Category Archives: Cryptocurrency

BATON ROUGE - Police arrested a college student after he allegedly installed malware on more than one hundred devices across different LSU computer labs over the course of about two years.

Campus police arrested Carlos Munoz-Salazar, 25, after a campus technology services employee found a USB drive he allegedly left in one of the infected computers.

Arrest records suggest the same device was used to install software on 169 different computers which allowed Munoz-Salazar to control them remotely. After gaining access, he then allegedly installed a program that allowed him to mine cryptocurrency from the university-owned computers.

LSU employees said some computers were infected as far back as June 2018, and the "attacks" continued until the university's ITS department blocked the software on July 23, 2020.

Police said the university was then able to use Munoz-Salazar's misplaced USB device to identify when he logged onto another computer at the school last week. An employee found Munoz-Salazar at the infected computer and took a photo of his student ID.

Munoz-Salazar admitted to authorities he made about $2,500 from mining virtual currency on the university's computers. He was arrested Friday and booked on 169 counts of computer tampering and computer fraud.

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LSU student allegedly tampered with 169 university-owned computers, used them to mine cryptocurrency - WBRZ

Bitcoin (BTC) being on a bull run may be hounding all the attention but the world's apex cryptocurrency is getting outdone by several decentralized finance, or "DeFi," projects.

What Happened: SushiSwap (SUSHI), one such DeFi cryptocurrency,has surged 96.24% in a 7-day period up to press time beating Bitcoin, which is up 12.86%.

DeFi has seen rising popularity in the cryptocurrency community, with some dubbing it as a fad. A lot of DeFi projects may be in a bubble, but that doesn't mean that "DeFi will eventually disappear entirely,"Binance CEO Changpeng Zhao said this week, as reported by Cointelegraph.

Zhao advocated cryptocurrencies like Bitcoin saying it was the money of freedom for millions of people worldwide.

Why It Matters: SushiSwap, the DeFi protocol supported by SUSHI,has been among the most popular such projects. SUSHI had surged 331% to $11.17 in September before its anonymousfounder cashed out $6 million worth of tokens, tanking the cryptocurrency.

Yearn Finance (YFI), another DeFi cryptocurrency, which offers yield farming, surpassed Bitcoins 7-day gains this week.At press time, YFI is up 13.1% in the 24-hour trailing period and 49.3% over seven days at $24,667.87.

SUSHI traded 16.85% higher at $1.33 at press time, while Bitcoin traded 0.51% higher at $17,756.63.

See Also:Bitcoin Storms Past $18,000

2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Think Bitcoin Is On The Run? Sushi Cryptocurrency Has Surged Nearly 100% In A Week - Benzinga

Introduction

The past few weeks were marked by a tremendous acceleration in bitcoin price, that recently broke the 18,000 level, nearly doubling in value since early December. We previously saw that the massive liquidity injections from major central banks and especially the Federal Reserve has led to a sharp recovery in most of the asset classes since mid-March and a sharp consolidation on the US dollar, with the DXY down 10%. Figure 1 shows the performance of a diversity of assets since the market reached its low on March 20th; Bitcoin is by far the asset that experienced the most drastic recovery, up 380%, followed by the 'FANGs' stocks, up 125% since their bottom.

Hence, investors have been asking themselves the following question: is the move done on bitcoin or should we experience much higher prices in the medium term?

Figure 1

Source: Eikon Reuters

With most of the European nations under national lockdowns, which is also expected to be announced in the US in the near term, investors have been speculating that economies will strongly rely on governments' support in the next few months, which implies a significant increase in central banks' assets. We saw that assets from the top major 5 central banks (Fed, ECB, BoJ, PBoC, and BoE) have grown by over 7 trillion USD this year, which has clearly supported most of the markets and resulted in a sharp recovery in asset prices and fundamentals. Figure 2 shows a very strong relationship between the annual change in CBs assets and the price of Bitcoin; as more restrictions imply more debt financed by central banks (i.e. QE), the cryptocurrency has surged as some investors have been looking at bitcoin as a hedge against currency 'debasement'.

