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Hacker Stole 1,000 Traders’ Personal Data From Crypto Tax Reporting Service

6 years 1 month ago

A hacker has stolen data on more than 1,000 users from CryptoTrader.Tax, an online service used to calculate and file taxes on cryptocurrency trades.

The hacker broke into a CryptoTrader.Tax marketing and customer service employee’s account on a support center platform, according to a source who came across the hacker on a dark web forum. With this access, the hacker could see customers’ names, email addresses, payment processor profiles and messages sometimes containing cryptocurrency incomes.

The hacker then screengrabbed samples of this sensitive information, posted them on the forum to entice potential buyers of the data trove and sent additional pictures to the source, who shared this evidence with CoinDesk.

Related: These Illicit SIM Cards Are Making Hacks Like Twitter’s Easier

See also: Even the IRS Admits Some Crypto Tax Regulations Are ‘Not Ideal’

David Kemmerer, a co-founder and the chief executive of CryptoTrader.Tax, confirmed to CoinDesk that a hacker gained unauthorized access on April 7 to the marketing and customer service employee’s account. The hacker was able to see support center details in the materials and downloaded a file containing 13,000 rows of information, including 1,082 unique email addresses, Kemmerer said.

CryptoTrader.Tax’s security team investigated the breach and found tax filing account passwords and CryptoTrader.Tax’s website were not compromised, Kemmerer said. The team then alerted parties affected by the breach and took steps to improve security measures and monitoring systems across internal and third-party applications, Kemmerer said. 

Operated by Kansas City-based Coin Ledger Inc., CryptoTrader.Tax allows users to import trades from 36 cryptocurrency exchanges and auto-generate cryptocurrency income gains and losses in tax reports exportable to TurboTax, the popular tax preparation software.

Related: Russia, With Bitcoin Playing Bit Part, Tried to Hack 2016 US Election, Senate Report Finds

See also: Crypto Taxes: Still Confused After All These Years

To pay for subscriptions, premium users also enter billing information into Stripe, a payment processor. Stripe is connected to CryptoTrader.Tax’s support center platform and shows customers’ email addresses and general locations, but it does not expose physical addresses or credit, debit and banking information, according to the Stripe website.

The hacker also accessed marketing communications, referral numbers, commission earnings and revenues from affiliates who promote the CryptoTrader.Tax service on websites and social media, according to the materials reviewed by CoinDesk and Kemmerer. 

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Bitstamp to Move Clients’ Accounts From London to Luxembourg

6 years 1 month ago

Cryptocurrency exchange Bitstamp told CoinDesk it will migrate its customer accounts from its London-based Bitstamp Limited to its entity in Luxembourg. But operations at Bitstamp Limited will not be affected by this decision, according to the company.

“[This is] a move that has been planned for months,” Vasja Zupan, chief operating officer of Bitstamp, confirmed with CoinDesk in an email response. “This does not involve any relocation or change in operations, staff or offices.”

The exchange currently has three physical locations around the globe, according to its website. The exchange, Bitstamp Ltd., is in London, while its payment institution, Bitstamp Europe S.A., where the accounts will be moving, is based in Luxembourg. Bitstamp also has its offices in New York. 

Related: India May Be Starting Its Biggest Bitcoin Bull Run Yet

The exchange was granted a license to operate as a fully regulated payment institution in Luxembourg in 2016, in an attempt to expand its crypto trading service throughout the European Union.

At press time, Bitstamp had not responded to CoinDesk’s follow-up questions regarding the reason it moved accounts from London to Luxembourg, but TrustNodes reported on Aug. 21 it was likely because of an increased chance of a “no deal” Brexit between the European Union and the U.K.

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Market Wrap: Bitcoin Hits $11.8K; Ethereum Gas at All-Time High

6 years 1 month ago

The bitcoin market is experiencing low volume Monday but ether continues to fuel DeFi’s growth.

  • Bitcoin (BTC) trading around $11,737 as of 20:00 UTC (4 p.m. ET). Gaining 0.34% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $11,592-$11,823.
  • BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Read More: Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

Bitcoin’s price opened the week heading higher, hitting $11,823 on Monday before dipping lower. “Bitcoin has settled into a consolidation position at $11,700,” said Daniel Koehler, liquidity manager at cryptocurrency exchanges OKCoin. “It appears that traders are waiting for better fills at $11,000,” he added.

Related: ‘Bitcoin Rich List’ Reaches All-Time High

Darius Sit, managing partner of quantitative trading firm QCP Capital, expects the final full week of August to be quieter than earlier in the month, when the world’s oldest cryptocurrency hit a 2020 high of $12,485 on spot exchanges like Coinbase. 

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

“One thing we were looking at is that August tends to be a weak month for both BTC and ETH,” said Sit. “So if that seasonality plays out, this last week of August might see some weakness.”

Spot volumes on major BTC/USD exchanges Monday are low. For Luxembourg-based Bitstamp, for example, it was just $27 million, well below its $91 million daily average.

Related: Canadian Software Startup Puts 40% of Cash Reserves Into Bitcoin

Interestingly, there are more addresses now with 1,000 or more bitcoin than ever before. The count of those on the “Bitcoin Rich List” has reached a high of 2,190. Those addresses hold nearly 7.87 million BTC, the equivalent of $92.2 billion. 

Nonetheless, many stakeholders who are usually bullish are expecting some retrenchment from bitcoin’s price gains, including Rupert Douglas, head of institutional trading for digital asset broker Koine. “We’ve come a long way quickly. I wouldn’t be surprised by a pause or a pullback,” Douglas said. OKcoin’s Koehler echoed that sentiment. “Momentum is still signaling bullish, but it’s unclear if we should test the $10,000 breakout area before moving higher,” said.  

