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What Crypto Exchanges Do to Comply With KYC, AML and CFT Regulations

Top fiat-to-crypto exchanges are adopting market surveillance technologies. Of all crypto-to-crypto exchanges, only Binance has one.

While it’s possible to buy top cryptocurrencies like bitcoin (BTC) and ether (ETH) in the over-the-counter (OTC) market, most people will need an exchange in order to buy other altcoins. Exchanges are simply an important component of the system that makes the crypto market tick. Regulators around the world have identified this, which is why regulatory moves have primarily targeted exchanges. Regulators want to be sure that exchanges employ the best security practices as well as measures — Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT), for instance — that discourage illicit transactions and improve account/wallet security.

Some exchanges do take their compliance to those measures seriously. For example, in the aftermath of the Binance hack on May 7, when around 7,074 bitcoins (worth $40 million on the day) were stolen, the company’s founder and CEO, Changpeng Zhao, announced that a significant security update will be conducted that will also include an upgrade to the KYC measures:

“We are making significant changes to the API, 2FA, and withdrawal validation areas, which was an area exploited by hackers during this incident. We are improving our risk management, user behavior analysis, and KYC procedures.”

So, let’s break down if such a stance over compliance with measures like KYC, AML and CFT is common among top cryptocurrency exchanges, and how much of an effect they have on the market and its participants.

What are KYC, AML and CFT

Each country has its laws governing KYC, AML and CFT measures. However, these laws do not come with specific standards, mainly because regulators want financial institutions to do all they can to reduce risks.

“The reasoning seems to be that if banks get clear guidelines on what constitutes adequate KYC they will never look any further than the minimum requirements,” John Callahan, chief technology officer at Veridium, an identity and access management software company, wrote in Forbes.

Know Your Customer

Know Your Customer, refers to a set of procedures and process that a company employs to confirm the identity of its user or customer. The robustness of KYC procedures varies across companies and jurisdictions. However, KYC fundamentally involves the collection and verification of a customer’s means of identification — including government-issued identity cards, phone numbers, a physical address, an email address and a utility bill, to name a few.

Anti-Money Laundering

Anti-Money Laundering measures are a set of procedures, laws and regulations created to end income generation practices through illegal activities. Some of them include tax evasion, market manipulation, public fund misappropriation, trade of illicit goods and other activities of this kind.

AML regulations require financial institutions to continuously conduct due-diligence procedures to detect and prevent malicious activities.

Anti-Money Laundering

The crypto industry has already been cited as facilitating a “rise of a new, high-tech era of virtual money laundering,” with cryptocurrency gambling sites reported by blockchain research house CipherTrace as being a common money laundering tool. In addition, Jamal El-Hindi, the former acting director of the Financial Crimes Enforcement Commission (FinCEN), a part of the United States Department of Treasury, hinted that AML compliance will be fundamental to the stability of crypto exchanges in the coming years:

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate US AML laws.”

Combating the Financing of Terrorism (CFT)

Combating the Financing of Terrorism refers to the set of procedures aimed at investigating, dissecting, discouraging and blocking sources of funding intended for activities that realize religious, ideological or political goals through violence, or its threat thereof, against civilians. These procedures provide law enforcement agencies with an alternative, and potentially effective way to track and block terrorist activities.

Yaya Fanusie, the director of analysis for the U.S. Foundation for Defense of Democracies Center (FDD), earlier in September 2018, told the U.S. Congress that terrorist organizations aren’t using cryptocurrency as a funding vehicle. However, the U.S. House of Representatives, on Sept. 26, passed a bill that would establish a task force to fight the use of cryptocurrencies by terrorist groups.

How crypto exchanges approach KYC, AML and CFT compliance

As stated earlier, the process of regulatory compliance for AML and CFT involves KYC throughout transaction lifecycles. The KYC process is generally divided into four levels, namely:

  • Customer acceptance policy (CAP), which is the stage where a company determines and documents the demographics of its desired customers.
  • Customer identification program (CIP), which is the stage where the company confirms that the identity of a (potential) customer matches its CAP.
  • Continuous monitoring of transactions to ensure regulatory compliance, identification of suspicious activities and risk management.
  • Risk management

Based on the information available, it can be examined how exchanges handle these stages. Crypto exchanges will be divided into two groups namely the “fiat-to-crypto” exchanges and “crypto-to-crypto” exchanges. Fiat-to-crypto exchanges are the gates for new fiat money to enter the cryptocurrency market. These exchanges allow users to exchange fiat currencies like dollars for bitcoin, ether or any other supported cryptocurrency. Crypto-to-crypto exchanges, on the other hand, primarily allow users to exchange one cryptocurrency for another.

