Malta is one of the first jurisdictions to embrace cryptocurrencies, providing a competitive environment for companies in the space, similar to the island’s iGaming industry. The E&S Group has been among the first legal services firms aiding startups and those exploring cryptocurrencies and blockchain for the first time.
“We started way back when there was nothing of all this,” E&S Group Director Dr. Christian Ellul said, referring to the present vibrancy of the cryptocurrency sector. “It was an unregulated environment, so we tried to help clients fit within the client regulations which were there. For example, ICOs, we structured as what we called reward-based crowdfunding events, to make sure we were compliant. Of course, now we have specific legislation just for that, which makes it easier and gives comfort to people who are investing, and even clients who feel, okay, they’re really getting like the Rolls Royce of treatment here.”
The firm has released its own token for availing of its services. “The last year, we’ve really focused on crypto and blockchain advisory. We’ve started assisting ICOs, in all their legal documents, all their legal work, now exchanges, OTC and all that, so we’re very much embedded in it. So we said, okay, what better way to do it than also have our token? So we have an ESTS token that connects to our services. People come pay our services apart from the main Bitcoin and alts,” Ellul said.
Holding such offerings was good in terms of public relations, according to Ellul, but also it showed that “we went through the process ourselves. We’re not just advising clients about something we don’t know about. We actually did it ourselves, in private placements, so I think that gives us the edge compared to others, because we really know what we’re doing.”
It makes sense, according to Ellul, to also provide assistance to those in iGaming. “There’s a nice relationship between gaming and crypto. Malta has been very well positioned because Malta regulated gaming a long time ago, it being a high-risk industry, and therefore, it’s a natural continuation to now regulate crypto, which is also seen as a high-risk industry. So then I think Malta really could bridge that gap by being the first in gaming and also among the first in crypto and blockchain,” he said.
The link between gaming and cryptocurrencies is evident in E&S Group’s clients’ activities. Ellul explained, “I think blockchain is useable for everyone in the world, and including gaming, but gaming tends to lend itself to blockchain. We have ICOs that are funding, for example, a gaming company. We have other gaming companies that want to start using cryptocurrencies, and that’s basically sandbox allocation rules by the MGA [Malta Gaming Association] now, so they really do link in well.”
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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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Miami, FL. – In a lawsuit filed on Thursday December 6th in the United States District Court for the Southern District of Florida, United American Corp. a Florida Company, petitioned the court for emergency injunctive relief citing losses stemming directly from the Bitcoin Cash fork that began on November 15, 2018, and asserting that a team of conspirators involved in what many are calling the “Bitcoin Cash Civil War” worked with the knowledge and support of the Chinese government to stage a premeditated hostile takeover of this popular cryptocurrency platform.
The litigation, being handled by a team of attorneys led by Brian Miller, of the powerhouse Miami-based law firm Akerman, alleges 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.” It claims this scheme caused “a global capitalization meltdown of more than $4 billion and caused many American and Canadian coin holders to suffer financial damages.”
Since 2017 United American Corp. has moved heavily into the development and implementation of blockchain and blockchain technologies and invested in the deployment of over $4 million of infrastructure towards that end. Those investments can be greatly imperiled by changes in the Bitcoin Cash network brought about by the alleged scheme, changes that have altered the fundamental economics of the business.
The lawsuit moves against multiple defendants: Bitcoin.com, Roger Ver, Bitmain Inc. Bitmain Technologies LTD. Bitmain Technologies Holding Company, Jihan Wu, The Kraken LLC, Jesse Powell, Amaury Sechet, Shammah Chancelor and Jason Cox.
This legal action will seek to prove that specific key actors, including some of the biggest US-based and international names and entities in the digital currency world, have been operating with the support of the Chinese government 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.
“We want the future of cryptocurrency in general and Bitcoin Cash in particular to live up to the tremendous potential of the Satoshi white paper’s original vision,” said Lawry Trevor-Deutsch, Vice President of Corporate Affairs for United American Corp. “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.”
For additional information on the alleged Bitcoin Cash takeover scheme click here.
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CoinGeek’s Becky Liggero caught up with White Company CEO Elizabeth White, who’s spreading merchant adoption with her various products.
Elizabeth White, with her White Company, makes it easier for merchants to accept cryptocurrencies for payment, even if they don’t know anything about the technology. With her White Market luxury store, she’s made it possible to acquire an assortment of luxury items, “from Pamp Suisse gold to Lamborghinis, to trips around the world, so anything your heart desires that you would like to spend your cryptocurrency on, we can facilitate.”
The White Company is doing everything cryptocurrency-related, from mining to having a stablecoin, and recently, they have just launched a reloadable debit card called the White Card. “[W]hat is exciting is we’ll be the first reloadable cryptocurrency debit card that will accept Bitcoin SV, Bitcoin Cash [ABC], [BTC], Ethereum, and XLM,” White said.
