Hodler’s Digest, Oct. 29 – Nov. 4: Rapper T.I., Charlie Shrem Sued Over Alleged Pump-and-Dump, BTC Theft Respectively
This week in crypto, T.I. is sued for allegedly pumping and dumping a token, and Charlie Shrem is sued for alleged theft of 5,000 BTC.
Coming every Sunday, the Hodler’s Digest will help you to track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions, and much more — a week on Cointelegraph in one link.
Top Stories This Week
US Rapper T.I. Sued for $5 Million After Alleged Failure of FLik Token
U.S. rapper T.I. is being sued for $5 million by a group of 25 persons who have alleged that the rapper’s promotion of FLiK tokens led to a loss of around a $1.3 million investment. The plaintiffs allege that T.I. and his business partner Ryan Felton promoted the “now worthless securities” on social media, creating a false impression of a “valuable liquid investment.” The lawsuit writes that T.I. and Felton defrauded them by driving the token’s price up with money from the investment, and then dumping the token when the price dropped.
The Winklevii Sue Charlie Shrem for Alleged Theft of 5,000 BTC in 2012
Tyler and Cameron Winklevoss have claimed in a new lawsuit that Bitcoin Foundation founder Charlie Shrem has “stolen” 5,000 Bitcoin (now $31.7 million) from them in 2012. According to a recently unsealed lawsuit, the Winklevii allege that Shrem failed to repay the twins as part of their investment in his extant project BitInstant. Shrem’s lawyer has called the claims “erroneous,” noting that his client will “quickly clear his name.” The judge overseeing the case has “agreed to freeze” some of Shrem’s assets in response to the case.
BTC Wallet Xapo Founder Says Bitcoin’s Current Stage Compares to 1992 Internet
Bitcoin “Patient Zero” Wences Casares, the founder of BTC wallet startup Xapo, said that Bitcoin may take years to become successful. In an interview this week with Bloomberg, Casares said that Bitcoin “may work, it might not work,” noting that the currency is in the early stages of its development, similar to that of the Internet in 1992. Casares gave a rough seven-year timeline for determining whether Bitcoin is successful, noting that if it is, it will become a non-political global standard of value and settlement.
Crypto Exchange and Wallet Coinbase Raises $300 Million in New Funding Round
Major U.S. crypto exchange and wallet Coinbase has raised $3 million in its latest funding round, bringing its post-money valuation to about $8 billion. Tiger Global Management reportedly led this recent Series E equity financing round, with participation from Y Combinator Continuity, Wellington Management, Andreessen Horowitz, and Polychain, among others. Coinbase noted that the funds will be used for the purpose of “accelerating” crypto adoption, noting plans to support regulated fiat-crypto trading worldwide, and laying the foundation for supporting “thousands” of cryptos in the future.
Climate Change Report Finds Bitcoin Usage Could Raise Global Temperature by 2 C
A new reported published by climate change scientists has raised warnings about the effects of Bitcoin’s carbon footprint on global environment. According to their research, which is based on the existing data for BTC’s electricity consumption in conjunction with different projections for the crypto’s future adoption, the cumulative emissions of BTC usages would “cross the 2 C threshold within 22 years.” Even if Bitcoin follows a faster adoption path, it could cross that threshold in just ”11 years.” The report notes that while more efficient hardware could reduce BTC’s carbon footprint, one can’t relay on “yet-to-be-developed hardware.”