Fiat-to-crypto exchanges

A few top fiat-to-crypto exchanges include Coinbase, Coinbase Pro, Gemini, Bittrex, Kraken, Bitfinex and Bitstamp.

Fiat-to-crypto exchanges

Fiat-to-crypto exchanges typically perform at least some level of KYC because they deal with fiat money. This forces them to conduct business with banks and other traditional financial institutions, most of whom conduct KYC procedures before doing business with any entities.

Coinbase

Coinbase is a licenced crypto exchange based in the U.S. A full list of the licenses it holds is here. All that the exchange requires to open an account is a full name, an email address and a password. While this means that anyone from anywhere in the world can store, send and receive cryptocurrencies using a basic Coinbase account, ID verification is required to buy and sell cryptocurrency in the 33 countries it supports.

For its KYC, Coinbase chose Jumio’s digital identity solution Netverify in an attempt to be regulatory compliant while still delivering a smooth customer experience. In a bid to further mollify regulators, the company hired former New York Stock Exchange executive Peter Elkins to build the Coinbase Trade Surveillance Program, an initiative to monitor the markets with the aim to weed out bad actors.

Gemini

Also licensed by the U.S. government, Gemini, unlike Coinbase, conducts KYC before allowing anyone to use its platform. On its user agreement page, Gemini states at least 13 regulations — including FinCEN, AML and CTF regulations — to which the users of its platform must be compliant. The exchange was launched in 2014 by brothers Cameron and Tyler Winklevoss.
At the start of the second quarter of 2018, a few months before Coinbase’s trade surveillance reports surfaced, Gemini partnered with U.S.-based stock exchange Nasdaq, which is one of the two largest exchanges in the world, for the deployment of Nasdaq’s SMARTS Market Surveillance technology to track market manipulations and fraudulent trades. The surveillance moves from both Gemini and Coinbase put them in the third stage of the KYC process.

Bitstamp

Bitstamp requires ID and address verification before users can start trading on the platform. In the wake of surged interest in bitcoin, the exchange partnered with Onfido in February 2018, a digital identity verification provider, to handle its KYC to the end in order to make the customer onboarding process frictionless. Bitstamp was originally founded in Slovenia in 2011, but moved to the United Kingdom in 2013, and then to Luxembourg in 2016.

On Nov. 5, Bitstamp chose Cinnober’s crypto trading system for its exchange. Cinnober claims that its trading solution is built for regulatory compliance. The solution also employs Irisium’s market surveillance technology for risk management. Cinnober boasts a list of customers, including the NYSE, the London Stock Exchange, Euronext, and the Johannesburg Stock Exchange, to name a few.

Bitfinex

Developed by fintech company iFinex, Bitfinex allows crypto users to open an account and immediately deposit, trade and withdraw crypto without identity verification. However, verification of a phone number, a residential address, two forms of government-issued ID and a bank statement is required to deposit and trade fiat currencies.

Earlier in the year, Bitfinex employed Irisium’s market surveillance technology to detect fraudulent behavior on its exchange. Bitfinex is based in Hong Kong.

Bittrex

Bittrex requires ID verification before allowing users to deposit, trade or withdraw cryptocurrencies. However, other than having a user agreement page that says its operations comply with KYC, AML and CTF policies — as does every other exchange — it is unknown if the exchange employs a market surveillance technology or plans to do so.

Kraken

Kraken launched following two years of product development and beta testing, making it one of the oldest crypto exchanges. It has five tiers of verification (tier 0 to 4) requirements, depending on users’ intent to use their account. Kraken founder Jesse Powell decided to build the exchange after seeing the struggles of the then-largest — but now defunct — crypto exchange Mt. Gox.

Kraken

Unlike Gemini and Coinbase, Kraken doesn’t appear to have any publicized surveillance program. All that is known comes from a Kraken blog post that was issued in response to the New York attorney general’s questionnaire. The company said:

“We currently employ nearly 200 people (more than 25% of the company) in compliance-related functions. As of Q1 2018, we are processing more than 1 law enforcement request per day, seven days a week.”

