Monday, February 25, 2019

Bitfinex Recovers $106,000 of Stolen BTC With US Government Help

 

Bitfinex has recovered 27.7 bitcoin stolen by hackers in August 2016, the company said on Monday. The coins, worth around $106,000 at the time of writing, represent only a small fraction of the total BTC stolen. U.S. federal law enforcement agencies recovered the bitcoin and returned it to the cryptocurrency exchange.

Recovered BTC to Be Distributed in Cash to Customers
In 2016, Bitfinex hackers made off with 120,000 BTC, valued at about $72 million at the time, in one of the biggest ever thefts from a cryptocurrency exchange.

Bitfinex said in statement that it will return the recovered bitcoin to more than 5,000 victims of the heist in cash. The exchange, the world's 17th largest, with trading volume of $443 million in the last 24 hours, said it will convert the returned BTC to dollars before distributing the money to its customers.

The exchange detailed how it had worked with unnamed law enforcement agencies from the U.S. and Europe, according to a Reuters report, "to provide intelligence and assist with investigations." In November, the U.S. government notified the British Virgin Islands-registered Bitfinex of the recovery of the stolen bitcoin.

Giancarlo Devasini, chief financial officer at Bitfinex, stated:
Over two years following the hack of the Bitfinex platform, today we see the results of a clear and robust response strategy and the efforts of the U.S. government. It gives us great pleasure to be able to reimburse our traders that were loyal to us and believed in us at a very difficult time. We would like to thank U.S. federal law enforcement agencies for their ongoing efforts to investigate the security breach and their commitment to seizing and returning stolen assets.

Bitfinex to Continue to Work With Law Enforcement Agencies
According to U.S.-based cyber security firm Cipher Trace, hackers stole a total $950 million from exchanges and cryptocurrency wallets last year. Japan's Coincheck has suffered the biggest theft yet, with $530 million worth of the NEM cryptocurrency stolen in January 2018. Hackers also pilfered hundreds of millions of dollars from Mt. Gox in 2014, another Japanese trading platform.

The U.S. government recovery and return of a fraction of the Bitfinex coins is thus seen as a positive development in an industry where such recoveries are rare. When BTC is stolen from an exchange, it is often lost forever and exchanges have been reluctant or simply unable to compensate those affected.

In response to the hacks, regulators all around the world have sought to tighten regulation around the trade of cryptocurrencies. Know-your-customer rules and anti-money laundering regulations have or are in the process of becoming compulsory at exchanges from Japan to the U.S. and from Spain to South Africa.

After the 2016 hack, Bitfinex spread losses across all its customer accounts, which meant a loss of about a third of each customer's assets held on the exchange. In compensation, the exchange offered users a credit token called BFX, which was equivalent to every dollar lost.

After eight months, customers had redeemed those tokens for cash or shares in iFinex Inc, Bitfinex's parent company. Users who opted for equity received additional tokens, giving them the right to receive any funds recovered from the hack. Speaking to Reuters, a lawyer representing Bitfinex said the exchange "would continue to work with law enforcement agencies to recover the remaining bitcoin."

Wednesday, February 20, 2019

Bank of Spain Report: Bitcoin Is a Solution for a System Without Censorship

 


A recent report published by the Bank of Spain states that Bitcoin is a solution for the creation of a system without censorship. This is in contrast to public comments made by most central bankers who are prone to attack cryptocurrency with little insight into why it is needed.   

Explaining Peer-to-Peer Electronic Cash to Bankers
Banco de España, Spain's central bank and supervisor of the Spanish banking system, recently published a report aiming to explain how Bitcoin works. The document details the functions of the cryptocurrency, as well as analyzing its strengths and weaknesses from the point of view of the established financial order. It also explains that the best way to understand the aims of the new system is by consulting the original Bitcoin whitepaper written by Satoshi Nakamoto.

The report mentions that according to Nakamoto the world needs "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." Thus the goal is to create an electronic payment system similar to cash which allows remote payments without the need for the intermediation of institutions such as banks. This is meant to enable truly irreversible payments and reduce intermediation costs.

