Saturday, July 4, 2020

Japan’s blockchain industry grows by 30% in 2020


Japan's blockchain industry has been growing rapidly in 2020 despite the economic struggles and the global pandemic. A new report by one of the country's largest digital currency companies revealed that the sector has grown by over 30% since 2019.

Japan has been a trailblazer in the blockchain industry for years, being one of the first countries to formulate and implement a regulatory framework for the industry. Its blockchain-friendly approach has led to a rapid growth of the industry, a new report now shows.

In the past year, the industry has grown by 30%, the report by the Monex Crypto Bank showed. The bank is a subsidiary of the Monex Group, the operator of Coincheck exchange which it acquired in 2018.

The report revealed that as of May this year, there were 430 blockchain companies in Japan. This is a 30.7% rise from the 329 companies reported in July last year.

64% of these companies focus primarily on blockchain technology, the report showed, with the rest being involved in a secondary capacity. The report further revealed that blockchain technology is not limited to startups, with 193 of the companies being labeled as large corporations. Of these, over half focus primarily on blockchain technology.

Moreover, there are 31 publicly-listed companies in Japan that are pursuing blockchain technology.

On the available blockchain products, the study found that finance had the highest share, accounting for 19% of the 422 active products. Entertainment accounts for 10%, with service, infrastructure, real estate and retail all accounting for less than 3%.

The digital currency exchange and mining sectors are still the biggest in the industry, the report notes. However, the gaming sector is quickly rising to prominence, using blockchain to change the experience for both the operators and the gamers.

While the Japanese blockchain and digital currency exchange industry has come a long way, it still faces challenges that have hindered its growth. Hacks and data breaches have been one of its biggest threats.

Police in China detaining digital currency OTC traders: report


China's fight against digital currency trading has now turned to the over-the-counter trading sector. Police in the country have been detaining OTC traders and platform operators to assist them with investigations. The most renowned is Zhao Dong, one of China's most prolific traders and a prominent investor in Bitfinex.

Dong was detained this week, with reports about his detention first emerging on local social media channels on Thursday. Local blockchain news outlets picked up on the reports, with some claiming that he was detained in Hangzhou while others claimed he was in Yancheng.

Following the widespread rumors, Dong's OTC digital currency OTC lending company RenrenBit took to social media to shed more light. In a statement on Weibo, RenrenBit revealed that the police had detained Dong upon arrival in China from Japan in late June. He was actively assisting the police in digital currency anti-money laundering investigations, the company claimed.

RenrenBit also revealed that Dong wasn't the only digital currency trader the police had detained. It claimed that in June, police had detained an entire OTC team working in Beijing. However, it clarified that it was just detention and that none of the traders were under arrest.

Matthew Graham, the CEO of Beijing-based blockchain investor Sino Global Capital confirmed the detention on Twitter.

A source with knowledge on the matter however revealed that Dong's detention isn't a targeted attack at him. It's part of a bigger effort by the government to stamp out OTC trading in China, claiming that it's being used to launder money.

The source, who spoke to CoinDesk, claimed that police in China have increased their scrutiny over OTC platforms since last month. This scrutiny has led to the detention of an unnamed number of OTC trading desks to assist in money laundering investigations.

The detention of Zhao Dong is however the most high-profile one yet. Dong is one of China's most renowned traders.  He is also reportedly an investor in Bitfinex, playing a big role in its $1 billion UNUS SED LEO token initial exchange offering. As Sino Global's Graham explained, in the Western world, it's the equivalent of detaining one of the Winklevoss twins.

The detentions follow the freezing of over 4,000 bank accounts belonging to digital currency OTC traders. As CoinGeek reported, authorities in Guangdong province froze the accounts claiming they were connected to digital currency money laundering..

Friday, June 19, 2020

Story from Markets Outflow of Bitcoin From Miners at Lows Not Seen Since 2010


Miner outflows of bitcoin have dropped to decade lows, with analysts suggesting a hoarding mentality is partly responsible.

The seven-day average of the total amount of bitcoin transferred out of miners' addresses declined to 987 on Thursday, hitting the lowest level since Feb. 3, 2010, according to data source Glassnode. The previous decade low of 988 was registered on May 23.

Source: Glassnode
The number of coins being sent by miners to exchanges is also at its lowest point in over a year, as noted by Glassnode in its weekly report.

"It is a sign of efficient miners continuing to hoard (only selling a proportion of BTC)," said Asim Ahmad, co-chief investment officer at London-based Eterna Capital.

The increase in miner holding does not necessarily have long-term bullish implications for the cryptocurrency's price. Miners tend to operate mainly on cash and liquidate their holdings almost on a daily basis to fund operations.

As such, miner hoarding could be termed as temporary deferral of BTC sales, possibly due to fears that the market lacks the strength to absorb the regular amount of supply. Essentially, they may be waiting for the market to show strength and prices to rise before realizing their profits.

The market, therefore, could face an above-normal miner supply during the next meaningful price rise. That, in turn, could put the brakes on a price rally.

Hoarding aside, the other main reason for the decline in outflows is the reduction in bitcoin being mined since May's reward halving, said Ahmad.

Indeed, transfer volume from miner addresses fell from 2,334 BTC to 1,034 BTC in the nine days following the May 11 reward halving, which reduced the per block emission by 50% to 6.25 BTC.

That sharp decline in profitability forced out less inefficient miners, as evidenced by a drop in the seven-day average of the hash rate – the total computing power dedicated to mining blocks on the blockchain. That fell from 120 tera hashes per second (TH/s) to 90 TH/s in the two weeks following halving (though it's since climbed as more efficient machines were switched on).

Forced out miners, however, may return to bitcoin's blockchain if prices rise sharply, making older hardware once again profitable.

Bitcoin is currently trading largely unchanged on the day near $9,370, according to CoinDesk's Bitcoin Price Index.

The cryptocurrency has been largely restricted to a narrow range of $9,000 to $10,000 since mid May. The direction in which the range is breached will likely set the tone for the next big move. 

Revolut updated terms allow users ‘beneficial rights’ to digital currency


Challenger bank startup Revolut has amended its terms and conditions, giving users 'beneficial rights' to digital currency bought through their platform.

The change in terms follows the U.K. bank allowing all customers access to digital currency trading for the first time, having previously been reserved to its Metal and Premium users.

While users will not be able to carry out the transactions themselves or send funds to an address other than one held by another Revolut customer, the change in terms means they will have rights to the financial value of the digital currency bought through the platform.

The distinction gives users legal title to their digital currency on the platform for the first time, giving them the freedom to direct what happens to their money.

"You will own the rights to the financial value of any cryptocurrency we buy for you. We will hold it on your behalf and you will have a right (called a 'beneficial right') to it. This means you can tell us when to sell or transfer it (within the limits of these terms and conditions). You have complete control of your cryptocurrencies, and we will only act upon instructions you give us. You will not be able to carry out transactions yourself."

The title to the digital currency is limited by the terms, and users are only able to transfer to other Revolut users through the app. This means users can pass title to buyers within the Revolut ecosystem, but are unable to move the digital currency to wallets not controlled by the bank.

Furthermore, the terms mean it is no longer possible to pay in crypto via a Revolut card. Those holding only digital currency balances will see card payments fail if there is insufficient fiat on account to cover the transaction.

The development comes as Revolut has launched its app in the U.S., as it aims to expand on its global user base. 

Saturday, May 30, 2020

Korea university to build blockchain and AI campus


A South Korean university has announced that it's building a blockchain and artificial intelligence (AI) campus in the city of Daegu. The campus will take a year to construct, with admission set to begin in 2021.

Suseong University partnered on the initiative with the Korea Artificial Intelligence Association (KORAIA). In an announcement on local outlet Money Today, the university revealed that the campus will also focus on other emerging technologies such as big data and cloud computing.

A number of technology companies based in Daegu have already signed up to be part of the project. They will provide training to the students, as well as practical experience. They include Wooshin Co. Ltd, an AI company based in Daegu.

The COVID-19 crisis has created a need for more robust systems, and combining blockchain with AI is the best way to respond to this need, according to Kim Kun-woo, the university's Planning and Coordination Division director.

Kun-woo further revealed that the university intends on giving students at the campus firsthand experience in the blockchain and AI industries by pairing them up with experts in these fields.

South Korea has been a global hub for blockchain technology, with the government playing a key role in the industry's development. As CoinGeek reported recently, the country launched a fintech sandbox that has promoted the growth of several blockchain startups. In its latest report, the Financial Services Commission revealed that the sandbox has attracted $111 million in the last year and created 380 jobs.

