Wednesday, May 29, 2019

China Releases New Crypto Rankings


China's Center for Information and Industry Development has released its latest rankings of 35 crypto projects that were evaluated over the past two months. While several top positions remain unchanged, Bitcoin has climbed up the overall ranking.

New Rankings From China
The Center for Information and Industry Development (CCID), under China's Ministry of Industry and Information Technology, released the 12th update of its crypto project rankings Thursday. The number of projects evaluated was unchanged from the previous rankings published in March. The center also announced that starting this month the rankings will be adjusted every two months instead of monthly.

In addition to the overall ranking, the CCID published three others based on basic technology, applicability, and creativity sub-categories. EOS tops the list overall, followed by Tron, and Ethereum. The center started ranking Tron in February, debuting at number two overall and has remained at that position ever since. BTC now ranks 12th, up three places from the 15th place in the previous ranking. BCH has also improved, currently occupying the 29th spot overall, up from the 31st place previously.

"The results show that the world's three major Dapp platforms — EOS, Tron, and Ethereum — remain ranked in the top three, [and] the scores are 148.5, 144.1 and 136.6," the CCID wrote.

The center describes itself as "a first-class scientific research institution directly under the administration of the Ministry of Industry and Information Technology of China." The first crypto ranking was released in May last year. The assessment is carried out by the CCID (Qingdao) blockchain research institute, an entity established by the CCID, in collaboration with multiple organizations such as the CCID think tank and the China Software Evaluation Center. "The result of this assessment will allow the CCID group to provide better technical consulting services for government agencies, business enterprises, research institutes, and technology developers," the center previously explained.

The overall ranking is based on the total index scores of 35 crypto projects. The total index of each crypto project is the weighted average of its three sub-indices: the basic technology index, the applicability index, and the creativity index. The basic technology sub-index accounts for 64% of the total index, while the applicability sub-index accounts for 20% and the creativity index 16%.

"The basic technology sub-index mainly assesses the level of technical realization of the public chain," the center described, adding that the key areas evaluated under this category "include the function, performance, safety and decentralization of the public chain." The top five crypto projects in this category are EOS, Tron, Steem, Bitshares, and Gxchain.

The creativity sub-index "focuses on continuous innovation in the public chain, including developer size, code updates, and code impact," the center detailed. In this category, the top five crypto projects are Bitcoin, Ethereum, Lisk, EOS and Tron.

The applicability sub-index "mainly evaluates the comprehensive level of public chain support for practical applications," the center continued. "The assessment includes four aspects: node deployment, wallet application, development support and application implementation." For this category, the top five crypto projects are Ethereum, Neo, Nebulas, Tron, and Ontology, which are unchanged from the previous ranking for this sub-category. "However, the data shows that the applicability indices of only 11 of the 35 public chains have increased, and the overall index has declined compared to the previous period," the CCID noted.

G20 Countries Start Implementing Unified Crypto Standards


As the G20 summit approaches, member countries have been discussing how to implement the standards set by intergovernmental organizations such as the Financial Action Task Force. While there may be some challenges in complying with the standards, the European Central Bank says the risks crypto assets pose to the euro area's financial stability are manageable.

The G20 countries have reaffirmed their support for the Financial Action Task Force (FATF) as the global standard-setting body in areas such as anti-money laundering. They have also agreed to follow the FATF recommendations including those concerning crypto assets.

The FATF held its annual Private Sector Consultative Forum in Austria earlier this month with its members and over 300 representatives from the private sector participating. Members of the FATF are 36 countries and two international organizations including the European Commission. The FATF explained:

The discussions focused on the mapping of virtual asset services and business models … and on the implementation of specific FATF recommendations.

A FATF meeting
In its April report to the G20, the FATF outlined its work on crypto asset standards and promised to update its guidance "to continue assisting jurisdictions and the private sector, in implementing a risk-based approach to regulating virtual asset service providers, including their supervision and monitoring," the report describes. "This will help countries in exercising oversight of this sector." While emphasizing various risks such as money laundering, the FATF also recognized:

Technological innovations, including those underlying virtual assets … may deliver significant benefits to the financial system and the broader economy.

Russia Has Issues to Resolve
Among countries that have announced their plans to implement the standards set by the FATF is Russia. The country has yet to finalize the regulatory framework for cryptocurrency, which President Vladimir Putin originally said must be done by July last year. Since no crypto regulation had been introduced, the Russian president signed another order for his country's crypto regulation to be implemented by July this year.

However, another delay may also be in the cards as the Chairman of the State Duma Committee on Financial Market, Anatoly Aksakov, has revealed that "The adoption of the law on digital financial assets is 'stuck' because of the requirements of the FATF," Tass reported on May 21. Speaking at the Russian Stock Market 2019 conference, he explained that the requirements will either be implemented in the law on digital financial assets or in a separate bill, elaborating:

The law on digital financial assets has been suspended … There were FATF decisions that require us to resolve issues related to bitcoins and so on.

