News

In what appears to be the first U.S. court case to address the matter, a New York federal judge has ruled that U.S. securities laws are applicable for prosecuting crypto fraud allegations, Reuters reports September 11.

U.S. District Judge Raymond Dearie ruled that the case against Brooklyn resident Maksim Zaslavskiy, which alleges that he defrauded investors in two cryptocurrencies reportedly backed by real estate and diamonds, can continue.

Dearie ruled Tuesday, Sept. 11, that federal securities laws should be interpreted “flexibly,” dismissing a motion from Zaslavskiy’s lawyers to drop the charges on the grounds that the cryptocurrencies didn’t fall under the Securities Exchange Act.

As cited by the Financial Times, Judge Dearie wrote in a statement:

“The question is whether the ‘elements of a profit-seeking business venture’ are sufficiently alleged in the indictment, such that, if proven at trial, a reasonable jury could conclude that ‘investors provide[d] the capital and share[d] in the earnings and profits; [and] the promoters manage[d], control[ed] and operate[d] the enterprise.’ For present purposes, we conclude that they are.”

According to Reuters, Dearie’s statement and other filings in Zaslavskiy’s case did not mention any similar court decisions on applying federal securities law to crypto-related fraud cases.

Attorneys for Zaslavskiy did not respond to Reuters’ questions. Richard Donoghue, a spokesman for the office of U.S. Attorney who works on the case, declined to comment as well.

Prosecutors have claimed that in 2017, Zaslavskiy gained at minimum $300,000 from investors for a cryptocurrency called REcoin, which claimed to be backed by real estate, and Diamond, “backed” by diamonds. Prosecutors allege that no real estate or diamonds backed the digital assets.

Dearie noted that it would be up to the jury to make a final decision, adding that Zaslavskiy’s lawyers will be able to make their case in court that the aforementioned tokens should be considered currencies, making securities laws not applicable.

Earlier in March, Cointelegraph reported that another federal judge from Brooklyn ruled that the Commodity Futures Trading Commission (CFTC) can regulate cryptocurrencies such as Bitcoin (BTC) as commodities.

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Stockholm IT Ventures AB (SITV), a Swedish company specializing in cryptocurrency and blockchain technology, has announced its subsidiary has finalized a software license agreement with Valens Bank, according to the official August 22 press release.

The agreement between Blocktrade Technology Ltd. (BTT), a subsidiary of SITV, and the German Valens Bank will allow the “multi-currency financial services startup” to “use the BTT Crypto Trading Toolbox exclusively for Crypto Fund Trading.” The press release notes that this is the second agreement between BTT and Valens Bank connection with digital financial services.

In exchange for a 1.5 percent yearly license fee for BTT on the “deployed capital into the trading program set forth by Valens Bank,” the two companies will collaborate in preparation for a September 2018 launch of the product for Valens Bank clients, according to Torben Pedersen, director at Valens Bank.

The Scandinavian region has recently contemplated embracing blockchain technology and cryptocurrencies. Back in May, Norway’s central bank had announced that it was considering developing its own digital currency with at least three possible applications: the introduction of a reliable alternative to deposits in private banks, as suitable legal tender as a supplement to cash, and an independent backup solution for electronic payment systems.

In Germany, the country’s second largest stock exchange announced its plans in early August for developing a new platform for Initial Coin Offerings (ICO) as well as a multilateral crypto trading venue.

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North Korean hackers have infected a cryptocurrency exchange with malware for both Windows and macOS for reportedly the first time, Russian internet security company Kaspersky Lab announced Thursday, August 23.

In Kaspersky’s report, the company reveals the malware — dubbed “AppleJeus” — made its way into the systems of an unnamed exchange after an employee downloaded a “tainted” app. Kaspersky now believes the app came from a fake developer with fake security certificates in a major operation by North Korean hacker collective Lazarus Group.

The malware aimed to steal cryptocurrency funds, Kaspersky claims, in what marks the latest in a spate of both successful and failed attempts by North Korea in the crypto hacking space.