A System Without Censorship
The report concludes that cryptocurrency was envisioned as a payments system without the possibility of transaction censorship or a central authority with the power to authorize or reject transactions. It states that "bitcoin is an imaginative and elegant solution to this problem" of "the creation of a system without censorship." However the central bank's report also determines that traditional payment systems do not seek to resolve this problem and therefore cryptocurrency is not an alternative to them.

In line with the common position usually expressed by central bankers, the report ends by saying: "Taking into account that for most agents the existence of trusted intermediaries is not a problem, along with the costs and inefficiencies generated when an attempt is made to eliminate these intermediaries, it does not seem that bitcoin, as it currently stands, is going to have a significant impact for the financial sector as an alternative payment system to the traditional channels."

Nearly Half of Millennial Traders Have More Faith in Crypto Than Stock Market

 


Nearly half of millennial traders have more faith in cryptocurrency exchanges than they do in traditional ones. They are also enthusiastic about the prospect of traditional financial institutions offering crypto assets. That's according to a new survey which shows a "generational shift" where millennials "place their faith in the power of technology and open networks." 

The Beginning of a Generational Shift
The survey by U.S.-based investment platform Etoro interviewed 1,000 online traders. It found that 43 percent of millennial online traders trust crypto exchanges more than they do U.S. stock exchanges. 93 percent of millennials surveyed also said that they would invest more money in crypto if it were offered by traditional financial institutions such as TD Ameritrade, Fidelity, or Charles Schwab. Even among millennials who don't trade crypto, one third said they would trust crypto over the stock market. Guy Hirsch, Managing Director of Etoro U.S. said:

We're seeing the beginning of a generational shift in trust from traditional stock exchanges to crypto exchanges. At the heart of this change are the asset classes themselves. Younger investors' experience with the stock market has seen a great deal of loss of trust, with the fall of Lehman Brothers because of irresponsible practices followed by the worst recession since the Great Depression.

He added: "Trust further eroded when Americans saw how hundreds of billions of dollars of taxpayers' money are funneled to the largest financial institutions while their savings evaporated and how banks get free money through quantitative easing while their cost of living continued to rise."

The survey also showed that two thirds of millennial crypto traders say they have more faith in crypto as a whole than the stock market. Of millennials who don't trade crypto, one third said they would trust crypto over the stock market. In contrast, 77 percent of generation X respondents revealed they trust stock exchanges more.

The Perfect Asset Class
Etoro's survey also showed that among investors across all age groups that don't trade crypto, 59 percent would invest more money in crypto if it were offered by a traditional financial institution. Current crypto traders would be more at ease investing in the asset class if it were offered by a traditional financial institution, with 92 percent admitting they would invest more money if a conventional financial institution provided this investing option. This shows that despite crypto enthusiasts and millennials distrusting traditional institutions, established companies with a global reputation could draw in younger investors were they to offer crypto assets.

The survey looked at savings plans too. Half of online investors surveyed expressed interest in a crypto allocation in their 401k plans. Of those that don't trade crypto, 45 percent expressed interest in having some of their 401k allocated to crypto assets, while 74 percent of crypto traders are interested in seeing the option from their 401k provider. Hirsch added: "While there is clearly a demand for crypto assets in 401k portfolios, there are a number of regulatory and market changes that need to occur before it becomes a mainstream offering."

Mati Greenspan, a senior market analyst at Etoro, told news.Bitcoin.com: "Millennials tend to place their faith in the power of technology and more specifically the power of open networks. This is why crypto is the perfect asset class for our generation."

Tuesday, February 12, 2019

Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations

 


India's supreme court has set a new date to hear the petitions against the cryptocurrency banking ban by the country's central bank. Meanwhile, the crypto community in India is campaigning on social media for "positive regulations" and the rollback of the banking ban.

