According to Canaan’s CEO, China Cannot Ban Clean Energy-Based Bitcoin Mining

Jenson Nunez
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According to Canaan’s CEO, China Cannot Ban Clean Energy-Based Bitcoin Mining

The manager believes that it will take a long time for Chinese regulators to recognize mining. The ASIC miner manufacturer is accelerating its expansion plans to other countries.

Zhang Nangeng, CEO of Canaan, one of the largest manufacturers of ASIC miners for Bitcoin, believes that China is not doing the right thing by prohibiting cryptocurrency mining without taking into account that a considerable percentage of the industry is currently using clean and renewable energy.

In a virtual conference Nangeng said that if cryptocurrency mining that consumes fossil fuels affects the environmental policy of the Chinese government, it is not entirely clear why the government still wants to punish miners based on “clean energy”, according to Reuters.

China’s State Council spoke on May 21 about strict measures that will take place against cryptocurrency mining and trading. Four days later, the Inner Mongolia region posted the proposal for a regulation to prohibit the mining of cryptocurrencies.

Canaan’s CEO said that an indiscriminate prohibition campaign on Bitcoin mining does not take into consideration the potential economic advantages that could come from adopting clean energy. Therefore, he disagreed with the measures to punish the mining industry that generates jobs in regions with a fragile development and helps to balance the local government budget.

Cryptocurrencies Represent a Good Alternative

Nangeng claimed that cryptocurrency mining represents a big alternative when it comes to the excessive supply of electricity in certain regions of the country. The miners prefer to settle in areas that offer electricity at lower cost, a sign that they have an excess supply and a possible waste of energy.

The announcements of the regulators are creating an uncertain atmosphere in the sector, so many local miners have chosen to emigrate and settle in other countries where they can operate with fewer obstacles, the note adds.

The warning regarding repressive measures approaching extends concerns to the point that some miners have been quick to “undersell” their equipment, even up to 30% below the current market price, the executive clarified.

Bitcoin Mining Is Looking to New Places

Canaan’s CEO was less than optimistic about how regulators could show more flexibility with clean energy-based Bitcoin mining. Regarding this matter, he pointed out that, just as it took a long time for bitcoin to be famous in the market, there will also be a long process for bitcoin and cryptocurrency mining to receive the approval of Chinese regulators.

The executive also said that the company is accelerating its expansion plans abroad, consolidating long-term contracts, and setting up its own bitcoin mining business in other countries. As part of these plans, there is the creation of a new office in Singapore and preparing the completion of a mining farm in Kazakhstan, in Central Asia.

Looking abroad will not be a struggle for Canaan, which during the first quarter of the year generated at least 78% of its sales outside of China. During that period, it sold 122.2% more computing power than during the same period last year.

China has decided to forbid Bitcoin mining because it considers that it is attentive to its zero greenhouse gas emission plans, a study by the University of Cambridge, published last year, concluded that 76% of miners use renewable sources as part of their energy mix.

By: Jenson Nuñez

May Legal Review

Katrina Arden
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May Legal Review

While the SEC’s case against Ripple Lab received the most attention from the industry in the past couple of months, there has been some other enforcement-related news, which are worth to be reviewed.

Ripple Lab

One of the very important decisions had been made in the case of SEC v. Ripple Lab. As part of the ongoing litigation, the agency sought to introduce to evidence the past communication between Ripple Lab and its attorney to prove that the company knew that its token sale could be considered an unregistered securities offering in violation of the U.S. securities law.

Earlier, the SEC filed a Motion asking to strip the attorney-client privilege from certain communication between Ripple Lab and its attorneys and compel the company to produce memos discussing the sale of XRP token with the company’s attorneys. The Judge denied this Motion based on the rationale that the privilege “encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.”

Although the Ripple Lab’s battle with the SEC is far from being over, this is a very important interim decision for the case and the industry overall, showing that the communication between clients and their lawyers is protected and cannot be used against clients.

BitConnect

While everyone’s eyes are on Ripple’s case, the SEC continues to enforce the U.S. securities law and bring charges against individuals and companies who violate such law. In May, the SEC filed a complaint with the U.S. District Court Southern District of New York against BitConnect and five promoters for conducting an unregistered offering and sale of securities.

According to the complaint, Trevor Brown, Craig Grant, Joshua Jeppesen, Ryan Maasen, and Michael Noble acted as promoters and, together with BitConnect, raised approximately 2 billion dollars from investments into the BitConnect “lending program.” In exchange, the promoters received a percentage of the invested funds each of them raised. At the same time, none of these promoters were registered with the SEC by broker-dealers in violation of the U.S. securities law.

