Krystal

Krystal

Crypto Exchange UpBit’s Operator Launches Custody Service with Ledger

DXM, a financial services subsidiary of South Korean fintech firm Dunamu, has worked with crypto cybersecurity firm Ledger to launch an institutional crypto asset custody service.

The partnership and the new custodian
Industry news outlet TheBlock reported on Dec. 4 that DXM plans to launch the custodian under the name Upbit Safe and that Ledger Vault, Ledger’s custody arm, will support the initiative with its technology. Upbit safe will reportedly use Ledger’s hardware security technology to make trading more efficient and safer for its institutional clients.

Ledger’s Head of Asia-Pacific region Glenn Woo explained that Ledger Vault offers solutions that allow institutions to customize their custody rules to better fit their needs. DXM Chief Strategy Officer Eric Yoo told the outlet that the firm plans to target UpBit’s customers first. Yoo explained the new enterprise’s outlook:

“We are a subsidiary of the largest exchange in Korea and have an advantage over our peers given that we already have a lot of assets we can bring into our custody. [...] The combination of the Upbit brand, Ledger Vault’s security technology, and DXM’s own technology will give DXM an edge in the Korean market.”

Lack of regulation hinders crypto growth
Still, Yoo admitted that institutional participation in the crypto space in South Korea is largely hampered by unclear regulation. Still, he believes that clarity should improve as soon as next year, bringing new money to the local crypto industry:

“The biggest regulatory risk in Korea is uncertainty and lack of regulations. [...] It’s quite a wild wild west out there. [...] Once regulations become clearer, it’d be easier for us to engage with institutional money and not take the risks from uncertainties.”

Woo also explained that Ledger Vault is still a new service in the space and is still trying to penetrate the market. He hopes that with his company’s help, DXM will be able to help his firm scale its operations:

“DMX has a reputation of being very secure… With the track record that they have in Korea, they can definitely help us scale.”

The number of custody services aiming to secure the crypto assets of institutions is steadily increasing as regulation is making the space more suitable for institutional investors. One of the last examples is the custody feature launched by institutional Bitcoin (BTC) trading platform Bakkt for its entire client base after obtaining regulatory approval in the first half of November.

Krystal

Circle Co-Founder Sean Neville Quits as CEO After Reshuffle: Report

Payments company Circle will install a new CEO at the start of 2020 after one of its original co-founders steps down from the position.

According to cryptocurrency media outlet CoinDesk on Dec. 5, co-founder and co-CEO Sean Neville will transition to a post on the company’s board of directors in January.

Sean Neville becomes board member
Neville launched Circle with Jeremy Allaire in 2013, and has presided over its metamorphosis in the ensuing years, including a pivot away from Bitcoin (BTC) and the acquisition of cryptocurrency exchange Poloniex last year.

As Cointelegraph reported, Circle is now selling Poloniex, Neville describing the current events as forming an appropriate time to switch roles.

He will additionally continue his activities with Centre, the project between Circle and cryptocurrency exchange Coinbase which produced the company’s native stablecoin, USD Coin (USDC). CoinDesk quoted him as stating in an email:

“I also expect to propel the mission forward through CENTRE and other new complementary paths that traverse worthwhile challenges in infrastructure, regulatory policy, economics, and product design.”

Neville has yet to confirm the move, and at press time had not updated his personal information on resources such as LinkedIn to reflect any changes.

All change at Circle
Circle’s sale of Poloniex, which it originally acquired for $400 million, has not gone without controversy. As part of the spin-out, United States traders will no longer be able to use the platform at all.

This week, executives announced that those who do not withdraw their funds from Poloniex before a Dec. 16 deadline would face various recriminations, including potential confiscation of their entire balance.

Last month, several former executives at Circle launched their own cryptocurrency trading firm. CMS Holdings is headed by Daniel Matuszewski, the former head of Circle’s over-the-counter, or OTC, trading arm.

Cointelegraph has reached out to Circle and Neville for comment, but had not received a response at press time.

Krystal

This Cryptocurrency Seems Designed For A Post-State Society

Upstart crypto company Saga wants to issue a new global currency on the blockchain. Just don’t call it a stablecoin.

Saga’s SGA digital currency relies on an international reserve asset called Special Drawing Rights (SDR), which was introduced by the International Monetary Fund in 1969. This is a conventional basket of major world currencies — the US dollar, the euro, the British pound sterling, the Japanese yen, and the Chinese renminbi — that central banks around the world use to hedge against fluctuations in their own local currency. SGA borrows this model for a financial instrument and puts it on the blockchain.

