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Author: Tim Copeland
The U.S. anti-money laundering watchdog has put out a new report on a surge in ransomware payment activity in 2021. But is it a surge in ransomware or in reporting related to ransomware?
Published on October 15, the report on ransomware in the first half of 2021 comes from the Financial Crimes Enforcement Network (FinCEN). The report says we are in the midst of a bumper year:
“The total value of suspicious activity reported in ransomware-related SARs during the first six months of 2021 was $590 million, which exceeds the value reported for the entirety of 2020 ($416 million).”
FinCEN is the Treasury office that enforces compliance with the Bank Secrecy Act and other anti-money laundering law. Among a host of provisions, financial institutions operating in the U.S. are required to file suspicious activity reports, or SARs, whenever they encounter activity that is, well, suspicious.
It is from its database of SARs that FinCEN compiled its data. The details are, however, tricky. As the office explained:
“The full data set consisted of 635 SARs reporting $590 million in suspicious activity. Of the 635 SARs filed during the review period, 458 report actual transactions that occurred during the review period worth $398 million. The remaining 177 SARs report transactions that occurred before 1 January 2021.”
While 2021 ransomware payouts seem on track to exceed those of 2020, the rate of change is, consequently, not as significant as that of SAR filing. Visualized, that difference looks like this:
Source: FinCEN
If you take the date of the actual attack rather than the filing, FinCEN’s data shows $398 million in ransomware events, not $590 million. This may indicate an improvement in filing compliance, but it could also be the result of a commonplace lag time in identifying cryptocurrency addresses associated with ransomware attacks.
Another potential issue with this report is that FinCEN requires SARs reports from a number of financial operators that could act along a chain of a single ransomware payment, opening up the possibility of double-counting.
In trends, FinCEN identified increased requests from ransomware actors for payouts in what the office calls “Anonymity-enhanced Cryptocurrencies.” In the industry, these typically go by the name “privacy coin.” The most famous privacy coin, Monero (XMR), received special attention. Data on XMR payouts are notoriously hard to come by and unreliable.
As previous authorities have noted, however, FinCEN said that the principle means of cashing out ransomware is not tricky technologies, but rather centralized cryptocurrency exchanges operating either without regulation or in jurisdictions that do not require know-your-customer checks.
High-profile ransomware attacks on U.S. infrastructure earlier this year catapulted the area to the top of the White House’s national security agenda. Earlier this week, the Biden administration convened 32 countries to discuss regulation that would protect against future devastating attacks.
In September, the U.S. Treasury sanctioned a crypto exchange for the first time. The exchange in question had been a vector for a number of ransomware payouts.
© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Kollen Post
This episode is sponsored by NYDIG.
On this edition of “The Breakdown Weekly Recap,” NLW looks at two new policy frameworks released by companies in the crypto and Web 3 space. The first comes from Coinbase and argues there should be a new regulator for digital assets. The second comes from venture capital firm Andreessen Horowitz (a16z) and is a holistic approach to what it calls the third generation of the internet.
See also: Crypto Finally Makes the Cut in OCC’s 2022 Bank Supervision Operating Plan
“The Breakdown” is written, produced by and features NLW, with editing by Rob Mitchell and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Only in Time” by Abloom. Image credit: franckreporter/iStock/Getty Images Plus, modified by CoinDesk.
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Author: Nathaniel Whittemore
Tribe Capital, a venture capital firm with previous investments in Kraken and FTX among others in the crypto sector, is launching a $75 million cryptocurrency fund, sources familiar with the initiative told CoinDesk.
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Author: James Rubin
A bitcoin exchange-traded fund (ETF) lets traders gain exposure to BTC via traditional stock markets, without needing to directly buy or sell the digital asset on a cryptocurrency exchange.
A bitcoin ETF is an exchange-traded fund that specifically tracks the price of the leading cryptocurrency and allows traders to purchase or sell the security on a stock exchange throughout the day. They can be cash-settled or physically settled, meaning investors will receive either fiat currency or actual bitcoin upon exiting, respectively.
ETFs are regulated traditional financial products and can be bought through a number of retail-friendly mobile trading apps, including Robinhood, Trading212, TD Ameritrade and Fidelity. The most popular ones track major stock indexes, such as the Standard & Poor’s 500 Index, or other traditional assets and commodities like oil and gold.
