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Bitcoin

New York AG Proposes Landmark Crypto Law, Citing 'Dysfunction' (bloomberg.com) 19

Posted by msmash from the heightened-scrutiny dept.
New York Attorney General Letitia James proposed a state law to tighten rules over cryptocurrency companies in her latest swing at an industry she claims is suffering from "rampant fraud and dysfunction." From a report: Under her proposal, New York would require independent public audits of crypto exchanges and bar people from owning both brokerages and tokens to prevent conflicts of interest. In a statement Friday, James called her proposal "the strongest and most comprehensive set of regulations on cryptocurrency in the nation." The measures, which first need to be adopted by state lawmakers, also would require crypto platforms to reimburse customers who are victims of fraud and strengthen the authority of the New York State Department of Financial Services to regulate digital assets, according to the statement. "Millions of investors have lost hundreds of billions in the value of their cryptocurrency investments because of rampant fraud, including market manipulation, hacking, and opaque business practices," James said. According to the attorney general, her proposal will be submitted to lawmakers for the 2023 legislative session.
Bitcoin

Balaji Srinivasan Closes Out $1 Million Bitcoin Bet Early (bloomberg.com) 53

Posted by msmash from the losing-the-battle-to-win-war dept.
Balaji Srinivasan, the former chief technology officer of Coinbase Global, said he closed out what appeared to be a losing bet that Bitcoin would rise to $1 million within 90 days. From a report: Srinivasan said he gave $1 million to two organizations, including Bitcoin Core development team at researcher Chaincode Labs, as well as paying $500,000 to someone who goes by James Medlock on Twitter, and who won the wager. The goal of the bet, Srinivasan reiterated in a Twitter post and a short video Tuesday, was to show that fiat currencies such as the dollar are in trouble, and that those troubles will push Bitcoin's price up. At $28,710, Bitcoin is about 10% up from when Srinivasan accepted the bet on March 17. "The reason that I did that is I wanted to tell you in a provable way that there's something wrong in the economy and the state isn't telling you about it," Srinivasan said in the video, recounting troubles with US banks, sovereign debt and other potential issues. "That is what I am doing at my own expense, I am raising public alarm."
Bitcoin

The Kingdom Of Bhutan Has Been Quietly Mining Bitcoin For Years (forbes.com) 25

Posted by msmash from the how-about-that dept.
The Himalayan kingdom confirmed it has been running a bitcoin mining operation as mystery surrounds the scale of its earlier cryptocurrency investments. From a report: Beneath the Himalayas, rivers fed by ancient glaciers supply the tiny kingdom of Bhutan with immense stores of hydroelectricity. The renewable resource has become an economic engine, accounting for 30% of the country's gross domestic product, and fueling the homes of nearly all of its 800,000 residents. But for the past few years, Bhutan's royal government has been quietly devising a new use for these reserves: powering its very own bitcoin mine. Sources familiar with Bhutan's efforts to develop sovereign mining operations told Forbes that discussions have been occurring since 2020, though until this week its government had never disclosed its plans.

Bhutan sought to harness the country's hydroelectric plants to power racks of mining machines that solve complex mathematical problems in order to earn bitcoin rewards. Once completed, this would make Bhutan one of the only countries to run a state-owned mine, alongside El Salvador. On Saturday, days after Forbes contacted Bhutanese officials with questions about the mining scheme, a government representative confirmed to local newspaper The Bhutanese that it had begun mining "a few years ago as one of the early entrants when the price of Bitcoin was around USD 5,000."

