The fourth largest European stock exchange, SIX Swiss Exchange, will list the world’s first multi-crypto exchange-traded product next week.
Switzerland‘s principal stock exchange SIX Swiss Exchange will list the world’s first multi-crypto-based exchange-traded product (ETP) next week, the Financial Times (FT) reported Saturday, Nov. 16.
Backed by the Swiss startup Amun AG, the first global multi-crypto ETP will be listed under index HODL, and will track five major cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).
According to the article, each cryptocurrency will acquire a certain market share within the upcoming ETP, with Bitcoin accounting for around half of the ETP’s assets. The rest are set to be divided in fractions, with 25.4 percent in now-second cryptocurrency XRP, and 16.7 percent in Ethereum, while Bitcoin Cash and Litecoin will acquire 5.2 and 3 percent of the market, respectively.
Amun’s co-founder and chief executive Hany Rashwan commented that the upcoming ETF is organized in a way to comply with the same strict policies that are required by traditional ETPs. According to Rashwan, this will provide a well-regulated tool for trading cryptocurrencies for both institutional and retail investors that are limited in the field by crypto-unfriendly environments.
The Amun ETP index will be managed by the German index unit of investment management firm Van Eck, according to major Swiss news agency Finews.com. While Amun AG is based in the Swiss “crypto valley” town of Zug, it is reportedly a branch of Amun Technologies, a U.K.-based fintech company. The firm first announced their plans to introduce a crypto ETP in late September this year, according to Bloomberg.
According to Amun’s official website, SIX Swiss Exchange is the fourth largest stock exchange in Europe with a market capitalization of $1.6 trillion. On Wednesday, Nov. 14, head of securities and exchanges at SIX Thomas Zeeb claimed that blockchain-based digital exchanges will entirely replace conventional ones in “about ten years,” citing a large interest in cost advantages of the technology by brokers, banks, and insurance firms.
ETPs represent a type of security that is priced derivatively and trades intraday on a national securities exchange, based on investment tools such as commodity, a currency, a share price, or an interest rate, according to New York City-based investing and finance website Investopedia. ETPs can reportedly be actively managed funds, including exchange-traded funds (ETFs), and others.
Some experts have predicted that adoption of Bitcoin ETFs will be a “way bigger deal” than a cash settlement Bitcoin futures contract, and hence will be a bigger basis for the growth of crypto markets.
In Sweden, XBT Providers already have a Bitcoin ETP called Coinshares, which has attracted around $1 billion since 2015 when it was listed on major Swedish exchange Nasdaq Stockholm.
Recently, the U.S. Securities and Exchange Commission (SEC) stopped accepting public feedback on their Bitcoin ETFs policy review, following the previous denial of nine applications to list and trade various BTC ETFs from three companies, including ProShares, Direxion, and GraniteShares.
The West Virginia Secretary of State has announced that 144 voters successfully cast their ballots in the 2016 midterm elections on a mobile, blockchain-based platform.
The Secretary of State of the U.S. state of West Virginia Mac Warner reported a successful first instance of remote blockchain voting in an official announcement Nov. 15.
Warner stated that in the 2018 midterm elections, 144 military personnel stationed overseas from 24 counties were able to cast their ballots on a mobile, blockchain-based platform called Voatz, adding:
“This is a first-in-the-nation project that allowed uniformed services members and overseas citizens to use a mobile application to cast a ballot secured by blockchain technology.”
Voting for the general elections on the platform started in September, when absentee balloting opened in West Virginia.
The first trial of the new platform took place during the state’s primary elections in April. Blockchain-based ballots were then restricted to a select group of voters such as deployed military members and other citizens eligible to vote absentee under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) and their spouses and dependents.
The Voatz system was initially developed to address the issue of low voter participation among members of the military. According to Symantec — the firm behind the Voatz system — only 368,516, or 18 percent of the 2 million service members and their families serving overseas received ballots in 2016. After counting rejections and tardy ballots, only 11 percent of said votes were counted.
While Warner noted the project’s success, his deputy chief of staff Michael Queen told the Washington Post that they have no plans for expanding the program beyond military personnel serving overseas:
“Secretary Warner has never and will never advocate that this is a solution for mainstream voting.”
According to data from the United States Elections Project, West Virginia ranks 44th of 50 states in voter participation at 42.6 percent.
