$6.4M Worth of FSN Tokens Stolen From Fusion Network’s Swap Wallet

Fusion Network’s token swap wallet was compromised. Roughly a third of FSN tokens was stolen as a result.

Fusion Foundation announced in a Medium post published on Sept. 29 that its swap wallet was compromised, which resulted in the theft of 10 million native FSN and 3.5 million Ethereum (ETH)-based ERC-20 FSN tokens. The total worth of stolen FSN tokens was estimated at around $6.4 million at that time.

The Foundation’s investigation has not revealed any other affected wallets so far. The alleged cybercriminal reportedly started to launder the coins already:

“After the currency was stolen, abnormal wash-trading behaviour occurred, and some of the stolen tokens were sold across exchanges, in particular Bitmax and Hotbit.”

Private key stolen

The attacker reportedly obtained access to the wallet by stealing the private key associated with it. The author of the post claims that “the Fusion Protocol and technology itself has been and remains secure.”

In an attempt to prevent the laundering of the funds in question, deposits and withdrawals of FSN tokens have been reportedly suspended on cryptocurrency exchanges such as Huobi, OKEx, Bitmax, Citex and Hotbit. All the funds remaining in the token swap wallet were moved to a cold wallet, abnormal transactions are being tracked. Lastly, the Foundation is also working on some unspecified technological approaches to recover the funds.

As of press time, FSN is trading at around $0.174 — over 66% lower than the one it traded at yesterday, according to Coin360 data.

As Cointelegraph reported yesterday, Amerian Internet infrastructure firm Juniper Networks found a new spyware that uses Telegram app to replace crypto addresses with its own.

Source Cointelegraph

Zcash Bug Could Reveal Shielded Full Nodes’ IP Addresses

A bug in all Zcash (ZEC) implementations and most of its forks could leak metadata containing the full nodes’ with shielded addresses (zaddr) IPs.

Komodo (KMD) core developer Duke Leto disclosed the bug in a blog post published on his personal website. A Common Vulnerabilities and Exposures (CVE) code has already been assigned to track the issue on Sept. 27. Leto explained:

“A bug has existed for all shielded addresses since the inception of Zcash and Zcash Protocol. It is present in all Zcash source code forks. It is possible to find the IP address of full nodes who own a shielded address (zaddr). That is, Alice giving Bob a zaddr to be paid, could actually allow Bob to discover Alice’s IP address. This is drastically against the design of Zcash Protocol.”

Per the announcement, everyone who published their zaddr or provided it to a third party could be affected by the vulnerability. Leto claims that users should consider their “IP address and geo-location information associated with it as tied to […] zaddr.”

Multiple cryptocurrencies affected

According to Leto, users who never used a zaddr, only used it over the Tor Onion Routing network or only to send funds, are not affected. Furthermore, Leto also claims that Zcash is not the only cryptocurrency affected and provides a non-exhaustive list.

The cryptocurrencies included in the list are Zcash, Hush, Pirate, Komodo smart chains with zaddr enabled by default, Safecoin, Horizen, Zero, VoteCoin, Snowgem, BitcoinZ, LitecoinZ, Zelcash, Ycash, Arrow, Verus, Bitcoin Private, ZClassic and Anon. Leto also points out that Komodo has already disabled the shielded addresses feature and transitioned it to the Pirate chain, which means that KMD no longer contains the bug.

As Cointelegraph recently reported, Electric Coin Company, which launched and supports the development of privacy-coin Zcash, recently published a paper describing a trustless cryptographic system called Halo.

Source Cointelegraph

LedgerX Claims Ex-CFTC Chairman Stalled Approvals Due to Personal Bias

Cryptocurrency derivatives firm LedgerX alleges that former United States Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo obstructed the approval of its amended Derivatives Clearing Organization (DCO) registration because of personal bias against the firm’s CEO Paul Chou.

As Industry news outlet Coindesk reported on Sept. 28, LedgerX made the allegations in two letters obtained via a Freedom of Information Act request. The first letter — dated July 3 — states:

“We have strong reason to believe that this unreasonable delay that is in clear violation of the Commodity Exchange Act is related to the Chairman’s animus towards a blog post written by our CEO.”

