CoinDesk Crypto

Binance is trying its hand at decentralized stablecoin governance.

The exchange joined the distributed oversight team that approves contracts and code changes on Equilibrium, a DeFi outfit behind the EOSDT stablecoin. EOSDT contracts hold nearly $10 million in collateral according to the Equilibrium website.

Announced Friday, Binance now has oversight power over new EOSDT smart contracts. As a party to Equilibrium’s multisignature hierarchy, Binance will grant – or conceivably withhold – its approval to all contracts prior to release.

Related: CZ’s Twitter Feed Swayed New CoinMarketCap Ranking That Put Binance on Top

That authority had been exclusive to block producers EOS Nation and EOS Cannon. Now, it also includes Binance and fellow newcomer eosfinex, the decentralized exchange developed by Bitfinex.

“You can also consider it as establishing a four-eyes principle for Equilibrium’s EOSDT,” Equilibrium CEO Alex Melikhov told CoinDesk. For any one transaction to take effect, at least two parties must first give their okay.

Read more: EOSDT Now Has $17.5M in Insurance That Pays Out Automatically

In doing so, Melikhov said the four give EOSDT updates the weight of their reputation. 

Related: Binance Quashes Upbit Hackers’ Attempt to Launder Stolen Funds

“Instead of a single owner who can potentially do whatever they want there is a group of reputable and known ecosystem participants who bid their reputation on the integrity/relevance of these updates,” he said.

That involves more than just rubber stamping public proposals. According to Melikhov, Equilibrium will give a “detailed audit report” to the four before release. They will also conduct their own independent reviews, he said.

“So eventually the community and users can be 100% sure that the smart contract owner cannot deploy malicious code or simply transfer funds out,” he said.

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The kin cryptocurrency is exploring a move from its own fork of Stellar to the Solana blockchain. 

To recap, the mobile app company Kik ran a $98 million initial coin offering (ICO) for kin in 2017, which was made on the Ethereum blockchain. Then the company said that it would use Ethereum for security and Stellar for transactions. Then it forked Stellar and ran its own chain. Now that’s proving to be inadequate so the cryptocurrency will port over to Solana in a matter of months, pending adequate support from app developers in the Kin ecosystem.

“The fork of Stellar enabled Kin to reach millions of consumers, but we knew it would not be a long-term solution,” a draft Kin Improvement Proposal shared with CoinDesk reads. “Stellar has five-second block times, so irrespective of network load, a consumer could be seeing five-second latency on their transactions – not what we would deem a great consumer experience.”

Related: Kin Foundation Publishes First Transparency Report Amid SEC Court Fight

Read more: Goodbye Ethereum: Kik Plans to Move Its ICO Tokens to Stellar

Solana is a high-throughput blockchain that relies on a concept called optimistic concurrency control, which assumes that transactions generally don’t conflict with each other. The project describes several other key features of its technology on Medium.

“Kin is one the best ways to show what Solana is capable of,” Anatoly Yakovenko of the Solana Foundation told CoinDesk. “We expect to see other projects looking for speed and raw horsepower to migrate to Solana as well.”

The Kin Improvement Proposal says the move would enable an 84% reduction in latency. “Solana is measured to have approximately 60,000 transactions per second, with 400ms block times,” it says. 

Related: Stellar Enterprise Fund Invests $5M in Crypto App Abra Ahead of Blockchain Integration

The Solana Foundation would actually pay the Kin Foundation for making this move, however, awarding it with up to 1% of the supply of SOL (roughly $6 million at today’s prices), with 0.1% unlocking for each new 1 million active users that join over a 24-month period. 

Next steps

The next step will be for Solana to make a presentation to kin developers about the process for switching chains. If enough developers agree to make the move, Solana staff will largely facilitate it and the process should be complete in a matter of months. 

“It is ultimately up to the developers in the Kin ecosystem to decide if they want to migrate to Solana; however, we know that speed and throughput are two key issues within this community, and those happen to be two areas where Solana shines brightest,” Yakovenko wrote. 

Read more: Solana Blockchain Adds Korean Stablecoin Terra for Better Payments

Based on the Kin Improvement Proposal, the Solana Foundation will start tracking progress on Jan. 7, 2021. 

“Few projects in the blockchain space have shown an ability to grow a user base as fast as Kin has,” Gokal wrote. “We expect to see a myriad of use cases that come out of the Kin ecosystem within the near future that perfectly exemplify Solana’s leading performance.”

Why now?

“What has happened over the last year, but mostly has been accelerated in the last six months, is the kin ecosystem has been growing like crazy,” Tanner Philp, head of corporate development at Kik, told CoinDesk.

Kin has seen a dramatic uptick in its core metric – monthly active spenders – over the course of the coronavirus quarantine period, Philp said.

In early March, there were approximately 1.5 million people who had spent kin in the prior 30 days. On April 20, the growth spike peaked at 4.4 million. The numbers have trended down somewhat since then but it’s still running at about 3.5 million, a significant gain over prior numbers.

Read more: Kin Foundation Publishes First Transparency Report Amid SEC Court Fight

Kin has been integrated into 57 different applications, but usage is dominated by a few popular ones, including apps for sharing media and making funny, shareable shorts. 

Kik, the company that still oversees kin, began investigating new blockchains to pursue eight months ago in anticipation of the need to get to something faster, Philp said. 

The key use for kin is payments, and that was what Solana was always designed to accelerate. 

“Solana is one of the solutions, if not the only solution, that scales transaction times down into sub-second territory – the type of experience you’d demand for any mainstream application, such as Kin,” Yakovenko wrote.

Kik believes its Stellar fork has room for several more months, though pending developments could shorten that runway.

“What we’re getting close to is rolling out the new wallet for kin that Kik Inc. is working on, to connect the ecosystem, and that’s where you’ll start to see some more vibrancy within the ecosystem,” Philp said. 

New features

The wallet will make it simple to move kin earned in one app over to others. The company isn’t committing to a timeline but that wallet could appear in late Q3, Philp said. 

When that happens, if users start moving tokens around between apps, it will become important to add metadata to transactions showing which application drove the spend. That data helps apps get properly credited by the Kin Rewards Engine. Stellar does not support a large enough amount of data to make its metadata features useful.

Read more: Blockchain Gaming, Messaging Apps See User Growth Amid Coronavirus Lockdowns

Kin was founded out of the company that formerly ran the Kik mobile app. The vision for the cryptocurrency was to create a way for people using mobile and web-based products to have a marketplace of value, but one where that value could be very tiny, for trade in items like digital stickers and access to small games.

Companies are rewarded for building out the kin ecosystem with daily emissions from the Kin Rewards Engine, which shares out its vast trove of undistributed kin to developers who are driving transactions. 

“Kin started out with getting a lot of users using it across a lot of different apps,” Philp said. “Now it’s about getting people to spend larger amounts, and by that we mean going from fractions of pennies to pennies spent.”

Related Stories

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Related: Why Kyber Network Tokens Tripled to $100M Despite the Coronavirus Recession

“Any asset minted on Ethereum by RenVM is a 1:1 backed ERC-20. This means that if you have 1 renBTC (an ERC-20), you can always redeem it for 1 BTC. It’s a direct supply peg. renBTC isn’t a synthetic, it doesn’t rely on a liquidation mechanism, and it’s not the price of Bitcoin on Ethereum. It is a one to one representation of Bitcoin on Ethereum that can be redeemed for BTC at any time, in any amount.”

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The latest implementation of bitcoin (BTC) on the Ethereum blockchain quietly went live this week.

There are 1.24 renBTC live on the Ethereum mainnet now, according to Etherscan. Three sources with knowledge of the project have confirmed this is the Ren smart contract, live ahead of its launch announcement.

However, there’s no way yet for members of the public to mint additional bitcoin-on-ethereum using Ren, the CEO of the company behind the project told CoinDesk in an email.

