DSV – nothing more than a bucket shop?

The U.S Supreme Court defines a bucket shop as “An establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in.” This sounds very similar to what can be found on the Augur prediction markets platform, where users can place wagers on everything from assassinations to World Cup events. They can also bet on the state of securities and commodity prices, which might not sit well with regulators per the Supreme Court’s position.

The same concern is being raised over the OP_CHECKDATASIG, or DSV, opcode for Bitcoin BCH. The opcode allows for the integration of a third-party oracle – one that exists outside of the blockchain – that can publish prices for use in wagers of any type, including on the movement of Bitcoin BCH. By virtue of being an experiment in gambling against a cryptocurrency, this could ultimately prove to be a loser with financial regulators.

Several high-profile individuals in the Bitcoin BCH community, including Bitmain founder and CEO Jihan Wu and Bitcoin.com’s Roger Ver, support the integration of new tools on the blockchain in the upcoming upgrade scheduled for a week from now. Among these is DSV, which leads many to wonder what they’re hoping to achieve. If DSV is developed as intended and the Bitcoin BCH turns into a free-for-all gambling platform, this will not sit well with regulators and could ultimately lead to the demise of the cryptocurrency.

DSV also has another dangerous characteristic. It would enable the network to be halted. This means that Bitcoin BCH would no longer be available on exchanges, it couldn’t be traded through wallets and it would stop being useful as a currency.

The Commodity Futures Trading Commission (CFTC) has already started to take a closer look at Augur and believes that it could be operating in violation of the Commodity Exchange Act in that the platform is not a designated contract market. While Augur has tried to distance itself from being seen as a prediction market, it obviously realizes that there’s a connection. It even has a wager listed on the site, “Will the Forecast Foundation face an enforcement action from the SEC or CFTC before Dec. 21, 2018 for hosting unregulated derivatives markets?” The Forecast Foundation is the group behind Augur’s protocol.

If the CFTC is willing to go after Augur for not being a registered contract market, what is to stop it, or any other regulatory body, from doing the same to Bitcoin BCH?

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Switzerland clamps down on banks trading in crypto: report

The situation in Switzerland got a whole lot more difficult for cryptocurrency and banking in general, as the Swiss Financial Market Supervisory Authority (FINMA) is getting tough on those banks who want to trade in crypto assets.

On Monday, Swissinfo.ch  reported that the financial regulator has described its stance on how financial institutions should weigh crypto assets.

In a letter to EXPERTsuisse, a copy of which was obtained by the Swiss news outlet, FINMA noted that banks and securities dealers should assign “a flat risk weight of 800% to cover market and credit risks” against crypto assets. This means that with the current BTC price of $6,000, institutions would have to value the coin at no less than $48,000 as a buffer level. EXPERTsuisse is a group representing Swiss trustees and accountants.

The guidance is on the high end of the range and on the level of hedge funds, according to the report, meaning FINMA considers crypto assets to be volatile.

Swissinfo.ch reported that FINMA has also set the crypto-trading cap at 4% of a bank’s total capital, noting that banks must report to the authority if they reach that upper limit.

While the letter offers insight into the regulator’s stance and outreach on this issue, it hasn’t yet released official rules for how Swiss banks should deal with cryptocurrencies under the Basel III international banking regulations, according to the report. The financial regulator has already issued an official guidance for initial coin offerings (ICOs) in February, after it received a number of enquiries on the matter.

At the time, FINMA said the applicability of regulation to cryptos would be determined on a case-by-case basis—a stance that is similar to the one taken by the U.S. Securities and Exchange Commission (SEC) in July.

According to FINMA, “asset tokens” fall under securities, meaning there are securities and civil law requirements for trading such tokens. It noted, “FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations.”

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Japanese cybersecurity experts track down Zaif exchange hackers

Cybersecurity experts in Japan claimed that they have found incriminating evidence against suspected hackers of Japanese cryptocurrency exchange, Zaif.

In an official statement released on Monday, Japan Digital Design Co. (JDD), a subsidiary of Mitsubishi UFJ Financial Group, announced that it has succeeded in identifying five transactions of the stolen funds from Zaif exchange. JDD has also shared the information with authorities in Japan.

