Wendy McElroy: Does Your Money Serve the State or You?

Does Your Money Serve the State or You?

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 4
Does Your Money Serve the State or You?

The State, in short, subjects people, whereas Society associates them voluntarily.

– Felix Morley

Two simple litmus tests determine whether money serves the state (organized force) or whether it serves society (voluntary exchanges).

  • Who issues it? State money is issued either by the state or by an authority controlled by it, who claims a monopoly.
  • Can people choose to use it or not? State money is established by requiring people to accept it as legal tender.

Cryptocurrency is privately issued, and no one is forced to use or to accept it. Crypto is a pure money of society—a public money, not one that serves rulers and elites. Indeed, many people use it to escape the corrupt central banking system and its domination of the global economy through fiat money. Control of the economy is the basis of social control.

The state lives or dies through its ability to regulate the flow of wealth within society. This makes cryptocurrency, even in its infancy, a threat to established power that the state addresses by dominating crypto through regulation, through its own monopoly issuance, or through banning it. Each step requires law. And, except for dictatorships, law requires public justification. Even with dictatorships, public justification is usually offered in order to avoid public resistance. The state needs law to destroy crypto, which means it needs justification. If there is not a real need, then a false one must be created.

The appeal to law reveals another and more fundamental difference between state money and that of society. Namely, what is the purpose of law regarding each one?


What is the Purpose of State Law Regarding Crypto?

The alleged illegality of crypto and of those who use it is, again, divided by the state into two clear categories.

First and foremost to the state are violations of its own self-declared jurisdiction. Given that the state produces no wealth, its claimed jurisdiction amounts to the rules by which wealth is confiscated and redistributed. Crypto violates these rules. Some uses do so directly. For example, it is sometimes used for tax evasion, money laundering, black-market activities, and other functions that compromise the state.

Of course, people who use fiat also commit such ‘crimes.’ In those cases, however, there is a remarkable difference in how the law approaches the offenses. Namely, objectionable individuals are demonized, often in a high-profile manner that intimidates those in the shadows. But the money itself is accused of no crime, and bears no liability. With cryptocurrency, both individuals and the money are demonized. The money is the true target, with individuals being the means by which to attack its legitimacy. Prosecutions springboard quickly into calls for monetary control.

Crypto also violates rules of the state in a more profound manner. It renders trusted third parties irrelevant, and there is no more massive third party than the state. The state created the central banking system as an omnipresent regulator of money and as a choke point for information. It wove an iron web of laws to monitor money and require its ounce of flesh from every transaction. If no one needs central banks, if they can easily avoid the strangling laws, then the power of the state dramatically diminishes. Some crypto zealots argue that the power is or will be destroyed. In either case, crypto constitutes a threat as muscular as any other revolution. Perhaps more so. No wonder, the loudest cry of “there ought to be a law” revolves around the preservation of state privileges.

The second round of the state’s cry for law is the claim that crypto violates the person and property of individuals. The line of attack is secondary, by far, and often sounds like an afterthought. But it is also the most dangerous claim to the continued freedom of crypto users because the accusation is valid, and it resonates with decent people. Most people hate taxes, and many would avoid them if it were safe to do so. But the same people hate fraud, theft, and violence.


Fraud, Theft, and Violence

Some uses of cryptocurrency are fraudulent. A March 2018 article in bitcoin.com opened,

“In the time it takes you to read this sentence, $850 will have been lost to cryptocurrency scams. In the time it takes to complete this article, that figure will have risen to $17,000. Phishing; fraud; theft; hacking; it’s all rife. In the first two months of 2018, there were 22 separate scams involving thefts of $400,000 or more. Put it all together and that equates to an average of $9.1 million a day. Oh, and that doesn’t include 2018’s outliers – Coincheck, Bitconnect, and Bitgrail. Otherwise, the total would actually stand at $23 million a day.”