Bitcoin ETFs have been a hot topic in the crypto space for many years, ever since the Winklevoss twins’ “COIN” bitcoin ETF filed with the U.S. Securities and Exchange Commission (SEC) in 2013 was rejected. It was widely believed that a bitcoin ETF would usher in a new wave of institutional investment into the crypto industry, bringing much-needed maturity and stability to the market. Seven years on, however, the SEC still has yet to approve a bitcoin ETF despite dozens of proposals from multiple companies including a second Winklevoss Twin ETF in 2018, one from Bitwise, five from Direxion, two from GraniteShares and many more.
The main arguments given by the SEC for these repeat rejections have been that the bitcoin market is too volatile, lacks sufficient surveillance and is too easily manipulated.
Things may be about to change, however, as Canada’s financial regulator, the Ontario Securities Commission (OSC), recently approved the world’s first two bitcoin ETFs in quick succession. The Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT) are both physically settled ETFs and have applied to be listed on the Toronto Stock Exchange. TradeBlock, a CoinDesk subsidiary, is the index provider for the Purpose ETF.
With the arrival of a bitcoin ETF in North America, many are optimistic the SEC will follow suit soon in the United States especially if Gary Gensler, former commissioner of the Commodity and Futures Commission (CFTC) and MIT blockchain tutor, is confirmed by the U.S. Senate to replace former SEC Chairman Jay Clayton.
“My guess is we get an ETF this year,” says Mike Novogratz, CEO of Galaxy Digital and former colleague of Gensler at Goldman Sachs in the late 1990s.
“Gary taught a class on blockchain at MIT and on crypto. He understands it cold. He’s progressive, right? And progressives broadly are going to go after … the rent takers. Crypto is not a rent taker… Crypto is trying to disrupt the rent takers.”
Bloomberg Senior ETF analyst, Eric Balchunas, tweeted his support for the new bitcoin ETFs, adding, “U.S. usually follows shortly after. Good sign for U.S. bitcoin ETF.”
Sui Chung, CEO of CF Benchmarks, also anticipates pressure will now be on the SEC to follow suit. “Now that the OSC has said that if a product is well constructed enough the crypto market is sufficiently mature for these types of financial products, the industry’s attention inevitably turns south of the border to the U.S.”
You don’t need to be an accredited investor to purchase ETFs. Anyone can invest in them.
All you need in order to begin investing in ETFs is to set up an online brokerage account or download one of the many mobile trading apps. From there, you’ll be able to buy and sell a wide range of ETFs that track a number of different markets. A list of leading mobile trading services can be found here.
While it might seem counterintuitive to invest in a bitcoin ETF rather than buy actual bitcoin, there are a number of advantages to doing it this way, namely:
There are, however, a number of disadvantages to investing in a bitcoin ETF as opposed to buying the asset directly.
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Author: Ollie Leech
The Commodity Futures Trading Commission (CFTC) fined Bitfinex and Tether more than $42 million on allegations the USDT stablecoin was not fully backed at all times and that Bitfinex violated a previous agency order.
The federal commodities regulator settled charges with the sibling crypto companies on Friday, barring both firms from “any further violations of the Commodity Exchange Act (CEA) and CFTC regulations.”
According to a CFTC press release, Tether’s stablecoin was fully backed by reserves for only one-quarter of the time over a 26-month period between 2016 and 2018. Further, Tether comingled reserve funds with the company’s corporate funds and held reserves in non-cash products.
“At various times, Tether maintained some of the Tether Reserves in bank accounts other than the Tether Bank Accounts. Tether represents that, at times, it also included receivables and non-fiat assets among its counted reserves; and further represents that Tether has not failed to satisfy a redemption request for tether tokens,” an order attached to the release said.
The New York Attorney General’s office reported similar findings in an investigation into Tether and Bitfinex that was settled earlier this year.
“The order also finds that, instead of holding all USDT token reserves in U.S. dollars as represented, Tether relied upon unregulated entities and certain third-parties to hold funds comprising the reserves,” the press release said.
Spokespeople for Tether and Bitfinex did not immediately return a request for comment.
In a statement published shortly after the CFTC release, the firm contested the claims.
“As to the Tether reserves, there is no finding that tether tokens were not fully backed at all times – simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times. As Tether represented in the Order, it has always maintained adequate reserves and has never failed to satisfy a redemption request,” Tether wrote.