Zaif exchange had its funds and those of its clients stolen by unknown suspects after their system was hacked in September. The hackers managed to steal JPY6.7 billion (about $60 million) of cryptocurrencies, including Bitcoin BCH, BTC and MonaCoin.

To track the missing cryptos, JDD said it held a hackathon with the help of TokyoWestern, a local cybersecurity team, and EL Plus, a security firm. JDD used an array of cloud-hosted MONA nodes to analyze transactions that involved the stolen currencies. Using this, along with other blockchain technologies, the team was able to determine several things such as the source IP address allowing them to trace the stolen currencies.

During their investigation, JDD discovered that one of the stolen currencies, MonaCoin, started being moved in late October, which made it easier for the team to track the hackers.

It is not yet clear as to the accuracy of the leaked information. Authorities are still doing their investigation to bring the involved parties to justice.

Following the hack, Zaif exchange was recently slapped with a business improvement order by the Financial Services Agency (FSA) in Japan. The regulatory agency stated that it regretted having allowed Zaif to continue operating. FSA claimed that they should have followed multiple warning given in the past about the exchange. In addition, FSA is seeking more information about the exchange and Tech Bureau, the operators of Zaif, including why there was a delay in reporting the hack.

Tech Bureau previously announced its intention to sell its entire stake in the exchange to Fisco Digital Asset Group to pay back customers who lost their funds. The terms of the deal are set to be completed on November 22.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Crypto market daily report – November 6, 2018

The cryptocurrency markets held on to Monday’s strong gains with the top performers, Bitcoin Cash (BCH) and Ripple (XRP) maintaining their momentum.

Bitcoin BCH remained around the $560 level after having gained an astonishing 20% over the past two days and was well supported with strong turnover. Ripple, meanwhile, also shot up by 17% to touch the $0.55 mark. This was probably due to the news on the XRapid system which continues to be accepted by several major banks.

BTC held on to the $6,500 mark after having dropped briefly below the $6,400 mark on Monday, although turnover remained weak with XRP actually leapfrogging it on Binance. ETH posted a steady increase of around 4% to the $215 level and appeared poised to continue consolidating at this level, although again turnover remained a worrying factor. ETH’s poor performance of late means that XRP has now overtaken as the second largest coin by market cap.

Other coins from the Top 10 registered significant increases. Stellar and Cardano were both up by about 6% to $0.26 and $0.08 respectively, whilst NEO registered a more modest 3% increase to the $17 mark. LTC regained the $55 level on the back of a 4% increase whilst ETC was up by around 3% to the $9.70 mark. EOS was also up by around 4% to the $5.70 level. BNB registered a relatively insignificant 1% increase to trade at the $9.82 level at press time.

Smaller market cap coins had a more modest performance with IOTA and ONT registering relatively minor 2% increases. VET had a similar 2% increase to the $0.010 level, whilst ICX was the only coin that registered a decrease although this was less than 1%. QTUM was up by 2%, whilst PAX remained static.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Bitstamp partners with Cinnober to speed up transactions

Cryptocurrency exchange Bitstamp has tapped financial technology solutions provider Cinnober to replace its in-house matching system, which will make for speedier completion of trades.

Bitstamp Chief Technology Officer David Osojnik, in a press release, said that he expected the platform’s order matching speed to become 1,250 times faster than at present, with throughput increasing 400 times. “While Bitstamp’s matching engine was already very good by crypto standards, this will put us in the same league as traditional exchanges with decades of experience,” he said.

Implementation of the new matching engine, which will use Cinnober’s TRADExpress Trading System, will be in several phases, beginning in the first quarter of 2019, with full implementation targeted by the second quarter.

Bitstamp CEO Nejc Kodrič said, “This is a crucial step on our mission to bridge the gap between crypto and traditional finance. Our matching engine will be on par with traditional exchanges in both speed and throughput, once again placing Bitstamp on the technological frontier of crypto trading.”

Just last week, Bitstamp announced it had been acquired by investment firm NXMH, which will hold an 80% stake in the exchange. Last September, Nasdaq announced its public offer to acquire Cinnober for $190 million.