Elsewhere, the country's central bank published a report that touted the use of blockchain-based digital currencies. The Bank of Korea pointed to the decline of cash use and the advancement of digital payment technologies as key reasons why central banks are increasingly developing CBDCs. The report further claimed that several central banks have developed IT systems that rely on DLT to record digital currency transactions.

Instability, high remittance fees drive India digital currency adoption


The instability of the rupee combined with high remittance fees is driving digital currency adoption in India, according to a new report.

The report from exchange OKEx in partnership with Coinpaprika found an increasing share of global digital currency business in India, projecting significant growth relative to other countries over the coming two years.

The problem of remittance fees is particularly acute in the country, with 17 million Indian employees working overseas and remitting money home. Of the $80 billion remitted from overseas workers in 2018, some $5.67 billion in fees were incurred.

According to the report, increasing liberalization of digital currency rules in India could set the country on a similar path to Mexico, where digital exchange Bitso has grown to account for 2% of U.S.-Mexico remittance.

The growth in digital currency uptake has accelerated since the Supreme Court ruled against the Reserve Bank of India's ban on banks serving crypto businesses. OKEx has reported a 545.56% increase in traffic from India, with sign-ups during the first quarter of the year up 4,100%.

The shift to crypto also coincides with instability in the rupee, which has lost 7% of its value against the dollar since the beginning of the coronavirus crisis.

Complex rules for exchanging foreign currency in India have made it difficult for those looking to transfer rupees into more stable fiat currencies, which the report said had also been a factor in driving more people to turn to digital currencies.

While the report found digital currency was currently being used as a vehicle for ultimately transferring funds to alternative fiat currencies, it suggests more Indians could turn to digital currency directly as the market continues to mature.

The move follows similar trends seen in other countries with unstable fiat currencies, and from those with large overseas remittance industries.

Friday, May 22, 2020

Happy Bitcoin Pizza Day! But don’t think about the fees


Happy Pizza Day! And this year, please make mine extra spicy. Yes, it's May 22 again, the day all Bitcoiners celebrate by ordering a pizza. Any pizza is good, but to make it special you'll need to buy it with Bitcoin—don't make the mistake of using BTC these days though, because at the time of writing the average transaction fee on the BTC network is US$6.28.

What is Pizza Day and why is it significant?
Today is actually the 10th anniversary of Bitcoin Pizza Day. It's significant because it marks the first (or at least, the first documented) purchase of real-world goods with Bitcoin. Before then, mining and transacting with Bitcoin was largely a hobbyist pursuit, so the purchase proved that Bitcoin could have a real-world dollar value. This in turn sent a price signal to the nascent "market" for Bitcoin, and became the first benchmark for BTC value. The rest, as they say, is history.

On May 18, 2010, Laszlo Hanyecz of Jacksonville, Florida, posted on the Bitcoin Talk forums:
"I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I'm aiming for is getting food delivered in exchange for bitcoins where I don't have to order or prepare it myself, kind of like ordering a 'breakfast platter' at a hotel or something, they just bring you something to eat and you're happy!"

It took a few days to finally get a taker—user "jercos" (Jeremy Sturdivant) ordered two large pizzas from Papa John's for delivery to Hanyecz's home, paid in USD and collected the 10,000 BTC. The pizzas themselves cost US$41.

You can see photos of the now-famous Bitcoin pizzas here.
Technically, Hanyecz didn't buy the pizzas directly for Bitcoin so you could say the price included Sturdivant's service fee. Since the Bitcoin price in May 2010 was officially $0, he did take on a $41 risk.

As we now know, that risk paid off—the current market value of BTC is $9053, meaning either owner of the 10,000 coins would now have US$90,530,000. If BTC's all-time-high price stands at $19,891 then 10,000 coins would've been worth $198,910,000. Had they kept those coins in time for the two forks that shifted Bitcoin protocol development to BCH and finally to Bitcoin SV (BSV), it would be millions more.

Only BSV now is Bitcoin according to the Satoshi Nakamoto whitepaper and the original protocol, and 10,000 BSV is currently US$1,915,900.

Million-dollar pizzas, but value is priceless
Yes, that's an expensive pair of pizzas (for pedantic reasons, remember it was two large pizzas instead of the single "198 million dollar pizza" often mentioned in the media). Naturally, Hanyecz often finds himself in demand for a quote on whether he regrets his purchase. He's on the record as saying he doesn't at all, since his move kickstarted the Bitcoin economy. Had he not sent those 10,000 coins, and had no-one else taken the plunge either, Bitcoin's value could still be $0 today.

It's a sign that, unless people are willing to take risks and do something to give Bitcoin value, it doesn't have any. What if Hanyecz had abided by BTC's "HODL" mentality, or cared about all the people who called him crazy over the years, reminding him of his (theoretically) lost millions?

Most people who've been in the Bitcoin community for many years have "Bitcoin Pizza" stories of their own to tell. This writer likes to show off his "thousand dollar" Bitcoin keychain; everyone hates to be reminded of how much money they'd have now if they'd never spent those coins.

But again, if no one had ever spent Bitcoin then the value of Bitcoin would be $0. Bitcoin only has value if it's used in the real world. And thanks to the people who invested time, effort and money building user-friendly services so more people could use Bitcoin, that value has increased even more over time.

Think about all that next time you hear someone say "HODL" (ie: save your Bitcoins, don't spend them). HODLing creates no value whatsoever. BTC wouldn't even have speculative-gambling value if no-one sold them, and that's about the only utility BTC has nowadays. If you know any committed BTC HODLers, remind them how much that $6.28 transaction fee they just paid could be worth at some random point in the future. That's extra spicy.

BSV, on the other hand, recognizes real-world usage as the main value driver and its people build services that aim to solve real-world problems. The large-volume, low-fee model is creating a global immutable ledger for enterprises, and yet remains cheap enough to send individual transactions for cents, or much less.

But enough of that—Happy Pizza Day once again, and enjoy the food!

Justin Sun’s Steem locks user funds


Steem is going to freeze roughly $5 million in Steem tokens that belong to supporters of Hive.IO, a hard forked version of the Steem blockchain. The battle between Justin Sun's Steem and Hive has been going on for more than three months now, and the trouble began when Justin Sun acquired Steemit.

Sun purchased Steemit, the blockchain-based blogging and social media website that rewards its users in Steem for publishing and curating content, on February 14. As part of his purchase, Sun became entitled to millions of pre-mined tokens (called the founder's reward) that belonged to former Steemit owner Ned Scott.

However, the Steem community viewed Sun's acquisition as problematic. Steem is a delegated Proof-of-Stake blockchain that is governed by the community and the community's votes—the more Steem tokens a user holds, the more voting power they have. Sun's Steem inheritance represented about 20% of the total supply of tokens, which made him one of the most powerful voters.

Sun's acquisition of Steemit will be a precedent that showcases the problems that can arise from Delegated Proof-of-Stake networks–problems that Ethereum is bound to run into when it switches from Proof-of-Work (PoW) to Proof-of-Stake (PoS) in the Ethereum 2.0 upgrade.

PoS networks can quickly turn into an oligarchy because token distributes are rarely, evenly distributed. As a result, on Proof-of-Stake network, the richest users on the network have the lion's share of power when it comes to decision making or mining new blocks—which extends the gap between the rich and the poor on the network. Proof-of-Work networks eliminate these problems because competition between miners is fierce. In addition, the gap between those who frequently mine blocks and those who don't can close very quickly in a PoW system. As Eli Afram says in his latest article, " While the majority staker inevitably grows to become a bigger majority staker in a PoS systems, it is not so in a PoW world. The competition among POW miners is fierce… a newcomer with a great new invention in ASIC mining could perhaps take the lead…A society that rewards competitiveness, risk, and investment is far superior to a society that rewards oligarchy and the descent into the hands of another."

The Steem community feared that Sun's acquisition threatened the decentralization of the blockchain because it put too much power into the hands of Sun. To solve this problem, the Steem community created a community proposal that suggested the Steem blockchain soft fork in a way that would prevent Sun from being able to access and vote with the pre-mined tokens he inherited. The community voted in favor of this proposal—which only made matters worse.

Justin Sun regains control
Once the community voted to soft-fork away from Sun controlling the pre-mined tokens, a proposal was created on Justin's behalf that would allow him to regain control of the pre-mined tokens if it was passed.