The news outlet also reported first deputy chairman of the Bank of Russia, Olga Skorobogatova, indicating that the law on digital financial assets could be adopted in the Spring session. "The law on digital financial assets, on crowdfunding, etc., all these bills are in a fairly high degree of readiness," she told the State Duma. "Colleagues from the State Duma committees are very helpful, we expect that these laws can be passed during the Spring session." She further stressed that these laws "are extremely important for the country and will provide an opportunity to implement new projects."

Japan Collaborating With Other G20 Countries
The host of the June G20 summit, Japan has been actively working on implementing global standards on crypto assets. Last week, the country's House of Representatives passed a crypto bill with a number of required resolutions. According to Impress publication, one of them reads:

We have fully grasped the regulatory trends of G20 countries, and cooperated with each country to achieve international harmony.

In April, local media reported that the Japanese government is preparing to offer a handbook to the G20 countries to help them with their own crypto regulations. This matter will be discussed at the June summit along with a wide range of regulatory measures relating to crypto assets.

In December last year, Japan's top financial regulator, the Financial Services Agency (FSA), released a report stating:

To manage and mitigate the risks emerging from virtual assets, countries should ensure that virtual asset service providers are regulated for AML/CFT purposes.

They should also be "licensed or registered and subject to effective systems for monitoring and ensuring compliance with the relevant measures called for in the FATF recommendations," the report details.

South Korea Wants Regulatory Consistency
South Korea has announced several times that it will comply with the unified crypto regulatory standards. At the FSB plenary meeting in April, the progress report to be delivered to the upcoming G20 meetings in Japan, vulnerabilities in the global financial system, and global standards of crypto regulation were discussed. "Transnational cooperation is necessary to regulate virtual currencies," Choi Jong-ku, Chairman of the Financial Services Commission, was quoted as saying. He emphasized the importance for each country to consistently implement international standards prepared by the FATF "to minimize regulatory inconsistencies."

FSC Chairman Choi Jong-ku
Possible Challenges Ahead
Blockchain analysis firm Chainalysis provided feedback to the FATF on its guidance for crypto assets in April. "FATF's guidance, as it is currently drafted, would have profound implications for the cryptocurrency industry," the firm wrote.

"There are clear technical obstacles that prevent cryptocurrency businesses from being able to comply with these standards," Chainalysis detailed. Citing that "Cryptocurrencies were originally designed as a peer-to-peer financial system that has no central authority and no intermediaries," the firm asserted that in most cases crypto exchanges "are unable to tell if a beneficiary is using another exchange or a personal wallet," adding:

Requiring a transmission of information identifying the parties is not technically feasible.

The firm proceeded to discuss "technical opportunities," suggesting that in order to meet the FATF's goals, "Cryptocurrency exchanges can use the transparency of the shared ledger to form an effective risk-based approach." They explained that it should be the job of exchanges to collect and store know your customer (KYC) information of each transaction's originator, and clarified that "While the transactions themselves are public, exchanges should also link their customers with their specific transactions as this information is not available on the public ledger."

Another point highlighted by the firm, which they referred to as "unintended consequences," is that "There is no infrastructure to transmit information between cryptocurrency businesses today, and no one has the ability to change how cryptocurrency blockchains work." The firm elaborated:

Forcing onerous investment and friction onto regulated businesses, who are critical allies to law enforcement, could reduce their prevalence, drive activity to decentralized and peer-to-peer exchanges, and lead to de-risking by financial institutions.

Chainalysis noted that "Such measures would decrease the transparency that is currently available to law enforcement."

Manageable Financial Stability Risks
The European Central Bank (ECB) monitors crypto assets and analyzes potential implications for monetary policy and the risks they may pose on market infrastructures, payments, and the stability of the financial system. Its report published earlier this month entitled "Crypto-Assets: Implications for financial stability, monetary policy, and payments and market infrastructures" summarizes the outcome of the analysis of its Crypto Assets Task Force. The report reads:

At present, crypto-assets' implications for and/or risks to the financial stability of the euro area, monetary policy, and payments and market infrastructures are limited or manageable.

Noting that crypto assets cannot be used to conduct money settlements in important financial market infrastructures in the EU, the bank states that "they do not qualify as securities … [and] central securities depositories (CSDs) cannot undertake settlement of crypto-assets."

Even if crypto-based products were to be cleared by central counterparties, they would need to be authorized and to satisfy existing regulatory requirements, the bank clarified, adding that "Even at their peak in early 2018 the outstanding value of crypto-assets was too small to give rise to concerns for the EU financial system and the economy." Stressing that "Crypto-assets market developments are dynamic and links to the financial sector and the economy may increase in the future," the bank claims:

It is therefore important that the ECB continue to monitor the crypto-assets phenomenon, raise awareness and develop preparedness for any adverse scenarios, in cooperation with other relevant authorities.

