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CEO of Coinflux Exchange Accused of Fraud and Money Laundering

Vlad Nistor

Vlad Nistor, CEO of Coinflux, was arrested by local authorities in his native Romania after the United States launched a formal investigation charging him with several crimes against American citizens.

According to local media, Ziar de Cluj report, in a loose translation, MrNistor used other online platforms to scam people via fraudulent sales and get personal information about the victims. Coinflux is not mentioned as a part of the scams:

“Two of these methods were run online via phishing or through various fictitious sale ads  (via Ebay or via online platforms.) For example, Romanians were sending e-mails using instant messaging programs or phone numbers where the user is advised to give confidential data to win certain prizes or was informed that they are necessary due to technical errors that led to loss of original data. A web address containing a clone of the site of a financial or trading institution was indicated in the e-mail.”

Coinflux is one of the most important exchanges in Romania, Mr. Nistor’s country of origin. According to data provided by the platform’s own website, so far more than 201 million Euros worth of cryptocurrencies have been traded in more than 203,000 transactions made by the nearly 20k registered users of the platform.

A Short Recount of What Happened

According to local media, the U.S. Justice Department accused Coinflux’s CEO of running a fraud scheme, committing computer fraud, leading an organized crime group and money laundering. Nistor was preemptively detained while awaiting a decision by the Bucharest Court of Appeals regarding his extradition.

Shortly after his arrest, the judges of the Bucharest Court of Appeals denied the extradition requested by the United States. Nistor was released under judicial control for a period of 30 days.

Nistor’s arrest affected the proper functioning of the platform. According to an article published on the Exchange’s official blog, Coinflux’s team mentions that due to the procedure under which its CEO is located, operations on the platform were temporarily interrupted:

“Unfortunately, our company’s bank accounts have been frozen, situation which affects the CoinFlux wallets as well. We are doing all possible efforts, along with our legal advisers, to make sure everyone who had money deposited in CoinFlux wallets gets it back.
Another unpleasant consequence of the investigation is the fact that our access to some parts of our platform has been restricted; thus we are unable to send this announcement through the usual communication channels: e-mail and website. Our expectation is that we will gain control back, within the next days.”

Until now it seems that Mr. Nistor’s situation has been clarified; however, there is still some uncertainty regarding the future of the platform. In a post published yesterday, the platform announced that it was taking action with the aim of refunding the funds to the bank accounts of its users.

 

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Binance’s Bitcoin (BTC) Trading Share Falters In Crypto Bear Market

Binance’s Bitcoin (BTC) Trading Dominance Dives

Another week, another crypto-centric analytics report from Diar, a leading research unit in the nascent cryptocurrency ecosystem. In the startup’s most recent installment, released on Monday, Diar drew attention to the ever-changing role that Bitcoin (BTC) and that exchanges that support it have played in the cryptocurrency market at large. Interestingly, per data compiled by Diar, sourced from this industry’s foremost exchanges, Binance’s nearly-unquestioned hegemony over crypto may be at risk.

According to Diar, “Bitcoin trading volumes have taken a hit across major token exchanges over the course of 2018.” The research team, doing their best to portray this happenstance, noted that while Binance continues to dominate the crypto trading scene, its in-house BTC/USD(T) pair only accounts for 32% of the entire market’s total BTC/USDT volume. While this may seem like a hefty figure in and of itself, considering that this statistic for Binance peaked at 47% in June, the unprecedented growth of interest in altcoins through Binance may be worrying to Bitcoin’s diehard maximalists.

Binance isn’t alone in its inability to attract active Bitcoin traders. Hong Kong-based Bitfinex saw its BTC/USD market undergo an even worse popularity decline, with the pair now only amounting for 27% of the market’s aggregate BTC/USD volume, compared to 51% at the turn of 2017. This can likely be attributed to the platform’s uncanny ability to generate immense controversy in recent months, as seen by the Tether debacle and banking qualms.

Interestingly, “State-side” platforms, exchanges based in America, have “suffered” the largest losses in BTC/USD in recent months, with Bittrex and Polniex now only accounting for 2.7% of Bitcoin trading volumes.

There’s been one notable outlier in this case of ‘bear market blues’, with OkEX, widely lauded as Binance’s primary competitor, seeing its primary BTC market post a 6x market share gain since January.