It explained that the earnings go towards subsidizing power and hardware costs. Bhutan's Ministry of Finance did not respond to a list of questions from Forbes about the scope of the enterprise. It's unclear when mining began, where it's located and whether the scheme has turned a profit. (As for the start date, bitcoin was valued at $5,000 in April 2019.) It's also unclear why Bhutan never disclosed the project to its citizens or international partners.
Bitcoin

New Venmo Feature Lets Users Transfer Crypto To Outside Wallets - and To Each Other (fortune.com) 16

Posted by msmash from the moving-forward dept.
Venmo soon will allow users to transfer their Bitcoin, Ethereum, Litecoin, and Bitcoin Cash to outside wallets -- as well as to other users of the popular payment app. From a report: The feature will roll out starting in May, according to a statement from PayPal, which acquired Venmo in 2013. Users can also transfer crypto to their PayPal wallets, which released a similar ability for users in 2022. Crypto transfers on Venmo will be irreversible, just like crypto transactions more broadly -- a function of cryptocurrency's use of blockchains, or immutable public ledgers. To roll out the transfer system, PayPal is partnering with Paxos, a crypto firm that specializes in stablecoins.

"We're excited to connect Venmo's customers to the community, other wallets and exchanges, and we intend to continue to roll out additional crypto products and services in the year ahead," PayPal said in its statement. The announcement from PayPal is one of the first drips of crypto updates from the payments giant since February, when it was reported that the publicly traded company was pausing work on its own stablecoin after reports that Paxos, its partner in the effort, was under investigation from the New York Department of Financial Services, a key player among U.S. cryptocurrency regulators.
The Courts

Coinbase Sues the SEC, Seeking Regulatory Clarity For the Crypto Industry (theblock.co) 37

Posted by BeauHD from the writ-of-mandamus dept.
The U.S. cryptocurrency exchange Coinbase is suing the Securities and Exchange Commission, seeking to force the commission to respond to a petition (PDF) requesting them to draft and approve a rule specific to digital assets. "The lawsuit aims to force the agency to provide a yes or no to Coinbase's ask," adds The Block. From the report: Since that request by Coinbase, the SEC has reopened custody and exchange rules to explicitly say that they apply to digital assets, but has not engaged in drafting a rule specific to digital assets. The agency has also engaged in several enforcement actions against crypto companies, including an investigation into Coinbase.

"From the SEC's public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. But they haven't told the public yet. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision," the company's chief legal officer Paul Grewal wrote in a blog post about the filing. The suit filed by Coinbase is a writ of mandamus, a type of lawsuit for "exceptional circumstances" in which a court can force federal officials to act. If the SEC declines to make a new rule, Coinbase can file another lawsuit in an attempt to make a federal court force them to do so.
Bitcoin

US Crypto Exchange Coinbase Secures Bermuda License (reuters.com) 16

Posted by BeauHD from the what-to-expect dept.
Coinbase has been granted a license by the Bermuda Monetary Authority, allowing the US crypto exchange to operate as a digital asset business there. The exchange is also in the process of obtaining a license in Abu Dhabi. Reuters reports: Coinbase CEO Brian Armstrong said on Tuesday that crypto firms will develop in "offshore" havens unless the U.S. and UK create "clarity about regulation" for crypto. Coinbase is planning to launch a crypto derivatives exchange in Bermuda as soon as next week, Fortune reported on Wednesday, citing a person close to the company.

U.S. SEC Chair Gary Gensler told lawmakers on Tuesday that he had "never seen a field that's so non-complying with laws." Crypto firms say they need clarity about regulations, but Gensler has said that crypto markets "suffer from a lack of regulatory compliance, not a lack of regulatory clarity."
Bitcoin

Ontario Teachers Fund Steers Clear of Crypto After $95 Million FTX Loss (ft.com) 32

Posted by msmash from the closer-look dept.
Canada's $190bn Ontario Teachers' Pension Plan says it is steering clear of the cryptocurrency sector after writing off a $95mn investment in FTX, the failed digital currency exchange. From a report: OTPP was among a number of big-name money managers to back FTX, with investments in 2021 and early 2022. The move was widely seen as a sign that high-profile, blue-chip investors were giving their stamp of approval to the fast-growing but lightly regulated crypto sector. But in November 2022 OTPP wrote off its entire stake, following FTX's dramatic collapse. The exchange's high-profile founder, Sam Bankman-Fried, is now facing fraud charges. "We're still working through what exactly happened there and you're going to be careful," OTPP chief executive Jo Taylor told the Financial Times. "It'd be unwise for us to rush" into another crypto investment based in part on "feedback from our members," he added.
Bitcoin