There are thieves who prey upon the crypto community. An April 2018 article in bitcoin.com explained,

“Hardware wallets are regarded as one of the safest means of storing bitcoin and other cryptocurrencies. Each device grants the holder possession of their private keys and adds a PIN code plus other tamer-proof [sic] tech for enhanced security. Hardware wallets are not impregnable, however, as one British man found to his peril after purchasing the device on Ebay. Redditor moodyrocket is coming to terms with having his “life savings” wiped out this week, after $34,000 of crypto was stolen from his newly acquired Nano Ledger hardware wallet. The device was compromised, not due to any flaws in its design, but thanks to a man in the middle attack that saw the reseller insert their own recovery seed.”

Crypto allegedly cloaks acts of violence. This is the shakiest claim, because it is based on reports from state officials, or experts who are often in their pay. The “10 of the Biggest Lies Told About Bitcoin” (December 2017) addressed the claim that crypto is the finance of choice for terrorists.

“If you want to blame a currency, try the U.S. dollar which has been used to fund more wars, proxy wars, bombings, hijackings, and insurgencies than any other. Europol found no evidence that terrorists were using cryptocurrencies to fund their activities. That’s not to say it hasn’t happened and won’t happen. It’s telling however that the only people linking bitcoin with terrorism are governments seeking to crackdown on digital currencies.”

For the sake of argument, assume every accusation leveled at cryptocurrency is true. But it is also true of fiat. Fraud, theft, and violence has been associated with every means of exchange that has ever existed. Again, only crypto is discredited. Not barter. Not gold. Not fiat, against which no one shakes their fist due to fraud. It is telling that cryptocurrency is blamed for the actions of individuals, in much the same manner that guns are blamed for crimes.

Law will be imposed upon crypto. The state needs to reassert control. The free market needs to do what it does best: provide a solution to a need. State versus society. It will play out before our eyes.  I have a good idea of what it will look like, on both sides.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

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Texas Regulator Issues Cease and Desist Order to a Network of Crypto Companies

Texas Regulator Issues Cease and Desist Order to a Network of Crypto Companies

The Texas State Securities Board has taken an emergency action to stop a network of crypto-related companies from illegally offering investments in the state. A token offering and a mining firm are among those targeted by the securities board as selling fraudulent “cryptocurrency-related investments.”

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Emergency Action Taken

Texas Regulator Issues Cease and Desist Order to a Network of Crypto CompaniesThe Texas State Securities Board announced Thursday that an emergency action has been taken to “target promoters of crypto-mining investments.” According to the notice published on July 12 by the Board:

Texas Securities Commissioner Travis J. Iles took emergency action July 11 to stop a network of companies from fraudulently offering cryptocurrency-related investments to Texas residents.

Utah-based companies Mintage Mining LLC, Symatri LLC, NUI Social, Social Membership Network Holding LLC, and BC Holdings and Investments LLC are named in the emergency cease and desist order. They are all controlled by Darren Olayan of Lehi, Utah. In addition, NUI Social affiliates, Utah-based Douglas Whetsell and Houston-based Wyatt Mccullough, are also named in the order.

Investment Schemes

Texas Regulator Issues Cease and Desist Order to a Network of Crypto CompaniesMintage Mining LLC allegedly issues and offers two different crypto mining-related investments “illegally and fraudulently.” Together with Symatri LLC, they sell “pre-configured computer hardware to mine Kala,” an ERC-20 token which Symatri claims to be “fungible and transferable, and it is expected to be traded on cryptocurrency exchanges in the near future.”

Symatri also claims that more than 13,000 users have signed up for Kala’s ICO, which sold more than 814 million tokens. It supposedly raised over $8.5 million and more than 800 BTC. According to the Commissioner:

Symatri is not disclosing material information about the value of its cryptocurrency Kala. Nor is it providing information about the risks of investments in the computer hardware used to mine Kala.

Texas Regulator Issues Cease and Desist Order to a Network of Crypto CompaniesNUI Social is a multi-level marketing company that claims to have more than 300,000 members in 140 countries. Members of the scheme recruit individuals for crypto investments and earn commissions for the people that they recruit.