Douglas also noted ether (ETH) continues to steal bitcoin’s spotlight. “Overall, ETH is stronger and I think will continue to outperform BTC,” he said. 

Read More: Marathon Brings New Bitcoin Mining Rigs Online

Into the ether

Ether, the second-largest cryptocurrency by market capitalization, was up Monday, trading around $401 and climbing 2.1% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ether Volatility Now Highest in Six Months Compared With Bitcoin’s

The amount of “gas” used, denoted in gwei, worth 0.000000001 ether on the Ethereum network, hit an all-time high Sunday, reaching 79,294,213,632 gwei, according to aggregator Glassnode. A unit of measure to execute operations on the network, gas is used within Ethereum to conduct transactions or use smart contracts. The record amount of gas used is viewed as a sign that Ethereum’s utility for decentralized finance, or DeFi, is higher than ever. 

However, George Clayton, managing partner of Cryptanalysis CapitaI, has concerns whether Ethereum’s heavy usage can be sustained given that average fees for using the network have gone as high as $6.68 in August. “I think the gas issue is leaving Ethereum vulnerable,” he said, “vulnerable to competing smart contract public blockchains. Something has to give.”

Other markets

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

Read More: Binance Taps DeFi Excitement to ‘Fuel’ Expansion Strategy in India

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

Read More: Anything-Goes Token Market Repudiates Rich-Only Venture Capital Club

Equities:

Read More: No Collateral Required: How Aave Brought Unsecured Borrowing to DeFi

Commodities:

  • Oil is up 0.29%. Price per barrel of West Texas Intermediate crude: $42.39.
  • Gold was in the red 0.64% and at $1,926 as of press time.

Read More: Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

Treasurys:

  • U.S. Treasury bonds all climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year, in the green 8.4%.

Read More: Over $1M in Ryuk Ransomware Bitcoin Was ‘Cashed Out’ on Binance: Report

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‘Bitcoin Rich List’ Reaches All-Time High

6 years 1 month ago

There are more than 2,000 addresses holding over 1,000 bitcoin, potentially reflecting increased interest from institutions and high-net-worth investors.

  • The Bitcoin Rich List, or the number of addresses holding all that bitcoin, is at a record high, according to data site Glassnode.
  • At press time, 2,190 addresses contain 1,000 or more bitcoin, according to data compiled by BitInfoCharts. The previous record was 2,184 on Sept. 28, 2019. Bitcoin‘s price was $11,717, up 0.28% from the previous 24 hours as of 19:15 UTC.
  • The total amount of bitcoin held in accounts of 1,000 or more was 7,868,823 as of press time. That amounts to $92.2 billion.
  • In the wake of the coronavirus pandemic, more investors have been looking into bitcoin and other cryptocurrencies as alternative investments to traditional markets.
  • George Ball, the former chief executive of Prudential Securities and now CEO of Sanders Morris Harris, told Reuters earlier this month that bitcoin or another cryptocurrency is a very “attractive” investment and hinted that many “very wealthy” investors and traders have turned to bitcoin.
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Huawei Builds Blockchain Platform to Help Beijing Government Manage People’s Data

6 years 1 month ago

Chinese tech conglomerate Huawei has set up a blockchain-based platform for the Beijing government to better track and manage its citizens’ data in everything from medical records and property registration to real-time vehicle parking status.

  • Huawei’s cloud services branch has enabled the project with blockchain technology such as smart contract and distributed ledgers, according to a report by state media People’s Daily on Monday.
  • The Beijing government project is part of China’s “New Infrastructure Initiative” to transform digital governance with blockchain so data can be immutable and shared among different government agencies. 
  • The Beijing government project aims to leverage the blockchain platform to make data shareable among more than 50 agencies within the municipality.
  • The new platform will help the government monitor coronavirus cases, streamline the process for people to register their real estate and find parking spots for local citizens in real time. 
  • Huawei, as the poster child of Chinese tech, has met with heavy scrutiny and political resistance from the western world.
  • The U.S. has barred Huawei’s major semiconductor suppliers from selling chips to the company, while both the U.S. and U.K. have banned local telecom companies from using Huawei’s 5G devices and technology for national security reasons. 
  • The move also echoes the Chinese central government’s shift toward boosting domestic demand for emerging technology and services as techno-nationalism rises and the global market weakens.
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Moscow May Sell Footage From Public Security Cameras: Report

6 years 1 month ago

The tech branch of Moscow’s city hall plans to broadcast on the internet videos from cameras in public spaces and may also sell those videos to third parties, according to reports.

  • The Department of Information Technologies at Moscow City Hall will purchase cameras to install inside and outside of 539 hospitals in Moscow, the Russian newspaper Kommersant wrote.
  • The same department organized the blockchain-based electronic voting in Moscow and one more Russian region this summer when Russians voted to amend the country’s constitution. The voting process was criticized for the weak data protection.
  • Video from the cameras will be accumulated on a central server, and there will be an option to provide access to the data for purchase, according to documents. The video can also be broadcast via open channels in the internet.
  • According to Kommersant, journalists found similar terms in other contracts for surveillance cameras already operating in Moscow. The Department’s press office told the publication that it was just standard wording for such contracts.
  • Russian publication MBK Media wrote in December that access to footage from Moscow street cameras was on sale on the dark market, with an option to get access to individual cameras or to the entire system.

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FTX Launches Uniswap Index Futures to Meet Surging Demand for DeFi Access

6 years 1 month ago

Antigua and Barbuda-based FTX announced Monday a futures index for the top 100 liquidity pools on Uniswap, the largest decentralized exchange by traded volume.