Report: Crypto Market To Consist Of 66% Bitcoin in 2019

Although Diar’s report didn’t paint a positive picture for the short to mid-term prospects for Bitcoin’s hegemony over the cryptosphere, as it seems that traders are looking to altcoins yet again, a number of analysts from A.T. Kearney expect for BTC to continue to rule over altcoins with an iron fist, no holds barred.

Per reports from Forbes contributor Panos Mourdoukoutas, who has taken a liking to Bitcoin, A.T. Kearney, a multinational management consulting firm, reportedly issued a report specifically on Bitcoin’s market dominance statistic, which is currently situated at 55%. The corporation noted that it expects for the statistic to “nearly” reach two-thirds of the aggregate capitalization of cryptocurrencies. Citing reasons for this ~66% target, which isn’t out of the realm of possibility, the American firm purportedly stated that altcoins have “lost their luster” due to growing risk aversion tactics enlisted by retail investors.

Investors’ growing penchant for liquidating their altcoin positions for Bitcoin can potentially be chalked up to the U.S. SEC’s renewed crackdown on ICO-funded tokens. Just recently, the American financial regulator fined AirFox and Paragon, two lesser-known ICOs, in a precedent-setting case, instilling fear throughout the crypto investor base as a whole. As is common practice, if there aren’t enough rewards to justify the risk, investors won’t allocate capital to the asset class in question. This case with altcoins, a majority of which were parented by ICOs, is undoubtedly no different.

However, A.T. Kearney says this isn’t exactly the case, with the firm drawing attention to the ever-growing complexity of the nascent altcoin subset. Courtney Rickert McCaffrey at A.T. Kearney wrote:

“Our prediction is that Bitcoin will regain its dominance is supported by the ever-growing complexity among altcoins, most recently demonstrated by the ‘hash war’ that occurred in the Bitcoin Cash ecosystem.”

Although this isn’t a well-documented issue, a number of crypto-centric consumers took to Twitter during Bitcoin Cash’s hard fork to express how confusing the whole fracas was. This, of course, only legitimizes the aforementioned firm’s report, albeit only be a smidgen.

Title Image Courtesy of Andre Francois Via Unsplash

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Changpeng Zhao Likens Binance Chain To Ethereum, BNB To ETH

Binance Chief Speaks On DEX — BNB Like Ethereum (ETH) 

As reported by Ethereum World News last week, Changpeng Zhao, CEO of the world-renowned crypto startup that is Binance, recently sneak peaked its most promising venture yet, the so-called “Binance Chain” and the decentralized exchange (DEX) that will be based upon it.

Through the medium of a short video, an unnamed member of the project’s vast team outlined the latest edition of the DEX demo, which sports a graphical user interface (GUI) that is reminiscent of the startup’s world-renowned centralized exchange. The seven-minute video outlined a number of the venture’s pertinent features, including the issuance of trade orders, which were surprisingly quick, account and wallet creation for the newfangled blockchain, and the in-house block explorer.

While the ambitious project was well-received by the community at large, with Binance Coin (BNB), the startup’s in-house crypto asset, posting a hefty single-digit gain following the DEX sneak peek on Tuesday/Wednesday, little is still known about the venture’s exact intricacies and caveats. Former Bloomberg employee Zhao, who also goes by “CZ,” recently took to CoinTelegraph to lend his insight on the matter.

The long-time crypto advocate, who made an entree into this innovative ecosystem years ago, told the media outlet:

The Binance DEX is a decentralized exchange that allows you to trade you to another token on our chain… The chain also allows you to send and recieve BNB, which is the native coin, plus other tokens. So the blockchain can allow you to send and recieve [tokens/coins] directly, only if I want to send them to you.

CZ, doing his best to explain Binance’s latest initiative in-depth, added that the blockchain his upstart developed is very similar to how Ethereum, ETH, and ERC-20 tokens operate and are transacted/traded.

Touching on what sets Binance’s DEX and blockchain apart from competing networks, namely Ethereum, Stellar, EOS, or Tron, the industry savant first noted that ideally, cryptocurrency transactions would be “instantaneous.” Yet, as seen by the block times posted by the Bitcoin network, for example, transactions almost always take upwards of 10 minutes to settle.

While Zhao acknowledged this, stating that “initially [blockchains] did that,” the CEO noted that as Bitcoin and Ethereum have drastically grown in popularity, not only can transaction fees spike, but so can the speed of transfers. CZ noted that with Binance Chain, faster and cheap transactions should be possible yet again, which he sees as the “original inspiration for crypto” and related technologies.