Preferential treatment

Per the report, while Giancarlo did not answer the outlet’s request for comment, Chou confirmed that the letters are real, accurate and are only some of the messages sent by the firm to the CFTC. LedgerX claims that in January Giancarlo called one of its board members, explaining:

“[Giancarlo] told him that he was going to make sure our DCO order was revoked within two weeks, due to a blog post written by myself the previous year implying that preferential treatment was being given to larger companies so he could ‘cement his legacy.’ This refers to the ICE / Bakkt approval, which was running into issues that were frustrating the chairman.”

While the topics in the letter are quoted, it is unclear which blog post exactly he refers to.

Auditors “never seen this kind of thing before”

Per the outlet’s report, LedgerX was asked by the CFTC to acquire insurance and conduct a SOC 1 Type 2 audit. Furthermore, the company claims that one of the CFTC staffers tried to interfere with LedgerX’s audit. The company also reportedly notes that some auditors were “saying they had never seen this kind of thing before.” Chou claims that he later received apologies:

“Previous chairman wanted to revoke LX license bc Bakkt efforts not moving along. Having no legitimate reason to revoke our license, staff resorted to contacting our independent auditors to tamper with audit to give commission reason to revoke license. Staff admitted & apologized.”

In the second letter, dated July 11, the firm also notes that its application has been pending for nearly 250 days — now it is over 300. Per the report, the CFTC has now has 180 days to approve or deny an application under federal laws.

Reliance on the direct competitor

The letters also note that the CFTC’s swap data repository requirements force LedgerX to report to the Intercontinental Exchange’s ICE Trade Vault, and the latter company has already launched its own competing service — Bakkt. In the July 3 letter, LedgerX claims to have an audio recording of a call with ICE, adding:

“Later, we have on voice recording, when ICE staffers thought they had muted their side, that they were instructed to delay support for our SDR reporting so that we could not start trading — something we consider incredibly anticompetitive. We filed a formal complaint regarding this anti-competitive aspect which was not answered at all. A division head later admitted, in person, to our COO that I was correct in stating that certain entities were being preferentially treated by the Chariman’s office.”

Lastly, Chou also told the outlet that he has been excluded from the CFTC’s Technology Advisory Committee. He said:

“They didn’t tell me why but I think it’s pretty obvious why they did it. […] One of the issues they were going to talk about… was custody and LedgerX is essentially the only member that does custody right now so we were about to send Juthica.”

As Cointelegraph reported at the end of July, the CFTC has reportedly confirmed that LedgerX’s physically-settled bitcoin futures product has not yet been approved by the Commission.

Source Cointelegraph

How Crypto Gambling Is Regulated Around the World

The Japanese House of Representatives recently passed new crypto asset regulation affecting exchanges and custodians — the Payment Services Act and the Financial Instruments and Exchange Act. However, the country’s crypto gambling industry still endures strict gambling regulations. 

“Japan has very strict rules regarding gambling and the same applies to crypto gambling,” Joseph D. Hugh, CFO of international cryptocurrency betting platform Jukebucks, told Cointelegraph, adding:  

“Although it is very difficult to restrict players who play, the government keeps a close tab on crypto transactions originating from Japan using taxation as an excuse.” 

Yet, Japan passed a federal law in July 2018 that allows physical casinos in the country: “Japan is opening up its offline casino license to major players after next year’s Olympics,” Hugh pointed out, “It is uncertain who will receive licenses for Tokyo, Osaka, Okinawa and Hokkaido. We believe online casinos will follow only after offline casinos start operation.”

Japan’s approval of “integrated resorts” has yet to be felt by the cryptocurrency industry. An integrated resort is a comprehensive entertainment complex with casinos, shopping malls, theaters, hotels and theme parks. While Prime Minister Shinzo Abe has introduced such pro-casino legislation as part of his overall growth strategy, Japan has not been so welcoming of crypto gambling.

Crypto gambling in Japan

Cryptocurrency gambling in Japan isn’t as prevalent as one would think given the country’s track record of implementing cryptocurrency regulations early, which is perhaps due to its experience with the collapse of Mt. Gox, a Japanese-based crypto exchange that went bankrupt in 2014.

