Tag Archives: Bitcoin
SEOUL (Reuters) – South Korean cryptocurrency exchange Bithumb said 35 billion won ($ 31.5 million) worth of virtual coins were stolen by hackers, the second local exchange targeted in just over a week as cyber thieves exposed the high risks of trading the digital asset.
Bithumb said in a notice on its website on Wednesday that it had stopped all trading after ascertaining “some cryptocurrencies worth about 35 billion won were seized between late yesterday and early morning today.”
The exchange, the sixth busiest in the world according to Coinmarketcap.com, said it had stored “all clients’ assets in safe cold wallets,” which operate on platforms not directly connected to the internet.
It added that the company would fully compensate customers.
The Bithumb theft highlights the security risks and the weak regulation of global cryptocurrency markets. Global policymakers have warned investors to be cautious in trading the digital currency given the lack of broad regulatory oversight.
In Ho, a professor at Korea University’s Blockchain Research Institute, said the stolen coins were most likely to be from the more insecure ‘hot wallets.’
“Since coins in the cold wallets are not at all wired to the internet, it would have been impossible for hackers to steal those in cold wallets unless they physically broke in,” said In, a blockchain expert at the research center.
Bithumb did not immediately respond to Reuters’ request for comments, and its statement did not say whether the stolen coins were stored in its ‘hot wallets’.
Mun Chong-hyun, chief analyst at ESTsecurity, said digital coins would continue to be juicy targets for hackers around the world.
“No security measures or regulations can 100 percent guarantee safety of virtual coins. It is held anonymously and in lightly-secured systems, which makes them an irresistible target,” Mun said.
On the Luxembourg-based Bitstamp, bitcoin BTC=BTSP was down 1.8 percent at $ 6,612.92 by 0351 GMT, extending losses as a series of intrusions on cryptocurrency exchanges in recent weeks sparked concerns over security.
It has fallen roughly 70 percent from its all-time peak hit around mid-December 2017.
On June 11, another South Korean cryptocurrency exchange Coinrail said it was hacked. The cyber attacks come after a high-profile theft of over half a billion dollars worth of digital currency at Japan’s exchange Coincheck earlier this year.
In January, South Korea banned the use of anonymous bank accounts for virtual coin trading to stop cryptocurrencies being used in money laundering and other crimes. But the government said it does not intend to go as far as shutting down domestic exchanges.
Bithumb trades more than 37 different virtual coins, according to Coinmarketcap.com
Editing by Shri Navaratnam and Jacqueline Wong
HONG KONG (Reuters) – Two Chinese bitcoin mining equipment makers plan to raise up to $ 1 billion each from Hong Kong listings this year, riding on strong global interest in cryptocurrencies, IFR reported on Tuesday, citing people familiar with the plans.
Canaan Creative filed a listing application to the Stock Exchange of Hong Kong on Monday, IFR, a Thomson Reuters publication, reported.
Zhejiang Ebang Communication has also started working with advisers on a proposed Hong Kong float of up to $ 1 billon, reported IFR.
Ebang listed on China’s National Equities Exchange and Quotations, also known as the New Third Board, in 2015 and was
delisted from the over-the-counter market in March after announcing in January that it would seek a Hong Kong listing.
Chinese bitcoin mining equipment makers are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines.
Canaan, which sells “Avalon” mining machines with customised super-fast ASIC chips, made revenue of more than 1 billion yuan in 2017. Although cryptocurrencies can be mined using regular computer equipment, specialised processing devices dedicated to mining are more effective and can generate more income.
The company’s co-chairman Jianping Kong told Reuters in April that he expected China’s push to promote the domestic chip industry to help drive growth for the company.
Credit Suisse, CMB International, Deutsche Bank and Morgan Stanley are joint sponsors for Canaan’s float, according to IFR.
Canaan Creative declined to comment. Ebang could not be immediately reached for comment. All the banks didn’t immediately respond to a request for comment.
Canaan’s IPO valuation has yet to be set as there is no listed comparable and the prices of cryptocurrencies have
fluctuated a lot, reported IFR. It was valued at $ 500 million in mid-2017, IFR said, attributing it to one of the people.
Reporting by Fiona Lau at IFR; Additional reporting by Sijia Jiang; Writing by Julie Zhu; Editing by Muralikumar Anantharaman
NEW YORK (Reuters) – New York state on Monday authorized the Gemini Trust Co exchange founded by internet entrepreneurs Cameron and Tyler Winklevoss to offer trading of the privacy-focused cryptocurrency Zcash, making it the world’s first licensed Zcash exchange.
The state’s Department of Financial Services said it also approved Gemini to offer custody services and trading of Bitcoin Cash and Litecoin in the future.