Further touching on this point, the former OkCoin (OkEX) executive, explained that current DEXs, while much more distributed than centralized exchanges, are “either slow or have relatively difficult UIs,” with there being close-to-zero platforms to provide a happy medium for consumers. As such, Zhao is seemingly stating that the creation of the Binance DEX was predicated on the need for a “high capacity chain” and an easy-to-use decentralized platform. CZ explained:

So, we believe that as we improve the latency and the user experience on the DEX, we’re hoping to see liquidity increase on the DEX, hopefully making a [good] contribution to the market.

Putting a spotlight on BNB, which has followed the performance of Bitcoin (BTC) in recent weeks, Zhao noted that his firm is currently “working with many partners on the business side” to implement BNB into their services. One of Binance’s recent notable partnership is with TravelByBit, which allows cryptocurrency users to travel the world through the use of cryptocurrencies. In the end, as alluded to by the member of Binance’s top brass, these partnerships come down to Binance’s goal to create a cryptocurrency ecosystem that is cost- and time-efficient and widely used.

Binance Forges Ahead In Crypto Bear Market

Binance Chain and its decentralized platform aren’t the only ventures that the preeminent crypto startup is embarking on.

Binance Labs, the venture and incubator arm of its namesake, recently made a $3 million investment into Koi Trading. San Francisco-based Koi Trading, for those who aren’t aware, is an emerging platform that acts as an OTC desk, specializing in the facilitation of non-retail investor-issued crypto exchange orders.

Title Image Courtesy of sydney Rae on Unsplash

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Bitcoin Cash (BCH) Temporarily Overtakes BSV After Gemini Listing

Gemini Adds Bitcoin Cash Support

Starting today, users of the U.S.-regulated, Winklevoss Twins-headed Gemini platform will be able to deposit Bitcoin Cash (BCH), the chain backed by the ABC client. This development comes via an official statement from the New York-based company, issued through Medium on Thursday morning.

Per the announcement, trading for BCH will commence on Monday, December 10th, while custodial services for the popular altcoin have already started. BCH is now the fifth crypto asset listed on Gemini, now an exchange even more exclusive than Coinbase when it comes to listings. BCH joins Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and ZCash (ZEC), the latter of which was recently added to Coinbase in a surprising turn of events.

BCH trading on Gemini was first announced in May, after the startup received approval from the New York Department of Financial Services (NYDFS), but the Winklevoss Twins were mandated to delay the asset’s launch due to the fork.

Closing off its announcement on the matter, Gemini maintained that the addition of BCH is in-line with the startup’s underlying mission. It was explained by Eric Winer, the platform’s Vice President of Engineering:

“We are excited to add this cryptocurrency to the Gemini platform — the world’s most regulated cryptocurrency exchange and custodian. We are proud to provide our customers with a safe, secure, and compliant method to buy, sell, and store cryptocurrency as we build the future of money.”

Abra Reactivates BCH Trading

Just days prior to Gemini’s surprising announcement, American crypto platform Abra, often touted as a Coinbase and Circle competitor, also made a BCH-related announcement, but in a different context.

Through an official company blog post, the Mountain View-based startup first noted that prior to the November 14th hard fork, it suspended its in-house BCH-centric services. But starting last Monday, deposit, withdrawal, and trading support for the controversial asset resumed. The fintech company then issued a comment on why it chose to back ABC, the client of choice of Roger Ver, Bitcoin.com, and Bitmain, as such a decision was likely deemed disputable.

Abra, headed by crypto advocate Bill Barhydt, noted that it is “becoming clear” that ABC is the dominant chain, presumably due to the block lead and higher PoW statistics the fork had at press time. Yet, the popular crypto-centric platform added that it may “consider supporting” BSV, ABC’s primary competitor chain, in the future, dependent on how two chains play off each other moving into the future.

BCH Overtakes BSV After Multi-Week Brawl

For those who aren’t in the loop, amid this week’s market tumult, BSV, backed by the notorious Craig “Faketoshi” Wright and Calvin Ayre, saw a monumental rally this week, moving up the crypto standings faster than many could utter “HODL.”

In a matter of days, if not hours, BSV began to approach the market capitalization of BCH, with many crypto-centric commentators taking to Twitter to express their disbelief, as many thought the civil war between the two factions ended.

