{"id":15240,"date":"2019-12-15T18:50:32","date_gmt":"2019-12-15T18:50:32","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=15240"},"modified":"2019-12-15T21:54:09","modified_gmt":"2019-12-15T21:54:09","slug":"news-eran-eyal-and-shopin-charged-again-some-cryptopia-money-found-richard-heart-and-hex-exhuming-gerald-cotten","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2019\/12\/15\/news-eran-eyal-and-shopin-charged-again-some-cryptopia-money-found-richard-heart-and-hex-exhuming-gerald-cotten\/","title":{"rendered":"News: Eran Eyal and Shopin charged again, some Cryptopia money found, Richard Heart and Hex, exhuming Gerald Cotten"},"content":{"rendered":"<ul>\n<li>And so this is Christmas \u2014 and <i>that<\/i> relative is gonna talk Bitcoin at the dinner table. The spine of the <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/book\/\"><i>Attack of the 50 Foot Blockchain<\/i><\/a> paperback (<a href=\"https:\/\/amzn.to\/2xSxs1e\">US<\/a>, <a href=\"https:\/\/amzn.to\/2iW7kzW\">UK<\/a>) can take their head clean off in a single swipe! (Of course, two more heads will promptly pop up, both still talking Bitcoin.) Be prepared!<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>The SEC continues methodically through all the ICOs. This week, it&#8217;s <a href=\"https:\/\/www.sec.gov\/news\/press-release\/2019-259\">Shopin from 2017.<\/a> Eran Eyal and his company have been charged with running an unregistered offering of securities, and fraud \u2014 lying about their development plans, and Eyal misappropriating $500,000 of investor funds for his own use.<\/p>\n<p>The <a href=\"https:\/\/www.sec.gov\/litigation\/complaints\/2019\/comp-pr2019-259.pdf\">complaint<\/a> is completely routine, and nobody who&#8217;s been following ICOs will be surprised by any of it. Stephen Palley<a href=\"https:\/\/twitter.com\/stephendpalley\/status\/1205159520844107777\"> says:<\/a> &#8220;The SEC&#8217;s ICO enforcement work has quickly become indistinguishable from other types of enforcement litigation. Crypto&#8217;s novelty receives no special treatment. Like any other securities offering \u2014 you have to register, you can&#8217;t make misstatements, and you can&#8217;t misuse funds. These allegations here are like in scores of other SEC complaints. Some leeway might have been granted early on while the government was getting its bearings, there&#8217;s going to be precious little for people who took money and didn&#8217;t use it as promised.&#8221;<\/p>\n<p>Eyal has previous form \u2014 his company <a href=\"https:\/\/www.longisland.com\/news\/08-27-18\/ag-underwood-announces-indictment-of-former-ceo-of-global-crowdsourcing-company-for-600k-securities-fraud-scheme.html\">Springleap was charged<\/a> by the New York Attorney General in August 2018 for stealing $600,000 of investors&#8217; money through misrepresentation. Eyal <a href=\"https:\/\/ventureburn.com\/2019\/12\/eran-eyal-convicted-fraud-springleap-shopin\/\">pleaded guilty on Thursday.<\/a> He had previously sent a lawyer&#8217;s letter to several media outlets, offering <a href=\"https:\/\/ventureburn.com\/2019\/09\/eran-eyal-offers-reimbursement-media-legal-letter\/\">\u201creimbursement\u201d for removing articles<\/a> about the cases against him.<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/search?q=%24MATIC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$MATIC<\/a> revealing their new logo tomorrow, here&#39;s a sneak peak.. <a href=\"https:\/\/t.co\/a3f6tcWn65\">pic.twitter.com\/a3f6tcWn65<\/a><\/p>\n<p>&mdash; \ud83c\udf18 k\u027e\u10e7\u0569\u0535\u0585 kl\u04bd\u0569\u0535\u0585 \ud83c\udf12 (@krypto___klepto) <a href=\"https:\/\/twitter.com\/krypto___klepto\/status\/1204695880005062657?ref_src=twsrc%5Etfw\">December 11, 2019<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<p>QuadrigaCX creditors want <a