  • “We’ve seen large demand from customers to get exposure to a broad base of DeFi (decentralized finance) products,” CEO Sam Bankman-Fried told CoinDesk in a private message.
  • The futures index allows traders to use a traditional cryptocurrency exchange to access markets native to the new decentralized trading platform, while paying lower fees and using leverage.
  • The index provides traders on FTX, the leading cryptocurrency exchange by order book liquidity, with “exposure to 100 markets without paying gas fees 100 times,” Bankman-Fried told CoinDesk, referencing skyrocketing network fees on the Ethereum blockchain.
  • Surging demand to trade on Uniswap pushed the trading platform’s volume in August above its July record high in less than two weeks.
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Blockchain Bites: Aave’s Advance, BitMEX’s Block, Turkey’s Bitcoin Trot

6 years 1 month ago

A branch of the Fed is looking at 30 blockchain networks to possibly support a “digital dollar,” Turkey is experiencing a bitcoin bull run and the Aave protocol has taken a leap forward for DeFi.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Top shelf

“Can’t stop the nodl”
Turkey is experiencing a dollarization crisis and a bitcoin bull run, exchange volume data reveals. BTCTurk, the largest crypto exchange in Istanbul, has seen volumes roughly quadrupled over the past year, attracting roughly 100,000 active monthly users by July 2020 out of nearly one million accounts, CoinDesk’s Leigh Cuen reports. “August might be the highest volume ever and the highest level of registrations in any month this year,” CEO Ozgur Güneri said. “This also correlates to the volatility in prices.”

Related: First Mover: Anything-Goes Token Market Repudiates Rich-Only Venture Capital Club

Digital dollars
The Federal Reserve Bank of Boston, one of 12 regional Federal Reserve banks operating under the U.S. central bank, is evaluating more than 30 different blockchain networks to determine if they would support a digital dollar, CoinDesk’s Nikhilesh De reports. This follows on news from earlier this month the Boston Fed is actively testing a tokenized version of the U.S. dollar with the Massachusetts Institute of Technology’s Digital Currency Initiative, looking at how it might complement the existing greenback. 

BitMEX blocked
Crypto derivatives exchange BitMEX will block users in the Canadian province of Ontario beginning in September. Without going into detail, the exchange said it was “mandated” by the state’s securities regulator, the Ontario Securities Commission. Existing positions may run till Jan. 4, 2021, but no new contracts will be filled. The news comes as the sometimes controversial exchange moves to become more compliant with regulators, having brought in compulsory “know-your-customer” verification procedures earlier this month, CoinDesk News Editor Daniel Palmer reports. 

Wandering yuan?
China’s central bank said experiments of its digital yuan project only involve small retail transactions. The statement, from a People’s Bank of China employee, came after rumors of a Shenzhen house sale conducted through the DCEP (digital currency, electronic payment). The seller had been paid with a large amount of the digital currency, but was unable to convert it into the traditional version of the currency, Chinese news source Global Times reported. The PBoC employee later told news source Sina scenarios involving larger-sized transactions during the pilot period are not yet being addressed.

Mining news
Enegix may become one of the largest bitcoin mining facilities in the world if it opens in September. The 180 megawatt (MW) data center will be able to support 50,000 mining rigs, according to sales director Dmitriy Ivanov. Assuming full capacity with Bitmain’s AntMiner S19 series or MicroBT’s WhatsMiner M30, they could produce mining power of about 5-6 EH/s – approximately 4% of bitcoin’s current hashrate, CoinDesk’s Paddy Baker reports. The $23 million project would draw as much electricity as 180,000 U.S. homes and employ about 160 people in Kazakhstan. Separately, Nasdaq-listed Marathon Patent Group has deployed two shipments of mining machines, increasing the company’s hashrate by 130 petahash per second to 186 petahash per second.

Quick bites
  • Barstool’s Dave Portnoy Is Bad at Trading Cryptocurrency (Zack Voell/CoinDesk)
  • Money Reimagined: DeFi-ing History (Michael Casey/CoinDesk)
  • People Aren’t Buying the “Great American Recovery” Narrative (Nathaniel Whittemore/The Breakdown)
  • “Yield farming” is flashy, but in some ways it resembles what’s happening in traditional markets (Frank Chaparro/The Block)
  • Binance Taps DeFi Excitement to “Fuel” Expansion Strategy in India (Leigh Cuen/CoinDesk)
At stake

Related: Blockchain Bites: Bitcoin’s Weary Bulls, ETC’s Action Plan, INX’s IPO

Aave advances
Aave, a DeFi money market protocol, has brought unsecured borrowing to decentralized finance (DeFi). CoinDesk’s Brady Dale reports the protocol’s credit delegation function is live, allowing users with collateral on Aave to delegate their credit line to a third party they trust, earning a cut of the interest. Aave, like most other DeFi protocols, had allowed users to earn interest on cryptocurrency and borrow against it. Unsecured borrowing represents “a significant shift for DeFi lending, which until now has been predicated on only one of the traditional “four C’s” of credit: collateral,” he writes, (“capacity,” “capital” and “character” were the remaining three). 

What people are saying:
“I think it’s healthy and natural to experiment around these models. But they do have a lot of risks around them, for obvious reasons, if the assets can’t be recovered in time for the primary owner,” Joseph Kelly, CEO of Unchained Capital, a company that writes loans against bitcoin collateral.

Market intel

Bitcoin up, dollar down
Bitcoin was up slightly at about $11,776 early Monday, rising along with European equities, stock futures, gold, copper and oil amid market optimism, CoinDesk’s First Mover reports. The dollar weakened. Prices have now spent 27 straight days above $10,000, the third-longest period in the five-digit zone in bitcoin’s 11-year history. According to Cryptoslate, the streak suggests “$10,000 as strong support, which typically is a positive medium-term sign.” 