As BTC tanked, falling under $3,500, BCH followed close behind the world’s first cryptocurrency. Although many expected for BSV to follow suit, it didn’t, with the forked asset immediately surging, passing the market capitalization of BCH.

However, with Gemini’s stamp of approval, BCH has started to outperform BSV for the first time in days, recently surpassing its competitor in terms of market capitalization.

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Chinese Crypto Traders Find Ways To Skirt Government Crackdown

Rules Are Meant To Be Broken? 

To many in the crypto community, intense government intervention or regulation is not a problem, as a majority of nations across the globe are somewhat open to the use and propagation of crypto assets. However, as reported multiple times by Ethereum World News in the past few weeks, China-based regulators have been doing their utmost best to clamp down on the development, use, and trading of cryptocurrencies within the country’s borders.

Some of the measures the government took include, silencing crypto discussion on online forums, banning cryptocurrency-related events, restricting 124 foreign crypto exchanges, blocking access to eight crypto-centric news outlets on WeChat, and also banning Alipay accounts that have been suspected of facilitating crypto trades.

But as the old saying goes, “rules are meant to be broken.” Cryptocurrency firms and traders within the country have evidently taken this saying to heart, doing their best to skirt the bans by introducing ingenious solutions and workarounds.

As per a recent report from the South China Morning Post, despite Beijing’s attempt to shutter local exchanges, executives and employees within these firms have sought to avoid the ban by utilizing a series of domains to get their exchanges to the public via alternative means, albeit in less than ideal manner.

By moving their servers and legal operations outside of Chinese borders, these firms can essentially bypass a majority of the legal risks of propping up an exchange in China, which become classified foreign exchanges at that point. Speaking on the matter, Terence Tsang, the chief operating officer of TideBit, which maintains a series of crypto exchanges in Hong Kong and Taiwan, stated:

The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company… Those exchanges whose website landing pages are in Chinese have drawn particular scrutiny by regulators.

However, despite these updated exchange “website landing pages” drawing substantial amounts of scrutiny from regulators, industry leaders said that as long as an exchange’s server remains outside of China, that it would be a “huge challenge” for governmental bodies to stamp out all instances of cryptocurrency trades and transactions.

China’s Alternative Mode Of Crypto Trading

The South China Morning Post went on to describe how Chinese crypto investors have been trading following the ban. First prospective traders will need to find a way to purchase Tether tokens for Yuan, which can be done via exchange sites that offer Tether-to-yuan trading after the two sides of the trade submits fulfill the proper KYC requirements. The “exchange” oversees the trades, ensuring that both sides of the agreement get what they were asking for.

Sources told the SCMP that money will be transferred from bank-to-bank, or via third party payment networks, like AliPay or WeChat. Once the Tether appears in the wallet of the trader, he/she/they can trade these tokens on foreign exchanges through the use of VPNs and similar programs.

Photo by 郑 无忌 on Unsplash

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Bittrex Waves Goodbye To Bitcoin Gold (BTG) After $18M Hack

The entirety of the cryptocurrency industry has indisputably had a dismal year, with prices collapsing by upwards of 70% across the board. But Bitcoin Gold (BTG) may take the cake when it comes to a cryptocurrency that has suffered the most in 2018.

From day 1, Bitcoin Gold’s ethos was to be ASIC resistant, with the team behind the project widely touting this Bitcoin fork as a “cryptocurrency that you can mine with a graphics card (GPU).” But in May, the fImage result for bitcoin goldork’s blockchain fell under a 51% attack, with malicious actors renting out thousands of dollars of ASICs to take control of the network for personal gain.

While in control of the network, the hackers reportedly sent over 388,000 BTG ($18 million at the time of the hack) worth of double-spent transactions to a variety of exchanges, which allowed the attackers to swindle the same amount (388,000 BTG) from an exchange-owned wallet.

It is unclear how many exchanges were hit in this attack, as a good majority of the foremost platforms (Binance, Bittrex, Bitfenix, HitBTC, OKEx etc.) offer support for BTG trading. However, following the attack, Bittrex, a Seattle-based exchange, requested for the Bitcoin Gold team to pay a compensation of over 12,000 BTG ($265,000) for apparent negligence to the rising threat of ASICs.

