Bakkt Expands Compliance Capabilities With Its First Acquisition

ice bakkt nyse

Fresh from completing its maiden funding round, Bakkt announced its first acquisition on Monday, Jan. 14, 2019. The daughter company of the Intercontinental Exchange (ICE) is also eyeing the possibility of expanding beyond the U.S. market.


Bakkt Acquires RCG Back Office

Bakkt announced the news of the acquisition via a Medium post by CEO, Kelly Loeffler. According to the blog post, the company is acquiring some assets of Rosenthal Collins Group (RCG), a longstanding independent futures commission merchant.

According to Loeffler, the deal should be finalized by February. Back in December 2018, Marex Spectron, the Commodity Brokerage firm acquired RCG’s customer business. The Bakkt CEO says the deal with RCG is for the purchase of assets related to its platform.

In an interview with Fortune, the Bakkt CEO said:

Typically when companies are combined you have overlapping systems, so we saw an opportunity to a purchase a portion of the back office operations, including compliance and treasury services, and risk management, as well as adding members of the RCG team.

Commenting on the importance of the acquisition, Loeffler said that it enhanced the platforms expertise across risk management and treasury operations.

Other aspects of the transaction will contribute to our regulatory, AML/KYC and customer service operations as we help enable digital asset acceptance by bringing more choice and control to buyers and sellers.

To this end, Loeffler insists that the acquisition isn’t tailored to institutional needs alone. According to the Bakkt CEO, the move has immense benefits for its consumer business as well.

Not Standing Still

The United States Commodity Futures Trading Commission (CFTC) is yet to approve for Bakkt to begin trading its Bitcoin futures. However, Loeffler says the company isn’t waiting around for approval as the team continues to work behind the scene.

Initially set for launch in January 2019, reports say the current U.S. government shutdown will push the launch to ‘early 2019.’

Nevertheless, Bitcoinist reported that the company raised $182.5 million in its first funding round from prominent investors like Microsoft at the end of December.

While waiting for CFTC approval, Bakkt is reportedly eyeing making inroads to markets outside the United States. According to Loeffler, the platform is in talks with regulatory agencies outside the country.

Meanwhile, the company continues to reiterate that the current market conditions do not negatively impact its plans. Loeffler noted:

People focus narrowly on Bitcoin’s price, but blockchain and crypto-currency technology keep advancing. Bitcoin certainly needs a boost; Bakkt could very well help provide it.

Do you think the Bakkt launch will ignite Bitcoin boost? Let us know your thoughts in the comments below.


Images courtesy of Twitter (@Bakkt), Shutterstock

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Source: Blockchain

Swiss Vontobel Bank to Offer Cryptocurrency Custody in Global ‘First’

Bank Vontobel Switzerland

Swiss private bank Vontobel is planning to offer custody services for cryptocurrencies in a move executives described as a worldwide “first.”


Vontobel To Create ‘Digital Asset Vault’

In an interview with local finance magazine Finews.ch, Vontobel, which has offered cryptocurrency-related investment products since 2016, said it now wanted to increase its integration.

“As far as I know, Vontobel is the only bank globally to offer itself as a custodian for digital assets,” investment banking head Roger Studer told the publication.

Alprockz Partners with Swiss Banks to Issue a New Stablecoin Backed by Swiss Franc

Switzerland continues to position itself as a leader in banking attitudes to cryptocurrency, with multiple entities seeking to open up the market to institutional and private investors.

However, Vontobel, Studer says, will be the first bank-sponsored custody solution to market, not just in Switzerland but in the world.

“…We decided two years ago to make the new crypto investment world available to our clients,” he continued. “Our custody offering is a further step in this direction.”

Legacy Finance Sidles Up To Crypto Assets

The move will come via a partnership with Geneva-based startup Taurus, which specializes in crypto custody and storage. Vontobel will ultimately operate what it calls a “Digital Asset Vault,” a label synonymous with the physical bunker currently operated in Switzerland by Xapo.

“The cooperation between Taurus and Vontobel is of high importance for the Swiss financial market because we are linking up two worlds: traditional banking and crypto finance,” Taurus co-founder Lamine Brahimi continued to Finews.

