Category Archives: Cryptocurrency

Global Cryptocurrency (GCC) has a Neutral Sentiment Score, is Rising, and Outperforming the Crypto Market Friday: What's Next?  InvestorsObserver

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Global Cryptocurrency (GCC) has a Neutral Sentiment Score, is Rising, and Outperforming the Crypto Market Friday: What's Next? - InvestorsObserver

Hackers have stolen more than $3 billion in cryptocurrency so far this year, shattering the previous record of $2.1 billion set in 2021, according to blockchain analytics firm Chainalysis.

A big chunk of that $3 billion, around $718 million, was taken this month in 11 different hacks, Chainalysis said in a series of tweets posted Wednesday.

"October is now the biggest month in the biggest year ever for hacking activity, with more than half the month still to go," the company tweeted.

In past years, hackers focused their efforts on attacking crypto exchanges, but those companies have since strengthened their security, Chainalysis said. These days, cybercriminals are targeting "cross-chain bridges," which allow investors to transfer digital assets and data among different blockchains.

The bridges hold a lot of cryptocurrencies, providing a larger and more complex arena for hackers to infiltrate, according to cybersecurity experts.

"Cross-chain bridges remain a major target for hackers, with three bridges breached this month and nearly $600 million stolen, accounting for 82% of losses this month and 64% of losses all year," Chainalysis said.

Hackers initially made of with$570 million in cryptocurrency from Binance, but company officials have minimized the losses to under $100 million, its CEO said last week. Hackers also struck Nomad in August, reportedly taking nearly $200 million. Both the Binance and Nomad attackswere instances of hackers exploiting security flaws within the cross-chain bridge transaction protocols.

Crypto.com, known for its recent $700 million deal torename the former Staples Centerin Los Angeles, said in January that hackers managed to bypass its two-factor authentication system and withdraw funds from 483 customer accounts. Harmony lost about $100 million in ahack in June.Crypto platforms WormholeandRoninNetwork were also targets of hackers this year.

All told, Chainalysis said there have been 125 hacks so far this year.

Binance CEO Changpeng Zhaosaidin an interview with CNBC last week that the crypto industry is vulnerable to hackers whenever customers move assets from one blockchain to another, but the goal is to learn from what caused the hack and develop extra safeguards in the future.

Cryptocurrency is not federally regulated or FDIC insured like a bank account, which means if an account gets hacked, the government will not work to restore a customer's funds.

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Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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Hackers have stolen record $3 billion in cryptocurrency this year - CBS News

A cryptocurrency firm that employs the former chancellor Philip Hammond as an adviser has withdrawn its application to operate in the UK, after struggling to win approval from the financial regulator.

The Guardian revealed earlier this year that Copper Technologies, in which Hammond holds a 0.5% stake, was considering seeking registration in Switzerland rather than the UK.

The company had been given temporary registration by the Financial Conduct Authority (FCA), pending approval of the controls it had put in place to prevent money laundering and terrorist financing.

Fintech company Revolut, which had also been placed on the FCAs temporary list, was awarded full registration for its UK crypto business last month.

But Copper Technologies has revealed, in accounts filed at Companies House, that it had withdrawn its application and moved UK customers to Switzerland, after winning approval there.

Hammond, who was chancellor between July 2016 and July 2019, has been critical of the UK for failing to set up a comprehensive regulatory framework governing cryptocurrencies.

Earlier this year he said it was frankly quite shocking that Britain was lagging behind other countries.

The FCAs regime for digital assets currently covers money laundering and terrorist financing but not specific aspects of cryptocurrency trading and investing.

Hammond, recruited by Copper Technologies as a senior adviser in 2021, has growth shares that were thought to be worth up to $15m (13m), based on reports by Bloomberg that the company was seeking a valuation of $3bn in a fundraising exercise.

The accounts show that Copper Technologies has raised $196m so far but the ultimate success of the fundraising and thus the valuation could be affected by a broad global sell-off of digital assets over the past year.

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In the meantime, losses at Copper, which provides digital currency infrastructure to other businesses, have increased from 3.6m to 14.3m, accounts show.

A spokesperson for the company said: Copper maintains open and active dialogue with regulators across the jurisdictions where we are operating, including of course with the FCA. Since gaining our membership to [Swiss body] VQF in May, we are pleased to be able to offer clients services from Switzerland.

