Category: Bitcoin

Disgraced Mt. Gox CEO Appointed as London Trust Media CTO

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The last four years have been pretty tough for Mark Karpelès, the Chief Executive Officer of Mt. Gox, the bitcoin exchange that went bankrupt in 2014 following the loss of 850,000 bitcoins. The situation not only made the former head of Mt. Gox one of the most hated men in the crypto world but also saw him serve a jail term for nearly a year while awaiting criminal trial for charges of data manipulations, breach of trust and embezzlement. This is despite the fact that Mt. Gox was able to recover 200,000 bitcoins – the remaining 650,000 bitcoins are believed to have been stolen by hackers from elsewhere.

“I have no way to be sure that I’ll still be able to work in one year, two years,” Karpelès said in an interview with Fortune in an interview in Tokyo in March. “So I cannot really get a normal full-time job.”

This sentiment by Karpelès clearly indicates that he acknowledges the possibility that he may be sent back to jail. Regardless of all this, he did land a new job as a C-level executive at a U.S. corporation – he will be the new chief technology officer (CTO) of London Trust Media which is paid virtual private network (VPN) service provider based in Denver.

The company also invests in cryptocurrency. In fact, it was an early investor in Zcash, a privacy-focused cryptocurrency, as well as Purse, an e-commerce startup that allows people to pay for Amazon purchases with bitcoin.

“Mark fought and fell. And although he fell, his skills, experience, and know-how unarguably continue to exist. And so, bringing in a seasoned warrior makes perfect sense to me. I am more than willing to give a second chance to Mark in this fight’s critical hour. I wouldn’t dare say that the person who architected the Titanic should never again architect another ship”, said Andrew Lee, co-founder at London Trust Media and former head of Mt. Gox’s North American operations.

In the interview with Fortune, Karpelès admitted that the new position at London Trust Media was now his main job alongside other five different IT consulting jobs, as well as online video game-related and network communications projects with employers he preferred not to mention. Also, since he is on trial and thus cannot legally leave Japan, Karpelès will only be able to work remotely.

However, even though his new job description puts him in charge of London Trust Media’s cryptocurrency ventures, the former Mt. Gox CEO has been quite open about the fact that he no longer believes in bitcoin.

“Bitcoin right now is, I believe, doomed. Its original promise of being the future of currency is clearly out of reach”, Karpelès said.

He believes that the cryptocurrency may have a lot of trouble evolving, scaling up and keeping up with everything. In addition to this, he pointed to the split between bitcoin and Bitcoin Cash as proof of how polarized the cryptocurrency community is.

Bitcoin Declared “Generally Permissible” Under Islamic Law

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Yesterday, the value of Bitcoin went from $6,962.6 to $7,720.27 in less than one hour sparking a whole lot of speculations, one being that the price surge had something to do with an Indonesia-based startup’s report. In the report that was published in Thursday, April 12 press release, Blossom Finance, the fintech startup, concluded that bitcoin is “generally permissible” or “halal” under Sharia law. This conclusion was made in conjunction with the startup’s internal Sharia advisor.

Islam is currently the fastest growing religion in the world with over 1.6 billion devoted Muslims. For the longest time, the adoption of cryptocurrencies has been a rather grey area for Muslims around the world – this is because Muslims are forbidden from using currencies that do not have any intrinsic value and lending money with high-interest rates, a practice known as usury.

With the recent massive worldwide adoption of cryptocurrencies, Muslims were left behind as they were forbidden from staking claims in the crypto space – not anymore.

“In Germany, Bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. In countries such as the US, Bitcoin lacks official legal monetary status but is accepted for payment at a variety of merchants, and therefore qualifies as Islamic customary money,” Mufti Muhammad Abu Bakar, an Islamic scholar and Blossom Finance’s Sharia advisor wrote in a paper he published to address the issue.

“Bitcoin is permissible in principle as bitcoin is treated as valuable by market price on global exchanges and it is accepted for payment at a wide variety of merchants. Moreover, many private individuals accept bitcoin as a medium of exchange in their private transactions,” the study adds.

What This Means

While many people agree that the assumption that bitcoin’s price surge might be purely speculative, even more people believe that it was largely due to the crypto market finally opening up to the Islam community who account for about a quarter of the world’s population. In fact, the assumption is justifiably reasonable especially considering how the digital currency’s price has been affected in one way or the other by external entities such as media outlets.