Early in 2019, Blockchain network Tron, which claims to be building the infrastructure for a truly decentralized internet, blocked gambling apps on its decentralized app (dapp) store in Japan following pressure from Japanese regulators. 

Tron proactively blocking access to certain dapps led Tron’s Chief Technology Office (CTO) and co-founder Lucien Chen to leave the team. He cited the inconsistency between Tron’s dedication to being decentralized and its actions, which Chen said were more inherent to those of a centralized entity.

How does cryptocurrency gambling work? 

Blockchain-based gambling, for the most part, takes place in two ways: on-chain and off-chain.  

Off-chain cryptocurrency gambling involves physical and online casinos accepting cryptocurrency, mostly Bitcoin (BTC), as a deposit method into an internet casino account.

These establishments will often use a third-party custodian, such as BitPay, to convert Bitcoin or another cryptocurrency to a local fiat currency. There are online casinos that purely operate without fiat denominations, though, and pay out in Bitcoin. 

On-chain gambling occurs on a blockchain via smart contracts that comprise a decentralized application (Dapp), which has a backend code running on a blockchain network instead of traditional centralized servers. 

It is much easier for governments to go after off-chain casinos. Crypto gambling website casinos often ban IP addresses, preventing access from certain countries. When attempting to use on Bitcoin-accepting gaming sites from within the United States, the users will most likely be blocked. 

Message, appearing on Cashgames.bitcoin.com

On-chain casinos and other more decentralized or distributed methods of online gambling are not entirely immune to the effects of government regulation either, as we’ve seen with Tron’s refusal to show gambling dapps to Japanese users, as reported by Cointelegraph. Japanese internet users, however, can use a VPN to access Tron’s gambling dapps or blocked dapps from anywhere. Cryptocurrency gambling indeed remains a topic of hot debate in Japan. Nevertheless, no official guidelines have been put into place yet. 

A global snapshot of crypto gambling regulation

While most countries have official regulations in place regarding online gambling, only a handful of nations regulate crypto gambling.They include the United Kingdom, Italy, The Netherlands, Greece, Poland and Belgium. 

In many countries, Bitcoin is not considered a legal payment method under existing guidelines, so therefore shouldn’t be used in gambling. More clarity on that matter is evidently needed in various countries. Japan is perhaps the most notable example, where the gambling industry exceeds that of Nevada by over $4 billion and is estimated to be $15.8 billion.

Top-10 countries by gambling losses

In the U.K., numerous online gambling platforms and service providers accept cryptocurrency. Cryptocurrency-oriented service providers must adhere to the existing gambling laws active in the United Kingdom. There, sports betting is an extremely popular activity, having grown into a 700-million-GBP industry. Several crypto-focused sports betting websites can also be found online. 

While the U.K. Gambling Commission allows Bitcoin gambling, it also issued a warning on its website against untrustworthy service providers. Users are advised to “be cautious when using Bitcoin due to the associated risks.”

Yet, the benefits provided to gamblers by cryptocurrencies cannot be overlooked. Bitcoin provides a degree of privacy, though not anonymity. No personal information is transmitted when conducting a Bitcoin transaction, but a person attempting to convert BTC to fiat must be identified in most countries through know your customer (KYC) and anti-money laundering procedures (AML). 

On the other hand, privacy coins such as Monero (XMR) and Zcash (ZEC) give their users a greater amount of identity protection and, although less widely-accepted than Bitcoin, are known to be an impediment to law enforcement’s investigative abilities. Joseph Hugh believes that tighter crypto regulations will help those using the digital currency for legal purposes: 

“It is the role of all governments to try to regulate any and all financial activities of its citizens and nobody can blame them except for people who are in the grey and fishy businesses. I strongly believe that dapps are here to stay as country boundaries cannot stop people from getting around to them eventually.”

Despite the numerous regulatory and technical challenges faced by successful adoption in casinos, the world’s gambling industry is becoming increasingly friendly to cryptocurrency. Online casinos and even well-known Las Vegas establishments are starting to accept Bitcoin and other cryptocurrencies, which is a trend that we will likely continue seeing in the future.

