Centra Tech Co-Founder Sentenced One-Year in Prison Over $25 Million ICO Scam

Robert Farkas, 34, the co-founder of the cryptocurrency firm Centra Tech was sentenced to a year in prison on Tuesday by US District Judge Lorna G. Schofield in Manhattan.

Farkas pleaded guilty to tricking investors of over $25 million in an investment scam that was promoted by the likes of Floyd Mayweather and musician DJ Khaled, who settled their own charges with the SEC for failing to disclose that they had been paid to promote the project.

The other two co-founders have also pleaded guilty to their roles in the scam.

The guilty parties solicited investors in 2018 to commit frauds to an initial coin offering (ICO) for its “Centra Tokens” by falsely claiming that they have developed a debit card that will allow the users to make purchases with digital currency at businesses accepting Mastercard and Visa, said prosecutors.

In other news, the Public Prosecutor’s Office of the Argentine city of Córdoba indicted 12 people in connection with the Onecoin Ponzi scheme last week.

One of the biggest scams in crypto history, this Bulgaria-based project netted about $4 billion.

The local police carried out multiple raids and arrested eight people over the years in different countries. Onecoin founder Ruja Ignatova, who was also indicated, is still at large.

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Author: AnTy

Avalanche Blockchain Taps into the $10 Billion Market With An Initial Litigation Offering Token

In collaboration with Republic Advisory services and U.S-based law firm Roche Cyrulnik Freedman LLP, Ava Labs has announced the debut of Initial Litigation offering (ILO) using the Avalanche blockchain. This initiative will tap into the $10 billion litigation financing asset class to open up the market to more retail investors. Notably, the token is the first of its kind to be hosted within a blockchain ecosystem.

The initial ILO to be hosted on Avalanche blockchain will be a litigation financing towards an ongoing matter where the plaintiff Apothio LLC is accusing Kern County, California of unlawfully destroying 500 acres of Hemp; an estimated $1 billion according to market value. Apothio LLC, which specializes in the industrial research, development, and commercialization of cannabidiol oil (CBD), is expected to raise its ILO in Q1 2021.

Decentralized Litigation Funding

Litigation funding, which is also dubbed ‘legal financing,’ is an avenue for plaintiffs to raise resources to sustain their court matters to the end. Before the ILO token launch on Avalanche, this process was generally centralized and mainly attracted institutional players such as LexShares, a leading litigation fund.

Well, the field has now been leveled by Avalanche’s ILO; each token will represent a legal claim to a portion of the potential financial recovery. However, the funders will have to bear the full risk of capital erasure if claims that they choose to back are unsuccessful. Ava Labs’ Kevin Sekniqi commented on the value proposition of decentralizing litigation funding,

“ILOs are a breakthrough for both individuals lacking the resources to seek remediation, and for retail investors who are often locked out of the most highly-performant asset classes.”

“They are fundamentally unique from any other investments, and the creation of the ILO marks the first time blockchain technology will be used to democratize financial products at a multi-billion-dollar scale.”

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Author: Edwin Munyui

Elliptic Report: Crypto Criminals Turn to Privacy Wallets to Launder Bitcoin

Privacy has been one of the hot buttons in the crypto space. In a new report, leading blockchain analytics firm Elliptic reviews the industry’s illegal activity levels this year.

On Wednesday, the firm released a study showing that criminals are now laundering Bitcoin using private wallets like Wasabi.

The Hunt for Privacy

Private wallets are known for their privacy features. They obfuscate funds and hide their origins from tracking mechanisms, through a process called coin mixing.

Mixing works by swapping coins between users. It creates a complex network of transactions designed to create a maze that throws trackers off a transfer over time.

Elliptic explained that 13 percent of Bitcoin crime proceeds are now being laundered through these services. The number is up from the 2 percent reported in 2019.

Tom Robinson, Elliptic’s Chief Scientist, explained that the use of privacy wallets had grown primarily due to the increased identity verification standards operated by exchanges and traditional wallet providers.

While the general use of these privacy wallets has increased, there is a noticeable uptick in criminal applications.

Blame the Government and Analysis Firms

Mixers have also grown in prominence thanks to increased tracking technologies and procedures from firms like Elliptic.