Kaspersky’s report states that in order to “ensure that the OS platform was not an obstacle to infecting targets, it seems the attackers went the extra mile and developed malware for other platforms, including for macOS,” noting:

“A version for Linux is apparently coming soon, according to the website. It’s probably the first time we see this APT group using malware for macOS.”

South Korean exchanges have traditionally been the targets for Lazarus, with a rash of complaints surfacing with regard to attacks on platforms such as Bithumb, YouBit, and Coinlink.

Speaking to Bleeping Computer, Vitaly Kamluk, head of Kaspersky’s GReAT APAC team, added:

“The fact that they developed malware to infect macOS users in addition to Windows users and – most likely – even created an entirely fake software company and software product in order to be able to deliver this malware undetected by security solutions, means that they see potentially big profits in the whole operation.”

In early July, a group of security researchers had discovered macOS malware attacks targeting Slack and Discord users talking about cryptocurrencies, with hackers  impersonating “key people” in crypto-related chats and then sharing “small snippets” that are downloaded and execute a malicious binary.

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Singapore-based cryptocurrency exchange Huobi Group has launched a new product designed to streamline the token listing application process.

According to a statement shared with Cointelegraph, the new service, which Huobi developed to provide a more transparent listing process, is called the Huobi Automated Listing Platform.

Per the announcement, projects that want to list on Huobi Global or an autonomous digital asset exchange Huobi HADAX, will have to register and submit specific documentation about the project. The announcement states that the Huobi Automated Listing Platform “will not automatically list any token or coin that applies.”

Upon passing the verification process, applicants will receive a unique login account, which provides access to submit, edit, amend, and review documents and status of the token listing.

Projects that fail to pass the verification will be provided with a reminder notification of re-application to HADAX 2.0 and assistance in registering on the newly launched platform. Projects that decide to re-apply will have to follow specific application and listing rules.

The announcement also states that later this year, Huobi is looking to launch the Huobi Blockchain Project Show Center within the Huobi Automated Listing Platform, which will provide users access to reports, videos, and live broadcasts.

In July, Huobi Group launched Huobi Cloud, which allows users to build over-the-counter (OTC) and digital asset exchanges on top of Huobi’s existing platform. Partners will also be able to use the order integration and wallet systems, as well as the asset management and clearing system of the Huobi Global platform.

That same month, HBUS, the U.S. “strategic partner” of Huobi, confirmed the release of its API for “experienced traders” in some U.S. states. The product was geared to high-volume users who required live pricing data and other tools. In addition to price tracking, the API also offers historical price data, support for margin trade customization support, setting buy and sell limits, and retrieving trade history.

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The Securities and Exchange Commission (SEC) has issued rejections to bitcoin exchange-traded fund (ETFs) proposals from ProShares, Direxion and GraniteShares.

In three orders published on August 22, the rejections came ahead of previously reported deadlines arising from the SEC’s public-facing approval process.

Notably, the agency used the exact same reasoning – and wording – in all of its rejections.

The agency wrote in the case of ProShares:

“…the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

And in the case of Direxion’s five proposed ETFs:

“…the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

In all instances, the SEC stressed that it “emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

Similar language was also used in the GraniteShares rejection as well.

The rejections come mere weeks after SEC commissioners completed a review on a proposed bitcoin ETF from investors Cameron and Tyler Winklevoss, whose multi-year effort was dashed after a majority of the SEC’s commissioners backed up the agency’s original March 2017 decision.

One commissioner, Hester Peirce, dissented that decision, later telling CoinDesk in an interview that the move to block a bitcoin ETF is a disservice to both investors and innovators.

Past issues cited

For those who have read disapproval orders for bitcoin ETFs in the past, the language likely calls to mind the justifications used to twice strike down a proposal from investors Cameron and Tyler Winklevoss for their proposed bitcoin ETF.

Yet for the three companies named today, the proposals were unique in that they were tied to the market for bitcoin futures rather than a fund that holds bitcoin directly.

