Coinbase Turned Over Info on 1,914 Users; 96.6% Were Criminal-based Law Enforcement Requests

As part of its commitment to be a trusted venue, Coinbase has released its first Transparency Report.

Much like other financial service providers and technology companies, Coinbase says it received requests from the law enforcement and government agencies seeking information and financial records in connection with civil, criminal, and other investigative matters in the form of subpoenas, search warrants, court orders, and other formal processes.

Because these requests are valid under the applicable laws, Coinbase must respond, wrote Paul Grewal, Chief Legal Officer at the San Francisco-based exchange, that currently serves over 38 million customers worldwide.

As per the report, the exchange received requests for information on 1,914 customers during the first six months of 2020. 58% of this request was from US agencies, and 16% was from state or local authorities like FBI, HSI, DEA, SEC, IRS, DOJ, and others.

Of the request, the majority, 96.6%, were criminal, while the rest was a civil or administrative type.

Overall, 90% of all requests came from just three jurisdictions — the US, UK, and Germany.

Coinbase Transparency Report
Source: Coinbase

“Great to see this transparency from coinbase. After some controversy re: privacy, this is a strong step forward,” said Jake Chervinsky, General Counsel at Compound. “Also worth noting, this comes from new CLO Paul Grewal (who I still think of as Judge Grewal), an extremely well-respected tech lawyer & big asset to the company.”

Coinbase also noted in the report they have been pushing back when appropriate; back in late 2017, they won against IRS over customer policy.

“I hope they’re pushing back on inappropriate gag orders as well,” said Jerry Brito, executive director of Coin Center, a DC-based crypto think tank.

“Glad to see Coinbase publishing a transparency report, joining companies like Kraken. Hopefully this becomes an industry standard,” he added.

More Reading: After US Secret Service, Coinbase Strikes a Deal with IRS to Sell its Data

Also Read: #DeleteCoinbase Trending After the Coinbase’s Deal with DEA & IRS Becomes Public

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Author: AnTy

FSB Publishes 10 High-Level Recommendations to Regulate ‘Global Stablecoins’

The Financial Stability Board (FSB) has released 10 high-level recommendations for regulation, supervision, and oversight of “global stablecoin” in its latest report on Tuesday.

The international body that monitors and makes recommendations about the global financial system says global stablecoins must adhere to all applicable regulatory standards before commencing operation.

While these so-called fiat-backed stablecoins have the potential to “bring efficiencies to payments and to promote financial inclusion,” they may also challenge the existing regulatory oversight and generate risks to financial stability, says the report.

As such, the 10 high-level recommendations have been made that follow the “same business, same risk, same rules” principle.

To enhance the cross-border payments commissioned by the G20, the FSB has agreed to complete the international standard-setting by December 2021. Necessary adjustments must be made by that time, too, and a framework consistent with the FSB recommendations must be enabled at the national level by July 2022.

The report came the same day the financial officials of the United States, Canada, Japan, Germany, France, Italy, and Britain said digital payments should be “appropriately supervised and regulated.”

Until adequate regulatory, legal, and oversight standards are set, no global stablecoin project should begin operation, said the G7, without explicitly mentioning Facebook’s Libra, which has been the one that pushed them into action.

The officials also called on all countries to implement FATF standards to reduce the exploitation of criminals’ financial services. The emphasis was put on coordinated response through information sharing and economic measures.

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Author: AnTy

Coinbase Commerce Attempts at ‘Be Your Own Bank’ & Launches a Self-Custody Crypto Wallet

Coinbase has released Coinbase Commerce to allow businesses and merchants to accept cryptocurrencies.

“With Coinbase Commerce, we’re building the most trusted and secure way for merchants anywhere in the world to accept cryptocurrency payments, and in turn, enabling more ways for customers to spend their crypto,” said John Zettler, Senior Product Manager at Coinbase.

The latest service by the San Francisco-based exchange is advertised as fast and free, where it gives full control of the crypto ownership to the merchant itself.

With no middleman, the idea is to allow everyone to “be your own bank.”

An Open Finance System

Coinbase’s latest step is towards the company’s mission to create an “open financial system” where it wants to help connect an increasing number of participants in the crypto-economy, reads the official announcement.

Commerce merchants were needed to transfer their crypto to an exchange before selling their crypt for cash or fiat-backed stablecoins, but with Coinbase Commerce, they can convert their crypto payments into USD, EUR, GBP, or USD Coin right from its platform for a 1% fee.

For now, the service is available for merchants with Coinbase.com accounts; connection for Coinbase Prime or Coinbase Pro accounts will be coming soon.