Chainalysis and CipherTrace, two of the foremost analytics firms in the blockchain space, have worked extensively with regulators to crack down on illegal activity this year. Seeing nowhere else to turn to, criminals are now being inventive and using mixers.

CipherTrace has been incredibly effective in cracking down on privacy-related activities in the crypto space.

In August, the firm announced a new tool to track Monero transactions, the most popular privacy coin. It has even filed two patents to improve tracking for Monero.

In a blog post, CipherTrace stated that the patents would include forensic tools to explore transaction flows in Monero and assist financial investigations. They will also have probabilistic and statistical methods to score transactions and cluster possible wallet owners, as well as visualization tools and techniques to track stolen or illegally used assets.

“CipherTrace’s Monero tracing capabilities will allow [Virtual Asset Service Providers] to identify when inbound XMR may have criminal origins, allowing them to adequately risk rate customer transactions per any required regulations.”

CipherTrace added that it aimed to improve criminal users’ detection and improve the safety and sustainability of privacy coins.

The development follows an earlier $625,000 bounty program set by the Internal Revenue Service (IRS) for anyone who can develop Monero tracking tools. As privacy becomes more of a luxury in the crypto space, it is understandable that criminals would want to get inventive and use privacy wallets.

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Author: Jimmy Aki

Bitbond And Germany’s Oldest Bank to Issue A Euro Stablecoin On Stellar’s Blockchain

Bitbond, a Germany-based tokenization firm, has finally completed the launch of its first stablecoin after securing a partnership with Bankhaus von der Heydt (BVDH), the country’s oldest running bank, an official statement confirmed on December 9. Earlier in February this year, BEG had reported the partnership between the two to develop the first Euro-backed stablecoin on the Stellar blockchain, which has now come to life.

In a press statement, Radoslav Albrecht, founder and CEO of Bitbond said,

“Bitbond has been working with Stellar since 2019 when we issued the first-ever tokenized security recognized by the Federal Financial Supervisory Authority (BaFin), [the financial regulatory authority for Germany].”

Bitbond utilizes blockchain technology to enhance the issuance, settlement, and custody of bonds through tokenization. Following the completion and launch of the Euro stablecoin issuance, Bitbond “has completed our digital assets tech suite which, up to now, included digital asset custody and tokenization technology,” Albrecht further said.

The statement claims the Euro stablecoin is the first-of-its-kind issued in Europe or across any banking institution. It is fully regulated by BaFin and fully backed at a 1:1 ratio, which gives institutional investors and third party banks confidence in using the token. However, given the strict regulations, KYC/AML compliance, and other regulatory requirements, Bitbond’s EUR stablecoin will not be traded on open exchanges.

BVDH customers and other third-party developers of financial applications dealing with digital assets’ online settlements can use the stablecoin – reducing their costs and transaction times – albeit in a more regulated way. Bitbond also integrated the tokenization of bond securities allowing the system to directly mint and destroy tokens according to the demand/supply mechanisms.

This opens up a gateway for Stellar blockchain to dominate the Euro stablecoin market in a similar manner that Ethereum does for Tether – the dollar-backed stablecoin. Partnering with one of the largest banks across Europe shows the digital space’s potential to work with traditional banks to create better innovative solutions in the finance space. Denelle Dixon, the CEO and Executive Director of the Stellar Development Foundation stated,

“This is a testament to the ways that traditional banking and blockchain can work together, bringing together one of the oldest banks in Europe with a FinTech start-up to deliver exciting innovation in the digital currency space.”

The 266-year old bank is finally taking its role in digitizing securitization, fund administration, and mergers & acquisitions to complement the traditional methods already employed in the bank. The bank has looked at stablecoins and digital assets in the past few years, according to Lukas Weniger, BVDH business development.

However, institutions and big corporations are still wary of using current stablecoins such as Tether and Circle’s USDC due to the third party risk and a lack of a fully licensed bank to back them, Weniger said.

Bitbond will also offer regulated tokenized bonds on the Stellar blockchain as the company works with real estate developers who wish to issue tokenized securities, he further confirmed.

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Author: Lujan Odera

German Conglomerate, Bertelsmann, Invests In BaFin Regulated Crypto Fund for Web 3.0

German private multinational conglomerate and publishing firm Bertelsmann announced an investment in a Berlin-based regulated crypto fund, Greenfield One.

