Tether Partly Backed by Bitcoin, Court Transcription Reveals

Source From https://bitcoinmagazine.com/articles/tether-partly-backed-bitcoin-court-transcription-reveals/

Tether And Bitcoin

Tether, a stablecoin tied to the dollar that is meant to mediate the volatility of other cryptocurrencies, is partly backed by bitcoin.

As detailed in court documents obtained by The Block, Tether admitted to using some of the cash reserves meant to back its stablecoin to purchase bitcoin, among other assets.

This revelation is the latest in legal proceedings between the New York Attorney General (NYAG) and Bitfinex, a leading cryptocurrency exchange which shares management with Tether. Bitfinex and the NYAG have gone back and forth in a battle of legal letters after the NYAG petitioned the New York Supreme Court to stop the exchange from drawing on a $900 million line of credit it established with Tether to cover $850 million in losses it incurred when its fiduciary relationship with payment processor Crypto Capital went south.

The war of words has offered a rare glimpse into Tether/Bitfinex’s shared business practices, including the revelation that Tether’s reserves are only 74 percent backed following the $850 million loss. Additionally, Bitfinex used Crypto Capital to commingle business and customer funds. Now, Bitfinex’s legal counsel is saying that some of these funds were used to buy bitcoin.

“Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin,” David Miller, Bitfinex’s attorney, testified, adding that it is a “small amount.”

Presiding Judge Joel M. Cohen responded by saying that, while it “may be a little beyond the issue,” that “Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate,” then that supports the NYAG’s argument.

The rest of the document outlines an argument for why the NYAG’s injunction has grounds under the Martin Act, an anti-fraud law that gives the NYAG legal leeway to bring action against allegedly fraudulent securities issuers. The NYAG argues that, under the Martin Act, it has jurisdiction to pursue Bitfinex/Tether because neither offered sufficient disclosure to stakeholders (namely, Bitfinex users and tether holders).

But the judge opened up his remarks questioning this legal basis, stating that “it [isn’t] 100 percent clear what the violation [is].”

“The petitioner [NYAG] … very clearly and correctly said that the Attorney General’s Office is not a regulator, so there is no general mandate in the Martin Act to maintain the financial stability of any given company unless there is a statutory violation to pursue,” Judge Cohen said. “So the petitioner … has to show why in this particular case instability or failure to have enough coverage in terms of dollars constituted by itself a violation.”

Miller criticized the NYAG as having a “lack of jurisdiction” in the matter, arguing that the attorney general is only going after Bitfinex/Tether because it dislikes bitcoin as an asset. He also argues that Tether made proper disclosures regarding its fractional reserves in a February website update.

The May 16 hearing followed a temporary injunction granted by judge Cohen that would freeze Bitfinex’s line of credit for 90 days, a timeframe Bitfinex/Tether sought to reduce to 45 days.

In the background of the courtroom battle, Bitfinex launched a token sale to the tune of $1 billion to aid fund recovery efforts. The token, LEO, sold out and is currently trading; the $1 billion raised will go to cover some of the $850 million lost to Crypto Capital, with Bitfinex planning to buy back and burn outstanding supply until all tokens are out of circulation.

This article originally appeared on Bitcoin Magazine.

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The Bitcoin Magazine Podcast – Quantum Narratives with Dan Held

Source From https://letstalkbitcoin.com/blog/post/the-bitcoin-magazine-podcast-quantum-narratives-with-dan-held

Look, I believe in freedom. That’s the core root of everything that I believe in, whether that be social freedom, or monetary freedom. And I think Bitcoin is our best shot at enabling both. – Dan Held

Dave and Grahm are back with the latest on news and narratives in the Bitcoin community. News includes Bitcoin’s recent price spike, Blockstream’s Liquid Securities launch, Microsoft’s plan to build on the Bitcoin blockchain, CFTC’s crypto whistleblowing rewards and how mainstream retailers are now accepting Bitcoin.

After the news, they talk with Dan Held about the writing process, the quantum narratives surrounding Bitcoin and how it permits social freedom.

