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Leaked Tax Filing: CEO of Under Fire Brazilian Firm Owns 25,000 Bitcoin

The CEO of Brazilian cryptocurrency firm Grupo Bitcoin Banco has claimed 25,000 Bitcoins (BTC) — a staggering $209 million as of press time — on a tax filing, while also saying his firm is unable to pay out customer funds as the result of a hack. 

The tax document was shared with Cointelegraph by an individual close to Brazil’s tax authority, the Department of Federal Revenue (RFB), who asked to remain anonymous for security reasons. According to the document, the exchange’s CEO, Claudio Oliveira,claimed his crypto holdings in a 2018 filing with the RFB. Although the document is genuine, it is not possible to know if the numbers reported are accurate or the most current, due to tax filings in Brazil being self-reported.

Screenshot of Oliveira’s 2018 tax filing

Screenshot of Oliveira’s 2018 tax filing. Source: Cointelegraph

Despite the fact that the tax filing is for Oliveira’s personal funds, legal experts told Cointelegraph that Brazilian law could potentially demand the CEO’s personal assets to cover the firm’s debt. Oliveira’s Bitcoin is more likely to be seized if his company is found to have engaged in fraud and was not the victim of a hack, as the company’s representatives have stated.

Firm under investigation

Oliviera’s personal holdings are surfacing amid the company’s recent legal troubles and an ongoing police investigation into its activities.

In May, Grupo Bitcoin Banco claimed that it had become embroiled in a security breach that saw some customers double the balances of their accounts and withdraw money that did not exist, as Cointelegraph Brasil reported. The cost of the purported hack could amount to 50 million Brazilian reals ($13 million).

Although Grupo Bitcoin Banco has always maintained it was the victim of a hack, the firm has yet to offer any evidence in support of that claim. On June 6, a judge from the State of Paraná ordered the firm to provide evidence of the hack in its defense against a former client’s lawsuit. Grupo Bitcoin Banco never shared evidence of the hack with the court. On July 2 the firm settled with the former client for an undisclosed amount.

Starting in May, customers of all of Grupo Bitcoin Banco’s exchanges had their funds frozen, preventing withdrawals and trades. At that point, the firm became the subject of several lawsuits and legal actions.

In June, a judge at the Court of Justice of the State of Sao Paulo froze accounts associated with the firm amid both complaints from the exchange’s clients that they could not withdraw their funds and allegations of “abusive practices.” The clients claimed that they had a total of 726,630 reals (about $174,000) on the platform and urged the judge to seize the funds.

As of mid-August, over 20,000 clients had been affected, with Grupo Bitcoin Banco facing roughly 200 ongoing lawsuits, ranging in damages claimed from $3,000 to $3 million. Following searches of the company’s bank accounts, the court could not find money to reimburse the customers who had unsuccessfully tried to withdraw their invested funds. But at the time courts were not aware of Oliveira’s personal Bitcoin holdings.

The cover page of Oliveira’s 2018 tax filing

The cover page of Oliveira’s 2018 tax filing. Source: Cointelegraph

Military police officers raided the headquarters of Grupo Bitcoin Banco on Aug. 20 to seize an unspecified quantity of Bitcoin. The police action consisted of 10 uniformed officers and four police vehicles. A legal representative for Grupo Bitcoin Banco alleged that authorities used excessive force. 

Military police of Paraná State outside GBB headquarters during the Aug. 20 raid. Source: Ezequiel Gomes / Cointelegraph Brasil

Tax filing includes Bitcoin, cars, properties

On Oliveira’s annual adjustment statement for the 2018 calendar year — filed with the RFB in 2019 — 25,000 Bitcoins are listed under the column for claiming goods and dues. 

The tax document shows that Oliveira initially declared that he owned 20,000 Bitcoins, but later amended the amount to 25,000 Bitcoins. 

However, Oliveira’s statement does not include an associated wallet address for the Bitcoin, making it impossible to verify both the actual existence of the BTC and potential transactions made with it.

The balance reported on the tax statement is personal and is not linked to Grupo Bitcoin Banco.  

Per the filing, Oliveira traded 1,447 BTC ($14.8 million at press time) with various companies and individuals, including Sao Paulo-based telecommunications firm BWA Brasil Tecnologia Digital and trading platform Negociecoins. 

