Wanna buy some BTC?

The 66K and the (very) Murky Waters of the Centralized Exchange Model (CEM)

OAX
OAX
Jul 28, 2017 · 3 min read

By Liam Bussell

It was a(nother) bad day for crypto-users this week, with the shuttering of BTC-e, a UK registered, Russian located exchange. Alexander Vinnik, a senior figure at the exchange, was detained in Greece and will likely face extradition to the United States to be prosecuted by the DOJ for “international money laundering — that by virtue of its business model, catered to criminals — and to cyber criminals in particular.”

BTC-e is well known, and has been around since 2011 and has a large user base and 43.3 k Followers on Twitter

(As an aside; For some unknown reasons Twitter followers are a good indicator of exchange traffic - Poloniex 63.8 k, Kraken 48.6 k, Bitfinex 40.3 k, Bittrex 74.2 k — excluding Chinese and Korean exchanges, who use different social media)

One of the very significant allegations from the DOJ that has conspiracy minded cypher-geeks salivating is that BTC-e accounts received a “substantial proceeds” from the Mt. Gox exchange hack and netted funds from Cryptowall, a large ransonware attack.

THis is where we get the the 66K of the title of this piece. Around the time BTC-e went offline, a very large number of Bitcoins (66,000!) worth approx. $169 million USD at today’s prices could be seen on Blockchain.info

It’s a very strange series of transactions. I can’t think of anything else than it’s dropping small amounts of bitcoin off in lots of different wallets. Wait, there’s a word for this…its laundering. (Seriously, if anyone else can give me a rational explanation, I’m all ears) This conspiracy has spread far and wide, and now it’s in China too.

I particularly like the people who, in the early parts of the Reddit thread accuse other people of spreading FUD, only to come back with Super-FUD claims once the DOJ announcement came out. Some people also pointed to the fact many of these coins seemed to go back into a different cold storage location. You can see what they mean here;

https://blockchain.info/charts/balance?address=1KwA4fS4uVuCNjCtMivE7m5ATbv93UZg8V

I feel pretty bad for the innocent users of the exchange. I don’t know what happens when the Department of Justice shuts an exchange down for AML violations but I assume small investors go the the very end of the queue. I don’t even know to assets held in laptops etc, they probably end up in the FBI’s “Silk Road” wallet.

As someone relatively new to crypto, but motivated and interested, even I can begin seeing a pattern beginning to emerge. It really looks like the opaque nature of centralized exchanges is a serious issue into wider adoption of crypto and digital assets as a whole, after all. If I was thinking of getting in now, surely stories like this would cause me to hesitate? Maybe.

This is one of the hurdles that we are trying to address at openANX, it comes back to our slogan “Open, Transparent, Decentralized.” This whole, sad story and the FUD surrounding it seem to be a violation of transparency.

To know more about openANX, go to

It’s a simple case of “Who Watches The Watchers?” and how can this conundrum be solved in the crypto-community. Hopefully we can work together to find a solution.

NOTE
Remember people, tomorrow is the 29th of July, and that’s OAX token transfer day! For those of you who are registered, tokens will be good to go by tomorrow (please keep in mind it may take a few hours to unlock all addresses, so please be patient)

If you are not registered, get registered here;

And you’ll be able to get in the second batch of activations.

OAX

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OAX is a new, decentralized, digital asset ecosystem initiative run by the “The OAX Foundation Limited”. Go to http://www.oax.org to learn more.

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