Regulierungs-ECHO KW 38: The Hammer Falls Overseas

There are already three times as many cryptoclaims in the USA as last year. Japan is expanding its regulatory team, while France is pinning all its hopes on successful regulation of ICOs. The most important thing that has happened in Bitcoin and other crypto currency regulation in the last week, in brief. The regulatory ECHO.

The regulatory reports are again clearly USA heavy. There, Hester Peirce of the SEC spoke in favor of a much more positive tone compared to Bitcoin. In addition, a court in the case of Mt Gox dismissed his responsibility. No wonder, after all they have enough to do: there are already more cryptoclaims in 2018 than in the whole of last year. Meanwhile Japan is working on a new regulatory team, while France is hoping to lure blockchain start-ups into the country. You can find out where the regulation hammer is swinging in the regulation ECHO.

Bitcoin news: Hester Peirce speaks out for crypto currencies

Hester Peirce, commissioner at the US Securities and Exchange Commission, SEC, has argued in the Bitcoin news that the authority should be more open-minded about crypto currencies in general and prevent scam. It also pointed out that crypto currencies have a stigma. In this context, she said, it was above all the high complexity of the issue that deterred many investors. The SEC had to position itself well in order to create some clarity here.

US court drops proceedings against Mt Gox
A US court had to drop the lawsuit against Mt. Gox and the associated Mizuho Bank. The reason for this was that the Japan-based bank did not have a valid jurisdiction in the USA. As a result, it will be even more difficult in future for users from the USA who have been put off by the law to take legal action against the questionable stock exchange from Japan.

USA: In 2018 three times as many crypto-claims as last year
In the first two quarters of the current year, there have already been three times as many crypto claims as in the whole of 2017. According to one report, the number of claims containing the words bitcoin, blockchain or crypto currency has already tripled compared to last year. According to the report, the SEC is responsible for about one third of these lawsuits.

Japan: Larger team & self-regulation

The Japanese Financial Supervisory Authority has increased its team. At the same time, Japan has given an update on the current state of regulation of Bitcoin exchanges. At the time of publication, more than 160 companies wanted to penetrate the Japanese market. In order to cope with this onslaught, the FSA wants to increase its team of 30. The agency is also considering issuing guidelines on self-regulation in the future. In the light of the current Hacks of the Bitcoin stock exchange Zaif surely not a bad idea.

France: New guidelines for ICOs
There are news about ICO regulation from geographically close proximity. France has published a new framework that deals with the regulation of ICOs. Finance Minister Bruno Le Maire hopes that the new guidelines, which provide for clear tax regulation and a legally secure framework, will result in a significant increase in start-ups from the surrounding area:

Cryptosoft Course Analysis – Life after the Token Sale

At the end of the DAO Token sale the Ethereum course went down quite a bit. Since May 28th the price has risen slightly and is currently at 11.20EUR (12.47 USD).

Cryptosoft Summary:

At the beginning of the week Cryptosoft fell to 9.43 EUR (10.50 USD). On 28 May Cryptosoft recovered slightly to 11.20EUR (12.47 USD). Currently, the Ethereum price is going through a flat triangle pattern where a breakout is imminent or may already have begun.

Bulls take a breather

Well, the support was undercut and Ethereum obeyed on the word: He falls first properly into the cellar. On May 26th and May 27th the cops try timidly to break this downtrend – which was only achieved at the end of the DAO Token Sale. Since then the price has risen gently. So the bulls took a breather until 28 May. And as gently as the price rose compared to the previous week, apparently rightly so.

Perhaps an overinterpretation, but the pattern since 28 May has the character of a very flat triangle pattern. If this were so, it would currently look as if the triangle pattern is being broken upwards – which would suggest a stronger rise. But be careful – as the pattern is very flat the breakout to the bottom is still possible. I would set an alert on the current EMA100; if this support line is broken, it would be a sign for a downtrend.

Similarly “cautiously optimistic” is the MACD: it is currently positive. Furthermore, the MACD line (blue) and signal (orange) are fighting for the upper hand in the last few days. Currently one had just a bullish crossover, which speaks for a short-term upward trend. But beware: since May 28th, i.e. since the abrupt rise, both the MACD-line and the signal are decreasing.

After the MACD (second panel from above) was strongly positive until May 20th, it has been strongly negative since then and at best weakly positive since then. Currently, the MACD is negative – suggesting a negative correction in the nearest future.

Nevertheless, the RSI is positive overall: since May 28th the RSI is above 50 and thus bullish.

Finally, the Accumulation/Distribution-Chart also speaks for a further rising price for the time being. Since May 28th, the buyers predominate – which suggests that the price continues to rise.

So you can expect a rising price even after the DAO Token Sale. But the background could still be the DAO token, after all some Exchanges have already implemented the purchase and sale of DAO tokens (About the DAO token sale and what happens next is written elsewhere).

