Utkarsh Gupta

IOTA’s David Sønstebø to Compensate for 2.4 million Losses as Relaunch Approaches on March 10th

March 8, 2020 by Utkarsh Gupta

The 2^nd half of February was terrible for the collective digital asset industry as the bears started to take over but matters were far worse for the IOTA foundation, as a wallet hack led to the organization shutting down its entire network.

Now, according to recent reports, it has been revealed that David Sønstebø, co-founder of the IOTA Foundation, has taken matters into his own hands as he has announced that he will directly compensate hack victims from his own digital asset holdings.

Sønstebø released the announcement on Discord and stated that in light of slow progress over the investigation, he had decided to utilize a significant portion of his own funds to compensate the victims personally. Sønstebø stated,

“To bring assurance to everyone, I will commit to the fact that all victims identified here shall be made whole again. […] In practice this means that a significant portion of my own holdings will go towards resolving this unfortunate incident. I have made the decision to safeguard the IOTA Foundation’s runway. We are closer than ever to cross the finish line in terms of delivering on the tech and paving the road towards adoption and standardization ever.”

Additionally, the IOTA founder clarified his stance that he and the IOTA Foundation themselves, were fundamentally unaccountable but they ‘ultimately feel responsible’ because they were unable to avoid the situation and prevent the major losses.

Furthermore, Sønstebø said that the authorities were still working on the situation in order to bring down the hackers and exhibit a sense of justice to the uneventful past proceedings.

Reports indicated that over 2.37 million US dollars were stolen during the attack; hence the community applauded the founder’s commendable gesture to remunerate the lost funds.

Trinity Wallet Hack and Current Update

On February 12^th, 2020, IOTA foundation reported that a suspicious situation had risen with Trinity and users were informed not to access their wallets until further notice.

The situation got worse thereon as 30 minutes later, the foundation shut off the Coordinator node and since then, zero IOTA transactions have taken place on the network.

According to members from the IOTA team, the hackers targeted 10 high-profile IOTA accounts via “a third-part integration” of Trinity wallet. The exploitation of the wallet eventually allowed the attackers to steal the IOTA funds.

On 1^st March, the foundation released a seed migration tool in response to the vulnerability detected in the Trinity wallet, through which users would be able to move their IOTA assets to safety.

The migration process has gone smoothly over the past week and according to a recent interview, the Co-Founder of IOTA suggested that the foundation is on track to re-launch the network of 10^th March.

In spite of the longest outage suffered on a blockchain network, IOTA’s valuation and market sentiments remained fairly stable over the past 4 weeks. At press time, IOTA was valued at $0.21 with a market cap of just under $600million.

Bitcoin’ Improving On-Chain Metrics is Crucial for a Possible Bullish Rally in March

March 8, 2020 by Utkarsh Gupta

Bitcoin’s price faced a disappointing turnaround during the last 2 weeks of February after the king coin’s bullish run-up to that point was abruptly halted with a significant price depreciation.

After crossing the $10,000 mark on 11^th February, Bitcoin’s price breached key supports level at $9800 and $9300 consecutively on 19^th and 25^th February.

Bitcoin’s On-Chain fundamentals

Since the start of March, Bitcoin has managed to incur a rise of over 8 percent, allowing the asset to breach past the $9000 range. According to recent data, Bitcoin’s improving fundamentals may have played a key role during this period.

Bitcoin Active Addresses

Statistics from glassnode indicated that the number of active addresses on the Bitcoin network has spiked again since registering a recent low of around 600,000 addresses. On 6^th March, the active addresses were as high as 806,000, which underlined the increasing activity from the users.

Bitcoin’s Network Hash Rate

Chart 2 1 — Image Source: Blockchain.com

Another important metric scaling up the charts is Bitcoin’s network hash rate. Bitcoin’s price does not have a direct correlation with the hash rate but it is an important metric that measure the network health. The hash rate had depreciated under 100 million TH/s on the 4^th week of February but over the past few days, the rate has climbed back above 125 million TH/s, indicating developers are actively present in the Bitcoin network.

Lastly, the number of new non-zero addresses entering the frame registered a significant improvement as well, as the addresses jumped from 330,000 on 23^rd February to above 430,000 on 6^th March.

However, Bitcoin’s price suffered another dip over the past 24-hours which accounted for another slump under $8800. With the price hike over the past week, the current depreciation could be a timely correction before another bullish rally.