As Bitcoinist reported, 2018 already saw more direct support for Bitcoin specifically from Swiss financial sources.

IT consulting firm Inacta AG, one resident of the country’s Crypto Valley community in the city of Zug, became one of the first users of Blockstream’s Liquid sidechain in December.

What do you think about Vontobel’s cryptocurrency custody plans? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Shapeshift Admits ‘Imposition of KYC’d Accounts’ Hurt Company Financially

shapeshift fox

The instant digital asset exchange platform ShapeShift has laid off one-third of its team because of the “dramatic and severe” crypto recession as well as being cautious in “a challenging regulatory environment.”


Crypto Winter Cold Bites Shapeshift

In a detailed announcement, the company’s CEO, Erik Voorhees, revealed “with a heavy heart” that the company has let 37 of its employees go or one-third of its team. Voorhees:

Today, we let 37 employees go, reducing the size of our team by a third. It’s a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.

According to the CEO, the issues within the company which led to firing people were structural, legal, financial, and customer-related.

Shapeshift is not the first company to feel the negative effects of 2018’s prolonged bear market. Bitcoinist reported that industry giant Bitmain has laid off its entire Bitcoin Cash development team last month.

KYC Stung Financially and Psychologically

One of the reasons for which ShapeShift has reached a point where it had to lay people off according to its CEO is introducing know-your-customer (KYC) accounts.

Vorhees noted:

Business was declining from both aggregate market recession and increased competition. Our imposition of KYC’d accounts, themselves the result of trying to be cautious in a challenging regulatory environment, caused many of our most valuable API partners to leave us for competitors who have not perceived regulatory risks in the same way. We expected it, but still, it stung both financially and psychologically.

The instant online exchange introduced mandatory KYC requirements back in September 2018, resulting in a backlash from some users.

Immediately after that, self-hosted payment processor BTCPay announced that it intends to ditch the platform and use an interim solution as quickly as it’s possible.

“The shapeshift button does not work anymore, and they will probably require KYC soon. Instead, I am thinking about open sourcing (ShapeShift.io) by making it easy for anyone to be liquidity provider like shapeshift,” BTCPay Server tweeted in September 2018.

Were regulations the biggest factor in ShapeShift downsizing? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

Japan’s Internet Giant GMO Quits Mining Hardware Bussiness

GMO Internet mining quit

GMO
Internet says it will no longer develop, manufacture, and sell Bitcoin
mining hardware following significant losses incurred in Q4 2018. The
Japanese IT company will instead focus on its in-house mining activities
following a comprehensive revenue review.


GMO Internet Downsizing Bitcoin Mining Operations

In a statement Dec. 25, 2018, the IT behemoth announced the shuttering of its cryptocurrency mining hardware business. The decision follows the enormous losses suffered by GMO Internet in Q4 2018 as BTC 00 hit the lowest price in over a year.

After taking into consideration changes in the current business environment, [GMO] expects that it is difficult to recover the carrying amounts of the in-house-mining-related business assets, and therefore, it has been decided to record an extraordinary loss.

Data from the company’s statement show consolidated and non-consolidated losses for Q4 2018 at ¥ 35.5 billion ($321 million) and ¥ 38 billion ($344 million), respectively.

However, despite shuttering its mining hardware sales department, GMO, which generated a total of ¥154 billion ($1.3 billion USD) in revenue in 2017, expects to continue its in-house mining operations.

Presently, the company admits that a decrease in the profitability of its in-house mining venture. This trend is mostly tied to the falling cryptocurrency prices throughout 2018.

GMO began developing, manufacturing, and selling mining hardware in September of 2017. Back in August, GMO shut down its Bitcoin Cash mining activities to focus solely on mining bitcoin.

Bitcoin Mining Firms Feel the Pinch

For most of the year, as prices fell, Bitcoin hash rate still continued to increase. This translated to increased operational costs for reduced rewards. It was thus only a matter of time before miners began to feel the pinch.

After the mid-November price crash that took BTC down to $3,200, as many as 800,000 (unprofitable) miners reportedly pulled out. However, the Bitcoin mining difficulty has adjusted a since, stabilizing the falling hash rate.

