Category: Bitcoin

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Binance Bitcoin China Crypto News Data Hackers

Hacker Wants 10 Bitcoin for Stolen Data of 1 Billion Chinese Citizens

In what could be one of the biggest data breaches in history, a hacker who claims to have stolen the personal details of 1 billion Chinese citizens from a Shanghai police database is offering to sell the information for a mere 10 bitcoin – worth about US$200,000.

The anonymous hacker, identified only as “ChinaDan”, posted the following message on hacker site Breach Forums last week:

“In 2022, the Shanghai National Police (SHGA) database was leaked. This database contains many TB [terabytes] of data and information on billions of Chinese citizens. [These include] several billion case records including names, addresses, birthplaces, national ID numbers, mobile numbers, [plus] all crime/case details.”

‘CZ’ Corroborates Intelligence Threat

In a July 4 tweet, Binance CEO Changpeng ‘CZ’ Zhao said the exchange had stepped up its user-verification processes after Binance’s threat intelligence detected the sale of records belonging to “one billion residents of an Asian country” on the dark web:

CZ blamed the leak on “a bug in an Elastic search deployment by a [government] agency”, without specifically mentioning the Shanghai police case.

Implications for Greater Crypto Industry

Kenny Li, co-founder of Web3 privacy project Manta Network – in which Binance Labs is an investor – warned the breach might have widespread implications for the crypto industry:

The stolen data could be used to exploit users and do things like [launch] phishing attacks to steal keys or [gain] unauthorised access to applications like centralised exchanges.

Kenny Li, co-founder, Manta Network

The Shanghai Police data hack claim comes as China has vowed to tighten protection of online user data privacy, instructing its tech giants to ensure safer storage after multiple public complaints about mismanagement and misuse.

China has recorded a number of data leak incidents in recent years. In 2016, sensitive information about powerful Chinese individuals, including Alibaba founder Jack Ma, was posted on Twitter.

Ransomware War Continues

In November last year, US$6 million in crypto was seized from the REvil ransomware group, and three months later the US Federal Bureau of Intelligence announced the formation of a specific crypto crime division to tackle ongoing ransomware attacks.

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Australia Bitcoin Bored Ape Yacht Club Crypto News Cryptocurrencies Investing NFTs

Brisbane Man’s Crypto Bet Enabled Him to Buy a Home Mortgage-Free

In less than a decade, Brisbane IT specialist Joe Bridge turned a small-time household crypto mining hobby into an A$1.2 million profit that enabled him to buy a house outright along with two motorcycles and a pair of boats.

Bridge, now 38, was a law student living at home in 2013 when he installed mining software on three computers and used 10 graphics cards to generate Litecoin and Dogecoin.

Traded $LTC and $DOGE for ‘More Than a Dozen’ BTC

Although the power bills at his parents’ house in Paddington, in Brisbane’s inner west, ramped up to over A$600 per month, Bridge mined enough $LTC and $DOGE to trade it for “more than a dozen” bitcoins. He held on to the BTC until 2017 when the price began to spike, then invested some of his stash on motorbikes and boats.

Joe Bridge at his Clontarf home with one of his motorcycles. Source: ABC News / Alex Papp

By the time bitcoin hit its all-time high in November 2021, Bridge was able to cash out A$880,000 for a house at seaside Clontarf in Brisbane’s northeast, and still had enough left over to pay a $290,000 capital gains tax bill.

Cautionary Advice for Would-Be Investors

No longer active as a crypto investor, Bridge has cautionary advice for anyone thinking of buying the current dip in bitcoin’s price. “I think it’s a dangerous time to be getting into it,” he told ABC News last week. “I would imagine it’s possible [to still make money], though. [But] would I recommend it? No. I’m not currently participating.”

I do think there will be a shake-out and the speculative bubble that surrounds [cryptocurrency] will disappear. Perhaps from the ashes of that, something with real utility to humanity may arise, but there’s a lot of debate about what product that is. I don’t think it’s bitcoin.

Joe Bridge, IT consultant in financial software, former crypto investor
Crypto market cap since November 2021. Source: CoinMarketCap

More than a million Australians now own some form of cryptocurrency, according to a Roy Morgan survey conducted in February this year. However, chances are that none of them will ever get as lucky as Australian NFT collector Steve Morlando, who in May was able to turn US$300 into a whopping US$5 million when he bought a rare Bored Ape for what amounted to 0.01 percent of its then-current value.