According to Coinbase, decentralized finance is an important part of growing the crypto-economy; thus, they now support new Dapps on its Coinbase Wallet – the “self-custody crypto wallet app.”

Wallet users can now also sign-up and purchase cryptos right from the app — a feature available on Android devices in the US that will soon expand to iOS and more countries.

The exchange is cutting down the extra step of buying the crypto from an exchange and then transferring it manually to Wallet apps.

Most of the assets supported by the exchange are available within the Wallet, which supports debit card purchases. Wallet users can now store their crypto, send them or start using dapps like Uniswap and Compound from one place.

“With the addition of a simple and secure fiat onramp service, developers can build dapps with just one easy app install for their users,” said Sid Coelho-Prabhu, Group Product Manager at Coinbase.

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Author: AnTy

Aztec 2.0 Launches Ethereum Layer 2 Scaling Solution for Privacy Using zkSNARKs

Aztec, an Ethereum based protocol, has released its L2 scaling solution coupled with the project’s fundamental aspect of privacy. The startup announced this news in a Medium post earlier today, noting that Aztec 2.0 is now live on the Ropsten testnet. This comes as one of the many reliefs to an ailing Ethereum ecosystem due to network congestion and high gas costs.

According to the post, Aztec’s L2 scaling solution has been derived from the zero-knowledge (zk) rollup tech. This infrastructure is basically part of Ethereum’s zero-knowledge proofs that have come up to make transactions private. Based on the PLONK research, Aztec claims that its newly debuted L2 scaling network enables the protocol to leverage zkSNARKS tech in two distinct ways.

For starters, zkSNARKS is used to encode every transaction as part of protecting Aztec users’ data. It also plays a role in the ‘roll-up’ of these transactions, hence the batching into one proof that is, in turn, sent to Ethereum’s on-chain. Aztec has since said that this approach could scale its network throughput up to 300 TP/s and preserve on-chain data simultaneously.

“Using this technique, the network can scale on-demand up to a hard limit of ~300 TX/S, while preserving on-chain data availability.”

The firm further claims that gas costs will be slashed by 200x in Aztec 2.0 compared to prevailing costs within its 1.0 ecosystem. Other than scalability solutions, Aztec has also introduced an open-source scripting language dubbed ‘Noir.’ This will allow developers to easily compose the zkSNARKS transactions code compatible with the new L2 scaling solution by Aztec.

Aztec plans to upgrade this innovation in November to integrate DeFi access while maintaining scalability and privacy. The post reads,

“This upgrade allows users to anonymously access DeFi transactions at a fraction of the gas price. And, without having to port DeFi protocols to layer 2.”

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Author: Edwin Munyui

BitMEX Now Former CTO, Samuel Reed, Released On A $5 Million Unsecured Bond

Troubled BitMEX exchange executive Samuel Reed released on a $5 million bond paid to the district of Massachusetts court following his arrest on October 1. According to a document first shared by The Block, the court approved the unsecured bond payment on October 3rd on condition that Samuel Reed will show up to court and accept to serve a sentence if convicted.

The U.S Department of Justice (DoJ) charged BitMEX executives on October 1 due to allowing unlicensed trading to Americans and violating the anti-money laundering and know your customer rules and measures set in place. Founders of BitMEX, Arthur Hayes, Samuel Reed, and Benjamin Delo have all been charged with breaking the Banking Secrecy Act, carrying a maximum jail term of five years. Reed was arrested in Massachusetts earlier this month charged with

“willfully failing to establish, implement, and maintain an adequate anti-money laundering (‘AML’) program at the Bitcoin Mercantile Exchange or ‘BitMEX.’”

This was the second arrest amongst the company executives with the head of business development, Gregory Dwyer, also charged and arrested.

Reed’s $5 million bond payment will be secured with a $500,000 cash payment. Reed and his wife’s passports have also been confiscated by the authorities to mitigate flight risk.

The U.S Commodities and Futures Trading Commission (CTFC) has also filed a civil lawsuit against the three founders in the Southern District Court in New York on the AML/KYC breaches on the exchange.

In an attempt to please customers and halt the hammering exodus from the exchange, HDR Global, wholly owner of the BitMEX exchange, announced the three executives charged would step back from their respective roles. Arthur Hayes and Samuel Reed have stepped back from their respective roles as CEO and CTO, respectively.

Despite the charges, 100x Group chairman David Wong said, “it will be business as usual” for the exchange aiming to provide the best features and “maintain the highest standards of corporate governance.”

