Prolific Bitcoin Dealer ‘Blew a Giant Hole’ Through US Legal Framework

Prolific Bitcoin Dealer 'Blew a Giant Hole' Through US Legal Framework

A Mexico-based “prolific bitcoin dealer” has been indicted and held without bond in the US on a number of international money laundering charges. He used Bitfinex for his exchange needs after Coinbase closed his account. His “activities ‘blew a giant hole’ through the legal framework of U.S. anti-money laundering laws,” the Department of Justice wrote.

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

Bitcoin Dealer Indicted

The U.S. Department of Justice (DOJ) announced Friday that a bitcoin dealer, Jacob Burrell Campos, was indicted for international money laundering and is being held without bond. Assistant U.S. Attorney Robert Ciaffa said during Burrell’s bond hearing on August 17 that:

Burrell was a prolific bitcoin dealer who sold approximately $750,000 worth of bitcoin to hundreds of buyers throughout the United States. He conducted 971 separate transactions with over 900 individual customers, and accepted cash in person, through his bank accounts, and through Moneygram.

Prolific Bitcoin Dealer 'Blew a Giant Hole' Through US Legal FrameworkCiaffa told the court that Burrell operated as a “bitcoin exchanger” and his activities constituted a money transmitting business. He was therefore required to register with the Department of Treasury and comply with all anti-money laundering requirements including “reporting suspicious cash transactions.”

However, Ciaffa claimed that Burrell accepted cash “with no questions asked,” adding that he “supplied hundreds of individuals with an easy outlet to avoid the anti-money laundering laws applicable to all financial institutions, including licensed and registered bitcoin exchanges,” for a 5% fee.

The indictment states that Burrell sent 28 wire transfers totaling over $900,000 from his bank accounts in the U.S. to a bank account in the name of Bitfinex in Taiwan. Ciaffa elaborated:

Burrell sent the money from the United States to buy bitcoin and fund his business. With these and other funds, Burrell bought over $3 million worth of bitcoin in over 2,600 transactions. Burrell resorted to buying bitcoin through Bitfinex after his account was closed by Coinbase, a U.S.-based bitcoin exchange, for circumventing its ID verification process.

Blowing Giant Hole Through US Legal Framework

Prolific Bitcoin Dealer 'Blew a Giant Hole' Through US Legal FrameworkBorn in San Diego, Burrell lives in Rosarito, Baja California, Mexico. He was arrested on August 13 while trying to enter the U.S. from Mexico. The 21-year-old “was ordered held without bail today in connection with a 31-count indictment charging him with operating an illegal money transmitting business, failing to maintain an anti-money laundering program, international money laundering and conspiracy to structure monetary transactions,” the DOJ announcement reads.

The indictment also charges him with conspiracy to structure the importation of monetary instruments. Ciaffa told the court that “Burrell agreed with others to smuggle over $1 million in U.S. dollars into the United States from Mexico, in amounts slightly less than $10,000, in order to avoid the currency reporting requirements.”

The Justice Department reported the assistant U.S. attorney saying:

Burrell’s activities ‘blew a giant hole’ through the legal framework of U.S. anti-money laundering laws by soliciting and introducing into the U.S. banking system close to $1 million in unregulated cash.

Prolific Bitcoin Dealer 'Blew a Giant Hole' Through US Legal FrameworkU.S. Magistrate Judge Karen S. Crawford “ordered him held without bail,” citing that he has “significant ties to Mexico, citizenship in three countries, no steady employment in the United States, the ability to access large sums of cash, and a disdain and unwillingness to comply with U.S. laws.” She, therefore, “concluded that Burrell posed a substantial risk of flight.”

According to the DOJ, the 31 counts in the indictment against Burrell carry different prison terms and fines. The first count carries a maximum of five years in prison and a fine of $250,000. The second carries ten years in prison and a $500,000 fine. The third through 30th counts, for the charge of international money laundering, carry “twenty years in prison for each count, [and a] $500,000 fine.” The last count carries five years in prison and a $250,000 fine. However, the Justice Department clarified that the charges and allegations “are merely accusations” and the defendant is “considered innocent unless and until proven guilty.”

What do you think of this case? Let us know in the comments section below.


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Gaming in Asia may be crypto’s killer dApp

As money and talent flows into the crypto and blockchain worlds, a persistent question keeps coming up: what is going to be the “killer app” that drives adoption for these nascent technologies? The answer may well be quite simple: gaming in Asia.

That’s the theory for Cryptokitties, the notable purveyor of cute cats. The company has started expanding into China, Japan, and Korea as it attempts to capture a large market of gamer and crypto enthusiasts there, and it is building on the playbook pioneered by Uber when it launched in China in 2014.

Back in March, Andreessen and Union Square Ventures led a $12 million Series A round into Cryptokitties. A portion of that money went into Cryptokitties’ ambitions to expand into Asia. In fact, Cryptokitties’ largest user markets have been, and still are, the U.S. and China, followed by Russia.

For those unfamiliar with Cryptokitties, it’s often been alluded to as a digital version of Beanie Babies. Cryptokitties are virtual collectibles in the form of cute cats that can be bought, sold, collected and traded with cryptocurrency, with all the transactions listed on the blockchain. Owners who purchase these kitties can then breed them with other kitties to produce new baby kitties.

The company is part of Axiom Zen, the Vancouver and San Francisco-based design studio that originally built the game. Since its launch in 2017, Cryptokitties has also built a third-party app platform for crypto developers called the Kittyverse, open-sourced their digital asset licensing platform, and started a crypto gaming investment fund. The company currently has about 70 employees and is headquartered in Vancouver.

One of the main purposes why Cryptokitties raised venture capital was for geographical expansion. Having ample capital to not worry about cash flow as the company steps on the gas is certainly quite helpful. But as a business, Cryptokitties was already doing fine. Back in June when I was having a discussion with the company, Cryptokitties was already profitable starting in week three.

The company has successfully differentiated itself from many other crypto decentralized apps (dApps for short) companies out there by proving that they could make money first and have a sustainable user base. Jimmy Song from Blockchain Capital once said, you can make money three ways in crypto, and those are “selling mining machines, starting up Crypto exchanges, and organizing Crypto conferences.” Nonetheless, Cryptokitties was an outlier. With its newly raised money, the team was looking to deploy the capital for hiring, building out it’s Kittyverse, and expanding in Asia.