Link:
Cryptocurrency firm advised by Philip Hammond withdraws UK application - The Guardian

Bitcoin, launched in 2009, is generally considered the first cryptocurrency. The whitepaper by its creator/s Satoshi Nakamoto focuses largely on Bitcoins use as electronic cash, with no interference from intermediaries like banks. Later entrants, including Ether and Tether, are also classified as cryptocurrencies. However, these can be very different from Bitcoin with respect to the release of new tokens and the intended utility.

Ether or ETH is about the payment of the gas fee within Ethereums ecosystem, which allows developers to create new decentralised and distributed ledger-based applications. Tether, on the other hand, is not a typical cryptocurrency, but it is a stablecoin. This makes it different with respect to the launch of new Tether tokens. On Bitcoin and Ethereums blockchains, new BTC and ETH tokens, are mined. Mining is a specialised process that involves hashing through the use of sophisticated computing. Today, let us explore the subject of the release of new Tether tokens and if mining has any role to play in it.

Tether, as mentioned earlier, is a stablecoin, which by definition, means a coin with a stable value at all times. Tether is pegged to the most dominant fiat currency in the world -- the US dollar. One Tether token, often called USDT, must always be valued at US$1, otherwise, the entire scheme of things would not make any sense. Typical cryptocurrency tokens like BTC (Bitcoin), however, are exposed to value appreciation or depreciation, largely depending on demand and supply forces. For Tether to maintain stability in its per token price, mining is out of the picture.

A Tether token is not the outcome of any computational work on a blockchain but of reserves maintained by those handling the stablecoins operations. For example, for every 10 Tether tokens issued in the market, first there should be US$10 maintained through holdings like currency reserves and corporate bonds. Every single USDT must be backed by reserves, otherwise there is a chance of disruption in USDT-to-fiat-currency conversion. Adequate reserves are at the heart of the release of Tether tokens, unlike in BTCs case where the total supply is capped at 21 million BTC tokens and the value is subject to variations.

Data provided byCoinMarketCap.com

Tether operates on multiple blockchains, including those of Ethereum and Polygon. ETH, which exists only on Ethereum, can be mined by partaking in the transaction validation process. This is not possible in the case of Tethers USDT tokens, simply because Tether has no independent blockchain like Bitcoin and Ethereum, which means there is no place to become a node operator and carry out the sophisticated mining process.

Tether tokens are claimed to be a product of reserves maintained to back them. Does Tether have adequate reserves to back the presently circulating tokens -- over US$68 billion as of writing -- is a separate subject of discussion. Mining is not possible because neither a standalone blockchain exists, nor the intended utility of Tether is the same as that of typical cryptocurrencies like Bitcoin.

Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.

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Can Tether cryptocurrency be mined? - Kalkine Media

Remember late 2021 when cryptocurrencies were perceived as the future of global transactions. Since that peak a few months ago, cryptocurrency assets have declined a painfully staggering USD 2 trillion. With losses so monumental, a wave of crypto-related disputes in the form of international arbitration are imminent.

Cryptocurrency businesses have been known to include arbitration agreements in their contracts, which is unsurprising considering the harmonious nature of both cryptocurrency and international arbitration. As cryptocurrency identifies itself as a decentralized character, arbitration similarly enjoys the freedom of party autonomy that cannot be found before national courts.

This article seeks to provide a guide to the challenges and remedies that are bound to arise in cryptocurrency arbitrations as well as a look at the current Binance case.

VARIOUS FORMS OF CRYPTOCURRENCY DISPUTES

As with any subject matter, cryptocurrency disputes come in various forms, but as crypto is a novel sector, some disputes may raise novel legal issues. For instance, in the absence of a governing law clause, issues may arise as to what law governs the blockchain transactions. Expect to see some of the following forms of disputes:

The substantive underlying issues may be familiar to some, but the disputed factual issues may be outside of a partys scope. This is where industry experts come in handy. For instance, counsel may be unaware of how a decentralized finance platforms fake product identification system works. Engaging an industry expert to provide technical analysis of the disputed factual issues may go a long way in complimenting the legal reasoning.

