Yuri Molchan

Market Sheds $4 Bln More, Downtrend Continues as Bitcoin Cash Keeps Dropping

Over the last day, the overall crypto market value fell to $181 bln, losing another $4 bln, and thus shedding a large share for the past few days
Market Sheds $4 Bln More, Downtrend Continues as Bitcoin Cash Keeps Dropping
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On the day when Bitcoin Cash had its highly anticipated hard fork take place, the crypto market faced a large correction and lost around $27 bln. For the past two days, this retracement has continued, making overall losses even bigger.

Bitcoin Cash has also lost around 8 percent, even if one puts together the value of the two new assets (Bitcoin Cash SV and Bitcoin Cash ABC). Following the chain split, the rate of Bitcoin ABC (BCHABC) — the initial BCH network — decreased by over 15 percent, dropping to $250.

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Will Bitcoin roll down to $4,800?

On Friday, news outlets reported that a crypto trader also working with technical analysis, Crypto Rand, assumed that Bitcoin sees a growing risk of diving to $4,800 - $5,000. He added that technical indicators are not showing any signs of reaching a bottom at the moment. However, Crypto Rand bets on $4,800 as the bottom for BTC.

Even though the rates of other coins from the top-ten list as well as altcoins have begun to move independently, leaving its correlation with BTC, if Bitcoin drops to the aforementioned low, this will most likely lead to the rest of the market making an intensive downward move, too. At present, the volume of daily BTC trading is holding at around $5 bln. To compare, XRP, BCH, and XLM are showing trading volumes between $100 mln to $800 bln. That is 16 percent lower that this value for BTC.

Earlier this week, prominent blockchain investor Josh Rager mentioned that according to technical indicators, it is only a question of time until BTC rushes down to $4,900. However, the coin may bounce upwards from the support levels of $4,300 - $4,600.

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The SEC makes it worse

This week, the overall sentiment in the crypto market has been negative due to the market collapse. However, things also look bad for small crypto and tokens, since the US SEC has been intensively investigating coin offerings from startups. This could cause investors to lose their confidence in the industry, but analysts believe this would be only for a short term.

Since the SEC has made Paragon and AirFox give back the raised funds to investors and forced it to pay an extra $350,000 as a fine, experts reckon that investors may well stop putting their money in token offerings until the regulators come up with permanent legal rules.

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David Dinkins

Media Reports Binance Exchange Ordered to Cease Operations in Japan, Binance CEO Denies

Mainstream media outlets worldwide are reporting that the major cryptocurrency exchange Binance has been asked by Japan’s FSA to cease operations.
Media Reports Binance Exchange Ordered to Cease Operations in Japan, Binance CEO Denies
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A local news outlet, Nikkei, has reported that cryptocurrency exchange Binance was ordered to cease operations in Japan following its unauthorized expansion into the country. Japan’s Financial Services Authority (FSA) is the regulator that oversees the nation’s licensing program for cryptocurrency exchanges. Following a half billion dollar theft from Japan-based exchange Coincheck earlier this year, the FSA has reportedly been cracking down on crypto exchanges.

Shortly after Nikkei ran its story, Binance CEO Zhao Changpeng denied the rumors, tweeting:

Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them.

— CZ (not giving crypto away) (@cz_binance) 22 марта 2018 г.

Really big deal

Japan and Binance are both extremely important to the cryptocurrency sector. Japan presently has the largest Bitcoin trading volume in the world, with 56% of Bitcoin trades denominated in yen. Meanwhile, Binance is the largest cryptocurrency exchange in the world, by volume, with $1.7 bln in trades over the last 24 hours. Many of the top altcoins are heavily traded on Binance; the exchange is #5 by volume for Ethereum, #7 by volume for Litecoin, and #1 by volume for NEO.

