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Winklevoss Twins on Bitcoin: ‘Wall Street Has Been Asleep at the Wheel’

The Winklevoss twins — Bitcoin (BTC) bulls and founders of the Gemini crypto exchange — say its retail investors who are still largely reaping the benefits of the crypto market.

In an interview with CNN Business on Aug. 22, Tyler and Cameron Winklevoss gave their perspective on Bitcoin as an investment, industry risks and the traditional financial sector’s approach to the new asset class.

Buying a piece of the new internet of money

While many still regard Bitcoin as too risky a bet for the average investor, Tyler argued that on the contrary, the retail sector remains one step ahead of financial institutions when it comes to crypto. He argued that:

“Unlike the internet, which you couldn’t buy a piece of, you can actually buy a piece of this new internet of money. It’s still a retail-driven market, from day one […] and a lot of people have done really well. Wall Street has been asleep at the wheel.”

Of all traditional investments, Cameron added, Bitcoin is most similar to gold — a new store of value for the digital era. And while it may be volatile, it’s the future, he said, underscoring: “We had to invest because we were afraid of missing out, we couldn’t miss out on this future.”

Over-hyped risks

While the twins were, as ever, keen to demonstrate their readiness to liaise with regulators — “compliance is the DNA of our business” (Cameron) — they nonetheless called out a degree of alarmism that continues to cloud perceptions of the risks associated with crypto.

Facebook’s Libra, Tyler argued, hasn’t even been launched — no one’s using it for anything illicit — and yet there’s a regulatory din surrounding it already.

And while Bitcoin may have been used by bad actors — think Silk Road and the Kremlin’s Internet Research Agency during the 2016 U.S. elections —  many of those are now in jail, he emphasized. 

“Smart criminals,” Tyler noted, “aren’t using Bitcoin, because it’s actually very traceable” — with ever more sophisticated blockchain forensics tools being developed. 

The bottom line: “more criminals have used the dollar than anything else.”

As recently reported, the Winklevoss Twins have revealed they are open to partnering with archrival Mark Zuckerberg on Libra, with the caveat that they still need to learn more about the full details of the project.

Crypto Advocate Patrick Byrne Resigns as CEO of Overstock

Noted crypto advocate Patrick Byrne has resigned as CEO of Overstock.

Per a letter of resignation and company statement posted on Twitter Aug. 22, Patrick Byrne has stepped down as CEO of Overstock.

Having led crypto-friendly e-commerce at the company, including the launch of tZero, Overstock’s crypto token platform, and Overstock’s acceptance of Bitcoin payment, Byrne’s resignation follows the announcement of disappointing Q1 earnings for 2019.

More directly, Byrne cited the recent announcement of his controversial relationship with Maria Butina as the impetus for cutting ties with Overstock. 

In his letter of resignation, Byrne reaffirmed his faith that “the blockchain revolution will reshape key social institutions.” However, it is questionable to what degree this faith will direct Overstock’s future in Byrne’s absence. 

TZero reported pre-tax losses of $12.6 million in Q4 of last year, which did not diminish Byrne’s apparent confidence in the initiative.

Per an Overstock press release issued later on Aug. 22, Jonathan Johnson will fill Byrne’s shoes as CEO on an interim basis, while Kamelia Aryafar will take Byrne’s place as board member and executive vice president of Overstock Retail.

In September of last year, Cointelegraph reported on Byrne’s sale of over $20 million of stock in Overstock, in response to which he assured the public “don’t worry, I’m still in the game.”

Bitcoin Price ‘Not at the Top’ of New Bull Cycle Yet, Data Shows

Bitcoin (BTC) prices have far higher to go during their current market cycle if crowd sentiment takes charge, according to analysis of the Bitcoin Days Destroyed (BDD) technical metric.

In social media posts on Aug. 22, Hans Hauge, senior qualitative researcher at crypto investment fund Ikigai, identified Bitcoin sentiment as being similar to early 2017. That was just months before the cryptocurrency reached its all-time high of $20,000.

In a tweet accompanied by a corresponding chart, Hauge wrote: “Bitcoin bubble tops are clearly identified with a dark red cluster of Adjusted Binary BDD.” He added:

“Until that happens, we’re not at the top. Public opinion is key here because that red cluster is caused by the assumption of the crowd and is self-fulfilling (reflexivity).”