Zcash’s market value was roughly $ 1.3 billion on Monday, according to CoinMarketCap.com, while Bitcoin Cash and Litecoin’s respective values were $ 25 billion and $ 8.3 billion. Bitcoin’s market value was about $ 150.1 billion.
“With smart and thorough regulatory oversight, the development and long-term growth of the industry will remain thriving,” Financial Services Superintendent Maria Vullo said in a statement.
Cryptocurrencies are digital tokens that use encryption techniques to secure transactions. Industry critics say the market is opaque and vulnerable to risks such as money laundering.
Last month, then-New York Attorney General Eric Schneiderman asked Gemini and 12 other cryptocurrency trading platforms to provide details about their operations and safety measures.
Zcash incorporates the technology “zk-snark,” short for zero-knowledge succinct non-interactive argument of knowledge, which lets people trade with each other in anonymity.
Gemini said it expects to begin accepting Zcash deposits on Saturday, May 19, with trading to begin three days later.
“We are proud be the first licensed exchange in the world to offer Zcash trading and custody services and look forward to providing customers with a safe, secure, and regulated place to buy, sell, and store Zcash,” Gemini Chief Executive Tyler Winklevoss said in a statement provided by Vullo’s office.
The Winklevosses, who are 36-year-old twins, in 2008 reached a $ 65 million settlement with Facebook Inc and founder Mark Zuckerberg over who had the idea for the social media website.
They also competed in the men’s rowing competition at the 2008 Summer Olympics in Beijing.
Reporting by Jonathan Stempel in New York; editing by Chizu Nomiyama and Jonathan Oatis
The Federal Reserve Bank of St. Louis has provided some high-profile validation for a core premise of Bitcoin and other cryptocurrency. A blog post this week based on an earlier Fed research paper said that “bitcoin units have no intrinsic value” – but added that currencies “such as the U.S. dollar, the euro, and the Swiss france . . . have no intrinsic value either.”
The post, titled “Three Ways Bitcoin is Like Regular Currency,” doesn’t precisely endorse Bitcoin or cryptocurrency. In another recent report, the St. Louis Fed was critical of Bitcoin’s inefficiency. Cryptocurrency has also become rife with scams since its surge in value last year, and may constitute a global risk because it enables clandestine money laundering, capital flight, and tax evasion.
But the St. Louis Fed has provided a credible rebuttal to one of the most widespread and misguided criticisms of cryptocurrency: That, because it isn’t tied to a particular real-world commodity, it should have a monetary value of zero. As Fed researchers point out, since decoupling from the gold standard in the early 1970s, almost all global reserve currencies rely on nothing but trust to function as a media of value exchange.
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In the case of the dollar, that’s mostly trust in the U.S. government and economy. For Bitcoin and other cryptocurrencies, it’s trust in computer code and, at least to some extent, developers.
Surprisingly, the Fed’s new statement also echoes one of the predominant arguments that cryptocurrency fans use to disparage government-backed currency – though in a rather roundabout way. The post argues in part that “there’s a limited supply” of both cash and Bitcoin. The libertarian boosters at the heart of the crytpocurrency movement have often argued that Bitcoin is better than government currency because central banks can devalue national currencies through inflation, while Bitcoin has a strictly fixed supply. Though the Fed’s post points out that it doesn’t actually print cash – in the sense of physical notes – it acknowledges its ability to expand the money supply.
NEW YORK (Reuters) – Soaring crypto-currency prices last year are estimated to result in U.S. tax liabilities of $ 25 billion, adding further selling pressure to these assets in the short term, according to a research note by Fundstrat Global Advisers on Thursday.
This could mean a massive outflow from crypto currencies to the dollar by April 15, the deadline for filing taxes this year, the firm said.
“We believe selling pressures (in crypto) have been amplified by capital gains tax-related selling this year,” said Thomas Lee, Fundstrat’s co-founder and head of research. Lee was formerly J.P. Morgan’s chief equity strategist from 2007 to 2014.
Still, Fundstrat believes the outlook for bitcoin should improve after the April 15 tax deadline. It reiterated its mid-year target of $ 20,000 and year-end forecast of $ 25,000.
Bitcoin in 2018 has lost more than 50 percent of its value, with other crypto currencies such as ether and ripple also hurt by intense regulatory scrutiny around the world.
Bitcoin last traded down nearly 2 percent at $ 6,673.53 on the Bitstamp platform. In December last year, bitcoin hit a record just shy of $ 20,000.
Virtual currencies led by bitcoin grew $ 590 billion in 2017 in terms of market value, compared with an $ 11 billion increase in 2016, Fundstrat said, estimating that 30 percent of crypto holders are in the United States.
