Hacked Cryptocurrency Exchange Cryptopia Goes Into Liquidation
Copied from https://www.coindesk.com/pax-streamlines-redemptions-in-battle-for-stablecoin-market-share
Cryptopia, the cryptocurrency exchange hit by a major hack in mid-January, has gone into liquidation and suspended trading operations.
The news was announced Wednesday by Cryptopia’s assigned liquidator, professional services firm Grant Thornton New Zealand. Cryptopia confirmed the news on Twitter, as well as on its website.
Possibly signaling changes afoot, Cryptopia website went under maintenance yesterday without any message to the public on its social media platforms. It was first noticed by a Redditor who asked whether the exchange had been hacked again.
Back in January, Cryptopia went offline for a couple of days before stating mid-month that it had “suffered a security breach which resulted in significant losses.” A blockchain data analytics firm estimated after the attack that as much as $16 million in ether and ERC-20 tokens could have lost. Later, in March, the exchange restarted trading services, but still had banking issues.
Grant Thornton said the hack had a “severe” impact on the company’s trade, and despite the management’s efforts to reduce cost and return the business to profitability, it was decided that liquidation was the best path forward for all stakeholders.
David Ruscoe and Russell Moore from Grant Thornton will help Cryptopia secure its assets “for the benefit of all stakeholders,” according to today’s announcement.
“While this process and investigations take place, trading on the exchange is suspended,” Grant Thornton said, adding that the complex investigation will take “months rather than weeks.”
Commenting on Cryptopia’s Twitter announcement, numerous customers have expressed frustration that they were not allowed to withdraw funds since the hack, with some also calling for creditors to organize and take legal action against the exchange.
Ruscoe said:
Grant Thornton is expected to file an initial report on the case next week on the New Zealand Companies Office website.
Cryptopia image via Shutterstock
South Korean fintech firm Dunamu, operator of cryptocurrency exchange Upbit, says it invested 55 billion won ($46 million) in 26 blockchain startups over the past year.
The firm said Wednesday that the investments have been made mainly via its subsidiary Dunamu & Partners, which was launched in March 2018. At the time of the launch, the firm announced a three-year plan to invest 100 billion won ($84 million) in the blockchain industry.
The investments have been into companies that are focused on developing core blockchain solutions, as well as those related to fintech and games, Dunamu said, which also operates the Kakao Stock trading app.
Portfolio companies now include stablecoin-based payments network Terra, fintech startup Rainist and gaming software firm Dalcom Soft, according to the announcement. Peer-to-peer lending platform Honest Fund, online travel agency Tide Square and blockchain-based investment platform Finhaven have also seen investments from Dunamu.
Ryan Lee, CEO of Dunamu and Partners, indicated that the firm will continue to invest in blockchain and fintech startups this year, regardless of their size, stage and region.
“Our goal is to contribute to the healthy growth of the blockchain ecosystem by actively investing in startups with world class technology and services with potential for real-life implementation,” said Lee.
In particular, the firm will focus on companies that will help drive mainstream adoption of blockchain-based services and mobile fintech services, as well as those centered around individual content creators, according to the announcement.
Indeed, earlier this year, Dunamu backed a $3 million seed round for blockchain startup Band Protocol, which incentivizes reliable content producers with token rewards and staking.
The firm added Wednesday that it also partnered with games developer Neptune in April 2018 to set up a 100 billion won ($84 million) fund to invest in blockchain-based gaming companies.
South Korean won image via Shutterstock
Cryptocurrency exchange Binance has announced that it is back online after completing a security upgrade prompted by a recent hack.
Kicking off at 03:00 UTC Wednesday, the upgrade meant that all services were suspended during this period, according to a Binance support message. A two-hour extension to the upgrade was announced this morning as some tasks took “longer than expected.”
Following the upgrade, Binance published an update saying that trading will recommence at 13:00 UTC. Users can now cancel open orders and process deposits, while withdrawals “will be available shortly after trading resumes,” it said.
Deposits and withdrawals have been offline since the hack last week, which Binance said saw 7,000 BTC (worth about $41 million at the time) stolen from the exchange’s hot wallet. Exchange customers would not be affected by the losses, Binance said.
Following the breach, CZ said in a blog post that the exchange would make “significant” changes related to its application programming interface (API), two-factor authentication (2FA) and withdrawal validation to reduce the risk of future hacks.
The exchange did not disclose full details regarding these efforts due to security concerns, but did say it’s also improving risk management and know-your-customer procedures to fight phishing, among other measures at the back-end.
UPDATE – Zhao sent out an update noting that withdrawals “will be open shortly.”
“A new requirement to be logged in while confirming the withdrawal mail was added. It caused a small conflict while using the app so it will be rolled back shortly,” he wrote.