The CFTC said it also settled commodities charges against Bitfinex in a simultaneous action.
“The order finds Bitfinex engaged in illegal, off-exchange retail commodity transactions in digital assets with U.S persons on the Bitfinex trading platform and operated as a futures commission merchant (FCM) without registering as required,” a press release said.
Bitfinex will pay $1.5 million and institute “additional systems” to ensure it does not facilitate unlawful commodities transactions again, the press release said.
In a concurring statement, CFTC Commissioner Dawn Stump said she agreed with the agency’s findings but expressed concern about the CFTC’s role in regulating stablecoins specifically.
“We should seek to ensure the public understands that we do not regulate stablecoins and we do not have daily insight into the businesses of those who issue such,” Stump said. “But in pursuing and settling this matter, do we provide users of stablecoins with a false sense of comfort that we are overseeing those who issue and sell these coins such that they are protected from wrongdoing?”
Stump questioned whether the CFTC was broadening its jurisdiction versus protecting investors.
UPDATE (Oct. 15, 15:18 UTC): Adds context.
UPDATE (Oct. 15, 15:21 UTC): Adds statement from Tether.
UPDATE (Oct. 15, 15:26 UTC): Adds statement from CFTC Commissioner Dawn Stump.
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Author: Nikhilesh De
Digital asset platform Bakkt Holdings has completed its merger with VPC Impact Acquisition Holdings, Intercontinental Exchange (ICE) announced on Friday.
Bakkt will start trading on the New York Stock Exchange (NYSE) as a public company starting Oct. 18, ICE said in a press release. It will use the ticker “BKKT.”
ICE, best known for operating the NYSE, launched Bakkt in 2018. Bakkt first announced plans to go public in January through a merger with special purpose acquisition corporation (SPAC) VPC, with the deal’s valuation totaling about $2.1 billion.
ICE said it has an economic interest of about 68% in the merged company, plus a minority voting interest. VPC’s shareholders approved the merger with Bakkt during an Oct. 14 meeting, with about 85.1% of ballots in favor of the deal.
© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Kristin Majcher
The owner of the non-fungible token (NFT) CryptoPunk #6046 has turned down a 2,500 ETH (around $9.5 million) offer for his NFT. If it would have sold, it would have been the largest CryptoPunk sale ever by dollar amount.
The bidder, who goes by poap.eth on the Larva Labs marketplace, placed the bid just 15 hours after the CryptoPunk’s owner, who goes by Richerd, tweeted: “My punk is not for sale. Don’t care what anyone offers me.” His punk has the rare traits of 3D glasses (3% of CryptoPunks have this), a cigarette in its mouth (10%) and ‘frumpy’ hair (4%).
CryptoPunk #6046
In response to the bid, Richerd tweeted: “You guys want to see what diamond hands look like?” Richerd later told The Block he declined the offer. The bid is now marked as “withdrawn” on Larva Labs.
CryptoPunks is an NFT collection of 10,000 randomly generated images created by the startup Larva Labs. CryptoPunks is currently the top NFT collection of all time on the NFT marketplace OpenSea, with over 551,000 ETH (~$2.1 billion) in total sales volume.
The average price of a CryptoPunk has risen considerably over the past two months. As The Block’s data shows, a CryptoPunk was worth around $93,000 on August 1st to roughly $465,000 as of publication — a 400% increase.
© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: MK Manoylov
Online gaming giant Steam is kicking blockchain-based video games off its platform.
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Author: Cheyenne Ligon
The ProShares bitcoin futures-based exchange traded fund (ETF) is slated to list Monday pending no last minute regulatory interference.
The firm filed a post-effective amended prospectus today stating its intention to launch on Oct. 18. It will list under the ticker $BITO
There will likely be no formal green light from the Securities and Exchange Commission (SEC). In the case of such registrations, once 75 days lapses from the initial filing with no dissent from the SEC, a product is clear to list. ProShares most recent filing indicates it will list on NYSE Arca this Monday.
It will be the first crypto futures-based product to list on a U.S. exchange. Though it does not provide a vehicle to directly invest in bitcoin, it will be the most direct exposure available to investors in the form of an ETF.
Eric Balchunas, senior ETF analyst at Bloomberg, said the post effective filing amounts to “home free” for ProShares.
“The deed is done,” he tweeted with a screenshot of the filing.
© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Aislinn Keely
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