Part of the funds from the Cryptopia hack were recently sent to the Binance cryptocurrency exchange. In response, Changpeng Zhao (CZ), the CEO of Binance froze the funds, raising questions around cryptocurrency’s anonymity and fungibility.

Cryptopia is a tiny exchange with a daily trading volume averaging around $2 million. The exchange was hacked on the evening of Jan. 13th for an estimated $3.5 million in cryptocurrency. The company announced the hack on Jan. 15th.

Now, the hackers are likely looking for ways to launder, convert, and obfuscate the source of these funds. Especially now that authorities in New Zealand are involved.

As part of this process, the hackers sent 31,320 Metal (MTL) ERC20 tokens to Binance. Trading at approximately $0.24 at press time, this amounts to roughly $7,500 in stolen cryptocurrency. After receiving a tip-off on Twitter, Changpeng Zhao immediately froze the funds:

CZ Binance@cz_binance

Just checked, we were able to freeze some of the funds. I don’t understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It’s a high risk maneuver for them.I Dream Of Alts@ShaftedTanguHey @cz_binance Binance has stolen tokens from Topia hitting it sir. Can you lock it down? https://etherscan.io/address/0x99f9fc8852a1bedc914669e61040ad6fc3455442#tokentxns …1,3658:18 PM – Jan 16, 2019Twitter Ads info and privacy418 people are talking about this

Implications for Fungibility

Fungibility, as it applies to cryptocurrency, is the concept that any given coin is identical and substitutable for any other coin in the same denomination. To give a non-cryptocurrency example, an ounce of pure gold is equivalent to any other ounce of pure gold. Correspondingly, someone might think that one bitcoin is equivalent to any other bitcoin.

The problem boils down to traceability. If that bitcoin is tainted by money laundering or criminal activity, then it is not equivalent in value or utility to another ‘clean’ bitcoin. These tainted coins could result in blacklisting on exchanges. If they are found to be involved in criminal activity, future receivers could face legal consequences.

Frozen Funds Demonstrate Non-Fungibility

There is no doubt that freezing the hackers’ funds were justified. Exchanges should collaborate to inhibit illegal activity and make it as difficult as possible to engage in harmful criminal behavior.

Yet, the very fact that Binance was able to identify the stolen funds and freeze them at all could be cause for broader concern.

If someone receives $20 in cash, the previous owners of that cash are largely untraceable. If someone receives $20 in bitcoin, all previous walletaddresses attached to that transaction are visible. And, if bitcoin is treated as a commodity, then this could have interesting legal ramifications.

If someone unknowingly receives illicit funds, how will law enforcement treat these cases, and who does the onus for checking fall on?

For other commodities, if stolen goods are purchased unknowingly, law enforcement has the right to seize those goods and return them to the original owner. Those who intend to resell goods have an even higher responsibility to evaluate whether purchased goods are stolen.

Yet, it’s still unclear whether exchanges, businesses, and individuals need to go through similar processes. If they do, it introduces yet another complication and cost for transacting in cryptocurrency.

Potential Solutions

Privacy coins such as Monero and Zcash offer one potential solution: using technology to obfuscate transaction history.

But, both of these coins need to catch up to the network effects already established by Bitcoin and Ethereum—which are already accepted at a larger—albeit still limited—number of vendors. Moreover, there is still a non-zero risk that regulators succumb to the public perception that these coins are used by “criminals and tax-evaders,” and place a blanket ban on privacy coins.

Other ways crypto users have tried to limit personal liability include maintaining anonymity between wallet addresses and personal identification, using new wallet addresses for each transaction, using cryptocurrency mixers, washing coins in a loosely regulated exchange, or other systematic ways for obfuscating the transaction history of funds before making a purchase. Whether these activities fall into a legal gray area is another question.

There still isn’t a clear solution to the issues of fungibility. Until then, it is likely that, over time, regulators and law enforcement will set a clearer precedent through doled-out enforcement actions.

This post credited to Cryptoslate. Image source: Cryptoslate

Binance, the world’s largest cryptocurrency exchange by adjusted trading volume, has taken another big step in its growth by launching a new fiat-to-crypto exchange. The exchange was opened on the self-governing island of Jersey, acting as the exchange’s first fiat-to-crypto outpost, with a focus on serving the UK and Europe.