Asia and China has a Large and Untapped Crypto Gaming Market

Benny Giang, one of the co-founders of Cryptokitties, has been tasked with Cryptokitties Asia expansion since late 2017. Since then, the team has launched Cryptokitties in China, Hong Kong, and Taiwan. During the launch, in order to avoid another one of Ethereum’s network clogs like what happened in late 2017, the iOS app launch was initially limited to 5,000 new players, based on selected WeChat accounts.

Benny believes blockchain games in Asia are a huge untapped market but with increasing competition. Whereas the intersection of gaming and blockchain users is still pretty limited in the Americas, in Asia, that audience is significantly larger. This is primarily due to three reasons: 1) the awareness of cryptocurrency and blockchain is more prevalent in Asia, 2) the regulatory markets are more developed and sophisticated (for better or worse) in China, Korea, and Japan, and 3) there is a proportionally higher number of gamers in Asia than the U.S.

China is the biggest market in this intersection, but there have been challenges. As Cryptokitties launched and grew in the last year, the company saw competition and copycats (pun intended) from China moving quickly into the market. In the beginning of 2018, just as Cryptokitties was launching in China, Xiaomi, the mobile phone maker that recently IPO-ed on the Hong Kong Stock Exchange, launched their own crypto collectible called Cryptobunny. Baidu, the large search engine of China, also recently launched Cryptopuppy.

Go to Market Learnings from Uber in China – Identifying the Right Local Partners and Hires

As Benny and team began doing research on the Asia market, they realized that working in a market that’s twelve hours away is not easy. Taking some of its lessons from Uber’s experience in China, they decided that they needed to localize their go-to-market approach.

One of the reasons Uber ended up exiting the Chinese market was that it did not successfully build a product catered to Chinese citizens. Despite the large sum of money it was pouring into the Chinese market, Uber was still losing market share to Didi. Another suggested reason for the failure was that Uber should have gone to market with a local partner like Didi instead of going head to head with them. The Cryptokitties team knew that they wanted to expand correctly, and subsequently identified a local partner in China to target the market there.

In January 2018, Axiom Zen partnered with Animoca Brands to publish the Cryptokitties game on mobile in China, Hong Kong, and Taiwan. Animoca is a Hong Kong-based, privately-held developer and publisher of games, with a number of games using popular IP such as Garfield, Ultraman, and Doraemon. By working with Animoca, Cryptokitties was able to build out a localized website for its Chinese-speaking audience, provide native-speaker support services, and host numerous giveaway events.

In my discussion with him, Benny provided some insightful advice on go to market strategy in Asia. First, he mentioned that for a blockchain gaming company like themselves, it is best to find two local partners – one in blockchain and one in gaming – to help navigate the landscape. This kind of well-thought-out, go-to-market strategy requires hard work and local community understanding that very few cryptocurrency teams have achieved.

Currently, most Western crypto companies do not apply a traditional tech-oriented go-to-market strategy when trying to expand into other regions. Instead, most of them choose to leverage their “global communities.” They would incentivize these regional token holders to do local marketing and encourage them to find more token supporters and buyers in their region. Nonetheless, that type of marketing approach effectively identifies people who want to make a quick buck, rather than users who can sustain a platform.

Secondly, tasteful and culturally-appealing design is also very important when it comes to dApps. Cryptokitties originally differentiated themselves from other dApps by creating beautiful cats on the blockchain that immediately caught people’s attention. They have also decided to apply a similar local strategy in China.

Momo Wang is the creator of the highly popular Tuzki character, a black and white line drawing of a bunny that’s used widely across various instant messaging platforms, particularly WeChat .

The popular character Tuzki (Photo courtesy WeChat)

Cryptokitties hired Momo as a brand ambassador and contributor to the Artist Series to design kitties for them. By doing so, they are able to appeal to an audience who may have a different local taste.

Benny adds that it is essential for dApp companies to create beautiful websites and great user experiences that appeal to local communities. However, there are also cons when building beautiful websites for a blockchain company that is decentralized by nature. Smooth user interfaces in the form of a traditional website or an app fall under the jurisdiction of a traditional tech business. Internet companies in China, for example, require approval and licensing from the government to be able to operate and serve its citizens.

China has become the wild west of crypto and blockchain, and there will continue to be unforeseen obstacles. It certainly isn’t easy for Cryptokitties to be the first western dApp company to venture into China, but in the next five years, we’ll see a significant number of Western companies heading east – and these early learnings will be invaluable.

Huobi Launches Partner Exchanges in Russia, Philippines, Taiwan, Indonesia, Canada

Huobi Launches Partner Exchanges in Russia, Philippines, Taiwan, Indonesia, Canada

Chinese exchange Huobi and its partners are launching cryptocurrency exchanges in five regions: the Philippines, Russia, Taiwan, Indonesia, and Canada. Partners “share Huobi’s order integration system, wallet system, asset management and clearing systems.” The exchange in Manila has launched with trading in three markets with over 40 trading pairs.

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

Five Partners, Five New Exchanges

Chinese digital asset and service provider Huobi has announced that it has chosen five partners to launch cryptocurrency exchanges in five regions.

Huobi Launches Partner Exchanges in Russia, Philippines, Taiwan, Indonesia, CanadaHuobi is one of the world’s largest cryptocurrency exchanges, with a 24-hour trading volume of $915,183,234 at the time of this writing, according to Coinmarketcap. With offices in Singapore, the U.S., Japan, South Korea, Hong Kong, Thailand, and Australia, Huobi claims to serve millions of users in over 130 countries.

The five partners are Yatai International Holding Group, Vnesheconombank, Chi Fu Group, Asia International Finance Holdings (AIF) and Dbank Group, according to South China Morning Post. Each partner will utilize Huobi Cloud to set up a new cryptocurrency exchange in “the Philippines, Russia, Taiwan, Indonesia and Canada, respectively,” the publication added.

Huobi clarified on Thursday:

Corporate partners also share Huobi’s order integration system, wallet system, asset management and clearing systems; in addition to Huobi Global’s world-leading depth, liquidity and market data.

The company officially launched Huobi Cloud on July 20, aimed at “enabling its partners to build secure and stable digital asset exchanges quickly.”

