alleged Ponzi scheme.

  • As reported by the Financial Standard, the Australian Securities and Investment Commission (ASIC), New South Wales resident John Bigatton may not work in financial services for the multi-year period.
  • An investigation is still ongoing, per the report.
  • ASIC made the ruling after it was discovered Bigatton had engaged in misleading or deceptive conduct in promoting BitConnect.
  • Bigatton was an Australian national representative of cryptocurrency platform BitConnect, as well as its investment scheme BitConnect Lending Platform, between 2017 and 2018.
  • Over that time, the watchdog alleges Bigatton provided unlicensed financial product advice that was deceptive, misleading or likely to mislead investors, regarding the BitConnect scheme.
  • ASIC found Bigatton not to be a “fit and proper person to provide financial services,” “not adequately trained” and was “likely to contravene a financial services law.”
  • Bigatton now has the right to appeal ASIC’s decision at Australia’s Administrative Appeals Tribunal.
  • BitConnect was a cryptocurrency investment scheme that encouraged investors to exchange bitcoin for its own BitConnect Coin (BCC) promising high-interest returns.
  • It has been alleged to be a fraud in various lawsuits.
  • In January 2018, the Texas State Securities Board ordered BitConnect to cancel another planned token sale, ruling the proposed token qualified as an unregistered security.
  • Weeks later, BCC's price collapsed amid news BitConnect’s lending and exchange operation was shutting down.
  • That came after state regulators issued cease and desist orders over the scheme’s failure to register its services and offerings under securities rules.

See also: Australian Woman Charged With Unlawfully Exchanging Over $3M in Crypto

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CoinDesk

Fishy Business: What Happened to $1.2B DeFi Protocol SushiSwap Over the Weekend

6 years 1 month ago

SushiSwap investors were handed a raw deal over the weekend after the pseudonymous founder of the $1.27 billion, 1.5-week-old decentralized finance (DeFi) protocol cashed out.

A fork of DeFi darling Uniswap, SushiSwap is the brainchild of a pseudonymous founder, Chef Nomi, who took the former project an extra yard by adding rewards for providing liquidity to the exchange through a liquidity provider token (LP), called sushi (SUSHI), that earns a portion of the AMM’s revenue.

In essence, AMM’s provide the infrastructure to match lightly traded tokens with liquidity. A variant of other decentralized exchange (DEX) experiments, Uniswap has grown to be the largest AMM with volumes nearing those of centralized exchanges such as Coinbase Pro.

Related: Binance Unveils New Product for ‘Yield Farming’ Crypto Assets

The episode underscores the complexity, creativity and unpredictability of the white-hot DeFi space, where more than $8 billion worth of cryptocurrency is currently locked up in smart contracts, according to DefiPulse. 

But, as sushi investors discovered Saturday, putting money into an unaudited contract controlled by an unknown founder was not a great idea after Chef Nomi unexpectedly sold his share of LP tokens Saturday. 

As reported by The Block, Chef Nomi swapped his Sushi LP tokens for some 37,400 ether (ETH) worth about $13 million in what bears strong resemblance to an “exit scam.”

The sushi token immediately fell 73% in price, dropping from $4.44 to $1.20 over the subsequent 18 hours, according to CoinGecko. The token is now trading hands at $3.16 as of publishing time.

Control-C, Control-V

Related: SushiSwap Moved Up Its Massive Liquidity Withdrawal From Uniswap to This Weekend

Long story short, adding a native token to an AMM was a good idea, or at the very least one that sparked digital bread and circuses.

Chef Nomi launched the Uniswap rival Aug. 28. 

Eleven days later on Sept. 6,  $1.27 billion is “locked” in Sushi contracts. That’s equivalent to 77.4% of Uniswap’s tradable assets, according to Sushiboard. 

Read more: Uniswap Rises to Top of DeFi Charts Thanks to Rival Looking to Unseat It

SushiSwap’s transcendence to DeFi unicorn was made possible through an innovative leaching of its rival, Uniswap. Chef Nomi bootstrapped SushiSwap by leaning on Uniswap’s popularity within DeFi circles. 

In a technique called “Zombie mining,” SushiSwap gave extra LP tokens for users providing liquidity to the ether (ETH)/sushi pool on Uniswap. LP rewards, moreover, were ten times higher than they would normally run up to a certain time. That created a mad rush to earn LP tokens through farming Sushi on Uniswap as shown by an exponential rise in Uniswap volume late last week.

Zombie mining has an end game. Chef Nomi planned on “migrating” the liquidity created on Uniswap through token dispersals to SushiSwap once enough volume was created. As CoinDesk reported Friday, that day moved to Sunday as the AMM continued to attract outsized demand.

‘Chef Nomi sucks’

But then everything changed when Chef Nomi attacked. 

The founder, who ostensibly became a multi-millionaire by merely copying and pasting Uniswap’s code, shortly became the center of a Twitter doxxing campaign. His identity has yet to be confirmed.

Meanwhile, Chef Nomi, DeFi founders and sushi investors became engaged in verbal sparring.

Chef Nomi declared his intention to stick with the Sushi protocol and that his Sushi sale was well within his rights as a founder.

Others, such as FTX CEO and sushi investor Sam Bankman-Fried, were not enthused about that decision: “First of all, Chef Nomi sucks,” he tweeted Sept. 5.

Read more: Yearn, YAM and the Rise of Crypto’s ‘Weird DeFi’ Moment

Yet the clock kept ticking on the planned migration from Uniswap to SushiSwap. And, at this point, virtually no one trusted Chef Nomi to undertake the transfer in an honest fashion.

Through push and pull, Chef Nomi decided to give up his keys to the SushiSwap contract he and he alone held. To boot, the contract to the $1.25 billion protocol was given to none other than Bankman-Fried, who canceled the migration.

The entire exchange took place on Twitter Sunday with Chef Nomi lamenting his position. “Again I did not intend to do any harm. I’m sorry if my decision did not follow what you expected,” he tweeted.

As of now, Bankman-Fried controls the SushiSwap contract. In a Discord message, he said he plans to move the contract to a multi-signature contract until the project can be fully decentralized into the hands of SushiSwap LP token holders, similarly to other DeFi protocols.

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CoinDesk

SushiSwap Moved Up Its Massive Liquidity Withdrawal From Uniswap to This Weekend

6 years 1 month ago

SushiSwap, the automated market maker aiming to unseat market leader Uniswap, has moved up its launch by five days.

Because of SushiSwap, total value in assets locked on Uniswap have gone up by just under $1.5 billion since the SushiSwap contract went into effect at block 10750000 on Aug. 28, according to DeFi Pulse, making Uniswap the largest holder of Ethereum assets in DeFi right now. 

Both Uniswap and Sushiswap are designed to always have a price at which they will swap any two tokens they have in liquidity pools.

Related: Binance Eyes Uniswap’s Lunch With Launch of Centralized ‘Swaps’ Platform

One app is able to drive liquidity into another because of SushiSwap’s liquidity mining scheme. SushiSwap promises to reward those who help it compete on liquidity with both a fee on trades and fresh governance tokens, which will also earn a portion of trading fees.

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

Uniswap is built without a governance token; it is instead a venture backed company. Liquidity providers (LPs) are rewarded by sharing the 0.3% fee on all trades within pools they have submitted liquidity too. 

Explaining how this works requires getting into the weeds of DeFi composability.