At the end of the second quarter of this year, a Bloomberg report called out irregularities involving certain tether trades on the Kraken exchange. John Griffin, a professor of finance at the University of Texas, told Bloomberg that the irregularities noticed are “suggestive of wash trading.” This technique is sometimes employed by traders, who act as both seller and buyer in a given transaction, to give a false impression of supply and demand. This act in itself is illegal. Kraken discredited the content of the report in a blog post. “It’s not clear what harm could come from wash trading of a pegged asset against its peg,” Kraken wrote.

Crypto-to-crypto exchanges

Based on data from CoinMarketCap, top crypto-to-crypto exchanges include OKEx, Binance, Huobi, HitBTC, Bibox, ZB.com, Coinbene and LBank.

Crypto-to-crypto exchanges

Binance

Binance, being a pure cryptocurrency exchange, isn’t as exposed to regulations. Therefore, it allows withdrawals of up to 2 BTC per day without any form of ID verification. For withdrawals up to 100 BTC per day, it requires photo ID verification.

OKEx

OKEx, which partially allows fiat trades, has three levels of verification. Level 1 users have a transaction limit of $10,000 per order or $2,000 for fiat trades, and are required to provide a government-issued ID during verification. Its level 2 allows for trades over $10,000, and requires document verification. Level 3 is for trades above $200,000 and involves video verification.

HitBTC

HitBTC doesn’t perform any form of ID verification at account opening. Users can deposit and trade crypto without going through any KYC procedures. However, the exchange advises users to verify their identity by sending in the usual KYC documents, including bank documents, to its compliance department via email to “avoid eventual verification procedure in the future.” Users have taken to a number of social media channels to complain that HitBTC allegedly limited their accounts, with the exchange operator asking them to verify their identities.

Huobi

Huobi doesn’t appear to require any KYC documents before allowing users to trade, but it does have an ID verification section in the settings area of a user’s account. It appears to only enforce KYC when users reach a certain account usage limit. In addition, Huobi has different withdrawal limits for verified and unverified users.

Bibox

Bibox allows users to trade up to 2 BTC per day without any form of KYC verification. For trades up to 20 BTC per day, it requires a passport verification. On its website, Bibox advises users who want a higher limit to reach out to its support team via email. All that is required to deposit funds and start trading with Bibox are account security measures, including SMS and Google authentication.

Should crypto exchanges take KYC seriously?

Put simply, similar to fiat-to-crypto exchanges, the top crypto-to-crypto exchanges, as determined by their 30-day volume on CoinMarketCap, have some sort of KYC policy that they enforce at different stages. However, many of them haven’t been proactive about compliance.

“To gain respect and empathy from regulators, crypto exchanges need to be proactive about compliance,”  Tony Mackay, who recently launched the Kryptos-X exchange, said. He went on:

“At the minimum, you want to get the on-boarding stage right, even if the crypto market is currently under-regulated. You also want to ensure that your user registration system can detect and deter criminal activities, using the expertise of best-in-class KYC/AML providers.”

Also, unlike their fiat-to-crypto counterparts, crypto-to-crypto exchanges — except for Binance — haven’t been reported as monitoring or tracking transactions to detect market manipulation or fraudulent behaviors.

Should crypto exchanges take KYC seriously?

In October, Binance partnered with Chainalysis, a compliance and investigation company catering to the cryptocurrency space. As part of the partnership, Chainalysis did a global roll-out of its compliance solution, which has a Know Your Transaction (KYT) feature. KYT is a real-time transaction monitoring solution for cryptocurrencies. U.S. agencies — including the IRS and FBI — are using Chainalysis’ solution to track cryptocurrency transactions.

Is it worth playing by the rules?

A recent report from P.A.ID Strategies, a payments and identity security consulting firm, found that the majority of crypto exchanges “lack sufficient background checks.”

It also claims that exchanges, at best, take a reactive approach to being compliant. Only a few have set up a system for monitoring behaviors and appear prepared to deal with regulators despite the under-regulation of the industry.

A recent emerging trend in the crypto space has been that of exchanges closing their offices in highly regulated jurisdictions and setting up shop in jurisdictions — such as Malta — where the local laws are “crypto friendly.” Binance and OKEx are the most notable examples.

For some crypto firms compliance is a double-edged sword in that on one side, firms ensure that no illicit activity is conducted on their platforms, while potentially compromising on the notion of decentralization on the other side.