New Supreme Court Hearing Date
Indian Court Moves Crypto Hearing, Community Calls for Positive RegulationsThe Supreme Court of India has reportedly set a new date to hear the petitions against the crypto banking ban by the Reserve Bank of India (RBI). The central bank issued a circular in April banning all regulated financial institutions from providing services to crypto businesses. Banks complied and closed accounts of crypto exchanges by July.

A court document circulating on Twitter on Thursday indicates that the supreme court has scheduled Jan. 15, 2019, as the date it will revisit the crypto case.

The court originally scheduled to hear the case on Sept. 11 but continually postponed it. Then, on Oct. 25, it directed the government to submit a counter affidavit within two weeks, detailing its crypto regulatory progress.

According to Quartz India, the government has filed a counter affidavit with the supreme court, stating that it expects the regulatory framework to be finalized in December.

On Saturday, Inc42 reported that the finance ministry's counter affidavit defends the RBI banking ban. The news outlet wrote:

Representatives from the finance ministry submitted that the RBI circular as well as warnings issued by finance ministry on December 29, 2017, and by finance minister Arun Jaitley in his budget speech on February 1, 2018, are in line with the first inter-ministerial (interdisciplinary) committee's recommendations on cryptocurrencies.

The finance ministry set up an inter-ministerial committee in November last year, led by its Economic Affairs Secretary Subhash Chandra Garg, to recommend crypto regulatory measures. The publication noted that this committee has "yet to draft its report." Its next meetings are in December and January.

Community Campaigns for 'Positive Regulations'
The CEO of Indian cryptocurrency exchange Wazirx, Nischal Shetty, started an ongoing Twitter campaign on Oct. 31, calling for "positive regulations" for the Indian crypto industry. Shetty, who has over 55,100 followers on Twitter, wrote:

Please bring positive regulations in crypto and over 5 million crypto Indians will be thankful to you. Youth of India have found a new way to make wealth & this is especially important when there are not enough jobs for everyone.

He added, "We need to tweet to our ministers every day till we get [a] reply. The more we tweet the more chances of our voices being heard and crypto getting a positive regulation in India."

Shetty plans to continue the campaign "till the time the government takes a positive stance on regulating cryptocurrency in India," Inc42 quoted him emphasizing. The CEO elaborated:

We are worried about the RBI's banking ban on crypto. It has hampered the entire crypto sector of India and the innovations that come along.

In addition, the news outlet noted that crypto exchange Bitbns started a campaign on Change.org, demanding the repeal of the RBI circular. This petition has garnered 44,626 signatories at press time.

BTC Transactions Hit 1-Year High But Volume Remains Sluggish

 


There's good news and bad news for traders monitoring onchain data for signs of a market revival. The number of daily transactions has been rising for months, suggesting that BTC is being used for more than merely speculative purposes. Daily trade volume remains sluggish, however, suggesting another bull cycle is still some way off.

BTC Passes 350K Transactions per Day
The average number of daily transactions on the Bitcoin Core blockchain has been rising steadily since mid-2018 and recently surpassed 350,000. Save for a wild day in late 2017, when BTC notched a record 490K transactions, and the opening weeks of 2018, which saw major spikes, Bitcoin is seeing more sustained usage than ever. With Lightning Network taking a small but growing number of transactions offchain, along with Liquid, Blockstream's inter-exchange settlement layer, the actual number of onchain transactions would otherwise be higher stll.

Network usage does not necessarily correlate with price, and it is common for a blockchain to see sustained transaction growth while price remains stagnant. For all the usage that the BTC chain is witnessing, it remains trapped in $3,400-$3,700 territory. A look at trading volume shows that there has been no discernible uptick in months. 2019 has begun in muted fashion, with an average of 50,000 BTC being exchanged per day – a far cry from late 2017, when several hundred thousand bitcoins were being traded on a daily basis.

