Huobi Secures Its FSA License in Japan, Other Large Players Are Pending

On Jan. 17, Singapore-based cryptocurrency exchange Huobi, one of the largest players on the market, relaunched as a fully licensed platform in Japan after merging with the BitTrade exchange.

Branching out to Japan, where compliance is valued and many regulatory measures are imposed for crypto players by domestic regulators, is a complex process. Here’s how Huobi entered the market, and which firms might soon follow suit.

Specifics of the Japanese market and the FSA’s role in it

Japan is one of the world’s largest markets for cryptocurrencies. Bitcoin (BTC) and altcoins can be used as a legally accepted means of payment there, although they are not considered “legal tender.” Being closely overseen by the national financial regulator, the Financial Services Agency (FSA), the Japanese crypto market is also one of the most compliant and regulation-oriented.

Since the amendment of Japan’s Payment Services Act in April 2017, all crypto exchanges in the country are required to register with the FSA. Counting Huobi’s recent merger with BitTrade, the pool of exchanges cleared to serve the Japanese market currently consists of 17 platforms: Money Partners, Liquid (previously known as Quoine), Bitflyer, BitBank, SBI Virtual Currencies, GMO Coin, Btcbox, Bitpoint, Fisco Virtual Currency, Zaif, Tokyo Bitcoin Exchange, Bit Arg Exchange Tokyo, FTT Corporation, Xtheta Corporation, Huobi and Coincheck.

The FSA is known to have a tight grip on local exchanges, firmly reacting to security breaches after a number of high-profile local crypto exchange incidents, namely last year’s bizzare $532 million Coincheck hack and the infamous collapse of Tokyo-based Mt. Gox. The FSA also conducts on-site inspections of exchanges that have their registration pending and occasionally asks exchanges to submit their risk management system reports in the wake of security breaches.

For instance, in March 2018, following the Coincheck hack, the watchdog sent “punishment notices” to as many as seven crypto exchanges and temporarily froze the activities of two more after a round of inspections. Business improvement orders were sent for a lack of “the proper and required internal control systems,” with Coincheck being specifically cited as missing a framework for preventing money laundering and the financing of terrorism. Shortly after the regulator’s move, two local exchanges — Mr. Exchange and Tokyo GateWay — decided to close up shop.

As a result of the FSA’s thorough supervision, some players have decided to quit the Japanese market. Binance, one of the world’s largest crypto exchanges that had opened an office in the country, turned to Malta — the famously crypto-friendly country — after the regulator had issued a warning in March 2018. Similarly, around the same time, crypto exchange Kraken also decided to end its services in Japan, although citing the rising costs of doing business there as the primary reason for relocation. Japanese social messaging app Line has also decided to exclude the domestic market prior to the launch of its cryptocurrency exchange, citing local regulatory difficulties.

In May of last year, the FSA rolled out further regulatory stipulations for domestic crypto exchanges, intensifying its efforts to prevent another major hack. Exchanges were required to monitor customer accounts multiple times per day for suspicious fluctuations and must comply with stricter Anti-Money Laundering (AML) measures, which specifically demand Know Your  Customer (KYC) checks, such as ID verification. There have also been reports regarding the FSA potentially prohibiting the trading of anonymity-oriented altcoins — such as Dash (DASH) and Monero (XMR) — in the future.

In July, the agency underwent a major redo aimed at improving its presence in fintech-related fields, including cryptocurrencies. Thus, the Strategy Development and Management Bureau replaced the Inspection Bureau to develop a financial strategy policy and handle issues addressing the digital currencies market, fintech and money laundering.

The Policy and Markets Bureau, in turn, succeeded the Planning and Coordination Bureau, and was tasked with developing a legal framework that addresses the rapid growth of the fintech sector.

In August 2018, Toshihide Endo, the commissioner of the FSA, said that his agency wants the cryptocurrency industry to “grow under appropriate regulation.” The official added:

“We have no intention to curb [the crypto industry] excessively. We would like to see it grow under appropriate regulation.”

In response to regulatory pressures, a self-regulatory body named the Japan Virtual Currency Exchange Association (JVCEA) has emerged, comprised of the local exchanges. In October 2018, Japan’s financial regulator formally granted self-regulatory status to the JVCEA to oversee the crypto sector. Therefore, the JVCEA might have a better say when it comes to the industry standards in the future. Specifically, the self-regulatory outfit is now expected to develop AML policies for crypto exchanges.

Huobi’s way of getting the FSA clearance — and similar attempts from the past

Founded in China in 2013, Huobi Group has been headquartered in Singapore since Beijing’s crackdown on domestic crypto-fiat exchanges in September 2017. As part of its ongoing overseas expansion efforts, the platform has recently rebranded its United States-based strategic partner trading platform HBUS to the better recognized the Huobi name. Now, the platform — currently the world’s sixth largest by daily traded volume — has expanded to the Japanese market. Huobi’s arrival follows the news about Coincheck receiving full permission from the FSA to continue operating in the country after the above mentioned security breach.

Huobi’s press release emphasizes its security precaution, outlining that Huobi Japan “features specialized distributed architecture, a Distributed Denial of Service (DDoS) attack countermeasures system, and A+ ranked SSL certification (the highest available).”

According to the official announcement, Huobi Japan supports the trading of Bitcoin, Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Ripple (XRP) and Monacoin (MONA).

Importantly, Huobi didn’t receive the FSA license from scratch, going through a different route instead. Although Japan’s Payment Services Act allows foreign operators to register in the country as “virtual currency exchange service providers,” Huobi has relaunched as a fully licensed platform in Japan after acquiring a majority stake in BitTrade last September. At the time, BitTrade was one of only 16 crypto exchanges in the country to have secured a license from the FSA.

However, Huobi’s market expansion through acquisition of a pre-approved FSA platform is not an entirely new move: In June 2018, BitTrade became Japan’s first FSA-licensed platform to be entirely purchased by an international investor, the Singaporean multi-millionaire and entrepreneur Eric Cheng. The investor also acquired BitTrade’s affiliate company at the time, FX Trade Financial Co., Ltd — one of Japan’s leading forex trading platforms. Following the Huobi deal, FX Trade Financial kept 25 percent of BitTrade’s shares.

BitTrade Acquisition Breakdown

More exchanges to receive the FSA’s blessing: Coinbase, Yahoo and others

Other players are only preparing to enter the market, still waiting to get clearance from the FSA. As Cointelegraph Japan reported on Jan. 12, seven applications will be either approved or rejected by the FSA within six months. The article also revealed the FSA’s complex and lengthy routine of reviewing crypto exchanges that have applied for a license.

Thus, the FSA conducts a procedure that takes almost six months from the time of application — which includes the submission of answers to over 400 questions — to final decision.

After receiving the answers, the FSA communicates with the company to verify its business plan, governance, cybersecurity and management system, along with its AML and counter-terrorist financing measures. In that phase of the review — which reportedly takes about four months — the agency’s officers personally double-check the company’s practices in person. After that, the company officially submits their application to the FSA. The agency then finally reviews the documents and decides whether or not to grant the license.

The financial regulator stated that there are 21 companies taking part in the first part of the review as of January, while seven are already in the decision phase. Therefore, up to seven companies could be granted a new license by the summer. In total, the FSA has reportedly received around 190 cryptocurrency exchange license applications.

Perhaps the most major of the pending candidates is San Francisco-based Coinbase, which revealed its plans to enter the Japanese crypto market in June 2018. Being a compliance-oriented company, Coinbase has made positive remarks about Japan’s crypto regulatory climate in the past, saying that the FSA’s intense focus on security is “good for us.” Given that the U.S. exchange originally planned to establish its operation in Japan “within the year,” the FSA is likely to approve or decline its application at some point in the next few months.

Moreover, the Japanese arm of the internet giant Yahoo will reportedly open their own crypto exchange “in April 2019 or later,” through buying 40 percent of BitARG Exchange Tokyo. Other potential players to open a crypto exchange in Japan include Mitsubishi UFJ Financial Group, the largest domestic bank. In January 2018, South Korean newspaper KBS reported the financial group’s plans — however, there has been no update since.

Also, Money Forward, the company behind a popular financial management application that has over 7 million users in Japan, recently shared details regarding the upcoming launch of its cryptocurrency exchange. Thus, Money Forward is reportedly planning to open their yet-to-be-named platform between January and March 2019, although it depends on how the registration with the FSA will go.

Licensed Exchanges in Japan

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Crypto Prices See Calm as ZB.Com Bypasses Binance to Become Top Exchange

Friday, Jan. 18 — crypto markets continue to see calm, with all top ten coins seeing mixed 24-hour price changes capped within a 3 percent range, as Coin360 data shows.

Market visualization from Coin360

On CoinMarketCap (CMC)’s crypto exchange rankings by adjusted daily traded volumes, however, some major upheavals are underway. Today, Chinese exchange ZB.com saw an 80 percent surge in 24-hour trade volume to hit ~$606.7 million, and displacing Binance as top exchange on CMC.

ZB.com is currently ranked the largest exchange globally; however, during the time of writing, a separate China-based exchange, LBank, has flickered in and out of the top spot, at several points posting over 150 percent increase in trades on the day to hit volumes of ~$800-900 million. Up to press time, the exchanges volumes had fleetingly reduced to ~$380 million, thus dropping back to fourth place.

First three top crypto exchanges by adjusted daily trade volume

First three top crypto exchanges by adjusted daily trade volume. Source: CoinMarketCap

Around 47 percent of the trade volume on ZB.com is accounted for by Qtum-Tether (QTUM/USDT) trading, according to CoinMarketCap data.

Trade volumes of formerly top platform Binance have meanwhile dropped 14 percent on the day, seeing ~$550 million in trades.

Commentators on crypto twitter have remarked on the conspicuous uptick, with Twitter persona TheFist claiming:

“Looks like a ton of market manipulation by zb.com tanking most digital assets and trying to pump tron. The Chinese are dump and pumping last night[.]”

Meanwhile, according to a tweet from ZB.com Jan. 16, crypto ranking website CoinGecko has released its own exchange rankings for Q4 2018, which places ZB.com as the second largest by median  reported volume:

CoinGecko’s crypto exchange rankings for Q1 2018

CoinGecko’s crypto exchange rankings for Q1 2018. Source: ZB.com Twitter

Considerably less volatile, top cryptocurrency Bitcoin (BTC) has seen negligible price change over the past 24 hours, down 0.45 percent on the day to trade at $3,645. After an intraweek low of ~$3,550 Jan. 13, Bitcoin has recovered to trade just 1.6 percent down on its 7 day chart. On the month, the coin is up by 3 percent.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: CoinMarketCap

Ripple (XRP) — which has regained its spot as largest altcoin by market cap — has also seen mild price change on the day, losing 1.2 percent to trade ~$0.32 at press time. With a market cap of $13.3 billion to press time, Ripple is only just ahead of Ethereum (ETH), which has a market cap of around $12.6 billion to press time, according to CoinMarketCap data.

