largest crypto lawsuit ever 😳 / what really happened to bitcoin's Lightning Network ⚡️ / Binance Jersey closing 🇯🇪

The relationship between Bitfinex, the USD-backed stablecoin Tether (USDT), and the price of bitcoin is at the heart of the largest cryptocurrency lawsuit ever...

Inside.com Part of   Network October 19, 2020

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Market Watch Bitcoin $11,698 7 day: +1.6% Ethereum $379 7 day: -2.2% All crypto $364b 7 day: -0.5% Bitcoin dominance 59.3% 7 day: +0.9% Prices as of 4 p.m. EDT

NYAG Court Order from April 2019 Regarding the trillion-dollar Bitfinex-Tether lawsuit. The relationship between Bitfinex, the USD-backed stablecoin Tether (USDT), and the price of bitcoin is at the heart of the largest cryptocurrency lawsuit ever.  Over the years, plaintiffs have accused cryptocurrency exchange Bitfinex of manipulating markets and the price of bitcoin through its related stablecoin, Tether (USDT). One plaintiff is New York Attorney General (NYAG) Letitia James. For background on her ongoing lawsuit, see this edition of Inside Cryptocurrency. In today's edition of Inside Cryptocurrency Premium, I dive deep into the industry's largest lawsuit, with dozens of citations and facts about Panama, Reginald Fowler, Crypto Capital, iFinex, Wells Fargo, Tether, and the price of bitcoin. Start your free 14-day trial today! FREE TRIAL

Google search queries for "lightning network" since 2015 Regarding bitcoin's Lightning Network: Lightning Network was heralded in 2018 as a viable scaling solution to bitcoin's congested network. However, interest in the project has fallen since early 2018 and not recovered.  What's really going on: At times, a single person controlled a majority of the Lightning Network's activity, the anonymous owner of LNBIG. LNBIG was one of the largest contributors to Lightning Network's operations. Its owner poured hundreds of bitcoin into Lightning Network nodes and often controlled over half of the network, with still 40% control as of September 2019. Background: In 2015, Joseph Poon and Thaddeus Dryja published a draft whitepaper for the Lightning Network. The proposed second-layer scaling solution sped up transactions by processing most bitcoin transactions off-chain, and then bundling them into packets and logging them as a group onto bitcoin's blockchain. Lightning Network provided cheaper and faster payments between users. Lighting Labs was the primary supporter of the project. It launched an initial release called "lnd 0.4-beta" that was sponsored by Jack Dorsey, CEO of Twitter (NYSE:TWTR) and Square (NYSE:SQ). The three primary Lightning Network development teams were Lightning Labs, Blockstream, and ACINQ. Various promotional stunts on Twitter were launched to attract attention to the project, the most famous of which was the "lightning torch."  The "torch" was a small amount of bitcoin that was passed between crypto celebrities using the Lightning Network. The aftermath: As the crypto community became aware of Lightning Network's centralization and lack of security, interest has declined from its 2018 height and has not recovered. Lightning Network has a centralized configuration whereby a few active nodes can act as "hubs," and even relatively small amounts of bitcoin deposited into nodes can grant that node authoritative privileges within the network. Moreover, Lightning Network does not have robust safety protections against attacks that originate within the system itself. The bitcoin held in Lightning Network totals $12.4m as of last month, or 0.006% of bitcoin's $216b market capitalization. Researchers investigate: In February 2020, a team of researchers published a paper indicating that Lightning Network remains centralized. Based on their findings after 18 months of data, the network had unequal wealth distribution, a small number of nodes with expansive authority, and a small oligopoly accumulating a significant amount of mining rewards. Researchers found that the surge in Lightning Network's popularity during 2018 was shortlived. Most public node operators from that time have vanished from the network and those nodes remain unused (i.e., did not route any payments). The anonymous owner of LNBIG also closed several inactive nodes, lowering Lightning Network's capacity. Hebrew University researchers tested a congestion attack on the payment channel network on Feb. 18. They found that an attack costing just $4,000 would severely disrupt the Lightning Network. The researchers concluded that "it is possible to disrupt the Lightning Network by locking most of its liquidity using less than half a bitcoin." Coindesk provided an update on Sept. 2, showing less than $13m of total value locked (TVL) in Lightning Network (again, 0.006% of the value of all circulating bitcoin). Google Trends

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Binance Jersey is closing soon Binance Jersey is closing. Less than two years after launching in the tax haven, all accounts will become inaccessible on Nov. 30. Binance Jersey was once an important fiat-to-crypto onramp for both Euros and British Pounds. Binance Jersey's daily trading volumes have subsequently dwindled. Today, Binance.je processes less than $250,000 in daily transactions; Binance.com processes $3.2b. Binance has other country-specific domiciles, including Singapore (binance.sg), USA (binance.us), U.K. (binance.co.uk), Australia (binancelite.com), and Uganda (binance.co.ug). A repeating story in other countries: Binance Uganda, for example, eased fiat-to-crypto purchases for the Chinese diaspora working on the Belt & Road. (A key country along China's Belt & Road, China owns one-fifth of Uganda's debt and many of its industrial properties. Uganda's economy is intimately tied to China.) Binance Uganda subsequently lost government approval for the listing of its Binance Coin (BNB). Elsewhere, the Malta Financial Services Authority previously ordered Binance to cease operations in its country. Binance's offices are difficult to locate and change frequently. Its CEO regularly refuses to locate himself and his employees. CoinTelegraph

Quick Hits: Binance has burned 2,253,888 BNB coins ($68m). LocalBitcoins competitor Paxful integrates with troubled cryptocurrency exchange Bithumb. Five of the largest miners of Filecoin (FIL) have turned off their machines to oppose the project's "unfair" economic model. The protests are beginning just one day into the mainnet launch. Read more on the troubled ICO here at Inside Cryptocurrency. Central bankers continue to evaluate CBDCs. The Block Crypto reports that a $46b hedge fund was "on the verge of" investing in cryptocurrencies. Chargebee is organizing the largest tech summit for change-makers of the SaaS space, featuring champions from HubSpot, Drift, Dropbox, Slack, etc. Join here.* *This is a sponsored post.

Written and curated by wide-eyed bitcoin watcher since $1, Aaron Wise. Streaming headline junkie, Associated Press fanboy, eye-strained news terminal watcher, 2017 founder of Cryptocurrency Newsfeed. Temporarily based in Florida while awaiting the construction of cryptopia.  Editor Edited by Eduardo Garcia in New York. Eduardo is writing an illustrated book about climate change that will be published by Ten Speed Press, an imprint of Penguin Random House. Bylines in The New York Times, The Guardian, Slate, Scientific American, and others. In one of his previous lives, Eduardo worked as a Reuters correspondent in Latin America for nearly a decade.

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