Related: Jump Trading Invests in Decentralized Exchange Serum, Signs On as Market Maker

Under the original design for the SushiSwap launch, Ethereum users would get an extra-large share of SUSHI if they deposited Uniswap V2 LP tokens pre SushiSwap launch, over the two weeks following block 10750000. 

Read more: Uniswap Rises to Top of DeFi Charts Thanks to Rival Looking to Unseat It

Uniswap runs on a series of pools of two tokens each. It uses these pools to allow users to make exchanges between any two ERC-20 tokens. Each of these pools has its own unique LP token that users get if they deposit liquidity.

These LP tokens can be withdrawn at any time for the users’ share of that pool. SushiSwap is giving users an incentive to deposit large amounts into Uniswap and then turn the LP tokens they receive for doing so over to SushiSwap. Then, at the appointed time, SushiSwap will redeem all those LP tokens, moving a large amount of Uniswap’s liquidity onto SushiSwap.

This is why some have referred to it as “vampire mining.” 

Obviously, depositors of Uniswap’s LP tokens have been promised exactly the same amount of SushiSwap LP tokens, so everyone will be made whole. 

According to one tool tracking SushiSwap’s expected token share, the upstart has 79.9% of Uniswap’s liquidity in LP tokens.

That liquidity withdrawal was originally scheduled to occur at the end of that two week bonus period, or on roughly September 11.

With a new proposal submitted by NomiChef, SushiSwap’s creator, on Thursday, that timeline has been moved up to 48 hours from the “timelock,” which is presumably sometime shortly following the end of the vote.

The vote ended at 14:00 UTC Friday, with just under 87% of SUSHI holdings voting in favor, which should mean the liquidity shift should happen sometime on Sunday.

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CoinDesk

Market Wrap: Bitcoin Tumbles to $9.8K; Investors Continue Plowing Crypto Into DeFi

6 years 1 month ago

Bitcoin is in bear territory for the third straight day and investors are still looking to DeFi to capture gains during the dump.

  • Bitcoin (BTC) trading around $10,606 as of 20:00 UTC (4 p.m. ET). Slipping 0.90% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $9,894-$10,081
  • BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin’s price dropped below $10,000 Friday, sliding as low as $9,894 on spot exchanges such as Coinbase. 

“It’s not the best look for BTC from a momentum and positive volume standpoint, to be honest,” said Constantine Kogan, partner at crypto fund of funds BitBull Capital. 

Related: First Mover: Buying Bitcoin’s Dip, Betting Against Tether and Weighing the Jobs Report

Read More: V-Shaped Recovery From Bitcoin’s Biggest Drop Since March Unlikely

David Lifchitz, chief investment officer for crypto quantitative firm ExoAlpha, says traders are taking profit after bitcoin could not get past $12,100. It may seem like a long time ago but the price went as high as $12,058 only Tuesday. 

“It looks like some bitcoin holders decided that this last failed breakout was one too many,” he told CoinDesk. “A full move could potentially bring the price back toward $9,500.

Lifchitz added that a few more fundamental factors that might be influencing the bearish bitcoin run. 

Related: Binance Eyes Uniswap’s Lunch With Launch of Centralized ‘Swaps’ Platform

“We observed that the market started to fade as South Korea’s largest exchange, Bithumb, had been raided by police,” he noted. 

Read More: Police Reportedly Raid Headquarters of Bithumb

“It could also be miners deciding to monetize their rewards,” Lifchitz added. Indeed, bitcoin holders, which could include larger holders such as miners, are pushing more inflows into exchanges to its highest levels since late July.

“In my opinion, this is a classic case of an overstretched market, which had advanced too much too quickly, and so was in dire need of consolidation,” said Jean-Marc Bonnefous, managing partner of multi-asset manager Tellurian Capital. “Crypto is dropping in sympathy with other traditional risk assets,” he added. 

Equities indexes were in the red Friday:

Alessandro Andreotti, an Italy-based crypto over-the-counter trader, is optimistic despite the currency cryptocurrency market environment. “Bitcoin has been extremely oversold. It actually reminds me of the March crash,” he said. “But, honestly, I think it can bounce back after this drop.”

Read More: Wasabi Wallet Patches Flaw That Could Have Thwarted Bitcoin Privacy 

More crypto locked in DeFi

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday, trading around $392 and slipping 2.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Binance Eyes Uniswap’s Lunch With Launch of Centralized ‘Swaps’ Platform

Yields in DeFi may become important to crypto traders should the market continue to show bearish signals: Ether locked in DeFi is up, from 5 million to 6.9 million in the past week, a 35% increase.

Investors also continue to lock bitcoin into decentralized finance. There are now over 74,000 BTC in use on Ethereum as those who lock in bitcoin gain a yield or profit in the DeFi ecosystem. In the past week, the amount of bitcoin in DeFi has increased 33%. 

“An amazing amount of BTC is locked into DeFi, earning hodlers ‘dividends’ for simply owning the asset,” noted Henrik Kugelberg, a Swedish crypto over-the-counter trader. 

Read More: Tether, Bitfinex File Motion to Dismiss Market Manipulation Lawsuit

Other markets

Digital assets on the CoinDesk 20 are almost all in the red Friday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

  • eos (EOS) + 4.5%
  • neo (NEO) + 0.22%

Read More: Stacks Foundation to Spend ‘Majority’ of STX Token Fortune on Ecosystem 

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

  • tron (TRX) – 23.9%
  • nem (XEM) – 12.3%
  • zcash (ZEC) – 8.9%

Read More: BitMEX to List Futures for New Crypto Coins for First Time in Over 2 Years

Commodities: 

  • Oil is down 4.2%. Price per barrel of West Texas Intermediate crude: $39.50.
  • Gold is in the green 0.25% and at $1,935 as of press time.

Read More: Craig Wright Trial Over a Fortune in Bitcoin Moved to 2021

Treasurys:

  • U.S. Treasury bonds yields all climbed Friday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 11.2%.

Read More: BitClub Promoter Pleads Guilty for Role in $722M Fraudulent Mining Scheme

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Alameda Research Claimed Nearly 70% of Wrapped Bitcoin Minted in August

6 years 1 month ago

As the decentralized finance (DeFi) craze continues, growth in the supply of bitcoins tokenized on Ethereum is keeping pace, with one company – Alameda Research – gobbling up nearly 70% of wrapped bitcoin (WBTC) minted in August.

