News

Korean police seize crypto for unpaid traffic fines in trial
August 18, 2022 1:34 am

Local police in a suburb of Seoul have the authority to seize crypto in order to clear the balance of delinquent fines from traffic violations.

A South Korean town near Seoul has been successfully operating a pilot program that allows police to seize crypto from the exchange accounts of individuals with delinquent traffic fines.

Gunpo, a city of about 275,000 in the northwestern Gyeonggi province was selected by the national government to execute the pilot program in 2022 which an Aug. 16 report from the JoongBoo Ilbo news outlet stated was a way to collect delinquent funds in an “untact," or contactless fashion.

The program appears to have been successful, at least in the first half of 2022, with Gunpo police achieving an 88% collection rate on traffic fines amounting to $668,000, putting the city on pace to vastly exceed its goal of chasing $759,000 in traffic fines by the end of the year.

However, the trial only saw delinquent fines totaling an excess of about $759 by an individual subject to crypto seizures by the police, while crypto seizures were only a measure taken if the funds in the individual's bank accounts have already been exhausted. 

Related: Do Kwon reportedly hires lawyers in S. Korea to prepare for Terra investigation

Jungo Ilbo reported that the fines collected through the first half already exceed the total annual collections over each of the past three years.

The Korean crypto market is a lucrative one for law enforcement to extract fines from as it grew to $45.9 billion in 2021, though the report did not state which crypto would be seized and sold to pay fines.

Solana wallet fires up the grill to burn spam NFTs out of existence
August 18, 2022 1:16 am

The Phantom wallet app has launched a new Burn Token feature, allowing users to remove spam NFTs sent by scammers.

Solana-based wallet provider Phantom has launched a new burn feature allowing users to remove spam non-fungible tokens (NFTs) sent by scammers.

According to an Aug. 18 blog post from the Phantom team, the new feature is accessible via the Burn Token tab in the Phantom wallet app, allowing users to receive a minuscule deposit of Solana (SOL) each time they use it.

“We’re still in the Wild West days of Web3. As the crypto ecosystem grows, so have the number of bad actors looking for ways to steal user’s funds. The rapid growth in popularity of NFTs has led to an increasingly prevalent method of attack for scammers – Spam NFTs.”

Phantom noted that the issue has been particularly prevalent on Solana due to its low transaction fees, with bad actors often airdropping supposedly free NFTs en masse which contain malicious links.

Spam NFT generally prompt the receiver to click a link to mint a free NFT, however, if they complete the process, their funds end up being drained from their wallet. Alternatively, the link will ask the receiver to input their seed phrase, resulting in the same outcome.

“These scams are becoming increasingly more sophisticated. For instance, after a contract address and domain are identified as malicious, scammers can change the metadata of an NFT to try to avoid being blocklisted. It can feel like an endless game of whack-a-mole,” the blog post read.

The move is part of a broader initiative by Phantom to counter spam NFTs and bad actors in the space. The team stated that it also fights scammers through its phishing warning system, which issues warning to users on “any malicious transactions that could compromise their assets or permissions” after clicking on dubious links.

The post added that Phantom is currently collaborating with Blowfish to improve how “we alert users to phishing attempts.”

“While we’re introducing NFT Burning today, we’re not stopping there. Users can look forward to more automated spam detection in the future. Using providers like SimpleHash and our own internal reporting, we will be able to gauge if an NFT is likely to be spam,” the post read.

Related: Crypto spam increases 4,000% in two years — LunarCrush

Phantom is one of the most popular wallet providers for Solana-based NFTs and decentralized fiance (DeFi), with more than 2 million monthly active users according to the firm.

At the start of August competing wallet firm Slope suffered a security exploit which saw an estimated $8 million worth of funds drained on the Solana blockchain.

In a post mortem analysis, Solana’s head of communications Austin Fedora found that 60% of the victims of the attack were Phantom users, despite the issue originating from Slope.

Solana hosted the second largest amount of NFT sales volume in July at $56.1 million, behind only Ethereum which posted a whopping $535.6 million according to data from CryptoSlam.

Senator asks FDIC about allegations it discourages bank relations with crypto companies
August 17, 2022 9:56 pm

Sen. Pat Toomey says he has information from whistleblowers that the FDIC, without a legal basis, is discouraging banks from dealing with companies that have crypto links.

Pennsylvania Senator Pat Toomey, ranking member of the United States Senate Banking Committee, has sent a letter to Federal Deposit Insurance Corporation (FDIC) director and acting chairman Martin Gruenberg informing him of allegations made by a whistleblower concerning FDIC activities. The senator suspects the FDIC “may be improperly taking action to deter banks from doing business with lawful cryptocurrency-related (crypto-related) companies.” 