Related: Colombia, Deloitte, ConsenSys Sign On to WEF’s ‘Blockchain Bill of Rights’

“While the smart contracts have been deployed on Ethereum, RenVM itself is not actually on mainnet. This is because RenVM is a distinct network separate to Ethereum. The final mainnet subzero version of RenVM won’t be deployed until later,” Taiyang Zhang wrote. Those minted so far have been made as part of internal tests.

RenBTC becomes the latest in a rash of products built to expose bitcoin-backed assets to the benefits of Ethereum’s various decentralized finance (DeFi) platforms.

Here’s a succinct description of the system from a Medium post by the company’s CTO, Loong Wang:

“Any asset minted on Ethereum by RenVM is a 1:1 backed ERC-20. This means that if you have 1 renBTC (an ERC-20), you can always redeem it for 1 BTC. It’s a direct supply peg. renBTC isn’t a synthetic, it doesn’t rely on a liquidation mechanism, and it’s not the price of Bitcoin on Ethereum. It is a one to one representation of Bitcoin on Ethereum that can be redeemed for BTC at any time, in any amount.”

Related: Why Kyber Network Tokens Tripled to $100M Despite the Coronavirus Recession

Kain Warwick of Synthetix tweeted Wednesday that he was the first person to hold a full bitcoin in renBTC.

The contracts for the three new tokens are already published in Ren’s documentation. There are also already 1.12 renZEC minted and a negligible amount of renBCH.

Ren is a project that grew out of the $30 million initial coin offering (ICO) for the Republic Protocol, originally envisioned as a way to run dark pools – privacy-preserving trading venues where the order book is kept secret. According to Crunchbase, its backers included Polychain Capital and FBG Capital.

Read more: Into the Dark Pool: $30 Million ICO Could Pave Way for Huge Crypto Trades

But, in a recent issue of The Defiant newsletter, Wang explained his firm’s pivot away from dark pools. 

The big trades were on chains that weren’t Ethereum, he said. “ETH had a lot of liquidity, but it was predominantly Bitcoin and USDT. So we would had to leverage things like atomic swaps, and they’re just too painful,” Wang told The Defiant’s Cami Russo. “And so we kind of turned around to say, well, we need to solve this interoperability problem before large liquidity is actually truly accessible in this space.”

According to a promotional release sent to CoinDesk, the RenVM was slated to go live May 27. 

The RenVM is a way to hold a cryptocurrency in a multi-signature wallet controlled by nodes in the RenVM and mint a representation of that asset as an ERC-20 token for use on Ethereum. Unlike other projects, RenVM is bringing more than bitcoin to Ethereum (see bitcoin cash (BCH) and zcach (ZEC) above), with other assets to follow.

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China-based bitcoin miner manufacturer Canaan has reported a net loss of $5.6 million for Q1 2020, even though it had cut down the prices for its hardware by more than half in an effort to sell more machines.

In an earnings report released on Friday, the firm said it made $9.4 million in revenue for the first three months this year with a growth of 44.6% compared to the same period last year. But it also incurred $9.3 million and $5.9 million expenses in cost of goods sold and R&D, respectively.

For that revenue, Canaan sold 0.9 million terahashes per second (TH/s) of Bitcoin computing power, which accounts for less than 1% of the network’s current total.

Related: Bitcoin Mining Difficulty Drops by 6% in First Adjustment After Halving

That means Canaan had cut down the prices for its mining hardware sold in the first three months by more than 50% to just $10 per TH/s, reflecting an overall slowdown of the buying interest into mining hardware amid Bitcoin’s halving event and the COVID-19 pandemic that has disrupted global logistics.

For context, Canaan booked a revenue of $66.5 million in 2019 with 2.9 million TH/s of Bitcoin computing power sold, meaning the average prices was around $22 per TH/s last year. Other major manufacturers have also taken a similar price cut strategy over the past a few months.

“The overall market situation since December last year until January had not been too good. So the unit price per TH/s was indeed lower,” Zhang Nangeng, CEO and chairman of Canaan, said in an earning call on Friday. “And the logistics in mainland China had basically stopped around the Chinese new year due to the COVID-19 pandemic. So even though bitcoin’s price was a higher point in February and early March, the pandemic largely affected our sales.”

The filing also shows that as of March 31, Canaan had cash and cash equivalents of $37 million, compared to $71 million as of the end of last year.

Related: The Last Word on Bitcoin’s Energy Consumption

“The decrease was mainly due to higher short-term investments as the Company invested RMB173.4 million (US$24.5 million) in short-term investments as of March 31, 2020,” Canaan said in the report.

Zhang said the firm has partnered China-based Semiconductor Manufacturing International Corporation – in addition to its existing supply chain partnership with Samsung and TSMC – to roll out bitcoin mining equipment with 14-nm chips and expects to be able to ship in larger quantity in Q2.

But the firm declines to issue a business outlook for Q2 2020 citing the uncertainty of the COVID-19 pandemic and the uncertainties after Bitcoin’s halving gives itself “very limited visibility on the potential impacts to its business and the markets in which it operates.”

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The token economy just gained an organized structure for collaborating with world leaders. 

The World Economic Forum revealed its Presidio Principles on Friday, a “blockchain bill of rights,” according to the nonprofit focused on fostering diplomacy and international business partnerships. The document includes signatories from the Government of Colombia, Deloitte Consulting LLP, ConsenSys, Electronic Coin Company, CoinShares and the United Nations’ World Food Program, just to name a few. 

“We supported the creation of the Presidio Principles – as well as guidelines and design principles for public institutions – because we wanted to ensure that progress can continue rapidly and responsibly, ensuring that basic characteristics like security and data privacy are secured for our citizens,” Victor Munoz, Colombia’s presidential advisor on economic affairs and digital transformation, said in a press statement. 

Related: RenBTC Quietly Goes Live in Latest Bid to Bring Bitcoin Into Ethereum

Read more: Why the World Economic Forum Is Creating a Blockchain ‘Bill of Rights’

The principles include a user’s right to “manage consent of data stored in third-party systems, port data between interoperable systems” and “revoke consent for future data collection.”

Ethereum co-founder Joe Lubin encouraged crypto startups to become signatories and join the WEF’s open dialogue. In a press statement, he said he hopes “all builders of Ethereum-based projects – and across the blockchain landscape – will sign on to demonstrate their commitment to the users of their systems and applications.”

Indeed, Aya Miyaguchi of the Ethereum Foundation was involved. Greg Medcraft of the Organisation for Economic Co-operation and Development (OECD) and Delia Ferreira Rubio of Transparency International also contributed to the project.

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Iranian President Hassan Rouhani has ordered the government to draw up a renewed national approach for the emerging crypto industry.

Chairing Iran’s economic coordination headquarters – a seminar for the national economic strategy – earlier this week, Rouhani told officials from the Central Bank of Iran (CBI), energy department and information and communication technology ministries that they needed to devise a new national strategy for crypto mining, including regulation and mining revenue, Iranian news site ArzDigital reported Wednesday.

The news comes barely two days after the Iranian parliament published a bill proposing to apply the country’s strict foreign exchange and currency smuggling regulation to cryptocurrencies. The new parliamentary law would also require crypto exchanges operating in the country to first register with the CBI – possibly in a move to try and prevent too much capital leaving the country.

Related: First Mover: Bitcoin Just Got Easier to Mine, but for How Long?

Penalties for smuggling in Iran can include fines and imprisonment.

Just months ago, the administration of U.S. President Donald Trump raised concerns that Iranians were using digital assets in order to circumvent sanctions.

See also: Iran Issues License for Nation’s Biggest Bitcoin Mining Operation

Iran was one of the first countries to officially recognize cryptocurrency mining as a legitimate industry back in July 2019. The government now issues mining licenses, giving companies the right to mine and then sell off any digital assets produced. An industry report in January said Iran had issued over 1,000 such licenses in its first six months.