Carrot and stick

Japan seems to be adopting a carrot-and-stick approach to dealing with Bitcoin. Last spring they made Bitcoin a legal payment method, but shortly thereafter began imposing licensing requirements on cryptocurrency exchanges. The strategy seems to be to offer an olive branch, then bring on the regulation. Put differently, Japan’s government seems to have some faith in cryptocurrency, but only so long as it remains within the nation’s existing regulatory framework. “Rogue” Bitcoiners must be shut down with alacrity.

 

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David Dinkins

G20 Called Upon to Regulate Cryptocurrencies, Present Unified Front

This week, France and Germany called on the heads of the world’s top 20 economies to take a unified approach to regulating cryptocurrency.
G20 Called Upon to Regulate Cryptocurrencies, Present Unified Front

France and Germany, the two powerhouse economies of the European Union, have called for a coordinated approach to Bitcoin regulation. Officials from the two governments sent a letter to the president of the G20 asking that the subject be included on the next meeting’s agenda. The G20 is a meeting of the world’s top 20 economies (with the entire EU being counted as one), comprising 85 percent of the world’s GDP.

Money laundering?

The letter reads in part:

“Tokens and their potential for financial innovation should not be left to those who make the worst use of them. France and Germany have already taken concrete regulatory measures regarding 'virtual currencies' in the field of anti-money laundering and counter-terrorism financing and the European Union is working in the same direction.”

"However, an efficient pushback against the use of “tokens” and “virtual currencies” for the purpose of criminal activities will require a coordinated international effort."

As usual, the two governments are focusing on the potentially negative uses of Bitcoin and other digital currencies. Money laundering and terrorist financing are, of course, the twin bugaboos of governments worldwide.

If governments spent a little more time worrying about fiat money, there’d be a lot less money laundering. That’s because the biggest source of money laundering is fiat money.  Dutch Rabobank was just fined hundreds of millions for their knowing involvement in laundering money for Mexican cartels. Several years ago, HSBC was fined over $1 bln for laundering billions of dollars worth of drug funds. Perhaps the government should spend less time worrying about crypto and more time minding their own houses.

New refrain

In the last few weeks, we’ve seen a new refrain from crypto critics: they allege that the cryptocurrency market threatens to undermine the global financial system. In the letter sent to the G20, France and Germany wrote:

“In the longer run, potential risks in the field of financial stability may emerge as well.”

Likewise, Wells Fargo’s head of equity strategy recently made the ridiculous assertion that the $400 bln crypto market could somehow upend the massively larger, $100 tln equities market.

Hope on horizon

Fortunately, the US government seems poised to take a relatively hands-off, “wait-and-see” approach to digital currencies. This week, the heads of the SEC and CFTC testified before the US Senate and argued for relatively light regulation to keep from stifling the sector. This is reminiscent of Congress’ decision in the 1990s to treat Internet regulation in the same way, giving the technology room to grow rather than smothering it in the womb.

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🕵️‍ ICO Watch Tzao Se

Past ICO Review: How Anti-Stupidity Crypto Project Has Reached its Goals by Completely Failing

👁 ICO Watch
A failed crypto project that raised north of $19 mln, increased the average IQ of the cryptomarket by removing a significant bunch of people too stupid to operate on it
Past ICO Review: How Anti-Stupidity Crypto Project Has Reached its Goals by Completely Failing
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I grew up in a plattenbau neighborhood, in a micro-district inspired by Le Corbusier. It is fashionable to despise this architectural style, but I must admit that I secretly love factory-built assembled plattenbau projects.

The thing is, I love them on the design sketches, on maquette miniatures, I love them in the imagination of their architects, I love them on 70s postcards of an idyllic, innocent urban landscapes of heartland’s France towns social housing developments (which we know ended up eventually converting into ethnic ghettos and welfare-subsidised slums).

They say mass-production buildings and vast spaces create ghettos. They blame Le Corbusier for their misery. Nonsense. Le Corbusier and his disciples aren’t to blame. The residents are.