Ripple is now down around 3.5 percent on the week, and down 2.4 percent on the month.

Ripple’s 7-day price chart

Ripple’s 7-day price chart. Source: CoinMarketCap

Ethereum has seen a similarly mild 1.6 percent loss to trade at ~$121. The altcoin is down close to 6 percent on its 7-day chart; on the month, growth remains at a bullish 27 percent.

Ethereum 7-day price chart

Ethereum 7-day price chart. Source: CoinMarketCap

Among the remaining top ten coins on CoinMarketCap, all are in the red, seeing losses capped below 3 percent. EOS (EOS) is seeing the heaviest losses on the day among the top ten coins, down 2.7 percent to press time.

Among the top twenty, losses are also capped near 3 percent — with Ethereum Classic (ETC) losing the most, down 3.2 percent on the day to trade at $4.33. Binance Coin (BNB) and IOTA (MIOTA) are the only coins in the green, with the former up a solid 3.9 percent and the latter up just a fraction of a percent to press time.

Total market capitalization of all cryptocurrencies is at around $121.2 billion as of press time — down around 1.6 percent on the week.

7-day chart of total market capitalization of all cryptocurrencies

7-day chart of total market capitalization of all cryptocurrencies. Source: CoinMarketCap

Speaking against the tide in a tweet posted today, Morgan Creek investment analyst Chris King stated:

“I used to pound the table on tokenized securities. As new information on the market was presented I’ve completely changed my view. Not much value will be captured by “tokenizing” traditional securities. -no liquidity or liquidity premium -no demand -no value creation.”

Tokenized securities have been gaining significant traction with industry leaders, as exemplified by the words of Bitcoin bull and co-founder of Gemini exchange, Cameron Winklevoss, who recently remarked:

“I think the next wave will see the real innovation, and the really interesting assets that become tokenized — like real estate, like buildings that are currently not traded in a really liquid fashion. So that’s exciting.”

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Linux-Targeting Cryptojacking Malware Disables Cloud-Based Security Measures: Report

A new cryptojacking malware has the ability to disable cloud-based security measures to avoid detection on Linux servers, research by information security company Palo Alto Networks Jan. 17 reveals.

The malware in question mines Monero (XMR) and is reportedly a modified version of one used by the so-called “Rocke” group, originally discovered by cybersecurity firm Talos in August last year. According to the research, one of the first things that the malware does is check for other cryptocurrency mining processes and add firewall rules to block any other cryptojacking malware.

The virus reportedly also searches for cloud security services by Chinese internet giants Tencent and Alibaba and neutralizes them in an attempt to remain concealed. Ryan Olson, vice president for threat intelligence at Palo Alto Networks explained:

“This evolution indicates that attackers who are compromising hosts operating in cloud platforms are now attempting to evade security products that are specific to those platforms.”

The virus also reportedly takes advantage of known vulnerabilities in older versions of Apache Struts 2, Oracle WebLogic and Adobe ColdFusion to infect the systems. Still, keeping the software updated to the latest version prevents the attack, according to the report.

As Cointelegraph reported in December last year, cryptojacking malware activity rose by over 4000 percent in 2018, according to a new quarterly report published by cybersecurity firm McAfee Labs.

According to another report published the same month, 415,000 MikroTik routers had been affected by cryptojacking malware at that time, double the number of infected devices since last summer.

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Huobi Resumes Trading in Japan as FSA-Licensed Exchange

Cryptocurrency exchange Huobi — currently the world’s 7th largest by daily traded volume — has relaunched as a fully licensed platform in Japan after merging with BitTrade. The news was announced in a press release published Jan. 17.

As reported, Huobi Global’s wholly owned subsidiary, Huobi Japan Holding Ltd, acquired a majority stake in BitTrade last September. At the time, BitTrade was one of only 16 crypto exchanges in the country to have secured a license from national financial regulator, the Financial Services Agency (FSA).

Leon Li, Huobi Group Founder and CEO, has said that securing the license represents a significant milestone for Huobi, given the importance of the Japanese market.

Huobi’s press release takes pains to emphasize security provisions, outlining that Huobi Japan “features specialized distributed architecture, a Distributed Denial of Service (DDoS) attack countermeasures system, and A+ ranked SSL certification (the highest available).”

According to the press release, Huobi Japan supports trading of Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Ripple (XRP), and Monacoin (MONA).

While a license has been mandatory for all crypto exchanges operating within Japan since the amendment of the country’s Payment Services Act back in April 2017, the FSA has continued to ratchet up requirements for applicants throughout 2018, in the wake of last January’s industry-record-breaking $532 million theft of NEM tokens from Coincheck.

Ahead of Huobi’s majority stake deal — BitTrade became Japan’s first FSA-licensed platform to be fully acquired by an international investor, the Singaporean multi-millionaire and entrepreneur Eric Cheng. The investor also acquired BitTrade’s affiliate company, FX Trade Financial Co., Ltd — one of Japan’s leading forex trading platforms. Following the Huobi deal, FX Trade Financial retained 25 percent of the BitTrade’s shares.

Founded in China in 2013, Huobi Group has been headquartered in Singapore since Beijing’s crackdown on domestic crypto-fiat exchanges in September 2017. As part of its ongoing overseas expansion efforts, the platform has recently rebranded its United States-based strategic partner trading platform HBUS to the better known Huobi name.

Following Coincheck’s very recent acquisition of an FSA license, the total number of regulator-approved exchanges in Japan stands at 17.

Last fall, an executive from leading U.S. crypto exchange Coinbase made positive remarks about Japan’s crypto regulatory climate, saying that the FSA’s intense focus on security is “good for us.” Coinbase has had plans to secure a license to operate within the country in the works since June 2018.

Huobi has seen $299.6 million in trades over the 24 hours to press time, according to CoinMarketCap data.

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Blockchain Consortium R3 Launches Corda Network and Independent Governance Foundation

Enterprise blockchain software firm R3 has announced the launch of its Corda Network, which will be operated and overseen by a newly created not-for-profit organization, the Corda Network Foundation. The announcement was made in an R3 press release published on Jan. 16.

R3 has to date reportedly gathered over 300 partners from across multiple industries — both the private and public sector —  to collaborate on developing Corda, its open-source blockchain platform, as well as its business-oriented offshoot Corda Enterprise.

The Corda Network will reportedly serve as a base layer of identity and consensus for all participants, and allow for the transfer of data and digital assets between communities of nodes (business networks) and the different decentralized applications running on the Corda platform (CorDapps).

With identity verification and privacy provisions, the network will enable participants to create nested private ecosystems within their organization — or join together with commercial partners — to efficiently share data between approved parties, while retaining interoperability with the wider Corda community.

The Corda Network Foundation, whose directorial board will reportedly be elected by members of the Corda Network, is set to operate independently of R3.

The joint launch will aim to establish an international, transparently governed network that will make Corda adoption seamless and foster the secure and efficient development of new applications for Corda and Corda Enterprise.

Multiple Corda ecosystem participants are quoted in the press release as saying that the open governance system and oversight from a non-biased operator will be crucial to securing the success of the Corda Network and contribute toward its aim to provide a secure, trusted and efficient alternative to today’s siloed systems.

As reported, Corda has seen a wave of adoption news in recent months, most recently onboarding an American blockchain consortium and credit union service organization (CUSO).

In December, R3’s Corda-based Euro Debt Solution was used by a German-French-Dutch triad of banks to successfully complete a live commercial paper transaction; major Japanese financial services company SBI Holdings announced its partnership with R3 to boost the use of Corda in Asia; and 26 French companies and five major banks completed a Know Your Customer (KYC) test using Corda.

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Bitcoin Sees New 2019 Lows as Crypto Markets Slide Down

Monday, Jan. 14 — crypto markets are still sliding down after a weekend in the red. According to CoinMarketCap, Bitcoin (BTC) has hit a new 2019 low, trading at $3,552 around press time as other major cryptocurrencies are facing moderate losses.

Market visualization from Coin360

Bitcoin has lost another 2 percent in 24 hours, with its price barely reaching $3,600. Although some reports predicted major market movements due to the recent activation of long-dormant Bitcoin wallets, the major coin has spent a weekend mostly in the red.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: CoinMarketCap Bitcoin Price Index

Ripple (XRP), which is currently the top altcoin with a market capitalization around $13.3 billion, is facing slight losses of around 2.5 percent. As of press time, the coin is trading at around $0.324.  

Ripple 7-day price chart

Ripple 7-day price chart. Source: CoinMarketCap Ripple Price Index

Ethereum’s (ETH) market cap is almost $1 billion less than XRP, ranking in third on CoinMarketCap. The altcoin is now trading at around $118; its weekly chart has seen a significant drop in comparison to last Monday’s high of $154.

Ethereum 7-day price chart

Ethereum 7-day price chart. Source: CoinMarketCap Ethereum Price Index

The total market capitalization of all cryptocurrencies is currently hovering around $119 billion. It has declined by almost $20 billion since Thursday, Jan. 10, reaching its 2019 low of $116.8 billion earlier today.

7-day total market capitalization chart

7-day total market capitalization chart. Source: CoinMarketCap

As for other altcoins, TRON (TRX) is currently the only altcoin in the top ten in the green, seeing up to 2 percent gains on the day as of press time. Bitcoin SV (BSV) has seen the worst performance among major coins in last 24 hours, losing around 9 percent and trading at $77 as of press time.

As Cointelegraph reported earlier today, Tyler and Cameron Winklevoss, Bitcoin (BTC) endorsers and founders of the crypto trading platform Gemini, have predicted a bright future for stablecoins and tokenized securities. The entrepreneurs believe the crypto industry will move from a focus on unregistered initial coin offerings (ICO) to tokenized assets in various areas, such as real estate.

In the meantime, Reuters has reported that Malaysian cryptocurrency regulation will come into effect on Tuesday, Jan. 15. The new regulation classifies digital currencies, tokens and crypto-assets as securities, placing them under the Securities Commission’s authority.

Meanwhile, Google has reportedly blacklisted keywords mentioning Ethereum on its advertising platform Google Ads. According to auditing startup Decenter, the “ethereum development services” and “ethereum security audits” keywords are no longer available for their use. The official Google Ads Twitter account explained that the problem might be linked to targeting features, as crypto exchanges can only target their ads in the United States and Japan.