What is BDD?

BDD refers to the amount of time between movements of an amount of Bitcoin. Higher prices tend to coincide with coins moving more often — and at present, Hauge says the opposite trend is apparent.

Coupled with this, as Cointelegraph recently reported, the Bitcoin Fear & Greed Index, which also measures market sentiment, remains near the bottom of its possible range. 

“That’s the exact thing you should be looking for if you’re buying the dip for the long-term,” Hauge advised.

Bitcoin accumulation phase due for timeout

BTC/USD has languished in an uninspiring sideways pattern for much of this month, leading to warnings that a downturn is on the way. 

Next in line could be a trip to the $7,000 range, according to another trader who argues that such a pullback remains historically plausible and would not suggest a bear market.

Zooming out, other market analysts predict just the opposite: fresh gains to be characterized by next year’s block size reward halving due in May.

PlanB, the Twitter account championing the stock-to-flow method of predicting Bitcoin price, also suggested current behavior mimics that of early 2017.

“Bitcoin’s 3 month struggle to break the magical $10k feels like begin 2017 struggle to break $1k … we all know what comes next,” he tweeted last week.

Casa Releases Node Monitor Service to Improve Bitcoin Network Health

Casa, a crypto firm that provides a private key management service and Bitcoin node machine, has unveiled a node monitor and accompanying rewards program to promote Bitcoin network health.

Casa announced the new projects in an official blog post on Aug. 21. Per the announcement, the node monitor — called Node Heartbeats — relies on establishing a brief connection between Casa’s server and an online, synced and Tor-activated node owned by a customer. The rewards program lets Casa node users earn 10,000 SatsBack per week in exchange for performing 5 Node Heartbeat checks per week, on different days. 

SatsBack can reportedly be exchanged for Bitcoin (BTC) once a day on Casa’s Keymaster app, provided that a user has accumulated a minimum of 50,000 SatsBack points. Per the report, Casa believes that it is difficult for users to stay up to date on their nodes’ uptime and security. By providing an incentives program to increase node health, the company reportedly hopes to improve the overall health of the Bitcoin network.

Charlie Lee is a Casa investor

Litecoin (LTC) founder Charlie Lee announced just three days ago that he has invested in Casa. Lee praised Casa for driving BTC adoption, commenting:

“I have the same feeling about Casa today as I had about Coinbase when I joined in 2013 as the 3rd hire. Casa is making Bitcoin easy to use and that is extremely important for this space. Looking forward to great things!”

Lightning Labs launches a node monitor

As previously reported by Cointelegraph, Lightning Labs, the developer of the high-speed transaction protocol Lightning Network, recently launched an alpha version of a node monitor. The new tool, called Indmon, purportedly allows node operators to monitor node usage in real time. Network issues this year reportedly motivated the developers to create a tool for preemptively spotting node and network issues.

India: Supreme Court Gives Central Bank 2 Weeks to Justify Crypto Ban

India’s Supreme Court has slammed the country’s central bank over its handling of a cryptocurrency business ban and ordered it to address complaints.

Judge: RBI has not properly responded to representation

In the latest session of an ongoing hearing into the actions of the Reserve Bank of India (RBI) on Aug. 21, the court ruled that officials had not appropriately responded to concerns from the cryptocurrency industry over its actions. 

The RBI forbade banks from servicing crypto operators such as exchanges in July 2018 — effectively stopping such platforms from continuing to operate in India. 

On Wednesday, the move came in for severe criticism from Supreme Court Justice Rohinton Fali Nariman.

As summarized by advisory resource Crypto Kanoon, which was present at the hearing, Nariman gave the RBI just two weeks to justify its actions.

“Now justice Nariman questions RBI why you have not properly responded to the representation. You just said that we are forwarding to Govt. Angrily says this is not an answer,” one update on Twitter read.

RBI agrees to two-week deadline

Discussing the final outcome of the hearing, which is now over, Crypto Kanoon summarized:

“Case takes the most unlredictable turn. Justice Nariman directs that RBI must respond to the representation in the manner appropriate. Offers to defer the case for 2 weeks as part heard, let the answer come on reconsideration of banking ban by RBI. RBI has agreed.”

