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Compromised Traffic Counter Features in New Kind of Exchange Hack

In a new type of hack, malicious code was injected into a website traffic analysis app called StatCounter in order to steal Bitcoins from Gate.io users. Gate.io currently has a daily trading volume in excess of USD 20 million, but was near USD 35 million before the information about this hack was published. That being said, it appears Gate.io and StatCounter have been fixed and are safe to use at this point.

StatCounter is one of the more popular website traffic analysis tools, with 2 million websites and 10 billion pages analyzed per month. Websites that use StatCounter place a snippet of java code on their web pages. Hackers exploited this piece of code and injected their own malicious code, placing all 2 million websites that use StatCounter at risk.

The malicious code checks for ‘myaccount/withdraw/BTC’ in the URL; if it finds this then it downloads another piece of malicious code from statconuter.com, which is spelled very similar to statcounter.com to avoid detection. The only website that has this URL out of all 2 million StatCounter websites is Gate.io, making it clear this hack was aimed at the exchange.

This second piece of code replaces the destination Bitcoin address chosen by Gate.io users with the Bitcoin address of the hacker at the moment they submit an external Bitcoin transfer. Further, the malicious code increases the send to the daily withdrawal limit for the user, depending on how much Bitcoin is in their account.

This made the losses from this hack very hard to track since as far as Gate.io was concerned, they sent the Bitcoin to an external address as usual; only the user would know that they did not receive their Bitcoins. As the hackers changed their Bitcoin address every time a user hit submit, there is no central Bitcoin address that can be viewed to see the total losses.

This is the latest evidence to show that hackers are becoming more sophisticated and creative, developing new ways to hack cryptocurrency exchanges.

 

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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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BitMEX Launches Venture Capital Arm

Seychelles-based BitMEX is launching a venture capital (VC) arm called BitMEX Ventures, which will invest in blockchain and cryptocurrency-related projects worldwide.

BitMEX is the largest cryptocurrency derivatives exchange in the world, with daily volume consistently in excess of USD 1 billion, more than any single spot cryptocurrency exchange. There was a day when BitMEX’s volume hit BTC 1 million Bitcoins, which was USD 8 billion at the time, the all-time record for any cryptocurrency-related exchange. Traders can leverage their accounts up to 100 times and the platform collects millions of dollars in fees per day from trading and margin lending. Already, BitMEX has purchased the most expensive office space in the world; now it appears it will also be using its profits to enrich the crypto space.

Kumar Dandapani will be the Global Head of BitMEX Ventures and Maxim Wheatley will be in charge of global seed funding and partnerships. BitMEX Ventures’ first investment is Blockfolio, an app which manages cryptocurrency portfolios. BitMEX Ventures is preparing to make another investment into FRST, a cryptocurrency data technology company.

The crypto space has been waiting patiently for institutional investors; many experts believe the next big cryptocurrency rally will be sparked by an influx of institutional capital. BitMEX has grown so large that it can be considered an institutional investor and, unlike traditional institutions, it has expertise.

Other cryptocurrency companies that have launched VC arms include Coinbase, which launched in April 2018 and already has 20 companies in its portfolio. Huobi, among the top spot cryptocurrency exchanges in the world, launched Huobi Labs which has dedicated USD 1 billion for investment into blockchain startups. Likewise, Huobi’s primary competitor Binance has launched a USD 1 billion blockchain investment fund.

With the biggest crypto companies seemingly wielding significant strength in investment, the importance of institutional investors – whose funding is anticipated by some to have a huge impact – could be diluted. The potential for an internal positive feedback loop is appearing, where big companies can invest the capital needed to get startups off the ground, then some of those startups might become institutional investors with VC arms, replicating the cycle.

 

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Cryptopia Relaunching New Zealand Dollar Stablecoin

Cryptopia has announced that it is relaunching the New Zealand Dollar stablecoin (NZDT) in Q1 2019. The exchange has a daily trading volume in excess of USD 2 million and has been a hub of altcoin trading and mining activity since it launched in 2014.