Whetsell and Mccullough were named for publishing “advertisements targeting Texas residents,” the Commissioner explained. According to the document, the promoters made claims such as:

The average weekly rate of interest varies from three percent to seven percent and the annual rate of interest ranges from 180 percent to 250 percent.

The advertisements also represent that Mccullough’s investment grew 500% within 7 weeks while his uncle’s rose 4,000% in 10 weeks.

The Violations

The order “alleges widespread violations of the Texas Securities Act” by all of the entities and individuals named within. According to the Commissioner, “none of the persons offering any of the investments are registered to sell securities in Texas, nor are the investments themselves registered for sale or have qualified for an exemption from registration.”

The Commissioner elaborated:

The violations include making deceptive claims to the public. Olayan and Mintage Mining, for instance, are telling investors that Mintage is ‘in compliance’ with securities laws, ‘works to always stay ahead of cryptocurrency regulation,’ and ‘remain[s] so continually by keeping in contact with legal firms.’

All named parties have been ordered to immediately cease and desist from offering a security for sale in Texas until the security is registered or exempt. They must also cease acting as securities dealers or agents in the state until they are registered or exempt. They have likewise been told that they cannot engage in any security-related fraud in the state.

What do you think of the Texas State Securities Board’s cease and desist order? Let us know in the comments section below.


Images courtesy of Shutterstock and the Texas State Securities Board.


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Youtube Dragged Into Bitconnect Class Action Lawsuit for Failure to Protect Victims

Youtube Dragged Into Bitconnect Class Action Lawsuit for Failure to Protect Victims

Youtube has been dragged into a class action lawsuit against Bitconnect for failure to protect its users from being exposed to the scam’s videos. This case might be used by Google and others to justify their bans on crypto ads, arguing that their algorithms can not distinguish between legitimate projects and frauds.  

Also Read: No Insider Trading, Market Manipulation and Misleading Ads – Malta’s New Crypto Law

Youtube to Blame for Bitconnect?

Youtube Dragged Into Bitconnect Class Action Lawsuit for Failure to Protect VictimsYoutube has been added as a defendant in a class action lawsuit against Bitconnect recently, evident by publicly available documents filed with the Southern District Court of Florida. According to the lawsuit, the Google-owned video platform failed to protect or warn its users from Bitconnect affiliates’ promotional material, which reached over 70,000 hours and 58 million views on Youtube.

“Several of the Affiliate Promoter Defendants had partnerships with YOUTUBE pursuant to which the BITCONNECT Defendants disseminated fraudulent and harmful content unsuspecting victims across the globe. YOUTUBE was negligent in failing to warn those victims of the harmful content for which YOUTUBE compensated their creators and publishers,” the document alleges. Another segment reads: ”In short, aided by YOUTUBE’s negligent failure to warn, the BITCONNECT Defendants defrauded tens of thousands of investors by capitalizing on the general public’s excitement for virtual currencies and by luring unsuspecting investors into purchasing unregistered securities and participating in pyramid/Ponzi schemes.”

Youtube Dragged Into Bitconnect Class Action Lawsuit for Failure to Protect Victims

“Wide-Reaching Ponzi Scheme”

Youtube Dragged Into Bitconnect Class Action Lawsuit for Failure to Protect VictimsAs we reported earlier this year, the original complaint has been filed by Charles Wildes, Francisco Doria, Aric Harod, Akiva Katz, James Gurry, and Ronald Nelson – represented by the law firm of Silver Miller – made on behalf of all Bitconnect customers. The plaintiffs stated that Bitconnect’s former $2.5 billion market capitalization was “built through the use of fraudulent means,” in particular “a wide-reaching Ponzi scheme that defrauded investors, made a mockery of state and federal securities laws, and employed an army of social media mercenaries who were paid to bring more unsuspecting victims into the fraud.”