SEC: Bitcoin and Ether ETN exposed, BTC price reacts cautiously

The US Securities and Exchange Commission (SEC) is temporarily suspending trading of Bitcoin and Ether-ETN. This means that it will no longer be possible to trade the Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF) securities until 20 September 2018.

However, the Bitcoin formula reacts unimpressed

First BTC-ETF, now also BTC-ETN and Ether-ETN: The SEC doesn’t trust the whole crypto thing yet. Sometimes it’s the high fluctuations in the Bitcoin formula, now it’s a lack of knowledge among investors. In any case, the US Securities and Exchange Commission announced the temporary suspension of Bitcoin Tracker One and Ether Tracker One trading in a public announcement:

“The Securities and Exchange Commission announces the temporary suspension of trading in the securities Bitcoin Tracker One (“CXBTF”) and Ether Tracker One (“CETHF”) pursuant to Section 12(k) of the Securities Exchange Act of 1934. The suspension will commence on 9 September 2018 and end on 20 September 2018 at 23:59 EDT.

The Commission has temporarily suspended trading in the CXBTF and CETHF securities due to confusion among market participants […]. The Commission warns broker-dealers, shareholders and potential buyers not to carefully examine the above information together with any other information currently available and any information that the company may subsequently issue”.

Investor ambiguities

According to this, it is probably primarily conceptual ambiguity that confuses potential investors. For example, the SEC advises that any applications should be carefully examined:

“In addition, brokers and traders should ensure that, according to Rule 15c2-11 of the Stock Exchange Act, no listing may be entered upon termination of the trading block as long as they have not strictly complied with all the provisions of the Rule. If a broker or trader has questions as to whether or not he has complied with the rule, he should not make an offer but should immediately contact the Trading and Markets Department of the Office for Interpretation and Advice at (202) 551-5777.

Furthermore, if a broker or trader is uncertain of what is required by Rule 15c2-11, he should refrain from entering quotations in respect of CXBTF or CETHF Securities until he has familiarised himself with the rule and is satisfied that all provisions have been complied with. If a broker or trader makes an offer that violates this rule, the Commission will consider the need for immediate enforcement.”

It is the proximity to the Bitcoin ETF, in particular, that is currently causing confusion among investors. By definition, Exchange Traded Notes (ETN) are an exchange-traded bearer bond that reflects performance 1:1. In contrast to ETFs, however, an ETN is not a special fund, i.e. not protected against insolvency. Click here for the details of the Bitcoin ETF.

Influence on the Bitcoin price
However, the Bitcoin price reacts cautiously to the SEC decision. Bitcoin is still quoted at almost 6,300 US dollars and a 7-day minus of around 13 percent. Last week’s price slump was probably related to a false report about the crypto trading desk plans of investment giant Goldman Sachs. In addition, the liquidation of a large number of crypto currencies, the origin of which is attributed to the haze circles of the Silk Road, is suspected to have fired the negative price event. The price reacted similarly cautiously to the SEC’s last announcement that it would temporarily not approve the Bitcoin ETFs.

The Opinion Echo: “Long Bitcoin secret, Short the Banks” – Deutsche Bank in the Crossfire of the Crypto Community

Rarely has the discrepancy between hype and reality in the crypto-cosmos been higher than these days. Bullish forecasts can be found everywhere despite falling prices. Permabullen have still the interpretation sovereignty over expected course of prices in the short to middle term. This can be seen in the exalted reactions of the Bitcoin community against the bearish tones of Vinny Lingham.

But Deutsche Bank is also catapulting itself to the sidelines with renewed accusations of money laundering, thus triggering the banking-critical community. What moves the scene in KW48.

Tim Draper: You called it Bitcoin secret

Mr. “In 2022 Bitcoin secret will be worth $250,000” Draper likes to call Bitcoin secret political currencies. These are slow, inefficient and simply expensive. For this reason alone, Draper says, the money market will seek more efficient ways in the short or long term. For Draper, the winner is already certain: Bitcoin. At the World Crypto Con in Las Vegas, he reaffirmed his bullish stance and referred to the casual coercion of the laws of the market economy:

“I mean, just because they cost you less, it’ll be better for people. And so they will move on to crypto, away from the political currency they call Fiat.” Tim Draper

The Bitcoin Community Trolls Deutsche Bank

For the bank-critical part of the crypto community, reports about money laundering allegations against well-known credit institutions such as Deutsche Bank are a found food. Under a tweet of the bank, in which it commented on the accusations, a whole series of malicious comments were found. A selection:

It is true that the police is currently conducting an investigation at a number of our offices in Germany. The investigation has to do with the Panama Papers case. More details will be communicated as soon as these become known. We are cooperating fully with the authorities.