  • Alameda’s accumulation of 14,654 WBTC last month came after the quantitative trading firm lobbied in July for an increase in the amount of collateral placed to earn interest on the Compound platform from 0% to 40%. Notably, the firm had not minted WBTC prior to August.
  • The proposal was introduced and later approved after a previous proposal from Alameda to increase collateral to 65% was rejected.
  • At the time, the firm said WBTC would diversify the assets used for collateral on the platform and increase interoperability between Compound and MakerDAO, which also supports WBTC as collateral.
  • Alameda co-founder Sam Bankman-Fried has called wrapped bitcoin the “easiest bridge” between Bitcoin and Ethereum’s decentralized finance ecosystem.
  • A straw poll passed Thursday in favor of increasing the number of dai, MakerDAO’s stablecoin, that can be minted from WBTC from 80 to 120 million. Some 14% of dai is derived from WBTC currently, according to Daistats. The motion is now set for an executive vote.
  • “Alameda has a tremendous reach within the market,” said Kiarash Mosayeri, product manager at BitGo, the company that helped spearhead Wrapped Bitcoin. “It’s great to see another robust onramp help make Bitcoin more available for use on trustless protocols,” he told CoinDesk, speaking about the growing demand to use bitcoin in the Ethereum-base DeFi ecosystem. 
  • Alameda’s sister company, FTX, supports conversion between bitcoin and wrapped bitcoin on its derivatives exchange. Also Binance, a notable investor in FTX, announced its support for wrapped bitcoin on Monday.
  • Beyond wrapped bitcoin, the aggregate supply of all tokenized bitcoins tripled in August, as already strong demand to denominate DeFi-based trades and loans in bitcoin continues to grow.
  • Following July’s growth, DeFi gained over 26,000 freshly tokenized bitcoins in August with a total supply of nearly 55,000 tokenized bitcoins worth more than $333 million, according to Dune Analytics.
  • Notably, the supply of renBTC, the second largest tokenized bitcoin project, exploded from just under 2,000 renBTC in July to over 13,500 renBTC in August.
  • Wrapped Bitcoin, still the dominant form of tokenized bitcoin, represented nearly 70% of the total supply of bitcoins on Ethereum.
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Blockchain Capital Isn’t Flattered by Imitation, Sues Similarly Named Firm

6 years 1 month ago

Venture capital firm Blockchain Capital filed a lawsuit Thursday alleging a Florida company, Blockchain Capital Management LLC (BCM), has infringed on its trademark by using a similar name to operate in the financial services sector.  BCM’s founder says the accused firm will soon be dissolved.

  • The San Francisco-based Blockchain Capital was co-founded by crypto entrepreneur Brock Pierce and partners Bart Stephens and Bradford Stephens in 2013. The venture capital firm has invested in over 55 tokens and equities. 
  • Blockchain Capital’s complaint argues the alleged infringement can cause confusion and creates the possibility of the public being deceived.
  • The San Francisco-based firm wants the Florida Secretary of State to either dissolve BCM or force it to remove ‘Blockchain Capital’ from its name. 
  • The suit may be short-lived as BCM founder Fareed Ifthikar told CoinDesk in a LinkedIn message that BCM is largely a dormant company and has no intention of fighting the case.
  • “We have asked our counsel to start the process of dissolution for the aforementioned company and should be completed soon,” said Ifthikar 
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Blockchain Bites: Tether’s Dispute, Buterin’s Fix and 3 Reasons for Bitcoin’s Sell-Off

6 years 1 month ago

Tether disputes allegations of market manipulation brought in court, Vitalik Buterin issues a proposal for Ethereum’s high gas fees and Voatz weighed in on whether a longstanding federal law over computer access is overly broad.

Top shelf

Tether disputes
Tether and affiliate exchange group iFinex have called for a market manipulation lawsuit to be dismissed because plaintiffs, they say, cannot prove $3 billion worth of unbacked stablecoins actually entered the market. Five crypto traders are suing the companies for incurred monetary losses after buying cryptocurrencies at prices they claim were inflated by Tether’s manipulation of the market. Plaintiffs claim Tether issued billions of dollars worth of dollar-backed cryptos, which Bitfinex then used to purchase cryptocurrencies on the open market to prop prices up during market downturns. Defendants’ lawyers argue the claim USDT is not properly backed is based on “unfounded allegations, and that it hasn’t been proven cryptocurrency prices were indeed artificial at the time in question. 

New pairs
BitMEX announced plans to introduce futures markets for two cryptocurrencies, chainlink (LINK) and tezos (XTZ), the first new coins to appear on the exchange in over two years. These two cryptos have seen triple-digit year-to-date returns. BitMEX last listed a new token in June 2018, when it announced a TRON/BTC futures market. Shortly before that announcement, the exchange removed six altcoin futures markets, including ethereum classic (ETC), zcash (ZEC), and monero (XMR). Notably, the new altcoin futures will trade against tether (USDT) instead of bitcoin (BTC). In Friday’s announcement, BitMEX said the reason for this is because “USDT pairs account for over 60% of overall altcoin volume.” 

Related: Money Reimagined: Defanging FAANG

Fee fixes?
Ethereum co-founder Vitalik Buterin released an improvement proposal (EIP 2929) Tuesday in a bid to ameliorate soaring network fees. Average network fees reached $15.21 on Wednesday, up 660% from $2 a month ago. The surge in fees is likely being driven by the growing use and number of decentralized finance (DeFi) applications. Buterin’s proposal would make “heavy” contracts, which update the Ethereum state, more expensive by a factor of three. This repricing proposal could break some smart contracts already operating on Ethereum, Buterin wrote, adding developers “have had years of warning” about potential changes. Necessary consensus to vote the proposal in could take weeks or months. 

International regulation
Bank of England (BoE) Governor Andrew Bailey said regulators have to come together for a “global response” to stablecoin issuance. Speaking Thursday, he said the international nature of stablecoins, which can be based in one country and operate in another, meant failure to coordinate could result in confusion and regulatory fragmentation. While admitting stablecoins could reduce frictional costs, even becoming the primary means for purchasing goods and services, regulators must ensure they maintain their 1:1 backing with fiat currencies. Further, Bailey called bitcoin unsuitable for payments and multi-asset backed crypto-dollars like libra premature. The BoE is actively researching a “digital pound.”

Quickening research
Brazil’s chief central banker Roberto Campos Neto said Wednesday that his country could be ready for a digital currency (CBDC) by 2022. By that time, the Banco Central president said, Brazil will have an interoperable instant payments system and a “credible” and “convertible” international currency – “all the ingredients to have a digital currency,” he said at a Bloomberg event covered by local outlet Correio Braziliense. Campos Neto also was reported to have said that CBDCs are the consequence of fast-digitizing financial systems such as Brazil’s. 

Quick bites At stake

Is the CFAA overly broad?
Blockchain voting startup Voatz weighed in on a longstanding ruling about improper access to a  “protected computer.”

Related: First Mover: Buying Bitcoin’s Dip, Betting Against Tether and Weighing the Jobs Report

Appearing in a “friend of the court” brief before the U.S. Supreme Court, the startup argued that bug bounty programs concerning cybersecurity should be operated under strict supervision.

The case, Van Buren v. United States, is centered around whether it is a federal crime for someone to access a computer “for an improper purpose,” if they already have permission to access other files on that computer.

Nathan Van Buren, the petitioner in the case, is a former Georgia police officer who was charged under the Computer Fraud and Abuse Act (CFAA), which is often used to  prosecute computer hackers. Enacted before the establishment of the internet, the CFAA prohibits accessing a “computer” without permission as well as the unauthorized deletion, alteration or blocking of privately stored data.

Some, like prominent lawyer Tor Eklend, believe the law is overly broad and outdated. 

For his part, Van Buren claims a lower court ruling upholding his conviction could be taken to mean that “any ‘trivial breach’” of a computer system could be a federal crime. He was given permission to look up a license plate for an acquaintance.

In its brief, Voatz says the CFAA does not need to be narrowed, and some breaches of computer systems are necessary. 

However, the firm argues researchers looking into potential vulnerabilities should specifically check with the companies they are evaluating prior to doing so, and should only proceed with authorization from the companies. 