After the matter was exposed, a number of prominent people on the platform have called out Youtubers for promoting Bitconnect, including Pewdiepie. Now the accusations go deeper than that, blaming the platform itself, which might have chilling consequences for sharing crypto content on social networks if accepted by the court.

Youtube Dragged Into Bitconnect Class Action Lawsuit for Failure to Protect Victims

Should media platforms like Youtube be blamed for the content scammers upload? Share your thoughts in the comments section below. 


Images courtesy of Shutterstock.


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Syscoin Hack Disrupts Binance Prompting Temporary Shutdown

Syscoin Hack Disrupts Binance Prompting Temporary Shutdown

Syscoin has been hit by an unusual hack that has manipulated the coin’s total supply. The attackers then sent the fraudulently generated coins to Binance and sold them, pushing the price of 1 SYS to as high as 96 BTC. The BTC they received was then withdrawn, prompting Binance to temporarily cease trading and to reset all APIs, which are believed to have facilitated the attack.

Also read: EU Report Advises Regulators Not to Ban or Ignore Cryptocurrencies

Syscoin Gets Pumped, Binance Gets Rekt

Syscoin Hack Disrupts Binance Prompting Temporary Shutdown96 BTC ($600,000) is a lot of money to pay for anything, not least a single altcoin that normally retails for a few cents. The first signs that something was astir emerged on Tuesday evening (EST) when Syscoin noted that it had detected unusual activity on its blockchain. It was initially suggested that a block was mined that somehow created 1 billion new SYS. Given that the total supply is set at 888 million, this ought to have been impossible. It is now understood, however, that the attackers were simply moving the same 40 million SYS around, as reported by a member of the Syscoin team. As such, the attack was not a hack in the conventional sense of the word, even if the end result was the same.

In recent weeks, a number of blockchains have been compromised before the funds were sent to Binance to launder, but 51% attacks were usually used, as was the case with Zencash. Intriguingly, the Syscoin hack came just one day after blockchain security protocol Blue claimed that half of the top 50 cryptocurrencies were vulnerable to “destructive flaws”. It promised to make the information public, before claiming that it had delayed the release to allow exchanges to make security preparations.

Syscoin Hack Disrupts Binance Prompting Temporary Shutdown

Binance Cancels All APIs

When cryptocurrency is stolen or otherwise appropriated through mischievous means, Binance has become the preferred destination for culprits seeking to cash out. That’s because it’s one of the few high liquidity exchanges with no KYC, making it easy to withdraw coins anonymously. It is widely assumed that Binance will soon enforce KYC, not least to protect itself from attacks such as these. It has been claimed that as much as $50 million of BTC was withdrawn from Binance, but these reports are as yet unverified.

Binance, for its part, has responded promptly to the hack, and communicated regularly with its users, as has been its trademark during times of crisis. Customers of the exchange woke up to the following email:

Syscoin Hack Disrupts Binance Prompting Temporary Shutdown

Binance CEO CZ promised a full post-mortem after the exchange re-enabled trading on Wednesday morning. In an incident recap, Binance has promised to rollback irregular trades and offer zero-fee trading to irregular trading. The exchange tweeted the news accompanied by the #SAFU hashtag, in reference to a rising crypto meme spawned by a previous CZ typo in which he assured users that “funds are safu”. In March, Binance was hit by a similar API-based attack, on that occasion using Viacoin. Using compromised APIs, the attackers set ridiculously high sell orders on the victims’ accounts, dump their illicitly obtained crypto on them and then cash out. Decentraland’s MANA cryptocurrency also soared dramatically on Binance in a move that’s believed to be linked to the Syscoin API attack.

