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Coinbase Custody Buys Xapo Institutions, Continuing Rapid Expansion

Coinbase Custody has reportedly acquired Xapo’s institutional business to become the world’s largest crypto custodian by assets under custody.

Major crypto exchange Coinbase announced the news in a post on the company’s blog Aug. 15. The news follows rapid growth on the part of Coinbase’s year-old custodial wing, which only two months ago reported assets under custody (AUC) valued at $1.3 billion. 

According to the announcement, the new acquisition puts Coinbase Custody’s AUC at $7 billion.

Xapo is itself a major crypto wallet provider who has apparently been in negotiations with Coinbase Custody over the sale of its institutions business since the middle of May this year.

The announcement claims that Coinbase Custody now stores on behalf of more than 120 clients in 14 different countries. In affirming the company’s commitment to its institutional services, Coinbase wrote: “Our institutional range of products provides a seamless, powerful and compliant ecosystem for our clients to trade, store and interact with their crypto.” 

Earlier this month, Cointelegraph reported that Coinbase Custody had added experts in New York banking regulation to its Board of Directors, suggesting plans to expand in the notoriously tough regulatory environment of New York State.

In July, Coinbase CEO Brian Armstrong said in an AMA session that he hoped to see Coinbase shift its focus from trading to broader adoption within the economy in the next five years.

As of press time, Coinbase had not responded to Cointelegraph’s request for comment.

$3B Ponzi Scheme Is Now Allegedly Dumping Bitcoin by the Hundreds

Amid a downturn in the cryptocurrency markets, the apparent swathe of Bitcoin sell-offs from a $3 billion Chinese Ponzi scheme could be to blame.

On Aug. 14, Dovey Wan — founding partner of blockchain-based investment company Primitive Ventures — called attention to the ongoing mass sell-offs from the fraudulent Chinese investment scheme, dubbed PlusToken.

10 million investors scammed of $3 billion 

As Wan outlines, PlusToken was created in mid-2018 and promised high yield investment returns at different rebate percentages to its four tiers of member — a classic Ponzi scheme structure. By early 2019, the project claimed to have over 10 million members. 

Wan has attached data on all the wallet addresses — including Bitcoin (BTC), Ether (ETH) and EOS — known to be associated with PlusToken and urgently called on exchanges and over-the-counter platforms to blacklist them.  

She notes that Chinese police hunted down a core team member of the scheme two months ago and have revealed that investors were scammed of a whopping $3 billion.

Alongside the addresses, Wan has attached investigative data from security audit firm Peckshield that reveals the money flow from PlusToken’s wallet as of early July, the date the sell-offs are thought to have begun:

Graph showing PlusToken’s money flow in early July

Graph showing PlusToken’s money flow in early July. Source: Peckshield via @DoveyWan

Incessant sell-offs

Despite the arrest, the cryptocurrency cannot reportedly be rolled back, as Wan explains:

“Many of their BTC addresses are started with P2SH which commonly used for mutil-sig, most likely some ppl who hold the keys are not being caught hence police can’t unlock the wallet. For EOS/ETH wallet can be diff case but so far police was not able to touch any of those.”

In an attempt to curb the impact of the sell-offs, she has recommended that Peckshield and blockchain analytics firm Chainalysis analyze the flows more closely, noting that PlusToken appears to be moving their funds in small batches of 50-100 BTC into exchanges. 

Chinese traders have reportedly claimed that an unknown address has in recent days been dumping 100 BTC incessantly on crypto exchange Binance, which Wan suspects to be connected to the scheme. 

As just reported, the PlusToken scheme was identified as being the largest single incident of loss in a recent summary of 2019 crypto-related theft from blockchain security firm CipherTrace, having purportedly defrauded investors of $2.9 billion.

Bitcoin Drops to $10,000 in Recent Downtrend

Despite exceeding $12,000 several times this month, Bitcoin (BTC) has slumped back to $10,000 in a recent downtrend. The number one cryptocurrency last traded below $10,000 on July 31.