THE BINANCE CASE

Binance is one of the leading crypto trading platforms with offices in France, Spain, Italy, and the UAE. On May 19, 2021, a power outage caused the platform to fail. This failure left users unable to exit their positions all whilst crypto prices were dipping in real-time. Hundreds of users/investors commenced arbitration against Binance, seeking relief for the millions they had lost as a direct result of the outage.

Whilst the dispute is being headed by White & Case, with a USD 5 million minimum in funding from Swiss private equity firm Liti Capital, the dispute is the first of its kind, but certainly not the last.

One of the main challenges currently arising from this dispute is the fact that Binance states they have no official headquarters and as such, it has been incredibly difficult for investors to figure out how, and where, to take the company to court.

Another challenge was identifying the correct counterparties. The Binance terms of use refer only to Binance Operators as being the parties that run Binance, without naming any incorporated legal persons, and conversely, including language to the effect that the identities of these operators are subject to change. This open-ended definition includes but is not limited to legal persons (including Binance UAB), unincorporated organizations and teams that provide Binance Services and are responsible for such services. When a dispute arises, it is the task of the claimant to identify the counterparties to the dispute depending on the specific services [Claimant] uses and the particular actions that affect rights or interests. This caused immense issues as arbitrating against the wrong party could result in the tribunal rejecting a claim, despite the validity of the claim.

CHALLENGE I: NATURE OF THE JURISDICTION

Several jurisdictions across the globe have taken steps to regulate cryptocurrency assets or even just outright ban them. In Qatar, a circular warned all banks operating in Qatar against trading in bitcoin. India and Russia are among the nations where bitcoin trading has been outright outlawed. Courts have been found to follow suit. In 2020, a court in Mainland China set aside an award regarding cryptocurrency on the grounds that it violated public policy.

All this being said, the seat of arbitration is a significant factor in cryptocurrency disputes. However, risks can be mitigated. For instance, based on the jurisdiction, parties may opt to request an award in damages quantified in a currency of equivalent value to the cryptocurrency in dispute. This may reduce the likelihood of the enforcement being denied.

CHALLENGE II: IDENTIFYING THE CORRECT PARTIES

As we saw in the Binance case, cryptocurrency businesses are sometimes organized in opaque ways which may it difficult to identify the correct counterparties to the arbitration agreement.

However, once the correct party(ies) have been identified an examination of their ability to satisfy the requirements of the award should be done. Several cryptocurrency businesses do not have the financial means to satisfy an award, due to the staggering decline of the market and arbitrating against a party on the brink of financial collapse may not be beneficial.

CHALLENGE III: VALUATIONS

Valuating cryptocurrency businesses may be a challenge due to the lack of comparable publicly listed companies with sufficient financial information to conduct a market-based valuation. Similarly, valuating the cryptocurrencies themselves may be straightforward but where the currency is illiquid, difficulties may arise.

Another issue with valuations is assessing the future prospects of crypto businesses, at their valuation date and identifying key driving factors. Again, this may seem straightforward, but problems are prosed when the valuation date falls within a period of significant market volatility, such as that seen during the winter of 2021.

As such, identifying the valuation data has a significant impact on the quantification of damages.

CHALLENGE IV: ARBITRAL AWARDS AND RELIEF

If an arbitral award is rendered in a partys favor, they still face the challenge of receiving their money. First, crypto assets and transactions take place on blockchain which makes it difficult to track down and even locate the amounts. Second, as previously discussed, some jurisdictions may reject enforcement of cryptocurrency-related disputes on the grounds of public policy or some other issue relating to the assets.

In addressing these challenges, parties and their counsel may utilize some of the following:

Mareva Injunction

A worldwide freezing order and asset disclosure order. It extends to all a defendants assets worldwide, limiting the defendant from utilizing those assets except for regulatory purposes (i.e., paying employment salaries) unless consent is granted by the plaintiff. It also requires the defendant to disclose its worldwide assets over a certain threshold value (i.e., over USD 10,000 or USD 50,000).

The Hong Kong High Court recently granted a Mareva injunction over bitcoins that had been fraudulently misappropriated freezing up to USD 2.6 million of the defendants assets (including any digital assets).

Norwich Orders

Injunctive orders obtained against an innocent third party in order to identify a wrongdoer or details related to a potential wrongdoer. This can be used to compel an innocent third party (such as a cryptocurrency exchange) to disclose relevant information to a plaintiff/applicant.

