$100M In Crypto Loans Liquidated On Compound After ‘Bizarre’ 30% Spike In DAI Price

  • Over $100 million in loans were liquidated on Compound after a possible oracle exploits on Coinbase.
  • A further $8 million in crypto loans were liquidated on dYdX, a DeFi lending platform.

Almost $103 million in loan collateral has been liquidated on Compound Finance, a DeFi lending and borrowing platform, over the last 24 hours after a price spike on DAI stablecoin on Coinbase. According to data aggregator, LoanScan, a further $7.81 million was also liquidated on the dYdX exchange, totaling close to $110 million in DeFi loan liquidations.

image1
Nearly $110 million in crypto loans liquidated over the past 24 hours after a DAI suddenly spikes 30% in price (LoanScan)

The momentary DAI price spike

DAI caused massive liquidations on Compound as the price of DAI momentarily spiked by 30% on Coinbase, the lending platform’s primary price oracle. According to Alex Svanevik, CEO at Nansen, a crypto-analysis firm, the liquidations arose from an under-collateralization of Compound users’ loans. Svanevik said,

“My understanding is that the DAI price on Coinbase was driven up to a premium of around 30%. Compound’s oracle uses Coinbase for pricing data.”

Nearly 45% of the total liquidated amount on Compound arose from one wallet address, the third-largest COMP farmer, facing liquidation in a total of $46 million.

So how exactly does a DAI price spike to $1.30 cause such massive liquidations?

As a lending/borrowing platform, Compound allows users to borrow and lend multiple cryptocurrencies across the platform. Borrowers must place more significant collateral than the loan they are receiving over collateralized loans. If, at any moment, the smart contract notices the loan is under-collateralized, then it will automatically liquidate the loan and repay itself. Svanevik further explains,

“This caused liquidations as the value of the loans exceeded collateralization-ratio thresholds.”

As DAI’s value spiked, the amount of DAI loaned out increased relative to the collateral provided, leading to under-collateralized positions, hence the liquidations.

Of the total $110 million in crypto loans liquidated, $56 million was from DAI borrowers, $38 million from Ethereum (ETH) borrowers, $10 million from USDC stablecoin borrowers, and $4 million from wrapped BTC (wBTC).

Read Original/a>
Author: Lujan Odera

Ripple Shortlists A Move to Asia and Europe Should it Leave the US

Ripple Labs considers Japan, Singapore, Switzerland, UAE, and the UK as possible jurisdictions should the blockchain patent services company leave the US amidst a lack of regulatory clarity, said Ripple CEO, Brad Garlinghouse. In an interview with Bloomberg, he said,

“The common denominator between all of them is that their governments have created a clarity about how they would regulate different digital assets, different cryptocurrencies.”

When it comes to the US, authorities here are unclear on the status of cryptocurrencies, said Garlinghouse adding that there are different opinions on whether crypto is a currency, commodity, property, or security. “Regulation shouldn’t be a guessing game,” he said.

“Ripple is definitely a proud U.S. company, and we’d like to stay in the U.S. if that was possible, but we also need regulatory clarity in order for us to invest and grow the business.”

In “contrast” to the US, Garlinghouse said Japan had created an “environment for a very healthy market to develop.”

The country has already introduced a registration system for crypto exchanges about three years back. Moreover, Ripple has close ties with Japanese financial conglomerate SBI Holdings, and its CEO Yoshikata Kitao also sits on Ripple’s board since last year.

“Japan is one of our fastest-growing markets, in part because we have key partners like SBI,” he said. “I have spoken to the SBI team about the fact we are looking at” Japan as a potential destination, Garlinghouse said.

Ripple has been thinking of a move for some time now; in another of his interviews, Garlinghouse has said that China is already decades ahead in the digital currency sector.

In terms of a central bank digital currency, China has moved further ahead in its digital currency trial as it distributed 200 digital yuan to 50,000 people spendable at 3,000 retail outlets. Other central banks, including the Federal Reserve, meanwhile are still in the research phase.

The playing field won’t level until a country established a lead in “the internet of value,” he said.

The pandemic raised the interest in digital currencies and not just for CBDC. According to Garlinghouse, the coronavirus pandemic has given a “tailwind” to crypto markets because of all the money printing central banks have been doing.

While the monetary stimulus, which is “inflationary on some level,” drives the demand for crypto, a move away from cash is also helping, he said.