It is important to note that this is more than a request, as Bittrex is essentially threatening to delist all BTG trading pairs if the sum of 12,000 BTG is not paid by September 14th. In response to the threat, the team behind the project issued a statement in a bid to bring clarity to the situation. They wrote:

Bittrex informed us that they make this decision because the BTG team would not “take responsibility for our chain,” and that taking responsibility meant paying Bittrex 12,372 BTG to cover the loss they incurred. They later informed us they would cover part of the loss from their own BTG reserves and requested we pay the remaining ~6,000 BTG, and that if we did not, we would be delisted.

The team also added that it was not their fault that the Bitcoin Gold network fell under attack by ASICs, as “the Bitcoin Gold team is not responsible for the security policy of Bittrex; those who earn revenue running a private business must manage the related risks and are ultimately responsible for their own security.”

As occurrences like the aforementioned are rare, it is still unclear how exactly this situation should be addressed, but some fear that the “long-term survivability” of Bitcoin Gold could be hampered by Bittrex’s likely delisting. Some beg to differ, however, as Bittrex only accounts for ~$350,000 of BTG’s $10 million trade volume.

Since the hack, Bitcoin Gold team has since sought to restore its ASIC resistance as reported by Ethereum World News in early-July.

Even though moves have been made to restore the ethos of the Bitcoin Gold network, BTG has had a tough year in terms of prices, with the asset falling by over 96% in the span of 8 months. It is still unclear whether the asset will ever recover to its previous all-time highs, as the sentiment surrounding this currency took quite a hit after the hack, but there are some optimists still holding on to fleeting glimmers of hope.

Chart Courtesy of TradingView.com

Photo by Andre Benz on Unsplash
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Japanese Regulators Clamp Down On Prospective Crypto Exchanges

Japanese Regulators Introduce New Measures To Protect Consumers

Japan has long been at the forefront of the cryptocurrency/blockchain industry, with innovators and forward-thinkers within the country quickly adopting and developing crypto assets and similar technologies. And although many Japanese citizens see eye-to-eye with cryptocurrencies, regulatory bodies across the country have taken a cautious stance, doing their best to protect consumers from scams, hacks and the like.

As per a report from The Japan Times, a Tokyo-based publication, the country’s Financial Services Agency (FSA) has recently clamped down on one of the most important aspects of this industry — exchanges.

The FSA, which is essentially the Japanese equivalent of the US’ SEC, has tightened the registration process for upcoming crypto exchanges, insiders tell The Japan Times. More specifically, the regulatory body is doing its best to ensure that said exchanges are utilizing the proper risk management and mitigation techniques, methods, and systems. The revised registration screening rules are reportedly an update to Japan’s Payment Services Act, which was instated in April 2017 to protect the average cryptocurrency consumer from financial risk.

Those familiar with the matter noted that the revised act will require each crypto exchange license applicant to answer upwards of 400 questions, or a four-fold increase in potential questions. The Japanese news source elaborated, writing:

The state watchdog has increased the number of questions asked when screening applications to about 400 items, up fourfold, sources said Saturday.

Along with the bolstering of the regulatory questionnaire, the FSA added one more hoop for exchanges to jump through, with the revised act now requiring applicants to submit board meeting minutes. It was noted that via the minutes, the regulatory body intends to certify that there are proper measures in place to “sustain the company’s financial health and ensure the security of its computer system.”

The sources later added that this move to garner these minutes is not only to ensure security, but to also confirm that company executives are legitimately involved in the decision-making process of an exchange’s operations.

The updated screening process will also include a regular review of a crypto exchange’s primary shareholders, to “examine if an internal system is in place to check for links to antisocial groups.”

Unfortunately, analysts expect for this new regulatory move to hamper the development of Japan-based exchanges, as the stricter rules may cause the over 100 prospective exchanges to drop their applications ‘tout suite’.

It is clear that the FSA still has the $538M hack of the Japan-based CoinCheck fresh in their minds, as it is apparent that this move, along with a series of recent regulatory restrictions, is directed at mitigating the future risk of hacks and the subsequent loss of consumer-owned funds.

Regardless, as reported by Ethereum World News last week, Toshihide Endo, a commissioner at the FSA, stated:

We have no intention to curb (the crypto industry) excessively,” he said. “We would like to see it grow under appropriate regulation.

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Q1 2018 Binance Profits Surpass Deutsche Bank, Near Nasdaq

Binance Pulled In $200M In Q1, While Deutsche Bank Brought In $146M

To be frank, there isn’t too much of a comparison between the crypto industry and legacy capital markets, but on the exchange side of things, maybe this isn’t the case, with Binance’s Q1 2018 profits reportedly surpassing Deutsche Bank’s and nearing Nasdaq’s.