The case comes at the same time as the Indian government considers making cryptocurrency illegal for all Indians. In July, a government committee recommended Delhi moves to ban all tokens except an official digital version of the rupee. 

Subsequently, as Cointelegraph reported, an expert estimated the country would lose a market worth around $13 billion if it signed the ban into law.

Facebook-owned WhatsApp Looks to Launch Digital Payments in Indonesia

Facebook-owned messaging service, WhatsApp, is purportedly in preliminary talks with multiple digital payments firms as well as a state-owned bank to launch digital payment services in Indonesia. 

Reuters reported that they had learned of this development from anonymous sources on Aug. 20. According to the report, WhatsApp is currently negotiating with transportation booking service Go-Jek, mobile payments provider DANA, fintech startup OVO and state-owned Bank Mandiri. Bank Mindri operates a digital wallet service, per the report. 

WhatsApp’s plan for Indonesia is to support payments through digital wallets in the region, according to Reuters’ sources. The report further speculates that Facebook’s dealings in Indonesia could become a template that they later use to dodge local regulations, pertaining to bans on foreign digital wallets.

A Facebook spokesperson confirmed that WhatsApp was negotiating with financial partners Indonesia, but declined to provide specifics:

“WhatsApp is in conversations with financial partners in Indonesia about payments, however the discussions are in early stages and we do not have anything further to share at this stage.”

However, the sources reportedly said that Facebook’s deal with the three payments firms will be finalized imminently. The launch of these services is, however,  not expected until 2020, since WhatsApp is looking to launch in India at the same time or sooner, per the sources. According to the report, Facebook is still waiting on regulatory approval from India before they can launch WhatsApp-based payments. 

Libra in WeChat

As previously reported by Cointelegraph, Facebook intends to integrate its crypto wallet service, Calibra, into WhatsApp and all of its platforms. Calibra would host Facebook’s planned stablecoin, Libra. However, Calibra will not be available in India, or any countries with a ban on cryptocurrency. A Calibra spokesperson commented on this in April, saying:

“The libra blockchain will be global, but it will be up to custodial wallet providers to determine where they will and will not operate. Calibra won’t be available in U.S.-sanctioned countries or countries that ban cryptocurrencies.”

Max Keiser: New Bitcoin Network Hash Rate High Suggests Price Is Next

The Bitcoin (BTC) hash rate has broken yet another new all-time high, according to Aug. 19 data from monitoring resource Blockchain.com.

The top coin’s hash rate has continued to break previous records throughout summer, today hitting an whopping 82.5 TH/s.

Bitcoin network hash rate, 1-year chart

Bitcoin network hash rate, 1-year chart. Source: blockchain.com

In a tweet posted earlier this month, Bitcoin investor Max Keiser reiterated his mantra that:

“Price follows hashrate and hashrate chart continues its 9 yr bull market.”

The argument goes that the higher the Bitcoin hash rate, the more secure the network, the higher the investor confidence will be, driving up demand. Therefore, Keiser argues that price is playing catch up with network fundamentals.

Network Fundamentals

The hash rate of a cryptocurrency — sometimes referred to as hashing or computing power — is a parameter that gives the measure of the number of calculations that a given network can perform each second. A higher hash rate means greater competition among miners to validate new blocks; it also increases the amount of resources needed for performing a 51% attack, making the network more secure.

The string of new records posted throughout summer is a bullish sign, with analysts and traders alike buoyed by signs of the strength and robustness of the network.

Looking ahead

Bitcoin’s halving — a pre-coded 50% reduction of block rewards for miners— remains some time away: May 2020

While the event can have bullish implications for a coin’s price (by increasing scarcity), its impact on miners is keenly watched, with some concerned that lower block rewards will deter network participants and adversely impact the network’s hashing power.

This summer, Litecoin (LTC) creator Charlie Lee — who had forecast a post-halving shock to the coin’s mining ecosystem — had his expectations overturned when the network’s post-event hash rate was revealed to be just as robust as ever.

New York Court Rules That State Attorney Has Jurisdiction Over Bitfinex

The New York State Supreme Court has ruled that the New York Office of the Attorney General (NYAG) has jurisdiction over cryptocurrency exchange Bitfinex.

According to a court filing on Aug. 19, this will allow the NYAG to continue its investigation of the exchange over allegations of fraud and misleading investors. 