BitConnect promised investors as high as 40% monthly return from the company’s Bitcoin trading operations. In addition, BitConnect offered referral commissions to existing investors who referred new investors to the lending program. The referral commissions ranged between 0.2% and 7%, depending on the referrer’s level. Many may remember a very aggressive marketing campaign of BitConnect filled with a large number of testimonials from investors with referral links to the BitConnect lending program.

For their promotional efforts, five promoters listed in the SEC’s complaint together received over 5.5 million dollars. The SEC’s complaint charges the promoter defendants with violating the registration provisions of the federal securities laws and Jeppesen with aiding and abetting BitConnect’s unregistered offer and sale of securities.  The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties.

FBI reports an increase of email crimes involving crypto

In April, the FBI issued an interesting report about the rise in the use of cryptocurrency in business email compromise schemes. Although the scams involving compromised emails had been around for decades, the use of cryptocurrency in such scams became a rapidly increasing trend in recent years.

The scammers operate in a similar manner to the wire transfer frauds when a business or personal email accounts get compromised through social engineering or computer intrusion with the request to transfer funds to the scammers’ bank account. But with the growing acceptance and wider use of cryptocurrencies in business and personal transactions, the scammers direct the victims to transfer crypto funds to the scammers’ wallets.

It is understandable why these crimes become more and more common. Although most crypto transactions can be traced on the blockchain, there is no mechanism to identify the owner of the wallet. Crypto transactions are much faster than bank wires, and they cannot be reversed. Being a more efficient alternative to bank transactions, unfortunately, crypto transfers are also used by criminals in all kinds of scams, including email-related.

According to the FBI report, the mentioning of cryptocurrencies in the business email compromise complaints was minimal before 2018, but since then, the numbers have more than doubled every year. Just last year alone, there were 20 crimes reported with an average monetary loss exceeding 10 million dollars. It is anticipated that this number will continue to rise; therefore, the FBI warns people to be extra cautious when receiving requests for crypto funds transfers over an email.

This summary is provided by international attorney Katrina Arden. Attorney Katrina Arden spoke at the leading tech conferences, authored legal articles and participated in discussions with multiple countries’ regulators on the development and implementation of the blockchain and cryptocurrency law.

The Winklevoss Brothers Predict that Ether Could Reach USD 40,000 in the Long Term

Alexander Salazar
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The Winklevoss Brothers Predict that Ether Could Reach USD 40,000 in the Long Term

The price of Ether could grow to USD 40,000 but the cryptocurrency will need to break some psychological barriers. Bitcoin and Ether will be among the five cryptocurrencies that will reach widespread popularity within ten years.

The price of Ether could hit USD 40,000 in the long term, according to twin brothers Tyler and Cameron Winklevoss. The co-founders of the Gemini exchange forecast a price between USD 5,000 and USD 10,000 by the end of this year.

There is no reliable way to predict the price of Ether beyond the immediate future. However, the Winklevoss have speculated that Ether could have a specific value in the long term.

The Winklevoss Twins Believe that Ether Is Heading for USD 40,000

During the start of this year’s bullish run, the Winklevoss twins believed that Ether was undervalued at USD 1,400. That price was close to the all-time high that the crypto asset had reached in 2017.

After that, the price of Ether hit a new all-time high above USD 4,300 before plummeting to USD 2,000. At the time of writing this article, Ether is trading at around USD 2,670, according to CoinGecko.

According to Tyler and Cameron Winklevoss, a price between USD 5,000 and USD 10,000 would be reasonable for the end of the year. However, they believe that it could grow much more in the long term to reach USD 40,000. They also note that there are psychological barriers that Ether will need to break to reach their prediction.

The Winklevoss brothers spoke about what the biggest threats against Ether are. They argued that people would only change it for another project that was ten times better. Furthermore, they said that Ether has the “great advantage of being the first [crypto asset] to move.”

“There is so much building taking place on Ethereum that everyone wants to go there and eyeballs are there. What needs to happen is scalability and performance, that is, its ability to process many transactions cheaply,” the two executives said.

Tyler and Cameron Winklevoss Also Give Opinions about Ethereum 2.0

The Winklevoss added that Ethereum 2.0 could solve ETH’s scalability problems with the help of current enthusiasm in the market.