Not long after the paper was published, over a billion dollars in trades were initiated across nearly all the cryptocurrency exchanges which subsequently saw bitcoin’s price increase sharply over a very short period – less than an hour to be more precise. Bitcoin has proven time and time again that it is not going away any time soon and the adoption by the Muslim community is certainly another step in the right direction for the entire crypto community.

Crypto Trading Has Not Been Banned In India, Govt. Confirms

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As mentioned in the Friday news post, the cryptocurrency situation in India is quite unstable at the moment. Still, it is worth noting that there have been a lot of misconceptions regarding the recent decision by the Indian government with a number of media outlets claiming that India has banned trading in bitcoin, and other cryptocurrencies for that matter. This is certainly not the case. Just to be clear, the Reserve Bank of India (RBI) only cut ties between its own banks and any entity that deals with cryptocurrencies.

No Cause for Alarm?

It goes without saying that the RBI press release indeed caused quite a stir especially because it somehow translates to a total ban on bitcoin trading, depending on how one interprets it. While this is not the case, it cannot be said that there is nothing worry about since the RBI’s ultimatum is still rather significant for cryptocurrency users.

All banks that are currently servicing any entities that deal in cryptocurrencies have a three-month deadline looming over their operations. Any bank that fails to sever its ties with the crypto users the will no longer be considered as a partner of the Reserve Bank of India.

What It Implies

According to Unocoin, there is not much cause for alarm since the RBI has not deemed bitcoin as an illegal currency and there is no ban on cryptocurrencies. For now, Unocoin will continue operating as usual until the banks it is affiliated with state otherwise. The three-month ultimatum creates room for a lot of changes and adjustments but everything will become crystal clear after that. So far, the damage is going to be minimal even though this is subject to abrupt change, but such kind of change is something you get used to when you stay in the crypto-world for long.

The decision by Indian officials is not entirely surprising since the RBI has for several months now reiterated the risks associated with cryptocurrencies. As such, it is likely that many of the India cryptocurrency entities have always been prepared for such developments. In other countries, the alternative has been moving to crypto-friendly countries such as Malta and Switzerland. All that matters now is that bitcoin trading has not been banned in the country but in case it happens, there are viable options for the crypto operations. We will just have to wait and see how it all plays out.

RBI Bans Regulated Entities from Dealing in Cryptocurrencies

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Even though it is currently exploring the creation of its own cryptocurrency, India’s central bank on April 5 escalated a crackdown on existing digital currencies like bitcoin. In an official statement released by the Reserve Bank of India, it was directed that all regulated entities, including banks, should stop providing services to individuals or even businesses that are users, holders and traders of cryptocurrencies.

Meanwhile, the central bank has set up a panel that will be tasked with studying the feasibility and the desirability of introducing a fiat digital currency. The Reserve Bank of India (RBI) confirmed in a statement on Thursday that the panel will be expected to submit a report by the end of June this year.

“It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling virtual currencies,” the RBI said. “Regulated entities which already provide such services shall exit the relationship within a specified time. A circular in this regard is being issued separately.”

As far as the specified time frame is concerned, the RBI gave the regulated entities three months to unwind their positions with the crypto-related entities. This move comes after over three warnings that were issued to the public in regards to the risks of dealing with decentralized digital currencies. It also follows in the footsteps of several other governments around the world that have been strengthening scrutiny of the virtual currencies. In fact, by its own admission, the RBI affirmed that this move is geared towards protecting the regulated entities form the risks associated with digital currencies.

“Virtual Currencies (VCs), also variously referred to as cryptocurrencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others… In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs,” the RBI said in an April 5 statement.

Possible Introduction of a Fiat Digital Currency

The new RBI regulations certainly have rather significant implications for the crypto market in India. However, the central bank is taking steps that will maintain or draw from certain aspects of the crypto-ecosystem. The underlying blockchain technology, for instance, is quite promising and the RBI acknowledges this fact – the bank will be investigating ways of exploiting the blockchain technology in order to achieve financial inclusion and enhance the efficiency of the country’s financial system.