Launch Schedule

Huobi has provided a rough schedule for when the new exchanges will be launched by its partners. The exchange in Bali, Indonesia, will be launched on August 22. The one in Taiwan will be called Shubao Digital Asset Exchange and will be launched on August 26. The one in Moscow will be launched on September 3. The company has not provided the launch date for the exchange in Canada at press time.

The only exchange that has already been launched by one of the above partners is in the Philippines; it is called Huibi. Launched on August 12, it is headquartered in Manila and co-founded by Ya Tai International Holding Group.

Huobi Launches Partner Exchanges in Russia, Philippines, Taiwan, Indonesia, Canada
Huibi exchange in the Philippines.

Huibi lists three markets on its platform: USDT, BTC, and ETH. Eight trading pairs are available for the USDT market, seven for the BTC market, and 26 for the ETH market. There is no fiat support.

Huobi is also expanding its presence in the U.S. On Wednesday, August 15, the company announced that it “has entered into a strategic partnership, including a significant investment” with Openfinance Network, a US compliant security token trading platform launched earlier this summer. This follows Huobi’s recent attempt to enter the US market with the launch of Hbus exchange.

What do you think of Huobi and its partners launching exchanges in these countries? Let us know in the comments section below.


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Messaging firm Line launches a dedicated crypto fund

Messaging company Line is continuing to burrow deep into the crypto space after it announced the launch of a $10 million investment fund.

The fund will be operated by Line’s Korea-based blockchain subsidiary Unblock Corporation, which is tasked with research, education and other blockchain-related services. The fund will be called Unblock Ventures and it’ll initially have a capital pool of $10 million but Line said that is likely to increase over time.

The company said the fund will be focused on early-stage startup investments, but it didn’t provide further details.

Line is listed in Tokyo and on the NYSE. This fund makes it one of the first publicly traded companies to create a dedicated crypto investment vehicle. The objective, it said, is “to boost the development and adoption of cryptocurrencies and blockchain technology.”

Line claims nearly 200 million users of its messaging app, which is particularly popular in Japan, Taiwan, Thailand and Indonesia. The company also offers a range of connected services that include payment, social games, ride-hailing, food delivery and more.

This marks Line’s second major crypto move this year following the launch of its BitBox exchange last month. It isn’t available in the U.S. or Japan right now but Line envisages closes ties with its messaging service and other features further down the line.

These moves into crypto come despite some serious downturn in the valuation of the space this year following record highs in January which saw the value of one Bitcoin touch nearly $20,000 and Ethereum, among others, surged. In the months since then, however, many cryptocurrencies have seen their valuations decline. This week, Ethereum dropped below $300 in what is its first major price crisis. Bitcoin has, for many years, risen and fallen although January’s valuations took the extremes to a new level.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Regulations Round-Up: Central Bank-Issued Digital Currencies, Regulatory Clarity

Regulations Round-Up: Central Bank-Issued Digital Currencies, Regulatory Clarity

In recent regulatory news, Spain’s Central bank has issued a report favoring the development of a central bank-issued digital currency (CBDC), the president of Taiwan’s central bank has advocated caution regarding CBDCs, the Blockchain Research Institute has published a summary of recent roundtable discussions calling for great regulatory clarity, and a Russian court has a warned a publishing company for breaching advertising legislation with an ad pertaining to cryptocurrencies.

Also Read: Brazil’s Pro Bitcoin Presidential Candidate: É Boa Pra Caramba!

Spanish Central Bank Report Favors Central Bank-Issued Digital Currency

Spain’s central bank, Banco de Espana, recently published a report that seeks to consider the potential impacts that cryptocurrency and distributed ledger technology may have upon the Spanish economy.

The report advocates that the introduction of a central bank-issued digital currency would allow Banco de Espana to more efficiently implement monetary policy, stating: “An argument that could be considered at the time of assessing the introduction of CBDC is related to the improvement in the conduction of monetary policy through a better control in the market returns that savers and borrowers have to face. Also, the possibility of eliminating the restrictions associated with the zero level of the interest rate is theoretically attractive, especially in an environment of low interest rates such as the current one.”

Taiwan Central Bank President Advocates Caution Regarding CBDCs

By contrast, the president of Taiwan’s central bank, Yang Jinlong, recently advocated that financial institutions adopt a cautious approach regarding the central bank-issued digital currency.

During the Finance Technology Ecology Summit, Mr. Jinlong stated: “The financial authorities should be cautious about issuing central bank digital currency (CBDC). We will continue to pay attention to this issue, as well as the development of virtual currency, which may also drive out the debating topic of whether the central bank should issue CBDC. At present, the international consensus towards CBDC is that the general CBDC to the general public should be treated with cautious because of the complexity of issues involved, including the technology, security, policies, and user privacy protection issues.”

DLT Think Tank Advocates for Clarity Regarding Cryptocurrency and Blockchain Regulation

Major distributed ledger technology (DLT) think tank, the Blockchain Research Institute, has published a report calling for increased regulatory clarity regarding DLT and cryptocurrencies.

The report, the “2018 Blockchain Regulation Roundtable,” drew upon discussions involving “executives from blockchain start-ups,” “senior representatives of various global banking and securities regulators,” “senior non-regulatory government officials,” “business leaders from various established industries that are experimenting with blockchain in their business models and practices,” and “lawyers, accountants, investment bankers, and other key industry professionals.”

The report emphasized four “core issues” pertaining to regulations that it calls to be addressed: “The lack of regulatory clarity, the obsolescence of statutes and regulations, the lack of a mechanism for meaningful dialogue between regulators and other stakeholders, and the lack of dialogue between financial service providers and blockchain entrepreneurs.”

The report makes six key recommendations, advocating that the roundtable participants “form a multistakeholder action committee, prepare all stakeholders and the public for self-sovereign identities and pass legislation to recognize digital identities as valid, institute a national regulator with oversight of the nascent industry rather than allow individual agencies to create their own regulations piecemeal, agree on distinctions among cryptoassets and regulate accordingly, discourage discrimination against blockchain entrepreneurs and support start-ups in the space, and encourage the formation of special interest groups to move governance issues forward across applications and domains.”

Russian Court Warns Publisher for Breaching Advertising Laws With Crypto Ad

The Eleventh Arbitration Court of Appeal in Moscow has warned a publishing company after one of its newspapers published cryptocurrency-related advertising deemed to be in violation of Russian laws.

