News: SEC subpoena storm, KodakCoin, QuadrigaCX funds frozen, exchange shenanigans

The SEC is finally getting around to calling up all those ICOs who sold billions of dollars’ worth of tokens — “focusing on those that failed to properly ensure they sold their token exclusively to accredited investors” — pretty much exactly as crypto skeptics have been saying since The DAO and before. It also turns out that calling your offering a SAFT isn’t magic. “The SEC has gotten dozens of ICOs to refund buyers and pay a fine, simply by reaching out and asking questions.” I’m just surprised it took them this long.



KodakCoin latest: they finally closed the ICO on 30 September. Meanwhile, it appears that Ryde GmbH put up its software — the basis for the exciting new KodakOne system — as security for a loan from ICOx Innovations. WENN Media split from Ryde GmbH, and signed up with KodakOne’s competitor, Copytrack — who ran an ICO in January, and whose white paper proposal was very similar to KodakCoin’s. Copytrack are now being sued over their ICO — a lot of stuff Copytrack claimed doesn’t … appear to exist. And by the way, here’s the SEC form D for the January 2018 second round of the KodakCoin ICO — the one that aimed for $6,750,000 and netted $880,000.

Unforeseen ICO hazards — someone bought 530 Copytrack tokens (~CDN$780). Copytrack mistakenly sent 530 ETH (~CDN$495,000). They asked the recipient for the ether back — but he said he’d been hacked, so sorry, too bad. Copytrack sued him for the return of the funds … but the recipient has since died. Neither party contests the facts of the case, so the Supreme Court of British Columbia has ordered those particular ETH be returned to Copytrack — not any old 530 ETH, not the CDN$495,000 cash value. It’s not clear how this will be resolved.

Woolf University — the university plannng literally to run on the blockchain — is still on the publicity trail. No, nothing about this makes any more sense than it did previously.

Including transactions is too slow, let’s just mine empty blocks — now on Ethereum!

SpankChain just lost $38,000 in Ether to a Solidity re-entrancy bug very like the one that took out The DAO.

FT Alphaville: Coinbase wants to be “too big to fail”, lol — those times when it’s 100% appropriate for an august financial journal to use “lol” in a headline.

I don’t want to scare you — but crypto exchange volume is frequently fake. You can even buy wash trading services. And OTC and “decentralised” trading is a lot of the manipulation.

Wall Street Journal, October 2018: “Bots Are Manipulating Price of Bitcoin in ‘Wild West of Crypto’.” Bitfinex’ed, August 2017: “Meet ‘Spoofy’.”

Why you can’t cash out, QuadrigaCX edition: $28m Canadian is frozen (archive) at CIBC, the bank of Quadriga’s payment processor — because they literally couldn’t determine whose money it was. “In a factum filed with the Ontario Superior Court of Justice, the bank says it froze the accounts after it was unable to determine who owns the funds.” Quadriga is shocked, shocked at such assertions — “This court should not succumb to the bank’s unsubstantiated and highly offensive speculation that there must be shady dealings afoot because Quadriga’s business is a trading platform for individuals trading in cryptocurrencies.” When I wrote up the KYC/AML problems with getting your money out in December, some commenters told me how Quadriga was 100% reliable …

Meanwhile, a global standard for cryptocurrency anti-money laundering is shortly to be agreed (archive).

Every 24 hours, the YoBit crypto exchange will pick a random minor altcoin and pump it by buying 10 BTC worth, in ten transactions. (Archive, archive.) YoBit previously had problems with the authorities in Russia, Ukraine and Indonesia (translation), because they keep trading against their own customers. But I’m sure you can trust them.

Binance previously told new altcoins who wanted to be listed on the exchange to pay a couple of million dollars for the privilege. This has proven sufficiently embarrassing that Binance will now be making all listing fees public, and donating 100% of the fees to charity — specifically, Binance’s own Blockchain Charity Foundation, which will focus on “Decentralizing Worldwide Poverty Alleviation.” The charity isn’t up and running yet — there’s a Memorandum of Understanding with Malta — but it plans a complicated donation architecture in which “We envision a 3 or 4 layer donation tracking system”. The first response (archive) on Twitter: “I don’t like this idea. Your revenues should go to rewarding your team and the improvement of the platform. Not go to welfare”. CZ suggested it was his money, after all.

EOS ran an ICO token offering that was so egregious I used it as a perfect example of the form in chapter 9 of Attack of the 50 Foot Blockchain. You’ll be shocked to hear that there’s rampant collusion and corruption amongst the controlling nodes of their blockchain. (Twitter thread.)

Cardano (ADA) is porting their software to Rust — but the bit I didn’t know is that ADA is a completely centralised coin, and they’re trying the thing where they get things up and running, then try to decentralise.

The dumbest idea you will see this whole week — the Bitmain AntRouter: a Litecoin mining rig that’s a wifi access point! Linus Sebastian of Linus Tech Tips is not impressed:



What’s worse than your mistress ordering a hit on your wife? When she tries to pay for it on an immutable public ledger of all transactions.

The Brexit Border Blockchain proposal was misunderstood by the Conservative Party — the actual suggestion was to chain Phillip Hammond to a block, and drop him into the Irish Sea.

An interview with David Golumbia, author of The Politics of Bitcoin (US, UK).


Angus Champion de Crespigny: How I Lost My Faith in Private Blockchains. “It may, therefore, be easiest to think of a blockchain as a distributed database with the ability to administer it taken away.”

Preston Byrne: For the last time, Ripple Labs created XRP.



The UK Parliament’s Digital Currencies Inquiry has produced its report — Crypto-assets: Twenty-Second Report of Session 2017–19 — and concurs with Izabella Kaminska’s and my recommendations on protecting retail investors from predatory crypto scammers. I’m in paragraph 120. FT Alphaville: Parliament gets it, crypto-currency bunkum edition.

Digital identity, on the blockchain! “How to create a person” in Decrypt — with quotes from me.

The South China Morning Post’s YoungPost section, 18 September 2018, correctly propagandises my book to the children — Blockchain-based platform ‘Decentraland’ wants you to pay real money for virtual land.

The New York Times asked me about the Wal-Mart/IBM supply chain proposal — where all nodes of the Hyperledger are on the IBM Cloud and administered by Wal-Mart. I pointed out this constitutes a “database.” Matt Levine: “You don’t generally read a lot of stories about supply-chain management and database design in the New York Times. I can’t quite figure out why they were interested in this one. Can you?”




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One Comment on “News: SEC subpoena storm, KodakCoin, QuadrigaCX funds frozen, exchange shenanigans”

  1. calling your offering a SAFT isn’t magic. “The SEC has gotten dozens of ICOs to refund buyers and pay a fine, simply by reaching out and asking questions.” I’m just surprised it took them this long.

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