href=\"https:\/\/www.millerthomson.com\/wp-content\/uploads\/2019\/12\/Cover-Letter-to-RCMP-Final.pdf\">Gerry Cotten&#8217;s alleged dead body exhumed,<\/a> and propped up on trial for his crimes \u2014 I&#8217;m sorry, for post-mortem autopsy to confirm his identity. To be fair, if ever there was a &#8220;death&#8221; that warranted a permanent prefix of &#8220;alleged&#8221;&#8230;<\/p>\n<p>From last month \u2014 the Globe &amp; Mail details <a href=\"https:\/\/www.theglobeandmail.com\/business\/article-before-quadriga-how-shady-ventures-in-gerald-cottens-youth-led-to\/\">Cotten&#8217;s history of fraud since age 15.<\/a><\/p>\n<p>The Cryptopia exchange was hacked, and went into liquidation. The liquidator, Grant Thornton NZ, has recovered nearly <a href=\"https:\/\/www.grantthornton.co.nz\/globalassets\/1.-member-firms\/new-zealand\/pdfs\/cryptopia\/second-liquidators-report-to-creditors_cryptopia.pdf\">NZ$7.2 million for disbursement to creditors<\/a> \u2014 $10.9 million incoming, $3.7 million so far in expenses ($823,164 to Grant Thornton) \u2014 but finding out who it should go to is a mammoth task. Especially as Cryptopia didn&#8217;t require a lot of identifying information from customers.<\/p>\n<p>Amy Castor: <a href=\"https:\/\/www.atmmarketplace.com\/blogs\/canadas-instacoin-bitcoin-atms-now-offer-a-slew-of-stablecoins-including-tether\/\">Canada&#8217;s Instacoin Bitcoin ATMs now offer a slew of stablecoins, including tether.<\/a> You can buy or sell cryptos at these machines \u2014 with transactions up to C$1,000 being anonymous. They&#8217;re street-corner crypto exchanges, though with swingeing fees \u2014 C$5 per Bitcoin transaction, around C$1 for other coins, and 4-7% fees in the offered exchange rates.<\/p>\n<p>What I don&#8217;t get is \u2014 why would you buy tethers at an ATM? They&#8217;re only useful for crypto trading. Amy got onto the president of Instacoin, and he couldn&#8217;t explain why either. Bitcoin ATMs are for street-corner money laundering \u2014 but I really don&#8217;t see how tethers help with this job.<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Broke: Crypto<\/p>\n<p>Woke: Lottery tickets <a href=\"https:\/\/t.co\/pJD29dJCEG\">https:\/\/t.co\/pJD29dJCEG<\/a><\/p>\n<p>&mdash; \ud835\udd44\ud835\udd5a\ud835\udd5c\ud835\udd56 (@mikeinspace) <a href=\"https:\/\/twitter.com\/mikeinspace\/status\/1205840927169896449?ref_src=twsrc%5Etfw\">December 14, 2019<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<p>A bitcoiner foolishly believes <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2019\/11\/28\/a-year-of-good-news-for-bitcoin-hodlers-try-to-talk-up-a-fresh-crypto-bubble\/\">the narrative<\/a> \u2014 and is actually surprised when he <a href=\"https:\/\/np.reddit.com\/r\/Bitcoin\/comments\/e7ujrf\/argentina_people_buying_up_bitcoin_adoption\/fa6fz1z\/\">can&#8217;t use his bitcoins in Argentina.<\/a> He couldn&#8217;t even sell them face-to-face for actual money he could use.<\/p>\n<p>From the cryptocurrency that brought you &#8220;why hasn&#8217;t Bitcoin reached mass adoption in Argentina?&#8221;, here&#8217;s the newest hit: &#8220;why hasn&#8217;t Bitcoin reached mass adoption in <a href=\"https:\/\/www.reddit.com\/r\/Buttcoin\/comments\/e8esru\/from_the_same_cryptocurrency_that_brought_you_why\/\">Venezuela?&#8221;<\/a><\/p>\n<p>How to make number not go down? Binance has recently taken to selectively <a href=\"https:\/\/twitter.com\/lawmaster\/status\/1206090023180931073\">disabling shorting<\/a> on certain tokens, when bad news comes out. They haven&#8217;t disabled long margin trades, though \u2014 so you can&#8217;t bet on prices going down, only on them going up.<\/p>\n<p>Stephen Palley opines that Richard Heart&#8217;s Hex token is \u2014 despite the claims of Ponzi-like interest rates \u2014 <a href=\"https:\/\/www.theblockcrypto.com\/post\/49989\/the-hex-token-sale-may-be-an-unregistered-securities-offering-but-its-no-ponzi\">not a Ponzi!