Tether continues to lose market dominance

Tether may currently be stable and may have seen its value return to be even with the US dollar, but this may not last long. The stablecoin held 94% of the stablecoin market at the beginning of 2018 – with only two other stablecoin competitors – and continues to lose ground. Now with eight serious stablecoins in the market, Tether’s market dominance lies at only 74% and could fall even further.

It seems like everyone wants to launch a stablecoin these days. There is the USDCoin from Circle, Paxos, TrueUSD and even Gemini Dollars. Even the Huobi exchange has gotten in on the fun, launching its HUSD stablecoin. On the surface, they appear to be solid as they’re backed by physical assets such as dollars or gold, but we have already witnessed how easily it is to see a stablecoin come unglued. Not too long ago, Tether saw its price break free from the US dollar, falling at one point to $94.

This past October, the co-founder of CoinCorner, Danny Scott, showed how easy it was for the stablecoins to not hold their value. He said at the time, “This is because they are openly traded on exchanges based on the supply and demand, meaning their price can fluctuate if people are willing to pay less or more for the currency. For example, GUSD (Gemini dollar) was pegged at $1 and actually hit $1.18. Similarly, USDT (Tether) which is pegged at $1 has fluctuated over time and is currently trading at $0.96. So do we think stablecoins are here to stay? Only time will tell, but for now we are not committing to them.”

Tether has had to deal with a series of issues that may have contributed to its decline among stablecoins. It has repeatedly refused to release audits of its holdings, stating that it would be too difficult (even though other stablecoins readily acknowledge that they can provide the data). Its new banking partner, Deltec out of Brazil, is facing an investigation for its possible involvement in a money-laundering scheme. There have also been concerns raised that the stablecoin was used to manipulate Bitcoin Core (BTC) prices last year. 

The case for stablecoins is tenuous, at best. While all cryptocurrency options are still young and the industry needs to be developed, there isn’t much call for an option that can both show volatility on its own, as well as on the asset which backs it.

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The fallacy of the “crypto’s only good for money laundering” argument

We’ve all heard the lame excuses – cryptocurrency is only good for criminal activity, cryptocurrency is only useful for money laundering, cryptocurrency has no real purpose – in trying to derail crypto as a legitimate alternative to fiat. Of course, the statements need to always be taken with a grain of salt and the speaker needs to be identified. In every case, the person uttering the words was a definite fiat pundit who either didn’t understand crypto or who was too imbedded with fiat to be able to see the bigger picture. The truth has begun to surface, though, and none of those arguments stand up to scrutiny. Japan has just given us another good indication of the fallacy behind the arguments.

The Japan Times reports that, according to an “official police document,” the country has seen a total of 340,000 suspected cases of money laundering activity or abuse this year in all types of financial transactions. Of this amount, only 6,000 transactions were related to cryptocurrency. Quickly crunching numbers, that means that only about 2% of all the money-laundering activity was found in crypto.

6,000 is still a big number, for sure. However, given the fact that 334,000 cases of money laundering were recorded through fiat, it’s merely a drop in the bucket. Measures are already being undertaken to help reduce the number more, but the fact that money laundering can still be so prevalent in fiat after centuries of existence shows how difficult the activity is to control.

Japan is working diligently to provide better oversight of cryptocurrency entities and exchanges. It is introducing a number of measures that will help prevent tax evasion and control initial coin offerings (ICO) and the Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory entities overseeing crypto exchanges, has authority to patrol the industry, as well.

Any system anywhere in the world can be used positively or negatively – nothing can escape this, not even cryptocurrency. However, it has already shown itself to be a viable option and one that allows users to take back control of their own money. It is not “that thing that criminals use” or “an environmental disaster.” It is a legitimate type of currency that continues to be accepted by more and more merchants every day.

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Meet the players in the BCH Market Manipulation Lawsuit

On Thursday, a lawsuit was filed in Florida’s Southern District against a group of cryptocurrency heavyweights alleging intentional fraud and market manipulation surrounding the recent Bitcoin Cash BCH update.

The civil suit filed by United American Corp. against multiple Bitmain related companies, Bitcoin.com, Roger Ver, Jihan Wu, Kraken, Jesse Powell, Amaury Sechet, Shammah Chancellor and Jason Cox alleges the group was involved in a scheme to manipulate the cryptocurrency market for Bitcoin Cash in an effort to highjack the Bitcoin Cash network, resulting in a global capital meltdown of more than $4 billion and causing countless people irreparable harm.

