An anonymous reader quotes a report from Reuters: FTX founder Sam Bankman-Fried sold a stake in the company worth $300 million when the crypto exchange raised capital last year, the Wall Street Journal reported on Friday, citing the firm's financial records and people familiar with the transaction. At the time, Bankman-Fried told investors it was a partial reimbursement of money he'd spent to buy out rival Binance's stake in FTX a few months earlier, the report added. The Journal's report cited FTX's October 2021 funding round where the company had raised $420 million from a clutch of big name investors including Temasek and Tiger Global, valuing the crypto exchange at $25 billion.

Nayib Bukele, the president of El Salvador, announced late Wednesday that his government plans to buy one Bitcoin every day starting on Thursday. Gizmodo reports: The current price of one Bitcoin is roughly $16,540, down 1.5% from a day earlier and down 73% from a year ago. Bitcoin was trading at an all-time high of over $68,000 in November 2021 when El Salvador was purchasing large quantities of Bitcoin. President Bukele has already lost El Salvador tens of millions of dollars, according to the latest calculations by Bloomberg News. El Salvador hasn't publicly confirmed how many bitcoin purchases the country has made, but based on Bukele's tweets we can determine he's purchased 2,381 Bitcoin since the start of his experiment. The price for all the country's Bitcoin holdings has totaled $105 million to purchase, according to Bloomberg, while the current worth is roughly $39.4 million. Bukele would've been smarter just holding U.S. dollars as cash, even with annual inflation at almost 8%.

Despite declaring Bitcoin an official currency in El Salvador in late 2021, few people are actually using the crypto for purchases in the country. And one of the common reasons cited for declaring it a currency, sending remittances back to the country from abroad, has been a bust as well. Roughly $6.4 billion dollars was sent as remittances to El Salvador from September 2021 until June 2022, but less than 2% of those were in cryptocurrency, according to Reuters. The Bitcoin experiment has also caused El Salvador's credit rating to get knocked down repeatedly, with the country's rating currently sitting at CC, due to the likelihood it will default on bond obligations that are coming due in 2023, according to CoinDesk.

The embattled and now bankrupt cryptocurrency exchange FTX may owe more than a million people money, according to a Tuesday court filing (PDF). Motherboard reports: "The events that have befallen FTX over the past week are unprecedented. Barely more than a week ago, FTX, led by its co-founder Sam Bankman-Fried, was regarded as one of the most respected and innovative companies in the crypto industry," the filing notes. "FTX faced a severe liquidity crisis that necessitated the filing of these [bankruptcy] cases on an emergency basis last Friday. Questions arose about Mr. Bankman-Fried's leadership and the handling of FTX's complex array of assets and businesses under his direction."

The filing goes on to state that, originally, it was thought that there were "over one hundred thousand creditors in these Chapter 11 Cases." It then states that, "in fact, there could be more than one million creditors," meaning that FTX could owe money to more than a million people, the vast majority of whom are customers and former customers. The filing is an attempt to consolidate and simplify the bankruptcy process; as noted in an earlier filing, FTX operated a highly complex corporate structure with dozens of companies, each of which filed for bankruptcy separately last week. The fate of customers' money is still up-in-the-air as FTX halted withdrawals last week. According to the Wall Street Journal, FTX founder Sam Bankman-Fried thinks he can raise enough money to make users whole. "Mr. Bankman-Fried, alongside a few remaining employees, spent the past weekend calling around in search of commitments from investors to plug a shortfall of up to $8 billion in the hopes of repaying FTX's customers," WSJ reports. "The efforts to cover that shortfall have so far been unsuccessful."

With the cryptocurrency market becoming ever more complex and intimidating, California Attorney General Rob Bonta had decided to issue guidance for novice crypto buyers. CoinTelegraph reports: The California Office of the Attorney General's website now features a page that will help those new to crypto "avoid the hype, [and] get the facts." "Don't fall for a fantasy -- Cryptocurrency, like all investments, carries significant risks, and there's no guarantee that you'll see large -- or any -- returns," Bonta said in a statement. "Our new webpage is meant to be a resource for Californians curious about this new and volatile market."

The new page emphasizes customer safety. It provides a two-sentence explanation of what "crypto assets" are, plus a vocabulary list, and warns that: "Even when there are no scams involved, crypto assets can be risky, especially if you don't have enough information to make sound judgments about how you're spending your money."