Bearish bets
Bearish bets in bitcoin futures from leveraged funds hit record highs on the Chicago Mercantile Exchange (CME), CoinDesk’s Omkar Godbole said. Last week, leveraged funds increased their short positions by 110% to a record high of 14,100 contracts, according to a Commitment of Traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC) on Friday. Crypto derivatives research firm Skew suggests these short positions are “a function of attractive cash and carry levels,” an arbitrage strategy.

Op-ed

Crypto Long & Short
It wasn’t just Coinbase alum Brian Brooks, now head of the U.S. Office of the Comptroller of the Currency (OCC), who wanted to open the possibility for banks to custody crypto – the OCC had been looking at this for some time. CoinDesk Head of Research Noelle Acheson looks at the growing number of regulators and politicians – including from the Commodity Futures Trading Commission and Congress – trying to “support crypto innovation while protecting investors for longer than many realize.” Thus, “the OCC’s recent bold move is probably not the only welcome surprise we’ll see from an official body this year,” she writes. 

Podcast corner

Yielding curves
On the latest Long Reads Sunday podcast, Nathaniel Whittemore looks at markets’ reaction to Federal Reserve minutes suggesting yield curve control is off the table. 

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

6 years 1 month ago

Brazil, home to South America’s largest economy and a bullish-on-fintech financial bureaucracy, is studying the benefits and challenges of issuing a central digital currency (CBDC).

  • Banco Central do Brasil (BCB) established an intergovernmental CBDC study group on Aug. 20.
  • The 12-member team is tasked with investigating CBDC security risks, economic implications and societal benefits against Brazil’s existing payments landscape.
  • The team will also evaluate CBDC issuance and even propose an issuance model for Brazil. A final report is due in to BCB officials in 180 days.
  • CBDC may “improve the current model of commercial transactions between people and even between countries,” BCB said in a press statement, calling CBDC issuance “eventual.”
  • Brazil’s monetary policy makers are already moving to digitize payments in South America’s largest economy. Pix, a central bank-run instant payments system, is coming online in November.

See also: Brazilian Financial Regulators Will Vet Companies and Political Appointees on a Blockchain

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Canadian Software Startup Puts 40% of Cash Reserves Into Bitcoin

6 years 1 month ago

An Ottawa-based graphics software firm, Snappa, announced Monday its decision to move a significant amount of its cash reserves into bitcoin, citing concerns of inflation and global economic uncertainty.

  • Co-founder Christopher Gimmer told CoinDesk in a private message, “The allocation itself represents 40% of our cash reserves.” The company did not mention the number of bitcoins it currently holds, however, which Gimmer explained was a decision made “for privacy reasons.”
  • The initial 40% allocation is only the beginning for the seven-person startup. “We’re still accumulating coins, and we don’t plan on selling anytime soon,” Gimmer told CoinDesk. “If we’re right about where bitcoin is heading then our allocation could get very high.”
  • In a blog post, Gimmer explained his company’s belief that traditional savings accounts are inferior to other options for growing cash reserves. “I believe we now have a far superior savings technology available to us,” Gimmer wrote. “That technology is Bitcoin.”
  • Gimmer also mentioned the recent decision by MicroStrategy to move $250 million into the leading cryptocurrency, which he described as “fascinating.”

Read more: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

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Ether Volatility Now Highest in Six Months Compared With Bitcoin’s

6 years 1 month ago

Investors are expecting more volatility in ether (ETH) compared with bitcoin (BTC), according to a key metric, with the measure of risk at a six-month high amid a boom in decentralized finance (DeFi).

  • The three-month spread between ether's volatility and bitcoin's has risen to 29%, the highest level since Feb. 23, according to data source Skew.
  • The metric, which tracks the difference in implied volatility for at-the-money options in both cryptocurrencies, has risen from -2.4% to 29% in two months. 
  • Implied volatility is calculated from options prices and shows the market’s opinion of the underlying asset’s potential moves. It is often considered a proxy of market risk.
‘Potential big move’ – but not necessarily up
  • The surge in the volatility spread suggests investors are pricing bigger percentage moves in ether than bitcoin over the next quarter.
  • “Investors are focused on DeFi and mindful of a potential big move in ETH,” said Skew’s CEO Emmanuel Goh. 
  • Implied volatility does not tell us anything about the direction of the next big move.
  • As such, traders are warned against interpreting the rise in ether-bitcoin volatility spread as a bullish price signal.
  • Ether has witnessed greater price volatility over the past four weeks. The three-month ether-bitcoin realized volatility spread bottomed out at 5.7% on July 20 and was last seen at 19%, the highest level since June 11.
  • Realized or historical price volatility is a measure of daily price movements that have already happened. Implied volatility is what the market expects for the future.
  • Bitcoin’s price is up 64% on a year-to-date basis, while ether has gained over 200%, according to data source CoinDesk 20.
  • The total value locked in DeFi platforms is now closing on the $7 billion mark – up 10% on a year-to-date basis, as per data provided by defipulse.com. Most decentralized applications are based on ethereum’s blockchain.
  • Ether’s average transaction costs reached record highs above $6 earlier this month, signaling network congestion.

Also read: Nic Carter: What Ethereum’s Fees Mean for Its Future

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Over $1M in Ryuk Ransomware Bitcoin Was ‘Cashed Out’ on Binance: Report

6 years 1 month ago

Researchers have traced millions of dollars’ worth of bitcoin sent as payments to Ryuk ransomware controllers and found a good portion passed through the Binance exchange platform.

