Friday, October 12, 2018

Bithumb gets bought

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EOS Divide? The language divide between the Western world and the Eastern world is effectively hindering technological progress for the EOS network.

Despite showing a united front for the release of the EOS mainnet, relations between block producers have deteriorated in part due to the "Great Firewall," the nickname given to the stringent internet rules enforced by the Chinese government, and in part due to the cultural differences between the two communities.

Hoping to resolve these differences, in the past weeks EOS community members have been working toward a more inclusive arbitration system. A new organization, the EOS Mandarin Arbitration Community (EMAC) is seeking to increase Chinese speakers' access to dispute resolution, and two of its members have joined the EOS Core Arbitration Forum (ECAF).

The efforts appear to be paying off: EMAC advisor Thomas Cox told CoinDesk that "by now anybody who feels that there's an unbridgeable divide probably was on vacation for four or five weeks." Full Story

BITHUMB BUY-OUT: On Thursday Bithumb, South Korea's largest crypto exchange by volume, announced it has a new majority shareholder: the Singapore-based BK Global Consortium.

BTC Holdings Company, which held 76 percent of Bithumb's equity, agreed to sell more than half of its holdings to the blockchain investment firm formed by BK Global, a plastic surgery medical group in Singapore.

The acquisition deal further indicates Bithumb's total valuation is now roughly $880 million. Full Story

EXCHANGES BEWARE: The Financial Crimes Enforcement Network (FinCEN) released an advisory cautioning crypto-firms to be wary of transactions that originate or terminate in Iran on Friday.

The financial authority fears that the Middle Eastern country could be turning to cryptocurrencies to sidestep strict financial sanctions levied by the U.S. government.

The U.S.-based crypto exchanges were reminded of their responsibility to uphold the sanctions as they pertain to the Bank Secrecy Act. Full Story

The U.S. Senate held a hearing on the cryptocurrency ecosystem yesterday. Two guests were invited to share their positive and negative sentiments on the state of the industry. The negative viewpoint was represented by than none other than Dr. Doom, Nouriel Roubini, the NYU economist.

During his testimony, he claimed that cryptos are down 70-90 percent, all ICOs are scams and that much of the industry is totally centralized.

As a rebuttal:

The 2017 Q4 over-speculation caused losses but if you bought exactly one year ago, you are probably up about 40 percent. If you bought earlier you are up higher.
It was reported that 80 percent of ICOs were scams this year. However, the difference between failed and scam is subjective, especially since that study defined a scam by what was "deemed by the community." For comparison, Startup Genome reported that within traditional early stage investing, 90 percent of startups fail.
Cryptos are not centralized states, but rather open source software projects. The fact that there are about 2,000 or so cryptos indicate a wide distribution of developers and users decentralizing themselves further from the source.

For more research insights check out the CoinDesk Research section here. You can also follow CoinDesk's research analyst Peter Ryan on Twitter for the latest insights.

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DESCENT AHEAD? Following the drop in bitcoin's price after weeks of lateral movement, the charts indicate a bearish future. In fact, a number of price factors in the charts strongly favor a bear takeover. Full Story

BEST OF THE BEST

BLOOMBERG BUSINESSWEEK: The brains behind the discovery of the bitcoin-tether connection – John Griffin and Amin Shams – are continuing their efforts to expose malpractice in financial markets.

Griffin, a UT Austin professor, told Bloomberg Businessweek he was inspired by a Bible quote to publish findings on misdeeds that occur in different markets, although he fears that malicious actors will use his papers as a guideline to better manipulate the markets.

Griffin's critics claim that he and his team do not understand exactly how the market works and do not understand the consequences of publishing based on "a fundamental misunderstanding."

THE REST

NDTV: Indian Prime Minister Narendra Modi alleviated the fears of citizens concerned that technological advancement would deprive them of jobs, and in doing so set up hopes for a more blockchain-friendly India.

In his statement at the launch of the World Economic Forum’s Centre for the Fourth Industrial Revolution, NDTV's Gadgets 360 quotes him saying that "the government is working on a national strategy for blockchain technology and will also announce a drone policy."

He went on to add that after missing the first three industrial revolutions, this revolution "can take India to new heights of development," specifically citing work in emerging fields such as blockchain.

BLOOMBERG: The age old adage "finders keepers" may be modified to "builders keepers" in the case of Bibox Exchange.

Bloomberg reported that the co-founder of the exchange, Wanlin Wang, sued former employee Wei Liu for furtively naming herself as the sole managing member and shareholder of the firm's crypto management platform.

Wang contends that he hired Liu to set up the paperwork for the platform, and to register him and a business partner as the shareholders.

However, Liu's lawyers argued that she authored the white paper behind the venture, has ownership of the website domain and most importantly, control of the key to the entity's digital wallet for releasing assets.

We've launched our first-ever podcast, "Late Confirmation," a digest of top stories in the blockchain world, delivered daily from the team at CoinDesk.

Listen to Latest Episode and Subscribe

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#94: Cryptocurrency (probably) doesn’t threaten global financial stability (yet).

Chain

Letter

Blockchains, cryptocurrencies, and why they matter

10.12: Inside the box

Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies.

