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BTCManager’s Week in Review - Bitcoin Plummets Below $6,000 Mark as Bithumb Gets Hacked and Mt.Gox Creditors Reimbursement to be in BTC/BCH

BTCManager’s Week in Review – Bitcoin Plummets Below $6,000 Mark as Bithumb Gets Hacked and Mt.Gox Creditors Reimbursement to be in BTC/BCH

Reading Time: 6 minutes by on June 25, 2018 Altcoins, Bitcoin, Blockchain, Crime, Ethereum, Finance, News, Regulation, Tech
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For the first time since the start of the year, the price of bitcoin dipped below $6,000 per coin, which marks a 10 percent decline versus the previous week and an over 50 percent drop year-to-date.

The continuance of the bitcoin price decline was driven by the hack of Korean bitcoin exchange Bithumb and the news that Mt.Gox creditors will be reimbursed in BTC and BCH.

The Bithumb hack led to the loss of around $31 million worth of digital currency, which will eventually need to be sold in the market for fiat currency for the hackers to cash out, which has weighed on prices.

The fact that Mt.Gox creditors will be reimbursed in BTC and BCH would suggest that thousands of early bitcoin adopters who had their funds tied up in Mt.Gox when it collapses may soon cash out (at least part of) their investments into fiat currency at a huge profit. When Mt.Gox collapses, the price of bitcoin was at around $480. Today, it is at around $6,000 and all creditors are also entitled to the equivalent of their bitcoin in bitcoin cash.

The decline in the price of bitcoin has also pushed the altcoin market to new 2018 lows and has reminded investors that cryptocurrencies are not for the faint-hearted or the weak-handed investors.

This week’s contributions have been provided by Ogwu Osaemezu Emmanuel, Priyeshu Garg, Rahul Nambiampurath, and Shaurya Malwa.

Korean Cryptocurrency Exchange Loses $31 Million to Hackers

The hack of Korean cryptocurrency exchange Bithumb on June 20, 2018, has once again raised concerns over the security practices of cryptocurrency exchanges. Here, the attackers made away with digital coins worth an estimated $31 million. While that figure does not eclipse the infamous Mt Gox hack of 2014, it has undoubtedly resurfaced similar investor concerns. The hack also triggered a panic selloff, which only worsened the bearish sentiment in the market.

Korean cryptocurrency exchange Coinrail also reported a similar security breach on June 10, 2018. With the sudden onslaught of attacks, it seems as if cryptocurrency exchanges have become a prime target for hackers, mainly because they store a massive wealth in the digital currency.

Crypto Facilities Eyes Litecoin (LTC) Derivatives Launch

Since the first bitcoin futures contracts were launched in December 2017, when the price of bitcoin saw an all-time high of $20K, more firms have joined the bitcoin derivatives bandwagon. In the latest development, a UK-based regulated trading platform that created the first Ethereum futures contracts is set to launch its Litecoin derivatives.

Crypto Facilities, an FCA-regulated firm that offers clients’ bitcoin (BTC), ethereum (ETH) and ripple (XRP) futures contracts are set to launch its litecoin derivative product shortly.

According to a Finance Magnates report, the London-based firm is looking to make it possible for crypto traders to bet on both long and short selling of litecoin.

Crypto Facilities has announced the first-of-its-kind product for the sixth largest cryptocurrency will go live on June 22, 2018, at 4 pm BST.

Commenting on the milestone reached by the firm, CEO of Crypto Facilities, Timo Schlaefer, revealed that the company decided to list the LTC-USD futures due to the unending clients’ demand for litecoin instrument.

Tether’s Transparency Update Report Raises More Questions Than it Provides

In an exciting turn of events, the people at Tether seem to have finally done what they have not been able to do since dissolving their relationship with their auditor six months ago – produce an independent report on their currency reserves. While still not an actual audit, the report was supposed to silence the critics, but this is not exactly what’s happening.

On Wednesday, the company released a third-party report that claims its cryptocurrency is fully backed by USD. According to the Transparency Update Report, Tether worked with the law firm Freeh, Sporkin & Sullivan (FSS) to undergo a review of their bank account documents and inspect the number of Tethers in circulation along with their currency reserves.

The Washington-based law firm provided a three-page report with a conclusion that “FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tether in circulation as of June 1, 2018.”

Australia’s largest comparison site Finder, however, does not trust the transparency report. In a recent post, Finder mentioned that “Tether has zero credibility and there’s no reason to trust the value of USDT.” Finder’s concerns stem from contrasting statements between Tethers being backed by USD reserves, and how, “the bottom line is an audit [that] cannot be obtained.”