  • In a document seen by Forbes and covered in a report Sunday, the anonymous researchers said they had analyzed a sample of 63 bitcoin transactions linked to the Ryuk malware that were worth around $5,700,000 in total.
  • Of these, “over $1 million [in bitcoin] was sent from the hacking team wallets to the Binance exchange platform to cash out their ransom payments,” they said.
  • Ryuk, like other ransomware variants, locks up infected computers using encryption and demands a payment (normally in crypto) to release the files.
  • Ryuk is said to have raked in $61 million in the two years since it was let loose on the world, Forbes said.
  • Looking at 13 other bitcoin addresses linked to Ryuk, the researchers also found some of the total $1,064,865 in bitcoin held there also passed through Binance.
  • The remainder of the bitcoin traced, some $4.7 million worth, was found to be held on non-exchange wallets – a suggestion that the malware’s operators favor Binance, according to the report.
  • Binance has been provided the research findings, Forbes said.
  • The exchange said in the report it prioritizes ensuring “the safety of our customers and the integrity of the broader crypto space,” though spotting such illicit activity is “not always black and white.”
  • Binance also analyzed the Ryuk bitcoin flows and reportedly found that 400 bitcoin went to Huobi, a Singapore-based exchange, and 140 BTC moved through a now-closed Thailand-based exchange.

Also read: Bitcoin’s Ransomware Problem Won’t Go Away

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Marathon Brings New Bitcoin Mining Rigs Online, Sees Itself Becoming Cash-Flow Positive

6 years 1 month ago

Nasdaq-listed cryptocurrency mining company Marathon Patent Group received and deployed two shipments of new mining machines, which increased the company’s hashrate by 130 petahash per second to 186 petahash per second.

  • According to an announcement Monday, the company received 700 WhatsMiner M31S+ Miners from MicroBT and 600 S19 Pro Antminers from Bitmain.
  • 1,000 additional S19 Pro Antminers are expected to arrive between September and December this year leading to an expected additional hashrate increase of 153.4 petahash per second.
  • “We believe that the increased hashrate production will mean the company will become cash-flow positive on a go forward basis for the first time since we embarked on this pivot to become a bitcoin mining company,” said CEO Merrick Okamoto.
  • Marathon shares, which were already down about 50% from their yearly high set earlier in August, are down 10% from their Monday open, trading around $2.52 at last check.
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Boston Fed Is Looking at ’30 to 40′ Blockchain Networks for Digital Dollar Experiments

6 years 1 month ago

The Federal Reserve Bank of Boston, one of 12 regional Federal Reserve banks operating under the U.S. central bank, is evaluating more than 30 different blockchain networks to determine if they would support a digital dollar.

The Boston Fed, as it’s more commonly known, announced earlier this month it was actively testing a digital dollar – a tokenized version of the U.S. dollar – with the Massachusetts Institute of Technology’s Digital Currency Initiative. The collaboration builds on previous research efforts, and is intended to establish how a digital dollar might complement the existing greenback, said Boston Fed Senior Vice President Jim Cunha. Ultimately, the results will be published and potentially considered for an actual digital dollar, though the latter part is still years away. 

“What we’re doing now really is much more thorough, much more building a platform to see whether distributed ledger can meet the needs of a U.S.-based central bank digital currency,” he said. “Can it actually function?”

Related: APIs Will Decentralize CBDCs

The collaboration is “in its formative stages,” he said, meaning right now the two institutions are determining what the requirements are for the project and which platforms to build on.

As the work proceeds, the researchers hope to answer questions about scalability, throughput, privacy, resiliency and resistance to cyber attacks, he said. 

“I would think we’re probably looking at 30 to 40 different either open source or private solutions at a very high level first, and then doing a deeper dive into a few of them, because we’re in the early stages of this, and we want to make sure we have the broadest view possible,” Cunha said.

Fed x MIT

The Boston Fed announced its formal collaboration with the DCI to test a digital dollar last week. However, the relationship between the two entities and their research into digital currencies stretch back years, Cunha said.

Related: The Federal Reserve Is Experimenting With a Digital Dollar

“Now that we are going further with our research with the Digital Currency Institute, we decided to get a more formal relationship with them,” he told CoinDesk.

Neha Narula, director of the DCI and a research scientist, said MIT’s lab is a neutral research institution. 

Researchers on the project will implement different designs, which Narula hopes will provide concrete data and options for policymakers who are considering whether to move forward with a CBDC and what tradeoffs might exist with one model or another.

Read more: Senate Banking Committee Remains Open to Idea of Digital Dollar in Tuesday’s Hearing

“We’re excited about this collaboration because DCI’s goal is to answer the fundamental questions necessary to determine under what circumstances a CBDC is a good idea, and how we might deploy one should a central bank decide to do so,” she said. “Working closely with one of the largest central banks in the world is incredibly helpful in terms of getting real-time input on how to frame and answer these questions.”

For the moment, the research is exploratory and focused on the technology aspects, rather than policy. 

Bob Bench, assistant vice president at the Boston Fed, told CoinDesk the U.S. might have a different view on privacy or other issues than other nations do, so the research effort has to consider what privacy measures it can take, as one example. 

Even basic questions such as which programming language should be used are up in the air, he said.

“These are some of the issues we’re thinking about at the core level before we even start thinking about user interface,” he said.

Cunha said the goal is to publish joint research over the next two years, to ensure anyone else looking at CBDCs can learn from the collaboration’s work. 

“We hope to create an open source code base that supports multiple trade offs and will be useful to anyone who is interested in building, testing, and deploying central bank digital currency,” Narula said. 