Figure 2

Source: Eikon Reuters, RR calculations

Another interesting development has been the strong divergence between bitcoin and FANGs stocks in recent weeks; figure 3 shows that while the FANG+ index has been oscillating around 5,300 since the start of September, bitcoin has surged from $10,000 to $18,000. We saw that in the past, bitcoin prices were very sensitive to equity moves (especially the mega-cap growth stocks) and were strongly correlated during upside momentum but also during equity drawdowns. Bitcoin went down 60% during the February/March episode and was also down nearly 20% during the early September bear consolidation.

Hence, investors will be curious in the future to see if bitcoin prices can hold if tech stocks start to fall.

Figure 3

Source: Eikon Reuters

Even though US real interest rates seem to have found their low back in August, with the 5Y real IR trading at -1.4% back then (currently at -1.25%), the amount of negative-yielding debt has continued to surge in recent months. After peaking at 17tr USD in August 2019 (when the 2Y10Y US yield curve inverted), the amount of negative yielding debt had fallen dramatically until March 2020 to 8tr USD and then started to skyrocket again. The negative-yielding debt could be seen as a 'real-time gauge' of the economic activity; more debt yielding below 0 percent simply means growing concerns over the economic outlook. Therefore, we could also link the rise in bitcoin to the constant increase in the amount of negative-yielding debt around the world.

Interestingly, gold, which has also shown a strong co-movement with the negative-yielding debt in the past few years, has been following the US real rate in recent weeks and constantly testing new lows, which implies that the precious metal is still very sensitive to US real rates in the current environment.

Figure 4

Source: Eikon Reuters

In the medium to long term, we are strongly bullish on bitcoin as we think it could act as a strong hedge against currency depreciation and inflationary pressures. In figure 5, we look at the equity curve of the top asset in each decade of the past 50 years; we first had gold in the 1970s due to the unexpected sudden rise in inflation coming from the oil shocks, then came the Japanese stocks in the 1980s with Japan's economic miracle, then the US boom in the 1990s led to a titanic performance in US growth stocks, then the double-digit growth in China led to an outperformance of consumer staples in the 2000s, and then the prominent growth of new Internet companies led to a strong performance in Tech stocks in the past decade. If we look at the cumulative returns of each asset in the past 50 years, a person who invested $100 would have accumulated over USD 1.3 million of wealth, averaging 22.2% in annual return for a volatility of 25.3% (Sharpe ratio of 0.88).

We are strongly convinced that cryptos (especially bitcoin) could be the best pick for the next 10 years and that investors should hold some bitcoin in their portfolio as it could eventually act as a good diversifier and generate significant returns from current levels.

Figure 5

Source: Eikon Reuters, RR calculations

In the short run, we could see a small consolidation as bitcoin approaches its ST resistance at 19,500 (December 2017 high) as investors start to take profit on the cryptocurrency. We think that any significant bounce on bitcoin should be considered as a good opportunity to buy the dip.

Disclosure: I am/we are long BTC, GBPUSD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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New Restrictions, More QE, Higher Bitcoin Prices - Seeking Alpha

Stratagem Market Insights has recently published abusiness research report titled, Global Cryptocurrency Mining Market by Size, Share, Growth, Manufacturers, Type, and Application, Forecast to 2027in its research database with report summary, table of content, research methodologies, and data sources. The investigative report represented in an organized format in charts, graphs, tables, and figures to impart a detailed understanding of the Cryptocurrency Mining market in an easy manner.

The report includes CAGR, market shares, sales, gross margin, value, volume, and other vital market figures that give an exact picture of the growth of the global Cryptocurrency Mining market.We have also focused on SWOT, PESTLE, and Porters Five Forces analyses of the global Cryptocurrency Mining market.

The major market players that are operating in the Cryptocurrency Mining market are AntPool, Ebot, BTC Top, Genesis Mining, BTC.com, F2Pool Hashing 24, ViaBTC, Bitmain Technologies Ltd., and Hashflare..

The Coronavirus (COVID-19) pandemic has affected every aspect of life worldwide. The report considers the impact of COVID-19 on market growth. Furthermore, it covers the present and future impact of the pandemic and offers a post-COVID-19 scenario to provide a deeper understanding of the dynamic changes in trends and market scenarios.

Need a report that reflects how COVID-19 has impacted this market and its growth?