Sun enlisted the help of three digital currency exchanges—Binance, Huobi and Poloniex—and had them vote in the proposal by (illicitly?) pooling together the Steem tokens that were held on their exchanges by their users, and putting them towards the proposal to put Sun back in control of the pre-mined tokens. With the help of the three cryptocurrency exchanges, the proposal passed.

Hardfork to Hive
To combat Sun regaining control of the pre-mined tokens, Steem supporters decided to hard fork the Steem blockchain and call it Hive, a blockchain where everyone was airdropped Hive tokens in a 1:1 ratio to the Steem tokens they held—except for the founder's reward. On Hive, Justin Sun is not a central source of power that can sway community voting decisions.

Where we are today
The Hive blockchain has persisted without Sun or individuals that support the Sun's vision for the Steem blockchain. But in what seems to be a move to get back at those who support the Hive blockchain, a Steem hard fork scheduled for May 20 freezes roughly $5 million of STEEM that belongs to Hive supporters and even calls the users whose funds will be frozen out by name.

It is even rumored that Justin Sun has gotten law enforcement involved to put an end to the Hive blockchain, a chain he said was illegally created and is the work of hackers. 

Friday, May 15, 2020

Embattled ABTCoin ICO can’t pay settlement costs


ABTCoin, a digital currency startup that was found guilty of violating federal securities laws, has just told New York federal judge Vernon S. Broderick that they cannot pay the $250,000 settlement that they agreed to pay plaintiffs.

$20 million ICO but financially struggling
On May 12, ABTCoins lawyers from Reitler Kailas & Rosenblatt LLC wrote a letter to U.S. District Judge Vernon S. Broderick saying the company was not able to pay the settlement cost that they proposed "due to a change in circumstances." The lawyers also added that ABTCoin was not able to cover their legal costs, and therefore, Reitler Kailas & Rosenblatt LLC lawyers were requesting to withdraw from the case.

This news comes as a surprise considering that ABTCoin raised more than $20 million in its 2017 initial coin offering (ICO). Before hosting a token sale, ABTCoin told potential investors that it was going to use the funds that they raise to create "the fastest blockchain in the world." However, upon release, the ABTCoin blockchain was not able to accomplish the technological achievements they had marketed. In addition, the ABT blockchain did not see very much user adoption and decreased in value by 85% by March 2018.

The lawsuit
After experiencing ABTCoin's technological shortcomings, investors in the project took action against the company.

Raymond Balestra, the lead plaintiff in the class-action lawsuit, sued ABTCoin, claiming that they had conducted an unregistered securities sale in 2017. ABTCoin attempted to have the case dismissed, but in March 2019, Judge Broderick rejected ABTCoin's dismissal bid, saying that the plaintiffs had adequately shown that ABTCoin had violated federal securities laws.

ABTCoin may have done this because they are making a legal chess-move, or maybe ABTCoin is out of money. It looks like the ABTCoin case is coming to a close—but backtracking on the settlement that they proposed themselves was unexpected. 

Fake Libra scams pose new challenge for Facebook


Almost a year after Facebook's Libra was first announced, the outlook for the stablecoin looks starkly different. Once hailed as a game-changer for digital currency, the project has been beset by delays and regulatory difficulties.

Now, fake Libra scams are presenting an increasingly pressing new challenge for Libra and Facebook, with a proliferation of websites claiming to offer investment schemes denominated in fake Libra tokens.

Dante Disparte, Deputy Chairman and Head of Policy and Communications for The Libra Association, said the organization was now constantly working to suppress fake Libra scams: "As we become aware of these sites, we work diligently to address them. We respond to inquiries concerning the validity of these pages, indicating that the only official website is"

"We are still in the early stages of this project and work to address issues like these as they arise," Disparte told Finance Magnates, urging people to report the scams.

The fake Libra problem is one that has been around for some time, with reports dating back to July 2019. At the time, a report in the Washington Post discovered dozens of fake social media accounts and pages linked to fake Libra scams—including many on Facebook itself.

In an article published on July 23, 2019, the Washington Post said this would continue to be a problem for the social media giant: "Roughly a dozen fake accounts, pages and groups scattered across Facebook and its photo-sharing app Instagram present themselves as official hubs for the digital currency, in some cases offering to sell Libra at a discount if viewers visit potentially fraudulent, third-party websites."

Libra had originally been penciled for launch in the first half of 2020, a milestone that has nearly been reached with limited progress towards a wider rollout.

Thursday, May 7, 2020

ErisX obtains BitLicense, gets green light to serve New Yorkers


ErisX has become the latest digital currency company to make an entry into New York after Eris Clearing, its clearing and settlement arm, obtained the coveted BitLicense. The license, issued by the New York Department of Financial Services (NYDFS), allows digital currency firms to legally offer their services to New Yorkers.

ErisX is now licensed to offer its services in 47 states and jurisdictions in the U.S., the company revealed in a press release.

In granting the BitLicense, the NYDFS has recognized the high standards that ErisX applies to its trading platform, CEO Thomas Chippas believes. ErisX has borrowed these standards from the existing capital markets and applied them to digital currencies, ensuring the industry adheres to globally accepted standards, he said.

He added, "Our technology stack as well as regulatory framework, operations, and transparent marketplace are building blocks from the established commodity markets bringing familiarity, reliability and conventionality to the crypto markets."

On its part, the NYDFS cited the approval as a show of its commitment to fostering financial innovation in New York. Linda Lacewell, the Superintendent of Financial Services remarked, "Today's approval is another step in expanding virtual currency activities in the State and promoting New York's support for financial innovation, which will be especially important as we work to reopen the economy of the world's financial capital."

ErisX becomes the 25th digital currency company to obtain the BitLicense since its launch in 2015. Other companies that have received the license include Robinhood, Coinbase, bitFlyer, Square, SoFi Digital Assets, Bitstamp and Genesis Global Trading.

Upon launch, the strict requirements to get the license forced many digital currency companies to exit New York in what was known as the Great Bitcoin Exodus. The application fee stood at $5,000, with the legal fees to comply running up to $50,000. The companies also had to share information about their users.

Companies like Kraken called it quits, stating that the license "comes at a price that exceeds the market opportunity of servicing New York residents." Others who left include ShapeShift, Poloniex, Bitfinex and LocalBitcoins.

Boston-based Circle became the first recipient of the BitLicense, with itBit –now Paxos Trust Company- and Gemini being the second and third recipients respectively.

Bitmain admits hardware problems with Antminer S17


Chinese processing hardware manufacturer Bitmain has admitted there are problems with its Antminer S17, following a growing number of complaints posted to social media.

The company acknowledged that some users were experiencing problems, the first time it has acknowledged the difficulties many of their customers had been reporting online. According to a spokesperson for the company, Bitmain was beginning to negotiate with customers who had run into difficulties with their hardware.

Antminer is paying close attention to the issues of some products from the 17 series, which has recently been mentioned by the media.

The issue first raised its head earlier this month, after an entrepreneur started a Telegram group to highlight what he described as a "bad batch" of S17 units. According to the group, some 30% of the models delivered had experienced serious glitches or failed within a single month of operation.

Having grown to some 160 members, the group now contains several other mentions of users experiencing problems with their units.

The reports echo similar findings published by blockchain infrastructure company Blockstream, which suggested 20-30% of S17 customers were experiencing problems with their technology. CoinGeek has also spoken to several to large transaction processing companies in the space that have confirmed this news, saying that they've also experienced "failure rates of 2-3x for the T17 units compared with the S9s" while "Bitmain have reduced and closed repair centers in various global locations."

The embarrassing acknowledgement comes as Bitmain prepares to ship out its latest batch of S19 units, which are expected to be delivered from May 11.

The S19 has been designed to process digital currencies more productively, ahead of the BTC halving due to take place soon.

According to the Bitmain representative, the company has "begun to negotiate solutions with customers who have encountered issues from the product. Antminer has always been adhering to the concept of placing customers first. If any customer has any product issues, please contact the official customer service of Antminer at any time."

Friday, May 1, 2020

Japan Implements Significant Changes to Cryptocurrency Regulation Today


Major changes are happening in the cryptocurrency space in Japan as new cryptocurrency regulation enters into force today. Among notable changes are the regulation of crypto custody service providers and crypto derivatives businesses. Japan has 23 regulated crypto exchanges; unregulated platforms have modified their terms of service affecting Japanese residents.

Japan Adopts New Way to Regulate Crypto Industry
The amendments to the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA) that revise the regulatory framework for cryptocurrency in Japan go into effect on May 1. They were proposed by the country's top financial regulator, the Financial Services Agency (FSA), and adopted by the Diet on May 31 last year. The finalized rules were published on April 3 along with the FSA's answers to public comments. International law firm Morrison & Foerster described:

The regulations coming into effect as of May 1, 2020, represent a significant change in the way the FSA will regulate cryptocurrency-related business activities of operators in Japan going forward.