Toomey wrote that there is corroboration of whistleblower allegations that “personnel in the FDIC’s Washington, D.C. headquarters are urging FDIC regional offices to send letters to multiple banks requesting that they refrain from expanding relationships with crypto-related companies, without providing any legal basis for sending such letters.”

In addition, Toomey wrote that there were reports that staff at FDIC headquarters took the highly atypical step of contacting staff in a regional office to urge them to downgrade the status of a loan to a crypto-related company, adding:

“FDIC regional office staff reportedly interpreted the involvement of FDIC headquarters in this matter as an effort to change how loans to crypto-related companies are generally classified and to deter banks from extending such loans in the future.”

Judging from Toomey's letter, the alleged letters from the FDIC were sent on or around June 6. Toomey has asked Gruenberg to confirm or deny the alleged activities by the end of the month, in addition to asking whether the FDIC legal division has provided an opinion on the alleged activities.

Related: Deposits at non-bank entities, including crypto firms, are not insured — FDIC

Toomey is a hawkish crypto advocate. He has been a vocal critic of Securities and Exchange Commission policy. He is also the author of the Stablecoin TRUST Act of 2022 and introduced the companion legislation for the Virtual Currency Tax Fairness Act of 2022 in the Senate. He has also expressed reservations about the issuance of a U.S. central bank digital currency.

'There's a lot less land to go around' — why White Rock established off-the-grid mining in Texas
August 17, 2022 9:27 pm

“The U.S. is where the action is in terms of markets, so we plan to be in at least another couple of states as well as Texas with some diversified offering," said CEO Andy Long.

Amid many cryptocurrency mining firms in Texas scaling down operations to reduce the load on the power grid, at least one company set up miners not quite as affected by the state’s energy requirements during extreme heat.

In June, White Rock Management expanded its crypto mining operations to Texas — its first in the United States — but reported its facility in the Brazos Valley region would mine Bitcoin (BTC) using “environmentally responsible” methods. While the firm’s mining operations in Sweden used hydroelectric power, White Rock CEO Andy Long told Cointelegraph that its Texas facility was “off grid”, powered only by natural gas that would otherwise be burned.

“The U.S. is where the action is in terms of markets, so we plan to be in at least another couple of states as well as Texas with some diversified offering — it won’t all be off grid,” said Long.

The White Rock CEO said major storm systems capable of knocking out power supplies — of which Texas has had no shortage in the crypto era — played a role in the company’s decision to rely on flared gas for mining, but said it would explore “a mixture of different power sources” as it expanded to different U.S. states, including hydroelectric and nuclear. According to Long, the Texas facility would have a 10-megawatt capacity “in the next month or two” and had already passed a total hashrate of 1 exahash per second.

New York was a less appealing option for White Rock to first expand to the U.S. given the regulatory environment was “sending the wrong message," according to Long. State lawmakers have pushed for legislation that would ban proof-of-work mining.

“As soon as you start to say to energy companies ‘oh, you can do this with your power, but not this’, then they’ll start to tell you which networks you can mine, or you can mine this coin but not that coin. We would rather create a welcome environment for investment and regulatory certainty — that’s one of the things we like about Texas.”

Texas is home to many crypto mining firms including Core Scientific, Riot Blockchain, and Argo Blockchain, all of which announced in July they would voluntarily scale back operations at the request of the state’s energy grid operator, the Electric Reliability Council of Texas. Low winds reducing the energy production from the state’s turbines as well as the need for electricity to run air conditioners caused concerns demand could surpass the available power supply.

“I think it’s good practice for miners to provide that demand response,” said Long. “It’s not really going to hurt their earnings [...] it’s a good example of the grid and miners working together.”

Related: Crypto bear market will provide ‘excellent’ M&A opportunities: White Rock CEO

The White Rock CEO added that due in part to the energy crisis in Europe as many countries attempt to stop relying on natural gas and oil from Russia, sites suitable for crypto mining were “getting harder to find” with cheap power:

“A year ago, even two years ago, you could find pretty cheap power in a lot of places and it wasn’t that hard to find good sites and to deploy large amounts of miners. What’s changed is everybody’s doing orders of magnitude more of hardware and there’s a lot less land to go around [...] I think also the owners and the operators, the utilities companies they’re looking for larger companies that they know can rely on to pay their power bill.”
European Central Bank addresses guidance on licensing of digital assets
August 17, 2022 9:00 pm

Specifically, the ECB will consider crypto firms’ business models, internal governance, and “fit and proper” assessments which apply to licensing other companies.