These days, one SDR is worth about $1.40 USD, and SGA will be worth the same when it launches. But SGA’s value can go up or down depending on how many other people are using SGA. To buy this cryptocurrency is to cause Saga’s smart contracts to generate it from scratch. To sell it back is to burn the coins. So the monetary value of SGA can change, but the idea is that any change in price happens slowly and sustainably.

So SGA is not a stablecoin with a permanently fixed price. But you could fairly call it a “stable currency.”

“It’s increasingly clear that for a global economy, we need a global currency,” said Saga founder Ido Sadeh Man. “If we want to achieve this, we need to answer a few questions. Who controls it, how do you tame volatility, and is it legitimate?”

Saga treats its token holders as sovereign. Yes, Man started the business, but Saga uses an Ethereum-based governance model that makes it possible for holders to elect a board of directors or another monetary committee that ignores his wishes entirely.

Saga is ultimately an ERC-20 token system that also adheres to AML and KYC practices. While the thought of regulating some new global currency might seem silly, this compatibility should be quite appealing to policymakers. Man explained that Saga probably won’t achieve status as a means of exchange within a year or two of launch — why hold it if no one accepts it, and why accept it if no one has it? Instead he suggests SGA will find its first applications within hedging.

When asked about his currency playing a role in a world hypothetically free of geopolitical borders, Man said, “It’s obvious that nation-states can’t handle all our identities for all our lives, but I don’t believe that my generation will witness that, and probably not my children’s generation either.”

SGA launches on December 10th and will be available for trading on Liquid.

Krystal

Researchers Detect New North Korea-Linked MacOS Malware on Crypto Trading Site

Security researchers have discovered a new cryptocurrency-related macOS malware believed to be the product of North Korean hackers at the Lazarus Group.

As tech-focused publication Bleeping Computer reported on Dec. 4, malware researcher Dinesh Devadoss encountered a malicious software on a website called “unioncrypto.vip,” that advertised a “smart cryptocurrency arbitrage trading platform.” The website did not cite any download links, but hosted a malware package under the name “UnionCryptoTrader.”

Linkage to North Korean hackers
According to the researchers, the malware can retrieve a payload from a remote location and run it in memory, which is not common for macOS, but more typical for Windows. This feature makes it difficult to detect the malware and carry out forensic analysis. Per VirusTotal, an online service for analyzing and detecting viruses and malware, only 10 antivirus engines flagged it as malicious at press time.

After conducting an analysis of the newly detected malware, security researcher Patrick Wardle determined “clear overlaps” with malware found by MalwareHunterTeam in mid-October, which purportedly led to the Lazarus group. At the time, the researchers detected that Lazarus had created another malware targeting Apple Macs that masquerades behind a fake cryptocurrency firm.

Recent North Korea-related developments
In recent months, there has been plenty of news about North Korea-related developments. In late November, United States prosecutors announced the arrest of Virgil Griffith, who allegedly traveled to North Korea to deliver a presentation on how to use crypto and blockchain technology to circumvent sanctions.

Following the arrest, Ethereum (ETH) co-founder Vitalik Buterin declared his solidarity with Virgil Griffith, having supported a petition to free the blockchain developer.

The United Nations Security Council's Sanctions Committee on North Korea accused the country of using a Hong Kong-based blockchain firm as a front to launder money.

Krystal

Bakkt CEO Kelly Loeffler Appointed to US Senate Seat

Georgia Governor Brian Kemp has appointed Kelly Loeffler, CEO of institutional Bitcoin (BTC) futures platform Bakkt, to a United States Senate seat.

With the appointment, Loeffler will replace Sen. Johnny Isakson (R-GA), who plans to retire at the end of the year, the Washington Post reported on Dec. 4. A person familiar with the matter, shared Loeffler’s remarks with the publication, in which she ostensibly said:

“I haven’t spent my life trying to get to Washington. But here’s what folks are gonna find out about me: I’m a lifelong conservative. Pro-Second Amendment. Pro-military. Pro-wall. And pro-Trump. I make no apologies for my conservative values, and will proudly support President Trump’s conservative judges.”

As previously reported by Cointelegraph, various party leaders, including President Donald Trump, reportedly pressed Kemp to choose U.S. representative Doug Collins instead, purportedly given his strong support for Trump, gun rights and anti-abortion efforts.