After viewing a redacted version of Oliveira’s tax document, José de Araujo Novaes Neto, a partner at Novaes e Roselli Advogados, told Cointelegraph:

“Bitcoin is like a regular asset and it must be declared to the RFB with your properties and your other assets. BTC is like any other property, even if it’s not regulated. 

“If he [Oliveira] were to sell some of his BTC without declaring it first, he would then have to explain where this fiat money came from. So, according to the annual tax declaration rules, he must declare his BTC if he has any.”

The tax filing also includes several cars, which were subject to a search-and-seizure warrant earlier this year, including a BMW X5, two Land Rover Sports, a Maserati Ghibli and a Mercedes Benz C300.

The document also notes shares in various companies as well as bonds, savings and real estate holdings of 14 different properties in various locations across Brazil. 

What now? Legal experts weigh in

GBB argues that the private Bitcoin holdings of Oliveira are not in anyway related to the GBB’s Bitcoin holdings or the debts to its clients. In a statement to Cointelegraph, a GBB representative commented on the tax document, saying:

“It should be clarified that the data of a private individual are totally different from that of an individual that legally belongs to the group [Grupo Bitcoin Banco].”

However, local legal experts told Cointelegraph that Brazilian law could theoretically demand Oliveira’s personal assets — the most valuable of which is his reported BTC holdings — to cover Grupo Bitcoin Banco’s debt. There is precedent for seizing private assets in recent Brazilian history, most notably when former President Luiz Inácio Lula da Silva had his assets frozen during a sweeping corruption probe known as “Operation Car Wash.” 

In another case more akin to the predicament with Grupo Bitcoin Banco, the assets of Eike Batista and his sons — totaling 1.6 billion Brazlian reals (about $385 million) — were frozen. Batista reportedly used a Panama-based company, The Adviser Investments, to manipulate markets, commit insider trading and conceal clients’ financial activity. A Rio de Janeiro judge had the Batista family’s assets seized for the duration of the criminal investigation.

Speaking with Cointelegraph, Novaes Neto explained the relationship between company debt and the owners of those companies:

“There is a distinction between the individual and the legal entity. In general, the owner is not charged with a company’s debt. But there is a legal provision that allows, in certain situations, to request the ‘disregard of legal personality’ and reach the partners of the company individually, as individuals. This happens in cases where there is abuse of legal personality, misuse of purpose, property confusion, among other things. In such cases, the judge may determine the extent of the charge to the private property of the partners or directors of the legal entity. This has become increasingly common in Brazilian law.”

Francisco Sandrin, a federal district public defender and professor of business law, told Cointelegraph that in cases of criminal fraud, a company’s debts may be transferred to the owners or directors of a company: 

“Once the fraud is recognized, the judge may order the attachment of the partners’ assets to pay the company’s debts and vice versa.” 

With the extent of Oliveira’s personal Bitcoin wealth now a matter of public record, it remains to be seen if he will be forced to use those funds to pay Grupo Bitcoin Banco’s debts. That all depends on whether judges determine if Grupo Bitcoin Banco was indeed hacked or if this has been a case of fraud all along.

Olivia Capozzalo and Kollen Post contributed to this report.

SEC Reaches $24 Million Settlement With EOS Parent Firm Block.one

The United States Securities and Exchange Commission (SEC) has reached a settlement with Block.one to pay $24 million in penalties for conducting an unregistered initial coin offering (ICO).

On Sept. 30, the SEC announced in a press release that it has settled the charges against the firm behind the EOS network and corresponding token in the form of a civil monetary penalty. Block.one settled the charges without admitting or denying the findings.

According to the press release, Block.one’s ICO of 900 million tokens “began shortly before the SEC released the DAO Report of Investigation and continued for nearly a year after the report’s publication.”

Block.one raised the equivalent of billions of dollars but failed to register its ICO as a securities offering in agreement with the U.S. federal securities laws, “nor did it qualify for or seek an exemption from the registration requirements,” the SEC states. Co-director of the SEC’s Division of Enforcement Stephanie Avakian said:

“A number of U.S. investors participated in Block.one’s ICO. Companies that offer or sell securities to U.S. investors must comply with the securities laws, irrespective of the industry they operate in or the labels they place on the investment products they offer.”

Steven Peikin, co-director of the SEC’s Division of Enforcement added that Block.one did not provide ICO investors with the needed information, saying: 

“The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.”