Late last year, a University of Michigan student or students participating in a security course likely accessed Voatz’ systems. In its brief, Voatz said the “students’ ill-advised activity” was reported to West Virginia officials, prompting an FBI investigation, because the company could not distinguish between their research and an actual hostile attack. 

“Regardless of the particulars, however, the West Virginia incident illustrates the harm caused by attacking, or ‘researching,’ critical infrastructure without proper access or authorization especially in the middle of an election,” Voatz wrote.

Non-malicious researchers trying to break into digital tools “imposes significant additional costs” to organizations, Voatz said, and could harm public confidence.

Market intel

Reasons why
Bitcoin prices fell below $11,000 yesterday for the first time in a month.

First Mover Editor Bradley Keoun spoke to market analysts for their take on why the market tanked. Here are the three most common responses. 

1. Bitcoin is tracking traditional markets

  • “There could be an overlap between equity sellers and digital currency sellers. The largest equity market decliners this morning are tech stocks, including retail trading darlings, Tesla and the FAANG names [Facebook, Amazon, Apple, Netflix and Alphabet, once Google]. It is unclear if this will push into a continued broader crash in equity markets, which could put more pressure on digital currencies, or if it is just a short-term correction,” John Todaro, director of institutional research at the cryptocurrency analysis firm TradeBlock, said.

2. DeFi sell-offs cascaded into bitcoin

  • The total value locked (TVL) in all DeFi applications dropped to $9.1 billion from $9.5 billion, over the past few days, according to the website DeFi Pulse. This may be related to drops in both ether and bitcoin’s price. 
  • “Also, an aggressive unwind of the very crowded trade across Uniswap token related positions in the wake of a number of tokens, namely PIZZA and HOTDOG, dramatically collapsed from $6,000 to $1 in a mere few hours. This is likely because the same assets (bitcoin, ether and others) are used aggressively to structure collateralized positions,” Denis Vinokourov, head of research at the crypto prime broker BeQuant, said.

3. Miners sold some of their bitcoin

  • Blockchain-data analysis firm CryptoQuant found major bitcoin-mining pools have increased the amount of bitcoin they’re transferred out, potentially as a de-risking maneuver.
  • “Miners are good traders. I think they are just looking for selling opportunities, not capitulation. I think it’s going to be the war of miners between those who want a bitcoin price rally and those who don’t. Some Chinese miners already realize their mining profitability (ROI), and they might not want new mining competitors joining the industry because of the bull market,” Ki Young Yu, founder of CryptoQuant, said.

Risk off?
Bitcoin isn’t likely to see a quick rebound from the double-digit price drop over the last two days, CoinDesk’s Omkar Godbole reports. Bitcoin fell by over 10% on Thursday to $10,006, according to CoinDesk’s Bitcoin Price Index, the biggest single-day percentage decline since March 12 when prices crashed around 40% amid a major sell-off across the equities markets. Though up slightly, Matthew Dibb, Stack COO, thinks bitcoin will track traditional assets during “this ‘risk-off’ period.” “Macro factors are currently at play,” Dibbs said.

Tech pod

Wallet forks
Wasabi Wallet has hard-forked the wallet Thursday to address a vulnerability for a hypothetical attack the team assumes has never been carried out. Discovered by a team member at Trezor, a leading maker of hardware wallets, the vulnerability would have interfered with the wallet’s implementation of CoinJoin, a privacy protocol. Users need to upgrade to the latest version of the wallet if they want to continue using the CoinJoin feature. “The flaw’s discovery is another example of the open-source community’s camaraderie and cooperation,” CoinDesk’s Colin Harper reports. 

Op-ed

Stablecoin opportunity
Nic Carter, a CoinDesk columnist and partner at Castle Island Ventures, believes the billion-dollar stablecoin market presents an opportunity for the United States, not a threat. “If the U.S. chooses to marginalize crypto-dollars and punish their issuers, not only will they suppress a burgeoning American industry, they will also push users into even less accountable alternatives,” he writes.

Podcast corner

DeFi degens
The latest edition of The Breakdown looks at the burgeoning DeFi market and its “degenerate” players. 

Who won #CryptoTwitter? Related Stories
CoinDesk

US Antitrust Chief Says Protecting Blockchain From Competitive Abuses Is Top Priority

6 years 1 month ago

A U.S. Department of Justice (DoJ) official said blockchain deserves the full protection of antitrust law because it has the potential to mount an effective challenge to monopolies.

  • In a speech published last week, Makan Delrahim, assistant attorney general at the DoJ’s Antitrust Division, said blockchain could prevent or limit the concentration of market power, improving competition in a whole host of industries.
  • He said: “[I]t is of utmost importance that we prevent competitive abuses in markets where blockchain may offer consumers and business lower-cost or higher-value options.”
  • Delrahim said the Antitrust Division would try to understand how businesses are implementing blockchain solutions as well as the possible effects it could have on market competition.
  • He also said the division would try to anticipate how incumbents could try to stop or limit the potential of blockchain solutions so they can maintain market-dominant positions.
  • This could include using private blockchains to deny rivals access to crucial market infrastructure, he said.
  • Thibault Schrepel, an assistant professor in Antitrust Law at Utrecht University School of Law and faculty affiliate at Standford University’s CodeX Center, told CoinDesk the antitrust chief could be subtly hinting that blockchain could disrupt big tech monopolies.
  • In his speech, Delrahim added that critical questions remain, such as whether existing intermediaries have any place at all within a blockchain-based market system.
  • It’s also possible, the antitrust chief said, that the role of blockchain could change over time as it faces further mainstream adoption.

See also: Blockchain Code Can Fill In When Antitrust Law Fails

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CoinDesk

First Mover: Buying Bitcoin’s Dip, Betting Against Tether and Weighing the Jobs Report

6 years 1 month ago

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

HOLIDAY NOTICE: First Mover will publish next on Tuesday, Sept. 8. Happy Labor Day to our U.S. readers.

Price Point

Bitcoin (BTC) was up in early trading to $10,500, rebounding after Thursday’s 11% tumble, the biggest single-day decline since March. 

Related: V-Shaped Recovery From Bitcoin’s Biggest Drop Since March Unlikely, Say Analysts

The sell-off, which took prices as low as about $10,000, coincided with a rout in U.S. stocks, rekindling long-simmering discussions over whether the largest cryptocurrency was a safe haven like gold or merely another risky asset. Prices for ether (ETH), the native token of the Ethereum blockchain, slid 13%, potentially a sign of an unwind of the recent fervor in decentralized finance, or DeFi. U.S. 10-year Treasury yields fell and the dollar gained in foreign-exchange markets, indicating a flight to safety by traditional investors. 

Joe DiPasquale, CEO of the cryptocurrency-focused hedge fund BitBull Capital, told First Mover in an email that “$10,000 still stands as a strong support and has absorbed selling pressure fairly well in the last two instances.” John Kramer, a trader at crypto over-the-counter firm GSR, told CoinDesk’s Daniel Cawrey that “many investors will see this as an opportunity to buy the dip.”

Market Moves

After years of debating whether tether (USDT) is fully backed 1-for-1 with U.S. dollars, the  stablecoin’s critics and defenders alike can now put their money where their mouths are.

Opium, a derivatives exchange, has introduced credit default swaps (CDS) for USDT. The product, launched Thursday, insures the buyer in the event of default by Tether, the issuer of the world’s largest stablecoin and fifth-largest cryptocurrency overall. 

