The Perennial Tug of War Between the US SEC and CFTC – Are Crypto Assets “Securities” or “Commodities”?

Colleagues, the fraudulent representation or claim of a “security” or “commodity” in the US can be tired as a federal or a state level crime. Nevertheless, fraud is fraud. So ruled a district judge regarding the cryptocurrency My Big Coin Pay scam. Co-defendants Mark Gillespie and Randall Crater are alleged to have use investments – categorized as commodities - in My Big Coin Pay for personal use and gain. Sovereign nations, their governments and court systems around the world are struggling to regulate digital assets. One of the foremost dilemmas is whether cryptocurrencies are securities or commodities. To outsiders the distinction may appear meaningless, however, to government regulators and the exchanges upon which these assets are traded the difference in critical. In the US, the issue will ultimately depend upon the decisions of the judicial system along with the US SEC and the Commodities Futures Trading Commission (CFTC). Although the issue of My Big Coin Pay may be decided for now, the much larger issue will likely not be resolved at the federal level for another 2-3 years. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

US SEC Cyber Unit Sues PlexCoin Founders for Illicit Cryptocurrency Scheme

Colleagues, the promise of a 13-fold appreciation in one month lies at the core of the US SEC’s lawsuit against PlexCoin co-founders Sabrina Paradis-Royer and Dominic Lacroix. The defendants are charged with an illicit PlexCoin ICO scheme. Although fraudulent ICOs are not a daily occurrence, they are far too common. Moreover, they represent one more reason why the US SEC – and its counterparts abroad – are reluctant to classify cryptocurrencies as legitimate “securities” tradeable on leading stock exchanges. That is why even the most prominent digital assets including Bitcoin, Ethereum, Ripple and the like are confined to crypto only exchanges like BitFinex, Binance and Huobi. Bottom line: We predict that within 24-36 months the US SEC will define and implement a strict framework for regulating cryptocurrencies and allowing only those assets, which meet the most stringent requirements bona fide “securities” status. As we continuously stress crypto investors must perform their due diligence and are urged to stay with proven currencies traded on legitimate exchanges. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Cybercrime involving $60m in Zaif crypto exchange raises yet another red flag concerning security

Colleagues, Zaif is a small cryptocurrency exchange based in Japan. Although Zaif on ranks as the 45^th largest exchange based upon daily trading volume by CoinMarketCap, a crypto theft worth $60m USD is reason for concern. The exchange processed some $43B per day in cryptocurrencies. The Japanese Financial Services Authority (FSA) is investing this cybercrime and questioning why Tech Bureau – Zaif’s parent company – waited several days to report this incident. Bottom line: Whether this was an “inside job” by a disgruntled Tech Bureau employee or an external cyber-attack is unknown at this time. What we do know is two-fold. First, Japan is an early adopter and supporter of cryptocurrencies. Second, there has been a meteoric rise in the number and value of cybercrimes specifically targeting crypto exchanges during the past two years. Where possible, we highly recommend that crypto traders and investors alike perform their due diligence and stay with top tier exchanges such as BitForex, BitMEX, Binance, OKex and Huobi. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Cyber Threat Alliance Confirms a 400% Spike in Cryptojacking Mining Attacks from 2017 to 2018

Colleagues, although the numbers are alarming they also confirm what many of us assumed to be true. Cyber-attacks focused on cryptocurrency mining (aka “cryptojacking”) has sky rocketed by some 400% YoY between 2017 and 2018. As reported by the CTA entitled “The Illicit Cryptocurrency Mining Threat” indicates that EternalBlue, perhaps the world’s most pervasive cyber-attack in history, targets Microsoft’s Server Message Block (SMB) protocol via port 445 is the leading culprit. Researchers suspect that North Korea is the likely source behind EternalBlue’s root cause – the infamous WannaCry ransomware. Bottom line: The global crypto ecosystem continues to be the most common target of cybercrime, which ultimately serves to thwart mass market adoption of cryptocurrencies. Crypto ecosystem members need closer ties and cooperation with their cyber security peers in order to mitigate the relentless rise in cryptojacking is cryptocurrencies are to move to the mainstream.   Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

