Category Archives: Crypto Exchange

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CoinUp CEO Gets 16 Years in Prison after Exchange Ponzi Exposé

South Korean-based cryptocurrency exchange CoinUp has been exposed as a Ponzi scheme. Its CEO Kang-mo has been sentenced to 16 years in prison for his role in defrauding investors of KRW 450 billion equivalent to USD 384 million.

Apparently CoinUp executives promised investors guaranteed gains of up to 200% in just 4 to 10 weeks, when in fact, the crypto investments offered were actually fake cryptocurrencies. In order to gain the confidence of investors, there was a photoshopped magazine of Kang-mo standing next to South Korean President Moon Jae-in in the CoinUp office.

Further, evidence indicates that CoinUp paid early investors with deposits from later investors. This is the structure of a classic pyramid — also known as a Ponzi — scheme and causes early investors to think CoinUp is trustworthy, which causes early investors to tell their friends and family which lures in even more investments.

CoinUp’s CFOs Kwon and Shinmo were also sentenced to 11 years in prison, with CoinUp’s ‘governor’, Yunmo, and his mother-in-law receiving seven years in prison. Other CoinUp executives received sentences between six and nine years.

 

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FCA Toughens Inspection of Crypto Exchanges

UK’s FCA Toughens Inspection of Crypto Exchanges

FCA Toughens Inspection of Crypto Exchanges

UK’s financial regulator, the Financial Conduct Authority (FCA), has increased its inspection of the crypto exchanges within the country, as reported by Financial Times. Per the report, there has been a 74% hike in the total number of investigations since October 2018, with the watchdog looking into 87 cryptocurrencies as of September 2019 as compared to 50 around the same time last year.

The increased probe comes after a surge in fraudulent activities in the crypto sector. The FCA estimated that the people in the UK lost a whopping EUR 27 million in 1,800 different crypto and forex scams over the past year. The alarming statistics only point out to the necessity of the aforementioned step to control the situation, atleast to some extent.

David Heffron Partner and Head of Financial Regulation at law firm Pinsent Masons LLP, said:

“The rise in investigations reflects the FCA’s increasingly hands-on and no-nonsense approach to enforcing the law in the cryptocurrency market. For cryptocurrency businesses acting lawfully, these statistics will be encouraging – they want bad actors pushed out. The FCA’s crackdown on businesses operating on its regulatory perimeter will instill a degree of confidence that products reaching consumers are less likely to be scams.”

Time and again, the FCA has showcased its intention to be tough on the cryptocurrency market since digital money is a part of the financial market and subject to the same level of scrutiny. In July 2019, the FCA proposed a blanket ban on the sale of crypto derivatives to retail consumers to avoid “sudden and unexpected losses” that might incur from these investments.  Although the stringent laws may come off as extreme, the FCA has obtained results before and it is anticipated that the move will help reduce investor losses drastically.

 

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Eureka Network Rolls Out High-Liquidity Exchange with Rewards Program for First 100,000 Signups

Eureka

Eureka Network has launched a new high-liquidity crypto exchange called EurekaX, celebrating with a giveaway program for signup and referrals. To be eligible, users have to sign up before August 21st for the chance to win 300 EurekaCoin (ERK).

Its flagship exchange EurekaX is set to become a go-to place for cryptocurrency liquidity, taking over the exchange market scene by guaranteeing readily available trade offers for traders worldwide by creating a robust, high-liquidity pool from some of the biggest players in the scene, including Binance and OKEx, enabling them to compete directly with other major players. 

A Game Changer 

Cryptocurrency exchanges are running an industry worth tens of billions of dollars, however, cryptocurrency liquidity still remains a major drawback in the industry. Crypto traders looking to convert their assets are usually forced to wait until their order(s) are filled by interested parties. The lack of immediate access to liquidity coupled with volatile market conditions can be a significant source of distress to traders and the value of their assets.

EurekaX is designed to tackle this problem by becoming the largest liquidity provider in the industry. It is steadily working towards becoming an advanced cryptocurrency exchange, with uncontested high liquidity pool for traders to get their orders quickly converted without delays. The blockchain solutions company will also boost its ecosystem by ensuring that all tokens created on its innovative and decentralized chain get listed on its world-leading high-liquidity exchange.

All tokens built on Eureka Network can run their own dynamic Proof of Stake (PoS) network and enjoy the many advantages the network provides. The company is currently striving for the creation of as many projects as possible by its network’s ERC20 and ERC22 tokens.

As a PoS blockchain platform, Eureka Network is set apart from other competitors, right from its inception, which is based on a unique and unprecedented architecture. The platform is an EVM compatible UTXO model; in essence, built on both Ethereum and Bitcoin technology. This is to ensure adequate access to a unique layout enabling open-source development and low-cost deployment of the network. Eureka Network will also benefit directly from its own network interface by receiving all payout from transaction profits on the network to support its vibrant and growing ecosystem. This is in stark contrast to how Ethereum network runs, where profits are collected by the miners. 