Aside from that, the page concentrated on scams, red flags and how to "stay safe." That information is concise but complete. It reminded the reader of the limit legal recourse available if problems arise with a cryptocurrency purchase, but gave detailed instructions on how and where to file a complaint. Besides explaining what a rug pull and pig butchering are, the guide reminded readers that celebrities are paid for what they say about crypto and that the wise buyer does not fall for Fear of Missing Out.

Long-time Slashdot reader kid_wonder writes: BlockFi, a crypto exchange, had suspended withdrawals on Friday and now appears to be having serious issues directly related to the FTX meltdown. In an email to customers this morning they said: "The rumors that a majority of BlockFi assets are custodied at FTX are false. That said, we do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX US. While we will continue to work on recovering all obligations owed to BlockFi, we expect that the recovery of the obligations owed to us by FTX will be delayed as FTX works through the bankruptcy process.

At this time, withdrawals from BlockFi continue to be paused. We also continue to ask clients not to submit any deposits to BlockFi Wallet or Interest Accounts." Reuters has a list of some firms who have given information about their exposure to FTX.

"The collapse of FTX will likely give rise to a number of criminal and civil actions against the exchange and its executives, like former FTX CEO Sam Bankman-Fried," reports CoinDesk, citing a number of legal experts. "It's also likely to push forward actual regulatory changes, either via lawmakers or through federal agencies themselves." An anonymous reader shares an excerpt from the report: FTX filed for bankruptcy last Friday, days after halting withdrawals and a little over a week after CoinDesk first reported that the balance sheet of FTX sister company Alameda Research held a surprisingly large amount of FTT, an exchange token issued by FTX. FTX was "fine," Bankman-Fried said in response to questions about his exchange's solvency, before a series of events showed otherwise. As a result, several state and federal agencies launched or expanded investigations into the company, including the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the Securities Commission of the Bahamas and the Bahamas' Financial Crimes Investigation Branch. Members of the U.S. Congress from both political parties are also calling for further action as a result of the collapse. Some lawmakers are even talking about holding hearings, potentially by the end of the year, said Ron Hammond of the Blockchain Association.

The fact that regulators apparently had no view into some of the major projects that fell apart this year -- such as Celsius, Three Arrows, Luna and now FTX -- is "precisely the problem," said an industry participant who works closely with policymakers. Still, the individual told CoinDesk that they don't expect any major legislative action to occur this year. Most likely, Congress will look at bills like the Digital Commodities Consumer Protection Act, a bill that Bankman-Fried supported but was written prior to that, in the upcoming year. According to an attorney who requested anonymity, the SEC may have an easier time kicking off the investigation just due to its mandate. "The SEC is in a much better position to go to court and get a freeze [on assets] if they believe there's a reason to do that," the attorney said. "The SEC also has a less cumbersome process for subpoenaing testimony and freezing documents." The SEC and DOJ are likely to cooperate though, to the extent that DOJ investigators may sit in on SEC interviews.

FTX has various U.S. connections, which is all the SEC and DOJ need to assert jurisdiction for their investigations. FTX appears to be preparing for these investigations, with FTX US General Counsel Ryne Miller having already told the entire company to preserve documents. A former federal prosecutor told CoinDesk that the bankruptcy court may also shed light on the situation, thus assisting government investigators with their probes. "The bankruptcy court has the ability to now oversee the company and to obtain information from the company that, let's say the DOJ might not have been able to obtain as easily pre-bankruptcy, and they'll likely have access to a new trustee or an examiner and be able to learn in essentially real-time what's going on," the former prosecutor said. Executives like Bankman-Fried may also "be in a tough spot with respect to" deciding whether to cooperate or assert Fifth Amendment rights against self-incrimination, the former prosecutor added. "A complicating factor -- for FTX anyway -- may be the fact that Bankman-Fried has tweeted his way through his company's collapse," adds CoinDesk.

"It's a complete nightmare," said Ken White, a former federal prosecutor and a partner at the Brown White & Osborn law firm. "This is a situation where all sorts of agencies are going to be looking at this, the SEC, the FTC, and probably the Department of Justice. There are all sorts of potential criminal and civil consequences -- lawsuits. Civil lawsuits are a certainty. And here he is sort of tweeting out his thoughts about it. It's every attorney's nightmare of what a client might do."