The $ 25-billion tax liability accounts for 20 percent of the expected total tax payments for capital gains of around $ 168 billion in 2017, the research firm said. The projected tax liability is based on taxable gains for crypto of $ 92 billion, it added.
Fundstrat also said crypto exchanges posted record profit in November and December and are expected to have huge tax liabilities, which should add to further selling in crypto-currencies. Many of the exchanges have net income exceeding $ 1 billion in 2017 and keep their working capital in bitcoin and ether, the research firm added.
To meet these tax liabilities, exchanges need to sell bitcoin and ether.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum
A version of the technology that’s meant to make cryptocurrency payments faster and cheaper went live Thursday.
The software, called Lightning Network, can now be used for Bitcoin payments after more than a year in which thousands of developers tested it. Lightning Labs, one of the firms developing the technology, released this initial version, which is compatible with networks being developed by other groups, such as Blockstream and Acinq.
Bitcoin has become digital gold — or a viable investment alternative — to many, but it has been harder for it to fulfill its original purpose of becoming digital money, as transaction fees have skyrocketed to as high as $ 50, while confirmation times took as long as a week at their peak. Enthusiasts say the Lightning Network will solve these problems with fees at a fraction of a cent and instantaneous transactions.
The Lightning Network rolls out, another technology meant to speed up transactions, Segregated Witness, gains traction, with the number of transactions using it doubling to more than 30 percent of total Bitcoin transactions in the past month. Bitcoin transaction fees have plummeted in part thanks to this, but the total number of transactions has also declined. Lightning Network is also meant to help lower fees on the main Bitcoin network.
The Lightning Network allows Bitcoin users to open payment channels between each other. The parties can than conduct transactions without having to post them to the Bitcoin blockchain, avoiding delays and costs that result from recording those transactions each time. Once the channel is closed, only the resulting balances are recorded on the blockchain, not the full transaction history of the channel, and only then are Bitcoin fees paid. There is no required time or transaction limit required to close a payment channel, so they can potentially remain open for months of years.
Elizabeth Stark, Lightning Labs founder and chief executive officer, says merchants and especially online businesses will be the most likely users as it facilitates a high volume of payments and its near-zero fees allow for micropayments. Cryptocurrency exchanges could also use the software to accelerate deposit and withdrawal of funds, she said.
The network is currently able to process transactions in the low thousands per second, according to Stark, which is still far from Visa Inc.’s maximum of 56,000, but an improvement on Bitcoin’s five transactions per second. More than 4,000 payment channels have been opened since the technology was released in January 2017, and even though it was in testing, some merchants already started using it. Block & Jerry’s, an online ice-cream store playing on American ice-cream brand Ben & Jerry’s, is one.
“Bitcoin enthusiasts have gotten excited about this, merchants are excited about this,” Stark said. “It feels like we’re right on the edge of mass cryptocurrency adoption.”
LONDON (Reuters) – One of the biggest bitcoin exchanges has struck a rare deal which will allow it to open a bank account with Britain’s Barclays, making it easier for UK customers of the exchange to buy and sell cryptocurrencies, the UK boss of the exchange said on Wednesday.
Large global banks have been reluctant to do business with companies that handle bitcoin and other digital coins because of concerns they are used by criminals to launder money and that regulators will soon crack down on them.
San Francisco-based exchange, Coinbase, said its UK subsidiary was the first to be granted an e-money license by the UK’s financial watchdog, a precursor to getting the banking relationship with Barclays.
The Barclays account will make it easier for British customers. Previously, they had to transfer pounds into euros and go through an Estonian bank.
“Having domestic GBP payments with Barclays reduces the cost, improves the customer experience…and makes the transaction faster,” said Zeeshan Feroz, Coinbase’s UK CEO.
The UK is the largest market for Coinbase in Europe, and the exchange said its customer base in the region was growing at twice the rate of elsewhere.
Feroz said that it took considerable time to get a UK bank on board, partly because Barclays needed to be sure that Coinbase had the right systems in place to prevent money laundering.
Regulators across the globe have warned that cryptocurrencies are used by criminals to launder money, and some exchanges have been shut down.
“It’s a completely brand new industry. There’s a lot of understanding and risk management that’s needed,” Feroz said.
Despite growing interest in both digital currencies and the technology behind them, some big lenders have limited their customers ability to buy cryptocurrencies, fearing a plunge in their value will leave customers unable to repay debts.