Most Memorable Quotations
“The word 'block' is immediately associated with something closed. In Russia, where a third of the population was held behind bars... Next you have 'chain'. 'Block' and 'chain' — it works on a subconscious level," — Ella Pamfilova, the head of the Russian Election Commission
“I never changed what I said, I just regret having said it. I didn’t want to be the spokesman against Bitcoin. I don’t really give a sh*t, that’s the point. Blockchain is real, it’s technology, but Bitcoin is not the same as a fiat currency,” — Jamie Dimon, JPMorgan CEO
“[Crypto is] all I’m going to talk about. See, I don’t want to be president. I couldn’t be… no one’s going to elect me president, please God. However, I’ve got the right to run,” — John McAfee, crypto enthusiast
Laws and Taxes
Ukraine Development, Trade Ministry Creates State Policy for Legalizing Crypto
Ukraine’s Economic Development and Trade Ministry announced this week that it has initiated a “state policy” for the classification and legalization of crypto-related activities. According to the ministry’s press release, the purpose of the policy is to “create understandable conditions for conducting activities in the field of virtual assets and virtual currencies," and to usher in “adoption of the concept of a state policy” for crypto. The policy specifically suggests creating legal definitions for key terms like “virtual currency” (“cryptocurrency”), “virtual assets,” Initial Coin (or Token) Offerings (ICOs or ITOs), cryptocurrency mining, “smart contracts,” and “tokens.”
Brazil’s Tax Regulatory Creates Draft Regulation for Crypto Taxes
The Department of Federal Revenue of Brazil (RFB) wants to receive monthly reports on crypto assets operations, according to recently released draft legislation. In the draft bill, the RFB would require Brazil-based crypto exchanges to send them detailed reports on all crypto-related operations on a monthly basis. The bill also notes that legal entities and individuals living in Brazil would be required to report all transactions with foreign crypto exchanges if they are over than R$10,000 (about $2,700) per month.
Crypto Investment Firm Greyscale Reaches $330 Million in Revenue
Crypto asset management firm Grayscale Investments Inc. has reported around $330 million in revenue in 2018, according to its third quarter investment report, despite the currently prevailing bear market. In the recently released report, Grayscale notes that they have raised $81.1 million over the last three months, representing an increase of almost 1,200 percent from the same period in 2017. Grayscale writes that this is the strongest calendar year the firm has experienced since the beginning of its activity.
New York Regulator Grants BitLicense to Bitcoin ATM Operator Coinsource
The New York State Department of Financial Services (NYDFS) has granted a virtual currency license, the BitLicense, to Bitcoin ATM operator Coinsource. The regulatory approval means that New Yorkers can use cash to buy or sell Bitcoin using Coinsource’s “Bitcoin Teller Machines (BTMs),” of which there are 40 machines currently deployed across the state in three counties. This is the first BTM operator to receive the BitLicense, and the regulator notes that its decision came following a comprehensive review of Coinsource’s application and requirements for AML and CFT measures.
Morgan Stanley Report Classifies Cryptocurrency as New Institutional Investment Class
A new report from investment bank and financial services firm Morgan Stanley notes that Bitcoin and altcoin have been a “new institutional investment class” since 2017. According to the document, the “surprises” to be seen in crypto in 2018 are a “strong” formation of new funds targeting the nascent sectors, as well as the “growth” of crypto-tied futures. The report also touches on decentralized technology, noting that it makes the world “better.”
Crypto Exchange and Wallet Coinbase Executive Reveals Plans to Add up to 300 Coins
Major U.S. crypto exchange and wallet Coinbase may offer as many as 300 more coins in the future, according to an interview with the company’s president and COO. Speaking to Bloomberg, Asiff Hirji said that Coinbase planned on avoiding complex U.S. regulations on crypto tokens by offering more assets to non-residents, noting that the number could jump from its current seven to “200-300” over the next year. Moreover, Hirji noted that the company will not perform an IPO “any time soon.”
Mergers, Acquisitions, and Partnerships
Chinese Retail Giant JD.Com Partners With Tech Institutes for Blockchain Research Lab
Chinese e-commerce firm JD.com will launch a research lab for blockchain in partnership with two technology institutes: the Ying Wu College of Computing at the New Jersey Institute of Technology and the Institute of Software at the Chinese Academy of Sciences (ISCAS). According to the release, the lab aims to develop solutions for efficiency problems and examine new applications and uses cases of blockchain tech, as well as specifically researching consensus protocols, privacy protection, and security in DApps.