The main issue being that Bankman-Fried repeatedly took to Twitter to reassure users that everything was fine. "It creates new bases for criminal or civil claims against him just based on those tweets," White said. "So if he says that everything's fine, that their assets are real assets, and that's not true, then that can be securities fraud, and wire fraud, all sorts of other stuff, not to mention all sorts of civil causes of action ... It is just disastrously reckless."

Friday the Wall Street Journal reported: Crypto exchange FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange's implosion, a person familiar with the matter said.

FTX Chief Executive Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, one of the people said.

All in all, FTX had $16 billion in customer assets, the people said, so FTX lent more than half of its customer funds to its sister company Alameda.
And then Friday night Reuters reported that "At least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, according to two people familiar with the matter.

"The exchange's founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried's trading company Alameda Research, the people told Reuters. A large portion of that total has since disappeared, they said." One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.

While it is known that FTX moved customer funds to Alameda, the missing funds are reported here for the first time. The financial hole was revealed in records that Bankman-Fried shared with other senior executives last Sunday, according to the two sources. The records provided an up-to-date account of the situation at the time, they said. Both sources held senior FTX positions until this week and said they were briefed on the company's finances by top staff....

In text messages to Reuters, Bankman-Fried said he "disagreed with the characterization" of the $10 billion transfer. "We didn't secretly transfer," he said. "We had confusing internal labeling and misread it," he added, without elaborating.

Asked about the missing funds, Bankman-Fried responded: "???"

FTX and Alameda did not respond to requests for comment....

At the heart of FTX's problems were losses at Alameda that most FTX executives did not know about, Reuters has previously reported.... FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a "backdoor" in FTX's book-keeping system, which was built using bespoke software. They said the "backdoor" allowed Bankman-Fried to execute commands that could alter the company's financial records without alerting other people, including external auditors...

In his text message to Reuters, Bankman-Fried denied implementing a "backdoor"....

On Friday, FTX said it had turned over control of the company to John J. Ray III, the restructuring specialist who handled the liquidation of Enron Corp — one of the largest bankruptcies in history.

An anonymous reader quotes a report from CoinDesk: The swift collapse of the FTX crypto exchange has sparked an industry push among big rivals to publish proof of their reserves as a means to provide transparency into the assets on their platforms. With those efforts just getting underway, one firm, Crypto.com, has taken the proactive step of providing a preliminary set of disclosures -- sharing wallet addresses with the blockchain analysis firm Nansen to create a dashboard of nearly $3 billion of reserves and other assets. What that shows is just how heavily the mix of assets is skewed toward a meme-y token called shiba inu (SHIB), a digital asset built atop the Ethereum blockchain that was largely inspired by the joke token dogecoin (DOGE).

Like DOGE -- a key staple of billionaire Elon Musk's crypto schtick on Twitter -- the SHIB token is a highly volatile cryptocurrency whose primary use case is often considered to be speculation itself; it's traded for fast profits and yuks. Of the $2.88 billion in total assets in the wallets, roughly $558 million, or about 20%, are in SHIB. The holding ranks second only to the $872 million of bitcoin (BTC), the largest cryptocurrency by market value, which represents 31%. The amount exceeds the $487 million in ether (ETH), the second-biggest cryptocurrency, and dwarfs the $1.5 million in dogecoin (DOGE), Nansen data suggests. Crypto.com's large holding of SHIB is a "reflection of user interest/activity," Nansen data journalist Martin Lee told CoinDesk.

"In an ideal world, we'd want the best assets to be worth the most, but SHIB and DOGE both have extremely high market caps," he said. So it's "not super surprising that retail-heavy exchanges will have a higher concentration of such tokens. And regardless, as an exchange, your main source of revenue would likely be trading fees, so whether it's meme coins or more fundamentally sound assets, your business model is intact."

Further reading: Binance's CZ Slams Reports Binance's Reserves Are Full of Its Own Tokens

An anonymous reader quotes a report from Benzinga: Binance CEO Changpeng Zhao on Friday came down heavily on a report the cryptocurrency exchange holds $74.6 billion in tokens, out of which nearly 40% are its own stablecoin BUSD and native coin BNB. Sharing data provided by blockchain analytics firm provided by Nansen, the Bloomberg report said about $23 billion of the $74.6 billion net worth is in the company's own stablecoin BUSD and $6.4 billion was in its own cryptocurrency, BNB. According to Nansen data, the exchange has also allocated 10.5% of its holdings to Bitcoin and 9.8% to Ether.