In June 2019, new Financial Action Task Force (FATF) guidelines will be imposed that govern AML and CFT activities. The announcement from February states:

“Countries should ensure that VASPs [virtual asset service providers] are subject to adequate regulation and supervision or monitoring for AML/CFT and are effectively implementing the relevant FATF Recommendations, to mitigate money laundering and terrorist financing risks emerging from virtual assets. VASPs should be subject to effective systems for monitoring and ensuring compliance with national AML/CFT requirements.”

There are many who disagree with the tightening of controls, saying that, first of all, it would be difficult to set up domestic regulatory bodies, and in the meantime, companies may suffer as they will become overburden by reporting.

It is also not always possible to know the identity of the beneficiary, whom the destination wallet belongs to and what type of a wallet it is, according to Chainalysis. The company states that it would be more beneficial to collect wallet addresses of bad actors instead of user’s personal information.

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Crypto Exchange HitBTC Appeals to Cryptography in Dispute With Altcoin BTCP

HitBTC continues its dispute with altcoin Bitcoin Private’s team after delisting the coin following a scheduled coinburn.

Cryptocurrency exchange HitBTC appealed to the specificity of its cryptography in an ongoing dispute with the team behind altcoin Bitcoin Private (BTCP). The post was published on HitBTC’s blog on Tuesday, March 26.

The dispute involves HitBTC’s delisting of the altcoin, whose team then accused the exchange of fraud.

HitBTC, currently ranked by CoinMarketCap as the world’s 15th largest exchange by adjusted daily trade volume, claims that the BTCP team had offered an “unsuitable” solution for moving its funds prior to a scheduled coinburn.

In the recent blog post — titled “Explanation of the situation with BTCP” — the exchange also states that the coin’s developers did not provide any code or documentation for specific transaction cryptography used in their blockchain. Moreover, HitBTC accuses BTCP of creating custodial risk and ecosystem instability.

Earlier this month — the day BTCP published its letter accusing the exchange of fraudulent activities — HitBTC revealed that BTCP had burnt a part of the funds still remaining in the exchange’s custody, on behalf of users. The exchange stated that it then compensated all resulting losses to its users.

In this week’s statement, the exchange claims that BTCP is still available for withdrawal from the platform and that its customers did not sustain any losses as a result of the coinburn.

The blog post does not, however, provide concrete responses to the previous allegations from the BTCP team, which accused HitBTC of an extortion attempt.

As Cointelegraph previously explained, BTCP was created in a fork from ZClassic (ZCL) and Bitcoin (BTC), with a notice of a future coinburn in its whitepaper. The event scheduled for mid-February 2019 was meant to delete all the coins that hadn’t been claimed or moved since the fork.

However, prior to the coinburn, HitBTC reportedly contacted BTCP requesting assistance to protect its users’ funds in a series of emails. The exchange further asked for 58,920 BTCP (about $17,600) to be given as compensation after the coinburn, due to expected losses.

BTCP reportedly insisted that addresses created after the fork would not be affected, therefore there would be no loss of funds. The altcoin’s team instead alleged that HitBTC secretly held 58,920 BTCP in a BTCP Segwit wallet and that the concerns over the coinburn were related to the exchange’s personal funds.

When the coinburn actually took place, according to the altcoin’s team, HitBTC threatened to pull BTCP support if the coin’s development team did not compensate the BTCP sum. In March, the coin was delisted from the exchange.

In early 2019, Proof of Keys’ organizer Trace Mayer had publicly suggested that HitBTC may be deliberately freezing withdrawals in the wake of the campaign. Mayer’s Proof of Keys event advocates a mass withdrawing of all funds from exchanges and other centralized third parties.

However, HitBTC dismissed the allegations, a company representative telling Cointelegraph: “These temporary, safety-related withdrawal freezings are a direct consequence of our international KYC and AML measures. These rules exist and apply to us and everybody, 24 hours a day, 365 days of the year.”

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Bitcoin Private Team Accuses Crypto Exchange HitBTC of Fraud After Delisting

Bitcoin Private (BTCP) developers have accused cryptocurrency exchange HitBTC of fraud in connection with the recent coinburn.

Bitcoin Private (BTCP) developers have accused cryptocurrency exchange HitBTC of acting in a fraudulent manner in regards to their delisting from the exchange following a planned coinburn.

The accusations are portrayed in a letter written on Feb. 26 to the exchange by the Petros Law Group on behalf of the BTCP community, developers and contributors, and published by the Bitcoin Private Twitter profile on March 9.

