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Overstock CEO Praises tZERO Blockchain Platform in Q4 Earnings Report

The encouragement comes despite withdrawal of investment plans for tZERO, while Overstock will change its strategy this year.

Canadian online retailer Overstock.com said it would counter its significant losses for 2018 with a return to profits this year in its Q4 earnings report released on March 18.

Overstock, which is famous as being one of the first major retailers to accept Bitcoin (BTC), saw profitability dive through last year as a result of a change of strategy, something CEO Patrick Byrne says he will now reverse.

“Our retail arm lost money last year because I gunned things in an attempt to create a conventional high-growth/money losing e-commerce business, but the losses were nauseating and we reverted back to the philosophy of profitability on which we built Overstock,” he wrote in a letter to shareholders. Byrne added:

“As a result, in 2019 Retail will return to profitability, generating a positive operating cash flow ≥ $10M.”

As part of the Q4 breakdown, Byrne drew specific attention to Overstock’s tZERO cryptocurrency token platform, which launched in January.

Pre-tax losses for tZERO were $12.6 million in Q4, but the potential of the new platform has Byrne unruffled by the figures.

“Our blockchain projects are some of the most significant and cutting edge in the world, and we are just reaching the point where our products are being introduced to the public. In particular, tZERO brought live a security token trading platform,” he added in the shareholder letter.

Earlier in March, tZERO’s major backers announced they were significantly cutting investment in the project.

Q4 nonetheless delivered total profits in excess of $80 million, with Overstock appearing to broadly insulate itself from the cryptocurrency market downturn which accelerated during that period.

As Cointelegraph reported, mining entities in particular bore the brunt of Bitcoin’s price drop from around $6,500 to $3,100 in November, with hardware manufacturer Nvidia’s earnings report painting a decidedly mixed picture.

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Canada: Regulatory Bodies Call on Crypto Industry to Participate in Securities Law Review

The CSA and IIROC say they wish to adapt rules to take into account the new cryptocurrency trading arena.

Two national securities bodies in Canada have issued a joint consultation paper on March 14, aiming to gather industry feedback about cryptocurrency token regulation.

In a summary press release about the paper, the Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) said it was necessary to adapt existing laws in order to cope with the emergence of new trading platforms specializing in crypto-assets.

The CSA is a national standards group covering 57 different areas, while the IIROC is a self-regulatory body overseeing investment dealers and trading platforms.

“This consultation outlines a proposed regulatory framework that provides clarity for platforms, greater market integrity and protection for investors,” CSA Chair Louis Morisset commented in the press release. Morisset also stated:

“Platforms have told us that a tailored regulatory framework is welcome as they seek to build consumer confidence and expand their businesses across Canada and globally.”

As Cointelegraph continues to report, the issues surrounding cryptocurrency’s interaction with securities rules has formed a central preoccupation for some countries’ regulators, notably the United States’ Securities and Exchange Commission (SEC).

Canada has maintained a reticent stance by comparison, with the tone of the latest documentation being conspicuously pro-change as opposed to concerned about cryptocurrency market participants.

The two bodies will consult with a range of entities, including the fintech community, investors and nonspecific others.

“The emergence of digital and crypto assets continues to be a growing area of interest for regulators, investors and marketplaces — and, together, securities regulators are taking steps to deepen our understanding of this area,” IIROC president and CEO Andrew J. Kriegler added. Kriegler continued:

“We must adapt to innovation, and provide clarity to the market about how regulatory requirements might best be tailored and applied to these unique business models, while maintaining investor protection.”

The push for more comprehensive controls comes at a timely juncture for Canada following the debacle over local trading platform QuadrigaCX, which currently owes users around $190 million.

Following the death of its CEO in December, it appeared much of the platform’s funds were inaccessible, while controversy over the events ensued. Big Four auditor EY is managing the firm’s administration.

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Canadian Police Asks for Public Assistance to Identify Bitcoin Fraudsters

The Calgary Police Service Cybercrime Team has asked the public to assist in the identification of four individuals allegedly involved in multiple fraudulent Bitcoin transactions.