The $24 million fine is not expected to make a significant dent, as it only represents a small portion of the $4 billion initial raise.

Block.one opens headquarters in Washington DC

Cointelegraph reported recently that Block.one opened its fourth global site located in the Washington, D.C. metropolitan region. The office is said to create 170 high-skilled jobs over a period of three years. Block.one CEO Brendan Blumer said at the time:

“Its proximity to the nation’s capital positions us close to the policy innovation around digital assets and distributed ledger technology in the U.S. This expansion opens up important new avenues of talent expansions for us at a time when there is rapidly increasing demand for blockchain-based technologies.”

BitPay Undergoes Security and Confidentiality Certification Audit

Major cryptocurrency payment services provider BitPay has undergone a security and confidentiality compliance review, the Service Organization Control 2 (SOC 2).

Per a Sept. 30 press release, business advisory company Aprio confirmed BitPay’s compliance with the SOC 2, a tech audit and a requirement for technology companies that assures that customers’ personal data is kept secure and confidential.

Passing an SOC 2 review means that the firm has met criteria set by the American Institute of Certified Public Accountants in regard to confidentiality, security, privacy, processing integrity and availability. Commenting on the evaluation, Dan Schroeder, partner-in-charge of information assurance services at Aprio, said:

“After thorough review, we have confirmed the design and application of BitPay’s payment system meets the standards set forth in SOC 2 for protecting customer data. SOC 2 reporting is an industry best practice standard that evaluates a company’s controls relative to matters such as securing transactional and other sensitive customer data.”

In mid-August, BitPay introduced new security measures on its platform, where users are required to undergo a one-time verification process that requires the input of data such as their Social Security number or passport number, as well as a photo ID. The measures were met with some skepticism, given the resistance that many in the cryptocurrency community have toward seeing their personal data stored in centralized troves.

SOC 2-compliant crypto and blockchain projects

In January,  cryptocurrency exchange Gemini announced that it had completed an SOC 2 Type 1 certification.

In April, blockchain security firm BitGo, which last year gained an SOC 2 Type 1 certification from Deloitte, upped its procedures to conform to the Type 2 requirements of the same standard.

Last month, about 15 global jurisdictions, including the G7 countries, announced that they will reportedly develop a system for tracking crypto transactions to prevent illicit uses of cryptocurrencies by collecting and distributing personal data on individuals.

Zcash Bug Could Reveal Shielded Full Nodes’ IP Addresses

A bug in all Zcash (ZEC) implementations and most of its forks could leak metadata containing the full nodes’ with shielded addresses (zaddr) IPs.

Komodo (KMD) core developer Duke Leto disclosed the bug in a blog post published on his personal website. A Common Vulnerabilities and Exposures (CVE) code has already been assigned to track the issue on Sept. 27. Leto explained:

“A bug has existed for all shielded addresses since the inception of Zcash and Zcash Protocol. It is present in all Zcash source code forks. It is possible to find the IP address of full nodes who own a shielded address (zaddr). That is, Alice giving Bob a zaddr to be paid, could actually allow Bob to discover Alice’s IP address. This is drastically against the design of Zcash Protocol.”

Per the announcement, everyone who published their zaddr or provided it to a third party could be affected by the vulnerability. Leto claims that users should consider their “IP address and geo-location information associated with it as tied to […] zaddr.”

Multiple cryptocurrencies affected

According to Leto, users who never used a zaddr, only used it over the Tor Onion Routing network or only to send funds, are not affected. Furthermore, Leto also claims that Zcash is not the only cryptocurrency affected and provides a non-exhaustive list.

The cryptocurrencies included in the list are Zcash, Hush, Pirate, Komodo smart chains with zaddr enabled by default, Safecoin, Horizen, Zero, VoteCoin, Snowgem, BitcoinZ, LitecoinZ, Zelcash, Ycash, Arrow, Verus, Bitcoin Private, ZClassic and Anon. Leto also points out that Komodo has already disabled the shielded addresses feature and transitioned it to the Pirate chain, which means that KMD no longer contains the bug.

As Cointelegraph recently reported, Electric Coin Company, which launched and supports the development of privacy-coin Zcash, recently published a paper describing a trustless cryptographic system called Halo.