The European Central Bank, or ECB, laid the foundation for the criteria it would be considering when harmonizing the licensing requirements for crypto in Europe.

In a Wednesday statement, the ECB’s banking supervision division said it would be taking steps to regulate digital assets as “national frameworks governing crypto-assets diverge quite extensively” and given the seemingly differing approaches to harmonization following the passage of the Markets in Crypto-Assets (MiCA) regulation and the Basel Committee on Banking Supervision issuing guidelines for banks’ exposure to crypto. The ECB said it would apply criteria from the Capital Requirements Directive — in effect since 2013 — to assess licensing requests for crypto-related activities and services.

Specifically, the central bank will consider crypto firms’ business models, internal governance, and “fit and proper” assessments which apply to licensing other companies. In addition, the ECB said it will rely on national Anti-Money Laundering (AML) authorities and the financial intelligence units of respective countries to provide data necessary to assess potential risks.

“The higher the complexity or relevance of the crypto business, the higher the level of knowledge and experience in the field of crypto should be,” the ECB said. “Senior managers or board members with relevant IT knowledge and chief risk officers with robust experience in this area are important safeguards.”

According to the ECB, there is “work ongoing” to analyze the role crypto may play in Europe, which will “remain an area of focus for European banking supervision in years to come.” With the passage of MiCA, global regulators may begin to standardize rules for crypto service providers within the European Union.

Related: ECB head calls for separate framework to regulate crypto lending

On Aug. 2, the ECB released the results of a study which identified a central bank digital currency as the top choice for cross-border payments over Bitcoin (BTC) and other options. Officials previously pointed to the crash of Terra as a possible example of a stablecoin threatening the financial system, recommending supervisory and regulatory measures to reduce risk.

Fed adds a new layer of bureaucracy for US banks engaging in crypto asset activities
August 17, 2022 8:45 pm

The U.S. Federal Reserve Board has issued new instructions for banks engaging in crypto asset activities that include running their plans past their Fed supervisor.

The United States Federal Reserve Board issued a letter Tuesday to its supervisory officers, staff and the banks they supervise regarding activities with crypto assets. The letter covers the preliminary steps a bank must go through before engaging in activities with crypto and instructs banks to notify the board before proceeding with those activities.

The letter, signed by the directors of the regulatory and community affairs divisions, applies to all banks supervised by the Fed with no threshold of minimum assets. It begins with a warning about the risks associated with crypto, specifically mentioning evolving technology and its governance, Anti-Money Laundering and transparency and the stability of assets such as stablecoin.

The Fed is monitoring banks’ activities, the letter noted:

“Given the heightened and novel risks posed by crypto-assets, the Federal Reserve is closely monitoring related developments and banking organizations’ participation in crypto-asset-related activities.”

It went on to remind banks that they need to make adequate risk management preparations for activities with crypto assets. It also recommended checking state and federal laws on the legality of their plans and required filings, mentioning the Bank Holding Company Act, the Home Owners’ Loan Act, the Federal Reserve Act and the Federal Deposit Insurance Act, in particular.

Related: Portuguese banks shutting crypto accounts citing risk management concerns

The letter’s real call to action was the instruction that banks should notify their Fed supervisory contacts in advance of their planned activities with crypto. Banks that are already engaged in such activities should provide prompt retrospective notification so that they can receive feedback.

An accompanying statement said a statement on crypto asset policy was provided last year after an interagency “policy sprint” with the Federal Deposit Insurance Corporation (FDIC) Office of the Comptroller of the Currency (OCC).

The Fed letter comes on the heels of guidelines for reserve banks opening Federal Reserve accounts for “blockchain banks,” among other organizations.

Quebec Pension Fund loses almost entirety of its Celsius investment in less than ten months
August 17, 2022 8:00 pm

"For us, it is clear, when we look at all this, we arrived too soon in a sector which was in transition," says CEO Charles Émond.

According to local news outlet LaPresse on Wednesday, the Caisse de dépôt et placement du Québec (CDPQ), an institutional investor chartered with managing retirement assets in Canada's predominantly French-speaking province of Quebec, wrote off almost the entirety of its CA$200 million ($154.7 million) investment in troubled cryptocurrency lender Celsius Network. 

The move came just ten months after the CDPQ and growth equity firm WestCap made a joint investment of $400 million into Celsius at a valuation of $3 billion. At that time, Celsius boasted over 1,000 employees, $25 billion in total assets and $850 million in cumulative interest paid to depositors.