In February, British banks Lloyds and Virgin Money said they would ban credit card customers from buying cryptocurrencies, following the lead of JP Morgan and Citigroup. [nL8N1PU10Y]
Coinbase said it had also become the first crypto exchange to use Britain’s Faster Payments Scheme, a network used by the traditional financial industry.
Reporting by Tommy Wilkes and Emma Rumney; Editing by Elaine Hardcastle
NEW YORK (Reuters) – Bitcoin rose above $ 10,000 on Thursday for the first time in more than two weeks, as investors bought back the digital currency after having fallen 70 percent from its all-time peak hit around mid-December.
On the Luxembourg-based Bitstamp, bitcoin rose as high as $ 10,095.82 and was last at $ 10,060.26, up 6 percent on the day.
Reporting by Gertrude Chavez-Dreyfuss
Most major U.S. credit card issuers have now banned the use of their cards to buy Bitcoin or other digital currencies, in a move intended to decrease both financial and legal risk.
Citigroup also says it is halting cryptocurrency purchases on credit, and Capital One and Discover had already enacted their own bans. That means all of the top five credit card issuers have announced or implemented bans.
The moves are above all in the banks’ self-interest. As Fortune previously reported, the mania surrounding cryptocurrency late last year appears to have motivated many retail investors to use credit cards as leveraging tools, buying more cryptocurrency than they could afford. With Bitcoin down roughly 50% from December highs, many of those investors are likely underwater right now, and may not be able to pay off their initial Bitcoin purchases soon, if ever.
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Further, as Bloomberg points out, banks may be responsible for monitoring customers’ behavior to prevent money laundering after they make a credit-backed Bitcoin purchase, a tough standard for them to comply with.
The bans — or more to the point, the news of the bans — may exacerbate ongoing declines in cryptocurrency prices. After a hefty bounce Saturday morning, crypto markets broadly retreated on Sunday. Bitcoin is now trading at around $ 8,500 from a December high near $ 20,000.
In the longer term, however, tighter cryptocurrency investment controls, whether from regulators or lenders, seem likely to help mitigate the consequences of both hype and scams. For much of 2017, those threatened to overshadow the underlying promise of blockchain technology, which is still in the very early stages of evolution.
TOKYO/SINGAPORE (Reuters) – Bitcoin extended its sharp tumble of the past 24 hours, skidding more than seven percent on Wednesday in a rapid downturn in fortunes as investors were spooked by fears regulators might clamp down on an asset whose value has skyrocketed in the past year.
The price of the world’s biggest and best-known cryptocurrency fell to as low as $ 10,567 on the Luxembourg-based Bitstamp exchange, not far from its six-week nadir of $ 10,162 touched the previous day. The session’s high was $ 11,794.07.
It led the fall in cryptocurrencies, although others such as Ethereum and Ripple, have also slid sharply this week after reports South Korea and China could ban trading, sparking worries of a wider regulatory crackdown.
“Cryptocurrencies could be capped in the current quarter ahead of G20 meeting in March, where policymakers could discuss tighter regulations,” said Shuhei Fujise, chief analyst at Alt Design.
At its lows on Tuesday, Bitcoin had fallen 25 percent in the session, its biggest daily decline in four months. It was a far cry from its peak close to $ 20,000 in December, when the virtual currency had risen nearly 2000 percent over the year.
Tuesday’s decline followed reports that South Korea’s finance minister had said banning trading in cryptocurrencies was still an option and that the government plans a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
Separately, a senior Chinese central banker said authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services.
“Bitcoin is deciding whether this is the moment to crash and burn,” said Steven Englander, head of strategy at New York-based Rafiki Capital.
“My conjecture is that cryptocurrency holders are trying to decide whether to abandon Bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them.”
Bitcoin futures maturing on Wednesday on the Cboe Global Markets Inc’s Cboe Futures Exchange were at $ 10,740, with 1,586 contracts traded, after having opened at $ 10,850. The open interest was 2,895 contracts. The Cboe 14 March 2018 contract was quoted at $ 11,130.
The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.
The MVIS CryptoCompare Ripple Index, which covers the performance of a digital assets portfolio which invests in Ripple (XRP), a cryptocurrency developed by Ripple Labs, dropped 15 percent to $ 7,298 on Wednesday.
That equity index has seen a 66 percent slide in its value since the start of the year. Ripple itself was quoted at $ 1.15 on website CoinMarketCap, down from a high of $ 3.81 on Jan 4.
“The run-up in Bitcoin created a mystique of one-way trading which is being shaken but the pricing requires faith that there will always be demand,” Englander wrote.
“This is far from guaranteed given the existence of alternatives with better characteristics.”
Reporting by Hideyuki Sano in TOKYO; Writing by Vidya Ranganathan; Editing by Shri Navaratnam