Anatomy of a Hack

Telegram channel Whatblock has published what appears to be a fair summation of the Syscoin hack, writing:

1. [Hacker] spent a very long time collecting API keys through malware.
2. Look for a REALLY low liquidity shitcoin with an extremely thin order book on the ask side and find SYScoin.
3. Mine a lot of SYS coins and Take over SYS mining power to prevent rollback of the chain.
4. Get full access to an account on Binance that has a very high trade volume and regularly deposited and withdrew extremely large amounts of BTC (To avoid suspicion).
5. Send SYS (mined earlier) to this Binance account.
6. Place ask orders of SYScoin at VERY high rates at the very top of this thin order book.
7. Use BTC of Binance users that use API to buy all SYS in the orderbook.
8. Withdrew 1000 BTC in 7 different withdrawals all to the same BTC address.

While Binance has earned plaudits for its prompt response to suspicious trades, it is evident that it will remain a prime target to attackers so long as they are able to deposit and withdraw crypto with anonymity and impunity.

Do you think API-based attacks such as these are likely to happen again? What can exchanges like Binance do to mitigate the threat? Let us know in the comments section below.


Images courtesy of Shutterstock, Twitter, and Binance.


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Alleged Fraudster Arrested in China Over $15M Mining Hardware Con

Alleged Fraudster Arrested in China Over $15M Mining Hardware Con

When making investment decisions it is always important to remember the old saying, “If something looks too good to be true, it probably is.” This is especially true if anyone promises you a bitcoin mining rig, which people wait for months in advance, at just a third of the retail price.

Also Read: Silicon Valley Whales Buy Diamonds in the Millions With Bitcoin

The $15 Million Sting

Alleged Fraudster Arrested in China Over $15M Mining Hardware ConThe cryptocurrency market is usually hit with rather sophisticated cyber crimes like ransomware, hacking and malicious code injections. Still, good old fashioned methods of separating people from their money have not disappeared. A new example of this comes from China where a man allegedly made about $15 million by just appealing to people’s greed, promising mining hardware at a huge discount, and simply running away with the money.

Mr. Zhang, a resident of Anhui province in his twenties, has been arrested for allegedly defrauding almost 100 million yuan from fifty victims over a three month period, state media China Central Television (CCTV) reports. He took advantage of the insatiable demand for bitcoin in China at the tail end of 2017’s price rally and posted claims online that he can deliver mining rigs, that cost about 30,000 yuan at the time, for just 10,000 yuan. The delivery of the goods was promised two months after he got the money, but it never materialized.

Money Spent on Luxury Cars

Alleged Fraudster Arrested in China Over $15M Mining Hardware ConAccording to the report, Zhang gained the trust of his victims by appearing to deliver some of the mining machines for the discounted price. However, he didn’t really have a source for cheap rigs, and the Chinese police discovered later-on that they were actually bought for full price by him. Once people were convinced Zhang can really get discounted rigs, he received orders for thousands of them before vanishing in January.

The alleged conman surrendered to the police by his own volition after two months, claiming he was unable to deliver the promised rigs due to supply shortage and rising prices. He now awaits prosecution, but the money he received had already been spent on luxury cars as well as the rigs, according to CCTV.

Would you trust anyone that promises a mining rig at a third of the cost? Share your thoughts in the comments section below. 


Images courtesy of Shutterstock.


Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi’s Pulse, another original and free service from Bitcoin.com.

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Ukrainian Police Arrest Four in Alleged Cryptocurrency Exchange Fraud

Ukranian Police authorities have arrested four people in connection with running six fraudulent exchanges.t The authorities say that the accused setup exchanges using a custom CMS(content managemenset uptem), and attracted users through review websites, which they had infused with fake positive ratings. The websites the accused deployed are: 1. moneycraft.info 2. wowex.online 3. swapex.net 4. … Continued

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Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

A major South Korean exchange, Upbit, has paid six people for reporting fraudulent crypto-related schemes. Ten cases were reported to the exchange and six of them were selected. Upbit also recently partnered with Thomson Reuters to operate a system to support transparent crypto transactions.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Upbit Paid Users for Reporting Fraud

One of South Korea’s largest cryptocurrency exchanges, the Kakao Corp-backed Upbit, has paid six individuals for reporting fraudulent crypto-related schemes.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesThe exchange implemented a bounty system in March to reward users for identifying fraudulent schemes related to cryptocurrencies. The system is focused on identifying multi-level, illegal scams posing as cryptocurrencies or initial coin offering (ICO) tokens. “To the original complainant, Upbit pays a reward of 1 million won [~USD$931],” the exchange’s operator Dunamu Inc announced at the time.

