Mt. Gox Crypto Exchange Begins Civil Rehabilitation Proceedings, Ends Bitcoin Sell-Offs

Mt. Gox will not sell any more Bitcoin to repay creditors after swapping bankruptcy proceedings for civil rehabilitation.

Defunct Bitcoin exchange Mt. Gox has formally entered civil rehabilitation proceedings, officials announced June 22.

A statement and accompanying documentation confirm the move, which will see attorney Nobuaki Kobayashi act as civil rehabilitation trustee.

Kobayashi was responsible for selling vast tranches of Bitcoin reserves beginning Q4 last year to reimburse Mt. Gox users who lost money in the exchange’s mass hack in late 2013. The sell-offs appeared to have a conspicuous effect on markets, Bitcoin prices tumbling immediately following each transaction, which Kobayashi performed on major exchanges.

“The power and authority to administer and dispose of MTGOX’s assets is still vested exclusively in me, and I will implement the civil rehabilitation proceedings, including the administration of MTGOX’s assets and the investigation of claims, subject to the Tokyo District Court’s supervision,” Kobayashi wrote in the new documentation.

However, due to the bankruptcy proceedings now being halted as part of the civil rehabilitation, Kobayashi will not sell any further bitcoins, with users set to receive compensation in BTC instead of fiat currency as originally intended.

“…In the civil 2 rehabilitation proceedings in this matter, claims seeking a refund of Bitcoins (“Bitcoin Claims”) will also not be converted into monetary claims after the commencement of the civil rehabilitation proceedings,” Kobayashi continues.

Reacting to the news, a group of claimants who had established Mt. Gox Creditors lobby group out of dissatisfaction with progress considered it a mixed blessing.

“…Enormous assets, which were to be distributed to Mt. Gox’s shareholders under the bankruptcy proceedings, will be returned to creditors of Mt.Gox in civil rehabilitation proceedings. This is the creditors’ victory,” a statement from the group reads.

“…However, this victory has not been realized yet. The victory will come to creditors when Mt. Gox makes payment to creditors and creditors actually receive such payment.”

Mt. Gox became infamous in the crypto industry after suffering a hack, followed by a collapse in 2014, resulting in the loss of $473 million worth of customers’ money – the single largest loss of funds in the history of crypto until this year’s $534 million Coincheck hack.

Chinese Police Arrest Bitcoin Miner Who ‘Stole’ 150 MW of Electricity

A Bitcoin miner who failed to pay electricity costs has been arrested by police in China’s Anhui Province.

A Chinese man has found himself in police custody after attempting to steal electricity to fund his unprofitable Bitcoin mining operation, local media outlet Xinhua reports June 22.

The suspect, known only by his surname Ma, allegedly mined Bitcoin and Ethereum on two hundred computers in the country’s Anhui province, all of which have been confiscated by the police upon the miner’s arrest. In total, Ma had stolen 150 megawatt (MW) of electricity, according to Xinhua.

According to the sources, Ma had no idea about the power costs for running the considerable mining operation when he purchased the hardware in April, which subsequently turned out to be over 6000 yuan ($930) per day.

Police were alerted to Ma when the local grid “reported abnormal electricity usage.”

“…Police found that the electricity meter for the suspected cryptocurrency mining operation had been short-circuited, which was likely an attempt to dodge the power bill,” Xinhua adds.

China has sought to crack down on its mining industry in recent months, which had previously involved a proliferation of operators in areas which had over-supply of power.

Various cases involving the practice have surfaced in the media, including a case in April when a Taiwanese miner was shot by gangsters after a mismanaged deal.

Worldwide, Bitcoin mining is expected to consume 0.5% of total electricity output as soon as the end of this year, Cointelegraph reported in May.

Japan Crypto Crack Down: FSA Flags 6 Native Cryptocurrency Exchanges

Japan

Japan has also been a crypto-forward and friendly country, but it seems Japan’s top financial regulator is putting its foot down on cryptocurrency exchanges. Just this morning, the Financial Services Agency (FSA) issued six new business improvements to the list of 16 cryptocurrency exchanges it previously approved.