The ECB concluded that "Financial institutions investing directly or indirectly in crypto assets should have in place relevant governance arrangements, also in line with the licensing criteria, and commensurate to the materiality of investments in crypto-assets and/or crypto-assets-related activities." The bank added that many factors ranging from market developments to "unintended 'legitimising' effects" of crypto regulation could result in greater exposures to crypto assets.

Wednesday, May 22, 2019

Dutchman arrested for alleged crypto mining fraud of $2.2 million


Dutch authorities arrested a 33-year-old businessperson for allegedly defrauding investors through a crypto mining fraud.

According to local reports, Dutch tax authority's investigative department, FIOD, made the arrest. The suspect was a director of two private limited companies, which he allegedly used for money laundering, fraud and forgery activities.

The man started his company back in 2017. Through the company, the suspect received money from investors who thought they were buying computers for buying bitcoins. The suspect collected about €2 million ($2.2 million) from the investors. Investors were promised returns of 0.3 Bitcoin Core (BTC) per month (about $2,389 at current prices). Investors became worried when they failed to get the returns or their mining computers.

Upon investigations, authorities discovered that the BTC mining machines were probably never even purchased. Initially, police had searched his house in November 2018 and discovered luxury goods such as bags, dirt bike, and shoes, and understand that he also used the money on motorbikes and gambling.

Notably, one of the suspect's BTC mining companies, Koniz Trading, was declared bankrupt last year after customers' accused him of fraud, according to reports by the NL Times.

The FIOD added that fighting money laundering is the priority for the government as it is one of the "serious" crimes in the country.

Earlier this year, De Nederlandsche Bank (DNB), the nation's central bank, and the Netherlands Authority for the Financial Markets published a report that suggested that fiat-to-crypto exchanges and custody solution providers must be licensed as cryptocurrencies carry "high financial crime risks." In their report, these authorities explained:

"These risks must be addressed effectively, which can be achieved as a result of the international coordination of countermeasures that AMLD5 [the Fifth European Anti-Money Laundering Directive] provides."

Other countries, notably Malta, have already started to warn its investors on crypto fraud. Late last month, authorities in that country came out to issue guidelines that will help investors identify fraudulent crypto projects. This was done through a report released by the Malta Financial Services Authority (MFSA).

Among the issues addressed in the report, is the need for investors to protect themselves from engaging in suspicious projects, especially those that promise huge returns.

How to Buy Pizza With Bitcoin Cash


Every year on May 22, the cryptocurrency community marks this day in 2010 when Laszlo Hanyecz purchased two pizzas for 10,000 bitcoins. To help you celebrate Pizza Day, here are a variety of options to buy to pizza with bitcoin cash (BCH) in different countries around the world.

How to Buy Pizza With BCH on Bitcoin Pizza Day 2019
One of the simplest ways to pay for pizza with bitcoin cash (BCH) in the U.S. is to get a gift card for you favorite joint on the Store. Here you can order cards for use in major national chains such as Domino's and Papa John's as well as smaller regional options.

To find a place selling pizza for BCH in Europe you can check out your country's local branch of The Amsterdam-headquartered company operates over a dozen international food delivery websites and apps and a number of them accept BCH such as Germany's, Poland's, and the Netherlands'

If you are living or visiting Seoul, South Korea, you should check out Shuttle Delivery, which enables users to spend BCH in more than 200 restaurants in the area. This South Korean food delivery platform offers an app in Korean and English and supports Android and iOS devices.

To find a nearby pizza-serving BCH-friendly establishment wherever you are in the world, use the Marco Coino app.

Thursday, May 16, 2019

SEC Commissioner Says Time Is Right for Bitcoin ETFs — 3 Funds Pending


The U.S. Securities and Exchange Commission (SEC) is currently reviewing three bitcoin exchange-traded funds (ETFs), one of which was filed last week to track the prices of two cryptocurrencies. An SEC commissioner said at the Consensus conference on Monday that the time is right for a bitcoin ETF, as the commission is due to make a decision on one of them next week.

At the Consensus 2019 conference in New York on Monday, SEC Commissioner Hester Peirce, also known as "crypto mom," discussed the regulatory environment for bitcoin ETFs. Expressing her dissatisfaction with the current law, she asserted that the SEC should do more to provide a regulatory framework for cryptocurrency including rules around safe harbor. Decrypt quoted her as saying:

I thought the time was right a year ago — even longer than that … My first chance to comment on it was a year ago … Certainly the time is right, but there are still questions floating around the SEC that need to be answered as much as possible by you all.

Peirce then encouraged the audience to write to the SEC to help them understand the market. One issue she noted was market manipulation, which "is a concern that people keep raising at the SEC," she shared. "Other issues like custody issues [also] come up a lot."