Related: Tether, Bitfinex File Motion to Dismiss Market Manipulation Lawsuit

As Opium’s blog points out, USDT is the lifeblood of the borderless cryptocurrency marketplace. The oldest stablecoin, USDT remains the largest such cryptocurrency by market cap and a top-five coin overall with $13.8 billion  in issuance. Traders often use it to move money in and out of exchanges quickly to take advantage of arbitrage opportunities.

“You can use it to protect yourself against (or speculate on) a systemic failure of the most widely used stablecoin in crypto,” Opium said of the new CDS contract, in a blog post to be published Thursday.

There are nagging questions about the issuer’s creditworthiness. The firm behind USDT is under investigation by the New York Attorney General’s office for alleged misappropriation of funds, and Tether revealed in April 2019 that only 74% of USDT was backed by “cash and cash equivalents.” 

Paolo Ardoino, chief technology officer at Tether, said through a spokesman: “Tether is solvent. Therefore, this solution is not really interesting to us or our community.” 

Read More: New Crypto Derivatives Let You Bet on (or Against) Tether’s Solvency

The solution might be interesting to traders who just want a little extra assurance.  

-William Foxley

Bitcoin Watch

Bitcoin’s options market has flipped bearish with the cryptocurrency registering its first double-digit decline in six months on Wednesday. Prices fell to a low of $10,006 before recovering to $10,500.

  • The one- and three-month put-call skews that measure the cost of puts relative to that of calls have surged above zero, a sign of investors adding bets (put options) to position for a more profound price drop. 
  • Joel Kruger, a currency strategist at LMAX Group and macro trader at MarketPunks, who had warned earlier this week when prices were closer to $12,000 that a correction might be looming, also sees scope for additional price declines on the back of risk aversion in equity markets. 
  • “The next key support comes in the form of the June low at around $8,900,” Kruger told CoinDesk in a Telegram chat and added further that bitcoin would eventually realize its potential as store of value.

Read More: V-Shaped Recovery From Bitcoin’s Biggest Drop Since March Unlikely, Say Analysts

– Omkar Godbole

Token Watch

Ether (ETH): Vitalik Buterin, co-founder of Ethereum, released an ” improvement proposal” to address soaring transaction fee rates as network congestion rises. 

Bitcoin (BTC): “Supercycle” thesis from Stack Funds predicts breach of $14K in next 100 days.

Tether (USDT), USD Coin (USDC): Stablecoins are the closest thing to digital cash that exists today, Castle Island’s Nik Carter writes for CoinDesk. 

Chainlink (LINK), Tezos (XTZ): BitMEX plans futures on LINK and XTZ, the first new coins to appear on the exchange in over two years.

Gnosis (GNO): Investment firm Arca calls for tender offer of prediction market’s tokens as market value trades at 0.3% of project’s treasury balance, the Block reported. 

CoinDesk Research’s latest Monthly Review features 15 charts that highlight bitcoin’s performance relative to macro assets, its relationship to the dollar and other fiat currencies, and Ethereum’s growing congestion problem. Download the report.

What’s Hot

Failure to coordinate stablecoin rules internationally may bring “confusion and regulatory fragmentation,” Bank of England governor says. (CoinDesk)

Binance, world’s biggest centralized crypto exchange, noses into DeFi with launch of automated market maker pools. (Binance)

DeFi users are “mostly crypto nerds or early adopters” with their own jargon and maximalist dogma, says William Mougayar (CoinDesk)

Vitalik Buterin and Ethereum’s developers are shifting focus back to “Eth 1” to tackle congestion that caused fees to spike over 600% in a month (CoinDesk)

The SEC will have a tough task regulating DeFi, says Hester Peirce (Decrypt)

Analogs The latest on the economy and traditional finance

U.S. jobs increased by 1.4M in August, in line with expectations, though slowing from July’s pace, report shows. Unemployment rate drops to 8.4% from 10%, report shows.

U.S. presidential election in November could bring “incredible fireworks” in market volatility based on VIX futures premiums. (Bloomberg) 

HSBC strategist says China to let yuan strengthen versus dollar in bid to “promote yuan internationalization.” (Reuters) 

Wall Street investment banks are cashing in on fees from arranging emergency loans to companies as Federal Reserve props up credit markets. (WSJ)

Easy central bank monetary policies in Europe pushes interbank lending rates down further into record (negative) territory. (WSJ)

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CoinDesk

Binance Eyes Uniswap’s Lunch With Launch of Centralized ‘Swaps’ Platform

6 years 1 month ago

Exchange giant Binance is hoping to capitalize further on the DeFi boom with a new centralized trading platform that makes it a rival of the likes of Uniswap.

  • Binance said Friday users would be able to provide liquidity and make trades, or “swaps,” initially with three trading pairs from their exchange accounts.
  • Called Binance Liquid Swap, the platform is in effect an automated market maker (AMM) exchange where smart contract-based liquidity pools set spot prices and facilitate swaps.
  • In AMM exchanges, users become liquidity providers by depositing digital assets into the pools, receiving in return interest and a cut of transaction fees.
  • This is the same model used by Uniswap and SushiSwap – two decentralized exchanges (DEXs) now at the center of the white-hot decentralized finance space.
  • In a blog post, Binance said Liquid Swap is the first AMM platform to be launched on top of a centralized exchange.
  • When asked if Binance was moving into direct competition with the likes of Uniswap and SushiSwap, a company spokesperson told CoinDesk that Liquid Swap was aimed at an audience more at home on centralized exchanges.
  • “The crypto industry is still in its early stages, and there is still a barrier of entry for decentralized products,” they said.
  • With the new platform, Binance aims to offer users “a more secure and seamless product while allowing them to earn as on decentralized AMM pools,” according to the spokesperson.
  • The three initial trading pairs will be USDT/BUSD, BUSD/DAI, and USDT/DAI.
  • Binance first ventured into DeFi with its decentralized exchange in April 2019, built on top of its native Binance Chain.

See also: Blockchain Bites: How SushiSwap Drove Uniswap to DeFi’s Top Spot

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CoinDesk

Craig Wright Trial Over a Fortune in Bitcoin Moved to 2021

6 years 1 month ago

The trial of nChain Chief Scientist Craig Wright over his alleged billions in bitcoin has been moved to Jan. 4, 2021.

  • In an order signed Thursday, Judge Beth Bloom at the District Court in the Southern District of Florida granted the joint motion from Wright and plaintiff Ira Kleiman to move the trial from the previous date of Oct. 13.
  • Judge Bloom further extended some pre-trial deadlines to mid- and late December.
  • The case was brought by Kleiman on behalf of the estate of his late brother David, who had worked with Wright in the early days of bitcoin.
  • Ira is suing Wright for half of his alleged fortune of 1.1 million bitcoin (worth over $11 billion) he claims the two mined together, as well as intellectual property.
  • A jury trial was ordered in June after an attempt by Kleiman to sanction Wright over his claimed misbehavior in court was denied.
  • Judge Bloom said at the time she was concerned by the facts of the allegations, but ruled the matter was best left “for a jury to make as fact finder at trial.”
  • She took into account that Wright had provided an expert witness to testify that he had been diagnosed with autism to explain his erratic testimony.
  • Wright has proclaimed himself as the inventor of bitcoin, known by the pseudonym Satoshi Nakamoto.
  • However, many in the cryptocurrency space dispute the claim, which has not been backed by convincing evidence, such as moving bitcoin thought to have been mined by Satoshi.