The list of Japenese crypto exchanges receiving administrative punishment include:

bitFlyer
Bit Bank
BTC Box
Bit Point Japan
QUOINE
Tech Bureau

>> Bithumb Hack

bitFlyer In Hot Water

Among the list is Japan’s largest cryptocurrency exchange by trade volume, bitFlyer.

The …

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Crypto Prices Plummet Sharply, With Significant Losses Across the Board

Almost all of the top one hundred cryptocurrencies by market cap have seen significant losses within the space of just a few hours today.

Almost all of the top one hundred cryptocurrencies by market cap have seen significant losses within the space of just a few hours today, June 22, as data from Coin360 shows.

Market visualization from Coin360

Market visualization from Coin360

Total market capitalization of all cryptocurrencies has dropped to just under $268.4 billion at press time, dropping a hefty $16 billion on the day.

Total market cap of all cryptocurrencies from Coinmarketcap

Total market cap of all cryptocurrencies from Coinmarketcap

Bitcoin (BTC) is trading around $6,386 at press time, down 7.2 percent over the 24-hour period. The leading cryptocurrency has now reversed a flash three day rally, which saw its price recover to as high as $6,792 June 19.

Bitcoin price chart

Bitcoin price chart. Source: Cointelegraph Bitcoin Price Index

Ethereum (ETH) has been hit with an even harder loss over the past 24 hours, dropping 8.2 percent and trading around $492 to press time. The leading altcoin briefly recovered June 18-21 to reclaim the $520-540 range, but today again dipped below the round $500 figure and is trading only just slightly higher than its intra-weekly low of $485.

Ethereum price chart

Ethereum price chart. Source: Cointelegraph Ethereum Price Index

All of the top ten cryptocurrencies by market cap have lost between 4 and around 10 percent over the 24-hour period, according to Coinmarketcap, with EOS dropping most sharply, trading at $9.45 to press time, down 10.08 percent.

Earlier this week, EOS block producers preemptively acted to prevent theft, freezing seven accounts compromised by the registration process through phishing scams. The action led to a backlash from commentators, including high-profile crypto industry players, Nick Szabo and Charlie Shrem:

EOS’ tumbling fortunes this week could also be related to the fact that it is the top-traded altcoin on leading South Korean crypto exchange Bithumb, which suffered a $30 million theft when its hot wallet was hacked on the night of June 19.

Chart

At the time of the hack, Bithumb was ranked sixth largest crypto exchange by trade volumes globally, but has now dropped to ninth place following news of the high-profile incident.

While the full details of the hack are still being clarified, Bithumb has said there will be “no damage” to its customers, yesterday confirming it will reimburse affected users. The exchange says it is working closely with the Korea Internet & Security Agency (KISA), the Korean Ministry of Science and Technology (MIC), the national police and others to investigate the theft, and says it will undertake “systematic measures” to prevent a repeat of the incident.

While news of a security breach on a major crypto trading platform can significantly undermine market confidence in the immediate term, analysts have this week been closely following the crypto markets with an eye on technical performance.

The president of Blue Line Futures has said that with Bitcoin’s rolling 30-day annualized volatility declining to 61 percent as compared with its peak of over 150 percent last year, the stats now indicate that “selling has become exhausted,” signalling that cryptocurrencies are likely in a bottoming process.

The traditional financial sector continues to closely follow developments in the crypto and blockchain space, with board director of the Swiss National Bank (SNB) Thomas Moser this week saying that cryptocurrencies and blockchain technology are still too rudimentary to consider issuing a state-backed digital currency, and that he cannot envision an “e-franc” anytime soon. Speaking at the Crypto Valley blockchain conference in Zug, the director admitted that blockchain technology has potential, but only when it “looks very different from what it does today.”

Just yesterday, Bloomberg Terminal announced it would now be listing crypto exchange Huobi's Cryptocurrency Index, which it said was a mark of bringing cryptocurrencies into the mainstream financial marketplace. Bloomberg Terminal will also list prices for nine crypto trading pairs, denominated in Tether (USDT), including Bitcoin (BTC), Litecoin (LTC), Bitcoin Cash (BCH), Ethereum Classic (ETC), Ripple (XRP), Dash, EOS, and ZCash.