Reports from Berlin confirm that Greenfield One, an institutional-focused crypto fund, has successfully completed its second crypto fund, including an investment from Bertelsmann, a Germany-based conglomerate owning top publishing firm Penguin Random House LLC., RTL Group, Arvato, and music publishers BMG Rights Management.

The crypto fund is regulated under the country’s top financial regulator, the Federal Financial Supervisory Authority (BaFin), allowing institutional investors to take positions in the crypto market. According to a statement from Sebastian Blum, one of Greenfield’s founders, having a regulated digital asset fund provides “regulatory clarity and a safe haven” for institutions investing in it. Blum said,

“We have deliberately decided to structure all of our funds as an on-shore product to provide a high level of clarity and comfort for investors with no exposure to crypto yet.”

“This caused additional scrutiny and complexity in fund formation on our end, but we believe that this turns out to be helpful in the long-run.”

The company is yet to disclose the value of the crypto fund and the value of investment made by Bertelsmann and other investors participating in the fund, including a major European family office known as Lennertz & Co.

The company used the first crypto fund to invest in promising blockchain solutions, including Multis, Dapper Labs, Vega Protocol, Near Protocol, Celo, and Spacemash. The second fund is yet to be invested with no comment or reply from Greenfield One on how they plan to spend the funds.

However, according to a circular distributed earlier in the year, the crypto fund will be invested in assorted blockchain projects with no specific market mentioned.

“The fund focuses on crypto networks and developer teams that use blockchain-based technology to create the infrastructure for Web 3.0 as a fundamental asset layer on the internet,” the circular read.

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Author: Lujan Odera

Circle Secures Major Partnership With Visa to Provide Seamless USDC Payments

Payment processor VISA is improving its presence in the crypto space. The firm has partnered with Circle Internet Financial to facilitate USDC payments for select VISA users.

Easy Payments for Individuals and Businesses

VISA’s partnership with USDC will initially start with selected users, the firm’s Head of Crypto Cuy Sheffield explained on Twitter. The end game is to help users make seamless USDC transactions.

Businesses will also be able to make cross-border payments using their USDC balances.

USDC’s operator Circle would also join the Fast Track program, VISA’s launchpad initiative that allows businesses to leverage its network’s speed to get up and running quickly. VISA estimates that Circle will graduate from the program sometime next year, following which the former will issue a credit card that allows businesses to send and receive USDC-based payments directly.

Speaking on the initiative, Sheffield, said that the firm is looking to become a “network of networks.” He added:

“We see significant potential for stablecoins like USDC to help our clients enable new payment flows and are committed to helping them become integrated into the payments ecosystem in a secure and convenient way”

VISA Strengthens Crypto Ties

The news follows another significant partnership from VISA. On Tuesday, Bloomberg reported that the credit card manufacturer had partnered with BlockFi, one of the top crypto loans and savings providers, to launch a Bitcoin rewards card.

As the report explained, the new credit card will reward buyers with Bitcoin, instead of cashback rewards, airline miles, or other conventional channels. Cardholders can get up to 1.5 percent of their purchases in Bitcoin.

The cards will carry a $200 annual maintenance fee, and they will be issued by the Evolve Bank & Trust. It is expected to be available to the public in early 2021, although BlockFi users can sign up for it before then. Like the Circle partnership, this is also a part of VISA’s Fast track program.

The payment processor appears to be gearing up for more crypto partnerships, especially since regulators have put a snag on its acquisition of financial services firm Plaid. Last Thursday, the Department of Justice (DOJ) filed a complaint against VISA, alleging that it was committing antitrust violations in its Plaid acquisition.

In part, the complaint alleged that VISA was looking to purchase Plaid as an “insurance policy” to neutralize any threats to its U.S. debit business. The DOJ added that the acquisition could see VISA easily eliminate nascent competitive risks that could help customers at the detriment of its market share.

VISA announced its blockbuster $5.3 billion Plaid acquisition in January. Since then, however, the latter had been embroiled in several lawsuits over its misuse of data. With the DOJ complaint not putting a hold on things, this deal looks dead in the water.

A few of the other Crypto to VISA connection in recent months includes ZenGo, Binance, Coinbase, and Paxful. This list also included crypto lender Cred, which filed for bankruptcy last month.