Among the major changes are the regulation of cryptocurrency custody service providers that do not sell, purchase, or intermediate the sale and purchase of cryptocurrencies and cryptocurrency derivatives businesses. The former now falls under the PSA while the latter must register under the FIEA. A crypto derivatives business that also provides crypto custody service may need to register as a cryptocurrency exchange. In addition, the FSA previously explained to the implication of the new law on the possibility of a bitcoin exchange-traded fund (ETF) being approved in Japan.

The amendments "are quite extensive and many issues regarding the scope, applicability, and relevance of the regulations remain open to interpretation," the law firm opined. The regulatory changes are summarized here.

Japanese Cryptocurrency Landscape Changing, Unlicensed Crypto Exchanges Exiting
Japan currently has 23 FSA-approved cryptocurrency exchanges. As the new regulation takes effect, unlicensed crypto trading platforms modify their terms of service to exclude Japanese users in compliance with the new law.

Global cryptocurrency exchange Bitmex, for example, announced that it would stop providing services to Japanese residents starting from 11 p.m. JST on April 30 for first-time registered users and 12 a.m. on May 1 for existing registered users. "We are restricting access to users who are Japan residents," the exchange confirmed on Tuesday, adding:

The restrictions are in response to the amendments to the Japan Financial Instruments and Exchange Act and Japan Payment Services Act effective as of 1 May 2020.

"We will continue to work with the Japanese regulatory authorities to support their aims for the Japan market and will keep our Japan users updated," Bitmex wrote.

Furthermore, the FSA announced on April 30 that it has approved two self-regulatory organizations (SROs) in the crypto sector: the Japan STO Association and the Japan Virtual and Crypto Assets Exchange Association (JVCEA). These organizations work closely with the FSA to enforce strict standards on the country's crypto sector.

Early signs of BTC downturn show up in China


Times have changed for BTC block processors in China. Once considered a pariah by many Chinese government officials, the sector is now finding itself in demand by local municipalities as attitudes towards blockchain have shifted this past year with central government regulators.

The city of Ya'an, located in China's mountainous Sichuan province, is publicly encouraging blockchain industry firms to come set up shop and consume excess hydroelectricity ahead of the summer rainy season. This encouragement comes in the form of recently jointly issued public guidance by the Municipal Economic and Information Bureau and the Municipal Development and Reform Commission.

The Sichuan region is well known for its abundance of digital currency processing facilities, which are estimated to account for over 50% of the BTC network's computing power. Although not expressly mentioned in the guidance, BTC processing is the primary activity with the sector which consumes the most electricity.

According to other online reports, the city officials are looking to promote the city's infrastructure advantages and make it a high-quality example for consuming excessive hydropower electricity and build itself into "an impactful blockchain industry hub" in the country.

Is this a case of better late than never or indicator of trouble brewing for BTC processors in China?

BTC transaction processing may have been taboo in certain quarters of China but never prohibited. In the past, officials would publicly complain about the environmental and economic impact of BTC processing while privately granting business permits and selling off excess power and commercial occupancy space to firms at customized rates.

It's reasonable to ask why now. Cities, and their surrounding areas, now actively embracing the industry might signal that the sector's demand for space and electricity has waned as the halving quickly approaches.

If this were 2016, the guidance issued by these government bodies would come as a welcome sign that China is finally embracing a rapidly growing sector.

In 2020, Chinese BTC processors are facing unprecedented troubles as they seek to navigate the halving against the backdrop of the COVID-19 pandemic which has wiped out fresh investment capital from coming in to prop up the BTC token price. Many publicly traded block reward mining companies are blaming the pandemic on guidance calls, but the reality is these operations were not properly prepared for life at the 2020 Bitcoin halving. BTC hash power is projected to decline as unprofitable nodes go offline, and smaller companies close or get acquired.

Friday, April 24, 2020

AirAsia launches Freightchain, a blockchain-based air cargo network


AirAsia has launched a blockchain-based air cargo network, aiming to make it easy and convenient to book for cargo space on its airlines. Known as Freightchain, it seeks to eliminate the tedious manual process previously involved, making it convenient for both the clients and the airline.

AirAsia, which is Malaysia's largest airline, launched the network through Teleport, its logistics arm. It allows the clients to view the available cargo spaces on its airlines and make bookings in real time. It relies on a bidding process, enabling the clients to make informed decisions on costs and convenience.

Freightchain will replace the previous system where the clients would manually search for the cargo airlines that best suit their needs. This process was quite tedious, with the clients often having to send several emails and make calls to several airlines. Even then, they were not sure they were getting the best deals and often had to settle for what they got.

Launching Freightchain under the current COVID-19 pandemic was strategic, the network's CTO Vishal Batra said. The crisis has brought global supply chains to their feet, with many critical players being forced to shut down operations. Freightchain can take advantage of this, and help bridge this gap, Batra believes.

He commented, "We deliberately launched Freightchain during this period of uncertainty within global supply chains, caused by the coronavirus pandemic. Agile software platforms like Freightchain help to connect uneven supply and demand amidst a rapidly evolving environment. Trust and transparency are needed now more than ever."

In its pilot, Freightchain shipped pharmaceutical products from Bangalore in India to Ulan Bator in Mongolia. Since direct flights from the two locations weren't available, the system scheduled connecting flights via Malaysia and South Korea, connecting three different carriers. The network utilized smart contracts and according to AirAsia, the process was ten times faster.

AirAsia revealed that the network will benefits the airlines as well, allowing them to manage their cargo space better. For instance, it will allow clients to take advantage of underutilized flights to ship their cargo at a lower rate, with both the airline and the clients standing to benefit.

AirAsia has seen a big turnaround since businessman Tony Fernandes took over in 2003. It was only then that the company, previously owned by the government, became profitable. Fernandes has gone on to make AirAsia one of the world's leading low-cost airlines. The savvy businessman has sought to expand the company's interests into payments with the BigPay e-wallet. As he told CoinGeek a few years back, his goal is to democratize remittances.

Sunday, April 19, 2020

Russia not letting up in bid to bring Alexander Vinnik home


Russia has requested the home detention of Alexander Vinnik amid concerns over COVID-19, in its latest attempt to secure the extradition of the alleged money launderer.

Vinnik is currently in the custody of authorities in France, after being implicated in a $4 billion BTC money laundering scandal. The former BTC-e founder has been the subject of an intense legal struggle in recent months, with several states, including his native Russia, asserting their own rights to prosecute.

However, while Vinnik is wanted by authorities in France and the U.S. on money laundering charges, Russia has been attempting to secure his extradition on less serious charges. This is widely believed to be a legal tactic by Russia to extradite Vinnik, and to ensure he faces less serious charges in his home country.

The latest extradition request, reported by Russian media, highlights concerns for Vinnik's safety amid the COVID-19 outbreak.

Speaking to RT, former Russian agent Maria Butina said Vinnik has existing health conditions which make his ongoing detention in France risky: "Vinnik's health situation is indeed very complicated, and the coronavirus infection could pose him a risk of fatal outcome. I hope that the French authorities will be guided by their own stance of humanism and choose to save the life of a person who is at severe risk by giving Vinnik the opportunity to await the trial under house arrest."

The request asks France to hand over Vinnik to Russian authorities, promising to detain him on behalf of French authorities under house arrest. According to the proposal, Vinnik will be detained by Russian authorities in a state-provided apartment, to allow him to avoid exposure to the potentially deadly coronavirus.

So far, requests for extradition have been ignored by French authorities, who remain determined to prosecute Vinnik on the outstanding money laundering charges.

Since his arrest in Greece in 2017, Vinnik has been in detention for some 30 months, as various states grapple to secure his extradition.

With the new Russian proposals on the table, it looks like his future remains uncertain.

Corona Money Printing Worries – Housing Prices Slide Downwards First Time in 10 Years in Northern Europe


Real estate price reports from March in northern countries like Denmark and Sweden now show negative developments for the first time in over 10 years. If furloughed workers continue into unemployment, the effects on the housing markets will be even more significant, says Claudia Wörmann at SBAB Bank.

Spring Real Estate Price Increase, Trend Broken
Inhabitants of the northern countries of Finland, Sweden, Norway and Denmark have gotten used to very low interest rates and constantly increasing real estate prices. In Sweden, interest rates were dipping into negative territories and in Denmark, famously some homeowners have been offered payments for taking out a mortgage (negative interest rates).