<\/a> Though it&#8217;s really obviously an unregistered securities offering under the Howey test. &#8220;You don\u2019t ever get your Ether back. Never. Ever. Just a bunch of Hex. So: is this really a CD? No. No sweetheart, it\u2019s not a CD. It looks to me more like wealth transfer to somebody else\u2019s Ethereum wallet based on a promise that network effects and a magic pool of liquidity will make Hex worth a lot of money some day &#8230; if this thing is still operating in a couple of months I will be really, really surprised. It has <i>ex parte <\/i>Temporary Restraining Order written all over it.&#8221;<\/p>\n<p>Alex Kr\u00fcger offers a short thread on <a href=\"https:\/\/twitter.com\/krugermacro\/status\/1202681800226746368\">Hex, stupidity and greed.<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>https:\/\/twitter.com\/karbonbased\/status\/1204772070053298176<\/p>\n<p>&nbsp;<\/p>\n<p>UK crypto payments startup Bottle Pay is <a href=\"https:\/\/bottlepay.helpscoutdocs.com\/article\/40-official-announcement-on-the-shutdown-of-bottle-pay\">shutting down<\/a> \u2014 due to the evil EU regulators forcing the 5th Anti-Money-Laundering-Directive (5AMLD), which takes effect in January 2020, upon them! There is the minor detail that 5AMLD was ratified in 2018, and Bottle Pay didn&#8217;t launch until June 2019 \u2014 but I guess time flowing in a forward direction is just old-paradigm thinking.<\/p>\n<p>Crypto is not a Ponzi scheme! It&#8217;s just a great platform to build other Ponzis on \u2014 in this case, the <a href=\"https:\/\/www.justice.gov\/usao-nj\/pr\/three-men-arrested-722-million-cryptocurrency-fraud-scheme\">BitClub cloud mining scam.<\/a> These guys took in $722 million. Here&#8217;s the <a href=\"https:\/\/www.justice.gov\/usao-nj\/press-release\/file\/1225306\/download\">indictment.<\/a><\/p>\n<p>The Netherlands officially recognises crypto! It&#8217;s <a href=\"https:\/\/nos.nl\/artikel\/2314218-fraude-met-tikkie-en-andere-betaal-apps-strenger-bestraft.html\">raising the penalties<\/a> for online fraud, including cryptocurrency fraud, to match those for conventional fraud.<\/p>\n<p>Surprisingly, it turns out that just printing money isn&#8217;t that great a business to be in. De La Rue, who&#8217;ve printed all Bank of England notes since 1860, <a href=\"https:\/\/www.nbcnews.com\/business\/consumer\/world-s-largest-printer-money-running-out-money-n1094426\">is going broke<\/a> \u2014 they lost the contract to print UK passports, and then they did a large run of banknotes for Venezuela &#8230; who didn&#8217;t pay them.<\/p>\n<p>In <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/table-of-contents\/\">chapter 11<\/a> of <i>Attack of the 50 Foot Blockchain<\/i>, I described Intel&#8217;s &#8220;Proof of Elapsed Time&#8221;\u00a0 blockchain consensus mechanism \u2014 where you use a DRMed timer running in the Software Guard Extensions (SGX) &#8220;enclave&#8221; on an Intel CPU to tell you when you can verify a block of transactions. Which is why I called it &#8220;Proof of Buying an Intel CPU&#8221; \u2014 you &#8220;decentralise&#8221; by making Intel the trusted third party. Well, SGX has <a href=\"https:\/\/plundervolt.com\/\">just been broken<\/a>\u00a0\u2014 undervolt the enclave, corrupt the memory, extract the keys. Intel has released new microcode that works around this particular attack.<\/p>\n<p>&#8220;Right now computer do not have write access to human brains. But in the future they will. Then the one person that controls Ethereum will be able to read and write to human brains and well.&#8221; <a href=\"http:\/\/web.archive.org\/web\/20191212070720\/https:\/\/old.reddit.com\/r\/btc\/comments\/e9d596\/who_is_the_biggest_bitcoin_cash_wale_and_why_has\/fainrj1\/\">This guy<\/a> clearly injected four whole bitcoins.