Related: Iran Moves to Restrict Crypto Exchanges Under ‘Currency Smuggling’ Laws

Iran currently has a 4% share in bitcoin’s total hashrate, according to the Bitcoin Mining Map, more than double what it was at the beginning of September 2019.

It’s unclear why Rouhani wants Iranian officials to revisit bitcoin mining regulation. With the clampdown on value leaving the country, in the form of cryptocurrencies, it’s possible the President wants to ensure miners, too, aren’t taking their money away from the government’s clutches.

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Bitcoin fell for a second day, extending a downdraft triggered by Wednesday’s revelation that a member of the cryptocurrency community from the blockchain’s earliest days in 2009 had moved a long-dormant cache of coins. 

As of 20:30 UTC (4:30 p.m. ET), bitcoin (BTC) was trading at $9,044, a loss of 5.6% over 24 hours. 

Bitcoin remains well below its 10-day and 50-day technical indicator moving averages — a signal of bearish sentiment. 

Related: Bitcoin Drops Over 3% Despite Golden Cross and Bank Calls for More US Stimulus

At 14:00 UTC (10 a.m. ET) the world’s oldest cryptocurrency began experiencing high selling volume on exchanges including Coinbase, dropping bitcoin below $9,000 for the first time since May 13.

While the market appears to have turned bearish, Rupert Douglas, head of institutional sales at asset management firm Koine, said he planned to “‘buy the dip” — a popular phrase for accumulating an asset when prices drop in the belief that they’ll soon start going up again. 

“In a way I was hoping for this,” Douglas said in an email. “I’m a buyer at $9,000, as this is shaking out the weak longs before taking it higher.” 

Read more: What I Learned the First Time I Lost a Million Dollars

Related: Market Wrap: Bitcoin Rebounds to $9,500 After Scary Sell-Off

Volatility in the notoriously fickle bitcoin market has declined since collapsing in March, when the devastating economic toll from the coronavirus started to become clear.   

“I wouldn’t call this a dump,” Darius Sit, managing partner at crypto quantitative fund QCP Capital, told CoinDesk via a Telegram message. “It’s nowhere near statistically significant.”  

The price drop could take a toll on the profitability of bitcoin miners, already hurting from a revenue cut following last week’s rewards halving. The miners have had to rely more on transaction fees to maintain revenue. 

Fortunately, fees are up post-halving, said Marc Fleury, CEO of digital asset brokerage Two Prime. 

“Transaction fees associated with moving bitcoin around have increased from 60 cents to upwards of $5, providing some income for the miners,” he said. 

Read More: Why Kyber Network Tokens Tripled to $100M Despite Coronavirus

Fleury said many bitcoin miners are counting on a price increase to stay profitable. “This has historically happened in the past two halvings, within a span of 18 months,“ said Fluery. “It will take some time for the market to adjust.”

Other markets

Digital assets on CoinDesk’s big board are in the red Thursday. The second-largest cryptocurrency by market capitalization, ether (ETH), lost 5.6% in 24 hours as of 20:30 UTC (4:30 p.m. ET). 

The biggest losers in 24-hour trading were cardano (ADA) slipping 7.6%, iota (IOTA) losing 6.5% and neo (NEO) down by 6.1%. All price changes were as of 20:30 UTC (4:30 p.m. ET) Thursday.

In the commodities sector, oil is trading up 1.4%, with the price of a barrel of crude at $33 at press time. Oil has experienced a wild ride in 2020, up 101% the past month yet still down 44% for the year to date. 

Gold is in the red today, with the yellow metal falling 1.2% to $1,725 at the close of New York trading. 

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

In the U.S. the S&P 500 fell less than 1% on the day, but still up over 2% since Monday despite U.S. jobless claims coming in at over 2.4 million for the past week, the seventh weekly increase. 

U.S. Treasury bonds slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year bond, falling 5.6%.

In Asia, the Nikkei 225 index ended its trading day down less than a percentage point on losses in the real estate and transportation sectors. Trading of Europe’s largest public companies by market cap on the FTSE Eurotop 100 index was also down less than a percent, dragged down due to continued coronavirus uncertainty. 

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Top Chinese political advisers have proposed a regional digital currency that would be backed by four major Asian currencies including the Japanese yen, Korean won, Hong Kong dollar and the yuan. 

The proposal unveiled Thursday describes the currency as a “stablecoin,” a term for cryptocurrencies designed to hold their value and backed by a reserve currency, although it does not explicitly mention crypto or blockchains.

The People’s Bank of China (PBOC) would lead the proposed effort. The basket of underlying collateral would follow the special drawing rights (SDR) model of the International Monetary Fund (IMF), where each country’s currency is assigned a different weight based on its economy.

Related: Internal Struggle at Bitcoin Mining Giant Bitmain Escalates to Physical Confrontation

As such, the proposal resembles the original vision for libra, before that Facebook-spawned project watered down its plans and pivoted to developing digital versions of individual fiat currencies. (The Libra Association recently welcomed Singapore investment company Temasek as its first state-owned entity member.)

The proposed stablecoin would help facilitate trade among the four countries, which is key to economic recovery in the region after coronavirus, its proponents said. It would do so by improving cross-border settlement and clearing services with a new payment network and digital wallet for enterprises. 

Read more: Chinese City Known for Bitcoin Mining Seeks Blockchain Firms to Burn Excess Hydropower

Neil Shen, founding and managing partner of Sequoia China and a member of China’s upper house, presented the proposal to Chinese legislators during the Two Sessions, the country’s largest annual political gathering.  

Related: Crypto Exchange OSL to Establish ‘Digital Asset Powerhouse’ in Asia, US Regions

Nine other advisers who are also upper house members, including Kennedy Wong, a solicitor of the Supreme Court of Hong Kong, former chief secretary of Hong Kong Henry Tang and Hong Kong-based Chinese billionaire Songqiao Zhang, co-signed the proposal.

Shen attended the first session of the Chinese People’s Political Consultative Conference (PCC) on Thursday. The PCC is essentially an advisory upper house where a range of organizations and independent members help the government make national-level decisions. This meeting will be followed by plenary sessions of the National People’s Congress (NPC) starting Friday and lasting for about two weeks. 

Proposals out of the PCC do not tend to have the same level of influence as the more concrete bills discussed in the NPC because the bills will yield significant changes in laws and regulations.  However, in this case the proposal might have some sticking power.

California-based Sequoia Capital, Sequoia China’s parent, is one of the few big-name VC firms that have ventured into crypto. It invested in $10 million in one of the largest global crypto exchanges by volume, Huobi Group, when it was based in China in 2014. (Huobi Group is now based in Singapore.)

It also invested in Nervos and Conflux via private token sales. Both these startups have collaborated with China’s state-owned entities to develop blockchain technologies. 

The stablecoin proposal also suggests creating a regulatory sandbox and scaling up the system in Hong Kong over time to improve cross-border payment services between the four countries. 

Read more: Meet Red Date, the Little-Known Tech Firm Behind China’s Big Blockchain Vision

Led and supervised by the PBOC, companies from private sectors would launch the stablecoin and develop the project with the latest financial technologies. Enterprise users would be able to store the coins in a digital wallet and deposit cash at a custodian as reserves to back their stablecoins, according to the proposal. 

The Hong Kong Monetary Authority and PBOC can create a framework to regulate the stablecoin’s cross-border transactions, manage risks and discourage money laundering, the proposal said. 

The stablecoin could be launched ahead of China’s national digital currency and pave the way for its rollout by testing use cases to identify potential risks and technical problems. If launched, the stablecoin could be “seamlessly” connected with the digital yuan, the proposal said. 

The proposal stresses Hong Kong is one of the most important financial gateways that connect mainland China to the other Asian countries, with over 70% of cross-border renminbi payment processed in the city. 