They warned that “Ethereum can fall victim to the weight of its own success if transaction fees become too high.”

By buying ETH, investors also acquire part of the projects and protocols built on the network, according to the executives.

The Future of the Price of Bitcoin, Ether, and Other Cryptocurrencies

In the end, the twins reiterated their prediction that the price of Bitcoin (BTC) was targeting USD 500,000. In this regard, the Bitcoin community hopes that they are right.

“The question on our mind is not so much if it reaches USD 500,000 but how fast,” they stated.

“[A price of] USD 500,000 per Bitcoin is really quite conservative even though the game has not even started,” they added.

Many experts predict that three to five cryptocurrencies will reach widespread popularity within ten years. They assure that both Bitcoin and Ether will be among the options for investors.

According to Tyler Winklevoss, “Ethereum will be the backbone of a new type of Internet just as oil is the backbone of today’s society.” These two brother entrepreneurs anticipate that Bitcoin and Ether will reach new all-time highs, thus demonstrating the community’s trust in those crypto assets.

By Alexander Salazar

Bearish Markets Are Not Always the Result of Bitcoin Corrections, According To Binance

Alexander Salazar
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The cryptocurrency exchange considers that there is currently a realignment between supply and demand. The causes of the latest drop were China and the overstimulation of the market.

In recent days, the exchange of Bitcoin (BTC) and other cryptocurrencies Binance analyzed the latest crash in the crypto asset market. It stated that this type of correction does not always mean that a bearish trend has arrived. The exchange considers that it is a situation in which the forces of supply and demand usually readjust.

According to Binance, there may be various corrections during a bullish trend like the one that the market is currently experiencing. Two of the factors that caused the most recent one were the power outages to Chinese miners and an overstimulation of the market.

The corrections that occur in the cryptocurrency market do not always lead to bearish markets. Several corrections preceded Bitcoin’s run until its last all-time high of nearly USD 64,000 in April 2021,” the exchange explained.

The exchange recalled that corrections like the one occurring in recent weeks usually precede recoveries. The market could resume the bullish run that it had since 2020 if this behavior takes place. However, should the corrections continue, there would be a longer period of decline.

Binance had previously cited what happened in 2017 when the pioneering cryptocurrency reached USD 20,000 per unit. After it achieved that milestone, Bitcoin underwent several corrections that turned into a bearish market that lasted for two years.

Bitcoin Is Just “Warming Up” to Regain its Bullish Trend, According to Woo

Cryptocurrency markets analyst Willy Woo believes that the bullish trend for crypto assets like Bitcoin is still intact. The researcher considers that BTC is just “warming up” for a much more important rise in its price. He came to that conclusion despite the recent correction and subsequent volatility of the cryptocurrency.

Woo argues that there is an increasing number of users interested in Bitcoin regardless of its trading price in the markets. “BTC users have roughly doubled every year since its inception a dozen years ago,” Woo commented.

For his part, Venezuelan analyst Alberto Cárdenas recently stated that the price of Bitcoin rose due to extreme leverage. The trader considers that this leverage would already be decreasing so that BTC would return to a bearish trend that would take it to USD 20,000.

Cárdenas mentioned leverage that refers to economies in general re-applying “healthier growth” measures. This would include tasks such as solving deficits, raising taxes, and issuing regulations, among others. He said that the execution of these types of measures could drive the price of Bitcoin downward as the credit cycle would end.

The truth is that Bitcoin has already proven that it can reach and exceed its previous all-time highs. The cryptocurrency has received the trust of large institutional investors, who have helped its dominance in the market grow even more. In addition to that, regulators in several countries have it in their sights as they distrust the anonymity of its transactions.

By Alexander Salazar

Five Promoters of the BitConnect Scam Received a Lawsuit from the SEC

Alexander Salazar
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Five Promoters of the BitConnect Scam Received a Lawsuit from the SEC

The defendants were part of a network of influencers that raised more than USD 2 billion. The promoters were not registered as brokers with the SEC as the law requires.

In recent days, the US Securities and Exchange Commission (SEC) filed a lawsuit against five people who traded unregistered securities. In a statement, the federal agency said that the defendants were violating US federal laws.

Bitconnect has operated as a cryptocurrency market investment scheme since 2016. It created a network of sellers worldwide, who raised over USD 2 billion.

Through the Southern District Court of New York, the SEC reported on the lawsuit in which it accuses four promoters based in the United States. They are Trevon Brown (also known as Trevon James), Craig Grant, Ryan Maasen, and Michael Noble (who became known as Michael Crypto). None of them were registered as a stockbroker with the US securities industry regulator, according to the statement.

