Court rules Kik’s 2017 ICO violated U.S. securities laws

A judge has ruled that the $100 million ICO conducted by the Canadian messaging platform Kik in 2017 violated federal securities laws.

U.S. District Judge Alvin Kellerstein has sided with the U.S. Securities and Exchange Commission (SEC), ruling that the Canadian technology firm Kik’s $100 million initial coin offering (ICO) violated federal securities laws.

On September 30, Judge Kellerstein responded to both parties’ requests for summary judgment, determining that Kik’s 2017 token sale meets the definition of a securities issuance according to the Howey test, as the ICO participants had a reasonable expectation of profit.

“In public statements and at public events promoting Kin, Kik extolled Kin's profit-making potential. Kik's CEO explained the role of supply and demand in driving the value of Kin: Kik was offering only a limited supply of Kin, so as demand increased, the value of Kin would increase.”

The judge noted the unique nature of the case, highlighting that he had no “direct precedent” to inform his determination due to the groundbreaking nature of distributed ledger technologies.

After analyzing statements from Kik’s executive’s and the firm’s business model, Judge Kellerstein likened Kik’s offering to a “common enterprise”, saying that the success of the firm’s digital ecosystem “drove demand for [Kik’s token] and thus dictated investors’ profits.”

Kellertsein’s order mandates that the SEC and Kik jointly submit a proposed judgment for injunctive and monetary relief before October 20.

The SEC brought its complaint against Kik in June 2019, arguing that the firm had violated securities laws by selling $55 million worth of KIN tokens to U.S. investors in 2017 (andthe remainder to overseas investors).

The SEC described Kik’s digital currency “pivot” as an opportunistic bid to turn its financial tides after losing money from its core messenger product for many years.

An October 30 statement from Kik asserts the firm “continue[s] to believe that the public sale of Kin was that of a functional currency and not a sale of securities.”

"While this is a setback for Kik, this decision does not impact the Kin Foundation, the Kin token, and the growing ecosystem of developers making Kin the most used cryptocurrency by mainstream consumers,” the firm added.

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Australian government’s digital business plan includes $5M for blockchain

Australia’s Prime Minister has announced the Federal Government’s biggest investment in blockchain to-date, with two pilots set to receive almost $5 million.

The Australian government this week unveiled its $574 million Digital Business Plan that includes seven-figure grants for distributed ledger technology initiatives. 

Announced by Prime Minister Scott Morrison ahead of next week’s Federal Government budget, the plan outlines $4.95 million in support for “two blockchain pilots directed at reducing business compliance costs.” Morrison said:

“The plan supports Australia’s economic recovery by removing out-dated regulatory barriers, boosting the capability of small businesses, and backs the uptake of technology across the economy.”

Piper Alderman partner Michael Bacina told Cointelegraph that these two projects are important “to help demonstrate and unlock the value of blockchain":

“With blockchain adoption accelerating around the world, this funding is a very welcome boost to the Australian blockchain industry and our local expertise.”

As part of the plan, $480 million has been designated for various technological initiatives that could intersect distributed ledger technologies, including $183 million towards a new digital identity system, and $301 million for developing a single business register — allowing businesses to quickly view, update and maintain their business registry data in one location.

National Blockchain Lead Chloe White from the Department of Industry, Science, Energy, and Resources called the direct funding “a huge win for Australian blockchain today” adding that it “is the biggest investment the Government has made in the sector.”

Over the last eight months, White has been working closely with industry leaders to implement Australia’s National Blockchain Roadmap and announced two blockchain working groups for supply chain and educational credentialing. White noted:

“These pilots will complement the National Blockchain Roadmap, which is driving working groups on RegTech, supply chains, cybersecurity and credentialing.”

Throughout 2020, the government has shown a growing interest in distributed ledger technology (DLT) and blockchain application. In September, the Select Committee on Financial Technology (FinTech) and Regulatory Technology (RegTech) published an interim report with over 50 blockchain citations. Submissions to the committee reported that blockchain's potential is “estimated at $175 billion annually within five years and $3 trillion by 2030”.

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Organic growth? Bitcoin SV activity up 761% ahead of BSV conference

Bitcoin SV users appear to have got very excited ahead of the conference.

Active addresses and transaction counts on the Bitcoin SV network saw unbelievable growth in the two days leading up to the CoinGeek Live conference in New York this week.

Active BSV addresses grew from 110,000 on September 28, to 947,400 addresses today.

That's an astonishing growth rate of 761%, in just two days leading up to CoinGeek Live, which kicked off on September 30 at 9am New York time, and will run until October 2.

The spike in active addresses raised eyebrows on Crypto-Twitter. Bitcoin SV and Craig Wright antagonist Arthur van Pelt reposted SirToshi's chart that calls attention to the fact BSV has managed to overtake the Ethereum network in the middle of a DeFi boom. He said sarcastically:

"Seems legit. Organic Growth I think. Has nothing to do with #CGLive I bet'."

Bitcoin influencer ‘Holdlonaut’ responded with a facepalm emoji.

Transactions on the Bitcoin SV network more than doubled in the same period, from 715.6K to 1,751K today. That's growth of 145% in the 48 hours leading up to the conference. Average transaction values meanwhile, fell by two-thirds over the same period.

However, it’s possible the spike could simply be a coincidence, as the network does see some unusual bursts of activity on occasion. Active addresses spiked to over 1 million briefly on June 24, and transactions spiked to 5.5 million on July 10.

The CoinGeek Live conference is mostly an online affair and features speakers including nChain's controversial chief scientist Wright, Bitcoin Association President Jimmy Nguyen and Fundstrat Global managing partner Thomas Lee.

In his opening address, Nguyen said that Bitcoin SV has incentives to discourage bad behavior and noted that the original Bitcoin whitepaper mentions the word "honest" 15 times.

According to CoinGeek’s report on Nguyen's address, Bitcoin SV currently processes more 2,800 transactions per second on its mainnet, and is aiming for 50,000 in the near future. The forthcoming Teranode enterprise-tier protocol aims to have 1TB transaction blocks.

Nguyen said that Bitcoin SV is “the foundational rule set for an entire network,” and is “re-inventing the internet."

In somewhat related news, the Supreme Court of Norway has rejected Craig Wright's jurisdictional appeal. The Satoshi claimant had been trying to sue Hodlonaut for libel in the UK but will now have to go through Norwegian courts.

Hodlonaut said the court has awarded him another $6000 in costs on top of the $60,000 in costs already awarded:.

Supreme Court in Norway today rejected CSW’s jurisdiction appeal, awarding me costs of $6,000 on top of the $60,000 already owed.
His perfect loss record is intact. (4 out of 4)
The real case will now go forward in Norway where another loss surely awaits him.
Welcome to law! https://t.co/Ue4TL4P5gp

— hodlonaut ⚡ (@hodlonaut) September 30, 2020

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Institutional crypto platform Wootrade raises $10M in investment round

Institutional trading platform Wootrade has raised $10 million in a private fundraising round that will be used to expand its team and launch leveraged trading products.

Wootrade, a Taiwan-based liquidity provider platform and crypto asset exchange aimed at institutions, has concluded a $10 million private investment round led by Dragonfly Capital. 