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Author: Jimmy Aki

NY Investment Firm, AllianceBernstein Says Investor Portfolios Should Hold 1% to 10% BTC

  • New York investment firm praises Bitcoin (BTC) as an alternative to gold in investors’ portfolios in the long term.
  • Bitcoin’s lower volatility makes a case for the top crypto as a “store of value and medium of exchange.”

One of the top New York investment firms, AllianceBernstein, is finally switching its calls on Bitcoin, stating investors need to own about 1% to 10% of the crypto in their portfolios. The multi-billion investment firm had previously cautioned investors from the top crypto due to BTC’s volatility and regulatory risks.

In the latest research note to the company’s investors, first mentioned on Coindesk, Inigo Fraser Jenkins, co-head of the portfolio strategy team at Bernstein Research, the research arm of AllianceBernstein, stated the current global changes in policies, investment environment, and diversification benefits is key to their change in sentiments on Bitcoin.

Previously in 2018, shortly after BTC hit an all-time high, the investment firm dismissed the coin as an investment asset, advising their clients against adding the coin to their portfolios. With BTC retesting all-time highs again on November 30, the asset manager “admits” that BTC has a role in asset allocation and diversification.

The current global pandemic has seen BTC register a less volatile price movement since a shocking dip below $3,500 back in March, the note stated. Jenkins states that the lower volatility in BTC during this period makes the asset “more desirable” for the long term investors – showing properties similar to gold as a store of value.

According to the note, during the pandemic, Bitcoin has witnessed a higher correlation with other assets, showing its promise as an investment asset. Bitcoin’s correlation with gold and the S&P 500 index reached an all-time high as BTC performance resurrected after the March crash. Jenkins said,

“From a narrow empirical point of view, the downward shift in [volatility] of bitcoin makes it more desirable, but its increased correlation points the other way.”

Notwithstanding, the research also states BTC protects the investors from inflation in a similar manner to gold. To this effect, BernsteinResearch compared the two assets. Despite BTC not “exactly moving in a way that would counteract inflation in a given fiat currency, it behaves as stores of value similar to gold.

The note advises investors to place about 1% to 10% of their portfolio in BTC following the crypto’s monthly return performance. While 1% could seem low compared to other assets, BTC is “empirically significant.” Jenkins wrote,

“The resulting allocation to bitcoin is low, but then within this simple optimization framework the allocation to some other asset classes is zero, so in that context, bitcoin seems to empirically be potentially significant.”

Jenkins’ research, however, does not give Bitcoin a free pass as an investment asset. The note lists inherent risks the cryptocurrency can face, such as government regulation, illicit use, and environmental concerns arising from mining as the currency’s adoption grows.

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Author: Lujan Odera

Cybersecurity Firm, CipherTrace, Files Second Patent for Tracking Privacy Coin Monero (XMR)

  • A cybersecurity firm, CipherTrace announced on Monday their second patent on tracing and tracking privacy-enabled cryptocurrency, Monero (XMR)

A press release shared to the BEG news desk confirms CipherTrace, a blockchain analysis, and cybersecurity firm, has filed its second “Monero tracing” patent – “Techniques and Probabilistic Methods for Tracing Monero.” The patent follows the firm’s registration of the “Systems and Methods for Investigating Monero” patent earlier in the month in a bid to trace and track the privacy-enabled cryptocurrency.

Over the past few years, regulators and governments worldwide, including the United States and Russia, have been working on solutions to tracking XMR. According to the statement, over 45% of the darknet transactions are completed using privacy coins – with Monero leading the line, only second to Bitcoin (BTC).

Monero gives the user total anonymity through a privacy-by-default blockchain, unlike other privacy-based blockchains, ensuring no user can be deliberately or accidentally be traceable.

In September, the crypto intelligence firm announced a partnership with the U.S. Department of Homeland Security to develop a forensic tool to track and trace Monero. At the time, CipherTrace CEO Dave Jevans confirmed the product has been in the works for a year stating,

“Our research and development team worked for a year on developing techniques for providing financial investigators with analysis tools. There is much work still to be done, but CipherTrace is proud to announce the world’s first Monero tracing capability.”

The latest patent will allow CipherTrace to build unique solutions and a toolkit to help regulators and law enforcement officials easily trace private cryptocurrency. The patent covers many features, including forensic tools to explore the XMR transactions, statistical and probabilistic methods to clustering likely owners, transaction visualization tools and methodologies for gaining intelligence about XMR transactions and node operators, etc.