Also, as mentioned earlier, the RBI is exploring the concept of a fiat digital currency that will be issued by the bank and thus will be considered to be its liability. The new currency will in circulation alongside the tradition paper currency – if it succeeds it also holds the promise if reducing the costs of printing the paper currencies.

Bitcoin Crashes Again amid Social Media Ban on Crypto Ads

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Just a few months after Facebook banned cryptocurrency adverts on its platform, Twitter has followed in its footsteps by confirming reports from earlier this month that it was implementing a global crackdown on ads for Initial Coin Offerings (ICOs). Twitter’s updated Restricted Content Policies now requires any project seeking to conduct a token sale to have proof of legal regulation in the targeted country before it is allowed to run adds on the social platform. The same goes for cryptocurrency exchanges and wallets which will now have to be publicly-listed companies on major stock markets.

Bitcoin dropped 12 percent in January after Facebook, which happens to be the world’s second-largest online advertiser, said it would be banning all adverts that promote cryptocurrencies in a bid to prevent what it termed as “financial products and services frequently associated with misleading or deceptive promotional practices.” Twitter’s updated policy is more or less giving the same vibe since the terms it has set are meant to curb the same problem. The policy effectively requires that any adverts for financial products and services must be compatible with all applicable laws in the target countries and the all information regarding the products or services must be provided to the investors. Also, the owners of the ads will have to provide necessary disclosures as well as balanced information detailing the risks and benefits.

Reddit Also Jumps Ship

In similar news, Reddit, another popular social media website, will no longer be accepting bitcoin as payment for the platform’s Reddit Gold membership program. While there is still hope that the payment option may be reinstated in the future, players will have to manage with the existing options, that is, PayPal and credit cards. According to “emoney04”, a Reddit admin, the removal of bitcoin as a payment option was prompted by the upcoming Coinbase change and “some bugs around the Bitcoin payment option that were affecting purchases for certain users.”

“We’re going to take a look at demand and watch the progression of Coinbase Commerce before making a decision on whether to re-enable,” the administrator said.

Bitcoin Price Brushes Aside Child Abuse Report, Nears $9,000

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On Tuesday evening, bitcoin’s price rose above $9,000 for the first time in a week regardless of reports that its blockchain contains links to child abuse imagery. Researchers from the RWTH Aachen University, Germany discovered 1,600 files that were currently stored in the bitcoin blockchain. At least eight of the files contained sexual content including two with 274 links to child abuse imagery and one that looked like an image of the same. Also among these files were 142 that contained links to dark web services.

The blockchain, which is essentially a transaction ledger distributed and stored on many different computers was designed to be immutable so as to guarantee the integrity of information. This is how all decentralized digital currencies work. As such, the information cannot be altered – at least not yet. The only alternative to would be a consensus among the network’s users to use a new version – also called a “fork” – of the blockchain instead of the original one. However, bitcoin is yet to experience this.

The Implications

Some blockchains, such as the one powering bitcoin, which is probably the oldest, can contain all sorts of information fragments some of which may be illegal in certain jurisdictions. Since the information cannot be deleted, everyone that has a copy of the blockchain is essentially breaking the law.

It came as no surprise that the blockchain would undoubtedly cause trouble with laws in certain jurisdictions. The European data protection laws, for instance, say that people must be given the liberty of having their personal data amended or deleted regardless of where it is stored. Public cryptographic keys and transactions which are regularly stored on blockchains are basically personal data – and since the blockchain does not allow these to be altered, it is a breach of that particular law.

“Our analysis shows that certain content, e.g., illegal pornography, can render the mere possession of a blockchain illegal,” the German researchers explained. “Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK, or the USA suggest that illegal content such as [child abuse imagery] can make the blockchain illegal to possess for all users. This especially endangers the multi-billion dollar markets powering cryptocurrencies such as bitcoin.”

This is quite serious, isn’t it? But, how is bitcoin braving it? Well, while the research report highlights the importance of addressing the possibility of unintended data insertion in future blockchain designs in order to protect users accordingly, it is also important to note that the existing bitcoin blockchain design troubles do not affect casual users of the cryptocurrency.

Jeff Garzik, a bitcoin core developer explains that the unintended information on the network is not even accessible directly since it has to be decoded first. This does not also apply to users who download fragments of the blockchain such as those who are just doing Bitcoin transactions.