BTC Fees Remain Low for Now
BTC fees haven't been a talking point for months because there hasn't been much to talk about. A BTC transaction can currently be made for around $0.25. While almost 50x higher than the average BCH fee, it's still low enough to keep the majority of network users content. BTC users shouldn't count on fees remaining permanently low however. As 2017-18 data from Coinmetrics shows, average BTC transaction fees tend to lag behind average transaction count. In other words, it is possible that BTC's rising number of daily transactions could lead to fees also rising in due course.

Regardless of which direction BTC's fee market takes, continued usage of the protocol for its original purpose – sending electronic cash P2P – bodes well for future adoption and pricing. Combined with the ongoing development work being done behind the scenes, which makes it easier for users to send and receive bitcoin with confidence, means the next phase of growth may be driven by more sustainable fundamentals than speculative mania alone.

Tuesday, February 5, 2019

Indian Government Concerned Cryptocurrencies Could Undermine the Rupee

 


The Indian government panel tasked with drafting crypto regulation is reportedly worried that cryptocurrencies could destabilize the rupee if they are accepted as payments. Its concern came to light despite evidence that cryptocurrencies do not currently pose a threat to financial stability.

Impact on the Rupee
The Indian government committee tasked with developing the regulatory framework for cryptocurrencies is reportedly "obsessed" with the impact they may have on the rupee if they are allowed to be used in payments, Quartz India reported. The committee is headed by Subhash Chandra Garg, Secretary of the Department of Economic Affairs.

"If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilising the fiat currency is a major concern" for Garg's panel, the publication quoted an unnamed representative from the crypto ecosystem who recently met with the ministers as saying. "The overall impact on the financial ecosystem that it is likely to have is still unclear and it has been a challenge to convince them on this particular point."

If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilizing the fiat currency is a major concern.

Garg's panel is finalizing its report containing the recommendations for the country's crypto regulation, according to the government's reply to a Right to Information filing.

However, the Ministry of Finance told Parliament that "It is difficult to state a specific timeline to come up with clear recommendations" and that Garg's panel is "pursuing the matter with due caution."

No Threat to Financial Stability
The Financial Stability Board (FSB) published a report in October last year on the financial stability implications of crypto assets. The FSB is an international body that monitors and makes recommendations about the global financial system to the G20, an international forum for governments and central bank governors. Its members are financial regulators and central bankers from 24 countries as well as global organizations such as the International Monetary Fund.

Cryptocurrencies need constant monitoring on overall financial stability considerations, given the rapid expansion in their usage.

The FSB report states that "Based on the available information, crypto assets do not pose a material risk to global financial stability at this time." Nonetheless, it notes that "vigilant monitoring is needed in light of the speed of market developments. Should the use of crypto-assets continue to evolve, it could have implications for financial stability in the future."

Citing the FSB's finding, the Reserve Bank of India (RBI) reiterated in its Trend and Progress of Banking in India 2017-18 report that cryptocurrencies are not a threat currently. "The market continues to evolve rapidly, however, and this initial assessment could change if crypto assets were to become more widely used or interconnected with the core of the regulated financial system," the central bank detailed. "Cryptocurrencies need constant monitoring on overall financial stability considerations, given the rapid expansion in their usage," the RBI concluded.

Report Claims Quadrigacx Never Held More Than 1,000 BTC

 


The drama surrounding Canadian cryptocurrency exchange Quadrigacx continues to intensify, with a recent report by Zernoncense claiming that the exchange has no identifiable cold storage reserves and that it has never held more than 1,000 BTC in customer funds.

Report Refutes Claims of Quadrigacx Owner's Widow
The report finds numerous assertions made in the affidavit submitted to Canadian courts on Jan. 31 by Jennifer Roberston, the wife of the exchange's allegedly deceased chief executive officer, Gerry Cotten, to be false.

The findings have been informed by analysis of Quadrigacx's BTC and ETH wallets. As the wallet addresses for Quadrigacx "were not widely known," the report relies on deposit information given to customers that was aggregated from Reddit.

The author notes that the findings are not guaranteed to represent "a factual truth," however, comparisons between Quadrigacx and the withdrawal practices of known solvent exchanges shows "highly unorthodox" practices.