According to its authors, the letter — which was published the day BTCP was delisted from HitBTC — alleges that HitBTC attempted to extort BTCP following unresolved complications arising from the coinburn.

According to the document, at the beginning of March last year, BTCP was created in a fork from ZClassic (ZCL) and Bitcoin (BTC) with a notice of a future coinburn in its whitepaper: the scheduled event was meant to delete (or “burn”) all the coins which haven’t been claimed (or moved) since the fork. On March 3, 2018, the day after the launch, HitBTC reportedly charged the BTCP team a listing fee of half a million dollars in Bitcoin.

The document includes screenshots of apparently since-deleted tweets in mid-February from HitBTC, which explained to users that since the exchange’s BTCP addresses were created after the fork took place, users won’t be affected by the coinburn.

On Feb. 15, one day before the coinburn was planned to happen, HitBTC reportedly contacted BTCP requesting assistance to protect its users’ funds in a series of emails, which then escalated into a request for compensation of 58,920 BTCP to be given after the coinburn due to expected losses.

However, as the document underlines that BTCP addresses created after the fork will not be affected, the exchange cannot have been concerned about users’ loss of funds, as that situation did not exist. Instead, the document alleges that HitBTC secretly held 58,920 BTCP in a BTCP Segwit wallet, and the concerns over the coinburn were related to the exchange’s personal funds.

The document further claims that BTCP developers informed the exchange that they didn’t intend to accommodate the compensation demand, but did provide technical assistance — shown with email screenshots — meant to help protect the funds from the coinburn.

On Feb. 17, the coinburn reportedly happened, one day after it was forecasted, and on Feb. 21, HitBTC allegedly threatened to pull BTCP support if the coin’s development team did not compensate 58,920 BTCP.

HitBTC has released a statement on its official blog on March 9 stating that the BTCP team was unable to provide a safe way to move the funds before the burn, but that the exchange has compensated all the custody losses. HitBTC has not responded to Cointelegraph’s request for comment by press time.

As Cointelegraph reported in December last year, during the import of Bitcoin chain data, an additional 2.04 million units of altcoin Bitcoin Private were reportedly secretly coined.

The discovery was later confirmed by the coin’s developers, who stated that the findings were mathematically accurate but “at this time, the source, purpose, and recipient of this exploit is currently unknown.”

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Team McAfee launches McAfee Market Cap and McAfee Crypto Team Websites

John McAfee has been dubbed the crypto-crusader who will fight for the rights of every single crypto-trader to his last breath. He has thrown jabs at the SEC for their role in trying to stop the expansion of cryptocurrencies and even filed a lawsuit against the HitBTC. With regards to HitBTC, McAfee is gathering information from those affected by the HitBTC services after the exchange ‘made it difficult’ for owners of Docademic (MTC) to withdraw their funds on the exchange.

It is with this background that Team McAfee has launched McAfeeMarketCap.com and McAfeeCryptoTeam.com.

McAfeeMarketCap.com

The McAfeeMarketCap.com website presents data aligned with the values and 24 hour trends of all the major coins and tokens in the crypto-markets. The current list on McAfeeMarketCap.com gets to 948 cryptocurrencies and also provides real time data on the total market cap of the crypto-markets, 24 hour volume and the Bitcoin Dominance.

Screenshot McAfeeMarketCap.com. Source, mcafeemarketcap.com

According to the website, McAfeeMarketCap.com was founded due to the following reason:

The McAfee Market Cap was founded at the start of 2018 when a few Team McAfee members had a vision: to create the ultimate one-stop shop knowledge and information database regarding all things blockchain  and cryptocurrency. Today, there are several websites that offer great information and price tracking. The McAfee Market Cap aims to improve on these concepts and bring something unique and valuable to the table.

The site goes on to state that there are plans for additional functions on the website:

Summer 2018 will be a big one for the McAfee Market Cap and the cryptoverse.  We will be implementing additional coins, indexes, and an online social network for traders, investors, and blockchain enthusiasts.

McAfeeCryptoTeam.com

Team McAfee has also launched The McAfee Crypto Team website that offers support for ICOs at all stages of development. Their experts work with ICOs in the following ways:

  • Strategic analysis – at all stages of the ICO process
  • Whitepaper support – polishing whitepapers to better communicate the project’s vision
  • Web Optimization – website usability and aesthetics
  • Crypto-connection audit – audits all partners on key elements such as trust, viability and experience
  • Network Resources – access to team McAfee’s industry connections
  • Audience Reach – social media and other multimedia services

These two websites and services by the McAfee team are a welcome addition to the crypto-community resources. Three cheers to the team!

