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Facebook Registers New Fintech Firm in Switzerland

Facebook has registered a new fintech firm that will center on blockchain, payments, data analytics, and investing.

Social media giant Facebook has apparently formed a new financial tech firm, Libra Networks LLC, according to a filing on the Geneva Commercial Register.

Libra Networks was registered in the Geneva con May 2 by Facebook Global Holdings II LLC. Per the official filing the firm provides:

“…services in the fields of finance and technology, as well as the development and production of software and related infrastructure, in particular in connection with investment activities, the operation of payments, financing, identity management, data analysis, big data, blockchain and other technologies.”

Facebook registered the trademark “Libra” with the United States Patent and Trademark Office back in June, which was reportedly part of its secretretive in-house crypto project. Facebook has also hired two cryptocurrency compliance experts who formerly worked at the major crypto exchange Coinbase as reported by Cointelegraph in May.

Anonymous sources have claimed that Facebook could release a native stablecoin some time in the third quarter of 2019.

At the recent crypto conference Consensus 2019, Polychain Capital CEO Olaf Carlson-Wee commented that he thinks the rumored stablecoin should be built on a public, open source infrastructure. Carlson-Wee thinks it would be in the self-interest of the company given recent controversies surrounding the social media platform:

“I think given all the problems that Facebook has had with policing their platform and things like that, I think that the strategic move for Facebook would actually be to build public infrastructure. And that public infrastructure could be incorporated onto all the Facebook platforms, which of course are proprietary. But that public infrastructure, if they don’t try to own it, I think that’s where they will have the most success.”

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Blockchain Sister Startups Allegedly Pull $8 Million Exit Scam

RepuX and JoyToken have reportedly completed an initial coin offering (ICO) exit scam together.

Blockchain startups RepuX and JoyToken have reportedly pulled a joint initial coin offering (ICO) exit scam, according to an exposé by Hard Fork of The Next Web (TNW) on May 16.

RepuX and JoyToken reportedly ran their ICO promotions during March and April of 2018, and are now walking away with $4.7 million and $3.3 million, respectively. As far as the startups’ stated plans were concerned, Hard Fork reports:

“RepuX claimed that it was trying to build what it called a ‘blockchain-powered data marketplace,’ while JoyToken was trying to create a decentralized gambling platform, powered by its own JOY token.”

The United Kingdom offices for these organizations reportedly closed earlier this week. Additionally, the websites and Telegram channels associated with the startups have been shut down, and neither of their Twitter accounts have posted since last year.

The CEO of JoyToken, Andrew MacDonald‏, had previously called RepuX a “sister company” in an official twitter post at the beginning of 2018. The projects also shared two of the same advisors, Lee Murphy and Mateusz Mach, according to the ICO database ICObench.

The two organizations also initially secured community management from the same crypto-centric marketing solutions website, AmaZix, but were purportedly cut off from the platform when they refused to pay their promoters the amount agreed upon. In a forum announcement about the discontinued relationship, AmaZix said:

“The ICO teams have stated that because of the lower than expected results in their token sales they are no longer willing to pay out the originally allocated amount to the bounty participants.”

In a previous report by Cointelegraph, a study in 2018 by ICO advisory firm Statis Group indicated that over 80 percent of alleged ICOs in 2017 were scams. The largest scams identified were Pincoin ($660 million), Arisebank ($600 million) and Savedroid ($50 million).

However, it should be noted that as a percentage of money spent on ICOs as a whole, scams accounted for only 11% of funds invested ($1.34 billion out of $11.9 billion).

In more recent news, social media giant Facebook has recently loosened its previously strict policy on blockchain and crypto related ads, which was initially implemented partially in an attempt to protect users from ICO scams. In keeping with its original intent (despite the recent changes) ICO advertisements remain forbidden.

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Polychain CEO Says Facebook’s Rumored Stablecoin Blockchain Should Be Public

Polychain Capital CEO thinks Facebook would do best to build a public platform for its currency, relinquishing authority over the blockchain.

Polychain Capital CEO Olaf Carlson-Wee thinks Facebook would be smart to build its stablecoin on a public, open blockchain infrastructure. Carlson-Wee delivered his remarks at the Consensus 2019 panel “To the Moon and Back” on May 15.

Carlson-Wee explained that the blockchain platform he is referring to is one like bitcoin’s, in which the creator relinquishes control over the platform they built. He argues that such an arrangement would be beneficial to the social media giant, saying:

“I think given all the problems that Facebook has had with policing their platform and things like that, I think that the strategic move for Facebook would actually be to build public infrastructure. And that public infrastructure could be incorporated onto all the Facebook platforms, which of course are proprietary. But that public infrastructure, if they don’t try to own it, I think that’s where they will have the most success.”

