News: Bitfinex/Tether v. New York, Facebook-only Libra, Justin Sun, IRS letters, unbanking the banked

Bitfinex and Tether went up against the New York Attorney General today, and got another 90-day stay on the NY AG’s subpoena for full documentation of everything about Tether. The NY AG’s investigation can continue, however.

It’s good that Bitfinex is so good at keeping US customers off their platform! Except the one who came in from a New York IP with the account name “ImaNYresident,” and got through Bitfinex’s otherwise bulletproof Know Your Customer process by the unstoppable hack of clicking the “Not a  US Resident” button. “ImaNYresident” traded on the platform for a week, then  left a note on the withdrawal transaction saying “I am a NY Resident.” Bitfinex responded that it’s apparently the media’s job to do their Know Your Customer for them, and not to independently verify stuff or anything.

And then there’s the US investment firms — Arrington XRP Capital  and Arca — who bought LEO tokens via intermediaries.

As for Bitfinex/Tether’s one-time US fiat currency agent, Reggie Fowler of Crypto Capital, who has been charged with bank fraud and unlicensed money transmission — both defendant and government want more time to complete discovery, and both parties have asked for the next status hearing to be scheduled for September. Fowler is out on bail in the meantime. Amy Castor has been told that the two “financially responsible people” who put up Fowler’s bail were his ex-wife Lori Fowler, and Molly Stark, the director of Spiral Volleyball, a company Fowler owned.


No-one other than Facebook has joined Libra. In their Q3 2019 earnings call, Visa CEO Alfred Kelly said: “We have signed a nonbinding letter of intent to join Libra … So no one has yet officially joined.” This is pretty much the level of commitment that Visa’s startlingly unenthusiastic press release on Libra put across.

Alex Lipton, MIT: “Without being particularly obnoxious, I can tell you that the actual structure of Libra is pretty much lifted verbatim from the paper which Sandy Pentland and Thomas Hardjono and I published last year.



Crypto is just like the early Internet — trading platform Robinhood stored passwords in plaintext.

The @BitmexREKT account on Twitter, which listed every trader who blew their margin, got banned for “impersonation.” The bot owner wrote further about the ban. It’s possible that BitMEX are worrying about the CFTC probe. The account is back up as @BXRekt.

Polish exchange Bitmarket shut down two weeks ago, claiming “lack of liquidity” — i.e., all the money was gone. On 25 July, the body of owner Tobiasz Niemiro was found with a bullet through his head. “It seemed like he had found himself in an environment of shady businessmen.”



Remember when Long Island Iced Tea changed their name to Long Blockchain, right at the peak of the crypto bubble in late 2017? You’ll be shocked to hear that … it was a pump-and-dump scheme, orchestrated by a group of serial scammers.

IOTA founder Sergey Ivancheglo has quit the IOTA Foundation. Reddit /r/iota assures us that this is good news for IOTA. The two remaining directors are non-developers. Ivancheglo is the project representative who claimed that IOTA’s security holes weren’t coding errors, but deliberate booby-traps for “copy protection,” and made legal threats against security researchers. Maybe that’s what Ivancheglo means by “my use of free speech has repeatedly been leveraged in unfair attacks against the IOTA Foundation.”

Justin Sun from TRON turns out to have been under Chinese border control since June 2018, according to a report in Caixin — but snuck out through an unspecified loophole in the regulation in October or November 2018. Speculation is that China was annoyed at Sun giving $4.6 million to a US charity for the lunch with Warren Buffett, and talking it up quite so much.

Sun has also failed to make his last payment to BitTorrent inventor Bram Cohen for his purchase of BitTorrent, Inc. “I totally understand he wants his money, but right now it has nothing to do with me,” Sun told Decrypt, in this week’s least convincing debtor excuse.



The SEC has issued a no-action letter to Pocketful of Quarters for its ERC-20 token, Quarters! This holds as long as Quarters aren’t being used as securities — they’re being sold as fixed-value tokens to spend on games. “You can never be too careful in crypto, and our partners (both financial and video game) care about this validation,” say Pocketful of Quarters.

Bitcoin is still unbanking the banked — in this case, Kai Sedgwick from I especially liked the bit where he gave NatWest a stern telling-off, and everyone stood up and clapped. “I couldn’t care less whether the bitcoin I sold them was being used to purchase methamphetamine or depleted uranium: that’s none of my business.” I mean, how can you expect anyone to remember £8000 being sent to their personal account a few weeks ago?

In Canada, the Ontario Securities Commission has sanctioned CoinLaunch for their consulting work for two ICOs, BCZERO and ECOREAL. CoinLaunch would write white papers, put the tokens on a blockchain, market and promote the offering, and so on. But ICO tokens are likely securities in Ontario — so CoinLaunch should have registered as a dealer. CoinLaunch paid CDN$50,000 to settle, and deleted their keys to the tokens they’d been paid — a “modest” penalty, because they’d cooperated fully, and wound down their ICO promotion business.

The IRS has started sending letters to US crypto traders, strongly suggesting they file amended returns that account for their cryptos. One Reddit /r/btc commenter says the letters were sent to every Coinbase customer who traded more than $20,000 between 2013 and 2015. The first /r/bitcoin thread about the letters is purestrain sovereign citizen comedy godl. “never surround for it, they don’t have the right to say whats ilegal and whats not” — it’s probably a better idea to get an accountant.



FT Alphaville Vaudeville on Friday was tremendous fun. No, Pamela Anderson couldn’t make it. Craig Wright was more than a little odd. I didn’t get to ask Dr. Wright my question, about how he thought the Andrew O’Hagan deposition would go.

I went on the Let’s Talk ETC! podcast, to talk about the book, about crypto in general, and about Facebook’s Libra.





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