Official Newsletter of 2/4

Bitcoin continues its consolidation around the $3,500 range as it has since late November. The bear market is continuing to claim victims — first there were the large scale layoffs at Consensys, and now NEM announced a restructuring of its project and team. This comes as something of a surprise, as NEM has been a mainstay in the top 20 in terms of market cap. It’s unclear what this restructuring will entail, but the closure of regional teams and many layoffs seem likely as the NEM Foundation stated they had just one month of funding to continue at the current rate. Meanwhile, XRP and TRX have done well against Bitcoin, and both have risen on the rankings, although 1% Bitcoin drops are still correlated with much greater losses across the altcoin space. Sentiment in the market was perfectly captured on Wednesday, when Tether was the fourth largest cryptocurrency by market cap.

(Taken on 2/4/2019 at 10:28:26 PM US East Coast Standard Time from CoinTelegraph)

Monthly Pivots

(Taken on 1/28/2019 at 11:14:09 AM US East Coast Standard Time from DailyFX)

Weekly Pivots

(Taken on 1/28/2019 at 11:14:09 AM US East Coast Standard Time from DailyFX)

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Business

Binance Adds Credit Card Support

The largest altcoin exchange announced support for Visa and MasterCard payments on Thursday. The announcement was expected to bring great enthusiasm to the market and perhaps lead to a surge, so of course it didn’t . Fees for credit card transactions are flat at 3.5%, which will remain a large deterrent for anyone capable of OTC or bank transfer purchases. Nonetheless the introduction of fiat support is a legitimization for the platform which looks to add more exchanges and attract institutional money in parallel to the hotly anticipated Binance decentralized exchange.

Crypto Exchange ‘Kraken’ Acquires Futures Trading Platform

Kraken has acquired “Crypto Facilities” in a $100 million deal. As this was the largest in the industry since 2019, this brings new value to Kraken’s customers as they can now offer positions on more price movements. Additionally, users will now be able to trade beyond the traditional day hours of most US holdings.

Still, while this large acquisition is promising fuel for a growing company in a crowded market, the US-based Kraken exchange will not offer these new futures trading services to US customers at this time.

Canada Exchange Founder Reportedly Missing or Dead

Canadian exchange QuadrigaCX is missing an estimated $145 million in digital assets after the founder, Gerry Cotten, passed away on December 9th. A Nova Scotian creditor report said that the firm was “unable to locate or access the funds.” The fund only has $296,000 in cash but owes $198,435,000 to its user base. Because Cotten was responsible for holding the digital keys to the “cold wallets” that stored many of the users’ holdings, the company has been unable to find these keys after his alleged passing.

EY has been hired to monitor the wallets so that if there are any transactions made using those keys, they will hopefully be identified. This story has brought some bad press to QuadrigaCX, but the company hopes that by hiring an independent 3rd party, they can assuage some skeptics’ assertions that they are involved in the disappearance of the digital keys.

Bitgrail founder “The Bomber” has assets seized to return assets to customers

The now infamous operator of the Bitgrail exchange, Francesco Firano, faced an Italian Bankruptcy Court in late January and was held at fault for the hack of 17 million NANO, the equivalent of roughly $170 million. Firano was known by the online pseudonym “The Bomber”, which he likely regretted when interacting with the judge who ordered the seizure of his personal assets. This included his car, the make and model of which is unknown. However, given the fact he is Italian and made a considerable fortune in the cryptocurrency space at one point, we might speculate that it might be shortened to a five letter word beginning with “L” and ending with “o”.

More details of the Bitgrail hack came to light during the case. The largest bombshell was the emergence that the funds had actually been taken between July and December of 2017, and not when Firano reported them stolen in February 2018. This makes the issue much worse, because Nano was almost 100 times more valuable by the time he went public with the alleged hack. It also allowed Firano to transfer ownership of Bitgrail from a sole proprietorship to a limited liability company, in an attempt to limit his personal losses. In addition to the personal assets seized, the court has taken possession of millions of dollars worth of crypto on the Bitgrail exchange and appointed trustees to assist the victims of the hack in receiving their claims.

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Regulation

South Korea Continues Ban on Crypto ICO’s

The South Korean government voted this week to maintain its current ban on domestic ICO’s due to it’s “high-risk nature.” South Korea has long been a center for booming crypto growth; however, the government has lashed back at private industry’s abuse of regulatory loopholes by “establishing paper companies in overseas markets” such as Switzerland or Japan.

At a time when the crypto industry’s future is uncertain, South Korean government officials seek to curb both foreign and local companies’ rapid domestic growth. Naturally, companies that have huge presences in South Korea, like WhatsApp competitor KakaoTalk, are pursuing overseas growth opportunities.

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Hacking

Cryptopia hack continues, with exchange said to reopen in February

In mid-January a hacker seized control of the private keys of New Zealand-based crypto exchange Cryptopia and began extracting Ethereum and ERC20 tokens from user wallets. Six unsuspecting users seem to have topped up their accounts in the meantime, and a further 1,675 ETH were stolen on Jan 29. New Zealand police apparently told investors the exchange will reopen for business in early February, in a letter dated January 25th. The ongoing draining of assets could affect this timeline, and it is unclear if affected users will receive refunds.

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What’s on the Horizon?

Fidelity Rumored March Launch of Bitcoin Custody Service

With the ever growing user base in crypto and blockchain technologies, large firms with consulting branches like Deloitte, JPMorgan, and Fidelity are continuing to look into these new ventures. Fidelity has nailed down a March timeline for the launch of its Bitcoin custody service. The crypto community has long awaited the news that institutional investment is coming, and this new service by Fidelity directly targets large investors like hedge funds. Support for Bitcoin will be first on the priority list, hopefully soon followed by Ether.

Further readings we found interesting!

  1. CBInsights 2019 FinTech Trends to Watch

https://www.cbinsights.com/research/report/fintech-trends-2019/

2. TokenDaily: Blockchain Privacy: Equal Parts Theory and Theater

3. A Crypto Thesis by Joey Krug (Co-CIO of Pantera Capital)

https://medium.com/cryptolawreview/against-szabos-law-for-a-new-crypto-legal-system-d00d0f3d3827

4. Against Szabo’s Law, For a New Crypto Legal System

https://medium.com/cryptolawreview/against-szabos-law-for-a-new-crypto-legal-system-d00d0f3d3827