A little earlier this month, experts were optimistic about Bitcoin continuing its rally, citing geopolitical tensions — particularly the ongoing United States-China trade war — as a reason for its possibly continuing success. Galaxy Digital CEO Mike Novogratz commented on Aug. 5 about this possibility, saying:

“With the yuan over 7.0, an FX war, instability in HKG and the beginnings of capital flight, $Btc rally could have real legs.”

Co-founder of market research firm DataTrek Research Nicholas Colas recently said that investors in Hong Kong and Argentina have used the original crypto as a safe haven asset. Forbes contributor and former executive director at Deutsche Bank Peter Tchir recently wrote in an article that Bitcoin is a leading indicator of hidden geopolitical tensions.

Crypto investors are reportedly now divided into three main camps regarding Bitcoin price predictions. The most bearish of the three say that Bitcoin is set to pull back to $8,500–$7,500 while the moderates say it will consolidate between $9,000 and $12,000 prior to its rewards halving in 2020.

The bulls remain unphased by recent price trends and remain confident that Bitcoin will retake its yearly high and continue upwards. Correlatory data with Tether (USDT) suggests that it will reach $20,000 in about a month.

At press time, Bitcoin is trading at $10,048, down 5.81% on the day and almost 16% on the week according to data from Coin360.

ING Poll: Austrians Are Most Skeptical of Bitcoin and Cryptocurrency

An online survey by banking giant ING finds that Austrians are the most skeptical of Bitcoin (BTC) and cryptocurrencies in general. The poll, including respondents from 15 countries, shows that Bitcoin-positivity is also weakening in other countries, according to Der Standard, Aug. 14.

The worst and getting worse

Austrians are generally conservative on investments, but on cryptocurrency they are very skeptical, with only 13% seeing digital currencies in a positive light.

Attitudes towards cryptocurrency worsened since last year’s survey. This year 17% of Austrians think that cryptocurrency is the future of digital payments, compared to 20% last year. And now only 14% believe it is a significant form of investment in contrast to 17% last year.

Just 5% of Austrians would consider having their salaries paid in Bitcoin.

According to the survey, Austrians know more than most nations about cryptocurrencies, but prefer to avoid risk and volatility as much as possible.

Bucking the trend

Of the 13 European nations (plus Australia and the United States) who were questioned, the majority saw a downturn in crypto-positivity compared to last year. The exceptions were Turkey, Poland and Romania.

Poland and Romania saw 43% and 44% of respondents with a positive opinion of cryptocurrencies. While in Turkey, 62% were crypto positive and 36% would be happy to be paid in Bitcoin.

Austrians do however see the value in blockchain as a technology. Energy trading firm, Graz, is planning to use a DLT-based platform in the move towards zero-carbon energy distribution.

Barclays May Be Ending Work With Coinbase, Transactions in GBP to Slow

British banking giant Barclays has reportedly cut ties with United States crypto exchange Coinbase.

As Coindesk reported on August 13, unnamed industry sources have said that Barclays will no longer be banking for Coinbase, severing a relationship that began when Coinbase opened a Barclays account in March 2018.

The news is expected to hit the crypto community hard, as, in addition to linking a major crypto exchange with a heavy hitter among the traditional banking establishment, the break may end Coindesk users’ access to the United Kingdom’s Faster Payments Scheme (FPS) and slow the exchange of cryptocurrencies for British pounds sterling dramatically.

The precise reason for the split is unknown, but one anonymous source speculated to Coindesk that: 

“It is my understanding that Barclays’ risk appetite has contracted a little — I’m not sure exactly why or what’s been driving that, maybe there has been some activity they are not happy with. But it’s about Barclays’ comfort level with crypto as a whole.”

Reportedly, Coinbase will continue its access to UK banking through Clearbank, a younger and less established operation.