Collapsed Turkish Crypto Exchange Thodex's CEO Faruk Ozer Extradited, Arrested In Istanbul (coindesk.com) 9

Posted by BeauHD from the you-can't-hide-forever dept.
Faruk Fatih Ozer, the founder of Thodex, one of Turkey's largest crypto exchanges, facing charges of fraud and running a criminal organization, has been extradited to Turkey and was detained by police upon arrival in Istanbul, state media aa.com reported on Thursday. CoinDesk reports: Ozer was arrested in Albania in August after an Interpol red notice against him. Ozer, the founder and CEO of Thodex, fled to Albania after his exchange suddenly went offline last year. More than 400,000 members were left in the dark without access to deposits of $2 billion in cryptocurrencies.

The events surrounding Thodex had created a stir in Turkey where crypto has been used as a hedge against inflation. Ozer's brother, sister and four other senior employees were jailed, and at least 83 people were detained as part of the investigation.
Intel

Intel Discontinues Bitcoin-Mining Blockscale Chips (tomshardware.com) 10

Posted by msmash from the tough-luck dept.
It's been just a year since Intel officially announced its Bitcoin-mining Blockscale ASICs, but today the company announced the end of life of its first-gen Blockscale 1000-series chips without announcing any follow-up generations of the chips. From a report: We spoke with Intel on the matter, and the company told Tom's Hardware that "as we prioritize our investments in IDM 2.0, we have end-of-lifed the Intel Blockscale 1000 Series ASIC while we continue to support our Blockscale customers."

Intel's statement cites the company's tighter focus on its IDM 2.0 operations as the reason for ending the Blockscale ASICs, a frequent refrain in many of its statements as it has exited several businesses amid company-wide belt-tightening. We also asked Intel if it planned to exit the Bitcoin ASIC business entirely, but the company responded, "We continue to monitor market opportunities." In the original announcement that the company would enter the blockchain market, then-graphics-chief Raja Koduri noted that the company had created a Custom Compute Group within the AXG graphics unit to support the Bitcoin ASICs and "additional emerging technology." However, Intel recently restructured the AXG group, and Koduri left the company shortly thereafter.
United Kingdom

Bank of England Official Says Stablecoin Use May Need Limits (bloomberg.com) 22

Posted by msmash from the tradefi-meets-defi dept.
Bank of England Deputy Governor Jon Cunliffe said regulators may need to impose a limit on using so-called stablecoins for payments as policy makers try to balance the need for innovation with its accompanying concerns. From a report: Cunliffe raised the prospect that rapid innovation in payment systems could bring new risks for customers and financial markets as a whole. "While, from a public policy perspective, we want competition and innovation in payments we need to guard against rapid, disruptive change that does not allow the financial system time to adjust and could therefore threaten financial stability," Cunliffe said Monday in a text of remarks at an event hosted by fintech industry body Innovate Finance. Regulators would need to decide "whether there should be limits, initially at any rate, on stablecoins used for payments." Stablecoins, which are currently issued by non-bank businesses, are pegged to the value of an asset. They are designed to maintain a stable value, unlike cryptocurrencies such as bitcoin, while using ledger technology to record and transfer ownership. Cunliffe noted that "so far their use has been confined to facilitating trading and other transactions in the world of crypto assets," but that there were proposals to use them for other, broader payment purposes. "Stablecoins offer the possibility of greater efficiency and functionality in payments," Cunliffe said. But they currently do not fit into any regulatory framework, unlike the existing payments systems and money issued by commercial banks.
Privacy

The US Cracked a $3.4 Billion Crypto Heist - and Bitcoin's Anonymity (wsj.com) 59

Posted by msmash from the closer-look dept.
Federal authorities are making arrests and seizing funds with the help of new tools to identify criminals through cryptocurrency transactions. From a report: James Zhong appeared to have pulled off the perfect crime. In December 2012, he stumbled upon a software bug while withdrawing money from his account on Silk Road, an online marketplace used to hide criminal dealings behind the seemingly bulletproof anonymity of blockchain transactions and the dark web. Mr. Zhong, a 22-year-old University of Georgia computer-science student at the time, used the site to buy cocaine. "I accidentally double-clicked the withdraw button and was shocked to discover that it resulted in allowing me to withdraw double the amount of bitcoin I had deposited," he later said in federal court. After the first fraudulent withdrawal, Mr. Zhong created new accounts and with a few hours of work stole 50,000 bitcoins worth around $600,000, court papers from federal prosecutors show.

