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Hodler’s Digest, February 4–10: Top Stories, Price Movements, Quotes and FUD of the Week

The mystery around embattled crypto exchange QuadrigaCX deepens, and Facebook acquires a blockchain startup.

Top Stories This Week

Facebook Reportedly Acquires Blockchain Startup in First Blockchain-Related Acquisition

Social media network Facebook has reportedly acquired blockchain startup Chainspace in its first apparent blockchain-related acquisition. According to news outlet Cheddar, the acquisition is considered an “acquihire,” or an acquisition of a company made in order to get the skills or expertise of its staff, as opposed to the company’s service or products. According to Cheddar, four of the five researchers that worked on Chainspace’s academic white paper will be joining Facebook. Facebook had told Cheddar that it had not acquired any of Chainspace’s technology.

Leaked Mt. Gox Info Purports to Show $318 Million in Bitcoin, Bitcoin Cash on BitPoint

According to leaked documents reportedly showing the rehabilitation proceedings of defunct cryptocurrency exchange Mt. Gox, the trustee for the process has sold around $318 million in  Bitcoin (BTC) and Bitcoin Cash (BCH) on trading platform BitPoint. The information, which purportedly comes from the Tokyo District Court, shows incomplete scans of transaction at BitPoint, reportedly confirming that Mt. Gox trustee Nobuaki Kobayashi sold coins on a major exchange to repay creditors. CEO of United States exchange Kraken Jesse Powell has previously noted that Kraken’s suggestions for selling coins in an auction or with an OTC broker were not acted on.

Jack Dorsey, CEO of Twitter and Square

Venezuela’s New Crypto Legal Framework Comes Into Force, Doesn’t Mention Petro

Venezuela’s new crypto legislation, which establishes a legal framework for the industry, officially came into force at the end of January. The official set of rules, which makes no mention of the national cryptocurrency Petro, was initially approved by the Constituent National Assembly — an alternative to the country’s Parliament, created in 2017 — in November 2018. The bill lets the national crypto watchdog inspect crypto-related commercial activities in the country. Also this week, Bitcoin trading reached an all-time high in the country amid the hyperinflation and ongoing presidential crisis, above 2,000 BTC on the week.

QuadrigaCX Controversy Continues as Securities Regulator Begins Investigation

As research this week has alleged that major Canadian crypto exchange QuadrigaCX may not have the cold wallet reserves that it had reported, the Ontario Securities Commission (OSC) has initiated a probe into the situation. The exchange had filed for creditor protection after the death of its founder in late December, Gerald Cotten, who allegedly controlled all of the exchange’s funds. Roughly 115,000 customers are without access to their funds, and a court-ordered lawyer will receive the encrypted laptop — which allegedly contains the crypto reserves — from QuadrigaCX representatives as per a court order. Moreover, the crypto exchange’s lawyers are considering selling the company to cover the debts.

BitTorrent Token Sales Sells Out in Under 15 Minutes, Makes Over $7 Million

The BitTorrent token (BTT) sale on the Binance Launchpad platform that concluded earlier this week net $7.1 million with the sale of 50 billion tokens in under 15 minutes. The BTT is based on a Tron TRC-10 token and will be used in order to transact computing resources between BitTorrent clients and other service users. Each token was priced at $0.00012, and were sold on the Binance Launchpad in two simultaneous sessions, one for those using Binance’s native token and the other for those using Tron (TRX).

Winners and Losers

The crypto market has seen a slight uptick at the end of the week, with Bitcoin trading at around $3,654, Ripple at about $0.30 and Ethereum at around $117. Total market cap is at about $120 billion.

The top three altcoin gainers of the week are Guaranteed Ethurance Token Extra, Nullex and MMOCoin. The top three altcoin losers of the week are Ultra Coin, bitqy and DOWCOIN.

Winners and Losers

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“I only have bitcoin,”

Jack Dorsey, CEO of Twitter and Square

 

“Amazon will have to issue a currency sooner or later.”

Changpeng Zhao, CEO of Binance

Changpeng Zhao, CEO of Binance

“There are 2,000 cryptocurrencies out there, 95 percent of them are useless and will die a painful death. The sooner that happens, the better.”

Matt Hougan, Global Head of Research at Bitwise Asset Management and president at ETF.com

 

“Eventually, do I think someone will satisfy the standards we’ve laid out there? I hope so, yes, and I think so.”

Robert J. Jackson Jr., the SEC’s only Democratic commissioner, speaking about Bitcoin exchange-traded funds

 

“Thus, transparency and instantaneity are the true strengths of the blockchain, and should generate not only significant time savings and increased security, but also significant [financial] savings.”

Béatrice Collot, Head of Global Trade and Receivable Finance at multinational banking giant HSBC

 

“We need a change in our laws and that requires more interaction with lawmakers and regulators. We need to make Switzerland open and easy for companies to invest in blockchain projects.”

