News: McAfee may be in US custody, NY AG v. Bitfinex/Tether, Cryptopia shuts, Quadriga money still gone, Tapscott busted

News: McAfee may be in US custody, NY AG v. Bitfinex/Tether, Cryptopia shuts, Quadriga money still gone, Tapscott busted

JUST IN: Mike Dudas from The Block tweets that John McAfee “is currently either in the custody of US Federal Agents or on the run in or near the Bahamas. He was last seen leaving a prominent crypto persons home via boat. He is separated from his wife at the moment. Sources are claiming that he is in federal custody.”

And further: “I’ve spoken with a number of additional friends of @officialmcafee who say it is typical for him to disappear for long periods of time and then reappear for PR purposes. However, not a single member of his inside group professes to have previous warning here. Is it the Feds?” Update: This tweet has now been deleted. However, that was the text.

(“Word on the street is that the whale decided to press charges” — Azathoth on SomethingAwful.)

 

 

The judge hearing New York Attorney General v. iFinex et al — iFinex is the parent company of Bitfinex and Tether — asked both parties to submit their proposed courses of action. They did so on Monday.

iFinex’s letter seems to admit everything the NY AG accused them of. They want to invest the Tether reserves to survive, and pay their employees — rather than keep the reserves in cash, as they spent years telling their customers they were doing. They admit to commingling company operating funds with the reserves — their excuse for this is literally “Money is fungible”, as if companies don’t address this conventionally by using different accounts for different purposes. They propose that they be asked merely to preserve documents, and not actually produce any as yet.

The NY AG’s letter notes that they just want Tether to keep the reserves in the manner they spent years saying they were. They don’t want to allow employees to be paid from the Tether reserve, as they don’t want the reserve drained by insiders. They ask the judge to let the previous order stand.

And the ruling is just in — the judge says Bitfinex may not touch Tether reserves for 90 days, may not pay executives, employees, or agents of Bitfinex, except for payroll and payments to contractors and vendors, and must preserve documents. Bitfinex paints this as a tremendous victory, because … they don’t have to produce documents yet? OK.

Traders aren’t confident in Bitfinex — there appears to be a bank run in progress on their cold wallets. Bloomberg notes that the Bitcoin price rally is masking “capital flight” from exchanges — that’s “exchanges” plural, but the only one they name is Bitfinex.

Reggie Fowler, Bitfinex’s former US money-mule, has not been held in custody as the US Government asked — he’s out on $5 million bail.

Robert-Jan den Haan has done a nice podcast on Bitfinex, Tether and Reggie Fowler with The Block.

 

 

After getting hacked in January, New Zealand altcoin exchange Cryptopia has gone into liquidation. They closed after the January hack, and were still offline in early March. They reopened for trading in mid-March — then 14 May they put up a notice saying “Don’t Panic! We are currently in maintenance. Thank you for your patience, and we apologize for the inconvenience” … and yesterday, they closed forever. The liquidator conducting said “maintenance” is Grant Thornton NZ, who expect this will take “months rather than weeks” to sort out. HOW DOES THIS KEEP HAPPENING, IT IS A MYSTERY FOR (checks stopwatch) THE AGES

Also: sIGN ThiS pETitioN to save your cryptos from the liquidation! I’m sure that’ll work.

NEW QUADRIGA NEWS! All the money’s still gone. Ernst & Young have turned up about CDN$28 million, but it’s all in cash — they can’t find the CDN$200 million of missing cryptos. The “Trustee’s Preliminary Report,” on the EY document page, says that a complete accounting may be almost impossible to prepare, as the records just don’t exist.

Binance have reopened withdrawals after the hack — and apparently you can get your bitcoins out again.

David S. H. Rosenthal on the Binance hack — Immutability is for the little guys, not for us.

 

 

My quick Monday evening rant about the Bitcoin price rise seems popular — David Reid at CNBC asked for comment, I sent a couple of lines and “here’s the blog post, feel free to use quotes from it” and he linked it in the article! And so it was also used by TechCrunch and NewsBTC.

Bitcoin transactions are getting clogged and expensive again — $3.89 average fee to get in the next block today, as compared to $1.30 just a week ago.

Anthony Pompliano vs Kevin O’Leary on CNBC — Pomp recites disconnected fragments of bitcoin maximalist evangelism in a confident voice, O’Leary describes real things and events like a sensible person. It turns out Bitcoin talking points don’t work outside the echo chamber.

Kevin O’Leary further on CNBC — “Try and do a transaction of $100,000 in Bitcoin. I tried to do some real estate in Switzerland with it once. It is a useless currency. It is a useless currency.”

Bakkt say their plan to offer Bitcoin futures is going ahead in July! But what the press release actually says is: “an integrated custody service will be fulfilled by Bakkt’s qualified custodian, subject to regulatory approval” — their plan doesn’t appear to have been … CFTC-approved. Instead, they want to self-certify the offering, then the CFTC has 10 days to disapprove.

 

 

I’ve had people try to tell me the Bitcoin price rise is linked to coverage of Flexa’s new thing — “Large retailers including Starbucks, Amazon, Whole Foods, Barnes & Noble and Crate and Barrel, will accept crypto payments starting today.” — which correctly translates as: the shops will continue to accept only conventional money, but now there’s two more middlemen if you want to pay with crypto. Adding middlemen was the point of crypto, right?

BitMEX blogs on how investors in 2018’s top ICOs got rekt, except on EOS. Initial Exchange Offerings — coins offered only on a single exchange — did well if you bought into the offering, but went straight down from the offering date.

“Blockchain” is still useless for venture capitalists too — the only VC-funded startups that have gone anywhere are doing stuff with cryptocurrency.

 

 

The SEC gives us a quick preview of the next Tapscott blockchain book, working title “The Fines for Securities Law Violations Revolution” — Alex Tapscott’s investment startup NextBlock falsely claimed a bunch of famous blockchain names as advisors in their slide decks in late 2017. When they were busted by Laura Shin at Forbes, a pile of their investors pulled out. They shut down the company and returned investors’ money, but that wasn’t sufficient to make good with the SEC. Here’s the administrative order (PDF) — Tapscott was fined $25,000. That may not sound like much, but NextBlock had already paid a CAD$700,000 fine to the Ontario Securities Commission for the same offence.

The Stellar XLM blockchain went down yesterday — Tim Swanson describes how “a critical mass of nodes went down causing a cascading failure and so the entire network went down.” It also turns out that you can take Stellar down by taking out just two nodes. Fortunately, nobody uses Stellar.

The sociopaths of the “XRP Army” have gotten obnoxious enough that David Schwartz of Ripple has asked them to cool it — it’s starting to hurt Ripple’s business.

The Dark Web is tiny and unreliable — out of 55,000 Tor sites analysed, only 8,400 had a live site, and many of those weren’t up reliably.

Today’s most thoroughly buttcoin claim that Prof Dr Dr Craig S. Wright is Satoshi Nakamoto — the black-box Artificial Intelligence says so. They take the time to note that “the narcissist (narcissist argument) generally believes in what they are stating in their mind,” for some reason.

I went on the CryptoLaw Podcast with Adrian Cortez and Gabriel Shapiro. It came out pretty well!

 

 



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