Read Original/a>
Author: AnTy

FATF Releases Red Flag indicators To Identify Money Laundering Using Crypto

  • The Financial Action Task Force (FATF) releases report on how to identify possible red flags in crypto money laundering rings across virtual asset service providers, or VASPs in short.
  • The regulator highlights a number of ways that crypto exchanges can stop and curb illegal and illicit activity.

The report titled, Virtual Assets – Red Flag Indicators of Money Laundering and Terrorist Financing, outlines several red flags including those arising from irregular transaction patterns, anonymous transactions, arising from senders and receivers and sources of wealth profiles of the crypto users.

One of the red flags arises from the size and frequency of transactions whereby a money launderer could make multiple high frequency transactions over a period of 24 hours or staggered and regular transactions which stop shortly after they are made. Moreover, transferring virtual assets to exchanges with low or non-existent AML/CFT rules is also considered a red flag.

User profiling is also an excellent way of noticing possible money laundering and terrorist financing. Here, exchanges are tasked with checking on the transactions made and comparing it with the user’s profile.

This arises when a user deposits an unusual amount to their wallet which does not match the traders profile or recent transactions. This could signal the deposit is subject to checks of money laundering, scamming or a money mule. The report reads on transaction patterns as a red flags stating,

“Conducting a large initial deposit to open a new relationship with a VASP and funding the entire deposit the first day it is opened, and that the customer starts to trade the total amount or a large portion of the amount on that same day or the day after, or if the customer withdraws the whole amount the day after.”

Also quick deposits and withdrawals of full balance of virtual assets in a short period of time raises eyebrows.

Virtual asset accounts with no logical business explanation making frequent deposits and transfers off the exchange to less KYC friendly exchanges poses a red flag. Accumulation of funds from several unrelated exchanges or wallets sending small amounts to one virtual asset account before fully withdrawing the funds may be a money laundering scheme.

Regulators should also follow users who use anonymity enabled public cryptocurrencies and privacy coins such as Monero, Zcash and Dash closely, the report states. Also the exchange of public and transparent crypto coins such as Bitcoin for the anonymity enhanced cryptocurrencies also raises questions on the actions of the trader.

FAFT has pushed through KYC/ AML regulations and compliance rules for VASPs across the globe in a bid to curb money laundering and terrorist financing using crypto. The “Travel Rule” recommends that the 200 countries that follow it, say to mandate VASPs such as custodians and crypto exchanges to retain and share any information on possible illicit and illegal trades happening on their platforms.

Read Original/a>
Author: Lujan Odera

Microsoft Detects A New Cryptocurrency-Related Malware Spreading Across Windows Computers

  • Microsoft’s Security team warns of a possible cryptocurrency malware for Windows users.
  • The malware targets personal info, credit card details, credentials, and cryptocurrency wallets.
  • Users urged not to open any suspicious or fishy emailed attachments.

The Microsoft Security Intelligence team confirmed the presence of a new ‘info-stealing malware’ present in its Windows computers. In a tweet on Aug 27, the MSI team stated the malware was first spotted on cybercriminal black markets in June but has recently started spreading widely across the globe.

The malware, named Anubis, arises from a code forked from Loki info-stealing malware, which was first detected in February 2016. Loki malware first started targeting Android operating systems on mobile phones allowing the hackers to steal credentials, data ex-filtration, disabling notifications, and intercepting communications.

The widespread malware in the fall of 2017 detected ransomware behavior with a forked version sold in the cybercriminal underground marketplaces.

Read more: Microsoft Raises Alarm As 80k Computers Are Attacked By Crypto-Stealing Bug

Similarly, the hackers trick users into downloading the Anubis malware through suspicious emails and false websites and “sends these to command and control servers via an HTTP POST command.” The malware then steals Windows users’ information, mainly targeting crypto wallets, bank credit card information, personal info, and the system operating details.

However, MSI believes the malware is still in its maturity stages, hence limited, and users can keep safe from it.

“The new malware shares a name with an unrelated family of Android banking malware,” MSI tweet reads. “Anubis is deployed in what appears to be limited, initial campaigns that have so far only used a handful of known download URLs and C2 servers.”

MSI warns Windows users not to click on any suspicious emails and websites to avoid downloading the malware. MSI continues to monitor the progress of the fork and will give updates on its growth.

Read Original/a>
Author: Lujan Odera

Over 20% Of Central Banks Are Looking to Launch A CBDC In The Next 1-6 Years: BIS Report

  • There’s a growing interest in central banks looking at the possible implementation of digital currency in 2020 than the hype on Bitcoin (BTC), the Bank of International Settlement (BIS) reports.