Upbit said last week:

Since the implementation of the system, a total of 10 cases have been received and 6 of them have been selected. On June 6, we sent a reward of KRW 1 million with appreciation to the applicants.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes
Lee Seok-woo, the representative of Dunamu Inc (middle), and four out of the six winners.

“We provide reward money to users who have reported fraudulent acts that impersonate [an] ICO to the investigating agency (police, prosecutors) and submit the necessary evidence documents to prove the declaration,” the exchange clarified. While Upbit indicated that proper reporting procedures were not followed “such as the lack of evidence of investigation agency reports,” it decided to pay out regardless, to reward users for participating in the system and “to create a sound cryptocurrency ecosystem.”

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesThe Kakao Corp-backed Upbit used to command the number one spot in the South Korean market in terms of overall trading volume. However, at the time of this writing, Upbit is the world’s eighth largest crypto exchange with a 24-hour trading volume of $201,594,215, according to Coinmaketcap. It is the second largest exchange in South Korea, after allowing Bithumb to retake the number one spot with $239,054,683 of trading volume over the same time period. Last month, news.Bitcoin.com wrote about the Korean authorities launching an investigation into Upbit.

World-Check in Partnership with Thomson Reuters

In addition to the aforementioned fraud notification system, Upbit has also recently created a system called World-Check. The system is part of a collaboration with Thomson Reuters, a multinational mass media and information firm.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

The system is meant to support transparent cryptocurrency transactions and strengthen the company’s KYC (Know-Your-Customer) program. It aims to be “the trusted and accurate source of risk intelligence made available to help you meet your regulatory obligations, make informed decisions, and help prevent your business from inadvertently being used to launder the proceeds of crime or association with corrupt business practices,” the company described.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesWhen a user joins Upbit, their membership information is checked against the World Check data. If the security risk is determined to be high in relation to crime and terrorism, the registration process is immediately terminated. The system also checks daily for criminal records of members against the World-Check database. The company believes that this will help prevent money laundering and terrorism financing activities using cryptocurrencies.

In an unrelated event, a small South Korean crypto exchange, Coinrail, claimed it was hacked over the weekend. The police are now investigating the case.

What do you think of Upbit paying users for reporting fraudulent crypto schemes? Let us know in the comments section below.


Images courtesy of Shutterstock and Upbit.


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Bitcoin in Brief Wednesday: German Banks Trade Cryptos, US Universities Invest in Crypto Hedge Funds

Bitcoin in Brief Wednesday: German Banks Trade Cryptos, US Universities Invest in Crypto Hedge Funds

In today’s Bitcoin in Brief, regulators in Berlin have revealed that at least six German financial institutions are involved in cryptocurrency trading. Also, it has been reported that American universities have started investing in crypto hedge funds. The investments are on a limited scale but nevertheless indicate a growing interest from academic institutions. And, authorities in Belgium warn the public about crypto scams with a “Too good to be true” website.

Also read: Bitcoin in Brief Tuesday: Exchange ETF Action and Wozniak Wants Bitcoin to Rule World

Financial Authorities in Germany Find Six Institutions Trading Cryptos

Bitcoin in Brief Wednesday: German Banks Trade Cryptos, US Universities Invest in Crypto Hedge FundsAt least six financial institutions in Germany trade cryptocurrencies, the country’s Federal Ministry of Finance revealed. The information emerged from an answer to a question filed by Bundestag member Thomas Lutze. The figure is based on findings of the German financial regulator Bafin, which supervises the financial sector and is also expected to monitor crypto trading activities. The banks involved were not named.