Also Read: ‌DOJ’s First-of-its-Kind Crypto Framework Targets Decentralized, P2P Platforms & Privacy

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Author: Lujan Odera

Coinbase Launches Staking Program For Cosmos, ATOM Holders Can Earn 5%

In a blog post released on Wednesday, Coinbase introduced staking on ATOM, promising up to 5% return per annum on the value staked. The Cosmos Staking Reward will be available to select customers across 48 states in the U.S and across Europe, including the U.K., Netherlands, Belgium, Spain, and France.

This is an automatic process generated by Coinbase. Users only need to deposit ATOM or buy the tokens directly on the exchange to start earning rewards. At launch, ATOM rewards will be distributed every seven days – Tezos (XTZ) rewards are distributed every three days.

‘Coinbase is always looking for ways to enable easy and secure participation in the crypto-economy,” the statement reads.

Cosmos is a proof-of-stake (PoS) blockchain that allows users to “stake” their tokens to participate in the governance of the network and receive rewards in the process. The blockchain provides interoperability across blockchain and their native tokens.

A spokesperson from Coinbase to The Block states ATOM staking will charge a commission of 25% is lower than that of XTZ. The latter offers a 15% annual return being the only staking platform on the exchange before ATOM joined. Since launching in Q4 2019, Tezos holders have received more than $2 million in rewards from Coinbase.

Coinbase stated they would be adding more tokens to its staking program in the future.

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Author: Lujan Odera

SEC Takes a ‘Big Step Forward’ Regarding Broker-Dealers Trading Digital Asset Securities

In a no-action letter dated Sept. 25 from the US Securities and Exchange Commission (SEC), the agency has released guidance on the settlement of digital asset securities at alternative systems, which “could end up being significant news for exchanges, including DEXs.”

The SEC proposes a “three-step process” for ATS trading that might replace the previous four-step process that FINRA and the SEC instructed broker-dealers to follow. Dating back to the July 2019 statement from the SEC, the letter outlined the factors to be considered to allow ATS operators to facilitate the trade of digital securities.

In the latest process, The broker-dealer custodian can inform the customer about the execution of trades after the fact as such, customers can submit the trade orders and confirmation at the same time, which “doesn’t change much for trading in the industry,” said Brian Farber.

According to the letter, this three-step process would “reduce operational and settlement risk.” Lewis Cohen, founder of blockchain-focused law firm DLxLaw tweeted,

“In the 3-step approach, customers are never exposed to a BD/ATS, so CPR doesn’t apply. It may sound obvious, but still a big step forward.”

Moreover, enforcement action won’t be taken if the broker-dealer operator maintains a minimum of $250,000 in net capital, all applicable securities laws are followed, and an agreement between the broker and their customers states that “broker-dealer operator does not guarantee or otherwise have responsibility for settling the trades.”

This means custodial broker-dealers like Coinbase can legally exchange digital securities without the SEC pursuing enforcement action against them, provided the above-mentioned steps are followed.

According to Farber, it raises new questions such as the undefined term “custodian,” which not every holder uses. The mandate for $250k in net capital would require amending a membership agreement with FINRA. At the same time, the 2019 joint statement clearly prohibits those broker-dealers from custodial functions.

Comptroller Brian Brooks of the Office of the Comptroller of the Currency praised the move.

Drew Hinkes, an attorney at US law firm Carlton Fields also tweeted that the big picture is “It got easier to trade digital asset securities. BDs have certainty as to how to trade digital asset securities (and) Custodians are even MORE important.”

But still, there is no clear way to determine which cryptos are security and legal to trade. As such, more clarity and guidance is needed from the SEC.

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Author: AnTy

KuCoin Hack: Exchange’s Insurance Fund to Cover User Loss “Completely,” Tether Freezes 33M USDT

The Singapore-based cryptocurrency exchange KuCoin released a statement regarding detecting large withdrawals on September 26, 2020, at 03:05:37 (UTC+8).

The exchange has reportedly lost $150 million worth of funds, although KuCoin hasn’t declared it yet but released “suspicious addresses,” which are constantly updated. As per the company’s internal security audit report, some BTC, Tether, ERC20 tokens, and other cryptos from KuCoin’s hot wallets were transferred out of the exchange.

Tether has already frozen all the stolen USDT, but the community isn’t supportive of the move. This isn’t even the first time they did so; one address in 2017, eight in 2018, seven in 2019, and 24 in 2020 so far has been frozen by the company.

“If you steal our Tether, we’ll steal it right back,” commented one trader on this move.

KuCoin assured that “the assets in our cold wallets are safe and unharmed, and hot wallets have been re-deployed.”

