The cryptocurrency world was rocked in January when New Zealand-based exchange Cryptopia was hacked. The site, which has two million users around the globe, saw a reported $US 16.1 million (more than NZ$23 million) taken out of wallets during a sustained attack that began on the 13th of January.
Most of this stolen money was in the Ethereum (ETH) currency, apparently from 17,000 wallets. The site has been offline since then, with few updates issued to let users know what is happening. Understandably, users have been getting frustrated at having their accounts frozen and not knowing whether their money is affected.
The Current Situation
At the time of writing, the Cryptopia website is still offline. However, the company’s Twitter account has been showing signs of life again. They had previously sent links to the police statements and pointed out that they weren’t able to comment on the matter while it was being investigated by the High Tech Crimes Unit, with a team led by Detective Inspector Greg Murton.
After a month with no new tweets being sent, they sent out a message to say that they are “working relentlessly to evaluate” the stolen funds. They also pointed out that the police are still investigating but have given them back access to their building in Christchurch.
It seems that the exchange is free to carry on doing business but no date has been given for when they will go back online. As for the police investigation, they previously pointed out that they could be looking at a “considerable amount of time” to carry it out fully.
What Happened to the Stolen Money?
Will the money thieves be able to transfer their coin into fiat currency?
Image source: Higyou/Shutterstock.com
The issue that interests most people is that of the missing money. Have the cybercriminals been able to get out the money from the wallets? This hasn’t been confirmed yet and even the amount stolen hasn’t been officially stated, with the police simply calling it a significant value of cryptocurrency funds.
Blockchain analytics firm Elementus reported that $3.2 million of the stolen Ethereum funds had been liquidated by the 4th of February. This was done on exchanges such as Binance and Bitbox. Naturally, the biggest problem for thieves is that it is extremely difficult to turn stolen cryptocurrencies into fiat money.
Therefore, it is possible that the remainder of the stolen funds will remain in limbo for a long time to come. Anyone who is planning to buy Ethereum will be wary of touching these funds.
Is It Safe to Use This Exchange?
Users are obviously going to be wary of using this exchange in the future. It previously had a decent reputation, as you can see in our Cryptopia review, although we pointed out at the time that it was a target for hackers.
The hack appears to have happened when Cryptopia’s private keys were compromised and their whole database was then controlled by the hackers. The team will need to work hard to convince people that their security is now water-tight.
With so many other exchanges around, it is easy to look around if you aren’t satisfied with security on offer. The likes of the eToro site, which is reviewed here, Coinbase (reviewed here) and Coinmama (which we have also reviewed) are among the trusted sites that many people turn to.
As for Cryptopia, we wait to see what new security measures are put in place, if and when it opens up for business once again.
Featured image source: Sharaf Maksumov/Shutterbay.com
Cryptocurrency exchange Bithumb (formerly of South Korea, now of Hong Kong) is offering a new over-the-counter trading desk service for institutional investors. Seen as a way of drawing in asset managers and investment funds, Bithumb’s ORTUS (this is the service’s name) will fill an important gap in the crypto financial services industry.
Up till now, anyone who wished to buy cryptocurrencies (or any other kind of digital asset) had to do so on retail investor brokerage sites like Bithumb and Binance exchange. While this might work out just fine for the individual retail investor, with orders matched to buy/sell orders of other retail investors, large institutions can’t really use these sites.
Institutional customers control the money of countless individual clients. In the dispersal of these funds, institutions need to ensure that they’re dealing with fully licensed and regulated brokerage sources. They also need order options that exceed the simple market, limit, etc. types available through retail brokers like Binance. This is the sort of next-level brokerage experience that Bithumb’s ORTUS will provide.
Bithumb may be courting institutional investors, which could help crypto prices across the board.
Image source: Lukasz Stefanski/Shutterstock.com
ORTUS will not be a simple liquidity provider, bringing large quantities of digital assets to a common marketplace. It’ll also be a way for one user/institution to connect in a sale with another specific user/institution. Large sales are performed this way in mature markets. Think of it this way, Warren Buffett doesn’t buy stocks by going only Vanguard.com and snapping up whatever they have available, at the current market price. His sales are highly personalized, through the care of institutions of various kinds, to meet the complex needs (such as custodianship) of a world class investor dealing in massive asset values.
More simply put, ORTUS will allow huge corporate buyers to get into the crypto markets for the first time, and this could be very good news for today’s longsuffering cryptocurrency investors. Up till now, digital asset investors have been people like you – persons who buy a little bit of Bitcoin, hoping it will go up in value. Institutions, representing the interests of thousands of individuals, will buy up much more than a single retail investor like yourself could ever afford. They’ll do this, that is, if institutions determine that digital assets are a good investment for the clients they represent.