However, cryptocurrencies market woes may not be the core reason for GMO pulling out. According to BitMex Research, the company may not have been competitive to begin with and was thus unable to cope with falling prices.

Recently, Bitcoinist reported on massive downsizing going on at Bitmain. The mining behemoth closed down operations in Israel as well as its entire Bitcoin Cash development team.

Recent reports surfacing online even suggest that the staff layoffs might be as high as 85 percent of the company’s workforce.

Will Bitmain and GMO survive the bear market? Share your thoughts below.


Images courtesy of GMO and Twitter (@Excellion).

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Source: Blockchain

Coinbase President Says Institutions With Short-Term View Shouldn’t Touch Crypto

It hasn’t been the best of Christmases for the stock markets and let’s face it, Santa hasn’t exactly gone overboard when it comes to crypto. However, according to a CNBC Fast Money interview with Coinbase President Asiff Hirji, it hasn’t been all bad.


A Year of Innovation

When asked what happened to crypto in 2018 after such promise and expectation this time last year, Hirji reminded CNBC that Coinbase warned investors to be cautious.

In fact, in 2017, just when Bitcoin fans were starting to think all their Christmases had come at once, the world’s most regulated exchange dealt a cold blast of reality harsher than a Russian winter reinforcing that prices may be overinflated.

However, he went on to say that there had never been more innovation or institutional buy-in of crypto as there was in 2018, despite the fact that trading volumes were down. 

Not for the Faint Hearted

When asked about the BTC price 00 impact and its effect on his business, Hirji began to dance around the issue like any good president saying that years ago, Bitcoin was the only thing that mattered. Then along came Ethereum, and now there are around 3,000 to 4,000 cryptocurrencies out there but that:

There are probably 200 or so that matter.

Despite dealing a harsh hand to the flailing 2,800 cryptos or so that don’t make the grade, he said:

You should assume that (Coinbase) will over the course of time add all the cryptocurrencies that matter in as many geographies as we are allowed to add them.

He affirmed that he was full of expectations for the year ahead and that this was the start of the next great wave in crypto.

What Happened in 2018?

When asked why 2018 failed to deliver the institutional investor boost that everyone hoped would happen, Himji responded that buy-in was at an all-time high:

We’ve had hundreds of institutions onboard onto our custodian platform.

San Francisco

He added that they needed a valid venue to trade on and a qualified custodian to store with, as well as liquidity, and that Coinbase has the most compliant and regulated solution out there. 

Despite the dreadful year of 2018 for retail investors, 2019 would continue to be a good year for institutions going into crypto, he argued.

The Coinbase IPO?

When quizzed about a possible IPO for Coinbase and how its valuation must be affected by the lower prices, he recalled when the company was valued at $8 billion earlier this year, reinforcing that none of the investors were then betting on the price of the asset “today, tomorrow or even a year from now.”

“If that’s your time horizon, as an institutional investor, you shouldn’t be touching this [cryptocurrencies].

But, if you have a long-term constructive view of where crypto is going, we’re [Coinbase is] the best-leveraged bet on crypto that you can find.

Himji did admit, however, that the company’s revenue was directly tied to trading volume and that trading volume was way down, concluding:

We have a long way to go before we do an IPO.

What do you think about the Coinbase president’s comments on investing in crypto? Share your thoughts below!


Images courtesy of Shutterstock

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Source: Blockchain

Why Bitcoin? Patreon Pushed By Mastercard to Ban Accounts in ‘Terrible Precedent’

Mastercard Patreon

Crowdfunding platform Patreon is grappling with fiat currency centralization after MasterCard demanded it must block the account of a prominent US author and several others.


Spencer: Patreon ‘Axed’ Me

Citing an email from the company in August, Robert Spencer, who penned multiple books about countering Jihad and advised law enforcement agencies, said it had “axed” him and he could no longer put contributed funds to any use.

“I’ve been axed from Patreon, without explanation, warning or notice – no doubt as part of the ongoing efforts of the Left to deny all platforms to those who reject its agenda,” he wrote on Twitter. “To those who supported me there, thank you, and I’m sorry we couldn’t follow through on plans.”

Responding publicly, Patreon denied it had chosen to ban Spencer, alleging that “unfortunately Mastercard required” it to “remove” his account.