Her comments at Consensus echo her speech at the Securities Enforcement Forum which took place on May 9. "The problem is that the securities laws do not cease to operate as a new industry develops," she explained. "Consequently, individuals and companies in the industry must comply with our securities laws or risk becoming the subject of an enforcement action. It is therefore our duty as a regulator to provide the public with clear guidance as to how people can comply with our law. We have not yet fulfilled this duty." The commissioner additionally described:

It is not the SEC's overzealous action that has stifled the crypto industry, but its unwillingness to take meaningful action at all.

Peirce also expressed concern that the U.S. is falling behind other forward-thinking countries. "Our country has always been a country where innovation can really thrive," she opined Monday. "I worry that a lot of the activities are now happening offshore. I want the US to be the market for innovation."

The SEC staff recently issued a 14-page document detailing a framework to assist issuers with conducting a Howey analysis to evaluate whether token offerings are securities. It details features of an offering and actions by an issuer that could signal that the offering is likely a securities offering. Peirce expressed her worry, however, that this framework "could raise more questions and concerns than it answers."

The commissioner previously said she believes the SEC has no jurisdiction to look at the underlying asset when considering whether to approve a proposed rule change for an ETF. She has also emphasized that excessive regulation could hurt innovation such as cryptocurrency.

The SEC's Senior Advisor for Digital Assets and Innovation, Valerie Szczepanik, explained that the agency is moving slowly on cryptocurrency regulations and cryptocurrency-based products because it needs to be cautious. Szczepanik coordinates efforts across all SEC divisions and offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including cryptocurrencies and initial coin offerings.

In his speech at the SEC Sparks conference on April 8, Chairman Jay Clayton said one of the areas the commission has focused its attention on due to heightened risks is "digital assets, including cryptocurrencies, coins, and tokens." At the Consensus Invest conference in November last year, he revealed the key upgrades he needed to see before the SEC could consider approving its first bitcoin ETF such as better market surveillance and safe custody of crypto assets.

SEC Chairman Jay Clayton
Bitwise Bitcoin ETF: August 14
One of the proposals being reviewed by the SEC is for the listing and trading of shares issued by Bitwise Bitcoin ETF Trust filed by NYSE Arca Inc. on Jan. 28. This proposed rule change was published in the Federal Register on Feb. 15. On March 29, the SEC designated May 16 as the day to make its decision on this proposal. However, on May 7, the exchanged filed Amendment No. 1 to the proposed rule change, replacing the original one in its entirety. According to the amended registration statement filed with the SEC:

The trust will hold bitcoin … [and] will store its bitcoin in custody at a regulated third-party custodian, and will not use derivatives that may subject the trust to counterparty and credit risks.

Furthermore, the company explained that "the trust will not directly purchase or sell bitcoin. Instead, authorized participants will deliver bitcoin to the trust in exchange for shares of the trust, and the trust will deliver bitcoin to authorized participants when those authorized participants redeem shares of the trust."

The filing also details that "in seeking to ensure that the price of the trust's shares is reflective of the actual bitcoin market, the trust will value its shares daily based on prices drawn from ten bitcoin exchanges … [which] represent substantially all of the economically significant spot trading volume on bitcoin exchanges around the world."

On March 22, Bitwise tweeted clarifying that "The exact methodology largely mirrors the settlement pricing methodology of CME futures, which we believe has the correct construction." The company added that the exchanges are Binance, Bifinex, Bitflyer, Bitstamp, Bittrex, Coinbase Pro, Gemini, Itbit, Kraken, and Poloniex, noting that five of them "have implemented sophisticated market surveillance tools to prevent market manipulation and bad behavior."

Since the company filed an amendment, the commission began soliciting public comments on the new proposal on May 14. So far, 25 comments have been received on this proposal. Securities lawyer Jake Chervinsky remarked:

The new deadline is August 14. The SEC can delay one more time to a final deadline of October 13.

Vaneck Solidx Bitcoin ETF: May 21
The next proposal for a bitcoin ETF under review by the SEC is the high-profile Vaneck Solidx bitcoin ETF. Cboe BZX Exchange Inc. originally filed the proposed rule change to list and trade shares issued by the Vaneck Solidx Bitcoin Trust in June last year. However, it withdrew the proposal on Jan. 22 due to the U.S. government shutdown which affected the SEC.

The exchange refiled the proposed rule change for the same ETF on Jan. 30 which was published in the Federal Register on Feb. 20. On March 29, the commission extended the time period to review this ETF to May 21. At press time, 24 comments have been received for this new proposed rule change, far fewer than the 1,600 plus comments received for the previous filing that was withdrawn. The registration statement explains:

The investment objective of the trust is for the shares to reflect the performance of the price of bitcoin, less the expenses of the trust's operations.

This trust intends to achieve its objective by investing all of its assets substantially "in bitcoin traded primarily in the over-the-counter markets, and may also invest in bitcoin traded on domestic and international bitcoin exchanges," the filing states. "The trust will be responsible for custody of the trust's bitcoin."