No one knows just which cryptocurrencies and digital tokens will prove most valuable to this new class of investor. But just as Coinbase is adding custodial services in the West, ORTUS will be a major new marketplace in the East, one which could change the face of cryptocurrency for all of us.
A Brazilian judge has just handed down a ruling that may make it easier for crypto companies and investors to make payments. Ruling on a case involving local Bitcoin (BTC) exchange Mercado Bitcoin and Banco Sicoob, Judge Regina Lucia Passos found no basis for the latter’s decision to close the former’s checking account. Despite a district court judge previously ruling that Mercado Bitcoin could keep its crypto account open, Banco Sicoob filed an appeal.
Reviewing the evidence, Passos stated that the bank needs a “justifiable reason” before closing a customer’s account. On this occasion, despite the volatile nature of crypto trading, the judge concluded that Banco Sicoob had illegally closed the exchange’s account. What’s more, she pointed out that the Central Bank of Brazil has not prohibited the buying and selling of cryptos.
Brazilian Judge Gives Bitcoin et al a Boost
In handing down the favourable verdict, Passos may have indirectly given the industry a boost. With national governments and banks still trying to build their legal foundations, a ruling like this could set a precedent. In other South American nations where Bitcoin et al aren’t illegal, Brazil’s current attitude could be helping investors. Scanning the list of South American countries where cryptos aren’t legal but also aren’t governed by any formal laws, there are plenty. Argentina, Chile, and Venezuela are just three countries that could see a spike in trading activity.
Indeed, with banks essentially being told they can’t simply close accounts used for crypto trading without good reason, investors should now have more confidence to invest. Even though online brokers provide a form of regulated trading via contracts for difference (CFDs), traditional crypto exchanges aren’t governed by financial regulations. Because of this, investors in some countries have issues when it comes to making deposits and withdrawals via traditional banking methods.
Banks Can’t Target Crypto Investors Unnecessarily
Banks no longer able to close cryptocurrency trading accounts could increase Bitcoin adoption in Brazil.
Image source: Oekka.k/Shutterstock.com
Although eWallets like PayPal provide a viable option, there are times when bank transfers and credit/debit cards are the only available methods. If banks are able to make their own rules at will and close accounts used for trading cryptos, it leaves consumers at the mercy of an external force. When that’s the case, it makes trading cryptos less attractive. However, with Brazil’s legal system upholding for the rights of customers, it will give investors more confidence. Of course, with crypto rules and regulations fractured, one country’s legal ruling won’t necessarily impact things elsewhere. However, legal precedents are always useful.
As it stands, buying Bitcoin et al is still an evolving process. Because of that, any type of favourable ruling should be taken as a positive. While the immediate impact may only be felt in Brazil, the reverberations could easily be felt around the world as 2019 develops. Even if it doesn’t transform the way banks interact with traders and the crypto industry at large, it’s a start. For an industry still finding its feet, a start is certainly better than nothing.
The wild tale of QuadrigaCX, its dead founder Gerald Cotten, and millions in irrecoverable Ether tokens just keeps getting stranger. At this point, almost every point in the previous sentence has been called into question, and all we can do is explain what various camps believe to be the truth of the matter. We may know the reality in time, or what actually happened to QuadrigaCX’s millions in ETH may never be publicly understood.
First of all, Gerald Cotten is said to have died in Jaipur, India. We say “said to have died”, because there seems to be a growing possibility that Cotten’s death was faked. Cotten was supposedly in India to build an orphanage. And while that would have been a nice thing for him to have done, it’s a strange thing to do while suffering the crippling effects of Crohn’s Disease, the illness that is said to have killed him.
Is it possible that the stolen funds from Canadian exchange QuadrigaCX never existed in the first place? Source: AlekseyIvanov/Shutterstock.com
Let’s leave this issue for a moment to point out that authorities also cannot locate the missing $190 million in ETH tokens. Some say it was sent to various exchanges in the months leading up to Cotten’s death. Others say it’s still sitting in one or more (unknown) wallets. Cotten’s widow claims that, due to her husband’s fastidiousness for security, there exists no record of the keys to these (unknown) wallets.
All of the above may be true: Cotten’s death by Crohns, truly terrible security standards that resulted in the loss of millions of investor’s Ether. However, any number of other possibilities might also be true. Though death by Crohns is entirely possible, it’s rarely a reality for someone with means. Jaipur might be sufficiently remote to stage an exit from this mortal coil, however. Ether today unseen may have been leaked out to various exchanges, sold long before it was missed.