There is no case registered with Bafin against financial institutions suspected of any breach of money laundering regulations, due diligence requirements, nor reporting obligations regarding cryptocurrencies, the Bundesfinanzministerium said, quoted by Reuters. Each such institution, which has permission to trade properties, also has the right to set up mechanisms allowing the exchange of bitcoin to euros and vice versa, the ministry noted.

The Finance ministry also said that the issuance of a digital central bank money is currently not an option in the Eurozone, “given the wide range of unresolved issues and significant risks associated with unclear benefits.” According to the report, the Federal government in Berlin does not see crypto-related risks to the stability of the financial markets due to the low market capitalization of cryptocurrencies and the limited interdependence with the financial sector.

Bitcoin in Brief Wednesday: German Banks Trade Cryptos, US Universities Invest in Crypto Hedge Funds

East Coast Universities Invest in Crypto Hedge Funds

Academic institutions in the US have started making small investments into cryptocurrency hedge funds, according to a lawyer working in the industry. These universities are getting involved on a limited basis for strategic reasons, the founder of Capital Fund Law Group, John Lore, told Business Insider. “I can’t say the names because that’s attorney-client but we have people mostly on the East Coast that have begun doing investments in this space on a fairly modest basis,” he added.

Bitcoin in Brief Wednesday: German Banks Trade Cryptos, US Universities Invest in Crypto Hedge FundsThe New York-based law group specializes in providing legal services to the hedge fund industry. According to Lore, at this point investors are putting in very small percentages of their net worth into these new funds. He doesn’t expect institutional investors, such as pension funds, to invest in crypto soon, with one notable exception – university endowment funds, some of which have already begun to invest on a limited scale. “We see academia as a tie between these somewhat young and enthusiastic fund managers and capital raising,” the lawyer said.

Cryptocurrencies and the underlying blockchain technologies have seen a growing interest from universities. Leading academic institutions, such as Cambridge and Oxford, have introduced crypto and blockchain related courses. In December, the Belarusian National Technical University announced a diploma course covering cryptocurrencies, derivatives, and ICOs, as news.Bitcoin.com reported. In April, the Fundacao Getulio Vargas University in Sao Paulo launched “Brazil’s first Master’s degree in cryptofinance.” It has been reported that North Korea’s Pyongyang University is also offering educational courses on cryptocurrencies.

Belgian Regulators Warn About Crypto Scams with New Website

Financial authorities and regulators in Belgium have launched a website dedicated to warning the public about crypto scams and raising awareness about the associated risks. The move comes in response to substantial increase in interest towards investing in cryptocurrencies and related products. The site, temooiomwaartezijn.be (“Too good to be true”), can also be used to report suspicious offers and projects in the crypto space.

Belgians can find there useful tips on how to avoid fraudulent schemes. The site advises investors to make sure they know who they are dealing with, check if a project is registered as a scam and never share sensitive personal data. Regulators say people should always request clear and understandable information, take their time to critically evaluate an offer before accepting it and be wary of promises of excessive profits. “If the return seems too good to be true, it usually is. Profit is never guaranteed,” they warn.

Bitcoin in Brief Wednesday: German Banks Trade Cryptos, US Universities Invest in Crypto Hedge Funds

Scam-related losses of almost €2.2 million have been reported to financial authorities in the country, with at least 118 victims having contacted Belgium’s Financial Services and Markets Authority (FSMA). Belgian regulators claim only 4% of the cases are reported. According to their estimates, the total financial loss from fraud related to cryptocurrencies amounts to around 130 million euros annually. In March, the financial watchdog published a list of 19 cryptocurrency trading platforms showing signs of fraud. Last month, the FSMA expanded its blacklist including more businesses reported by customers.

What are your thoughts on today’s topics in Bitcoin in Brief? Let us know in the comments section below.


Images courtesy of Shutterstock.


