Blockchain Data Links Tether 'Attack' to 2015 Exchange Hack

The individual or group behind the alleged Tether attack may have been involved in a previous well-known hack in the bitcoin space.

Those behind the alleged theft of $31 million worth of Tether's US dollar-backed tokens were also involved in a high-profile hack two years ago, a cybersleuth has concluded from available blockchain data.

The company behind the dollar-backed cryptocurrency tether claimed Monday night that it had been robbed, sparking a new wave of speculation around the token, its backers and its alleged role in recent bitcoin market movements.

And, as might be expected, the availability of public blockchain data for the transactions involved led a number of observers online to trace them back in an attempt to find answers.

In posts on the r/bitcoin and r/cryptocurrency subreddits, a user going by the handle SpeedflyChris has linked the alleged Tether attack to the $5 million hack of Bitstamp in 2015. As reported at the time, employees at that Luxembourg-based bitcoin exchange fell victim to a weeks-long phishing attempt, ultimately leading to the loss of some 18,000 bitcoins.

At the heart of SpeedflyChris' analysis is this wallet, for which transactions from Bitstamp can be seen dating back to January 2015.

As SpeedflyChris notes, the address in question was used to send bitcoins to another address that later received tokens from Tether's "treasury" wallet, in a series of 21 transactions over the course of Nov. 19. Included in the alleged theft of the roughly $31 million in tethers was 5 BTC, which ended up in three separate wallets as Tether uses Omni, a bitcoin-based software protocol to effectively "tag" coins to serve different purposes.

Separately, SpeedlyChris' analysis indicates that the primary address in question is also connected to thefts that occurred at the China-based bitcoin exchange Huobi in 2015, as well as a number of transactions to peer-to-peer bitcoin exchange LocalBitcoins.

What now?

Despite the pseudonymous nature of public blockchains like bitcoin, the data offers a level of transparency into the movements of the funds involved.

Yet the absence of identifying information beyond wallet addresses means that online sleuthing has its limitations.

On the other hand, in the event of a law enforcement investigation, such data could ultimately come into play.

Source: CoinDesk

China's Bitcoin Exchanges Shift to P2P Model After Crackdown

Earlier, we reported that Chinese Cryptocurrency exchanges are looking into migrating their operations to other countries. But while that is something that needs partnerships and legal business papers, the exchanges are going another route to continue operations.

Some of China's top bitcoin exchanges are now shifting to the over-the-counter (OTC) market in the wake of a crackdown by regulators in the country.

In announcements made on Oct. 31, both OKEx and Huobi Pro said they will introduce peer-to-peer trading platforms that support fiat currency transactions, including the Chinese yuan, as an alternative for the country's domestic cryptocurrency investors.

Based in Hong Kong, the two exchanges had previously provided solely crypto-to-crypto trading since being founded by their respective parent exchanges, Beijing-headquartered OKCoin and Huobi. They will now pivot toward a combination of the existing structure and the direct, peer-to-peer model.

According to OKEx, the yuan is currently the only fiat currency that is available on its P2P platform, noting that it has seen increasing demand from Chinese investors since the exchange crackdown.

Lennix Lai, financial market director at OKEx, said the platform has received around 8,000 user applications for account registration since the new service's launch on November 1.

Lin Li, CEO of Huobi, said in his latest announcement that, besides the P2P platform on Huobi Pro, the company is also eyeing an expansion to overseas markets. The firm is currently in the process of setting up an exchange platform in South Korea in order to compete with local marketplaces like Bithumb.

The news follows months of growing scrutiny by Chinese regulators that led to all major bitcoin exchanges in the country, including OKCoin, Huobi, BTC China, and ViaBTC, to suspend order book trading of digital assets against the yuan.

Source: CoinDesk

Where to Trade Bitcoin? Brokerage Apps Move In Amid Cryptocurrency Market Boom

 

Established brokers and startups want in on the crypto boom – but, Trading 212 is a bit of both.

Founded by Bulgarians Ivan Ashminov and Boris Nedialkov, Trading 212 is the trade name for Avus Capital, a broker-dealer with roots going back 14 years in foreign exchange and commodities dealing in Europe. But while the company isn't exactly new, what it's doing with share trading and cryptocurrencies is – and it seems to be generating success so far.