Investors in the round include crypto notables including Haskey Capital, Three Arrows Capital, and DeFi Capital's venture wing. The newly raised funds will be used to expand the Wootrade team, and to support the launch of future products.

The platform is currently in closed beta, where roughly one dozen institutions and early investors are already driving seven-figure spot volumes for crypto assets on behalf of their 65,000 clients.

Wootrade expects to fully launch within six to nine months, and claims its liquidity will surpass that of top exchanges including Binance.

Wootrade will soon launch futures trading and a native governance token ‘WOO’. The platform is currently exploring distributing the token to its users based on retroactive activity.

Speaking to Cointelegraph, Wootrade founder Jack Tan stated that Uniswap-style airdrop model is appealing because token issuers can “reward the people who should really have our tokens.”

“If you’re going to be a user of the platform, we definitely want you to have our token.”

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SingularityNET set to ditch Ethereum for Cardano citing speed and cost issues

This potential move will swap the native AGI token from ERC20 to Cardano

SingularityNET, the AI company behind the expressive robot Sophia, is “seriously discussing” a migration from Ethereum to Cardano, after announcing a collaboration with IOHK.

IOHK is run by the founder of Cardano, Charles Hoskinson, and drives the development of the blockchain platform.

SingularityNET is a full-stack AI platform that lets anyone create, share, and monetize AI services at scale. The potential move to Ethereum is driven by concerns around speed and costs that have been badly affected lately by demand from DeFi platforms, with gas cost peaking as high as $17 per transaction. The team also has doubts about the feasibility of Ethereum 2, which has been in development for the past few years but is still some way off being a practical solution.

“Current speed and cost issues with the Ethereum blockchain have increased the urgency of exploring alternatives for SingluarityNET’s blockchain underpinning,” said Dr. Ben Goertzel, CEO and Founder of the SingularityNET Foundation. He said the partnership will help drive Caradano's development and  scale SingularityNET-based services:

“The transition of SingularityNET onto modern blockchains such as Cardano is a clear route to achieving scale and speed, and the completion of the fiat-to-crypto gateway will remove the requirement for end-users of SingularityNET-based services to deal with cryptocurrency infrastructure”

If SingularityNET goes ahead with the plan, it would swap its native AGI token from ERC20 to Cardano and completely ditch the Solidity programming language in favor of Plutus to create smart contracts. Dr. Goertzel took a swipe at Solidity's shortcomings saying:

“As a Turing-complete language without simple dedicated mechanisms for creating more limited Domain-Specific Languages (DSLs), Solidity presents significant challenges to the formal program verification and the analysis methods that are critical to safety and security on today’s Internet.”

Dr. Goertzel believes the future is multi-chain, so there’s a good chance the team may not move away from Ethereum completely. In an interview with IOHK’s Charles Hoskinson he said that being a decentralized project it was up to the community and market to decide:

“If the Cardano portion works much much better.. then everything should migrate there," he said. "If it turns out that the Ethereum portion is more useful for some purposes, the Cardano portion is useful for some purposes, then so be it, right?”

SingularityNET has a big vision for the future, with one of the important aspects something called  Artificial General Intelligence (AGI) — a hypothetical machine intelligence that has the capacity to understand or learn any intellectual task that a human being can.

The network aims to create an ecosystem where a variety of different AIs can collaborate and outsource tasks to other AIs. For Dr. Goertzel, diversification and decentralization of AI is very important since most AI projects are owned by large tech companies. He hopes that Cardano will accelerate this process:

“Cardano’s thoroughly formalized functional programming foundations have potential to provide a rich and flexible basis for implementing advanced aspects of the SingularityNET design — but just as critically, they have strong promise to provide a secure and reliable basis for the network’s operations basic and advanced alike.”

SingularityNET claims to be the first platform to allow different AIs to communicate with each other and share data while connecting developers and users. The company is also behind the most sophisticated and expressive robot to date, Sophia, and have applied for citizenship for the robot with the Maltese government.

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Crypto prediction markets turn against Trump after first debate

Emerging Ethereum-powered predictions platform Polymarket produced six-figure volume amid the first presidential debates.

The first debate of the 2020 U.S. presidential election had no clear winner, but crypto-powered prediction platforms are having a field day. 

Election futures on crypto derivatives exchange FTX boomed, with the platform’s CEO reporting more than $4 million in open interest trying to pick the winner between Democrat Joe Biden, and Republican Donald Trump. On FTX, Trump’s brash debate performance got a big thumbs down and drove a 10% crash in the price of futures contracts backing his re-election.

Price of TRUMP futures on FTX: FTX

Volumes on FTX are amplified by leverage. On predictive platforms that do not offer leverage, more modest six-figure volumes were recorded. Polymarket saw more than $100,000 in volume flow into its ‘Will Trump win the 2020 U.S. presidential election?’ market on September 30, with sentiment similarly shifting against the incumbent president over the course of the debate. Almost 55 percent believe Trump will not win the election.

Speaking to Cointelegraph, Polymarket founder, Shayne Coplan, said the platform was designed to find answers to issues “people really want to know about rather than just things that they want to speculate:”

“The beautiful thing about markets, in my opinion, is their ability to aggregate information and synthesize it into accurate forecast. That’s what price discovery is — aggregating everyone’s opinions and knowledge and synthesizing it into one metric. And that can have incredible social and informational value.”

Polymarket is built on Ethereum (ETH), however, is exploring Matic as a scaling solution for the interim leading up to the launch of ETH 2.0. Transactions executed on the platform do not carry fees and Polymarket is non-custodial.

The platform uses an automatic market maker (AMM) for price discovery, with all market participants effectively trading against the AMM’s liquidity pool. Ideas for markets can be submitted from Polymarket’s users, and are curated by firm’s executives to ensure that the terms and conditions pertaining to specific markets are “unambiguous.”

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Twitter’s Jack Dorsey takes aim at Coinbase's apolitical stance

Twitter CEO Jack Dorsey has called out Coinbase for seeking to suppress political activism and suggesting employees who think differently should leave.

Twitter CEO Jack Dorsey has taken major U.S. crypto exchange Coinbase to task over its open letter to employees published on Sep 28. 

The letter, written by Coinbase CEO Brian Armstrong, explained why the firm intends to avoid political and social distractions, and instead focus on its core mission of building an open financial system for the world.

The new direction has met with strong support in some quarters and pushback from others.

In a Twitter post to his 4.7 million followers, Dorsey argues that “Bitcoin (aka crypto) is direct activism against an unverifiable and exclusionary financial system.” He goes on to add that the exchange cannot simply ignore social issues as this will leave its customers behind:

#Bitcoin (aka “crypto”) is direct activism against an unverifiable and exclusionary financial system which negatively affects so much of our society. Important to at *least* acknowledge and connect the related societal issues your customers face daily. This leaves people behind: https://t.co/0LMlF1qcmG

— jack (@jack) September 30, 2020

Dorsey has long taken an active involvement in the cryptocurrency space, and Twitter itself has been criticized for favoring progressive over conservative political views in its moderation process. But Dorsey's opinion urging greater political engagement was not well received by the crypto community with the overwhelming number of replies agreeing with Armstrong’s approach.

