Bitcoin Pioneer Jeff Garzik Subpoenaed in 4 Bln Lawsuit Against Craig Wright

Bitcoin Pioneer Jeff Garzik Subpoenaed in $4 Bln Lawsuit Against Craig Wright


Software engineer and Bitcoin (BTC) pioneer Jeff Garzik

has been subpoenaed by a United States District Court in connection with the $4 billion lawsuit against Craig Wright, according to a document Garzik posted in a tweet on March 15. The suit was initially filed last February with the U.S. District Court of the Southern District of Florida, with the family of David Kleiman —  a computer scientist, whom many suspect to have been one of the developers of Bitcoin and blockchain technology — alleging that Wright stole up to 1.1 million BTC after he passed away.

Following Kleiman’s death in 2013, Wright, who proclaimed himself to be Bitcoin creator Satoshi Nakamoto, contacted his estate, allegedly claiming to want to help dispose of the Bitcoin fortune. Kleiman’s family claims that Wright did not return the funds. The official complaint states that Wright “forged a series of contracts that purported to transfer Dave’s assets to Craig and/or companies controlled by him. Craig backdated these contracts and forged Dave’s signature on them.”

Wright subsequently requested the court to dismiss the lawsuit against him, however the court rejected the request. The court document confirms that “the Court finds that Plaintiffs have sufficiently alleged a claim for conversion.” Now, the subpoena calls Garzik to appear in court and reveal any evidence to the “personal theory” that Kleiman was Satoshi Nakamoto. The subpoena also requests to provide all communications, agreements and documents related to both Wright and Kleiman.

Additionally, the document asks Garzik to provide information concerning Bitcoin mining for the period between January 1, 2009 and April, 2013, and refers to the search for documents related to Silk Road, Liberty Reserve,  Mt. Gox, and the Prometheus Project. The subpoena also asks for any communications with financial cryptographer Ian Grigg, CEO of Centre for Strategic Cyberspace + Security Science, Richard Zaluski, and early Bitcoin investor Roger Ver, among others. Last November, commenting on various hypotheses as to the Bitcoin creator’s identity,

Garzik said:

"My personal theory is that it’s [Satoshi Nakamoto] Floridian Dave Kleiman. It matches his coding style, this gentleman was self taught. And the Bitcoin coder was someone who was very, very smart, but not a classically trained software engineer.”

Article Produced By
Ana Alexandre

Total change in her career took Anastasia into the world of analytics and business information as a researcher and translator in 2010. Some time later she got into FinTech, a dynamically developing segment at the intersection of the financial services and technology. Ana joined Cointelegraph in September 2017.

French Cybersecurity Agency Grants Security Certificate to Ledger Nano S Hardware Wallet

French Cybersecurity Agency Grants Security Certificate to Ledger Nano S Hardware Wallet


The Ledger Nano S from French crypto hardware wallet firm Ledger

has received a First Level Security Certificate (CPSN) from France’s national cybersecurity agency, ANSSI. The development was shared with Cointelegraph on March 18. The National Cybersecurity Agency of France (ANSSI) reports to the Secretariat-General for National Defence and Security (SGDSN) in order to assist the French Prime Minister in matters of defence and national security. According to their list of certified products, 122 out of 261 products that ANSSI has started evaluating since June 1, 2018, have been certified. Products aspiring to receive a CPSN certificate undergo a series of evaluations by an ANSSI lab, with testing for multiple attack scenarios that challenge the product’s security. Evaluations span “firewall, identification, authentication and access, secure communications, and embedded software.”

Claiming a crypto hardware wallet industry first, Ledger underscores the importance of receiving an independent third party certification to attest to the security of its offering, and says the CPSN for Ledger Nano S is the beginning of an overall effort to certify all of their products. The blog post outlines that Ledger also operates its own in-house security evaluation “Attack Lab,” dubbed Ledger Donjon, which tests products’ resilience for a variety of threat scenarios. The company has also reportedly developed a custom operating system, BOLOS (Blockchain Open Ledger Operating System), to couple software and hardware strategies that enhance security.  

According to the blog post, the CPSN certificate covers a gamut of core embedded security functions, including a true random number generator, which is created via hardware and then post-processed through BOLOS, in compliance with security guidelines established in France’s Security General Referential. Other CPSN-certified security functions include a root of trust — which ensures that a given Nano S is authentically issued by Ledger — end-user verification measures, such as mandatory PIN numbers for accessing services, and post-issuance capability, which occurs over a secure channel.

As Cointelegraph reported last December, researchers have claimed they were able to hack the Ledger Nano S, as well as crypto hardware wallet Trezor One, and Ledger’s most expensive hardware wallet offering, the Ledger Blue. The day after the report, Ledger argued that the reported vulnerabilities in its hardware wallets were not critical. This February, Ledger apologized for — and pledged to remedy —  issues with a recent firmware update for Nano S, which had inadvertently decreased the device’s storage capacity.

Article Produced By
Marie Huillet

Marie Huillet is an independent filmmaker, with a background in journalism and publishing. Nomadic by nature, she’s lived in five different countries this decade. She’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives.

Coinbase Pro Increases Fees Updates Market Structure to Increase Liquidity’

Coinbase Pro Increases Fees, Updates Market Structure ‘to Increase Liquidity’


Major United States-based cryptocurrency exchange Coinbase

announced a new market structure for its professional trading platform, Coinbase Pro, in a blog post published on March 15. Per the announcement, the changes aim to increase liquidity, enhance price discovery and ensure smoother price movements. The changes include a new fee structure, reportedly designed to increase liquidity, updated order maximums, new order increment sizes, the turning off of stop market orders and added market order protection points.

According to the post, Coinbase Pro and Coinbase Prime — the firm’s institutional trading platform — will cease their support for stop market orders. The announcement further explains that all stop orders must now be submitted as limit orders and include a limit price. On the other hand, the market protection points that will be introduced both to Coinbase Prime and Coinbase Pro users will amount to 10 percent for all market orders. The statement explains that market orders that move the price more than 10 percent will stop executing and return a partial fill.