The analysis was conducted using Walletexplorer, which as the author states was created and is still being used by Chainalysis.

Report Claims Quadrigacx Uses Multi-Signature Wallets
Based on Zerononcense's findings, the number of BTC held by Quadrigacx is substantially less than that which was reported in Jennifer Robertson's affidavit.

The analysis finds that there are "no identifiable cold wallet reserves" for Quadrigacx, estimating that the exchange is in possession of less than 1,000 BTC.

The report also claims to evidence transfers totaling approximately 3.53 BTC that occurred on Jan. 24 and Jan. 25, apparently contradicting Robertson's claims that the exchange's funds are inaccessible.

The report also asserts that the numerous wallets used by Quadrigacx had multi-signature capability.

Quadrigacx Accused of Rerouting Customer Funds to Process Withdrawals
According to the report's findings, Qaudrigacx was "clearly" re-routing payments from customers to process withdrawals, comprising the operation of a "shell or a ponzi."

The author also asserts that withdrawal delays previously experienced by Quadrigacx customers resulted from the exchange not having the required funds available at the time, adding that in some instances the exchange was "forced to wait for enough customer deposits to be made" before processing withdrawals.

Tuesday, January 29, 2019

Italian Court Orders Bitgrail Founder to Refund $170M of ‘Missing’ Cryptocurrency

 


An Italian court has ruled that Francesco Firano, founder of defunct cryptocurrency exchange Bitgrail, was at fault for the disappearance of $170 million worth of the nano digital currency on his exchange last year. Firano, who called himself "The Bomber," is now "required to return as much of the assets to his customers as possible."

Court Seizes Firano's Personal Assets to Repay Victims
In its ruling, the Italian Bankruptcy Court, which enlisted the services of a court-appointed technical expert, concluded that both Bitgrail and Firano personally be declared bankrupt and forfeit their assets.

According to documents released by the Bitgrail victims advocacy group, the court's decision, delivered Jan. 21, authorizes the seizure of Firano's personal assets. So far, more than $1 million worth of assets have been seized, including a luxury vehicle, the group said. Digital assets worth several million dollars have also been confiscated from Bitgrail accounts and moved to accounts managed by trustees appointed by the court.

he documents show that Firano repeatedly mishandled security matters pertaining to the private keys of Bitgrail users, including his alleged transfer of client funds into wallets belonging to the exchange. Firano had failed to put in place suitable safeguards to prevent repeat, unauthorized withdrawals of nano from the exchange, the court said.

That's despite tens of millions of dollars worth of nano going 'missing' on several occasions due to duplicate withdrawals being fraudulently made from a single request due to a bug. The court berated Firano for not appropriately disclosing the suspicious transactions to his customers.

For example, the court found that the nano reported lost by Firano on Feb. 9, 2018 had actually been removed from the exchange months earlier, between July 2017 and December 2017. In total, about 10 million nano tokens left the exchange clandestinely during this period, with Firano's alleged full knowledge, but he did nothing about it.

The most damaging detail relates to how, just days before announcing the $170 million ( 17 million nano) theft, the Bitgrail founder moved 230 BTC (about $1.8 million at the time) into a personal account on another exchange called The Rock Trading, in a bid to swap it for euros. The documents show that Firano had also tried to withdraw money through a bitcoin ATM linked to that exchange.

The court appointed expert concluded:
Therefore it was the Bitgrail exchange that actually requested to the node multiple times to allow the funds to leave the wallet (funds that in fact, had already left the account after the first request) and not the Nano network that allowed multiple withdrawals. The shortfall reported by Firano in February was caused by a transfer request generated by Bitgrail multiple times upon receiving a single request from the user.

Victory for Investors as Firano Seeks Way Out
Meanwhile, Francesco Firano attempted to cheat his way out of the mess. After nano withdrawals were closed on the Bitgrail exchange in January 2018, Firano promised to repay investors 20 percent of their funds, but only "if they agreed to sign a waiver foregoing any legal action against him."