However, as an unregulated and centralized entity, a depositors' assets are not protected in the event of losses, nor is the firm subjected to any restrictions on the use of leverage. During the onset of this year's crypto winter, the sudden and violent crash of Bitcoin (BTC) and other digital assets left a $2.85 billion gap in Celsius' net assets. As a result, it suspended withdrawals on the accounts of nearly 1.7 million customers in June.

Related: Worried about inflation's impact on your retirement savings? Invest in cryptocurrency

It appears that the loss on Celsius represents only a negligible fraction of the CDPQ's portfolio. By June 30, the CDPQ managed a combined CA$391.6 billion in total assets (or about $303.4 billion), decreasing by 7.9% in the past six months. The entity is currently evaluating its legal options against Celsius, although it has not shared any details. According to court filings, Celsius is scheduled to run out of money by October.

3 strategies investors might use to trade the upcoming Ethereum Merge
August 17, 2022 7:57 pm

Investors have been crafting their strategies for navigating the volatility that could arise as the Ethereum Merge takes place. Here are a few to consider.

The Ethereum network’s long-awaited transition from proof-of-work to proof-of-stake is set to occur from Sept 15 to 16 and for the last year, traders and analysts have been discussing various outcomes for the upgrade and possible trading strategies. 

Let’s take a look at three options investors and traders have.

Hodl ETH to earn the expected “hardfork” token

The first strategy is relatively simple. Traders can simply buy Ether (ETH) in the spot market and hold it in their exchange wallet, or whatever platform/wallet will support forked tokens, and wait for the expected PoW token.

Way back in 2017, when Bitcoin was forked to Bitcoin Cash, BTC holders received an equal amount of BCH, which at one point traded for $1,650 per token. At the height of the 2021 bull market, BCH rallied as high as $800.

If PoW tokens from those entities that choose to ignore the Merge happens, then finding exchanges that support the hard forks would be the place to sell them. Don’t forget to pay your taxes if your country obligates you to do so.

There’s also a possibility that ETH PoW tokens won’t immediately pump and dump. Many analysts are sounding off about the risk of centralization to a PoS Ethereum network, and while it may sound far-fetched, a miner-led PoW ETH fork could gain ground, assuming projects and developers are willing to build DApps on the blockchain.

Related: Economic design changes will affect ETH's value post-Merge, says ConsenSys exec

Long ETH, short futures

Let’s say you’re a tad bit skeptical about whether Ethereum will successfully pull off the Merge. A lot of people are. And after this hellacious year where Bitcoin (BTC) lost all of its yearly gains, Wonderland Money collapsed and Terra (LUNA) —now Terra Classic (LUNC), Celsius and Three Arrows Capital rugged everyone, it's perfectly natural to be nervous about a fundamental change in the market’s second largest asset.

Hedging is the option for investors who feel 50/50 about the Merge. Basically, one would be long Ether, which many holders naturally are and have been for years, or at least from the recent $880 “bottom.”

While long Ether, holding a short position in futures or options contracts allows one to protect against losses if ETH corrects sharply and hopefully obtain the PoW hard fork tokens, which should further cancel out losses on the spot position.

The hope of making up some of those “losses” from gaining the unconfirmed PoW tokens could help skittish Merge traders sleep better at night and perhaps wrap things up in profit.

Stay in stablecoins and just trade the trend

For some investors, the risk of attempting to trade the Merge outweighs the reward and obtaining the “free” PoW hardfork tokens might not be a priority.

These investors might consider just staying in stablecoins and trading direction, or the strongest trend presented by Ether. In this scenario, one would either trade daily breakouts and breakdowns or whichever way the short-term trend dictates. Many traders anticipate the Merge to be a buy the rumor, sell the news-type event and others expect the price to dump considerably after the Merge is complete.

If this is your perspective, then crafting and executing a strategy around this anticipated volatility is relatively simple if one is sitting in stables. These traders could then purchase post-dip ETH if they’re true believers and if the various PoW tokens put up heavy volumes on exchanges, the price swings in hardfork tokens could also be played.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Celebrities called out for shilling NFTs: Nifty Newsletter, Aug 10–16
August 17, 2022 7:15 pm

A Polygon executive highlighted that NFT games have an advantage over traditional "money in, no money out" gaming business models.

In this week’s newsletter, read about how Justin Bieber, along with other celebrities, was called out to disclose their connections to nonfungible token (NFT) firms. Check out the market performance of blue chip NFTs and how NFT games have an advantage over traditional gaming business models. In other news, learn about how OpenSea is implementing new ways to combat NFT theft. And check out how experts feel about carbon offset NFTs that aim to help the environment. 