Competitive Landscape:

Competitor analysis is one of the best sections of the report that compares the progress of leading players based on crucial parameters, including market share, new developments, global reach, local competition, price, and production. The degree of competition among leading global companies has been elaborated by examining various leading key players operating across the global regions An expert team of research analysts sheds light on various attributes such as global market competition, market share, latest industry developments, innovative product launches, partnerships, mergers or acquisitions by leading companies in the Cryptocurrency Mining Market.

Geographically Regions Analysis:

The report provides an extensive analysis of the key geographical regions of the industry. The regional analysis covers North America, Latin America, Europe, Asia-Pacific, and Middle East & Africa. The report offers insightful information like production and consumption ratio, demand and supply, import and export ratio, and demand trends in each region. The report also covers a country-wise analysis of the segments and sub-segments of the market. Europe and North America regions are anticipated to show an upward and downward growth in the years to come. While Cryptocurrency Mining Market in Asia Pacific regions is likely to show remarkable growth during the forecasted period. Cryptocurrency Mining Market in the South, America region is also expected to grow in the near future.

Table of Content (TOC):Chapter 1 Introduction and OverviewChapter 2 Industry Cost Structure and Economic ImpactChapter 3 Rising Trends and New Technologies with Major key playersChapter 4 Global Cryptocurrency Mining Market Analysis, Trends, Growth FactorChapter 5 Cryptocurrency Mining Market Application and Business with Potential AnalysisChapter 6 Global Cryptocurrency Mining Market Segment, Type, ApplicationChapter 7 Global Cryptocurrency Mining Market Analysis (by Application, Type, End-User)Chapter 8 Major Key Vendors Analysis of Cryptocurrency Mining MarketChapter 9 Development Trend of AnalysisChapter 10 Conclusion

Key questions answered in the report:

About Stratagem Market Insights:

Stratagem Market Insights is a management consulting organization providing market intelligence and consulting services worldwide. The firm has been providing quantified B2B research and currently offers services to over 350+ customers worldwide.

Contact Us:Mr. ShahStratagem Market InsightsTel: US +1 415 871 0703 / JAPAN +81-50-5539-1737Email:sales@stratagemmarketinsights.com

Visit Our Blog:Shubham

Excerpt from:
Cryptocurrency Mining Market to Observe Strong Growth to Generate Massive Revenue in Coming Years 2020 to 2027 - re:Jerusalem

The report titled, Cryptocurrency and Blockchain Market boons an in-depth synopsis of the competitive landscape of the market globally, thus helping establishments understand the primary threats and prospects that vendors in the market are dealt with. It also incorporates thorough business profiles of some of the prime vendors in the market. The report includes vast data relating to the recent discovery and technological expansions perceived in the market, wide-ranging with an examination of the impact of these intrusions on the markets future development.

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Top Key Companies Players in this Report are: Intel Corporation, Microsoft Corporation, NVIDIA Corporation, BitFury Group Limited, Alphapoint Corporation, Advanced Micro Devices, Xilinx, BitGo, Ripple, BTL Group Ltd.

The scope of the Cryptocurrency and Blockchain Market report is as follows the report provides information on growth segments and opportunities for investment and Benchmark performance against key competitors. Geographically, the global mobile application market has been segmented into four regions such as North America, Europe, Asia Pacific and the rest of the world.

This report gives an in depth and broad understanding of Cryptocurrency and Blockchain Market. With accurate data covering all key features of the prevailing market, this report offers prevailing data of leading companies. Appreciative of the market state by amenability of accurate historical data regarding each and every sector for the forecast period is mentioned. Driving forces, restraints and opportunities are given to help give an improved picture of this market investment for the forecast period of 2020 to 2027.

Finally, all aspects of the Global Cryptocurrency and Blockchain Market are quantitatively as well qualitatively assessed to study the Global as well as regional market comparatively. This market study presents critical information and factual data about the market providing an overall statistical study of this market on the basis of market drivers, limitations and its future prospects. The report supplies the international economic competition with the assistance of Porters Five Forces Analysis and SWOT Analysis.

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In This Study, The Years Considered to Estimate the Size of Cryptocurrency and Blockchain Market are as Follows:

History Year: 2014-2019

Base Year: 2019

Estimated Year: 2020

Forecast Year 2020 to 2027

Table of Contents:

Lastly, this report provides market intelligence in the most comprehensive way. The report structure has been kept such that it offers maximum business value. It provides critical insights on the market dynamics and will enable strategic decision making for the existing market players as well as those willing to enter the market.