Design needs

A number of factors will be considered during the research effort. Narula noted that a retail-focused CBDC would need low latency and high throughput, meaning it would need to be able to process a large number of transactions per second, while remaining secure. 

Part of this mission means leveraging existing cryptographic and distributed ledger systems “that have been vetted in the real world,” she said. 

“We don’t want to take some brand-new consensus algorithm or cryptographic protocol and use it for a country’s national currency,” she said.

Ensuring this digital dollar can serve un- or underbanked users is another goal, Cunha said, an initiative Narula agreed with. 

It’s also important to ensure the resulting designs can be flexible, he said. 

We don’t want to take some brand-new consensus algorithm or cryptographic protocol and use it for a country’s national currency.

Beyond the basic questions, the Boston Fed wants to know how issues like throughput and privacy might be affected if participants are required to pass know-your-customer and anti-money laundering checks, he said.

“We’re not getting granular with this. We’re not trying to design and think about product design down to the level of ‘how would someone unbanked use this?’, we’re trying to be flexible enough to allow innovation to answer some of those problems,” he said.

Read more: How a Flurry of ‘Digital Dollar’ Proposals Made It to Congress

Different central banks have different issues they may be concerned with, Narula said.

Like Cunha, he emphasized that throughput is an important area of concern, saying whatever engine powers the CBDC would need to be able to support “the world’s largest currency’s transactions.” 

These are questions that may take years to resolve. Cunha said he does not expect to see anything come to production within the next two or three years.

“I would say I think a digital currency will launch inevitably, but then that’s a long time,” Cunha said. “These are decade-long paths, versus something that changes overnight.”

Years of work

The Boston Fed has been looking at distributed ledger technology since 2015 or 2016, Cunha said, and has published numerous papers on the subject. The group has also looked at similar central bank digital currency and payment efforts by other central banks, including the Monetary Authority of Singapore’s Project Ubin and Canada’s Project Jasper.

“Our goal really was to understand distributed ledgers, how it was unfolding,” he said.

This goal hasn’t changed. While private digital currency efforts like Libra and CBDC projects like China’s digital yuan may have created a bit more urgency to the Boston Fed and DCI’s work, there’s no mandate or timeline to launch a digital dollar by.

“It just creates more interest in the project,” Cunha said. 

In other words, he does not see the new collaboration as being a competition between the U.S. and China, or the U.S. and the Libra Association. 

Read more: China Aims to Be the World’s Dominant Blockchain Power – With Help From Google, Amazon and Microsoft

“I would say as the major powers start to launch, it does get the attention of people that are thinking about this broadly and at a policy perspective,” he said.

If anything, the fact that there are now multiple efforts underway to create a mainstream-accessible cryptocurrency might just indicate that distributed ledger technology “actually may have legs,” and has the potential to be incorporated into payment and monetary systems’ infrastructure in the future.

The Boston Fed intends to publish thought leadership papers and analysis of the platforms it evaluates as part of its new Project Hamilton, in an effort to provide educational materials based on the research, he said. 

The name is a nod to Alexander Hamilton, but also to Margaret Hamilton, one of the founders of software engineering and a former director of the Software Engineering Division of the MIT Instrumentation Laboratory, who worked on technology for part of the moon landing.

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Binance Taps DeFi Excitement to ‘Fuel’ Expansion Strategy in India

6 years 1 month ago

Binance, the global crypto exchange, is looking to accelerate business development in India during the local 2020 bull run – with an acute focus on decentralized finance (DeFi). Ever since India’s Supreme Court overturned banking restrictions in March, demand for crypto has skyrocketed. 

“With the second-largest blockchain developer base in the world, India has already kick-started the revolution of decentralization and we’re here to fuel it,” Binance CEO Changpeng Zhao said in a press statement.  

As the cornerstone of that India strategy, the Binance-owned and Mumbai-based exchange WazirX is collaborating with the Indian startup Matic on DeFi protocol research. Both are also co-sponsoring a DeFi-centric hackathon this autumn called Build for Bharat.

Related: Over $1M in Ryuk Ransomware Bitcoin Was ‘Cashed Out’ on Binance: Report

Read more: India May Be Starting Its Biggest Bitcoin Bull Run Yet

Hackathon winners will be eligible for the above-mentioned accelerator fund, according to press representative Simran Alphonso, in addition to prize money contributed by various sponsors including Marlin and Google Cloud India. 

The virtual hackathon will last until October, ending when five finalists receive 30,000,000 INR (roughly $400,000) in prizes. Alphonso said judges will be looking for projects related to DeFi. 

One of the goals for this hackathon is to help the global Binance teams identify local talent, including opportunities for both investment and remote hires. Registration for the hackathon, which will select 100 participating teams, opens in September, with winners earning both prize money and a prospective investment from Binance. 

Related: No Collateral Required: How Aave Brought Unsecured Borrowing to DeFi

Alphonso said crypto projects that receive investment from Binance’s $50 million Blockchain for India fund also get mentorship through the exchange’s first local accelerator program, Polaris, to help the recipient with everything from software tools to the go-to market strategy.

Read more: Binance-Owned WazirX Announces DeFi Project With Matic

In the meantime, WazirX continues to gain traction. Alphonso said the exchange processed a total volume of $255.5 million this summer alone, thanks to a 130% increase in user signups.

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First Mover: Anything-Goes Token Market Repudiates Rich-Only Venture Capital Club

6 years 1 month ago
Price point

Bitcoin was up slightly at about $11,776 early Monday, rising along with European equities, stock futures, gold, copper and oil amid optimism over a coronavirus vaccine and treatments. The dollar weakened. 

The largest cryptocurrency is coming off a 2.2% decline in the seven days through Aug. 23, breaking a four-week string of gains.