Nasdaq to Integrate Microsoft’s Azure Blockchain Tech Following Partnership
American software firm Microsoft will integrate its Azure blockchain technology into stock exchange Nasdaq Inc.’s Financial Framework (NFF). According to this week’s announcement, Microsoft will collaborate with Nasdaq to develop a “ledger agnostic blockchain capability” that will allow for operability across multiple ledgers. The release also notes that the new product can facilitate easier buyer and seller matching, management of delivery, and payment and settlement of transactions, as well as allow NFF customers to deploy various blockchain through one common interface.
Belgian-Based Investment Firm Acquires Crypto Exchange Bitstamp
Crypto exchange Bitstamp has been acquired by Belgian-based investment firm NXMH in an “all cash deal” this week. The CEO of Bitstamp told Reuters that the exchange was valued at $60 million in 2016, up from $39 million in 2014. NXMH is a subsidiary of South Korean-based media giant NXC Corp., which bought a 65.19 percent stake in South Korean exchange Korbit last year. NXMH now has an 80 percent stake in Bitstamp, with the CEO retaining his 10 percent ownership interest and staying on as CEO. The exchange noted that it is looking towards “global expansion” with the new deal.
Report: Bithumb Signs Deal With US Fintech Firm to Launch Securities Token Exchange
South Korean crypto exchange Bithumb has reportedly signed a deal with American crowdfunding platform SeriesOne in order to open a securities token exchange. A South Korean news outlet was told by its sources about the partnership, with at Bithumb official reportedly adding that the exchange plans to increase its efforts to develop into a worldwide financial firm. The sources also told the news agency that the exchange will be established by SeriesOne in the U.S. during the first half of 2019, with Bithumb to provide investment and the technical support for the exchange’s operations.
Controversial Stablecoin Tether Releases Letter Confirming New Banking Partner
The issuer of cryptographic stablecoin Tether has released a statement this week, confirming that it will now be banking with Bahamas-based Deltec Bank & Trust. Tether had previously been the subject of rumors about its ability to back up its tokens 1:1 with fiat after it parted ways with previous financial institution Noble Bank. This week’s statement, purportedly from Deltec Bank, reads that the USDT in the market are “fully backed by US dollars that are safely deposited in our bank accounts.”
Berkshire Hathaway Invests $600 Million in Two Fintech Payment Firms
Multinational holding conglomerate Berkshire Hathaway, whose CEO and chairman is crypto critic Warren Buffett, has invested about $600 million in two fintech payment firms that focus on emerging markets. The investments are reportedly headed by Todd Combs, one of Berkshire’s two portfolio managers, and go outside the purview of investments normally made by the company. The first is a roughly $300 million stake in the parent company of India’s largest mobile-payments service Paytm, and the second is a purchase of shares in an IPO for Brazilian payments processor StoneCo.
Sequoia USA Participates in $30 Million Funding Round for Israeli Blockchain Startup
Israeli blockchain startup StarkWare Industries has ended a $30 million funding round with participation from Intel Capital and Sequoia USA. The funding round, which was led by crypto hedge fund Paradigm — founded by Coinbase co-founder Fred Ehrsam — also included Atomico, DCVC, Wing, Consensys, Coinbase Ventures, Multicoin Capital, Collaborative Fund, Scalar Capital and Semantic Ventures. StarkWare Industries develops software and hardware, with applications including transparent privacy in blockchain, increased transaction throughput, as well as off chain computation.
Winners and Losers
The week has seen continued relative market stability, with Bitcoin at around $6,371 and Ethereum at about $200. Total market cap is at around $208 billion.
The top three altcoin gainers of the week are Etheera, Mero, and Mindexcoin. The top three altcoin losers of the week are YENTEN, empowr coin, RusGas.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
FUD of the Week
CryptoTrader Host Ran NeuNer Rescinds Claim That BTC Will Hit $50K in 2018
Ran NeuNer, the host of CNBC’s CryptoTrader, has retracted his earlier prediction that Bitcoin will reach $50,000 by the end of 2018. Speaking privately to Cointelegraph, NeuNer stated that he changed his prediction due to the recent state of the market, noting that the bear market status and the lack of “good news” moving the market made him lower his expectations. NeuNer had originally tweeted in February of this year that Bitcoin will finish 2018 at $50,000, and has updated it with a new pinned tweet that Bitcoin “will not” finish 2018 at $50,000.