Normally, homeowners in these regions see price increases each spring but this year the trend is broken and prices of apartments, houses and land plots have instead decreased a few percentage points. The change is large compared to the regular price increases. The development is worrying many citizens and has slowed the pace of sales to a virtual halt in April.

In Denmark, prices have decreased in seven out of 10 regions, including in Copenhagen where prices fell around 1.5% in March, according to Birgit Daetz, communications officer at housing watch outlet Boligsiden. She continued:

The real estate season normally starts in March and that means increasing prices. This year that hasn't happened and due to the health crisis we expect prices in Copenhagen to continue to fall in the coming months.

Swedish Real Estate Statistics Agency Mäklarstatistik concurred with the Danes' outlook and reported a drop in the number of sales in Sweden. During the last two weeks of March, the number of sales dropped more than 15% and continued on a downward trend into April.

Norway's stats look almost the same and in Finland, prices fell slightly in most regions. Real Estate Norway reported single-digit decreases in prices last month, with an average decrease of 1.4%.

Early morning on April 19 in Stockholm city, where real estate prices started to slide in March due to the effects from actions taken to combat the coronavirus. Cafés and restaurants are still open but every second table stays unoccupied for social distancing reasons.

Banks Must Continue to Provide Financing
Since the start of the coronavirus crisis, the Swedish government and central bank have been starting up the printing presses and made over 100 billion Swedish kronor available to the banks. Government parties are now suggesting printing more than 100 billion kronor ($12 billion) per month. Even with falling prices, the question is if this unprecedented money printing will later result in increased inflation, and possibly a Cantillon effect on housing prices — again leading to higher nominal real estate values while at the same time devaluing currencies like the dollar or the Danish krone due to the increase in money supply.

"What is important now is that banks continue to provide intermediate financing," Real Estate Norway CEO Henning Lauridsen said. He continued:

Experience from the financial crisis shows that a change in the dynamics of buying first and selling afterwards is counterproductive and destructive to the housing market. Although a more restrictive credit policy may seem rational to the individual bank, this collective is irrational.

The capital city of Stockholm saw the biggest price falls by an average of minus 1.7%. Real estate in cities in the Nordic regions lost more on average than in the countryside.

To counteract the slowdown in sales and the falling prices, governments in the region abruptly changed many rules and regulations pertaining to mortgages. From last week, citizens in Sweden can skip their mortgage payments until further notice. Similar actions are either underway or being discussed in neighboring Nordic countries, where politicians hope to boost the price of their real estate holdings.

Friday, April 10, 2020

Bitcoin Garners New Users as Governments Flood World With Fiat


Governments around the world are careening toward a period of dramatic spending.

The U.S. Federal Reserve announced another $2.3 trillion in lending programs on Thursday to stabilize America's coronavirus-stricken economy. The Bank of England announced it would likely extend billions of pounds to directly finance the government's crisis response.

All this inspires inflation concerns around the globe, which appear to be driving demand for bitcoin (BTC) in some corners.

"The non-stop quantitative easing process will finally impact the mid-term and long-term market," said Danny Deng, a leading member of both the China Blockchain Application Center and the National Internet Finance Association of China. "Bitcoin is designed for this kind of situation. So I'm optimistic about bitcoin's future."

China is also expected to announce a stimulus package of its own. Deng said he expects the People's Bank of China to use a digital currency to distribute a stimulus package, which he sees as a complementary catalyst to the bitcoin mining industry.

While central banks continue printing money, there will only ever be 21 million bitcoin. The halving of bitcoin miners' block rewards is scheduled for May in what some are calling an act of quantitative tightening.

Broadly speaking, dozens of nations are reevaluating which currencies and industries they depend on. Bitcoin fits into this broader spectrum as some nations with strong central governments, like China, shore up hard assets and digital infrastructure. Meanwhile, there has been a surge in retail crypto investors from nations with unstable currencies, such as Argentina and Russia.

"We see that interest in cryptocurrencies has grown significantly in Russia … due to the economic situation in the country," said Gleb Kostarev, Binance's head of operations in Russia. "The ruble has tumbled a lot in 2020. In addition, authorities are introducing a new tax on income from bank deposits from next year, which encourages people to withdraw funds from banks."

Bitcoin is hardly the most important asset in the broader economic turndown. However, recent bitcoin trends highlight the local impact of global developments. In places where distrust of banks historically runs high, many households now consider bitcoin among the assets they trust more than the local fiat currency.

Speculator's market
Some critics may see decline in bitcoin's wild volatility during the start of the coronavirus economic crisis, including what crypto traders called Black Thursday.

But the institutional sell-off and subsequent trading rush stimulated more diverse distribution, usage and liquidity options, all while making crypto companies a hefty profit.

Marius Reitz, general manager at the African crypto exchange Luno, said there was a 25 percent increase in new signups during Q1 2020 compared to Q4 2019. This includes "thousands" of new users from Nigeria, South Africa, Zambia and Uganda. He added there was a 100 percent increase in trading across the continent.

"People saw an opportunity to recover some of their earlier [traditional market] losses in bitcoin," Reitz said. "It's very much still a speculator's market."

According to the asset manager and research firm Bitwise, nearly all exchanges experienced an increase in volume during March. North American exchanges including Coinbase, Kraken and Gemini saw the most growth in trading volumes. Kraken's bitcoin strategist, Pierre Rochard, said the exchange saw a 300 percent increase in new users getting verified in March, compared to the previous month.

"These are new users who didn't have any crypto beforehand," Rochard said.

Fiat-denominated prices aren't the only way to measure bitcoin's performance. The number of active bitcoin wallet addresses is now comparable to metrics during the sky-high prices of September 2017, according to Coin Metrics, which estimated roughly 770,915 active accounts on March 30, 2020 compared to 718,184 on Sept. 29, 2017.

Although the price of bitcoin briefly dropped 40 percent, down from $9,160 in early March, it recovered to roughly $7,300 as of press time. As such, Luno's Reitz said bitcoin suffered less of an impact, and recovered faster, than many other asset classes.

Institutions that sold off in early March quickly bought back in, according to Diogo Monica, co-founder of crypto custody firm Anchorage. Plus, BitGo CEO Mike Belshe said his custody startup saw such high demand for bullish loans in March that he will double the size of the team handling crypto loans. Exchanges and custodians are actually making more profit during the recession.

Read more: Retail Investors Are Buying the Bitcoin Institutions Are Selling, Traders Say

When the market crashed, speculative crypto trading and demand for custody options soared. Ledger CEO Pascal Gauthier said hardware wallet sales saw "double-digit growth" in Q1 2020 compared to the same time last year, with sales still accelerating.

"We are increasing our hardware [wallet] production as a result," Gauthier added.

As speculative traders rush in, Latin Americans increasingly turn to bitcoin for savings and loans.

Latin America
"The main usage is to save. … People are seeking safety," said Ripio CEO Sebastian Serrano, whose Latin American company offers both crypto loans and an exchange. "Argentina was on the brink of default and that happened on Sunday."

Argentina isn't the only country to default, either. Lebanon, Ecuador and Venezuela are also on the brink. Bitcoiners in Lebanon often focus on savings because they, like Latin Americans, share a distrust in banks.

Cryptobuyer CEO Jorge Luis Farias said orders for crypto point-of-sale (POS) devices doubled in March, mostly in Venezuela. He's also shipping three new bitcoin ATMs to Chile, where the local currency hit a historic low in March.

Subsequently, by the first week of April, Chilean activity on LocalBitcoins reached an all-time high of $371,063.

"More people are looking for options to receive payments," Farias said on April 7. "We received 100 new [POS device] requests only last week."

Bitcoin Beach
My daughter buying veggies from the latest business in our community in #ElSalvador accepting Bitcoin.  300 families received BTC stipends last week and BTC is keeping families fed and businesses going in this time of crisis @b4_humanity @bitcoinmom @crypto_birb

"I think the economic situation has to do with it, in Argentina and Mexico. Mexico had a run-up in exchange-rate disparity," Bartolomeo said. "We expect to see a lot of demand from Latin America to save in options that aren't their local currency."

If the rate of bitcoin savings and reliable loans remain steady throughout the broader economic crisis, that may arguably be a more bullish signal than fiat-denominated price increases.

Asian alliance
Meanwhile, several Asian nations are reacting to the recession by increasing their economic interdependence.

