Maitland/AMO Cryptocurrency Monitor – 17 October 2019

17th October 2019

The Big Read

Payment firms back out in painful blow to Facebook’s cryptocurrency Libra

Nearly every payment firm that initially agreed to join Facebook’s Libra coin has backed out, in a potentially fatal blow to the currency. Visa and Mastercard said on Friday they would no longer participate in the Libra Association and Latin American payment system Mercado Pago announced it would back out as well, according to the Guardian. The payment processing company Stripe said it was stepping back, as well as the online auction company eBay.

SEC sues Telegram over $1.7bn digital token offering

The SEC is suing Telegram, the encrypted instant messaging and voice app, claiming that the company’s $1.7bn token offering had broken several federal securities laws. The Financial Times writes that the SEC has obtained a temporary restraining order against the app, in order to prevent Telegram from “flooding the US markets with digital tokens that were unlawfully sold”. Telegram has since responded that the “gram” tokens it sold were in fact currency, rather than securities.

BMW, General Motors, Ford to Start Testing Blockchain Payments in Cars

CoinTelegraph reports that BMW, General Motors, Ford, Renault and Honda will start testing a blockchain car identification and payment system next month in the United States. The system will aim to test the vehicle ID system developed under the Mobility Open Blockchain Initiative with the cars assigned digital IDs linked to ownership, service history and a wallet allowing the vehicle to automatically pay fees without specialized hardware.

Virginia Bitcoin Mining Operation Ordered to Liquidate Assets

BCause Mining, a Bitcoin mining operation in Virginia Beach, has been ordered to liquidate its assets, with a federal judge approving the motion to convert the filing from a reorganization to a Chapter 7 bankruptcy. Cointelegraph reports that the now-defunct mining company received a $500,000 grant in January 2018 from the city of Virginia Beach to expand its operations to a local rented warehouse, with the company to invest more than $60m in a massive expansion.

New Kid on the Block – The Technologies, Funds and ICOs you should know about

The IRS Just Issued Its First Cryptocurrency Tax Guidance in 5 Years

The U.S. Internal Revenue Service has published its first guidance in five years for calculating taxes owed on cryptocurrency holdings. CoinDesk reports that the guidance notice addresses the tax liabilities created by cryptocurrency forks; the acceptable methods for valuing cryptocurrency received as income; and how to calculate taxable gains when selling cryptocurrencies. The new IRS document also offers clarification on how taxpayers can determine the cost basis, or fair market value of coins received as income, such as from mining or the sale of goods and services.

EY Unveils Public Finance Blockchain to Track Government Spending

Big Four auditing firm EY has launched a blockchain platform for public funds meant to enhance transparency. The OpsChain Public Finance Manager (PFM) system enables transparent tracking of public budgets and expenditures viewable by all citizens. CoinTelegraph notes that EY was reportedly already tracking public funds on a blockchain in multiple places, including the city of Toronto.

New Government Initiative to Put South Korean Trade on Blockchain by 2021

CoinTelegraph reports that the South Korean government has planned to establish a digital trade foundation to lower the costs of trade by using blockchain technology. South Korean Finance Minister Hong Nam-ki unveiled South Korea’s Development Plan for Digital Trade, which aims to apply technologies such as blockchain, big data and AI to digitize the Korean trade finance ecosystem by 2021.

eToro Launches Crypto Portfolio Weighted by Twitter Mentions

eToro has unveiled its new sentiment-based crypto portfolio called the TIE-LongOnly CopyPortfolio. The new financial instrument is a partnership between eToro exchange and The TIE data analysis firm, and was launched Tuesday morning on eToro’s trading platform with a minimum $2,000 buy-in. This new crypto portfolio is based on the algorithm of Twitter mentions – about 850,000,000 daily – as the social media platform is one the main platforms for discussing crypto activities.

Scams, Sanctions and Suspicious Activity

Identity Thief Spends $5m on Cloud Computing to Mine Cryptocurrency

Singaporean citizen Ho Jun Jia has been indicted for stealing over $5m worth of cloud computing services to mine cryptocurrencies, according to a grand jury indictment from the U.S. District Court in Seattle. CoinDesk writes that Ho was arrested in Singapore and is being charged with wire fraud, access device fraud, aggravated identity theft, with the indictment alleging that Ho opened multiple accounts in cloud services providers with at least three stolen identities and credit cards.

Bank of Ireland Execs Back Out of Testifying in OneCoin Scam Hearings

Several Bank of Ireland executives have backed out of the testimony to the US Government for the case regarding a $400m worth money laundering scheme through cryptocurrency scam OneCoin. CoinTelegraph writes that the witnesses have changed their stance having originally agreed to testify and will now only testify in response to compulsory process under the U.S.-Ireland Mutual Legal Assistance Treaty.

N.Korean hackers’ New MacOS malware hides behind fake crypto firm

Notorious North Korean hackers known as the Lazarus APT Group have reportedly created another malware targeting Apple Macs that masquerades behind a fake cryptocurrency firm. CoinTelegraph reports that Apple Mac security specialist and principal security researcher at Jamf Patrick Wardle published a document outlining the nature of the malware, revealed by MalwareHunterTeam (MHT) researchers the previous day. MHT and Wardle warned that at the time of their warning, the malware was undetected by any engines on VirusTotal and that the sample appears to be closely related to a strain of Mac malware created by the Lazarus Group and identified by Kaspersky Labs back in summer 2018.

Bulls & Bears of the week

“China’s [Central Bank Digital Currency] may be strategically positioned to become the de facto global digital currency in emerging economies” - RBC analysts Mark Mahaney and Zachary Schwartzman

“I can’t even make pull payments with Bitcoin and that’s [...] the bread and butter of most of our commercial systems.” – Ethereum co-founder and Cardano creator Charles Hoskinson