Solidx Management Llc is the sponsor of the trust, with Delaware Trust Company as the trustee and the Bank of New York Mellon as the administrator and transfer agent. The bank will also serve as the custodian with respect to cash of the trust since it will occasionally hold cash for short periods in connection with the purchase and sale of bitcoin, and to pay trust expenses. Van Eck Securities Corporation will provide assistance in the marketing of the shares.

Crescent Crypto Index Fund: Just Filed
The third bitcoin ETF-related filing which the SEC is reviewing at press time is by the United States Commodity Index Funds Trust. The company filed a registration statement with the SEC on Thursday for Crescent Crypto Index Fund, sponsored by the United States Commodity Funds (USCF). It will be traded on the NYSE Arca stock exchange under the symbol XBET. According to the document:

The investment objective of XBET is for the daily changes in percentage terms of its per share net asset value to reflect the daily changes in percentage terms of the Crescent Crypto Core II Index (the 'CCINDX'), less XBET's expenses.

The new index seeks "to track the performance of a market capitalization weighted portfolio of bitcoin and ether," the company describes, noting that it "has limited history and is currently under development and subject to further input from the Crescent Crypto Index Committee." This index "is based on various inputs which may include price data from various third-party exchanges and markets."

The trust and fund are managed and controlled by USCF, a limited liability company that is registered as a commodity pool operator with the Commodity Futures Trading Commission and is a member of the National Futures Association. USCF will employ Crescent Crypto Manager Llc, a wholly owned subsidiary of Crescent, as co-portfolio manager to XBET.

SEC Decision Timeline
Whenever a proposed rule change is filed with the SEC, it will be published in the Federal Register which serves as the key start date for the SEC's ETF approval timeline.

The proposal for the Vaneck Solidx ETF was filed on Jan. 30 and published in the Federal Register on Feb. 20. The Bitwise ETF proposal was filed on Jan. 28 and published in the Federal Register on Feb. 15. The rule change for the Crescent ETF has yet to be published in the Federal Register.

After the proposed rule change has been published in the Federal Register, Section 19(b)(2) of the Securities Exchange Act provides that "within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days … the commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved."

According to the Securities Exchange Act of 1934, the SEC can extend the time to make a decision on an ETF up to 240 days after the date of its publication in the Register. If the SEC has not made a decision after 240 days for any reasons, the ETF would be automatically approved.

However, Chervinsky explained that it is extremely unlikely the SEC will let such a decision go to automatic approval, noting that the SEC would likely have measures in place to avoid missing such important deadlines. Further, if a bitcoin ETF is automatically approved, it can easily be undone after the emergency that prevents the agency from making a proper decision is over. The lawyer elaborated:

The SEC doesn't have the power to extend the 240-day deadline. The statute absolutely prohibits any further delays.

As for the three proposals in consideration, the SEC is due to make a decision to either approve, deny, or delay its decision on the Vaneck Solidx bitcoin ETF proposal on May 21, having just delayed its decision on the proposal for the Bitwise bitcoin ETF. Chervinsky estimates that if the commission decides to further delay its decision on the Vaneck Solidx ETF, then the new decision date will be Aug. 19. The final dates after 240 days will be Oct. 13 for the Bitwise proposal and Oct. 18 for the Vaneck Solidx proposal. He also emphasized that the agency could ask the sponsors to withdraw and refile, which will start the clock all over again.

Billon secures EU funding for blockchain document management system


While there are many countries around the world that are cracking down on cryptocurrency markets or wary about how to embrace and regulate them, there are other companies that are receiving support from the government due to the shifting attitudes on the potential of blockchain technology. Recently, Billon Group was awarded over $2.1 million by the European Union (EU) to develop a blockchain-based document management system.

The money comes specifically from the European Commission's SME instrument program, which is part of a larger overall Horizon 2020 program. Horizon 2020 describes itself as the "biggest EU Research and Innovation program" ever. A total of 64 organizations were awarded in this particular phase of the program, including other blockchain-related companies such as Settlemint, a blockchain software company, and KYC (Know-Your-Customer) service AUTHENTEQ.

Billon will not only be digitizing paper documents, but encrypting them, as well. The idea is to increase transparency in efficiency with respect to document storage and management by placing these documents on a distributed ledger. This can reduce cost for a variety of organizations and corporations by as much as 50%, according to the Billon Group. The solution will also be compliant with the General Data Protection Regulation (GDPR), as well as other EU regulations. The GDPR is a regulation adopted in 2016 that relates to overall data regulation and personal privacy that applies to all EU member states.

The company has already been adopted by the Polish Credit Office (BIK), which increases efficiency with respect to the Polish banking sector. The CEO of Billon Group, Wojtek Kostrzewa, pointed out how the company is working on disrupting the document management sector. He states: "Today's document management industry has struggled with fulfilling regulatory and customer requirements related to protecting document identity content, and to provide customers with control over data they choose to share or delete. With the funding from Horizon 2020, Billon will fulfill MIFiD2 and GDPR requirements with innovation that puts a customer in control of their own data and documents."