Too few people use digital currencies for them to really threaten the world’s financial stability. That’s the conclusion of a new report from the Financial Stability Board (FSB), an international body that keeps tabs on the global financial system and makes recommendations to the G20. Still, the market is developing so quickly that “vigilant monitoring” is needed, the FSB warns. The primary risks posed by crypto-assets are low liquidity, the use of leverage, volatility, and technological risks like vulnerability to cyberattacks. If the financial system regulators don’t properly account for these risks and they then materialize, it could undermine confidence in financial institutions.

But the most important words in the conclusion may be the caveat that the report is “based on the available information.” Assessing risks is difficult because there is so little available data, particularly on the extent to which investors are borrowing money to buy cryptocurrency, and how exposed financial institutions are. Crypto-specific regulations could force more transparency. Until then, the FSB is developing a new “monitoring framework,” which it says is based mostly on the sliver of public data that does happen to be available.

Here come the Asian stablecoins. Dollar-pegged crypto-tokens have dominated the stablecoin craze, but that won’t be the case for much longer. Several high-profile projects that use the Japanese yen as a peg are waiting in the wings. The latest to be announced is the GMO Japanese Yen, planned by major Japanese internet company GMO Internet. Just last month, a Hong Kong-based investment group announced plans to develop another yen-backed stablecoin, and a group of Japanese banks is supposedly developing one too, called J Coin.

Meanwhile, don’t count China out. In a recent opinion piece flagged by CoinDesk, Li Liangsong, a researcher for the China’s central bank and Wang Huaqing, a professor at China’s Fudan University argued that China should boost its research into stablecoins and consider giving financial support to issuers of yuan-pegged digital coins. The authors, writing in a magazine that Coindesk calls “a mouthpiece” of the People’s Bank of China, argue that China should be wary of dollar-pegged stablecoins, which could reinforce the dollar’s dominant role in the global financial system and negatively affect China’s currency.

The SEC appears to be taking its ICO crackdown to the next level. Tightening the noose. That’s how Yahoo Finance describes what the US Securities and Exchange Commission has been doing recently to startups that raised money via initial coin offerings. We learned back in February that the SEC had issued “dozens” of subpoenas to cryptocurrency companies. Now the agency has subpoenaed many more, reports Yahoo, citing more than 15 anonymous industry sources.

According to the article, the agency seems to be focusing on companies that aimed to stay exempt from strict SEC regulations by selling tokens only to so-called accredited investors—individuals who either have a minimum net worth of $1 million or who made more than $200,000 annually for the past two years. Apparently, many companies failed to properly limit their ICOs in this way and so dozens have now quietly agreed to pay a fine and return money to investors. Just the latest reminder that investor protection laws in the US are no joke.

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Loose Change

Fill your pockets with these newsy tidbits.

•

A new study of Bitcoin’s 32 largest holders, commonly called “whales,” suggests that on the whole their trading activity has stabilized the market rather than contributed to price volatility. (Chainalysis)

•

Hackers have stolen nearly $1 billion worth of cryptocurrency in 2018, up nearly 250 percent compared with last year, according to new research. (Reuters)

•

Swiss asset manager and commodities trader Tiberius Group has delayed the sale of its commodity metals-based crypto-token until December, blaming high fees imposed by credit card companies. (Bloomberg)

•

Binance has delisted four crypto-tokens for failing to meet its “quality standard.” (ETHNews)

•

Coinbase has added an Ethereum-based token, 0x, to its professional trading platform for the first time. (CoinDesk)

•

Venezuelans will now have to use the nation’s cryptocurrency, the petro, to purchase passports—at a cost of four times the national monthly minimum wage. (Bloomberg)

The Money Quote

“Where is the value created? I can’t get my head around it.”

—Jeff Jarvis, professor at the City University of New York’s Craig Newmark Graduate School for Journalism, talking about Civil, a startup trying to use the blockchain to give news consumers a better way to support quality journalism. Civil is struggling to raise money via its token sale, perhaps because its business model is hard for potential partners and users to understand. Jarvis told the Wall Street Journal that after speaking with the Civil team he’s unconvinced the project will work any better than traditional methods for paying for news.

We hope you enjoyed today's tour of what's new in the world of blockchains and cryptocurrencies. Send us some feedback, or follow me @mike_orcutt.

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The first of many?🤨

October 12, 2018

Coinbase Adds First ERC-20 Token to Platform, Who's Next?

0x wins the race

Yesterday, Coinbase announced that it will be listing the 0x protocol token (ZRX) on its Coinbase Pro platform and will launch three new trading pairs alongside: ZRX/USD, ZRX/EUR and ZRX/BTC.

The move is a significant milestone for Coinbase as ZRX becomes the first ERC-20 token, a token that runs on the Ethereum network, to be listed on the exchange.

While ZRX won’t be available on Coinbase.com or Coinbase IOS and Android apps yet, Coinbase did acknowledge in their blog that it will make a separate announcement for the situation when it happens.

Directly following the announcement, ZRX surged as high as 32% but has since retreated.