On Thursday, Dovey Wan, managing director of DanHua Capital and a crypto investor, took to Twitter to provide an interesting point of insight into the crypto industry, noting that Binance outperforming Deutsche Bank in Q1 of this year.

Backing this seemingly outrageous claim, Wan posted an image, which gave a short, yet sweet side-by-side comparison of the two firms. Deutsche Bank, which has been one of Europe’s foremost financial institutions for more than a century, pulled in a sizable profit of $146 million in Q1 2018 after giving salary to over 100,000 employees and fulfilling its operating costs. On the other hand, Binance, which was founded only in July 2017, raked in $200 million after its operational margin, topping Deutsche profits by 35%.

However, her comment’s quickly sparked some conflict within the Twitter thread, with some noting that this is more of an “apples to oranges” comparison, as both of the firms operate with an entirely different structure in separate industries.

Acknowledging this, the DanHua executive went on to make a better comparison, trying to make it more “apples to apples.” This time, she contrasted Binance and the Nasdaq capital markets exchange, revealing that Binance’s Q1 profits were ‘only’ $9 million shy of Nasdaq’s, even with the crypto exchange’s relatively small team.

While this by no means shows that crypto is surpassing traditional markets, Wan indicated that these statistics show that decentralized technologies and markets hold “disruptive potential,” writing:

Yes, there is nuance in compliance cost etc, the comparison mainly tries to illustrate an industry with exponential growth + disruptive potential. If AMZN can be accessible outside NASDAQ, why chinese investor has to pay super high P/E for local s***? Liquidity brings optionality.

Binance Rakes In Millions In Profit, Even Amidst A Bear Market

As per a previous Ethereum World News report, Binance’s CEO expects for his firm to pull in $1 billion in profits for all of 2018, even amidst a bearish market that has plagued investors since January’s all-time highs. This substantial profit figure could be attributed to the firm’s rapidly pudding user base, along with near-consistent volume levels on its over 100 trading pairs.

According to Zhao, his company has now supported over ten million customers, generating an average of $1.5 billion in trade volume each and every day. To give the user base figure a bit of perspective, Binance only had two million users at the start of 2017.

Some skeptics reasoned that the only reason why Binance could pull in such a profit is due to the suspected exorbitant listing fees requested by the exchange. As covered in early August, an ‘official’ email from Binance claimed that a fee of over $2 million should be paid for listing on the popular exchange. While this claim has since been rebutted by CEO Changpeng Zhao, many speculate that this could be the source of a good portion of the startup’s profits.

Regardless, Binance doesn’t seem to be the only firm ‘rolling in the dough’, even as the retail market all but dries up. With BitMEX, the world’s most popular Bitcoin mercantile exchange, recently ‘making it big’ with a move into one of the most expensive office towers in the world. As reported by Ethereum World News last week, the exchange, which has become well-known for offering margin trading, will pay over $570,000 a month in rent for just one of its offices, showing that the firm still has some cash to spend.

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Very Welcomed Announcement by the Ex-Leading Mt. Gox Exchange: Giving Back

Bitcoin (BTC) lost-users of the Mt. Gox exchange could be getting back their affected money as it was declared that approximately $1.0 bln in BTC are getting ready to return.

Almost all crypto-enthusiasts, traders and investors know about the history of Mt. Gox and how in a very short amount of time it went from the biggest and world leading exchange to a complete shut down. In 2014 it was reported by the exchange that more than a billion dollars in crypto was lost due to an attack. However, the saga was not done as 200k in BTC were located later on. Additionally, major amounts of pioneer BTC were sold when the coins reached the record marks.

Returning to the current highlight, impacted users can request their lost bitcoins with the use of an online feature which enable claim-submission for the money that is yours and its gone. The tool is available on the web-page. When it comes to corporate creditors, the process of reclaiming the lost coins will be available later down the road but in a likewise ways.

The deadline for filing proofs of claims is October 22, 2018 (Japan time) (must arrive by this date). If proof of claim is not filed by the deadline, then disenfranchisement (i.e., loss of the right to claim) might apply, so please be careful.

In late-June 2018, documents revealed that the Mt.Gox case would be transitioning from bankruptcy proceedings to civil rehabilitation. Although this may seem mundane in and of itself, many investors breathed a sigh of relief, as this meant that trustee Nobuaki Kobayashi would stop the sale of BTC on spot market exchanges.