This is not the first time that Barclays has taken a step back from increasing involvement in the crypto sphere. In August of 2018, the bank began official denials that it was opening a crypto trading desk in light of two employees removing information about work on digital assets from their respective LinkedIn profiles. 

Coinbase, for its part, does not seem to have suffered greatly in recent months. This July, it came out that the exchange had registered eight million new users in the preceding year.

Also in July, Cointelegraph reported that Coinbase’s CEO Brian Armstrong was looking to take the exchange beyond trading, expressing plans to expand Coinbase into wider promotion of crypto adoption.

Bitcoin Going to $100K After ‘Steady Accumulation,’ Says Crypto Trader

Former Goldman Sachs analyst turned Bitcoin (BTC)  maximalist Murad Mahmudov believes the top cryptocurrency will hit $100,000.

“Zoom out & think big”

In a tweet posted on Aug. 13, Mahmudov — who serves as chief information officer (CIO) at cryptocurrency hedge fund Adaptive Capital — wrote:

“At first glance this looks like a weak chop for the next week or so, but my intuition tells me there is steady accumulation happening at these levels. Don’t try to outsmart yourself on short timeframes, zoom out & think big. In my view, BTC is going to $100K per orangecoin.”

BTC-USD technical analysis

BTC-USD technical analysis. Source: @MustStopMurad

Mahmudov analyzed the coin’s key support levels, observing that “200MA [moving-average] /EMA [exponential moving average]/RSIbands [relative strength indicator]+Weekly support all point to 10.8 [$ thousands) but you may get a wick at most given the orderbook support across exchanges.”

Isolating $10,800 as an emergent key support level on the BTC/USD daily chart as well, he said that — with the caveat that he is not purporting to give financial advice — “If I were a betting man, I would be patiently and slowly adding at every key support.” 

To the sky

Mahmudov’s eye-popping $100,000 forecast has been recently echoed by Morgan Creek Digital Assets founder Anthony Pompliano, who considers that the recent dovish turn by central banks will be rocket fuel for Bitcoin’s price and help drive it to $100,000 by the end of 2021. 

Pompliano also cited bitcoin’s halving — the reduction of mining rewards in half in May 2020 — as a major factor likely to propel the coin’s valuation upwards.

This July, Cointelegraph reported that United States-based regulated crypto derivatives and clearing platform LedgerX was giving retail investors the chance to bet on Bitcoin hitting $100,000 by 2020.

At press time, Bitcoin is trading in the $11,200-300 range, fractionally down on the day, according to Cointelegraph’s Bitcoin Price Index.

SEC Postpones Decision on Three Bitcoin ETF Rule Change Proposals

The United States Securities and Exchange Commission (SEC) has delayed its decision on three Bitcoin (BTC) exchange-traded fund (ETF) proposals.

According to documents published on Aug. 12, the SEC has will put off a formal decision on proposed rules changes by NYSE Arca and Cboe BZX Exchange for three Bitcoin ETFs: by asset managers VanEck SolidX, Bitwise Asset Management, and Wilshire Phoenix.

According to the announcements, the SEC has delayed its decision for listing VanEck to Oct. 18, while Bitwise’s listing on NYSE Arca will be delayed to Oct. 13. The decision on Wilshire Phoenix’s United States Bitcoin and Treasury Investment Trust has been postponed until Sept. 29. The SEC stated in each case that:

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.”

ETFs are a type of security that tracks a basket of assets proportionately represented in the fund’s shares. They are seen by many as a step forward for the mass adoption of digital assets.

The VanEck proposal was filed in January, while Bitwise’s current application was filed in February. The Wilshire Phoenix proposal was published in the Federal Register on July 1, 2019.

Securities laws give the SEC the right to postpone its decision on proposed financial products in order to gather information or further deliberate on a rule change that would allow the listing.

Prior postponements and possible delays

Today’s news marks the latest in a series of delays on a Bitcoin ETF. The SEC had previously delayed its decision on VanEck and Bitwise’s ETF applications in March, and again in May.