Canadian police are seeking information on individuals alleged to be involved in defrauding Bitcoin (BTC) ATMs (BTMs), according to an announcement published by the Toronto Police Service on March 13.

The Calgary Police Service (CPS) Cybercrime Team has asked the public to assist in the identification of four individuals allegedly involved in multiple fraudulent transactions made within the country and targeting one Canadian Bitcoin firm. The CPS initially received the information in October 2018.

The press release states that in September of last year, the suspects allegedly made 112 fraudulent transactions at BTMs in seven Canadian cities, including Calgary, Toronto, Montreal, Ottawa, Hamilton, Winnipeg, and Sherwood Park. The CPS believes that the suspects made “double-spend” attacks.

In such attacks, the suspect allegedly withdrew money from a kiosk and subsequently cancelled their transaction remotely before the BTM operator could process the withdrawal. The fraud reportedly resulted in CA$195,000 ($146,666) in losses to the company.

Recent research published by crypto analytics company CipherTrace in January revealed that about $1.7 billion in cryptocurrency had been obtained via illicit means in 2018. Of that $1.7 billion, over $950 million was stolen from crypto exchanges, representing a 3.6 times increase over 2017. In 2018, at least $725 million was lost to scams such as ponzi schemes, exit schemes and fraudulent initial coin offerings.

At the same time, analytics company Chainalysis reported that cryptocurrency-related crime has decreased over the past few years, only accounting for 1 percent of all Bitcoin transactions in 2018. Chainalysis also made a prediction of criminal trends in the space in 2019, outlining increased usage of decentralized platforms and efforts to move and launder money around the world through cryptocurrencies.

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QuadrigaCX CEO Used Personal Money to Fund Exchange During Litigation With Bank in 2018

The late founder of QuadrigaCX, Gerry Cotten, was purportedly funding the exchange with his own money during litigation with a bank in 2018.

The late founder of Canadian crypto exchange QuadrigaCX, Gerry Cotten, was purportedly funding the exchange with his own money while it was in litigation with a major Canadian bank. Cotten’s widow Jennifer Robertson revealed details about the exchange’s financial situation in a statement published on March 13.

The statement reads that Cotten was putting his own money into Quadriga to fund user withdrawals in 2018, after the Canadian Imperial Bank of Commerce (CIBC) had frozen five accounts holding $21.6 million. Robertson stated:

“While I had no direct knowledge of how Gerry operated the business, he told me that he had been putting his own money back into QCX to fund user withdrawals in 2018 while the CIBC money remained frozen. I believe Gerry had the best interests of the business in mind, and cared for his customers.”

At the time, the CIBC froze accounts belonging to the exchange’s payment processor, Costodian Inc., and its owner, Jose Reyes, purportedly due to an inability to identify the funds’ owners.  The CIBC then requested the court to withhold the disputed funds and decide whether they belong to QuadrigaCX, Costodian, or the 388 users who had deposited the funds.

Quadriga subsequently told the court that the bank froze the funds mistakenly, and claimed to be the undisputed owner of the greater part of the funds as there was “no evidence” of competing claims.

In the recent statement, Robertson also revealed that the legal firm currently representing the exchange will cease its association with Quadriga CX, apparently due to a conflict of interest. The statement reads:

“I have been advised by Stewart McKelvey that, in light of concerns regarding a potential conflict of interest that have been raised as a result of information which has come to the attention of the Monitor since the start of the CCAA [Companies’ Creditors Arrangement Act] process, they have withdrawn from representing QuadrigaCX (QCX) and the other applicant companies in the CCAA process.”

Earlier in March, Robertson asked the court for $225,000 in compensation for legal costs for financing used to help the crypto exchange acquire court-approved protection from creditors. After $145 million in crypto assets went missing following Cotten’s death, Robertson provided interim financing for legal proceedings.

While the issue of repaying Robertson was reportedly discussed in court, the law firm representing QuadrigaCX’s affected clients, Cox & Palmer argued that repayment should not be granted until Ernst & Young — the court monitor — has reviewed asset and transaction information from Cotten’s estate.