The NZDT was originally launched in 2017, with daily trading volume rallying to NZD 1 million per day. This spooked ASB, the bank that Cryptopia was working with, since proper know your customer (KYC) and anti-money laundering (AML) laws were not in place. Fortunately, the orderly termination of the NZDT stablecoin gave customers a month to convert their NZDT back to NZD.

Apparently, Cryptopia has now secured a bank account with an undisclosed bank and is in talks with government regulators to make sure the NZDT is not abruptly terminated again. Regulators are reportedly favorable towards the stablecoin.

It is difficult for New Zealander cryptocurrency traders to enter the crypto space. Fees are high and it takes days to deposit NZD into an offshore exchange. Campbell Pentney from the Bell Gully law firm said, “Let’s assume blockchain takes off and has amazing projects all over the world. Without an NZ dollar entry point, New Zealanders will find it hard to invest in these projects directly. Because getting money from your bank here into one of these cross-border exchanges takes days and involves big fees.”

This is why the NZDT became so popular. The process is relatively quick and the fees are lower than when sending fiat to an offshore exchange. The NZDT allows New Zealanders to buy cryptocurrency worldwide on any exchange that integrates the wallet.

Pentney said, “Not having them [a New Zealand Dollar stablecoin] matters hugely. It was going great guns, growing massively fast, and then suddenly there was no banking access. People are saying: ‘how do I buy Bitcoin?’”

Currently, there are only a few cryptocurrency exchanges in New Zealand that accept NZD deposits directly but their volumes are low and the lack of liquidity is not optimal for trading.

 

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Lawyer Claims Bakkt Can Bypass Approval for Physical Bitcoin Futures

Crypto lawyer Jake Chervinsky has determined that Bakkt does not need direct approval from the Commodity Futures Trading Commission (CFTC) to launch the physical Bitcoin futures, so it appears the launch date will proceed as scheduled.

The cryptocurrency markets are highly anticipating the launch of physical Bitcoin futures on Bakkt on 12 December 2018. It is a new cryptocurrency exchange which will be owned by the Intercontinental Exchange (ICE), the same organization that runs the New York Stock Exchange (NYSE).

14/ A designated contract market like ICE can file a self-certification submission as late as one business day before initial listing.

That means ICE technically doesn’t have to file Bakkt’s papers until Tuesday, December 11 for Bakkt to launch futures on Wednesday, December 12.

— Jake Chervinsky (@jchervinsky) November 6, 2018

According to Chervinsky, ICE is a CFTC certified designated contract market, allowing it to self-certify new futures offerings without any prior approval. ICE and Bakkt can submit the filing for physical Bitcoin futures as soon as one day before launch. Chervinsky says the CFTC will probably publish a press release about the futures when the self-certification occurs.

16/ Consider the process that CME & CBOE went through to get approval for their bitcoin futures last year.

Both of them ended up self-certifying, but only after *months* of negotiations with the CFTC & changes to their products.

The CFTC explains here: (https://t.co/B0tuugmPDx)

— Jake Chervinsky (@jchervinsky) November 6, 2018

However, if the CFTC disapproves of the physical Bitcoin futures, they could find some way to block them after launch. At this time, there is no evidence that this will happen otherwise, the controversy would have already been underway as seen when cash-settled Bitcoin futures were launched on the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBoE). It took months of negotiations for CME and CBoE to reach an agreement with the CFTC, even though those exchanges can self-certify like Bakkt.

Bakkt CEO Kelly Loeffler indicates that the plans for the physical Bitcoin futures would be reviewed and approved by the CFTC before launch, probably to maintain 100% compliance with regulators and avoid problems in the future.