In a live stream, KuCoin CEO Johnny Lyu said one or more hackers “stole” the private keys to hot wallets but those cold wallets, that aren’t connected to the Internet as such considered more secure, were unaffected.

He also said the exchange is in contact with the police and that “all the loss will be covered by KuCoin risk provisions.”

The exchange has transferred the remaining crypto assets to the new hot wallets.

The Asian exchange that trades over 200 cryptocurrencies has a daily trading volume of about $100 million, as per CoinGecko. Following the security breach, its exchange token KCS fell by over 17% but has since recovered to above $0.90.

The trouble at the exchange first started when users complained about withdrawal issues. Initially, it was maintained that the platform was experiencing a system issue, and later, KuCoin’s admin team claimed that “transactions are simply pending,” and funds are SAFU.

While Liu said the amount lost is “small,” that might not be the case, many are pointing out that there could be over 1k BTC and tokens like ETH, LTC, Omni USDT, XRP, YFI, OMG, Maker, Ocean Token, Chroma, Gladius, Hawala, and others lost.

Currently, the investigation is going on, and a security review will also be conducted. Still, the exchange has said that any losses suffered by a user would be “covered completely” by KuCoin and its insurance fund.

As “The People’s Exchange,” we will take full responsibility and maintain transparency,” said the exchange in an official statement.

For now, the exchange has suspended the deposits and withdrawals service, which will be restored gradually once it ensures a safe state.

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Author: AnTy

Low Financial Literacy Investors Twice As Likely to Own Crypto vs Market Gurus: Bank of Canada

A new study released by the Bank of Canada has revealed that folks with lower financial literacy are more likely to own Bitcoin than those with higher literacy levels. The paper’s main point of the research was the use of ‘Cash Alternatives’ in Canada throughout 2019; some of the points highlighted include the adoption of cryptocurrencies and the possibility of a Central Bank Digital Currency (CBDC).

According to the report, cash payments in Canada decreased from 54% to 33% between 2017 and 2019 as more people opted for credit or debit cards instead. It highlights that this trend was mainly fueled by the rise of e-commerce, hence ease of making digital payments. Nonetheless, most Canadians are still using cash within the local Point-of-Sales (PoS).

Crypto Ownership Demographics

With cryptocurrencies getting more hype by the day, the survey revealed that at least 89% of Canadians have heard of Bitcoin. Out of these, 5% percent own BTC while another 1.6% have portfolios in other crypto assets such as Ether and Litecoin. As for the gender and age demographics, the groups which were mostly aware or own Bitcoin fall under young, male, university-educated, or high-income Canadians.

While those demographics may seem to favor financial literate folks, the research revealed that BTC ownership is more correlated to the less financially aware Canadians, ranking the sample into three where 47% had high financial literacy followed by the medium at 35% and finally low at 18%. Interestingly, 8% of the latter group said they own crypto assets compared to 4% of the highly financially aware.

However, awareness is still high among the more financially literate, with around 93% having heard of crypto assets instead of only 72% at the lower financial literacy group. While the digital payments space may be booming, the researchers noted that at least 86% of Canadians have no plans of shifting from cash.

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Author: Edwin Munyui

Parity Releases Substrate 2.0 to Build Custom, Scalable Blockchains Interoperable with Polkadot

Substrate has achieved a major milestone; the blockchain framework has released version 2.0, which is also compatible with Polkadot, which, along with Kusama, is already running the latest version.

Polkadot (DOT), built on Substrate, is currently the 6th largest cryptocurrency with a market cap of $3.74 billion, currently trading at $4.40.

Polkadot blockchain developer, Parity Technologies announced the launch of the second version of its blockchain building kit on Wednesday. This blockchain framework basically allows you to create and customize the blockchain “precisely” for your application or business. The new release provides the developers with additional tools to do just that.

With an aim to develop a Web 3.0, Substrate acts as a tooling kit for developers making their own blockchains that are interoperable with Ethereum’s co-founder Gavin Woods’ Polkadot.

The new release comes with 70 composable “modules” called “pallets” to play with various design ideas. These pallets, which can be developed using FRAME, help add basic and extended functionality.

“Substrate 2.0 comes with many new pallets that will help you quickly and easily build and deploy your blockchain runtime with the right properties for you and your network.”

Version 2.0 also includes modules for getting off-chain data on the blockchain. This new feature called off-chain workers communicates with the main chain to keep all network participants up to date and remove the massive data sets and intensive processes. Parity states,

“Substrate 2.0 comes with a suite of pallets to make data integration much more efficient for blockchains that depend on existing and/or real-world data.”

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Author: AnTy