Also read: Craig Wright Called ‘Fraud’ in Message Signed With Bitcoin Addresses He Claims to Own

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CoinDesk

V-Shaped Recovery From Bitcoin’s Biggest Drop Since March Unlikely, Say Analysts

6 years 1 month ago

Despite a slight bounce Friday morning, some analysts don’t expect bitcoin to chart a quick recovery from the double-digit price drop over the last two days.

  • Bitcoin fell by over 10% on Thursday to $10,006, according to CoinDesk’s Bitcoin Price Index.
  • That’s the biggest single-day percentage decline since March 12 when bitcoin prices crashed around 40% amid a major sell-off across the equities markets.
  • Other data sources such as Bitstamp even logged bitcoin as dropping a little below $10,000.
  • At the press-time price of $10,520, the cryptocurrency is down 18.59% from the recent high of $12,476 registered on Aug. 17.
  • Similar double-digit price pullbacks observed in April and May were quickly reversed in a couple of days, a sign of buy-the-dip mentality.
  • This time, though, a quick V-shaped recovery back to recent highs around $12,000 looks unlikely due to cryptocurrency’s increased sensitivity to traditional markets.
  • “The worst may be behind us, but bitcoin can take days to form a good base,” crypto analyst Edward Morra, who called the market top at $12,000, tweeted early on Friday.
  • Matthew Dibb, co-founder, and COO of Stack, a provider of cryptocurrency trackers and funds, told CoinDesk that prices could drop below $10,000 if the global equity markets retrace.
  • “Macro factors are currently at play, and bitcoin shows a higher correlation to global equities markets in this ‘risk-off’ period,” Dibb said.
  • Indeed, sharp losses on Wall Street look to have accentuated the bitcoin price drop on Thursday.
  • Stocks may extend the sell-off, pushing bitcoin below $10,000 on Friday if the all-important U.S. non-farm payrolls report shows the labor recovery is losing momentum.
  • The data, scheduled for release at 12:30 UTC, is forecast to show the economy added 1.4 million jobs in August versus 1.76 million additions in July.
  • Joel Kruger, a currency strategist at LMAX Group and macro trader at MarketPunks also sees scope for additional price declines on the back of risk aversion in equity markets.
  • “The next key support comes in the form of the June low at around $8,900,” Kruger told CoinDesk in a Telegram chat.
  • However, he still expects bitcoin will eventually realize its potential as a store of value.
  • Additionally, activity in the bitcoin options market suggests investors are adding bets to position for an extended decline in the cryptocurrency.
  • The one-month and three-month put-call skews have recovered sharply to positive territory this week.
  • That’s probably due to investors buying put options (bearish bets) to hedge buy positions in the spot/futures market, according to Vishal Shah, an options trader and founder of Polychain-backed derivatives exchange Alpha5.

Also read: 3 Reasons Bitcoin Just Tanked Below $11K for First Time in a Month

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CoinDesk

Tether, Bitfinex File Motion to Dismiss Market Manipulation Lawsuit

6 years 1 month ago

Tether and affiliate exchange group iFinex have called for a market manipulation suit to be dismissed – partly, they say, because plaintiffs don’t prove that billions of dollars of unbacked stablecoins did actually enter the market.

  • Lawyers for Tether and iFinex – the parent firm of the Bitfinex exchange – filed a motion Thursday calling for a class action accusing them of deceptive, anti-competitive and market-manipulative behavior to be dismissed with prejudice.
  • Claiming they had lost money as a result, the plaintiffs alleged in a complaint last October that over five years Tether issued as much as $3 billion-worth of unbacked USDT tokens, which Bitfinex then used to purchase cryptocurrencies on the open market to prop prices up during market downturns.
  • Per the complaint, this allegedly caused the total market cap of cryptocurrencies to skyrocket to $795 billion in late 2017.
  • The plaintiffs are five crypto traders who allege that they bought cryptocurrencies at inflated prices and, therefore, incurred monetary losses. As a class action, the suit represents anyone in the U.S. who might also have been injured by inflated prices.
  • But in a supporting memorandum, the defendants’ lawyers argue the case falls down partly because the accusation Tether printed its USDT stablecoins without any actual backing is based on “unfounded allegations,” rather than direct knowledge of the matter.
  • They also argue the plaintiffs have not demonstratively shown that cryptocurrency prices were indeed artificial at the time in question.
  • This means, according to the memorandum, that accusations of market manipulation and RICO conspiracy should be thrown out because plaintiffs can’t prove they actually suffered a monetary loss at the hands of the defendants – a pre-requisite in the U.S.
  • Allegations of anti-competitive and monopolistic behavior should also be thrown out because the class action doesn’t show how defendants tried to claim a dominant market position by raising prices or restricting output, the memorandum reads.
  • iFinex and Tether are battling two other separate cases on similar accusations that USDT isn’t properly backed by collateralized reserves.
  • These include one suit brought by the New York Attorney General’s office in April 2019.
  • According to market data site CoinGecko, Tether has a circulating supply of over 10 billion USDT, which are aimed to maintain a value of $1 each.
  • Tether’s website lists as “proof of funds” a letter from Washington-based law firm FFS, an affirmation that the company held $2.538 billion as of June 1, 2018.
  • The company states, however, that USDT is “backed by our reserves, which include traditional currency and cash 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.”

See also: Bittrex and Poloniex Move for Summary Judgment in Market Manipulation Case

Read the memorandum in full below:

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CoinDesk

Voatz Calls for Restrictions on Independent Cybersecurity Research in Supreme Court Brief

6 years 1 month ago

Blockchain voting startup Voatz argued that bug bounty programs concerning cybersecurity should be operated under strict supervision in a “friend of the court” brief before the Supreme Court of the United States (SCOTUS).

Voatz weighed in Thursday on Van Buren v. United States, a Supreme Court case examining whether it is a federal crime for someone to access a computer “for an improper purpose” if they already have permission to access other files on that computer.

Nathan Van Buren, the petitioner in the case, is a former Georgia police officer who was charged under the Computer Fraud and Abuse Act (CFAA) after looking up a license plate for an acquaintance. Van Buren claims that a lower court ruling which upheld his conviction could be taken to mean that “any ‘trivial breach’” of a computer system could be a federal crime.

Related: Hardware Wallet Flaw Lets Attackers Hold Crypto for Ransom Without Touching Device

The case’s scope appears to have broadened, addressing not just breaches, but how the CFAA itself can be interpreted. The question listed on SCOTUS briefs reads:

“Whether the evidence was sufficient to establish that petitioner, a police sergeant, exceeded his authorized access to a protected computer to obtain information for financial gain, in violation of 18 U.S.C. 1030(a)(2)(C) and (c)(2)(B)(i), when in exchange for a cash payment, he searched a confidential law-enforcement database for information about whether a particular person was an undercover police officer.”

The U.S., the respondent, argued the case is “poor vehicle” for examining whether the CFAA is too broad, and said in its brief that SCOTUS review isn’t even warranted.

In its brief, Voatz says that the CFAA does not need to be narrowed, and some breaches of computer systems are necessary. However, the firm argues that researchers looking into potential vulnerabilities should specifically check with the companies they are evaluating prior to doing so, and should only proceed with authorization from the companies.