The reason the Bakkt physical Bitcoin futures are important is that they would allow institutional investors to buy Bitcoin in a safe and regulated way on major stock trading platforms. The futures settle the same day and investors receive actual Bitcoin in their accounts, unlike the cash settled futures in Chicago. Market demand for the physical Bitcoin futures is expected increase demand on Bitcoin spot markets, which could possibly lead to a major Bitcoin price increase.

 

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Etherdelta Founder Fined $388,000 by SEC

In a landmark ruling for decentralized cryptocurrency exchanges, the founder of Etherdelta, Zachary Coburn, has been ordered by the United States Securities and Exchange Commission (SEC) to pay a USD 388,000 fine.

Etherdelta was until now among the top so-called decentralized exchanges. Its trading volume has crashed to USD 250,000 per day due to this news and it seems users have gone over to IDEX which now has USD 3 million of daily trading volume.

Etherdelta offers trading of Ethereum ERC-20 tokens, most of which are from initial coin offerings (ICOs) and can be considered securities by some jurisdictions, certainly by the SEC. The exchange did not have a license to operate as a securities exchange and Colburn is found liable for this since he created the exchange and operated it from July 2016 until it was sold to foreign investors in November 2017.

Coburn is being ordered to pay a disgorgement of USD 300,000, USD 13,000 of pre-judgment interest, and USD 75,000 to the SEC. The fines could have been heavier but apparently, Coburn worked closely with regulators and prosecutors.

This case sets a precedent where someone who creates the code for a decentralized exchange could be heavily fined by the SEC. This ruling could mean decentralized exchanges are considered illegal in the United States and therefore illegal worldwide. Even if a decentralized exchange tried to ban United States users, little could prevent enforcement scrutiny, as was seen with 1Broker, which was investigated by an undercover agent from the Federal Bureau of Investigations, paving the way for a lawsuit.

It would seem the only way to successfully launch a decentralized exchange is to retain full anonymity, extending decentralization to the hosting and management of the exchange hosting and software itself.

Bisq is a better example of a decentralized exchange, but still not 100% decentralized or anonymous. Most decentralized exchanges available fall short of true decentralization and autonomy, although that would be arguably impossible to create with today’s technology.

 

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CoinGecko Report: 4 of Top 5 Coins Post Year-on-Year Returns, “Trans-Fee” Mining on the Rise

Cryptocurrency ranking and evaluation site CoinGecko released its 2018 Q3 report on Tuesday, in it noting that four of the top five cryptocurrencies have posted positive year-on-year gains.

The one exception to this is Ethereum (ETH), falling 22% below its value this time last year. The report suggests that the cause of this decline can be put down to movements in the initial coin offering (ICO) market; overall, there has been a slowdown, while there has also been an ETH selloff by fundraising teams to store their value in fiat.

Bitcoin (BTC) outperformed Bitcoin Cash (BCH) through the year, with gains of 52% to BCH’s 28%. Ripple did better than both coins, however, increasing in value 186 %, while EOS succeeded in the highest gains, pushing an impressive 700% year-on-year return.

On exchanges

CoinGecko’s report also outlined some notable changes in the area of cryptocurrency exchanges. The new controversial strategy of so-called “trans-fee mining” has increased significantly during this quarter. This technique uses client trading activity to create the exchange’s native token as a repayment of transaction fees. Out of the top 30 exchanges, 12 now operate using a trans-fee system.

The relatively new platform Fcoin was the first to start this practice, with more prominent exchanges such as Bitforex and ZB copying the new fee model.

Q3 has seen cryptocurrency exchanges’ trading volumes show ”strong growth”, while those that operate trans-fee mining actually growing at a faster rate in the short term. They do, however, appear to be sacrificing long-term or sustained growth in trading volumes with that model as enthusiasm dissipates and volumes drop off.

The quarter was also marked as ”highly volatile” in terms of exchange volumes. The aggregate number of exchanges has increased by 65 in Q3, similar to the figure of 63 in Q2.