Changpeng Zhao image via Binance
The U.S. Securities and Exchange Commission (SEC) has fined blockchain author Alex Tapscott and his investment firm NextBlock Global over securities violations.
The SEC says that Canada-based NextBlock had been offering securities that were not registered with the SEC “in any capacity” and that false misrepresentations were made about the firm when soliciting investors. The agency has therefore ordered Tapscott, co-author of the book “Blockchain Revolution,” to pay a $25,000 penalty and also issued a cease-and-desist on further securities violations by him or his firm.
The SEC said it had taken into account the remedial acts “promptly undertaken” by Tapscott and NextBlock when agreeing the terms of the settlement. It also said that, following the firm’s payment of a 700,000 Canadian dollar (roughly US$520,000) administrative penalty, it had not imposed a further civil penalty on the company.
NextBlock was launched in 2017, raising $20 millionvia convertible debentures – a type of debt instrument – at the time to invest in blockchain and cryptocurrency companies, the commission said.
The SEC further said that, in order to solicit funds from investors in the U.S., Canada and elsewhere, NextBlock and Tapscott falsely claimed that as many as four “prominent” individuals in the blockchain industry were serving as advisors to the firm.
NextBlock and Tapscott also initiated a second funding round and hired two Canadian investment banks as advisors for the effort, as well as to help list the firm on the Toronto Stock Exchange, according to the order. However, due to media reports of misrepresentations to investors, NextBlock canceled the round and its initial public offering plan.
Later, NextBlock voluntarily initiated court proceedings in Ontario to wind up operations and liquidate its existing digital asset holdings, and return the funds to debenture holders with principal investment plus profits (approximately 140 percent as of March 2019).
Tapscott has voluntarily surrendered his right to collect his share from NextBlock’s profits worth over $2 million, an amount that was retained by the firm and formed part of the distributions to debenture holders, the order states.
Alex Tapscott image via CoinDesk archives
The average assets under management (AUM) of global cryptocurrency hedge funds increased three-fold in the first quarter of 2019, new research indicates.
Consultancy firm PwC and investment firm Elwood Asset Management jointly published a report on Monday, saying that the median crypto hedge fund AUM has grown to $4.3 million at the end of Q1 2019 as compared to $1.2 million in January 2018.
The growth indicates that funds have been “relatively successful” at raising investments despite bearish market conditions during the period, the firms said.
The report, based on interactions with 100 crypto hedge funds, further highlighted that the average fund AUM was $21.9 million as of Q1 2019 and 60% of funds have less than $10 million in assets while only less than 10 percent are managing assets over $50 million.
Crypto hedge funds also performed better than bitcoin last year, the report found. While bitcoin plunged about 72 percent in 2018, the median crypto hedge fund lost only 46 percent over the same period, “indicating that these managers were successfully able to outperform their benchmark.”
However, performance varied based on the type of strategy adopted. For instance, the median “quantitative” fund returned 8 percent in 2018, while the median “fundamental and discretionary” funds performed negatively, with returns of -53 percent and -63 percent respectively, according to the report.
In a separate statement, PwC Hong Kong director Henri Arslanian, said:
Elwood CEO Bin Ren shared similar view saying that there is “increasing evidence of institutionalisation” in the cryptocurrency space, which is a positive step towards digital assets being recognized as an asset class with “true viability and longevity.”
Another report from Crypto Fund Research last October showed that crypto hedge fund launches are spiking to all-time highs. There were 90 launches in the first three quarters of 2018, and the total was expected to reach as high as 120 for the financial year.
PwC image via Shutterstock
Cryptocurrency exchange Coinbase is expanding trading in the dollar-pegged stablecoin USD Coin (USDC) to 85 nations worldwide.
In a blog post Tuesday, the firm said it now offers crypto-to-crypto trading for USDC in those countries on both its retail site Coinbase.com and its Coinbase Pro service.
The firm touted the strengths of the token in the post, saying it offers a stable store of value and can be sent “near-instantly” around the globe. “Unlike other cryptocurrencies, each USDC is backed by $1 USD with monthly transparency audits showing 100% USD backing,” Coinbase said.
USDC could also help in countries where the national fiat currency is unstable, the firm suggested.
Coinbase said:
It further committed to providing more fiat-to-crypto onramps to enable more people to make use of the stable asset.
In the same announcement, Coinbase provided an update on the number of nations it now serves. While a year ago, 32 countries had access to its services, that number now stands at 103, with 50 announced today.
USDC was launched last autumn by a group of firms including crypto finance startup Circle. The CENTRE consortium developed the coin as a means to easily transfer value on public blockchains.
“Crypto assets and blockchain technology will enable us to exchange value and transact with one another … instantly, globally, securely and at low cost,” Circle said at the time.