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Chinese Crypto Bans on WeChat Accounts, Events, and Exchanges: What Happened and Why

This week, the government of China has cracked down on crypto-related WeChat accounts, blockchain events and digital asset exchanges, solidifying its negative stance on cryptocurrency trading and the Initial Coin Offering (ICO) market.

WeChat ban and PBoC’s warning against ICOs

On Aug. 22, Cointelegraph reported that WeChat, China’s biggest messaging app that has over 1 billion active monthly users, banned the accounts of cryptocurrency investors, users and businesses.

At the time, Lanjinger, a local financial media outlet, reported that the accounts of Deepchain, Huobi News, Node Capital-backed Jinse and CoinDaily were suspended or taken down permanently, as they violated its policy entitled “Interim Provisions on the Development of Public Information Services for Instant Messaging Tools” by promoting ICOs and cryptocurrency trading.

While CoinDaily confirmed that its WeChat channel with more than 100,000 subscribers was suspended by WeChat, Leonhard Weese, the president of the Bitcoin Association of Hong Kong, said to Cointelegraph that many accounts — destined to have been temporarily or permanently suspended — were actually taken down due to other sensitive subjects outside of crypto:

“They got blocked for talking about the vaccination scandal, not because of crypto. We find this counterintuitive, but reporting on scandals like that is far more sensitive than talking about crypto or doing crypto. I expect them to have their accounts reinstated in a week or a month.”

Expert argues WeChat ban is unrelated to crypto

In late July, the Chinese medical industry was involved in a major scandal after the country’s main drug industry watchdog released its findings that accused two pharmaceutical firms of developing inferior vaccines and deceiving local regulators.

Specifically, Changsheng Biotechnology was said to have released falsified data on the sale of more than a quarter million ineffective diphtheria, whooping cough and tetanus vaccinations, as Fortune reported.

Weese argued that, given the magnitude of the scandal in China and the global medicine sector, it is more likely that apart from the case of large-scale cryptocurrency accounts like CoinDaily, Deepchain, and Huobi News, most of the accounts that were banned by WeChat were involved in spreading misinformation about the scandal.

But, as one WeChat official confirmed to Lanjinger, the Chinese government vowed to take a stricter approach in cracking down on ICOs and token sales, and Chinese social media platforms will continue to shut down the accounts of individuals and businesses that are utilized to promote and advertise ICOs in the Chinese market, which were banned by the government in late 2017.

“[Accounts were permanently shut down for being] suspected of publishing information related to ICOs [initial coin offerings] and speculations on cryptocurrency trading,” the official said.

In a statement obtained by South China Morning Post (SCMP), the Huobi team denied that the ban of its account was related to the government’s restriction of cryptocurrency, but rather by the “broad action targeting industrial media” by WeChat.

Facebook blockchain initiative to affect China relationship?

In July 2018, Facebook, which was banned in China in 2008obtained a license to operate an office in China. The social media conglomerate has opened a $30 million subsidiary called Facebook Technology in Hangzhou to finance emerging startups and technology-related initiatives.

“We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups,” Facebook told Verge in a statement.

Given the rumors around Facebook wanting to introduce its own cryptocurrency to the global market, it remains unclear whether Facebook’s supposed idea of integrating cryptocurrencies or launching its own blockchain platform could impact its current relationship with the Chinese government.

Chinese social media platforms like Baidu and WeChat have not seen any rumors in both domestic and international cryptocurrency communities regarding cryptocurrency and blockchain-related initiatives, possibly to avoid any conflict with local financial regulators.

PBoC issues warning against ICOs

On Aug. 25, the People’s Bank of China (PBoC), the central bank of the country, issued a warning against ICOs, firmly declaring that raising funds through token sales is illegal in the country. The PBoC and local financial authorities added in an official announcement that it was difficult to track and monitor transactions made through ICOs, even if the token sales are done domestically.

“The funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult.”  

The PBoC further emphasized that, while the country has encouraged the development and commercialization of blockchain technology, ICOs cannot be considered to be legitimate operations or developments on the blockchain. The document reads:

“Such activities are not really based on blockchain technology, but rather the practice of speculative blockchain concepts for illegal fundraising, pyramid schemes and fraud. The main features are as follows:

  1. Risk of illegal activities, unregulated overseas markets and inability to track or monitor transactions made in ICOs.
  2. Deceptive, opaque and concealed fundraising methods, relying on celebrities and influencers to manufacture hype around investments to tempt investors.
  3. Illegal operations like profit-generating pyramid schemes and creating Ponzi schemes by describing them as ‘financial innovations.’”