Following the May decision, the SEC decided to publish 14 questions, available to the public, in order to gather more information and opinions about VanEck’s proposal.

Last December, SEC “Crytpo Mom” Hester Pierce told investors not to hold their breath when it came to waiting for a Bitcoin ETF. She then stated:

“Definitely possible could be 20 years from now or it could be tomorrow. Don’t hold your breath. The SEC took a long time to establish Finhub. It might take even longer to approve an exchange traded product.”

In June, SEC Chairman Jay Clayton said that the regulator must first feel comfortable with the security of cryptocurrency custodial services before it could move ahead on an ETF. Clayton also said that the SEC must be satisfied that protections are in place for preventing market manipulation.

Additional reporting by Max Boddy

Goldman Sachs Gets Bullish on Bitcoin With a Price Target of $13,971

In a note to customers, Goldman Sachs gave a bullish forecast for Bitcoin price. Shared on Twitter, Aug. 11, the note suggests a short-term target of $13,971.

Bullish analysis based on Elliott Waves

The target given is based on Elliott Wave Theory, which forecasts market trends by identifying extremes in investor psychology, along with price highs and lows.

According to the analyst, Bitcoin will rebound from support around $11,094, leaving room for at least one leg higher towards $12,916 and $13,971. This could complete a V wave count from July, producing a short-term top or consolidation.

The bigger picture, and longer-term forecast

Potentially, the analyst suggests, this could be the first leg of a five wave count. This would mean that any retracement from $12,916-$13,971 levels presents a buying opportunity, as after the consolidation period, price could once again resume higher unless it goes below the previous recent low of $9,084. 

The note suggests a short-term stop at $10,791. 

Goldman Sachs increasingly interested in Bitcoin and cryptocurrency

Goldman Sachs has taken an increasing interest in the cryptocurrency market. As Cointelegraph reported, in the last month it has gone from “looking at [the] potential” of launching its own virtual token, to making hires to accelerate the program.

China’s Digital Currency Is Ready, Central Bank Says

The People’s Bank of China (PBoC) has claimed that its digital currency “can now be said to be ready.”

According to PBoC deputy director Mu Changchun, a prototype that adopts blockchain architecture has been successfully developed after five years of research.

His announcement, made at the China Finance 40 Forum, was reported by local news site Shanghai Securities News on August 10.

Two-tier operating system

Mu said issuing a digital currency using a pure blockchain architecture would be difficult to achieve in a country as big as China because retailers require high concurrency performance.

The digital currency is also going to adopt a two-tier operating system to cater to the nation’s “complex economy with a vast territory and a large population,” with PBoC on an upper level and commercial banks on a secondary level. According to Mu, this will improve accessibility, enhance adoption rates among the public, and promote innovation among commercial entities.

According to the PBoC executive, the digital currency is designed to be suitable for “small-scale retail high-frequency business scenarios.”

A threat to the United States?

As reported by Cointelegraph on Aug. 9, the PBoC has been planning to get ahead of the U.S. and Facebook’s Libra by issuing a national cryptocurrency, as American politicians slam the brakes on the social network’s stablecoin because of regulatory concerns.

However, despite the upbeat remarks by Mu, it remains unclear exactly when China’s digital currency will actually launch.

XMR Cryptojacking Malware Smominru Updated, Now Targeting User Data

Malware Smominru mines Monero (XMR) on at least half a million infected computers and now also steals sensitive personal data.

An updated malware

Cybersecurity company Carbon Black claimed that its Threat Analysis Unit “uncovered a secondary component in a well-known cryptomining campaign” in a report published on Aug. 7. According to the firm, the malware has now been updated to “also steal system access information for possible sale on the dark web.” Per the report, the update is part of a broader trend in malware development:

“This discovery indicates a bigger trend of commodity malware evolving to mask a darker purpose and will force a change in the way cybersecurity professionals classify, investigate and protect themselves from threats.  ”

The change in the malware was first discovered during an investigation into anomalous activity behavior seen across a handful of endpoints. When investigating, the researchers found “sophisticated, multi-stage malware that was sending detailed system metadata to a network of hijacked web servers.”