Its app is the most-downloaded trading app in the UK, with the company now providing a full-blown trading operation, with markets in some 2,500 instruments, ranging from shares to commodities.

In June this year, however, Trading 212 took a bold step in adding cryptocurrencies to the mix, helping it to attract a younger crowd – the millennials – broking industry incumbents are finding hard to reach. These are the consumers who grew up against the background of the 2008 financial crisis, and as a consequence, are inclined to see financial service companies as the bad guys.

And while U.S. fintech startups Invstr and Kapitall are targeting the same demographic of 20-something financial cynics, they don't yet have the "magic sauce" of crypto to sell on their shelves. For the likes of Trading 212, crypto is a way of further enhancing its appeal to new users.

But the question is: just how effective has this push been?

No hard figures

Nick Saunders, chief executive of Trading 212's UK operation, won't say for sure.

In interview, Saunders was cagey about disclosing exact figures on how much crypto constitutes in terms of its overall business, although he described the contribution as "significant."

"We'd rather not share the exact numbers but it is [a few percent] of the combined volume generated by all exchanges, which is quite a lot for a single retail broker," he said.

Still, Saunders did suggest that Trading 212 is benefiting from the wave of new attention cryptocurrencies have received in 2017. After rising from under $10 billion at the start of the year, the total value of the combined market has risen to more than $170 billion.

In short, it's showing all the attributes of a hot market that's generating returns.

Saunders continued:

"Clients numbers are always driven by volatility and the news. When the two combine and bitcoin price rises make headline news, this drives new clients to open accounts."

Options and options

It doesn't hurt that Trading 212's app, honed for more mainstream tastes, is slick.

The app includes a real-time chat facility in a link-up with TradeBird – a trading-focused social network set-up by Trading 212's founders; accessible educational tools and regular cryptocurrencies analysis, which has all helped it to attract a growing audience.

Even before it offered crypto, Trading 212 caught imaginations when it came up with a freemium model for share trading, in which customers get commission-free dealing for up to 10 trades a month, up to a maximum value of £10,000 per trade.

The company estimates that 90% of its equity customers will pay nothing at all, with the 10% of high-rolling "whales" delivering its revenue stream.

Perhaps propelling its growth among more seasoned cryptocurrency traders, though, is that it has also added a swath of available options from the asset class. Customers can deal not just in bitcoin and ether, the two largest cryptos by market cap, but in ripple, bitcoin cash, dash, monero and neo.

Saunders revealed to CoinDesk that Trading 212 plans to add a further 14 currencies in November – ethereum classic, zcash, qtum, omisego, iota, eos, lisk, augur, cardano, waves, stratis, ark, steem and stratis.

Making markets

Apart from that, Saunders is pledging the app can "remove all the complexity and risk" of owning cryptocurrencies, which today often involves storing or managing a set of cryptographic keys (or trusting someone else to do so), by using contract for differences (CFDs).

A type of financial instrument made to mirror an underlying asset, the use of the tool means that trading crypto on the platform does not involve buying the claims to those keys, as you would on a crypto exchange such as Bitfinex, the marker leader by volume.

But, CFDs have a downside, too, in that trading isn't yet available in the U.S.

CDFs involve trading on margin, which has the effect of magnifying gains but also losses and is why the SEC has taken it upon itself to protect traders by banning CFDs.

Still, Trading212 has made other tweaks to its service to accommodate cryptocurrencies.

For one, it has a Bitcoin Mini market that quotes a price one-tenth the value of bitcoin, which they believe makes opening a position much more manageable and possible less scary. (Saunders says the average deal size for bitcoin is around £10,000.)

As with fiat currency or share trading, stop loses can also be set so you get to sleep at night without worrying if the South Koreans are about to start selling bitcoin big time.

Trading 212's killer feature, though, is perhaps the fact that on its crypto markets you can "sell" coins as well as buy. This provides novice and experienced users alike with a way to “short” the market if they think prices are going to fall. As ever with trading, it’s all about the timing.

Bigger wave

Elsewhere, other CFD, spread betting and forex brokers have been getting in on the action.

Avatrade.com and Trade.com are two forex brokers trying their hand at crypto. Another is InterTrader, which provides dealing in bitcoin and ether, and is currently giving away 1 ether to anyone opening a new account and trading a stake worth a minimum of €500.