Breaking News: Lawsuit links Bitmain, Ver camp to ‘premeditated takeover’ of Bitcoin Cash network

Some of the names are well known to the Bitcoin community while others have been background players. Let’s have a look at the who’s who in this landmark cryptocurrency lawsuit.

Bitmain Inc. – More commonly known as Bitcoin US, Bitcoin Inc. is an American corporation wholly owned by Bitmain Technologies Holding Company. With Bitmain Inc. being a USA corporation, it will be difficult for the larger company to claim the suit doesn’t belong in American courts. 

Bitmain Technologies LTD. – Founded by Micree Zhan and Jihan Wu in 2013, Bitmain rose to prominence and then dominance in the bitcoin mining space with their ASIC cryptocurrency miners.

Bitmain Technologies Holding Company – The company filed for an initial public offering this past September 26 with the Hong Kong regulatory agency. That IPO has been in doubt of late with disastrous financials leaking and their reputation taking a beating during the hash war that triggered this lawsuit. 

Saint Bitts LLC d/b/a Bitcoin.com – Bitcoin.com is one of the more controversial websites in the cryptocurrency industry. Bitcoin.com is probably responsible for onboarding more people to Bitcoin that any other site. They offer news, tools and even online gambling but after the 2017 BTC-BCH split, and their propensity for hyping up poorly planned and executed ICOs they’ve become more divisive in the past couple years.

Read the Court Filings from the BCH Manipulation lawsuit

Roger Ver – Known as the Bitcoin Jesus due to his early wiliness to invest and travel the world spreading the gospel of Bitcoin. He’s fallen from Grace particularly after the 2017 BTC-BCH fork. Ver would debate anyone and everyone, claiming BCH was the true Bitcoin and any chain that deviates from the Satoshi Whitepaper couldn’t claim to be Bitcoin. His decision to support the ABC instance during the hash war and his penchant for putting his promotional support behind pump and dump ICOs has left many of his disciples abandoning the faith. Ver denounced his American citizenship in 2014 and was once denied a USA visa as US immigration was unsure if he’d leave the country and he’d remain as an illegal immigrant. This case should offer US immigration sufficient grounds for a visitor’s visa.

Jihan Wu – He’s the public face of the Bitmain empire. A regular on the conference circuit and recipient of the lion’s share of both the praise and the scorn from the cryptocurrency community. He was the power broker during the 2017 battle for larger blocks in BTC, his mining pools held enough power to determine whether Blockstream’s Segregated Witness and the plan to leave BTC at 1MB blocks or if the big block battle would continue. Wu negotiated a split which created Bitcoin Cash BCH and took the big block supporters with him. He also played a major role in the Hash War, funding the controversial ABC instance and then arranging the mercenary miners to move over to the BCH chain. Like Ver, the split has left his reputation in tatters. 

Payward Ventures Inc. d/b/a KrakenKraken is a cryptocurrency exchange site that was funded by Roger Ver and operated by his high school friend Jesse Powell. The site was one of the more popular exchanges operating in the US, Canada, Japan and the EU. For a couple of years, it stood as the largest exchange in the industry before giving way to companies like Coinbase and Binance. This lawsuit isn’t the first time Kraken has faced scrutiny, earlier this year they were under investigation by the New York Attorney General’s (NYAG) office who was on a fact-finding mission to see what if any measures exchanges took to protect their customers from market manipulations.

Jesse Powell – Powell, in addition to being Ver’s high school friend, is the CEO of Kraken. When the NYAG was conducting their investigation, Powell made a point not to cooperate and declared the investigation was hostile and bad for business. Unlike Ver who renounced his USA citizenship and left the country, Powell still resides in the US and could be forced to do the heavy lifting if Ver doesn’t return to answer the suit.

Amaury Sechet – Sechet is the lead developer for Bitcoin ABC and the self-proclaimed benevolent dictator of Bitcoin Cash BCH. The anarchist is a French national who is responsible for the contentious changes to the node software that ultimately caused the rift and eventual fork in the BCH chain.

Shammah Chancellor – Is a developer with Bitcoin ABC who works with Sechet.

