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New Capital Inflows Spark Massive Crypto Relief Rally: BTCManager’s Week in Review July 2

New Capital Inflows Spark Massive Crypto Relief Rally: BTCManager’s Week in Review July 2

Reading Time: 6 minutes by on July 2, 2018 News Digest
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The mood among crypto investors has reached new lows in the past week when the price of bitcoin dropped below the $6,000 mark, and many bitcoin bears and naysayers popped up to claim that the “bitcoin bubble” has finally burst.

Fortunately, for crypto investors, we finally witnessed a much-needed relief rally on the weekend thanks to new capital inflows into cryptography assets. As a result, the price of bitcoin jumped over ten percent in an hour, and the altcoin market followed suit.

Week-on-week, the price of bitcoin closed around four percent in the green while leading altcoins managed to recover most of their mid-week losses to also close slightly in the green.

Monero (XMR), Ethereum Classic (ETC), and NEM (XEM) were some of the biggest winners this week, rallying eight percent, nine percent, and eight percent respectively versus last week’s close, cementing investors’ belief in the value of these altcoin projects.

There has also been bitcoin-positive news last week, such as Korean exchange Bithumb being able to recover some of the funds lost during its June hack, the launch of new cryptocurrency trading platforms and several countries issuing crypto-friendly regulations.

This week’s contributions have been provided by Cindy Huynh, Joseph Young, Ogwu Osaemezu Emmanuel, Priyeshu Garg, and Shaurya Malwa.

Hacked South Korean Exchange Bithumb Recovers Funds

Bithumb, which is the seventh largest digital assets trading platform in the world, initially estimated the total stolen funds at around $30 million. Bitcoin suffered the most significant attacks with XRP and Ethereum also taking substantial hits. In total, eleven cryptocurrencies were affected.

The exchange company stated that they countered the attack quickly by working with crypto organizations across the globe and by moving cryptocurrencies to cold wallet storage. Fortunately, their efforts paid off handsomely.

Bithumb has since revised damage estimates significantly after engaging in the recovery process. Damages are now estimated around $17 million. Along with ongoing recovery efforts, Bithumb has offered to compensate customers via an airdrop.

Messaging Giant Line to Open Cryptocurrency Exchange in Singapore

Announcing the launch of the exchange, Line-backed “BitBox” is set to open in July 2018, initially handling a list of over 30 cryptocurrencies.

BTCManager earlier reported Line has recently made a series of efforts to segue into blockchain and crypto-related activities, opening a South Korean blockchain platform and creating its blockchain to support DApps.

Bitbox will offer users trading services for more than 30 of the most popular cryptocurrencies by market volume. Included on the list of supported digital coins are bitcoin, ether, bitcoin cash and litecoin among others. The Bitbox web platform will be available to users around the world in 15 different languages.

Bitbox intends to sustain its operations by charging a transaction fee of 0.1 percent, a continuation of a trend in crypto to substantially undercut the trading and transaction fees available from conventional finance platforms.

South Africa Tests Ethereum-Based Interbank Payment System

A total of eight South African banks took part in the cryptocurrency-based tests, utilizing blockchain technology developed by Ethereum incubator ConsenSys Labs. Apart from the central bank itself, Absa, Capitec, Discovery, Investec, FirstRand, Nedbank, and Standard Bank took part in the pilot.

Currently, the SARB utilizes an indigenous technology, the South African Multiple Option Settlement System (SAMOS), to perform real-time gross settlements between local banks. For the project, J.P. Morgan-backed Quorum, a permissioned blockchain product of ConsenSys Labs, was chosen to simulate the SAMOS functions in a decentralized ledger system.

All participating banks had an individual node on Project Khokha with each financial authority configured with 16 GB RAM and four virtual computing units. The specifications were made with Linux Open-Source operating system’s Ubuntu in mind, as it requires the bare minimum setup to operate.

A variety of servers and cloud-storage services were utilized for Project Khokha, including Amazon Web Services, Microsoft Azure, and physical servers.

Research: Bitcoin’s Protocol Can Be Analyzed to Track Criminals

As per a Fortune report on July 27, 2018, blockchain security company Chainalysis has a team of cybersecurity experts and computer researchers who scrutinize the Bitcoin protocol for determining an act of criminal activity.

Law enforcement and financial watchdogs are said to refer to the company’s work for pinpointing criminal acts, which indicates the celebrated immutability of blockchain is technically anonymous, yet behaviourally transparent.