CVE Report for Bitcoin Core Revealed a Security Flaw that Could Bring Down Part of the Network

Colleagues, the recent Common Vulnerabilities and Exposures Report (CVE-2018-17144 Full Disclosure) states, “a fix for which was released on September 18th in Bitcoin Core versions 0.16.3 and 0.17.0rc4, includes both a Denial of Service component and a critical inflation vulnerability”. A cybercriminal exploited this bug to create new Bitcoin, which in turn would have deflated Bitcoin value by increasing the supply of the currency above the 21 million hard-cap. Matt Corallo, Bitcoin Core developer and Chaincode engineer acknowledged that if this bug has gone undetected someone could have launched a cyber-attack to print an unlimited number of BTCs. According to CoinMarketCap, global Bitcoin market capitalization exceeds $115.6B USD far outpacing Ethereum, which is valued at $24.6 USD. Bottom line: The world’s most valuable (and popular) cryptocurrency is prone to vulnerabilities and is subject to cyber crime. This is just one reason why regulators such as the US SEC question is legitimacy as a financial “security”. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Bitfury and Bitmain Launch New Mining ASICs – Can They Bring New Life to Crypto Mining?

Colleagues, crypto mining has been under siege from relentless cybercrime attacks, which have risen dramatically in 2018. Nevertheless, while mining vendors AMD and NVidia have struggled, Bitmain and Bitfury have introduce new 7nm and 14 nm ASICs this week. Bitfury serves as a hardware and software vendor of crypto mining and Blockchain technology. Bitmain is the world’s largest crypto mining company that also develops and sells its own mining ASICs. These announcement come during the World Digital Mining Summit takes place in Tbilisi, Georgia. Bottom line: Can new ASICs breathe new life into the beleaguered mining segment of the worldwide crypto ecosystem … especially given the onslaught of cyber-attacks across the globe? We would offer two conclusions: First, the mining sector in aggregate will continue to grow … although the rate of growth in 2016-2018 will be difficult to sustain. Second, there will significant consolidation in cypto mining ASIC segment during the next two years with Bitmain and Bitfury extending their leadership roles. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

The Spector of $2b in 2018 Cyber Crime Targeting Cryptocurrencies Threatens Market Adoption

Colleagues, according to CoinMarketCap the worldwide market capitalization for digital assets reached some $760b in December 2017 and currently hoover around $240b. Coindesk reports that the Japanese market lost $540m due to crypto crime in H1 2018. Globally, cyber security firm Carbon Black has confirmed $1.1b worth of cryptocurrencies were stolen in the same time period. The numbers are alarming, they continue to grow and represent the single largest threat to the market adoption of cryptocurrencies across the global economy. Conventional malware, fraudulent ICOs, attacks on crypto exchanges and crypto jacking which targets mining vendors and pools tops the list of cybercrime tactics. We offer two basic conclusions: First, it is highly likely that crypto theft will top $2b around the world in 2018. Second, the rise in cybercrime focused on digital assets heightens the concern of government regulators in the US and abroad that cryptocurrencies should not be categorized as legitimate “securities”. These factors are major barriers to adoption across the crypto ecosystem. We do believe that digital assets will take 2-3 years to cross the chasm from truly speculative investments to viable securities traded on market stock exchanges … foremost the US NASDAQ. Post a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Issuing fraudulent investments is the latest cyber security risk to the cryptocurrency ecosystem

Colleagues, the US Texas Securities Commission has issued cease and desist orders against three offshore entities suspected of issuing fraudulent cryptocurrency investment schemes. The orders target Ultimate Assets LLC, DigitalBank Ltd. and Coins Miner Investment Ltd.  All three entities purport to represent Coinbase, a prominent U.S. crypto exchange. The charges stem from crypto and forex trading services, false claims of meeting with the president of Ripple and soliciting funds to develop a claimed secure crypto wallet. Bottom line: The global crypto ecosystem is under siege from cyber criminals on all fronts. The three firms identified above a just the latest in a long list of bad actors targeting crypto investors, wallets, exchanges and underlying Blockchain technology. The most common motive across these nefarious actions is financial gain. We have and will continue to warn legitimate players in the crypto ecosystem to take major security and human factors measures to protect their business concerns. Send a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Can Fbot Help Prevent Crypto Mining Cyber Attacks by Destroying “com.ufo.miner” Malware?