Bitcoin Mining Has Just Been Banned in Small New York Town

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Plattsburgh, a small lakeside town in northeastern New York has banned the establishment of new bitcoin mining firms for the next year and a half citing the fact that the miners have been exploiting its low-cost electricity. This comes at about the same time that the New York public utilities arm gave a ruling that allowed the municipal power authorities to charge higher electricity rates for cryptocurrency miners.

The town which is quite close to the Canadian border put the one and a half year moratorium on cryptocurrency mining in a bid to preserve its natural resources, the health of its residents as well as the “character and direction” of the city. Thus, for the next 18 months, the city will not be considering any new applications for commercial cryptocurrency mining. Breaking this rule will attract a fine amounting to $1,000 daily for the period that the moratorium is violated.

“It is the purpose of this Local Law to facilitate the adoption of land use and zoning and/or municipal lighting department regulations to protect and enhance the City’s natural, historic, cultural and electrical resources,” Plattsburgh officials said after holding a public hearing on the matter Thursday.

Cryptocurrency mining is the process by which mining firms or individuals get paid with cryptocurrencies for running complex mathematical equations on high-powered computers in order to confirm the validity of transactions. This process needs enormous computing power and thus is very energy-intensive hence miners will almost naturally be drawn to areas with significantly lower electricity costs. Thanks to its hydropower plants and the subsidies that some of the municipal power authorities allow on the electricity, some parts of New York are able to offer electricity rates that are as competitive as the Chinese bitcoin mining market. Furthermore, the naturally lower temperatures in the state also significantly reduce the cost of cooling facilities at the mining firms.

It Is a Positive Move, Some Agree

While this might not be a favourable ruling for cryptocurrency miners, one local bitcoin mining operation, Plattsburgh BTC, has expressed its support for the ruling. David Bowman, the founder and CEO of the bitcoin mining firm said in an email that the move was a positive one for both the city of Plattsburgh and crypto mining as a whole.

“We will be actively working with the city right away to find solutions that work in all of our interests, like possibly shutting off the machines if we are in danger of going over the city’s quota, looking into energy recapture as a way to heat buildings,” he added. “Anything is on the table.”

India Can’t Regulate Bitcoin, Says Former Indian Bureaucrat

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India has been struggling with regulating cryptocurrencies for quite some time now mostly because of the strong aversion the governments has towards digital currencies but they are yet to ban any. Now, a former Indian top finance ministry official insists that bitcoin, as well as other cryptocurrencies, should be completely banned in the country.

Shaktikanta Das, who is a former secretary of economic affairs, believes that regulating bitcoin is going to be quite tough and thus the only feasible alternative would be to outlaw their use. Das headed the Indian government’s first panel that was set up in April 2017 in a bid to understand and recommend necessary regulations pertaining to cryptocurrencies. Currently, Das is a member of the 15th finance commission which has been tasked with reviewing the financial situation of the present government.

“Let us accept that it would not be possible to regulate it effectively. Because they will do transactions from their houses. You cannot enter every home to check what transactions are going on. So, I think this is a serious challenge, and this should not be allowed at all,” Das said.

The Indian government’s aversion to cryptocurrencies can be traced back to 2013 when the Reserve Bank of India (RBI) warned its customers against the potential security threats that were associated with digital currencies. Despite this, and multiple other warnings from the country’s ministry of finance and the RBI that followed since then, cryptocurrencies have grown in popularity even among people who were considered to be “conservative” Indian investors.

Why Das’ Opinion Matters

Shaktikanta Das has held a number of key positions in India’s ministry of finance including being the head of the departments of economic affairs and revenue. He has also served as a board member of the Indian market regulator Securities and Exchange Board of India and the Reserve Bank of India – both institutions play a monumental role in the drafting of cryptocurrency regulations in India.

Das argues that since the Reserve Bank of India is the only institution allowed to issue currency in India, cryptocurrencies are essentially illegal. He further pointed out that cryptocurrencies are paralleling present financial frameworks without any backing from legal provisions.