Challenging the report, Zhao, popularly known as "CZ" in the crypto industry, said: "#BUSD is issued by Paxos, an NYDFS regulated entity, not Binance. The numbers are all wrong too. These are users' assets, in the form users choose to store with us. We don't convert for them." According to data shared by Binance, it holds around 475,000 Bitcoin ($7.8 billion), 4.8 million Ether ($5.57 billion), 17.6 billion USDT ($607 million), as well as close to 21.7 billion of its own stablecoin BUSD (worth $21.9 billion) and 58 million of its BNB tokens (worth $16 billion). The current value of these tokens is about $72.3 billion, according to Nansen.

Following the collapse of popular crypto exchange FTX, Bitcoin fell 12% to just under $16,000, hitting a low not seen since November 2020. "It reached its all-time high of $68,982.20 one year ago Thursday," notes CNBC. From the report: Cryptocurrencies extended their slide for a second day Wednesday as the market absorbed the potential collapse of popular crypto exchange FTX. Prices were pressured to start the day and plunged by late afternoon as Binance, the largest global exchange by volume, abandoned plans to acquire Sam Bankman-Fried's FTX after a due diligence exam and recent reports of mishandled customer funds and alleged U.S. agency investigations of FTX.

The Bankman-Fried empire quickly unraveled after a report last week showed a large part of the balance sheet at Alameda Research, the trading company where Bankman-Fried was also CEO, had been concentrated in FTX Token (FTT), the native token of the FTX trading platform. After some light sparring on Twitter with Bankman-Fried, Binance CEO Changpeng Zhao announced his company was offloading the FTT on its books, leading to a run on the popular FTX exchange and a liquidity crisis. FTX counts some of the biggest names in finance -- including SoftBank, BlackRock, Tiger Global, Thoma Bravo, Sequoia and Paradigm -- among its investors. "Given the public-facing nature of FTX CEO Sam Bankman-Fried and the size of FTX, we believe that the week's events could cause some loss of consumer confidence in the crypto industry, beyond that seen in the aftermath of the 3AC, Celsius, and Voyager events that took place earlier this year," especially if panic spreads and crypto prices keep dropping, KBW analysts said in a note Tuesday. "It may take time for customers to regain trust in the industry, broadly speaking (and we think regulation could help this)."

According to CoinDesk, Binance has walked away from a deal to acquire FTX. From the report: "As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com," the spokesperson told CoinDesk. "In the beginning, our hope was to be able to support FTX's customers to provide liquidity, but the issues are beyond our control or ability to help. Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market. As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger." Further reading: Bitcoin Falls Below $16,000

Department of Justice, announcing through a press release: Damian Williams, the United States Attorney for the Southern District of New York, and Tyler Hatcher, the Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Los Angeles Field Office ("IRS-CI"), announced today that JAMES ZHONG pled guilty to committing wire fraud in September 2012 when he unlawfully obtained over 50,000 Bitcoin from the Silk Road dark web internet marketplace. ZHONG pled guilty on Friday, November 4, 2022, before United States District Judge Paul G. Gardephe.

On November 9, 2021, pursuant to a judicially authorized premises search warrant of ZHONG's Gainesville, Georgia, house, law enforcement seized approximately 50,676.17851897 Bitcoin, then valued at over $3.36 billion. This seizure was then the largest cryptocurrency seizure in the history of the U.S. Department of Justice and today remains the Department's second largest financial seizure ever. The Government is seeking to forfeit, collectively: approximately 51,680.32473733 Bitcoin; ZHONG's 80% interest in RE&D Investments, LLC, a Memphis-based company with substantial real estate holdings; $661,900 in cash seized from ZHONG's home; and various metals also seized from ZHONG's home.

U.S. Attorney Damian Williams said: "James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road. For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds. This case shows that we won't stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin."

An anonymous reader quotes a report from Bloomberg: Hong Kong is pivoting toward a friendlier regulatory regime for cryptocurrencies with a plan to legalize retail trading, contrasting with the city's skeptical stance of recent years and the ban in place in mainland China. A planned mandatory licensing program for crypto platforms set to be enforced in March next year will allow retail trading, according to people familiar with the matter, who asked not to be named because the information isn't public. Regulators are seeking to allow listings of bigger tokens but won't endorse specific coins like Bitcoin or Ether, the people said, adding the details and timetable have yet to be finalized as a public consultation is due first.