In digital asset disputes, these orders have been used to compel exchanges to disclose details related to crypto wallets and digital assets. The English High Court recently issued a Norwich order against two cryptocurrency exchanges outside of England compelling them to assist in identifying what had happened to the cryptocurrency in question.

Anton Piller Orders

A common law remedy which compels a defendant to permit a plaintiff to enter its property to search for and seize evidence and records (including electronic data and equipment). An Anton Piller order in a cryptocurrency dispute was recently issued by the Ontario Superior Court of Justice in relation to an alleged theft of CAD 15 million in digital assets from the plaintiffs crypto wallet.

CONCLUSION

Cryptocurrency and its arbitration are developing over time and it will be interesting to see the other challenges which will emerge over the coming months as tribunals around the world deal with cryptocurrency-related disputes.

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The Cryptocurrency Arbitration Handbook - Lexology

Partnership Opens up Ability for Businesses to Accept and Get Paid in up to 15 Different Cryptocurrencies

BOSTON, Oct. 13, 2022 /PRNewswire/ -- BlueSnap, a global payment orchestration platform of choice for leading B2B and B2C businesses, today announced a new partnership with BitPay, the world's largest provider of Bitcoin and cryptocurrency payment services. This product partnership will give businesses the ability to accept and get paid out in up to 15 different cryptocurrencies and seven fiat currencies globally, and supports BlueSnap's mission to help businesses across the globe increase their revenue and reduce costs.

"As many as 85 percent of major retailers already accept some form of crypto payment, and even small businesses are picking up on the trend with one-third of SMBs beginning to accept crypto. Together, BitPay and BlueSnap will bring this popular payment method to more businesses and consumers globally," said Merrick Theobald, Vice President of Marketing at BitPay. "We are proud to work with BlueSnap on this partnership, especially as more businesses adopt this growing trend of accepting cryptocurrencies as payment for products and services."

As a result of this partnership, businesses will be able to accept and get paid out in leading cryptocurrencies including Bitcoin (BTC), Bitcoin Cash (BCH), ApeCoin (APE), Dogecoin (DOGE), Ethereum (ETH), Litecoin (LTC), Shiba Inu (SHIB), Wrapped Bitcoin (WBTC), Ripple (XRP), as well as 5 USD-pegged stable coins (BUSD, DAI, GUSD, USDC, and USDP) and 1 EURO-pegged stable coin (EUROC). Because crypto protocols are global by default, the addition of cryptocurrency acceptance and payout will help BlueSnap's customers conduct business with key stakeholders around the world more seamlessly. Businesses who accept crypto payments also benefit from lower processing costs, access to a new customer base and no chargebacks. The partnership will also allow customers to accept crypto and be paid out in fiat currencies including USD, EURO, GBP, PESO, CAD, AUD, NZD.

"We are excited to partner with BitPay, one of the most well-respected crypto companies in the industry," said Ralph Dangelmaier, CEO of BlueSnap. "Our work together further supports BlueSnap's strategic growth, and we are eager to make an impact in this new space. We look forward to driving further payments innovation through growing technologies like blockchain and cryptocurrency."

To learn more about BlueSnap and how to set your business up to accept and get paid out in cryptocurrency, please visit https://bit.ly/3LYpzy9.

About BlueSnap

BlueSnap helps businesses accept global payments a better way. Our Payment Orchestration Platform is designed to increase sales and reduce costs for all businesses accepting payments. BlueSnap supports payments across all geographies through multiple sales channels such as online and mobile sales, marketplaces, subscriptions, invoice payments and manual orders through a virtual terminal. And for businesses looking for embedded payments, we offer white-labeled payments for platforms with automated underwriting and onboarding that support marketplaces and split payments. With one integration and contract, businesses can sell in over 200 regions with access to local card acquiring in 47 countries, 100+ currencies and 100+ global payment types, including popular eWallets, automated accounts receivable, world-class fraud protection and chargeback management, built-in solutions for regulation and tax compliance, and unified global reporting to help businesses grow. BlueSnap is backed by world-class private equity investors, including Great Hill Partners and Parthenon Capital Partners. Learn more at BlueSnap.com.