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Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up Operation

Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up Operation

Cease and desist letters have been sent to five crypto companies operating in Alabama, as part of the ongoing “Operation Crypto-Sweep.” The campaign, led by the North American Securities Administrators Association, is targeting ICO projects and blockchain startups suspected of fraudulent activities and violations of existing securities laws. Actions have been taken already by NASAA members in a number of states and provinces in North America.

Also read: Nearly 1 in 5 Offerings Accused of Fraud, Bermuda Passes Regulations, Thai SEC Holds Hearing

Three LA-Based Companies Among the Targeted

The Alabama Security Commission (ASC) has recently taken enforcement actions in five investigations as part of “Operation Crypto-Sweep.” The international crackdown on fraudulent Initial Coin Offerings (ICOs) and crypto-related investment products is coordinated by the North American Securities Administrators Association (NASAA), a voluntary organization whose membership consists of 67 state, provincial, and territorial securities administrators in the US, Canada and Mexico, of which the ASC is also a member. The Commission has issued a total of five cease and desist orders “to protect Alabamians”, according to an official announcement.

Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up OperationThe respondents are ICO organizations that have been targeting residents in more than one state. That’s why Alabama regulators have teamed up with their colleagues from Texas and New Jersey to go after the firms implicated in illegally soliciting investors. “Fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to Main Street investors in Alabama,” said ASC director Joseph Borg. The Commission is “committed to swiftly and effectively protecting investors from schemes and scams involving these products,” he added, noting that the measures taken are just the tip of the iceberg.

Cease and desist letters have been sent to three Los Angeles based companies. Extrabit Ltd., a purported crypto mining operation, offered through an ad the project’s EXB token at half price, conducting, according to regulators, an illegal and unregistered securities offering. Potential investors were told they had to spend $20,000 in the presale and expect the tokens within 48 hours. A 185 percent quarterly return was promised to those keeping a constant positive EXB balance. Returns were said to come from mining bitcoin, monero and zcash. The second firm form California, Leverage, has advertised itself as a crypto lending platform offering to investors a variable, daily interest. This case is again about an unlicensed security, the ASC said. Pool Trade is the third sanctioned company from LA.

Platinum Coin, another of the targeted crypto businesses, from Miami, Florida, has been caught offering investors an annual return of at least 320 percent. It has been issued with cease and desist order based on the same accusations – conducting sales of unregistered securities and making unrealistic promises. The fifth recipient of a cease and desist letter is an entity that purports to conduct business as an Internet-based escrow company. According to the ASC announcement, Chain Group Escrow Service is based in Kirkland, Washington.

Regulators Across North America Join “Crypto-Sweep”

Regulatory authorities in other states have also taken similar actions against dubious crypto businesses. The blockchain firm Shipchain, an operator of an etherium-based logistics platform, has received a cease and desist order from the Office of the Attorney General of South Carolina. The startup has been trying to sell its Shipcoin tokens without proper registration in the state, advertising its project to local investors. The state’s legislation treats investment contracts as securities and the tokens should have been registered as such. A permanent cease and desist order has been delivered to a company in neighboring North Carolina – Power Mining Pool. Another firm, Adosia LLC, has received a consent order in the state.

Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up Operation

According to NASAA’s website, cease and desist orders and letters have been sent so far to crypto and blockchain businesses in the following states: Missouri, Texas, Colorado, Maryland, New Jersey, and Ohio, as well as in the Canadian provinces of Quebec, British Columbia and New Brunswick.

“Operation Crypto-Sweep” is coordinated by NASAA which has united the efforts of more than 40 state and provincial securities regulators in the US and Canada for a coordinated series of investigations into ICOs and crypto-related investment products. There have been more than 70 inquiries and investigations so far, as well as 35 pending or completed enforcement actions since the beginning of May. The campaign was recently applauded by the chairman of the US Securities and Exchange Commission (SEC), Jay Clayton, as news.Bitcoin.com reported.

Do you think the actions undertaken by NASAA members will limit fraudulent activities in the crypto sector? Share your thoughts in the comments section below.


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