There’s simply no telling at this time in history. Fortunately, this story has become an international narrative, one which the mainstream media is even commenting upon. And even as we speculate about the claims of QuadrigaCX and Gerald Cotten’s estate, this is an event that’s having real life impact on the wife of the late Mr. Cotten.
Cryptocurrency internet sleuths are working overtime to get to the bottom of this, and mainstream journalists and financial regulators are doing the same. If there’s something fishy going on, you can bet that someone will figure it out. At the very least, we hope investors find a way to recover their lost ETH.
Abra wallet and cryptocurrency exchange now offers its users a range of cryptocurrency-collateralized assets, such as assets based upon Apple, Netflix, Vanguard Growth ETF, and other popular securities. Abra has been quick to pat itself on the back, stating that it is making Western-centric securities available to the rest of the world. And in some ways, this is true. However, when we look a little deeper into what “Crypto-Collateralized Assets” actually are, we see that users should be cautious investing this way.
Basically, a Crypto-Collateralized Asset is a kind of CFD (Contract For Difference), with Bitcoin used for trading. CFDs are investment contracts on offer from online brokers like Plus500. Rather than selling real shares of companies like Apple, brokers of this nature allow users to make price speculation contracts on any given security (i.e. kind of like a bet). If a person buys a contract for Tesla stock, they’ll pay the present value of Tesla stock, then be able to sell the contract back to the company at a future date.
If the price of Tesla, in this example, was higher at the time of sale than it was at the time of purchase, the broker would give the investors her money back, plus the difference. In the end, the user would have the same amount of money they would have had if they had actually bought and sold Tesla stock, without having had to pay the fees and wait the time necessary to actually do so.
The question is: will crypto users buy ETFs and Stocks on a cryptocurrency investment platform? (Source: Beneath blue/Shutterstock.com)
Abra now offers this model to its users, the difference being that contracts are settled with Bitcoin BTC and Bitcoin Cash, not US Dollars. Like CFD brokers, Abra will make its money “on the spread”. The “spread” is a range of prices above or below which an asset’s price must pass before Abra will pay out. This means that it’s not enough for a security’s price to increase; it must increase above the spread for a user to make money.
This CFD-like model isn’t bad or inherently unethical, but it’s important for users to understand that this is not the same thing as investing in real securities. User won’t own stocks or ETFs. They’ll just be making bets (let’s call it what it is) on the price of these assets, just like you’d make a bet on which horse might win a race. Plenty of people have lost money this way, and the odds are stacked against the user. A sign of industry development? We think not.
Featured image source: Panchenko Vladimir/Shutterstock.com
The cryptocurrency Mindexcoin is set for its very own Independence Day in 2019, with developers announcing it is set to break free from its established position on the Ethereum network and become available on its own blockchain at the end of March.
Originally launched in an ICO at the end of 2017, the Mindexcoin has enjoyed significant success as an ETH token in the past year or so. However, with Ethereum suffering from devaluation issues at the end of last year, the developers behind Mindexcoin have decided there is only one way that the cryptocurrency can really move forward – by going it alone.
A new platform for future success
As the organisation outlines on Medium.com, it has spent the first weeks of this year working with experts to create a blockchain based on Litecoin, which will not only provide Mindexcoin with independence but also expand its “possibilities”.
The official launch of the new blockchain and the new Mindexcoin is set to go ahead on March 20th, while those who simply cannot wait also have the option of purchasing the new version of Mindexcoin through its associated MindexWallet in the meantime.
Rewarding the Mindexcoin believers
The minds behind the Mindexcoin have also used this opportunity as a chance to thank those who have helped them so far. The process of implementing the new blockchain included a period up until the start of February where all current currencies needed to be replaced.
The process meant users who already had Mindexcoin had to place them in their MindexWallet for identification, with the organisation then taking the chance to multiply the amount by four as a special reward to those who had stuck with them.
Another new exciting phase for Mindexcoin
As Medium.com outlines, the news of the imminent launch of the Mindexcoin blockchain is just the latest exciting development in the Mindexcoin success story, with the cryptocurrency enjoying a range of triumphs in the last 12 months including:
Seven successful rounds of sales
The development of the Airdrop system
More security and speed with MindexWallet
The creation of online payments service Mindexpay
Cryptocurrencies have become one of the major talking points in the financial world in recent years, with the likes of Bitcoin reaching record levels towards the end of 2017. Interest in the currencies remains high and Mindexcoin is undoubtedly positioning itself as the next big name in this fascinating world.