About BitPay

Founded in 2011, BitPay is one of the oldest cryptocurrency companies. As a pioneer in blockchain payment processing, the company's mission is to transform how businesses and people send, receive, and store money. Its business solutions eliminate fraud chargebacks, reduce the cost of payment processing, and enable borderless payments in cryptocurrency, among other services. BitPay offers consumers a complete digital asset management solution that includes the BitPay Wallet and BitPay Prepaid Card, enabling them to turn digital assets into dollars for spending at tens of thousands of businesses. The company has offices in North America, Europe, and South America and has raised more than $70 million in funding from leading investment firms including Founders Fund, Index Ventures, Virgin Group, and Aquiline Technology Growth. For more information visit bitpay.com.

SOURCE BlueSnap

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BlueSnap Partners with BitPay to Offer Cryptocurrency Acceptance and Payout - PR Newswire

LAS VEGAS--(BUSINESS WIRE)--BitNile Holdings, Inc. (NYSE American: NILE), a diversified holding company (BitNile or the Company), announced today that its subsidiary, BitNile, Inc. (BNI), has begun development of a Bitcoin-based marketplace platform (Marketplace), which expects to leverage blockchain and other emerging technologies. BNI believes that the Marketplace will reduce the complexity of transacting in Bitcoin and result in lower transaction fees than traditional e-commerce. The Marketplace, planned for release in the first half of 2023, will be a multi-vendor e-commerce platform supporting a wide array of business sectors, including retail, real estate, commodities, and other consumer-driven offerings.

With its planned advanced buyer and seller functionality, third-party integrations, and enhanced security through a comprehensive buyer and seller pre-verification program, the Marketplace intends to provide a flexible, functional, and broad e-commerce experience to its users. The Company intends for the Marketplace to be a super-app, widely considered as a mobile or web application that can provide multiple services, including payment and financial transaction processing. The Marketplace will be accessible through all modern web browsers and is expected to include native iOS and Android mobile applications that will be available for download on the Apple and Google Play Stores.

BNI has appointed veteran developer Douglas Gintz as its President and Chief Product Officer to lead the effort. Mr. Gintz is a strategist, programmer, and marketer with broad experience delivering technology and content solutions to a wide audience for over 30 years. Specializing in emerging technologies, Mr. Gintz has developed e-commerce applications, DNA reporting engines, medical billing software, and manufacturing compliance systems for companies ranging from startups to multinational corporations.

Milton Todd Ault, III, the Companys Executive Chairman, stated, Our plan is to build an innovative Bitcoin-focused e-commerce platform that combines our experience in the cryptocurrency sector with our long-term philosophy of investing in disruptive technologies with a global impact. We believe the prospect of powering e-commerce with Bitcoin is a huge opportunity. The global business-to-consumer e-commerce market reached a value of $4.1 trillion in 2021, according to IMARC Group, and Pew Research Center reported that roughly three-in-ten Americans aged 18 to 29 say they have invested in, traded or used a cryptocurrency. Our goal is to deliver an innovative marketplace leveraging blockchain and other innovative technologies. We are pleased to have Douglas on our team to lead this effort.

Im excited to be leading an experienced team in reinventing what it means to transact in crypto, said Douglas Gintz, President and Chief Product Officer of BNI. Recently, online stores began adding crypto payment solutions to their checkout processes in response to demand, but thats not enough. Building a platform from the ground up allows us to deliver more innovative, secure, and seamless user experiences beyond just payments.

For more information on BitNile and its subsidiaries, BitNile recommends that stockholders, investors, and any other interested parties read BitNiles public filings and press releases available under the Investor Relations section at http://www.BitNile.com or available at http://www.sec.gov.

About BitNile Holdings, Inc.

BitNile Holdings, Inc. is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through its wholly and majority-owned subsidiaries and strategic investments, BitNile owns and operates a data center at which it mines Bitcoin and provides mission-critical products that support a diverse range of industries, including oil exploration, defense/aerospace, industrial, automotive, medical/biopharma, karaoke audio equipment, hotel operations and textiles. In addition, BitNile extends credit to select entrepreneurial businesses through a licensed lending subsidiary. BitNiles headquarters are located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141; http://www.BitNile.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as believes, plans, anticipates, projects, estimates, expects, intends, strategy, future, opportunity, may, will, should, could, potential, or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Companys business and financial results are included in the Companys filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Companys Forms 10-K, 10-Q and 8-K. All filings are available at http://www.sec.gov and on the Companys website at http://www.BitNile.com.