Justin Bieber, Paris Hilton among 19 celebs called out for shilling NFTs

Consumer watchdog Truth in Advertising called out 19 celebrities, including Justin Bieber, Paris Hilton and Tom Brady, over NFT promotion on their social media platforms. According to the watchdog, the space is full of deception and urged the celebrities to disclose connections with NFT companies.

In a previous post, the watchdog highlighted that the celebrities may be violating rules on endorsements and the requirements for influencers. Citing the Federal Trade Commission, the group noted that influencers must disclose their connections to brands that they advertise.

Continue reading…

Blue chip NFT performance fails recovery, but investors hodl even harder

The performance of NFTs that are classified as the blue chips of NFTs went to another all-time low range, according to the data gathered by the statistics platform NFTGo. The fall is attributed to the falling prices of projects like CyberKongz and CyberKongzBabies.

According to the site’s Blue Chip index, June 13 marked the worst performance in the history of blue-chip NFTs, with the index falling to 9,331 Ether (ETH). This follows its best-performing day, which was on April 29, when the index reached almost 14,900 ETH.

Continue reading…

NFT games have edge over ‘money in, no money out’ games: Polygon’s Urvit Goel

Urvit Goel, an executive from Polygon, told Cointelegraph in an interview that NFT games have an advantage over games where players can only put their money in and never get anything in return.

The executive argued that GameFi has a business model advantage over traditional gaming, where users cannot sell their in-game items for money. “We just want to give users the ability to own the content they’re buying,” he said.

Continue reading…

OpenSea introduces new stolen item policy to combat NFT theft

NFT marketplace OpenSea has expanded its use of police reports to confirm stolen item reports within its platform. According to the firm, this is a way to enhance its platform’s defenses against theft and false reports.

In addition to this, the platform is making it easier to re-enable the buying and selling of recovered NFTs. The NFT platform also said that its team is working to implement other solutions that combat NFT theft. This includes automating theft detection.

Continue reading…

Carbon credit NFTs are only effective if burned, experts say

While carbon credit NFTs are being marketed as a way to use the technology to help the environment, an expert argued that it’s only effective once the NFTs are burned and not traded anymore once the certificate is obtained.

A KlimaDAO core member told Cointelegraph in an interview that when it comes to carbon offsets, it's very important to not neglect the burning of the carbon offset NFT to permanently take the NFT out of circulation so that it can no longer be sold to someone else.

Continue reading…

Thanks for reading this digest of the week’s most notable developments in the NFT space. Come again next Wednesday for more reports and insights into this actively evolving space.

Economic design changes will affect ETH's value post-Merge, says ConsenSys exec
August 17, 2022 6:45 pm

Lex Sokolin said that post-Merge, DeFi projects will have to compete with the returns offered by the core ETH protocol.

As the Ethereum Merge draws near, many are speculating on its economic effects. To provide a clearer view to those who anticipate the major upgrade, Lex Sokolin, the head economist at ConsenSys, shared his insights in an interview with Cointelegraph. 

The expert discussed the effect of the Merge on users, developers and businesses. Additionally, Sokolin also cleared up some misconceptions about the Merge and explained how the new development can have an impact on the price of Ether (ETH).

On the user level, the economist said that the average user will be able to use the chain as they normally do, but one significant impact for users post-Merge is having a less risky way to stake ETH. He explained that:

“Right now, staking on the beacon chain carries the risk that the Merge doesn’t happen. But once it does, participation in staking is more accessible and has less technical risk.”

In terms of effects on businesses and developers, the expert shared that the Merge may standardize the notional interest rate for the entire Web3 space through the ETH yield. This could potentially remove the need for speculative financial engineering projects, according to Sokolin.

“We expect that risks of projects and business opportunities can be evaluated against merely staking ETH on a risk-adjusted basis.”

This may also affect the decentralized finance (DeFi) space significantly as products need to compete with the returns offered by the core protocol. “That should in turn mature the market, and create opportunity costs for investors chasing yield in places with too much risk,” he added.

When asked about people’s expectations and misconceptions about the Merge, the expert highlighted that it will not lower gas fees or solve for massive throughput yet. However, the Merge sets the foundation for these things in the future. Following this, Sokolin mentioned that the Merge will remove one of the less desired narratives for Web3, which is the issue of ESG impact.

Related: Coinbase will 'briefly pause' ETH and ERC-20 token deposits and withdrawals during Ethereum Merge

In terms of the Merge's effects on the price of Ether, the economist believes that all technical developments will somehow affect the value of ETH. According to Sokolin, the crypto-economic changes within the protocol naturally have implications on the supply and value of the asset. “Though, how the market ends up pricing those relative to broader macroeconomic events is still yet to be seen," he added.