Report: LedgerX Claims Ex-CFTC Chairman Stalled Approvals Due to Personal Bias

Cryptocurrency derivatives firm LedgerX alleges that former United States Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo obstructed the approval of its amended Derivatives Clearing Organization (DCO) registration because of personal bias against the firm’s CEO Paul Chou.

As Industry news outlet Coindesk reported on Sept. 28, LedgerX made the allegations in two letters obtained via a Freedom of Information Act request. The first letter — dated July 3 — states:

“We have strong reason to believe that this unreasonable delay that is in clear violation of the Commodity Exchange Act is related to the Chairman’s animus towards a blog post written by our CEO.”

Preferential treatment

Per the report, while Giancarlo did not answer the outlet’s request for comment, Chou confirmed that the letters are real, accurate and are only some of the messages sent by the firm to the CFTC. LedgerX claims that in January Giancarlo called one of its board members, explaining:

“[Giancarlo] told him that he was going to make sure our DCO order was revoked within two weeks, due to a blog post written by myself the previous year implying that preferential treatment was being given to larger companies so he could ‘cement his legacy.’ This refers to the ICE / Bakkt approval, which was running into issues that were frustrating the chairman.”

While the topics in the letter are quoted, it is unclear which blog post exactly he refers to.

Auditors “never seen this kind of thing before”

Per the outlet’s report, LedgerX was asked by the CFTC to acquire insurance and conduct a SOC 1 Type 2 audit. Furthermore, the company claims that one of the CFTC staffers tried to interfere with LedgerX’s audit. The company also reportedly notes that some auditors were “saying they had never seen this kind of thing before.” Chou claims that he later received apologies:

“Previous chairman wanted to revoke LX license bc Bakkt efforts not moving along. Having no legitimate reason to revoke our license, staff resorted to contacting our independent auditors to tamper with audit to give commission reason to revoke license. Staff admitted & apologized.”

In the second letter, dated July 11, the firm also notes that its application has been pending for nearly 250 days — now it is over 300. Per the report, the CFTC has now has 180 days to approve or deny an application under federal laws.

Reliance on the direct competitor

The letters also note that the CFTC’s swap data repository requirements force LedgerX to report to the Intercontinental Exchange’s ICE Trade Vault, and the latter company has already launched its own competing service — Bakkt. In the July 3 letter, LedgerX claims to have an audio recording of a call with ICE, adding:

“Later, we have on voice recording, when ICE staffers thought they had muted their side, that they were instructed to delay support for our SDR reporting so that we could not start trading — something we consider incredibly anticompetitive. We filed a formal complaint regarding this anti-competitive aspect which was not answered at all. A division head later admitted, in person, to our COO that I was correct in stating that certain entities were being preferentially treated by the Chariman’s office.”

Lastly, Chou also told the outlet that he has been excluded from the CFTC’s Technology Advisory Committee. He said:

“They didn’t tell me why but I think it’s pretty obvious why they did it. […] One of the issues they were going to talk about… was custody and LedgerX is essentially the only member that does custody right now so we were about to send Juthica.”

As Cointelegraph reported at the end of July, the CFTC has reportedly confirmed that LedgerX’s physically-settled bitcoin futures product has not yet been approved by the Commission.

ConsenSys and WWF Roll Out Platform for Transparency in Philanthropy

ConsenSys, a blockchain startup founded by Ethereum’s (ETH) co-founder Joseph Lubin, and the World Wildlife Fund (WWF) have jointly launched the Impactio platform to bring transparency into philanthropy.

Per an announcement made on Sept. 24, a new partnership between ConsenSys and the WWF resulted in an Ethereum blockchain-based platform dubbed Impactio designed to supervise and fund projects within nongovernmental organizations and standalone companies. The impetus behind the initiative is to trace how companies’ funds are spent within social impact projects.

What does Impactio solve?

Individuals and companies who utilize Impactio should submit their projects, providing clear objectives for aspects such as sustainability, inequality, emerging communities or the environment in accordance with the United Nations’ 17 Sustainable Development Goals.

After that, curators receive Impactio Tokens in a digital wallet, with the platform using a system based on ConsenSys’ research on Token Curated Registry (TCR) to curate and choose high-potential projects and subsequently present them to potential funders. The announcement further explains the TCR’s role in the process:

“It requires curators to stake their tokens to back a project, and for curators who wish to dispute that project to stake the same amount of tokens. If there are no other curators who object to the project, the project will be approved and surfaced for donors to decide on funding. If there are objections, curators can challenge the project by matching the tokens staked by the curator backing the project.”