Lastly, the post warns the exchange’s user base that the platform will be offline on March 22 from 6:00 p.m. to 6:30 p.m. PDT. The changes were met with some skepticism and negativity from the crypto community on social media. Economist and trader Alex Krüger complained on Twitter about “Coinbase Pro raising fees for smaller clients by 33% while lowering fees for larger clients.” The same user also further commented that “in a rational world, most Coinbase users would now move to Binance.”

In the same Twitter thread, Krüger also questioned Coinbase’s decision to disable stop market orders, claiming that stop-limit orders sometimes fail to execute because of slippage, suggesting using far off limits on limit orders as a workaround. Still, Krüger also admitted that those changes should lead to increased liquidity and trading activity. Another crypto trader on Twitter suggested that the new fee structure is seemingly targeting new users entering the cryptocurrency space,


“Pretty random day to hike all the fees up, Coinbase anticipating a new bull run perhaps?”

As Cointelegraph recently reported, Coinbase Pro announced support for altcoin Stellar Lumens (XLM). Just yesterday news broke that publicly traded U.S.-based company Riot Blockchain has filed with the Securities and Exchanges Commission to launch a new regulated cryptocurrency exchange, called RiotX, in the U.S. by the end of Q2 2019.

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

The SEC’s Guidelines and Statements Show That It’s Slowly Learning to Accept ICOs

The SEC’s Guidelines and Statements Show That It’s Slowly Learning to Accept ICOs


Initial coin offerings (ICOs) may be less fashionable

than security token offerings (STOs) right now, but that hasn't stopped the United States Securities and Exchange Commission (SEC) from keeping its beady eye trained firmly on them. Ever since it published its investigation into the decentralized autonomous organization (DAO) in July 2017 and declared that ICO tokens can be (and often are) securities, it has been producing a variety of guidelines and warnings on ICOs for investors.

Initially, its notices were used to emphasize the potentially fraudulent or dangerous nature of initial coin offerings, with its first-ever Investor Bulletin on ICOs concluding with a summary of "potential warning signs of investment fraud." However, even if it followed this up with a number of investor "alerts,” its current guidelines have taken a more balanced tone, treating ICOs as an established feature of the financial landscape that may nonetheless require a certain degree of diligence on the part of investors.

And on the whole, the industry welcomes this newfound balance, as well as the more measured approach the SEC has taken to crypto. That said, certain industry groups are calling for additional and clearer guidance from the SEC, since there's a feeling that certain grey areas still exist in the commission's classification of cryptocurrencies, with the Blockchain Association speaking of a "growing sense of urgency" that such questions be soon resolved.

Current guidelines

Even though the SEC's updated guidelines have reportedly been available since last March, it only recently began promoting them on social media, with tweets from February and the end of November inviting the public to learn five things it needs to know about initial coin offerings. For the most part, these five points don't present any radically new information, even if they might prove useful to ICO newcomers. Nonetheless, their presentation as digestible nuggets of info — rather than as sections of longer reports or statements — reveals an appreciation on the SEC's part that cryptocurrencies are being sought out by “regular” consumers, as well as by experienced traders interested in alternative financial instruments. And such a realization is borne out in the basic, easy-to-understand format of the five guidelines, as shown and explained below:

  • "ICOs can be securities offerings."
    This is essentially a warning that cryptos offered in a token sale may fall under the jurisdiction of the SEC, and may therefore need to be registered with the commission.
  • "They may need to be registered."
    Once again, another warning that some tokens may need to be registered with the SEC.
  • "Tokens sold in ICOs can be called many things."
    A warning that simply having a different or unusual name won't stop a token from being classified by the SEC as a security.
  • "ICOs may pose substantial risks."
    A warning that some ICOs may be scams. This point also includes a warning that, even if an ICO isn't fraudulent, sold tokens are at risk of being lost, hacked or having their prices manipulated.
  • "Ask questions before investing."
    Advice urging consumers to obtain clear answers to any questions or concerns they might have before buying any tokens.

The SEC's guidelines also include four additional pointers each for investors and "market professionals" (i.e., exchanges, brokers). With regard to the extra investor advice, this expands upon the points made in the five warnings above. For example, investors are encouraged to research how tokens will be traded, to research the individuals and companies offering the tokens, to be aware that tokens may be traded internationally (and may therefore escape the SEC's enforcement), and to be suspicious of offerings that are "too good to be true.”

Conversely, market professionals (i.e., exchanges) are advised in the additional guidelines specifically for them to uphold securities laws, to register if they sell securities, and to ensure that they protect the interests of investors and their customers. As with the guidelines for investors and the general public, most of the emphasis is placed on the fact that tokens can be — and frequently are — securities, given that they often promise future returns (one of the key components of the Howey Test). And while there are still certain issues left to be resolved (see below), this emphasis on the applicability of securities law is welcomed by the Blockchain Association’s Kristin Smith, with the director of external affairs for the Washington D.C.-based lobbying group telling Cointelegraph that the SEC's latest guidelines are a

positive step for the industry.

"It’s helpful that the SEC has been clear that organizations using tokens to raise funds must comply with securities laws, but the nature of these projects means that there is still a grey area for some tokens. We think that makes a lot of sense that some tokens be treated as securities because it helps close the information gap between investors and creators of a project. It’s a complex environment, so having some clarity on that issue is key."

Softening up

Despite containing plenty of warnings about the risks of ICOs, the SEC's latest guidelines appear to represent a tangible step forward in terms of treating crypto as a legitimate area of investment. Back in the first half of 2018, SEC Chairman Jay Clayton was talking about being "shocked" by the level of fraud the commission had encountered in the ICO space, while at the same time, announcing and applauding efforts by Canadian and American securities officials to crack down on ICO-related scams. He said in April at a

conference in Chicago:

"The fraudsters flocked to the new and attractive space. I guess that shouldn’t surprise me, but it does."