The Shanghai Cooperation Organization with China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan agreed in March to work with local currencies, instead of U.S. dollars, when conducting bilateral trade and issuing bonds. Deng said the Chinese government aims to make its currency regional tender, "then a global currency" like dollars.

"China's national digital currency will accelerate this process," he added.

The crypto industry could provide the infrastructure for this distribution. Kazakhstani entrepreneur Tilektes Adambekov said in April he is still working to launch a regional crypto exchange that will eventually include "fiat trading and security tokens," although these aren't plans specifically focused on China's digital currency.

"This region will accommodate global initiatives under the 'Belt and Road' global development strategy," Adambekov said during a meeting with Chinese business associates in January.

As for bitcoin itself, traders from the above-mentioned markets sometimes liquidate their crypto by investing in real estate, especially now that oil and bond markets are highly volatile.

Middle East
Gold, oil and real estate investments appear to increase, along with bitcoin transactions, when stocks and bonds dip.

Arms & McGregor International Realty CEO Makram Hani said his company is working to close a Dubai property purchase, worth $140 million, using multiple cryptocurrencies from a single Asian buyer.

Out of the hundreds of prospective customers who expressed interest in potentially buying real estate with cryptocurrency, Hani said the most popular property locations are Dubai, London and Berlin. It appears bitcoiners in nations with increased surveillance may be seeking a liquidity hedge with traditional assets, while others in the Middle East are willing to accept large amounts of cryptocurrency.

"We have seen a significant growth in real estate transactions that have been paid for, in one way or another, with funds originating as bitcoin or other currencies," Hani said.

Rain co-founder Yehia Badawy, who also serves bitcoiners in Dubai via his Bahrain-based exchange, said trading volumes increased 200 percent from January to March 2020, with 34 percent more new user signups driven by "high-volume retail."

"People are still trying to figure out how permanent the [economic] changes will be," Badawy said.

Due to the oil market slump, Bahrain, Saudi Arabia and Qatar have struggled to retain investor confidence in their debts. The oil market collapse could have more dire impacts on weaker states like Lebanon and Iraq, which were already saddled with crippling foreign debts before the pandemic hit.

Mikhail Kholodov, an oil market expert at MOL-Russ LLC, described the global market these days as "all speculation" and "hot money in a casino-like arrangement" that won't regain balance "anytime soon."
When spooked investors diversify, some now rank bitcoin alongside tangible investments like gold or real estate.

At least in the short term, Gabor Gurbacs, director of digital asset strategies at investment firm VanEck, wrote, "bitcoin correlation to gold has increased significantly" during the coronavirus pandemic.

People’s Bank of China will ‘undoubtedly’ launch digital yuan


The People's Bank of China has said it will "undoubtedly" launch a digital yuan, in what has been seen as one of the strongest signals to date of the central bank's support for the policy.

In a notice published on April 4, the bank said it would continue the development of a digital currency, with a view to launching as soon as practical: "The People's Bank of China (PBoC) will undoubtedly further its research and development of the national digital currency with enhanced top-down design."

The notice was published following the 2020 National Currency Gold Silver and Security Work Video and Telephone Conference, an event convened by the bank's Vice Governor Yifei Fan where the bank set out its priorities for the coming year.

This is the third time a digital yuan has been raised at the event, but the language in this year's notice has been widely interpreted as a strong signal of advancing plans and intentions.

In 2018, the bank said it was working at a "steady pace," before upping this to pledge to "accelerate" the development process during 2019.

Some analysts have reported the project may be advancing quicker than anticipated due to coronavirus, with the bank already concerned about transmission issues from physical bank notes. Back in February, the bank said it was preparing to quarantine and disinfect cash, as well as issuing some 600 billion in new notes to limit possible transmission through bank notes.

The Bank for International Settlements (BIS) has suggested central bank digital currencies (CBDCs) worldwide could be accelerated in response to the pandemic, with digital payment adoption likely to be increased by central banks worldwide in response to the crisis.

In the notice, the bank said it was also looking to overhaul the systems around withdrawing cash, with further plans to manage the flow of currency through China's financial system.

The bank will also be focusing on cracking down on counterfeit money, as well as increased cash testing to better manage the physical money flow across the economy.

At the 2020 National Currency Gold Silver and Security Work Video and Telephone Conference, the bank was joined by representatives from major state-owned commercial banks.

Friday, April 3, 2020

Manufacturers Mark Down Bitcoin Miners as Price Drop, Halving Change Calculus


Last month's crash in cryptocurrency prices has prompted manufacturers to sell inventories at a discount, in some cases as steep as 20 percent, over the past few weeks. Both the newest models and slightly older machines have been marked down.

Complicating the matter is the imminent bitcoin halving in May that will reduce the network's mining reward by half, causing most miners to be less profitable if bitcoin's price doesn't increase significantly by then.

For instance, DJ Miner, an overseas distributor for Shenzhen, China-based MicroBT, was advertising about $2,500 per unit of the manufacturer's flagship WhatsMiner M30S early last month. After bitcoin's March 12 crash – the worst sell-off in seven years – the price is now cut by 20 percent to $2,000 per unit.

The WhatsMiner M20S, a less advanced but popular model that boosted MicroBT's market share against major rival Bitmain in 2019, is also seeing a 20 percent price cut from $1,679 to now $1,340, DJ Miner's website shows. Pangolinminers, another distributor for MicroBT shows similar pricing rollbacks on its website.

Similarly, while Bitmain is advertising $1,567 for its AntMiner S17+ with a computing power of 67 terahashes per second, various resellers are posting quotes on WeChat seen by CoinDesk at around $1,300 per unit.

The Beijing-based mining giant has previously announced the pricing for its latest flagship AntMiner S19 Pro at about $2,900 per unit but the shipment won't take place until May and so far is only available for investors inside China.

See also: How Bitcoin's Price Slump Is Changing the Geography of Mining

Efficient market
It is important to note that most specialized bitcoin computers, known as ASICs, had already been dropping in price since the fourth quarter of last year, as the manufacturers adjusted their strategies in line with bitcoin's price swing.

These machines are priced assuming it would take the buyer on average 15 months to make back their equipment investment. Holding the payback period relatively constant, manufacturers would adjust the prices of their equipment according to bitcoin's market price and the level of competition on the network – the two factors that determine how much revenue a miner can generate in a day.

Miner pricing data compiled by research startup TokenInsight shows that, for example, the Whatsminer M20S and the AntMiner S17 Pro were priced at around $2,400 and $3,000, respectively, in mid-October 2019. The price for both had dropped to around $1,500 as of March 10.

"ASIC miners have experienced a relatively large market devaluation since Q4 2019. However, the miner market has found some level of price floor during Q1 2020 despite the recent crypto market downturn," said TokenInsight analyst Johnson Xu. "Some experienced miners are currently looking to purchase some secondhand ASICs at a significant discount … based on their carefully structured model."

Blockware Solutions, a reseller of bitcoin ASIC miners in North America that also operates mining facilities, said in a recent research report that the market crash in March, together with the coming halving, has led to a significant decrease of bitcoin's mining computing power – which in the long run, could be an encouraging sign for the market's efficiency.

"If Bitcoin remains at lower price levels for 2-4 months, post-halving, many miners operating at a loss will be forced to shut off," Blockware said. "After all the miners that are operating at a loss shut off, the miners that survive experience significant margin relief. We will witness a network in short-term chaos, but difficulty adjustments will reinstate stability once the inefficient miners shut off."

Russian rapper busted by the FBI for digital currency money laundering


If you want to conduct illegal activity, it's best not to leave a trail of any sort that can prove your involvement. A Russian rapper residing in California has learned this lesson the hard way after being arrested by the FBI. The federal law enforcement agency picked up Maksim Boiko and accused him of laundering money through digital currency exchanges and transactions, allegedly while doing little to hide his identity.

Court documents released (in pdf) on March 30 indicate that Boiko conducted his extra-curricular activities using platforms such as the now-defunct BTC-e digital currency exchange, a portal that was also shut down for money laundering. The documents also show that Boiko allegedly has ties to QQAAZZ, an organized crime syndicate that operates in several countries around the world.

The rapper's downfall began when he showed up at Miami International Airport this past January. At that time, he had $20,000 in cash, which is twice the amount allowed to be carried across borders without a written declaration of the source of the funds. It isn't clear if Boiko presented a declaration or not, but he was questioned about the money and explained that it came from digital currency investments and rental properties.

The explanation was not received with a great deal of credibility, and an investigation began. Subsequently, Boko was picked up by authorities in Miami toward the end of last month. He is charged with "knowingly and intentionally conspire and agree with other persons known and unknown, to commit money laundering in violation of Title 18, United States Code, Section 1956(h)."