The dispute involved Unity NK – the company producing the newspaper Unity Nizhnekamsk, The Office of the Federal Antimonopoly Service (OFAS) for Tatarstan, and the Volga-Vyatka Central Administration of the Central Bank of Russia. The case arose following the discovery of an advertisement in Unity Nizhnekamsk for “Invest[ment] in cryptocurrencies: Bitcoin, Ethereum, Zcash” and the “Creation and setting up mining farms” by employees of Russia’s central bank – which then appealed to the Office of the Federal Antimonopoly Service due to concerns that Unity NK had violated advertising legislation.

The Tatarstan OFAS determined that “From the meaning of the content of the above advertising it follows that Blumchen Richard Timurovich [the owner the phone number provided in the advertisement] provided financial services, and not consulting,” and as such, Unity NK should be brought to administrative responsibility due to the ad’s failure to detail the name of the individual offering to provide financial services, as is mandated by Russian advertising legislation.

After initially considering fining Unity NK 50,000 rubles (approximately $738 USD), the court chose just to warn the company instead. “The court of first instance reasonably considered that the application of a fine of 50,000 rubles will be unjustifiably punitive, not corresponding to the gravity of the offense and the degree of guilt of the person brought to justice,” the judge stated. “The warning meets the general constitutional principles of punishment justice, its individualization, proportionality to the constitutionally established goals and protected legitimate interests, and is sufficient to implement the preventive nature of administrative liability measures.”

What is your opinion on central bank-issued digital currencies? Join the discussion in the comments section below!


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HTC Layoffs Won’t Impact Production of ‘World’s First Blockchain Phone’

Smartphone manufacturer HTC’s recently-announced round of layoffs will not affect the development or production of the HTC Exodus, which the firm has said will be the “world’s first native blockchain phone,” CCN has learned. This week, the Taiwan-based company announced that it would be laying off 1,500 employees – nearly 25 percent of its global … Continued

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Gaming PC That Mines While Idling Hits Market in Russia

Gaming PC That Mines While Idling Hits Market in Russia

A hybrid computer, designed to please both gamers and miners, is now selling in Russia. The company offering the new PC promises a quarter ether of monthly income for gaming enthusiasts who would like to mine when their expensive configuration is idling. The premiere coincides with reports of new negative forecasts for hardware manufacturers.

 Also read: Associations Challenging Crypto Ads Ban to Proceed with Lawsuit

Quarter Ether per Month Promised

The Russian company, Crypto Technology, presented its latest product, Cashbox X-Gaming, last week in Saint Petersburg where it is based. The platform is a hybrid between a powerful gaming computer and a cryptocurrency mining device boasting enough capacity to fulfill both functions.

The base model is equipped with Intel Core i5 or i7 processors, two Nvidia GTX 1060/1070/1080 Ti video cards, between 16 and 64 GB of DDR4 RAM, plenty of cooling fans, and a high-quality sound system. The low-end configuration offers a hashrate of 106 MH/S, but it can go up to 181 MH/s with upgraded components, according to Russian crypto media.

Cashbox X-Gaming comes at a starting price of less than 140,000 rubles, around $2,200 USD, and is accompanied by a three-year warranty. More potent configs, utilizing more powerful processors and graphics processing units, will be a bit more expensive. Quoted by the Web-Payment.ru portal, Crypto Technology CEO Anton Sobin said that sales will not be limited to the Russian market and noted:

We are focused on developing the mining sector in Russia, and therefore we try to make the equipment available to everyone. The gaming model will allow users who are not ready for serious investments to try mining and understand the specifics of this exciting and profitable crypto sphere.

Not so long ago, cryptocurrency mining of some altcoins was possible even with an average PC. Nowadays, it requires some serious computing power and home mining rigs often feature 6, 8 or more of the latest GPUs on the market, specially designed motherboards and smart power supply units.

The new Russian gaming PC is basically doubling as a GPU mining device. Its developers claim that it’s capable of minting about 0.23 ETH per month, which is ~$100 at the time of writing. The preset and tuned configuration mines when it’s not used for gaming, earning passive income for its owner. The company also offers free training on crypto mining and 24-hour tech support.

Gaming PC That Mines While Idling Hits Market in Russia

Pessimism Takes Possession of GPU Producers in Asia

And while Russian entrepreneurs feel optimistic about the market prospects for their gaming/mining PC, hardware manufacturers in Asia are starting to feel more and more pessimistic as recent trends on crypto markets are diminishing the returns from mining. Registering weak demand from miners and gamers, major GPU producers, Nvidia and AMD, as well as OEM suppliers like Asustek Computer, Gigabyte Technology, MSI, and TUL, have seen increasing inventories in the past weeks.

The latest company to hear a negative forecast was Gigabyte, a leading manufacturer of motherboards and graphics cards used in mining applications. According to Capital Investment Management, the Taiwanese hardware manufacturer is set to see lower profitability in the second quarter of 2018, due to the decline in shipments and GPU prices as the crypto mining frenzy subsides, The Taipei Times reports.

“The prices of major cryptocurrencies have plunged after peaking in early 2018 […] leading to persistently lower demand for cryptocurrency mining and for Gigabyte graphics card shipments, which decreased somewhat since the beginning of the second quarter,” the investment advisory firm said last week.

Gaming PC That Mines While Idling Hits Market in Russia

Analysts point out that Gigabyte’s revenues reached about NT$5 billion (~$164 million) in April and May, compared to NT$8.5 billion (~278 million) in March. They believe Q2 revenues will be lower than those from the first quarter. According to the Economic Daily News, Gigabyte has shipped 1.2 million video cards in the first three months of 2018 and can see a decline of 20 percent in the second quarterly period.

According to K.J. Sun, a company spokesman, Gigabyte is expecting the launch of Nvidia’s new family of GPUs, Volta, to bolster card sales. Recent reports suggest that the Volta lineup will be presented in September, at the earliest. It’s been rumored that Intel may also delay the launch of its new Cannon Lake CPUs.

All this can negatively affect Gigabyte’s revenues and earnings in the second half of the year, Capital Investment notes. The company’s shares fell 14 percent last month largely due to the weaker demand for hardware used in crypto mining and the postponed launch of Volta.

What are your expectations for the future of the mining hardware market? Let us know in the comments section below.  