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Crypto Pundit John McAfee Filling Legal Charges Against HitBTC

Cryptocurrency big daddy, John McAfee has declared his readiness to file legal charges against HITBTC, after the exchange allegedly refused to yield to his complains.

On different occasions, McAfee has been the voice of the cryptocurrency community, condemning “inhumane” actions of some governments who put a ban on cryptocurrency and the Security and Exchange Commission (SEC) that earlier categorized some coins as security while playing double standard with many others.

“HITBTC has not responded to our requests. We are preparing a legal complaint against HITBTCs service provider and against HITBTC. If you have an issue with HITBTC, then please send details to: [email protected]

While the time that McAfee plans to fire his charges cannot be ascertained, the crypto enthusiast is gathering information from those affected by HitBTC services, which he said it is anti-people after it closed access to free health care available through Docademic.

The respected programmer whose Antivirus software known as McAfee was revered in the technology world earlier dished series of condemnations against HitBTC, but remained unsatisfied because the exchange has not replied him

The reason, as first stated by McAfee was that crypto exchanges are connected to banks and governments. He added that to take down the whole system (despotic government policies), exchanges must first be taken down. He said he singled out HitBTC because they are the worst.

In the same line, McAfee said he had sent eleven letters to HitBTC, however, he has not been replied.

“I have sent eleven empassioned letters to @hitbtc and received only one response. Is it our fault? CEO of Docademic, Mr. Charles Nader warned the CEO of Hitbtc three months prior to these unnecessary deaths. You tell me sir, who is responsible?”

Responding to McAfee, HitBTC sent a get well message to the crypto lord, then the exchange published a reply it sent to John McAfee, thanking him for been the voice of the cryptocurrency community.

Recently, McAfee released his “unhackable wallet”, Bitfi. The earlier batch of the wallet, according to him, sold out in less than a minute.

In the same line, the crypto lord had promised to unveil McAfee coin late last month. Observers have, however, opined that he is looking for a method to dodge the SEC unbendable policy before releasing the coin.

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John McAfee Continues To Throw Jabs At HitBTC

John McAfee has asked his twitter followers, and the crypto-verse at large, to boycott the exchange known as HitBTC. According to McAfee, the exchange has embodied the corrupt powers that decentralization had set out to eliminate.

He would state the following via twitter:

The crypto exchanges have become the thing that we have originally fought against. Their power is immense. Hitbtc, for example, has increased suffering for millions of poor people who cannot afford the minimum buy-in since it is greater than their monthly income. Boycott them.

In reply to his tweet, many of his followers expressed their frustrations with the exchange as can be seen below:

One of McAfee’s twitter followers would recommend that decentralized exchanges were the only way to get rid of the power hungry centralized exchanges such as HitBTC. Others elaborated their experiences of how the exchange ‘held’ hostage their coins for weeks without an explanation. This was after one of McAfee’s associates offered to offer his help in solving all issues related to the exchange. Evidence of this can be seen in the tweet below:

McAfee has vowed to continue fighting the exchange until it realigns its priorities to mirror those of the crypto community and those who cannot afford the high fees on the exchange. John would issue this warning via twitter when he said:

HitBTC I will be your worst enemy until you prove that you are aligned with our community and are truly interested in helping the poor. You have not done shit to help access the only free healthcare in the world.

One of McAfee’s chief goals is to take down the entire system of power hungry governments, banks and exchanges. This is why he has expressed his intentions to run for President in 2020. Although he admits his chances of winning the elections are slim, he is confident that it will provide him a global platform to air his views to a listening audience. He plans on showcasing the almost-free healthcare solution of Docademic, as a solution to the healthcare debacle in the United States.

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John McAfee Goes After Exchanges, Says HitBTC Suffers Millions Of Poor People

Crypto pundit, John McAfee, is speaking tough on HitBTC and other exchanges for not standing in defense of the poor whose funds are being carted away by hackers.

Mr. McAfee, a respected programmer known for condemning fiat currency while maintaining that crypto (BTC, LTC, XRP, XMR, TRX) is the next big thing, is calling for total boycott of HitBTC and other exchanges which crypto lovers say are behind market manipulations and having exorbitant buy-in that is greater than the poor’s monthly income.