In February, Coinbase soft launched a service that uses USDC and XRP as a means to make “fast and free” international payments. And earlier today, the exchange said it was opening up XRP trading for residents in New York state.
Coinbase image via Shutterstock
South Korean electronics giant Samsung is planning to bring cryptocurrency and blockchain features to more phones across its Galaxy range.
Citing a press release from Samsung, Business Korea reported Tuesday that the firm would make its digital wallet app available even on lower-cost models and will further expand the crypto features to more jurisdictions.
Chae Won-cheol, senior managing director of the product strategy team at Samsung Electronics’ wireless business division, said:
The Samsung Blockchain Wallet is currently only available on Samsung’s recently launched flagship phone range, the Galaxy S10. The S10 additionally comes with blockchain features such as digital signing and decentralized apps (dapps), which the report appears to suggest may also be added across the Galaxy range.
Business Korea said that Samsung is also in talks with telecom firms such as SK Telecom and KT Corporation (formerly Korea Telecom) about possibly of working together on blockchain-based digital identity verification tools and other initiatives.
Samsung has been wading deeper into the blockchain waters in recent months.
Following the reveal of the blockchain and crypto focus for the Galaxy S10 phones, it notably said it is developing its own blockchain network based on ethereum and may also issue a “Samsung Coin” token in the future. Samsung is also planning to addblockchain technology to its enterprise IT solution packages.
The tech giant also recently invested around $3 million in cryptocurrency wallet startup Ledger.
Samsung Galaxy phones image via Shutterstock
Cryptocurrency exchange Coinbase has launched trading support for XRP for New York state residents.
The San Francisco-based firm tweeted the news Monday, saying that New Yorkers can now buy, sell, convert, send, receive or store XRP on Coinbase.com or via its iOS and Android mobile apps.
After the announcement, the price of XRP jumpedover 20 percent to reach a high of $0.39, according to data from CoinMarketCap. However, the surge also coincides with bullish moves from bitcoin in the last 24 hours.
Coinbase initially added XRP support for its retail platforms in February of this year, but New York and U.K. residents were not included at the time.
The exchange’s list of supported cryptocurrenciescontinues to grow. It currently offers support for bitcoin (BTC), bitcoin cash (BCH), ether (ETH), ethereum classic (ETC), litecoin (LTC), Circle’s USDC stablecoin, zcash, Brave’s Basic Attention Token (BAT), among others.
Coinbase also recently started offering a “fast and free” payments service using XRP and USDC stablecoin. The service is “primarily designed as an educational resource for customers to learn about the benefits of using crypto for cross-border payments,” the exchange’s representative told CoinDesk at the time.
Coinbase image via Shutterstock
HTC’s blockchain phone, the EXODUS 1, now allows users to directly swap between some cryptocurrencies within its native wallet, the Taiwanese electronics giant announced Tuesday.
The new feature comes thanks to a new partnership that sees HTC add the liquidity protocol from decentralized exchange startup Kyber Network to its Zion Vault wallet app.
The addition means users can swap between ERC-20 tokens such as Brave’s Basic Attention Token (BAT) and MakerDAO’s DAI stablecoin, directly in Zion Vault, removing the need to first move tokens to third-party cryptocurrency exchanges. Swaps are entirely done on-chain, HTC said, adding that “fast and secure” crypto-to-crypto trading within mobile applications is key to streamlining the user experience.
Phil Chen, Decentralized Chief Officer HTC, told Coindesk:
Kyber Network CEO Loi Luu told CoinDesk last September that the firm aims to open up ERC-20 tokens to wider use cases, so they can be “seamlessly used for payments, as collateral for lending, investing in funds and so on.” ERC-20 is an ethereum standard widely used to build crypto tokens.
In today’s announcement, HTC said Kyber’s protocol allows decentralized token swaps to be integrated into any application, including wallets, vendors, websites and decentralized applications (dapps).
HTC is further planning to launch another blockchain phone this year, Chen revealed in late April. Last week, he revealed new details indicating that the upcoming EXODUS 1s will be a low-cost option and will notably be capable of acting as a full node for the bitcoin network.
“We think that’s foundational to the whole decentralized internet and just the whole fundamental premise,” he said. “If you don’t own your keys, you don’t own your bitcoin, you don’t own your crypto.”
Chen said that, while the bitcoin blockchain would be large to store on a cellphone, as is required for nodes, he “expects” HTC would provide sufficient memory, explaining:
The EXODUS 1s is expected to retail for between $250 and $300.
Exodus phone image courtesy of HTC
Tether has asked a judge for more leeway to use its cash amid the New York Attorney General’s investigation of the stablecoin issuer and affiliated crypto exchange Bitfinex.
