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Sunday, June 10, 2018

Bitcoin Tumbles After Major Crypto Exchanges Subpoenaed For Manipulation, Coinrail Hacked

Bitcoin and other cryptocurrencies flash-crashed Saturday night, one day after the US Commodity Future Trading Commission (CFTC) sent subpoenas four cryptocurrency exchanges in an ongoing probe into bitcoin manipulation that began in late July - following the launch of bitcoin futures on the CME, according to the Wall Street Journal.

CME’s bitcoin futures derive their final value from prices at four bitcoin exchanges: Bitstamp, Coinbase, itBit and Kraken. Manipulative trading in those markets could skew the price of bitcoin futures that the government directly regulates.

In delay reaction, Bitcoin fell as much as $433 or 5.6% in Saturday night trading, with some noting that the flash crash happened shortly after a 90th ranked crypto exchange, Coinrail, had suffered a "cyber intrusion", and was likely the more relevant catalyst for the crypto price drop.

While major Cryptocurrencies were down from 4.5 - 5.5%, Bitcoin Cash dropped over 8.4%.

The CTFC subpoenas were issued after several of the exchanges refused to voluntarily share trading data with the CME after being asked last December. Of note, the CFTC regulates the CTC.

According to the WSJ, the CME, which launched bitcoin futures in December, asked the four exchanges to share reams of trading data after its first contract settled in January, people familiar with the matter said. But several of the exchanges declined to comply, arguing the request was intrusive. The exchanges ultimately provided some data, but only after CME limited its request to a few hours of activity, instead of a full day, and restricted to a few market participants, the people added.

What is curious, is that if there was indeed manipulation since the launch of bitcoin futures, it was to the downside, as the price of cryptos peaked around the time the crypto futures were launched, and are down well over 50% in the 6 months since.

Coinbase in particular has been under the watch government regulators. On February 23, Coinbase sent an official notice to around 13,000 customers to notify them they were legally required to turn over their information to the IRS.

The IRS had initially asked Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes. However, another court order in Nov. 2017 reduced this number to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”

Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days. Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ. The ongoing legal battle between Coinbase and the US government dates back to November, 2016, when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.

On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers had reported cryptocurrencies on their federal tax returns.

And in April, former New York Attorney General, Eric "we could rarely have sex without him beating me" Schneiderman, launched a probe of 13 major cryptocurrency exchanges according to the Wall Street Journal - claiming that investors dealing in the fast-growing markets often don’t have the basic facts needed to protect themselves.

Former AG Schneiderman’s office said the program, called Virtual Markets Integrity Initiative, is part of its responsibility to protect consumers and ensure the integrity of financial markets, and its goal is to ensure that investors can have a better understanding of the risks and protections afforded them on these sites.

CFTC Commissioner: Crypto is a "modern miracle"

While the CFTC, IRS and New York Attorney General's office are all cracking down on cryptocurrency exchanges, it seems to all be part of the government's embrace of virtual currencies. Last week CFTC Commissioner Rostin Benham called cryptocurrencies a "modern miracle" at the Blockchain For Impact Summit held at the UN in New York last week.

But virtual currencies may – will – become part of the economic practices of any country, anywhere. Let me repeat that: these currencies are not going away and they will proliferate to every economy and every part of the planet. Some places, small economies, may become dependent on virtual assets for survival. And, these currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations.

We are witnessing a technological revolution. Perhaps we are witnessing a modern miracle. -Rostin Benham

Rostin hinted at the upcoming legal action against the exchanges during his speech:

Under the CEA and Commission regulations and related guidance, exchanges have the responsibility to ensure that their Bitcoin futures products and their cash-settlement process are not readily susceptible to manipulation and the entity has sufficient capital to protect itself. The CFTC has the authority to ensure compliance. In addition, the CFTC has legal authority over virtual currency derivatives in support of anti-fraud and manipulation including enforcement authority in the underlying markets.