Federal officials closed Silk Road a year later on criminal grounds and seized computers that held its transaction records. The records didn't reveal Mr. Zhong's caper at first. Authorities hadn't yet mastered how to track people and groups hidden behind blockchain wallet addresses, the series of letters and numbers used to anonymously send and receive cryptocurrency. One elemental feature of the system was the privacy it gave users. Mr. Zhong moved the stolen bitcoins from one account to another for eight years to cover his tracks. By late 2021, the red-hot crypto market had raised the value of his trove to $3.4 billion. In November 2021, federal agents surprised Mr. Zhong with a search warrant and found the digital keys to his crypto fortune hidden in a basement floor safe and a popcorn tin in the bathroom. Mr. Zhong, who pleaded guilty to wire fraud, is scheduled to be sentenced Friday in New York federal court, where prosecutors are seeking a prison sentence of less than two years.

Mr. Zhong's case is one of the highest-profile examples of how federal authorities have pierced the veil of blockchain transactions. Private and government investigators can now identify wallet addresses associated with terrorists, drug traffickers, money launderers and cybercriminals, all of which were supposed to be anonymous. Law-enforcement agencies, working with cryptocurrency exchanges and blockchain-analytics companies, have compiled data gleaned from earlier investigations, including the Silk Road case, to map the flow of cryptocurrency transactions across criminal networks worldwide. In the past two years, the U.S. has seized more than $10 billion worth of digital currency through successful prosecutions, according to the Internal Revenue Service -- in essence, by following the money. Instead of subpoenas to banks or other financial institutions, investigators can look to the blockchain for an instant snapshot of the money trail.
Software

Crypto's Ethereum Blockchain Completes Its Key Shanghai Software Upgrade (bloomberg.com) 17

Posted by msmash from the moving-forward dept.
The Ethereum blockchain, the most important commercial highway in the digital-asset sector, successfully implemented a widely anticipated software upgrade. From a report: The so-called Shanghai update enables investors to queue up to withdraw Ether coins that they had pledged to help operate the network in return for rewards, a process called staking. Tim Beiko, who helps to co-ordinate the development of Ethereum, posted on Twitter on Wednesday that the upgrade is now "official." The network revamp -- also known as Shapella -- is designed to let people exit an Ether staking investment and has stirred debate on whether the appeal of the largest token after Bitcoin will increase over time.

"Ethereum is updating and navigating with great skill -- so far anyway -- and cementing its position as the No. 2 crypto," said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. He added that the network is "moving to the future much faster than Bitcoin." About 1.2 million of Ether tokens -- worth approximately $2.3 billion at current prices -- are expected to be withdrawn over the next five days, according to researcher Coin Metrics. Some $36.7 billion of Ether is locked up for staking, data from Staking Rewards shows.
Bitcoin

FTX Has Recovered $7.3 Billion In Assets, Will Consider Rebooting Exchange 18

Posted by BeauHD from the latest-developments dept.
Bankrupt crypto exchange FTX has recovered over $7.3 billion in cash and liquid crypto assets, an increase of more than $800 million since January, the company's attorney said on Wednesday at a U.S. bankruptcy court hearing in Delaware. Reuters reports: FTX attorney Andy Dietderich said the company is starting to think about its future after months of effort devoted to collecting resources and figuring out what went wrong under the leadership of indicted ex-founder Sam Bankman-Fried. Bankman-Fried has pleaded not guilty. "The situation has stabilized, and the dumpster fire is out," Dietderich said.