Carlson-Wee notes that an additional benefit would be that by relinquishing control over the platform, they also avoid liability for controversy that takes place on the platform; he compares the situation to the creation of the internet:

“The people that made the internet aren’t responsible for everything that’s said on the internet.”

The CEO continued to share a broader vision for cryptocurrencies, in which they are used as a common and accessible store of wealth. He stated:

“If big technology companies want to put their resources toward building public peer-to-peer crypto infrastructure, I would be ecstatic.”

As previously reported by Cointelegraph, an anonymous source told Bloomberg that Facebook will roll out its cryptocurrency, purportedly a stablecoin, some time in the third quarter of 2019. Sources at the Wall Street Journal say that Facebook is seeking investments up to $1 billion to fund the upcoming “FB Coin.”

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Facebook Onboards Two Former Coinbase Compliance Experts

Social networking giant Facebook has on-boarded two compliance officers who previously worked at U.S. major cryptocurrency exchange Coinbase.

Social networking giant Facebook has on-boarded two new compliance experts, who previously worked at United States major cryptocurrency exchange Coinbase.

Mikheil Moucharrafie joined Facebook as compliance officer after almost four years of working at Coinbase. At the exchange, Moucharrafie held positions such as support analyst and quality assurance tester, anti-money laundering (AML)/bank secrecy investigator, compliance manager, and risk manager.

Jeff Cartwright spent nearly five years at Coinbase as a compliance manager, head of internal audit, and director of regulatory risk and exams. Prior to joining Coinbase, Cartwright was involved in AML consultancy at Big Four firm KPMG and AML compliance investigations at Goldman Sachs. At Facebook, Cartwright will hold the position of a policy and compliance manager.

As Cointelegraph reported in March, Facebook began hiring PayPal staff ahead of its rumored cryptocurrency launch. The company started onboarding dedicated blockchain staff last year, under the auspices of David Marcus, himself a former president of PayPal. Now, around 20% of the team’s 50 members come from the payments platform, a situation reminiscent of the so-called “PayPal Mafia” executive group of the early 2000s.

That same month, Facebook’s HQ in Menlo Park, California, opened five new positions in its blockchain department. The company was apparently seeking a growth product manager, product manager, data scientist, software engineer and business operations manager to join its blockchain team.

Recently, news broke that Facebook acquired the rights to the “Libra” trademark for its secretive cryptocurrency project. A source familiar with the matter confirmed that Facebook is recruiting financial firms to develop its own crypto and that the project’s codename and product name is Libra.

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Hodler’s Digest, May 6–12: Top Stories, Price Movements, Quotes and FUD of the Week

Fidelity may soon offer crypto trading, Facebook Coin may be launched in Q3 2019, and more.

Top Stories This Week

Hackers Withdraw 7,000 Bitcoins in Binance Crypto Exchange Security Breach

Binance, one of the largest cryptocurrency exchanges by daily trade volume, experienced a security breach this week, losing a little over 7,000 bitcoins (BTC). CEO Changpeng Zhao stated at the time that the bitcoins were withdrawn from its hot wallets, which contain only 2% of the exchange’s total bitcoin holdings. In the interim, proceedings from the hack have been moved to seven addresses. CZ devoted a live AMA on Twitter to address community concerns in the wake of the hack, also discussing the idea of a Bitcoin chain reorganization. In response to criticism of using the term “reorg,” CZ later apologized, but noted that “it is my strong view that our constant and transparent communication is what sets us apart from the “old way of doing things.”

Bitfinex Confirms Initial Exchange Offering to Raise Up to $1 Billion in Tether

Embattled cryptocurrency exchange Bitfinex confirmed it would conduct a $1 billion so-called initial exchange offering (IEO) in a whitepaper issued on May 8, with a Bitfinex shareholder confirming that $1 billion in both hard and soft commitments have been sealed. The exchange is currently facing ongoing legal scrutiny from authorities who accuse it of losing $850 million. The white paper notes that there will be a sale of up to 1 billion LEO tokens, each worth 1 tether (USDT), lasting until May 11, which marks the cut-off point for sales to private investors. Zhao Dong has noted that the $1 billion already committed means there is little chance of a public sale.