“There is the danger of cryptocurrencies leading to money laundering, terror financing, and unaccounted transactions. It will pose a serious threat to the financial stability not only of India, and in fact more, in the case of the developed world,” he added. “It’s a serious challenge and threat to global financial stability.”

Crypto Prices Drop Amidst Trader Suspicion of Binance Hack

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The major cryptocurrencies on Wednesday experienced sharp price drops as reports of system errors at Binance, a renowned crypto exchange, got many investors into a bit of a panic. At the same time, digital currency traders also had to digest reports that major United States regulators are demanding for the registration of all cryptocurrency exchanges.

Binance is considered to be one of the biggest exchanges in the world – CoinMarketCap reports that it is one of the top 4 biggest exchanges for the most popular cryptocurrencies in terms of the traded volumes. Prior to the Wednesday crash, a number of users noticed something highly unusual with Viacoin – that is, a huge increase in buy orders for the cryptocurrency after which its market capitalization jumped from $64 million to $159 million in just a few moments. A probe into the matter revealed that there were lots of unauthorized sell orders going around.

“We are investigating reports of some users having issues with their funds. Our team is aware and investigating the issue as we speak,” the Binance team wrote on Reddit. “As of this moment, the only confirmed victims have registered API keys (to use with trading bots or otherwise). There is no evidence of the Binance platform being compromised.”

Binance later announced that it had halted withdrawals so as to look into what the company referred to as “unauthorized market sells.” The company further stated that there was no evidence that the platform had been compromised at the time.

The impact the alleged Binance hack has had on the market is quite significant. 360 Blockchain USA president, Jeff Koyen pointed out the concerns surrounding Binance resulted in the plunge of the prices of bitcoin and several other digital currencies as well.

“All of crypto is getting battered right now, based on fears that Binance was hacked,” Koyen stated.

SEC Crackdown Played a Role

A number of market analysts have also pointed the price drops to the United States Securities and Exchange Commission’s (SEC) recent decision to subpoena a number of firms that either deal in cryptocurrencies, or are associated with them. A large number of the subpoenas were specifically sent to companies that are selling digital token through Initial Coin Offerings (ICOs).

Bitcoin Nears Regulatory Crackdown, Says Bank of England

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The Bank of England has issued a warning stating that bitcoin is headed towards a regulatory crackdown – it also pointed out that “inherently risky” cryptocurrencies are failing to fulfil their most basic function as a store of value. The banks’ governor, Governor Mark Carney, in a speech and interview that were held on Friday, tore into bitcoin. In his words, the world’s most popular decentralized digital currency is on the verge of a “pretty brutal reckoning.”

His remarks extended beyond bitcoin as an individual asset and included cryptocurrencies as a whole, which he also thinks have “all the hallmarks of a bubble. And normally they end with a pretty brutal reckoning.” Carney’s most significant concern was however portrayed by his call to have the “anarchy” of cryptocurrencies being utilized as a medium of exchange for criminal activities brought to an end. He said that it was about time that relevant authorities worked towards a framework to “regulate elements of the crypto-asset ecosystem to combat illicit activities”.

There are already a number of efforts around the world that are geared towards bringing bitcoin under the control of governments and central banks especially due to the prevailing fears that bitcoin users are likely to lose their money due to market manipulation. On the same note, there have been even more efforts directed towards curbing the use of cryptocurrencies for criminal activities such as drug dealing, money laundering and even financing terrorism.

In the run to Christmas in 2017, bitcoin soared very close to the $20,000 mark before plunging back by more than half at the beginning of the year. It has however recovered to $11,000 but there is still a ton of uncertainty plaguing the digital currency.

“Authorities are rightly concerned that given their inefficiency and anonymity, one of the main reasons for their use is to shield illicit activities. This cannot be condoned. Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to,” Carney said in the speech.

Will Everything Be Put Under Scrutiny?

Staunch believers in the bitcoin dream have maintained that the underlying technology of most, if not all, cryptocurrencies will certainly revolutionize the existing financial systems and in the process make everyday payments not only cheaper but also easier than they seem to be at the moment.

Carney clarified on this particular issue saying that the bank would still study, explicitly, the use of the distributed ledger technology that powers cryptocurrencies. He concluded that, as much as cryptocurrencies “do not appear to pose material risks to financial stability,” the situation is bound to shift as more people become aware of them.