Some experts have expressed concern over the safety of mobile voting. Joseph Lorenzo Hall, the Chief Technologist at the Center for Democracy and Technology, claimed:
“Mobile voting is a horrific idea. It’s Internet voting on people’s horribly secured devices, over our horrible networks, to servers that are very difficult to secure without a physical paper record of the vote.”
Conversely, Bradley Tusk of Tusk Montgomery Philanthropies has encouraged mobile voting, stating that it can turn out more voters, and as a result, “democracy would work a lot better.” Tusk Montgomery Philanthropies helped fund the Voatz app’s development.
Crypto loans company Salt, once associated with Erik Voorhees, is facing an SEC probe over its 2017 $50 million token sale and whether Voorhees’ involvement broke the law.
Crypto loans company Salt Lending Holdings Inc., once associated with high-profile crypto industry stalwart Erik Voorhees, is facing a U.S. Securities and Exchange Commission (SEC) probe over its 2017 $50 million token sale, the Wall Street Journal (WSJ) reported Nov. 15.
Founded in 2016, Salt — which uses clients’ crypto holdings as collateral against fiat currency loans — is reported to have received a subpoena from the securities regulator this February, according to “sources familiar with the matter.”
Among other issues, the SEC is said to be investigating whether Salt’s 2017 token sale was a noncompliant securities offering (i.e. whether it should have been registered with the SEC), how token proceeds were used, and the manner in which Salt employees received tokens.
Voorhees, who is well known as CEO of crypto exchange ShapeShift, is reported to have played a “leadership” role at Salt, and was notably listed as a “director” in an SEC filing five days ahead of the first SALT token sale in August 2017.
This latter point is now of particular contention, as Voorhees has previously been investigated by the SEC and has effectively been prohibited from raising money in private markets. In 2014, he reached a settlement of $50,000 in fines and disgorgement with the SEC over allegedly unregistered public offerings of securities in connection with two of his early Bitcoin (BTC)-related ventures.
Keith Higgins, chairman of the securities and governance practice at Ropes & Gray LLP and a former SEC division director, told the WSJ that:
“A provision in the  settlement makes him a so-called ‘bad actor’ unable to rely on an SEC safe harbor for private, unregulated stock sales.”
Aside from being listed on Salt’s summer 2017 SEC filing, Voorhees was also named as a Salt director on the company’s site and promotional materials, according to the WSJ’s review. In November 2017, Salt reportedly amended its SEC disclosure, declaring the $1.5 million it had raised, and refraining from any mention of Voorhees.
Jennifer Nealson, a Salt executive, has confirmed to the WSJ that the firm received a February subpoena, and clarified that Voorhees was an “early contributor” to Salt, but stated he “no longer serves in any formal capacity.”
Securities lawyers have said the SEC could seek civil penalties against the company if it deems that Voorhees’ involvement broke the law.
Aside from the probe, Salt is facing a private lawsuit in the U.S. state of Colorado from a former Salt financial officer, who has accused the firm of giving loans on advantageous terms to insiders, and of having lost $4 million worth of crypto in a February 2018 hack. Voorhees has reportedly not been named as a defendant in the case.
Earlier this fall, Voorhees refuted a WSJ report that alleged that $9 million in ill-gotten funds were laundered through ShapeShift, claiming that the WSJ had misrepresented or omitted the information provided by the exchange.
Recently, Blockchain protocol EOS became subject of a new scandal: its governance model was questioned, as evidence showing a moderator reversing transactions which had already been confirmed surfaced on Reddit.
Crypto community was triggered once again, but perhaps it is time to face it: EOS is not really decentralized. At least it is isn’t what EOS “is after”, in the words of its co-founder Daniel Larimer.
What is EOS and how it works?
EOS.io is a blockchain-powered smart contracts protocol for the development, hosting, and execution of decentralized applications (dApps). It was launched in June 2018 as open-source software, while first test nets and the original whitepaper emerged earlier in 2017. The platform was developed by block.one, a startup registered in the Cayman Islands and lead by Daniel Larimer and Brendan Blumer.
EOS holds the absolute record in terms of funds raised during initial coin offerings (ICOs): it has managed to gather around $4.1 billion worth of investments, or roughly 7.12 million Ethereum (ETH), after fundraising for nearly a year. The number remains unmatched to date.