Facebook May Announce FB Coin Stablecoin in Q3, Say Anonymous Sources

Social networking giant Facebook is hiring PayPal staff ahead of its alleged cryptocurrency launch, making up 20% of a 50-person team, according to an unnamed source familiar with the situation. According to the source, the social network company began hiring for a dedicated blockchain team last year, under the auspices of David Marcus, himself a former president of PayPal. The same source notes that the Facebook Coin could be launched as soon as the third quarter of 2019. The Committee on Banking, Housing, and Urban Affairs of the United States Senate is now seeking information on Facebook’s reported cryptocurrency project in response to the rumors over the project.

Bloomberg Report: Fidelity Will Start Institutional Bitcoin Trading Within Weeks

United States $7 trillion investment firm Fidelity will reportedly roll out bitcoin (BTC) trading for institutional clients in the coming weeks, an unnamed source told Bloomberg. According to this source, Fidelity’s cryptocurrency-focused spin-off, Fidelity Digital Assets, would be adding to the existing range of services, with trading to go live in a soon as in a few weeks. The source noted that the service will primarily target large-volume traders like other over-the-counter (OTC) offerings. Fidelity has not itself confirmed the time frame of the service offering, but did hint that its future direction would only involve more integration with the bitcoin space. Fidelity Digital assets launched in October 2018 and has offered cryptocurrency custody from March this year ahead of planned OTC trading.

Starbucks Working With Microsoft for Blockchain-Based Coffee Tracking Platform

United States-based coffee chain Starbucks will begin using  Microsoft’s Azure Blockchain Service to track the production of its coffee. The “bean to cup” initiative, first announced in 2018, involves farmers in Costa Rica, Colombia, and Rwanda piloting a blockchain-based coffee-tracking system. The system, whose pilot program will be open sourced by Starbucks, will allow customers to track the production of their coffee and will open up potential financial opportunities for coffee bean farmers on the backend. Microsoft’s Azure Blockchain Service is a blockchain-as-a-service (BaaS) platform that currently supports Quorum, the Ethereum-based platform of JPMorgan Chase.

“It doesn’t do anything. It just sits there. It’s like a seashell or something, and that is not an investment to me.”

Warren Buffet, Berkshire Hathaway CEO

“Cryptocurrencies or bitcoins, or anything like that, are not really currencies — they are assets. A euro is a euro — today, tomorrow, in a month — it’s always a euro. And the ECB is behind the euro. Who is behind the cryptocurrencies? So they are very, very risky assets.”

European Central Bank (ECB) president Mario Draghi

“The debate is over, bitcoin won. It is now seen by people all around the world as a legitimate place to [store] their value.”

Michael Novogratz, CEO of crypto bank Galaxy Digital and former Goldman Sachs partner

“And I think the people who are professional traders that go into trading cryptocurrencies, it is just disgusting. It is like somebody else is trading turds and you decide, ‘I can’t be left out.’”

Charlie Munger, billionaire investor and vice chairman of American holding conglomerate Berkshire Hathaway

Winners and Losers

At the end of this week, bitcoin is trading up, at around $7,154 as of 7:35 a.m. EST. Ether is at $190, XRP is at $.31 and total market cap is at about $213 billion.

The top three altcoin gainers of the week are Kurrent, Cryptosolartech and Everus. The top three altcoin losers of the week are ICOCalendar.Today, Lendroid Support Token and Commerce Data Connection.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

“Blockchain, Komgo, Forcefield, Vakt, one of these will have to work to change how trade is being done. It’s a matter of time. When, I can’t tell, but I think it has to go paperless.”

Ng Chuey Peng, managing director and head of global commodities finance at Singapore’s Oversea-Chinese Banking Corp Ltd. (OCBC), speaking about the trade finance industry

“I actually think we should shut down the cryptocurrencies.”

Joseph Stiglitz, American economist and Nobel Prize winner

“Ultimately we want to be able to tokenize existing securities — equities, fixed income, funds. Maybe the token will eventually replace the share one day.”

Thomas Zeeb, head of securities and exchanges and director at SIX

“If they came to us with a particular derivative that met our requirements, I think that there’s a good chance that it would be [allowed to be] self-certified by us.”

Unnamed CFTC official speaking about ether futures

“I eventually want to have a fund where I take in bitcoin and I fund everybody in bitcoin and they pay their employees and suppliers in bitcoin and then I pay my investors in bitcoin.”

Tim Draper

Prediction of the Week

Galaxy Digital CEO Michael Novogratz: Bitcoin Should Cross $20,000 Within 18 Months

Michael Novogratz, Galaxy Digital CEO, predicted this week that in his opinion, bitcoin will beat its all-time-high price within 18 months. During an interview, Novogratz added that $6,000 is a stall point, and the next one will be $10,000. The CEO also noted that altcoins were not likely to follow bitcoin’s rise, as they still have to prove their use cases. Illustrating his point with an allusion to the table of elements, Novogratz pointed out that out of the 118 elements present on the periodic table, only “gold has store of value just because.”