Institutional Investors Trust TrueUSD as Cryptocurrency Gateway

Cryptocurrency enthusiasts have long heralded the arrival of institutional money, but expressed concerns over the limitations of trading pairs and the controversy surrounding Tether.

The recent success of TrueUSD, however, suggests that fiat-backed cryptocurrencies could be the bridge that enables institutional investors to enter the space confidently. The fully-audited Tether competitor launched in March, fully funded by venture capital firm of Web browser billionaire Marc Andreessen and Ben Horowitz. As an audited stablecoin, the crypto provides a perfect way for traditional portfolio managers to enter the space, says Tory Reiss, TrustToken’s vice president of business development in San Francisco.

“Bitcoin Baron” Faces Jail-Time after Launching DDoS Attack on Government Websites

Self-styled hacktivist “Bitcoin Baron” was sentenced to prison on June 19, 2018, for launching a distributed denial-of-service attack against Madison’s administrative networks.

The U.S. Department of Justice (DoJ), released a public report on the matter and confirmed the attack caused a city-wide outrage in Madison, Wisconsin. Authorities stated the attack “crippled” emergency communication systems, causing significant outrages and delays in 911 control centers.

The Bitcoin Baron was identified as Randall Charles Tucker, a resident of Arizona, and sentenced to 20 months in prison following a guilty plea to one count of intentional damage to a protected computer. Additionally, Tucker confessed to several other such DDoS attacks in 2015 against government websites and other administrative services.

As noted by The Observer, Tucker claimed responsibility for a variety of online attacks against a range of services, targeting police departments, IRC chat rooms and in one instance, a children’s hospital.

Irish Banks Withdraw Banking Services of Legal Cryptocurrency Businesses

A report on The Irish Times on June 21, 2018, confirmed the claims of cryptocurrency businesses and listed out several firms facing the unfortunate situation.

Cork-based Bitcove, a recipient of Bank of Ireland’s “best business start-up” award in 2017,  was “particularly aggrieved” by the situation. The bitcoin exchange has been legally operational since 2014, and enjoyed the banking services of AIB, Permanent TSB and Bank of Ireland. However, the banks have closed the company’s accounts.

Peter Nagle, co-founder of Bitclove, stated: “The reasons cited has been that they do not support companies offering cryptocurrency exchange facilities despite the fact they had previously given us an account for this purpose.”

Nagle added the Bank of Ireland was “particularly disappointing.” His business was backed by the bank’s award program, and all operations were reviewed monthly by an official panel which including Bank of Ireland representatives. However, the move seemed like a media gimmick at the end, as Bitclove’s accounts were later frozen “and eventually closed.”

The company has not shuttered its business and has found “a more progressive banking partner” in Europe.

EOS Under Fire After “Constitution” Violates Own Rules

EOS, the world’s fourth-largest cryptocurrency by market cap, is facing a backlash from the community over recent developments. After reports suggested 50 percent of EOS tokens are owned by less than ten wallets,  the 21 block producers of the cryptocurrency decided to freeze seven EOS accounts suspected for theft.

As part of the EOS911 initiative, a safety protocol determined by block producer EOS42, users can claim stolen funds on a case-by-case basis. While the idea is indeed noteworthy for the broader cryptocurrency sector, the move to freeze seven wallets is a fundamental violation of the rules stated by the EOS constitution.

The constitution explicitly states such decisions to be made by requires such decision made by “arbitration bodies,” with the block producers merely executing an arbitrary decision.

In this instance, the EOS Core Arbitration Forum (ECAF), refused to freeze the accounts citing a lack of authority, as the constitution is not yet vetted by the EOS community and exists as an interim.

Regardless, the block producers took matters into their hands and froze accounts without consulting the ECAF or any member of the EOS community.

French President Acknowledges Initial Coin Offerings in Latest Business Reform

French President Emmanuel Macron announced a plan to transform the country’s business landscape on June 18, 2018. The changes outlined in the platform included everything from a reduction in the complexity involved while setting up a business to a more streamlined auditing process. Surprisingly, however, the President’s plan also included a provision for cryptocurrency-related ventures.

According to a report by Bloomberg, Macron stated that the national regulator Autorité des Marchés Financiers (AMF) would recognize initial coin offerings (ICOs) shortly and provide companies with a ‘visa’ to permit such kind of fundraising. The system will also “create a secure financial environment for fundraising in virtual currencies.”

Macron had initially announced his aggressive agenda to transform France into a ‘startup nation’ around a year ago. The move was in line with his efforts to portray the country as a technically progressive one that would be welcoming to technology companies looking for a home base.

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