QuadrigaCX, Canadian crypto exchange, is another in a seemingly endless list of crypto brokers who have screwed up badly (read about LocalBitcoin’s security breach for another recent example). The exchange’s problems are twofold. First, QuadrigaCX lost access to funds in cold storage. Second, QuadrigaCX is having liquidity issues. Both of these issues are problematic but the first is much more embarrassing.
What does it mean to lose cold storage access? In the world of crypto exchanges, this means “we lost our users’ money”. Crypto exchanges routinely keep large stocks of cryptocurrency in storage not connected to the internet. This prevents anyone else from being able to access these coins. It’s the same way a Bitcoin paper wallet, or a hardware wallet like the Ledger Nano S, works.
Cold storage is great as long as the owner can access the funds. This requires the owner to keep track of a secret key. The secret or “private” key is a long alphanumeric code that serves as the ID of ownership for various quantities of cryptocurrency. Specific Bitcoins go with specific keys, and no one without the correct key can use specific Bitcoin.
An exchange losing private keys to cold stored coins is very much a “you only had one job!” unforced error. Any exchange that loses access to cold storage is obviously poorly managed, to say the least, and QuadrigaCX shut its service down for a time after this revelation.
Knowing this, it should come as no surprise that QuadrigaCX was also suffering from low liquidity. Liquidity indicates a cryptocurrency (or any other asset) that can be easily bought or sold because there are plenty of customers and plenty of asset supply on both sides.
When a cryptocurrency exchange starts to lose customers, or a specific digital asset stops being traded, liquidity suffers. There are either too few customers or too little supply to fill orders, or both. In the case of QuadrigaCX, it’s likely that both problems were a factor.
Not all of this is QuadrigaCX’s fault. Cryptocurrency customers are not very active right now, and retail investors are especially quiet. This makes it very difficult for cryptocurrency exchanges, who survive on transaction fees, to make money. However, this doesn’t make it any less unacceptable for a fintech company like QuadrigaCX to lose access to its own funds.
This event simply underscores the reality that this market is learning to accept: the cryptocurrency industry is not as robust as conventional asset markets. More and more exchanges will have catastrophes like this and exit the space. Will effective players rise up and carry the industry into a new, more mature era? We’ll have to wait and see.
A leading blockchain fintech firm has launched an exciting new platform designed to make it easier than ever for individuals to manage their cryptocurrency assets. DARB Finance is aimed at both novice and experienced cryptocurrency traders, with the aim of creating a simple yet intuitive interface that makes it faster and more secure to trade crypto coins such as Bitcoin and the fast-emerging altcoins.
Not only is the DARB Finance platform said to be secure, it is also said to be extremely fast, allowing for seasoned traders to get the best available market value when buying and selling their assets. The platform is underpinned by a matching engine which allows it to process 3.7 million orders per second, instantly making it one of the quickest cryptocurrency exchanges in the crypto space.
The platform has already undergone a string of stringent penetration audits and tests, passing them with flying colours. All DARB Finance users will be protected with 2-factor authentication (2FA), same browser logins, new device login confirmation and will also require confirmations through verified email addresses, keeping cryptocurrency portfolios safely under wraps.
Savvy crypto traders will also be heartened to hear that DARB Finance offers some of the lowest rates of commission for both market makers and takers. Market makers are only charged 0.05% per transaction, while market takers are charged just 0.2%. The DARB platform has DARB tokens that operate within the platform’s ecosystem. Each trade placed on the DARB platform mines DARB tokens, with 65% going to market makers and 35% given to market takers.
The top-50 owners of DARB tokens – i.e. the most active users of the DARB platform – will be given the opportunity to be part of DARB’s Advisory Board, helping to assist and suggest ideas to improve the long-term success of the platform and its community.
There is already platform support for fiat-to-crypto investments too, with the users already allowed to buy Bitcoin, Ethereum and other leading altcoins using euros. It is thought that three more fiat currencies (USD, CNY and KRW) will soon be made available on the platform too.
Aside from the security and speed of DARB Finance, the platform’s simplicity and easy-to-use portfolio manager is what really catches the eye. At a few touches of a button, users can be taken to a screen that allows them to quickly and clearly monitor the progress of their cryptocurrency holdings.
DARB Finance has also implemented a service where users can pay with tokens to monitor the progress of other investor portfolios, helping them to watch and learn from experienced crypto traders in the same way that the eToro platform operates its Crypto CopyFund. DARB Finance has also released a unique feature allowing users to issue their own bespoke personal token, based on the ERC20 standard. All that’s required is an Ethereum address to guarantee ownership authenticity.