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Impact of Outbreak of Coronavirus (Covid-19) on Cryptocurrency and Blockchain Market 2020-2027| Intel Corporation, Microsoft Corporation, NVIDIA...

A battle for currency supremacy is underway as China doles out millions of digital yuan.

Cryptocurrencies offer innovative payment and security solutions for commerce, supply chains, and manufacturing. They make global payments faster, safer, more efficient, and more transparent. For years, Washington has neglected or misunderstood this most promising U.S. innovation, leaving American start-ups lost in a maze of regulatory uncertainty. Now that blockchain and cryptocurrency solutions have entered the real economy, revolutionizing money and payments, regulatory confusion has set the cryptocurrency community ablaze.Meanwhile, the Chinese are poised to capitalize on US policy mistakes yet again.

The leading American innovators in blockchain solutions are on the verge of leaving the US in frustration.Why?Because Washington has failed to develop a clear regulatory framework that would keep them in the US and ensure American leadership.This is the declaration of the CEO of Ripple, Americas leading cryptocurreny firm, who says the US is losing the tech war to China.

While Americas Constitution supports the flourishing of new technology, the administrative state has killed many important innovations in the cradle. This happens as obsolete agencies look for new things to regulate and join forces with protected industries to stifle competition, the process of regulatory capture described by Nobel economist George Stigler. At least eight US federal regulatory bodies have asserted jurisdiction over new fintech and digital currencies.This is not to say there should be no accountability in financial innovation, but the right policy should focus on achieving the objective in the most efficient, least intrusive way. Policymakers should think intelligently about the function they are trying to perform, not copy-paste paper-based bureaucracy on anything new.

Other countries are not immune to capture, but they are smart enough to not kill the golden goose. They have developed market-friendly frameworks to welcome crypto innovation to their shores, but the talent and scalability of the US market made the risk worthwhile until now.Crypto entrepreneurs hoped that after their billions of dollars in investments and development of innovative products that Washington would wake up, but no. Meanwhile China has advanced to garner increasing share of US and global financial markets.

The coming year will make or break cryptocurrency in the US. It depends on whether Congress and the Executive Branch can resolve their conflicting views of financial innovation, stop the grab bag of regulatory enforcement, and build a coherent policy framework. Bad actors have always found ways to exploit new developments, but that is not an excuse to deny consumers the fruits of new technologies. Law enforcement exists to prevent and punish crime, not to stop enterprise. Indeed, digital currency can reduce certain financial crimes.

Sadly, the current administration, purporting to promote the interests of Main Street investors, has been at war with itself on cryptocurrency. Outgoing Securities and Exchange Commission (SEC) Chairman Jay Clayton treated cryptocurrencies and other fintech startups like flies, swatting innovators with more than 50 enforcements. This contrasts with SEC Commissioner Hester Peirce who sees crypto as the next great technology. Again, the issue is not that poor conduct should not be addressed; its a question of priorities. For years, the SEC has done busy work while the Chinese government has exploited Americas stock exchanges and US technology.

As a new report from Congress bipartisan U.S. China Commission (USCC) notes, 217 Chinese companies are listed on US exchanges with a total market capitalization of $2.2 trillion, including 13 Chinese state-owned enterprises. According to the USCC, these companies endanger US national security through censorship and surveillance, evade American standards of transparency, and jeopardize the wealth of American investors. The SEC has not been able to perform oversight on the audits of these companies because of systematic blocking by the Chinese government. Meanwhile the number and size of these Chinese companies traded in the US has ballooned. Failing to deal with the real threats to Americas financial system, the SEC has directed its energy to homegrown startups.

The US lost the race on Bitcoin, and China now controls 65 percent of the computing power to mine the currency. The next battle is underway as the Chinese government has piloted a program to distribute digital yuan, a digital currency backed by Chinas central bank.It is only a matter of time before Chinas digital currency is offered to billions across the globe coupled with Chinese payment solutions copied from U.S. innovators.The US wont be able to block the proliferation of digital yuan. It can only win by making a better solution and getting to market first.