The exchange is targeting traders in this area allowing them to trade bitcoin and ether against the British Pound and the Euro. The new exchange is being classified as its own entity, while still falling under the parent umbrella of Binance.

CZ Binance@cz_binance

You asked for it, we listened.

AND worked hard in the background for all this time!#BUIDL baby #BUIDLCoinDesk@coindesk@binance has launched a new fiat-to-crypto exchange on the self-governing British island of Jersey. http://ow.ly/Vwjp30nkyll 1,6355:48 PM – Jan 16, 2019Twitter Ads info and privacy377 people are talking about this

It is a significant step for the major exchange, which in less than two short years has grown explosively to top the tree of crypto exchanges. It has virtually dominated the crypto-to-crypto market by having the highest trading volume and now intends to expand into fiat-to-crypto trading.

Binance’s Impressive History

The number of cryptocurrency-related businesses have flourished since the boom of 2017. But, what is rare to see is one of these businesses maintaining 2017-like growth.

Binance appears to be a cryptocurrency success story. Founded in early 2017 by Changpeng Zhao, Binance held an ICO in July of that year for its BNB token. The ICO raised $15 million, which promised discounts on trading fees. The move turned out to be a shrewd decision, taking advantage of the 2017 excitement around ICOs and allowed Zhao to retain equity in the company.

They also managed to take that early investment to grow the company and become a top three cryptocurrency exchange, all in only 143 days after launch. In the first six months of 2018, they also saw incredible growth as the exchange went from boasting two million users to having over 10 million. With that growth, the exchange predicted—and likely achieved—a tidy $1 billion in revenue.

Moving Along

Despite the extended bear market through 2018, Binance maintained its stature as a secure, liquid, and readily available cryptocurrency exchange. Now, the latest move of opening a fiat-to-crypto exchange seems to suggest that they have laid a stable enough foundation to continue building through the tough market.

It may be too early to see if this entrance by Binance—entering another market, with the usual accompaniment of regulatory scrutiny—will bring them further success.

This post credited to Cryptoslate. Image source: Cryptoslate

The price of Tron has jumped 34% this week, including a 10% leap in the past 24 hours, according to Coinmarketcap.

Last Tuesday, TRX sat at $0.0187 per coin. The price now stands at $0.0262. The rally follows a great week for crypto prices in general, as the total market cap of all cryptocurrencies has gained more than 10%.

Tron has led the charge with developments that are resonating with supporters of an emerging decentralized internet, including the announcement of a new Tron-based token issued by the Singapore-based BitTorrent Foundation for the popular peer-to-peer file sharing platform BitTorrent.

Tron, which acquired the BitTorrent last year, has been working on ways to integrate with the platform and incentivize its massive user base. Tron founder and CEO Justin Sun says the new token, which is also called BitTorrent (BTT), will be used to reward people who share files on the platform.

“Users will earn tokens for uploading, incentivizing them to continue seeding the file longer after the download is complete. Storage and bandwidth will be infused into the torrent ecosystem, causing a rising tide of high availability and longer torrent lifetimes.”

BitTorrent users will be able to use tokens to pay for files or faster downloads. Binance CEO Changpeng Zhao says the token will offer an interesting new test case for blockchain and crypto. 

“The grandfather of Dapp finally finds its decentralized currency and business model. Should be a very interesting case study.”

Binance Launchpad, a new platform for entrepreneurs striving to raise funds using token sales, will make BTT available to non-US accounts.

Tron says it has also added over 24 decentralized apps (DApps) since the beginning of the year, including the Everdragons platform which just migrated from the Ethereum network.

Everdragons brings two of its own games, Goldmine and Territory, onto the Tron blockchain. Both games saw their transactions leap to over 14,000 in the first 12 hours after launching on Tron.View image on Twitter

View image on Twitter

Jacqueline – EverDragons@4LDEverdragons

🔥
🤩
🚀
⭐️
⭐️
🤑

Last night Everdragons launched the first two games on #TRON

The feedback has been amazing

Over 14,400 transactions in 12 hours

We are filling the GOLDMINE prize pot with gold coins tonight!http://everdragons.com #TRX $TRX #DApps #WIN2511:27 PM – Jan 4, 201916 people are talking about thisTwitter Ads info and privacy

The competitive Ethereum game World War Goo is also heading to the Tron network. The game’s developer says the platform is utilizing Tron’s “faster transactions to deliver a smoother experience.”View image on Twitter

View image on Twitter

TRON Arcade@TRONArcade

This post credited to The Daily HODL. Image source: The Daily HODL

The Litecoin Foundation will sponsor an event of the Ultimate Fighting Championship (UFC) mixed martial arts organization, according to an announcement published Dec. 26.