Over the festive season, DARB Finance operated a Christmas promotion which gave new customers a chance to win $10,000 worth of Ethereum. It’s safe to say that won’t be the last of their promotions as DARB looks to ramp up its marketing efforts in 2019. Overall, it’s absolutely a blockchain asset platform to keep an eye on.
Gemini cryptocurrency exchange is set to become the world’s first SOC (Service Organization Control) 2 level company in the industry. Having already completed SOC 1 with Deloitte, and undergone strict oversight certifications within New York State, Gemini is arguably the most transparent and regulation-compliant crypto exchange in the world, Coinbase exchange included.
SOC 2 certification will not be complete until fall 2019 but there is no reason to believe that Gemini will not pass muster. The exchange, led by Tyler and Cameron Winklevoss, has already initiated an ambitious media campaign in New York City. Messages placed on the NY subway system and on cab toppers deliver a message that the past chaos of the crypto industry will be wiped away with sensible regulation and compliance. Gemini hopes to be the leader in this next wave of crypto exchanges.
Not everyone agrees with the Winklevoss plan. Many within the crypto space still long for an industry that operates outside of the confines of government and regulatory oversight. However, to Gemini, this philosophy has already proven bankrupt. 2018 and early 2019 have seemed like nothing other than major price declines, exchange and ICO frauds, and stalled adoption. The industry needs to turn over a new leaf.
By achieving SOC 2, Gemini would start to look less like a crypto exchange and more like a mainstream fintech company. This achievement would surely help the Winklevoss twins pull off their other major goals, like getting the SEC (Securities and Exchange Commission) to approve a Bitcoin ETF (exchange traded fund). With high-level regulation, it’s even possible to imagine Gemini becoming a public traded company, effectively integrating the crypto investment industry with the world of global finance.
These developments should be no surprise to anyone who understands the Winklevoss twins’ pedigree (and, no, we’re not talking about their Olympic rowing record). The Winklevii were part of the early days of Facebook. They had a famous legal showdown with FB CEO Mark Zuckerberg, and the outcome of this era in their corporate ambitions did not turn out according to their plan.
With Gemini, the Twins hope to create a worldwide corporation that’s their own, without the controversy of ownership they once shared with The Zuck. Already millionaires many times over from early Bitcoin investments (the Winklevosses used to be Bitcoin billionaires), the Gemini operators clearly have a reason to want cryptocurrency to be fully legitimate in a regulatory sense. Only time will tell if they succeed but, in the process, they’re likely to change the industry for the better.
The latest cryptocurrency exchange to bite the dust is Liqui, which officially announced this week that it would be closing its doors to crypto traders due to a lack of liquidity. Liqui.io published a heartfelt statement on its website and distributed the same message to all of its exchange users via email. It confirms that Liqui is “no longer able to provide liquidity for the Users left” on the platform.
The statement goes on rather bluntly to state that it does “not see any economic point in providing” their services. The decision was clearly a difficult one for the company to take, with its post concluding that it “broke [their] hearts” to close all active accounts and cease transactions on its exchange.
Where did the downfall of Liqui begin?
It’s not yet clear whether the long-term bearish cryptocurrency markets have had an impact on Liqui’s closure. However, the company’s official statement acknowledged that the cryptocurrency market had “significantly changed since 2017”. In the hours leading up to its announcement, Liqui’s exchange had executed trades worth more than $100,000. The platform was also a staunch supporter of a string of altcoins, whilst also providing liquidity for those wanting to buy Bitcoin and Ethereum.
Blame the bearish cryptocurrency markets, say Liqui
Open Studio/Shutterstock. Most leading cryptocurrency trading graphs have been on a downtrend since early 2018
Although Liqui’s founders have not ruled out reopening its cryptocurrency exchange in the future, their return would depend largely on whether or not the bear markets for all cryptocurrencies subside. At the end of 2018, the combined market capitalisation of all available cryptocurrencies totalled just 20% of its peak value of more than $813 billion.
In some quarters, crypto experts believe that Liqui’s closure could have a domino effect on others, leading to more exchange shutdowns throughout 2019. Ran Neuner of CNBC is “expecting more exchanges to shut down in this bear market”. Mr Neuner added that while “everyone rushed to start an exchange” in 2018, the realities of the costs required to maintain an exchange infrastructure are beginning to hit home, and he believes that “most won’t survive this”.
It has certainly been something of a rough ride for crypto exchanges so far in 2019. New Zealand-based exchange, Cryptopia, suffered a serious hacking, with $16 million worth of crypto assets stolen in the attack; some of which ended up being transferred to Binance accounts. The security risks that smaller crypto exchanges face could also lead to others closing their doors in fear of letting their customers down.