Mixers to Erase Bitcoin Trail in PlusToken

Willmen Blanco
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Mixers to Erase Bitcoin Trail in PlusToken

Addresses associated with PlusToken have been linked to the trail of around 54,000 BTC. Research suggests that two methods were used to mix bitcoins.

A study shows how addresses previously associated with PlusToken, accused of stealing millions of US dollars in various cryptocurrencies, have tried to erase the trail of bitcoins stolen from their victims.

The research published by the user ErgoBTC suggests that PlusToken would have used wallet transaction mixers such as Wasabi, as well as the Huobi exchange platform, to gradually clean the trail of those bitcoins.

According to the text, an institution related to PlusToken tried to mix more than 50,000 BTC between early August and mid-September. To that end, they used the Wasabi mixer from at least five different Bitcoin addresses.

The text indicates the reception of large transactions of at least 3,000 BTC in the same address, and attempts to fork the funds with transactions of between 500 and 6,000 BTC. In addition to Wasabi, those addresses sent high amounts of BTC using Samourai Wallet, according to the article.

The mixing (or shuffling) process is used to increase the privacy of transactions. Basically, its function is to gradually obscure the trail of such transactions. Transaction inputs cannot be easily linked to their corresponding outputs.

Several Methods to Mix Bitcoins

Normally, this process is executed by third parties at the service of the party interested in blurring the trail of their transactions. This is done through Wasabi and sendings to the Huobi exchange, which was previously used by addresses allegedly linked to PlusToken.

The researcher also found attempted “self-shufflings,” which might be deficient to hide transactions and would facilitate the tracking of the origin of the funds that were sought to be hidden. The study determines that this method was aimed at mixing about 35,000 BTC, equivalent to about USD 315 million.

In total, the movement between the two methods mentioned was 54,000 BTC. However, this author referred to another 20,000 BTC “in addresses and clusters associated with this analysis, which have not moved since mid-September.”

PlusToken History

Last July, founding members of PlusToken were arrested and charged with fraud through their cryptocurrency investment scheme. Among those cryptocurrencies is not only Bitcoin, since the firm’s customers also invested high amounts of Ether (ETH), XRP and EOS.

According to police reports, the company’s proceeds after the arrest would have exceeded USD 3 billion. However, it is not clear what the equivalent figure in cryptocurrencies is, due to the price changes on the market.

A study published in August by Elementus dealt with 10,000,000 ETH stolen from the victims of PlusToken. In that research, the Huobi exchange was also raised as initially received funds would have been allocated there due to the alleged scam.

The same month, the founder of Primitive Ventures and researcher of the Chinese blockchain ecosystem, Dovey Wan, provided data on movements of thousands of bitcoins from addresses associated with PlusToken.

She revealed that some of those addresses were trying to discard their BTC. Among those addresses are some with 95,000, 68,000 or 38,000 BTC each. According to the researcher, all of them were emptying the funds in multiple transactions for several days.

Their data coincided with the dates provided by PeckShield. According to this company, PlusToken would have used Bittrex, in addition to Huobi, for the alleged sending of stolen bitcoins.

By Willmen Blanco

Activation of Istanbul Update to Occur on the Ethereum Main Network on December 4th

Willmen Blanco
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Activation of Istanbul Update to Occur on the Ethereum Main Network on December 4th

The developers agreed to the new tentative date after their call number 73. It is estimated that the hard fork will occur at the height of block 9,056,000.

The main developers of Ethereum agreed on Friday, October 25th, that the delayed hard fork that will activate the Istanbul update on the main network would tentatively take place on December 4th of this year.

The programmers’ decision came during their call number 73 in which it was also established that, in case of any inconvenience for the activation of Istanbul, the process would be postponed again until January 8th.

During the event, which was attended by Hudson Jameson, Danno Ferrin, Péter Szilágyi, Piper Merriam, James Hancock, and Wei Tang, inter alia, it was emphasized that the dates are modifiable. This statement was highlighted due to the events that had occurred prior to the Constantinople and St. Petersburg hard fork, which was activated on the main network after three attempts.

Tim Beiko, another of the developers who attended the event, wrote on Twitter that there seemed to be a general agreement that December 4th is the date of the hard fork and January 8th is used as a backup date in case that something goes wrong.