 

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Hilarious Lemoncoin Video Reveals Bitter Truths About the Crypto Space

A hilarious new cryptocurrency themed video has surfaced on YouTube. It starts with a man walking through the desert and being lucky enough to stumble upon a lemonade stand. He says “Perfect, I am dying out here, how much?”, and the man running the Lemonade stand responds “1 dollar worth of Lemoncoin, which is approximately 1,000 Lemoncoins”.

The man pulls out a US dollar bill, and the Lemonade stand operator aggressively responds “Get that centralized currency out of my face, this is 2018, I only accept cryptocurrency here, preferably Lemoncoin.” The man responds “I do not have whatever a Lemoncoin is.” The Lemonade stand operator explains “Lemoncoin is my utility token, it does not have a lot of utility yet, but we are working on it. One day it might go to a dollar.”

Although this video is certainly comedy oriented, it speaks the truth. Many dApps on the Ethereum network and other blockchain platforms force users to buy the native token of the platform. This is done in order to increase demand for the token and raise its price, with the tradeoff being a worse user experience. Further, initial coin offerings (ICOs) often make false promises of a cryptocurrency’s future price in order to get people to buy.

Another important point is that, while blockchain technology is highly useful and futuristic, it is not healthy to integrate blockchain technology into everything. Many platforms integrate blockchain technology into goods or services and try to hype it up, even if there is no benefit of using blockchain technology for that good or service.

The man trying to buy Lemonade says “Cool. I do not have Lemoncoin.” The man running the Lemonade stand says “Fine, I also take Bitcoin or Dogecoin.” The man tries to trade his Shiba Inu for a glass of lemonade at this point, but is refuted since the man running the Lemonade stand says it costs at least 200 Doge. This Siba Inu is obviously the man’s beloved pet, but clearly, he is so thirsty, due to being in the middle of the desert, that he needs the lemonade more than his pet.

The man who is now frustrated and desperate says “Ok fine, how do I get Lemoncoin, why is this so difficult?” The man running the Lemonade stand says “Think about it, it is the future of business, a trustless system without third parties. So to get Lemoncoin, I just need you to create an account on this third party exchange.”

A sketchy man in expensive furs then walks up and asks for bank information, passport, social security number, and a selfie. The man trying to buy lemonade says “I thought you said this was a trustless system.” This is the reality in the cryptocurrency space, converting from fiat to cryptocurrency is essential to enter the space, but exchanges and companies usually collect a full spectrum of know your customer (KYC) information before selling cryptocurrency due to government regulations. This is in drastic contrast to Satoshi Nakamoto’s vision of an anonymous and trustless form of money.

The man surrenders to this breach of privacy since he is so desperate for a cool drink, but then is informed it will take 3-5 days to process his application. This means the man, who is desperate for a drink, will not be able to get any lemonade when he actually needs it, even though it is sitting right in front of him and he has the cash to pay for it. He says “This is ridiculous, you are telling me if anyone wants to buy lemonade they have to go through this process?” The lemonade stand operator responds “This is the future of business, I already got like a dozen customers” when in fact there is no one else around and this frustrated customer is the only one there at the time.

That last part of the video really solidifies the point the video is making. Even if someone has money and desperately wants to buy a good or service with cryptocurrency, they have to wait days to get their cryptocurrency when using an exchange, making the process much more difficult than using regular cash. Cryptocurrency is designed to be secure and instant, but many of the centralized exchanges that exist are defeating that purpose.

Overall, although this video is hilarious, within 2 minutes it brings forth some bitter truths about why blockchain platforms will have a hard time gaining mainstream adoption. Indeed, many Ethereum dApps that have received tens of millions of USD of investment have far less than 1,000 users and a constantly declining user base.