The protocol is supported by the native cryptocurrency EOS, currently the sixth largest crypto by total market cap. Those tokens can be staked for using network resources either for personal use or leased out for developers use — as per the project’s whitepaper, dApp developers can build their product on the top of the EOS.io protocol and make use of its servers, bandwidth and computational power, as those resources are distributed equally among EOS holders. Basically, EOS.io attempts to represent a decentralized alternative to cloud hosting services.
EOS employs a consensus model called Delegated Proof-of-Stake (DPOS). That means that its investors are rewarded with voting power and decide who gets to mine the EOS blockchain.
Thus, the EOS ecosystem rests upon at least two major entities — the EOS Core Arbitration Forum (ECAF), effectively its ‘judicial branch,’ and Block Producers (BPs), who produce blocks on the EOS blockchain — just like miners do within the Bitcoin’s (BTC) blockchain.
BPs earn EOS tokens produced by inflation — according to some estimations, top three EOS BPs obtain around 1000 tokens per day. They are elected through the constant voting process, and their number is capped at 21 — consequently, the top is fluid, and BP candidates who earn enough votes can replace the BPs in power any minute.
Decentralization supporters’ nightmare: EOS reverses previously-confirmed transactions
On November 11, a screenshot showing a ECAF moderator reversing transactions which had already been confirmed, was posted on Reddit, and gathered hundreds of comments.
According to Reddit user u/auti9003, a dispute allegedly involving a phished EOS account was referred to one of the platform’s “arbitrators” Ben Gates, who decided to reverse transactions that happened without the owner’s permission. This, the user noted, involved undoing transactions which had already received network confirmations — most of cryptocurrencies would require a hard fork for that (like Ethereum with DAO), but EOS relies on a more flexible model.
“Under the powers afforded to me as arbitrator under article 6 of the Rules of Dispute Resolution, I, Ben Gates, rule that the EOS account in dispute should be returned to the claimant with immediate effect and that the freeze over the assets within the said account is removed.”
That move outraged decentralization maximalists, as Reddit responses mostly claimed that EOS had failed to prove its use case versus other more traditional centralized structures.
“Why would anyone use this over a bank account and traditional legal system?” the most popular comment reads, adding:
“These guys raised ($4 billion) to recreate the legal system using a token that is neither censorship resistant, nor immutable.”
Is EOS even trying to be decentralized?
EOS’ model of governance has attracted controversy before: for instance, in early October, allegations arose accusing the platform’s major Block Producers (BPs), including Chinese crypto exchange Huobi, of “mutual voting” and “collusion.”
Essentially, an alleged leaked Huobi spreadsheet suggested that main EOS nodes were involved in mutual voting along with pay-offs to remain in power of the EOS blockchain and keep their profits.
Soon after, Block.one, the developer of EOS, published a statement, saying it was “aware of some unverified claims regarding irregular block producer voting, and the subsequent denials of those claims.” Nevertheless, there was no further update on the matter, while Huobi remains EOS’ top BP as of press time.
Further, in June, an even bigger scandal occurred, when EOS BPs overrode an ECAF decision and froze seven accounts associated with phishing scams after the arbitration body failed to promptly come up with a response. The ECAF later retroactively ordered the accounts frozen, but the BP conference call-based decision caused some to question EOS’ decentralized system, and to label the move as ‘power abuse.’
Less than a week after, another ECAF order to stop processing transactions involving 27 more addresses surfaced. Interestingly, it lacked any explanation for blocking the addresses, promising to do so on a later date.
That attracted another round of harsh criticism from the crypto crowd, and, after an apparent fake ECAF order began to circulate on social media sever days later, some BPs, notably EOS New York, announced that they would suspend execution of any such orders, as they couldn’t’ tell if they were legitimate. Yet again, the ECAF and BPs struggled to coordinate their action, and that many decisions on EOS blockchain were handled by centralized entities.
On November 1, more detailed and grounded criticism of EOS’ governance model arrived, as blockchain testing company Whiteblock published results of “the first independent benchmark testing of the EOS software.” Essentially, the investigation came to several conclusions about the EOS, the most bold of which was that “EOS is not a blockchain,” but “rather a distributed homogeneous database management system,” because its transactions were reportedly “not cryptographically validated.”