After the call, Ferrin shared through the Gitter platform that, according to his calculations, the hard fork would occur at the height of block 9,056,000.

Network Enhancements

In August, Ethereum developers approved six changes for this first phase of the Istanbul hard fork that will include a reduction in data transmission costs for their transactions (EIP-2028) and the inclusion of a new algorithm for ETH mining (ProgPoW), all framed according to its plans to develop version 2.0 of the protocol. The one occurring in Istanbul will be the eighth hard fork that is executed on the Ethereum main network.

It should be remembered that at the end of September the Ethereum test network, Ropsten, forked into two separate chains after the update got two days ahead of time, taking developers by surprise. A similar situation occurred with the event of Constantinople.

The Istanbul test network delayed its activation from September 4th until October 2nd, since the programmers received more than 30 Ethereum Improvement Proposals (EIP). Of that total, six improvements were accepted to form the first phase of the hard fork, whilst the rest would be part of a second phase that would be applied at some point between January and April 2020.

Ethereum is the network that includes Ether, the second most important cryptocurrency according to its market capitalization, only behind Bitcoin. At the time of writing this article, its price is USD 191.29, according to data from CoinMarketCap.

Expert cryptocurrency users and novices may consider the option of investing in Ether, and so they are expecting to see what happens after Ethereum’s Istanbul hard fork occurs. The same as has happened with Bitcoin; there are many opportunities for investors to make profits with Ether if a bullish trend occurs in the market before December 4th.

By Willmen Blanco

American Financial Regulators Charge XBT Corp. for Selling Swaps for Bitcoin Whilst Being Unregistered

Andres Chavez
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American Financial Regulators Charge XBT Corp. for Selling Swaps for Bitcoin Whilst Being Unregistered

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC,) which are US-based financial regulators, both charged XBT Corp. for the sale of unregistered swaps for Bitcoin this week. To be more specific, the firm did not register as an FCM, which means futures commission merchant.

Both watchdogs issued press releases explaining the situation. They both stated that the company that did business as First Global Credit (or XBT) incurred in the selling of security-based swaps for BTC whilst failing to register on any exchanges.

Taking Futures Orders from 24 American Clients

The charges explain that the firm solicited or took futures orders from 24 different American clients in a span ranging from March 2016 and July 2017, accepting BTC for margin trades. During the aforementioned timeframe, XBT failed to register as an FCM, incurring in legal foul play.

The legal document explains that the company in question had a minimum of 90 investors, and between them, they processed over 18,000 security-based swaps in a span of five years between 2014 and 2019. The filing also notes that more than $100 million were conducted in transactions based on US-listed securities, with roughly $43.8 million coming in operations performed by American residents.

The settlement dictates that XBT needs to pay over $130,000 in fees and disgorgement. The SEC will be taking custody of those funds sometime in 2020. Another crucial point explained by CFTC in its release observes that the agency “recognizes that FGC’s civil monetary penalty in this matter was substantially reduced in light of FGC’s cooperation and remediation.”

CFD Derivatives Products

First Credit was introduced to the market near the end of 2014 and offered CFD (contract for difference) derivatives products, which let clients deposit BTC for the right of acquiring credits representing shares in high-profile firms around the world, with Apple being a notable example.

SEC’s filing explains that “although First Global Credit used different terminology to describe the investments it offered, including ‘bitcoin Asset Linked Notes,’ investors were able to participate in the price movements of securities, including those listed on U.S. securities exchanges, without owning them.” These types of instruments “are considered security-based swaps under the U.S. federal securities laws. First Global Credit offered these swaps to U.S. investors without complying with the registration and exchange requirements governing security-based swaps, which were enacted as part of the Dodd-Frank Act.”

David Peavler, currently the Regional Director of the SEC’s Fort Worth Regional Office, explains that “federal securities laws impose specific requirements for offering and selling security-based swaps to retail investors in the U.S. These obligations cannot be avoided merely by describing the swap transaction by a different name or funding it with digital currencies.”

SEC and the CFTC received help from the FBI and the Swiss Financial Market Supervisory Authority, or FINMA, in the investigation, as detailed by both press releases. XBT had not provided any comments regarding the situation at the time of writing this piece.