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US Leads in Blockchain-Related Job Offerings Globally: Report

A recent report from TNW shows that the U.S. leads the world in blockchain-related vacancies.

The United States is the world’s leader in blockchain-related jobs, according to a research by The NextWeb (TNW) published on March 8.

To prepare the report, TNW gathered information from job and recruiting site Glassdoor, finding all the job offerings that had the term “blockchain” in the job listing in countries around the world.

The results reportedly showed that the U.S. is leading the world in terms of blockchain-related jobs, having about half, or 2,616, of a total of 5,711 blockchain jobs listed on Glassdoor globally. The U.S. is followed by the United Kingdom, with 1,015 blockchain-related job ads, while India has taken the third place, with 257 vacancies.

Among the most common jobs posted on the site, “Blockchain Engineer” takes the lead. Such positions as “Senior Software Engineer” and “Blockchain Developer” are the second and third most popular job titles, respectively.

TNW also made a list of companies offering blockchain-related vacancies, wherein tech giant IBM reportedly offers the greatest number of blockchain jobs, and is followed by Big Four accounting firm Ernst & Young and software company Oracle.

In the top 10 companies, only three are reportedly related to digital currencies, which are Foris Limited, Crypto.com, and Wirex. Payment startup Ripple is on the 17th line, and blockchain software tech company ConsenSys is the 13th.

In February, recruitment company Hired released a report showing that the global demand for blockchain engineers is up by 517 percent year-over-year. The second-fastest growing software engineering role is security engineer, with 132 percent growth, and third is embedded engineer, up 76 percent. The blockchain engineer role also consistently stayed among the top-three most-paid software engineering jobs in the various cities covered in the report.

That same month, experts and industry players said that the adoption of blockchain technology is still in its early stages at the annual meeting of The Wall Street Journal CIO Network. Although enterprise blockchain technology has found its practical use, its new applications are not large scale, according to Christine Moy, executive director and head of the blockchain center of excellence at JPMorgan Chase.

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Former Iced Tea-Turned-Bitcoin Mining Firm Sells Beverage Business

Long Blockchain, previously named Long Island Iced Tea, reached an agreement to sell its ready-to-drink tea business to Canadian firm ECC2 Ventures.

Long Blockchain, previously named Long Island Iced Tea, has reached an agreement to sell its ready-to-drink tea business to Canadian firm ECC2 Ventures. The deal is documented in a Securities and Exchange Commission (SEC) document filed on March 6.

At the beginning of 2018, the company had rebranded from Long Island Iced Tea to Long Blockchain, seeing a 500 percent jump in shares, noting that it hoped to raise money to purchase Bitcoin (BTC) miners.

In August 2018, the company announced that it had again changed its line of business — the initial iced tea business to cryptocurrency — and was going to also focus on loyalty schemes that also leveraged digital ledger technology.

The former iced tea company is being sold for a combination of cash and shares, and ECC2 is seeking to raise $2 million to close the deal. As Cointelegraph reported in April last year, Long Blockchain was delisted from the Nasdaq Stock Market (Nasdaq) for low market capitalization.

According to a report by Long Island news website Newsday, the company would get CAD$500,000 (equivalent to over $372,000) and 9.2 million shares of ECC after that company completes a share consolidation.

In August 2018, Long Blockchain Corp. had also been issued a subpoena by the SEC. During a filling around the same time, the company reportedly said that the subpoena, originally dated July 10, requested certain documents from Long Blockchain Corp. The company declined to provide further detail, saying that it cannot predict or determine whether any proceeding will be instituted by the SEC in connection with the subpoena.

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Report: Canada Revenue Agency Auditing Crypto Investors

According to Forbes, the Canada Revenue Agency has sent crypto investors lengthy questionnaires regarding their holdings.

The Canada Revenue Agency (CRA), the government’s tax collection service, is reportedly auditing investors in cryptocurrencies like Bitcoin (BTC), Forbes reports on March 6.

Citing sources close to the matter, Forbes states that the CRA has sent extensive questionnaires to investors pertaining to their crypto-related activities in recent years. The questionnaires reportedly run 14 pages long with 54 questions and multiple sub-questions. The CRA told Forbes:

“In order to protect the integrity of our risk assessment systems, we cannot comment on the specific information or criteria we use to select files for audit.”