According to Robby Greenfield, co-founder at ConsenSys Social Impact, “Many nonprofits struggle to show that they are using their funds effectively and how it aligns their funders’ goals.” Indeed, a law firm Nolo’s study revealed that 75% to 85% out of 220,000 nonprofit organizations improperly allocated their expenses.

Industry players embrace blockchain in philanthropy

As Francesco Nazari Fusetti, social entrepreneur and founder of Ethereum blockchain-based token AidCoin and full-service platform CharityStars, previously told Cointelegraph: “Charities must keep in touch with their donors all the way through the project, and keep updating them about the new milestones reached” in order to prove that a success story is true, as well as to ensure the work is sustainable. He added:

“Adding financials and proofs of payment definitely helps to create a success story, but only with crypto and blockchain we can aim to give full transparency about the use of funds.”

In early September, news broke that Rainforest Foundation US, a New York-based nonprofit NGO working in Central and South America, was hoping to support anti-deforestation efforts with crypto and blockchain tech.

Binance Charity, the philanthropic wing of major cryptocurrency exchange Binance, also began a campaign to help support victims of Hurricane Dorian.

NBA: Brooklyn Nets’ Spencer Dinwiddie Cannot Tokenize His $34M Contract

The National Basketball Association (NBA) notified Brooklyn Nets’ player Spencer Dinwiddie that he cannot tokenize his $34.4 million contract.

As The New York Times reported on Sept. 27, the NBA pointed out that Dinwiddie’s initiative goes against the collective bargaining agreement in a statement sent to the outlet. The statement reads:

“According to recent reports, Spencer Dinwiddie intends to sell investors a ‘tokenized security’ that will be backed by his player contract. The described arrangement is prohibited by the C.B.A., which provides that ‘no player shall assign or otherwise transfer to any third party his right to receive compensation from the team under his uniform player contract.’”

Dinwiddie, on the other hand, told the outlet that he intended to better illustrate the investment scheme to league officials, hoping to change their minds. He commented on his initiative:

“What better way to be invested in a player as a fan than to have some level of skin in the game. […] With the way mine works, if I play well in that player option year and we split the profits up the first year of my new deal, it greatly appreciates the return on this investment vehicle.”

Heightened fan involvement

Per the report, by tokenizing the contract Dinwiddie would have allowed investors to bet — and capitalize — on his ability to play well enough to earn an even more lucrative contract after the second year of his deal. As Cointelegraph reported on Sept. 16, the plan was to enable investors to buy into his three-year $34 million playing contract with his team.

According to the Times, he intended to raise $4.95 million to $13.5 million by offering an Ethereum-based security token developed by his company Dream Fan Shares. He also reportedly intended to guarantee to investors a few percentage points in interest over the duration of the contract and to set the minimum investment to $150,000.

As Cointelegraph recently reported, Turkish Football Club Galatasaray Spor Kulübü plans to launch Ethereum-based fan tokens in partnership with blockchain sports fan startup Socios based on sports tokenization platform Chiliz.

Report: Ethereum’s Gas-Guzzling Suspected Ponzi FairWin Funds at Risk

The biggest Ethereum contract in the industry, dubbed FairWin, is allegedly putting user funds at risk and continues to guzzle a major amount of gas on the network.

Multiple crypto social media users have been analyzing what they believe to be the fastest-growing Ponzi scheme on Ethereum. On Sept. 27, blockchain developer Philippe Castonguay warned:

“The http://FairWin.me Ponzi Scheme contains critical vulnerabilities that put all funds at risk. Spread knowledge (especially in Asia) Users need to withdraw their funds and stop interacting with the contract ASAP.”

Crypto community sleuths at work

A detailed Dune dashboard has been collated by security and anti-phishing researcher Harry Denley at Meta Cartel Ventures, giving an overview of the contract and its creators’ exploits.

Denley notes that “the FairWin contract is a suspected Ponzi HYIP scheme, which holds a significant amount of ETH in it.” 