It is true that the police is currently conducting an investigation at a number of our offices in Germany. The investigation has to do with the Panama Papers case. More details will be communicated as soon as these become known. We are cooperating fully with the authorities.

All against Vinny
How sensitive the crypto community reacts to critical voices can be seen in Vinny Lingham’s example. The Civic CEO is regarded as the “Bitcoin Oracle”, a title that the community can only smile tiredly about because of Lingham’s bearish attitude. His interview with CNBC Fast Money, in which Lingham draws a very pessimistic picture, then triggered a veritable shitstorm on Twitter.

“Pack as many misconceptions into a four-minute video as you can. Go,” commented software developer and Bitcoin bull Vijay Boyapati.

Steemit: A combination of blockchain and social media

When a previously unknown digital currency with a market capitalization of just 14 million US dollars rises to 400 million US dollars within a very short period of time, then the sensation is caused.

If this digital currency also serves as the basis for a social media payment unit that rewards people for creating content, sometimes with several hundred dollars for a single post, then doubts or euphoria quickly arise.

Steemit, which can be described as a “blockchain-based social media platform”, was founded in March and became increasingly well known in July. So far Steemit seems to divide the Blockchain community.

Nonetheless, the Bitcoin loophole platform is making many newcomers familiar with Blockchain technology

Behind the Bitcoin loophole platform are Daniel Larimer, founder of Bitshares and Ned Scott, a former financial analyst. With Steemit, they want to give people a way to create their own content, promote it or comment on other content while making money. Read more here:

But Steemit is much more than just a website where you can earn some small change. The Steemit blockchain is based on a technology developed by Larimer called Graphene, which enables the use of specific blockchain applications.

The rise of Steemit

The big breakthrough came only on July 4 when 1.3 million US dollars were distributed in the form of the digital currency Steem to the platform’s participants, who had previously been involved in mining and providing content.

Scott explains that the reward for the platform’s participants was deliberately not spent before July 4 to test the platform in advance and find bugs before it becomes available to a much larger audience.

After all, despite the careful work of the development team, bugs cannot be ruled out. So the phase before July 4th was used to make Steemit as safe as possible.

That’s what Scott says:

“What happened on July 4th was like a three-month day that finally ended. The distribution of the proceeds is working perfectly today, a moment we’ve been working hard for.

Jeff Gallas: A Talk about crypto trader, Bitcoin Lightning and Hackdays

Jeff Gallas from Fulmo answered our questions in an interview. He discussed with us the Lightning Network and what distinguishes it from other scaling solutions. He also introduced the upcoming Lightning Hackday.

The Bitcoin Lightning Network is known to every crypto enthusiast, but for many a book with seven seals. When it comes to the real technical details, many have to fit in and real experience with Bitcoins’ scaling solution is still limited. This is where the start-up company Fulmo comes in, which wants to clarify Bitcoins about this second layer. Among other things, the young company is doing this with the Lightning-Hackday, which goes into its third round on the first of September. BTC-ECHO therefore sat down with Jeff Gallas to talk about Bitcoin’s scaling solution, the company Fulmo and the event.

How did you get to Bitcoin, crypto trader and blockchain?

Actually, I would like to tell a great story about a retreat in a Thai monastery, where after six weeks of vows of silence I met a young Swiss businesswoman who told me on a warm summer night in a small beach bar about the overwhelming possibilities of this new, revolutionary crypto trader technology. The reality is more profane: I read about crypto trader on a news portal a few years ago. But the fire was no less ignited, with everything that goes with it: sleepless nights, endless monologues with friends and family, in short: love at first sight. And in principle, I haven’t stopped dealing with the subject every day since. By the way, that was at a time when people still said “Bitcoin” and not “Blockchain”. At the moment, the trend is back to that.

As with a prepaid card
The Lightning Network is a Bitcoin scaling solution that allows instant transactions with low fees. Can you explain in simple terms how it works?

The Lightning Network is a network of payment channels. A payment channel is a contract enforceable by the blockchain between two network participants in which it is agreed that payments up to a certain amount can be sent to each other. Bitcoin is stored in the channel for this purpose, similar to recharging a prepaid card. The special feature of the Lightning Network is that the network defines rules of the game that make it possible to pay every participant – even if there is no direct payment channel – risk-free.

Satoshi’s Place and Sweets: Because we can!

Instantaneous, royalty-free transactions not only make buying coffee more convenient, but also offer interesting opportunities in terms of inter-machine communication, faucets or in-game currencies. A few months ago Blockstream presented some Lightning Apps, LApps for short. What is the most exciting development for you in this field?

Satoshi’s Place is a pretty gimmick that wouldn’t work without Lightning, as would David’s candy machine Knezić. There are a lot of interesting projects, many of them playful and “because we can”. And that’s also the most exciting aspect for me: seeing the excitement, trying out new things and seeing where the journey is going. With the Lightning Network, a new platform is being created on which diverse projects can be realised.