Leading U.S. investment banking group Goldman Sachs has this week revealed it is further exploring cryptocurrency trading derivatives, with Chief Operating Officer (COO) David Solomon stating that while the company is already assisting clients in publicly-traded derivatives such as Bitcoin futures, it is also “very cautiously” considering “some other activities” in the field.

Chinese Gov’t Partners With Tencent on New Blockchain Security Alliance

Chinese officials are partnering with Tencent on the formation of a new Blockchain Security Alliance.

Chinese officials are partnering with tech giant Tencent on the formation of a new China Blockchain Security Alliance, according to a report from state-owned ChinaNews June 21.

Aiming to promote security in the blockchain industry, the new alliance was announced at yesterday’s China Blockchain Security Forum in Beijing, hosted by the government-backed China Technology Market Association (CTMA).

According to ChinaNews, the alliance will consist of Tencent’s security arm, CTMA, the China Blockchain Application Research Center, and 20 other public and private institutions, including government advisory agencies, network security firms and blockchain-related organizations.

It is understood that the alliance will work to establish long-term mechanisms for the secure development of the country’s blockchain ecosystem, as well as working to crack down on illicit activities in the blockchain space, including pyramid schemes and fraud.

As ChinaNews notes, the Beijing conference was held amid the backdrop of a rising number of blockchain and crypto-related crimes in the country, most notably a recent suspected crypto pyramid-scheme alleged to have defrauded over 13,000 investors of ¥86 million ($13 million), leading to four arrests in the northwestern city of Xi’an this April.

As an in-depth Cointelegraph report earlier this month outlined, China is nonetheless placing blockchain at the fore of its technological innovation policy, even as it pursues a severe line against cryptocurrencies.

In the most recent high-profile case, China’s President Xi Jinping included blockchain as an example of a “new generation” of technologies that are accelerating “breakthroughs” in “reconstructing the global innovation map and reshaping the global economic structure.” 

China’s central bank has recently developed a blockchain system to digitize paper checks, while China’s Ant International – the operator of payment network Alipay – entered into “definitive agreements” earlier this month to secure $14 billion to invest in blockchain, security and related technological innovation.

Japan Hits 6 More Crypto Exchanges With ‘Business Improvement Orders’

BitFlyer and Quoine are among the Japanese exchanges receiving regulatory order June 22.

Japan’s financial regulator the Financial Services Agency (FSA) has sent business improvement orders to six major cryptocurrency exchanges, Cointelegraph Japan reports June 22.

According to press releases listed on its website, the FSA has demanded a risk management overhaul – centered on anti money laundering (AML) and know-your-customer (KYC) requirements – from bitFlyer, Quoine, BTC Box, Bit Bank, Tech Bureau and Bit Point.

As Cointelegraph Japan reports, bitFlyer, currently the 23rd exchange in the world by trade volume, has already begun remedial measures in response to its order, halting new account registrations and reviewing user identification documentation.

The FSA concluded that in bitFlyer’s case, “an effective management management system has not been established to ensure proper and reliable operation of the business, as well as countermeasures against money laundering and terrorist financing.”

Responding to the findings, the exchange was noticeably apologetic to users, saying it would carry out the eleven-point order, which also requires it to submit a progress report by July 23.

“We apologize to all concerned and the customers who have caused a great deal of worry and inconvenience due to this business improvement order,” officials stated.

The latest round of “administrative penalties” for Japanese exchanges continues an FSA policy which began following Coincheck’s massive $530 million hack in January.

In the intervening period, various other operators have received penalties or have closed altogether, like Bit Station and FSHO earlier in March.

Coincheck itself received stringent supervisory measures before being sold to online broker Monex for the nominal sum of $33 million in April.

Irish Bitcoin Broker Claims Country’s Banks Are Closing Crypto-Related Accounts

The owner of a leading Irish Bitcoin broker has accused banking institutions of discriminating against crypto-related businesses.