In research published over the weekend, the Swiss-based BIS reports the growing attention by global central banks on research and development of central bank digital currencies (CBDCs) in 2020. The paper states the motivations, technical developments and policy approaches towards the launch of CBDCs vary across the central banks with the more innovative countries taking a step ahead.

According to the report, there is an increasing consideration of retail CBDCs across the central banks to provide a publicly usable currency while some consider a wholesale CBDC which “could become a new instrument for settlement between financial institutions.”

The comprehensive 39-page research focuses on over 175 central banks and over 16,000 speeches from recent years. The findings of the report state that central banks controlling a fifth of the world’s population are considering to launch a digital currency. Additionally, over 20% of the banks are fast-tracking their CBDC to launch in the next 1-6 years.

The report further reads,

“A full 80% of surveyed central banks are engaging in research, experimentation or development of CBDCs.”

The tipping point

Per the report, the number of speeches positively talking about digital currencies has surged since the end of 2018. As of July 2020, there were more central bank governors speaking positively about retail and wholesale CBDCs than having negative stances.

The tide seems to have switched with the launch of Facebook-led digital currency, Libra, and the global COVID 19 pandemic, the report states.

“A tipping point was the announcement of Facebook’s Libra and the ensuing public sector response.”

As for COVID 19 pandemic role in implementing CBDCs, several governments are accelerating their research and developments on CBDCs to ease payment systems and curb the spread of the virus through cash payments. The U.S. recently enhanced its efforts to offer a digital dollar “as a means of quickly executing government-to-person payments (CARE package), as an alternative to credit transfers and slow and costly cheques.”

These efforts by central banks have seen the public become more attentive to CBDCs over time. In 2020, BIS reports that internet searches across the world for CBDCs are massively overshadowing searches of Facebook’s Libra and Bitcoin (BTC) – which crossed the $12,000 mark earlier this month.

Central banks entering the digital era

As mentioned above, the technical decisions, method of implementation, and reasons for the launch of a CBDC vary across states and countries. According to the BIS report, countries with higher mobile phone usage and higher innovation capacity are associated with a higher likelihood of developing a digital currency.

So far, three countries, China, Sweden, and Canada, have completed tests on a retail CBDC and 13 countries are actively researching on the launch of a wholesale CBDC. Another 18 countries have published reports on the impact and effects of digital currencies on their economies.

BEG reported this July, the Bank of Japan (BoJ) is extending its efforts to launch a CBDC division that will work in cooperation with the U.S. and European governments. The project aims to compete with China’s launch of its digital renminbi (RMB). Other states actively focusing on CBDC include Lithuania, Canada, Cambodia, Thailand, among others.

Read Original/a>
Author: Lujan Odera

Japan’s Central Bank to Prioritize the Development and Potential Issuance of the Digital Yen

  • The Bank of Japan has unveiled plans to zero in on the possible development and issuance of their own Central Bank Digital Currency (CBDC).
  • This has most likely been triggered by China’s efforts to developing its digital Yuan.

News has surfaced that the Japanese Central Bank will now focus their efforts on the development of the digital Yen. This is a there is growing concern that China might beat them by issuing the CBDC first.

Takeshi Kimura, departmental Director General at the BOJ, has reiterated that the Central Bank is still in talks about increasing their scope to past the preliminary phase. This was during his Q&A with a local Japanese news outlet. He indicated the probability of collaborating with the private sector, which may be knowledgeable about such projects. He was, however, not keen to put a timeline on the test runs.

According to Kimura, the digital Yen must constitute of two major attributes: Universal access and be resilient. The digital Yen must be accessible to everyone as it is with the local fiat currency. It must also be resilient and be available at all times, even in the face of calamities that may lead to power outages. He remarked that the reduction in the circulation of the digital yen would mark the consolidation of the digital currency era, further necessitating the urgency for a CBDC.

Notably, China’s push for the CBDC may have rattled other jurisdictions leading to a sudden need for their own CBDC’s. Various Central Banks such as Bank of Thailand have announced test-runs for their CBDC, the digital Baht. This June, an LDP policy committee put forward a dossier labeling China’s head start in the CBDC race as a threat to National security.

China’s own need for the digital Yuan may have been sparked off by the announcement of the ambitious Libra project. Although there is no launch date for the digital Yuan, they have made inroads into the project. Recently the former PBOC Vice-Chair, Wang Zhongmin, declared that they had already completed the backend infrastructure for the digital Yuan, which is an impressive feat in any CBDC initiative.