Jason Cox – Along with Chancellor, works with Bitcoin ABC as a developer.

United American Corp. – The Florida-based company focuses on telecommunications applications, including BlockchainDomes, which are eco-friendly crypto mining facilities that use the generated heat to power green houses and grow food. In 2017, UAC moved heavily into the development and implementation of blockchain-related technologies. The company believes that the high-jacking of the Bitcoin Cash network could imperil its investments, as the changes brought by Bitmain and Ver’s group have altered the fundamental economics of the business.

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Breaking down the United American lawsuit against Bitmain, Roger Ver, et al

The cryptocurrency world was rocked Thursday by the announcement of a huge lawsuit that was launched by United American Corp. (UAC) against a large number of Bitcoin Cash BCH supporters, including Bitmain and its co-founder Jihan Wu, Bitcoin.com founder Roger Ver, Amaury Séchet of Bitcoin ABC, the Kraken exchange and its CEO, Jesse Powell, as well as a few others. The lawsuit contends egregious amounts of fraud and market manipulation on the part of all defendants and could forever change how BCH is viewed, MarketWatch first reported.  The lawsuit and all updates will be available on the www.bitcoincashlitigation.com website.

UAC points out in its lawsuit, filed in U.S. District Court for the Southern District of Florida, that the group of individuals colluded to manipulate the BCH network and take control of its functions. The company asserts that BCH has become centralized, which violates “all accepted distributed and decentralized standards and protocols associated with Bitcoin since its inception.” The Florida-based blockchain company further asserts that Ver, Wu, et al worked in conjunction with the Chinese government in order to lead a hostile takeover of the cryptocurrency.

Breaking News: Lawsuit links Bitmain, Ver camp to ‘premeditated takeover’ of Bitcoin Cash network

The blockchain is meant to be a decentralized solution. To maintain this decentralization, the network operates on a consensus basis that prevents a single person or group from being able to control the majority of the hash, or mining power. If someone is able to control 51% of the network, they can effectively and autonomously decide the blockchain’s fate and this is what the defendants have been able to achieve.

Bitmain publicly acknowledged its support of Bitcoin ABC during the hash wars and launched efforts to force the BCH network to follow ABC during the hash wars. It rented hash power and even deployed 90,000 of its own mining rigs in favor of ABC mining operations, a move that can be seen as an attempt to centralize and control ABC. There were also speculations that Bitmain’s Jihan Wu was unloading BTC to fund the ABC mining operations, which, in turn, drove the prices of crypto down. Now, people are wondering if Wu is just cashing out amid the hash war.

Meanwhile, the U.S. Department of Justice is also allegedly looking to get involved in the case against Bitmain and Ver’s group through the FBI Cybercrimes Division.

Who are the defendants?

Roger Ver is a “crypto anarchist” and has also directed the mining operations of his Bitcoin.com mining pool to ABC. In addition,Bitcoin.com was a recipient of some of the hashing power that was rented by Bitmain in order to support ABC.

Ver has direct links to the Kraken crypto exchange through its founder, Jesse Powell. They are friends with a history that dates back to their high school days and Kraken was one of the first exchanges to show favoritism for ABC. It was also the first exchange to declare that ABC was offering the true version of BCH.

The lawsuit explains that Bitcoin ABC, the development and mining group that favored moving BCH away from its original design, has now forced changes on the blockchain without regard to what the community wanted. It introduced arbitrary checkpoints that can allow Bitcoin ABC to take over the network. UAC explains, “Combining this change with the hashing power of Bitcoin ABC backers amounts to centralization.  They will be able to override any consensus reached by the rest of the network, forcing other to conform or create an unwanted hard fork.”

UAC also asserts that the entities were fundamental in directing hash power—including through the renting of additional mining equipment—during the BCH “hash wars” this month that saw them force the direction the BCH blockchain was headed. The action resulted in an unprecedented amount of hash being processed by Bitcoin ABC backers and further disintegrated the integrity of the BCH network.

UAC has been involved in blockchain innovation since 2017 and has invested more than $4 million in the space. It argues that the selfish manipulation of the blockchain is not consistent with BCH’s design, and that it has completely altered the “fundamental economics of the business.” In simple terms, it can be viewed as ordering a Filet Mignon in a restaurant and being delivered a burnt hamburger, while still paying for the Filet Mignon.