The throughput project built with a revolutionary Account Abstraction Layer (AAL), which allows direct communication between EVM and EurekaCoin’s Bitcoin-like UTXO blockchain, will add a decentralized exchange, EurekaDEX. The launch schedule for EurekaDEX is slated for Q4 2019, and is designed to allow the trading and exchanging of all Tokens. 50% of generated profits will go directly into buy-back program for the burning of ERK coins

With only 150 million of its native token, ERK coin, in circulation, scarcity becomes an even bigger factor. And now, EurekaX is currently rewarding users who register before 21st August with 300 ERK on top of 200 ERK for each friend referred by the user. The rewards will be distributed among the first 100,000 sign ups before trading on the platform goes live on August 21st, 2019.

Learn more about EurekaX. Sign up now to claim your free 300 ERK Coins: https://eurekax.io/register

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Bitwise Report to SEC Shows Transparency a Problem with Crypto Exchanges

Bitwise Report to SEC Shows Transparency a Problem with Crypto Exchanges

A comprehensive Bitwise report that was submitted to the US Securities and Exchange Commission (SEC) that put the issue of fake volumes on crypto exchanges under the spotlight also provided a sound and clear answer on the true issue: a lack of transparency on crypto exchanges.

The complex relationships between token issuers or project owners and crypto exchanges, not to mention the data aggregation sites that look at market capitalization and trading volumes show that any data produced is difficult to verify and therefore, makes it very dubious for investors who already have a hard time dealing with the asset’s volatility.

A Forbes article points out that this three-party relationship’s worst and most noticeable repercussion is the “absurd volumes” on a majority of crypto exchanges.

It is worth noting that the Bitwise report was in fact only a comment to the SEC, in which it cited the “dramatic improvements” in the Bitcoin spot market and arbitrage strength, although also stressed that 95% of exchange volume was likely falsified due to wash trading.

Other reports have also echoed these findings, such as The Block‘s analysis that although showed a lower percentage (86%) was still a significant damning of crypto exchanges. Even the world’s leading crypto exchange, Binance, despite its claims of being clean and accusing others of wash trading, has been found to be equally guilty.

So even though the positive takeaway was that Bitcoin’s efficiency in the spot market was better than generally expected, the huge problem was that of the lack of transparency among most crypto exchanges.

The report scraped live trading data from 83 exchanges and 73 failed at least one of their tests for real trading volume, reporting this as “10.5 billion dollars out of the 11 billion dollars in reported daily volume (or – 95%) is either fake or wash trading”.

 

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BitMEX Ventures Invests in Philippines Crypto Exchange Platform

BitMEX Ventures invests in Philippines based crypto exchange platform, PDAX

BitMEX Ventures, the corporate venture arm of the crypto trading platform BitMEX, has invested in a Philippines based cryptocurrency exchange platform, PDAX (Philippines Digital Asset Exchange), as reported on 3 June 2019.

This enables PDAX to extend its service of digital assets beyond cryptocurrencies. Tokens can be used to trade commodities, real estate equities and debt securities. This will help PDAX to launch an official platform from its BETA version. The goal of the platform is to provide an open-market for cryptocurrencies and other assets to secure a digital financial market for all kinds of investment products and securities.

The CEO of PDAX, Nichel Gaba, believes that this will have a twofold effect, that is, it will increase cryptocurrency adoption and awareness among people about digital assets. He said:

“Through digital assets and blockchain, we want to even the playing field to give every Filipino from all walks of life the ability to grow their hard-earned wealth. With the support of BitMEX and by leveraging blockchain technology, we hope to create a digital financial market that is accessible to everyone.”

Arthur Hayes, co-founder and CEO of BitMEX, believes that Filipino users contribute considerably to cryptocurrency trading. Taking this opportunity, investing in PDAX comes as a savior to accomplish the mission of providing users with a reasonable and seamless platform.

CEO of BitMEX acknowledges investment in crypto exchange, PDAX

He said:

We are confident in the transformative potential of cryptocurrency and PDAX’s ability to widen access to the Philippine market and provide the tools to learn more about financial markets.”

 

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Binance Opens Singapore Market in Soft Launch

Binance Opens Its Singapore Market in a Soft Launch

The Binance cryptocurrency exchange finally sets up shop in Singapore as scheduled earlier this month, according to reports.

The Binance Singapore exchange is now live in a soft launch on Tuesday featuring only one trade pair BTC/SGD – allowing Singaporeans to purchase Bitcoin with their local currency. Comparatively, the excitement of the launch as announced earlier this month may have been dampened by the eventual limitation of trading pairs upon launch.

