Category Archives: coinsecure

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Coinbase Looks to Acquire Banking Licenses

Coinbase is currently looking into the processes involved in acquiring banking licenses. The Wall Street Journal reports that an undisclosed source revealed that the exchange engaged in conversations with members of the US Office of the Comptroller of the Currency in earlier this year:

“Coinbase Inc and another cryptocurrency firm talked to US regulators about the possibility of obtaining banking licenses, a move that would allow the startups to broaden the types of products they offer.”

Additional Coinbase services

Coinbase has been expanding its services this year to become more than just an exchange. Its commerce API or its “PayPal-like service”, was released in February. Merchants could quickly implement cryptocurrencies as a payment method supporting BitcoinBitcoin CashEthereum, and Litecoin. The platform adds a “PayPal-like” button to e-commerce sites allowing streamlined payments straight to the vendor’s wallet.

Coinbase isn’t the only company to offer these types of services, with BitPay also letting customers pay in Bitcoin and Bitcoin Cash. With the volatility within the cryptocurrency market this year it may take more to encourage merchants to adopt this additional payment method.

Coinbase announced this month that it would be releasing its Coinbase Custody platform. The new product could entice institutional investors, it went on to explain: “The cryptocurrency market is maturing rapidly as more sophisticated institutional participants enter the space. In fact, in the past few months over 100 hedge funds were created that exclusively invest in and trade cryptocurrency. Some of the world’s largest financial institutions have also recently announced their plans to begin trading cryptocurrency.”

Coinbase Custody is a storage service for a minimum of USD 10 million in crypto. Financial institutions will be expected to pay USD 100,000 as a set-up fee and an additional monthly premium dependant on holdings. Coinbase claimed: “We have leveraged our experience safely storing more than $20 billion of cryptocurrency to create Coinbase Custody, the most secure crypto storage solution available.”

Industry issues

Coinbase believes its recent progress will accelerate the world’s adoption of cryptocurrency by bringing new capital and greater awareness to the industry.

The volatility of Bitcoin still stands to be an issue and has led to merchants withdrawing the payment option. This was one of the main reasons for Steam halting Bitcoin payments at the end of 2017. The rise of crypto-related crime is enough to deter investors in the interim.

As much as 30,000 people who have fallen victim to Ethereum-related theft, suffering an average loss of USD 7,500 each, according to Chainalysis. Exchanges have been targeted in large-scale hacks with Coincheck losing USD 550 million worth of NEM cryptocurrency (XEM) in January and Coinsecure losing USD 3.5 million in Bitcoin (BTC). With legislation and regulation becoming a hot topic among unions and governments, 2018 is set to be an interesting year for cryptocurrencies.

Coinbases profitability values the company at around USD 8 billion. The growth and reinvestment into new ventures such as the banking industry shows Coinbase’s faith in the future of cryptocurrencies.

However, not everyone believes that the company is heading in the right direction. Reddit user Bitcoin Yoda explains how Coinbase Commerce is moving in a different direction to Satoshi’s vision: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Any intermediary between your BTC payment and the merchant is violating the definition of Bitcoin and your privacy.”

Is Coinbase’s pursuit of becoming a bank turning its back on the ideologies behind crypto?

 

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Coinsecure Exchange Remains Closed After Losing All of Its Bitcoins

Indian cryptocurrency exchange Coinsecure has remained closed, after a hack on 9 April led to a loss of over BTC 438 worth usD 3.3 million at the time. Coinsecure bought and sold Bitcoin against the Indian Rupee (INR).

Its chief security officer, Amitabh Saxena, claimed that the Bitcoins were stolen when he was extracting Bitcoin Gold to distribute to customers. He had saved the private keys in plain text format and was online during the extraction process, which was against standard security protocol, considered very risky when dealing with such large amounts of bitcoin. All of the Bitcoins were transferred to a single wallet address.

The parent company of Coinsecure, Bitcoin Traders Pvt Ltd, however, doubted Amitabh Saxena’s story and suspected intentional theft. It filed a complaint stating this on 10 April to police unit Cyber Cell and requested that Saxena’s passport be revoked so he could not flee the country.

Coinsecure is now sending emails to customers to facilitate the distribution of refunds. Customers have been told that they would be compensated with locked-in rates from 9 April, at a ratio of 90% INR to 10% BTC. According to Coinsecure, authorities have made the refund process very slow since the investigation is ongoing; direct permission from the police is required before any refunds can be sent.

It is not clear whether Coinsecure will ever re-open. If the stolen funds are not recovered, they will likely have to go into bankruptcy.

Coinsecure made news earlier this year by negotiating with the Venezuelan government to be the main exchange for state-backed crypto Petro. This was a risky decision since the president of the United States, Donald Trump, signed an executive order on 19 March, making all Petro dealings illegal. Therefore, Coinsecure could not legally operate in the United States anymore.

The close timing between Petro being made illegal and the Coinsecure exchange being compromised and shutdown raised suspicion in some observers that these events were related.

 

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Coinsecure Loses $3.5 Million in Bitcoin in Suspected Hack

Indian exchange platform Coinsecure suffered the worst cryptocurrency theft in the country’s history this week, with 438 Bitcoins syphoned out of user accounts into an address outside of the platform’s control. This was the equivalent of approximately USD 3.5 million.

The International Business Times reported that the theft came to light when users began complaining they could not access their funds over several days. The Coinsecure website issued an official notice on 12 April, assuring users that a First Information Report (FIR) with the Cyber Cell of Delhi had been filed and that they were working to recover all of the lost funds.

The notice outlined details of the apparent hack, noting that it appeared to occur when its chief security officer (CSO), Dr Amitabh Saxena, was extracting Bitcoin Gold. Dr Saxena claimed that the funds were ”lost in the process during the extraction of the private keys”.

Suspicious circumstances

As it is only the CEO and the CSO that maintain access to the private keys of the company’s wallet., this makes the circumstances behind the extraction particularly suspicious, leading the exchange to believe that the CSO created the story to cover up his own theft.

The FIR outlines their accusation, stating, ”The incident reported by Dr Amitabh Saxena does not seem convincing to us. The exchange in the FIR requested the authority to seize Dr Amitabh Saxena’s passport so he cannot fly out of the country.”

A second update on the Coinsecure website assured users that their Indian Rupee (INR) funds were safe, calling on members of the Bitcoin community for any information that could help secure the return of funds.

Crypto fraud in India

The last few months have seen several cases of similar fraudulent behavior in India. The founder of cryptocurrency investment fund Gainbitcoin was arrested earlier this month for allegedly scamming victims out of USD 300 million. The year to date has seen USD 670 million worth of cryptocurrencies stolen through fraudulent activities.

Investors are encouraged to put in research before parting with funds to protect themselves from such scams. It is important to ensure that platforms used are secure, with KYC policies being preferable. Due to the decentralized nature of cryptocurrency trading, it is often very difficult to recover stolen funds.

 

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