Meanwhile, the official Bitcoin website removed references to Coinbase, Blockchain.com and Bitpay, according to Crypto News - only one of which, Coinbase, was subpoenaed.

The CFTC officially recognized bitcoin as a commodity in September of 2015 when it went after Coinflip for operating a platform for trading bitcoin options without the proper authorization. Since the agency effectively asserted its dominance over the bitcoin market with that decision, this is the first time it has given its blessing to an bitcoin options trading platform. Expect a burst of institutional trading activity to follow - especially since they approved institutional options trading in July.

https://www.zerohedge.com/news/2018-06-10/bitcoin-tumbles-after-major-crypto-exchanges-subpoenaed-manipulation-coinrail

This post sponsored by Total Cryptos @ www.totalcryptos.com

Thursday, May 24, 2018

U.S. Launches Criminal Probe into Bitcoin Price Manipulation

The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter.

The investigation is focused on illegal practices that can influence prices -- such as spoofing, or flooding the market with fake orders to trick other traders into buying or selling, said the people, who asked not to be identified because the review is private. Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees derivatives tied to Bitcoin, the people said.

Authorities worry that virtual currencies are susceptible to fraud for multiple reasons: skepticism that all exchanges are actively pursuing cheaters, wild price swings that could make it easy to push valuations around and a lack of regulations like the ones that govern stocks and other assets.

Bitcoin extended its Thursday declines after Bloomberg News reported the investigation, and was down 3 percent to $7,409 as of 9:32 a.m. London time. It’s down more than 20 percent since a May 4 peak.

Such concerns have prompted China to ban cryptocurrency exchanges and nations including Japan and the Philippines to regulate them, contributing to a slump that has sent Bitcoin below $8,000 this year. Still, digital coins continue to be a global investment craze, drawing legions of loyalists to industry conferences, generating celebrity endorsements and increasingly attracting the attention of Wall Street.

Traders Colluding?

The illicit tactics that the Justice Department is looking into include spoofing and wash trading -- forms of cheating that regulators have spent years trying to root out of futures and equities markets, the people said. In spoofing, a trader submits a spate of orders and then cancels them once prices move in a desired direction. Wash trades involve a cheater trading with herself to give a false impression of market demand that lures other to dive in too. Coins prosecutors are examining include Bitcoin and Ether, the people said.

A Justice Department spokesman declined to comment and CFTC officials didn’t respond to requests for comment.

Spoofing Is a Silly Name for Serious Market Rigging: QuickTake

The investigation, which the people said is in its early stages, is the U.S.’s latest effort to crack down on an industry that was initially embraced by those who were distrustful of banks and government control over monetary policy.

But Bitcoin’s meteoric rise -- it surged to almost $20,000 in 2017 after starting the year below $1,000 -- has been a lure for mom-and-pop investors. That’s prompted regulators to grow concerned that people are jumping into cryptocurrencies without knowing the risks. For instance, the Securities and Exchange Commission has opened dozens of investigations into initial coin offerings, in which companies sell digital tokens that can be redeemed for goods and services, due to suspicions that many are scams.

Cryptocurrency trading is fragmented on dozens of platforms across the globe, and many aren’t registered with the CFTC or SEC. As a derivatives watchdog, the CFTC doesn’t regulate what’s known as the spot market for digital tokens -- which is the trading of actual coins rather than futures linked to them. But if the agency finds fraud in spot markets, it does have authority to impose sanctions.

Fraud Target

The limited oversight of crypto trading makes it a target for crooks, said John Griffin, a University of Texas finance professor who has studied manipulation, including in digital-coin markets.

“There’s very little monitoring of manipulative trading, spoofing and wash trading,” Griffin said. “It would be easy to spoof this market.”

Signs are emerging that some crypto exchanges realize the industry’s growth could be constrained if large swaths of investors conclude that trading platforms have a “buyer beware” approach to oversight.