Hong Kong could be the most favorable jurisdiction for such a regional stablecoin. The Hong Kong Securities and Futures Commission created a licensing system to regulate virtual assets transactions and trading platforms in November.  

Among the first 12 entities awarded with the license are Tencent’s WeBank; Alibaba’s fintech arm Ant Financial; Infinium Limited, a joint venture that includes Tencent, Industrial and Commerce Bank of China (ICBC) and other two Hong Kong-based institutional investors; and SC Digital Solutions Limited, whose 65 percent stake is owned by Standard & Chartered Bank. 

Read more: Starbucks, McDonald’s Among 19 Firms to Test China’s Digital Yuan: Report

On the other end, the PBOC and the top Chinese financial watchdog, the China Securities and Regulatory Commission (CSRC), recently put forward a slew of new measures to reform the financial system in the Guangdong-Hong Kong-Macao Greater Bay Area and encourage blockchain applications for improving international financial services in this area. 

In 2017, the Chinese government came up with an initiative to further integrate the Guangdong province with Hong Kong and Macau in a bid to build stronger financial connections between these cities and the mainland. The initiative encourages banks in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to have a regional network and operate in a more interconnected financial system.  

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The Kin Foundation is offering a peek under the hood.

The group published a transparency report Thursday, laying out its structure and operations, in a partnership with Messari and its disclosure database. 

According to the report, the Kin Foundation plans its budget a year in advance, with funds going to app developers, node incentives, user grants and marketing and operations. There are 1.45 trillion kin tokens currently circulating, out of 10 trillion created in all. 

Related: Telegram Agrees to Give SEC Bank Records, Communications in Ongoing TON Lawsuit

The foundation is currently run by a board of directors that consists of two members: Kik Interactive CEO Ted Livingston and William Mougayar, author of “The Business Blockchain” and one of the founders of the Token Summit annual conference. Kik created kin in 2017.

“The Board of Directors is appointed annually by the members,” the report said. There is also a Kin Representative, which the report says acts as “a conduit between the Kin Foundation and the community of developers and holders.”

Read more: Judge Approved Blockchain Association’s Brief in Kik Case Despite SEC Objections

Matt Hannam, who took the post last month, is the only representative at present, but the foundation plans to add another two or three over the next year. Kin also has an “informal” community of 10 delegates who oversee kin rewards and disagreements.

Related: Telegram Withdraws Offer to Repay Investors With Gram Tokens

The foundation’s tokens are vested at a rate of 20% per year, though the report noted that the first year is only a partial year (kin was created midway through 2017).

The report claims that more than 28 million users have acquired kin in the last three years, using more than 50 different active apps. Active apps are defined as those with at least one user spending kin in the past 30 days.

According to the report, nearly 300 million kin were spent per day earlier this year.

Legal fight

The report comes amid Kik’s ongoing legal fight with the U.S. Securities and Exchange Commission (SEC), which sued the company last year on allegations the kin token sale was an unregistered securities offering. 

Earlier this month, both parties filed their reply memos as part of the motions for summary judgement each party sought. 

Kik maintains that “the SEC cannot meet its burden to prove that Kin purchasers were primarily led to expect profits from the managerial efforts of others,” pointing to the terms of use kin purchasers agreed to as one piece of evidence. 

For its part, the SEC says Kik’s marketing of the kin token would have led purchasers to expect a profit, highlighting various online posts and a roadshow the company underwent.

In a statement, Kik General Counsel Eileen Lyon said, “Our take on the SEC’s opposition is that it relies heavily on the recent Telegram case, which we think was poorly reasoned and wrongly decided,” referring to the granting of a preliminary injunction against Telegram.

Read more: With Kik and Telegram Cases, the SEC Tries to Kill the SAFT

The Telegram case decision “is not binding precedent,” she said, “so it will be interesting to see what impact it might have, in light of the many other authorities we have cited and the significant factual differences in the two token offerings.”

Kik also felt that the SEC’s arguments about the “integration” issue “were conclusory and circular,” she said.

Related Stories

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Top Shelf

Yesterday, some of the earliest mined bitcoin moved after more than a decade of dormancy.

Whale Alert – a popular, mostly-automated Twitter account that tracks major crypto transactions – broadcast the message across the cryptoverse, saying 40 coins mined in the first month of the network’s operation had transferred from a “possible #Satoshi owned wallet,” referring to bitcoin’s long silent creator, Satoshi Nakamoto. 

This unfounded connection – based on the age of the bitcoin, and the fact they had not been moved for 11 years – caused a minor market stir.

Related: First Mover: Bitcoin Rattled by Transfer of Satoshi Coins That Might Not Be Satoshi’s

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. 

Since then, blockchain archeologists and bitcoin sleuths have poked holes in the theory the coins are Nakamoto’s, who, as far as we can tell, has never moved a single satoshi from the hoard of bitcoin he mined in the network’s early days. (Except for a test transaction sent to Hal Finney.)

Determining the sender of these coins is impossible, for now. But the occurrence is a moment to reflect on some important insights about the bitcoin community, infrastructure and market. 

Of the approximately 18.5 million coins already mined, about 2 million are dormant – either unspent because the keys have been lost, or for other personal or technological reasons. Estimates on the higher side assume as many as 4 million bitcoin are “lost forever.” Nakamoto once referred to lost coins as a “donation” to the network. The bitcoin protocol hardcaps the total supply of bitcoin at 21 million coins, but knowing that some coins have been “donated” has led some researchers to develop a new metric: Realized Capitalization. This measure discounts Bitcoin’s total supply to account for lost or otherwise inaccessible coins.

Related: 50 BTC Just Moved for First Time Since 2009 – But It Doesn’t Look Like Satoshi

When previously inert coins move – be they Nakamoto’s or not – this should challenge the assumption that coins in deep storage are out of circulation. Unless they’ve been tossed in the bin. Therefore, a price adjustment is logical.

A partial cause for yesterday’s price movements were fears Nakamoto has returned and could potentially dump billions of dollars worth of bitcoin on the market. Nakamoto’s seemingly altruistic, or at the very least mysterious, “donation” to the bitcoin community hangs over the market like the sword of Damocles.  

Like Nakamoto’s motivations, it’s an open question as to how many coins he holds. In 2013, Sergio Lerner wrote a blog post estimating the Satoshi stockpile to be around 1 million bitcoin. Years later, derivatives exchange BitMEX recounted and found the hoard to be in the neighborhood of 700,000 coins. 

Both estimates look at a technical detail called the nonce value to determine what blocks Nakamoto was likely to have mined. It’s analysis of this same block feature that leads many to assume yesterday’s transaction did not belong to Nakamoto, but one of the dozens of other miners assumed to be live on the network at the time.

Curiously, when these bitcoin were mined, bitcoin itself had no market value. The block reward is now worth just shy of half a million dollars. There were also no CoinJoins or SegWit code updates, modern wallet features yesterday’s transaction utilized, nor a host of blockchain analyzers watching where these coins will jump to next. 

How far bitcoin has come!

Castle Island Venture’s Nic Carter, in conversation with Moneymail developer Lawson Baker, said the biggest clue into the identity of the owner of the coins could come in a couple of days. Just look at the OP_RETURN field, a place to encode permanent messages on the Bitcoin blockchain, Carter said. We’ll be watching.

Media Diet

Red Flags: Citizen, the mobile application that alerts its more than 2 million users to crime and disaster around them, has launched a contact tracing functionality, called SafeTrace, in the fight against the coronavirus. The application, which makes use of GPS and Bluetooth proximity tracking and stores data in a centralized manner, has raised alarms among privacy experts and technologists. “GPS data tracking a person’s movements is very revealing, and difficult to effectively anonymize,” said Ángel Díaz, counsel at the Liberty and National Security Program of The Brennan Center for Justice in New York.