For a deeper narrative about the scheme, visit the Bitcoin Cash Litigation website.

The full filing can be found here.

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Bitcoin SV continues to rise in the ranks

Markets are down all across the globe. Wall Street has seen significant declines in its prices, futures trading was temporarily suspended and the general sentiment has been somewhat bleak. According to CoinMarketCap, even Bitcoin Core (BTC) is down, dropping 2.81% in the past 24 hours. In fact, all of the top five cryptocurrencies have seen declines of as much as 13%. In all of the chaos, though, there is a beacon that is shining bright. As of this writing, Bitcoin SV (BSV) has climbed 24.80%.

BSV now sits in the number five spot in the cryptocurrency rankings by market cap. Its current price sits at $110.94 and doesn’t show any signs of slowing down. This makes BSV more valuable than Ether, which is trading at just $97.57. Bitcoin Cash (BCH), which includes the controversial Bitcoin ABC version of BCH following the hard fork earlier this month, has dropped by 18.32% in the same period and now sits in seventh place by market cap – below Tether.

One of the reasons BSV is gaining ground is because of miners. They have remained loyal to BSV and their loyalty is beginning to show signs of paying off. It has been a difficult road, but one that has been well worth it in order to continue to develop the only cryptocurrency that follows the original definition of what a digital currency should be.

BSV has seen increases of almost 40% over the past week. While it’s difficult to determine exactly why it continues to climb, there are educated conclusions that can be made. BCH was running solid when it was still being rightfully viewed as the original Bitcoin as defined by Satoshi. As soon as chatter began that there were discrepancies in the direction the blockchain would take, the wobbling began. That wobbling continued through the hard fork, leading to the unprecedented drops seen in the price of BCH.

BSV is moving forward with a model that will ensure that Bitcoin lives on. This is being recognized by crypto enthusiasts who are beginning to understand that BSV and its supporters were right all along. Of course, a lawsuit against everything Bitcoin ABC stood for doesn’t help BCH’s cause, either.

There’s no way to know whether or not this bullish trend will continue. However, things are certainly looking up for BSV.

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Lawsuit links Bitmain, Roger Ver group to ‘premeditated hostile takeover’ of Bitcoin Cash network

Bitmain, its co-founder Jihan Wu, along with his “team of conspirators” including Bitcoin.com CEO Roger Ver, ABC lead developer Amaury Sechet, Kraken and its CEO, Jesse Powell, will have a lot to answer for. On Thursday, a lawsuit was filed before the U.S. District Court for the Southern District of Florida accusing the group of fraud and market manipulation, asserting that these people worked “with the knowledge and support of the Chinese government to stage a premeditated hostile takeover” of the Bitcoin Cash BCH network.

Florida-based blockchain company United American Corp. (UAC) is seeking an emergency injunctive relief, citing losses that stemmed from the Bitcoin Cash hard fork last November 15. On that day, a hash war was fought with miners voting between two competing implementations of the BCH protocol—Bitcoin SV and ABC. ABC took a temporary early lead due to an artificial burst from “rented” hash power subsidized by Ver’s Bitcoin.com, and some exchanges—Kraken in particular—prematurely listed the ABC token as Bitcoin Cash BCH.

Now the other shoe has dropped.

Lawyer Brian Miller of Akerman law firm, who heads the team of lawyers that handles the UAC litigation, said there was “a scheme by a tight network of individuals and organizations designed to co-opt the cryptocurrency market for Bitcoin Cash, effectively hijacking the Bitcoin Cash network, centralizing the market and violating all accepted distributed and decentralized standards and protocols associated with Bitcoin since its inception.” The scheme, allegedly spearheaded by Bitmain and Ver’s camp, reportedly caused “a global capitalization meltdown of more than $4 billion and caused many American and Canadian coin holders to suffer financial damages.”

Also named in the UAC lawsuit were ABC developers Shammah Chancelor and Jason B. Cox.

Aside from the awarding of restitution and compensatory damages, the lawsuit also seeks to prevent ABC from continuing to implement checkpoints on the Bitcoin Cash network and other software implementations that will “prevent the resulting chains from being able to be re-merged. UAC also wants the court to require ABC “to return the blockchain to its previously decentralized form with the previous consensus rules.”