Such public remarks gave the impression that the SEC regarded ICOs as a mostly illegitimate vacuum in which opportunists were effectively robbing the gullible. And even though some of Clayton's early remarks indicate that the SEC saw genuine potential in token sales, official statements and bulletins from the commission reinforced this impression. In July 2017, for instance, the SEC issued an Investor Bulletin, which contained many of the same pieces of advices as those given in the latest guidelines, yet the two concluding sections of the

statement focused exclusively on fraud.

"If fraud or theft results in you or the organization that issued the virtual tokens or coins losing virtual tokens, virtual currency, or fiat currency, you may have limited recovery options. Third-party wallet services, payment processors, and virtual currency exchanges that play important roles in the use of virtual currencies may be located overseas or be operating unlawfully."

Similarly, in August 2017, it published another Investor Alert that not only concentrated on ICO scams, but also apprised would-be investors about the danger that sold tokens would be subject to "pump-and-dump" and market manipulation frauds.

The alert declared:

"The SEC’s Office of Investor Education and Advocacy is warning investors about potential scams involving stock of companies claiming to be related to, or asserting they are engaging in, Initial Coin Offerings (or ICOs). These frauds include ‘pump-and-dump’ and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies."

Over the course of 2018, the SEC adopted a gradually less stringent and suspicious attitude toward ICOs and crypto, even if the commission reported in November that it investigated dozens of token sales in the previous 12 months, and even if it closed down a handful of coin offerings. This relative softening is apparent in its latest guidelines, but it's also apparent in some of the recent speeches and pronouncements given by SEC officials, as

highlighted by Smith.

"In general, the SEC has taken a measured approach as they assess how to regulate crypto tokens. As an industry, we think a couple of recent speeches set the right tone: Director Bill Hinman spoke on the topic of decentralization last June and Commissioner Hester Peirce gave a general assessment of regulatory issues earlier this month."

The assessment Smith is alluding to here was when Peirce stated that the SEC's delay in coming out with clear, decisive regulation should give the crypto industry more leeway to mature according to its own internal dynamics and logic. While Peirce — or “Crypto Mom,” as she's often referred to — is one of the more crypto-friendly individuals at the SEC, her comments at least offer indication that there are now people at the commission who view the industry positively, and don't want to restrict or warn against it.

It's likely that such a softening of the SEC's sentiment goes hand-in-hand with two things. First of all, having taken a harder line on ICOs towards the end of 2017 and through 2018, the Commission can now feel assured that it has a better handle on coin offerings, and that it can be more moderate and measured in its declarations.

Secondly, the fact that the ICO and wider crypto markets have settled down over the past few months has also helped to relax the SEC's attitude, even if it still prefers to highlight the risks rather than the benefits of ICOs. This is something that has happened with United Kingdom regulators, for example, and it's also something that has been helped by exchanges and token issuers, which have eagerly sought to gain either licensing or exemption status from the SEC.

For instance, research published by MarketWatch in January found that there had been a 550 percent increase in 2018 in companies seeking authorization from the SEC to hold token sales. If nothing else, this rise has shown the SEC that, even if there are scammers out there, the industry is, on the whole, a very serious one.

More detail please

But even though the SEC has, over time, placed less emphasis in its notices on the potentially fraudulent aspects of ICOs, the crypto industry still isn't entirely satisfied with its current guidelines and with its current approach. The Blockchain Association, for one, is satisfied that the commission's latest advice on ICOs has been simplified and made more accessible, yet Smith reports that the trade association is calling for greater clarity from the SEC on just when exactly tokens

are and aren't securities.

"We do urgently need additional, detailed guidance on how tokens that we used in decentralized networks should be classified. There’s a strong argument that they shouldn’t be considered securities. This is the biggest question that the industry and regulators are grappling with today."

So far, the SEC has acknowledged that at least some cryptocurrencies (e.g., Bitcoin and Ethereum) aren't securities, while recent speeches have taken a more favorable stance toward crypto. However, Smith asserts that this doesn't go far enough for the industry and doesn't provide it with

enough certainty for the future.

"These speeches are not formal guidance and there remains a growing sense of urgency that we need to answer the outstanding questions soon, because that lack of clarity is preventing developers from pursuing projects here in the United States. The questions before the SEC are very complex. Their position has become clearer over time, but there are still outstanding questions that need to be answered."

It isn't entirely clear when the outstanding questions will be answered, something that may be disconcerting for any startup or company flirting with the idea of having a token sale. Still, other industry voices agree with the Blockchain Association in affirming that the SEC nonetheless has a more or less balanced approach to ICOs and to crypto, and hasn't tried to be too restrictive. This is the view taken by Iqbal V. Gandam, the

chairman of CryptoUK:

"I think the approach is balanced. They [the SEC] have not said that they are a poor/risky investment, but simply stated that the investor needs to be cautious – as is true with other investments. I also do not feel they view all crypto to be securities. They have linked to a recent hearing/article which highlights a particular crypto [the 2017 DAO investigation] and how it was deemed to be a security. So again being cautious but at the same time giving freedom to token creators."

The SEC may not have issued formal guidelines or rulings on ICOs, but Gandam's comments support the idea that it has, despite the initial wariness of ICOs, given them space to operate and grow. Of course, it's still arguable that crypto could grow even faster if the SEC produced detailed formal guidelines, but for now, its current advice shows that it has reached a grudging acceptance of token sales, since otherwise it would have warned investors and consumers away from them altogether.

Article Produced By
Simon Chandler

Simon Chandler is a journalist based in Hove, UK. He writes mostly about technology, with his specialties including cryptocurrencies, AI, VR, and social media. He also occasionally writes about politics, culture and music, and has contributed to the likes of Wired, the Daily Dot, the Verge, Computer Weekly, Techcrunch, Bandcamp Daily, the New Internationalist, the Kenyon Review, and Tiny Mix Tapes

Riot Blockchain Plans Launch of Regulated Cryptocurrency Exchange in the US

Riot Blockchain Plans Launch of Regulated Cryptocurrency Exchange in the US


Publicly traded United States-based company Riot Blockchain

has filed with the Securities and Exchanges Commission (SEC) to launch a new regulated cryptocurrency exchange called RiotX in the U.S. by the end of Q2 2019. The regulator published the documents on March 14. The company declares in the filing that its subsidiary, RiotX Holdings Inc, would operate the new exchange. Furthermore, the exchange’s banking services would be handled by an Application Programming Interface (API) created by software company SynapseFi.