The co-founder of Irish Bitcoin (BTC) broker Eircoin accused the Banking and Payments Federation of Ireland (BPFI) of discriminating against crypto-related accounts, The Irish Times reports June 21. Dave Fleming blamed the BPFI for, “seeking to muddy the waters with insinuations of dirty money.”

Eircoin, which is reportedly “Ireland’s only Bitcoin broker,” was closed in April. The firm’s co-founder Dave Fleming said they were “shuttered due to a negligent and defensive banking system”. According to Fleming and his business partner Roisin Coogan, banks also refused banking services to a new secondary consulting business.

Fleming claimed that the closing of the brokerage “reeked of regulatory capture,” which is entirely different from the “arms wide open attitude” of IDA Ireland. IDA Ireland is a state-sponsored agency responsible for attracting foreign investment to Ireland that recently led an initiative promoting blockchain development and investment in the country.

According to Fleming, banking and financial institutions should not be involved in the prosecution of illegal activities associated with crypto trading. Thus, they have no right to refuse firms that deal with cryptocurrencies.

“If any of the Bitcoin sellers in Ireland were involved in terrorist financing I’m sure it wouldn’t be a bank discussing it with us, it would be the law.”

The Irish banks, in turn, denied discriminating against crypto-related businesses. According to The Irish Times, the BPFI, which represents 70 financial institutions, stated that it was not aware of a policy that would allow banks to close the accounts of crypto-related businesses.

One of the leading Irish banks, AIB, also denied claims that it was refusing banking services to crypto-related firms. The bank argued that it “[doesn’t] discriminate in relation to providing banking services to cryptocurrency companies nor [has it] been systematically exiting such companies.”

However, the bank added that they are required to adhere to AML and know your customer (KYC) regulatory requirements for opening and operating bank accounts. According to AIB, some companies were unable to comply.

Banks in numerous countries have shut their doors to crypto businesses and exchanges. In May, Poland’s largest crypto exchange BitBay suspended its activities in the country because banks refused to offer them services. In April, the Reserve Bank of India announced that they will no longer service any person or business that deals with cryptocurrencies. Crypto exchanges in both Finland and Chile have risked total closure as the respective countries’ banks are unwilling to do business.

Ukraine: Four Arrested for Running Fake Crypto Exchanges

Ukrainian police have arrested a group of four men suspected of running six fake cryptocurrency exchanges.

Ukrainian police have arrested a group of four men suspected of running six fake cryptocurrency exchanges, Bleeping Computer reported June 21.

Four men between ages 20 and 26 allegedly launched at least six digital currency exchanges, where they deceived users, subsequently stealing money from them. The alleged culprits lured users by promoting the exchanges with fake positive ratings and online reviews. The police reportedly said that the suspects had "special knowledge and skills in the field of programming" and "have created their own CMS-system for managing the content of exchange sites."

During the raid of the suspects’ homes, the police reportedly seized computers, flash drives, smartphones, and other devices. According to a spokesperson for the Ukrainian National Police, “the list of sites is not complete.” Now authorities are asking users to provide information about whether they were deceived by fraudulent exchanges before.

Yesterday, the U.S. Securities and Exchange Commission received an additional emergency court order to freeze the assets of Dominic Lacroix, owner of PlexCorps. Lacroix and his partner, Sabrina Paradis-Royer, were accused of violating securities law in respect to the PlexCoin initial coin offering (ICO) conducted by PlexCorps in August last year. The ICO reportedly raised $15 million from “thousands of investors.”

Earlier this month, Cointelegraph reported that a Bitcoin trader in Los Angeles, California, was facing prosecution for allegedly running an unregistered multimillion dollar Bitcoin-fiat money transmitting business. Accused Theresa Tetley, 50, reportedly earned at least $300,000 annually from her black market business, which ran between 2014 and 2017 via a listing on localbitcoins.com.

US Congressman Says ICO Market Needs ‘Light Touch’ Regulation to Provide Certainty

U.S. Congressman Warren Davidson says the ICO market needs “light touch” regulation to provide certainty.