Later, he announced plans to reopen the exchange and release a new token called Bitgrail Shares, which would be used to reimburse the victims over time. Users called him out, wary that it was an elaborate exit scam, and opted to go to court. Firano argued in a losing case that his exchange was a mere provider of services and that the currencies deposited on the exchange were "regular" since he could not freely use the deposited coins.

A Bitgrail advocacy group has called the court ruling "both a huge win for crypto users and a cautionary tale for cryptocurrency exchange owners, who have been provided with a clear example of how not to run an exchange or handle a loss of funds."

Cryptocurrency Is Providing a Lucrative New Revenue Stream for Governments

 


Cryptocurrency's resistance to government control is countered by the fact that a number of governments, including Chile, Romania, Spain and South Africa, are looking to cash in by taxing crypto assets. These countries are crafting laws that bind citizens to annually disclose cryptocurrency investments that, in some cases, are held at home and abroad, and to pay anything from 10-35 percent income tax on crypto gains.


Cryptocurrency Taxation: Coming-of-Age Responsibility or Loss of Freedom?
Crypto taxation is happening despite governments' largely lukewarm treatment of virtual currency as a bona fide financial instrument that is useful for everyday transactions. Some governments have previously issued skeptical statements in a bid to dissuade cryptocurrency usage on their turf, though others have committed to research, proactive policies and legislation to make digital coins an integral part of their economic strategy.

Governmental efforts to stake a claim in cryptocurrency wealth suggest that digital currencies are at a point where the establishment acknowledges their legitimacy and value to the state. However, the warm embrace of government tax agencies doesn't sit well with crypto visionaries for whom privacy and detachment from the state are foundational values.

Chile's new legislation, allowing it to tax cryptocurrencies starting in April, has been interpreted by observers as a major step towards legitimizing the trade and use of virtual currencies in the South American country, following previous uncertainty. Before the latest move to increase the tax base by targeting crypto assets, the Chilean judiciary had refused to protect cryptocurrency investments, noting that they are not legal tender, while taking issue with the fundamental qualities of virtual currencies.

In 2018, the country's Supreme Court upheld a bank's closure of a cryptocurrency exchange's accounts. It said the bank had acted in compliance with laws on money laundering and terrorist financing, a threat allegedly posed by censorship-resistant, decentralized cryptocurrencies. However, with the latest development, it may be necessary for the judiciary to protect cryptocurrency exchanges and individual investors from interference, even if their motive is merely to maintain the largest possible terrain for the taxman.

Crypto Users Faced With Autonomy Conundrum
Cryptocurrency users are faced with a conundrum whereby absolute autonomy from state interference denies them the protection of governments when banks and other institutions overstep the mark. However, recognition comes with a price in the form of relinquishing a degree of privacy and control to governments.

Governments have previously excluded cryptocurrencies from their definition of what constitutes money, but this interpretation also seems to be evolving. Whereas Chile exempted cryptocurrencies from Value Added Tax laws in 2018 on the premise that they are "intangible assets," investors will now be required to pay tax on earnings generated from crypto-related investments, according to the country's Internal Revenue Service.

The opacity of cryptocurrency is a source of worry for governments as it can potentially be used for tax evasion and money laundering. Then again, so can fiat currency. Spain has identified 15,000 cryptocurrency investors it will monitor to prevent illicit financial dealings and to tax for cryptocurrency transactions, as well as staking its claim in crypto assets.

"The use by organized crime of the deep internet for trafficking and trade in illicit goods, as well as the use of bitcoin-type cryptocurrencies as means of payment, is one of the most demanding challenges today. In order to face this threat, the use by the tax agency's research units of new information gathering and analysis technologies in all types of networks will be enhanced," Spanish publication El Pais reported.

Spain's anti-fraud law, drafted in October, will require crypto investors to declare all of the assets they hold at home and abroad. Profits from cryptocurrency transactions are currently taxable under legislation covering matters related to individual income taxes, with rates of between 19 and 23 percent depending on profit.