The API is planned to, among other functions, serve as a security enhancement by tracking user location in order to prevent fraudulent use of the service. For instance, improper use would include the use of the exchange in U.S. member states where it is not allowed, more precisely Wyoming and Hawaii. RiotX users would be allowed to create accounts connected to accredited banking institutions in the U.S., and transfer and hold both fiat and cryptocurrencies. Per the filing, the exchange will also be collaborating with exchange software provider Shift Markets.

As Cointelegraph reported in August last year, the SEC had intensified its investigation into crypto mining firm Blockchain Riot, which first came to the regulator’s attention in April 2018. The SEC’s investigation and subpoena information request began after Riot Blockchain changed its name to include blockchain at the peak of industry hype, and shifted their focus from biotechnology to mining. The regulator had previously noted that firms that changed their name to include blockchain would face increased scrutiny.

More recently, a dedicated analysis by Cointelegraph provides details about another similar instance: Long Blockchain Corp., previously known as Long Island Iced Tea, a publicly traded company that shifted from its beverage production business to mining. As of the beginning of March, Long Blockchain Corp. sold their beverage business, more than a year after their name change.

Article Produced By
Adrian Zmudzinski

Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.

The Tipping Point: Kroger Starbucks May Ignite Retail Crypto

The Tipping Point: Kroger, Starbucks May Ignite Retail Crypto


It's no secret that cryptocurrencies don't receive many plaudits

in the mainstream media as reliable means of payment. Critics have even claimed that Bitcoin "sucks" as a payment mechanism. Yet, despite that blinkered skepticism, cryptocurrency payments actually grew last year. Payment processor BitPay reported a "record" $1 billion in transaction revenue in 2018, with its business-to-business (B2B) operations increasing by 255 percent compared to the previous year. Meanwhile, the use of cryptocurrencies in such economically unstable countries as Venezuela and India has surged, as people turn to the likes of Bitcoin and Dash to escape from increasingly worthless national currencies.

These are all encouraging developments, and they've become more encouraging in recent months, with growing interest in crypto payments from major retailers. From Kroger to Starbucks and Rakuten, big corporate names have begun flirting with Bitcoin and the Lightning Network as a payment channel, as well as with other cryptocurrencies. Their interest comes amid rising disenchantment with legacy payment systems, stoking hopes that a few more big converts to crypto payments could provide an all-important tipping point toward widespread adoption.

However, while events appear to be moving in the right direction for crypto payments, experts agree that it will take more than a few isolated use cases before the industry will see adoption on a larger scale. Added to this, payment interfaces need to be improved and made more consumer-friendly. It's only with the combination of technological effectiveness and corporate adoption that the global public will begin using crypto as money.

Kroger struck by lightning?

At the beginning of March, supermarkets giant Kroger — the 17th-largest company in the United States — revealed that it would stop accepting Visa credit cards at over 250 of its stores. "Visa has been misusing its position and charging retailers excessive fees for a long time," said Kroger executive VP Mike Schlotman in a statement, with the retailing giant also explaining that Visa’s fees were the highest of any of the credit cards it accepted.

What's interesting about this episode is that members of the crypto community quickly swooped in to make the case for Kroger to accept Lightning Network payments. On Twitter, Morgan Creek Digital founder Anthony “Pomp” Pompliano reached out on March 2 to the retailer's leadership team, stating that the "Morgan Creek Digital team will fly to meet them and get them hooked up with the Lightning Network nationwide." Even more interesting, Pomp followed this up on March 3 with a tweet announcing that he had just "finished up first call with someone on Kroger Digital team," and that his followers should "stay tuned" for more updates.

It's hard to say just how far Kroger will run with Pompliano's offer, yet industry figures are more or less unanimous in their views that adoption of Bitcoin payments by a giant like Kroger would be a watershed moment for the industry. "Adoption of Lightning Network by a major retailer would definitely be a big deal for the entire crypto space," says Vilius Semenas, the chief commercial officer at crypto-payment processor CoinGate. "For bitcoin, exposure to real consumers on such a scale could only do good and pave the way toward another level of adoption."

According to Semenas, there's certainly an appetite among major retailers for a new payment network to replace legacy systems. "The card payments industry is unique in that Visa and MasterCard control the lion’s share of the consumer base," he told Cointelegraph. "At the same time, innovation adoption in this space takes a long time because the market is two-sided and needs adoption from both consumers and retailers. Retailers are naturally frustrated, because they have little-to-no ability to affect card payments, and they would probably turn to alternative payment rails if they could."

CoinGate isn't the only crypto-payment processor who suspects that such retailers as Kroger would prefer to move to more efficient and cost-effective payment systems. BitPay's director of product, Sean Rolland, also told Cointelegraph much the same thing, even if he suspects that it will be a long time before existing systems are replaced by crypto-based alternatives. "No business enjoys high fees," he said. "Legacy payment systems are not going completely away anytime soon, but retailers should always be evaluating better solutions."

Starbucks, Rakuten, Birks Group dip their toes

Aside from Kroger, there are signs that other big players are entertaining the idea of moving to the Lightning Network and crypto payments. Most notably, Starbucks will begin accepting Bitcoin payments at its U.S. outlets by the end of 2019, according to industry rumors. This acceptance comes as part of an equity deal with Bakkt, a cryptocurrency exchange and payments platform being launched later this year by Intercontinental Exchange (ICE), the operator of the New York Stock Exchange (NYSE).