Like Joe Bridge, Morlando plans to hang on to his investment “for a minimum of 10 years”.

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Bitcoin Crypto News Cryptocurrency Law ETFs Regulation

US Regulator Sued by Grayscale After Latest Bitcoin ETF Rejection

Historically, the Grayscale Bitcoin Trust (GBTC) was the primary vehicle for US institutional exposure to bitcoin. As jurisdictions including Australia and Canada approved spot bitcoin exchange-traded funds (ETFs), the Securities and Exchange Commission (SEC) resisted. Once again, it has rejected appeals to approve a bitcoin ETF, and this time it is getting sued:

Grayscale Committed to a Spot Bitcoin ETF

As news broke that the SEC had rejected its application to convert GBTC into an ETF, Grayscale moved swiftly to file a petition for review with the US Court of Appeals for the District of Columbia Circuit.

Speaking on CNBC’s Squawk Box, chief executive Michael Sonnenshein commented that Grayscale was “of course very disappointed, but as an organisation [we] were ready”. He added that the firm “almost immediately” filed a petition for review as it “vehemently disagreed with the decision”.

When asked for the basis for Grayscale’s legal challenge, Sonnenshein responded:

The SEC is acting arbitrary and capricious by continuing to approve Bitcoin futures based ETFs while continuing to deny spot Bitcoin ETFs.

Michael Sonnensheim, CEO, Grayscale

Nonetheless, Grayscale has said that it remains “committed” to converting the GBTC into an ETF, adding that:

Through the ETF application review process, we believe American investors overwhelmingly voiced a desire to see GBTC convert to a spot Bitcoin ETF, which would unlock billions of dollars of investor capital while bringing the world’s largest Bitcoin fund further into the US regulatory perimeter. We will continue to leverage the full resources of the firm to advocate for our investors and the equitable regulatory treatment of Bitcoin investment vehicles.

Grayscale press release

‘Poked the Wrong Nest’

In a rare display of unity between Bitcoiners and the crypto community, both sides agreed that pushback was needed against the SEC’s decision, with on-chain analyst Will Clemente saying:

Others commented that the SEC’s decision “lacked substance” or “common sense”:

Tellingly, during Grayscale’s 240-day review, a record-breaking 11,400 submissions were received with over 99 percent demonstrating support for the conversion.

Even though a final decision is only likely to be reached within the next 12 months, it appears as if the SEC may well have poked the wrong nest. Bitcoiners, in particular, have a tendency to make their voices heard.

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Bitcoin Crypto News Regulation

Regulation is Good for BTC Price Action, Report

Bitcoin-focused financial services firm New York Digital Investment Group (NYDIG) has released a report in which it found that increased regulatory clarity was beneficial to the price and adoption of Bitcoin.

Regulatory Clarity, Helpful or Hurtful?

The report notes that regulatory clarity is often cited as a significant hurdle for institutional adoption, however NYDIG has maintained the opposite view, believing that adoption would grow once investors “know the rules of the road”.

To test its thesis, the company looked at historical events related to digital asset regulation across a number of international jurisdictions. These events encompass matters including tax, accounting, payment, mining, the legal status of exchanges and other service providers, or even the legality of crypto assets themselves.

It then tracked the subsequent price returns of bitcoin in the following day, week, month, six months and year, with a focus on the longer-term windows. The returns were then evaluated in both absolute and relative (ie, average) terms.

Investors and Price Welcome Regulatory Clarity (Mostly)

The report noted that, other than China, which has implemented countless bans on mining and digital asset ownership, most other jurisdictions were “supportive but with guardrails”.

Aside from China, where regulations had a deleterious impact on price, across all other jurisdictions the study offered clear evidence that on both an absolute basis and relative basis, increased regulatory clarity was favourable for the price of bitcoin. This was particularly the case across six- and 12-month timeframes.

BTC absolute performance after a regulatory event. Source: NYDIG
BTC relative performance after a regulatory event. Source: NYDIG

The implication then is that regulatory clarity, despite its flaws, is appreciated by investors. Noting that retail only accounts for a quarter of volume, it’s little surprise that regulation brings with it positive price action across longer timeframes.