The vice president of venture capital firm Founders Fund, Mike Solana, did not agree with Dorsey opposing “a corporate trend away from polarizing political statements and dramatic displays of culture war pageantry”. Solana contrasted this apolitical approach with Twitter’s business model and suggested Dorsey was “a man who makes hundreds of millions of dollars fueling political polarization.”

Adam Draper, the son of famed crypto investor Tim Draper, praised the Coinbase approach, comparing Armstrong to Michael Jordanfor his single-minded focus on advancing the virtual currency sector:

“This is thought leadership. We get things done when we are all focused on a unified mission. Brian is Jordan in his prime right now. If anyone is selling shares of Coinbase, I’ll buy.”

Dorsey wasn’t entirely without support however:

Wow @jack just nailed it: Cryptocurrency is inherently about the social impact of finance and trust. These are irreducibly social issues, politics par excellance! https://t.co/J4oBViMhz0

— harryhalpin (@harryhalpin) September 30, 2020

Coinbase has offered any employee who fundamentally disagrees with Armstrong’s position a severance package of up to six months. The email added: “it’s always sad when we see teammates go, but it can also be what is best for them and the company.”

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Twitter’s Dorsey Calls Out Coinbase CEO for Ignoring Users’ ‘Societal Issues’

Twitter CEO Jack Dorsey tweeted his disapproval of Coinbase CEO Brian Armstrong steering his company away from corporate activism. Read more: Coinbase Offers Severance Package to Employees Unsatisfied With ‘Apolitical’ Mission

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RSK announces enterprise spin-off to focus on blockchain integration tools

IOVLabs believes the missing link is the developer-friendliness, not the type of blockchain.

A new enterprise initiative launched by IOVLabs, the company behind the RSK Bitcoin sidechain, seeks to simplify blockchain development for governments and enterprises.

The joint venture, called Extrimian, was established with Argentinian software provider Grupo Sabra to create the RSK Enterprise Cloud platform.

The blockchain-as-a-service platform is designed to allow governments and businesses to develop decentralized solutions and set up permissioned networks with ease. The platform is said to help integrate blockchain DApps into existing infrastructure used by enterprise and government entities.

Guillermo Villanueva, the CEO of Extrimian and co-founder of Grupo Sabra, told Cointelegraph that the focus of the initiative differs from existing offerings:

“There are many Blockchain-as-a-Service offers, but they focus on solving the problem of deploying permissioned networks. Our vision is that the key problem to solve is the connection and integration of the systems that the Enterprise already has to these new technologies.”

Villanueva believes that existing companies have a narrow focus on their niche — cloud providers focused on cloud-based solutions, while blockchain companies focus solely on the blockchain stack. He continued:

“After many years of dealing with the complexity of developing real world applications for the Enterprise segment using the blockchain technological stack, we realized that there was a missing piece, something that facilitates the development and operation of decentralized apps, that easily integrate to the rest of the technology that enterprises and governments already have.”

Villanueva clarified that Extrimian is not seeking to create a separate blockchain platform. Its users would be able to choose between a few existing enterprise blockchains, including RSK, Ethereum and Hyperledger Besu. The toolset will be usable on cloud platforms like Microsoft’s Azure and Amazon Web Services, with more integrations expected later.

Due to the nature of the software, Villanueva explained that its focus is not on convincing companies to make the initial foray in blockchain. “Our platform is intended for big, medium and small enterprises and governments who have a problem, have researched possible solutions and have selected blockchain as a platform for their solution,” he said.

The idea for the platform was apparently driven by RSK’s own experience in designing enterprise applications. The project participated in several pilot projects, including a blockchain-based payments service for Argentinian banks and an energy trading initiative.

“The Argentinean Central Bank pilot was one of multiple implementations we’ve delivered that gave us a clear understanding of the real requirements of the enterprise segment,” Villanueva explained.

In addition to enterprise, RSK is currently pushing for decentralized finance use cases on its smart contract blockchain with integrations of Chainlink oracles and an Ethereum bridge.

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DeFi ‘Vampire’ SushiSwap Still Hemorrhaging Liquidity

Uniswap challenger SushiSwap is continue to lose vital liquidity, with total value locked falling by 8% in the past 24 hours.

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Compound, Gauntlet Founders Raise $4M for New DeFi Scout Fund

Robert Leshner's Robot Ventures has secured $4 million in funding from Galaxy Digital and Paradigm to find early opportunities in DeFi.

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French Authorities Arrest 29 Suspected of Using Crypto to Fund Extremists in Syria

Hundreds of thousands of euros may have been supplied through a secret network benefiting al-Qaida-linked extremists in northwestern Syria.

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French police arrest terror financing ring that used Bitcoin coupons

The terror financing ring reportedly bought cryptocurrency coupons in licensed tobacco shops across France.

A large goup of accomplaces allegedly financing a jihadist network in Syria have been arrested after a sting operation by French police — despite choosing cryptocurrency coupons in an attempt to cover their tracks.

In a statement, police said that "constant surveillance of these networks prompted terrorist organisations to seek more opacity by using cryptocurrencies such as Bitcoin," as reported on Sept. 30.

Since 2019, the 29 accomplices have allegedly been supporting the operations of an  Al-Qaeda affiliate terror organization, called “Hayat Tahrir Al-Sham.” 

The network’s architects are reportedly two French jihadists in their mid-20s, who are both thought to be in northeastern Syria at present. Both were sentenced to 10 years in prison in absentia in 2016.

The 29 members of the network were busted after being caught purchasing cryptocurrency coupons worth between 10 and 150 euros each ($12–$176) on multiple occasions in recent months from tobacco outlets across France.

These outlets, known in French as tabacs, were last year integrated into crypto coupon services to encourage the adoption of cryptocurrencies by the French public.

Today’s report on the financing of Hayat Tahrir Al-Sham notes that there are currently around 24,000 licensed tabacs across the country. 

Alongside the coupons the defendants allegedly used to credit their Syrian accomplices’ Bitcoin (BTC) accounts, these tabacs support a range of small payments services like cashcard top-ups and money coupons. These services, notably, don’t require proof-of-identity.

The anti-terror prosecutors' office has claimed that the use of cryptocurrency coupons by the network represents a turn away from the more prevalent choice of cash to support nefarious activities.

As Cointelegraph previously reported, a range of militant groups, most of which are defined as terrorist organizations by some countries, have increasingly turned to cryptocurrencies to support their fundraising activities. Most of these organizations are financially isolated, with many global banks barring services to them using illicit terror financing prevention mechanisms.

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Indian man arrested on charges of crypto fraud via 'Morris Coin' scheme

A 36-year-old man from Kerala was arrested under charges of cryptocurrency fraud.

District police have arrested a 36-year-old man from the Malappuram district of the south Indian state of Kerala on charges of operating a cryptocurrency scam.

Nishad has been charged under the Prize Chits and Money Circulation Schemes (Banning) Act by the district police chief U Abdul Karim.

A team led by police inspector P Vishnu seized several documents from Nishad’s house and alleged that he has duped thousands of people from across India of hundreds of thousands of dollars. 

Nishad, who is also the managing director of a Bengaluru-based startup Long Rich Technologies, allegedly lured investors into investing in the cryptocurrency “Morris Coin.”