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Japan’s Line Launching Exchange With 30+ Cryptocurrencies in All but Two Countries

Japan's Line Launching Exchange With 30+ Cryptocurrencies in All but Two Countries

The operator of Line, Japan’s most popular chat app with approximately 200 million users worldwide, has confirmed the upcoming launch of its cryptocurrency exchange called Bitbox. The new platform will list more than 30 of the most popular cryptocurrencies, offering “low trading fees”. Supporting 15 languages, the new exchange will launch globally, except for two countries.

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

Line Corp Launching Crypto Exchange Next Month

Japan's Line Launching Exchange With 30+ Cryptocurrencies in All but Two CountriesLine Corp, the operator of Japan’s most popular chat app, announced Thursday at the Line Conference 2018 that “it plans to establish the cryptocurrency exchange Bitbox in July 2018.” According to the company’s official announcement:

Bitbox will offer more than 30 highly demanded cryptocurrencies for global users (except in Japan and the United States), with support in 15 languages.

Line Corp elaborated that the 15 languages include English, Korean, and Chinese. Furthermore, the company emphasized that the new platform will be a “Cryptocurrency-to-cryptocurrency exchange (no fiat currency trading available).”

Japan's Line Launching Exchange With 30+ Cryptocurrencies in All but Two Countries

According to the company, in the first quarter of this year, its chat app had 165 million monthly active users (MAU) across four key countries: Japan, Taiwan, Thailand, and Indonesia. In Japan, there were 75 million users in that time period, which was 2 million more than the previous quarter. While Line has continually gained more users in Japan, it has lost users in the other three markets combined. Nonetheless, its overall DAU (daily active users) to MAU ratio has been steadily growing.

About Bitbox

Japan's Line Launching Exchange With 30+ Cryptocurrencies in All but Two CountriesThe CEO of Line Corp, Idezawa Takeshi, commented that “with Bitbox, Line users will be able to access cryptocurrencies more easily, while also being assured of state-of-art security measures to protect their assets.”

Line Corp explained that the cryptocurrencies to be listed on Bitbox “have gone through an extensive screening process.” They were “selected by an internal committee to offer the most reliable and safest trading for users,” the company noted, adding:

Bitbox will trade highly demanded coins, including bitcoin, ethereum, bitcoin cash, and litecoin, while offering low trading fees of 0.1%.

Japan's Line Launching Exchange With 30+ Cryptocurrencies in All but Two Countries

In January, the company said it had applied for a registration to operate a crypto exchange with the Japanese financial regulator, the Financial Services Agency (FSA). Under the revised fund settlement law, all crypto exchanges in Japan must register with the FSA. However, the process was held up after one of the largest crypto exchanges in the country, Coincheck, was hacked which prompted the FSA to tighten its oversight and registration rules. Recently, the agency issued business improvement orders to six fully-licensed crypto exchanges including the country’s largest, Bitflyer.

What do you think of Line Corp launching a crypto exchange? Do you think millions of the Line Chat app users will be using it? Let us know in the comments section below.


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Chat app Line to launch crypto exchange in July but it won’t cover US or Japan

Messaging app firm Line has confirmed it will launch a cryptocurrency exchange called BitBox next month.

The company said back in January that it planned to enter the crypto space with an exchange, but today it said that the BitBox service won’t be available for users in the U.S. and Japan — that’s presumably down to regulatory uncertainty.

What it will include, however, is support for trading 30 tokens — Line is only revealing big names like Bitcoin, Ethereum, Bitcoin Cash, and Litecoin so far — and a 0.1 percent trading fee. Line said it has picked the tokens following “an extensive screening process” which saw an internal commitment asses what on the market represents “the most reliable and safest trading [options] for users.”

Bitbox will be available worldwide and in 15 languages. It isn’t yet clear whether it will include an option to buy or sell tokens using fiat — a key ramp to getting new money into crypto — or whether this will just be token-to-token trading.

Line has around 200 million monthly active users and it has expanded into adjacent services such as taxis on-demand, music streaming, mobile payment and more, so this foray could represent a step towards accepting crypto for its other services in the future. But the exclusion of U.S. and Japan-based users is a major caveat.

Japan is Line’s largest market for revenue and users, so by excluding the country, it is severely limiting the potential impact that Bitbox can have.

Nonetheless, the company is need of something fresh to revitalize its business in the wake of increasing competition from Facebook, which operates WhatsApp and Messenger, the world’s most popular messaging apps with over one billion monthly users each.

Prior its $1.1 billion U.S.-Japan IPO in 2016, Line had targeted a global audience via its messaging service — which pioneered the concept of stickers — and a connected games business. Its international expansion didn’t go according to plan, however, and the company refocused efforts on its four core markets of Japan, Thailand, Taiwan and Indonesia, which account for 168 million of its active users.

In those markets, it offers a range of localized services that include video streamingmanga cartoonsshoppingride-hailing and other on-demand services. Last year, it began to sell smart hardware and AI to offer its own cartoony alternative to Amazon’s Echo range and Google Home devices. In some markets, it also offers a Line-branded mobile phone/data service.

There’s plenty of pressure, however. Facebook’s global popularity makes Messenger an option for most internet users on the planet while the company is busy in other areas. WhatsApp recently moved into business solutions that allow companies to correspond with users via its service, and it is tipped to add payments soon. CEO Mark Zuckerberg pledged to look into whether Facebook can make use of blockchain technology and earlier this year he set up a dedicated division that is headed by David Marcus, the ex-lead for Messenger and former CEO of PayPal.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Crypto Markets, Weak Demand from Miners Hurt GPU Producers

Crypto Markets, Weak Demand from Miners Hurt GPU Producers

Dipping cryptocurrency markets are hurting not only crypto holders but also a number of related businesses and sectors. Manufacturers of hardware that can be used in mining applications, like GPU makers Nvidia, AMD and their OEM partners, are also hit by weak demand in the sector which is pushing inventories up.

Also read: Bitcoin Businesses Denied Banking Services in Ireland

Excess Inventory Due to Weak Sales in the Crypto Segment

Recent tech media reports suggest that the leading video card maker, Nvidia, is experiencing excess inventory issues in the GPU channel. The surplus is most likely the main reason for the delay in the launch of Nvidia’s new gaming card based on the Volta architecture, which was expected to replace the Pascal generation. The postponement was confirmed in comments made by Nvidia CEO Jen-Hsun Huang during Computex 2018. He said the company is not planning to release new graphics processors in the near future.

