News: Libra stumbles on, Bitmex leaks customer list, Crypto Capital Corp arrest and indictment, Tether appeal, Blockchain for China, Kleiman v. Wright settlement fails, Telegram tokens delayed, UK tax for cryptos

News: Libra stumbles on, Bitmex leaks customer list, Crypto Capital Corp arrest and indictment, Tether appeal, Blockchain for China, Kleiman v. Wright settlement fails, Telegram tokens delayed, UK tax for cryptos

I took a week’s holiday specifically to write about Libra, and ended up reading literally all the newspaper coverage of Libra that I could find, and taking notes. I have about 20,000 words here, as disjointed lumps of a few paragraphs, that I’ll need to sort and distill further.

(I almost found myself explaining what a bitcoin was the other day, but I think I got away with it.)

I’ve been skimming the audio of David Marcus in front of the House in July about Libra. Not going to do the whole seven hours — I still want a transcript to work from, thanks — but it’s worth listening to at least a bit, to hear in the representatives’ own voices how (a) informed (b) pissed off they are.

Libra makes a bit more sense when you realise Calibra is planned as a “custodial wallet,” meaning they hold the actual Libra tokens — for the user (that’s you!), it’s like money in a PayPal account. With all the anti-money-laundering pain-in-the-backside and anti-service that comes with PayPal.

I’m struck by the resemblance between the vague Libra plan and part 2 of the Initiative Q plan — the revolutionary payments platform that just so happened to require a new private currency.

 

 

Meanwhile, Libra continues doing things, sort of! Here’s Christian Catalini’s slides from San Francisco Blockchain Week, with commentary from Maya Zehavi. Still with a 2020 launch date in there — just as if all that stuff with the House and Senate never happened. “Libra claim that there is no reason for a run on the Libra reserve, while they intend to suck up entire emerging economies. You can’t build monetary policy by dismissing the worst case scenario … Really wish there was at least some attention as to how Libra or the FB overlords intend to guarantee the Libra project doesn’t end in unbanking the banked.”

There’s a good transcript of Mark Zuckerberg’s October testimony. I tried pulling the C-SPAN subtitles from David Marcus’ July testimony — youtube-dl does a great job of extracting subtitles, with youtube-dl --all-subs --skip-download — but C-SPAN’s are almost impossible to get clean text from.

Lael Brainard from the Federal Reserve gave a speech with a detailed roadmap of just what Libra will need to do to be even slightly acceptable to regulators.

The Bank for International Settlements — the central bank to central banks — has written a report on “global stablecoins.” It barely mentions Libra by name, but it’s 100% about throwing shade on Libra. Here’s FT Alphaville’s writeup.

Libra is open to the idea of doing Libra as a set of currency-pegged stablecoins, rather than synthesizing its price from a basket of currencies. I’m increasingly thinking Calibra really will just be PayPal-but-it’s-Facebook.

Jack Dorsey from Twitter and Square says “hell no” to joining Libra, because “It’s not consistent with what I personally believe” — that is, it’s not Bitcoin enough for him.

 

 

Bitmex sent an email run on Friday 1 November — with almost all their users’ email addresses in the To: line of the email.

(To be precise — there’s a limit to how many characters can go in a To: line, so they sent multiple emails, with the last address on each truncated when the line filled.)

Fortunately, bitcoiners always have first-rate security practices, never reuse passwords, use a separate email for each exchange, have two-factor authentication set up, and ahahaha sorry this is crypto.

So attackers will match these email addresses to public databases of data breaches — and they’ll try these emails and passwords against every possible public system, seeing how far they can pwn someone with trader quantities of bitcoins, but held with typical bitcoiner levels of security.

Rumour is that the communications person was fired for this — even though it would pretty clearly have been a developer API issue — and took revenge with a couple of deleted tweets straight after — “Hacked”; “Take your BTC and run. Last day for withdrawals”.

The emails were also sent via Sendgrid — a US company, eminently suitable as a recipient of IRS subpoenas.

The list of emails is already being used for referral shilling. Because it’s a handy list of degenerate gamblers.

The consequences of this will be … nothing. Because bitcoiners will forgive their favourite casino anything.

 

 

Ivan Manuel Molina Lee, president of Crypto Capital Corp — US money mules to huge swathes of the crypto economy through 2017 and 2018 — was arrested in Poland on 24 October. Something to do with laundering money from Colombian drug cartels through an unnamed crypto exchange. I wonder which exchange it could have been?

This just so happened to be the day of a massive spike in the price of Bitcoin — which always spikes on bad news for Tether.

Oz Yosef of Crypto Capital has been indicted, at least according to Stuart Hoegner, counsel for Bitfinex. Ravid Yosef, who was indicted at the same time as Reggie Fowler, is quite openly out and around in Israel.

Bitfinex thinks it can get back $880 million that Crypto Capital has of theirs. Given that money seems to have been seized as proceeds of drug trafficking, this might not be so likely.

The perfected version of iFinex’s latest appeal — appealing against the judge’s order that they finally cough up all the stuff they’ve been ordered to provide the New York Attorney General’s office in discovery — has to be filed by the end of today, 4 November. I’m not sure where it’ll be available, or even if it’ll be available before court resumes in January.

Patrick McKenzie has written the summary of the Tether story — if you ever need to explain this thing to normal people, just send them this. I think he’s covered just about all of the important points. “Bitfinex and its principals have not yet been indicted by the U.S. Attorney for the Southern District of New York, but crucially, not in the same sense that you have not been indicted by the U.S. Attorney for the Southern District of New York.”