The promoters recommended investing in cryptocurrencies through BitConnect testimonial-like videos that they often published on YouTube. The report notes that their ability to attract small investors allowed them to earn commissions of up to around 40% per month.

The other defendant who was helping to expand the network of fraudulent sellers is Joshua Jeppesen. He appeared at conferences and promotional events to attract potential influencers and small investors.

“We will seek to hold accountable those who illegally profit by capitalizing on the public’s interest in digital assets,” said Lara Shalov Mehraban. The associate regional director of the New York Regional Office of the SEC believes that the authorities should stop them scamming more people.

There Are Traces of That Ponzi Scheme in Various Parts of the World

The launch of BitConnect as a cryptocurrency that was only possible to trade on the exchange of the same name occurred in 2016. Securities regulators warned investors about the company’s alleged fraud, which is why its website closed in 2018.

The reasons for the indictment against Bitconnect included a complete and intentional ignorance of the identity of the directors of Bitconnect. Besides, they did not have financial information on the founders and the company did not have headquarters in Texas, USA. The reason for the latter was that it was registered with headquarters in Wenlock Road, London.

The project received several class-action lawsuits from the United States and even the United Kingdom after the company closed. The victims were requesting a refund of around USD 770,000 that they had lost through the platform. However, a Florida State District Court judge dismissed the lawsuit 3 years later.

There have been more accusations from various countries including Singapore, India, and Australia. There, the authorities have banned the scheme and have even made arrests. In August 2018, Divyesh Darji, one of the leaders of BitConnect India, went to prison after being on the run for several months.

After that, the FBI decided to search for the victims of the scheme who wanted to help with the investigation. For that reason, it posted an online questionnaire for anyone with information to aid in the federal assessment. The consultation requested investors for their personal and contact details, as well as information related to the amount that they invested in the BitConnect Coin (BCC) token.

By Alexander Salazar

Man Receives Sentence for Using bitcoin ATMs to Launder Money

Jenson Nunez
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Man Receives Sentence for Using bitcoin ATMs to Launder Money

The defendant admitted guilt over being aware that criminals used ATMs to commit money laundering. Among the accusations is the failure to conduct a good anti-money laundering policy.

The United States Department of Justice sentenced to 2-year prison to a man in the state of California, who was found guilty of working through a network of Bitcoin ATMs, without a license, which served to launder about USD 25 million from different illegal activities.

In the document presented by the department on May 28, knowledge is given about the facts that are attributed to Kais Mohammad, among which are: money laundering, operating without a service license, and not applying and giving maintenance to program cash against money laundering.

The business was active between 2014 and 2019 and in this way Kais carried out exchanges of up to USD 25,000, using an online exchange system named Herocoin. As described in the document, the person involved met with clients in a public place in southern California and executed the trade. Mohammad charged a 25% commission on the total transaction as described in the report.

In addition to this exchange activity, Kais worked with a network of bitcoin ATMs to which he was in charge of granting the money that was later withdrawn by his associates. These operations reached up to USD 3,000, of which no type of documentation was requested.

According to the report, the defendant already knew that he had to work with a license and that, in addition, he did not apply verification procedures against money laundering. Last September Mohammad pleaded guilty and had 17 BTC ATMs, USD 22,820 in cash, 18.4 bitcoins, and 222.5 ethers confiscated.

The DEA Warns Against Bitcoin ATMs

Last March, the Drug Enforcement Administration (DEA) reported information detailing how, possibly, Bitcoin ATMs were a tool for criminals to commit money laundering.

In the report, the ways that criminals commit money laundering are not well detailed. However, it does highlight the supposed ease that the transfer of assets could present, without the need for the physical delivery of the money between drug traffickers.

It is worth mentioning that most ATMs require identity verification, and which, in addition, photograph the user who is carrying out the procedure. In Mohammed’s case, he used unregistered and unregulated ATMs, which bypass the controls on official government lists. This type of practice was already warned in the DEA report.

Laundering money at an ATM is not so easy, given the verification controls to which they are usually subjected. Likewise, another DEA report, presented in 2018, indicates that only 10% of all cryptocurrency trade went through illicit activities.

In contrast to the latter, according to Chainalysis, by 2020, less than 1% of all circulating BTC belongs to or is associated with money laundering or illegal activities.

By: Jenson Nuñez

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