By Andres Chavez

BitMEX Accidentally Reveals Users’ Email Addresses in Recent Mishap

Andres Chavez
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BitMEX Accidentally Reveals Users’ Email Addresses in Recent Mishap

Online safety has never been as important as it is today, and users of the crypto derivatives exchange platform BitMEX, more than anyone, know that they should update their security preferences as soon as possible given the most recent events.

On Friday evening, more precisely at 8:00 UTC, the exchange let its customers know via a blog post and a tweet that it had incurred in an accident: it revealed the email address of a sizable portion of its users in the CC:field.

The episode was unfortunate because it could expose many people to phishing attacks: spammers and companies with this in mind likely beefed up their email address databases thanks to BitMEX’s data slippage.

Adding the Platform’s Support Email

Feeling responsible for what happened, BitMEX prompted users to add the platform’s support email to their contact lists in order to reduce the number of phishing emails, whilst also asking to add two-factor authentication (2FA) as an extra security measure.

According to the exchange, a bug was responsible for the mishap. The firm’s blog post read that “the error which has caused this has been identified and fixed,” but damage was inflicted and people are now worried about the safety of their data and information.

“We are aware that some of our users have received a general user update email earlier today, which contained the email addresses of other users. Our team have acted immediately to contain the issue and we are taking steps to understand the extent of the impact,” the company explained in the blog.

The platform’s deputy COO, Vivien Khoo explained to a specialized crypto news site that most of the exchange users got an email with the email addresses of fellow users in the “to” field, which was a “general email update” regarding changes to the weighting of their indices. She stated that the company is “sorry” about what happened, and explained that the problem was originated by an “error in the software used to send emails.”

Besides the users’ email addresses, no other important bits of personal data were disclosed in the episode.

“BitMEX takes the privacy and security of our users very seriously. Rest assured that in this instance, beyond email addresses, no other personal data or account information have been disclosed and no further emails have been sent,” they wrote.

No Stranger to Controversy

The unwanted reveal of the users’ email addresses is, sadly, not the first time that BitMEX has been in the news for the wrong reasons. The exchange is, according to report, being probed by an American financial watchdog (the Commodity Futures Exchange Commission, or CFTC) over whether it has let United States-based traders to use its ecosystem.

The issue is explained by the platform’s geo-block, which is used to prevent users from specific countries (including those in the United States of America) from having access to the site and the services offered. The use of Virtual Private Networks, or VPNs, as anonymizers has allowed users to circumvent the geo-block and enter the platform whilst being in the USA.

BitMEX is worldwide known as one of the most prominent crypto derivatives markets. It is famous around the industry for its leverage rates of up to 100x. It operates in the Seychelles islands. Its largest offering to the user base is the XBT/USD trade pair, which had a $2.8 trading volume in the last day, per data from CoinGecko.

By Andres Chavez

Due to Having Delays in Its Platform, Crypto-Exchange in Brazil is fined

Maria Rodríguez
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Due to Having Delays in Its Platform, Crypto-Exchange in Brazil is fined

Exchanges Mercado Bitcoin, the largest crypto-exchange house in Brazil, must pay compensation to the plaintiff for about approximately 4,323.06 reals, the equivalent to USD 1,122.84.

Through a statement published on October 16th by the judicial court of Sao Paulo, it was known that the Brazilian cryptocurrency exchange company, Exchanges Mercado Bitcoin, faces a lawsuit for breaching the time lapses in which it should offer the Bitcoin Gold cryptocurrency, a variant of the famous cryptocurrency Bitcoin (BTC). The lawsuit puts Brazil’s largest and most important exchange house in a difficult situation.

According to what is known about the issue, the client of the company submitted the claim arguing that at the time when Mercado Bitcoin manages to introduce the cryptocurrency on the platform the value of the asset changed, so it generated great losses. This information was corroborated by the judge who concluded that, in effect, the company caused losses to the plaintiff.

On this matter, the document issued by the Court of Justice of the State of Sao Paulo gave details regarding what happened.

“In this case, the plaintiff claimed that the value of the Bitcoin Gold unit on 10/23/2017 was quoted at USD 479. However, the plaintiff could not negotiate these assets, given that the Bitcoin Gold trading platform was created and enabled to users on 07/30/2018”, the document explains.