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

Related: Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

On the positive side, prices have now spent 27 straight days above $10,000, the third-longest period in the five-digit zone in bitcoin’s 11-year history. According to Cryptoslate, the streak suggests “$10,000 as strong support, which typically is a positive medium-term sign.” 

Market moves

A week after First Mover wrote that cryptocurrency markets are now looking more capitalist than Wall Street, a new report suggests they also might be more democratic. 

Mason Nystrom, an analyst at the digital-asset data firm Messari, wrote last week that digital tokens are giving “anyone with access to a smartphone or computer” the opportunity to bet on early-stage tech startups previously restricted to investors who were already rich.    

“The open nature of crypto networks has largely removed barriers that restricted early-stage investing to hedge funds or venture capitalists,” Nystrom wrote. “Hopefully, this will result in better capital allocation over time and democratize an industry that has for too long been limited to the wealthy few.”

Related: No Collateral Required: How Aave Brought Unsecured Borrowing to DeFi

The business of betting on the next Facebook, Google or Amazon can be risky but lucrative: According to VC News Daily, there’s at least 14 venture capitalists with fortunes of at least $1 billion. 

Because of investor-protection rules imposed by the Securities and Exchange Commission, clubby venture-capital funds have mostly been restricted to “accredited” individuals – those with a net worth of at least $1 million or annual income of $200,000.  

Now, quick-to-market digital tokens like Compound’s COMP and Spaghetti’s PASTA are allowing anyone to bet on the fast-growing realm of decentralized finance, or DeFi. According to Token Daily, some of the projects come with “frothy DeFi token valuations.” 

But check out the demand from investors: No fewer than seven DeFi projects have market valuations of $500 million or more. That’s 10 times the size of the Series C funding round that the centralized crypto lender BlockFi announced last week.

It’s unclear why the SEC has allowed this culture of unfettered tokenholder democracy to proliferate, with its potential for fast riches alongside the risk of steep losses due to poor execution, scams or fraud.

This month witnessed the meme-worthy spectacle of YAM, whose market value plunged to $0 from $60 million within a span of 35 minute because of a programming bug in the unaudited protocol.

Perhaps the SEC is taking a wait-and-see approach. Perhaps the market is too small, young and irrelevant in the midst of a global pandemic to allocate precious agency resources. Perhaps “governance tokens” in “decentralized autonomous organizations” are just too complicated. Maybe they’re even structured in such a way that they don’t run afoul of the rules. 

“Accredited investor regulations are designed in theory to protect average investors from losing a bunch of their money, but they also prevent people from investing in startups, or in certain crypto assets where some people might actually have a decent amount of knowledge,” Messari’s Nystrom said in a Zoom interview.

There’s a lot of similarities between crypto markets and Wall Street, such as fear and greed, leverage and luck. But at least for now, the playing field in crypto might be more level.

– Bradley Keoun, Editor, First Mover

Bitcoin watch

Bearish bets in bitcoin futures from leveraged funds recently rose to record highs on the Chicago Mercantile Exchange (CME) – though that doesn’t necessarily imply a fresh sell-off is coming.

  • In the week ended Aug. 18, leveraged funds – hedge funds and various types of money managers that, in effect, borrow money to trade – increased their short positions by 110% to a record high of 14,100 contracts.
  • The data comes from a Commitment of Traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC) on Friday.
  • Institutional investors held 1,400 short contracts last week too, per the COT; a number that has also more than doubled.
Spot prices:
  • Having put in lows below $11,400 over the weekend, bitcoin has rebounded to over $11,790 at press time, according to CoinDesk’s Bitcoin Price Index.
  • A series of higher lows (marked with arrows) seen on the daily chart suggest the path of least resistance is to the higher side.
  • The low of $11,367 registered on Saturday is the level to beat for the bears.

Read more: Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

– Omkar Godbole, Markets Reporter

Token watch

0x (ZRX): Efforts to reduce congestion on the Ethereum blockchain are reviving speculation in 0x and other decentralized-exchange tokens.  

Ethereum Classic (ETC): Frequently-targeted blockchain plans “defensive mining” strategy to help thwart more 51% attacks. 

Aave (LEND) – Protocol ratchets up DeFi returns (and risks) with unsecured lending.

Polkadot (DOT): Leaders of the decentralized-Web project complained about cryptocurrency exchanges’ rush to list the new redenominated token early, but as of Sunday the “new DOT” token was up about 30% in the first few days of trading.    

Analogs The latest on the economy and traditional finance

U.S. Debt Tops 100% GDP, Hitting ‘Death Spiral’ Decade Before Forecast (NYT)

In Bifurcated Economy, White-Collar Do Fine as Lower-Wage Earners Struggle (WP)

Fed Chair Powell Jackson Hole speech this week could focus on ‘worrying low inflation’ (Bloomberg)

Small, mid-size companies shut out of Fed-fueled credit binge (Bloomberg)

Money velocity is key to inflation, not just money supply (SeekingAlpha)

Younger conservatives ‘stepping away from strict free-market philosophies’ (WSJ)

David Einhorn’s Greenlight Capital is wagering on ways to profit from rising inflation (Bloomberg)

Treasury withdrawals of operating cash show fading fiscal stimulus (Bank of America):

Tweet of the day What’s hot

Turkish lira crisis sends bitcoin volumes soaring on Istanbul exchange (CoinDesk)

BitMEX says Canadian traders no longer welcome after Sept. 1 (CoinDesk)

Former Reserve Bank of India governor says bitcoin “has value because others think it has value” (CNBC)

New bitcoin-mining station in Kazakhstan would provide 4% of network hashrate (CoinDesk)

Barstool’s Portnoy makes quick exit from bitcoin after crypto volatility lesson (CoinDesk)

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CoinDesk

Leveraged Funds Take Record Bearish Positions in Bitcoin Futures

6 years 1 month ago

Bearish bets in bitcoin futures from leveraged funds recently rose to record highs on the Chicago Mercantile Exchange (CME) – though that doesn’t necessarily imply a fresh sell-off is coming.