According to new court documents filed Monday, the attorneys for each side failed to come to a consensus on what, precisely, Tether should be allowed to do with its holdings. The NYAG’s office wants to prevent “any affiliated entity” from touching funds in Tether’s reserve and a 90-day injunction.
On the other hand, attorneys for Tether and iFinex, the parent firm of Bitfinex, want a 45-day injunction and for affiliated entities that want to fairly redeem tether to be able to do so.
The case began last month, when the NYAG secured a preliminary injunction, alleging Bitfinex covered up the loss of $850 million by borrowing from Tether’s reserve. (The companies have overlapping management and owners.) A New York State Supreme Court judge ordered the two parties to clarify the order last week.
In a letter to the court Monday, iFinex’s attorneys wrote that, without waiving their previous motion to vacate NYAG’s Ex Parte order entirely, they would agree to certain changes to the preliminary injunction.
The key point, for the crypto exchange, appears to be that it wants to be able to use its stablecoin reserve funds, including for investment purposes.
“If [Tether] simply held the proceeds in cash, the company would not earn the money required to fund its operations,” Bitfinex’s attorneys said.
Earning interest
However, in its own letter to the court, attorneys from the NYAG’s office said that “bona fide holders of tether should be able to redeem those tokens for cash, as Tether has long represented to the market,” adding:
Tether argues that NYAG has no basis for cutting off the ability of tether holders “who happen to be affiliated with Respondents” – including Tether employees – to redeem USDT, and that as a result, the NYAG’s argument presents a “gross overreach,” particularly given that it is not actually a regulator.
NYAG’s attorneys say that they aren’t opposed to Tether’s employees being paid, but that they want the company to pay its employees using transaction fees, rather than its reserves.
Both parties submitted proposed modified orders, which have similar third subparagraphs, but which clearly demonstrate the differences of opinion in subparagraphs 1 and 2.
Judge Joel M. Cohen, who is overseeing the case, will likely schedule a hearing to reconcile the different proposals in the coming days, though it was not immediately clear just when that would be.
New York State Supreme Court image via Nikhilesh De for CoinDesk
Most crypto companies avoid comparisons to traditional banks. But Chad Cascarilla, CEO of the stablecoin issuer Paxos, welcomes the analogy.
“It’s akin to a bank account,” Cascarilla said, describing the new integration of Paxos wallets to the sister company itBit, a crypto exchange. “It has the look and feel in part of a bank account, in part of a custody account.”
As part of this new user interface, Paxos accounts now allow users to instantly redeem PAX dollar-backed stablecoins, which were previously only redeemable a few hours a day. The Paxos team said so far this stablecoin has facilitated $19.5 billion worth of transactions.
Stepping back, in 2018 Paxos and Gemini both ran incentive programs for their rival stablecoins, PAX and GUSD. Despite discounts on their dollar-pegged tokens, both assets failed to claim much market share from the godfather stablecoin, the partially dollar-backed token called Tether, and its scandal-riddled sister exchange Bitfinex.
Although so far Tether’s reign appears impervious to setbacks and continues to trade at high volumes, Paxos is focusing on making it easier to redeem PAX.
“I would say that recently it hasn’t been too bad to redeem,” an OTC trader, who asked to remain anonymous in order to protect his relationship with Paxos, told CoinDesk. “At the begining there was some pushback on it but it’s died down.”
Traders told CoinDesk in February 2019 that both Gemini and Paxos, to a lesser degree, were making it difficult to redeem their respective stablecoins for fiat.
Especially now with the automated feature, traders are able to redeem much faster and without the hindrance of internal politics. A second anonymous OTC trader said:
Perhaps there never was much competition between Tether more heavily regulated stablecoins. The second OTC trader said most Tether users aren’t looking for the “architecture and the framework” of a traditional bank like Paxos has. On the other hand, both institutional traders found Paxos’ level of security and compliance very appealing.
Gemini’s platform was deemed equally reliable. (The exchange company declined to comment for this article.) Yet the first OTC trader said there is hardly any appetite in the market for either GUSD or the newest contender in the stablecoin wars, the ethereum-backed DAI token.
“GUSD is basically dead in the water,” the trader said. “DAI hasn’t been doing well for a long time. You can see this in its liquidity, which is truly atrocious. DAI order books are really, shockingly thin.”
Speaking of the rare DAI traders, he added:
The dark horse in this stablecoin race has always been Coinbase’s dollar-backed token, USDC. The second OTC trader said over the past several weeks, since New York regulators clashed with Bitfinex over undisclosed documents related to Tether, there has been some modest increase in demand for both PAX and USDC.
“I think that the people that use Tether and that whole ecosystem have shown to be pretty resilient,” he said. “But there are people who use the other stablecoins on more regulated trading markets.”
Chad Cascarilla image via CoinDesk archives
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