Cameron and Tyler Winklevoss

Photographer: David Paul Morris

The Winklevoss twins, who are known for getting rich off Facebook Inc., hired Nasdaq Inc. last month to conduct surveillance of digital coins trading on their exchange, Gemini Trust Co. Cameron and Tyler Winklevoss have also urged trading platforms to band together to form a group that would serve as a self regulator for the industry.

Some market participants have alleged that crypto manipulation is rampant. Last year, a blogger flagged the actions of “Spoofy,” a nickname for a trader or group of traders that have allegedly placed $1 million orders without executing them.

https://www.bloomberg.com/news/articles/2018-05-24/bitcoin-manipulation-is-said-to-be-focus-of-u-s-criminal-probe

Friday, May 4, 2018

Blockpad Free Crypto Notepad and Security Tool released

(Bloc10 - 5/3/2018) - Bloc10, a Blockchain FinTech development and management company, has released a free software tool for Windows and Mac "Blockpad" get it free at www.blockpad.io Blockpad is a private encrypted personal ledger, notepad, password manager, secure browser to access exchanges, one time pad, and more. Blockpad is an ultra-secure environment by design, using multiple layers of security based on AES-256, a Cryptographic technology so secure, the NSA has stated it is sufficient to keep TOP SECRET information secure: The design and strength of all key lengths of the AES algorithm (i.e., 128, 192 and 256) are sufficient to protect classified information up to the SECRET level. TOP SECRET information will require use of either the 192 or 256 key lengths. The implementation of AES in products intended to protect national security systems and/or information must be reviewed and certified by NSA prior to their acquisition and use.[15] Blockpad is the Notepad for Crypto Traders, Blockchain Developers, Coders, Intelligence Operatives, Crypto Investors, et. al. Blockpad is a multi-use encrypted notepad secured with AES-256 and 2FA. Main features include code highlighting notepad for code writing, task list, document creation; keeping account usernames and passwords to Crypto related accounts securely in one place; and a Coin Records personal encrypted ledger to record coin transactions in an independently secured and controlled system. All the content in Blockpad is encrypted in a .bloc file accessible only with user credentials and 2FA. Blockpad is freeware with a paid option; Blockpad Premium is $1.99/month and offers more features, no ads, encrypted cloud backup of your .bloc file, premium skins, and an online recovery system. With security in mind, Blockpad can help you stay organized by keeping track of coin transactions, passwords, account credentials, and more. Blockpad is an application written in QT by Bloc10, a software and technology development company. It is available for Windows, Linux, Mac, Android, and iOS. With Blockpad's secure account tab, you can save all your passwords in one encrypted place. Unlike other password applicaitons, Blockpad is encrypted with AES and protected by 2FA which you can setup as complex as you'd like. There is even a timer that will lock the application after x minutes in case your curious roomate or office worker is snooping around your desk. get it free at www.blockpad.io Perhaps one of the most useful writing applications and the most ubiquitous of the Windows generation has been Notepad++. It has a ridiculous amount of features, is useful in many ways, and is free. It will open files Windows notepad doesn't, such as large files that can cause memory issues in Windows notepad, and types of binary files with no extension. Basically Notepad++ is the most basic programming tool as it allows the creation and manipulation of simple text files. Programming environments such as Microsoft Visual Studio and other IDE are enhanced 'cockpit' environments but at the end of the day for programming all you need is a notepad and a compiler. Notepad++ is a limitless text editor and stops short of offering only compiling tools (and this is a logical and rational design decision as it remains in its own exclusive domain). get it free at www.blockpad.io Enter Bitcoin and Blockchain in the Fall of 2017 when everything is moving 'on-chain' and suddenly people are opening Crypto trading accounts at record paces. As with many new paradigms, the hype and excitement ran far infront of development; few useable robust tools exist for Blockchain development. Crypto trading is another area where there is more interest than there is robust tools to support it. "Exchanges" often fail in simple functions like 2FA, account reporting, logging in, money transfers, and it's mostly web based. Users who are not programmers or technical people are left only to trust friends who are. Unlike in traditional banking where everything is made for 'moms and dads' - in the Crypto world, not. So we developed Blockpad, it's a multi-use Notepad tool, we hope it is the Notepad++ of Crypto. get it free at www.blockpad.io It's free, it's safe, and it's fun! Blockpad has multiple uses:

As a secure notepad, for taking notes, or for programming Solidity, or your website.
As a secure private ledger, for recording your Crypto transactions.
As a store of account usernames and passwords, including 2FA info.