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BitNile, Inc. to Launch Innovative Bitcoin Marketplace Platform Intended to Reimagine Cryptocurrency Transactions - Business Wire

What happened

The broader cryptocurrency market has been seeing rather low levels of volatility of late. Whether that's investors believing that much of the macro news that's already impacted markets has been priced in or not remains to be seen. However, with most tokens hovering around flat today, and the overall market down only 0.3% at the time of writing, many are focusing on tokens that are making unusual moves.

One such token that fits this criteria today is Hedera Hashgraph (HBAR -1.38%). The world's 36th-largest token by market capitalization, Hedera has surged 6.2% higher over the last 24 hours as of 1:30 p.m. ET. This is the largest upside move of any token today.

Recent reports that Hedera has seen developer interest in its enterprise-grade network surge may be behind this move. According to recent data fromSentiment, Hedera is currently in third place in terms of development activity, behindPolkadotandCardano.

The race for developer talent to build out decentralized applications on Layer 1 networks like Hedera is on. The fact that so many are choosing this lesser-known (but significant) blockchain is something worth diving into. I intend to do a deep dive on this blockchain project at some point moving forward. My interest has been piqued by this move.

The idea behind Hedera is relatively simple. Via an open-source network, Hedera allows developers to compete for the ability to deploy decentralized applications, with the same competition applying to users vying for transactions on this network. Some level of competition can spur interest among a certain personality type, making this network intriguing, to say the least.

On days like today, when broadly bearish sentiment continues to rein over any indications that bullish catalysts can be on the horizon, upside moves such as the one seen in Hedera are worth noting. This is a crypto project I've yet to explore deeply, but I intend to do so, on the basis of what appears to be relatively strong demand for these tokens.

When times get tough, projects that stand out tend to get even more attention. Such appears to be the case with Hedera today.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Hedera: The 1 Cryptocurrency That's on Fire Today - The Motley Fool

Cryptocurrency mixers, a software that provides anonymity in crypto transactions, are at the forefront of the latest clash between regulators and the emerging world of digital assets, with legal actions, arrests, counter lawsuits, and North Korean hackers all part of the picture.

The U.S. Treasurys Office of Foreign Assets Control (OFAC) slapped sanctions on the Tornado Cash cryptomixer in August. This is based on allegations that since its creation in 2019 the mixer has handled more than $7 billion of cryptocurrency, including from criminal organizations like the North Korean state-backed Lazarus Group.

Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks, said Treasury Under Secretary Brian E. Nelson in announcing the sanctions. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.

Sheila Warren, chief executive officer of the Crypto Council for Innovation, said the sanctions effectively a ban on U.S. citizens and businesses using the service set a precarious precedent and would have potentially very far-reaching implications.

This is a departure from the principle that code or technology itself has a fundamental neutrality that is benign, and it is what you do with it that is what turns it into something that can be malicious, she said at the Forkast live-streamed event, Crypto Rising: The Role of Law: An International Debate post Tornado Cash on October 5.

In addition to sanctioning specific wallets, all assets held in Tornado Cash were frozen, triggering a backlash from many in the crypto community and a lawsuit against the Treasury. The case filed by six Tornado Cash users and backed by cryptocurrency exchange firm Coinbase Global, Inc may set important precedents for U.S. regulators.

Privacy vs. Security

Advocates of crypto mixers argue they are key to privacy on the blockchain because they obscure the history and origin of digital assets. When the mixer receives cryptocurrency, it pools it together with assets from other users, mixes them together, and returns the same amount of funds, less a fee, into a new wallet that the user can access with a special digital key though the details of how Tornado Cash works differ slightly.

The ability to move cryptocurrency into a wallet that has never been used or associated with the user ensures more privacy. Though cryptocurrency is often considered anonymous, it is pseudonymous, with every transaction traceable to a public cryptocurrency wallet address.

A wallet can become associated with the users actual identity the more it is used in transactions with traditional finance. For example, once a wallet is added to a third-party exchange, the users wallet and bank account can be linked.

While the absence of crypto mixers would have a negligible effect on legal cryptocurrency activity, they present a dilemma to regulators and members of the cryptocurrency community, according to legal and blockchain experts.