<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">i still think my favourite thing that&#39;s ever happened to me on the internet is the time a guy said &quot;people change their minds when you show them facts&quot; and I said &quot;actually studies show that&#39;s not true&quot; and linked TWO sources and he said &quot;yeah well I still think it works&quot;<\/p>\n<p>&mdash; Catherine #BWithTheT (@cafernblue) <a href=\"https:\/\/twitter.com\/cafernblue\/status\/1204492897002958849?ref_src=twsrc%5Etfw\">December 10, 2019<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<p>I&#8217;m doing the Blockchain Debate Podcast against Jimmy Song \u2014 on the question &#8220;Bitcoin will attain global store of value status by 2040.&#8221; We&#8217;re recording on Wednesday \u2014 please <a href=\"https:\/\/twitter.com\/BlockDebate\/status\/1205991545658208256\">suggest further questions!<\/a><\/p>\n<p>Decrypt gets quotes from me! <a href=\"https:\/\/decrypt.co\/14489\/these-bitcoin-skeptics-want-to-kill-wikipedias-lightning-page\">Explaining Wikipedia<\/a> to them again. <a href=\"https:\/\/decrypt.co\/14471\/bitcoin-price-now-at-crossroads-will-it-go-bullish-or-bearish\">What will happen to the Bitcoin price?<\/a> No, &#8220;institutional investors&#8221; is just narrative, <i>i.e.<\/i> wishful thinking. <a href=\"https:\/\/decrypt.co\/14624\/what-the-uk-general-election-means-for-cryptocurrency-in-britain\">What the UK General Election means for cryptocurrency in Britain<\/a> \u2014 bugger-all, because the narratives won&#8217;t be any more connected to reality than they are now.<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">There has been a lot of drama recently; it is time for some reflection.<\/p>\n<p>Is crypto Twitter a perfect, cohesive community? No. <\/p>\n<p>But do we strive to bridge divides, find areas of agreement, and work jointly towards a common purpose? Also no. <\/p>\n<p>Thanks for attending my TED talk.<\/p>\n<p>&mdash; Cred (@CryptoCred) <a href=\"https:\/\/twitter.com\/CryptoCred\/status\/1206222367543975941?ref_src=twsrc%5Etfw\">December 15, 2019<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<br><br><div align=\"center\"><p><a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\"><img src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/10\/become_a_patron_button.svg\" alt=\"Become a Patron!\" title=\"Become a Patron!\" width=217 height=51><\/a><br><p style=\"align:center;\" class=\"patreon-badge\"><i>Your subscriptions keep this site going. <a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\">Sign up today!<\/a><\/i><\/p><\/div>","protected":false},"excerpt":{"rendered":"<p>Crypto is not a Ponzi scheme! It&#8217;s just a great platform to build other Ponzis on.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[568,1568,1567,1122,1569,1565,1141,1566,1571,952,6,417,938,1572,1570,1564,1573],"class_list":["post-15240","post","type-post","status-publish","format-standard","hentry","category-uncategorised","tag-binance","tag-bitclub","tag-bottle-pay","tag-cryptopia","tag-de-la-rue","tag-eran-eyal","tag-gerald-cotten","tag-grant-thornton","tag-hex","tag-instacoin","tag-links","tag-netherlands","tag-quadrigacx","tag-richard-heart","tag-sgx","tag-shopin","tag-springleap"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/15240","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/comments?post=15240"}],"version-history":[{"count":22,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/15240\/revisions"}],"predecessor-version":[{"id":15263,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/15240\/revisions\/15263"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=15240"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=15240"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=15240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}