She believes it is important to make blockchain technology as accessible as possible to foster adoption. This is why she prefers having users transact with email addresses, “compared to using an actual long blockchain hash or private keys, secure keys, storing them. And this will never move to masses till we actually are able to consolidate the process. So with our products, we have been able to transfer funds, quickly and easily, with three-second settlements, just with your e-mail address.”
Merchants can use White Label Solutions, which allows cryptocurrency payments to be settled in fiat, in the currency preferred by the seller. White said, “[T]hey can accept cryptocurrency, and the fees are much lower than, say, a Visa or a Mastercard. We’re actually only charging 0.1% for merchants to accept cryptocurrency and then convert directly into fiat and settle, where you have things with Visa and Mastercard that are 3%-7%, and if you’re a high-risk merchant, up to 11%… Merchants still accept that, but there are easier ways, and the future is to accept the cryptocurrency which allows them to give back to their employees, have better revenue and returns, and give back to their, maybe, stock owners or investors.”
Watch Elizabeth White’s presentation, Building a Two-Sided Network, at the CoinGeek Week Conference in London below.
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The number of MikroTik routers that have been affected by a malicious malware that mines privacy-centric cryptocurrency Monero (XMR) has risen to 415,000, according to security researchers.
The cryptojacking malware was first discovered in August. According to a Trustwave report, the malware attacked the MikroTik routers after their systems became vulnerable earlier this year in April. Initially, hackers had penetrated 175,000 routers and then expanded to Eastern Europe, where they attacked 25,000 more routers. The hackers were using Coinhive and 15 other malware to mine XMR.
Since it was discovered, Twitter user VriesHd and researchers from Bad Packets have been following the cryptojacking malware. In September, they reported the number of affected MikroTik routers have risen to 280,000. In his recent tweet, VriesHd explains that the numbers have doubled since the initial attacks.
Just three different ways to abuse vulnerable Mikrotik routers to try to mine cryptocurrencies. Total combined 415 thousand results. Many more ways active. pic.twitter.com/u01HEr2UQy
— Kira 2.0 (@VriesHd) December 2, 2018
According to VriesHd, the number is derived from checking three possible ways hackers could be abusing MikroTik, although the number could be higher since the data reflects IP addresses known to have been infected with cryptojacking scripts. He noted that it would not surprise him if the actual number totals to somewhere around 350,000 to 400,000.
The researcher further found that the hackers are no longer exclusively using Coinhive; they have been using other mining software like Omine and CoinImp to mine the privacy-centric cryptocurrency.
To protect themselves from the malware, Bad Packets Report security expert Troy MUrsch advises MikroTik router users to download the latest firmware version available for their device. This will prevent the malware from using their routers to mine cryptocurrencies.
VriesHD also points out that internet service providers (ISPs) can also be used to fight the spread of malware by forcing over-the-air updates to the routers.
Cryptojacking cases continue to rise with figures increasing by 500% this year. According to reports, Brazil is the leading country affected by the malicious malware. Research shows that Coinhive has hit the country over 81,000 times in October. India ranks second with 29,000 discovered incidents followed by Indonesia, which has more than 23,000 cryptojacking cases.
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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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Vertcoin (VTC) has fallen prey to a 51% attack, with some estimates suggesting losses have already surpassed $100,000 as a result of double spend transactions on the chain. It is the latest example of a 51% attack, where attackers take control of a majority share of a network, reflecting the inherent weaknesses in the proof of work model.
According to a Medium post by Mark Nesbitt, a security engineer at Coinbase who identified the attack, the requirement for ‘honesty’ in proof of work remains the key vulnerability to attacks of this kind. He wrote: “The “honesty” of more than half of miners is a core requirement for the security of [BTC] and any proof of work cryptocurrencies based on [BTC]. Honest action, in this context, means following the behavior described in the…white paper. This is sometimes described as a “security risk” or “attack vector,” but is more accurately described as a known limitation to the proof of work model.”
“Failure to meet this requirement breaks several core guarantees of the Bitcoin protocol, including the irreversibility of transactions,” according to Nesbitt.
The attack follows on from several other similar attacks this year, including those affecting MONA, BTG and XVG. According to Nesbitt, this demonstrates the vulnerability of the so-called ‘long tail’ of crypto assets, as well as the weaknesses of the proof of work system.
“These attacks on VTC are not the only examples of a successful 51% double spending attack. 51% attacks occurred in BTG, XVG, and MONA earlier this year; this is merely another incident that shows that threat actors exist that are both resourced and sophisticated enough to execute this kind of attack. This recent spate of successful 51% attacks has significant implications on what is often referred to as the “long tail” of cryptocurrency assets,” he explained.
“There are a large number of cryptocurrencies, including many based on [BTC], that implement their own proof of work based blockchains. Observers of the industry have claimed that these assets have the same properties as SegWit. This claim has now been undeniably, empirically proven to be false.”
With attacks of this kind becoming increasingly common, it looks as though more unsuspecting crypto investors will be caught out by investing in insecure tokens.
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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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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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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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