U.S. Representative Warren Davidson (R-Ohio) said the initial coin offering (ICO) market needs “light touch” regulation on CNBC's Squawk Box today, June 21.

When asked about cryptocurrency regulation, Davidson argued that the “big thing” the market needs is a “light touch regulatory framework” which, according to the congressman, would provide more certainty.

Davidson stressed the necessity of defining the status of cryptocurrencies, pointing out the recent announcement of the U.S. Securities and Exchange Commission (SEC) that the top altcoin Ethereum (ETH) will be considered a commodity rather than a security. He added that the government still “[has not] put together” a coherent regulatory framework, claiming that there’s still “arbitrage going on.”

“You don’t really know when somebody does an ICO, whether they are really launching this great distributed ledger product that is going to be a security or if it looks a little different, like [Ethereum] and [Bitcoin] determined to be essentially commodities.”

Davidson stated that a lightweight regulatory framework could provide more clarity to investors without encumbering projects with undue regulations. He said that a clear regulatory framework would save companies from the bureaucratic difficulties of navigating myriad different court decisions at varying levels.

The congressman further explained that the lack of regulatory certainty made the ICO market risky and potentially unsafe, as fraudulent ICO projects could take advantage of investors. He advocated for the proper application of  know your customer (KYC) and anti-money laundering provisions to “make sure we protect ourselves.”

When asked why crypto is the “currency of choice” for people engaged in illicit activities, Davidson responded:

“I’m not sure that it would be considered the currency of choice, but it is easy to transmit through time and space, and its distributed, you don’t need a central clearing house… but if you look at how cases like Mt. Gox have been solved, there are ways to trace who is the beneficial owner…”

Davidson said that crypto asset flows are “more trackable than cash,” and “certainly more open than hawala network, and both those things are still legal.”

Yesterday, Nasdaq CEO Adena Friedman claimed that ICOs pose “serious risks” for retail investors and highlighted that the ICO processes have “almost no oversight.” from the SEC in comparison with initial public offerings (IPOs).

On June 19, CBOE Global Markets President Chris Concannon claimed that the ICO market could soon face a two-fold regulatory “reckoning,” should the SEC classify ICOs as unregistered securities.

Swiss Central Bank Exec: Crypto ‘Too Primitive’ to Issue State Digital Currency

A board director of the Swiss central bank said that crypto and blockchain are “too primitive” to consider issuing a national digital currency.

Board director of the Swiss National Bank (SNB) Thomas Moser said that cryptocurrencies and blockchain technology are too primitive to consider issuing a state-backed digital currency, local news outlet swissinfo.ch reported June 21.

Speaking at the Crypto Valley blockchain conference in Zug, Moser compared blockchain in its present condition with the “useless innovation” of compact discs (CDs):

“Something similar has to happen with bitcoin. People will only switch to something new if it works better or is cheaper.”

Moser, who was appointed to the board of Switzerland’s central bank in 2010, admitted that blockchain technology has potential, but only when it “looks very different from what it does today.” Given the current state of technology, Moser cannot envision an “e-franc” anytime soon.

At the same conference, member of the Swiss Federal Council Johann N. Schneider-Ammann said that someday blockchain will  “penetrate our entire economy.” Schneider-Ammann stated that the country does not know enough about the potential risks, adding that expanding blockchain education is critical.

Switzerland has been recognized as a cryptocurrency and blockchain-friendly country, especially due to the “Crypto Valley,” a center of fintech, blockchain, and digital currency activity located in the canton of Zug. According to a study by blockchain conference BlockShow Europe 2018, the country was ranked number one in a list of the top European countries for launching a blockchain company.

Last month, the Federal Council of the Government of Switzerland requested a report on the risks and opportunities of introducing a government-backed digital currency. The idea to develop a national cryptocurrency was proposed in February by Romeo Lacher, chairman of the Swiss stock exchange SIX. He said, “an e-franc under the control of the central bank would create a lot of synergies – so it would be good for the economy.”