In building its case against Boiko, the FBI was able to come across several interesting finds. It was able to determine that he had registered an email account,, using his own name and created a username of gangass. That username was also picked up on several underground communications channels used predominantly for criminal activities.

In addition, Boiko had been a little too willing to brag about the amount of money he had in his possession on several occasions, posting pictures of himself holding huge stacks of bills, and even one that appeared to show him getting ready to launder funds through a Chinese bank account. He didn't appear in the picture, but a placard with "Maksim" and a screenshot of a "plinofficial" account on Instagram are clearly seen.

Boiko apparently had greater success as a criminal than he did as a rapper, but everything he did made it easy for law enforcement to conduct its investigation. As a rapper, he uses the moniker Plinofficial.

Friday, March 27, 2020

After Coronavirus ‘War,’ Bretton Woods-Style Shakeup Could Dethrone the Dollar


For governments, fighting the coronavirus pandemic is like fighting a war.
The leaders of Italy, Spain and Germany have used the analogy – along with the CEOs of Bank of America and the U.S. telecommunications giant AT&T – to describe the mass-scale efforts needed to combat the disease: mobilizations of the health care industry, a retooling by factories to produce masks and makeshift morgues to accommodate a fast-rising death count.

During a televised press conference this week, U.S. President Donald Trump characterized himself as a "wartime president."

Now, it's becoming clearer that the economic toll of the virus, as in a war, is likely to be dire. In the U.S. alone, a record 3.3 million jobless claims were filed last week. Deutsche Bank predicts the country's job losses might exceed 15 million, with Europe approaching a similar level. Countries are prepping aid and stimulus packages into the trillions of dollars, stretching already heavily indebted government balance sheets. Central banks led by the U.S. Federal Reserve have pledged nearly unlimited support to financial markets. Investors have flown to safety in U.S. dollars, and in doing so driven down emerging-market currencies, inflicting additional economic damage on some of the world's poorest countries.

So with officials starting to envision what it might take to rebuild damaged economies and restore society to a semblance of normal, speculation is mounting that seismic shifts might be in the offing for the global monetary system — a phenomenon that historically has occurred in the wake of world wars.

Think Bretton Woods, the historic gathering in 1944 at a mountaintop resort in New Hampshire, which set the template for the current system and entrenched the dollar's near-century-long reign as the world's dominant currency.

"I wouldn't rule out anything at this point," says Markus Brunnermeier, a Princeton University economics professor who has advised the International Monetary Fund, Federal Reserve Bank of New York and European Systemic Risk Board.

Questioning dollar dominance
Even before the coronavirus hit, questions were percolating among some economists and monetary officials over whether the dollar-based system could last through the 2020s.

One concern is that monetary policy in the U.S. – actions by the Fed to maximize domestic employment and keep prices stable – reverberates through countries all over the globe, often saddling them with higher inflation whenever their currencies weaken versus the dollar; while exporters of raw materials or manufactured goods might become more competitive, consumers feel the pinch from higher prices for imported goods. Another factor is that so many commodities such as oil, copper and gold are priced in dollars, leaving producers including Russia, Brazil and South Africa at the mercy of foreign-exchange markets.  

Bank of England President Mark Carney floated the idea of a "synthetic hegemonic currency," possibly based on new digital-asset technologies, to reduce the dollar's "domineering influence" on global trade. China, the world's second-largest economy, has been pressing forward with a digital version of its yuan that might be used more widely in global trade. Facebook, the social network, proposed last year to create its own payment token, libra. Bitcoin, launched in the throes of the 2008-09 financial meltdown, offers another alternative.

"Eventually we're going to get past this crisis," said Tim Shaler, a former portfolio manager at the bond fund Pimco who now serves as chief economist for iTrust Capital, which allows clients to buy cryptocurrencies and physical gold through their retirement accounts.  "If there's a possibility to create some digital currency not tied to any domestic economy, there might be an opportunity for somebody to figure that out."

The Fed helicopters in with trillions
It's little surprise the Federal Reserve is intervening so deeply in U.S. markets during a time of crisis. That "quantitative easing" (QE) playbook was put in place by former Fed Chair Ben Bernanke, who garnered the moniker "Helicopter Ben" thanks to his advocacy for plying the financial system with large quantities of much money when needed. In a matter of months in 2008, from August to December, the Fed's balance sheet doubled in size to more than $2 trillion. It doubled again during the next few years to over $4 trillion.

On Monday, the U.S. central bank, now led by Chair Jerome Powell, made an unprecedented pledge to buy bonds in unlimited amounts to support markets, while reviving 2008-era QE emergency-lending programs to ply banks, Wall Street dealers and even corporations with fresh liquidity. The new efforts could quickly balloon the Fed's balance sheet to north of $8 trillion, says Stephen Cecchetti, who headed the monetary and economic department at the Bank for International Settlements in Basel, Switzerland, in the early 2010s.


On Wednesday, lawmakers in Washington were negotiating a $2 trillion aid package, but the investment-research firm Evercore ISI predicted this week in a report that another $3 trillion might be needed. Some of the Treasury bonds issued to finance surging U.S. government budget deficits might get sopped up by the Fed.  

"The central bank has to be a part of the war machine," said Cecchetti, now a professor of international economics at Brandeis University.

The dollar's inflationary threat
Despite the flood of new dollars, the U.S. currency has surged in recent weeks to its strongest levels in three years. Inflation is muted, and the economy's weakness means prices in the U.S. won't be pressured upward anytime soon.

But the Fed's trillions could eventually lead to higher inflation. There also might be a renewed outcry that such money injections merely bail out bankers and rich people, with few of the benefits going to the middle or lower classes – similar to the arguments of the Occupy Wall Street movement that followed the 2008 crisis.

Outside the U.S., central banks might emerge from the coronavirus shock with a stronger appetite for independence from American influence over the global monetary system.

"It's going to be interesting to see how it plays out when we have at least two major financial players that are going to emerge from this," said Omer Ozden, CEO of RockTree Capital, a merchant bank with expertise in blockchain technology. "China will have its own thoughts and may take a different direction from, let's say, a Bretton Woods-style global organization."

Trustless world, trustless systems
It's highly unlikely the global monetary system would see a negotiated accord along the lines of the Bretton Woods accord, which was joined by 44 countries, said Edwin Truman, a senior fellow at the Peterson Institute for International Economics who oversaw the Federal Reserve's division of international finance from the late 1970s through the late 1990s.

Trump's brash, freewheeling style and protectionist impulses in recent years have alienated former allies in Europe, and his border wall campaign has ratcheted up tensions with Mexico. He demonized China in last year's trade war and recently referred to the coronavirus as the "China virus."

"One of the big challenges of today, in contrast to 2008-2009, is that the state of national cooperation is pretty low," Truman said. "In order to do, collectively, a big change in the system, people would have to agree, and everyone seems to be fending for themselves."

For George McDonaugh, CEO and co-founder of Isle of Man-based KR1, a publicly traded cryptocurrency investment company, it's the head-scratcher of "helicopter money" that might ultimately raise fundamental criticisms of the current monetary system. Deep interest rate cuts and central bank money injections in ever-growing quantities appear to have become the default solution whenever a market crisis hits every seven to 11 years.  

The Fed's trillion-dollar money injections during the 2008 financial crisis did little to weaken the dollar's dominance in the years since, but this time might be different.

"If someone on TV says we can have infinite money, someone on the other side of that TV screen says, 'Why have I been working my ass off for the past 40 years?'" McDonough said.

Telegram token investors ‘ready to accept refund’ amid SEC court battle


A number of investors in the token issued by messaging app Telegram are reported to be ready to accept their money back, which would see the firm settle at a fraction of the funds paid into the token.

According to a TASS report, as many as 10 separate investors in Telegram's blockchain project are now poised to accept the offer, which would see 72% of money invested in the token returned.

Head of Russian digital currency investment firm Hash CIB, Yakov Barinsky, said the refund offer was looking more attractive to investors in light of the global coronavirus crisis: "What I see now among various investors is that many, at least 10 investors with whom I spoke, are inclined to take away 72% of the invested funds. Considering what is happening in the financial markets, this offer now looks much better than in October."

Back in October, investors were offered 77% of invested funds back as refunds for the project, which has been beset with difficulties—not least ongoing investigation by the U.S. Securities and Exchange Commission (SEC), over what the regulator argues was an illegal sale of securities.