With bitcoin capitulating below its previous cycle’s all-time high, one wonders what the impact will be of the recently released US “crypto bill”, dubbed the Lummis-Gillibrand Responsible Financial Innovation Act, once passed.

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Bitcoin Crypto News Terra

$10 Billion Crypto Venture Capital Fund ‘3AC’ Reportedly Liquidated by BVI Court

Troubled crypto hedge fund Three Arrows Capital (3AC) has been ordered into liquidation by a court in the British Virgin Islands, according to a news report published amid the 2022 crypto crisis.

The order came on June 29, the same date that crypto asset broker Voyager Digital issued a notice of default to 3AC for its failure to pay its 15,250 Bitcoin and 350 million USDC loan. Voyager’s shares had plunged after it disclosed its exposure to 3AC.

3AC Liquidation Marks ‘Significant Moment’ in Sector

Singaporean-based crypto hedge fund 3AC, which was set up in 2012 by partners Su Zhu and Kyle Davies, has been plunged into liquidation amid current crypto market turmoil.

The fund suffered heavy losses as Bitcoin dropped below US$20,000 for the first time in two years and the possibility of insolvency was reported in mid-June after the firm incurred at least US$400 million in liquidations.

Crypto insiders have described the liquidation as “a significant moment in the current unravelling of the cryptocurrency sector, which [had] grown at breakneck speed in recent years”.

3AC’s troubles can be attributed to its significant exposure to Terra’s LUNC token. Reportedly, 3AC’s position of roughly US$200 million in locked Luna Classic evaporated to less than a thousand dollars, with Davies telling The Wall Street Journal that “the Terra Luna situation caught us very much off guard”.

Like many in the space, Twitter user LomahCrypto is of the opinion that 3AC could have acted earlier, tweeting: “I try not to shit on 3AC but ffs I don’t understand how you could tweet some shit like this in May, while your firm is severely underwater and probably at risk of liquidation. Either the self-awareness is nonexistent or this was an actual hint into their operations.”

3AC co-founder tweeted this in May. Source: MoonOverLord via Twitter

Nothing to See Here: Founders

As reports run rampant regarding 3AC’s insolvency, the company’s founders continue to assure customers that they are doing their best to find an equitable solution to the current situation. As such, the firm has hired legal and financial advisers to explore assets sales and a possible rescue package by another firm.

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Bitcoin Crypto News

2022 Has Been a Bear Market of ‘Historic Proportions’, Glassnode Report

 A new report from on-chain analytics firm Glassnode has described current market conditions as a “bear of historic proportions”, adding that “it can reasonably be argued that 2022 is the most significant bear market in digital asset history”:

This Year BTC’s Worst on Record?

Following Glassnode’s recent report arguing we were in “the darkest phase of the bear market“, its latest release, titled “A Bear of Historic Proportions”, outlines reasons for believing that 2022 has been the worst on record for Bitcoin.

Interestingly, according to the blockchain analysis firm, the bear market commenced in April 2021 and not November 2021, since “a large proportion of the marginal buyers and sellers were flushed from the market”. It adds that bear market lows typically have drawdowns between -75 percent and -84 percent from the all-time high (ATH), taking between 260 and 410 days.

With the current drawdown reaching -73.3 percent below the November 2021 ATH, Glassnode concludes that “this bear market is now firmly within historical norms and magnitude”:

BTC drawdown from ATH. Source: Glassnode

Mayer Multiple in Rare Territory

One of the clearest signs of a bear market is when the spot price of bitcoin drops below the 200-day moving average (MA) and, in seldom seen cases, below the 200-week MA.

To illustrate, Glassnode uses the Mayer Multiple (MM), a metric used to identify bear and bull markets. Simply put, when prices are below the 200-day MA it signifies a bear market, and when above the 200-day MA, a bull market. Currently, bitcoin’s price of around US$20,000 is at a very rare level, given that it is below half the 200-day MA:

BTC price falls below 0.5 MM for the first time since 2015. Source: Glassnode

Glassnode comments that falling below 0.5 MM is an extraordinarily rare event which hasn’t happened since 2015:

Only 84 out of 4160 trading days (2 percent) have recorded a closing MM value below 0.5. For the first time in history, the 2021-22 cycle has recorded a lower MM value (0.487) than the previous cycle’s low (0.511).