Cinnober, in its statement, said the new trading system will allow Bitstamp to meet demands even as the cryptocurrency market grows further. Cinnober Group CEO Peter Lenardos said, “By upgrading their trading technology to further improve performance and stability as interest from investors and regulators grow, [Bitstamp] demonstrate[s] their firm commitment to providing a safe and reliable marketplace.”

Among Cinnober’s existing clients are the Australian Securities Exchange, Brazil-based B3, the Dubai Gold & Commodities Exchange, Euronext, Japan Exchange Group, the London Metal Exchange, the Johannesburg Stock Exchange, and the Stock Exchange of Thailand.

Last month, Cinnober partnered with cryptocurrency payment solutions provider GAP600 to enable instant confirmation of cryptocurrency transactions on exchanges. The value-added functionality uses a risk engine that determines the risk involved with each transaction, and guarantees payments via an underwriter.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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SVPool global BCH hash power up to 10%; OKEx’s Jack Liu backs Bitcoin SV

Another day, another period of growth for public Bitcoin BCH mining pool SVPool.

Data on Coin Dance showed that as of Nov. 2, SVPool holds 10.42% of global Bitcoin BCH hash power. Following behind are ViaBTC (9.72%), OKMiner (7.64%), Bitcoin.com (5.56%), BTC.com (4.86%), Antpool (4.17%), Waterhole (2.08%), P2Pool and GMO IG (1.39%), and Huobi and Northern Bitcoin (0.69%). BMG Pool takes the top spot with 13.19%, followed by CoinGeek and BTC.top with 11.11% respectively.

SVPool global BCH hash power up to 10%; OKEx’s Jack Liu backs Bitcoin SV

On a seven-day basis, SVPool already accounts for 8% of the Bitcoin BCH hash power.

SVPool global BCH hash power up to 10%; OKEx’s Jack Liu backs Bitcoin SV

SVPool is a personal initiative of nChain Chief Scientist Dr. Craig Wright. It offers zero fees to miners and launching with initial Pay-per-last-N-shares (PPLNS), and plans to add more features and Pay-per-share plus (PPS+) options in the coming weeks. Customer hash for the public mining pool, which opened for business last Oct. 22, is currently around 30,000 miners.

SVPool is managed by CoinGeek Mining and proudly runs the Bitcoin SV full node implementation, which is also experiencing a growth in popularity—and support—within the BCH community.

Over the weekend, Jack C. Liu, former chief strategy officer of digital asset exchange OKEx and current advisor to Bitcoin Cash Association, announced his support of the full node implementation designed to fulfil the Satoshi Vision for Bitcoin.

Cobra Bitcoin, the anonymous handler of the bitcoin.org website, also signaled his support for Bitcoin SV. In a tweet on Nov. 2, the developer announced that he “will be running and supporting Bitcoin SV,” noting that “we need to stop adding too many features all at once, and the protocol as implemented by Bitcoin SV makes the least changes.”

This marked a change of heart for Cobra Bitcoin, who, in August, promised to release his own implementation for Bitcoin BCH that would include replay protection and would also prevent transactions from being replayed across different chains when a split takes place. It appeared, however, that the anonymous developer is fed up of Bitmain “trying to become a more powerful version of Blockstream” and forcing “changes through without consensus.”

Unlike other competing BCH implementations, such as Bitcoin ABC, that seek to experiment with unnecessary technical changes to the Bitcoin protocol, Bitcoin SV’s roadmap will restore the original Satoshi protocol, keep it stable, enable the BCH network to massively scale, and professionalize Bitcoin. The Bitcoin SV implementation will allow global enterprises to confidently operate and build their major projects on a stable, scalable BCH protocol.

To protect this vision of a scalable, workable money for the entire world, CoinGeek and its founder, Antiguan entrepreneur Calvin Ayre, have poured resources and money into several projects—from Terab to Cash Shuffle—to spread the message of BCH. CoinGeek recently awarded £5 million to Tokenized, an on-chain token system designed exclusively for the BCH network and proudly uses the original Satoshi Vision design of Bitcoin. CoinGeek’s tokenization contest is still open, with a secondary award of £1 million up for grabs.