Notably, the SEC cited a letter from one of the current markets for bitcoin futures in the U.S., CBOE.

“Additionally, the President and COO of CFE, recently acknowledged in a letter to the Commission staff that ‘the current bitcoin futures trading volumes on Cboe Futures Exchange and CME may not currently be sufficient to support ETPs seeking 100 [percent] long or short exposure to bitcoin’,” the agency wrote.

At the same time, the SEC did concede a notable point: that investors would gain an extra layer of protection by trading exchange-based products for bitcoin – while also contending that possible benefits should be held against other considerations.

“The Commission acknowledges that, compared to trading in unregulated bitcoin spot markets, trading a bitcoin-based ETP on a national securities exchange may provide some additional protection to investors, but the Commission must consider this potential benefit in the broader context of whether the proposal meets each of the applicable requirements of the Exchange Act,” officials argued in the ProShares rejection.

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Bitcoin’s value keeps conquering new heights. The public’s interest in the cryptocurrency is at an all-time maximum and is only going to increase with time. Massive corporations are investing money and manpower in Bitcoin and experts are dubbing it the future of finance.

It is only natural that more and more small businesses worldwide are starting to accept Bitcoin as a form of payment. By accepting Bitcoins in your establishment, you’re signaling that you’re at the forefront of the technological development, attracting new customers and eliminating certain kinds of fraud.

Below is our thorough guide to adopting this completely new way of payment for your business. There are numerous ways of doing so, but even if you’re still only considering it, you can always start with a sign. Your customers who wish to pay in Bitcoins will be able to contact you directly to process the payment, while you’ll be raising awareness of the cryptocurrency and encouraging other merchants to start accepting it.

Offline

Wallet addresses

If you only have a small volume of potential Bitcoin users, the easiest way to accept BTC would be to ask your customers to transfer the money directly you. But before being able to do so, you need to set up a Bitcoin wallet first.

Essentially, a wallet is just a string of random letter and numbers. Numerous Bitcoin exchanges are catering for different needs that offer wallet services as well as independent wallet platforms. All you need to do is register with one of them, receive your wallet address, which is also your public key, and a private key, which is necessary for signing for transactions and should be kept secret.

In order to be able to withdraw funds from your Bitcoin wallet in flat currency, you will need to link your bank account or your credit card.

To make things easier for your customers, it might be a good idea to present your wallet address in the form of a QR-code. All they will need to do is to scan it, put in the amount of Bitcoins necessary and sign with their private key. Bitcoin’s value is known to fluctuate a lot, so make sure to look up the current exchange rate on any major exchange before conducting the transaction.

Creating a short and easily understandable tutorial on how to transfer Bitcoins to your wallet would also be a good idea.

List of services:

Exchanges:

• Bitfinex
• Kraken
• Coinbase
• CEX.io
• Coinmama

Online wallet services:

• Eidoo
• Blockchain.com
• BTC.com
• CoinsBank
• StrongCoin

Screen apps

In a pursuit of streamlining Bitcoin payments for businesses, software developers have been coming up with various touchscreen apps. These apps work much like direct transactions to online wallets do. The merchant needs to connect their wallet address with the app, put in the required amount in fiat currency, and the app generates a QR-code containing the address and the amount of funds that need to be sent in BTC. All the customer has to do is scan the QR-code with their Bitcoin mobile wallet app and sign for the transaction. These services can be used on most smartphones and tablets.

List of services:

• CoinFly
• Coinbox (Android)
• CoinGate
• BitPay
• Blockchain Merchant (Android)

Hardware terminals (POS)

Bitcoin’s recognition as a viable form of payment has lead to the emergence of an ever-rising number of commerce-specific hardware point-of-sale solutions. Those can come in the form of Bitcoin-specific payment terminals as well as Bitcoin-oriented APIs that can be integrated in some of the existing point-of-sale terminals, and so on.

Their capabilities vary depending on a manufacturer.