The latest taxman to join the club is Romania, which amended its tax laws this month, allowing it to start taxing gains from bitcoin investments at a rate of 10 percent. The improved fiscal code legislation categorizes earnings generated from buying and selling cryptocurrencies as "income from other sources" and therefore subject to income tax, local media reports.

The evolution in governments' perceptions of cryptocurrency and subsequent demands of its owners seem inevitable. It is up to the cryptocurrency community to also evolve in ways that allow it to manage the mixed blessings of state encroachment. While concerns about criminality are warranted, sweeping government encroachment into the space will result in loss of freedoms such as insulation from censorship.

Tuesday, January 22, 2019

Falcon Private Bank Launches Crypto Wallet With Support for Direct BTC and BCH Transfers

 


Switzerland's Falcon Private Bank has introduced a cryptocurrency wallet as well as support for direct transfers of BTC, BCH, ETH and LTC for private and institutional investors. The bank said investors can now directly transfer cryptocurrencies to and from its own "segregated Falcon wallets." They can also convert their digital coins into cash.

Fully Bankable Blockchain Assets'
In a press release published on Jan. 21, Falcon claimed that its latest offering "makes blockchain assets fully bankable." The Zurich-based bank also claimed to provide secure storage thanks to its "proprietary custody solution."

"Clients can place trading orders conveniently through e-banking or a dedicated relationship manager," said Falcon. "Digital assets are included in portfolio statements as well as in tax reporting documents."

The bank stated it had developed a process that ensures full compliance with Switzerland's anti-money laundering and know-your-customer laws and regulations. It claimed to have a multi-level protection that covers hardware, software, and transaction processes. "Our custody solution has been audited and reviewed by independent providers," Falcon detailed.

Martin Keller, chief executive officer of the Swiss private bank, commented:
Falcon has … demonstrated its expertize … in the digital assets space by merging traditional private banking services with innovative financial solutions.

 Progressive Switzerland Allows Crypto Firms to Flourish
Founded in 1965 as Ueberseebank, Falcon Private Bank is Switzerland's 26th largest foreign-controlled bank by total assets. The bank has more than $15 billion worth of client assets under management and has offices in Abu Dhabi, Dubai, London and Zurich.

It was licensed as a bitcoin asset management company by the Swiss Financial Market Supervisory Authority (FINMA) in July 2017. However, the bank has reportedly set its minimum bitcoin investment threshold at two million Swiss francs ($2 million), cutting off many Swiss citizens from investing through it.

Switzerland has taken a progressive stance toward cryptocurrencies by legalizing their use and formalizing crypto transactions in a range of different contexts. But some crypto projects still struggle to open bank accounts, and cryptocurrency-focused bankers and investors still complain about a relative lack of regulatory clarity, as it remains unclear whether cryptocurrencies can be considered legal tender in certain contexts.

Switzerland sees virtual money and blockchain technology as strategic innovations in global finance. It is therefore determined to maintain and expand the jobs it has to offer in the field. The country's tax regulator views cryptocurrencies as assets that should be subject to wealth taxes and declared on annual tax returns.

Airdrop Causes Exchange to Accidentally Send BTC to Customers EXCHANGES 2 hours ago | Kevin Helms | 3671

 


A South Korean crypto exchange mistakenly sent its customers BTC and other cryptocurrencies due to an error during an airdrop. Some users immediately sold the coins, causing the prices of a number of cryptocurrencies on the exchange to sharply fall. The exchange said, however, that the majority of customers have agreed to return the assets.

South Korean cryptocurrency exchange Coinzest reportedly sent its customers BTC and other cryptocurrencies while trying to airdrop WGT tokens. The exchange posted a notice on its website that at approximately 18:30 p.m. Korean time on Jan. 18:

The WGT token airdrop process caused a computer error that incorrectly reflected the deposit details of some customers' assets … we took measures to immediately check the server to prevent any additional damage as a result of the sales and purchases of some misappropriated assets by some customers.