Crypto Markets, Weak Demand from Miners Hurt GPU ProducersWith crypto markets reacting to a number of negative events in recent weeks, like the hacks of Korean exchanges Coinrail and Bithumb, regulatory actions in Japan, and the exposure of scams and suspected market manipulations, the rumors of a technical issue with the new consumer lineup have been replaced by another explanation – inventory buildup. Observers say it is probably due to overestimated demand in the gaming sector and the underestimated impact of the declining demand in the market for mining equipment.

These suspicions have been increased by rumors that a major Taiwanese OEM partner of Nvidia, ASUS, MSI or Gigabyte, has reportedly returned 300,000 graphics cards to the company. According to reports by Seeking Alpha and Semiaccurate, the giant has been also aggressively buying GDDR5 memory, which indicates an excess stock of lower-end GPUs that need to be made into boards. Quoted sources from the industry claim the return of the chips is related to the decreasing demand from cryptocurrency miners.

Nvidia has previously shared its expectations that the crypto fever would last until at least the third quarter of 2018, but obviously GPU sales have already started to go down. The prices of many altcoins that are mined with video cards decreased along with that of bitcoin. BTC is trading well below $7,000 and experts believe the downturn in the demand for graphics processors is largely due to the prices under this threshold.

Crypto Markets, Weak Demand from Miners Hurt GPU Producers
AMD Price Chart, Ycharts

The crypto market ups and downs and the weak demand from miners have also affected Advanced Micro Devices, Nvidia’s main competitor. According to Investopedia, AMD’s shares rose by 25% in February before plunging by 30% in April, then soaring by 50% in May, until reaching around $17 on June 18. At the time of writing, their price is $15.69, according to data provided by Ycharts.

A Shift Towards Modest Expectations, Results

In April, AMD announced revenues of $1.65 billion dollars for the first quarter of 2018, with net income reaching $81 million, a 40% year-over-year growth. The company benefited substantially from the increased sales to crypto miners, which allowed it to reduce the gap between its results and those of Nvidia. In the last quarter of 2017, AMD’s share of the GPU market rose from 27.2% to 33.7%. AMD products remain cheaper while offering similar productivity, when it comes to crypto mining.

In May, Nvidia announced its revenues for Q1, noting that the total has increased by 66% year-over-year, and 10% sequentially, to a record $3.21 billion. For the first time, its quarterly report mentioned separately the amount generated from sales to the crypto market. The total GPU business revenue was $2.77 billion, up 77% from a year earlier and up 12% sequentially. $289 million of it is related to sales of GPUs for mining.

Crypto Markets, Weak Demand from Miners Hurt GPU Producers

The two leading producers of video cards reacted differently to the increased demand for hardware for mining applications. In February, AMD said it was planning to increase production. Nvidia initially took steps to limit GPU sales to crypto miners. Then it was rumored that the company might launch a dedicated mining card called “Turing.” Later reports suggested its launch has been postponed to until at least July. If the current trends persist, however, both companies are likely to announce more modest plans and results in the coming months.

According to sources quoted by Digitimes, Taiwanese suppliers of graphics processing units are also expected to experience dropping shipments and profits in the second half of this year. Companies like Asustek Computer, Gigabyte Technology, Micro-Star International, and TUL have seen their inventories increase significantly, mostly in result of shrinking demand from the mining sector. Observers expect a shift in the focus towards the gaming and datacenter segments.

What are your expectations for the future of the GPU market and the crypto mining sector? Share your thoughts in the comments section below.


Images courtesy of Shutterstock.


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Taiwan’s Financial Regulator to Conduct Limited Oversight of Cryptocurrencies

The Financial Supervisory Commission of Taiwan has indicated its intentions to maintain only a limited oversight of cryptocurrencies. The regulator said it’s going to focus mainly on the enforcement of anti-money laundering policies, while remaining open towards innovations like those coming from the crypto sector.

The Financial Supervisory Commission of Taiwan has indicated its intentions to maintain only a limited oversight of cryptocurrencies. The regulator said it’s going to focus mainly on the enforcement of anti-money laundering policies, while remaining open towards innovations like those coming from the crypto sector.

Also read: Bitcoin Businesses Denied Banking Services in Ireland

Not Stifling Innovation

The Financial Supervisory Commission of Taiwan has indicated its intentions to maintain only a limited oversight of cryptocurrencies. The regulator said it’s going to focus mainly on the enforcement of anti-money laundering policies, while remaining open towards innovations like those coming from the crypto sector.With the executive power in Taipei still mulling over new regulations for cryptocurrencies and initial coin offerings (ICOs), representatives of Taiwan’s financial regulator indicated their unwillingness to slow down progress in the fintech industry. The Financial Supervisory Commission (FSC) will mainly focus on one of its core duties – overseeing the enforcement of anti-money laundering policies, and will continue to welcome innovations that come with digital currencies.

During a press conference on Thursday, Banking Bureau Deputy Director Sherri Chuang said the FSC prefers to monitor developments and avoid stifling early-stage growth. Quoted by The Taipei Times, she emphasized:

The commission maintains an open stance and welcomes all industry innovations.

Chuang also noted that cryptocurrencies, and the tokens issued through ICOs, which are classified as commodities at this stage, do not currently fall under the commission’s jurisdiction. The regulator is only involved in preventing money laundering through virtual assets, the official reiterated before the media. Sherri Chuang compared the situation with that of the lease finance companies, where the involvement of the regulator is also limited to money laundering prevention.

The Financial Supervisory Commission of Taiwan has indicated its intentions to maintain only a limited oversight of cryptocurrencies. The regulator said it’s going to focus mainly on the enforcement of anti-money laundering policies, while remaining open towards innovations like those coming from the crypto sector.According to another representative of the commission, Securities and Futures Bureau Chief Secretary Chien Hung-ming, ICOs do not cross any regulatory red lines in Taiwan. He explained that each coin offering would be assessed on a case-by-case basis, noting that regulators are primarily concerned with examining the fundraising prospects of the respective token sale.

The FSC will assess each issuance to determine if the digital coin should be classified as a security or a virtual commodity, Chien added. “It is very difficult to define broadly, as each case is different,” the FSC official pointed out.