Beautiful, well-thought projects of well-organized, frugal, cost-effective communal life was given to the people who weren’t enlightened enough to grasp the concept. They’ve brought their ignorance and prejudice to the bright world of the hopeful future, so that future never happened. If the same kind of people were given palaces as social housing, they would turn Versailles into a ghetto.

Well, 2017’s ICO rush have something in common with plattenbau. Technology isn’t to blame for humans’ stupidity. You may blame regulations, you may blame the lawlessness, you may blame whatever external factor there is, but sometimes, an ICO like that hype acts as a great equalizer, a machine to redistribute money between the stupid and the smart.

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I have no pity whatsoever for the people who invested into the thing called BitcoinGrowthFund, that is said to have raised some $19 mln in May 2017, and is among the biggest ICOs of 2017. They got what they deserve.

A website with no information on the team, with a laughable white paper, no advisors got that kind of money.

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The idea offered to the investors was essentially an investment fund: “you buy our coin, and we invest money into mining of cryptocurrencies with potential.”

They’ve had a wallet on the site, which showed the increase of the investment, but many people complained that when a withdrawal was attempted, the transaction simply did not take place. “Withdrawal of your money is more important than investing as if we cannot withdraw what is the sense of investing,”  asked one poor soul on bitcointalk. Mua. Ha. Ha.

Seems legit

Legally this is not a scam at all, and it took almost no effort to fool so many people. These people were quite straightforward: “MCAP tokens are not participation in the Company and MCAP tokens hold no rights in the said company. MCAP tokens are sold as a functional good and all proceeds received by Company may be spent freely by Company absent any conditions. MCAP tokens are intended for experts in dealing with cryptographic tokens and Blockchain-based software systems.”

They were telling the truth from the very start. BitcoinGrowthFund web is not updated since November 2017.

Even if sneaky Hindus behind this gig have spent every single penny they’ve raised on coke and New Dehli’s finest escorts, it’d still a better use for the money than it was in the hands of their so-called investors.

“Due diligence” wasn’t called that for nothing. Because it is a diligence that is due in some circumstance.

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Criminally stupid

Normally, I’d keep preaching that ICOs should start adopting regulations, better corporate governance, and so on and so forth. Not now. No regulation wouldn’t have helped here. It is like blaming plattenbau developments for ghettoization. Technology and laws aren’t to blame. People who invested in this kind of crap have to blame only themselves.

Don’t be like these people. Invest smart. And remember: CryptoComes is watching you.

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David Dinkins

Payza Founders Indicted for AML/KYC Violations, “Knowingly” Laundering Money

US prosecutors allege the founders of Payza have transmitted $250 mln in funds without the necessary money transmitter licenses, connected with other illegal acts.
Payza Founders Indicted for AML/KYC Violations, “Knowingly” Laundering Money
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The cofounders of Payza, brothers Firoz and Ferhan Patel, have been indicted on multiple charges related to their operation of Payza, according to the US Department of Immigration and Customs Enforcement (ICE). The brothers are being charged with:

“One count of conspiracy to operate an unlicensed money transmitting business and to violate anti-money laundering program requirements, one count of a money laundering conspiracy and one count of operating an unlicensed money transmitting business in the District of Columbia.”

If convicted, each man faces up to 25 years in prison.

Payza

The government is alleging that Payza has operated without the necessary state licenses and “knowingly transmitting funds that were derived from illegal activity.” Prosecutors claim to have connected Payza to “Ponzi schemes, pyramid schemes and a child pornography site.” It is unclear whether the Patels knew that they were facilitating such activities, although prosecutors are alleging that they “knowingly” facilitated them. However, based on the charge of violating AML requirements, it seems most likely that the Patels simply did not do the required due diligence and may not have actually known that some funds were being transmitted for illegal use.

US Attorney Liu says:

“The arrest and indictments in this case demonstrate that we will vigorously enforce laws meant to protect the American consumer. Money transmitting businesses are required to be registered federally and licensed in most states and jurisdictions, including the District of Columbia.  Consumers should beware of those that do not follow these laws because they could be acting as a cover for other illegal activity.”