Resources:

Bitcoin Breaks $8000

Blockstream Releases First Enterprise Grade Product

Microsoft Building ID Verification Platform on Bitcoin

CFTC Will Pay You To Report Crypto Scams

Flexa Enables BTC Payments

Interview:

Hodlers Are the Revolutionaries

Quantum Narratives

Tycho

Planting Bitcoin

Schrƒdinger’s Cat

Twitter:

Bitcoin Magazine

The LTB Network

Dan Held

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Insured Cryptocurrency Custody Services and Their Potential Impact: The Key to Institutional Investment Growth?

Source From https://cointelegraph.com/news/insured-cryptocurrency-custody-services-and-their-potential-impact-the-key-to-institutional-investment-growth

Global Conglomerate Believes Insured Custody Services to Be the ‘Key’ to Cryptocurrency Institutional Investment Growth.

Registered custodial services, which are common in traditional investment classes, have been on the rise in the digital asset sphere, including for cryptocurrencies.

Branding China Group (BC Group) has recently unveiled its plans for an insured custody service specifically for cryptocurrencies. A conglomerate with a diversified portfolio of blockchain-focused businesses in marketing communications and technology, believes its custody service removes one of the key barriers that have prevented professional traders and institutions from adding digital assets to their portfolios to date.

Leading United States crypto exchange and wallet provider Coinbase launched its custody services for institutional investors in July 2018. In an apparent effort to expand on these services, Coinbase is currently in advanced negotiations to buy custody provider Xapo, one of the largest custodians of bitcoin in the world, in a deal reported to be worth $50 million.

Crypto hardware wallet producer Ledger partnered with a Hong Kong trust company, Legacy Trust, to offer insured cryptocurrency custody services.

A number of regulated financial institutions have also opened up digital custodial services, including Kingdom Trust, Germany’s second-largest stock exchange Börse Stuttgart, Swiss private investment bank Vontobel, and major investment management company Fidelity.

What are crypto custody services?

Private investors typically have their crypto stored in an exchange wallet, an online digital wallet or an offline hardware wallet. For institutional investors, these storage options are too risky and put too much responsibility on the investors themselves to ensure that the large amounts of funds are stored securely.

Insured cryptocurrency custody services, much like traditional investment custody services, are third-party providers of storage and security facilities with the main purpose of safeguarding investor assets. These services are aimed specifically at institutional investors — such as hedge funds and other investment funds — and hold the digital assets on behalf of the investor in secure storage locations.

Typically, the custodian would be a bank, trust or other regulated financial institution and would also insure investor funds up to a certain amount. However, because of the inherent perceived risk with cryptocurrencies, up until recently, there has been a lack of regulated, insured custodians for cryptocurrencies.

Why do institutional investors need custodial services?

The two main reasons are risk reduction and regulatory compliance.

Typically, the amounts involved in institutional investments are much larger than with private investment. Uninsured online storage, such as exchange and other digital wallets, pose too much of a risk for institutional investors. And while offline, “cold” storage options — such as Trezor and Ledger — are deemed to be more secure, there’s a risk of forgetting passwords or physically losing the device.

With a regulated custody service, the onus to keep funds secure will move from the investor to the specialized custodian. In addition, should anything go wrong, funds will also be insured. Although this does not completely eradicate the risk, it does put it an acceptably low level for institutional investors to enter the market.

The second reason why institutional investors need custody services is to comply with regulation.

Regulatory bodies around the world, such as the U.S. Securities and Exchange Commission (SEC), the United Kingdom’s Financial Conduct Authority (FCA), and the Monetary Authority of Singapore (MAS) require institutional investors to keep customer funds with a regulated custodian. Regulated custodians include banks, savings associations and registered broker-dealers.

In referencing the SEC’s rejection of the Winklevoss twins Bitcoin ETF, Hugo May, an investment analyst at crypto investment firm Invictus Capital, highlighted the importance of insured custody services for regulatory compliance:

“One of the most important regulatory requirements is sufficient custody solutions. The topic has been a very prominent talking point by the SEC in regards to Bitcoin ETF applications.”

Traditional cryptocurrency exchanges and wallets do not necessarily meet these criteria and are not viable options for institutional investors to trade and store customer funds on.