However, according to the TechCrunch, it would appear the exchange may have made the move in a ‘test-the-water’ approach, as the source says that correspondence from Binance revealed that the exchange said Binance Singapore is a work in progress. It added citing a comment from Binance’s spokesperson:

“Binance is excited to bring world-class blockchain technology to Singapore and we look forward to showcasing Binance’s tier one safety and security measures to the world. BTC/SGD is the initial pair Binance Singapore is offering with the soft launch and there may be more pairs added as regulations allow.”

Currently one of the top cryptocurrency exchanges in the world, Binance reportedly has about 10 million users, 461 trading pairs, and having more than USD 1.17 billion 24 trading volume; it appears a lot of good stuff has been happening for the CEX/DEX hybrid platform – which includes the migration from the Ethereum blockchain to its mainnet. Moreover, the exchange’s token BNB is also one of the coins (perhaps the only one) currently trading close to its January 2018 market high.

With the Singapore market being the second installment so far this year, following its fiat-to-crypto exchange which was launched in January; Binance continues to spread its influence across the globe showing strong fundamentals for crypto startups. This new market brings Binance’s total fiat-to-crypto exchanges to three. Although, it would appear that there are other service providers in Singapore where bitcoin could be bought using the local currency or altcoins. Buy Bitcoin Worldwide lists 10 service providers.

In other news, US-based and exclusive cryptocurrency exchange Coinbase recently closed down its Chicago office causing a setback to the development of its matching engine, however, the exchange had disclosed that it was going on a full-throttle hiring spree in its other offices as well as redistribute the former engineering employees at the Chicago office.

 

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Crypto Exchange QuadrigaCX Funds Trapped in Cold Wallet as Only Dead CEO Had Access

Crypto Exchange QuadrigaCX Funds Trapped in Cold Wallet As Only Dead CEO Had Access

Another colossal misfortune greets 115,000 crypto traders who had their funds trapped in the now insolvent crypto exchange QuadrigaCX as it has reported that it is unable to access about USD 190 million of funds stored in the cold storage as well as fiat drafts held in custody, according to a filing for bankruptcy with the Nova Scotia Supreme Court on 31 January.

QuadrigaCX’s misfortune began when the founder and CEO Gerald Cotten reportedly died from Crohn’s disease in early December 2018, but the exchange waited until early January to announce his passing.

It was common practice for Cotten to move funds from the hot wallet into the cold storage for security purposes, and it was his sole responsibility. However noble the act – protecting users from hackers, – his passing has left the crypto exchange in a predicament, as only he has access to the cold wallet storages.

According to the affidavit submitted by Robertson, the storages hold 26,488.59834 Bitcoins; 11,378.79082 Bitcoin Cash, 11,149.74262 Bitcoin Cash SV, 35,230.42779 Bitcoin Gold; 199,888.408 Litecoins; and 429,922.0131 Ethereum as at 18 January and further reports indicated that the exchange was still accepting deposits after Cotten’s death.

The exchange also had challenges with fiat custody as funds that were deposited in a personal account were frozen – the company had no corporate account due to the nature of cryptocurrency business in the region, and funds operated through third-party has also been held back awaiting further order from the court, according to the affidavit.

A total of about USD 32.5 million in fiat is stuck and awaiting court proceedings before any action can be advised. Perhaps there’s hope for creditors funds to be paid back, which is however largely dependent on how the court proceedings turn out. According to the affidavit:

“The residual balance of these funds [once the cost of the proceeding is deducted], combined with net recoveries from other sources, would be made available to satisfy the claims of Quadriga’s creditors as confirmed through the CCAA process.”

The exchange hopes for a preliminary hearing on 5 February to appoint a third-party Ernst & Young Inc., to monitor the proceedings.

While exchanges provide a rather unique opportunity for digital asset owners to interact and have played important roles in the development of the cryptocurrency industry; seeing that most of the promised platforms are yet to launch a viable product, safety remains an issue.

Exchanges continue to battle on the frontline with compliance, market share, liquidity and security threats and perhaps will continue to do so until there are more standard protocols applicable for the industry. Quadriga’s unfortunate situation is bound to trigger some ill feelings towards crypto, and dent what little reputation has been built thus far. Fear that it might follow suit with the biggest cryptocurrency exchange fallout in the history of crypto – the Mt. Gox – is a possibility.

This incident has, however, further demonstrated the need for users of crypto exchange to have more active roles in the control of their funds, whether stored on an exchange or in a cold wallet in case of emergencies and unpredictable natural disaster as with the case of QuadrigaCX. As for exchanges, employing contingent approach such as multi-signature security systems can go a long way to prevent disasters such as this from scaling.

 

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