The exchange's computer program "allocated a particular cryptocurrency to the event," Sedaily explained on Monday, noting that "Coinzest originally tried to airdrop 30,000 WGT coins, but accidentally entered data to airdrop other coins."

An official of the exchange said that about 400 members were supposed to receive WGT tokens, Hankyung publication reported, adding that other cryptocurrencies such as BTC and ETH were sent to members' wallets. The news outlet elaborated that "about 10 members tried to sell about KRW 600 million worth [~$530,000] of cryptocurrencies or to withdraw money in Korean won even though they recognized the mistake of depositing money and computer errors. [Therefore] there has been a problem of rapid price decline."

The price of BTC and a number of other cryptocurrencies on Coinzest subsequently plummeted at about 7 p.m. Korean time on Jan. 18, with BTC's price falling to 999,000 won (~$883) from over 4 million won.

Asking Customers to Return Assets
After detecting the problem, Coinzest immediately halted trading and performed a server checkup, according to a notice on its website. It then resumed trading the next day. "The asset and transaction information was restored to 18:33:18 on the 18th, the last time a normal transaction occurred before the computer error occurred," the exchange clarified. Hankyung detailed:

Coinzest immediately contacted the customers and asked them to return their assets. The majority of the members promised to return [them].

Coinzest CEO Jeon Jong-hee was quoted by the publication as saying, "I am extremely sorry that I have caused an unexpected computational error to customers … I am very sorry for my customers." He added that his exchange's emergency response system will be strengthened to prevent the problem from recurring.

Tuesday, January 15, 2019

Malaysia Starts Regulating Cryptocurrencies Today

 

Malaysia's finance minister has announced that the order to regulate cryptocurrencies and initial coin offerings as securities has come into force. Crypto service providers and exchanges are required to obtain authorization from the country's Securities Commission, which will work with the central bank to ensure compliance.

Regulating as Securities
Malaysian Finance Minister Lim Guan Eng said on Monday that his country "will regulate initial coin offerings (ICOs) and the trade of cryptocurrencies," Reuters reported, adding:

An order to recognize digital currencies and digital tokens as securities will come into force on Jan. 15, under the regulation of the Securities Commission Malaysia [SC].

The order is known as "the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019." Cryptocurrencies, ICOs and their related activities must comply with relevant securities laws and be approved by the commission, the minister explained.

Following Lim's statement, the Securities Commission Malaysia confirmed that it "will put in place guidelines to regulate offering and trading of digital assets." The regulator noted that "the offering of digital assets, as well as its associated activities, will require authorisation from the SC and compliance with relevant securities laws and regulations," elaborating:

The guidelines will among others, establish criteria for determining fit and properness of issuers and exchange operators, disclosure standards and best practices in price discovery, trading rules and client asset protection. Those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing (AML / CFT) rules, cyber security and business continuity measures.

Furthermore, the commission stated that it "will enter into coordination arrangements" with the Bank Negara Malaysia, the country's central bank, in order "to ensure compliance with laws and regulations under the purview of both regulators." In addition, the regulator revealed that "The relevant regulatory framework is expected to be launched by end-Q1 2019."

Lim was quoted by The Star as saying, "Any person offering an ICO or operating a digital asset exchange without SC's approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10mil [~$2.44 million]."

Ministry of Finance Sees Potential
The finance ministry "views digital assets, as well as … underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries," Lim further described, elaborating:

In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses, and an alternate asset class for investors.

Meanwhile, Bank Negara Malaysia has repeatedly said that cryptocurrencies are not legal tender in its country. The central bank has advised the public to carefully evaluate the risks associated in dealing with them.

Bank Negara Malaysia has published a list of companies that have declared themselves as cryptocurrency exchanges or service providers, but emphasized that it has neither licensed nor authorized these businesses. Among companies on the list are Belfrics Malaysia, Bit Malay, Bitpoint Malaysia, Bit Trade Enterprise, Bong Technology, Bxm, Luno Malaysia, Openbit, Udax International, Upbit Malaysia, and Xbit Asia.