In the filing, Judge Joel Coehn dismissed a motion by Bitfinex to terminate an action by the NYAG that would prosecute Bitinex under a New York law — the Martin Act. The NYAG originally alleged that Bitfinex and associated stablecoin firm Tether covered up an $850 million loss and in doing so, misled investors in the state of New York.

The allegations have resulted in a protracted legal battle between Bitfinex and state prosecutors, with the exchange claiming that it spent $500,000 and hired over 60 lawyers in order to comply with documentation requests by the NYAG.

The issue of jurisdiction has recently become a primary issue of contention in the case. Legal representatives for both Bitfinex and Tether have previously submitted documents to the court, stating that neither firm served customers in New York — which has a uniquely stringent regulatory regime for cryptocurrencies.

The lawyers claimed that, even should the state be able to prove that they had served New York clients, it could not establish whether those customers were harmed by the exchange or stablecoin issuer’s alleged actions.

Today’s ruling by Justice Cohen denies Bitfinex and Tether’s motion to terminate the NYAG’s action on the grounds that it was extra-jurisdictional in addition to dissolving a temporary stay of the state’s investigation. 

Bitfinex’s claims that it did not serve New York-based customers is further complicated by reports that United States-based users are still able to access the platform by simply lying on a pop-up query about their geographical location.

Binance Reveals ‘Venus’ — Its Own Project to Rival Facebook’s Libra

Top cryptocurrency exchange Binance is launching an open blockchain project “Venus” focused on developing localized stablecoins worldwide.

In an announcement published today, Aug. 19, the exchange argues it is well-positioned to launch such a currency ecosystem in light of its existing public chain technology, Binance Chain, wide user base and already established global compliance measures.

Leveraging existing know-how

The exchange says it is seeking partnerships with governments, corporations, technology firms, and other cryptocurrency and blockchain projects in order to develop a new currency ecosystem that will empower both developed and developing countries

The exchange’s vision for the project, per the announcement, is to “build a new open alliance and sustainable community” that enlists partners who wield influence on a global scale.

Binance Chain, as the announcement notes, has already been running several native asset-pegged stablecoins, including a Bitcoin (BTC)-pegged stablecoin (BTCB) and the Binance BGBP Stable Coin (BGBP) pegged to the British Pound.

Binance says it will leverage its existing infrastructure and experience with various regulatory regimes to consolidate a compliance risk control system and build a multi-dimensional cooperation network for the Venus project.

Vying with Libra

Binance’s ambitious new venture appears to compete directly with plans from social media titan Facebook to launch a fiat-pegged stablecoin, Libra, that would power a global crypto payments network embedded into the company’s three wholly-owned apps: WhatsApp, Messenger and Instagram.

With its choice of name, “Venus,” Binance is also stepping into the astrological waters of both Facebook’s Libra project and the Winklevoss Twins’ Gemini exchange and Gemini dollar.

US Lawmakers to Visit Switzerland to Discuss Crypto, Facebook’s Libra

A delegation of the United States House of Representatives will visit Switzerland on cryptocurrency concerns, with Facebook’s not-yet-released stablecoin Libra being in the focus.

As local weekly news outlet NZZ am Sonntag reported on Aug. 17, a six-member delegation from the House Financial Services Committee is going to meet with Swiss Federal Data Protection and Information Commissioner (FDPIC) Adrian Lobsiger to exchange views about digital currencies.

A spokesperson told NZZ am Sonntag that Libra will be the focal point of the dialogue between the regulator and U.S. lawmakers. The delegation is led by the chairwoman of the House Financial Services Committee, Maxine Waters, who previously requested that Facebook halt Libra’s development until the purported risks it poses could be properly understood.

Swiss regulation

The visit from U.S. legislators aims to clarify regulatory issues surrounding Libra. In hearings before the House Financial Services Committee in July, some representatives expressed their discomfort with the coin being regulated from Switzerland. 

In the hearings, Facebook’s David Marcus assured Representative Bill Huizenga that Facebook had been in touch with the Swiss Financial Market Supervisory Authority.

The head of communications at the FDPIC, Hugo Wyler, subsequently said that Facebook had not contacted the regulator regarding the registration of its cryptocurrency project. The FDPIC then sent a letter to the Libra Association — the stablecoin’s proposed governing body — asking for details about Libra:

“The FDPIC stated in his letter that as he had not received any indication on what personal data may be processed, the Libra Association should inform him of the current status of the project so that he could assess the extent to which his advisory competences and supervisory powers would apply.”