Daniel Haudenschild, recently elected president of the Swiss Crypto Valley Association

FUD of the Week

US Lawsuit Alleged Investment Group Duped Investor Into $2 Million Token Purchase

A U.S. lawsuit this week has alleged that New York-based investment group Blue Ocean Capital Group Inc. had misled plaintiff Lijun Sun to purchase $2 million of the cryptocurrency MCash. The lawsuit notes that the MCash token was not properly registered with the U.S. securities regulators, and that the investment materials provided to Sun did not accurately represent the token or its terms of purchase. Sun has asked for a return of his investment as well as damages worth $6 million.

Zcash Discloses Already Fixed Vulnerability That Permitted Unlimited ZEC Counterfeiting

An official blog post from Zcash reported this week on the patching of a vulnerability that could have allowed an attacker to create infinite Zcash (ZEC). According to the post, the vulnerability was discovered in March 2018 by one of the Zcash developers. A solution for the problem was covertly included (in order to prevent exploitation by bad actors) in the Sapling network upgrade that was adopted last October. Since the variant of zk-SNARKs that contained the bug was implemented by other projects, Zcash noted that these projects have also taken appropriate actions.

Matt Hougan, Global Head of Research at Bitwise Asset Management and president at ETF.com

Winklevii vs. Shrem: Judge Rules Twins Must Pay $45,000 in Shrem’s Legal Fees

A judge has ruled that Tyler and Cameron Winklevoss must pay $45,000 of crypto entrepreneur Charlie Shrem’s legal fees as part of an ongoing lawsuit. In the proceedings, the Winklevoss twins have previously instigated an investigation and asset freeze on Shrem after accusing the entrepreneur of failing to pay back 5,000 BTC from a 2013 trade deal. Shrem’s lawyer has denied the accusations, and a judge has removed the asset freeze. According to media reports, the lawsuit will cover new ground in June.

Best Cointelegraph Features

‘The NEM Foundation You Knew Before Is Gone,’ What Is Next?

After the NEM Foundation released an announcement this week about the state of their funds, revealing that they only had about a month of operations left, the crypto community has been questioning how things got to this point. Cointelegraph looks at the history of the Foundation and how this financial disaster could have come about.

Forbes ‘Fintech 50’ List, Reviewed: New Players, Veterans and Startups Which Didn’t Make the Cut

Forbes’ latest edition of “Fintech 50” has been released, this time with only six crypto and blockchain companies, as opposed to last year’s 11. Cointelegraph examines what made these companies stand out even amid the crypto bear market.

QuadrigaCX Is Filing for Creditor Protection Amid Liquidity Crisis, Community Remains Largely Skeptical

As the controversy around embattled Canadian crypto exchange QuadrigaCX deepens, Cointelegraph gives a rundown of the exchange’s legal history, current legal problems, and some of the questions raised concerning the death of its founder and the locations of its cold wallet reserves.

How We Will Remember the Year of the Dog? ICO Market Decline, Trend Toward Compliance and Other Takeaways

And happy Chinese New Year to all our Hodler’s who celebrated this week! We here at Cointelegraph looked at all of the major events that have taken place during the Year of the Yellow Mountain Dog.

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Judge Lifts Order to Freeze Charlie Shrem’s Assets in Winklevoss Case

Early bitcoin supporter and entrepreneur Charlie Shrem has won his first battle in an ongoing lawsuit filed against him by Tyler and Cameron Winklevoss and their firm, Winklevoss Capital Fund.

According to a court document filed Thursday by federal Judge Jed Rakoff, of the U.S. District Court for the Southern District of New York, a $30 million attachment initially granted against Shrem was lifted after a hearing earlier in the day.

The attachment order, which was granted on Oct. 2 but remained under seal until Oct. 26, allowed the U.S. Marshal for the Southern District to freeze assets belonging to Shrem.

The order included instructions for Xapo, Coinbase, Poloniex, Bittrex and other exchanges and financial institutions to freeze any assets up to 5,000 bitcoin or their equivalent value that they had in their possession which belonged to Shrem.

Not that there would have been much to freeze from those companies. Coinbase, Xapo, Digital Asset Holdings, Branch Banking and Trust Company, Noble Markets and ItBit all submitted statements saying they did not have any funds belonging to Shrem, while Poloniex (part of Circle Internet Financial) said it held $0.41 in bitcoin in an account belonging to Shrem, and Bittrex held roughly $4.44 combined in bitcoin and a fork currency called bitcoin gold.

“After careful consideration, the Court denies plaintiff’s motion to confirm the order of attachment and therefore lifts the attachment currently in place, effective immediately,” Judge Rakoff wrote Thursday.

“An opinion explaining the reasons for this ruling will issue in due course,” he added, though he did not provide a timeline for when that opinion may be issued. No further documents were publicly available as of press time.

Brian Klein, an attorney representing Shrem, told CoinDesk via email that the ruling “is an important first step towards [Shrem’s] complete vindication.”

“We are very pleased the judge ruled in [Shrem’s] favor, dissolving the $30 million-plus attachment order after he heard extensive argument from both sides earlier today,” he wrote.

Going to trial

The matter is not ending, however: a separate filing indicates that the case will proceed to a jury trial on April 8, 2019.