Interested in learning more about Satoshi Vision, Bitcoin SV and SVPool? Join the gathering of miners at the upcoming Miners Day, happening as part of the CoinGeek Week Conference in London on Nov. 27-30. It’s the perfect opportunity to meet the members of the BCH community and discuss not just the ongoing reality of Miners Choice for Bitcoin going forward but also why enterprise applications needing Bitcoin should stop moving in order for the ecosystem to grow. Secure your seat to the four-day conference today via Eventbrite. Also, join the (free) bComm Association and be part of the revolution.

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China to begin regulating airdrops

As China continues to move toward wider regulation of the cryptocurrency industry, it now has its next target in sight. The country’s central bank, the People’s Bank of China (PBoC), is going to start taking a harder look at airdrops, which the bank describes as being nothing more than initial coin offerings (ICO) in disguise.

The PBoC published (in pdf) its 2018 financial stability report last Friday, in which it turned to the same worn-out arguments against ICOs and crypto trading. Once again, it called out the risks of financial fraud associated with cryptocurrencies and the number of pyramid schemes found in the space. Of course, nothing like that ever happens in the fiat financial world.
An airdrop is a type of cryptocurrency distribution made for free to a large group of crypto wallets. It is used to offer rewards for a particular activity or to help promote the crypto project.

The bank asserts that airdrops are an attempt to circumvent regulations created for public token sales. It claims that they offer free assets to investors and that companies use market speculation to inflate their coin’s value to increase their profits.

Despite an attempt to thwart ICOs in the country, the PBoC says that the number of airdrops is climbing. It wants to implement an “early detection” system and is pushing for regulators from around the world to provide a significant increase in oversight.

The financial report also delves into rise of crypto firms deciding to move overseas because of the strict regulations and how they use foreign intermediaries to invest on behalf of Chinese investors. It also warns against what it sees as a prevalence of fraudulent whitepapers and crypto projects that are only disguised as “blockchain innovation,” but which are not at all blockchain companies.

As crypto opponents routinely do – and which has already been proven to be false – the bank also brought up the use of crypto for money laundering and terrorism financing. It would appear that the authors of the report based their conclusions on data that was relevant maybe a year ago.

Bringing the report to a close, the authors bragged about the bank’s actions against the crypto space over the past couple of years. It referred to a PBoC report from 2013, Notice on Precautions Against the Risks of Bitcoin, and its complete ban on ICOs from September of last year.

As much as the bank would like to try to convince the public, crypto is not illegal in China. A recent case in Shenzhen that was sent to arbitration found that crypto is a property and, as such, is legal. Arbitrators in the case asserted, “There is no law or regulation that explicitly prohibits parties from holding bitcoin or private transactions in bitcoin, [only warnings to] the public about the investment risks. The contract in this case stipulates the obligation to return the bitcoin between two natural persons, and does not belong to the [Sept. 2017 ban].”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Coinschedule and Trecento announce new crypto investment fund

According to a press release published last month, Coinschedule and Trecento Blockchain Capital have announced a joint venture that will see the creation of a new cryptocurrency investment fund. The project will invest in early-stage blockchain companies, as well as equity-based deals and initial coin offerings (ICO).

The Coinschedule Trecento BC Fund will incorporate Coinschedule’s TrustScore, an algorithm created with the help of scientists at the University of Oxford that assigns a credit score to each blockchain project after analyzing dozens of data points. Already, TrustScore has been shown to be an effective tool in determining those projects that have a greater likelihood of long-term success.

TrustScore will make the initial determination, and the team at Trecento will then assess the opportunity before the final decision whether or not to invest is made. Coinschedule CEO Alex Buelau said about the partnership, “We are very excited to partner with such a young yet successful team that can bring all their expertise and best practices from the traditional financial markets into the blockchain world.”

Trecento is an asset management company focusing entirely on the blockchain industry. It was founded this year and is part of Trecento Group, which was launched in 2012. Trecento Group has around $200 million under management and targets institutional investments. The company’s blockchain investment arm is designed to invest in projects with long-term growth possibilities that can provide the best returns for the fund’s members.