FUD of the Week

US Court Orders Craig Wright to Provide Bitcoin Ownership Records

The United States District Court of the Southern District of Florida issued an order this week that requires Craig Wright, the self-proclaimed Satoshi Nakamoto, to provide a list of his public bitcoin (BTC) addresses. The court’s order is part of a continuing case against Wright that has been filed by the estate of computer scientist David Kleiman over Wright’s purported thefts of hundreds of thousands of BTC. The plaintiffs had requested that the court make Wright turn over a list of the public addresses of bitcoin he owned as of Dec. 31, 2013, as well as identify all bitcoin allegedly transferred to a blind trust in 2011.

Chinese Social Media Giant WeChat Bans Crypto Transactions in Its Payment Policy

Chinese social media giant and payment service provider WeChat banned cryptocurrency transactions in its payments policy this week. According to a tweet with an alleged screenshot of the policy changes, users who engage in cryptocurrency trading will have their accounts terminated. The updated rules — coming into force on May 31 — state that “merchants may not engage in illegal transactions such as virtual currency,” the issuance of tokens, selling pornography or online gambling. WeChat is a popular messaging and payments service provider in China with the overall number of users allegedly reaching 1.098 billion by the end of last year.

“It’s like being on the internet; so people can spin out and they can start owning bitcoin, they can start owning ether. Some percentage of the user base is likely to do so, and again I think that’s gonna be a dramatic catalyst.”

Spencer Bogart, partner at Blockchain Capital, speaking about Facebook Coin

“Blockchain…very interesting development.”

Charles, Prince of Wales

“An awful lot of our international power stems from the fact that the dollar is the standard unit of international finance and transactions […] it is the announced purpose of the supporters of cryptocurrencies to take that power away from us.”

United States Congressman Brad Sherman

“We should not be trying to guide innovation, but we also should recognize that we cannot stop it and embrace the potential for positive change that innovation offers. Our silence is likely to simply push this innovation and any attendant economic growth into other jurisdictions that have done their work and provided clear guidelines for the market participants to follow.”

United States regulator and so-called “crypto momHester Peirce

“We have teams clearly working on blockchain and cryptocurrency as well, and we want to participate in that in whatever form it takes in the future. I just think it’s a little early on right now.”

PayPal CFO John Rainey

Best Cointelegraph Features

Emin Gün Sirer on Rethinking Blockchain, Promoting Good Crypto Use and Leaving Stagnation Behind

Cornell University’s Emin Gün Sirer talks with Cointelegraph about the missions of academics to change the world, and about the new waves of projects to come.

India’s Complex Relationship with Crypto

In this latest analysis on India and cryptocurrency, Cointelegraph looks at how the Indian government has toyed with the idea of banning cryptocurrency in the past, and how their stance looks now.

A Landmark for the Blockchain Island

The Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister of Malta gives his thoughts on the new virtual financial assets acts, and how far Malta has gone as the Blockchain Island.

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US Senate Banking Committee Presses Facebook for Info on Crypto Project

The U.S. senate is seeking information on Facebook’s secretive cryptocurrency project.

The Committee on Banking, Housing, and Urban Affairs of the United States Senate is seeking information on Facebook’s reported cryptocurrency project. The committee addressed its concerns to Facebook founder and CEO Mark Zuckerberg in a letter on May 9.

In a series of questions, the Senate highlights certain aspects of consumer protection, asking Zuckerberg how the company plans to protect consumer financial information. The committee also asks Zuckerberg whether Facebook shares or sells consumer information with unaffiliated third parties.

The social media giant become embroiled in controversy last year, when it became the subject of several scandals surrounding user data privacy. In April 2018, Zuckerberg himself testified before Congress regarding the firm’s practices. Canadian legislators have also called on Zuckerberg to testify, after it was found that Facebook violated the country’s privacy laws.

The committee further asks whether Facebook has any information on individuals’ credit standing, credit capacity, creditworthiness or information that could affect their ability to secure credit.

Rumors of a “Facebook Coin” surfaced in December 2018 following a Bloomberg report, which stated that Facebook was making a token for use on WhatsApp for the remittances market in India.

In February, the New York Times reported that the token would be usable on multiple platforms, including Facebook itself and Instagram. Unnamed sources further stated that the token would likely be a stablecoin pegged to a fiat currency.

Facebook is reportedly seeking $1 billion in investments for the token project from major payment networks Visa and MasterCard.