Read Original/a>
Author: Lujan Odera

Police Freeze Chinese Crypto OTC Traders’ Accounts; Digital Assets Tied to Laundered Money

Chinese Police freeze crypto over the counter traders (OTC) accounts to investigate a possible incident of money laundering stains on some of the digital assets on exchanges. The abrupt halt in China’s biggest fiat on- and off- ramp gives sets in surveillance by the relevant law enforcement officers with locked users’ accounts needing an “approval of innocence” by the government before getting back your funds.

Chinese Police launch investigation on ‘tainted accounts’

A blog post on Weibo by one of the top OTC desk managers in China, Sun Xiaoxiao, revealed that China’s police in Guangdong province froze thousands of crypto OTC traders’ accounts starting last Thursday.

According to Sun the police froze users’ funds which they found to be “tainted” by money laundering activities. The police maintain the act to freeze funds is to investigate further on the possible source of the tainted crypto – no trader is being accused of any wrongdoing.

The speculations however are rising on what could be the possible reasons the OTC traders accounts have been frozen. Sun reasoned that the police may be targeting crimes involving telecommunication frauds, Ponzi schemes and casino businesses which use these trading desks to launder ‘dirty money.’ Sun’s blog post read,

“Now there are also OTC merchants who had their bank accounts frozen because of questions over the source of the coins they bought. That means, besides ‘dirty money,’ there are also ‘dirty coins‘ circulating.”

The police are yet to release any statement on the possible reasons why they froze the accounts.

An unusual act from the authorities

Money laundering on blockchains is quite common as the anonymity on cryptocurrencies give users some masked protection in laundering their money. In China, money laundering on OTC desks has been growing as the dirty money is transformed into Bitcoin (BTC) and other cryptocurrencies.

Through market activities, some of these cryptocurrencies bought by tainted cash do find their way to innocent users’ accounts. Blockchain tracking tools such Chainalysis have made it easier for the police to trace such cash on public blockchains. The Chinese police are heavily invested in tracking tools in order to track down the money laundering activities, and innocent accounts do get caught in the middle.

However, in the past the police never froze innocent OTC traders’ funds due to tainted coins. Sun said this was a rather strange move by the police stating its “unusual for users to have their accounts frozen over tainted cryptocurrencies.”

For users to regain access to their accounts, they will need to prove to the authorities that their coins are “clean” by proving their source.

Read Original/a>
Author: Lujan Odera

Is The Lightning Network Becoming More Centralized? 10% Of Nodes Hold 80% Bitcoin

The Lightning Network has been touted as the possible solution for the Bitcoin scalability concerns. However, various researches have indicated that there is a small percentage of nodes that handle most of the funds in the network. Is the decentralized finance product becoming more centralized?

The widespread adoption of the Bitcoin has now come with the scalability of the technology the BTC is built on. With reports indicating that the Bitcoin has the ability to process only a specific number of transactions per second proportional to the size of a block and its release frequency.

The Bitcoin Lightning Network (LN) has been touted as the solution to the scalability concerns. It is a “Layer 2” protocol that operates on top of Blockchain-based cryptocurrencies. An attempt to create a payment platform that overlaps over a cryptocurrency such as Bitcoin affording users cheaper and faster transactions.

A research paper points out that there is unequal distribution of wealth in the Lightning Network with some nodes holding most of the funds. Notably 10% of the nodes are controlling 80% of the funds in the Network. This exposes the vulnerability as they cannot afford to lose the nodes as they are too essential to operations.

“As only about 10% (50%) of the nodes hold 80% (99%) of the bitcoins at stake in the BLN… Removing hubs leads to the collapse of the network into many components… suggesting that this network may be a target for the so-called split attacks.”

This could be solved by lowering the barriers which may incentivize individuals such as hobbyists to take up running routing nodes. Meaning they could setup infrastructure at reduced costs as Christian Decker lightning engineer at bitcoin tech startup Blockstream explained.

After detailed analysis by researchers on the evolution of the global nodes that carry out transactions in different geographical locations they were able to determine the various nodes transactions pass through.

The end nodes are mostly passive as they just await to send and receive. However, it was the center (routing) nodes that picked up the slack by directing transactions throughout the network. This has resulted to some of them overcharging a little for their services.

In a report by Hebrew University researchers demonstrated how to exploit vulnerabilities and carry out a congestion attack that would render some routes locked for up to days. The results were damning as they proved they could effectively lock up most of lightning’s liquidity causing instability to the network.