The President and many among his followers are not sold on Loeffler, viewing her as too moderate. Previously, Kemp reportedly met with the President and Loeffler in a bid to obtain Trump’s approval of his pick for the Senate seat but to no avail.

Bakkt’s recent developments
In the meantime, Bitcoin futures open interest on the Bakkt platform hit a new all-time high of $6.5 million on Dec. 3. The reported open interest was a 42% increase from the previous day, which had been an all-time high as well.

Also, Bakkt is planning to launch the first regulated options contract for Bitcoin futures on Dec. 9. The new options product is based on customer feedback, explained Loeffler, and is designed to hedge or gain bitcoin exposure. Bakkt added:

“ICE Futures U.S. has self-certified the contract with the CFTC and we’re excited to leverage the benchmark futures prices and institutional-grade custody to meet the needs for a regulated options contract.”

Krystal

Crypto Exchange Gemini Burnt One-Fifth of Its GUSD Stablecoin Supply

Cryptocurrency exchange Gemini burnt about one-fifth of its Gemini Dollar (GUSD) stablecoin total supply on Dec. 3.

Whale Alert — a Twitter account dedicated to tracking large cryptocurrency transactions — reported on Dec. 3 that 1,035,020 GUSD were burnt in a single operation. This number of tokens is equivalent to around 20% of what was the total GUSD circulating supply before the burn. The remaining GUSD supply is a little more than 4.1 million GUSD.

Gemini Dollar market cap one-day chart. Source: CoinMarketCap
Gemini Dollar’s rise and demise

The Gemini dollar has seen an overall poor performance since its launch in late September last year. The token received approval from the New York Department of Financial Services and the United States dollars that back it are “held at a bank located in the United States and eligible for FDIC ‘pass-through’ deposit insurance, subject to applicable limitations.”

But clearing regulatory hurdles is seemingly not enough to assure the success of a stablecoin. CoinMarketCap historical data shows that GUSD reported $3.3 million in trading volume on Dec.3, down from a peak of over $249.4 million reported on Feb. 20, 2019. The data suggests that initial enthusiasm around the asset has cooled down.

The burn of a notable portion of the token’s total supply has not gone unnoticed by the community, with Frank Chaparro, news director of industry news outlet The Block, commenting on Twitter, “GUSD is one of the biggest crypto failures of 2019.”

Stablecoins are causing concern among financial regulators worldwide. As Cointelegraph reported earlier today, Bank of Japan Governor Haruhiko Kuroda recently said that no global stablecoin should begin its operations until legal, regulatory and oversight challenges and risks are addressed.

Krystal

Plaintiffs in Tether-Bitcoin Price Manipulation Case Will Not Drop Complaint

The plaintiffs in a class-action lawsuit accusing the Tether (USDT)-affiliated crypto exchange Bitfinex of Bitcoin (BTC) price manipulation have declined to amend their complaint.

According to a court filing dated Dec. 2, the plaintiffs declined to make amendments to their complaint as a study conducted by John Griffin and Amin Shams “still concludes that USDT was being used to manipulate Bitcoin prices.” Moreover, they state that the findings connect the manipulation to a single entity.

Last year, Griffin and Shams of the University of Texas published a paper, alleging that Tether partially caused Bitcoin’s historic high of $20,000 in 2017. The paper stated:

“Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.”

The study claimed that “one large player on Bitfinex uses [USDT] to purchase large amounts of Bitcoin when prices are falling and following the printing of [USDT].” The plaintiffs further added that “Bitfinex executives either knew of the scheme or were aiding it.”

Bitfinex’s response to the single entity allegations
In November, Bitfinex issued a response to the paper, denying its findings and even accusing the authors of unethical motivations. The exchange said, “To obtain publication, Griffin and Shams have released a weakened yet equally flawed version of their prior article. The revised paper is a watered-down and embarrassing walk-back of its predecessor.”

Blockchain education platform Longhash released research that it claims debunks the single-whale theory of the 2017 price surge. According to Longhash, the metric measures how much Bitcoin could be bought with the entire Tether supply at any given time, pointing out that the higher the ratio, the more likely it is for Tether to potentially manipulate the markets. The researchers said:

“This suggests that even if Tether were indeed manipulating the market, its ability to do so actually is strongest when the Bitcoin price falls. This contradicts the claim that Tether issuance drove the 2017 bull market. The supply of Tether actually failed to keep up during the height of the bull market.”