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Coinbase Listings Continue to Accelerate, Basic Attention Token (BAT) About to Go Live

Coinbase, the largest cryptocurrency exchange headquartered in the United States with a valuation of USD 8 billion, continues to list new cryptocurrencies at an increasing pace. Deposits for Basic Attention Token (BAT) began on 2 November 2018 on Coinbase Pro, and once sufficient liquidity is achieved trading will go live. In general, once a cryptocurrency is listed on Coinbase Pro it soon becomes available on regular Coinbase, since Coinbase and Coinbase Pro have the same cryptocurrencies listed.

BAT is the official cryptocurrency of the blockchain-based Brave browser and is used to fuel a built-in advertising platform. Advertisers on the Brave browser give publishers BAT based on the performance of ads, and users receive a share of BAT too. Users can then choose to donate BAT to publishers or use the tokens to buy things on the Brave browser. The Brave advertising platform is designed to be transparent, reduce fraud, and cut out the middle-men.

Previously, only 5 cryptocurrencies were available on Coinbase: Bitcoin, Litecoin, Ethereum, Bitcoin Cash, and Ethereum Classic. Coinbase is the most prominent exchange in the United States, and there is a thirst among Coinbase traders and investors for more options. This caused Coinbase to launch a new listing process, with the goal of adding all legal and popular cryptocurrencies.

In the past month, Coinbase has listed the popular Ethereum ERC-20 token 0x, as well as USD Coin, which is an ERC-20 stablecoin that is managed by Circle and Coinbase. All ERC-20 tokens use the same backbone wallet technology, so it is straightforward for Coinbase to add any other ERC-20 tokens. Therefore, it is no surprise that Coinbase is adding the BAT, a popular ERC-20 token. BAT has a market cap near USD 300 million, placing it at #30 on CoinMarketCap.

Whenever a cryptocurrency is added to Coinbase it experiences a rally in price, and this is called the Coinbase Effect. BAT has already rallied 15% since the Coinbase listing was announced, and it is likely this rally will accelerate once trading goes live. Generally, the Coinbase Effect is sustained long-term, unlike the Binance Bump which is a short term pump and dump on average.

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Binance Off To Flying Start In Uganda With 40,000 Users In First Week

Binance has stepped into Uganda with a flourish as 40,000 new users signed up to the exchange in the hope of bypassing the Ugandan Shilling (UGX).

Many citizens of African countries are unbanked, either by choice or due to complicated prohibitive rules which make it hard to open an account. Uganda is no different, with a recorded 3/4 of the population without any form of conventional banking.

This is Binance’s first fiat-crypto exchange with UGX, the primary fiat currency and comes less than a month after the company acquired an EUR bank account in Malta, with more exchanges to come, according to CEO Changpeng Zhao. Binance’s enigmatic boss clearly realises the potential of Africa as a new investment hub due to the unbanked nature of much of its population:

“Uganda is a really interesting situation, only 11% of the population has bank accounts. It’s both a challenge and an opportunity. So it may be easier to adopt cryptocurrency as a form of currency instead of trying to push for bank adoption”.

Africans have been clever in dealing with financial barriers, and using cryptocurrency is increasingly becoming a go-to way in order to sidestep banking restrictions or weak state currencies. Corruption is also another factor never far from the surface in some African economies often necessitating the need for a clever approach by locals in order to conduct their everyday business.

Recently, neigbouring Kenyan Distributed Ledgers and Artificial Intelligence task force chairman Bitange Ndemo said that that government should consider tokenizing the economy to deal with “increasing” rates of corruption and uncertainties-such is Africa’s increasing faith in crypto ahead of local fiat currencies.

Wei Zhou, Binance’s chief financial officer, suggested that one reason for the exchange’s surge of clientele in the first week is the fact that it is so easy for Uganda’s unbanked to access the system, commenting, “They [users] just have to have money within the mobile payment system. They don’t have to have bank accounts.”

The country’s president, Yoweri Museveni, said recently that he welcomed and embraced blockchain technology in Uganda since it provides full transparency, and added that he was aware how businesses were being negatively impacted by what he called “secrets and deceit.”

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