His dashboard provides a link to a Reddit thread collecting details of 6 Ether (ETH) wallets that are allegedly accounting for high percentage levels — fluctuating around 50% — of network gas used and that are all purportedly spamming deposits to the same contract address.

FairWin ETH balance grouped by year month. Last updated Sept. 25.

FairWin ETH balance grouped by year month. Last updated Sept. 25. 

Source: FairWin Contract dashboard on Dune Analytics

One of the biggest-ever scams on Ethereum, users claim

A detailed allegation from Reddit contributor chutiyabehenchod on Sept. 20 outlined that FairWin is purportedly mainly shared on Chinese social media and blogs, and works as a 5-day period high yield investment program whereby users allegedly deposit 1-15 ETH and get a percentage return of 0.5-1% after 5 days. The post continues:

“It’s decentralized, however only 70% of the amounts deposited actually go back to pay the commissions of the older deposits. […] 30% is always taken! Once the account is dried out those that entered last will be punished by losing absolutely everything… likely some of them will be reinvestments. Currently with 40k ETH, 12k are already for the unknown scammers.”

The post concludes with the claim that FairWin could “be one of the biggest scams ever seen in Ethereum.”

Community members have further claimed that the contract is purportedly susceptible to being “drained by the owners,” with one commentator alleging “there is a separate attack black hats can do if the owners don’t stop it (by draining it themselves).” 

ETH network congestion

As reported just last week, Ethereum network participants are currently attempting to raise the network’s block size as a direct response to network congestion.

Rather than just gas-guzzling suspected Ponzis, some have attributed the uptick in network usage to stablecoin Tether (USDT), which has shifted its reliance from Bitcoin via the Omni Layer to the Ethereum blockchain.

When to Sell Bitcoin? ‘Never’ — Mark Yusko Says BTC Like Amazon Stock

Bitcoin (BTC) is a buy and it has never been the right time to sell it, serial investment manager Mark Yusko has told mainstream media viewers.

Yusko on Bitcoin: All indicators rising

Speaking to CNBC in an interview on Sept. 27, the founder, CEO & chief investment officer of Morgan Creek Capital Management compared Bitcoin’s ten-year history to Amazon

He was responding to concerns from regular cryptocurrency host Melissa Lee over the Bitcoin price, which fell below $8,000 on Thursday.

For Yusko, while the price of Bitcoin can go up and down, year-on-year growth gives a solid reason to buy and not sell it. 

“All the indicators of the network and the network value are rising; the price of any asset fluctuates,” he explained. 

Examples included network hash rate, transaction volume and wallet numbers, all of which have continued their upward trajectory this year. 

Betting on a bullish return

Yusko thus concluded that selling Bitcoin would be like selling shares in Amazon — so far, there has not been an advantageous point to do so. 

“In every year, including this year, it’s had a double-digit drawdown. The average peak-to-trough: 31%, twice 90%. When was the right time to sell? Never,” he said.

Earlier this month, Fundstrat Global Advisors co-founder Tom Lee predicted Bitcoin would rally once the S&P 500 put in new highs.

What Crash? Bitcoin Hash Rate Doubles in 24 Hours Despite Price Drop

Bitcoin (BTC) has already dispelled myths its hash rate suffered a 40% drop this week, reaching new all-time highs just days afterwards.

What hash crash?

As data from monitoring resource Coin Dance confirms, after the hash rate metric dipped from 104 quintillion hashes per second (h/s) to 57 on Sept. 23, it immediately reversed.

On Sept. 24, it doubled, reaching 114 quintillion h/s, just a touch away from the all-time highs of 121 quintillion h/s seen ten days previously. 

Bitcoin network hash rate

Bitcoin network hash rate. Source: Blockchain.com

As Cointelegraph reported, commentators initially appeared scared when hash rate dropped. Long considered a measure of commitment to the Bitcoin mining process, what appeared to be a sudden exodus of computing power sparked alarm. 

That feeling was compounded as BTC/USD itself shed 15% a day later — a common theory among commentators is that price action follows hash rate movements.

Dispelling the myths on Bitcoin health

Nonetheless, technical sources subsequently explained that the hash rate charts available online in fact give little idea of computing power involved in Bitcoin. Hash rate, they explained, is essentially unmeasurable, and the statistics are simply an estimate. 

Factors such as slow block times can disproportionately affect results, leading to overly ominous results such as this week’s fake crash, they added.