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Hodler’s Digest, Jan.7–13: Top Stories, Price Movements, Quotes and FUD of the Week

Top Stories This Week

Altcoin Ethereum Classic Reportedly Undergoes 51 Percent Attack

Earlier this week, the Ethereum Classic (ETC) reportedly underwent a 51 percent attack. In the aftermath, crypto exchange Coinbase noted that upwards of $1.1 million in crypto was double spent during the time of the deep blockchain reorganization. Coinbase and several other cryptocurrency exchanges temporarily paused deposits and withdrawals of the altcoin to prevent loss of funds. Crypto exchange Gate.io confirmed that the attack was carried out and promised refunds, stating that around 54,200 ETC in total (worth around $271,500 at the time) was transferred during the attack. However, Gate.io also reported later that $100,000 was returned to them with no explanation, prompting rumors of participation by a white hat hacker.

Coinbase, Square Cash App Reported Bans Accounts of Social Media Platform Gab Founder

This week, the social media platform Gab announced that both Coinbase and the Square Cash app had banned the personal account of Andrew Torba, the founder of Gab. As reported earlier last year, Gab.com’s business account on Coinbase had already allegedly been closed in December. The blocking of Torba’s Square Cash account occurred after the reported Coinbase block, and also after Gab sent an email to its user base promoting both the Cash App and Bitcoin. Gab is a social media platform that promotes itself as a place for free speech, becoming in effect a draw for those blocked on other platforms for hate speech concerning right wing extremism.

Addition of Monero Payment Option to Fortnite Merch Store Was Accidental

The CEO of Epic Games, Tim Sweeney, said this week that the addition of altcoin Monero (XMR) as a payment option for the Fortnite merchandise store was an accident. The store, called Retail Row, accidentally began accepting the altcoin on Jan. 5, according to tweets from developer Riccardo Spagni. Sweeney, denying the rumors, said this week that the addition of Monero was unintentional, and that staff have since removed the privacy-centered altcoin from the store’s payment option. Sweeney also denied that Epic Games had partnered with crypto payment processor GloBee.

Analysts Say BTC Whale Activity Could Move Market as Dormant BTC Wallets Revive

A number of long-dormant Bitcoin wallet have seen an uptick recently, Bloomberg reported this week, which could mean that major BTC whales might influence the crypto market. According to analysis from crypto analytics startup Flipside Crypto, several long-inactive BTC holders have begun to move their coins, meaning that wallets active over the past 30 days now hold about 60 percent of total BTC supply. Similar wallet movement preceded Bitcoin’s major historical price volatility in both 2015 and 2017 — in the latter year, the coin surged to all-time price highs of $20,000.

Winklevoss Twins Express Commitment to Bitcoin ETF During Reddit AMA

Cameron and Tyler Winklevoss doubled down on their commitment to getting a Bitcoin (BTC) ETF approved during a question and answer session on Reddit’s Ask Me Anything (AMA) subreddit this week. The twins also showed support for specifically Bitcoin, referring to it as “the OG crypto” and calling it “the winner in the long term.” Tyler Winklevoss also underlined the importance of blockchain versus cryptocurrencies, noting that they need each other in order to exist.

Winners and Losers

The cryptocurrency markets are holding steady at the end of the week, with Bitcoin trading at around $3,670, Ripple at around $0.33 and Ethereum at around $126. Total market cap is around $122 billion.

The top three altcoin gainers of the week are BDT Token, CariNet and Simmitri. The top three altcoin losers of the week are SoundDAC, AgaveCoin and WhaleCoin.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“I think we will come back a few years from now and say how could we ever have gotten into this situation where we believed this kind of a fairy-tale story,” — Ardo Hansson, governor of Estonia’s central bank and member of the Governing Council of the European Central Bank, about crypto

“We believe bitcoin is better at being gold than gold. If we’re right, then over time the market cap of Bitcoin will surpass the ~7trillion [sic] dollar market cap of gold,” — Tyler Winklevoss, co-founder of Gemini, during Reddit AMA

“Some self-proclaimed Bitcoin Maximalists are actually Bitcoin Extremists. They think all other coins are scams and will go to zero. Maximalists think Bitcoin is and will remain the dominant cryptocurrency but there is room for altcoins to exist and even do well,” — Charlie Lee, Litecoin (LTC) founder

“Bitcoin has the potential to be worth a lot and to be worth zero,” — Bill Miller, noted Wall Street investor

“Ripple took a contrarian view on a bunch of things pretty early right and that made us unpopular among the die-hard crypto community. In the face of those kind of arrows, though, I still have conviction that we’re on the right path,” — Brad Garlinghouse, Ripple CEO

“You hear all the bulls**t out there, oh, this does 10,000 transactions a second. It’s all crap. We were going to melt TRON. Literally destroy it,” — Simon Morris, former Bittorrent employee, speaking about Tron’s tokenization

Prediction of the Week

“The reality is it’ll probably trade sideways between $3,000 and $5,000 for another month or two while it’s trying to find which way to go,” — Vinny Lingham, CEO of blockchain identity platform Civic

FUD of the Week

Former BitTorrent Executive Claims Tron Won’t Be Able to Manage BitTorrent’s Token

Simon Morris, the former chief strategy officer at BitTorrent, said in an interview this week that Tron doesn’t have the capabilities to manage the transaction volume that will be needed to tokenize BitTorrent. Morris said that his team needed hundreds of transactions per second just to get started, and that Tron would only be able to manage the volume if they manage BitTorrent transactions on a central server and pretend it is Tron-based. A Tron representative told Cointelegraph that “Morris appears to have little insight into BitTorrent operational plans since his departure.”

Fourth Indian Suspect Arrested After $70 Million Cryptocurrency Scam

Police in India have arrested a member of a group that has been accused of conducting a cryptocurrency scam involving 5 billion rupees (around $71.6 million) this week. The case is ongoing, and this is the fourth arrest in connection with the alleged scam involving a token, dubbed Money Trade Coin (MTC). According to the police, the group artificially inflated the price of the token in order to prop up investments, leaving investors unable to sell the token when the price fell.

Hackers Take Over Belgian Non-Profit Twitter to Tweet Fake Coinbase Giveaways

The Federation of Enterprises in Belgium (FEB) had their Twitter account hacked this week and made to resemble an affiliate account of major United States crypto exchange Coinbase.  After the hackers tool control of the FEB’s Twitter, they proceeded to tweet scam giveaways, offering followers a large amount of crypto if they send a small amount first. In this case, the hackers offered both 3,000 BTC and 30,000 BTC in an apparent typo to their followers. The Coinbase branding has since been removed from the Twitter account.

Best Cointelegraph Features

Ethereum Classic 51% Attack — The Reality of Proof-of-Work

In the wake of the confusing and sometimes contradictory media coverage of the 51 percent attack on the Ethereum Classic network this week, Cointelegraph’s looks at the questions brought up over how security and power of proof-of-work (PoW) algorithms should and do function.

What We Know About Yellow Vests’ Bank Run and How Crypto Could Help It

As the protests in France against the government continue, a call for a run on the banks has brought up parallels between the protestors’ goal to show the vulnerability of those in traditional positions of power, and crypto’s aim to create a parallel financial structure unconnected with traditional finance.

From Bitconnect to SIM-Swap Swindling: 2018’s Biggest Scams

In the beginning of 2019, Cointelegraph takes a look back over the past year’s most memorable scams, including the fall of Bitconnect and the rising phenomenon of SIM-swapping.

Article First Published here

Malaysian Government Reportedly Still Undecided on Whether to Legalize Crypto

The Malaysian government is reportedly still undecided whether to legalize cryptocurrencies, English-language local media New Straits Times reports on Jan. 12.

When answering a query about whether digital currencies are currently legal or illegal, Khalid Abdul Samad, the Malaysian federal territories minister, reportedly said:

“At the moment, the answer is neither legal nor illegal as the situation is still unclear.”

Samad also pointed out that while he was involved in the launch of Harapan Coin (HRP) — a proposed political cryptocurrency — he wasn’t appointed as finance minister, noting that the the matter therefore does not fall under his jurisdiction.

In December 2018, as Cointelegraph reported, Malaysia’s finance regulator and central bank issued a joint statement in which they confirmed they were setting up regulation on cryptocurrency and initial coin offering (ICO) assets.

Samad has also reportedly previously proposed to Bank Negara Malaysia and Prime Minister Tun Dr Mahathir Mohamad to use the digital currency, Harapan Coin, for government transactions.

However, as Cointelegraph reported in November last year, a Malaysian Member of Parliament had urged the government to implement proper cryptocurrency regulations before undertaking the Harapan Coin cryptocurrency project.

Cointelegraph explained in a dedicated analysis in December 2018 that as much as 30 percent of the funds raised for the project were destined for the system’s administrators — who remain effectively anonymous.

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Mongolia Partners With Stablecoin to Use Blockchain for Lending Services, Money Transfers

Mongolia’s capital city of Ulaanbaatar has partnered with a stablecoin company to release instant money transfer and lending services, Asia’s largest tech media platform e27 reported on Jan. 11.

Ulaanbaatar City’s administration has agreed to partner with a South Korean blockchain company, dubbed Terra, in order to eventually replace the current payment methods for utility bill and government subsidies with the Terra stablecoin, according to the publication.

The pilot program is scheduled to be launched within the next six months, and will start in the city of Ulaanbaatar’s Nalaikh District, with plans to expand throughout the whole city. The article also states that the program within the Mongolian capital will contain both peer-to-peer payments and mobile payments.

Terra is a stablecoin project co-founded by Daniel Shin, the creator of South Korean e-commerce marketplace Ticket Monster. The stablecoin project closed a $32 million funding round in August 2018, with participation from Binance Labs, OKEx and Huobi Capital, as well as Polychain Capital.

Back last fall, the Bank of Mongolia, the country’s central bank, had given permission to Mongolia’s largest mobile telecoms operator to issue its own digital currency, as Cointelegraph reported on Sep. 28.

Terra, the stablecoin project, had already partnered with South Korean messaging app giant KakaoTalk back in last November as well. The partnership is aimed at developing a blockchain-based payment system and creating a blockchain ecosystem that would allow a large number of people to use its services, Cointelegraph wrote on Nov. 14.

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Bitwise Files With the US SEC for a Physically Held Bitcoin ETF

Cryptocurrency index fund provider Bitwise Asset Management has applied with the United States Securities and Exchange Commission (SEC) to launch a new Bitcoin (BTC) Exchange Traded Fund (ETF), according to a registration form published today, Jan. 10.

According to the form, Bitwise’s proposed ETF will track the Bitwise Bitcoin Total Return Index, the value of which is “calculated based on the prices of bitcoin that the Index Provider derives from bitcoin price transactions occurring on cryptocurrency exchanges.” According to a press release accompanying the newly filed form, the firm’s proposed Bitcoin ETF reportedly differs from other previously proposed Bitcoin ETFs in that it draws prices from a variety of crypto exchanges, with the aim of better representing the market.