List of services:

• Coinkite — A Bitcoin payment terminal similar to chip-and-PIN terminals. It can scan Bitcoin-based debit cards, issued by the same company, operate as a Bitcoin ATM and print out QR-codes for customers to scan.
• BitPay — A global payments processor, streamlined into the SoftTouch POS system. It contains an API that can be integrated into almost every point-of-sale system with a bit of programming job.
• Revel — A company that offers a range of POS solutions for various types of businesses and incorporates Bitcoin as a payment option.
• BitXatm — A startup from Germany that created Sumo Pro – a cryptocurrency ATM that incorporates a point-of-sale.
• XBTerminal — A Bitcoin POS device that allows customers to pay from any mobile Bitcoin wallet by NFC of QR-code. It also facilitates payments from offline mobile devices via Bluetooth.

Gift Cards

When it comes to Bitcoin, gift cards are often used as a medium of exchange. Even though major retailers like Amazon, Target or H&M are yet to start accepting Bitcoin as a form of payment, there is always an option of buying a gift card to one of those establishments with Bitcoins.

If your business sells gift cards or gift certificates, you will find that perhaps the easiest way of accepting Bitcoin is to accept it for the purchase of gift cards or sell those cards on designated Bitcoin-accepting platforms. Obviously, those gift cards will then be used to purchase goods or services from your business.

List of services:

• eGifter
• Gyft
• Yes to Bitcoins
• GiftOff
• Paxful

Online

Button

If you’re running an online business, you can of course still accept manual payment directly to your wallet, providing customers with either a public key or a QR-code. However, there is also a way of streamlining online payments in Bitcoins by implementing a ‘pay with Bitcoin’ button on your website.

Several different services offer solutions for this. Some of them even provide button generators, where all you need to do is fill in a short form. As a result, you will get a few lines of HTML code to copy and paste into your website. While it is a relatively easy process, it is recommended you entrust an experienced programmer with this task.

List of services:

• BitcoinPay
• Coinbase
• BitPay
• Stripe
• CoinGate

Invoices

In case your business receives payments via invoices, there are a few things you need to consider. Besides the required amount in fiat currency, it is recommended that you include at least a suggested amount in Bitcoin or an instruction on how to calculate it. Due to Bitcoin’s constant fluctuation stating a certain amount in BTC may incur significant losses either on your part, or on your customer’s part.

The invoice should include a wallet address for the customer to send the funds to. As the public key is a long and random string of numbers and letters, both upper and lower case, including a QR-code would also be a good idea. This is especially necessary if you’re sending out paper invoices.

List of services:

• Invoiced
• Coinkite
• Coinify
• Blockonomics
• BitPay

Countries where it is allowed

In many jurisdictions, Bitcoin and other cryptocurrencies are still in the legal grey area. Lawmakers, tax authorities and financial regulators are still trying to understand where it fits in within existing legal frameworks and are crafting new regulations to govern it.

In most countries worldwide, Bitcoin is either legal or unregulated. This means that accepting payments in BTC is legal in those jurisdictions, at least for now. However, the laws and regulations in different countries can view and treat merchants accepting Bitcoin differently. Moreover, those regulations are obviously subject to change. So, before deciding to accept Bitcoin as a form of payment, make sure to consult with a legal advisor and be prepared to adapt.

The only countries where Bitcoin and other cryptocurrencies is outright banned are Bangladesh, Bolivia, Ecuador, Kyrgyzstan and Vietnam. China and Russia are about to join those jurisdiction in due time.

Taxation

Depending on a jurisdiction you live in, once you’ve accepted payment in Bitcoin, you might need to include it in your tax report. In terms of taxation, Bitcoin is treated very differently from country to country. In the US, the Internal Revenue Service ruled that Bitcoins and other digital currencies are to be taxed as property, not currency.

In theory, this really complicates merchants’ lives. This is because when acquiring property, the merchant is required to record the fair market value of the property. When the asset is later exchanged, if the fair market value has increased, then the owner has a taxable gain. So, when a merchant receives multiple payments in Bitcoin over a month during which the exchange value fluctuates and decides to exchange all of them for a flat currency, the taxable gain of every single transaction might be significantly different.