Brazil Banks Investigated: On Wednesday, Brazil’s antitrust watchdog, the Administrative Council for Economic Defense (CADE), voted to continue its investigation of banks who denied financial services to crypto brokers in alleged violation of Brazilian competition law. CADE’s nearly two-year-old inquiry into Itaú Unibanco, Banco do Brasil, Santander, Inter, Bradesco and Sicredi now returns to the General Superintendency for further review. Those six banks, which comprise nearly 80% of Brazil’s deposit market share, could face eventual sanctions and even be forced to provide financial services to crypto brokers.

Geographic Details: Block.one, a primary EOS developer wielding about 9% of the total token supply, is about to begin voting in the ecosystem, after years of holding back its influence. In a note last Friday, the Cayman Island-based company outlined criteria it would use to decide on which block producer candidates to support and vote for, including information pertaining to the public disclosure of the “location of the node.” While Block.one representatives downplay the significance of this geographic information, other stakeholders believe it could lead to favoring specific countries. 

New Shareholder: IBM has become a shareholder in we.trade, the trade finance platform jointly owned by 12 European banks, signaling further consolidation across the enterprise blockchain space. While IBM has been a technology partner since the beginning, we.trade has always intended ween itself off the Hyperledger-based IBM Blockchain Platform and take its tech stack in-house. Ciaran McGowan, we.trade’s CEO, said this financial relationship with Big Blue will help the platform in its next phase of global expansion.

Digital Dividend: Online retailer Overstock has finally distributed its digital dividend to shareholders after a series of delays including an investor class action suit against the company and the ousting of the dividend’s brainchild former Overstock CEO Patrick Byrne. The digital security, called OSKTO, can now be freely traded on Overstock subsidiary tZERO’s blockchain-underpinned platform. Shareholders need to open a brokerage account with a broker-dealer that subscribes to the tZERO ATS to trade the securities, the firm said.

Genesis Brokerage: Genesis Global Trading is moving toward full-service prime brokerage – covering lending, trading and custody – with the acquisition of crypto custodian Vo1t.  The terms of the deal were not disclosed. “We’re coming at this after having a successful business on the trading and lending side,” said Genesis CEO Michael Moro. “The goal is for clients to be able to do any and all activities with Genesis.” Genesis is owned by CoinDesk’s parent, DCG.

Blockchain Strategy: A U.S. lawmaker introduced a bill calling on the Federal Trade Commission (FTC) to survey how blockchain technology is being used by other nations as well as outline a comprehensive blockchain strategy for the United States.

“Bloodbath”: Highly leveraged crypto hedge funds are struggling to recover from recent volatility, reports the Financial Times.

Digital Euros: Societe Generale issued €40 million worth of covered bonds as security tokens that were then settled by the Banque de France, the nation’s central bank, in blockchain-based digital euros. (The Block)

Synthetic, Priceless Token Model: The UMA Project community approved contracts that allowed creating its first token: ETHBTC. This is also the first experiment with UMA’s priceless token model, which minimizes the need for oracles, allowing for the synthetic ETHBTC token to track the relative value of ETH to BTC, without requiring users to stake either of the two cryptos.

Staking Services: Coinbase Custody now offers staking services for Cosmos and Algorand tokens. Last year the firm added staking support for Tezos tokens. (The Block)

Market Intel

Buyers Exhausted? Bitcoin prices look to be struggling with buyer exhaustion, having put in a negative performance in the last 24 hours despite positive developments on both the macro and technical fronts. Despite intimations from JPMorgan and Goldman Sachs calling upon the Federal Reserve to step up its inflationary bond purchase programs, analysts at Stack, a provider of cryptocurrency trackers and index funds, expect bitcoin to consolidate in the range of $8,000–$10,000 for some time. 

The Breakdown

Dollar’s Strength Weakens the World: Lyn Alden, founder of Lyn Alden Investment Strategy, joins The Breakdown to discuss why the U.S. dollar’s persistent hegemony is bad for everyone. 

Who Won #CryptoTwitter?

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Anchorage now has six executives in its C-suite, hiring a head of finance and head of sales with experience in both tech and Wall Street.

Julie Veltman, who’s joining the crypto custodian as head of finance, has issued new asset-backed securitizations for Merrill Lynch’s Structured Product Capital Markets group. She also built out a broker-dealer, debt issuance platform and fixed-income trading business for financial services firm Cohen & Company. Most recently, Veltman drove financial planning, reporting, and efficiency at Salesforce. 

Geoff Clauss, who’s joining Anchorage as head of sales, has more than two decades of experience in private equity, wealth management and fintech. Before Anchorage, Clauss spent seven years overseeing sales at wealth management platform Addepar. He also spent 15 years at investment software company Advent. 

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

Veltman will oversee operational finance, day-to-day operations and the firm’s prime brokerage products. The fact that Veltman’s experience extends far beyond Anchorage’s current products is a sign of where the firm wants to go, said co-founder and President Diogo Mónica.

“It’s pretty obvious that Anchorage has larger ambitions than its current set of services,” he said. “I think you can start following the breadcrumbs and seeing where the direction of the company is going – Julie’s background is absolutely perfect for where we want to go with the company.”

Read more: Anchorage Moves Into Crypto Trading With New Brokerage Service

With the new hires, this will be the first time the custodian has employees with “this deep of a bench” running the sales and finance sides of the business, Mónica said. While the company won’t be hiring any more executives in the near future, it does continue to hire more employees throughout the current economic crisis. 

Related: BlockFi Hires Credit Suisse, Prudential Execs to Drive Global Expansion

“We’re rounding out our executive team and it really feels internally like we’re getting to the next step of execution of the company and maturity of the company,” he said.

Sometime in the near future, Anchorage is going to announce new products related to quantitative analysis and risk modeling from its Merkle Data acquisition in January, Mónica added.

“We’ve already integrated a lot of the work that they’ve done, and we’re going to be launching some products that actually rely heavily on their work pretty soon,” Mónica said.

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Spoooky! BTC saw a ghost Wednesday and scared the markets. It’s CoinDesk’s Markets Daily podcast.

For early access before our regular noon Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica or RSS.

This episode is sponsored by ErisX, The Stellar Development Foundation and Grayscale Digital Large Cap Investment Fund.

Related: ‘Dismantle the Euro to Save Europe’ Feat. Tuomas Malinen

Today’s stories:

50 BTC Just Moved for First Time Since 2009 – But It Doesn’t Look Like Satoshi

Bitcoin Drops Over 3% Despite Golden Cross and Bank Calls for More US Stimulus

After Lawsuits and Delays, Overstock Hands Shareholders Digital Dividend

Related: Why a Strong Dollar Is Bad for the US and Bad for the World, Feat. Lyn Alden

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

For early access before our regular noon Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica or RSS.

Related Stories

• Bitcoin News Roundup for May 20, 2020
• ‘Minsky Moments’ and the Financial History of Pandemics

Harsh new rules making many uses of digital assets punishable with fines or prison might soon become law in Russia. 

New draft bills setting out how Russia should regulate cryptocurrencies were sent to the country’s parliament, the State Duma, earlier this week. Although the official website for the planned legislation hasn’t been updated yet, the two documents have been published in the OrderCom Telegram channel and were confirmed as genuine by sources of Russian news outlet RBK. 

The legislative proposals were reportedly written by staff at the Digital Economy think tank and the Skolkovo business accelerator. They seek a new version of the bill on digital assets, which has been stuck in the Duma for more two years now, as well as crypto-focused additions to the country’s criminal code.

Related: Telegram Quits Court Fight With SEC Over TON Blockchain Project

The first draft bill would regulate digital currencies in Russia. Or, to be more clear, prohibit the issuance of, and operations with, digital currencies in the nation. Even distributing information about such activities would be banned.