Bitwise’s Bitcoin ETF reportedly also differs from other applications in that it would require “regulated third-party custodians to hold its physical bitcoin.”

In the firm’s press release, John Hyland, Global Head of ETFs at Bitwise declared:

“Having a regulated bank or trust company hold physical assets of a fund has been the standard under U.S. fund regulation for the last 80 years, and we believe that is now possible with Bitcoin.”

As Cointelegraph reported in July, Bitwise had filed with the SEC to launch a crypto ETF tracking the Bitwise HOLD 10 Private Index Fund, a basket of ten cryptocurrencies. To press time, a decision from the SEC is still pending.  

An ETF is a security that tracks an asset or a group of assets and is traded the same way in which stocks are on an exchange. As Cointelegraph reported earlier this month, Japan’s Financial Services Agency (FSA) has denied that it is considering allowing Bitcoin exchange-traded funds.

The crypto industry has long awaited the approval of a Bitcoin or generally crypto ETF by U.S. regulators, since a number of firms have applied to launch such products in the country. In December, the SEC further postponed its decision on a Bitcoin ETF by investment firm VanEck and blockchain company SolidX on the Chicago Board Options Exchange (CBOE),  setting the new deadline for Feb. 27, 2019.

Also in December, an SEC commissioner said “not to hold your breath” waiting for a Bitcoin ETF, speaking at the Digital Asset Investment Forum held in Washington.

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From Bitconnect to SIM-Swap Swindling: 2018's Biggest Scams

2018 will long be remembered as the start of a significant cryptocurrency bear market, but the declining market still provided opportunities for scam artists to snag unwary investors.

Given that 2017 was a breakout year for Bitcoin (BTC) and the likes, investors were clamoring to enter the fray as the price of cryptocurrencies skyrocketed toward the end of the year.

With such a positive environment, businesses and developers looked to leverage blockchain technology for new projects, leading to a boom of new initial coin offerings (ICO) that has collectively raised more than $20 billion since the beginning of 2017.

This provided the right atmosphere for more nefarious individuals to set up scam operations looking to fleece unsuspecting victims.

The modus operandi varied from project to project, but there was no shortage of conventional multi-level marketing and pyramid schemes, as well as pump-and-dump operations.

As the year has come to a close, it is worthwhile to take a look at some the biggest scams of 2018, as well as some of weirdest and outright ridiculous schemes.

Bitconnect falls

Bitconnect will go down as one of the biggest scams the crypto world has ever seen, but the shady project saw its eventual end at the beginning of 2018.

Thousands of investors were duped by the platform, which promised impressive returns on a lending scheme using its own native token.

The concept was fairly simple: Investors would trade in Bitcoin in return for Bitconnect Coin (BCC), which they could then lend out at varying rates of return in interest.

Bitconnect’s lending platform led to accusations of the platform being a Ponzi scheme, which in time led to a cease-and-desist order being issued by United States regulators.

What further drove concerns around the legitimacy of the operation was the referral system and the anonymous ownership of the company.

The worst fears were realized when the anonymous creators of the program sold their coins and made off with the reserves of BTC — leading to class action lawsuits from a number of affected investors.

The scale of Bitconnect’s influence spanned across several continents, leaving investors around the world dealing with losses.

Pump me up!

As recent research from the Social Science Research Network suggests, price manipulation of various projects is still rife among the cryptocurrency community.

Culprits make use of messaging applications like Discord and Telegram to orchestrate price hikes of certain crypto tokens in order to sell their own holdings for a profit.

According to the findings, researchers identified 1,051 and 3,767 pump-and-dumps schemes on Discord and Telegram respectively, indicating just how prevalent this illegal practice has become.  As per current regulations, this practice amounts to securities fraud under the jurisdiction of the U.S. Seсcurities and Exchange Commission (SEC).

While many of these schemes targeted a variety of altcoins, Bitcoin was not immune to orchestrated buying groups operating through various chat groups.

The research identified at least 82 pump schemes targeting BTC on these two apps in 2018, although that amounted to just over 1 percent of total pump signals.

Social media shenanigans

Social media networks have also become a crucial tool for criminals to prey on unwise investors.

A prime example was the hacking of verified Twitter accounts that were then used to promote fraudulent money-raising schemes.

The latest instance saw a number of accounts impersonating Tesla founder Elon Musk, promoting a Bitcoin fundraising scheme.  One of these Bitcoin wallets used in the scam raised over $150,000, showing how many people fell for the authenticity of a “verified” account.

It certainly wasn’t the first time hackers had taken control of prominent accounts in 2018. At the beginning of the year, Litecoin founder Charlie Lee had a number impersonators setting up accounts on Twitter, promoting fake LTC giveaways.

Telegram founder Pavel Durov was also a victim, as a number of accounts looked to take advantage of some downtime of the Telegram app, setting up fake accounts offering crypto giveaways for their support.

Sim-swapping whiz kid nabbed

19-year-old Xzavyer Narvaez made headlines in August, after he was identified as the perpetrator of an elaborate sim-swap heist that saw more than $1 million worth of BTC stolen.

According to reports, the teen stole phone numbers and used them to gain access to the social media and financial accounts of his victims. He would do this by performing a “sim-swap” in order to take control of accounts on his own devices.

Investigators allege that Narvaez’s Bittrex crypto wallet had received over 157 BTC between March and June 2018.

Narvaez faces charges on four counts of using personal identifying information without authorization; four counts of altering and damaging computer data with intent to defraud or obtain money, and grand theft of personal property of a value over $950,000, according to court documents.

If not for his flashy spending of his ill-gotten gains, which included the purchase of a McLaren sports car, and his brazen use of the same device to process over 20 sim-swaps, Narvaez may have gotten away with his crimes.

The purchase of the $200,000 vehicle, which was made using BitPay, also helped authorities build a case against Narvaez.

Narvaez is not the only perpetrator to be arrested for stealing large amounts of crypto through the use of sim-swaps.

According to Krebs On Security, police arrested a man in August believed to be part of a cross-state syndicate involving nine suspects that used sim-swapping to steal large amounts of cryptocurrencies from his victims.

Vietnamese investors swindled by iFan, Pincoin

In April 2018, news broke of a massive ICO scam that had affected 32,000 investors in Vietnam.

The fraud was touted as one of the biggest to affect the crypto community, as $660 million of investors’ money had been stolen by two separate ICOs, run by a parent company in Ho Chi Minh City.

Modern Tech operated two projects, iFan and Pincoin, which duped investors before they could alert authorities. The owners liquidated the company and vacated their offices in the city by the time affected investors lobbied to get their money back.

iFan was touted as a social networking platform for celebrities to promote content and merchandise to fans around the world.

Modern Tech was promising users in Vietnam 48 percent returns monthly for iFan tokens, but they had to make an initial investment of $1,000. Furthermore, users were given an 8 percent commission for referring new investors.

Pincoin, an ERC-20 token powering the PIN project, promised users up to 40 percent monthly return on investments on the landing page of the website. The project promised to build an online platform powered by cryptocurrency and blockchain to provide an advertising network, auction and investment portal, and peer-to-peer (p2p) marketplace, among other offerings.

GAW, Paycoin Ponzi operator jailed

After a protracted legal battle, Homero Joshua Garza, the CEO of now defunct GAW miners and Paycoin cloud mining, was sentenced to 21 months in jail in September 2018. His offences date back to 2015, when he was found guilty of running Ponzi schemes.

Both projects were setup that year, but within months, GAW was accused of being a Ponzi scheme, leading to its closure in 2015.

The developers of GAW also created Paycoin, a cloud-mined cryptocurrency.

Taiwanese scam outed by Finnish investor

In August 2018, Taiwanese authorities acted on information $24 million crypto scam that had taken advantage of wealthy offshore investors.

Thai citizen Prinya Jaravijit was detained in August by authorities, suspected as the main culprit in the investment scam targeting Finnish investor Aarni Otava Saarimaa and his Thai business partner Chonnikan Kaewkasee.

The pair had alerted authorities after they’d failed to receive dividends from investments made with Jaravijit and nine other suspects.

The investors believed that their $24 million would be pumped into the casino- and gambling-focused cryptocurrency Dragon Coin (DRG). After parting ways with the funds, the pair never received any dividends from the so-called investment, a proof of investment in DRG, nor were they invited to shareholders meetings.

The case gained international attention when Jinya’s younger brother, Jiratpisit “Boom” Jaravijit, a well-known soap-opera actor, was detained in August.

Sniffing out the perpetrators

While the number of fraudulent operations may be startling, there seems to have been some real success by authorities looking to take action and protect investors.

U.S. Commodity Futures Trading Commission chairman Christopher Giancarlo said the organization had seen an increase in the amount of actions and fines taken against fraudulent projects, including the cryptocurrency sector.

“We have not been shy to take these cases to trial, winning significant trial victories in this area over the past year — including a precedent setting victory in a trial involving Bitcoin (BTC) fraud.”

While financial regulators and authorities may have been dishing out fines, conventional authorities made a number of high-profile arrests during the course of the year, as Cointelegraph has previously reported.

Some of the ring leaders have been included in this article, but these arrests show that even the anonymous characteristics of cryptocurrencies can’t completely hide the paper trails of illicit activities.

As regulators gain a better understanding of the ins and outs of cryptocurrencies and ICOs, the prevalence of these types of crimes could very well drop.

However, these stories show that investors need to be cautious with their crypto and make sure that due diligence is done when investing.

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Payment Network RippleNet Exceeds 200 Customers, Garlinghouse Highlights Fiat Volatility

Crypto and blockchain company Ripple has reported today, Jan. 8, that 13 new financial institutions have signed up for the RippleNet payment network, bringing the total number of customers over 200.

The new institutions range from locations including Sweden, England and Kuwait, with 40 countries in total across all customers. Ripple’s blog post notes that five of the new additions — JNFX, SendFriend, Transpaygo, FTCS and Euro Exim Bank — will use Ripple’s digital asset, XRP, for liquidity when sending customer cross-border payments.

Other institutions new to RippleNet, like the named CIMB or Olympia Trust Company, will use Ripple technology for immediate settlement and more transparency payments.

Ripple CEO Brad Garlinghouse noted in the post that RippleNet is seeing two or three new customers join each week since last year, with a 350 increase in 2018 in customers sending live payments.

Speaking to CNBC, Garlinghouse, addressing a common concern that crypto payments are a poor substitute for fiat payment due to the currency’s volatility, noted foreign currencies can also be volatile. He said:

“The average Swift transaction takes three days — but really what we’re seeing is three business days. You’re taking fiat volatility risk while markets are closed over the weekend.”