Patreon has since gained negative publicity for further bans, including last week’s move against podcast host Sam Harris.

A History Of Censorship

It remains unknown what had led to the decision, with commentators from both within and outside the cryptocurrency community immediately accusing the payment processor of censorship.

“Trusted third parties are security holes (a phrase coined by Bitcoin pioneer Nick Szabo). Escape through bitcoin,” one wrote, while a popular response to the Twitter thread accused Patreon of providing a “fairly lame excuse.”

“Your agreements clearly say nothing about Mastercard. So what gives?” it reads.

Are you saying that this 3rd Party has control over who you support and protect, and who you do not? Sounds like you’ve set a terrible precedent.

Patreon is far from the first company to fall foul of payment networks. As Bitcoinist reported, PayPal has regularly blocked or limited activities of Bitcoin businesses and users over the years.

In October, the practice continued, PayPal banning censorship-resistant social media platform Gab several months after US exchange Coinbase did the same. Coinbase also targeted WikiLeaks in April this year.

Crypto pundits have become visibly more irked by censorship policies this year, calling for mass boycotts of payment processors and other platforms such as Twitter in favor of politically-neutral open-source payments alternatives such as Bitcoin.

What do you think about Patreon blocking Robert Spencer? Let us know in the comments below!


Images courtesy of Shutterestock

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Source: Blockchain

Bitcoin Private (BTCP)…Privately Pre-Mined 2 Million Coins for Its Founders

The creator of altcoin Bitcoin Private (BTCP) was battling accusations his project was a “scam” December 24 after an investigation revealed over 2 million ‘secret’ coins.


Coinmetrics: There Are 2.04M ‘Extra’ BTCP

BTCP 00, a so-called “fork merge” of the Bitcoin and ZClassic blockchains, fell 20 percent after research group Coinmetrics published the information Sunday.

After analyzing the BTCP blockchain, the company claims, it became apparent an extra 2.04 million coins were mined during its genesis – likely unknown to miners, users and perhaps most developers.

Known as a “covert premine,” the tokens were stored in a “shielded pool.”

“Three hundred thousand units of the covert premine were moved out of the shielded pool towards what appear to be exchanges,” a summary of the investigation continues.

Ultimately the lack of uptake of BTCP by the recipients of the airdrop meant that those additional 300k transparent units today represent close to 10% of the BTCP supply in circulation, with 1.80M covertly minted units remaining in the shielded pool.

Caught By Surprise?

The response from developers and creator Rhett Creighton, who also led the formation of ZClassic from ZCash, differed.

Creighton was first to respond to Coinmetrics, writing on Twitter he thought BTCP had suffered a “covert inflation attack.” He subsequently deleted the tweet.

Afterward, operations lead Jake Brutman conversely suggested Creighton personally sanctioned the 300,000 token deployment.

“This was some of the earliest code work done,” he tweeted.

From my recollection, it was a bounty placed by Rhett and the code was merged by Rhett when he was acting as Lead Developer.

In an update, Creighton meanwhile said he had “not been involved with the Bitcoin Private project for many months.”

“I never wrote any software for it. I was never paid or given any BTCP for free,” he continued.

I have no knowledge of who may or may not have been involved in the inflation hack.

He subsequently faced calls from well-known pundits that he was a “scammer” and even “deserved some years in prison.”

Consumers remain cautious about the impact of hard forks in the current climate following the debacle surrounded that of another Bitcoin fork, Bitcoin Cash (BCH).

Splitting into two chains in November, BCH and its new spin-off Bitcoin Cash SV (BSV) entered a bitter conflict in order to woo miners and build a reputation despite growing controversy about their technical prowess.

What do you think about the possible Bitcoin Private covert premine? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain

25% of Pantera Capital ICO Projects May Have to Refund Investors

Pantera Capital

Crypto hedge fund Pantera Capital says that as much as one-quarter of the projects its ICO fund invested in may be in violation of US securities laws after the SEC decision. 


Things keep going from bad to worse for US blockchain companies that held ICOs without registering with the SEC. One of crypto’s largest hedge funds Pantera Capital told Bloomberg that around 25 percent of the digital currency projects in its portfolio may have to refund the money.