Everything is encrypted, you can't open Blockpad without creating an Encrypted .block file using AES. We digitally signed it so Windows should recognize it. Now we're releasing the Beta version and will work on a cloud backup solution and premium version. Stay tuned in for more updates by joining Bloc10 for free. Get bloc. get it free at www.blockpad.io

Wednesday, May 2, 2018

Billionaire Thiel Unveils Broker-Dealer Venture For Major Crypto Traders

Billionaire Peter Thiel’s venture-capital firm is investing a startup designed to optimize block trading for major cryptocurrency market participants.

The Wall Street Journal reports that Founders Fund is among the investors in the early-stage startup, called Tagomi Systems Inc., people familiar with the situation said.

Thiel's investment comes after it was revealed that Founders Fund itself has already made a "monster bet" on bitcoin.

It also confirms Thiel's bullish view on bitcoin reported in October last year when the billionaire investor argued that critics of bitcoin were "underestimating" the cryptocurrency.

“If bitcoin ends up being the cyber equivalent of gold and it has a great potential left and it’s a very different kind of thing from what people in Silicon Valley focus on—companies, not algorithms not protocols, but this might be maybe one exception that is very underestimated,” the Silicon Valley elite said.

And, in March, he said there will ultimately be only one digital equivalent to gold, and bitcoin, as the "biggest" cryptocurrency, will triumph.

The question with something like bitcoin is whether it can become a store of value. And the thing it would replace is something like gold. The analogy is it's like bars of gold in a vault that never move and you get it and it's a hedge of sorts against the whole world falling apart."

"The objections that people have to bitcoin are also objections to gold. It's this weird currency that's not backed by any government. Same thing is true of gold. It's not clear what the intrinsic value of bitcoin is. Same thing is true of gold. It may well be a bubble, but - and most bubbles are unstable and end - one of my friends has this line that 'money is the bubble that never pops', so if it is a bubble, then it is money."

"If everybody decided that a $100 bill was worthless then you wouldn't want to have a $100 bill."

According to The Wall Street Journal, the problem that the new startup aims to solve stems from a fragmented trading environment across global cryptocurrency exchanges, where, for instance, the price of bitcoin can vary between platforms. As such, the startup - co-founded by Greg Tusar, the former chief of electronic equities trading at Goldman Sachs - is building a platform that finds the best market to execute large numbers of cryptocurrency trading orders at a specific time.

Currently, buying or selling large quantities of digital currencies is tricky because the market is fragmented across more than 100 crypto exchanges around the world. Connecting to all of them requires setting up a separate account with each one, and crypto exchanges generally impose limits on daily flows in and out.

That makes it cumbersome and time-consuming to pull off a big trade, and the price of a digital currency can move dramatically before the investor finishes buying or selling.

Tagomi hopes to make it easier to make such bulk trades by borrowing a page from the stock market. In U.S. equities, broker-dealers use systems called smart order routers that dispatch their clients’ buy and sell orders to various venues, including a dozen exchanges and more than 30 off-exchange “dark pools.”

These routers make rapid-fire decisions about which market is the best place to execute a trade at any given time. Tagomi is looking to develop a similar tool for the crypto markets, according to people with knowledge of its plans.

It certainly seems clear that Thiel is making a bet (size of the bet has not been reported) that institutional interest is expected to increase dramatically in cryptocurrency trading.

https://www.zerohedge.com/news/2018-05-02/bilionaire-thiel-unveils-broker-dealer-venture-major-crypto-traders

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