In the statement, the foundation said that it has become the “Official Cryptocurrency Partner” of the UFC light heavyweight title fight between Jon Jones and Alexander Gustafsson. The Litecoin Foundation stated that the sponsorship is part of its effort to expand the adoption of digital currencies, saying:

“With brands and institutions continuing to push into cryptocurrency and blockchain, this is yet another signal of this technology moving closer towards the mainstream.”

Litecoin (LTC) was released in 2011 by former Coinbase engineering director Charlie Lee. The coin is a proof-of-work currency with a limited supply of 84,000,000 LTC. Litecoin is not centrally managed, but the Litecoin Foundation develops its network. Lee is also the managing director of the foundation.

In 2017, the global sports market was valued around $557 billion, while North America was the biggest region in the sports market that year, with a 33 percent market share, according to market research and intelligence firm the Business Research Company. Raising funds through sponsorship purportedly attracts new sponsors to the market, with cryptocurrency-related support gradually expanding to date.

In December, Brazilian premier league soccer club Atletico Mineiro launched a fan token dubbed “GaloCoin” based on Footcoin — a platform for making utility tokens on the Ethereum blockchain. Atletico’s token will allow fans to purchase game tickets, official apparel, and participate in discount programs.

In September, French soccer club Paris Saint-Germain (PSG) partnered with blockchain platform Socios.com to launch a token ecosystem. The token will allow the club to launch a Fan Token Offering (FTO) that gives fans access to branded Saint German club tokens. The tokens will come with voting rights and can also confer VIP status and/or rewards to their holders.

In June, the world’s largest crypto exchange Binance made an undisclosed investment into blockchain-based esports voting platform chiliZ.

This post credited to cointelegraph Image source: Cointelegraph

Binance announced Friday that it would be adding a few new USD Coin pairs and moving its two existing USDC pairs into the combined stablecoin market called USDⓈ. Both ripple (XRP) and stellar (XLM) will have USD Coin pairs, in addition to their existing stablecoin pairs. The move involves the cancelling of any trades that exist in the current two USDC markets: BTC/USDC and USDC/BNB at the time of the move, essentially wiping the slate and creating fresh markets for the stablecoin.

The pairs being created with USDC are: BNB, BTC, ETH, XRP, EOS, XLM, and USDT. All of these will now be accessed through the USDⓈ asset market tab. They will no longer be in the regular coin exchange of Binance. It has BTC and ether as its primary base trading tokens.

Binance was clear on their warning about existing trades in tangential markets:

“Please note: The existing USDC/BNB and USDC/BTC trading pairs will be removed and delisted at 2018/12/16 03:00 AM (UTC). All existing orders in each order book will also be canceled at this time.”

The new markets were already showing in the advanced exchange as of Friday but were not operational.

Stellar (XLM) and Ripple (XRP) Both Get New Liquidity

stellar cryptocurrency crypto xlm
Stellar (XLM) should receive a liquidity bump from the introduction of USD Coin trading pairs on Binance.

XRP and XLM, ripple and stellar, the feuding cousins of the regulated international money movement game, were both already listed against PAX, USDT, and TrueUSD. Now they will have an additional fiat trading pair in USDC. That they are being treated equally is an interesting move on the part of Binance, whereas their overall market indicators are far from equal.

XRP was trading at 29 cents at the time of writing with a 24-hour volume of over $300 million. Stellar lumens were at around 10 cents. Their 24-hour volume was approximately one-fifth of ripple’s, at just over $67 million.