According to the police, the investors were promised a daily return of 270 rupees (~$3.60) for 300 days if they deposited a minimum amount of 15,000 rupees ($200) into  Morris Coin. 

The scheme suggested that the investors would be able to exchange Morris Coins after the 300-day lock-up period. Investors were reportedly promised added benefits for bringing more people to deposit funds into the scheme.

The police said that Morris Coin was not listed on any exchanges, making it impossible to exchange the coin. They also claimed that the company does not have any registered offices.

Even the Morris Coin ICO website has no information about team members or developers, nor does it give any insight into what the project is about. Nishad, however, claimed that Morris Coin was operating in compliance with the law. 

The police plan to reach out to investors in Morris Coin to record statements and further investigate the case.

Cointelegraph tried reaching out to Long Rich Technologies and Morris Coin but received no immediate response.

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At $10,600, Bitcoin price is on track for its second-best quarter ever

Data shows Bitcoin should seal both its best Q3 on record and its second-highest lifetime quarterly close on Sep. 30.

Bitcoin (BTC) is on track for its best third quarter ever, data shows as Q3 2020 has just one day left to go.

According to price records from on-chain analytics resource Skew, this year should produce Bitcoin’s strongest Q3 in its history.

BTC price challenges Q2 2019 close

BTC/USD traded at around $10,680 at press time on Sep. 30. That number comfortably beats any other Q3 close on record, the next highest being last year’s $8,310.

What’s more, Bitcoin may seal the second-best quarterly close of its lifetime — but that depends on whether it can stay above Q2 2019’s $10,590.

“One more day to go and still looking like second-best quarterly close for bitcoin but it's a close call with Q2 2020,” Skew commented.

Bitcoin quarterly closing prices summary. Source: Skew/ Twitter

Bitcoin has stabilized in a $1,000 trading corridor since losing momentum after hitting $12,500 in August. The opinion is mixed for the short term, and concerns remain that BTC/USD may still drop to fill the last remaining CME futures “gap” at $9,600.

“There’s a rangebound structure with the upper resistance zone at $10,800,” Cointelegraph Markets analyst Michaël van de Poppe summarized in an update on Tuesday.

If BTC/USD fails to crack that resistance, he said, it was “very likely” that support levels lower down would be tested, notably $10,600, with potential for $10,400 and $10,200 to come into play. 

Long term bulls in charge

Zooming out, however, the picture more conspicuously favors bulls. As Cointelegraph reported, long-term behavioral patterns remain true to form for Bitcoin, with this week proving no different.

Difficulty ribbon compression, a metric designed to quantify suitable BTC/USD entry points, has left its lower green “buy” zone for the first time since March.

Network fundamentals also speak to overall strength, with difficulty itself at all-time highs and set for another upwards readjustment of around 3% in three days’ time.

Hash rate, a measure of the estimated computing power being directed to mining, is also trending back towards its highest-ever levels.

Among traders, however, discussion remains of potential near-term lows, including a dip below the CME gap toward $9,000.

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Is Reddit’s MOON Token Really 2000x Bigger Than the Global Economy?

A unique anomaly means the market cap for a token for incentivizing content on a particular Reddit forum has ballooned to $2.88 septillion.

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SEC Seeks Trial of Swedish National Over Alleged Fraud That Took $3.5M in Crypto

The man is alleged to have fleeced 2,200 victims in the U.S. and 45 other countries, netting $3.5 million via payments in bitcoin and other digital assets.

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Bilibili Copycat Tried to Save Itself With a $2M Crypto IEO – It Didn’t Work

A Chinese video streaming copycat service raised $2.1 million via an initial exchange offering in August 2019 – but it appears this last resort wasn’t enough to save the company.

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Bitcoin exchange reserves down $5B in 2020 hints at whale accumulation

Bitcoin exchange reserves dropped by $5 billion in the past year, showing signs of accumulation.

The Bitcoin (BTC) reserves of exchanges are continuing to drop, which suggests retail investors and whales might be accumulating.

According to data from CryptoQuant, all exchanges’ reserves dropped to 2.4 million BTC, which is equivalent to $25 billion. In contrast, in October 2019, exchanges had around 2.8 million BTC, currently worth $30 billion.

Bitcoin reserves on all exchanges throughout the past year. Source: CryptoQuant

There is a clear decrease in selling pressure from whales and retail investors

The reserves of exchanges increase when investors deposit Bitcoin. Typically, deposits or inflows are considered selling pressure, because traders have to send BTC to exchanges in order to sell.

Hence, when exchange inflows decline, it often signifies that the appetite to sell BTC by investors is declining.

Another chart from CryptoQuant depicts the trend of net inflows of Bitcoin into exchanges in the same timeframe.

Throughout the past two months, net inflows have generally remained in the negative 20,000 BTC level. Net inflows sharply dropped in recent weeks, specifically as BTC sharply rebounded from $10,300 to above $10,700.

On Sep. 26, Cointelegraph reported that large whale clusters emerged at $10,407. Whale clusters form when whales accumulate new BTC and do not touch the new holdings. Clusters usually indicate that whales are beginning to accumulate in a new area.

Considering the accumulation trend and the resilience of BTC above $10,000, investors likely have little appetite to sell.

All exchange Bitcoin net inflow. Source: CryptoQuant

Due to the confluence of the lacking willingness to sell BTC at current prices and consistent accumulation, BTC is on track for a strong quarterly close.

Another possible reason behind the steep fall in exchange net flows might have been large-scale hacks. Most recently, KuCoin was reportedly hacked for $150 million after the private keys of hot wallets were compromised.

BTC on track for its second-best quarterly close 

According to Skew, Bitcoin is en route to see its second-best quarterly close. BTC closed the second quarter at around $9,140. It would have to stay above $10,600 to secure the second-best quarterly close.

The quarterly closing prices of Bitcoin since 2014. Source: Skew

There are several reasons behind the strong performance of Bitcoin throughout the third quarter. Most notably, BTC rallied in tandem with gold and stocks after the U.S. approved a stimulus bill.

The initial kick start of a market-wide recovery from the stimulus, combined with a low-interest-rate environment, created a favorable macro backdrop. The analysts at Skew said:

“One more day to go and still looking like second best quarterly close for #bitcoin but it's a close call with Q2 2020.”

Throughout the year’s end, there are three key fundamental and macro factors that could buoy Bitcoin’s sentiment, namely the weakening U.S. dollar, the prospect of a stimulus package and vaccines.

Meanwhile, the U.S. dollar is continuing to show weakness against reserve currencies, in the likes of the yen, yuan and franc as the Fed has doubled down on its average inflation targeting strategy. 

But while the prolonged weakness of the dollar might put the U.S. stock market at risk of underperforming against other markets, it should directly benefit Bitcoin and gold, which are priced against the USD.

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Government investment firm develops blockchain health passport in Singapore

Singapore continues to apply blockchain in its public administration.

In a pandemic era of unprecedented health data collection and surveillance, Singapore is turning to blockchain technology for the infrastructure that can make it work. 

Government-owned investment firm SGInnovate and Singaporean startup Accredify have jointly developed a new blockchain-powered digital health passport, according to a report on Sept. 30.