Read more: Bank of Russia Says New Digital Assets Bill Will Outlaw Crypto Trading, Issuance

Individuals and companies would not be permitted to accept digital currencies as payment, except if they are inherited, distributed to the debtors of a bankrupt company or confiscated as a result of a court decision. People owning cryptocurrency should declare it at the tax agency, as well as provide information on how it was purchased.

The second draft would introduce a new article into the criminal code bringing sanctions for illegal operations with digital assets.

Related: US Lawmaker Proposes Legislative Groundwork for National Blockchain Strategy

If passed, issuing digital assets in Russia without being approved for listing on a yet-to-be created register at the country’s central bank would see a company fined for up to two million rubles (nearly $28,000). The same level of penalty is suggested for organizing operations with digital assets and cryptocurrencies without approval, while individuals would face a fine of up to $2,800.

Buying crypto for cash or via a bank transfer from a Russian bank would be subject to a fine up to one million Russian rubles ($14,000) or up to seven years in prison, depending on the scale of the deal. Similar punishment would be in store for those who accept crypto for goods and services.

Read more: Russians Troll Government COVID-19 App With 1-Star Ratings, Harsh Reviews

If such a business brings “especially large” profit or especially large damage to the citizens and the state, the proposal would put the person(s) involved behind bars for up to seven years, or even forced labor. Facilitating crypto purchases, if such operations somehow “brought significant damage” to the state or individuals or “especially large profit” to the operator, could lead to five years in prison.

The mentions of a central bank register suggests legislators are providing leeway for some officially sanctioned entities to issue and use digital assets, while most general operations would be banned.

According to the RBK report, Anatoly Aksakov, chief of the Duma Committee on Financial Markets, confirmed the authenticity of the documents, but said they had not been finalized.

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Bittrex really didn’t want to get involved in the war that’s currently raging within the Steem community.

Richie Lai, co-founder of the U.S.-based crypto exchange, posted an announcement late on Wednesday saying his firm would return – reluctantly, it seems – million of dollars worth of disputed cryptocurrency back to a Steem wallet no one knows who controls.

After the 23.6 million steem tokens were confiscated from community dissenters in a tit-for-tat Steem hard fork Wednesday, they were quickly diverted to Bittrex by an unknown individual (or individuals) in the hope they would be returned to their original 64 owners – currently all persona non grata at the blockchain project.

Related: Why Kyber Network Tokens Tripled to $100M Despite the Coronavirus Recession

The controversial hoard is worth a little over $5 million at press time and was worth approximately $6.3 million at the time of the fork.

“We wish the entire Steem community could have addressed legitimate concerns in a manner which was viewed as fair by everyone,” said Lai. “The fact is, we only interpret the data on the blockchain, and in this case the consensus of the blockchain, regardless of how it was reached, agreed that the funds from those 64 accounts be moved to the ‘community321‘ account.”

“We believe in the sanctity of blockchain, and as an industry we need to adhere to the consensus rules of the blockchain without interjecting whatever our personal opinions might be,” he continued. “If we want blockchain to succeed, we must live by the rules of the blockchain.”

“While I am among those frustrated by the outcome, my own personal feelings do not matter,” Lai said.

Related: Steem Hard Fork Confiscates $6.3M, Community Immediately Takes It Back

See also: Tron’s Takeover of Steemit Is Internet History Repeating Itself

Wednesday’s Steem hard fork was the culmination of months of bitter infighting between those for and against the Tron Foundation’s takeover of Steemit – the largest application on Steem – earlier this year.

After the anti-Tron faction forked the network to create HIVE – a near-identical copy of Steem that copied over and then confiscated tokens linked to Tron founder Justin Sun – the pro-Tron team retaliated by forking Steem to seize tokens belonging to 64 of the former witnesses – blockchain validators – and stakeholders involved in creating the HIVE splinter group.

The tokens were sent to the mysterious wallet known as community321 but, as CoinDesk reported, were almost immediately sent to Bittrex’s platform. A note on the transaction said the funds had been “stolen by the Steem witnesses,” and asked Bittrex to “please return them to their original owners prior to the fork.”

No one knows who carried out the transaction (publicly, at least), but it was evidently someone from the anti-Tron lobby.

A former Steem witness told CoinDesk he believes this community member – whoever they may be – had access to an app and were able to cling on to the keys linked to the community321 wallet.

“There is a service run by an original community witness called AnonSteem, it allows users to make anonymous accounts,” they said. “They [the community321 wallet creator] used this service, and my initial guess is [a community member] saved the keys generated. Then used them to send the funds to Bittrex to rescue them.”

See also: Why Crypto Should Care About Justin Sun’s Steem Drama

In an interesting twist to the whole saga, Bittrex’s procedure for returning hacked tokens is to first receive proof of ownership from the victim. “We must review the facts of this transfer in order to return these funds to the original wallet owner provided the owner or owners of the wallet can prove the funds belong to them,” Lai said in his notice.

In other words, whoever is sitting behind the community321 wallet may have to declare themselves, at least to Bittrex. It could be interesting to see who does, eventually, break cover.

At the time of writing, the funds still hadn’t been returned.

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Kyber may be the Great Lockdown’s hottest token project. 

According to the analytics firm Flipside Crypto, the Kyber Network is one of the fastest-growing token projects so far during the coronavirus-led recession (in terms of developer contributions, social media chatter, blockchain records, wallet addresses and corresponding apps).

This decentralized exchange (DEX) protocol is associated with the token KNC, which jumped up in price since 2019, from roughly $0.18 in December 2019 to $0.64 by early May 2020, according to Messari. Traders don’t need to use KNC but in the near future they’ll be able to use it for staking rewards and to vote on development decisions. 

Related: Finance and the Real Economy Can’t Stay Out of Sync Forever

In the meantime, the Kyber Network protocol is essentially the third-most-popular DEX, with nearly $5.4 million worth of reserves in its decentralized finance (DeFi) systems, ranked behind Uniswap and IDEX. It’s estimated the protocol handled $200 million worth of volume in March alone. It was utilized by 13,000 crypto wallet addresses in March out of 62,264 active addresses tallied since January 2019.

Plus, this Asian DEX startup with team members in Vietnam and Singapore is now also part of the first batch of participants in Chicago’s DeFi Alliance (CDA), joined by DeFi startups like IDEX, dYdx, Synthetix, Set Protocol, Opyn and 0x. 

Read more: Ethereum’s Top DEX Is Rebooting With New Scaling Features

CDA co-founder Imran Khan of Volt Capital said over 100 teams applied to join the CDA, but only seven startups were chosen.

Related: Caught Up in Steem Squabble, Bittrex to Return Tokens Diverted in Hard Fork

“Market makers and liquidity providers all need different options based on their trading strategies,” Khan said. “Kyber’s competitive advantage is that it’s a decentralized exchange, they can play regulatory arbitrage and grow quickly.”

Liquidity

So far, the Kyber Network’s liquidity appears relatively healthy. In January 2020, Binance Research estimated the project had 35,000 active users. 

The network survived its first true stress-test in March, when the protocol supported $33 million worth of trading in a single day without any significant glitches despite cataclysmic volatility in broader markets. Khan added the CDA aims to grow the value of assets locked in DeFi systems from roughly $1 billion to $8 billion by 2021. 

“For the space to get real liquidity, we need professional market making,” said Kyber Network CEO Loi Luu.

Most DEXs saw significant gains during the start of the coronavirus crisis, so this doesn’t make Kyber unique. For example, fellow CDA member 0x reached a new all-time high in March with over $100 million worth of volume. What makes Kyber different from startups like 0x is that the former is primarily a liquidity protocol, not just a DEX. 

Read more: Chicago’s Trading Firms Look to DeFi With New ‘Alliance’

The Kyber Network DEX is merely a proof-of-concept, to show the protocol can allow on-chain trading functionality. Many wallets and DeFi platforms, like Uniswap and Trust Wallet, are also connected to the Kyber protocol on the backend. 