The long history between the two tokens makes for an interesting dive for anyone interested in cryptocurrency. They’ve been embroiled in lawsuits and the like, but their communities have a lot of crossover. They started with essentially the same technology, but the Stellar project philosophically prefers to see itself as a peer-to-peer payment protocol. Blockchain startup Ripple, with whom XRP is closely associated, prefers to focus on bank-to-bank and institutional money movements across borders, easing frictions created in the old world financial system. Such frictions were created using clearinghouses and intermediary banks. They go away when cryptocurrency and blockchains enter the picture.

Both are, of course, a long way from their all-time highs. However, their current prices are much more realistic than many altcoins in that they draw from multiple fiat markets, including the now four they will each have on Binance, the world’s most active exchange.

This post credited to ccn Images from Shutterstock

The world’s largest cryptocurrency exchange, Binance, has announced that it will host the company’s first conference, according to a press release shared with Cointelegraph Dec. 6.

Binance Blockchain Week is scheduled to be held in Singapore this January and is to include two major events –– the conference itself, along with a two-day “first-ever Binance SAFU (Secured Assets For Users) Hackathon,” according to the press release. As its name indicates, the hackathon reportedly focuses on developing blockchain-based tools for securing crypto assets.

Binance CEO Changpeng Zhao, better known as CZ in the industry, underlines that the firm has chosen Singapore as they consider it “the finance and technology hub of Asia.” CZ also added that the conference will feature the “most notable players and thought leaders in blockchain.”

Earlier this week, Binance announced plans to “help [the] advancement of the industry” by launching its own blockchain, “Binance Chain,” in the “coming months.”  The same day, the industry giant revealed a second preview of its forthcoming decentralized exchange (DEX), as a part of the newly announced Binance Chain initiative.

In October the crypto exchange also revealed the establishment of the Blockchain Charity Foundation (BCF) during the World Investment Forum, hosted by the U.N. Conference on Trade and Development (UNCTAD) in Geneva, Switzerland.

Just last month, BlockShow also held a blockchain conference in Singapore, which saw 2,800 attendees and hosted more than 50 speakers and panelists.

This post credited to cointelegraph Image source: Cointelegraph

As 2018 bids its last farewells, the crypto market has stuttered, with a majority of crypto assets establishing new year-to-date lows, leading many analysts to express their sentiment that capitulation is officially occurring. However, the peculiar performance of the market hasn’t fazed this industry’s leading constituents. Binance, for one, continued its investment spree, siphoning millions into a budding upstart.

Binance Throws $3 Million At OTC Crypto Desk, Foray Into China Expected

Binance, the crypto industry’s leading retail exchange, hasn’t seemingly remained unfazed amid the cryptocurrency market downturn, recently diverting $3 million of its venture arm’s war chest into Koi Trading, a U.S.-based over-the-counter (OTC) trading desk that specializes in non-retail crypto exchange.

Per previous reports from NewsBTC, Koi Trading also has hands in the jars of other industries, which include data science and analytics, quantitative research, and compliance. The San Francisco-based startup’s expansive portfolio presumably made it a logical investment for Binance itself, which has been ramping up its ventures throughout 2018’s dismal market.

Still, it was divulged by Ella Zhang, chief of Binance Labs, that her firm’s investment in the OTC desk was triggered by the alignment of Koi Trading’s and that of Binance. Zhang explained:

“Koi’s Trading mission is to bridge fiat and cryptocurrencies in a compliant manner. This aligns with our broader vision at Binance to build the infrastructure which provides the freedom of exchange globally.”

Although Binance’s investment in Koi seems cut and dried, some believe that the $3 million investment was made in a bid to capitalize on China’s tumultuous crypto scene, which has been beaten and battered by local regulators in recent months.

Per Hao Chen, CEO and founder of the startup, Koi has been bolstering its business relationships in “Greater China,” alluding to speculation that it may foray into that market in due time. It isn’t clear how the desk will skirt Beijing’s regulations, which have included a crackdown on OTC platforms and online discussion regarding cryptocurrencies, but many are hopeful that Koi’s entrance into China will catalyze another round of investment “FOMO” from the local clientele.

Bitcoin Commerce Payments Down 80% Since January, Scalability Blamed

Per data from Chainalysis, a leading crypto analytics startup, the U.S. dollar value of on-chain Bitcoin payment processor-based transactions has fallen drastically since early-2018’s all-time high. More specifically, the aforementioned statistic has taken an 80% hit since January, comparable to BTC’s 75% decline in the same time frame.