Glassnode report

Realised Price, Another Bear Signal

In addition to the MM, Glassnode also notes that Bitcoin’s spot price is trading below “Realised Price”, a valuation metric calculated by taking the value of all bitcoins and the price they were bought, divided by the number of bitcoins in circulation.

Glassnode notes that the current discount to Realised Price suggests that sellers are offloading their coins at a loss. This too is an uncommon phenomenon, as spot price has only traded below Realised Price five times since Bitcoin’s launch:

Spot prices are currently trading at an 11.3 percent discount to the realised price, signifying that the average market participant is now underwater on their position.

Glassnode report
BTC realised prices. Source: Glassnode

To highlight the severity of current market conditions, Glassnode concludes by saying that the “deviation from the MA is so large that only 2 percent of trading days have been worse off”. A bear market of historic proportions indeed. Then again, it’s all a matter of context:

BTC fear and greed index December 2020 vs June 2022. Source: Documenting Bitcoin
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Bitcoin Crypto News Ethereum

US Regulator Affirms BTC is a Commodity, Won’t Comment on Other Cryptos

Securities and Exchange Commission (SEC) chair Gary Gensler has confirmed in a recent interview with CNBC that Bitcoin is a virtual commodity. Notably, he declined to comment on the status of any other cryptocurrencies.

Bitcoin: the Only Commodity?

In an interview with CNBC’s Jim Cramer, Gensler was probed as to whether he was collaborating with the Commodities and Futures Trading Commission (CFTC) in relation to the regulation of cryptocurrencies.

The significance? While the SEC focuses on securities regulation, the CFTC (as its name implies) is responsible for regulating commodities such as oil, gold, silver or wheat. According to Gensler, and his predecessors, you can add Bitcoin to that list:

Some, like Bitcoin, and that’s the only one, Jim, I’m going to say because I’m not going to talk about any one of these tokens, my predecessors and others have said, they’re a commodity.

Gary Gensler, chair, SEC

Interestingly, former SEC chair Jay Clayton argued that Ethereum was a commodity, saying it was sufficiently decentralised. However, when pressed, Gensler refused to provide a direct response.

Gensler’s view, expressed during his tenure teaching blockchain at Massachusetts Institute of Technology (MIT), is that Ethereum’s ICO (initial coin offering) passed the “Howey Test”, a legal precedent used to classify securities:

Given the time passed, Ethereans have argued that the network is now sufficiently decentralised to constitute a commodity, although Gensler has thus far refused to provide an official view.

Bitcoiners remain convinced that Bitcoin is the only commodity, a view that MicroStrategy CEO Michael Saylor has repeatedly stated:

A quick scan of Twitter reveals that the general sentiment among Bitcoiners is that if you raised money, and/or you have a foundation, leader or CEO, it is a security and cannot be regarded as decentralised:

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Australia Bitcoin Crypto News

Australia Confirms Crypto is Not a Foreign Currency

Even though El Salvador and the Central African Republic have made bitcoin legal tender, newly-elected Australian Treasurer Jim Chalmers has said that crypto will continue to be excluded from foreign currency tax arrangements under the Albanese Labor Government.

In a prepared statement, Chalmers noted that the decision by the Government of El Salvador to allow bitcoin as legal tender “has the potential to create uncertainty about the status of crypto assets such as Bitcoin for tax purposes in Australia”.

Crypto Remains Subject to Capital Gains Tax

Therefore, in an effort to ensure absolute clarity in the current legislative arrangements, Chalmers added:

Crypto assets will not be regarded as a foreign currency for tax purposes. Capital gains tax will continue to apply to crypto assets that are held as investments.

Jim Chalmers, Australian Treasurer

Finally, he clarified that this latest proclamation was backdated to July 1, 2021, and that the government would “continue to take a pragmatic and timely approach to its role in the rapidly-evolving digital currency landscape”.

Pragmatism Needed in Australia

No further details were offered as to what was meant in that regard, however, pragmatism presumably would entail a reconsideration of the position should further evidence come to light.

As an example of pragmatism at work, consider the US Lummis Gillibrand crypto bill currently under consideration, which proposes that crypto transactions less than US$200 do not create a taxable event.