“On-chain market making is very different from off-chain market making, because you are actually using the blockchain to run all your operations,” said Kyber Network advisor Ming Ng. “Smart contracts can only talk to other smart contracts.” 

In short, in order for ethereum to become a global financial platform, something like Kyber Network (although not limited to it) would have to translate smart-contract functionality throughout all the layers of a trade.

Chains

Even if trades are settled on-chain, usually order books are off-chain, which is precisely the gap the Kyber Network wants to bridge. 

Stepping back, liquidity generally means the ability to move money around and actually use it, while a “smart contract” is just software that automatically triggers business activity. So, for example, if a trader wanted to build a tool that queried for the price of a specific asset across integrated order books, he could use the Kyber Network to do it. Then his smart contract could execute a trade or change the amount or price. 

“They are providing a different way to trade and some of the market makers will be more comfortable working with them,” Luu said of fellow CDA members IDEX and 0x. “You can have the full-fleshed decentralized stack [with Kyber], from the domain name and code to the smart contract as well.”

Getting more professional market makers to experiment with on-chain trading will be a challenge, but Luu’s staff of 55 still has more than half of its original token sale funds, Luu said. The KNC initial coin offering (ICO) reportedly raised 200,000 ether (ETH) in 2017. Plus, the team has been dogfooding their protocol by using it for market making and the above-mentioned DEX, turning a modest profit so far. 

“Market makers should be able to make a profit using Kyber,” Ng said. “We’re building a fully sustainable ecosystem where all the players in the ecosystem can make money.”

A new protocol upgrade coming in late June, called Katalyst, will allow KNC token holders to participate in a proof-of-stake system to earn rewards for helping maintain this DeFi network.

Read more: Kyber to Offer Delegated Token Staking After Coming Network Upgrade

When the token sale proceeds run dry, the namesake startup could also use this mechanism to earn money, just like other stakeholders. For now, demand for the token is surging across exchanges as more teams use the Kyber protocol for unique trading strategies related to stablecoins like dai, USDC and tether.  

Some traders may prefer a more familiar exchange and settlement model. For those who want to experiment with quasi-decentralized models, the CDA now offers the old guard a structure for getting hands-on experience working on-chain. Likewise, Volt Capital’s Khan said his fund plans to participate in staking on the Kyber Network. 

“The goal for Kyber Network as a DEX is that assets being traded should not exit the protocol,” Khan said. “Deeper liquidity enables more efficient markets and new ways to onboard retail traders.”

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Even idle speculation that mysterious bitcoin founder Satoshi Nakamoto might be moving around a small batch of the cryptocurrency appeared sufficient to spook the market on Wednesday.  

Bitcoin slid 2.3% on the day, retreating after a four-day rally and pushing the price down to about $9,500.

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: Blockchain Bites: Satoshi’s Sword of Damocles

But earlier in the day, bitcoin plunged as low as $9,100 after the Twitter account “Whale Alert” sent a message indicating a recent transfer of 40 bitcoins, worth some $391,055, might be from a “possible #Satoshi owned wallet” that had lain dormant since the first few months of 2009 – soon after bitcoin itself had launched.  

Shortly afterward, on Wednesday, the same address transferred 10 more coins over the blockchain. 

Satoshi wrote the white paper that mapped out the framework and rules for the bitcoin blockchain, but disappeared soon after the protocol launched, and their identity has never officially been confirmed. Many believe the name was a pseudonym. 

The reason it matters to digital-asset traders is that Satoshi — whoever he, she or they may be — is assumed to have amassed a large amount of bitcoins from mining shortly after the protocol’s launch in early 2009.

Related: 50 BTC Just Moved for First Time Since 2009 – But It Doesn’t Look Like Satoshi

Of course, a bitcoin transfer doesn’t necessarily indicate anything has been sold, and there are strong indications the address might not even be connected to the enigmatic founder.

But one fear could be that if Satoshi — or whoever it is behind the account — starts selling in large amounts, it could theoretically put downward pressure on the price.

“No matter who moved the coins, it did cause a mean ol’ nasty spike on the charts,” wrote Mati Greenspan, founder of foreign exchange and cryptocurrency research firm Quantum Economics, in an e-mail to clients. 

According to the cryptocurrency security researcher Sergio Demian Lerner, Satoshi’s untouched hoard might include as many as one million bitcoins, though BitMEX Research has estimated the number could be closer to 700,000.

Movement from old, inactive bitcoins is notable since such events rarely happen.

In fact, the 50 coins at the focus of Wednesday’s speculation — from data block 3,654, versus more than 631,000 now — were the first inactive coins mined in early 2009 to move since August 2017, according to data shared on Twitter by Coin Metrics engineer Antoine Le Calvez.

The bitcoin market sold off more than 7% almost instantly, as Whale Alert’s tweet quickly went viral, according to Bitstamp market data. As the rumor spread, something like $40 million worth of bitcoin futures contracts were liquidated on BitMEX, according to Skew.

“This occurrence highlights the importance of ‘address watching,’” Jose Llisterri, co-founder of crypto trading platform Interdax, told CoinDesk’s Daniel Cawrey. That includes “monitoring the addresses of whales/early miners and the so-called ‘Satoshi coins’ mined in the first months of bitcoin.” 

But there are strong indications the coins might not actually belong to Satoshi.

The primary evidence linking them to bitcoin’s creator are that the coins were mined in 2009, when few people were involved in the network, and that they’ve been inactive ever since.

But Lerner, the cryptocurrency security researcher, identified a unique “Patoshi pattern” in April 2019 that appears in the hash rate of a single, early miner. The assumption is the miner was likely Satoshi.

Lerner has identified all of those data blocks, and the 50 coins moved on Wednesday weren’t among them. 

Some bitcoiners immediately panned the Whale Alert’s suggestion. 

“Y’all need to up your analysis game,” Jameson Lopp, chief technology officer at bitcoin custody provider Casa, tweeted at the Whale Alert account.

In response to questions sent via Twitter, Whale Alert tweeted back that the “chance that this wallet is associated with Satoshi himself given its age and the transactions itself was interesting enough to post.”

“We are aware of the Patoshi research, but unlike what some are saying, we do not feel it excludes the possibility that Satoshi was the owner of those coins,” Whale Alert wrote via a direct message. 

Another angle is the vintage bitcoins might have been transferred by an early bitcoiner who has been active all along — just buying and selling newer bitcoins. So the fact the earliest coins were transferred might not mean the owner is suddenly doing anything differently.  

Gregory Maxwell, prominent Bitcoin Core developer and Blockstream co-founder, took to Reddit on Wednesday to explain that certain characteristics of the bitcoin protocol could cause coins like these to be left inactive in an otherwise active wallet owned by the same entity. 

“It’s possible that the author of this transaction has been frequently active all along, and their wallet just got around to spending this particular coin,” said Maxwell. From his perspective, he said, “nothing connects these coins to Satoshi.”

The takeaway for traders is to be on the lookout for vintage bitcoins — whether they’re Satoshi Nakamoto’s or not.

Tweet of the day Bitcoin watch

BTC: Price: $9,349 (BPI) | 24-Hr High: $9,795 | 24-Hr Low: $9,235

Trend: Bitcoin is facing selling pressure on Thursday amid bearish developments on short-duration technical charts.

The top cryptocurrency by market value is currently trading at $9,360, representing a 1.7% decline on the day, having spent the first half of the week battling selling pressure near $10,000.

Prices fell by over $600 to $9,100 on Wednesday, confirming an ascending triangle breakdown on the hourly chart. The pattern indicates the rally from the low of $8,100 observed ahead of bitcoin’s May 11 halving has ended, and the bears have regained control. 