Additionally, the research results showed inaccuracies in performance claims. In July, EOS’ chief technology officer Daniel Larimer tweeted that EOS was performing 2351 transactions per second (Ethereum, for comparison, can process around 15). The Whiteblock report, however, showed that with “real world conditions” of round trip latency and 0.01 percent packet loss, EOS performance was below 50 TPS, “putting the system in close proximity to the performance that exists in Ethereum.”
Thus, the investigation concluded that “the foundation of the EOS system is built on a flawed model that is not truly decentralized.” Later, on November 6, the EOS Alliance, a non-profit organization formed by EOS community members and block producers with the role to “facilitate the dialogue within community,” published a response signed by its Interim Executive Director Thomas Cox. Dubbed “Yes, EOS is a blockchain,” it criticized Whiteblock’s “provocative paper,” noting that the benchmarking firm “only recruited Ethereum folks for the project.”
Still, EOS’ chief technology officer Daniel Larimer confirms that his company does not aim to be decentralized. In an interview with YouTube blog “Colin Talks Crypto” aired on October 3, Larimer clarified his vision:
“Decentralization isn’t what we’re after. What we’re after is anti-censorship and robustness against being shut down.”
Nevertheless, Larimer added that his project was still more decentralized than Bitcoin and Ethereum, because it takes 11 BPs to control the majority of EOS network, while BTC and ETH relied 4 and 3 pools respectively.
Holy mackerel! Out of the blue, Bitcoin dropped to a new 12-month low with little notice. Anyone hoping for a Santa Claus rally had better drop to their knees and start the Hail Marys.
Today Bitcoin (BTC) 00 got nuked. In fact, the entire cryptocurrency market took a direct hit from a 50 megaton hydrogen bomb — and it looks like it’ll take a while for the smoke to clear. Novogratz was wrong, Tom Lee was wrong, everyone who thought $6,000 was the bottom was wrong. Analysts will probably spend the rest of the week attempting to determine the sources responsible for the turmoil.
Currently, the most digestible explanations suggest that the current sell-off was kicked off by a combination of $6,000 representing a stop loss trigger, as well as the current Bitcoin Cash hard fork exerting pressure on an already fragile Bitcoin price.
Today’s sharp correction took Bitcoin to a 12-month low and the market cap has now dropped below $100 billion for the first time since November 2017. The total cryptocurrency market cap also dropped below $200 million for the first time this year.
The weekly chart broke bearish after a lengthy series of sideways trading. Any oversold bounce under $6,540 is just a lower high, meaning a nearly 15% bounce is needed to restore BTC 00 back to where it was yesterday. Fairly unlikely given the last 4 – 6 months of trading. Although, as mentioned yesterday with the upcoming Bitcoin Cash hard fork, ANYTHING could happen.
The MACD made a bearish cross, and the RSI has also broken from its persistent flatline and now dips toward oversold territory. A number of investors and analysts are attributing the current volatility to the BCH fork — but it should be noted that Bitcoin frequently dipped below $6,200 and $6,100 and BTC’s inability to overcome overhead resistances highlights an underlying weakness. So while surprising, today’s dip below $6,000 seemed inevitable.
$4,500 and $3,000 are the next supports to watch and the market and its multitude of analysts will decide which prices in between this range will function as psychological supports and resistances.
There’s not too much to say here that hasn’t already been said. The lack of resistances below the $6,200 – $6,100 zone allowed BTC to drop like a blade through butter, and BTC price is now lower than it was on November 12 of 2017.
Traders might think twice about playing oversold bounces as bears are clearly in control and the current downtrend is still young. The RSI, Stoch, and MACD could easily become extremely oversold and given that a family feud over BCH might be fuelling the entire market downturn, analysis of charts may provide limited value for time being.
The wisest thing to do might be to watch from the sidelines and enjoy the free BCH-SV coins that will be earned by BCH holders. Alternatively, savvier traders might take note of the spread between USD and stablecoin (USDT, Paxos, TrueUSD) or the $300 Bitcoin 00 premium that exists between Bitfinex and Coinbase.
Bon Arbitrage, Mes Amis!
[Disclaimer: The views expressed in this article are not intended as investment advice. Market data is provided by Bitfinex. The charts for analysis are provided by TradingView.]
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Images courtesy of Shutterstock, Trading View. Market data sourced from Bitfinex.