Virtually everyone would acknowledge that privacy is valuable, and that in a vacuum, theres no reason services like mixers shouldnt be able to provide it, however, this needs to be balanced with the fact that 25% of mixed funds come from illicit addresses, Andrew Fierman, head of Sanctions Strategy at U.S. blockchain analysis firm Chainalysis, told Forkast in an email.

A sizable amount of the more than $7.6 billion worth of Ether crypto that Tornado Cash has received since starting up in August 2019 has come from illicit or high-risk sources, including $455 million from hacks by the Lazarus Group, according to Chainalysis data.

In the first half of 2022, crypto addresses tied to illicit activity transferred nearly 10% of their funds to cryptocurrency mixers like Tornado Cash, Chainalysis data shows, which didnt provide a dollar figure.

Given the data, Fierman said, we may see this trend continue and for OFAC to designate other mixing services used by cybercriminal groups.

However, on the privacy and safety side of the argument, Ethereum cofounder Vitalik Buterin has said he used Tornado Cash to donate to Ukraine following the invasion by Russia, stating the service allowed him to do so without disclosing the identities of recipients.

Sanctioning code?

Christopher Goes, the cofounder of Anoma, a privacy-centric blockchain protocol, told Forkast via email that hes skeptical of how effective sanctioning Tornado Cash would be, as it is not targeted or specific enough to shut down particular parties.

He argues it is easy to copy and rename protocols, diluting efforts to crack down on money laundering, while freezing the assets of individuals for using a service that was legal when they first engaged with it.

While I can see how this goal makes sense within a certain U.S. foreign policy rationale, I am not sure that sanctioning Tornado Cash will actually accomplish it, or help, he said, adding that he does not believe Tornado Cash is technically a crypto mixer.

This is an unfortunate misconception, he said, when users use Tornado Cash, their funds are kept separate, not mixed with one another. There are some custodial Bitcoin mixers, which do mix funds but which do not provide privacy, and those are probably regulated under money transmitter laws.

At its core, Tornado Cash is just code running on various open public blockchains like Ethereum, making it a complex entity to regulate. The code was publicly available for anyone to use on the open-source software hosting service GitHub.

The code was then removed from GitHub on concern that even hosting the software was in breach of the Treasury sanctions.

Tornado Cash advocates pushed back, arguing the OFAC did not have the Congressional authority to sanction code, which they argued is an expression of freedom of speech, as established in 1996 in the Bernstein v. U.S. Dept of State case.

Digital Rights advocacy group the Electronic Frontier Foundation said in a blog post: the disappearance of this source code from GitHub after the government action raised the specter of government action chilling the publication of this code.

Peter Van Valkenburgh the research director at Coin Center, a non-profit on public policy and cryptocurrencies weighed in, saying the Tornado Cash ban is unconstitutional.

OFAC has since walked back slightly, saying that U.S. persons would not be prohibited by U.S. sanctions regulations from copying the open-source code and making it available online for others to view. The code is now back on GitHub, though in a read-only form.

Ethereum Core developer Preston Vanloon, tweeted about the reversal, saying, that is progress from an outright ban. I still encourage GitHub to reverse all actions and return the repositories to their former status.

Arrested

Another casualty is 29-year-old developer Alexey Pertsev who was arrested in Amsterdam on August 10 by the Netherlands Fiscal Information and Investigation Service (FIOD) for his alleged involvement in the Tornado Cash protocol.

Accused of facilitating money laundering through the mixer, Pertsev was ordered to be held an 90 days in prison on August 25, though he has not been charged with any crime.

Six individuals who said they have funds trapped in Tornado Cash filed a lawsuit on Aug. 8 against the OFAC and the Treasury Department, alleging the sanctions exceeded the agencys authority, infringed on users constitutional rights, and threatened the ability of law-abiding Americans to engage freely and privately in financial transactions.

Coinbase Global Inc., the biggest U.S. cryptocurrency exchange, has helped organize and bankroll the lawsuit.

The Treasury Department on 13 September announced a way for Tornado Cash users to recover their funds by applying for an OFAC license to withdraw funds legally.

More than US$1.6 million is frozen in Tornado Cash accounts, according to data from DeFiLlama, and much of it may well be illicit, but as with Buterins Ukraine donation there are legitimate reasons users may want layers of privacy when making a transaction.