Back in August, the coffee giant was revealed as one of Bakkt's key partners, alongside Microsoft and consultancy BCG. According to the press release announcing Bakkt and its partnerships, Starbucks would not only be working with Bakkt to create its platform, but it would also be using the platform to accept crypto payments. In other words, even though the latest reports regarding Starbucks' imminent acceptance of Bitcoin payments are unconfirmed, the company itself had already confirmed that it will be doing this sooner or later, as explained in August by its VP of partnerships and payments, Maria Smith.

"As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks," Smith said on the occasion of Bakkt's announcement. “As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers."


This is precisely the arrangement that's now rumored to be launching

toward the end of the year. Reports indicate Starbucks will accept Bitcoin payments at its American outlets, but it will immediately convert these to fiat, as indicated by its initial press release from August. So even though the exact launch date hasn't been confirmed, this will prove a massive boost to Bitcoin and crypto payments, and it's hard to imagine that other big companies won't follow Starbucks' lead. Right now, there are no firm signs that other retailers as big as Starbucks or Kroger will begin accepting crypto payments anytime soon. However, there are a steady supply of slightly less high-profile companies (less high-profile in the U.S., at least) that have begun accepting such payments, or which will do so soon.

In November, Birks Group — one of Canada's largest and oldest jewellery retailers — announced that it had begun accepting Bitcoin at eight of its 30 stores in Canada. And in January and February, it became increasingly likely that Rakuten — Japan's largest e-commerce website — would begin accepting crypto, after it established a new payments subsidiary and announced an update to its Rakuten Pay app that would feature support for cryptocurrency payments. You can still count such companies on one or two hands. However, given their size and clout, their movements into crypto payments are likely to put greater pressure on their rivals to act similarly. As BitPay’s Rolland affirms, "The more retailers that accept bitcoin, the better."

The path has hurdles

Despite this early movement in the direction of crypto payments, there are still a number of significant obstacles in the way of widespread adoption. Perhaps most difficult of all, there's the chicken and the egg problem: How can big companies adopt crypto payments if not enough consumers hold and use crypto, and how can most consumers come to hold and use crypto if not enough big companies adopt crypto payments? Acknowledging that many retailers are looking for new payment channels, CoinGate's Vilius Semenas nonetheless warns they're not likely to adopt any channel that doesn't already boast a critical mass of users. "The problem is that there isn’t a payment system adopted widely enough by consumers," he said. "And it is virtually impossible to get consumers to effectively switch to another payment form other than cash."

This is arguably why there aren't more retailers like Kroger, Starbucks and Rakuten, since only around 5 percent of Americans own at least one kind of cryptocurrency. It's also why it might be unwise to get too excited about Kroger or Starbucks providing a “tipping point” for crypto payments, since without mass ownership of cryptocurrencies, other companies aren't likely to be swayed too much by the examples these pioneers set. Again, this is a point made by Semenas, who notes that other instances of adoption haven't resulted (at least, not yet) in waves of copycat behavior:

"Whether this could become a ‘tipping point’ leading to a cascade of other merchants starting to accept bitcoin is uncertain. A few months ago, Ohio adopted bitcoin payments for taxes, for example. But it didn’t lead to other states doing the same yet. It would likely depend on the results of the experiment." There's also the issue that systems like Lightning Network aren't quite ready yet for large-scale deployment. Lightning Network is currently in beta, so the idea that Kroger will drop such processors as Visa in favor of Bitcoin still remains a little fanciful. And as Vilius Semenas notes, many crypto-based payment channels like Lightning Network currently lack the kind of simple-to-use, streamlined interface that would lend them to massive consumer adoption:

"In an ideal world, for a retailer like Kroger, Lightning Network would be the perfect solution to accept consumer payments in a secure, cost-efficient way. Actually, it might be even the only solution that would enable worldwide payments on a scale that Visa and MasterCard currently provide. The major barriers to this would be consumer-friendly technology and convenient interfaces to transact money at the point of sale, rather than capacity constraints of the Lightning Network technology itself." These words of caution aside, Semenas nonetheless believes that "it is most probably just a matter of time for user-friendly applications to get developed." And given that Lightning Network was conceived as recently as 2016 and launched in beta only last March, it has already come a long way. There's no reason to think that it, Bitcoin and other cryptocurrencies won't go even further in the future.

Article Produced By
Simon Chandler

Simon Chandler is a journalist based in Hove, UK. He writes mostly about technology, with his specialties including cryptocurrencies, AI, VR, and social media. He also occasionally writes about politics, culture and music, and has contributed to the likes of Wired, the Daily Dot, the Verge, Computer Weekly, Techcrunch, Bandcamp Daily, the New Internationalist, the Kenyon Review, and Tiny Mix Tapes

SEC Chairman Highlights Investor Protection in Regard to Bitcoin ETF

SEC Chairman Highlights Investor Protection in Regard to Bitcoin ETF


United States Securities and Exchanges Commission (SEC) Chairman Jay Clayton

is still concerned about investor protection when it comes to the commission approving a Bitcoin (BTC) Exchange-Traded Fund (ETF). The SEC chairman spoke about crypto in an interview with FOX Business on March 14.

In the interview, Clayton claimed to be neutral toward digital currencies, saying that he is not a spokesperson against the asset. The SEC chairman explained that he is concerned with the potential for manipulation associated with the space, and wants to

guarantee investor protection:

“What I’m concerned about at the moment is if it can be reasonably demonstrated that the underlying trading is generally not manipulated, it’s happening on reliable venues with good rules and that custody is something we can feel comfortable about.”

While Clayton declined to comment on any specific Bitcoin ETF application, he still noted that there “may be a case where a Bitcoin ETF could satisfy our rules.”

The chairman elaborated:

“I think this technology has and is already demonstrating pretty significant promise, but it’s demonstrating significant promise in the places where it’s consistent with our approach to capital raising in the past.”