Far reaching implications

According to the researchers, this trend will have far-reaching implications for the cybersecurity space. More precisely, according to the report, it will “catalyze a change in the way cybersecurity professionals classify, investigate and protect themselves from threats.”

As Cointelegraph reported yesterday, computer analysts at cybersecurity firm Zscaler ThreatLabZ have found a new type of trojan that targets cryptocurrency users.

Cointelegraph first reported the discovery of Smominru in February of 2018, though the malware had allegedly been infecting computers since May 2017.

Crypto Exchange Binance Points out a Dusting Attack Against Litecoin

Cryptocurrency exchange Binance claims that a dusting attack against fourth-biggest altcoin, Litecoin (LTC).

A large scale attack against privacy

The official Twitter exchange of cryptocurrency exchange Binance claimed that a major attack against users of altcoin Litecoin took place yesterday. The firm made this claim in a tweet on August 9:

“Approximately 5 hours ago there was a large-scale dusting attack on $LTC @Litecoin users.”

The tweet also links to a transaction — which according to Binance is part of the attack — sending a fraction (0.00000546 LTC) of a coin to 50 addresses. Furthermore, the exchange also links to an explanation of a dusting attack, which defines it in the following way:

“A dusting attack refers to a relatively new kind of malicious activity where hackers and scammers try and break the privacy of Bitcoin and cryptocurrency users by sending tiny amounts of coins to their personal wallets.”

A data acquisition strategy

The way this kind of attack works is that the attacker can then track down the transactional activity of these wallets. By analyzing this data, the attacker tries to determine the identity of who controls those wallets.

As Cointelegraph reported at the end of the January, research at the time cited dusting as one of the major threats to cryptocurrencies.

New Jersey Governor Signs Bill to Establish Blockchain Task Force

Governor of New Jersey Phil Murphy recently signed bill S2297, which is an act to create a so-dubbed New Jersey Blockchain Initiative Task Force. The purpose of the task force is purportedly to study blockchain solutions for the benefit of the state.

The news that Murphy passed this bill comes by way of an announcement on the official site of the state of New Jersey on Aug. 8. According to the press release, the taskforce will study the risks and rewards related to blockchain and distributed ledger technology; public blockchains, private blockchains and consensus algorithms; current projects and use cases around the world and their potential within the state; and what laws could be changed for secure and paperless recordkeeping.

Task force will compile six-month report

The task force will contain 14 members who are appointed by officials in various positions of government.

The group will have 180 days after it first convenes to report on its findings and will include a cost-benefit analysis of introducing blockchain tech into government agencies, as well as the force’s recommendations on implementing such solutions.

The task force will be headed by the states Chief Technology Officer Chris Rein. Rein remarked that he was “excited to evaluate and help shape how our state government can best use, and optimize, blockchain technology.” 

Senator James Beach, who sponsored the bill, commented on how he feels confident that blockchain has a place in local government as a type of security measure:

“In an age where digital information needs protecting, blockchain is a technological innovation that will protect us from hackers and those seeking to steal our information […] I believe that whatever the taskforce decides, there is a place for blockchain to be used in local governments to protect them from the ever increasing dangers of the Internet.”

Regulatory enforcement for crypto in New Jersey

As previously reported by Cointelegraph, the state of New Jersey has recently taken steps to protect its citizens against two allegedly fraudulent initial coin offerings (ICOs). The Bureau of Securities in New Jersey has claimed that the companies Zoptax and Unocall are engaged in fraud via their unregistered ICOs, and has called on them to end their offerings immediately. The bureau claimed that the two companies had previously issued “materially false and misleading statements and/or omitting to state material facts in connection with the offer and sale of its securities.”