This will exacerbate money laundering across the virtual asset service providers (VASPs) such as crypto exchanges and custodial services. Monero’s privacy makes it difficult for these VASPs to take on the compliance risk due to the high possibility and risk of money laundering. Over the past year, several exchanges have delisted XMR due to these challenges, including OKEx, Upbit, and recently Switzerland-based ShapeShift.

While CipherTrace works to remove the anonymity that cryptocurrency assets offer, the privacy of the crypto users’ identities will not be disclosed, the statement reads.

“We do, however, identify the Virtual Asset Service Providers (VASPs) that are commercial companies operating cryptocurrency businesses.”

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Author: Lujan Odera

ConsenSys Acquires Truffle Suite; The ‘Most Widely Used’ Development Toolkit On Ethereum

Ethereum’s leading development and investment firm, ConsenSys, has acquired Truffle Suite’s dev team and technology. Truffle Suite is a platform hosting Ethereum development tools, a development environment, testing framework, and asset pipeline, allowing developers to build dApps on the second-largest blockchain network easily.

The acquisition follows a one-and-half year-long layoff in any partnership between the two companies. As one of the first companies to be incubated by ConsenSys since 2015 as a developer tool kit, Truffle spans out of the firm in 2019 and has since raised over $3 million in equity funding. The terms of the contract of their reunion were not disclosed in the report. ConsenSys Founder, Joe Lubin said,

“The Truffle Suite is essential for developers to get started on Ethereum and Web3, and is invaluable for increasing adoption of Mainnet applications and enterprise blockchain solutions alike.”

Truffle is currently used by over 1.3 million developers worldwide, enhancing Solidity development into an elegant, productive, and safe product for users. According to the report, the acquisition “concludes ConsenSys strategic restructuring of the company”. The report further stated the restructuring would “form two separate entities and delineate our core technology business from our investment activities, which we started in February 2020″.

“Truffle will now be a wholly-owned product of ConsenSys the software company, which includes Codefi, Diligence, MetaMask, Infura, and Quorum.”

Tim Coulter, Founder of Truffle, labeled Truffle Suite’s acquisition by ConsenSys “a natural fit” for the products stack. He further said,

“We look forward to delivering enterprise-grade solutions that enable developers to build and deploy blockchain systems using Ethereum and across multiple blockchains.”

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Author: Lujan Odera

SkyBridge Capital Wants to Invest in Bitcoin & Digital Assets, Reveals SEC Filing

New York City-based global investment firm SkyBridge Capital founded by Anthony Scaramucci has filed Form 424B3 with the US Securities and Exchange Commission (SEC) on Nov. 13. As per this amendment, the $3.6 billion fund of the company will start investing in Bitcoin.

“The Company may seek exposure to digital assets (as defined herein) by investing in Investment Funds that provide exposure to digital assets,” and in companies that provide technologies related to digital assets or other emerging technologies.

The fund wishes to hold long and short positions in digital assets, known as “virtual currencies” and “cryptocurrencies” with no intrinsic value other than as a method of exchange, reads the amendment.

While having a limited history, these extremely volatile assets are typically “not issued or backed by any government, bank, or central organization.” These digital assets may trade on unregulated exchanges or are outside the US and can be shut down permanently.

It further says these assets shouldn’t be expected to be correlated or connected to traditional economic or market forces as they could decline rapidly, to even zero.

“Investment Funds may invest in digital assets without restriction as to market capitalization or technological features or attributes (including lesser-known or novel digital assets known as “altcoins”) and may invest in initial coin offerings, which have historically been subject to fraud.”

The investment may be in part or whole in digital assets or technologies that are “highly disruptive, and the future successes of such technologies are highly uncertain.”

Because of being a nascent space, the companies to be invested in maybe “rapidly eclipsed by newer and more disruptive technological advances that render current digital assets or technologies outdated or undesirable.”

Covering the regulatory aspect, the report says, it is “undefined and rapidly developing” and subject to “significant uncertainty.” This means the federal, state, or foreign governments may restrict the use and exchange of digital assets at any time, which could further limit investment funds’ ability to pursue investment strategies in digital assets or cause digital assets to lose significantly, or all, of their value.

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Author: AnTy