More importantly, UAC wants to prove that the ABC camp, which has “some of the biggest U.S.-based and international names and entities in the digital currency world” among its ranks, is being backed by the Chinese government, all in an effort “to centralize the Bitcoin Cash network resulting in Chinese entities now having established dominance over this important segment of the cryptocurrency market with proprietary software checkpoints and instituting other means of control over the system.”

Lawry Trevor-Deutsch, VP of Corporate Affairs for UAC, said, “We envision a future led by an open, democratic and collaborative community fostering innovation and freedom. No entity or group of entities should seek to seize control of this platform for their own narrow interests or create rules that inhibit new competition and future technological innovation. That’s what this lawsuit is about.”

Full filing can be found here.

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New York approves blockchain-based ‘real-time’ digital payment service

The New York Department of Financial Services (NYDFS) has granted virtual currency approval to commercial banking transactions, authorizing a new system from Signature Bank which will allow corporate customers to make bank payments in a form of virtual currency.

Dubbed ‘Signet,’ the platform will allow the bank’s commercial customers to send transactions in tokens known as ‘Signets,’ allowing for free transactions sent directly at any time via the blockchain.

The approval is part of the department’s approach to fostering ‘regulated innovation,’ in providing greater flexibility for Fintech innovation and research.

DFS Superintendent Maria T. Vullo welcomed Signet, which she said would provide a low cost way for businesses to send payments.

“DFS is pleased to strengthen and foster regulated innovation in New York’s burgeoning financial technology sector, specifically within our state-chartered banking system,” Vullo said in a statement. “New York continues to support and help advance innovation through sound state regulation and with products such as Signet, which provide lower-cost ways for businesses to efficiently make payments.”

Joseph J. DePaolo, president and CEO at Signature Bank, said the support of the Department of Financial Services was crucial in helping them turn their digital vision into reality. He noted, “Through regulated innovation, we were able to turn our vision into a reality. It is clear the Superintendent and Department of Financial Services have thoroughly researched the financial technology arena and understand how it impacts the future of financial services. We look forward to working closely with their team to continue to transform digitally.”

Fintech innovation often runs into challenges with regulation, particularly around transactions that might typically require a degree of regulation and licensing beyond the grasp of most startups.

By giving the go-ahead to the Signet scheme as a virtual currency, the DFS has underlined its commitment to supporting emerging applications for cryptocurrency assets.

The approval comes following an extensive and robust assessment of Signature Bank’s application, and is attached to stringent compliance requirements.

Nevertheless, it demonstrates a proactive response from a regulator, at a time of increasing focus on blockchain developments of this kind.

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Abu Dhabi Global Market achieves KYC breakthrough with blockchain’s help

Abu Dhabi Global Market (ADGM), the financial centre of the UAE’s capital, has successfully completed trials of a new app for improving Know-Your-Customer (KYC) processes, known as e-KYC.

The app is designed to simplify the know-your-customer obligations incumbent on financial institutions and other regulated bodies under anti-money laundering laws, and was developed with blockchain partners, banks and advisors, including KPMG.

Rather than submitting to individual ID checks and verification, the app enables customers to verify their identity on a one-off basis, recording the information immutably on a blockchain. From there, the information can be accessed securely by other institutions, with a full audit trail to ensure compliance with relevant laws.

According to those participating in the trial, the technology has allows for a “radically simplified” KYC process, which will deliver cost and efficiency savings during the onboarding process.

Richard Teng, CEO of the FSRA of ADGM, welcomed the project, and the “tangible benefits” it delivers for financial institutions in improving the KYC process. He said, “By harnessing the power of technologies such as blockchain, the e-KYC project has demonstrated tangible benefits that may be offered by an e-KYC utility for financial institutions in the UAE. In addition to enhancing KYC checks across the industry, the utility can achieve significant cost efficiencies and financial inclusion driven by unified KYC standards.

According to the executive, “The use of digital platforms to share information, transact and test solutions forms a core part of ADGM’s FinTech strategy. We look forward to delivering further meaningful results through the ADGM Digital Sandbox initiative, where we will facilitate FinTech-institutional partnerships and host consortium projects such as the e-KYC project.”

The platform allows individuals to have more control over their personal data, while simultaneously allowing institutional members access to the KYC material they require to discharge their obligations.