Recently, the SEC announced it will soon start the countdown period to approve or disapprove the VanEck/SolidX Bitcoin ETF. After withdrawing the ETF application due to the U.S. government shutdown in late January, the Chicago Board Options Exchange (CBOE) re-submitted the application a week later. Earlier this week, Jay Clayton confirmed his previous statement that Ethereum (ETH) and similar cryptocurrencies are not securities under U.S. law. However, Clayton stipulated that he meant that a digital asset’s definition as a security can change over time.

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Ledger Client Address Issue and Fake Deposits: Community Spots Two Vulnerabilities Related to Monero

Ledger Client Address Issue and Fake Deposits: Community Spots Two Vulnerabilities Related to Monero


This week, at least two seperate bugs related to Monero (XMR)

were reported by crypto community members. The first one allegedly lead to a Ledger hardware wallet user losing around 1,680 XMR (nearly $80,000, as of press time) of his funds after making a transaction. The other vulnerability allowed hackers to make fake XMR deposits to cryptocurrency exchanges.

Anonymity above all: What is Monero and how it works

Monero is a cryptocurrency with an additional focus on anonymity. It was launched in April 2014, when user thankful_for_today forked the codebase of Bytecoin into the name BitMonero. To create the new coin, he relied on the ideas that were first outlined in a 2013 white paper dubbed “Cryptonote” written by anonymous personality Nicolas van Saberhagen. Ironically, BitMonero was soon forked itself by open-source developers and named “Monero” (which means “coin” in Esperanto). It has remained to be an open-source project ever since.

Indeed, Monero has considerably more privacy features compared to conventional cryptocurrencies like Bitcoin (BTC): On top of being a decentralized coin, Monero is designed to be fully anonymous and virtually untraceable. Specifically, it is based on the CryptoNight proof-of-work (PoW) hash algorithm, which allows it to use “ring signatures” (which mix the spender's address with a group of others, making it more difficult to trace transactions), “stealth addresses” (which are generated for each transaction and make it impossible to discover the actual destination of a transaction by anyone else other than the sender and the receiver), and “ring confidential transactions” (which hide the transferred amount). In 2016, XMR experienced more growth in market capitalization and transaction volume than any other cryptocurrency, undergoing almost a 2,800 percent increase, as per CoinMarketCap.

Notably, a lot of that gain could have come from the underground economy. Being an altcoin that is tailor-made for fully private transactions, Monero eventually became accepted as a form of currency on darknet markets like Alphabay and Oasis, according to Wired. Specifically, after being integrated on those trading platforms in the summer of 2016, Monero’s value “immediately increased around sixfold. "That uptick among people who really need to be private is interesting," Riccardo “Fluffypony” Spagni, one of the Monero core developers,

told Wired in January 2017.

"If it’s good enough for a drug dealer, it’s good enough for everyone else."

Currently, XMR is the 13th-biggest cryptocurrency by market cap, with equivalent of over $800 million, according to CoinMarketCap data. Monero’s alleged privacy remains to be a controversial topic, as some suggest that the coin is not, in fact, fully anonymous. In an interview with Bloomberg, United States Drug Enforcement Administration (DEA) Special Agent Lilita Infante noted that, although privacy-focused currencies are less liquid and more anonymous than BTC, the DEA “still has ways of tracking” altcoins such as Monero and Zcash.

Infante concluded:

“The blockchain actually gives us a lot of tools to be able to identify people. I actually want them to keep using them [cryptocurrencies].”

Moreover, as previously reported by Cointelegraph, Monero has been endorsed as “The Official Currency of the Alt Right” by white supremacists like Christopher Cantwell for its focus on anonymity. The privacy-focused nature of Monero has also driven compliance-oriented crypto exchanges to turn the coin down. For instance, in June 2018, Japan-based Coincheck delisted XMR and three other anonymity-focused altcoins to follow Counter-Terrorist Financing (CTF) and Anti-Money Laundering (AML) procedures issued by the local financial regulator.

Bug #1: change address bug with Ledger

Status: pending

On March 3, user MoneroDontCheeseMe started a Reddit thread, claiming that he or she believes to “have just lost ~1680 Monero [around $80,000] due to a bug” while using the Monero app with his or her Ledger hardware wallet. According to the post, the user transferred about 0.000001 XMR from his or her wallet to a view-only wallet, sent another 10, 200 and then 141.9 XMR. Allegedly, before sending the last transaction, MoneroDontCheeseMe had about 1,690 XMR in the wallet and 141.95 XMR in an unlocked balance, which is why he or she decided to send 141.9 XMR. However, after the transaction had been sent, the user’s wallet is reportedly showing a balance of 0 XMR.

Furthermore, according to the Reddit user, the amounts sent and the transactions recorded on the blockchain “don’t line up.” MoneroDontCheeseMe wrote that the 200 XMR transaction actually deducted 1691.001 XMR from the Ledger Wallet, and also that the amounts reported for the 10 XMR transaction are incongruous. Monero core developer nicknamed

binaryfate told Cointelegraph over email:

“My understanding is that the Ledger may have sent the ‘change’ amount to an erroneous one-time destination that the user did not control. For more details you should ask the Ledger team directly, they are working on it and already identified and fixed the bug as far as I know, so it should be pushed shortly.”

Initially, in the comments to the post, Nicolas Bacca, chief technical officer at Ledger, said that their app has been extensively tested, suggesting that could be a synchronization issue. However, several hours later, Ledger developers published a warning on the Monero subreddit, advising users not to use the Nano S Monero app because

“it seems there is a bug with the change address.”

“The change seems to not be correctly send. Do not use Ledger Nano S with client 0.14 until more information is provided.”

The official Monero Twitter account has since retweeted Ledger’s tweet containing a link to the warning. Thus, according to Monero’s binaryfate, the Ledger team has prepared a patch to fix the issue, and is expected to release it in the near future. Cointelegraph reached out to MoneroDontCheeseMe to ask him or her whether this issue is being fixed by Monero or Ledger developers, but he or she appeared hesitant to answer straight away and requested more time. Cointelegraph has also contacted Ledger developers for further comment, but they have not prepared any statement as of press time.