In March, SWIFT’s blockchain proof-of-concept reportedly was completed successfully with a focus on Nostro accounts — a bank’s account in a foreign currency in another bank. At the end of November, SWIFT India also partnered with a fintech firm to test a distributed ledger (DLT) network with the aim to increase the efficiency and security of financial products.

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India: Fourth Suspect Arrested Following Alleged $70+ Million Crypto Scam

Indian police have arrested an associate of a group accused of conducting a crypto scam involving 5 billion rupees (about $71.6 million), English-language local media The Indian Express reports Jan. 7.

This is the fourth arrest of the ongoing case and reportedly occurred a year after Thane police uncovered the alleged scam in Mumbai. The man, Rohit Kumar, has reportedly been arrested by Delhi police acting on a complaint from a Kanpur resident.

According to the police, Amit Lakhanpal — the man who launched the allegedly scam cryptocurrency — is the CEO of a real estate firm. The police also reportedly said that the token, dubbed Money Trade Coin (MTC), allegedly was never listed on a cryptocurrency exchange.

An unspecified police source, cited by The Indian Express, declared that “the accused had set up office in Delhi’s Vikram Nagar and used [it] to collect money from investors promising high returns.”

According to the police, the organization inflated the price of the token to prop investments. When the price of the token fell, investors were reportedly unable to sell them. A first information report from the police, registered Dec. 31, reportedly charges the accused with cheating, criminal conspiracy and banning.

According to reported police statements, Lakhanpal conducted events in Dubai that were attended by members of the royal family. Furthermore, an unnamed police officer reportedly claimed that “the accused also showed prospective clients an article in an international magazine, which claimed that one of the royals was his partner.”

As Cointelegraph recently reported, the police of the Indian state of Jammu and Kashmir issued a public statement warning the public against investing in cryptocurrencies.

In December, an government committee in India reportedly suggested that cryptocurrencies should be legalized in the country.

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Law Enforcement Inquiries Sent to Kraken Nearly Tripled in 2018

Cryptocurrency exchange Kraken has received nearly three times more law enforcement inquiries in 2018 than in 2017, the exhange reported in a tweet Jan. 5.

According to data displayed in the weet, in 2018 the exchange received 475 law enforcement inquiries from global government agencies, while in 2017 there had been only 160. Still, 2017 numbers were already considerably higher than the previous year, when there were only 71 inquires.

Annual Law Enforcement Inquiries Received by Kraken – Source: Kraken tweet

The tweet further highlighted the prevalence of United States agencies among the inquiries, stating “you can see why many businesses choose to block US users.” The exchange reported that 315 of the 475 inquiries in 2018 came from U.S. government bodies.

Inquiries by Country of Inquiring Agency

Inquiries by Country of Inquiring Agency – Source: Kraken tweet

As Cointelegraph reported at the beginning of December, Florida-based United American Corp. (UnitedCorp) has purportedly filed a lawsuit against Bitmain, Bitcoin.com, Roger Ver, and Kraken.

The suit filed alleges that the defendants jointly used unfair methods and practices to manipulate the Bitcoin Cash (BCH) network for their benefit and detriment of UnitedCorp and other BCH stakeholders.

Also in December, Japanese police reported that there has been a significant uptick in reports from cryptocurrency exchanges about suspicious transactions. The increase reports occured after a bill came into force obliging the exchange to report such activity.

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Crypto Markets See Green as Bitcoin Nears $3,900 and Ethereum Touches $160

Saturday, Jan. 5 — the crypto markets are mainly in the green today, as Bitcoin (BTC) moves closer to the $3,900 mark, data from Coin360 shows.

Market visualization by Coin360

Bitcoin has shown slight growth today, up by around 3 percent and trading at about $3,899 at press time. Over the month, Bitcoin is up almost 1 percent and almost 7 percent over the week.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: Cointelegraph’s Bitcoin Price Index.

Ethereum (ETH) is currently trading at around $159, up more than 6 percent on the day at press time. The second-largest cryptocurrency is seeing around 35 percent gains over the week, and 47 percent gains over the month.

This week, developers from Ethereum discussed the possibility of implementing a new proof-of-work (PoW) algorithm that would raise the efficiency of GPU-based — rather than ASIC-based — mining on the network. The debate over whether to go forward with the implementation comes ahead of the upcoming Ethereum Constantinople hard fork.

Ethereum’s 7-day price chart

Ethereum’s 7-day price chart. Source: Cointelegraph’s Ethereum Price Index

Third-largest cryptocurrency Ripple (XRP) is up over 2 percent at press time, trading at around $0.36. Over the week, the coin has seen more than 7 percent growth, and almost 5 percent gains over the month.

Ripple 7-day price chart

Ripple 7-day price chart. Source: Cointelegraph’s Ripple Price Index.

The total market cap of all cryptocurrencies is currently around $133 billion at press time, up from its weekly low of about $125 billion.

7-day chart of total market capitalization of all cryptocurrencies

7-day chart of total market capitalization of all cryptocurrencies from CoinMarketCap

Of the top ten cryptocurrencies, Litecoin (LTC) and TRON are showing the biggest growth, up over 12 and 15 percent respectively.

Earlier this week, the Gemini crypto exchange — founded by the Winklevoss twins in 2014 — released a series of ads calling for better regulation of the crypto space. The ads, which read “Crypto needs rules,” were received with mixed reactions from the crypto community, as some believe the space suffers from the intervention of regulators.

Also this week, five more crypto exchanges — including Coincheck — joined Japan’s self-regulatory association of cryptocurrency exchanges.

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India: Central Bank Report States Crypto Does Not Threaten Financial Stability

The Reserve Bank of India (RBI) has stated that cryptocurrencies currently pose no threat to financial stability in its recent financial report, published Dec. 28.

The document entitled “Report on Trend and Progress of Banking in India 2017-18” reads:

“[C]rypto-assets do not pose risks to global financial stability 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.

RBI quoted a conclusion drawn from a recent report by the Financial Stability Board (FSB) — an international agency consisting of banking and financial institutions from different countries, including India. RBI itself is a member of the FSB, along with country’s Securities and Exchange Board and Ministry of Finance.

In its study “Crypto-asset markets: Potential channels for future financial stability implications,” published October, the FSB claimed that bankers see no significant danger in the existence of cryptocurrencies, as their total market cap by that time had barely reached 2 percent of the global value of gold. However, the board urged watchdogs to keep an eye on the digital coin markets, given their quick growth.

RBI reiterated this stance in its December report, stating that сryptocurrencies need “constant monitoring,” given their rapid expansion in recent years.

The legal framework for cryptocurrencies in India remains unclear, as RBI formally stopped all banks from dealing with cryptocurrencies in April. The de facto prohibition came into effect in June, while the Supreme Court’s hearings on the case — initiated by local crypto firms — were repeatedly postponed. At the same time, an Indian government panel is reportedly considering a complete ban on crypto.

Initially, RBI had considered launching its own central bank digital currency, dubbed “Laxmi.” However, in January, the bank gave up the idea of making a stablecoin tied to the rupee, stating that it’s too early to even think about it.

Yesterday, Jan. 3, the police of the Indian state of Jammu and Kashmir issued a statement, warning the public against investing in cryptocurrencies due to the “heightened risk” associated with them. The authorities also added that digital currencies are not regulated by the Indian government.

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From Dorian Nakamoto to Elon Musk: The Incomplete List of People Speculated to Be Satoshi Nakamoto

Ten years ago, on Jan. 3, 2009, the Bitcoin (BTC) network was created as Satoshi Nakamoto mined the genesis block, also known as block number zero.

However, the identity behind the Bitcoin creator has remained one of the biggest mysteries in the crypto community since the original white paper was published by Satoshi in October 2008.

Various journalistic investigations have attempted to unveil the person or group of individuals responsible for creating the top digital currency, but Satoshi’s real identity remains unknown to date. On his P2P Foundation profile — which went inactive in late 2010 — Nakamoto identifies as a 43-year-old male who lives in Japan, but he almost never posted on the Bitcoin forum during local daytime. Other clues, like the British spelling of words like “colour” and “optimise,” suggest he was of Commonwealth origin.

So far, the media and community have come up with numerous results of who might be the real Satoshi, none of which have been confirmed. On June 14, 2018 the United States Central Intelligence Agency (CIA) said that it could “neither confirm nor deny the existence” of Nakamoto after a Motherboard journalist requested information on his identity through the Freedom of Information Act (FOIA).

Here’s the (incomplete) list of potential candidates.

Vili Lehdonvirta

Suspect credentials: a 38 year-old Finnish professor at the Helsinki Institute for Information Technology

Source: Joshua Davis, The New Yorker

One of the first attempts to reveal Satoshi’s identity dates back to October 2011, when journalist Joshua Davis wrote a piece for the New Yorker. During his quest to identify the Bitcoin creator, Davis found Michael Clear, a young graduate student in cryptography at Trinity College in Dublin, who had worked at Allied Irish Banks to improve its currency-trading software and co-authored an academic paper on peer-to-peer technology. Clear denied he was Satoshi, but offered the journalist the name of “a solid fit for Nakamoto” — a thirty-one-year-old Finnish researcher at the Helsinki Institute for Information Technology named Vili Lehdonvirta, who used to be a video game programmer and studied virtual currencies.

However, after being contacted by Davis, Lehdonvirta also claimed he was not Satoshi. “You need to be a crypto expert to build something as sophisticated as bitcoin,” he said. “There aren’t many of those people, and I’m definitely not one of them.”

Shinichi Mochizuki

Shinichi Mochizuki

Suspect credentials: a 49 year-old Japanese mathematician at Kyoto University

Source: Ted Nelson

On May 17, 2013, American IT pioneer, sociologist and philosopher Ted Nelson suggested that Nakamoto could be Japanese mathematician Shinichi Mochizuki of Kyoto University, who worked mostly in number theory and geometry. Nelson’s evidence was largely circumstantial, however, as it mostly rested on how Mochizuki released his solution to the ABC Conjecture, one of the biggest unsolved problems in mathematics.

A few days later, Nelson told Quartz that he would donate to charity if Mochizuki denied being Satoshi Nakamoto:

“If that person denies being Satoshi, I will humbly give one bitcoin (at this instant worth about $123) to any charity he selects. If he is Satoshi and denies it, at least he will feel guilty. (One month time limit on denial– bitcoins are going UP.)”

In July 2013, The Age reported that Mochizuki denied Nelson’s claims, but did not specify the source.

Dorian Nakamoto

Dorian Nakamoto

Suspect credentials: a 68-year-old Japanese American man who has done classified work for major corporations and the U.S. military

Source: Leah McGrath Goodman, Newsweek

On March 6, 2014, Newsweek published a lengthy article written by journalist Leah McGrath Goodman, who identified Dorian Prentice Satoshi Nakamoto, a Japanese American male living in California as the original Bitcoin creator.