Avoiding another hiccup

After seeing ZRX surge, it’s clear that the ‘Coinbase Effect’ - or the idea that one of the world’s most exclusive crypto exchanges will list a cryptocurrency - still has an effect even though the market slumped.

However, Coinbase is taking extra caution to make sure the ZRX listing happens smoothly and fairly to make sure another listing fiasco doesn’t happen again.

In a blog post, Coinbase detailed it’s 4 step plan to ensure the ZRX order books are healthy:

Transfer Only
Post Only
Limit Only
Full Trading

It’s unclear how long each phase will take, but Coinbase will be tweeting updates as ZRX passes through the process.

Alright...alright...but who’s next?

Short answer...no one knows.

However, we do know that Coinbase announced 5 assets it was looking at listing in July and since ZRX was on that list, we are hopeful ADA, BAT, XLM, and ZEC get similar treatment.

And with a new and improved listing process announced late last month, Coinbase is equipped with everything it needs to onboard assets in a quicker manner than before.

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BIG IDEA

Cryptocurrency Market Follows Equities Downward

Equity market going on a bear run of its own

Ever since the financial crisis of 2007-2008, the United States equities market has been on a prolonged bull run. While it has not been as extreme as crypto's bull run of 2017, equities have been on a very steady upward trend for about the last ten years. According to some methods of calculation, the past decade has been the longest bull run in history for stocks.

As crypto investors know, good things don't last forever. The equities market has been slaughtered over the last week or so, with tech stocks leading the way downward.

Investors are frightened by the Federal Reserve shifting toward contractionary monetary policy. Also, trade wars and other political events have made investors wary of the futures. China is probably the biggest of the unknowns and we have yet to see how the tariffs imposed will impact the market.

Unfortunately crypto has followed

Cryptocurrency is always pitched as a hedge against traditional financial markets, a "digital gold". Cryptocurrency proponents claim that crypto is the place to go to lower an investors exposure to the stock market.

While in theory these arguments make sense, this has not been the case as of late. Gold has appreciated as the equity market spiraled down, but Bitcoin followed the equities down. Actually, the entire crypto market mirrored the stock market.

This is not a good sign for crypto. One of its most important use cases should be a hedge to traditional financial markets. Investors should be able to flock to crypto to diversify their holdings.

In the past, crypto has had a zero correlation with the equities market. This may have been because of the rapid growth of the crypto, rather than market fundamentals. Hopefully, the crypto market can once again separate itself from traditional assets.

RESEARCH

Whales Aren’t So Killer After All, Chainalysis Finds

Call them friendly whales

In August, many investors feared a Bitcoin whale that reportedly sold 50,000 coins and sent Bitcoin into a 15% plunge.

Now though, according to a new study by blockchain research firm Chainalysis, whales don’t seem to be manipulating the price of Bitcoin downward after all.

Absorbing sales

The report followed the activity of the 32 largest Bitcoin wallets and found that during the most recent downturn, these whales were actually net purchasers of Bitcoin.

While this research doesn’t show on-exchange transactions, it does show these wallets have had a net-gain of Bitcoin holdings in times of turmoil.

To Chainalysis, this means that these whales are actually stabilizing the markets, rather than destabilizing the markets.

REGULATION

ICO Falsely Claimed SEC Approval... It Didn't End Well

Don't mess with the SEC

Blockvest LLC is a blockchain startup that recently held an initial coin offering. It's founder, Reginald Buddy Ringgold III claimed to investors that the company registered the offering with the SEC and received approval from regulators. However, Ringgold was not telling the truth, the company had no communication with the SEC. This tactic turned out poorly for the ICO.

On top of feigning SEC approval, Ringgold went one step further. He created a fictitious 'Blockchain Exchange Commission'. The founder claimed to also have approval from this nonexistent regulator.

When the SEC got word of what was going on with Blockvest, it obtained an emergency court order to halt the ICO.

An excerpt from the SEC complaint reads:

“Blockvest and Ringgold claim their ICO has been ‘registered’ and ‘approved’ by the SEC and other regulators, even going so far as to use the SEC’s seal to promote their offering. None of that is true: the SEC has in no way approved, authorized or otherwise endorsed defendants, their entities, nor their ICO. Defendants also claim they are “partnered” with and “audited by” Deloitte Touche Tohmatsu Limited (“Deloitte”)-which they are not.”

SEC is doing what it said it would

Cryptocurrency investors have been upset with the SEC for its unclear stance on cryptocurrency regulations, but the SEC is doing exactly what it said it would. The Commission has always voiced that its main goal was to protect investors.

For the large part, the SEC has left legitimate cryptocurrencies alone. Of course, it has denied a handful of Bitcoin ETFs but is likely that one will be approved eventually. The SEC is just doing its due diligence.

BITS

But wait, there's more...

A fake news site has used the likeness of New Zealand Prime Minister Jacinda Ardern to promote articles on Facebook aimed to pump a crypto startup.
Ethereum-based adult entertainment platform SpankChain confirmed that it had recovered all the funds lost during a security breach October 6.
Jeff Kaufmann, Legal Director at British law firm Reynolds Porter Chamberlain (RPC), said that the introduction of cryptocurrency market regulations in the U.K. could take two years.

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