Colleagues, we have extensively reported on the dramatic rise in crypto mining cyber-attacks in 2018 that have plagued the crypto ecosystem. Enter Fbot. Security researchers are unclear if Fbot is a friend or foe with regard to crypto mining. However, they have confirmed that Fbot is designed to propagate, scan and install itself over “com.ufo.miner“ malware which targets vulnerable browser software. According to NetLab 360, com.ufo.miner has its origins in monero ADB Miner Android-based software. At first glance, it would appear that Fbot might be a tool of unknown origin, which can reduce browser vulnerability to cyber-attacks. The key question is whether Fbot has an ulterior motive – that is to destroy com.ufo.miner and clear the path for another form of crypto mining malware to be installed in its place. Share a comment today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Dark Web Security Vulnerabilities Lie at the Center of AlphaBay Crypto Fraud

Colleagues, we all know that the cryptocurrency ecosystem is a high-value target for cyber criminals worldwide. Nowhere is this more evident than the recent seizure of some $8.8m USD in cryptocurrencies along with another $14m of tangible assets from deceased cyber criminals Alexandre Cazes. Operating from Thailand Cazes amassed over 1,600 Bitcoins and another 8,300 Ethereum tokens from his illicit AlphaBay empire. A US Magistrate ordered this seizure with the aid of Thai officials. AlphaBay is believed to have its origins in the defunct dark web Silk Road platform. Bottom line: Crypto investors small and large are reminded that their assets are at from cybercrime and need to maintain the highest level of security. We recommend once again that investors and traders alike only engage with established and proven crypto exchanges, wallets, infrastructure providers and custodian service providers. Cyber criminals are relentless and crypto investors must be as well. Share your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Introducing Crypto Coin Sniper

Colleagues, have you heard about Crypto Coin Sniper? I am talking about the automated crypto software that can make you up to $3,000 daily, all from just a few minutes work! That’s because the software does everything for you. All you have to do is place the trades it tells you to make and collect your profits! Because everything is done online, you can make money from just about anywhere. All you need is an internet connection and you’re good to go. Make money on the train, at the office or from your 5-star hotel in the Maldives. It takes less than 20 minutes to set up Crypto Coin Sniper and absolutely no trading experience is required. And you too could have your first $3,000 day with as little as a $50 investment! Visit us today at: http://bd2573gipo3gmpa7voslp7wnfv.hop.clickbank.net/… The money making power of this software is unparalleled. Regards, Lawrence Wilson

Is a security breach of a defunct Mt. Gox crypto wallet responsible for the movement of $720m Bitcoin?

Colleagues, a Mt Gox wallet worth some $720 is the prime suspect in the movement of up to $720 Bitcoin since the Japanese exchange went out of business in 2014. To date some $100m has been transferred from this anonymous wallet to the Binance and Bitfinex exchanges. While some experts believe this infamous wallet is linked to the Dark Web’s Silk Road portal, most evidence points to the defunct Mt Gox exchange. Two fundamental questions arise. First, who (or whom) controls this wallet? Second, what is their motive? Numerous theories are floating across the global cryptosphere. Nonetheless, given the fact that Mt Gox was founded in 2010 – the very early days of cryptocurrencies – there is a high likelihood that the funds contained on this wallet were (and perhaps still are) being used for drug trafficking, payment for contraband and/or to evade trans-border trade sanctions. Our goal is to present facts not idle speculation; however, we are confident that the movement of these funds is due to some form of cybercrime. As such, we will add this topic to our crypto-cyber “watch list”. Share your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Will Samsung’s Blockchain Strengthen the Security for International Trade and Commerce?