Bug #2: wallet bug enabling hackers to make fake deposits to crypto exchanges

Status: fixed

On March 3, the official account of the Ryo (RYO) cryptocurrency published a Medium post, highlighting a bug in the XMR wallet software that could allow for sending fake deposits to crypto exchanges. According to the post, an email reportedly sent to the Monero Announce mailing list warned platforms using the coin that the Monero Vulnerability Response team received a disclosure concerning a vulnerability. The bug was reportedly related to coinbase transactions (the first transaction in a block, created by miners).

“This essentially means that the attacker can make it appear as if he deposited any sum of his choosing to an exchange,” the post read. The mentioned email also contained the patch preventing the vulnerability from being exploitable. As binaryfate explained to Cointelegraph, first, somebody made a responsible disclosure following the Monero Vulnerability Response Process. Then, an email was sent to the Monero Announce mailing list “warning in advance that both a patch and details of the bug would be released together on the 6th of March.” After that, the Monero developer added that

Ryo published details “right away”:

“Due to this article, the details had been made public and delaying would have caused unnecessary risk. Hence a patch was publicly merged on github, and a new version of Monero tagged right away.”

Indeed, a few hours later, the official Monero account tweeted that the fix for the vulnerability had been written and was awaiting review. As per the GitHub page dedicated to the patch, it appears that the code has been already merged with the main branch, which means that the fix is ready and only needs the new release to be published. Ryo is a code fork of Monero, as per its website. According to the Medium entry, its team fixed the same vulnerability seven months ago. The post also notes that they avoided making a responsible disclosure to the Monero team earlier because of Monero’s “long history of toxic behaviour towards security researchers.”

Furthermore, the post also claims that when discussing the exploit in the Ryo public channel, the author of the post accidentally disclosed another vulnerability, concluding that “Monero might want to get that one patched too.” When asked whether they knew anything about such a bug, the Monero representative answered by saying “you would have to ask the author of the article.” Ryo has not returned Cointelegraph’s request for comment as of press time.

Previous Monero bugs and cryptojacking problems

Monero, being an open-source project, tends to collaborate with its community members to tackle security breaches. Thus, in September 2018, Monero developers successfully eliminated at least two bugs that were reported on its subreddit page. First, there was a burning bug, which Monero promptly fixed and notified “as many exchanges, services and merchants as possible,” to apply the new patch. Secondly, the XMR community reported that the Mega Chrome extension was compromised, leading to its quick removal from the Chrome webstore.

Further, Monero’s privacy features have made it popular among cryptojackers. Thus, last year, more than 526,000 computers were reportedly infected with a cryptocurrency botnet malware called Smominru, which allowed hackers to mine more than $2 million worth of XMR. In February 2019, tech corporation Microsoft removed eight Windows 10 applications from its official app store after cybersecurity firm Symantec identified the presence of hidden XMR coin mining code. The firm’s analysis identified the strain of mining malware enclosed in the apps as being the web browser-based Coinhive XMR mining code. Later that month, Coinhive announced it will stop all its operations on March 8, saying that the project is not “economically viable anymore.”

Article Produced By
Stephen O'Neal

Stephen O'Neal is a Sociology major from Leeds. He's passionate about crypto and all the stuff you can spend it on.

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Coinbase Pro Adds Support for Stellar Lumens

Coinbase Pro Adds Support for Stellar Lumens

Coinbase Pro, the professional offering of United States-based crypto exchange

and wallet service Coinbase, has announced support for Stellar Lumens (XLM) in a blog post on March 13. Per the post, Coinbase Pro will now accept deposits of XLM for around 12 hours before enabling full trading. Coinbase notes that after establishing sufficient supply of XLM, it will open trading pairs in U.S. dollars, euro and Bitcoin (BTC) in phases.

XLM trading will go through three stages before enabling full trading, including limit, market and stop orders. The stages involve “transfer-only,” “post-only,” and “limit-only.” The first two stages will allow users to transfer XLM to Coinbase Pro accounts and post limit orders, while the subsequent one will enable customers to match limit orders. XLM trading will be initially available for customers in Coinbase’s supported jurisdictions, expect the state of New York. Coinbase may add additional jurisdictions at a later time.

Last month, Coinbase Pro added support for Ripple (XRP), that joined already listed Ethereum Classic (ETC), Basic Attention Token (BAT) and privacy oriented altcoin Zcash (ZEC). In the past, these tokens were added to Coinbase Pro, before support for them was eventually extended to and its apps for Android and iOS. The recent addition of XRP to Coinbase was long-awaited by the crypto community. The coin reacted promptly to the news about its listing on Coinbase Pro, turning out to be one of the biggest winners on that day.

However, a report by blockchain research firm Diar stated that XRP breaks one of Coinbase’s requirements to be listed on the platform. In its “Digital Asset Framework,” Coinbase stipulates that "the ownership stake [in a token] retained by the team is a minority stake," while, according to Diar, Ripple holds around 60 percent of the supply in escrow with a release schedule. At press time, XLM has gained around 3.94 percent on the day and is trading around $0.108, according to data from CoinMarketCap.

Article Produced By
Ana Alexandre

Total change in her career took Anastasia into the world of analytics and business information as a researcher and translator in 2010. Some time later she got into FinTech, a dynamically developing segment at the intersection of the financial services and technology. Ana joined Cointelegraph in September 2017.

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Why Market Players Are Enthusiastic About Investing in New Economy’: Expert Blog

Why Market Players Are Enthusiastic About Investing in “New Economy’: Expert Blog


ICO fundraising is still strong despite increased attention

on the part of regulating bodies and saturation of the market. Still, compared to an average seed round venture investment (even considering bias we get due to our dataset’s nature), amount raised stands quite high. This could easily be explained. Not only a bulk of investors are coming from the crypto world, with their understanding of it (or self-confidence) deep enough to invest in Blockchain-related projects more eagerly, but with “it is new Ethereum/Bitcoin” being a recurring theme in projects’ pitches.