And then there’s UK spread-betting behemoth IG Group, which was the first to offer CFD and spread-betting bitcoin products. Shai Heffetz, managing director at InterTrader is a long-time bitcoin believer, stating: "There is no doubt virtual currencies are going to play a significant role in the future of the economy."

A new kid on the block is a trading app from startup Bux, positioning itself as a "millennial financial brand," is trying to make headway by turning stock investing into a game with virtual trading, hoping to convert its young customer base to funding their accounts with real money.

Of its 200,000 UK users, Bux claims 85,000 are now using real money. Its app, with a design look-and-feel that evokes then Grand Theft Auto video game, and judging from the stream showing what app users are trading, bitcoin is one of the more popular trades among its client base.

Still, the likes of Coinbase notwithstanding, buying and securing your crypto is not seen as a straightforward matter by most ordinary folk.

Yet, as interest in crypto grows, the new breed of trading apps from Trading 212 (and others) show there's a big market for more familiar ways to gain exposure.

Chinese Cryptocurrency Exchanges Looks to Migrate to Other Countries

Due to the Chinese government's crackdown last month, bitcoin exchanges in China are looking to continue their businesses in cryptocurrency-friendly countries. Nineteen Chinese companies are said to be applying for a license to operate in Japan, while others are considering Singapore, Hong Kong, and South Korea.

These cryptocurrency exchanges are reportedly seeking to migrate their operations to other Asian countries that are more cryptocurrency-friendly, following China’s clampdown on crypto trading and initial coin offerings (ICOs). According to Bloomberg:

They’re applying for licenses in Japan — solo or via partners — setting up over-the-counter shops in Hong Kong, or laying the groundwork to operate from Singapore and South Korea.

Hong Kong-based Lennix Lai, the financial market director for Okex exchange, believes that there is enough demand. He said, “as formerly one of the biggest operators in China, we think we have a good chance of competing globally.”


Licenses and Partners in Japan

Japan has already legalized bitcoin as a method of payment in April this year. As a consequence of this legalization, cryptocurrency exchanges are required to register with the country’s Financial Services Agency (FSA). The agency granted licenses to eleven bitcoin exchanges in Japan for the first time last month. Out of the Chinese exchange seeking to operate in Japan, Bloomberg noted:

There’re at least 19 companies applying for a Japanese license.

While some are applying for a Japanese license, others are looking for local partners. For example, the Hong Kong-based exchange, Binance, is looking for local partners and also considering acquiring an operational exchange, CEO Zhao Changpeng revealed. Beijing-based exchange Bixin has also expressed interest, the news outlet detailed.

Mike Kayamori is Head of Quoine, the Singapore-based exchange with a strong presence in Japan. He commented, “we’re talking to almost all of those guys. They’re all desperate now.” He expects to sign a deal with a Chinese partner by the end of this year, the publication noted, and quoted him saying:

There’s a lot of Chinese retail people reaching out to us, but we can’t handle it. So if a Chinese partner can handle all of those and they connect to us, that will be much easier.

Early this month, ECNC reported that one of Japan’s largest bitcoin exchanges, Coincheck, had received many requests from Chinese companies to list tokens on its exchange following China’s ICO crackdown.

“We are receiving hundreds of requests from Chinese startups and startups around the world asking us to list their tokens, after the Chinese government banned ICOs,” Kagayaki Kawabata, International Business Developer at Coincheck told Global Times. While he said Coincheck is careful about listing ICO tokens, he noted that “if Chinese tokens can meet the criteria that exchanges will set, Japan will be a great place to list tokens.”


Other Friendly Shores

Japan is not the only contender for Chinese exchanges to flee to. Some Chinese investors have “resorted to peer-to-peer trading over messaging apps like Telegram since the clampdown: basically Chinese investors can still buy from individuals who’ve access to overseas markets,” Bloomberg described.

To capture this market, bitcoin exchange Okex is setting up its own over-the-counter trading platform in Hong Kong, which Lai expects to attract customers primarily from China, Russia and the U.K. “They’re now trying to recruit people to act as third-party market makers, who’ll chaperone deals, make money off a spread and then split the revenue with Okex,” the publication detailed.

Additionally, some Chinese exchanges are turning to Singapore as a backup option. Recently, the managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, said the central bank has no plans to regulate cryptocurrencies. The country is working on formalizing the payment services regulation which will affect some activities relating to digital currencies.