However, in practice, most of the merchant service providers mentioned above offer an instant exchange service. This means that once you receive a payment in Bitcoin, it is exchanged into a traditional currency of your choice instantly, allowing for minimum fluctuation.

It is recommended that you consult with a tax specialist in order to get a better understanding of how Bitcoin is taxed in your jurisdiction and how income gained through Bitcoin should be reported.

Pros

When it comes to accepting credit and debit card payments, a lot of small businesses often find themselves in a position where they have to set a card purchase minimum. This is because of the fees, which can range from two to five percent of the transaction total. On the other hand, one of Bitcoin’s main advantage is the lack of any central intermediary, which dramatically reduces transaction fees.

One of the main problems that any money transfer system, including standard bank cards, needs to solve is so-called ‘double-spending.’ Oftentimes, a transaction can be reversed with just a simple phone call, and the fraudster is able to spend that same amount of money again. Bitcoin, thanks to its distributed public ledger called the Blockchain, offers protection from such fraudulent schemes. Once the transaction is confirmed, it is recorded in the Blockchain and after that it becomes irreversible and unchangeable. In this respect, accepting Bitcoin is pretty much like accepting cash.

Bitcoin holders are always looking for new ways to spend it. Even though there are a lot of different businesses accepting Bitcoins these days, your business will not get lost among them. By accepting the cryptocurrency, you will attract a whole new group of customers, especially if you’re running an online-business.

Finally, accepting Bitcoin means giving your customers an extra way to pay, while also providing them with an extra layer of protection for their personal information. All in all, Bitcoin has a potential of significantly increasing your businesses’ profits.

Cons

The biggest disadvantage of accepting Bitcoin is the cryptocurrency’s insane volatility. For instance, in the beginning of 2017 one Bitcoin was barely worth $1,000. Then, it got to almost $5,000, quickly dropped to $3,200 before hitting its historical maximum of $8,000 in mid-November.

This means that you’ll need to adjust your prices on the daily, if not hourly basis. Moreover, you will have to translate Bitcoins into your currency of record quickly and regularly in order not to sustain a loss. Some of the merchant service companies mentioned above provide an instant exchange service, which means that prices in BTC are adjusted in real-time and Bitcoin payments made by your customers are immediately exchanged for cash value at BTC’s current value.

Even though Bitcoin transactions are safe and fraud-free, there is still a chance of hackers getting their hands on users’ wallets. The story of Mt. Gox, an infamous exchange that lost approximately 850,000 of its users’ Bitcoins, which amounted to more than $450 mln at the time still haunts the Bitcoin community. Overall, around a million of Bitcoins have been stolen from exchanges since 2011. Unlike most traditional currencies, Bitcoin is not backed or insured, so the loss of funds will most likely be irreversible.

However, there are steps that you can take to avoid that. In order to better protect your funds, store them outside of popular exchanges, use multi-factor authentication on your accounts, secure and take care of your private keys and do regular backups of your data.

Perhaps the most complicated problem with accepting Bitcoin is the regulatory grey area the cryptocurrency finds itself in right now. Existing laws and regulations are sparse and differ drastically depending on a jurisdiction. Moreover, they are subject to change, which means business-owners have to constantly monitor new developments in the world of Bitcoin and be prepared to adapt.

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What is mining?

Mining is the process of creating valid blocks that add transaction records to Bitcoin’s (BTC) public ledger, called a blockchain. It is a crucial component of the Bitcoin network, as it solves the so-called “double-spend problem.”

The double-spend problem refers to the issue of needing to find consensus on a history of transactions. Ownership of Bitcoin can be proven mathematically through public key cryptography, which cannot be broken with today’s technology. However, cryptography alone cannot guarantee that one particular coin hadn’t previously been sent to someone else. In order to form a shared history of transactions, one needs to have an agreed-upon ordering that is based on, for example, the time of creation of each transaction. But any external input can be manipulated by whoever provides it, requiring participants to trust that third party.

