Cryptocurrency News Now!: #65: The EOS launch is still a chaotic mess

Thursday, June 21, 2018

#65: The EOS launch is still a chaotic mess

Chain

Letter

Blockchains, cryptocurrencies, and why they matter

06.21: Reinventing the wheel

Happy Thursday! Today’s Chain Letter will be an extra helping of news and analysis instead of the customary deep dive. And next week we will be taking a break, so don’t be alarmed when you don’t hear from us. We’ll return the week of July 2 with our regularly scheduled programming.

Update: EOS is still a sh*tshow. Last week we told you about how the launch of EOS’s new blockchain didn’t quite go as planned. Unfortunately for EOS token holders, things haven’t gotten much better since. The drama du jour revolves around a decision by the 21 recently-elected “block producers” (EOS’s version of cryptocurrency miners) to freeze seven accounts that have supposedly fallen victim to a phishing scam in which hackers stole token holders’ private keys. The unilateral decision has drawn cries of “Centralized!” from all across the crypto world.

It’s also set off what’s been called a “constitutional crisis” for the currency. But that’s not quite right—EOS’s governing constitution hasn’t been ratified yet! Without a founding document in place, things unraveled when a group of block producers asked the “EOS Core Arbitration Forum,” a body that is supposed to function as the network’s judicial branch, to freeze the compromised accounts. The forum initially refused, saying it lacked the authority under the interim constitution. So the block producers went ahead and froze the accounts themselves. So much for decentralization.

Tethered to the truth? Tether, the world’s most popular—and controversial—stablecoin, is pushing back against speculation that it might not be completely backed up by US dollars. And, oh yes, the company also took exception to being accused of being instrumental in a large-scale Bitcoin price manipulation scheme. Yesterday, the Tether team put out a “transparency update” that said a Washington, DC law firm co-founded by former FBI director Louis Freeh can attest that the number of Tether crypto-tokens in circulation indeed matches that of real dollars held by the company in reserve.

According to the report, Tether approached the firm this year and asked it to “review bank account documentation and to perform a randomized inspection of the number of Tethers in circulation and the corresponding currency reserves.” Tether says firm found that the amount of real dollars in the bank “is nearly equal” to the $2.54 billion worth of Tether coins out there. The report could calm the waters a bit, but it’s not a proper audit, so it won’t quiet the skeptics. Meanwhile, the company’s CEO denied to Bloomberg that any manipulation has occurred, and its general counsel was quoted in the same piece as claiming that “an audit cannot be obtained” because the cryptocurrency market is too new to the big accounting firms. The saga continues.

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Loose Change

Fill your pockets with these newsy tidbits.

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Hackers have stolen more than $31 million worth of cryptocurrency from the popular South Korean exchange Bithumb. (Reuters)

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Members of the US House of Representatives have been advised that they must disclose any cryptocurrency holdings worth more than $1,000. (Bloomberg)

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A cryptocurrency exchange in the UK plans to launch a product for trading Litecoin futures. (CoinDesk)

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Quebec will raise electricity prices for crypto-miners while it tries to figure out how to deal with exploding energy demands from the industry. (Bloomberg)

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The musician Akon says he’s planning to build his own city in Senegal where a new cryptocurrency, Akoin, will be the medium of exchange. (The Verge)

The Money Quote

“We’re making history. This Warhol is the first artwork of many more to come.”

—Marcelo García Casil, chief executive of Maecenas Fine Art. The company is helping the owner of a 1980 silkscreen by Andy Warhol use cryptocurrency to sell shares in the piece without giving up more than 49 percent of its ownership. (Quartz)