Kara Kennedy, custody product manager at Bank of New York (BNY) Mellon, said in a research article that, although there is an increasing demand in the market for a traditional, established custodian to provide custody of cryptocurrencies, there are some significant hurdles that must be overcome if traditional custody banks are to engage with this emerging asset class. These hurdles include operating models, technology, risk, compliance, and legal and regulatory frameworks. According to Kennedy:

“Given the market interest, custodians should be considering their capabilities in relation to cryptocurrency servicing; but in order to advance, the industry will have to collectively overcome the issues and uncertainties which remain outstanding.”

What is the potential market impact if institutional investors can be lured in?

Whether or not mainstream institutional investment will embrace the cryptocurrency market has long been a debate.

But analysts and cryptocurrency commentators agree that a lack of regulated custody services is one of the main reasons institutional investors are still reluctant to enter the market.

In an interview with Investing.com, Jae Choi — CEO of blockchain-focused crowdfunding platform Pledgecamp — said one of the key missing pieces of safeguarding crypto assets has been a custodian service:

“If you want cryptocurrency to be treated as a traditional asset, you need to offer regulation and custody options that resemble those available for traditional financial instruments or models.”

Blake Estes, co-leader of blockchain and distributed ledger technology (DLT) at Alston & Bird LLP, said:

“For chief investment officers, there’s only downside risk in cryptocurrency. It would take a leap of faith with a new custodian with no brand recognition. That presents a real risk for them.”

But with the rise in regulated custodians, this might change.

In January, Cointelegraph reported on a survey done by market research company PollRight, which showed a 41% increase expected in institutional investment in the next five years. And in February, pensions and endowment consultancy, Cambridge Associates, said that cryptocurrency represents a sound investment for institutional investors, according to a Bloomberg report.

An analyst at the Boston-based consultancy said:

“Despite the challenges, we believe that it is worthwhile for investors to begin exploring this area today with an eye toward the long term.’’

Although it would be impossible to predict the exact impact of an institutional influx into crypto, the overall consensus seems to be that a boost of capital into the market will bring a significant increase in prices, but with greater stability.

Blockchain and crypto-focused crowdfunding startup MediaShares’s CEO, Gene Massey, said in an interview:

“Blackrock, Vanguard, State Street, and BNY Mellon are recognized as the largest institutional investors and if they adopt Blockchain and Cryptocurrencies, you will see massive new investments from retail.”

In February, Galaxy Digital Holdings Ltd founder and renowned crypto bull Mike Novogratz said in an interview with Bloomberg:

“Over the next six to 12 months you are going to see institutions put a small amount of their assets in digital currencies. A small amount of institutional assets is a lot of money.”

According to Novogratz, that inflow will set the stage for a rally and should push bitcoin past the $8,000 mark in the short term.

A report published in November 2018 by Big Four auditing and consulting firm KPMG argued that, for the cryptocurrency industry to reach its fullest potential, institutional investors must join it:

“Institutional participation is required to facilitate scale and increase trust for this emerging economy.”

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Bitcoin News Summary – May 20, 2019

Source From https://99bitcoins.com/bitcoin-news-summary-may-20-2019/

The post Bitcoin News Summary – May 20, 2019 appeared first on 99 Bitcoins.

Here’s what happened this week in Bitcoin in 99 seconds.  Crypto markets this week reached their highest level since August of 2018. Markets then corrected downwards, however, sentiment is still bullish, with major news networks covering the resurgence of crypto. Bitcoin, Ethereum, BCH, and Gemini exchange’s US Dollar-based stablecoin can now be used to […]

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Proof of Love Episode 15 Audience Questions

Source From https://letstalkbitcoin.com/blog/post/proof-of-love-episode-15-audience-questions

Listen to this fun episode where we read questions from the audience! We discuss about what “going dutch” is, and when/if a girl should pay for herself or let a guy pay for her along with other cultural expectations of gender roles. Next, can political views affect a relationship? Should you stay with someone because of a sense of obligation even if you want to leave? Can you still be with someone even if they don’t want kids? We even touch a bit on health, alzheimers and getting over past trauma.