Source Cointelegraph

Æ Ventures’ Blockchain Accelerator Reaches $1.6M in Investments

Æ Ventures, an investment company providing initial funding, acceleration and advisory support to blockchain projects, announced that it’s Starfleet Accelerator program surpassed $1.6M in investments and opened applications for the third round.

Mentoring and funding for blockchain startups

Per the press release shared with Cointelegraph on Sept. 26, the third edition of Starfleet Accelerator program takes place in Malta and offers its members mentorship and investment opportunities up to $100,000. The program’s launch is planned for early November and blockchain startups have to apply by Oct. 20.

The initiative will start with what Starfleet Accelerator calls “Genesis Week” — a period during which “participating startups receive access to mentorship and support in areas such as business models, token economics, blockchain infrastructure, and æternity apps architecture, from the best experts in the industry.”

A blockchain accelerator in India

The company also announced that its first 2020 program will take place in India. Æ Ventures CEO Nikola Stojanow commented on the development:

“We are amazed at the growth of the Starfleet accelerator program from its start to now and we can’t wait to launch the third edition with new companies breaking blockchain barriers. […] Hosting the program in Malta and India presents new opportunities to engage the burgeoning blockchain culture in these regions and we’re proud to continue to foster global blockchain growth through these communities.”

As Cointelegraph reported on Sept. 23, blockchain analytics firm Elementus raised $3.5 million from backers including a sister company of crypto-friendly asset manager Fidelity Investments.

Source Cointelegraph

New Balance to Use Cardano Blockchain to Confirm Product Authenticity

Cardano CEO Charles Hoskinson announced that New Balance will be using the Cardano blockchain to help authenticate its products.

The announcement

According to a Sept. 28 article by Crypto Briefing, Charles Hoskinson, CEO of blockchain engineering startup IOHK, announced that American footwear brand New Balance will use the Cardano blockchain to allow its customers to verify the origins of an range of products.

Cardano and New Balance are planning to roll out the program globally. However, current plans do not entail using the ADA token during this pilot.

Hoskinson reportedly made the partnership announcement during Cardano’s 2nd anniversary event at the Cardano Summit in Bulgaria’s second-largest city, Plovdiv.

Blockchain, global supply chain and health insurance

A wide range of companies have already started to implement blockchain technology into their supply chains. As Cointelegraph recently reported, Walmart is using blockchain technology to create a food traceability system based on the Linux Foundation’s Hyperledger Fabric. 

In August public enterprise blockchain platform VeChain partnered with Australian winemaker Penfolds to release a case of blockchain-encrypted wine bottles for sale, as part of its Wine Traceability Platform initiative.

Cointelegraph reported in March that Carrefour introduced its own blockchain-powered solution for tracking milk, which is reported to guarantee clients complete product traceability across the entire supply chain — from farmers’ fields to the store shelves.

Source Cointelegraph

Class Action Complaint Filed Against Patrick Byrne and Overstock.com

A new complaint filed in Utah accuses Overstock.com, former CEO Patrick Byrne and former CFO Greg Iverson of securities fraud.

The complaint

Filed on Friday, Sept. 27, the complaint requests a trial by jury, alleging that Byrne designed Overstock.com’s digital asset-based dividend as a means of punishing short sellers, which other outlets have alleged previously. On the subject, and in language more dramatic than many legal filings, the complaint reads: 

“While defendant Byrne had previously, at different times, launched into public tirades over short selling and naked short selling, the tZERO Dividend was his secret plot to finally obtain hegemony over them — and it almost worked.”

Punishing short sellers

In July, Overstock.com began offering a special dividend called “Digital Voting Series A-1 Preferred Stock,” which would trade on the company’s own blockchain platform. However, and unusually, investors would not be able to trade the dividend at all for six months. The complaint explains the mechanism of tampering with Overstock.com’s stock price: 

“While shares traded to a Class Period high of $26.89 each on September 13, 2020, they traded to as low as $15.50 by September 18, 2020, three trading days later, after investors learned that the tZERO dividend was designed to be a short squeeze.”

As Cointelegraph reported at the time, Byrne managed to sell his 13% share in Overstock.com for $90 million in the days leading up to Sept. 18.

