By Eric Lam, Jiyeun Lee and Jordan Robertson for Bloomberg / Fin24
The 2018 selloff in cryptocurrencies deepened, wiping out about $42bn (about R552bn) of market value over the weekend and extending this year’s slump in Bitcoin to more than 50%.
Some observers pinned the latest retreat on an exchange hack in South Korea, while others pointed to lingering concern over a clampdown on trading platforms in China. Cryptocurrency venues have come under growing scrutiny around the world in recent months amid a range of issues including thefts, market manipulation and money laundering.
Bitcoin has dropped about 12% since 5 pm New York time on Friday and was trading at $6v756, bringing its decline this year to 53%.
Most other major virtual currencies also retreated, sending the market value of digital assets tracked by Coinmarketcap.com to a nearly two-month low of $298bn. At the height of the global crypto-mania in early January, they were worth about $830 billion.
Enthusiasm for virtual currencies has waned partly due to a string of cyber heists, including the nearly $500m theft from Japanese exchange Coincheck Inc. in late January. While the latest hacking target – a South Korean venue called Coinrail – is much smaller, the news triggered knee-jerk selling, according to Stephen Innes, head of Asia Pacific trading at Oanda in Singapore.
“This is ‘If it can happen to A, it can happen to B and it can happen to C,’ then people panic because someone is selling,” Innes said.
A cryptocurrency slump
The slump may have been exacerbated by low market liquidity during the weekend, Innes added.
“The markets are so thinly traded, primarily by retail accounts, that these guys can get really scared out of positions,” he said. “It actually doesn’t take a lot of money to move the market significantly.”
Coinrail said in a statement on its website that some of the exchange’s digital currency appears to have been stolen by hackers, but it didn’t disclose how much. The venue added that 70% of the cryptocurrencies it holds are being kept safely in a cold wallet, which isn’t connected to the Internet and is less vulnerable to theft. Two-thirds of the stolen assets – which the exchange identified as NPXS, NPER and ATX coins – have been frozen or collected, while the remaining one third is being examined by investigators, other exchanges and cryptocurrency development companies, it said.
Coinrail trades more than 50 cryptocurrencies and was among the world’s Top 100 most active venues, with a 24-hour volume of about $2.65 million, according to data compiled by Coinmarketcap.com before news of the hack.
The Korean National Police Agency is investigating the case, an official said by phone.
In China, the Communist Party-run People’s Daily reported on Friday that the country will continue to crack down on illegal fundraising and risks linked to Internet finance, quoting central bank officials. The nation’s cleanup of initial coin offerings and Bitcoin exchanges has almost been completed, the newspaper said, citing Sun Hui, an official at the Shanghai branch of the central bank.
By Hanna Ziady for Business Live
Payments between SA’s banks, averaging R350-billion daily, can be settled using blockchain technology, tests demonstrate.
“Project Khokha”, whose results the Reserve Bank announced on Tuesday, successfully trialled interbank settlements using distributed ledger technology (DLT), of which blockchain, the mainstay of cryptocurrencies such as bitcoin, is one type.
Distributed ledgers use independent computers to record, share and synchronise transactions in online ledgers, without the need for an independent third party to verify those transactions. DLT could “fundamentally change the financial sector, making it more efficient, resilient and reliable”, according to the World Bank. In the long term, it could usurp a large portion of the work performed by trusted intermediaries such as banks and clearing houses.
Central banks around the world, meanwhile, are grappling with the implications of financial technology (‘fintech’) for financial markets and their supervisory roles in those markets. That Project Khokha has been a success puts the Bank at the cutting edge of developments in DLT, alongside the likes of the Bank of Canada and Singapore’s central bank.
The trial was designed, built and executed in three months. Key role-players included the Bank’s fintech unit, established in August 2017, and SA’s six biggest banks, as well as newcomer Discovery Bank.
The results show that the typical daily volume of SA’s payments system, averaging R350bn, could be processed on a distributed ledger in less than two hours with full confidentiality of transactions.
This has considerable implications for future applications of blockchain technology in SA. Future “blockchain experiments” might involve other central banks on cross-border payments, said Bank governor Lesetja Kganyago.
The Bank had “pushed the envelop in a number of ways” on the project, said Peter Munnings, technical lead of enterprise delivery at New York-based ConsenSys, a blockchain software technology firm and the Bank’s technology partner.
“There are many issues to consider before the decision to take a DLT-based system into production can be taken,” the Bank said.
“Some of these issues relate to the practicalities of implementation, but also to legal and regulatory factors, and to the broader economic impact.”
One of the objectives of Project Khokha was to better understand how the South African Multiple Option Settlement (SAMOS) system would integrate with a DLT system. SAMOS is the current interbank settlement system provided by the Bank, allowing banks to settle their obligations in real-time.
By Jillian D’Onfro for CNBC
Google is cracking down on cryptocurrency-related advertising. The move follows a similar ban by Facebook earlier this year. The company will no longer allow ads about cryptocurrency-related content, including initial coin offerings (ICOs), wallets, and trading advice across any of its ad platforms.