Do you have a burning question, or a show idea for us? Please email us at tatiana@proofoflovecast.com!

Thank you to our sponsor Blocktap.io

Remember, this is a new show, so if you like it, please be sure to tell 3 friends! Leave a good review on Itunes, and be sure to follow us on our socials!

More Info:

The Tatiana Show

Blocktap.io

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Bitcoin Cash Devs Publish the First 3 of 3 Multi-Sig Schnorr Transaction

Source From https://news.bitcoin.com/bitcoin-cash-devs-publish-the-first-3-of-3-multi-sig-schnorr-transaction/

Bitcoin Cash Devs Publish the First 3 of 3 Multi-Sig Schnorr Transaction

On May 15, the Bitcoin Cash network successfully upgraded by implementing Schnorr signatures, after which a few developers processed some basic Schnorr signatures. Then, on Saturday, May 18, software developers Chris Pacia, Mark Lundeberg, and Checksum0 performed the first multi-sig Schnorr signature on BCH and sent the funds to Freeross.org.

Also Read: After Trillions Printed Under QE, Politicians Now Say Deficits Don’t Matter

A Multi-Sig Schnorr Transaction With a P2PKH Output

This weekend, Openbazaar and Bchd full node developer Chris Pacia announced the first 3 of 3 multi-signature in a Pays To PubKey Hash (P2PKH) output. Developers Checksum0 and Mark Lundeberg helped process the transaction and the funds were sent to the Ross Ulbricht defense fund. “Mark Lundeberg, Chris Pacia and I made the first Schnorr multi-signature in history — The transaction is a donation to Free Ross — Proof will be published shortly,” explained Checksum before the transaction confirmed. Then, sure enough, the multi-sig transaction published to the chain and contained an opreturn message which read:

BCH is about giving people the freedom to make their own choices, to pursue their own happiness, however they individually see fit.

Bitcoin Cash Devs Publish the First 3 of 3 Multi-Sig Schnorr Transaction

Privacy-Enhancing Transactions

As of block 582680, the BCH chain had implemented the new Schnorr signature features, bringing the very basics of Schnorr to the table. With the help of another future Schnorr related upgrade, BCH developers will be able to implement public signature aggregation and complex sign-to-contract concepts. Public signature aggregation could bolster scaling immensely and more trivial smart contract ideas like Graftroot and Taproot could increase BCH privacy a great deal. However, there are still pretty cool applications that can happen today like hidden payment channels and atomic swaps. This includes the 3 of 3 multi-signature P2PKH output performed by the three developers. In another instance, Mark Lundeberg showed a Schnorr signature transaction on Twitter that highlighted Schnorr’s privacy-enhancing attributes.

“A Schnorr-signed transaction — Was it a secret payment channel closure?” Lundeberg asked on Twitter. “Did hundred parties sign to make it happen? Did a secret atomic swap occur? Or did I just send coins to myself in a boring txn? You will never find out.”

Bitcoin Cash Devs Publish the First 3 of 3 Multi-Sig Schnorr Transaction
The multi-sig transaction.

The BCH community was thrilled to hear the news about the Schnorr multi-sig transaction sent to Freeross.org. Well-known BCH proponent Emergent Reasons said: “More privacy for the win — Nice one.” “I thank BCH for taking steps to restore my individual economic liberty and financial privacy,” another supporter remarked. It’s only been four days and developers have already processed basic Schnorr sigs and the 3 of 3 multi-sig transaction as well. BCH developers will be testing a few different types of Schnorr signatures coupled with other mechanisms in future to further private transactions and create unique transaction types.

What do you think about the first multi-sig transaction using Schnorr signatures on the BCH chain? Let us know what you think about this subject in the comments section below.


Image credits: Shutterstock, Twitter, and Bitcoin.com’s Blockchain Explorer.


Want to create your own secure cold storage paper wallet? Check our tools section. You can also enjoy the easiest way to buy Bitcoin online with us. Download your free Bitcoin wallet and head to our Purchase Bitcoin page where you can buy BCH and BTC securely.

The post Bitcoin Cash Devs Publish the First 3 of 3 Multi-Sig Schnorr Transaction appeared first on Bitcoin News.

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