Development work on the application, which allows personal medical data to be stored in a blockchain-secured digital wallet, began in May. 

A successful pilot in July showed that the app was capable of managing and verifying digitized healthcare documents — including COVID-19 discharge memos, swab results, immunity proof, and vaccination records — more than 1.5 million times.

For the pilot, the health passport app was introduced as a new feature in the Singapore Manpower Ministry's FWMOMCARE app. The latter is a mobile application which was launched in May to help monitor and report migrant workers’ daily health status during the pandemic.

SGInnovate is funded by Singapore’s Ministry of Finance and has a track record of engagement with the blockchain space. 

The digital health passport app has been built on the Open Attestation platform — an open-sourced framework for notarising documents using the blockchain, developed by the Singapore government's CIO office, GovTech. 

SGInnovate’s deputy director of venture building, Simon Gordn, has said that “as the pandemic tested Singapore's healthcare sector, we identified a gap in the large-scale management of medical records.” “We wanted to quickly build a solution that enables a trusted authentication process,” he added.

In a joint statement, SGInnovate and Accredigy have said that the app will remove reliance on paper-based documents, which can be lost or tampered with. SGInnovate explained:

"Digital Health Passport leverages blockchain technology to generate tamper-proof cryptographic protections for each medical document. Users can automatically verify the digital records via a mobile app and present it to officials via QR code, for a quick and seamless verification process." 

The company underscored the key advantages of blockchain technology in the field of healthcare data, insofar as it offers greater transparency, security and privacy for managing sensitive documents.

As previously reported, various companies and organizations worldwide have been exploring blockchain solutions for digital health passports and digital identity management as they attempt to open up their economies during the pandemic.

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Crypto Finance Conference to host industry experts in-person in January 2021

Physical crypto events come back, but with a set of strict COVID-19 measures.

As the world is battling to recover from the damage caused by the coronavirus pandemic, a major cryptocurrency event in Switzerland prepares to take return to a physical format.

Crypto Finance Conference (CfC), an international crypto event held in St. Moritz, will take place from Jan. 20–22, 2021, and feature speakers from key industry firms and institutions like Winklevoss Capital, Swiss National Bank, the European Parliament, Ledger and others. Cointelegraph will serve as the main media partner for the CfC St. Moritz 2021.

The upcoming conference is the fourth annual iteration of CfC and will be different from previous events — the conference will prioritize the health and safety of attendees with a comprehensive COVID-19 strategy.

Available on the CfC website, the strategy outlines a wide set of preventive measures for pre-event and on-site safety like mandatory face masks, strict cleaning and disinfecting policies, and social distancing rules. The strategy also limits the event capacity to 250 people and requires the guests to use the SwissCovid app for contact and symptom tracing.

According to CfC organizers, the measures come in line with requirements from the Swiss Federal Office of Public Health. CEO of CfC St. Moritz Nicolo Stoehr said that “physical encounters and personal exchanges are more necessary than ever and will be possible under strict hygiene rules.”

The CfC St. Moritz 2021 website states that the conference preparations “are in full swing.” 

“The challenges caused by COVID-19 require additional efforts, which we as the organizer are happy to take on. We believe that the unique experience at CfC St. Moritz is not possible without physical interaction and personal exchange — and are even the more sought after, particularly if appropriate measures are in place,” it reads.

Confirmed speakers at CfC St. Moritz 2021 include major industry figures like CoinShares CSO Meltem Demirors and Morgan Creek Digital co-founder Anthony Pompliano. The event will also feature European Parliament Member Eva Kaili and Thomas Moser, an alternate member of the governing board at Swiss National Bank. Other speakers include Ledger CEO Pascal Gauthier, Winklevoss Capital’s Jane Lippencott, and XBTO’s Philippe Bekhazi.

The application-only conference will host a number of keynote speeches and panel discussions on important industry topics like cryptocurrency regulation, central bank digital currencies and stablecoins, as well as crypto investment strategies. The event will also be available online.

Crypto events going virtual amid the 2020 pandemic

The CfC St. Moritz 2021 will purportedly be among the first global crypto events featuring physical encounters after most events in 2020 went online or were delayed due to the coronavirus pandemic.

Shortly after the World Health Association officially labeled the coronavirus outbreak as a pandemic on March 12, a number of major crypto conferences like Consensus announced their plans to move conferences from physical sites to online. BlockShow, a global blockchain event powered by Cointelegraph, partnered with San Francisco Blockchain Week to host the first-ever online trade show called Unitize in July 2020.

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BitcoinACKs Lets You Track Bitcoin Development and Pay Coders for Their Work

BitcoinACKs aggregates pull requests for upgrades to Bitcoin Core and lets users pay for the Bitcoin development they want to see.

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Coinbase Offers Severance Package to Employees Unsatisfied With ‘Apolitical’ Mission

Coinbase's CEO has issued a company-wide letter informing employees to get in line with a new cultural shift or take a severance package.

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Global economy saved: Reddit’s MOON token has a $2.64 septillion market cap

Despite still being on the Rinkeby testnet, holders of Reddit’s ‘MOONs’ have devised a way to trade the tokens for fiat.

In defiance of Reddit's apparent wishes, crypto traders have devised a way to exchange the social platform’s ‘community points’  tokens for fiat — and it’s resulted in a pretty surprising market cap. 

In May Reddit announced it would begin distributing ERC-20 rewards tokens on the Rinkeby testnet among users of its cryptocurrency and Fortnite subcommunities in the form of ‘MOONs’ and ‘BRICKs.’ The tokens are distributed according to a user's contributions to the respective subreddits.

xMOON pairings appeared on xDai network exchange Honeyswap last week after Reddit introduced a feature allowing Moons to be converted into ‘coins’.

MOON holders can now trade the tokens by converting them to xMOON via xmoon.exchange, and then exchanging the xMOONs for xDAI — which can be converted to the stablecoin DAI 1:1 — via Honeyswap.

Reddit’s crypto community token is currently changing hands on Honeyswap for $0.088 worth of xDAI. Pairings for xMOON have generated $174,000 in volume over the past 24 hours.

According to Etherscan, more than 30,000,000,000,000,000,000,000,000 (30 septillion) MOONs have been distributed to roughly 7,800 addresses, meaning that the token’s market capitalization is roughly $2.66 septillion.

By contrast, the entire global economy was worth roughly $133 trillion in 2019, suggesting that the creation of MOONs has increased the value of the world’s economy by close to 2 trillion percent. Who said crypto wasn’t good for the economy?

After trading for approximately $0.015 for its first two days of trading, xMOON rallied to post all-times of $0.35 on September 26, before retracing back to $0.055 by September 30.

xMOON/xDAI: Honeyswap

Reddit is currently hosting a contest for developers working on scaling solutions that could facilitate the launch of the platform’s tokens on the Ethereum (ETH) mainnet, ideally before 2021.

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93% of the top 250 coins declined in price in September

The DeFi hype faded in September, dragging prices with it.

Over the last few months, DeFi protocols including Yearn.Finance, Compound, Synthetix, and Chainlink have seen their token prices go through the roof, sparking talk that the long-awaited bull market might be here. 

The DeFi boom is built on Ethereum and propelled ETH’s price rise from $100 in March to $470 in August.