The government is expected to flesh out its recently stated goal of creating a top crypto hub at a fintech conference starting Monday. The push comes amid a broader drive to restore Hong Kong's credentials as a finance center after years of political turmoil and Covid curbs sparked a talent exodus. [...] The upcoming regime for listing tokens on retail exchanges is likely to include criteria such as their market value, liquidity and membership of third-party crypto indexes, the people familiar said. That's similar to the approach for structured products such as warrants, they added. "Introducing mandatory licensing in Hong Kong is just one of the important things regulators have to do," said Gary Tiu, executive director at crypto firm BC Technology Group Ltd. "They can't forever effectively close the needs of retail investors."

Core Scientific, one of the world's largest miners of Bitcoin, warned that it may run out of cash by the end of the year and could seek relief through bankruptcy protection. Bloomberg reports: Operating performance and liquidity have been severely impacted by the prolonged drop in the price of Bitcoin, a rise in electricity costs, increased competition and litigation with bankrupt Celsius Networks LLC, the Austin, Texas-based company said in a US Securities and Exchange Commission filing on Thursday. Shares of Core Scientific dropped 78% on Thursday, its worst trading day since going public earlier this year through a merger. Bitcoin mining companies such as Core Scientific had recently been increasingly opting to sell equity, resorting to one of their least attractive options to raise money as profits dry up and higher interest rates makes borrowing more expensive. The company entered into a $100 million common stock purchase agreement with B. Riley Principal Capital II in July. Bitcoin has slumped almost 70% since reaching a record high in November 2021.

"We could see similar filings within the sector," said Brian Dobson, an analyst at Chardan Capital, who had a 'buy' rating on the shares. "This is going to weigh on all of the publicly traded crypto miners." Should Core Scientific file for bankruptcy, it would likely be the first large publicly traded Bitcoin miner to do so, Dobson said. Core Scientific said it won't make payments coming due in late October and early November with respect to several of equipment and other financings, including two bridge promissory notes. The company is exploring alternatives, including hiring strategic advisers, raising additional capital or restructuring its existing capital structure. Core Scientific held 24 Bitcoins and approximately $26.6 million in cash as of Thursday. That's compared with 1,051 Bitcoins and about $29.5 million in cash as of September, the company said in the filing. The shares, which traded as much as $14.32 late last year, closed at 22 cents. they've tumbled 98% since the start of the year.

One year after its record-breaking launch, the world's first exchange traded fund tracking the price of bitcoin has lost more of investors' dollars than any other ETF debut. The Financial Times reports: Asset manager ProShares launched its Bitcoin Strategy fund in October 2021, and it immediately became the most successful new ETF in history, amassing more than $1bn in its first week of trading on the New York Stock Exchange. Bitcoin enthusiasts proclaimed the launch as the moment when crypto joined the world's biggest equities market and became enmeshed in mainstream investment strategies for retail and institutional buyers alike. But one year into its existence, the fund has lost money on an unprecedented scale, according to data from Morningstar Direct for the Financial Times.

Its 70 percent share price drop also makes this the sixth-worst performing debut ETF of its kind of all time, in a test for investors during what has become known as the "crypto winter." The ETF, known as BITO, has attracted inflows consistently through its life, with only light withdrawals. But even with net inflows of $1.8 billion in its debut year, its assets now stand at $624 million. Taking together the timing of inflows and the 70 per cent drop in the fund's equity price, Morningstar calculates that BITO has lost $1.2 billion of investors' money, making this by far the biggest debut loser. Buyers "remained extremely loyal to the long-term thesis for bitcoin," said Todd Rosenbluth, head of research at consultancy VettaFi.

"The fund has not seen the outflows one would expect given its performance. The pendulum has swung away from certain investment theses this year. Historically it can swing back in favor, but the challenge is whether the asset manager has the confidence to keep the product afloat."

As cryptocurrency prices soared last year, no investor bet more on the sector than Andreessen Horowitz. The timing wasn't good. From a report: The storied venture-capital firm had developed a reputation as Silicon Valley's greatest crypto bull, thanks largely to a 50-year-old partner named Chris Dixon who was one of the earliest evangelists for how the blockchain technology powering cryptocurrencies could change business. His unit was one of the most-active crypto investors last year, and in May announced a $4.5 billion crypto fund, the largest ever for such investments.