McAfee tweeted: “The crypto exchanges have become the thing that we have originally fought against. Their power is immense. HitBTC, for example, has increased suffering for millions of poor people who cannot afford the minimum buy-in since it is greater than their monthly income. Boycott them.”

He later maintained that he’s going to be HitBTC’s worst enemy until they go in line with the cryptocurrency community while helping the poor at the same time.

“I will be your worst enemy until you prove that you are aligned with our community and are truly interested in helping the poor. You have not done shit to help access the only free healthcare in the world.”

While the cryptocurrency community is wondering what might have gone wrong between McAfee and HitBTC, it is no news that so many exchanges are being manipulated to fence out the poor who believe there is future in HODLing crypto.

Recently, John McAfee launched his coin, McAfee coin, saying in a tweet on the 29th of May, that the crypto will come live in 26 days time.

“No hoax. The “McAfee Redemption Unit” is real and coming in 26 days. The graphic is low res – don’t want to give much away yet. Printed on currency paper, holographs on both sides, serialized, linked to the blockchain, redeemable, convertible, collectible”

Though, there is no sign McAfee coin would be unveiled soon, owing to his silence on the coin, but there is a new development. The crypto dad has unveiled his McAfee wallet on the 22nd June, and when it was made public for sale on 28th, the first batch of the wallet was sold out within 2 minutes.

“Today I am announcing my ultra secure wallet, built by Bitfi. It will forever change the landscape of crypto storage. Would have told you earlier, but, if you read my prior tweets, I was unconscious. Anyway, you must check it out”.

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HitBTC: Japan Users Banned ‘Temporarily’ As Solution Planned For Q3 2018

Cryptocurrency exchange HitBTC said it wants to relaunch trading for Japanese residents via a “regulated subsidiary,” Cointelegraph Japan reported June 4.

In a blog post, the world’s eighth-largest exchange by volume – according to Coinmarketcap data – outlined its plan of action after users received letters warning them that the exchange would freeze Japan-linked accounts over “compliance” issues.

“The company has been in consultation with the regulator and decided to suspend its operations for Japanese residents to comply with current regulation,” the post reads.

“The measure has been taken in response to recent regulatory changes by the Japanese Financial Services Agency (FSA), and will apply only to those living in the country.”

While not stating which exact “changes” had led to the move, the exchange appears to have planned a shake-up of its Japanese availability for some time.

“Previously this year, HitBTC team started working with a worldwide-recognized Japanese law firm, the cooperation aimed to get HitBTC through the local subsidiary setup and licensing procedure to resume its services for Japan residents,” the post continues, adding it was also in touch with unnamed “authorities and regulatory bodies from different regions worldwide” over the issue.

Japan has sought to formalize its cryptocurrency exchange market in recent months following the $530 mln hack of Coincheck in January.

Following various closures, remedial measures and a buyout of stricken Coincheck, other operators continue to eye the country as a potential success story.

Japanese financial services giant SBI Group launched its first exchange this week, while the list of competitors includes Yahoo! and the largest US exchange Coinbase.

HitBTC meanwhile plans to launch its subsidiary operations in Q3 this year.

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Bytecoin (BCN) Team Reschedules Hard Fork, Clarifies BCN is Not A Pump and Dump

Unbeknownst to many Crypto traders, the team at Bytecoin (BCN) had an AMA (Ask Me Anything) on Reddit that concluded on the 16th of May. This is the project’s third such event and was geared towards answering some lingering questions about the project’s road-map, its progress and to address the rumors that their was a pump and dump orchestrated when the coin was listed on Binance on the 8th of May.

With respect to the Binance listing, the coin managed to surge by 30% in less than one hour from $0.007 to $0.009. What initially happened is that the coin peaked to levels of $0.018 exactly after listing on Binance. Moments later, Binance users were experiencing delays with deposits and withdrawals, indicating a clogging of the BCN network. The issue was resolved but also occurred in two other exchanges: Poloniex and HitBTC.

The events described above, prompted many in the crypto community, to assume that the Coin is a pump and dump scheme. Many traders were quick to judge that the BCN team had intentionally orchestrated the delay so they can cash out efficiently, and with huge profits. However, the BCN team has refuted these claims and explained themselves on reddit.