  • In the week ended Aug. 18, leveraged funds – hedge funds and various types of money managers that, in effect, borrow money to trade – increased their short positions by 110% to a record high of 14,100 contracts.
  • The data comes from a Commitment of Traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC) on Friday.
  • Institutional investors held 1,400 short contracts last week too, per the COT; a number that has also more than doubled
  • “Record shorts [by leveraged funds] were mostly likely a function of attractive cash and carry levels,” according to Skew, a crypto derivatives research firm.
  • “Cash and carry” is an arbitrage strategy that seeks to profit from mismatches in pricing between a derivative product and its underlying asset.
  • The method involves buying the asset on the spot market and taking a sell position in the futures market when the latter is trading at a significant premium to the spot price. 
  • Futures prices converge with spot prices on the day of the expiry, giving a risk-free return to a carry trader.
  • Bitcoin futures, due to expire on Aug. 28, were trading at a premium of $400 earlier this month, as per TradingView data.
  • As the highest premium since April, that may have prompted leveraged funds to make carry trades. Other exchanges like OKEx also witnessed a surge in the futures premium, as discussed last week. 
  • The premium has declined to sub-$100 levels in the past three trading days (CME futures are closed on Saturday and Sunday), making carry trades relatively unattractive right now.
  • Skew, therefore, expects the next CFTC report for the week ended Aug. 25 to show a decline in short positions.
Spot prices
  • Having put in lows below $11,400 over the weekend, bitcoin has rebounded to over $11,790 at press time, according to CoinDesk’s Bitcoin Price Index.
  • A series of higher lows (marked with arrows) seen on the daily chart suggest the path of least resistance is to the higher side.
  • The low of $11,367 registered on Saturday is the level to beat for the bears.

Also read: Stablecoin Demand May Drop if Traders Abandon Bitcoin ‘Cash and Carry’ Strategy

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PBoC Says Digital Yuan Tests Focus on Small Transactions After Rumored Property Sale

6 years 1 month ago

China’s central bank has apparently played down rumors of a property transaction settled with its in-the-works digital currency, saying that current tests only involve small transactions.

  • According to a report from Chinese news source Global Times on Monday, internet users had suggested that a house sale had been conducted in the major city of Shenzhen.
  • The seller had apparently been paid with a large amount of the digital currency being developed by the People’s Bank of China, but had not been successful in converting it into the traditional version of the currency.
  • Later, an employee at the central bank reportedly told news source Sina that trials of the digital currency are currently solely focused on smaller retail transactions and that scenarios involving larger-sized transactions are not yet being addressed.
  • The digital money is legal tender equivalent to fiat-based yuan and is 1:1 exchangeable with cash, they added.
  • The central bank digital currency (CBDC) is currently being trialed across a number of regions, with an expansion into cities like Hong Kong also announced in the last two weeks.
  • As well as banks, the CBDC is soon to be tested at companies including several within the Tencent group.

Also read: Chinese Ex-Banker Says Digital Currency Should Replace Fiat Money

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CoinDesk

Crypto Derivatives Exchange BitMEX to Block Ontario Traders

6 years 1 month ago

BitMEX, one of the oldest cryptocurrency derivatives exchanges, is to block users in one Canadian province.

  • According to a blog post on Monday, customers based in Ontario, Canada, will no longer be able to use the trading platform as of Sept. 1, 2020.
  • New derivatives positions may not be opened after that date, while positions that are already open may run till Jan. 4, 2021.
  • BitMEX said it would force close positions open at that point and requested users to close them prior to the shut-off date.
  • A precise reason why the block on Ontario users was brought in was not disclosed, but the exchange said it was “mandated” by the state’s securities regulator, the Ontario Securities Commission.
  • Ontario users trying to register and trade on BitMEX after Sept. 1 would be in breach of the firm’s Terms of Service, per the post.
  • The news comes as the sometimes controversial exchange moves to become more compliant with regulators, having brought in compulsory “know-your-customer” verification procedures earlier this month.
  • The exchange has barred U.S.-based users from its platform since 2015, and recently blocked traders in Hong Kong, Bermuda and Seychelles.
  • Based in Eden Island, BitMEX has sometimes been criticized for offering traders high levels of leverage.
  • The exchange’s parent firm recently changed its name to “100x,” though claimed it was not a reference to leverage at the time.
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Hong Kong Regulator Gives Crypto Exchange OSL Tentative Licensure Approval

6 years 1 month ago

Hong Kong may soon have its first fully licensed cryptocurrency exchange: OSL Digital Securities, which on Friday received a landmark approval-in-principal from the Securities and Futures Commission (SFC).

  • Preliminary approval pushes OSL, a subsidiary of Fidelity-backed BC Group, closer to becoming one of the first exchanges licensed to offer automated digital asset trading services under the virtual asset regime SFC unveiled last November.
  • Full licensure is contingent on OSL satisfying undisclosed conditions, according to Reuters. But OSL is well positioned; it was the first exchange to apply for the license and appears to be the only one this far along.
  • SFC is one of a handful of regional regulators beefing up its virtual asset oversight in response to anti-money-laundering (AML) and know-your-customer (KYC) concerns.
  • The watchdog’s approach to crypto now treats virtual asset exchanges much like traditional securities brokerages in terms of oversight. It is, however, an “opt-in” system.
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