The complaint claims that Overstock.com, Byrne and Iverson violated Section 10(b) of the Securities Exchange Act governing antifraud provisions of securities swaps, and that Byrne alone violated Section 20(a) of the same act by virtue of his status as controlling person.

Byrne’s summer

Both Byrne and Iverson resigned from their positions at Overstock.com recently, Byrne on Aug. 22 and Iverson on Sept. 17. Byrne’s resignation was particularly dramatic, with him claiming that it was due to scandal surrounding a relationship with alleged spy Maria Butina and involvement with federal agencies. 

News of Byrne’s resignation came as a shock to the crypto community, given his long history of support for Bitcoin and blockchain technologies. Indeed, Friday’s complaint reads that: 

“In fact, it was recently reported that, for the last several years, defendant Byrne spent no fewer than 220 days a year on the road, ‘spreading his blockchain gospel, despite the fact that Overstock was hemorrhaging cash.’”

Source Cointelegraph

Cryptocurrency and Blockchain News From Brazil: Sept. 22-28 in Review

Brazil has seen another tumultuous week in the cryptocurrency industry as the central bank of Brazil wants to use blockchain technology starting in 2020, the president of Unick Forex continues to claim they pay customers on time, and the Brazilian Securities Commission investigates the alleged fraudulent activities of more crypto-related companies.

Here is the past week of crypto and blockchain news in review, as originally reported by Cointelegraph Brasil.

President of Unick Forex says it pays customers on time 

On Sept. 23, Cointelegraph Brasil reported that president of alleged investment scheme Unick Forex Leidimar Lopes said that the company’s payments are up to date, despite the complaints of thousands of investors who claim that the exchange is not honoring their payments. Lopes said:

“We are paying thousands of customers every day, everything is still normal, everything is working.”

However, despite Lopes’s announcement, nothing seems to have changed. Investors still claim that their funds are blocked and say that the announcement was just another excuse from Unick. One investor added:

“They released the withdrawal but paid nothing. Requesting a withdrawal is easy, it is difficult for them to pay.” 

Cointelegraph previously reported that a court in Rio de Janeiro ordered Unick Forex to pay $28,500 to a client who filed a lawsuit against the company for a delay in platform withdrawals.

Central bank of Brazil wants to use blockchain technology starting in 2020

On Sept. 24 Cointelegraph Brasil reported that the central bank of Brazil has decided to move away from its current payment system (Ted and Doc), which it considers slow and expensive. The new blockchain-based instant payment system should launch by November 2020.

The central bank hopes to connect more than 120 regulator-registered financial institutions and assure the availability of funds to the final beneficiary in real time, 24/7. 

Regulator investigates crypto-related firms for alleged fraud

On Sept. 20 Cointelegraph Brasil reported that the Brazilian Securities Commission (CVM) started investigating the alleged fraudulent activities of A2 Trader and Kleyton Alves Pinto. CVM stated that both entities are not registered with the institution, adding:

“They cannot perform the activities or provide the services […] such as analysis, consulting or distribution of securities.”

The CVM is also investigating two additional companies, Blue Benx and NYC Technology, on charges of operating financial pyramids. According to the Brazilian regulator, these companies promised their customers large returns through various operations involving Bitcoin (BTC) and other cryptocurrencies.

Source Cointelegraph

Crypto News From the German-Speaking World: Sept. 22–28 in Review

The German-speaking world has experienced another week full of exciting developments in the crypto industry, with a Berlin-based fintech startup receiving $1.5 million to develop its own blockchain, German experts warning about Facebook’s crypto coin, and the Federation of German Industries asking the government to create suitable conditions for blockchain.

Here is the past week of crypto and blockchain news in review, as originally reported by Cointelegraph auf Deutsch.

German fintech startup receives $1.5M to develop its own blockchain

On Sept. 23, Cointelegraph auf Deutsch reported that the Berlin-based fintech startup Centrifuge received funding from the public investment bank Berlin and the European Regional Development Fund to further develop its financial market platform. 

Centrifuge, which is an open, decentralized platform that aims to connect the global financial supply chain, will receive around $430,000 as a grant and an additional $1,100,000 as a loan to develop its own blockchain, called Centrifuge Chain. 