The BCN team clearly stated that they only have control of the BCN software that governs the coin and were not aware what time Binance was going to make the announcement of the listing. The team reiterated that they have nothing but good intentions for the project and community. They said that the crypto market is what dictates the prices of the coins and tokens in general.

With respect to the scheduled Hard-fork of the coin to simplify the software, the BCN team has decided to reschedule the event due to the issues during the Binance listing. The main purpose of the hardfork as earlier stated, is to simplify the code, improve P2P protocol, and introduce dynamic fees.

More on the AMA (Ask Me Anything) discussion can be found on reddit.

Other questions that were answered were with regards to updating the roadmap and BCN debit cards. The BCN team pledged on updating on any developments on both issues with time. They also mentioned announcements of partnerships and more exchange listings of the coin to come as we progress down the year.

BCN is currently trading at $0.008644 and down 7.22% at the moment of writing this. This is because the entire market is also in the red, with the total crypto market capitalization dropping $3 – $5 Billion from levels witnessed only yesterday.

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Crypto Exchanges Pause Services Over Contract Bugs

As many as a dozen or more ethereum-based ERC-20 smart contracts have been found to contain bugs that let attackers create as many tokens as they want.

While the bugs – first identified on April 22 and April 24, respectively, in a pair of posts published by a group called Coinmonks – aren’t tied to the ERC-20 standard itself, the issues prompted a number of exchanges to suspend ERC-20 tokens as they investigate. Those exchanges included OKEx, PoloniexChangelly, Quoine and HitBTC.

Huobi.Pro separately announced on April 25 that it had suspended all coins, but has since limited that to ERC-20-based tokens. As of press time, Poloniex has moved to reinstate services for ERC-20 tokens.

In one example, an attacker transferred 57,896,044,618,658,100,000,000,000,000,000,000,000,000,000,000,000,000,000,000.792003956564819968 BeautyChain Tokens – as shown by transaction data on Etherscan – on April 22, a development that prompted the initial investigation into the issue.

“Our study shows that such transfer comes from an “in-the-wild” attack that exploits a previously unknown vulnerability in the contract. For elaboration, we call this particular vulnerability batchOverflow,” Coinmonks’ post on the 22nd explained. “We point out that batchOverflow is essentially a classic integer overflow issue.”

Countless coins

The batchOverflow post outlines how the batchTransfer function in a contract has a maximum number of tokens that can be sent in a transaction, adding that the value of the tokens being transferred must be less than the total number of tokens that were generated. However, the “_value” parameter – one of the two that determine the total number of tokens – can be manipulated, which would then change another variable, resulting in an attacker being able to create as many tokens as they’d like.

Further, the attacker can bypass the barriers in the contract which would normally ensure that a reasonable number of tokens are being transferred.

“With amount zeroed, an attacker can then pass the sanity checks in lines 258-259 and make the subtraction in line 261 irrelevant,” the post explained, noting:

“Finally, here comes the interesting part: as shown in lines 262-265, the balance of the two receivers would be added by the extremely large _value without costing a dime in the the attacker’s pocket!”

While initial reports indicated all ERC-20 tokens may be impacted, the “batchTransfer” function is not part of the token standard.

The Medium post did not list the vulnerable projects, though it did note that the BeautyChain was the first project they discovered. In a sign of the seriousness of that bug, OKEx said on April 24 that it was rolling back trades on the BeautyChain Token.

The exchange also announced around that time that in light of the bugs, it was suspending desposits and withdrawals a project called SmartMesh trading due to “abnormal trading activities.” Coinmonks and author Ranimes noted that this was possibly due to the proxyOverflow bug, which, like batchOverflow, is a classic integer overflow problem. Certain variables can be manipulated to spontaneously generate large amounts of tokens.

One Twitter user noted that an attacker created $5 octodecillion in SmartMesh tokens.

As one of the posts noted, the danger exists that someone can use a vulnerable cryptocurrency to manipulate prices in their favor by trading with bitcoin, ether or another trading pair.

Representatives for the BeautyChain and SmartMesh projects did not immediately respond to requests for comment. However, a statement on BeautyChain’s website acknowledges the bug and states that trading will resume at an undetermined point in the future.

Similarly, SmartMesh announced that it would take steps to prevent price manipulation, saying:

“The SmartMesh Foundation will take the equivalent amount of SMT to the counterfeit amount and destroy it to make up for the losses caused, and keep the total supply of SMT at the value of 3,141,592,653.”

Image via Shutterstock

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