While the California-based Pantera Capital believes that the majority of its investments will be unaffected by the SEC ruling, at least one-quarter of them have an undecided fate at the current moment. There is the distinct possibility that these projects could be in violation of securities laws — and that’s not a good place to be.

What Did the SEC Say?

In an announcement on Nov 16, the US Securities and Exchange Commission (SEC) stated that two startups, Paragon Coin and AirFox, had raised millions of dollars’ worth of funds by issuing tokens that did not comply with US securities laws as they were issued to non-accredited investors.

In order to get on the right side of the law, it seems, any startup in the same position has a pretty clear path ahead of them. Pay the penalty, offer a refund, and register with the SEC. Sounds pretty simple right? Except that these blockchain startups raised funds to build products and teams and much of the funding has already been spent.

After these two ICOs set a precedent warning last month, shockwaves of panic were felt throughout the crypto community. It became clear that many startups that held ICOs could soon find themselves in the same boat. If they did not register with the SEC and they sold tokens indiscriminately to everyday people rather than accredited investors, their doors would certainly be knocked on.

STOs are Sexy

This has all but seen the death of the ICO in the United States where companies are moving toward STOs that are approved by the SEC but may be cost-prohibitive to startups.

Pantera’s co-chief investment officers Joey Krug and Dan Morehead stated in a newsletter on Thursday:

While we believe the vast majority of the projects in our portfolio should not be affected, approximately 25 percent of our fund’s capital is invested in projects with liquid tokens that sold to U.S. investors without using regulation D or regulation S.

They continued to elaborate:

If any of these projects are deemed to be securities, the SEC’s position could adversely affect them. Of these projects, about a third (approximately 10 percent of the portfolio) are live and functional and, while they could technically continue without further development, ending development would hinder their progress.

What do you think about the news that upwards of a quarter of Pantera Capital’s ICO projects may need to refund investors? Let us know your thoughts in the comments below!


Images courtesy of Shutterstock.

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Source: Blockchain

To The Moon! Bitcoin Space Travel Gets Closer As Virgin Galactic Takes Flight

Virgin Galactic

Billionaire Richard Branson appeared to cry tears of joy when his ‘Bitcoin-friendly’ Virgin Galactic reached the edge of space for the first time December 13.


World Sees First Commercial Space Flight

Branson, who revealed himself as a Bitcoin believer and investor in 2013, watched as SpaceShipTwo, the latest vehicle from the Virgin Galactic and The Spaceship Company, broke free of Earth to mark a “momentous achievement” for crewed space travel.

“SpaceShipTwo is now the first crewed vehicle built for commercial service to reach space. (With due credit of course to the amazing SpaceShipOne prototype for paving the way),” he wrote in a dedicated blog post.

Virgin Galactic aims to make both space tourism and long-distance point-to-point travel using rocket power a viable commercial enterprise.

In 2013, Branson announced the project would accept Bitcoin for flights, calling the cryptocurrency a “brilliantly conceived idea.”

“Sometime in the future, innovative payment models such as… Bitcoin will become serious challengers to traditional banks, which will spur more competition and give customers even more options,” he forecast at the time.

Galactic is a company looking into the future, so is Bitcoin. So it makes sense we would offer Bitcoin as a way to pay for your journey to space.

Bitcoin To The Moon

Like the Bitcoin ecosystem, the project has had its ups and downs. In 2014, a crash during the fourth test flight of SpaceShipTwo resulted in the death of its copilot, while its pilot sustained serious injuries.

In the intervening years, Blockchain technology has meanwhile become the focus of a more general push to advance space exploration.

As Bitcoinist reported, NASA is among the entities looking to enhance their operations using both Blockchain and artificial intelligence (AI), specifically within the field of communications.

Blockstream satellite

Bitcoin transactions can also be broadcasted via satellite. Four have been launched by Blockstream to date, covering a large part of the earth to protect against network interruptions and providing anyone in the world with the opportunity to use Bitcoin.

Virgin Galactic, meanwhile, will now continue to conduct tests on SpaceShipTwo with aim of creating longer fights and “creating thousands of private astronauts.”

What do you think about Virgin Galactic? Let us know in the comments below!


Images courtesy of Shutterstock

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Source: Blockchain