IOTA joins forces with the Linux Foundation

On Sept. 26, Cointelegraph auf Deutsch reported that the Iota Foundation joined forces with the Linux Foundation through LF Edge, an umbrella organization that aims to establish an open, interoperable framework for edge computing independent of hardware, silicon, cloud, or operating system. Iota Foundation added:

“We’re happy to announce that our first step Towards Open Collaboration is that we have joined the Linux Foundation to help complete their stack of technologies to advance their development of a truly interoperable solution set for IoT, Edge and Cloud integration.”

German experts warn about Facebook’s planned crypto coin Libra

Cointelegraph auf Deutsch reported on Sept. 27, that, during a technical meeting held by the German Bundestag, experts and institution representatives warned about the possible consequences of Facebook’s planned cryptocurrency Libra. In addition, the potential of blockchain technology in general and the idea of a digital central bank coin were also discussed.

German Vice Chancellor and Finance Minister Olaf Scholz previously expressed similar sentiments, saying that policymakers cannot accept parallel currencies such as Facebook’s proposed Libra stablecoin and that it will be clearly rejected. 

German trade organization asks gov’t to create better conditions for blockchain

On Sept. 24, Cointelegraph auf Deutsch reported that the Federation of German Industries (BDI), an umbrella organization that speaks for 36 trade associations and more than 100,000 enterprises with around 8 million employees, has called upon the German government to quickly create suitable conditions for the use of blockchain technologies.

The BDI said it considers blockchain technology to be of the highest importance for the competitiveness of the German economy, adding:

“Blockchain technology offers many opportunities and industrial applications, such as for a global digital market, with low barriers to entry and cross-border trade costs. It helps to create networks between companies, business processes and business objects.”

Crypto loan platform YouHodler moves to Switzerland

On Sept. 24, Cointelegraph auf Deutsch reported that crypto-financial services provider YouHodler announced that it is moving its operation to the Alpine republic in Switzerland. The company said that the transformation from a blockchain startup to an “international fintech provider of crypto-fiat services” is now completed and that it is looking forward to “rapid growth and long-term business relationships.”

Source Cointelegraph

Government of Uzbekistan Triples Tax on Electricity for Crypto Miners

The government of the Republic of Uzbekistan has ordered a 300% increase on electricity tariffs for cryptocurrency miners.

According to a Sept. 27 announcement, the Cabinet of Ministers of the Republic of Uzbekistan has decreed that cryptocurrency miners must pay three times more the existing electricity tariffs. 

The provision follows an Aug. 22, 2019 decree from President Shavkat Mirziyoyev entitled “On Accelerated Measures to Improve Energy Efficiency of Economic Sectors and the Social Sphere, Implement Energy Saving Technologies and Develop Renewable Energy Sources” and to further motivate the rational use of electrical energy by consumers.

Uzbekistan’s approach to crypto and blockchain

Last September, Mirziyoyev ordered the establishment of a state blockchain development fund called the “Digital Trust.” The fund’s primary goal is to integrate blockchain into various government projects, including healthcare, education and cultural areas. The organization is set to be responsible for international investment in the Uzbek digital economy.

Earlier the same month, a decree legalizing crypto trading — also making it tax-free — and mining in the country came into force. According to the law, foreign nationals can only trade cryptocurrencies in Uzbekistan by creating a subsidiary in the country.

The law also specifies a minimum capital requirement of roughly $710,000 to establish a crypto exchange. Furthermore, crypto traders will not fall under Uzbek stock market regulations and will be relieved of their obligation to pay taxes on trading revenues.

Mining regulation in other countries

In June, the Iranian government announced that they would cut power to crypto mining operations until new energy prices were approved. Iran’s Ministry of Energy reportedly revealed that the country had seen a 7% spike of electricity consumption over a monthly period ending on June 21, 2020. The Ministry believes that the surge was caused by the growing number of crypto mining activities in the country.

China’s Bitcoin mining scene is a major player in the global hash rate, with China-based mining pools reportedly mining potentially 70% of all the coins created yearly. However, in April, the Chinese government said that it was considering the elimination of crypto mining in the country.

Source Cointelegraph