Related: Russia’s New Blockchain Voting System Isn’t Ready, but It’ll Be Used This Month Anyway

“Bug bounty programs are highly effective,” Voatz wrote. “They are extremely widespread in the technology industry, and even outside that industry, one survey in 2019 reported that 42 percent of companies outside of the technology industry were running a crowdsourced cybersecurity program.”

The brief may come in response to another filed by a group of security researchers who argue the CFAA has indeed “been interpreted too broadly,” which is holding back computer security efforts. This brief criticizes Voatz among its other arguments.

Broad rules

Voatz has notably faced criticism from cybersecurity researchers, including by a team at MIT who published a report in February claiming Voatz had insufficient transparency and that its internal systems faced a number of vulnerabilities. Voatz has disputed the claims in the report. 

Trail of Bits, another cybersecurity firm tapped by Voatz to conduct an audit of its systems, confirmed the MIT researchers’ claims in a subsequent report.

Voatz has tussled directly with researchers as well. Late last year, U.S. Attorney Mike Stuart announced that the FBI was looking into “an unsuccessful attempted intrusion” into Voatz, which was likely caused by a University of Michigan student or students participating in a security course. 

In its brief, Voatz said the “students’ ill-advised activity” was reported to West Virginia officials because the company could not distinguish between their research and an actual hostile attack. 

“Regardless of the particulars, however, the West Virginia incident illustrates the harm caused by attacking, or ‘researching,’ critical infrastructure without proper access or authorization especially in the middle of an election,” Voatz wrote.

Non-malicious researchers trying to break into digital tools “imposes significant additional costs” to organizations, the legal brief said, and could harm public confidence.

Jake Williams, who founded Rendition Security, told CNET that a “vast majority” of cybersecurity researchers likely do not have authorization, meaning Voatz’s support for a broad CFAA would “100% make it more difficult” for researchers.

Voatz’s brief comes a day after it published a press statement claiming the Michigan Democratic Party used its app during a recent party convention when voting for a number of positions. The Michigan Democratic Party did not immediately return a request for comment.

Contrary views

Voatz’s arguments aside, its brief makes a number of citations and claims which seem to lack context.

Voatz says it has been used in 70 elections, including state and municipal elections, and claims in the brief that it is considered “critical infrastructure” by the Department of Homeland Security.

The elections include West Virginia (which announced in March it would not be using Voatz for its upcoming elections) and Utah County (whose clerk and auditor received a $1,500 campaign donation from Overstock CEO Jonathan Johnson, who is also the president of Voatz investor Medici Ventures).

The company has said it’s meeting requirements by Pro V&V, a federal Voting System Test Laboratory, but according to Politico cybersecurity reporter Eric Geller, “the report is meaningless” because the standards were set years ago and the evaluation was not objective.

Eddie Perez, the global director of tech development at the Open Source Election Technology Institute, wrote that the Election Assistance Commission (EAC), the federal entity that accredited Pro V&V, doesn’t actually have any national standards for remote voting systems.

The EAC itself released a statement saying “these test reports should not be viewed as implicit approval by either the [voting system test laboratories] or the EAC that the evaluated systems are compliant with the [voluntary voting system guidelines] standard or are equivalent to an EAC-certified voting system.”

“Currently these programs are organized by Voatz itself, but in the past some were conducted through a vendor such as HackerOne Inc.,” the brief said. It did not mention that HackerOne severed ties with Voatz in March.

What’s more, HackerOne founder and CTO Alex Rice said on Twitter that “we support the opposing arguments made by” the Electronic Frontier Foundation (EFF), which calls for a narrowing of the CFAA, unlike Voatz, which cited HackerOne in the brief.

Similarly, Casey Ellis, founder and CTO of crowdsourced security platform Bugcrowd, which Voatz cited a number of times, also wrote that he signed off on and supported the EFF’s brief, and not Voatz’s.

Both Rice and Ellis said Voatz did not contact them prior to filing the brief.

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CoinDesk

BitMEX to List Futures for New Crypto Coins for First Time in Over 2 Years

6 years 1 month ago

BitMEX said early Friday morning it plans to introduce futures markets for two cryptocurrencies, the first new coins to appear on the exchange in over two years.

  • The stalwart cryptocurrency derivatives exchange announced new futures markets for chainlink (LINK) and tezos (XTZ), two cryptocurrencies with triple-digit year-to-date returns, in addition to new contracts for EOS and cardano (ADA), two coins already traded in futures markets on BitMEX.
  • Tezos has traded on BitMEX before, however. Prior to the project’s initial coin offering (ICO) in 2017, XTZ/BTC futures were listed on BitMEX and settled at the sale price of 0.0002 BTC per tezos.
  • The last time BitMEX listed a new token was June 2018, when it announced a TRON/BTC futures market.
  • Shortly before that announcement, the exchange removed six altcoin futures markets, including ethereum classic (ETC), zcash (ZEC), and monero (XMR).
  • Notably, the new altcoin futures will trade against tether (USDT) instead of bitcoin (BTC). In Friday’s announcement, BitMEX said the reason for this is because “USDT pairs account for over 60% of overall altcoin volume.” By listing tether pairs, “we are providing users with the trading options to better meet their needs,” BitMEX said.
  • More details are to come later Friday, the Seychelles-based exchange said.

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CoinDesk

BitClub Promoter Pleads Guilty for Role in $722M Fraudulent Mining Scheme

6 years 1 month ago

50-year-old Joseph Abel pleaded guilty to two securities and tax-related offenses Thursday due to his involvement in promoting BitClub Network, a fraudulent investment scheme worth $722 million that purported to be a cryptocurrency mining pool.

  • Abel admitted to selling shares of the BitClub Network’s purported mining pools without approval from the U.S. Securities and Exchange Commission. He also failed to report roughly $1 million in income that he received in exchange for his promotion of BitClub.
  • “Abel operated as a large-scale promoter of the BitClub Network,” according to a press release from the District of New Jersey U.S. Attorney’s Office. The scheme took money from investors in exchange for shares in the scheme and rewarded its investors for recruiting new participants.
  • BitClub highlights how widespread investor enthusiasm over bitcoin and other cryptocurrencies can be co-opted by fraudulent actors.
  • In July, the 35-year-old Romanian programmer behind the operation pleaded guilty to his role in defrauding investors of hundreds of millions of dollars in bitcoin, as CoinDesk previously reported.
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CoinDesk

Brazil’s Central Bank Says Nation Might Be Ready for a Digital Currency by 2022

6 years 1 month ago

Brazil’s chief central banker Roberto Campos Neto said Wednesday that his country could be ready for a digital currency (CBDC) by 2022.

  • By that time, the Banco Central president said, Brazil will have an interoperable instant payments system and a “credible” and “convertible” international currency – “all the ingredients to have a digital currency,” he said at a Bloomberg event covered by local outlet Correio Brazilienese.
  • Campos Neto also was reported to have said that CBDCs are the consequence of fast-digitizing financial systems such as Brazil’s. Banco Central is rolling out its PIX instant payments system in November and launching an Open Banking initiative later this year.
  • The comments place some context around Banco Central’s late August move to create a working group to begin studying CBDC issuance. That group’s final report should be ready within six months to a year, he said Wednesday.