“While Shitcoins are still doing marketing, Bitcoin is already scaling.”
Bad tongues say that Lightning makes the system unnecessarily complicated. Asked as the devil’s advocate: What can this scaling solution do that other scaling solutions like larger blocks, shorter block times, (delegated) proof of stake or a tangle cannot?

The Lightning Network differs from these proposals in two ways. First, it is a Second Layer Protocol, i.e. a second layer based on Bitcoin and other blockchains. So it is only one of many conceivable scaling options for Bitcoin in the future that leave the Bitcoin block chain itself untouched. On the other hand, this scaling solution already works. There is an active, growing network in which thousands of payments are made every day. The “scaling solutions” mentioned above live largely from loud announcements, but still have to prove what they can do. Or whether they are suitable for scaling at all. While Shitcoins are still doing marketing, Bitcoin is already scaling with the Lightning Network.

Ledger trade journal publishes first issue

The issue contains 10 peer-review papers including a probabilistic analysis of the NXT “Forging Algorithm”, questions of blockchain governance and theories on social contracts. The publication was formally announced last year. They wanted to give the industry a greater incentive to participate, so they decided to create a platform on which scientists of digital currencies could publish their studies in full length.

The first issue of the news spy has been published

According to the people involved, it took a little longer. The reason was the formalization of the review process. Now that the first publication of the first issue has been completed, the editors are planning a complete publication twice a year and additional articles on the side.

Christopher Wilmer, deputy managing director and principal investigator of the University of Pittsburgh, explained CoinDesk:

“There is growing interest and activity among scientists from Princeton, MIT, Duke, Cornell and a whole list of other universities researching crypto-currencies,” Wilmer said.

Academics to be involved in the crypto industry

Wilmer explained that there have been two main inspirations for the news spy this journal. On the one hand he wanted academics to be involved in the crypto industry and on the other hand he wanted to offer a common place where scientists (even those who want to remain pseudonymous) can share their work.

The publication is funded by the non-profit crypto currency group Coin Center, while the journal is distributed by the University Library System.

The publication accepts submissions in four categories, including scientific articles that are no longer than 4,000 words and reviews that summarize relevant research topics with no more than 6,000 words.

Before an article is published, journal staff insert a hash of the final manuscript into the Bitcoin blockchain. Authors are then encouraged to sign this hash with their public keys.

Embezzlement or securing? Battle over the match pool ICO

Funds worth about 1.500.000 EUR are said to have disappeared from Matchpool. A co-founder makes heavy accusations and leaves the project.

Some time ago we reported about the Matchpool ICO. The goal of the project is a blockchain-based Tinder app – dating on the blockchain. Specifically the basis for a kind of own dating application is to be laid, in which possible payments are regulated by Smart Contracts.

The project was financed by an ICO. Tokens called Guppy or GUP were sold via this ICO. The goal was to sell 60% of the existing Guppy tokens against ether in this Initial Coin Offer – a goal that was achieved very quickly. A certain demand in the community is therefore clearly visible.

Now, however, controversies arose

The CEO is accused of having stolen more than EUR 5 million from the Multisig account at ETH Zurich, which was connected with the discovery.

This unannounced coin movement confirms the concerns of those who have criticized Matchpool from the outset. Even more dramatic is that Philip Saunders, one of the co-founders, made this coin movement public and declared his withdrawal from the project.

Coin Movement for Security: Matchpool Explains Itself

In a blog post on Medium Yonatan Ben Shimon commented on the accusations and the quarrel with co-founders. Regarding the accusation of embezzlement of funds, reference is made to an earlier blog post in which Matchpool explained its risk management strategy: Since the volatility of Ethereum is higher than that of Bitcoin, it was considered sensible to invest part of the money in the more stable Bitcoin in order to hedge the funds. The Bitcoins acquired should be secured on a Trezor Cold Storage.

Regarding the exit of Philip Saunders, the view of Yonatan Ben Shimon is presented. According to him, Philip’s interest has waned. In addition, his work – apart from writing the white paper and implementing the necessary smart contracts – is said to have been rather inadequate, so they wanted to complement the team with more talented developers anyway.

According to Yonatan, after the ICO Philip Saunders wanted to retain his share of the funds he had acquired – which he was denied. This refusal finally led to the current drama about the withdrawal of a co-founder.

So we see that in the aftermath of the ICO there are different sides throwing dirt at a team in dispute. Funds were generally moved, but not in the aforementioned size. The reason is understandable that some people see some red flags here, especially with the money supply at stake – the history of the ICOs knows its scams.

However, the CEO deserves credit for quickly responding to the accusations and for pointing out that something had been planned to minimise the risk anyway. In any case, we will continue to monitor and report on the Matchpool case.