In another lawsuit filed against the U.S. Treasury in September, the plaintiff Tyler Almeida said he used the mixer to privately donate 0.5 ETH to the Ukrainian governments public crypto wallet address. Almeida said this was to avoid public crypto wallets that donated to Ukraines public addresses being targeted by Russian state-sponsored hackers, according to the complaint.

Implications

Despite the Treasurys actions, cryptocurrency mixers are not illegal. Other services, such as UniJoin and ChipMixer, are still up and running. However, the risk of sanctions loom, according to Leonie Tear, counsel at King & Wood Mallesons and certified global sanctions specialist with the Association of Certified Anti-Money Laundering Specialists.

I think its a warning shot to the whole industry in terms of the need to get compliance programs in place, said Tear.

While the decentralized nature of Tornado Cash makes it difficult to identify individual bad actors, targeting the most high profile tumblers can dissuade users and incentivize new industry standards, Tear added.

Its all pushing the industry to really put in place proper controls and stop virtual assets being used for crime, she said. The aim I dont think is just to stifle innovation or to stop cryptocurrency being used, its just to try and rein in the more wild side.

Some crypto companies have distanced themselves from Tornado Cash. Circle, issuer of the popular dollar-pegged USDC stablecoin, froze 75,000 USDC held by users with ties to Tornado Cash.

Conversely, Tether Holdings Ltd., the issuer of the worlds largest stablecoin by market capitalization, USDT, decided not to freeze any assets linked to Tornado Cash unless instructed specifically to do so by law enforcement.

Christopher Goes at Anoma said that either way, this story is far from over.

I see a lot of productive engagement, and I expect that to continue, he said, the technology and regulations are both complex, and I hope that all involved parties can exercise patience and assume good intent by default.

(Updates in third section to add that Goes does not regard Tornado Cash as a crypto mixer.)

More:
What is the future for cryptocurrency mixers after U.S. sanctions on Tornado Cash? - Forkast News

After losing value all day yesterday and for the majority of this week, the cryptocurrency markets are still showing little change on Friday. With a gain of 1.94% over the previous day, the market capitalization of all cryptocurrencies is now $920 billion. Ethereum has risen back above the $1,300 support level, and Bitcoin is currently trading at $19,000. Lets examine recent news that is important to prices today.

Key Notes:

The $19k support level is still being held by Bitcoin, indicating extraordinarily strong resilience to volatility despite the drop in trading volume and general bearish mood. According to a Cointelegraph report, Bitcoins bear market will only persist for about two to three months at most, after which recovery efforts are likely to start.

Although several on-chain data suggest that Bitcoin may have bottomed out, the bottom cannot be called until we see many weeks of bullish momentum.

While a bear market results in losses for investors, projects benefit from the slump since it gives them time and breathing room to innovate and get ready for the bull market. The development of a Bitcoin protocol that benefits the environment is the goal of some projects. When it comes to transforming blockchain and cryptocurrency assets into environmentally friendly technology, Ethereums merger is the perfect positive move.

Additionally, according to a Coindesk report, Ethereum is becoming a deflationary asset, which suggests that over the long term (months to years), we might witness significant price growth for Eth in comparison to other crypto assets.

While Ethereum has lagged behind BTC over the last few weeks, ETH outpaced BTC today in terms of price movement. The markets most valuable cryptocurrency, Ethereum, may yet surpass Bitcoin in market worth next year.

If Ethereums price doubled to $2,600 from its present $160 billion market value, it would be very close to Bitcoins $370 billion market cap. Although doubtful, such a spike in Ethereums price isnt completely improbable.

The trading volume for cryptocurrencies today is essentially unchanged, with Bitcoins volume falling by 2% and Ethereums volume rising by 8%. At $923 billion, the market capitalization of cryptocurrencies is still below the $1 trillion barrier, indicating a bearish outlook.

Even though the absence of bullish price action may appear to be a bearish indicator, its crucial to remember that cryptocurrency prices are also showing significantly less volatility than they were earlier this year. A decrease in volatility suggests that the market is stabilizing and may be bottoming out.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any projects.

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As the Weekend Approaches, the Cryptocurrency Markets Barely Change - The VR Soldier