The SECs Clayton will step down at the end of the year, providing an opportunity confirm a Chair who will recognize the value that cryptocurrencies and blockchain technology, will step up stop Chinas abuse of Americas exchanges, and put American consumers first. Americans, not the Chinese government, should be first in line for American technological innovation. The new SEC Chair will be critical to ensuring whether the U.S. dollar retains its position as the worlds reserve currency.US policymakers should promote crypto, not crush it. Otherwise and once again, China will pick up the technology that the US discards.

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The SEC Swats Cryptocurrency Flies While The Chinese Government Takes The Farm. - Forbes

On November 10, six members of the U.S. House of Representatives wrote to Acting Comptroller of the Currency Brian Brooks raising concerns about the OCCs recent unilateral actions to regulate cryptocurrencies. In the letter, the members question the OCCs regulatory priorities. For example, the members highlight that, through recent actions, such as its advance notice of proposed rulemaking on digital activities (covered by InfoBytes here), the OCC has sought to serve those already-banked with better payments options while potentially overlooking opportunities for assisting the unbanked and underbanked to participate in the economy and the banking system. Additionally, the members note that the OCCs interpretive decisions, which authorize financial institutions to hold cryptocurrency and stablecoins for customers (covered by InfoBytes here and here), may have broad implications for the future of banking and are best made in collaboration with your fellow regulators and with Congress to ensure we avoid potential harms to institutional safety and soundness and equity and inclusion. In closing, the members ask the OCC to answer a number of questions, including (i) whether stablecoin reserves will be segregated from calculating the capital requirements of large banks; (ii) what consumer protections the agency will impose on stablecoin providers; and (iii) whether the OCC has collaborated with other federal regulators on their recent decisions.

Link:
Representatives question the OCC's cryptocurrency and stablecoin efforts - Lexology

Trying to come to grips with the nascent technology of cryptocurrency, with all its concomitant risks and potential, governments around the world have taken very different approaches toward cryptocurrency taxation and penalties for crypto tax evasion. It is not easy to strike the right balance. Yet it is also imperative to develop cryptocurrency taxation systems that are fair, continue to encourage innovation, close the loopholes on tax cheats and offer companies as well as investors clarity so that they can carry out financial planning and make informed investment and business decisions.

Clear and consistent regulation is needed for dealing with virtual assets, because in order to work with them companies need to understand the framework and the rulebook they are working under, Douglas Borthwick, chief marketing officer of digital assets trading platform INX, told Forkast.News. Without a clear-cut tax policy in place, Borthwick added, investors can hardly be expected to have faith in the value of both their own assets and those underlying the industry at large.

Recognizing that there are many issues, gaps and unanswered questions in the emerging field of cryptocurrency taxation, the Organisation for Economic Co-operation and Development (OECD) has published Taxing Virtual Currencies: An Overview of Tax Treatments and Emerging Tax Policy Issues in advance of its 2020 Global Blockchain Policy Forum taking place this week.

Today, the OECD blockchain forum will offer a special Deep Dive panel discussion titled, Crypto-tax Ensure a robust and transparent tax policy framework. The panels speakers will include a vice president of Coinbase, a U.S. Department of Treasury senior counsel and other tax law and policy experts.

The OECDs cryptocurrency tax report, which was presented to G20 finance ministers and central bank governors last month, analyzes how 50 jurisdictions treat crypto-assets. The report also surveys emerging issues such as the rise of DeFi (decentralized finance) and central bank-backed digital currencies (CBDCs), which has been rapidly gaining traction around the world this year with China, France, Australia, Cambodia and many other countries all now racing to develop their own.

One of the key findings of the OECD crypto tax report is the importance of a coherent policy toward cryptocurrency as well as the implications of crypto tax evasion, which until now are issues that have largely been neglected in favor of cryptos macroeconomic and anti-money laundering considerations.

The very nature of cryptocurrency is also what complicates its taxation. Crypto in its purest form is decentralized and anonymous, Borthwick said. While these qualities define its potential, they also engender possibilities for exploitation. The challenge facing tax authorities across the board, Borthwick said, is to see where they can use cryptos best attributes, while limiting its worst.

The most common way that countries have attempted to achieve this is by taxing all income from mining and cryptocurrency exchanges as capital gains, according to the OECD report. Few countries make a distinction between business and personal activity. Virtual currencies, according to the OECD, also form part of a taxpayers assets and are taxable under wealth and inheritance taxes.