However, the DeFi euphoria has been fading in recent weeks, and there is bearishness in the rest of the market too. For the past two weeks, ETH price has been hovering at around $350.

And according to CoinMetrics, 72% of the top 250 crypto assets have declined in price week over week, and that number increases to 93% for the month over month analysis. Looking at Messari's DeFi chart, across September, most DeFi tokens corrected by anywhere between 15% - 85%, with bZx Network losing 85%, Curve down 78%, Swerve (-76%), Ren (-57%), Balancer (-53%), THORChain (-52%), Synthetix (-34%) and AAVE (-29%).

To better understand what’s going on here, let’s look at a rolling 7-day metric using the ratio of assets making new 30 day highs less a ratio of those making 30 days lows. The chart shows bearish levels not seen since the selloff in March of this year — but thankfully still a long way off the depths of crypto winter in 2018.

While the recent pullback has some traders wondering if the party is over, trend reversals are common in bull markets. During the bull market of 2017, there were numerous price retracements.

For instance, in early 2017, when Bitcoin hit $1,180 for the second time, it triggered a massive sell-off and the top cryptocurrency fell by almost 40%. And of course, that didn’t stop Bitcoin from reaching an all-time high around $20,000 later that year.

 In its newsletter this week, DeFiWorld suggested corrections were normal and just part of a larger trend, adding this year reminded them of 2016.

"We move in bubbles and 4-year cycles. While everyone is just thinking about what happens today, this week, or this month, you should zoom out and reflect where we are really heading. The long term trend is clear: It’s upwards."

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FinCEN director warns banks about cryptocurrency risk exposure

FinCEN has warned U.S. banks that it is closely watching how they respond to crypto risk exposure with their AML programs.

The U.S. Financial Crimes Enforcement Network (FinCEN) director Kenneth Blanco has warned banks to think seriously about their cryptocurrency risk exposure.

During the virtual 2020 ACAMS anti-money laundering Conference in Las Vegas this week, Blanco discussed the obligations of banks in implementing effective anti-money laundering (AML) policies.

Current FinCEN regulations (FIN-2019-A003) state that it is the responsibility of all financial institutions to identify and report suspicious activity concerning how criminals and other bad actors exploit card verification checks for money laundering, sanctions evasion, and other illicit financing purposes. For many banks, it is still unclear how virtual currencies affect their institutions.

The director emphasized the need for banks to have another look at their AML policies and procedures, especially in relation to cryptocurrencies, adding that “if banks are not thinking about these issues, it will be apparent when examiners visit.”

“To be clear, exchanges are not the only ones with crypto risk exposure. These risks are not unique to money services businesses or virtual currency exchanges; banks must be thinking about their crypto exposure as well. These are areas your examiners, and FinCEN, will ask you about when assessing the effectiveness of your AML program.”

According to research by crypto analytics firm CipherTrace Labs in 2019, eight of the ten major U.S. retail banks had dealings with illicit crypto money service businesses (MSBs). These MSBs accept cash payments in exchange for crypto, essentially running as unregistered P2P exchanges.

In addition many P2P exchanges have no AML or know-your-customer (KYC) programs in place, resulting in extensive money laundering risks to banks and other financial institutes.

Banks have long been criticized for failing to maintain robust AML and KYC programs. The International Consortium of Investigative Journalists (ICJI) report that more than $2 trillion of processed transactions have been identified by banks as suspicious and should be frozen. The amount of suspicious money not identified by banks could be many times larger.

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Bitcoin price in flux: Bulls target $11.5K, bears desire drop to $9.8K

As Bitcoin price consolidates, bulls target $11.5K and bears expect a drop below $9.8K.

Bitcoin (BTC) price appears to be gearing up for another shot at the $11K mark but traders shouldn’t get overly excited as resistance in the $11,000-$11,200 zone and at $11,389 have kept the price from moving higher for the last few weeks. 

Crypto Fear & Greed Index. Source: Alternative.me

Currently the Crypto Fear & Greed Index registers 49 which shows crypto investors feel neutral about the current state of the market. While it’s difficult to gauge the accuracy of the indicator, Bitcoin price and volume have been relatively flat as the price is basically pinned between $9,900-$11,200. 

BTC/USDT daily chart. Source: TradingView

As the daily chart shows, since Sept. 18 Bitcoin price has bounced between the trendlines of the symmetrical triangle and if the compression continues investors will start to look for a decisive move to occur in the coming week.  

In the event that the price drops from the symmetrical triangle the volume profile visible range (VPVR) shows buying interest from $9,950 to $9,200 and looking back to Sept. 3 through Sept. 10 bulls consistently purchased dips below $10,000. 

As mentioned in a previous analysis, for the moment it seems that traders are waiting on Bitcoin price to make a stronger move above $11,500 or below $9,800 before becoming more engaged with the market. 

DeFi tokens fall flat as Bitcoin price consolidates

While Bitcoin price has held a relatively stable range, DeFi tokens appear to have lost their bullish momentum. 

At the time of writing CoinGecko’s Top 100 DeFi Coins index shows that 45 of the 100 listed tokens have registered losses in the past 24-hours and Uniswap data shows volume has declined when compared to the $953 million record reached on Sept. 1. 

Uniswap daily trading volume. Source: Uniswap

Even top DeFi darlings like Yearn.finance (YFI), Aave (LEND), and Chainlink (LINK) have corrected sharply in the last month and traders will note that YFI is currently down 43% from its all-time high at $44,000. 

Some analysts have suggested that the profits and funds invested in DeFi protocols are steadily making their way back into Bitcoin but data is yet to support this narrative. 

Bitcoin price daily performance. Source: Coin360

As Bitcoin and DeFi tokens search for momentum, altcoins managed to accrue marginal gains. At the time of writing, Ether (ETH) is up 0.50%, Binance Coin (BNB) has added 5.19%, and Cosmos (ATOM) rallied 8.39%.  

According to CoinMarketCap, the overall cryptocurrency market cap now stands at $346.5 billion and Bitcoin’s dominance index is currently at 57.6%.

Keep track of top crypto markets in real time here

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StrongBlock launches DeFi protocol but token prices slump 70%

A new DeFi protocol has been launched rewarding node operators to improve public blockchain performance, but token prices have tanked

Just-launched DeFi protocol StrongBlock has announced the integration of Chainlink oracles — however its native token’s price tumbled 70% today. 

The platform, founded by former members of the original EOS core team, was launched on Sept. 29. StrongBlock says that low quality and insecure blockchain nodes can be unreliable and provide erratic market data, especially if they get out of synch. The protocol’s core concept is to shift the emphasis away from rewarding validators, to rewarding node security, as a way to improve public blockchain performance.

Bitcoin Cash evangelist, Roger Ver, gave the project a shout out:

Nodes are the voluntary backbone of decentralized blockchains. $STRONG by @Strongblock_io is the first to pay them for the work they already do. Go to https://t.co/xxozJI6ur6 to stake your #Ethereum

— Roger Ver (@rogerkver) September 29, 2020

Mining rewards are in the form of Ethereum and Chainlink tokens and StrongBlock announced Sept. 30 it had integrated Chainlink’s price oracles for LINK/ETH and ETH/USD to determine the prices of its own token called STRONG.