During a hearing before U.S. House of Representatives in mid-July, Marcus fielded questions as to why the company had chosen to register its Libra Association in Switzerland rather than the U.S. “The choice of Switzerland,” Marcus claimed, had “nothing to do with evading regulations or oversight.” Marcus argued that the jurisdiction is an international place conducive to doing business.

Chainzilla and Pundi X to Enable Retail Bitcoin Payments in Panama

Cryptocurrency startup Pundi X announced that its point-of-sale payment gateway (XPOS) will soon be launched in Panama and its surrounding regions. Blockchain development company Chainzilla joined the initiative as a local distributor.

Combining cryptocurrency and traditional payments in one terminal

On Aug. 14, Cointelegraph in Spanish spoke with Chainzilla CEO, Charles Gonzales, to find out more details. According to Gonzales: 

“Recently, Pundi X integrated its module into the Verifone X990. This is an important development because this payment processor is compatible with both cryptocurrency and traditional payments. […] That means that a seller can process crypto payments alongside other Visa and Mastercard payments, it’s all in one device.”

As well as acting as the distributor of the XPOS terminals in Panama, Chainzilla will launch tools for merchants to immediately convert their Bitcoin (BTC) and other cryptocurrency payments into the local currency or stablecoins.

Opportunities through education

The first of the new payment processors will arrive in Panama in two weeks and will be demonstrated by Chainzilla at Revolve Summit for entrepreneurs. Chainzilla will also offer the first blockchain course in the country with the help of Panama’s Chamber of Digital Commerce and Blockchain, along with education startup The Blockchain Space, in October 2019.

When asked about the fintech scene in Panama, Gonzales replied: 

“The fintech sector is fragmented in Latin America. Each country acts as an island that has its own regulations, which are often different from those of its neighboring countries. This creates difficulties in developing international services. These challenges are difficult and they will take time to resolve but it all starts with education. That’s why we’re focusing on educating the people, companies, and government entities we interact with.”

As Cointelegraph reported, it was only last month that Pundi X integrated its crypto payment module into the Verifone device.

QuadrigaCX Users Request Details on How EY Lost 103 Bitcoins

Users of now-defunct Canadian cryptocurrency exchange QuadrigaCX are requesting further information concerning the recent loss of 103 Bitcoins (BTC) during the funds’ recovery.

An unfortunate loss

As Cointelegraph reported in February, one of the Big Four accounting firms — EY (formerly branded as Ernst & Young) — was appointed by QuadrigaCX as an independent third party to monitor the proceedings in a creditor protection case.

Ey announced at the time that “Quadriga inadvertently transferred 103 Bitcoins valued at approximately $468,675 to Quadriga cold wallets, which the Company is currently unable to access.” Currently, the coins would be worth $1 million.

Industry news outlet Coindesk reported on Aug. 16 that — six months after the accident — the auditor has not yet given any insightful information concerning how the loss occurred. 

According to the article, all the information disclosed came from the report released by EY in February, in which the company declares that the loss was caused by a platform setting error. QuadrigaCX creditor Ali Mousavi told the outlet:

“This sounds like gross negligence to us and many of us want to hold EY accountable for what happened. […] Instead of giving us the details, they [struck] a deal with [law firm Miller Thomson] to keep the details confidential and [are] making it harder for us to hold EY accountable.”

Creditors want a different legal firm

Creditor Xitong Zou also said that “EY does not seem like they want to explain what happened when that’s the very least they could do” since “it was our money, after all.” He also claims:

“A lot of people want [Miller Thomson] replaced. […] Although I don’t think that’s going to happen.”

EY has reportedly recovered about $25 million, with a judge awarding $1.6 million in fees and costs to all the firms involved in the case. The auditor also aims to raise another $9 million by selling assets of the exchange’s CEO.

As Cointelegraph reported in a dedicated follow-up piece, the crypto community has recently been actively discussing the fate of QuadrigaCX’s 30-year-old founder, Gerald Cotten, who reportedly died in India from a fatal disease in December 2018.

Recently, Cointelegraph also recounted the biggest alleged crypto heists.