See related post: How IRS treats crypto staking: tax issues every crypto investor should know

In its recommendations to policymakers, the OECD report emphasizes the need for providing clear guidance and legislative frameworks for the tax treatment of crypto-assets and virtual currencies, and allowing frequent updates as is necessary to keep up with such a fast-moving, innovative field. Accordingly, appropriate guidance is urged with regards to other blockchain innovations for which existing tax treatments may not be appropriate.

The OECD report also highlights the need to improve compliance and suggests simplifying rules of valuation as one way to do so.

Overall, the OECD recommends that the direction of cryptocurrency tax policy should correspond with that of other policies in related sectors, such as environmental impact. The report points out that cryptocurrency mining can be very energy-intensive. Tax policy should also align with the worldwide shift toward electronic payment systems as a replacement for cash, a trend that has accelerated during the Covid-19 pandemic.

Considerable scope remains to improve guidance on tax treatments, particularly in the emerging areas of stablecoins, proof-of-stake consensus mechanisms, and decentralized finance, Grace Perez-Navarro, deputy director of the OECD Centre for Tax Policy and Administration, told Forkast.News. The OECDs Taxing Virtual Currencies report considers these issues and stresses that clearer guidance would provide certainty for taxpayers and facilitate compliance.

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OECD shines light on the future of cryptocurrency taxation - Forkast News

The popular cross-border African payments app, Chipper Cash, has raised $30 million in a Series B round led by Ribbit Capital and Amazon CEO personal VC fund, Bezos Expeditions.

According to Chipper Cash CEO, Ham Serunjogi, the raise will help the startup expand its products and geographic scope. On the product side, this entails offering more:

Well always be a P2P financial transfer platform at the core. But weve had demand from our users to offer other value services like purchasing cryptocurrency assets and making investments in stocks.

~ Ham Serunjogi, CEO, Chipper Cash

SEE ALSO:You Can Now Buy & Sell Bitcoin Across Africa On Chipper Cash

Currently, users can buy bitcoin on Chipper Cash using any of the following currencies:

The startup, which was founded in 2018, has recently been on a run to raise and expand its growing portfolio of services.

Here are the latest stats about Chipper Cash:

According to Serunjogi, the startup alos plans to launch a stocks product with Nigeria being the first market to allow Nigerians buy fractional stocks such as Tesla, Apple and Amazon stocks, through the app before expanding to other countries.

An API payment solutions is also under development for businesses looking to collect payments for sale of goods.

RECOMMENDED READING:[WATCH] How to Buy Bitcoins in Kenya Using MPESA, Chipper Cash, and Bank Transfer on Paxful on Your Mobile Phone

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African Fintech, Chipper Cash, Raises $30 Million to Expand its Cryptocurrency Trading Options - bitcoinke.io

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Recent actions filed in early October 2020 by the U.S.Department of Justice (the "DOJ") and the CommodityFutures Trading Commission (the "CFTC") against BitMEX, alarge cryptocurrency derivatives exchange incorporated in theSeychelles, highlight how virtual asset exchange platforms can besubject to the law and potential enforcement action in multiplejurisdictions based on the locations of their customers. Shortlyafter the filing of these actions, the DOJ published itsCryptocurrency Enforcement Framework, which emphasized that the DOJasserted jurisdiction over virtual asset transactions based notonly on the location of customers but also contacts with"financial, data storage, or other computer systems within theUnited States". These broad assertions of jurisdiction by U.S.prosecutors and regulators, and similar assertions of jurisdictionover foreign trading platforms by Canadian regulators, are acaution to virtual asset exchange platforms to carefully considerthe steps taken to limit their contact with jurisdictions in whichthey do not wish to do business.

Since September 2015, the CFTC has taken the position thatBitcoin and other virtual currencies are commodities under theCommodity Exchange Act. Accordingly, it is the CFTC'sposition that entities that offer leveraged retail transactions,futures, options or swaps for commodities are required to registerwith the CFTC as a future commission merchant (a"Merchant") as well as comply with theBank Secrecy Act, which requires Merchants to establish,implement and maintain an adequate anti-money laundering("AML") program. As part of the AML program, a Merchantis required to implement a written "know your client"("KYC") program that includes risk-based procedures forverifying the identity of its clients. At a minimum, a Merchantmust collect the name, date of birth, address and governmentidentification number of each client prior to their opening anaccount on the Merchant's platform.