Wednesday, May 8, 2019

Bitcoin in “large scale security breach”


Binance suffered a large scale security breach late today, according to a statement. Hackers managed to obtain API keys, two-factor-authentication codes and other information. In addition, 7,000 Bitcoin ($40 million) were withdrawn in a single transaction.

The hackers used multiple techniques, including phishing attacks and computer viruses to get at Binance and its hot wallets, where it keeps funds to manage the day-to-day operation of the exchange. The hackers were unable to access the Binance cold storage—the off-line wallets where the majority of funds are kept. Likewise, individual user wallets were not directly affected.

CZ Binance✔
 Have to perform some unscheduled server maintenance that will impact deposits and withdrawals for a couple hours.  No need to FUD.  Funds are #safu.

Though trading will continue, the $40 million hack means Binance will halt withdrawals and deposits for a week, while performing a security audit.

According to the statement: "The hackers had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time."

The company reported it that maintains an emergency fund for these eventualities, called Safu, which will be used to cover the stolen Bitcoin.

As has become usual in exchange hacks, the breach in was announced via an "unscheduled server maintenance" tweet.  That alarmed a number of Twitter users, who messaged CEO Changpeng Zhao, wondering if the exchange had been hacked.

Since the hack was revealed, the price of Binance Coin (BNB) fell eight percent to $19.88 but has since recovered to $21.

Responding to the security breach, CEO at blockchain analytics firm CipherTrace, Dave Jevans, said, "Binance responded quickly to the hack and was very transparent about the ordeal. It is a shining example in the industry of rapid response, full transparency and a solid financial model for reimbursing customers from hacks."

Jevans pointed out it was the second exchange hack using two-factor authentication this week, recommending a more stringent three-factor authentication. However this will be down to exchanges to implement.

Binance said it will undertake a security review to determine what went wrong and what can be fixed. While deposits and withdrawals will remain closed, trading will continue.

Feds Seize News Site Deepdotweb as Darknet Crackdown Intensifies


The FBI, working in conjunction with its European partners, has struck another blow against darknet markets (DNMs). On this occasion, it's a particularly low blow, as news website Deepdotweb has become the latest victim of its interminable war on drugs. On May 7, both its clearnet and darknet domains were seized, and the operators arrested and slapped with money laundering charges.

The War on Drugs Becomes the War on Information
Not content with waging a war on drugs, law enforcement (LE) have set their sights on media platforms that report on darknet activity. Earlier today, Deepdotweb became inaccessible, its homepage replaced by a seizure notice that's become all too familiar to darknet market users. The shutdown generated shockwaves that have resonated way beyond the darknet community, marking the first time that feds have targeted the press in this manner. Deepdotweb (DDW) was by far the most popular clearnet resource for accessing links to DNMs, following the closure of subreddit r/darknetmarkets last year.

Two Israeli suspects were arrested in connection with the bust, as well as individuals from France, Germany, Holland, and Brazil. The arrests were the result of two months of investigation, and arrive within days of the ringleaders of Wall Street Market (WSM) being arrested in Germany, together with a WSM moderator from Brazil. Deepdotweb is reported to have made millions of dollars in BTC from referral links to DNMs. It is unclear, though, how this activity might constitute a crime, given that darknet markets are not in themselves illegal, and sell a variety of wares, some of which are perfectly legal.

The money laundering statute cited in the seizure notice on DDW –18 USC 1956(h) – suggests that LE has sought a roundabout way to shut down a site it believes to be complicit in spreading information that enables people to access darknet markets. If so, it is a move reminiscent of Al Capone's arrest and incarceration for tax evasion, rather than for gang-related activities.

The Thin End of the Wedge
Numerous freelance reporters worked for Deepdotweb, covering a wide range of topics including the Tor network, cryptocurrency markets, opsec and privacy. The site's closure is a major loss, not only to its staff, but to its sizeable readership, many of whom had no interest in darknet markets. With DDW gone and its ringleaders behind bars, operators of other darknet new sites will be looking over their shoulders nervously. Despite breaking no laws by providing links to DNMs, webmasters may be fearful that underhand LE tactics could see their site shuttered and freedom curtailed due to some tenuous infringement.

On Dread (dreadditevelidot.onion), the Reddit-like forum for DNMs which operates on the darknet, the news of DDW's demise was the primary topic of discussion today. "I feel TPTB [the powers that be] are working on a big operation for this summer," speculated one commenter. "It all adds up to that. They have been testing the waters with DDoS attacks and seizures. Now that they know the DDoS attacks can cripple the markets without much done to prevent it, they'll start shutting down the sources of information to keep people from being able to alert the community once the real OP starts." They continued:

The Hub, DNA, Dread will be attacked even more. DDW was seized because the Tor based DDoS attack wouldn't have taken down their clearnet site. Now with the DNMs in chaos and everyone scrambling to various sites, they'll start the OP in earnest and will prevent the spread of information in the meantime.