Colleagues, with the goal of reducing shipping costs by 20% while increasing the security of imports and exports, South Korea’s Samsung Electronics is building a building a distributed ledger system (DLS) to track international trade. Samsung is partnering with the Samsung is partnering with Ktnet, the Ministry of Oceans and Fisheries , the Korea Customs Service, Ministry of Oceans and Fisheries, IBM Korea and Hyundai Merchant Marine. South Korea is surely an early adopter of cryptocurrency tokens, exchanges and mining. This initiative represents a major test as the country seeks to extend Blockchain technology to international trade via a private-public sector consortium. Simultaneously the Korea Internet and Security Agency (KISA) intends to increase the number of Blockchain pilot projects in 2018 from six to twelve. While the financial services sector is the target of most high profile cybercrime, international trade and shipping is a “high value” target for opportunistic cyber criminals. We will report in late 2018 on the implementation of this project.

Share your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Crypto Mining Rocked Once Again by the Sentencing of GAW CEO Garza – Buyers Beware

Colleagues, crypto mining has been overwhelmed with illicit cybercrime from within and without. The sentencing of GAW CEO Josh Garza is simply the latest assault on the dubious mining sector. The crypto mining sector consists of three components – ASIC vendors such as AMD and NVidia, legitimate mining firms like Bitmain and the rather amorphous niche of mining services resellers. GAW falls into the mining services niche. In fairness to all, there are legitimate mining services firms such as Genesis, Hashflare, Eobot to name a few (visit Tech Radar for a more comprehensive list). GAW’s downfall was due to greed – pure and simple. Reseller more services than it actually had under contract was a classic Ponzi scheme. We have extensively reported on the onslaught of cybercrime targeting the vulnerable mining sector …, which was pervasive in 2017 and has reached epic proportions in 2018. Bottom line: Buyers beware. If you want to participate in the attractive crypto mining space a double [portion of due diligence in a necessity. Verify the firm’s background, Board of Directors, investors, check for any complaints filed with the US FTC or US SEC, have a legal expert review their terms and conditions, and speak directly with current customers large and small regarding the firm’s stability. Share your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

The Merger of Crypto and Stock Exchanges – Will Binance and MSX Set an Example for Other Exchanges?

Colleagues, the world’s largest crypto exchange according to CoinMarketCap, Binance, is teaming up with the Malta Stock Exchange (MSX) with the goal of delivering security token trading. Granted, the MSX is no match for the NYSE or NASDAQ, however, the “Blockchain Island” may serve as a bellwether for the co-existence and perhaps the integration of cryptocurrency and conventional securities trading. The Cryptocurrency Academy foresees three future scenarios. First, crypto exchanges continue to operate independently as so-called crypto “pure plays”. Second, public stock exchanges enable the trading of digital crypto assets on their platforms. The US-based NASDAQ is pursuing this trajectory. Third, is the Binance-MSX model whereby crypto and public securities exchanges seek to merge their platforms to serve both digital and traditional assets. The linchpin is whether a sovereign government considers cryptocurrencies as bona fide “securities” …, which is a topic of major debate by the US SEC and its overseas counterparts. Share your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

NASDAQ Analytics Hub - One Small Step for Man … One Giant Leap for Cryptocurrency Trading?

Colleagues, the Cryptocurrency Academy has closely tracked and reported on the NASDAQ’s interest in trading cryptocurrencies. Therefore, it comes as no surprise that CEO Adena Friedman was recently quoted by Ethereum World News that is now beta testing a Crypto Pricing Prediction Model, which would become part of the exchanges’ Analytics Hub. Moreover, Friedman is on record as stating NASDAQ would “consider becoming a crypto exchange over time.” We believe there are two fundamental issues standing between the NASDAQ and its implementation of full-blown crypto trading services: Security and Regulation. The global crypto ecosystem has been wrought with security breaches on all sides during the past two years. Moreover, the US SEC has been sending mixed signals with regard to its consideration of cryptocurrencies (and related ETFs) as financial “securities”. Security threats and lack of regulatory clarification notwithstanding, we believe NASDAQ’s drive to be on the bleeding edge of financial innovation will lead it to provide crypto trading and exchanges services within 12-24 months. Send us your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

How will the lack of regulatory clarity impact Goldman, JP Morgan and Blackrock crypto trading desks?