Crypto Implosion Juices Senators Lummis, Gillibrand to Push for Law to Clamp Dow - Bloomberg
Senators Kirsten Gillibrand (left) and Cynthia Lummis advanced the US Crypto Bill. Source: Bloomberg

Even though Australia’s Bitcoin Industry Body specifically campaigns for bitcoin to be treated as a foreign currency, this latest government announcement has put a stop on that, at least for the time being.

While cryptocurrencies remain highly volatile with potential for exponential gains, it’s unlikely that the Australian government will forego the opportunity to extract revenue in the form of capital gains.

On the bright side, shrewd investors are likely to use this latest downturn as an opportunity to harvest losses to maximise tax efficiency.

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Bitcoin Crypto News Ethereum Vitalik Buterin

Vitalik Buterin Claims BTC Stock-to-Flow Model is False

Ethereum co-founder Vitalik Buterin has renewed his attack on the stock-to-flow (S2F) price model for Bitcoin, dismissing it as “false”, “harmful” and “deserving of mockery”.

He went even further in echoing EthHub co-founder Anthony Sassano who, in a same-day tweet, damned S2F as an “epic failure”:

How the Stock-to-Flow Model Works

The S2F price model, authored by crypto analyst PlanB, predicts the future price of bitcoin based on its supply in circulation (stock) relative to the number of coins mined each year (flow), which decreases by half every four years. According to S2F predictions, 2022 would see bitcoin trading within the US$100,000-110,000 range, though the most recent market crash marked an 18-month low for BTC under US$20,000 last week, calling the model’s accuracy into question.

At that time, Buterin railed against “the ‘halvings cause BTC price rises’ theory”, implying that any price can be cited as evidence that the S2F model is correct.

S2F author PlanB countered Buterin in saying that the market’s slump made some people look for “scapegoats for their failed projects or wrong investment decisions”:

BTC vs S2F: Which Will Thrive to Survive?

In an earlier tweet, PlanB admitted that the model had enjoyed a “good run” for three years (until March 2022) but had since wobbled from its trajectory. As for the current market, PlanB considers that “either BTC is extremely undervalued and will bounce back soon, or S2F will be less useful in the future”.

Just last month, Buterin voiced his admiration for Bitcoin, saying he’d like to see Ethereum attain a similar level of stability. To do so, however, would require significant short-term change and instability – an apparent contradiction that has since come to pass.

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Bitcoin Crypto News

‘Bitcoin is Dead’ Hits All-Time High on Google Searches

As bitcoin cratered below its 2017 high, retail investors – arguably most prone to speculative trading – turned to Google ask whether this time, in fact, bitcoin was well and truly dead.

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Google searches “bitcoin dead”. Source: Google Trends

Bitcoin Sentiment Bottoming?

At present, market sentiment is shaky, and with “Bitcoin is Dead” searches hitting an all-time high, investors are demonstrating a distinct lack of confidence in the asset class’s short- to medium-term prospects.

Bitcoin Fear & Greed Index
BTC fear and greed index. Source: Alternative.me

As bear markets come around, Bitcoin’s critics tend to become increasingly vocal. And one of the more prominent detractors is gold bug and perennial Bitcoin adversary Peter Schiff, who recently called for a US$3,000 price target:

Bitcoiners responded in turn, arguing that he “has a poor track record” when it comes to bitcoin predictions:

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Peter Schiff meme. Source: Dan Held

Bitcoin Obituaries – 455 and Climbing

Information site 99 Bitcoins keeps track of so-called “Bitcoin Obituaries”, a rough approximation for “Bitcoin is Dead”.

A Bitcoin obituary is categorised as such if “the content itself (not just the headline) is explicit about the fact that Bitcoin is or will be worthless (not ‘maybe’ or ‘could’)”. Furthermore, it additionally requires that the “content was produced by a person with a notable following or a site with substantial traffic”.

Thus far in this year, Bitcoin has died 18 times, all the way down from around US$50,000:

Bitcoin obituaries since January 22. Source: 99 Bitcoins

For patient investors, with a long-term horizon, calls that “Bitcoin is Dead” may be a sign to start entering the market. As the world’s most famous investor has repeatedly said:

Be fearful when others are greedy and greedy when others are fearful.

Warren Buffett