Bitcoin will go to $135,000 over the next 9-12 months

Bitcoin’s price recently corrected itself under $8400 but popular Bitcoin analyst, Willy Woo remained unfazed as he believes that Bitcoin could be on its 4-year bullish cycle at the moment. According to Woo, Bitcoin’s price as an aggregated average is one of the most reliable metrics to foresee Bitcoin’s movement in the charts. He stated,

“You could go 35 times the cumulative average of the price, and that’s actually picked every single top in the ten-year history of Bitcoin.”

Factoring in the above condition, Woo stated in a recent interview with Max Keiser, it is ‘common sense’ for Bitcoin to cross $135,000 by the end of 2020 or start of 2021 due to the arrival of Bitcoin’s bullish cycle which surfaces during the 4^th year after the previous bullish rally.

However, the Adaptive Capital partner believed Bitcoin’s price still lacked substantial value in terms of market cap to be considered as a medium of exchange. He said,

“Bitcoin’s current valuation is one-sixth of a trillion. Fiat is $90 trillion. So, In order for Bitcoin to be considered as a medium of exchange, the market cap needs to improve significantly.”

Over $100 Million Stolen in Cryptocurrency as U.S Sanctions Charges Against Two Chinese Individuals

March 3, 2020 by Utkarsh Gupta

Illicit activities surrounding the digital assets medium found its way back in the headlines as a couple of Chinese individuals were sanctioned by the United States for money laundering accusations tied to a multi-million cryptocurrency fraud.

An official report from the U.S Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently stated that Tian Yinyin and Li Jiadong played an influential part in moving more than $100 million in stolen crypto assets in a ‘cyber-intrusion’ against a digital asset exchange back in 2018. The hack was linked back to Lazarus Group, a government-backed North Korean cyber association that has played a major role at previous malicious attacks against the U.S and other national banks.

Over $250 million stolen in the 2018 Cyber-Hack

The aforementioned hack took place back in April 2018 and the estimated amount of cryptocurrency stolen was reported $250 million. The stolen funds accounted for nearly half of the Democratic People’s Republic of Korea (DPRK)’s virtual assets heist that particular year. The report stated,

“Tian and Li received from DPRK-controlled accounts approximately $91 million stolen in an April 2018 hack of a cryptocurrency exchange (referred to hereinafter as “the exchange”), as well as an additional $9.5 million from a hack of another exchange. Tian and Li transferred the currency among addresses they held, obfuscating the origin of the funds.”

Additionally, the report added,

“Tian ultimately moved the equivalent of more than $34 million of these illicit funds through a newly added bank account linked to his exchange account. Tian also transferred nearly $1.4 million dollars’ worth of Bitcoin into prepaid Apple iTunes gift cards, which at certain exchanges can be used for the purchase of additional Bitcoin.”

The Justice Department also revealed that the accused cyber-criminals were using doctored photographs and forged identifications in order to avoid security hassle and the stolen funds were utilized to carry out the expenses in other illegal hacking activities.

However, the hacked exchange in the discussion has not yet been confirmed as a result of multiple attacks by the North Korean Community in 2018.

Earlier that year, Coinrail, a crypto exchange based in South Korea was also reported to be a victim of a $40 million hack carried out by the Lazarus Group back in 2018.

After the announcement, Timothy Shea, the US attorney in Washington claimed,

“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system.”

Hackers have improved over time; Chainalysis

A recent report by Chainalysis indicated that, in order to improve the security of exchanges, hackers have simultaneously improved their game as well. In 2019, more than 11 assaults on exchanges took place, and perpetrators were able to steal more than $250 million. Although the amount is substantial, it drastically dropped from 2018’s enormous theft of $875.5 million, stolen collectively from six crypto exchanges.

The report also pointed fingers at the aforementioned Lazarus Group and believed that was responsible for the 2014 Sony Hack and 2017’s WannaCry ransomware attacks.

With digital assets and their exchanges slowly gaining these infiltrator’s attention, it was imperative to raise security standards and take precautionary measures to make sure such criminals are not using or taking advantage of large exchanges or institutions.