The timing wasn't good. Prices for bitcoin and other cryptocurrencies have plunged this year in the midst of a broad market downturn, erasing billions of dollars in paper gains for Andreessen's funds. Consumer demand has vanished for some of the firm's most-prized crypto startups, while others are facing increased scrutiny from regulators. Andreessen's flagship crypto fund shed around 40% of its value in the first half of this year, according to people familiar with the matter. That decline is much larger than the 10% to 20% drops recorded by other venture funds, which have largely avoided the risky practice of purchasing volatile cryptocurrencies, according to fund investors. Despite the record cash pile, Andreessen has dramatically slowed the pace of its crypto investments this year.

Gizmodo points out that the United Kingdom's next prime minister, Rishi Sunak, "is a certified Crypto Bro who once requested that the Royal Mint issue an NFT." From the report: During his tenure as finance minister under former PM Boris Johnson, Sunak was in charge of advancing a number of crypto-related initiatives that sought to normalize digital currencies and integrate them into the British economy. By all accounts, he is the first crypto enthusiast to serve in the UK's top office. He's also the first person of color and the youngest PM -- 42 years old -- that Britain's had in 200 years. To be fair, Sunak's efforts at crypto promotion have at least trended towards regulation and taxation as opposed to total laissez faire deregulated madness -- though those efforts could, ultimately, simply normalize a phenomenon that critics say is redundant at best and a privacy hazard at worst. In April, Sunak announced a series of programs to turn the UK into what he called a "global cryptoasset technology hub." Among the initiatives announced at the time was a plan to integrate stablecoins into the national payment system, thus "paving their way for use in the UK as a recognized form of payment." Considered to be the least volatile form of cryptocurrency, stablecoins have seen more interest by governments than other forms of crypto -- though projects like Terra and Tether have shown the potential danger in putting too much faith in the assets' stability.

Sunak's plans also suggested creating additional regulations that would've helped further incorporate crypto into the UK's economic and legal framework, thus spurring greater investment in the space. "The measures we've outlined today will help to ensure firms can invest, innovate and scale up in this country," Sunak wrote in a press release published at the time. Another ambitious initiative pushed by Sunak was the Financial Services and Markets Bill, a piece of legislation that would give local governments in Britain broad discretion to regulate cryptocurrencies, thus further assimilating them into the nation's economy. The bill, which has not yet passed, is currently being looked at by Parliament.

At the same time, Sunak also recently backed a study to look at the potential benefits of creating a central bank digital currency (CBDC), or "Britcoin" as he dubbed it. Proponents of CBDCs argue that they could have benefits for spenders, making payments "faster, cheaper, and more secure," as one op-ed puts it. However, critics argue that they are unnecessary and could ultimately spell huge privacy troubles, given the trackable nature of crypto and digital currencies. Despite his crypto track record, analysts have suggested that is is unlikely Sunak will have time to focus much on any web3-related initiatives in the near term. Given Britain's current economic dumpster fire, any work on "Britcoin" might have to take a backseat.

The US unsealed charges claiming two Chinese intelligence officers tried to obstruct a criminal investigation of Huawei , and alleged others were working on behalf of a "foreign power" to try procure technology and recruit spies. Bloomberg reports: The charges were part of a series of recently unsealed cases the Justice Department announced Monday that officials said had disrupted criminal activity being conducted by the People's Republic of China. Ten of the 13 individuals charged were Chinese intelligence individuals, according to FBI Director Chris Wray. Deputy Attorney General Lisa Monaco added that the case involving alleged obstruction of a US probe of a telecommunications company -- which the DOJ wouldn't identify -- exposes the connection between the Chinese government and its companies. She said the telecom giant tried to "unlawfully gain an edge" to undermine the US investigation, and shows why Chinese companies shouldn't be trusted to handle the personal data of Americans.

In a complaint made public Monday, the US claims Guochun He and Zheng Wang worked on behalf of the Chinese government to target the US, from 2019 until the present, for the benefit of the company. A person familiar with the matter confirmed it is Huawei. The US claims He and Wang bribed a law enforcement employee to provide what they believed was confidential information about witnesses, evidence and possible additional charges to be filed against the technology giant. He paid the employee $61,000 in Bitcoin, according to the criminal complaint. In a separate action, four people were charged in federal court in New Jersey with conspiracy to act as an illegal agent of a foreign government. The conspiracy allegedly involved Chinese intelligence officers posing as academics to recruit US law enforcement workers and others in seeking help procuring fingerprint technology and equipment for the US. They also allegedly pressured one former official to stop protests in the US along the 2008 Olympic torch route, according to court filings.