Goodman learned that Nakamoto worked as a systems engineer on classified defense projects and computer engineer for technology and financial information services companies. Nakamoto reportedly turned libertarian after being laid off from his job twice in the early 1990s.

There were other clues besides his birth name. Goodman argues that Nakamoto confirmed his identity as the Bitcoin founder after she asked him about the cryptocurrency during a face-to-face interview. “I am no longer involved in that and I cannot discuss it,” he allegedly replied. “It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”

However, in a following full-length interview with The Associated Press, Dorian Nakamoto denied all connection to Bitcoin. He said that he had never heard of it before, and that he thought that Goodman was asking about his previous work for military contractors, which was largely classified. Interestingly, in a Reddit “Ask Me Anything” interview, he stated he had misinterpreted Goodman’s question as being related to his work for Citibank. Later on the same day, the Nakamoto’s P2P Foundation account posted its first message in several years, stating: “I am not Dorian Nakamoto.”

Nick Szabo

Nick Szabo

Suspect credentials: (supposedly) a 55 year-old American man of Hungarian descent and creator of BitGold, a predecessor of Bitcoin

Sources: Skye Grey, researcher; Dominic Frisby, financial writer

In December 2013, researcher Skye Grey published results of his stylometric analysis, which indicated that the person behind Satoshi Nakamoto was a computer scientist and cryptographer named Nick Szabo.

Essentially, Grey searched for unusual turns of phrase and vocabulary patterns “in particular places which you would expect a cryptography researcher to contribute to,” and then “evaluated the fitness of each match found by running textual similarity metrics on several pages of their writing.”

Szabo is a decentralized currency enthusiast who developed the concept of “BitGold,” a pre-Bitcoin, privacy-focused digital currency, back in 1998. In his May 2011 article on Bitcoin, Szabo wrote:

“Myself, Wei Dai, and Hal Finney were the only people I know of who liked the idea (or in Dai’s case his related idea) enough to pursue it to any significant extent until Nakamoto (assuming Nakamoto is not really Finney or Dai).”

Additional research carried out by financial author Dominic Frisby, which he describes in his 2014 book titled “Bitcoin: The Future of Money?” also suggests that Nick Szabo is the real Satoshi. In an interview on Russia Today, Frisby said: “I’ve concluded there is only one person in the whole world that has the sheer breadth but also the specificity of knowledge and it is this chap [Nick Szabo].”

Nevertheless, Szabo has denied being Satoshi. In a July 2014 email to Frisby, he reportedly stated:

“Thanks for letting me know. I’m afraid you got it wrong doxing me as Satoshi, but I’m used to it.”

Hal Finney

Hal Finney

Suspect credentials: an American cryptographic pioneer who died in 2014 at the age of 58

Source: Andy Greenberg, Forbes (who eventually denied his own assumption)

On March 25, 2014, Forbes journalist Andy Greenberg published an article on Dorian Nakamoto’s alleged neighbor, a pre-Bitcoin cryptographic pioneer named Hal Finney, who received the very first BTC transaction from Nakamoto.

Interestingly, Greenberg reached out to the writing analysis consultancy Juola & Associates and asked them to compare a sample of Finney’s writing to that of Satoshi Nakamoto. Reportedly, they found that it was the closest resemblance they had yet come across — including the other candidates suggested by Newsweek, Fast Company and New Yorker journalists, along with Ted Nelson and Skye Grey. However, the company established that Nakamoto’s emails to Finney more closely resemble the style that the original white paper was written in when compared to Finney’s emails.

Greenberg suggested that Finney may have been a ghostwriter for Nakamoto, or that he used his neighbor Dorian’s identity as cover. Finney denied he was Satoshi. Greenberg, after meeting Finney in person, seeing the email exchanges between him and Nakamoto, and his Bitcoin wallet’s history, concluded that Finney was telling the truth.

On Aug. 28, 2014, Hal Finney died at his home in Phoenix at the age of 58 after five years of battling amyotrophic lateral sclerosis.

Craig Wright

Craig Wright

Suspect credentials: a 48 year-old Australian computer scientist and businessman

Sources: Andy Greenberg, Gwern Branwen, Wired; Craig Wright (himself)

On Dec. 8, 2015, Wired published an article written by Andy Greenberg and Gwern Branwen that argued an Australian academic named Craig Steven Wright “either invented bitcoin or is a brilliant hoaxer who very badly wants us to believe he did.”

On the same day, Gizmodo ran a story that featured documents allegedly obtained by a hacker who broke into Wright’s email accounts, claiming that Satoshi Nakamoto was a joint pseudonym for Craig Steven Wright and his friend, computer forensics analyst and cyber-security expert David Kleiman, who died in 2013.

Wright promptly took down his online accounts and disappeared for several months until May 2, 2016, when he publicly declared that he is the creator of Bitcoin. Later on the same month, Wright published an apology along with a refusal to publish the proof of access to one of the earliest Bitcoin keys. Cointelegraph has published several articles on why Wright is most likely not Satoshi. Nevertheless, Wright continues to claim that he is Satoshi to this day.

In February 2018, the estate of Dave Kleiman filed a lawsuit against Wright over the rights to $5 billion worth of BTC, claiming that Wright defrauded Kleiman of virtual currency and intellectual property rights.

Neal King, Vladimir Oksman and Charles Bry

Neal King, Vladimir Oksman and Charles Bry

Suspects credentials: U.S. and German residents, occupancy and age unknown

Source: Adam Penenberg, Fast Company

In October 2013, journalist Adam Penenberg penned an article for Fast Company, where he cited circumstantial evidence suggesting that Neal King, Vladimir Oksman and Charles Bry could be Nakamoto. King and Bry reportedly live in Germany while Oksman was claimed to be based in the U.S.

Penenberg’s theory revolves around the claim that King, Oksman and Bry jointly filed a patent application that contained the phrase “computationally impractical to reverse” in August 2008, which was also used in the white paper published by Nakamoto in October that year. Moreover, the domain name bitcoin.org was registered three days after the patent was filed.

All three men denied being Nakamoto when contacted by Penenberg.

Elon Musk

Elon Musk

Suspect credentials: a 47 year-old American technology entrepreneur

Source: Sahil Gupta, SpaceX intern

In what seems as one of the most absurd Nakamoto theories to date, Sahil Gupta, who claims to be a former intern at SpaceX, wrote a Hacker Noon post speculating that Elon Musk was probably Satoshi Nakamoto. Gupta emphasized Elon Musk’s background in economics, experience in production-level software and history of innovation to speculate that Musk could have invented Bitcoin.

The post was published in November 2017 and was soon disproved by Musk himself, who tweeted that Gupta’s suggestion “is not true.”

Satoshi Nakamoto

Government Agency

While there is no actual evidence that Nakamoto is a government agency, it makes for a great conspiracy theory that contains a vast amount of reasons as to why the U.S. (or any other state) would want to create Bitcoin. For instance, a 2013 Motherboard article theorized: “Bitcoin could be used as a weapon against the US dollar. It could be used to fund black ops.”

It then suggested a theory “that Bitcoin is actually an Orwellian vehicle that would allow governments to monitor all financial transactions.”

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Crypto Markets Are Mostly in Green, Ethereum Regains Top Altcoin Position

Wednesday, Jan. 2 — The main cryptocurrencies have mostly been in the green for two days now, according to data from Coin360. Bitcoin (BTC) is still over $3,800 mark, while Ethereum (ETH) has regained the top altcoin position.

Market visualization from Coin360

Proof of Keys — a celebration when BTC holders temporarily withdraw their funds from all exchanges and mediators  — is coming in just a few hours, and BTC has gained about 3 percent in price since the beginning of Jan. 2. The coin is traded at approximately $3,900 as of press time.

Bitcoin 7-day price chart

Bitcoin 7-day price chart. Source: CoinMarketCap Bitcoin Price Index

ETH has yet again beaten Ripple (XRP) as the world’s major altcoin by market capitalization after spending several weeks on the third place. The altcoin’s market cap reached almost $15.8 billion at press time, surpassing XRP’s market cap by almost $1 billion. ETH is now traded around $150, gaining more than 13 percent in price in comparison to yesterday’s charts.

Ethereum 7-day price chart

Ethereum 7-day price chart. Source: CoinMarketCap Ethereum Price Index

Meanwhile, XRP, the third-top altcoin, is trading at $0.36, seeing a slight growth in price during the day. The coin’s market cap is around $14.9 billion.

Ripple 7-day price chart

Ripple 7-day price chart. Source: CoinMarketCap Ripple Price Index

The total market capitalization of all cryptocurrencies has climbed up to $132 billion, $2 billion away from its weekly high of $134.3 billion reached on Sunday, Dec. 30.

7-day total market capitalization chart

7-day total market capitalization chart. Source: CoinMarketCap

All of the other altcoins from the top 20 are in the green today, with EOS (EOS), Cardano (ADA) and IOTA (MIOTA) having the most visible price increases with 5.1, 5.5 and 7.2 percent on the day respectively.

In the meantime, the crypto community is discussing the accusations against crypto exchange HitBTC, which allegedly froze the accounts of several of its users in the wake of the Proof of Keys campaign.

The firm itself has not yet responded to the accusations of Twitter and Reddit users, some of whom claim that BTC withdrawal was not available for them for the last few days. The connection between the blocked withdrawals and the Proof of Keys is not confirmed.

Meanwhile, major Japanese e-commerce conglomerate DMM.com Ltd. has announced the closure of its crypto mining services due to their deteriorating profitability. The news comes shortly after similar announcements made by Japanese internet giant GMO Internet Group, which has ceased the development and selling of BTC miners.

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India: Media Reports Central Bank Has Postponed ‘Crypto-Rupee’ Plans

The Reserve Bank of India (RBI) is pausing its plans to release a digital currency, Indian business news outlet the Hindu Business Line reported on Jan. 1.

India’s central bank had originally announced its intentions to consider a central bank digital currency (CBDC) in April of this year, at the time noting the establishment of an interdepartmental group to look into potential advantages and feasibility.

In August, RBI confirmed the creation of the group, specifying that it was researching a CBDC that would be backed the rupee for reasons including the cost of printing paper and the rising popularity of using digital tokens.

Now, amid confusion over the group’s exact findings, which remain a mystery, Delhi has apparently had a change of heart.

“The government doesn’t want the digital currency any more. It thinks it is too early to even think about a digital currency,” Hindu Business Line quotes an unidentified source as saying.

The hesitancy echoes that which the government displayed last week on the topic of cryptocurrency regulation. Non-CBDC assets such as Bitcoin (BTC) will remain in a gray area for the foreseeable future, one state minister told parliament, saying the issue was being approached with due caution.