Cas Piancey is writing a book on Tether. Here’s a Twitter thread to start you off.

 

 

Chinese president Xi Jinping gave a speech talking up the wonders of “blockchain” — presumably the work of anti-Chinese infiltrators out to sabotage the economy. The talk itself seems to be generic extruded blockchain hype — the Google translation probably improves it — but the real question is: who gets funding, universities or industry, and when?

The reaction was predictable — any stock with “blockchain” in it rocketed. The Shanghai Stock Exchange told companies to keep their official statements “factual and simple,” and a People’s Daily commentary asked traders to restrain themselves. I’m sure they’ll be right on that.

(The Bitcoin price went up too, but I’m pretty sure that was just another Tether-related Bart.)

The upshot may, at last, be the digital renminbi — a central bank digital currency. Note that such a thing doesn’t in any way necessitate a blockchain. Also, China was only pushed toward a CBDC by fear of Libra — and there was still no timetable for a CBDC as of September.

 

 

Craig Wright’s settlement talks with the Kleiman estate have broken down — and the trial is back on. “On October 30, without any advance notice, Plaintiffs were informed Craig could no longer finance the settlement and was ‘breaking’ the non-binding settlement agreement.”

This motion is to conduct a deposition at short notice, of an Australian witness, James Wilson — the Chief Financial Officer of Wright’s companies in 2012 and 2013 — who happens to be in the US quite soon. Wright won’t consent to the deposition, so Kleiman’s asking the judge to allow it.

Stephen Palley is pretty sure this deposition will go forward, and that Dr Wright’s lawyers will be extremely annoyed at him. Kleiman’s next problem is collecting when he wins, because there is frankly no way Wright can win this case — perhaps Wright’s still hoping $5 billion in bitcoins will arrive by time-travelling courier in January.

 

 

Telegram’s Gram tokens are delayed until at least next year, and the court hearing will be around 18-19 February 2020. The SEC gets expedited discovery (including third-party), and preservation of documents.

Sergey Vasin at GramVault sought to get Grams listed on Circle before the SEC halted the launch.

Larry Sanger quits Everipedia to start yet another new project — the Encyclosphere! As far as I can tell, he’s describing a search engine for encyclopedias. He’s given back all his equity and IQ tokens too.

Kik finally sold the messenger software and network, to a holding company called MediaLab. Now Kik can get on with its core business — getting sued by the SEC for its cryptocurrency shenanigans. MediaLab plan to keep using the Kin tokens, for some reason.

You know how Long Island Ice Tea becoming Long Blockchain was a blatant pump-and-dump? Two of the guys involved have just pleaded guilty in a similar pump-and-dump scheme. The scam was to buy into failing or distressed penny stocks, pump the price and dump the stock.

The Veritaseum ICO, whose funds were frozen in August, has settled with the SEC — they’re paying out $8,474,137 in disgorged profits plus interest, plus a fine of $1 million for Reggie Middleton. They’re also permanently barred from selling “digital securities.” Stephen Palley explains — “Specifically, both the disgorgement and the civil penalty are satisfied if certain assets (including a bunch of precious metals) are transferred to an intermediary chosen by the SEC … Mr. Middleton doesn’t have to write a personal check to the SEC if the referenced assets are transferred.”

 

 

HMRC has updated its guidance on UK tax treatment of cryptoassets — and it’s all fairly reasonable business stuff. Your accountant shouldn’t have problems handling this. The important point is that cryptoassets are not money or currency for tax purposes.

The Binance exchange did not charge Blockstack a $250,000 listing fee! No, it’s a “marketing fee.” Even though it looks and works exactly like a listing fee.

Jihan Wu returns to Bitmain — “a Steve Jobs coming back to save Apple situation”, if Steve Jobs made machines to literally waste a country’s worth of electricity on the most inefficient payment network in history.

Digital Asset, the Blythe Masters blockchain startup that was going to take over the world — and which originally started Hyperledger — has lost 25% of its staff (archive) since April. Digital Asset couldn’t sell “DLT,” so they’re pivoting to selling their smart contract language, DAML — which doesn’t seem to have many takers so far either, apart from the Australian Securities Exchange.

The Litecoin hash rate has gone through the floor in the past few months — from 450 terahashes/second to under 200. (Nobody cares.)

A huge swathe of the XRP Army just got banned from Twitter. Press X to pay respects.

Binance.com adds fiat currency! Specifically, rubles — via the Gibraltar-based AdvCash. CZ promises more fiat pairs soon, though I’d be surprised if any were very easily exchangeable with dollars.

 

 

J. P. Koning: Bitcoin as a chain letter. “We all thought bitcoin was solving a monetary or payments problem … What is now apparent is that bitcoin was never a monetary phenomenon. No, bitcoin is a new sort of financial betting game.” One in which you bet on new greater fools coming in to buy your bag.

Shocked, shocked to hear that, actually — blockchain … sucks?!

Ben Munster asks luminaries, including me: So what would happen if Satoshi Nakamoto did return? My actual forecast didn’t make the cut — that the markets would go “THIS IS FINE” and just pretend nothing had happened.

Bitcoin breaks down into Death Cross as bearish woes continue — Technical Analysis, but with my opinion of why TA is nonsense in BIG BOLD TEXT up top. And Tether. That’s what I like to see.

 

 



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