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West Virginia Secretary of State Reports Successful Blockchain Voting in 2018 Midterm Elections

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.

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WSJ: SEC Opened Probe into Erik Voorhees, Crypto Loans Firm Over 2017 $50 Mln Token Sale

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 [2014] 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.

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Mining Giant Bitmain Sues Unknown Hacker for Alleged Theft of $5.5 Million in Crypto

Bitman sues unknown hacker who allegedly stole $5.5 million worth of crypto by using Binance and Bittrex wallets for manipulation of MANA token.

China-based Bitcoin (BTC) mining giant Bitmain has sued an anonymous hacker for the alleged theft of cryptocurrency worth $5.5 million from Bitmain’s account on Binance in April, according to a lawsuit filed with the U.S. District Court for the Western District of Washington at Seattle on Nov. 7.

As stated in the court document, an unknown hacker, referred to as “John Doe” in the case, managed to take over Bitmain’s Binance account and used stored Bitcoin to manipulate the price of altcoin Decentraland (MANA) and then steal the profits.

Bitmain says in the court document that the amount of the company’s losses “exceeds” $5.5 million in “Bitcoin and other digital assets,” and specifying that the defendant was able to steal “approximately 617 BTC.” The document cites that the unauthorized action took place on April 22, when Bitcoin was trading at around $8,935.

The document also explains that as a part of the “scam,” the unknown hacker used two of their own accounts on now-second largest crypto exchange Binance, as well as on Bittrex, with around 2.3 million MANA already acquired on Bittrex. “John Doe” reportedly placed purchase orders from Bitmain’s digital wallet offering to buy MANA “and other digital assets” with Bitmain’s bitcoins at a price that was “far above the going market rate.” The defendant also allegedly further artificially inflated MANA’s price by using Bitmain’s BTC to buy Ethereum (ETH), which was then used to buy MANA.

According to the lawsuit, the hacker further carried out a number of orchestrated trades in the reverse direction between BTC and MANA from Bitmain’s wallet and their own, eventually reportedly completing the theft by transferring BTC from their Bitmain account “ultimately into a digital wallet on the Bittrex cryptocurrency trading platform.”

In Mid-October, Cointelegraph reported that losses caused by hacks of crypto exchanges in the first nine months of 2018 have exceeded the numbers for the whole year of 2017 by 250 percent, with $927 million stolen.

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Tim Draper Stands by His Bitcoin Price Prediction of $250K in 2022

U.S. investor Tim Draper still believes the Bitcoin price will surge to $250,000 in four years, and eventually replace “political money.”

Venture capital investor Tim Draper reaffirmed his prediction that the Bitcoin (BTC) price will reach $250,000 by 2022, during a panel discussion at the Web Summit summit conference Nov. 6

Draper initially predicted that the BTC price will surge up to $250,000 in April of this year. “Believe it, it’s going to happen – they’re going to think you’re crazy but believe it, it’s happening, it’s going to be awesome!,” Draper said then.

When asked at the recent Web Summit conference whether he still thinks the BTC price will experience a 40 times return in a span of four years and reach $250,000, Draper said:

“Yes. We are talking […] about five percent market share to get to $250,000. That seems like a drop in a bucket and all we need to really do is make it so that Bitcoin can be used to buy Starbucks coffee, and all of a sudden the world just opens up and then they say ‘I’ve got this choice.’ […] Do I want a currency that I can take from country to country […] or do I want one that sticks me in one country or one geographic area and I can’t use it anywhere else?”

Draper also questioned the need for fiat currencies or “political currencies,” stating “why do we even trust currencies that are determined by some weird political party or another?” In Draper’s view, banks issue money “whenever they feel like it for whatever reason they want it,” and the emergence of a “totally apolitical,” global, and open currency would cede control of money from banks to common people, he explained.

Speaking at the GovTech Pioneers conference in May, Draper presented his vision of a future in which blockchain utilizing smart contracts in conjunction with artificial intelligence (AI) will massively change the role and responsibilities of states. “If we combine Bitcoin, blockchain with smart contracts and artificial intelligence, we could create the perfect bureaucracy,” he said.

In September, Draper made another prediction, saying that the total cryptocurrency market capitalization will hit $80 trillion in the next 15 years. Draper argued that the significant slide in the cryptocurrency market in previous months is attributed to people who had not adopted digital currencies as a new asset class. Draper said then:

“Cryptocurrency will go after trillion dollar markets — these are finance, healthcare and insurance, banking and investment banking, and governments.”

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Law Firm Perkins Coie Adds Ex-CFTC Counsel to Dedicated Crypto, Blockchain Group

Law firm Perkins Coie has hired Kari Larsen after identifying her “understanding of the impact that blockchain and crypto will have” on the legal sector.

U.S. international law firm Perkins Coie (PC) announced it had hired a former counsel for the country’s commodities regulator to work in its blockchain practice in a press release Nov. 6.

Kari Larsen, who previously worked at the Division of Enforcement of the Commodity Futures Trading Commission (CFTC), will now be based at PC’s Blockchain Technology & Digital Currency industry group.

The group originally formed in 2013, with PC keen to gain an understanding of the complex legal landscape which continues to evolve around cryptocurrency and related tokens in the U.S.

“I’m confident that Kari has a true understanding of the impact that blockchain and crypto will have on our industry,” Molly Moynihan, co-chair of the firm’s investment management practice and member of the firm’s management committee commented in the release, adding:

“Her extensive experience representing clients in a wide range of commodity and transactional matters, and regularly providing counsel on global matters related to U.S., U.K. and E.U. commodity laws and regulations, will be a significant advantage to our national practice.”

The move comes as legal advice concerning cryptocurrency handling remains highly sought-after in the weeks leading up to the emergence of fresh offerings targeting institutional investors.

As Cointelegraph reported, Dec. 12 should see the launch of the Intercontinental Exchange’s Bakkt platform, which will offer one-day physical Bitcoin futures. Earlier this week, the  U.S. Chicago Board Options Exchange (CBOE) noted that their BTC futures offering hit record volatility lows in October.

The path to regulatory certainty for Bakkt is complex, commentators have noted this week, some seeing the launch as a crucible for what is possible under the current U.S. climate.