Not Following China

The Executive Yuan, or the Taiwanese government, has yet to develop and adopt comprehensive regulations for cryptocurrencies and initial coin offerings. In April, high-ranking officials indicated that the respective legislative framework should be developed and introduced by November, 2018, as news.Bitcoin.com reported.

According to a statement by Taiwan’s Justice Minister, Qiu Taisan, the government intends to task the FSC with developing the regulatory system for digital currencies. The Ministry of the Interior, the Investigation Bureau, and the Central Bank of the Republic of China (Taiwan) are expected to assist the commission.

The Financial Supervisory Commission of Taiwan has indicated its intentions to maintain only a limited oversight of cryptocurrencies. The regulator said it’s going to focus mainly on the enforcement of anti-money laundering policies, while remaining open towards innovations like those coming from the crypto sector.

Although cryptocurrencies like bitcoin have been increasingly mentioned as a subject of concern, mainly in the light of money laundering, Taiwan is not likely to severely restrict them. Last year the chairman of the FSC, Wellington Koo, confirmed that the country would not adopt a prohibitive regulatory framework like the one implemented in China.

Earlier in April, Taiwan’s Central Bank signaled it would favor regulating cryptocurrencies under the country’s existing anti-money laundering laws. Its new governor, Yang Chin-long, suggested that the Ministry of Justice should include bitcoin in the scope of ROC’s Money Laundering Control Act.

Do you expect Taiwan to eventually adopt crypto-friendly regulations? Share your thoughts on the subject in the comments section below.  


Images courtesy of Shutterstock.


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Mining Hardware Supply Chain Seeks Alternative Revenue Streams Amid Declining Demand

Mining Hardware Supply Chain Seeks Alternative Revenue Streams Amid Declining Demand

With demand for cryptocurrency mining hardware having sharply declined following the onslaught of 2018’s bear market, reports are indicating the companies operating in the supply chain behind mining hardware are increasingly seeking alternative revenue streams to offset falling demand from the mining industry.

Also Read: SEC Executive: ‘Cryptocurrencies with Decentralized Structures Not Securities’

Cryptocurrency Bubble Pops for Mining Hardware Supply Chain

Mining Hardware Supply Chain Seeks Alternative Revenue Streams Amid Declining DemandBetween April 2017 and March 2018, the virtual currency mining hardware manufacturing industry appeared unstoppable. Last year, the multi-year cryptocurrency bull trend was accelerating toward its peak, drawing with it unprecedented media coverage of the virtual currency markets.

With demand for mining hardware at unprecedented levels, companies operating within the supply chain manufacturing mining devices were reporting record sales and witnessing all-time high stock prices. At one point, China’s leading ASICs supplier, Bitmain, was briefly ranked as one of the top ten clients of the world’s largest semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC).

Profit Projections Slashed

Mining Hardware Supply Chain Seeks Alternative Revenue Streams Amid Declining DemandAccording to a report from Digitimes, the party is well and truly over for Taiwanese suppliers of graphics processing units (GPUs), who “have seen their inventories pick up rapidly, and their sales prices have declined to the levels seen in early 2017.” The report, citing “industry sources,” asserts that “[GPU] suppliers may be forced to return to the gaming market to renew growth momentum in second of the second half of 2018.”

In April, CNBC reported that Wells Fargo Securities had slashed its profit forecast for Nvidia due to “falling demand for GPUs [graphics processing unit] used in cryptocurrency,” according to Wells Fargo analyst, David Wong. Later that month, TSMC reduced its projected earnings in response to waning demand for mining hardware. Taiwan’s Gigabyte Technology is also expecting to sell less than 10 million motherboards in 2018 due partly to shrinking demand for mining hardware.

ASIC Manufacturers Turn to AI for Alternative Revenue Stream

Mining Hardware Supply Chain Seeks Alternative Revenue Streams Amid Declining DemandWhilst GPU manufacturers are able to refocus their efforts on the gaming market, suppliers of application specific integrated chip (ASIC) miners are exploring alternative revenue streams in order to offset declining demand for mining hardware.

In a recent interview with Fortune, the co-founder and co-chief executive officer of Bitmain, Jihan Wu, was asked of the company’s “priorities over the next few years” – to which Mr. Wu replied investing further resources in the research and development of mining rigs, that “Bitmain will also start to deploy lots of artificial intelligence products into the market.”

Canaan Inc., the world’s second largest ASIC manufacturer, is also looking to the artificial intelligence (AI) markets to bolster its profits, with the prospectus for the company’s proposed initial public offering indicating that it plans to focus on producing chips for AI applications.

Do you think that demand for mining hardware will see a resurgence in the foreseeable future? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


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Mining Round-Up: Venezuelan Authorities Raid Miners, Taiwanese Miner Shot for Debt to Investors

Mining Round-Up: Venezuelan Authorities Raid Miners, Taiwanese Miner Shot for Debt to Investors

In recent mining news, Venezuelan authorities are cracking down on mining operations – with one Venezuelan telling reporters that he was forced to leave his home country after becoming the victim of extortion. In other news, a Taiwanese miner was shot by gangsters after failing to deliver on returns on the gang’s investment into his mining operation, and a state-owned wind farm in Estonia has begun mining cryptocurrency.

Also Read: This Week in Bitcoin: Digital Money Makes the World Go Round

Venezuelan Authorities Raid Mining Operations After Instituting Ban

Mining Round-Up: Venezuelan Authorities Raid Miners, Taiwanese Miner Shot for Debt to InvestorsVenezuelan authorities have sought to crack down on cryptocurrency mining, with local media reporting that government has banned the importation of mining hardware into the country. International shipping companies such as DHL, Domesa, and Learexpress have been informed of the prohibition on mining hardware imports. The raids are being carried out just a few months after the Venezuelan government requested that the country’s mining community create a national registry of miners – at the time inciting suspicion among Venezuelan cryptocurrency users.

In recent weeks, a Venezuelan man, ‘David’, revealed to media that was forced to flee his home country after becoming the victim of extortion from authorities. David alleges that late last year, Venezuelan police received a tip that he was mining, leading to his office being raided, and his equipment confiscated – with police demanding a ransom in order for his equipment to be returned. Believing that he had now become a target for further extortion, and fearing for the safety of himself and his loved ones, David, and his family chose to flee and cross the border into Colombia.

Miner Shot by Gangster Investors After Failing to Deliver Promised Returns

Mining Round-Up: Venezuelan Authorities Raid Miners, Taiwanese Miner Shot for Debt to InvestorsIn recent weeks, a Taiwanese bitcoin miner was shot by two members of the criminal organization ‘Freshwater Gang’. The victim, Mr. Wu, was shot at seven times by Gao Qitang and Chen Yumin, however, has survived.

The Freshwater Gang has invested approximated $50 million TWD (nearly 1.677 million USD into Mr. Wu’s mining operation, and had been expecting quick returns. Mr. Wu was unable to meet the expected initial payment of $10 million TWD (approximately $340,000 USD), citing China’s crackdown on cryptocurrency as the reason. Mr. Wu was shot after an argument with the two men. The shooting took place in the Longhua Hall in Banqiao.

Gao Qitang and Chen Yumin surrendered within seven hours of shooting and were taken into custody at the Haishan Police Substation of New Taipei City.

Estonian State-Owned Wind Farm Launches Crypto Mine

Mining Round-Up: Venezuelan Authorities Raid Miners, Taiwanese Miner Shot for Debt to InvestorsOn Friday, a wind farm owned by the Estonian government launched a began mining cryptocurrency. According to local officials, the mine will take advantage of virtually unlimited power available to the windswept Baltic Sea island on which it is situated.

The mining hardware, comprising a bank of computers hooked up to the seven turbine, six megawatt wind farm, was set-up by Estonian private limited company Eesti Elekter. Oleg Sonajalg, a board member of Eesti Elekter, stated “It is great that the decentralized money transfer blockchain technology has found its way to our wind farm. Hopefully, it will be a fruitful cooperation.”

“The more synergy between future technologies we find, the more able to compete we will be in the future,” Mr. Sonajalg added.

Do you think that the situation will continue to worsen for Venezuela’s bitcoin miners? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


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Bitcoin in Brief Thursday: Asus Creates 20-GPU Mining Motherboard

Bitcoin in Brief Thursday: Asus Creates 20 GPU Mining Motherboard

In today’s edition of Bitcoin in Brief we feature news from all over the world. These stories include a new multi-GPU mining motherboard from Taiwan’s Asu; a Singaporean businessman acquiring a Japanese exchange; some ripple-loving alleged Russian hackers shaking down Canadian banks; and a Colombian soccer star launching his own coin.

Also Read: Austrian Financial Market Authority Stops ‘Active Managed Mining’ Operation

H370 Mining Master

Bitcoin in Brief Thursday: Asus Creates 20 GPU Mining MotherboardAsus (TWSE: 2357), the Taiwanese computer hardware manufacturer, has announced a new motherboard that increases density with support for up to 20 graphics cards, designed specifically for crypto miners. The H370 Mining Master greatly replaces its predecessor’s x1 slots with banks of vertical PCIe-over-USB ports that let riser cables plug directly into the motherboard.

The company explains that: “Mining is a numbers game; it’s only worthwhile if the value of the cryptocurrency you generate exceeds the cost of producing it. Increasing the number of graphics cards per node is a great way to stack the deck in your favor.” The motherboard includes several more mining-enhancing features including a suite of diagnostic features designed to make a rig easier to manage. Chief among them is GPU State Detection, which scans the system at boot and indicates whether each riser port is empty, connected to a functional graphics card, or whether it’s experiencing problems. It will be unveiled at Computex 2018 in Taipei, June 5-9.

Real Estate Entrepreneur Buys Bittrade

Singaporean property entrepreneur Eric Cheng has announced the acquisition of two Japanese companies for S$67 million, giving him a 100% controlling stake in FX Trade Financial and its affiliate Bittrade. Bittrade is one of only sixteen Japanese FSA-regulated cryptocurrency trading platforms. Speaking on the acquisition, Cheng commented: “The cryptocurrency industry is growing exponentially. Against this backdrop, the key to capturing the rising demand is having a well-regulated and licensed outfit. With this Japanese FSA-licensed platform, I will work closely with the regulators to scale this platform globally.”

Ripple Loving Bank Hackers

Bitcoin in Brief Thursday: Asus Creates 20-GPU Mining MotherboardHackers and ransomware cyber criminals usually prefer privacy coins such as monero, or just BTC to avoid having to explain too much about the crypto markets to their victims. But a new group, possibly from Russia, has been more successful with Ripple’s XRP. According to a report from Canada, an address with about $5 million in XRP is controlled by hackers who recently attacked two banks.

Bank of Montreal (BMO) and Simplii Financial revealed personal information about 90,000 clients of the two banks was being held hostage for $1 million, to be paid in XRP. The hackers, using a Russian email service, explained that the banks’ lack of education security has enabled the situation. “They were giving too much permission to half-authenticated accounts which enabled us to grab all this information,” they said, adding that the system “was not checking if a password was valid until the security questions were input correctly.”

$30 Million Gumi Cryptos

Gumi Cryptos is a new $30 million investment fund meant to help crypto ventures crack the Japanese market. It is led by Hironao Kunimitsu, founder and CEO of Tokyo-based mobile gamer publisher Gumi, and Miko Matsumura, founder of U.S.-based exchange Evercoin.

“We’ll be bringing startups from outside of Japan to the Japanese market,” Matsumura told Gamesbeat. “We like early stage. We invest in equity or tokens. We like financial services. We like game technologies, and we believe there is a strong connection between gaming and crypto.” He added that “Having advised top global cryptocurrency startups alongside some of the best investors in the world, I’ve come to realize that all of them struggle to break into Japan, the largest cryptocurrency market in the world. I’m excited to join Gumi and their well-respected network in Japan.”

James Rodriguez Coin

Bitcoin in Brief Thursday: Asus Creates 20 GPU Mining MotherboardColombian soccer star James Rodriguez, currently attacking midfielder for Bayern Munich Football Club, has announced he decided to create a new coin for fans to capitalize on his brand. The JR10 token, developed in collaboration with Selfsell, is planned to be used for exchange of match tickets, souvenirs, and exclusive merchandise as well as the opportunities to participate in Rodriguez’s fan club activities.

Previous crypto collaborations by soccer stars include Leo Messi promoting an ultra secure mobile phone for paranoid cryptocurrency users.

What do you think about today’s news updates? Share your thoughts in the comments section below. 


Images courtesy of Shutterstock, Asus.


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