Sheng Songcheng, an adviser to the People’s Bank of China, also confirmed to state-owned publication ce.cn that the government has decided to strengthen its ban on ICOs, banning public accounts, channels and communication platforms utilized to spread information about token sales.

Rise of OTC trading, Alipay takes notice

In December of last year, during the peak of the cryptocurrency market, when the combined valuation of all of the digital assets in the market totaled at $900 billion, China’s National Committee of Experts on Internet Financial Security — a government-backed research group — reported that the volume of the over-the-counter (OTC) Bitcoin market was rapidly increasing.

“Over-the-counter trading is booming. This warrants further attention,” the researchers said.

At the time, speaking to South China Morning Post, biggest mainstream publication in Hong Kong, Weese said that Telegram has been the go-to platform for large OTC trades due to the connections between local financial authorities and the operators of WeChat, but that a small portion of investors were still using the Chinese messaging platform. Weese explained:

“Telegram is very popular for large, over-the-counter trades. While WeChat is used by the less paranoid.”

Operators of various cryptocurrency exchanges and OTC platforms — including Tidebit — confirmed the rise in activity in the Bitcoin OTC market, stating that investors who could no longer trade within the Chinese market have started to explore peer-to-peer alternatives to invest in the asset class.

This week, Alipay — the most widely utilized fintech platform in China, with a 90 percent market share and a $150 billion market valuation — formally banned OTC trading on the Alipay network, preventing users of the Alipay mobile app to initiate transactions for Bitcoin or digital asset purchases.

Red Li, a cryptocurrency researcher and the founder of Chinese cryptocurrency community 8BTC, revealed that Alipay has begun the process of shutting down accounts involved in OTC Bitcoin trading, most likely due to the government’s request for banks and financial networks to shut down all possible payment channels that could be used to send funds to cryptocurrency trading platforms.

A rough translation of the statement released by Alipay disclosed the intention of the company to permanently ban any account that is reasonably suspected of funding Bitcoin exchanges to invest in the cryptocurrency space.

With the prohibition of OTC cryptocurrency trading by Alipay, the only channel that is left for local investors to allocate funds into the cryptocurrency market is the Hong Kong cryptocurrency exchange market.

Given that investors in China still send millions of dollars to Hong Kong shell companies’ bank accounts to purchase multi-million dollar properties on the Hong Kong real estate market, the possibility of investing through Hong Kong digital asset trading platforms with local bank accounts still exists.

But, due to the country’s strict capital controls and the government’s newly implemented initiative to track down savings and brokerage accounts utilized to evade taxes, it could become even more difficult to send money out of China to overseas markets.

Ban of crypto events

This week, Binance — the world’s largest cryptocurrency exchange by daily trading volume — had to cancel a cryptocurrency-related event in Beijing on August 23, as the government announced a ban on commercial blockchain conferences and meetups.

The local government of the Chaoyang District in Beijing revealed that it has informed hotels and other large-scale venues in the country that they are not allowed to host events that are related to cryptocurrency and blockchain, as part of its larger initiative to completely crackdown on ICOs and distributed fundraising.

In an interview with The Wall Street Journal, a Binance spokeswoman said that she was not aware of the closure of the event because the exchange hosts many events across the world.

“We have so many meetups around the world, and [they] may be canceled due to any reason.”

The People’s Daily, the publication operated by the Communist Party, reported that so-called venture capital-backed media outlets in China have made a significant fortune by creating hype around ICOs, but it is unsure whether the publications will be able to continue promoting ICOs in the long term. The publication could lead investors to believe that local authorities may target independent media outlets that promote ICOs in the months to come.

“These ‘media’ outlets have made huge fortunes in the speculative waves of cryptocurrencies, but due to their nature, it’s doubtful how long their barbaric growth can keep on going.”

Conclusively, in the past two months, the government of China has allocated the majority of its resources to strengthening its ban on cryptocurrency trading and the ICO market.

Given the censorship practiced by WeChat, Alipay and other platforms, along with Beijing’s ban on crypto events, it is likely that the country will see a decline in the adoption of blockchain technology and cryptocurrency development, which is ironic, as China has spent more than $3 billion in funding blockchain projects this year.