FTX has benefited from a recent rise in crypto prices, Dietderich said. Its total recovery would be valued at $6.2 billion based on crypto prices from November 2022, when it filed for bankruptcy after traders pulled $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal. As it looks to the future, FTX is negotiating with stakeholders about options for restarting its crypto exchange, and it may make a decision on that in the current quarter, Dietderich said.
Bitcoin

Do Kwon Converted Illicit Funds From LUNA To Bitcoin (cointelegraph.com) 7

Posted by BeauHD from the behind-the-scenes dept.
According to South Korean prosecutors, Terraform Labs co-founder Do Kwon converted most of the illicit funds associated with him and his associates into Bitcoin. CoinTelegraph reports: South Korean prosecutors have identified 414.5 billion won ($314.2 million) in illicit assets associated with Terraform Labs co-founder Do Kwon and his associates. Out of the identified illegal assets, prosecutors have linked about 91.4 billion won ($69 million) of the specified amount directly to Kwon. Although Kwon amassed millions, none of the assets tied to him are recoverable or under the jurisdiction of the South Korean authorities. This is mainly because the now-arrested former CEO reportedly converted most of the illicit funds into Bitcoin using overseas crypto exchanges instead of investing in physical assets, per a report published by local media outlet KBS.

The South Korean authorities have requested Binance to halt any withdrawal request associated with Kwon. Binance confirmed to Cointelegraph that they are cooperating with the prosecutors and offering any assistance they need. South Korean prosecutors are actively tracing properties associated with Terraform Labs executives to recover some illicit funds from the Terra debacle. On April 3, prosecutors seized homes and other assets to stop former Terra employees from selling things that might be tied to legal cases. In addition to the residences in Seoul owned by former CEO Shin Hyun-seong and others, the prosecutors also filed foreclosure actions against their foreign-registered vehicles, lands in Hwaseong and Gapyeong in Gyeonggi-do, and Taean in South Chungcheong Province. Kwon evaded arrest for almost a year before getting caught in Montenegro on March 23rd.
Bitcoin

Binance Has Australian Financial Services License Canceled By ASIC (theguardian.com) 18

Posted by BeauHD from the effective-immediately dept.
Australia's financial regulator has cancelled the local financial services licence of the world's biggest cryptocurrency exchange, Binance. The Guardian reports: Earlier this year, the Australian Securities and Investments Commission (Asic) found Binance had incorrectly classified hundreds of retail customers as wholesale investors. The Asic chair, Joe Longo, said the distinction was important because retail customers have access to more consumer protections under Australian law, including the right to dispute resolution. Binance's Australia's financial services (AFS) licence only allows it to provide derivatives products to sophisticated investors, rather than retail customers.

"It is critically important that AFS licensees classify retail and wholesale clients in accordance with the law," Longo said. "Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian financial complaints authority. Our targeted review of these matters is ongoing, including focus on the extent of consumer harms."

From April 14, Binance clients will not be able to increase derivatives positions or open new positions. The exchange must close any remaining open positions by April 21. Binance can remain a member of the Australian financial complaints authority until April 8, 2024. "As we have said before, Asic supports a regulatory framework for crypto with a focus on consumer protection and market integrity. The final decision as to the regulatory settings is one for government," Longo said. Binance has been operating in Australia for many years but its now cancelled AFSL was with Oztures Trading, a company it acquired last year.
Bitcoin

Apple Has Included Bitcoin Whitepaper in Every Version of macOS Since 2018 (macrumors.com) 65

Posted by msmash from the stranger-things dept.
In every copy of macOS that has shipped since 2018, Apple has included the original Bitcoin whitepaper by Satoshi Nakamoto, and no-one seems to know why. From a report: The baffling discovery (or rediscovery - see below) was recently made by developer and waxy.org writer Andy Baio, who stumbled upon the PDF document while trying to fix a problem with his printer. Anyone with a Mac running macOS Mojave or later can see the PDF for themselves by typing the following command into Terminal:

open /System/Library/Image\ Capture/Devices/VirtualScanner.app/Contents/Resources/simpledoc.pdf

If you're running macOS 10.14 or later, the 184 KB Bitcoin PDF should immediately open in Preview. The document can also be located via Finder: Navigate to Macintosh HD -> System -> Library -> Image Capture -> Devices, then open the Contents -> Resources folder. The whitepaper titled "simpledoc.pdf" should be in there.
Bitcoin