Dubai’s DIFC, Mashreq Bank launches KYC Blockchain Platform as Blockchain Continues to Develop in the Middle East

March 2, 2020 by Utkarsh Gupta

Over the last decade, Blockchain technology has become a major part of the Fintech industry, and the modern banking system is now on the verge of incorporating its innovations into its accounting systems.

Approximately 40 central banks in the financial ecosystem have already taken steps to establish a blockchain platform for their operations, some of them considering issuing digital currencies to the central bank.

Now, according to a recent press release, Dubai International Financial Centre [DIFC] and Mashreq Bank announced the middle east region’s first blockchain sharing platform, that would support licensed enterprises and allow an easy initiation of digital bank accounts. Organizations would be able to open their accounts instantly with the bank with promoting enhance transparency.

DIFC and Mashreq Banks to enable KYC protocols

One of the major focuses of DIFC and Mashreq Bank is to integrate corporate KYC information while holding high standards of customer experience when users are opening their digital accounts.

The introduction of KYC operations suggested that the central institutions were looking forward to storing user data on a decentralized network; thus, third parties may have access to it after the requested permission has been given.

A blockchain-based KYC is also an ideal step forward from the perspective of data security as it abolishes the threat of unauthorized access that often leads to data streaming. Blockchain-based KYC platforms would also enable active surveillance to keep track of day-to-day transaction activity and spot malicious transactions.

At press time, the blockchain platform was live and, according to the report all UAE-based banks and corporations had access to the platform.

After the announcement, Arif Amiri, CEO of DIFC Bank stated,

“As the leading financial center in the MEASA region, we take great pride in continuously enhancing and evolving the DIFC ecosystem in order to provide a world-class environment for our partners and community to conduct business. As we enter a new period of growth and expansion, our core focus on FinTech and blockchain are major steps on our journey towards transforming the future of finance.”

Major Banks entering the Blockchain space

Central banks are no longer in a position to prevent the emergence of the blockchain and the resulting rise of digital assets. Although not all banks were considering the integration of blockchain in order to compete with decentralized assets, some major banks were experimenting with the technology of issuing CBDC.

Central institutions around the world have been researching and setting up a task force to understand the functionality of the digital dollar and the use of blockchain technology. The financial ecosystem is moving into a digitized space at a fast rate and Libra’s proposed announcement for a stablecoin backed with the U.S dollar turned several heads in the space.

The discussions over a CBDC picked up pace after China’s People Bank of China voiced its support for blockchain in 2019. As a result, other banks followed suit as well, as recently Bank of England, Bank of Japan, European Central Bank, Bank of Canada and Sweden’s Central Bank banded together to initiate their own research about central bank digital currencies.

The financial and technological space has risen to the benefits of blockchain in the past decade, and over the next 10 years, the development with regards to this technology will probably facilitate involvement in various industries around the globe.

Bitcoin Accumulated Negative Returns in February as Sentiment Remains Bearish

March 1, 2020 by Utkarsh Gupta

After a promising start to 2020, the collective digital asset industry has been facing massive bearish pressure since 14th February. The correction period continued to take its toll on the market and over the past week, drastic changes have surfaced.

According to CoinMarketCap, Major assets like Bitcoin, Ethereum and XRP are currently exhibiting negative returns of 12.91, 18.20 and 17.05 percent over the past seven days. Other assets haven’t been able to escape the bearish stronghold as well, and data suggested that the gains acquired during the course of February by most crypto assets were completely drained out at press time.

Bitcoin’s February and sentiment reversal

Bitcoin’s valuation faced a favorable spike of 31.41 percent in January as the price stretched from $7237.35 to $9510.84. The trend continued in February as well, as BTC breached past $10,000, and reached a monthly high of $10,495 on 12th February.

The trend drastically shifted thereon, and the price took a massive tumble. Over the past two weeks, BTC has registered a depreciation of 19.06 percent as its valuation dropped from $10,500 to under $8600 at press time.

Overall Bitcoin witnessed a negative return of 8.14 percent in February. Such bearish pressure triggered the reversal of various bullish metrics over last week.

Bitcoin’s Fear and Greed index were largely bullish during the start of February but over the past week, the index pictured a ‘Fear’ sentiment. The ratings recorded by the metric is 39 at press time. In January, the metric indicated an average index of 59, exhibiting a ‘Greed’ sentiment.

Although a ‘fear’ sentiment for Bitcoin may facilitate a buying opportunity for the traders, the continuation of a downwards spiral is not out of the equation.