With a total supply of 10 million STRONG, around 4.89 million have been allocated to the shareholders, founders, and team. A third of this allocation was unlocked along with the DeFi protocol launch and it appears some are being dumped. Following an initial surge from $180 to $275, STRONG prices have tanked over 70% today to $66 according to Uniswap.info.

StrongBlock, launched its Blockchain-as-a-Service platform in February 2020, and selected the Ethereum network due to the network effects of the blockchain hosting the majority of DeFi platforms. The move has raised eyebrows however, as it was founded by members of the original EOS core team and Block.one company executives.

CEO and co-founder of StrongBlock, David Moss, acknowledged that Ethereum is the heart of DeFi at the moment, and that EOS does not have as much support at present. The protocol is looking for existing and new Ethereum full nodes to be listed in order to start earning mining rewards. A guide was published on September 24 to advise on the requirements of getting a node listed on the protocol.

The #StrongBlock DeFi platform is live! And the secret ERC-20 you can mine with is $LINK. We're excited to be working with Chainlink https://t.co/xZq8AHjMDA

— strongblock.io (@Strongblock_io) September 29, 2020

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Court tosses out short-sellers’ lawsuit targeting Overstock’s 'digital dividend'

The lawsuit, accusing Overstock of market manipulation through its security token airdrop, has been turfed by a federal judge.

A Utah federal judge has tossed out a lawsuit that accused Overstock ($OSTK) of market manipulation by distributing a ‘digital dividend’ of security tokens to shareholders and repeatedly revising retail earnings guidance upward to punish short-sellers.

U.S. district judge Dale Kimball granted two motions to dismiss the suit on September 28, finding that the digital dividend did not manipulate the market, and that the revised earnings statements were protected by the Private Securities Litigation Reform Act. In his judgement Kimball said:

“On the day that Overstock announced the dividend, market observers recognized and publicized that the digital dividend would place short sellers in a pickle by forcing them to cover their short positions to avoid breaching pre-existing contractual obligations.”

The lawsuit was filed by Mangrove Partners Master Fund in September 2019, two months after Overstock, a former-online retailer-turned crypto retailer, announced its digital dividend. The dividend airdropped ‘OSTKO’ security tokens to Overstock shareholders at a ratio of one token for every ten shares. 

Mangrove claimed that conditions that prohibited the token’s sale until six months after distribution were intended to make it hard for shorters to cover their positions, and accused Overstock of engineering an artificial short squeeze.

The U.S. Securities and Exchange Commission later launched an investigation into the actions of Overstock and its executives, subpoenaing documents concerning the dividend, in addition to communications with the firm’s former CEO Patrick Byrne.

Judge Kimball ruled that Byrne’s “very public disdain” for shorters (he made numerous disparaging comments about them) was not relevant to the case as “there was a legitimate business purpose for issuing the dividend.”

He summed up the lawsuit as “a classic attempt to plead fraud by hindsight.”

Speaking to Law360, Byrne’s attorney Robert Driscoll said: “Federal securities laws do not serve as investment insurance and the court agreed.”

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‘DeFo’ staking enabled for Waves' Neutrino stablecoins

Crypto traders can earn passive income through Neutrino stablecoin staking.

U.S.-based cryptocurrency exchange Waves.Exchange, which supports the price-stable multi-asset Neutrino protocol, is introducing a way for crypto traders to earn passive income through stablecoin staking.

According to a Sept. 29 announcement from Waves, the exchange has expanded its tokenized assets ecosystem to include seven different Neutrino stablecoins — synthetic versions of national currencies — through a decentralized foreign exchange market, or 'DeFo'.

Holders of the Neutrino US dollar (USDN), euro (EURN), yen (JPYN), yuan (CNYN), ruble (RUBN), Ukrainian Hryvnia (UAHN) and Nigerian Naira (NGNN) can reportedly get up to 15% annual percentage yields (APY) through staking. Users can also receive up to 20% by providing liquidity to the stablecoin pools. According to Waves, there will be no penalties for withdrawals.

Unlike centralized fiat-collateralized stablecoins, where holders have to trust the issuer, Neutrino stablecoins are algorithmic, issued by a smart contract.

Waves is far from the only platform offering staking rewards this year. Coinbase launched a similar system in July for crypto traders to gain 2% APY on their Dai (DAI) holdings on top of its existing 0.15% for USD Coin (USDC) holders. In September, Binance announced its Launchpool platform would allow users to earn token rewards in return for staking Binance Coin (BNB) and Binance USD (BUSD) as well as a variety of other coins.

Cointelegraph reported in August that Waves had made its Neutrino dollar available for users to stake on the Ethereum blockchain. The exchange is also reportedly planning to add more DeFo trading pairs, which Neutrino’s governance token (NSBT) holders will vote on.

Waves intends to launch Gravity Hub in October. It's a blockchain-agnostic protocol addressing the interoperability issue between blockchains including Bitcoin (BTC), Ethereum (ETH), Cosmos (ATOM), Solana (SOL), and Ethereum Classic (ETC). The platform will allow dApps to send a request to other dApps on a different blockchain, and to transfer tokens using token ports.

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'No coiner' TikTok star launches finance podcast with Bitcoin bull Pomp

‘I do believe crypto is its own asset class and one worth exploring,’ said the TikTok star.

A 21-year-old social media star famous for his TikTok videos is entering the crypto space, guided by Bitcoin bull Anthony ‘Pomp’ Pompliano.

Bryce Hall has launched a finance podcast with Pompliano called “Capital University”. Unlike Pomp’s regular podcast, which is focused on business, investing, and promoting Bitcoin (BTC), the joint venture will cross the generational divide, as the 32-year-old Pomp learns how social media influencers are making money, while Hall learns tips about building generational wealth through investment strategies.

“I just want to highlight the power and importance of diversification,” Hall told Cointelegraph.

“I do believe crypto is its own asset class and one worth exploring. It is definitely the Internet’s version of gold with the caveat of having a known finite amount of units.”

The TikTok star, who claims he has roughly 25 million followers between the short video-sharing app, YouTube, Instagram, and Twitter, reportedly has a net worth of more than $2 million. He described himself as “completely broke” before achieving internet fame but is now earning a large income through YouTube AdSense revenue, apparel merchandise sales, and brand deals.

Source: Instagram

Hall implied in a Sept. 29 Tweet that despite his wealth, he has only recently begun to think about buying Bitcoin, and he’s not currently associated with the crypto community. However, this venture with Pomp, a known Bitcoin enthusiast, coupled with his announcement that Gemini co-founder Tyler Winklevoss ha agreed to be on the new podcast, may change that:

“When Tyler and Cameron Winklevoss are engaging with your tweets and direct messaging you, you better take what they say seriously and reevaluate your investment positions.”

The 21-year-old has described himself as “stupid and crazy” when it comes to his social media personality, but stated he “just wasn’t sure what to do” with cryptocurrency. However, having someone like Pomp at his side could provide “the right guidance.”

“Right now, when you’re at the top, this is when you’re going to be making the most money,” said Hall. “You just have to find a way to sustain it.”

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SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges

Digital security exchanges that ensure listed assets are legitimate will not face sanctions, the SEC said in an open letter.