Mining (and blockchain in general) leverages economic incentives to provide a reliable and trustless way of ordering data. The third parties ordering transactions are decentralized, and they receive monetary rewards for correct behavior. On the contrary, any misbehavior results in loss of economic resources, at least as long as the majority remains honest.

In the case of Bitcoin mining, this result is achieved by creating a succession of blocks that can be mathematically proven to have been stacked in the correct order with a certain commitment of resources. The process hinges on the mathematical properties of a cryptographic hash — a way to encode data in a standardized manner.

Hashes are a one-way encryption tool, meaning that decrypting them to their input data is near-impossible, unless every possible combination is tested until the result matches the given hash.

This is what Bitcoin miners do: they cycle through trillions of hashes every second until they find one that satisfies a condition called “difficulty.” Both the difficulty and the hash are very large numbers expressed in bits, so the condition simply requires the hash to be lower than the difficulty. Difficulty readjusts every 2016 Bitcoin blocks — or approximately two weeks — to maintain a constant block time, which refers to how long it takes to find each new block while mining.

The hash generated by miners is used as an identifier for any particular block, and is composed of the data found in the block header. The most important components of the hash are the Merkle root — another aggregated hash that encapsulates the signatures of all transactions in that block — and the previous block’s unique hash.

This means that altering even the tiniest component of a block would noticeably change its expected hash — and that of every following block, too. Nodes would instantly reject this incorrect version of the blockchain, protecting the network from tampering.

Through the difficulty requirement, the system guarantees that Bitcoin miners put in real work — the time and electricity spent in hashing through the possible combinations. This is why Bitcoin’s consensus protocol is called “proof-of-work,” to distinguish it from other types of block-creation mechanisms. In order to attack the network, malicious entities have no method other than recreating the entirety of its mining power. For Bitcoin, that would cost billions of dollars.

How Bitcoin miners are paid

The network recognizes the work conducted by Bitcoin miners in the form of providing rewards for generating new blocks. There are two types of rewards: new Bitcoin created with each block, and fees paid by users to transact on the network. The block reward of newly minted Bitcoin, amounting to 6.25 BTC as of May 2020, is the majority of miners’ revenue. This value is programmed to halve at fixed intervals of approximately four years, so that eventually, no more Bitcoin is mined and only transaction fees guarantee the security of the network.

By 2040, the block reward will have reduced to less than 0.2 BTC and only 80,000 Bitcoin out of 21 million will be left up for grabs. Only after 2140 will mining effectively end as the final BTC is slowly mined.

Japan’s biggest messaging app has launched its own blockchain network and cryptocurrency called LINK, with a vision to create a tokenized economy for 200 million of its users.

n order to make any profit from cryptocurrencies, traders need to know how to get the best price when selling their holdings.

If you’ve ever found yourself asking “How much should I sell?” or “When should I sell?”, this article will hopefully help you find some answers.

You’ll learn how to control your emotions, set price levels to sell your Bitcoin and altcoins, and what percentage of your portfolio you should sell at what prices.

My aim in this article is to show you how to create a long-term trading strategy that will maximise your ROI while maintaining over 20% of your total cryptocurrency holdings.

As always, the views in this article should not be considered financial advisement. The volatility of the crypto markets means money can easily be lost. Never invest more than you can afford to lose and always do your own due diligence.

China’s social media giant WeChat has blocked the official sales channel of Bitcoin mining giant Bitmain, as well as a host of further crypto-related “hype news” accounts.

The Bank of Korea claims it expects another “kimchi premium” — a widening of the gap in crypto prices between local and foreign exchanges.

The Russian presidential Special Representative on digital and technological development said the country is not ready for the circulation of cryptocurrencies.

The World Economic Forum and Bain & Company have released a joint forecast about distributed ledger technology in world trade finance.

Institutional crypto exchange Seed CX has raised $15 million in a funding round led by Bain Capital Ventures.