Token Report: Bitfinex & Tether’s Murky Relationship and 2 Token Sales to Watch

This post first appeared Monday in our investor newsletter. Sign up for the email, here; or, go to tokenreport.com for our listing of all current and upcoming token generation events (TGEs).

Every Monday, we cover the news of the past week in crypto assets and offer a list of upcoming token generation events (TGEs) to watch, pulled from the Token Tracker, where we never miss a current or upcoming token sale. Check it out on our new corporate site.

Last week, Bitcoin Cash (BCH) rose to a record high near 900 USD, after bitcoin soared above 4,500 USD on Aug. 15 before lowering to just over 4,000 USD at its current price. We also visit ongoing speculation on the relationship between Bitfinex and Tether, a “digital money” that supposedly isn’t money. Filecoin continues to rake in funds (its sale is open for another 17 days), the two TGEs that we covered last week — exchange protocol 0x, VR world Decentraland and virtual goods market DMarket — closed at 24M USD, 26M USD and 10M USD, respectively. This week we’re keeping an eye on two TGEs, another VR project and a tokenized asset exchange.

Last Week in Crypto Assets

• Cryptocurrency exchange Bitfinex is using a “digital money” called Tether in its margin markets for wash trading. A blog post published on Medium on Wednesday by cryptocurrency blogger BitCrypto’ed highlighted findings that 80 million USD worth of Tethers created in July have entered circulation on Bitfinex to fund margin positions. Bitfinex announced its partnership with Tether in 2015, which it defines on its website as a “type of digital currency … backed 1-to-1 by traditional currency held in Tether Limited’s reserves.” But CoinTelegraph writes that Tether’s terms of use disavow any backing.
• Blockchain technology service provider Blockstream on Tuesday announced its new project Blockstream Satellite, a service that will broadcast real-time Bitcoin transactions and blocks from a group of geosynchronous satellites in space. Blockstream’s satellite ground stations transmit Bitcoin blocks to the satellites, which then receive the signal and broadcast it back to earth so that anyone in the coverage area with a satellite antenna and USB receiver can receive the blocks — no internet connection required. It hopes to eliminate cost barriers to running a Bitcoin node as well as protect against network interruptions and node isolation. Presently, Blockstream’s satellites cover two-thirds of Earth’s landmass, with global coverage anticipated for the end of the year.
• Bitcoin Cash rose 40 percent on Friday from the previous day and rose again on Sunday to above 900 USD, but is currently trading at 614.47 USD as of 12:25 pm Eastern US time, Monday. The majority of Bitcoin Cash trading action came from South Korean exchanges, with Bithumb, Coinone and Korbit taking the top three spots for trading volume. On Wednesday bitcoin cash miners successfully supported an eight megabyte block.
• Australia has set its sights on updating anti-money laundering and counter-terrorism financing laws to include digital currency offenses. In a proposed amendment published on the Parliament of Australia’s website, the bill aims to insert a clause that providers of digital currency exchange services must be registered with the country’s financial regulatory agency AUSTRAC. Penalties for operating an unregistered exchange include up to seven years in prison and up to 100,000 USD in fines for first-time offenders.

The Week Ahead in Token Sales

LAToken (LAT)
Documentation
Open Date: August 22
Hard cap: 40M USD

LAToken is a project aiming to build a tokenized asset exchange platform and wallet for the trade of various types of assets with cryptocurrencies. Conducting asset exchange on the blockchain would ideally reduce transaction costs and enhance asset liquidity and transparency. LAToken recognizes five main asset categories which it aims to tokenize: equity, debt, real estate, commodities and artwork.

On the exchange, LAToken would issue liquid asset-backed tokens backed by publicly-traded assets, and investors would buy them with cryptocurrencies. LAToken would then buy back the tokens at a pre-determined date at the market price of the underlying asset. LAToken’s wallet allows users to hold tokens, make transactions and link tokens to assets. LAToken also aims to build a trading terminal for the web and mobile on which investors make bids and offers as well as set trading criteria.

LAToken’s platform and wallet is currently in operation, with asset holders able to list items for sale and trade on a secondary market. Asset tokens backed by Apple and Amazon shares are currently being traded on the LAT exchange. Liquid asset-backed tokens are linked to assets by users who fill out a form on the platform and set their own terms; the asset is then sold to “LAT-certified custodians,” who act as middlemen in transactions and verify asset ownership.

LAToken’s token sale will be completed in four rounds, with each round raising funds for the development a specific asset class: equity, real estate, debt and commodities, and illiquid assets. The first round will run from Aug. 22 to Aug. 29 and consist of 25 million LATs for sale, priced at 0.001 ETH. The token price in subsequent rounds will be higher. To take into consideration the U.S. Securities and Exchange Commission (SEC), LAToken has published a “Legal Considerations” clause in its whitepaper to warn buyers that LABT may be considered a security. It will only allow U.S. buyers to participate if they are accredited as defined in the Securities Act of 1933, and they must hold LAT for one year before reselling. LAToken will register for an exchange license where needed.