Crazy regulations

Cryptocurrency regulation in the US is a horribly tangled affair. Both the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) claim that digital currencies fall within their regulatory purview. The Internal Revenue Service (IRS) insists that cryptocurrencies are property and are subject to capital gains taxes, and the Financial Crimes Enforcement Network (FinCEN) treats digital currencies like money, subjecting them to AML and KYC laws.

So which is it? Is cryptocurrency a security, per the SEC? A commodity, per the CFTC? Property, per the IRS? Money, per FinCEN?

At present, nobody knows, and that’s led to a great deal of frustration among cryptocurrency users and businesses. Although, to be fair, the Patels were apparently warned that they were breaking the law and continued operations:

“Despite receiving cease and desist letters from various states, and being told by a consultant that operating a money transmission business without the necessary licenses was a crime, Firoz and Ferhan Patel continued their illegal activity, the indictment alleges.”

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David Dinkins

Bank of England Governor Slams Bitcoin’s Illicit Uses, Fails to Mention British Banks’ Bad Acts

Mark Carney is at it again, slamming Bitcoin as being useful only for illicit activities. Nevermind how involved British banks have been with drug cartels in the past
Bank of England Governor Slams Bitcoin’s Illicit Uses, Fails to Mention British Banks’ Bad Acts

Mark Carney, governor of the Bank of England, is determined to see Bitcoin brought under the control of central banks and regulators, he said in a speech today. Carney cited “anarchy” in digital currency trading, lamenting the existence of unregulated exchanges outside the government’s direct control, according to The Guardian.

Carney stated:

“[It’s time to] regulate elements of the crypto-asset ecosystem to combat illicit activities.”

Illicit activities

Carney trotted out the typical rhetoric used by Bitcoin opponents, namely that Bitcoin’s primary reason for existing was to ensure anonymity in illicit transactions. In a surprisingly direct attack, Carney said:

“Authorities are rightly concerned that given their inefficiency and anonymity, one of the main reasons for their use is to shield illicit activities. This cannot be condoned. Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to.”

Indeed, The Guardian, reporting on Carney’s speech, trotted out the typical anti-Bitcoin propaganda, writing:

“There are also growing efforts to curb the risk of cryptocurrencies being used for money laundering, financing terrorism and drug dealing.”

Not to be outdone, Vox recently cited a “former NSA official” who alleges that Bitcoin is supporting North Korea’s nuclear program. Apparently Bitcoin’s supposed use in “money laundering, financing terrorism and drug dealing” is no longer enough to scare the masses, so the currency is now being blamed for financing rogue states.

Isn’t it ironic?

Speaking of money laundering, in 2012 British banking giant HSBC was fined by the US Department of Justice (DoJ) for laundering $881 mln for Mexican and Colombian drug cartels. The bank was also cited for contravening sanctions against Iran, helping wealthy clients evade taxes and rigging the price of precious metals and foreign exchange.

The Head of the US Department of Justice’s criminal division, Lanny Breuer, said of the British bank:

"The record of dysfunction that prevailed at HSBC for many years was simply astonishing."

HSBC was narrowly spared from criminal prosecution only after former Chancellor George Osborne and British regulators told US authorities that if HSBC faced the full penalty for its criminal actions, the “systemically important” bank might collapse, leading to “global financial disaster.” US lawmakers compiled a report on HSBC’s misdeeds and British regulator’s interventions with DoJ officials, entitling it

“Too Big to Jail.”

Misplaced fears?

Perhaps Carney should be less worried about individuals using Bitcoin to buy drugs on the dark web or laundering ill-gotten gains and should focus a bit more on making sure his own country’s major banks aren’t laundering hundreds of millions of dollars for drug cartels. Despite all the anti-Bitcoin rhetoric spewed by regulators, it still remains that the currency most responsible for terrorist funding, money laundering and drug purchases is...the US dollar.

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