Former US Federal Reserve Chair: Bitcoin Is “Anything But” a Useful Store of Value
Former U.S. Federal Reserve chair Janet Yellen said this week that Bitcoin is “anything but” a useful store of value. Speaking during an interview at the 2018 Canada FinTech Forum in Montreal, Yellen noted that Bitcoin’s failure to be a stable source of value means that it is not a useful currency, adding that it’s “very slow” at payments and has difficulty “because of its very decentralized nature.” Yellen is known in the Bitcoin community due to an incident when a Bitcoin fan held up a handwritten “Buy Bitcoin” during her televised speech on interest rates and reserve policies last July.
“Godfather of ETFs” Says Bitcoin Exchange-Traded Funds Will Not Be Approved Soon
Reggie Brown, the so-called “godfather of ETFs,” said this week that Bitcoin exchange-traded funds (ETFs) will be certified “no time soon.” Browne, who is a senior managing director and head of ETF trading at financial services firm Cantor Fitzgerald, noted during a speech that BTC ETFs will only be approved after the development of a robust regulatory framework in the industry. Browne noted that it is “very difficult” for the SEC to “wrap their heads around a positive approval” due to a lack of data.
Report Finds Lack of Diversity in Ethereum Smart Contracts Could Pose Risks
A report from a group of analysts at Northeastern University and the University of Maryland said this week that a lack of diversity in Ethereum (ETH) smart contracts poses a risk to the ETH blockchain ecosystem. According to the researchers, since they found that most Ethereum smart contracts are “direct- or near-copies of other contracts,” the risk arises if copied smart contract contains a vulnerable or buggy code. The study, which was partially supported by the U.S. National Science Foundation, analyzed Ethereum smart contracts’ bytecodes during its first 5 million blocks over an almost three-year timeframe from the cryptocurrency’s inception in 2015.
American Faces 5 Years in Prison for Operating Unlicensed Business via LocalBitcoins
A U.S. citizen has pled guilty this week in federal court for operating an “unlicensed money transmitting business” through LocalBitcoins.com. Jacob Burrell Campos allegedly admitted selling “hundreds of thousands of dollars” in BTC to more than 1,000 customers from January 2015 to April 2017, meaning that he operated an unregistered “Bitcoin exchange.” According to the court, it is illegal in that Burrell did not register his business operation with the U.S. Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury, and failed to apply AML regulations on the sources of his clients’ funds.
Prediction of the Week
Crypto Winter Could Last 12 to 18 Months, Says CEO of Top Derivatives Platform BitMEX
Arthur Hayes, the CEO of major crypto derivatives platform BitMEX, said this week that “based on previous experience,” the low volatility and volume trading climate could continue for “another 12 to 18 months.” Hayes noted that he has been in the Bitcoin space since 2013, and based his current predictions on his experience in the 2013-2015 “nuclear bear market.”
Best Cointelegraph Features
Cointelegraph celebrates the 10 year anniversary of Satoshi Nakamoto’s release of the Bitcoin white paper with an overview of the white paper’s influence, a brief history of the cryptocurrency, and an interactive quiz to find out how “expert” our readers’ knowledge of Bitcoin is.
As the crypto markets see the fourth worst correction in their nine-year history, the hash power of the Bitcoin network continues to increase. Cointelegraph contributor Joseph Young delves into how crypto mining manufacturing giant Bitmain will compete with the emergence of products from Samsung and GMO into the market, as well as the effects on mining due to the ongoing U.S.-China trade war.
Part two of Cointelegraph’s series on China and cryptocurrency gives an in-depth analysis of what exactly is going on in China in the aftermath of the country’s ICO ban, and why regulators continue to attempt to curb the rise of crypto trades.