Mr. Decker was not worried as he explained that criticizing their model could only lead to progress.

Read Original/a>
Author: Lujan Odera

Ripple Co-Founder’ Claims His XRP Sell-Off Doesn’t Impact The Market Is ‘Simply Preposterous’

  • XRP Whale and former Ripple CTO argues his huge sell offs
  • Not possible to sell off over 2% of the total supply without influencing the price, counters analyst

As we reported, an analysis by Whale Alert stated that the amount of XRP Jed McCaleb, co-founder and former CTO of Ripple and an XRP Whale is selling is “insignificant” compared to the digital asset’s total trading volume per day. Whale Alert wrote,

“because he is exclusively selling XRP, he is adding to the net amount available.”

Now, McCaleb who also co-founded Stellar Lumens (XLM) and Mt. Gox exchange has taken to point just this out that “date shows there is no impact on the market, and I don’t see any reason why that will change.” While speaking with CoinTelegraph, McCaleb said,

“I have been transparent from the beginning. The market has known for years that I have been selling my XRP at a slow, steady rate.”

“My investment decisions are not based on any desire to negatively impact other companies in this industry.”

However, as analyst Mati Greenspan notes, “It’s not possible to sell off more than 2% of the total circulating supply of a token without influencing the price at least a little.”

Even if it’s by OTC (over-the-counter) desk, Greenspan says it “still creates sell pressure,” adding,

“The claim he’s making that value extracted from the market doesn’t affect market prices is simply preposterous.”

Till now, McCaleb has dumped 1.05 billion XRP on the market between 2014 and 2019. However, there’s still 4.7 billion XRP worth over a billion dollars left with McCaleb.

More importantly, the rate at which he was selling his XRP stash has been limited by his settlement agreement with Ripple which is likely to expire sometime this year. As Ripple clarified in a statement:

“In 2016, we entered into a very structured agreement with Jed with the goal of ensuring distribution of his XRP holdings in service to a healthy, growing ecosystem without market disruption, with Ripple as custodian of Jed’s XRP holdings. This agreement remains in place today.”

Currently, XRP price is enjoying the bull rally, like much of the crypto market — though a bit late to the party — and is trading at $0.296. In 2020 so far, the digital asset jumped over 52%.

As we recently reported, popular trade AngeloBTC has predicted XRP to climb to at least $1 in 2020, a level last seen in Feb. 2019.

Read Original/a>
Author: AnTy

IBM To Launch ‘Thank My Farmer’ A Seed-to-Store Blockchain-Based Coffee Tracking App

A new blockchain app from IBM will make it possible for coffee consumers who are interested in sustainability to trace the coffee they’re drinking.

The app is called Thank My Farmer and allows people to learn things about the coffee places from where they have gotten their so loved beverage and the farm where their coffee has been grown. Built in partnership with Farm Connect and using IBM’s blockchain, Thank My Farmer was unveiled in Las Vegas, at the Consumer Electronics Show. It’s supposed to launch this year.

10 Important Organizations in the Coffee Industry Supporting the App

The app is supported by 10 of the most important coffee organizations like The Colombian Coffee Growers Federation (FNC) and Beyers Koffie. It’s also very appreciated because it supports consumers to more informed decisions when it comes to their coffee choices, not to mention it helps with the promotion of coffee suppliers that are using environmentally friendly processing methods.

Not the First Blockchain Initiative for the Coffee Supply

It isn’t the first time that blockchain technology is being used to make things transparent when it comes to the coffee supply chain, as Starbucks has said in May 2019 that it will use the Azure blockchain technology from Microsoft to inform consumers about their coffee, while the government in Ethiopia is exploring how blockchain tech could be used to track the country’s coffee exports.

With IBM’s Thank My Farmer, people will be able to scan QR codes from coffee jars and find out more about where their product is coming from, not to mention they’ll be able to make additional payments to coffee farmers. Founder and president of Farmer Connect, David Behrends explains,

“After scanning a QR-code, consumers are taken straight to a product page that gives details about the coffee they are drinking. Below that description is an interactive map that shows the journey the coffee has taken. We say you can travel the world through a cup of coffee, and we’d like to help consumers visualize that.”

Only Selected Brands in the US and Europe for Now

While the app will be initially available only for some brands in Europe and the USA, IBM is looking to bring in other coffee producers and to create additional support pages for making donations to the communities from areas in which the coffee has been grown.

Read Original/a>
Author: Oana Ularu