The bearish view has been reinforced by rejection at $9,600 (lower high) seen during the Asian trading hours and the subsequent drop to levels below $9,400. Further, the MACD histogram is again producing deeper bars below the zero line, indicating strengthening of bearish momentum. 

As a result, the path of least resistance appears to be on the downside. Some observers may suggest otherwise, as the daily chart is reporting a golden crossover – a bull cross of the 50- and 200-day averages. However, the so-called long-term bull market indicator is based on historical data and often traps buyers on the wrong side of the market. “The last time the 50 DMA crossed above the 200 DMA, there was a 60%+ drop in price over the next month,” tweeted popular analyst Josh Rager. 

The immediate support is seen at $9,000, which, if breached, would open the doors to the four-hour chart 200-candle average at $8,590. On the higher side, key resistances are located at $9,600 (the Asian session high) and $10,000, which has proved a tough nut to crack over the past few days. 

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Bitcoin prices look to be struggling with buyer exhaustion, having put in a negative performance in the last 24 hours despite positive developments on both the macro and technical fronts.

The top cryptocurrency by market value fell from $9,760 to $9,100 during Wednesday’s U.S. trading hours, even though major investment banks JPMorgan Chase and Goldman Sachs called for an increase in the size of the inflation-boosting government bond purchase programs run by the Federal Reserve and other major central banks. Bitcoin is increasingly eyed as an investment alternative that isn’t prone to inflation.

“The level of the expected increase in supply this year – about $2.1 trillion – is offsetting the $1.9 trillion demand for bonds to the tune of $200 billion,” JPMorgan said. 

Related: Market Wrap: Traders ‘Buy the Dip’ as Bitcoin Hovers at $9,000

The bank is essentially predicting a rise in bond yields and a fall in prices due to the shortage of demand in the bond markets. An uptick in yields or borrowing costs may discourage investors and corporations from borrowing and investing, prolonging the coronavirus-led economic downturn. 

As a result, analysts at JPMorgan think the central banks would have to ramp up their bond purchase programs in order to keep yields depressed. Goldman Sachs strategists echoed similar sentiments last week. 

Even so, bitcoin, which is widely touted as “digital gold” due to its limited supply and programmed supply cut at regular four-yearly intervals, fell on Wednesday and remains under pressure near $9,390 at press time, representing a 3.8% decline on a 24-hour basis, according to CoinDesk’s Bitcoin Price Index. 

The decline looks more surprising considerin technical studies have been biased bullish from the start of the week. For instance, last week’s candle penetrated an 11-month falling trendline, confirming a bullish breakout. Further, the 50- and 200-day averages produced a “golden crossover” earlier Thursday, signaling long-term bullish conditions (as technical theory suggests, anyway). 

Related: Market Wrap: Bitcoin Rebounds to $9,500 After Scary Sell-Off

With buyers unwilling to step in despite the bullish signals, the cryptocurrency looks vulnerable to deeper pullbacks. 

Some observers have suggested that on-chain movements of bitcoins caused a decline in prices on Wednesday. Selling pressure strengthened after a dormant address moved some of the earliest mined coins for the first time in 11 years. 

The subsequent recovery was shallow, and prices faced rejection at $9,600 early on Thursday before falling back to lows under $9,400. While Wednesday’s price dip was an opportunity for investors to snap up bitcoin amid bullish macro developments, the weak bounce suggests most chose to remain on the sidelines. 

Signs of buyer exhaustion is not surprising because the cryptocurrency has rallied by over 150% in the past two months. The rally was likely fueled by the bullish narrative surrounding the reward halving, which took place on May 11, and due to the unprecedented amounts of liquidity injected by major central banks into the traditional markets. The G7 central banks purchased more than $1.3 billion worth of bonds in April, as tweeted by Jeroen Blokland, a portfolio manager for the Robeco Multi-Asset funds.

Analysts at Stack, a provider of cryptocurrency trackers and index funds, expect bitcoin to consolidate in the range of $8,000–$10,000 for some time. 

From a technical analysis standpoint, immediate support is seen near $8,970 at a trendline rising from March lows. 

Daily chart

Acceptance under the ascending trendline support would expose the 200-day moving average located near $8,000.

So far, the confirmation of the golden cross has failed to invite stronger chart-driven buying. The indicator tends to lag prices and trapped traders on the wrong side of the market earlier this year, as warned by Darius Sit, co-founder and managing director at Singapore-based QCP Capital.

On the higher side, $10,000 is the level to beat for buyers. 

Disclosure: The author holds no cryptocurrency at the time of writing.

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IBM has become a shareholder in we.trade, the trade finance platform jointly owned by 12 European banks, signaling further consolidation across the enterprise blockchain space.

Ciaran McGowan, we.trade’s CEO, said the deepening relationship with Big Blue will help the platform in its next phase of global expansion.

“Now we’ve got a very strong partnership with IBM for scaling globally, and we are working closely together on Asia, Africa and Latin America,” McGowan said.

Related: Standard Chartered Claims First Yuan-Based Letter of Credit Issued on a Blockchain

We.trade has the distinction of being the first enterprise blockchain consortium to go live, which happened back in early 2018. The platform was formed by a group of banks to help European small and medium-sized enterprises (SMEs) get better access to trade finance. IBM has been the project’s technology partner from inception.

Read more: Staying Alive: Why the World of Enterprise Blockchain Has Turned to Collaborations

However, the plan at we.trade was always to take its technology in-house and rely less on IBM, as stated by McGowan at last October’s Sibos event in London.

“It’s all about getting the right balance,” McGowan said this week regarding IBM’s new role as part-owner of the platform as well as the sole technology provider. “Back then [in 2019], we had seven staff at the company and it wasn’t realistic for seven staff to make all the decisions, to collate all the different requirements, to prioritize and manage everything.”

Related: IBM Blockchain to Offer Decentralized Smart Contract Option

The move also raises the question of intellectual property (IP) ownership, something that has caused problems for IBM in the past with blockchain consortia.

Part of we.trade’s success was down to the fact no single entity had more say than another. The platform’s previous CEO, Roberto Mancone, pointed to a “clear distinction” between IBM’s IP, which was the components used to build the platform, and the IP of the platform itself. 

Read more: IBM and Maersk Struggle to Sign Partners to Shipping Blockchain

These lines appear to be blurring now. In addition to owning the Hyperledger-based IBM Blockchain Platform that we.trade is built on, IBM would own 7% of the platform’s IP, McGowan confirmed.

A concession being promoted by we.trade (and IBM) involves a new multi-cloud approach so customers can use Microsoft Azure or AWS, instead of having to use IBM Cloud.

IBM joins we.trade’s existing 12 shareholder banks: CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit. 

McGowan said some European banks are “playing wait and see” with enterprise blockchain, especially in the busy trade finance space.

“I think that because there are quite a number of players in the space, and quite a number of banks on those platforms, the European banks have been kind of sitting back and are maybe afraid to join one platform in case another does better.”

Read more: Banking Giant UBS Goes Live on We.Trade Blockchain for Trade Finance

Still, McGowan said we.trade plans to interoperate with Hong Kong’s eTradeConnect, a blockchain-based trade finance platform formed by 12 Asian banks. An investment round planned for September will see the platform onboarding some insurance companies as well as more banks, he added.

Asked if IBM is getting its hooks into a platform that previously had a semblance of independence, Parm Sangha, the global trade finance leader at IBM, said: “Hyperledger is open source; IBM has opened up to have a multi-cloud approach. The only thing we are collaborating smarter on is where does this all go, and that is the pursuit of market share and market size.”

A source involved in the enterprise blockchain space who wished to remain anonymous said we can expect to see IBM begin rolling together its big blockchain services such as TradeLens and Food Trust, in an attempt to get critical network mass.

“I’m not sure that strategy will work – the cost of transition may be higher than the cost of integrating those services together,” they said.

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