A case management plan notes that the parties to the case have until Nov. 15 to amend any pleadings, request documents and file any questions they may have.

The plan further notes that expert witnesses must submit any legally mandated disclosures by February or March, depending on whether they intend to support a claim or oppose a claim, respectively.

Cameron and Tyler Winklevoss, as well as the Winklevoss Capital Fund, did not immediately respond to a request for comment.

The Winklevoss Capital Fund sued Shrem in September, alleging he withheld 5,000 bitcoin he was supposed to purchase on behalf of the Winklevoss brothers. This suit was unsealed in late October.

Shrem has maintained that these accusations are false.

Winklevoss brothers image via JStone / Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Bitcoin’s White Paper Gave Us Liberty – Let’s Not Give It Back

One of bitcoin’s earliest entrepreneurs, Charlie Shrem is the former founder of BitInstant and co-founder of cryptocurrency intelligence service CryptoIQ.

This exclusive opinion piece is part of CoinDesk’s “Bitcoin at 10: The Satoshi White Paper” opinion series.


Ten years after Satoshi published the white paper that gave us bitcoin – and the explosion of innovation it launched – I continue to be astounded at its transformative power.

Money is such a fundamental part of life, and it has played such a huge role in mine, for good and bad. Bitcoin is the awakened sleeping giant of it all because it has fundamentally and forever changed money and, more importantly, money’s seat of power.

For me, this is the most important aspect of bitcoin and cryptocurrency: its role in propagating power to the greatest number of people possible. What Satoshi did when he democratized money was hand every individual alive – and generations to come – vast personal liberty.

This shift in power from the few to the many equals events in history like the advent of democracy itself, the invention of the printing press and the Renaissance. But it’s important to remember that nothing is free. What we gained in liberty with bitcoin, we lost in the security of knowing someone else was responsible for protecting our money.

But which would you rather have? Would you rather be able to spend your money exactly how you see fit and know that it is safe from the whims of political leaders with no skin in the game? Or would you rather have the comfort of knowing that if you fail to be vigilant, someone will make you financially whole again?

This is why I’m an ardent student of history. It’s a shortcut to understanding human nature, and it tells me I’d rather take my chances being the one making decisions about my life.

A Real Use Case

These days you don’t even need to study the past. The 24-hour news cycle gives us a window on economic disaster as it unfolds. We’re seeing in real time every stage of financial collapse on a national scale.

Look to Venezuela to see a society in the last throes of a financial meltdown, its people starving while its leaders continue to thrive, inflation hitting numbers that seem made up.

The International Monetary Fund expects that Venezuela’s year-end annual inflation rate will approach 13,000 percent. That’s astonishing when you consider that 4 or 5 percent makes news in other parts of the world. We’ve all heard about post World War I Germany and people using bags of money to buy bread. Here we are, a century later, and people are still subject to the capriciousness of the powerful.

Bitcoin could have changed things for the Venezuelans if they’d had an inkling of what was to come – and they should have – and thought to buy bitcoin or some other currency not tied to the bolivar.

Look to Turkey to see the early stages of a financial meltdown. The country is battling rising government debt, double-digit inflation and a currency whose value has plummeted. Turkish citizens are frantically unloading their lira to hang onto whatever value they can.

Many are turning to foreign currencies and many to bitcoin and other cryptocurrencies.

According to a survey of 15,000 people by Statistica, roughly one in five Turks owns cryptocurrency, the greatest rate of adoption of any of the countries surveyed. Bitcoin is already changing things for the Turks.

To see a society in the earliest stages of this kind of collapse, look to the U.S. Few here realize where we are headed with our inflationary monetary policy and runaway spending. But those few are already hedging against what many experts say will be a new and massive financial crisis for this country.

For the few paying attention, bitcoin is changing things in the U.S. before they even get started.

Fiat’s Star is Setting

We all know from trading cards and small toys in the schoolyard that money is part of being human. If it doesn’t already exist for us, we create it. I saw that in prison.

Despite rules and razor wire, prisoners were able to create a currency of mackerel packets and a black market economy that was stunningly diverse in what it offered for sale – everything from personal services like weight training and letter writing to specialty catering built on the limited, shelf-stable foods available.

So in a sense, bitcoin is nothing new to money. People are always innovating, and bitcoin is the logical next step. It is the response of people long imprisoned by a system that puts them at a significant disadvantage compared to the powerful. It’s a system that has allowed those who rule money to steal from the people who use and save it for themselves and their families.

Again, you don’t need a history book to see what happens when governments are sloppy and even malicious with monetary policy, when leaders neglect their duty to protect not only a country’s currency but also its value. All we need to know from history is that this has happened many more times than once and that it will happen again – is happening now.

Our dependence on others to take care of us at the expense of personal liberty and responsibility has grown insidiously to the point when people are at the mercy of individuals and organizations who have never had their best interests at heart.

Bitcoin comes with great rewards and risk, but your national currency is fiat with everything that entails and has its own even graver risks, I believe. To me, it is handing someone else the keys to the future and crossing your fingers.

Any history book will tell you how well that’s worked out.

Liberty Bell image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.