In addition, the Justice Department announced that seven people from China were charged in an indictment unsealed in the Eastern District of New York last week with conspiring to harass a Chinese citizen living in the US in hopes of causing the person to return. The actions were allegedly part of an effort by China, called "Operation Fox Hunt," to force the repatriation of alleged fugitives living in other countries. In the case involving the Huawei probe, the complaint includes conversations between He and Wang and a US government employee working as a double agent under supervision of the Federal Bureau of Investigation. They were using an encrypted messaging program that is not identified.

Freeway, a UK-based crypto platform that promised annual returns up to a mind-boggling 43%, halted withdrawals on Sunday, according to a notice published to the company's website. Freeway's native cryptocurrency, which goes by the ticker FWT, plummeted 74% following the announcement and, to top it all off, the Freeway website appears to be scrubbing the names and photos of some executives. From a report: Upset users have taken to the community Telegram channel for Freeway, expressing frustration that they can't access their accounts. People who told friends and family members to invest in the platform seemed the most angry, based on comments viewed by Gizmodo early Monday. The news, first reported by the crypto-watcher Twitter account FatManTerra, comes in the wake of other high-profile collapses in the crypto space this year, including Celsius, which has filed for bankruptcy. FatManTerra tweeted on Saturday that they believed Freeway was a Ponzi scheme which would likely collapse by this time next year. Well, apparently we didn't have to wait a whole year for things to collapse. It seems to have happened in just a day, as Freeway's website includes a varied assortment of confusing terms to explain that users can no longer access their money. And it sounds a lot like what Celsius said after it announced it was halting withdrawals back in June.

Harry Halpin helped create uniform cryptography standards for the World Wide Web Consortium, reports Quanta magazine — but "he also wanted to protect the lower, foundational level: the network through which the information is transmitted.

"In 2018, he started Nym Technologies to take on this problem.... Halpin spoke with Quanta from Nym's headquarters in Neuchâtel, Switzerland." Halpin: The trickier problem is this: How do I communicate with you so that no one else knows I'm communicating with you, even if our messages are encrypted? You can get a sense of what people are saying from the pattern of communication: Who are you talking with, when are your conversations, how long do they last...?

There are two key elements: One is the "mixnet," a technology invented by David Chaum in 1979 that my team has improved. It relies on the premise that you can't be anonymous by yourself; you can only be anonymous in a crowd. You start with a message and break it into smaller units, communications packets, that you can think of as playing cards. Next, you encrypt each card and randomly send it to a "mixnode" — a computer where it will be mixed with cards from other senders. This happens three separate times and at three separate mixnodes. Then each card is delivered to the intended recipient, where all the cards from the original message are decrypted and put back into the proper order. No person who oversees mixing at a single mixnode can know both the card's origin and its destination. In other words, no one can know who you are talking to.

Q: That was the original mixnet, so what improvements have you made?

Halpin: For one thing, we make use of the notion of entropy, a measure of randomness that was invented for this application by Claudia Diaz, a computer privacy professor at KU Leuven and Nym's chief scientist. Each packet you receive on the Nym network has a probability attached to it that tells you, for instance, the odds that it came from any given individual.... Our system uses a statistical process that allows you both to measure entropy and to maximize it — the greater the entropy, the greater the anonymity. There are no other systems out there today that can let users know how private their communications are.

Q: What's the second key element you referred to?

Halpin: Mixnets, as I said, have been around a long time. The reason they've never taken off has a lot to do with economics. Where do the people who are going to do the mixing come from, and how do you pay them? We think we have an answer. And the kernel of that idea came from a conversation I had in 2017 with Adam Back, a cryptographer who developed bitcoin's central "proof of work" algorithm. I asked him what he would do if he were to redesign bitcoin. He said it would be great if all the computer processing done to verify cryptocurrency transactions — by solving so-called Merkle puzzles that have no practical value outside of bitcoin — could instead be used to ensure privacy.

The computationally expensive part of privacy is the mixing, so it occurred to me that we could use a bitcoin-inspired system to incentivize people to do the mixing. We built our company around that idea....

A new paper that came out in June shows that this approach can lead to an economically sustainable mixnet....

We are not building a currency system or trying to replace the dollar. We just want to provide privacy to ordinary people.