The company is updating its financial services-related ad policies to ban any advertising about cryptocurrency-related content, including initial coin offerings (ICOs), wallets, and trading advice, Google’s director of sustainable ads, Scott Spencer, told CNBC.
That means that even companies with legitimate cryptocurrency offerings won’t be allowed to serve ads through any of Google’s ad products, which place advertising on its own sites as well as third-party websites.
This update will go into effect in June 2018, according to a company post.
“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution,” Scott said.
Google’s hard-line approach follows a similar ban that Facebook announced earlier this year.
While the crypto-currency boom has produced a lot of excitement and wealth, it’s still a largely unregulated space and has spawned countless high-profile scams.
This news comes as Google releases its annual “trust and safety” ads report.
Google said it took down more than 3.2 billion ads in 2017 that violated its policies, which is nearly double the 1.7 billion it removed the year before.
Google parent company Alphabet makes roughly 84 percent of its total revenue from advertising, so convincing advertisers that its ecosystem is safe and effective is critically important.
By Jillian D’Onfro for CNBC
Over 27‚000 cryptocurrency investors have fallen victim to one of the biggest Bitcoin scams to hit South Africa, TimesLive reported.
Hawks spokesman Captain Lloyd Ramovha confirmed the commercial crimes unit was investigating complaints against BTC Global‚ a company which asked investors to send their cryptocurrency to an online wallet address.
Many of the victims were South African, but the extent of the scam spread to the US and Australia.
“The amount is over $50 million and could rise as more victims come forward‚” said Ramovha.
He said the company was being investigated for violating the Financial Advisory and Intermediary Services Act, but could not confirm whether it was a Ponzi scheme or if the people behind it are South African.
Victims from South Africa told TimesLive they had invested between R16‚000 and R1.4 million with BTC Global.
BTC Global’s selling point was the skill of its “master trader” Steve Twain, whom many victims believe does not exist.
BTC Global promised investors that if they sent their Bitcoin to its wallet address they would receive guaranteed returns of 14% per week.
Its website now displays a message which states that Steven Twain is missing and calls for victims to stop threatening harm to the admin team.
Craig Wright, the self-proclaimed inventor of Bitcoin, is accused of swindling more than $5-billion worth of the cryptocurrency and other assets from the estate of a computer-security expert.
Wright, who claimed in 2016 that he created the computer-based currency under the pseudonym Satoshi Nakamoto, allegedly schemed to use phony contracts and signatures to lay claim to bitcoins mined by colleague Dave Kleiman, another cryptocurrency adherent, who died in 2013, according to a lawsuit filed by Kleiman’s brother.
Kleiman’s family contends they own the rights to more than 1 million Bitcoins and blockchain technologies Kleiman mined and developed during his lifetime and that the assets’ value exceeds $5 billion, according to the Feb. 14 filing in federal court in West Palm Beach, Florida.
“Craig forged a series of contracts that purported to transfer Dave’s assets to Craig and/or companies controlled by him,’’ lawyers for Kleiman’s family said in the complaint. “Craig backdated these contracts and forged Dave’s signature on them.’’
Wright, an Australian who lives in London, couldn’t immediately be reached for comment on the suit, which also accuses the entrepreneur of violating partnership duties to Kleiman and unjustly enriching himself at his colleague’s expense. There is no attorney listed for Wright on the docket.
Wright and Kleiman formed a Florida-based company, W&K Info Defense Research LLC, in 2011 to focus on cybersecurity, according to the court filing. The pair also had earlier worked together on the development of Bitcoin and had extensive mining operations, according to the family’ s lawsuit.
The pair controlled as many as 1.1 million Bitcoins at the time of Kleiman’s death, according to the suit. They were held trusts set up in Singapore, the Seychelles Islands and the U.K., the suit says.
Wright said in a 2016 blog post and interviews that he was the main participant in a team that developed the original Bitcoin software under the pseudonym Satoshi Nakamoto. After skeptics questioned the claims, Wright said that he decided not to present any further evidence to prove that he is the creator of Bitcoin.
In the filing, Kleiman’s brother includes what he says is email traffic between himself and Wright in which the entrepreneur indicates he may have been holding 300,000 of Kleiman’s Bitcoins.
Dave “mentioned that you had 1 million Bitcoins in the trust and since you said he has 300,000 as his part,’’ the computer expert’s brother wrote. “I was figuring the other 700,000 is yours,” he added in the email. “Is that correct?”
“Around that,” Wright wrote back. “Minus what was needed for the company’s use.”
The case is Ira Kleiman v. Craig Wright, No. 18-cv-80176, U.S. District Court for the Southern District of Florida.
Forbes has released its list of the richest people in the cryptocurrency community.
The net worth of those on the rich list is denoted in range estimates based on estimated cryptocurrency holdings, post-tax profits from cryptocurrency trades, and stakes in cryptocurrency-related businesses.
The net worth estimates reflect the estimated holdings of the rich list as of 19 January 2018.
Forbes acknowledged that it may have missed certain major cryptocurrency holders due to the obfuscated nature of blockchain transactions.
The top 10 richest people in cryptocurrency, according to Forbes, are below: