Category Archives: Bittrex

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IEO Offers Light Post-ICO Era, but Not All Are Convinced

IEO Offers Light Post-ICO Era, but Not All Are Convinced

After the apparent bursting of the initial coin offering (ICO) bubble, startups have been struggling to raise funds through the crypto or token model of token/coin offerings as investor interest dwindled and price problems continued. That is, until 2019 introduced the concept of initial exchange offerings (IEOs).

Retail investors have warmed up to the idea of buying tokens for a project that has already been assessed by a trusted entity, in this case cryptocurrency exchanges, believing that the likelihood of getting scammed by a project is far less if the project has been approved by an exchange.

As reported by Bloomberg, crypto analytics firm CoinSchedule has recorded 23 such offerings already since February 2019, raising a total of USD 180 million. Bittrex CEO Bill Shihara, whose own platform launched its first IEO this month, selling out in under 1 minute, spoke in positive terms of the new concept:

“It [IEO] has the potential to be larger than the ICOs of 2017. We are seeing significant demand both from our users and token teams.”

However, not everyone is viewing this with positive eyes. Zach Fallon, a securities lawyer who worked on ICO-related issues at the US Securities and Exchange Commission until last year, makes a brutal assessment that IEOs “take everything from an ICO and make it worse”. He believes that IEOs are still exposing investors to the risk of fraud because the vetting processes are not transparent nor standardized.

ICOs have not yet died completely. CoinSchedule shows that ICOs have raised USD208 million, only slightly more than IEOs in their early stages of discovery.

 

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Popular Crypto Exchange Bittrex Denied Operating License in New York

Popular Crypto Exchange Bittrex Denied Operating License in New York

The popular cryptocurrency exchange Bittrex was today denied its application to operate in the state of New York.

The New York Department of Financial Services (NYDFS) rejected the BitLicense application from the exchange on the grounds of failure to adequately comply with a number of policies. In a letter written by NYDFS and addressed to the CEO of Bittrex, Bill Shihara, it is explained that the exchange failed to comply with the state’s anti-money laundering, know your customer and Office of Foreign Assets Control (OFAC) standards.

Bittrex first applied for the license back in August 2015 and has been operating in the state under a “safe harbor” since then, granted by NYDFS. Now, Bittrex has been given until tomorrow to cease all operations within the state of New York, as well as two weeks to formally confirm this closure via a written statement.

NYDFS claim they have issued the exchange multiple warnings regarding its ”continued deficiencies” in compliance, also telling the exchange it needed to develop ”appropriate controls and compliance programs” in line with the ”evolving nature of the sector”.

 

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Coinbase 48x More Expensive to Use Than Stock Exchange

Coinbase 48x More Expensive to Trade than Traditional Stock Exchange

Self-proclaimed market analyst Alex Krüger has drawn the attention of the crypto community to a rather bizarre comparison between cryptocurrency exchanges and traditional stock markets, claiming “maker fee + taker fee” for crypto exchanges could be far more expensive at higher volume tier trading.

1/ Are crypto exchanges overcharging customers?

The average “Maker Fee + Taker Fee” in crypto SPOT exchanges (excluding Gemini) for the lowest volume tier (where most users fall into) stands at 0.33%. pic.twitter.com/tZOmGSsAzO

— Alex Krüger (@krugermacro) March 28, 2019

Krüger queried the fees levied on crypto traders as he explains in a series of Tweets how legacy financial institutions often have a flat rate cut per trade, while a typical fee cut by cryptocurrency exchanges only remains fair for lowest volume tier, and according to him, this is where most users fall into. He illustrated how brokers like Fidelity charge a flat rate of USD 4.95 flat per trade, putting the sum maker and taker fee at 0.02% for a USD 50,000 trade, and at 0.33% for a USD 2,900 trade, which can further be reduced should a trader consider brokers who charge per share rather than per trade.

According to the data he shared, Gemini exchange stands out with a sum maker and taker fee set at an exorbitant 2.00%, followed by Bittrex and Bitstamp with 0.5%, whereas Bitmex being a derivative market only charges 0.05%. Meanwhile, major US cryptocurrency exchange Coinbase Pro takes 0.40%.

In a comparison with foreign exchange markets, Krüger further cited how “an FX trader at Oanda would pay 0.008% for a round trip (in and out of a position)”, concluding that:

“Trading on Coinbase is 48x more expensive, while trading on Bitmex is 6x more expensive.”

Moreover, Krüger opined: “A cross-asset trading costs analysis should also account for spreads and relative volatility,” which invariably should impact fees levied, however, “crypto fees are generally high even after adjusting by relative volatility”.

In recent times, institutional investors have been targeted with offshoot market solutions to further attract this class of investors to the burgeoning digital asset industry. However, considering Krüger’s analyses, crypto exchanges second to huge volatility index of cryptocurrency markets may indeed be a huge deterrent for currency traders from the traditional market.

In February, Marketing consultancy Edelman published a report noting an unwavering millennials’ support for cryptocurrency exchanges, further corroborating eToro’s findings of a generational shift in trust suggesting a concrete trust in cryptocurrency market exchanges as well as a fading faith in the traditional stock market exchanges. However, while cryptocurrency trading appears to be more rewarding due to high volatility, the practical aspects of trading come with hidden fees that make it a trying first-experience for newcomers into the industry.

Blockchain technology may appear to solve certain constraints in legacy financial institutions and reduce the cost of transactions between clients, however, cryptocurrency exchanges may end up constituting a clog to the furtherance of the decentralized ecosystem as it reinvents the centralized systems obtainable in the traditional markets.

 

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Iranian Students in UK Use Bitcoin to Bypass Sanctioned Banking

Iranian Students in UK Use Bitcoin to Bypass Sanctioned Banking

Iranian students studying at British universities are turning to Bitcoin to circumnavigate imposed sanctions on the SWIFT banking network.

In November, SWIFT suspended several Iranian banks from its service after the imposition of United States nuclear sanctions on Tehran. This has resulted in difficulties for Iranian students in the UK when obtaining cash. Many universities are now advising to return to Iran and return to the UK with sufficient cash funds to pay for courses and living expenses.

For many students, this is wholly impractical, involving crossing borders with large amounts of cash, notwithstanding the problems of personal security in doing so. There seems to be little option for students as universities payment systems can’t overcome the problem caused by the SWIFT sanction.

Consequently, some Iranian students have turned to Bitcoin, which was always intended to be a payment system obtaining their fiat funds through crypto exchanges. Maziar Bahari, editor of Iranwire, a news portal for Iranian citizen journalists based outside the country, suggests that students are now “…using Bitcoin and other cryptocurrencies in order to get money” after struggling to get banking services in the UK.

Its also rumored that the Islamic Republic of Iran itself may be circumventing the US-led economic sanctions in its own small way. The Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury, claims that “since 2013, Iran’s use of virtual currency includes at least USD 3.8 million worth of Bitcoin-denominated transactions per year”.

It now remains to be seen if Iran goes through with its plans for the imposition of a national cryptocurrency to bypass economic sanctions. The new Iranian state-backed cryptocurrency would be pegged 1:1 with the Iranian rial (IRR) and will initially be used by commercial banks in Iran once the Central Bank of Iran approves the cryptocurrency. Approval is likely, considering this cryptocurrency was developed by the Informatics Services Corporation at the request of the Central Bank of Iran.

International crypto exchanges, including Bittrex and Binance, have also begun complying with the sanctions against Iran and have stopped dealing with Iranian clients. This will make the travails of UK universities’ Iranian students even more complicated moving forward in the 2019 academic year.

 

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Bitmain Sues Unknown Hacker Who Stole 617 Bitcoins via MANA Market Manipulation

Bitmain is suing ‘John Doe’, an unknown hacker who gained access to Bitmain’s Binance account on 22 April 2018. Ultimately 617 bitcoins worth USD 5.5 million were stolen from Bitmain, the largest cryptocurrency mining firm on the planet.

The scheme the hacker used to steal the bitcoins was unique. Instead of directly withdrawing cryptocurrency from Bitmain’s account, likely impossible due to some sort of 2FA requirement, the hacker manipulated the MANA market to steal Bitmain’s bitcoins. MANA is the native cryptocurrency of decentraland, and its trading volume of only USD 10 million per day on average makes it an easy target for market manipulation.

After the hacker gained access to Bitmain’s bitcoins and ether, they placed large buy orders for MANA. This caused a rally in daily trading volume from USD 10 million to over USD 100 million. Part of this price rise can be explained by other traders thinking this was a legitimate MANA rally and jumping in. Globally, MANA’s average price jumped from USD 0.12 to USD 0.23 during the hack, an impressive 90% rise. On Binance, the price rise was even more drastic, with a peak price of USD 0.34, a 180% increase.

The hacker likely had a large amount of MANA on hand before the hack, and they filled Bitmain’s overpriced MANA buy orders. Then the hacker placed orders to buy Mana at prices far below the market value and used the Bitmain wallet to match these orders. The combination of these mechanisms drained USD 5.5 million of bitcoin from Bitmain’s wallet in a single day, without directly withdrawing cryptocurrency from Bitmain’s wallet.

After the bitcoins were siphoned into the hackers wallet, the hacker proceeded to trade for other cryptocurrencies and withdraw funds. Some of these funds were withdrawn to Bittrex and other unnamed cryptocurrency exchanges. Essentially, the hacker mixed the coins to obfuscate the trail.

Bitmain is suing the hacker for unauthorized access, computer trespass in the 2nd degree, electronic data theft, the USD 5.5 million of stolen cryptocurrency, and attorney fees. A key part of this lawsuit will involve subpoenas to obtain information from Binance and Bittrex, in order to gain enough information to identify the hacker and proceed with the criminal case.

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Bittrex, Cryptofacil to Launch Crypto Exchange in the Caribbean and Latin America

Bittrex has partnered with Cryptofacil, a new crypto exchange headquartered in the South American nation of Uruguay, to launch a crypto exchange across the Caribbean and Latin America. This is a major milestone since this region has lacked a major crypto exchange up until now. This new exchange will have over 200 cryptocurrencies and 270 token pairings.

Crypto exchanges are one of the most critical pieces of infrastructure for the adoption of crypto. Exchanges, like the one Cryptofacil is launching, provide a conduit for fiat currency to flow into and out of the crypto markets. Latin America and the Caribbean have numerous different fiat currencies, and major offshore crypto exchanges that usually only deal with USD, EUR, and JPY are simply inadequate. This launch is implicitly saying they will be making connections with banks in each nation in the region, to provide crypto trading for each type of fiat in the region.

Once Cryptofacil is fully launched, citizens of Latin America and the Caribbean will be able to buy and sell crypto with their native fiat currencies, massively accelerating crypto adoption and the usefulness of crypto in the region. There are hundreds of millions of people living in this region, so this is a major development.

Bittrex will provide essential infrastructure and liquidity for Cryptofacil. Bittrex has tens of millions of dollars in trading volume per day; Cryptofacil can connect with this trading liquidity, which will give its customers optimal trades even when this new exchange is just starting. Additionally, Bittrex is one of the biggest exchanges in the United States, and its experience will help guide Cryptofacil through complex international regulations.

Bittrex CEO, Bill Shihara, says, “Bittrex works every day to advance blockchain technology and this partnership with Cryptofacil will further drive its worldwide adoption. Cryptofacil and Bittrex will provide Latin American and Caribbean customers a reliable, fast and secure trading platform that also offers access to some of the world’s most innovative blockchain projects. As we continue expanding our global footprint, it is partnerships like this one that will serve to not only support the blockchain industry, but also to incubate innovative projects using this revolutionary technology.”

 

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Bittrex Teams up with Licensed Broker-Dealer for Securities Trading

Crypto exchange Bittrex is teaming up with licensed broker-dealer Rialto Trading to launch a new digital securities trading platform, pending approval from the relevant US authorities. Rialto Trading is an Alternative Trading System (ATS) that already offers fixed income securities, and once approval is granted it will begin offering crypto securities with the help of Bittrex’s expertise.

The CEO of Bittrex, Bill Shihara, says, “We’re merging Bittrex’s technology, cybersecurity and blockchain expertise with Rialto’s deep knowledge of the securities industry. And, when you add that foundation with Rialto’s extensive background in financial services, including Shari’s experience at Goldman Sachs and Deutsche Bank, this new venture is well-positioned to further advance blockchain’s adoption by offering a comprehensive solution at the right time.”

The US Securities and Exchange Commission (SEC) declared in 2018 that most initial coin offering (ICO) related cryptocurrencies were securities. The essence of the SEC’s new classification system is if investors buy a cryptocurrency and expect profits, and profits from that cryptocurrency go to a centralized organization, then that cryptocurrency is a security. Sufficiently decentralized cryptos like Bitcoin and Ethereum are not going to be considered securities, and so far the SEC has only given traders the green light to trade these without following securities laws. Exchanges must work with the SEC to offer trading for most other cryptos. Additionally, ICOs that don’t go through the SEC are illegal.

This is major news for Bittrex, the 37th largest exchange in the world according to CoinMarketCap with trading volume near USD 30 million per day as of 24 August 2018. Bittrex has been a popular exchange since the early days, and if this partnership with Rialto Trading is successful they will soon be able to offer most crypto without worrying about breaching securities laws.

Being able to offer legal securities trading will give Bittrex a major competitive edge over other exchanges that offer services to US citizens. Coinbase, the largest crypto exchange headquartered in the United States, is also making efforts to start offering securities trading via obtaining a broker-dealer license. Instead of partnering with a broker-dealer like Bittrex is, Coinbase is outright buying two firms with broker-dealer licenses, Keystone Capital and Venovate Marketplace.

 

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Exchange Alliance Unites Gemini, Bittrex, bitFlyer USA, Bitstamp

Cryptocurrency exchanges Gemini, Bittrex, Bitstamp and bitFlyer USA have formed an alliance called the Virtual Commodity Association (VCA) working group. The goal of the VCA working group is to be a self-regulatory organization (SRO) that will work together to regulate their cryptocurrency exchanges with a common set of rules, which will help increase global crypto adoption by increasing security, compliance, accountability, and transparency. The VCA working group will have an independent board of directors and executive director.

Bitstamp has been one of the top USD to Bitcoin exchanges since the early days. Gemini is a well-known exchange that is headquartered in New York City and geared towards institutional investors. Bittrex is a popular crypto exchange that accepts USD. bitFlyer USA is the US branch of Japan’s most popular exchange.

The common denominator between these exchanges is that they are well-known and make significant amounts of money, but they are nowhere near the top crypto exchanges in the world. Huobi, Binance, Bitfinex, and OKEx are the top crypto exchanges in the world and often have daily trading volume of USD 0.5-1 billion. Bitstamp has trading volume of less than USD 100 million per day, Bittrex is at less than USD 50 million per day, and Gemini is around USD 25 million per day.

Even though the VCA working group is being marketed as focusing on regulations, it is likely that they will be focusing on working together to achieve greater success, like an alliance or cartel. Right now the exchanges in the VCA working group are relatively small fish in an ocean filled with whales, and perhaps if they work together they could become a bigger player. A big part of that will be achieving optimal balance regarding regulations, and they can do that much better together than alone.

It appears the VCA working group is open to accepting new members beyond the initial four exchanges that comprise the group right now. Perhaps the group harbors hopes to one day become influential in the industry.

 

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Bittrex to Offer Select Clients US Dollar Pairs

US-based cryptocurrency exchange platform Bittrex has confirmed a partnership with several financial institutions that will allow select clients in the US to pair BTC/USD, as well as connect pairs for ‘stablecoins’ Tether and TrueUSD.

As reported by Bloomberg, the agreement will allow for now predominantly corporate clients in a limited number of states to purchase the nearly 200 digital tokens offered on the platform, using the US dollar directly.

Bittrex is working closely on the deal with New York-based Signature Bank alongside several other financial firms. Signature Bank will be responsible for holding the dollar-denominated funds.

Banks, regulations cryptocurrencies

Bittrex CEO Bill Shihara recently commented on the impact he suspects that this will have on the relationships between banks and cryptocurrency.

”It’s been a long path. It’s not just about banks being able to trust Bittrex. It’s about banks being able to trust crypto in general. And I think it’s really showing that crypto is turning the corner in terms of mainstream acceptance,” he said.

Purchasing cryptocurrencies directly with fiat currencies is becoming increasingly difficult as anti-money laundering (AML) regulations and know-your-customer (KYC) policies are being enforced by a growing number of governments.

These policies have in part contributed to a negative reputation that the cryptocurrency industry is paired with, disincentivizing many predominant financial institutions from offering related services for fear of risking their reputation.

While that is changing (notably Goldman Sachs announced earlier this month they are launching a Bitcoin trading desk), Bittrex’s actions are an important step in moving away from platforms that offer only ”crypto-to-crypto” services, meaning no fiat currency is involved in transactions.

Bittrex has confirmed that it plans to extend the offering to retail customers in the foreseeable future.

Several other banks have administrated similar deals. Prominent US cryptocurrency exchange Coinbase has reportedly developed close working relationships with Cross River Bank, Metropolitan Bank and Silvergate Bank in the US, recently securing a Barclays PLC bank account in the UK.

 

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