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Blockchain technology now powers a privacy-focused security camera

The new camera from IoTeX reportedly features a private key for access and end-to-end encryption of all data.

IoTeX, a privacy-focused platform for the Internet of Things, has partnered with camera manufacturer Tenvis Technology to offer Ucam, an indoor security camera powered by blockchain technology.

Head of business development at IoTeX Larry Pang told Cointelegraph that Ucam users can access their camera data through a decentralized system and log in with an “uncrackable” password. The camera or a user’s mobile phone handles all the computing, meaning decryption occurs on the devices, letting users control their own data.

“A private key is used to end-to-end encrypt all the data,” said Pang. “We need to have technology that guarantees our privacy and our ownership instead of terms and conditions and policies.”

The system was designed to avoid the type of data and security breaches that have haunted many companies behind internet-based surveillance cameras. Amazon’s Ring users reported a series of breaches in December, some of which involved hackers using the system to harass people in their homes. There were similar incidents from Google Nest camera users this year, one of which involved a bad actor playing pornographic sounds into a 2-year-old girl’s bedroom.

“These kinds of hacks are all ‘walking through the front door,’” said the IoTeX exec. “They’re password-based hacks, where they’re brute-force hacked. An 8-character password can get breached in a few minutes.”

By using blockchain infrastructure, Ucam will reportedly bring the end-to-end encryption typical of cryptocurrencies to home surveillance by using blockchain infrastructure. Pang said that even non-tech savvy Ucam users will start to see the benefits of the technology, offering the traditional camera features they want with the crypto concept of “not your keys, not your coins.”

“What better kind of daily life problem is there than peace of mind and privacy? That’s the first kind of intro for people to crypto.”

“We can try to convert [customers] into crypto users,” said the IoTeX exec, stating the underlying technology would provide a brand new way to reach those unfamiliar with digital currency. “We’re not talking about speculation of assets. They don’t really need to know about blockchain — they just need to know privacy is the goal, privacy is the result.”

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Gemini crypto exchange adds shielded withdrawals for privacy coin Zcash

“Regulators can get comfortable with privacy-enabling cryptos,” Gemini says.

Gemini, a cryptocurrency exchange founded by the Winklevoss twins, aims to improve user privacy with a major privacy token, Zcash (ZEC).

Starting Sept. 29, Gemini will support shielded withdrawals of ZEC, which allows users to hide their transaction data.

Gemini representatives said that the new feature is the “first time shielded ZEC withdrawals are available on a regulated exchange.” The new option comes in line with Gemini’s mission to strengthen financial privacy and “empower the individual through crypto,” Gemini executives said.

Launched in 2016, Zcash is a major privacy-focused cryptocurrency, enabling two user privacy levels through two types of addresses — transparent, or t-addresses, and shielded, or z-addresses. In contrast to transparent addresses, shielded ZEC addresses are designed to encrypt and hide transaction data like sender, receiver, as well as the amount sent.

According to Gemini, the exchange will store ZEC in t-addresses. In order to complete a withdrawal of shielded ZEC, users can simply withdraw their ZEC to a z-address. Exchange users are already able to deposit ZEC from a z-address into their accounts.

Gemini did not specify whether the exchange received any special regulatory approvals to introduce shielded ZEC withdrawals. However, the reps said that the new feature “demonstrates that with the right controls in place and the proper education, regulators can get comfortable with privacy-enabling cryptos.”

Gemini’s addition of shielded ZEC withdrawals comes amid regulatory uncertainty over Zcash.

As previously reported, some global exchanges like Japanese Liquid had to delist Zcash to be compliant with regulations. Over the course of 2019, a number of crypto services like OKEx and Upbit cut support for Zcash alongside major privacy coin Monero (XMR), citing concerns over their anonymous nature. In August 2019, major American crypto exchange Coinbase announced the termination of Zcash custody for customers based in the United Kingdom.

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Report: Impermanent loss on Uniswap and other AMMs is always permanent

Is it time to find another name for this phenomenon?

Alexis Direr, a researcher at the University of Orleans in France, has released a paper summarizing the mathematical underpinnings of Uniswap and other exchanges based on Automated Market Makers.

Automated Market Maker is the term for a class of decentralized exchange that reached significant popularity in 2020, spearheaded by Uniswap.

In a nutshell, these exchanges do away with traditional order books and instead rely on liquidity pools governed by a mathematical formula. Traders are always able to make a transaction with the pool for even the most illiquid tokens, but each order will impact the price of the asset they are trading — a phenomenon called slippage.

The mathematical formula defines how the price changes in response to the size of a particular order. For example, the formula may say that exchanging 10 Ether (ETH) into Dai (DAI) yields $3,500, but exchanging 100 ETH only yields $3,400. This means that the price of 1 ETH is $350 in the former case, but only $340 in the latter. The formula is often called the “bonding curve,” as the various possible combinations describe a particular price curve. In the case of Uniswap the curve is a hyperbola, though other AMMs may have more complex shapes to optimize for different scenarios.

AMMs rely on liquidity providers — people and entities committing their capital into liquidity pools to facilitate trades and lower slippage. In return, LPs obtain trading fees paid by users.

While this may sound like a sweet deal, liquidity providers need to deal with “impermanent” loss. LPs may end up with less money than they put in initially when the price swings significantly in one direction. Compared to an equivalent 50:50 portfolio of the assets in question, the pool underperforms significantly with large price deviations.

Source: University of Orleans

The researcher explains that this phenomenon occurs due to the presence of arbitrage traders. Outside market prices do not obey the bonding curve, so constant action is necessary to keep Uniswap’s price in balance with the rest of the market. But when arbitrageurs rebalance the pool to the correct value, they do so at a “suboptimal exchange rate” defined by the bonding curve. This action extracts value from liquidity providers in favor of the arbitrageurs.

The loss is generally named “impermanent” because if the price were to return to its initial value, liquidity providers are completely even compared to the benchmark 50:50 portfolio. Discounting the case where the price permanently moves to a new equilibrium, Direr posits the question:

“The fact that the two strategies yield the same result seems at first disturbing. In the pooling strategy, the pool incurs arbitrage costs twice [...] In the holding strategy, the investors avoids arbitrage costs altogether, yet ends up with the same final wealth. How is it possible?”

The researcher’s answer is that the way benchmarking is commonly done is misleading. Uniswap constantly rebalances the pool as it moves higher or lower, so that liquidity providers have fewer units of the asset that went up in price, and more units of the asset that went down in relative terms.

LPs effectively conduct a profit and cost averaging technique in both ways of the trip. They lock in some of the profit as one asset’s price moves higher, and progressively buy more as it goes back down.

Source: University of Orleans

Similarly to how such an averaging technique would work, a 50:50 portfolio that constantly rebalances will turn a profit, despite the price returning to the initial number. In comparison, the liquidity pool’s value simply remains where it was.

Hence, “impermanent loss” appears to be a misleading term. The loss is always permanent, but in the optimistic scenario it merely cuts into the gains that an equivalent strategy would have netted.

Bancor V2 and Mooniswap have adopted techniques to mitigate this type of loss. The former uses oracles to read true market prices and balance the pool accordingly, while the latter introduces a gradual time delay to minimize the profits of arbitrage traders.

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