At present, KYC checks are conducted on an institution by institution basis, with the app expected to significantly streamline the process.

It comes at a time when several other regulators and banks are investigating blockchain technology for KYC in a bid to improve the efficiency of the process.

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US regulator calls for global cooperation to stop fraudulent ICOs

Initial coin offerings (ICOs) are outright frauds that need to be stopped, according to the U.S. Securities and Exchange Commission (SEC). This is why it has become hard for regulators to monitor ICOs activities in different jurisdiction because often money raised in ICOs comes from investors in America and other parts of the world.

While speaking at Harvard Law School’s Program on International Financial System, SEC Co-Director for Enforcement Division Steven Peikin noted how the ICO market has exploded from a mere concept to a phenomenon within a short period of time. In 2016, ICOs raised $100 million, while in 2018, they raised $22 billion—a 22,000% increase. The novelty of ICOs, accompanied with the excitement surrounding blockchain technology, has been a key attraction that enterprising people have been using to lure investors, according to Peikin.

The hype and growth of the  ICOs can obscure the fact that most of these offering are high-risk investments. At times, the issuers may lack established records of accomplishment. They may also not have viable products business model or proper security measures safeguarding the digital assets from hackers. Without considering all these investors are quick, to pour out their money to projects that eventually fraudulently shut down.

Peikin recalled the case of ICO fraud conducted by Canadian Dominic Lacroix, who defrauded many U.S. investors out of some $15 million by promising a 13-fold profit in less than a month. Lacroix turned out to have had a long history of doing similar financial frauds in Quebec and Canada.

Peikin believes in fighting the fraudulent activities in ICOs and the crypto space there should be global cooperation. He acknowledges collaboration between, the United stated and Canada in Operation Crypto Sweep. The operation was launched in May 2018 by the two countries, which is conducting over 70 investigations into cryptocurrency scams and fraud in ICOs. So far, the North American Securities Administrators Association has sent cease letter to operators of fraudulent crypto companies I more than forty jurisdictions in both countries.

According to Peikin, “The sponsors of ICOs are, in many instances, located outside the United States. And international cooperation is critical to our ability to investigate and, where appropriate, recommend that the Commission bring enforcement action.”

Meanwhile, SEC lawyers recently warned celebrities from endorsing ICOs to avoid being charged with fraud. A few celebrities, such as Floyd Mayweather and Dj Khaled, have already fallen victims to such fraudulent ICOs.

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Chile’s Supreme Court decides against crypto exchange

The Supreme Court in Chile has issued a decision allowing the state bank Banco del Estado de Chile to close the account of cryptocurrency exchange Orionx on concerns over the nature of transactions being conducted on the exchange.

The ruling, reported by local news outlet Emol, reverses earlier decisions of the country’s Court of Appeals, and its anti-monopoly court, that had allowed the bank accounts of Orionx and several other plaintiffs to remain open.

According to the Supreme Court’s third division, the bank did not violate the Constitution, and that its acts did not arbitrarily curtail Orionx’s rights.

The decision stated that the assets being traded by Orionx, including ETH, XRP, LTC, and BTC, lacked physical manifestation and had “no intrinsic value,” in that they were not backed by any government or company. Rather, the digital currencies were viewed as controlled in a decentralized network of users.

The Supreme Court said that because of the nature of the assets, the bank could not comply with regulations requiring specific identities involved in transactions, which made the closure of the accounts justifiable.

The Banco del Estado de Chile was one of 10 banks that had closed accounts of cryptocurrency-related companies. Aside from Orionx, Buda and Crypto MKT had filed complaints with the anti-monopoly court of Chile. The move of banks to deny services to those in the cryptocurrency sector had been criticized as the act of a few in positions of power, who had not recognized measures put up by the companies to promote transparency and security.

Other countries’ banking sectors have shown greater openness to provide services for those using blockchain and cryptocurrencies, though not without conflict among regulators. Switzerland, where ‘Crypto Valley’ Zug is located, has had the government study how blockchain companies could be assisted in opening up bank accounts. Also, the Hypothekarbank Lenzburg has moved to accommodate such companies. However, the Swiss Financial Market Supervisory Authority (FINMA) has maintained a tough stance, requiring invested cryptocurrency assets to be covered by eight times their amount in fiat, to take into account the perceived risk associated with volatility of cryptocurrencies.

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