At the time, investors rejected the offer and agreed to extend the deadline for issuing the tokens to April 2020. Now, Telegram has said investors can receive 72% of their funds back, with the remaining 5% already spent on the development process in the intervening months.

It follows on from a ruling earlier this week, in which a federal court in New York ruled against Telegram, finding that issuing the Gram tokens would constitute a violation of securities laws.

Barinsky said Telegram could now choose to register a transaction, and to recognize the court's interpretation of its Gram tokens as a security.

"To conduct an IPO, but in this case, the launch of the project will be postponed for another period, companies usually prepare for this for at least a year. For this scenario, it will also be necessary to conduct another consultation with investors and again ask for a delay in launching the project," Barinsky said. 

Saturday, March 21, 2020

Toyota launches blockchain lab for verification, supply chain and more


Japanese automotive manufacturing giant Toyota has launched a blockchain lab that will focus on integrating the technology into most of its operations. Known as the Toyota Blockchain Lab, the project has been in the works since April last year. It will integrate blockchain into its verification processes, global supply chain, financial systems and more.

The global automotive industry has evolved rapidly, forcing carmakers to focus on providing more value to their customers. Toyota intends on keeping ahead of its rivals, and with the integration of blockchain, it will allow its customers to "connect more openly under safety and security," the company said in a press release.

#Toyota's latest #blockchaintechnology improves information reliability and accelerates the sharing of data among multiple parties in a more open environment that is safe and secure.

The Blockchain Lab is a collaboration between the Toyota Motor Corporation and Toyota Financial Services Corporation. It has been undertaking demonstration trials since its formation 11 months ago. It stated, "In the following initiatives focused on customers and vehicles, demonstration trials under specific conditions were completed in November last year, confirming the usefulness of blockchain technology in each use application."

One of the key application areas for blockchain technology will be in identity verification. Toyota currently requires its clients to verify their identity separately for every service they intend to use. This reduces the chances of fraud and data breaches, but at the same time, it's quite time consuming. With blockchain, the client will only need to verify his identity once, after which he can share the data in a permissioned blockchain system.

Toyota also plans on applying blockchain in its supply chain management to improve efficiency and traceability. It will record and share information regarding manufacturing, shipping and more on a blockchain-powered network. The company, which is the second-largest automotive manufacturer after Volkswagen, will also record information about its repair parts. This will enable the end user to verify genuine Toyota products.

Toyota intends to record information about its vehicles on the blockchain platform as well. Data to be recorded includes any repairs over a car's lifetime, its mileage and ownership. This data will make it much easier to accurately value a Toyota vehicle.

Going forward, the company will partner with other industry stakeholders in its project, it revealed, stating, "In addition, with regard to various blockchain platforms around the world, in collaboration with partner companies, we will formulate non-functional evaluation items to accelerate the social implementation of the technology, and accumulate technical knowledge to select a suitable platform for each application."

Toyota has also revealed that it will integrate blockchain technology in its utopian conceptual city. Known as Woven City, it will be powered by hydrogen and will rely on smart technology. It will be built on a 175-acre land in Japan, on the base of Mount Fuji, with the construction beginning early next year. Artificial intelligence will be central to the city's operations, Toyota revealed.

Indian Parliament probing suspect ‘Bitcoin businesses’


An investigation into dubious digital currency businesses in India is underway, amid concerns about rampant fraud in connection with digital currencies in the country.

The investigation was revealed in a filing submitted before India's lower house, the Lok Sabha, following a formal question to the Minister of State for Finance and Corporate Affairs Anurag Thakur.

Center-left politician Mohammed Faizal asked the Minister whether he was aware of the "cheating and fraudulent practices by bitcoin companies", and whether these firms "are repeatedly violating rules laid out by the Corporate Affairs Ministry by not filing annual balance sheets".

In his answer, Minister Thakur said the companies concerned "are not defined under the Companies Act". The Minister said only two firms dealing with BTC were registered with the Companies Registrar, and one of the companies, Zeb IT, had previously been subject to prosecutions under the Companies Act. The firm is currently in liquidation.

The other firm, Unocoin Technologies, was reported to be up to date in its filings, with the Minister saying he had yet to receive any complaints against the company.

The developments come at a time of rapid change in the Indian digital currency sector, following the decision of the Supreme Court to overturn the Reserve Bank of India's earlier ruling effectively banning digital currency in the country.

The following day, Unocoin resumed fiat deposits, with several other exchanges including OKEx, Coindcx and Wazirx taking similar steps to resume business—despite none being registered by the authorities, according to the Minister's answer.

International exchanges Kraken and KuCoin have since confirmed their intentions to expand into the Indian market, with both companies expected to be eyeing a share of the newly liberated Indian sector.

The Reserve Bank of India has said it intends to appeal against the Supreme Court ruling, casting doubt on whether the position is settled long-term. For the time being, digital currency exchanges and other related companies can take advantage of the ruling to rebuild the sector so badly affected by the RBI decision.

Saturday, March 14, 2020

Bank of England chief warns of CBDC ‘challenges’ on fiat money


The outgoing governor of the Bank of England has warned of the risks of central bank digital currencies (CBDCs), highlighting the potential impact of CBDCs on fiat currency and the wider financial system.

Mark Carney, who is due to leave his post on Friday, addressed the risks posed by central bank digital currencies, highlighting the "significant challenges" that could be posed to financial stability.

First reported by Reuters, the comments come at a time when the bank is reported to be considering the feasibility of issuing its own digital currency on the blockchain:

While CBDC poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability…and would need to be very carefully designed if it were to be introduced.

Carney said there were likely implications for commercial banks, should significant balances move towards CBDCs: "If significant deposit balances are moved from commercial banks into CBDC, it could have implications for the balance sheets of commercial banks and…the amount of credit provided by banks to the wider economy."

The comments come in the final days of Carney's tenure at the bank, as he prepares to take up post as the U.K. government's Finance Adviser for COP26. He is set to be replaced by Andrew Bailey, the current head of the U.K. financial regulator, the Financial Conduct Authority (FCA).

In the report, the bank also addressed the decline of cash, with consumers and businesses alike increasingly opting for digital payment alternatives.

The Bank of England is scheduled to meet, alongside representatives from five other financial regulators, to discuss models for issuing a digital currency. On its preferred approach, the bank said that any digital currency would be denominated in Sterling, and would not be allowed to entirely replace cash notes.

It comes as other central banks are already testing their own digital currencies. In Sweden, for example, the central bank is running tests on issuing a digital currency dubbed the 'e-Krona', while other central banks are known to be running their own feasibility assessments on the technology.

FCA issues warning to avoid coronavirus-linked digital asset scams


Just like there always have been, scams are found in the digital currency space. There will always be those who are too inept to make a decent living and want to take advantage of situations in order to line their own pockets. As the coronavirus has gripped the world, there's no doubt that it is being used as a tool for initiating fraudulent activity, and the U.K.'s Financial Conduct Authority (FCA) has issued a warning to remind individuals to use caution when approached about making investments related to COVID-19.

In a message posted by the FCA on its website this past Wednesday, the financial watchdog explains, "Watch out for scams related to coronavirus (COVID-19). These scams take many forms and could be about insurance policies, pensions transfers or high-return investment opportunities, including investments in cryptoassets."

As is often the case, the potential scams will offer investment opportunities that are too good to be true, which should be the first sign for individuals to stay away. The FCA adds, as it has warned in the past, "If you decide to invest in something offering a high return or in a cryptoasset, you should be prepared to lose all your money."

The scams could come in many styles – requests for donations to the World Health Organization or the Centers for Disease Control and Prevention, or as a means to prepare for a rebound once the markets begin to recover. Common sense dictates that any investor perform his or her due diligence before making any type of investment, and understand the source of the request before turning over any funds.

Fortunately, digital asset enthusiasts have grown accustomed to potential scams and don't fall for the tricks as easily as may have once been seen. According to the National Fraud Intelligence Bureau in the U.K., those COVID-19 scams that have already been seen haven't had a lot of success. However, conventional investment scams in the U.K. tied to the virus have reportedly been able to collect more than £800,000 (a little more than $1 million).

The FCA recommends that individuals stay away from offers that appear out of the blue and to ignore investment opportunities that pop up on social media. It also suggests calling back those individuals who make contact looking for investments and to never provide any personal detail under any circumstances. In addition, before making any type of investment, consumers should check the FCA's register and its official Warning List to see if the entity is legitimate. If the company isn't listed in the register, don't hand over any money. The extra five minutes taken to do the research can help individuals avoid massive financial losses and headaches.