Banks Warier of Serving Crypto Clients After Blowups, Scrutiny 26

Posted by msmash from the how-about-that dept.
US banks, already hesitant to work with crypto customers, are now even warier of providing services to the industry after a string of regional-lender collapses and amid heightened scrutiny by regulators. From a report: The closure of crypto-friendly Silvergate Capital and seizure of Signature Bank has left crypto firms struggling to find new banks for depository and payment services. While there's no blanket ban on serving crypto clients, financial firms are imposing lengthy application procedures, turning away smaller companies and some retail platforms, and in some cases shutting the door on crypto businesses altogether, according to industry participants, investors and bank executives.

Cross River Bank, for example, received requests from more than 100 new clients -- not all of whom were crypto companies -- seeking a safe harbor for their deposits within days of SVB Financial Group's Silicon Valley Bank and Signature collapsing, according to a person with direct knowledge of the bank's business. The closely held company turned down almost all those requests, the person said. Among the few crypto companies that have won over the bank is stablecoin issuer Circle Internet Financial, which expanded a partnership with Cross River, announced after Silicon Valley Bank failed. Earlier this month, lenders that were bidding to buy failed Signature Bank from the Federal Deposit Insurance Corp. specifically asked not to take on the digital-assets business, according to a person familiar with the process. Signature's crypto business was not part of the eventual takeover by New York Community Bancorp, and the FDIC is still seeking to sell Signet, Signature's real-time payments network for crypto firms.
Bitcoin

SEC Chair Gensler: Existing Rules Regulate Crypto, Legislation Unnecessary (theblock.co) 23

Posted by msmash from the my-way-or-highway dept.
The Securities and Exchange Commission takes the lead in defining what a security is, not necessarily legislation, the regulator's Chair Gary Gensler said. From a report: After a House Appropriations Committee hearing on Wednesday, Gensler told reporters that existing securities laws "cover most of the activity that's happening in the crypto markets. If Congress were to act, though I don't think we need these authorities, not to undermine inadvertently through definitions of what's in or out, or in essence allowing for conflicts that we don't allow," Gensler said.

"I think there is one agency -- the Securities and Exchange Commission, overseen by two committees -- the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that," Gensler later said. Lawmakers have introduced legislation over the years to regulate crypto. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., have plans to reintroduce legislation next month that would, in part, assert that the Commodity Futures Trading Commission has control over digital asset commodities, such as bitcoin. "I think many of the legislative vehicles would, if adopted, would undermine the securities remit," Gensler added.
Crime

SBF Charged With Paying $40 Million Bribe (cbsnews.com) 48

Posted by BeauHD from the latest-developments dept.
FTX founder Sam Bankman-Fried was charged with directing $40 million in bribes to one or more Chinese officials to unfreeze assets relating to his cryptocurrency business in a rewritten indictment unsealed Tuesday. CBS News reports: The charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act means Bankman-Fried faces now faces a total of 13 charges after being arrested in the Bahamas last December and brought to the United States soon thereafter. [...] The indictment said Chinese law enforcement authorities in early 2021 froze certain Alameda crypto-trading accounts on two of China's largest cryptocurrency exchanges. The accounts, it said, contained about $1 billion worth of crypto.

Bankman-Fried understood that the accounts had been frozen by Chinese authoritIes as part of an ongoing probe of a particular Alameda trading counterparty, the indictment said. After Bankman-Fried failed several attempts to unfreeze the accounts through the use of lawyers and lobbying, the 31-year-old ultimately agreed to direct a multimillion dollar bribe to try to unfreeze the accounts, the indictment said.

"Bankman-Fried and others sought to regain access to the assets to fund additional Alameda trading activity, in order to assist Bankman-Fried and Alameda in obtaining and retaining business," court documents state. The bribe payment of cryptocurrency -- then worth about $40 million -- was moved from Alameda's main trading account to a private cryptocurrency wallet in November 2021 and the frozen accounts were unfrozen at about the same time, the indictment said.

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