According to Alice Lhabouz, founder of Trecento Group, “We are looking forward to help fund incredible blockchain projects at a time where many promising teams are finding it hard to raise capital. Partnering with Coinschedule will enable us to find the needle in the haystack of blockchain projects.”

Coinschedule launched about two years ago and is located in Oxford, UK. According to the company’s website, “Our unique Trust Score system, utilises Artificial Intelligence and allows ICOs to show how trustworthy they are to potential investors. It encourages ICO projects to provide transparent information about their team, their project and legal structure.”

The investment fund is expected to be launched within the next couple of weeks. It will invest in projects in accordance with a regulated legal and compliant framework. When it’s operational, the fund will have a tracking section available on the Coinschedule website.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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SEC enforcement report highlights ICO misconduct in United States

Although there isn’t a clear framework regarding regulation for cryptocurrencies in the United States, the Securities and Exchange Commission (SEC) has placed a considerable emphasis on the space throughout 2018, particularly on initial coin offerings (ICOs). This was revealed in the SEC’s Division of Enforcement annual report—the second of its kind in which the regulator focused on its ability to crack down on fraud in the financial system as well as protect investors.

This year, ICOs were an important theme throughout the document with almost 30 mentions in the whole document. There was also a complete section dedicated to the agency’s activity in identifying misconduct that was tied to digital assets as well as token crowdsales.

According to the SEC, the agency has meticulously selected the projects they pursued this year, which saw an “explosion” of ICOs, in a bid to send the most effective message to issuers not just in the U.S., but also internationally where they market to U.S. investors. SEC noted that fundraising has been on the decline, with the tally for September failing to surpass $300 million versus $3 billion in January 2018.

“We believe our approach to enforcement in this space has been thoughtful and consistent. Importantly, it has provided a template for authorities in other countries, where fraud and misconduct targeting U.S. investors often have been based,” the report noted.

The SEC also highlighted its enforcement actions for conducts such as registration violations and unregistered broker-dealer activity, as well as “instances in which the purported use of blockchain-related technology is merely a veneer for outright fraud.”

According to the securities regulator, “In FY 2018, the Commission brought 20 stand alone cases, including those cases involving ICOs and digital assets,” noting that many of the cases involved fraud allegations, although the Division has also “pursued enforcement actions to ensure compliance with the registration requirements of the federal securities law.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Winklevoss twins take Charlie Shrem to court over alleged $32M crypto theft

The Winklevoss brothers are suing Charlie Shrem, claiming the crypto investor and entrepreneur owes them some 5,000 cryptocurrency worth $32 million from a previous business deal.

Last week, The New York Times reported that Cameron and Tyler Winklevoss have filed a lawsuit against Shrem—who they claimed acted as their first crypto adviser—in September. Shrem previously served a year in prison in 2016 over charges of money laundering and operating an unlicensed money transmitting business related to BitInstant exchange he had created.

In the lawsuit, the brothers said Shrem first accepted $750,000 to buy BTC on their behalf in 2012. Several months later, the twins gave him an additional $250,000 to purchase additional crypto.

At the time, one BTC was going for $12.50. Shrem allegedly turned over $189,000 worth of crypto to the brothers, and failed to deliver the rest. The lawsuit claimed that two brothers tried to get the remaining crypto from Shrem, but their efforts were in vain. The brothers eventually brought in an accountant who documented the missing funds.

Cameron and Tyler believed Shrem used their BTC to acquire new extravagant properties. After his release from prison two years ago, Shrem had purchased a few highly expensive items despite previously claiming that he did not have money, according to reports. The man reportedly bought two Maserati sports cars, property in Florida worth $2 million, and two powerboats.

In their lawsuit, the twins stated that unless Shrem had stumbled upon some jackpot in the last couple of years since he left prison, he is likely to be using money from their crypto for his recent purchases. A judge who worked on his previous trial has frozen some of Shrem’s properties.

While speaking to reporters, Brian Klein, Shrem’s lawyer stated that his client plans to defend himself vigorously and clear his name.

Shrem has been involved in other cryptocurrency scandals in that last years. He was arrested in 2014 after federal authorities accused him of knowingly using his company, BitInstant to sell crypto to people wishing to buy drugs online.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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