In this way, the plaintiff said there is a delay in the activation of this asset of more than 9 months so the plaintiff stated that the company did not give a convincing argument justifying the delay.

On the other hand, the defense of the crypto-exchange company argued that it decided to activate the use of this cryptocurrency on its platform when the market stabilized. Mercado Bitcoin says it considered the launching date was the best time for its use and could be used in the surest possible.

This statement was dismissed by the judge, who argued that the defendant did not submit a contractual service provision document that could expressly agree to the right of retention of its users’ assets in certain circumstances or a certain period.

Therefore, it is inferred that the impossibility of negotiating the plaintiff’s assets retained by the defendant, characterizes “the abusive practice in the face of the plaintiff’s vulnerability”.

Given the arguments, the judge decided as a final verdict, the ruling in favor of the plaintiff, authorizing compensation to the plaintiff of 4,000.00 Brazilian reals. That is only a part of the damages caused to the client.

Part of the sentence reads as follows: “Before the exposed, judgment in part of the initial order and, based on art. 487, subsection I, of the Code of Civil Prosecution, I render the fact disabled, with resolution of merit, for the purpose of condemning the defendant to reimburse the plaintiff the amount of 4,323.06 reals (BRL), (equivalent to USD 1,122.84), referring to the amount of 2,340.20 Bitcoin Gold available on the digital commerce platform managed by the defendant”.

The judge concluded that, in addition to this, there are no moral damages to repair so the amount represents just enough for the time it took for the company to enable the cryptocurrency.

By María Rodríguez

Bitcoin Is a “Threat” to the US Dollar, According to the United States Congress

Maria Rodríguez
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Bitcoin Is a “Threat” to the US Dollar, According to the United States Congress

Congressman Brad Sherman had already applied to Congress for having the cryptocurrencies banned, last January

After the appearance on Wednesday October 23rd, of Mark Zuckerberg, Facebook’s CEO, in the United States Congress to explain his plans to launch Libra -the cryptocurrency of the popular social network- Brad Sherman, a Congressman from the United States, rejected the use of this technology and described it as “negative” for the nation’s economy.

During the hearing that took place due to the possible launch of Libra for 2020, Sherman decided to attack all the cryptocurrencies directly. He also mentioned Bitcoin and suggested that this technology is only useful for performing irregular activities so the ones who generally use them are “criminals”, according to the congressman.

In his speech, Sherman decided to comment that the use of these digital currencies puts the dominance of the dollar over the financial system at serious “risk”, both in the country and in the rest of the world.

The renowned congressman is a faithful defender of the traditional economy. In addition to having a strong stance on the use and adoption of these assets. This has been in a way that even Sherman asked the US Congress for the definitive ban on cryptocurrencies, last January.

Zuckerberg talked about his position with respect to these assets, in addition to suggesting that these digital currencies could be beneficial for the United States so the Libra project would be beneficial for the country too.

When Zuckerberg concluded these statements, Sherman mentioned a tweet published by the president of the United States, Donald Trump, where he mentions that these technologies can be used for illegal acts. “Unregulated crypto-assets can facilitate unlawful behavior, including drug trade and other illegal activities”, says the tweet.

With respect to the irregular events that have involved the use of cryptocurrencies, Congressman Sherman showed a report with investigations that give these assets as allies of terrorists, also ensuring that the dollar works much better for the economy, except for criminals.

“For the richest man in the world to come here and hide behind the poorest people in the world and say that’s who you’re really trying to help them, you’re trying to help those for whom the dollar is not a good currency: drug dealers, terrorists, [and] tax evaders”, he added.

However, with respect to illicit acts, in the past year 2015, the European Police Office (Europol) issued a report detailing that the US currency remains the most used currency for illicit acts.

The congressman culminated his statements saying that cryptocurrencies should be treated as a direct attack to the US dollar, so he added: “Cryptocurrency either doesn’t work, in which case investors lose a lot of money, or it does achieve its objectives perhaps and displaces the US dollar or interferes with the US dollar being virtually the sole reserve currency in the world”, Sherman said.

Some people in the US support cryptocurrencies and some lawmakers do not. Only with clear regulations, the controversy could disappear.

By María Rodríguez

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