All of the market participants were more enthusiastic about investing into “new economy” projects rather than into projects we could label as “traditional,” often with no apparent need for cryptocurrencies/Blockchain technology at all. As for fintech projects, this area has become quite naturally the first field for testing of Blockchain capability for real-world problems. According to research by The BB Fund, based on the data, more than $5.3 bln was raised via ICO in 2017 with $5.1 bln attracted for the last nine months.  There were 1,331 analyzed and only projects raising over $1 mln were considered. According to the research, 60 percent of ICOs have been profitable so far: median return is 2x.

The categorization is quite subjective and is organized as follows:

“Blockchain” category represents all Blockchain infrastructure-related projects. “Cards & Payments” stands for a very broad category of projects, from merchant-serving payment processors to crypto wallets with built-in p2p transfers and other functions. “Decentralized Market” consists of projects, which usually relied in their description on familiar cliché “Decentralized XYZ” – ranging from services’ markets (shipment, logistics, taxi drives) to goods markets (real estate, electricity) and universal markets, aiming any type of good/service imaginable.

While the majority of these projects do not benefit from Blockchain, implement things already implemented and suffer from lack of resources, some of them seem interesting and could be able to survive and prosper. “Crypto Market” category includes any type of exchange or exchange-like vehicles dedicated to crypto. “ICO platform” may refer not only to such platforms but also to accelerators, startup clubs and any sort of a project, which claims it is developing an ecosystem of investors, teams and crypto enthusiasts.

“Identity Verification” and “Advertising” are broad categories, too, with the first one including projects with an emphasis on verification – from people’s identity to identity of food products and content. The second segment includes everything advertising-like – lead generation, promotion, brand influencers’ network. Among other categories we would like to specifically mention businesses referred to as being “commodity”-backed. This term, again, doesn’t always stand for a commodity in common sense (gold or zinc oxide), but also for any tangible real-world asset, which either used as a sort of collateral or may be handled as such.

This distribution not only reflects bigger interest toward Blockchain infrastructure/fintech projects but also higher costs of development of them due to bigger development workload (Blockchain), license and integration-attributed costs (fintech). While valuations and investment attracted are rarely substantiated, investors more willingly allocated larger amounts of money to projects with high capital costs. Also, we could observe sorrowful tendency of poorer-quality projects to originate in Decentralized Market/Betting segments, with seemingly no diversification and original ideas behind them in many cases.

ICO market may be hard to predict at times

A system of simultaneous linear equations describes price dynamics of crypto assets, whether they are more “traditional” coins or ICO-related newly issued tokens, pretty well. While overall demand for crypto assets is defined by endogenous factors (mostly news, investor sentiment and manipulation of “whales”), this being the main factor, defining the value of all crypto markets.

Even if you are not quite familiar with a concept of correlation, you could have already noted that most of the assets usually move in the same direction, every time with exception of a few. This is a phenomenon very familiar for stock market investors too, especially for those involved in trading assets on markets with a high level of political turbulence, for example. You could easily find dependency between the volume of ICO money raised in a given month and ETH price (which are assets mutually influencing each other)- for Bitcoin and Ethereum interdependence in prices is also very characteristic.

However, in the case of ICOs, it is difficult now to attract long-term investors by promising them return some moment in the future– there should be a plan on the startup side how to get to this future as fast as possible at a steady pace. While Blockchain, ICOs, tokenized economy brings completely new technologies and business models to the world, investment principles and basics remain the same: long-term play, serving the real market demand, addressing pains and wishes of people.

Recently Vitalik Buterin wrote:

“All crypto communities […] need to differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society.”

ICO market gives a lot of opportunities for speculations and quick profits, especially due to early-stage “pre-sale” discounts and premiums, and only a few players are ready to play in a long-run. Your investment philosophy should be based specifically on a long-term strategy. The strategy being the development of technologies on the emerging and unbanked markets (Asia, Africa, LatAm), infrastructural implementations to enable and/or disrupt the traditional systems (including bank-as-a-service models and open banking principles) and convergence of crypto and traditional financial worlds, including Blockchain implementation by government bodies.

ICO market as a way of fundraising- promising projects as well as scammers

So far, we could observe several moves on the side of the industry, its main players incentivized and welcomed. They could allow for Blockchain-related technologies and companies to make a breakthrough and for investors to profit. Not only commodity sector, but also some advertising, payments and lending companies make their way into respective industries with the leverage of an ICO. Such as ETHLend (lending), Ripio (micro-lending), UTRUST (crypto payment gateway), BitClave (smart advertising and promotion) and NVB (native video advertising via vlogs and content discovery platform), to name a few recent examples.

For many of these companies, smart contracts and tokens are the only nuisance and it is highly doubtful they would make any use of Blockchain technology (or would be happy with something absolutely decentralized). Venture fund investors, family funds, banks and investment companies start to invest in Blockchain-related projects or Bitcoin funds. Anyway, it doesn’t matter, actually, as liquidity flows blazingly fast in comparison with many other ecosystems. USV, Y Combinator, Foundation Capital, Lux Capital, Winklevoss Capital, Jefferson River Capital LLC and Forsters LLP, Citi, JP Morgan and Goldman Sachs, Wells Fargo, Thomson Reuters, BoA, HSBC, Temasek Holdings etc. – it is hard to name all the family offices, venture funds and banks, which invested in companies developing Blockchain technologies and crypto.

While for those, who raised small and easily convertible sums via ICO fraudulent behavior and negligence it may seem a viable (even punishable by law) way, big players are forced to look for new ways of monetization, products and models, which could pay for all this (rather expensive) story. The biggest ones could probably become investors themselves (which would be bad for current token holders, but not so bad for the ecosystem as a whole), looking for projects to outsource the task of profit-making. This may seem crazy, but with so much money at stake and their future earning often tied to the buying power of their own tokens, companies are forced to look for ways of wealth creation like never before.

Article Produced By
Vladislav Solodkiy

Vladislav Solodkiy is a managing partner at Life.SREDA, Singapore-based fintech-VC, author of The First Fintech Bank’s Arrival book.

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