Bitcoin’s Institutional Demand on a Decline

Bitcoin’s depreciating price affected institutional interest over the course of February as well, with CME losing more than 40 percent in terms of open interest.

The Aggregated Open Interest for CME Bitcoin futures registered a yearly high of $338 million on 14th February but over the past 10 days, it slumped down to $206 million as observed on 29th February. It is important to note that Open Interest is still above the average exhibited between October and December of last year, but such a significant slump raises serious concerns.

Bitcoin’s Volatility opens the possibility for a trend reversal

Bitcoin Volatility has registered a tremendous hike over the past week after picturing a drop for most parts of the bullish rally in January. Since the 14th, the volatility levels have steadily increased from 2.24 percent to a monthly high of 2.98 percent on 27th February. At press time, the levels had dropped down to 2.78 percent but it is still considerably high.

Volatility is not a direct indicator of a bullish or bearish trend but a spike suggested that Bitcoin’s price is primed for more turbulence in the coming weeks. Many speculated that a correction period following the rally in January is a healthy sign but with the current market sentiment in play, the exhaustion of bullish momentum is a likely possibility.

Judge in Australia’s NSW Court Claims Crypto is a ‘Recognised Form of Investment’

March 1, 2020 by Utkarsh Gupta

As the Western Front continued its uncertain stance on cryptocurrencies, Australian government officials remained a step forward to better understand the functionality and utility of digital assets.

According to a recent report, Judge Judith Gibson of New South Wales district court in Australia permitted the utilization of a cryptocurrency exchange account as a security against the legal expenditure.

During an on-going defamation case, the defendant placed a request in front of the district court, stating that the accused party should place a sum of $20,000 AUD in a court-controlled bank account. Should the plaintiff lose the case or facilitate a withdrawal, the funds will be used to cover some of the legal costs of the defendant.

Funds to be stored in the Crypto Account

The court in Australia accepted the proposal but allowed the plaintiff to store the capital in a cryptocurrency exchange account that would be used as collateral in the event of the plaintiff losing the lawsuit.

Legal Representatives from the defendant’s side raised concerns regarding this situation as even though the account was by Australian dollars, the money was represented by a highly volatile form of asset. In response to this statement, Judge Gibson accepted that fact that digital assets were unstable but she added,

“However, this is a recognized form of investment.”

In order to address the volatile issue of cryptocurrencies, the plaintiff agreed to send monthly statements to the defendant’s counsel attached to the cryptocurrency exchange account. In addition, the court also stated that the plaintiff had to notify the defendant if the crypto’s account valuation drops below the agreed sum of $20,000 AUD.

The NSW district court Judge in Australia said,

“I can see the desirability of the defendant receiving prompt notification of any drop in the value of the account. These are uncertain financial times.”

While the use of cryptocurrency as collateral for a lawsuit is far from ideal, the approval of such a proposal only illustrated Australia’s increasing positive attitude to digital assets. The above-mentioned case will improve the credential of the digital asset while fostering mass adoption across the country.

312 Crypto Exchanges in Australia

From a point of adoption, regulatory institutions in Australia with regards to digital assets have been fast and responsive over the past couple of years. According to the Australian Transaction Reports and Analysis Centre (AUSTRAC), the regulators have already registered 312 digital exchanges at press time.

A total of 246 crypto exchanges were registered with AUSTRAC in February 2019, suggesting that 66 more exchanges had been added to the picture in the last 12 months.

Bitcoin; Not the only popular crypto in Australia

Although Bitcoin’s popularity in Australia and around the globe is unparalleled, XRP proponents in the nation were thrilled to realize that market volumes for the third-largest token outperformed Bitcoin’s trading volume by 4 times on BTCmarkets, a crypto exchange in Australia.

One of the major reasons behind such a huge pump could be the fact that BTC markets have successfully entered a collaboration with Ripple for the utilization of RippleNet’s ODL services.

Ripple has been fervently active in the continent as well and FlashFX, a licensed entity in Australia, currently uses RippleNet to facilitate cross-border transactions via AUD-PHP and AUD-USD corridors.

However, FlashFX’s Chief Enabling Officer, Nicolas Steiger believed that that possibility of an instant ODL adoption by Australian banks at the moment was less but it was due to lack of understanding rather a regulatory issue.

Utkarsh Gupta