If the latest statistics are reliable, however, Bitcoin’s hash rate remains on its upward trajectory, around all-time highs. This contrasts with its drop in price: at press time Friday, BTC/USD was down 21% versus seven days ago.

Ex-UBS Head Wants His Crypto Bank to Tap $220B Cryptocurrency Market

Peter Wuffli, the former CEO of Switzerland’s largest bank UBS and director at Swiss crypto bank Sygnum, wants to tap the “$220 billion market of institutions and private individuals who already own cryptocurrencies.”

Local news outlet SwissInfo reported on Sept. 26 that Wuffli has shown excitement concerning the potential of crypto assets. In an interview, he told the outlet:

“The most immediate opportunity is the existing $220 billion market of institutions and private individuals who already own cryptocurrencies. Thousands of clients have contacted us for a one-stop-shop for asset custody, loans and trading cryptocurrencies seamlessly with fiat currencies.”

Asset tokenization is the next frontier

Wuffli noted that he believes the tokenization of assets such as company shares, real estate, art or commodities is the next frontier in the industry. However, he also admits that there are still many unanswered questions, and many of them are regulatory in nature.

Wuffli also praised the potential of Distributed Ledger Technology (DLT), pointing out the opportunity he sees in securitizing shares and building smart contract-based share registers. He foresees such a system providing a great deal of simplification:

“You can do away with spreadsheets and combining systems to pay dividends, do capital increases and trade on the secondary market. And trading could take place without long settlement times and counterparty risk.”

Yes to DLT, no to corporate currencies

Still, he claimed that — on a deeper, philosophical level — DLT is about market democratization. He said that he believes that “the longer-term potential is to create a more open, broader and easier cross-border access to assets.” 

Still, he also voiced a skeptical stance towards Facebook’s Libra stablecoin. While Wuffli admitted that he does not know about Facebook’s plans in detail and that he cannot really comment on the project, he voiced concern over the idea of corporate currencies in general. He adds that nation-states will not allow such assets to threaten their monopoly on currencies, saying:

“However, I do believe that the regulation of financial services and control over currencies are essential tasks of the state and that currencies cannot be decoupled from sovereign states. As soon as someone tries to challenge the sovereign monopoly on currencies they will not allow it, and for good reason. Besides, I don’t think people will treat private currencies like that without the power of a country and a political system behind it.”

As Cointelegraph reported in August, Sygnum received a banking and securities dealer license alongside Swiss crypto-specialized entity SEBA. Wuffli noted:

“One thing missing from my CV is that I have never been involved in the creation of a new bank. I am a curious person and I love new things, it’s energizing.”

Bitcoin Price ‘Manipulated’ Before Futures Settlement Dates: Research

New research this week has added to suspicions that futures settlement dates end up manipulating the Bitcoin (BTC) price.

Bitcoin drops 75% of the time before futures expire

According to findings from Arcane Research reported by Norwegian crypto news outlet Kryptografen on Sept. 24, CME Group’s Bitcoin futures settlement dates, in particular, appear to negatively influence BTC markets.

Analyzing price behavior from January 2018 to August 2019, the company found that 75% of the times immediately before CME issued payouts, Bitcoin fell. 

CME was one of the first operators to launch Bitcoin futures in December 2017. Since then, interest has peaked, with this year seeing frequent all-time highs for trading volumes.

Arcane published the numbers just hours before Bitcoin nosedived 15%, bottoming out at $8,000. That event happened to occur days before a major settlement date: on Friday, 50% of open interest in Bitcoin options is set to expire

The week’s timing is also conspicuous following the launch of a new futures product from institutional trading platform Bakkt. Despite volumes being low, executives have already claimed the effectiveness of the product in helping markets with price discovery. 

According to the company on social media, the unexpected drop in Bitcoin price was a sign of the market finding its true value. 

Mulling “deliberate manipulation”

For Arcane, however, such price behavior is highly suspect. 

“The figures thus support a hypothesis that the bitcoin price is manipulated in advance of CME settlement,” Kryptografen concluded. It added:

“However, the figures do not say anything about ‘deliberate manipulation’ or, for example, only a result of investors’ strategy of hedging.”

In August, Arcane hit the headlines again when separate findings suggested Bitcoin’s market dominance was in fact over 90%, rather than the roughly 70% reported by trackers.