Per Forbes, the CRA is asking investors to clarify multiple points regarding their crypto investments, such how and through whom they purchased the assets and whether they use cryptocurrency mixing services or tumblers.

Another question reportedly asks whether investors have bought or sold assets on ShapeShift or Changellycryptocurrency exchanges which both allow users to trade assets without disclosing their real world identity.

The agency began taxing cryptocurrencies in 2013, and subsequently established a dedicated cryptocurrency unit in 2017 for collecting intelligence and conducting audits focused on crypto-related risks. While the CRA closely monitors crypto related activities, federal and provincial governments in Canada have created research and development tax incentives. The CRA said:

“The CRA’s enhanced efforts in this space stem directly from its broader Underground Economy Strategy, which includes a commitment to monitor emerging platforms and new business models, with a special focus on the sharing economy and digital currencies.”

Laura Gheorghiu, a tax partner at law firm Gowling WLG, previously told Cointelegraph that the CRA classifies cryptocurrencies as a commodity, making the exchange of crypto taxable as a barter transaction and making it taxable as business income or capital gains. Most Canadians must file their tax returns before April 30, while self-employed filers have until June 15.

As the April 15 deadline for tax filing looms in the United States, some companies are introducing new services that allow investors to more easily calculate taxes on their crypto holdings. In early February, tax preparation software TurboTax released a new version of its eponymous tax preparation software that allows users to import trading data directly from major exchanges, such as Coinbase, Gemini, and Poloniex.

Yesterday, Big Four auditing firm Ernst & Young launched a tool for accounting and preparing taxes on cryptocurrency holdings. The new tool called EY Crypto-Asset Accounting and Tax will allow both institutional and retail investors to calculate and prepare taxes on cryptocurrency holdings.

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Research: Global Blockchain Spending to Reach $2.9 Billion in 2019

According to the Worldwide Semiannual Blockchain Spending Guide, blockchain spending on a global scale will be nearly $2.9 billion in 2019.

Global spending on blockchain solutions will reach $2.9 billion in 2019, according to a recent report from advisory services firm International Data Corporation (IDC) published on March. 4.

The report dubbed “Worldwide Semiannual Blockchain Spending Guide” was prepared by market intelligence and advisory firm IDC. The report analyzes the emerging blockchain market evaluating spending data for 10 technologies across 19 industries and 15 use cases in nine geographic regions.

The report forecasts that blockchain spending will be nearly $2.9 billion in 2019, up by 88.7 percent from the $1.5 billion spent last year. For the period from 2018 to 2022, blockchain spending will purportedly see a compound annual growth rate (CAGR) of 76 percent, with total spending reaching the $12.4 billion mark in 2022.

The major driver of blockchain spending growth will purportedly be the financial sector, with an investment volume of more than $1.1 billion. That is followed by the manufacturing and resources sector led by the retail and professional services industries, which will see blockchain spending of $653 million and $642 million this year, respectively.

Cross-border payments and settlements along with trade finance and transaction settlements will get the most investment in 2019, which will purportedly amount to $453 million and $285 million, respectively. The banking sector will reportedly allocate the most investments in both cases.

Per the report, IT and business services will jointly see about 70 percent of all blockchain spending in 2019, while blockchain platform software will be the biggest sector of spending outside of the services category, with a five-year CAGR of 81.2 percent.

The breakdown at the regional level found that the United States will see the largest blockchain spending this year, amounting to $1.1 billion, which is followed by Western Europe and China, with $674 million and 319 million, respectively. The report adds:

“All nine regions covered in the spending guide will see phenomenal spending growth over the 2018-2022 forecast period led by Japan and Canada with five-year CAGRs of 110 percent and 90 percent, respectively.”

In February, a report from Infoholic Research LLP projected that the global blockchain in energy utilities market is expected to grow by 60 percent by 2024. The global blockchain in energy utilities market was assessed to be $210.4 million in 2018, and is reportedly expected to reach $3.4 billion by 2024.