To achieve its ends, Chainalysis tracks the alphanumeric hash keys, which are unique to each particular wallet, and matches the clusters of wallets tied to accounts labeled suspicious or accounts classified under criminal activity. These set of clues are enough for law enforcement to search for online traces of a user’s identity, which ultimately leads them to a real-life identity.

The publication cited a case from 2015 when Chainalysis conducted a forensic analysis of the Bitcoin protocol to help the U.S. Federal Bureau of Investigation (FBI) in identifying two corrupt federal agents who were humorously stealing bitcoin (BTC) from the operator of an online drug marketplace.

Another startup, California-based CipherTree takes a radical approach towards blockchain forensics. The company infects its servers with ransomware and publicizes it to nefarious websites. As hackers and cybercriminals try to free the system and gain the bitcoins, CipherTree tracks the activity to determine I.P. and wallet addresses with enough computing power and zeal to undertake the operation.

Abu Dhabi Authorities Introduce Cryptocurrency Regulations in Special Economic Zone

Following a successful public consultation exercise by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA) in May 2018, the Abu Dhabi authorities have now put in place a robust regulatory framework for its cryptospace.

According to a statement by the ADGM team, the regulatory framework for crypto-based companies operating in the financial free zone has been designed to include spot crypto services offered by exchanges, custodians and other intermediaries in the area.

At a time when the rate of cryptocurrency crimes is on an alarming increase, the authorities say the guidelines will eliminate a “range of risks” associated with virtual currencies including money laundering and other financial crimes while fostering consumer protection concurrently.

Indian Women Invest More in Cryptocurrencies Than Men

According to a survey conducted by Indian cryptocurrency exchange BuyUCoin, Indian female cryptocurrency investors on average, are investing twice as much as their male counterparts.

Although men heavily dominate the cryptocurrency industry, the BuyUCoin survey found that Indian women typically invest over $2,000 in cryptocurrencies, twice what men usually invest. The study was conducted in 2018 between March and June 2018 with over 60,000 participants.

“Usually, women investors who are buying or trading are over 40 years of age,” said Shivam Thakral, BuyUcoin’s CEO as he spoke to Quartz. “Therefore, typically these mature investors can put in more money. Alternatively, more men start investing at an early age with the average age for this investor group being 30.”

The survey, however, found that most cryptocurrency investors in India were males with less than ten percent being female from major cities. The region of Delhi NCR reported the highest number of female investors in relation to male investors at 8.8 percent with Chennai coming in second at 7.5 percent.

Another ICO Cracked down by SEC, Even the Investors Can Be Punished by Law

The US Securities and Exchange Commission (SEC) has cracked down on an initial coin offering (ICO) called PlexCoin for illicitly distributing securities without the approval and authorization from the SEC.

On June 20, 2018, the U.S. SEC disclosed that local authorities have requested the police to freeze the assets and holdings of PlexCoin project operators, alleging Dominic Lacroix, a Canadian securities’ violator, for unlawfully utilizing secret accounts and personal accounts of other individuals to launder money received during the token sale.

The SEC’s litigation release read:

“The SEC’s request for an additional asset freeze, filed in federal court in Brooklyn, New York, alleges that, since the original freeze in December, Lacroix had been using secret accounts, including an account in his brother’s name but which he controlled, to improperly dissipate for personal use digital assets obtained from investors during the PlexCoin Initial Coin Offering (ICO).”

Government Officials Have to Contact SEC before Participating in ICOs

In a memorandum to all house members, government officers, and employees, the U.S. House of Representatives Committee on Ethics has required government officials to disclose holdings of cryptocurrencies and digital assets as “other forms of securities.”

The memorandum emphasized the Internal Revenue Service (IRS), the national tax agency, has acknowledged cryptocurrencies like bitcoin and ether as properties, with the intent of taxing the sale of digital assets and income generated from investing in cryptocurrencies.

The Committee on Ethics also noted the disclosure of holdings by government officials is crucial to major U.S. financial agencies like the U.S. Commodity Futures Trading Commission (CFTC) and the SEC that have different jurisdictions over the cryptocurrency sector and regulatory frameworks about digital assets. The Memorandum read:

“Many regulatory agencies have addressed aspects of cryptocurrencies that are within their jurisdiction, or indicated they are continuing to review them. For example, the U.S. Commodity Futures Trading Commission (CFTC) has determined it can regulate cryptocurrencies as commodities. The Securities and Exchange Commission (SEC) has indicated for certain purposes, cryptocurrencies may be regulated as securities, and it is continuing to review how existing securities laws and regulations apply to them. The Internal Revenue Service (IRS) has advised for federal tax purposes, it will treat cryptocurrencies as property.”

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