Krystal

Deutsche Boerse’s DLT Security Lending Platform Sees First Transactions

Commerzbank, Credit Suisse and UBS carried out the first transactions on Deutsche Boerse and HQLAX’s distributed ledger technology-enabled (DLT) security lending platform.

According to a Deutsche Boerse press release on Dec. 3, the company jointly developed the platform with fintech firm HQLAX, which was launched by R3 and uses Corda DLT technology to provide liquidity and collateral management products.

The platform was able to swap ownership of a basket of German government bonds and a basket of corporate bonds between UBS and Commerzbank while employing Clearstream Banking as a custodian.

It also conducted a cross-custodian swap between UBS and Credit Suisse, which exchanged the ownership of a basket of corporate bonds at Clearstream Banking and a basket of German government bonds at Euroclear Bank.

Per the report, this approach did not require the physical movement of securities between the collateral agents since the change in ownership was recorded on HQLAX’s registry built on Corda Enterprise. Head of new markets at Deutsche Boerse Jens Hachmeister commented:

“The go-live of the HQLAX operating model demonstrates the power of innovation that DLT is already bringing to the financial services industry. [...] It proves how new technology can successfully be combined with trusted market infrastructure – and the positive reception of the model in the market speaks for itself.”

A broad collaboration
Per the release, Commerzbank, Credit Suisse and UBS have been working with the HQLAX since the initiative started. Furthermore, the project involves over 15 market participants including CIBC, Citi, Goldman Sachs and ING. JPMorgan is in the process of becoming the third tri-party agent in the HQLAX operating model, alongside Clearstream Banking and Euroclear Bank.

As Cointelegraph reported in late October, Deutsche Boerse and Commerzbank have previously collaborated on a joint pilot transaction settlement of post-trade securities using digital tokens and DLT.

Krystal

Litecoin-Funded Grin Developer Challenges Mimblewimble’s Privacy Issue

A Grin (GRIN) developer funded by the Litecoin Foundation has suggested a solution for fixing the “Achilles heel of Mimblewimble privacy.”

David Burkett, a developer at Mimblewimble’s (MW) privacy-centric coin Grin, started a thread on monthly updates detailing progress on both Grin’s development and the integration of MW’s privacy-focused technology into Litecoin (LTC). The developer announced the news on Twitter on Dec. 1:

“I'll be posting monthly status updates detailing progress on the LTC MW EB (YAY acronyms). This is geared toward those interested in LTC development, but will also talk a lot about Grin++ changes, so it may be interesting to Grinners as well.”

Burkett challenges the “Achilles heel of Mimblewimble privacy”
In terms of Grin’s progress, the developer has purportedly performed the first-ever pre-broadcast MW CoinJoin that would allegedly make transactions more private by disabling broadcasting before transactions joined others in the CoinJoin block. Burkett noted that this issue is one of the most critical problems associated with MW’s privacy. He wrote:

“The Achilles heel of mimblewimble privacy though, has always been that transactions are broadcast before they’ve had a chance to be joined with other transactions. That means nodes monitoring the network can see the original input-to-output links of most transactions. Sending a transaction directly to a CoinJoin server before broadcasting is one of many different techniques we can use to combat that.”

Some researchers claim that there is no way to fix Mimblewimble’s privacy
The implementation follows a recent report claiming that MW’s privacy is “fundamentally flawed” as a developer managed to track 96% of Grin transactions before they came to CoinJoin, a block that collects all MW’s transactions to ensure their anonymity.

Published by Ivan Bogatyy at blockchain research firm Dragonfly Research, the report claims that there is no way to fix that issue for MW, and the protocol should no longer be considered as a “viable alternative to Zcash or Monero when it comes to privacy.”

Litecoin Foundation is funding Burkett’s efforts to integrate Grin’s privacy
Alongside Grin’s developments, the developer confirmed that the Litecoin Foundation will be funding his efforts to implement the MW extension block as well as to continue his work on Grin. Litecoin creator Charlie Lee announced the initiative on Oct. 30.

Burkett also noted that he has been working with Lee and Bitcoin researcher Andrew Yang (not the presidential candidate) for several months to design a Mimblewimble extension block to enable confidential transactions on Litecoin. As such, the authors published two draft Litecoin Improvement Proposals using the MW protocol on Oct. 22.

In mid-November, Grin received an anonymous 50 Bitcoin (BTC) donation to its General Fund, sparking a rumor that the donation was related to Bitcoin creator Satoshi Nakamoto.

Krystal