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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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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Kraken’s crackin’ up

The Kraken cryptocurrency exchange is having a difficult time adjusting to the Bitcoin BCH hard fork. The exchange, which is backed by Bitcoin.com’s Roger Ver, called out BCHSV after the network upgrade, accusing it of not being a viable option, as it had no known replay protection and no support from major block explorers. Despite BCHSV apparently being a very bad idea and “an extremely high risk investment,” the exchange is moving forward with plans to support it.

Kraken’s own statement on BCHSV even says that “Some large holders have indicated they’d be dumping everything ASAP.” The exchange has repeatedly tried to push BCHSV under the bus for not being legitimate, which is surprising given that it admits, “Kraken has done only very minimal code review.”

Kevin Pham – crypto fan, Ethereum investor and outspoken voice of reason, decided to call out Kraken over its decision. When Kraken announced, “Kraken will credit client accounts with BSV and launch BSV trading at approximately 15:30 PST today, November 18th, 2018. The BSV order books will come online first, then accounts will be credited with BSV a short time later,” Pham wasted no time in reacting. He said on Twitter, “So you’re going to steal from BSV fork hodlers who are prudently waiting for the war to end before making an investment decision?”

Pham wasn’t done. He later targeted the exchange’s CEO, Brian Armstrong, directly, tweeting, “And Brian, Didn’t the ETC clusterfuck teach you to not listen to cult leaders and prematurely pick sides?
How are you still CEO?”

Kraken has already (erroneously) said that BCHSV is going to fail. If it believes that this could happen, it certainly doesn’t seem like a wise business decision to launch support of the cryptocurrency.

Pham, who is attributed with being a key figure in the ousting of Wells Fargo’s former CEO, John Stumpf, wasn’t done showing Kraken for what it truly is. He said in a recent Twitter post, “Coinbase has always been a political exchange. Sadly, Kraken now falls into that category now. Bullish on @binance, @Poloniex, @Gemini, @bitfinex? & @bitFlyer. Let me know of any other non-political exchanges that put user’s interests first.”

The California native knows his stuff and isn’t afraid to speak his mind. He is able to see through the fog and understand the bigger picture in a way that most people can’t. This is probably what led him to tweet yesterday, “ETH & ABC support cult leaders, short-sighted behavior (checkpoints/bailouts) & shitcoinery. BTC & SV support sound money & strict adherence to consensus rules. Bitcoin is ultimately an idea based in economic reality, not a ticker symbol. Not choosing a side is choosing a side.”

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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Insurance study finds Kraken, Bittrex, Coinbase Pro among safest exchanges

Insurance study finds Kraken, Bittrex, Coinbase Pro among safest exchanges

A joint venture between cybersecurity firm Group-IB and Swiss insurance broker ASPIS SA, through its CryptoIns platform, has classified cryptocurrency exchanges by insurance risk, finding the Kraken exchange to be the most secure.

According to online tech magazine The Next Web, the developers of what is claimed to be the first scoring model for security of cryptocurrency exchanges, looked at level of technical security, and reliability in storing keys, passwords, and personal data. Also considered are risk management systems and availability of anti-money laundering/know-your-customer (AML/KYC) guidelines, as well as independent ratings.

“In some cases, with founders’ consent, the assessment includes penetration testing using social engineering methods aimed at the network compromise through the most vulnerable link at any organization – humans,” a representative of Group-IB was quoted as saying.

“According to our estimates, Kraken is the most secure exchange, with 1.25 percent insurance rate” for a period of 90 days, Group-IB said, putting the exchange in the first, most secure group.

The next group consisted of Bittrex and Coinbase Pro, with a 1.5% premium assigned to them.

The third group, with a 1.9% premium, is where most of the assessed exchanges were included: Binance, BitFinex, Bithumb, Bitmex, Localbitcoins, MyEtherWallet, and Poloniex.

In the last group were OKEx, Huobi Pro, and CoinCheck, although many more were excluded that were deemed too risky to insure at all.

The maximum amount insured by CryptoIns is about $100,000, and premium payments can be made with around 100 different cryptocurrencies.

According to the Security Affairs website, CryptoIns sees the cryptocurrency insurance market amounting to $7 billion by 2023. The insurer’s CEO Timofey Volkov said, “Currently, approximately 3,600,000 BTC are stored in user accounts on cryptocurrency exchanges, making this market highly attractive for hackers… The challenge for insurers is how to cover emerging risks for customers in a young industry formed by completely new technologies and relationships between market participants.”

A study by blockchain forensics firm CipherTrace has pointed out that 2018 is the first year where cryptocurrency thefts will amount to over $1 billion. $927 million has already been stolen in the first three quarters of the year, much of which was taken from cryptocurrency exchanges.

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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