Colleagues, in H1 2018 the cryptosphere was abuzz about top tier financial institutions implementing cryptocurrency trading and investment services. For the time being Goldman Sachs has decided to focus on crypto custody services while halting any plans for cryptocurrency trading for institutional clients citing concerns about the direction of the US SEC’s regulatory framework. Under the leadership of incoming CEO David Solomon and its current CFO Martin Chavez is taking a cautious “wait and see” approach. GS notwithstanding, other tier one player such as JPM, Blackrock, Vanguard and Fidelity appear to be less risk averse. Bottom line: The Cryptocurrency Academy anticipates two key developments. First, the aforementioned players are likely to move ahead with their plans for crypto trading. Second, given time (perhaps 24-36 months) we still believe that Goldman Sachs will launch a crypto trading service once the SEC firms-up its regulatory guidelines and other financial institutions begin to gain traction in crypto trading. Send us your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

Will Gemini’s New Crypto Key Storage System Prevent Double-Spend Cyber Attacks?

Colleagues, co-founders of the Gemini crypto exchange Tyler and Cameron Winklevoss have been granted a patent for “Systems and methods for storing digital math-based assets using a secure portal”. Digital asset ledgers will be used to protect users from “double-spend” cyber-attacks. Unlike traditional paper currencies, cryptocurrencies have the potential to be copied and rebroadcasted. This leads to the opportunity for nefarious cyber criminals to spend the same cryptocurrency twice. Multiply this type of transaction known as “double-spend” by 100s of thousands of transactions and the value of crypto jacking easily runs into the millions of USD. Bottom line: How effective will the new crypto key storage system be in preventing illicit “double-spend”? Our readers along with the global crypto ecosystem will not know the answer until this system is designed, developed and battle tested in the real world. Yes, we will be tracking this matter closely. Send us your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)  

Will Blockchain’s Time-Stamped and Immutable Data Bolster the Fight Against Crypto Cyber Crime?

Colleagues, China has become one of the first countries to recognize Blockchain-based smart contracts as legally binding evidence. Moreover, the PRC has opened two courts dedicated to processing Internet and cybercrime. These moves would appear to strengthen crypto cyber security in both domestic and cross-border transactions. The UK Law Commission reported in July 2018 that it has launched a research project to assess the legitimacy of smart contracts as well. Meanwhile, the American Bar Association (ABA) views recognizes Blockchain-based smart contracts as a “disruptive advancement” which have the potential of transforming the legal system. Surely, there is a vocal minority in the global crypto ecosystem who view such measures as a hindrance to cryptocurrency adoption. By contract, we believe that collectively these initiatives will have two positive outcomes. First, enhanced security in cryptocurrencies and the Blockchains that enable them. Second, improvement in consumer and institutional confidence in cryptocurrencies. Send us your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/) 

IBM to join the parade of Blockchain-based payment systems vendor … with what level of security?

Colleagues, two of the greatest value propositions Blockchain offers the established financial and banking system is faster transaction speed accompanied by lower OPEX. This is especially appealing for trans-border payments. IBM’s World Wire joins the ranks of RippleNet, Ant Financial and GMO in this enticing market niche. The key players will likely tout their systems at the up-coming Sibos fintech conference in Australia this October. These systems are based upon on model integrated into a bank’s existing systems, fiat currency is exchanged into a digital asset at bank A which in turn is transferred to bank B where it is converted back into a second fiat currency. Sounds attractive, indeed. Bottom line: There are three critical success factors needed for this process to be commercially viable. They have speed and can reduce OPEX, but with what level of security … which is the Achilles heel of all Blockchains in the banking sector and beyond. We will closely monitor the aforementioned vendor’s system and report this fall. Send us your thoughts today! Lawrence – Cryptocurrency Academy (https://cryptocurrencyacademy.blogspot.com/)