Expectations had been that India would put some form of regulatory framework in place in 2018, amid anger over RBI’s ongoing ban on crypto transaction processing by banks.  

The government, meanwhile, continues to seek ways of reducing cash usage in India while attaching transactions to consumers’ biometric data via the Aadhaar scheme — reportedly the world’s biggest biometric ID system, which contains the records of more than one billion people.

Some parties appeared relieved at the shelving of the CBDC option.

“It is premature for RBI to launch crypto-rupee, as more understanding of the crypto economy need to be achieved,” local cryptocurrency exchange Belfrics founder Praveen Kumar told Hindu BusinessLine. He added:

“It is a right decision to delay the process and see how the publicly traded peer-to-peer economy is shaping up.”

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Stellar Co-founder Brands 90% of Crypto Projects ‘B.S.’

Most financial institutions will not use Bitcoin (BTC), payment network Stellar’s co-founder and CTO Jed McCaleb stated in an interview with Yahoo Finance Dec. 31.

Speaking to the online news outlet, McCaleb — who is also known as one of the founding fathers of defunct Japanese Bitcoin exchange Mt. Gox, as well as the co-founder of Ripple — made an argument in favor of the use of permissionless, open blockchains in finance. He told reporters bluntly:

“It doesn’t need to be the bitcoin blockchain, but if it’s not a public chain, then you’re missing the point.”

McCaleb also levelled criticism at cryptocurrency projects that were not Bitcoin, Ethereum or his own Stellar.

“Ninety percent of these projects are B.S. I’m looking forward to that changing,” he said when asked about the outlook for the cryptocurrency industry in 2019, continuing:

“Things like Tron, it’s just garbage. But people dump tons of money into it, these things that just do not technically work.”

Billed as an alternative token development platform to Ethereum, TRON (TRX) has upped its publicity efforts this year, with CEO Justin Sun regularly lambasting the Ethereum network over its alleged shortcomings.

Celebrations of TRON accruing its one millionth user account this month were likewise met with skepticism.

For McCaleb, however, no single cryptocurrency network or associated token forms an all-encompassing solution — including Stellar and its in-house coin, Lumens (XLM).

“There are some things bitcoin is good at, some things Ethereum is good at, and some things Stellar is good at,” he said, adding:

“And none of them can do all the things well. That’s just not how software works.”

Going forward, McCaleb was bullish, rejecting the idea that 2018 represented a bear market in crypto and instead describing it as “calming down.”

Stellar partnered with cryptocurrency wallet provider Blockchain.com last month to expand the circulation and uptake of XLM with a massive $125 million airdrop to users.

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Hodler’s Digest, Dec. 24–30: Top Stories, Price Movements, Quotes and FUD of the Week

Top Stories This Week

Nvidia Faces Class Action Lawsuit Over Losses After Lower GPU Mining Demand

Graphics processing unit (GPU) producer Nvidia is currently facing a class action lawsuit over losses that the company reported when lower crypto prices lowered demand for GPUs by miners. The Schall law firm announced the lawsuit this week, with the complaint alleging that Nvidia made false and misleading statements to the market. Schall noted that since the GPU producer claimed that drop off in demand for GPU on miners would not negatively affect the business, the lawsuit has merit.

Altcoin Bitcoin Private Team Confirms 2 mln Additional Coins Were Secretly Premined

The development team for altcoin Bitcoin Private (BTCP) has confirmed this week that 2.04 million units of BTCP were created that were never intended to exist on the altcoin’s blockchain. Following a report in late December from a digital asset analytics website that revealed the discrepancy, the BTCP team launched an investigation that eventually found that the extra coins had been mined, but they do not yet know who created the coins and for what reason.

South Korea Rules in Favor of Bithumb After Investor Lawsuit Over $355,000 Hack

South Korean court has ruled in favor of crypto exchange Bithumb in a lawsuit in which an investor had sued the exchange for his loss of around $355,000 in an alleged hack. Ahn Park alleged that he had been the victim of a hack of his Bithumb account on Nov. 20, 2017, which resulted in the aforementioned loss, and cited Bithumb’s lack of security safeguards as befit a financial services firm. However, the court did not find Park’s claims that Bithumb’s activities were similar to that of services offered in the financial sector to be true, and ruled against him.

– Vitalik Buterin Defending the Lightning Network

New Indian Governmental Committee Supports Crypto Legalization, Media Reports

Local India media reported this week that a governmental committee has suggested that cryptocurrencies be legalized within the country. An unnamed senior official who reportedly attended the panel’s meetings on cryptocurrencies stated that there was a “general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalized with strong riders.” The government reportedly set up this panel after the Reserve Bank of India’s ban on banks dealing with crypto businesses and persons in April this year.

Major US Magazine Time Column Reports on the Freeing Potential of Bitcoin

Time magazine published a column this week that praised the liberating potential of Bitcoin, mentioning Venezuela as an example of a country where the citizens can benefit from the cryptocurrency. According to the article, Bitcoin is a valuable financial tool for avoiding censorship, specifically noting that Bitcoin can help Venezuelans avoid inflation, as a government cannot simply print more Bitcoin. The currency can also be used to bypass mass surveillance in places like China.

Winners and Losers

The crypto markets are looking steady today, with Bitcoin trading around $3,874.67, Ripple around $0.37 and Ethereum at $138.85. Total market cap is around $130 billion.

The top three altcoin gainers of the week are SoundDAC, Bitspace and HondaisCoin. The top three altcoin losers of the week are RabbitCoin, Accelerator Network and CatoCoin.

Winners and Losers

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“Block-chain [sic] technology. No joke. Super powerful stuff, and the first one to figure out how to hack it, manipulate it or bring it down wins.” — Andrew Bustamante, reportedly a former CIA intelligence officer, speaking of the biggest threats to national security

Most Memorable Quotations

– Andrew Bustamante on the Future of U.S. National Security

“Once there are new issues, then Ether will rebound aggressively. When the ICO market returns, Ether will quickly test $200. The timing of the ICO rebirth is 12 to 18 months out,” — Arthur Hayes, BitMEX CEO

“Yeah no, I have my disagreements with the bitcoin roadmap, PoW, etc but they’re trying to do something that’s genuinely cool tech. BSV is a pure dumpster fire,”  — Vitalik Buterin, Ethereum (ETH) co-founder

“At some point, yes, it will drive a profound shift in how we communicate and collaborate, but we’re not there yet,”  — Lance Braunstein, E*Trade Financial Corp. CIO, speaking about “blockchain” as a buzzword

FUD of the Week

Hackers Steal Almost 1 Million in Phishing Attack on Electrum Wallet

A hack that reportedly took place this week against cryptocurrency wallet Electrum allowed a malicious party to steal almost 250 Bitcoin (BTC), commentators on social media reported. The hack was then confirmed by Electrum, which explained that it consisted of the creation of a fake version of the wallet that fooled users into providing password information. Affected users reported on social media that they failed to log onto their wallets after providing two-factor authentication code, which Electrum does not actually request during login.

WSJ: Hundreds of Crypto Projects Show Signs of Fraudulent Activity

Research published by the Wall Street Journal this week has revealed that hundreds of crypto offerings show signs of fraudulent activity, improbable returns and plagiarism. For its research, the WSJ downloaded the whitepapers of 3,291 crypto projects that had announced initial coin offerings (ICO), conducting an analysis of the documents. The research found that 16 percent — or 513 — of the aforementioned white papers showed signs of plagiarism and identity theft, and that 2,000 contained sentences with turns like “nothing to lose, guaranteed profit, return on investment, highest return, high return, funds profit, no risk and little risk.”

FUD of the Week

– Arthur Hayes on Ethereum and the Future of ICOs

Chinese Media Reports Jihan Wu and Jenke Group to Set Down as Bitmain CEOs

Unconfirmed media reports in China this week wrote that Jihan Wu and the Jenke Group will be reportedly soon retire as CEOs of leading mining ASIC producer Bitmain. According to unnamed sources, Bitmain is currently in a transition period, and employees are allegedly unhappy with the outcomes of the double-CEO system. The Chinese local media outlet also noted that their successor has the surname of Wang, without providing further information.

Japanese Giant GMO Internet to Stop BTC Miner Production After Losses in Q4

Japanese internet giant GMO Internet Group announced its intentions to leave the Bitcoin mining hardware sector. Citing major losses in Q4 of this year, GMO, which began its foray into BTC mining in 2017, has written in a public document that it will no longer develop, manufacture or sell miners, citing difficulties in the current business environment. The document also noted that GMO will relocate its mining operation “to a region that will allow us to secure cleaner and less expensive power supply.”

Best Cointelegraph Features

From Blanket Ban to Its Own Stablecoin: How Facebook’s Relationship With Crypto Changed Over 2018

Facebook often made the news this year in the FUD sense, as it banned, and then partially unbanned, advertising from cryptocurrency-related companies. In response to the rumors that the social media giant would be creating its own cryptocurrency, Cointelegraph looks at the history of how Facebook has interacted with crypto this year.

From “Obsolete” Blockchain to Bitcoin at $1 Mln: Predictions of 2018

As the year comes to a close, Cointelegraph looks at different predictions made this year about crypto, from the very accurate to the wildly off. As Bitcoin drops below $4,000 at year’s end, who was right?

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Major American Magazine Time Column Reports About Bitcoin’s Liberating Potential

Bitcoin (BTC) has a substantial liberating potential, American mainstream newspaper Time reports on Dec. 28.

The aforementioned article claims that “speculation, fraud, and greed in the cryptocurrency and blockchain industry have overshadowed the real, liberating potential of Satoshi Nakamoto’s invention.”

According to the article’s author, Bitcoin “can be a valuable financial tool as a censorship-resistant medium of exchange.”

Alejandro Machado, a cryptocurrency researcher at the Open Money Initiative, reportedly said that the fee on a wire transfer from the United States to Venezuela can be as high as 56 percent.

To circumvent such conditions, Venezuelans have reportedly turned to cryptocurrency, receiving Bitcoin from their relatives abroad. The main alternative is to wire money to Colombia, withdraw and bring cash to Venezuela, which according to the article, “can take far longer, cost more, and be far more dangerous than the Bitcoin option.”

Times suggests that Bitcoin is a good way to protect oneself from fiat currency inflation. Venezuela is prime example of that, with the inflation of their native currency projected to top 1 million percent. But there are also other similar examples, like Zimbabwe, where former president Robert Mugabe “printed endless amounts of cash.” But the author points out:

“His successors can’t print more Bitcoin.”

Bitcoin is also, according to the article, a tool to evade mass surveillance in places like China. That being said, as Cointelegraph reported in March, according to U.S. whistleblower Edward Snowden, Bitcoin isn’t optimal for avoiding government coercion, and he believes that the world needs a better option.