In light of the position taken by the CFTC in 2015, BitMEXannounced it was withdrawing from the U.S. market and implementedan Internet Protocol ("IP") address check, also known as"geo-blocking", designed to block U.S. residents fromaccessing the BitMEX trading platform. BitMEX did not,however, implement a KYC program for all of its clients.

On October 1, 2020, the DOJ filed criminal charges (the "DOJAction") accusing four executives of BitMEX of evading rulesdesigned to stop money laundering. That same day, the CFTCannounced that it had filed a related civil enforcement action (the "CFTCAction" together with the DOJ Action, the "BitMEXActions") against five entities and three individuals that ownand operate BitMEX, alleging that they had operated an unregisteredtrading platform in violation of multiple CFTC regulations,including failing to implement required anti-money launderingprocedures.

The BitMEX Actions allege that, since BitMEX's launch inNovember 2014, BitMEX has actively pursued and served thousands ofcustomers located in the U.S., even after its announced withdrawalfrom the U.S. market in 2015. In particular, the DOJ alleges thatBitMEX or its representatives:

Notably, the DOJ alleges that BitMEX's geo-blocking of U.S.IP addresses was deficient and failed to prevent U.S. persons fromtrading on the BitMEX platform. In particular, the DOJ allegesBitMEX failed to implement measures to restrict access to itsplatforms by clients using a virtual private network("VPN"), which can beused to mask the location of a computer's IP address andthereby circumvent geo-blocking.

Based on these allegations, the DOJ and the CFTC allege thatBitMEX failed to register with the CFTC as a Merchant as requiredby the Commodities Exchange Act and knowingly operated itsplatform in violation of multiple CFTC regulations and the BankSecrecy Act, including applicable AML and KYCrequirements.

The BitMEX Actions confirm the willingness of U.S. regulators toassert jurisdiction over virtual asset exchange platforms operatingfrom outside the United States but allegedly with customers orother contacts within the U.S.

As well, shortly after the DOJ Action was filed, the DOJpublished its Cryptocurrency Enforcement Framework, a reportsummarizing its cryptocurrency-related enforcement work to date. Inthis report, the DOJ emphasized its position that it has"robust authority" to prosecute virtual asset serviceproviders and other entities that violate U.S. laws even when theyare not located inside the U.S. The Report asserts that"[w]here virtual asset transactions touch financial, datastorage, or other computer systems within the United States, theDepartment generally has jurisdiction to prosecute the actors whodirect or conduct those transactions."

Like U.S. regulators and prosecutors, Canadian regulators alsotake the view that they have jurisdiction over online securitiestrading platforms operated from outside Canada but with Canadianclients. For example, in September 2018, the Ontario SecuritiesCommission (the "OSC") reached a settlement[PDF] with eToro (Europe)Limited ("eToro"), a Cyprus-based company that hadengaged in online trading of securities or derivatives with Ontarioresidents, including contracts for difference based on exposure tounderlying assets which included cryptocurrencies and stocks. eTorowas not a reporting issuer in Ontario, nor was it registered toengage in the business of trading in accordance with Ontariosecurities law. Nonetheless eToro operated approximately 2,500accounts for Ontario residents between 2008 and 2017. The OSCsettled an enforcement action with eToro based on, among otherterms, a CAD$550,000 administrative penalty, disgorgement of nearlyUSD$2 million, and an undertaking to return funds to Ontarioaccountholders.

Online virtual asset exchange platforms that do not intend toaccept U.S. and Canadian residents as clients nonetheless need tobe careful about inadvertent non-compliance with U.S. or Canadiansecurities, derivatives, money transmission or other laws. At aminimum, platforms need to consider adequate measures to preventresidents from these jurisdictions from accessing their services,but as the DOJ's Cryptocurrency Enforcement Framework notes,prosecutors or regulators may assert jurisdiction based onfinancial or technical contacts. Regulators appear to be highlyskeptical of geo-blocking of IP addresses, which suggests that morerobust KYC processes should be considered to exclude residents fromcertain jurisdictions.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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US Regulators Assert Broad Jurisdiction Over Offshore Cryptocurrency Trading Platforms - Finance and Banking - Canada - Mondaq News Alerts