One Down, a Dozen to Go
If the FBI's intent was to restrict the flow of information and trusted links leading to darknet markets, the agency has got its work cut out. Despite Deepdotweb's stature, it was merely one of many conduits leading to the darknet's preeminent marketplaces. Other aggregators of DNM links include Darkwebnews, Darkdotnet, and

As the criminal complaints are unsealed in the coming days, further details about the circumstances surrounding DDW's demise will emerge. One theory being floated on Dread is that one of the busted Wall Street Market moderators was also working for Deepdotweb. Wherever the truth may lie, it is evident that the war against darknet markets has now entered a new phase.

Wednesday, May 1, 2019



US entrepreneur turned presidential candidate John McAfee has invited infamous Bitcoin SV supporter Calvin Ayre for a face-to-face meeting following accusations he was a "conman."

The latest episode in the ongoing drama involving Bitcoin SV proponents, McAfee announced on social media that he was staying meters away from Ayre's Antigua residence.

The summons comes after Craig Wright, one of the co-founders of Bitcoin SV who alleges it to be the 'real' Bitcoin, gave an interview to Australian media network Finder.

During the debate, which lasted over 90 minutes, Wright accused McAfee of "building a career out of being a conman."

"Please sue me, Mr. McAfee," he said, alluding to current mass lawsuit he and Ayre are orchestrating against anyone who disputes claims Wright created Bitcoin.

"…I want you in court."

While not addressing Wright directly, McAfee took issue with the content of the interview, demanding Ayre make use of his current whereabouts to argue his corner.

"I am right now staying less than a quarter of a mile from Craig's partner – Calvin Ayre. I strongly recommend that Craig stop by for a cup of tea so he can expound on that statement in person," he wrote on Twitter April 30.

As Bitcoinist reported, McAfee is currently in transit while attempting to direct his presidential campaign.

Frequently changing his location, the entrepreneur spends most of his time on a private boat as he flees US demands to face charges of tax evasion.

Ayre, who himself successfully managed to get US money laundering charges against him dropped in 2017, has yet to respond to the challenge.

Amid an ongoing publicity nightmare for the controversial Bitcoin SV, the altcoin has seen the bottom fall through its support over the past month as major cryptocurrency exchanges simultaneously withdrew support for it.

That decision is also tied to Wright's lawsuits and other behavior, which industry CEOs view as threatening and not in-keeping with the moral values notionally tied to decentralized cryptocurrency.

At press time, BSV/USD traded at around $53, almost exactly 1/100th of the Bitcoin price and just $10 above its all-time lows.

Last week, Yoshitaka Kitao, CEO of Japanese giant SBI Group, took a board member position at Ripple, having confirmed his own exchange would not support Bitcoin SV and cease dealing with its predecessor, Bitcoin Cash (BCH).

"Coins that regularly experience hard forks are ludicrous," he said, referring to the turbulent genesis of Bitcoin SV last November.

Wizsec Security Blames Coinlab After Mt. Gox Trustee Delays Proceedings


On April 25, the Mt. Gox civil rehabilitation trustee Nobuaki Kobayashi published a new announcement concerning the deadline for the rehabilitation plan. According to the letter sent to Mt. Gox creditors, Kobayashi has delayed the proceedings for another six months due to "undetermined" claims. Following the announcement, bitcoin security specialists Wizsec published a scathing critique of the Coinlab claim for US$16 billion and alleged that it was "the elephant in the room causing this delay."

Mt. Gox Civil Rehabilitation Proceedings Delayed Another 6 Months
The Mt. Gox proceedings have been delayed once again according to the court trustee's latest letter to creditors, which says claimants now have to wait until Oct. 28, 2019. Nobuaki Kobayashi detailed that it is "not possible at this moment to make appropriate provisions in a rehabilitation plan." Moreover, Kobayashi also mentioned the court still has to deal with "undetermined rehabilitation claims" and in light of the issue he filed a motion to seek an extension of the submission deadline.

"A large amount of rehabilitation claims that the rehabilitation trustee fully or partially disapproved remains undetermined for being subject to claim assessment procedures," the letter notes.

The latest letter from the Mt. Gox civil rehabilitation trustee follows the coordinator of the largest Mt. Gox legal team, Andy Pag's decision to resign from his position. Pag had decided to sell his Mt. Gox claim and explained that he believed a settlement could take years. The founder of Mt. Gox Legal addressed some issues he had with Mark Karpeles but said the main reason for the rehabilitation delay was because of Coinlab's claim. After the letter on April 25 from the court trustee, security researchers Wizsec published an editorial that lambastes Coinlab and its CEO Peter Vessenes over the enormous claim. Essentially, Wizsec describes how Coinlab justifies a $16 billion dollar claim that is over and above every claimant's filing. Wizsec's report states that the security researchers acquired a copy of the latest court petitions in order to get to the bottom of the situation.