Times also points out the advantage given by the inability of governments to censor transactions or freeze Bitcoin wallets. In fact, Cointelegraph reported in April that WikiLeaks’ Coinbase account has been suspended due to a term of service violation.

Still, nobody can prevent WikiLeaks from using cryptocurrency wallets where the organization controls the private keys. In fact, WikiLeaks is still accepting cryptocurrency donations and also added support for Snowden’s favorite crypto Zcash in August 2017.

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From Blanket Ban to Its Own Stablecoin: How Facebook’s Relationship With Crypto Changed Over 2018

On Dec. 20, Bloomberg reported that Facebook is making a stablecoin for WhatsApp users. The cryptocurrency will reportedly be used for money transfers made within the messaging app and will focus on the Indian market.

The move provides a curious juxtaposition for the social media giant, which banned cryptocurrency-related advertising across its network back in January and then partly reversed it in June.

Here’s how Facebook’s relationship with cryptocurrencies and blockchain has been developing in 2018 — overall, it has been a patchy road.

January: Zuckerberg is being bullish about crypto; Facebook bans crypto ads

On Jan. 4, Mark Zuckerberg set out his person challenge for 2018: to fix Facebook. While this year brought even more problems for the social media giant — Zuckerberg’s sweaty testimony on data privacy before the United States Congress being a primary example — the Facebook CEO seemed optimistic about the company’s future at the start of 2018. Interestingly, he cited encryption and cryptocurrencies as potential ways to empower users in his Facebook post:

“There are important counter-trends to this – like encryption and cryptocurrency – that take power from centralized systems and put it back into people’s hands. […] I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”

Despite Zuckerberg’s bullish statement, on Jan. 30, Facebook announced that it will prohibit ads that use “misleading or deceptive promotional practices,” referring specifically to initial coin offerings (ICOs) and cryptocurrencies. Rob Leathern, product management director at Facebook, explained the company’s decision in a blog post:

“We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception. That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.”

The ban was “intentionally broad,” meaning that the social media company decided to ban all cryptocurrency ads on its platforms (namely Facebook, Instagram and Audience networks) first, and then find out how to pick out ones that are actually “deceptive.” However, Leathern also stated that the company intends to “revisit this policy and how [they] enforce it as [their] signals improve.”

Facebook’s move seemed to coincide with the U.S. Securities and Exchange Commission’s (SEC) public announcement regarding crypto-related investments and ICOs, which was published earlier in December 2017. In that statement, SEC Chairman Jay Clayton suggested that there is a growing trend for “fraud and manipulation” in the cryptocurrency and ICO markets due to their rising popularity.

Importantly, by rolling out its crypto ad ban, Facebook had set a precedent for other big tech companies, as Google and Twitter eventually followed suit. There was a shorter-term effect, too: The Facebook blanket ban was followed by a large Bitcoin (BTC) price drop, as it went from $11,200 to $8,800 over the few days after the decision was announced.

February: Facebook has no plans for crypto, says its head of Messaging

On Feb. 2, CNBC published an interview with David Marcus, Facebook’s head of Messenger and Coinbase board member, who has also admitted to having “a longtime” interest in cryptocurrencies.

Marcus told the news outlet that crypto won’t appear on his platform anytime soon, citing cost and scalability issues:

“Payments using crypto right now is just very expensive, super slow, so the various communities running the different blockchains and the different assets need to fix all the issues, and then when we get there someday, maybe we’ll do something,”

During the interview, Marcus also defended Facebook’s decision to ban all crypto-related ads:

“We want to protect the community. That’s job number one. All the legitimate people in the crypto world that I spoke to at least thanked me for what we just did with that move. […] The reality is the vast majority of these ads were a scam and we cannot allow scams to exist on our platform.”

However, he noted that the policy might be reviewed “once the industry self regulates a lot better and you have better more legit products that want to be advertised on the platform.”

May: Facebook forms its Blockchain team; rumors about social media’s own crypto emerge

On May 8, Facebook unveiled its blockchain plans, as David Marcus announced that he will head up the technology-focused group assembled within the social networking service company.

“I’m setting up a small group to explore how to best leverage blockchain across Facebook, starting from scratch,” Marcus stated on his personal page.

A few days later, on May 11, news outlet Cheddar reported that the social media outlet is “very serious” about launching its own cryptocurrency. Cheddar’s anonymous sources “familiar with Facebook’s plans” reportedly said that Facebook is “specifically interested in creating its own digital token” for its 2 billion users.

The company did not respond to rumors about the cryptocurrency, limiting their statement to a brief comment on the newly established blockchain team:

“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

June: Facebook backpedals on the crypto ad ban

On June 26, Facebook made somewhat of a U-turn in regard to its views on crypto. The social media giant updated its policies to once again allow cryptocurrency ads on the platform — however, it has kept its ban on ICOs.

In the accompanying announcement, Facebook said it has been looking into the best way of “refining” its blanket ban on crypto-related ads “over the last few months,” in order to “allow some ads while also working to ensure that they’re safe.”  

Facebook’s revised “prohibited products and services policy” stated:

“Starting June 26, we’ll […] allow ads that promote cryptocurrency and related content from pre-approved advertisers. But we’ll continue to prohibit ads that promote binary options and initial coin offerings.”

However, the updated policy required advertisers to submit an application so that Facebook can evaluate their qualification to run crypto-related ads. Specifically, applicants were advised to include “any licenses they have obtained, whether they are traded on a public stock exchange, and other relevant public background on their business.” Ultimately, Facebook stated that “not everyone who wants to advertise will be able to do so.”

July: Facebook’s director of engineering moves to its blockchain team

On July 6, Evan Cheng, Facebook’s director of engineering of three years, moved to the same position at the company’s recently established blockchain team led by David Marcus.

The software engineer updated his LinkedIn profile to reflect the newly acquired position, and the change has also been confirmed by Facebook.

Prior to this, Cheng was heading up the programming languages and runtimes division at Facebook for about three years. Before joining the social media company, Cheng was working on back-end engineering for the tech giant Apple for almost 10 years.

August: Marcus leaves Coinbase to avoid conflict of interest; Facebook denies working with Stellar

On Aug. 10, Marcus announced he was quitting his position on the board of Coinbase, which he obtained in December 2017:

“Because of the new group I’m setting up at Facebook around Blockchain, I’ve decided it was appropriate for me to resign from the Coinbase board. […] I’ve been thoroughly impressed by the talent and execution the team has demonstrated during my tenure, and I wish the team all the success it deserves going forward.”

According to a Facebook spokesperson cited by CNBC, the move was “to avoid the appearance of conflict, rather than because of an actual conflict.”

Also on Aug. 10, Business Insider reported that Facebook and Stellar, a decentralized protocol for cross-border digital currency to fiat currency transfers, had been considering a potential partnership to build a Facebook variant of the Stellar blockchain. The move “could shed light on Facebook’s ambitions to push into finance and take on big banks,” the report suggested.

However, Facebook promptly denied entering into talks with cryptocurrency firm Stellar. The social media giant’s spokesman reportedly told Cheddar that Facebook was “not engaged in any discussions with Stellar, and [was] not considering building on their technology” on the same day.

December: Facebook’s blockchain arm is on a hiring spree; rumors about a WhatsApp stablecoin surface

In December, the Facebook blockchain arm’s hiring spree was noticed by Cointelegraph, as the social media company listed at least five new blockchain-related positions on its careers page over three weeks, most of which have been closed as of press time.

The only remaining position mentioning blockchain is for a business development lead, for which potential applicants are required to have a “deep understanding of blockchain product and technology” in order to “inform and influence [Facebook’s] product roadmap and support and execute on product plans.”

As per Cheddar, by Dec. 13, Facebook’s blockchain department, once categorized by its head David Marcus as “small,” had nearly 40 employees. Facebook job listings state that its blockchain group’s “ultimate goal is to help billions of people with access to things they don’t have now,” which “could be things like equitable financial services, new ways to save, or new ways to share information.”

Further, in December, rumors about the Facebook-run cryptocurrency reignited once again. First, Cheddar cited a source who said that “Facebook employees pitched the idea of creating a decentralized digital currency” at a private dinner the company hosted during an unspecified crypto conference.

Further, on Dec. 21, Bloomberg followed with a more detailed report, stating that the social media company is making a cryptocurrency for users of the messaging service WhatsApp, which Facebook obtained for $19 billion back in 2014.

The token will allegedly allow users to make money transfers within the messaging app and will focus on the remittances market in India, where WhatsApp is reported to have more than 200 million users. According to data from the World Bank, the country received nearly $69 billion in foreign remittances in 2017, which is 2.8 percent of India’s GDP.

More specifically, Bloomberg’s sources said that Facebook is developing a stablecoin. However, it is not likely to be released anytime soon, as the social media company is reportedly still figuring out which asset their stablecoin will be tied to.

As for public comments, Facebook has been forwarding the same statement since May, when first rumors regarding their own crypto emerged. It reads: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

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Phishing Attack on Electrum Wallet Nets Hacker Almost $1 Million in Hours, Report

A reportedly ongoing hack against cryptocurrency wallet Electrum has seen a malicious party steal almost 250 Bitcoin (BTC) (about $937,000), commentators reported on social media Dec. 27.

Subsequently confirmed by Electrum itself, the attack consists of creating a fake version of the wallet that fools users into providing password information.

“The hacker setup a whole bunch of malicious servers,” Reddit user u/normal_rc explained:

“If someone’s Electrum Wallet connected to one of those servers, and tried to send a BTC transaction, they would see an official-looking message telling them to update their Electrum Wallet, along with a scam URL.”

Affected users report trying and failing to log in to their wallets after providing their two-factor authentication code — something Electrum does not in fact request during login. The hackers then empty the wallet balance.

“[W]hen I logged on it immediately asked me for my 2 factor code which I thought was a little strange as well as Electrum usually only asks for that when you attempt to send,” one victim continued in another Reddit post, adding:

“I kept trying to send and kept getting an error code ‘max fee exceeded no more than 50 sat/B [satoshis per byte]’ I then restored my wallet on a separate pc and found that my balance had been transferred out in full[.]”

According to u/normal_rc, several addresses are feeding into one main holding address, which currently contains 243 BTC.

Electrum posted about the incident on Twitter today, stating “[t]here is an ongoing phishing attack against Electrum users” and implored users to check the validity of the resource they were logging into.

“Our official website is https://electrum.org[.] Do not download Electrum from any other source,” the tweet continued.

Wallet hacks are less frequent than those afflicting online exchanges, several of which — most notoriously Japan’s Coincheck — have lost users hundreds of millions of dollars in 2018.

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