Team
LAToken was founded by Valentin Preobrazhenskiy, an entrepreneur in the fintech space with a hedge fund background. Beginning as a strategy consultant, he founded a hedge fund in 2010 which he managed for four years before founding a mortgage lending service Zalogo in Moscow, Russia, where he remains CEO. He started LAToken in March 2017. LAToken’s managing director is a former engagement manager at McKinsey & Company. Its advisors include security and cryptography specialist Anish Mohammed, who is the CTO of blockchain banking startup Babb and former advisor at Elon Musk’s Hyperloop One.

VibeHub (VIBE)
Documentation
Open Date: August 22
Hard cap: 11,500 ETH

VibeHub is building a virtual reality (VR) and augmented reality (AR) marketplace and wallet in which users can buy and sell VR experiences with the native VIBE token. “Hubs” on the platform will be like community spaces in which users can interact with one another with real-time communication. Some examples outlined in VibeHub’s whitepaper include live virtual concerts, online learning and collaborative art.

VibeHub’s web platform will be compatible with Metamask and Myst to onboard non-crypto users onto the platform, with its platform accessible via existing VR/AR hardware including Oculus, Microsoft HoloLens and Sony PSVR. A demo video of its beta marketplace was released in July, with a beta version released on Aug. 6 for users to preview. It aims to launch its beta web platform in early September after the token sale closes, with the token-integrated product going live on Sep. 15. Implementation of the AR and VR portion of the marketplace will not be incorporated in the product until February 2018.

The VR and AR market has experienced ups and downs, with the launches of VR headsets Oculus Rift and HTC’s Vive failing to meet expectations in 2016. Virtual reality headsets for the most part still require powerful and expensive PCs to run them, and the technology is not yet in place for mass consumer use of virtual reality on computers. Though nearly 100 million VR units were shipped in 2016, 96 percent of those were the 15 USD Google Cardboard mask. A report by Digi-Capital predicts that mobile AR will actually be the primary driver of a 108 billion USD VR/AR market by the year 2021 due to price, ease of use and app connectivity. Until VibeHub’s platform reaches significant scale, it may not be desirable for developers to build on it.

VibeHub’s token sale begins on Aug. 22 and will run until Sep. 21 or until the hard cap of 11,500 ETH is reached. It held a presale from Aug. 7 to Aug. 21. The token sold is named VIBEX, and will be exchanged to VIBE tokens (to be used in the platform). The amount of VIBE exchanged for VIBEX will be based on the total amount of tokens created. There will be bonuses given to buyers until Sep. 13.

Team
VibeHub’s team is led by a trio of software developers with past experience in the virtual and augmented reality space. One of its co-founders, Matthew Myers, is a musician from a petroleum engineering background who transitioned into cryptocurrency after years as an engineer for downhole drilling operations in North America. VibeHub’s UX developer Fred Bender had previously developed VR gaming and marketing experiences in the automotive, leisure and sports industries.

Scam of the Week

0x had experienced a flood of phishing attempts during its token sale, including a number of fake Twitter handles leading to fake 0x wallets. It closed its Slack channel to new users a couple of days into the sale due to a multitude of spam and scam accounts attempting to phish users. The Slack has since been reopened.

LOL

Television network HBO may be trying to acquire bitcoin to pay off hackers that stole 1.5 terabytes’ worth of scripts, unaired episodes, internal documents and emails back in July. The hacker(s), who identified themselves as “Mr. Smith,” demanded up to 6M USD worth in bitcoin. An email released last week from an IT employee at HBO read, “As a show of good faith on our side, we are willing to commit to making a bug bounty payment of $250,000 to you as soon as we can establish the necessary account and acquire bitcoin.”

Token Report is an independent financial information service founded by Galen Moore and Peter Vessenes. Galen is a financial journalist with a background in startups, venture capital and launching news sites. Peter is a co-founder of the Bitcoin Foundation, and launched the first VC-backed Bitcoin company in 2011. He is managing director at New Alchemy, a boutique consulting and investment group based in Seattle, Wash., that is making a pre-seed investment in Token Report.​

Nothing contained in Token Report materials or posted at tokenreport.com constitutes an offer or a solicitation of an offer to buy or sell a security, financial instrument, or other category of asset, or investment advice or recommendation of a security, financial instrument or other category of asset. Tokens involve risk and are not suitable assets for everyone. Token Report believes its information was obtained from reliable sources but does not guarantee its accuracy or completeness and accepts no liability for losses arising from the publishing of this information. The information provided by Token Report is not a substitute for financial, legal and other professional advice. Each individual should always consult his or her own financial, legal or other professional advisors and discuss the facts and circumstances that apply.