The Elephant in the Room
Coinlab is a claimant because back in 2012 it allegedly made a deal with Tibanne, the parent company of Mt. Gox, with the hope of securing the rights to both U.S. and Canadian Mt. Gox customers. However, the deal never came to fruition and Coinlab sued Tibanne for $75 million and Tibanne attempted to sue them back. Then Mt. Gox went bankrupt and the Coinlab legal battle forged its way into bankruptcy proceedings and ultimately the rehabilitation process. Coinlab now wants $16 billion and Wizsec says it is because Coinlab is assuming Mt. Gox would have stayed in business for the last five years. "CoinLab [claims it] was unfairly robbed of revenue that they would have earned had the license agreement been fulfilled," Wizsec writes in the latest post.

"Here's where Coinlab's claim starts going off the rails," Wizsec states. "Coinlab reasons that since the agreement was for a term of 10 years, plus a strangely one-sided post-termination clause giving them continued revenue sharing for an additional 5 years after termination, CoinLab is actually owed a full 15 years of revenue on 25% of global trade volume." The security researcher's paper continues:

They're basing their claim on the assumption that the Mt. Gox collapse never happened, first extrapolating their 25% "share" of global trade volume all the way until present date, and then extrapolating the last 12 months worth of trading all the way to 2027 and taking "their cut" on trades that haven't even happened yet.

Wizsec says Coinlab has argued for the revenue Mt. Gox made before it went under and then calculated that "between March 2014 and September 2018 they are owed damages for lost revenue equal to global trade volume × 25%." According to Wizsec, the Coinlab claim extrapolates those numbers to the year 2027 as well and has also added legal fees and an extra $1,127,731,005 per year because the proceedings dragged out past 2018. The researchers' editorial also notes that the rehabilitation trustee has said the Coinlab claim is "impossible and completely groundless." Kobayashi appears to be fighting the claim, Wizsec notes, and he has shown no indication of compromise thus far according to the post. But the security researchers conclude that Peter Vessenes and Coinlab are not giving up so easy and plan to "exhaust every legal avenue."

"To continue to argue this frivolous claim at the direct expense of tens of thousands of people who actually lost their own money is utterly shameless," concludes Wizsec.

Bitpay and Refundo Now Provide Tax Return Payouts in BTC


On April 30, the global cryptocurrency payment processing firm Bitpay announced its partnership with the tax-related financial products and services provider Refundo. The collaboration will give U.S. residents the ability to receive all or a portion of their federal and state tax refunds in crypto.

Federal and State Tax Refunds Using Blockchain Payments
U.S. taxpayers now have the ability to get all or a portion of their federal and state tax refunds back in bitcoin core (BTC), according to the latest announcement from the Atlanta-based company Bitpay. The firm recently partnered with Refundo, a leading tax service provider founded in 2011. Refundo provides taxpayers with professional financial services alongside refunds, advances, and refund transfers.

The company says the partnership with Bitpay allows for a transparent and seamless experience during tax season. Refundo believes the underbanked could benefit from a refund experience tied to crypto because it could help bridge the gap for individuals with alternative banking needs.

"Refundo offers several options to help taxpayers receive their tax refunds safer, faster and more conveniently," Roger Chinchilla, CEO at Refundo, said during the announcement. The tax service provider added:"Adding bitcoin was a natural fit for our customers who often do not have traditional checking accounts, pay high check cashing fees and regularly send money internationally. Coin-RT enables them to get bitcoin quickly and easily for one flat fee."

'Demand for More Digital Choice'
The new Coin-RT product offers taxpayers an account and they are given a unique routing and account number to input on their tax return. Refundo users who want a refund in BTC must provide identification for KYC purposes and a valid BTC address. When the federal and state deposit comes in, Bitpay sends the crypto to the taxpayer's wallet. Rolf Haag, head of business solutions at Bitpay, remarked that the Atlanta company is thrilled to help power Refundo's new solution.

"Refundo can now offer their customers a bitcoin payout for their tax refunds, meeting their customers' demand for a more digital choice," Haag pointed out. The Bitpay executive also emphasized that the Refundo and Bitpay collaboration bolsters Bitpay payouts and payroll used in the global marketplace.

The partnership with Refundo follows Bitpay's recent partnership with the leading global technology solutions company Avnet (Nasdaq: AVT). Avnet has also decided to accept crypto through Bitpay's services for various products and services. Bitpay believes Avnet clientele and customers getting refunds from Refundo will benefit from the high-speed settlement and low-cost payouts delivered by blockchain payments. Speaking with a representative from Bitpay, asked the company whether the Refundo payouts will support bitcoin cash (BCH), to which Bitpay responded that at this current time they will only be in BTC.