Read more: Brazil’s Central Bank Tasks Group With Laying Out Road Map to Digital Currency Issuance

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CoinDesk

Market Wrap: Bitcoin Tanks to $10.4K; ETH Market Dominance at 2020 High

6 years 1 month ago

Bitcoin continues to slide while ether has a larger share of the crypto market than it has had in years.

  • Bitcoin (BTC) trading around $10,726 as of 20:00 UTC (4 p.m. ET). Slipping 6.1% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $10,468-$11,474
  • BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin continues its downward trend Thursday, with prices descending as low as $10,468 on spot exchanges such as Coinbase. While it has recovered a bit, traders selling for profits has certainly been the theme right now. 

Read More: Bitcoin Plunges $403 in 1 Hour to Lowest in a Month

Related: 3 Reasons Bitcoin Just Tanked Below $11K for First Time in a Month

“This is similar to what we’ve seen as bitcoin approached the $10,000 and $11,000 levels, where profit-taking occurred on a few different occasions,” said John Kramer, a trader at crypto over-the-counter firm GSR. “Many investors will see this as an opportunity to buy the dip.”

Just like Wednesday, leveraged liquidations played a role in exacerbating bitcoin’s price drop. However, Thursday’s wipeout of long traders on derivatives exchange BitMEX was a bit higher, with $10 million in hourly liquidations topping Wednesday’s $9 million hourly spree, the equivalent of a margin call in crypto parlance. 

Read More: Bitcoin Risks Deeper Price Pullback as Exchange Inflows Spike

“Some people who were buying in over $11,500 in BTC with leverage suddenly got stopped out when we moved back down towards $11,100,” said Chris Thomas, head of digital assets for Swissquote Bank. 

Related: First Mover: As Bitcoin Falls for Second Day, Long-Term Holders Probably Won’t Care

Thomas suspects bitcoin’s price will not reach new 2020 highs in the near term, despite testing that level as recently as Tuesday when the price hit $12,085. “I think we trade in the $11,000-$12,000 range for a while,” he said. 

In equities, while the major Asian Nikkei 225 index was buoyed by expectations new leadership in Japan will continue economic stimulus policies put in place by outgoing Prime Minister Shinzo Abe, stocks in Europe and particularly in the U.S. are awash in red – as it is in most of the crypto ecosystem Thursday.

GSR’s Kramer views the equities markets with some trepidation, and has concerns about the performance of traditional finance for the balance of 2020. “Stock valuations remain overinflated in the eyes of many observers, and economic uncertainty persists,” he said. “A crypto drop like this won’t deter the majority of investors who have a longer-term investment thesis.”

Read More: Jump Trading Invests in Decentralized Exchange Serum

Ether dominance dominates

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Thursday, trading around $402 and slipping 7.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: DeFi Risk Management Startup Cozy Finance Debuts With $2M Funding 

But while the price is down, ether’s dominance of the broader crypto market hit a 2020 high of over 14% Wednesday. Although dipping a bit Thursday, the last time ether’s share was at these levels was back in August 2018. 

“A large number of useful projects on the Ethereum blockchain contribute to ether dominance growth,” said Azamat Malaev, co-founder of HodlTree, a decentralized lending protocol. However, scaling is an issue that could cause ether’s share to wane, Malaev added. “To maintain this trend, Ethereum urgently need to scale the network. For ordinary users, transactions are already very expensive”

Read More: Ethereum Developers Focus on Congestion as Fees Spike Over 600%

Other markets

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

  • tron (TRX) + 36%
  • nem (XEM) + 0.89%

Read More: New Crypto Derivatives Let You Bet on (or Against) Tether’s Solvency

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

Read More: Hardware Wallet Flaw Lets Attackers Hold Crypto for Ransom

Commodities:

  • Oil is down 0.67%. Price per barrel of West Texas Intermediate crude: $41.29.
  • Gold was in the red 0.61% and at $1,930 as of press time.

Read More: Around the Crypto World in 15 Charts

Treasurys:

  • U.S. Treasury bond yields all slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 2.8%.

Read More: Digital Bank Revolut Expands Crypto Buying and Selling Service to Australia

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CoinDesk

US Air Force and Raytheon Are Studying How Distributed Ledgers Could Help Command the Skies

6 years 1 month ago

The U.S. Air Force’s (USAF) continuing series of blockchain investments is entering the realm of battle management systems with a nearly $500,000 contract award to defense giant Raytheon.

  • Raytheon BBN Technologies won a $495,039 contract titled: “Characterizing the applicability and relevance of DLT (Distributed Ledger Technology) in Air C2″ (CARDIAC) from the Air Force Research Laboratory (AFRL).
  • The contract’s title indicates that Raytheon’s advanced tech researchers will consider how DLT can benefit commanders’ ability to keep their eyes on the skies and their pilots safe and lethal. That’s the gist of C2, Pentagon shorthand for Command and Control.
  • Other than the title, the parties, the funding and the date, the CARDIAC viewed by CoinDesk Thursday had little to reveal. Raytheon BBN did not immediately respond to a request for comment and neither did AFRL.
  • But Lt. Col. Neil Barnas, who has studied blockchain’s military potential, told CoinDesk DLT could be an asset for the USAF’s C2. He said distributing otherwise centralized C2 systems makes them less vulnerable to enemy attack.
  • “If you have the one command and control system to rule them all you’ve really just created a target,” he said, speaking to CoinDesk in a personal capacity.
  • The USAF has made clear this year that it is preparing to spend millions of dollars on modernizing C2. “Highly advanced and lethal tools” help airmen “to prevail in the high-end fight,” officers wrote in their FY2021 budget overview.
  • That document requested $435 million for an “Advanced Battle Management System” that links USAF and Space Force’s war-fighting capacity.

See also: US Air Force Gives Blockchain Firm $1.5M to Build Supply Chain Network

Update (9/3/20 22:14 UTC): This article has been updated to include comment from Lt. Col. Neil Barnas.

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CoinDesk

Stacks Foundation to Spend ‘Majority’ of STX Token Fortune on Ecosystem Development

6 years 1 month ago

An army of Web 3.0 educators, developers and platform boosters can now secure funding from Blockstack’s nonprofit arm – so long as their blockchain projects focus on the Stacks ecosystem.

  • Under the Stacks Open Internet Foundation’s beta grant program, projects will get between $1,000 and $5,000 to support their visions for Stacks blockchain tools, initiatives, evangelism and development.
  • Funding these relatively small-dollar projects will help grow Stacks’ community and facilitate its mission of supporting a user-built internet, said Brittany Laughlin, the nonprofit’s chief.
  • For now, the foundation said it will dole out its grants in dollar form in lieu of stacks tokens (STX). That’s a notable break from the crypto space’s now commonplace practice of fostering development with grants in their target project’s native token.
  • Stacks plans to switch over to STX payouts just as soon as the blockchain upgrade called Stacks 2.0 goes live, Laughlin said.
  • Her foundation has no shortage of the token. Last month Blockstack PBC turned 100 million STX tokens (worth $21.5 million at press time) over to Stacks, along with intellectual property rights to certain patented Blockstack technologies.
  • Laughlin said Stacks will pour most of its token fortune into “grants and ecosystem development.”
  • “At least 30 million STX are dedicated to fund application development, as they were set aside for App Mining’s next evolution, which will likely be awarded in the form of app development grants,” she said.

Read more: Stacks Foundation Will Soon Put Those 100M Tokens to Work

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