To attribute figures to this collapse, Reuters expressed that in late-December/early-January, over $427 million in BTC was transacted for retail payments. Now, just shy of a year later, this figure has fallen to a mere $96 million. While the latter figure isn’t something to sneeze at, the fact that such a collapse occurred, even though BTC found a semblance of stability in recent months, isn’t a promising sign for the short-term prospects of crypto.

Speaking on these statistics, London-based UBS strategist Joni Teves explained that scalability should catalyze the global adoption of Bitcoin in commerce. This sentiment echoes comments issued by Joey Krug, an Augur co-founder turned Pantera Capital executive, who told Bloomberg that the lack of efficiency on decentralized blockchain networks is directly hampering adoption.

Although the cryptosphere only recently began to walk on its own two legs, Krug explained that scaling blockchain networks, while difficult, is something that innovators within this industry can accomplish with a dab of elbow grease, grit, and determination. And when that happens, the Pantera executive added the crypto industry will undergo its next round of a Cambrian-level bout of growth, which Krug says will boost digital assets values by tenfold.

Bakkt Delays Bitcoin Futures Launch

After a multi-month hype cycle, Bakkt, an Intercontinental Exchange (ICE)-sponsored crypto-centric initiative, has divulged that it has fallen victim to an unfortunate road bump, a byproduct of the corporate world today.

Through a Medium post on the matter, Bakkt CEO Kelly Loeffler, formerly of the Intercontinental Exchange (ICE), revealed that her startup is now “targeting” January 24th, 2019 for the launch of its physically-backed Bitcoin futures contract, instead of December 12th. Loeffler, evidently aiming to calm players’ qualms regarding Bakkt, noted that “given the volume of interest in Bakkt and work required to get all our pieces in place,” a delay would be duly in order to ensure the program’s clients and business partners are poised for launch.

The 40-day delay aside, Bakkt has maintained that it is hell-bent on putting the pedal to the metal, as it were. Loeffler, wed to ICE CEO Jeff Sprecher, explained that the “level of collaboration at the exchange, customer, and regulatory levels are unprecedented in terms of engagement and effort,” indicating that crypto’s dismal market conditions haven’t fazed true “BUIDLers,” a moniker endowed upon this industry’s diehard believers.

Moreover, the startup chief added that Bakkt has secured cold storage insurance for its Bitcoin (BTC) holdings, a claim-to-fame that is likely to entice institutional investors into crypto.

Still, while the Medium update concluded on a high note, with Loeffler offering a fleeting glimpse of silver linings, the bottom line is that Bakkt’s futures instrument isn’t slated to go live yet. And the timing couldn’t have been much worse, to be frank. In fact, some pessimists have argued that Bakkt’s recent announcement imbued the cryptocurrency market with an influx of skepticism. But, considering the tumultuous market conditions, no one knows for sure.

Related Reading: Bakkt Focusing on Bitcoin Due to Its Liquidity and Classification as a Commodity

Crypto Tidbits

  • Edward Snowden Thinks Cryptocurrency Is Logical: World-renowned, libertarian-leaning whistleblower Edward Snowden recently sat down with Ben Wizner, his legal counsel, to have a candid conversation pertaining to blockchain technologies and cryptocurrencies. Interestingly, Snowden, who unveiled sensitive NSA documents in 2013, broke down the basic of blockchains, conferring on what makes this newfangled innovation tick and, more importantly, the value of this form of data management. The now-Russia-based former NSA contractor explained that blockchains, while currently inefficient, solve a key issue — the overabundance of trust. As made clear by 2008’s Great Recession, the presence of trust in financial ecosystems may be a detriment to consumers. Keeping this in mind, Snowden eulogized Bitcoin, Monero, and ZCash for their viability as scarce, uncensorable, trustless, and borderless mediums of value.
  • Coinbase Loses Mike Lempres To Andreessen Horowitz: While the crypto industry is lauded for its capability to catalyze Wall Street and Silicon Valley brain drains, Coinbase has divulged that Mike Lempres, the startup’s chief legal officer, decided to abdicate his position to foray into venture capital through Andreessen Horowitz (a16z). Interestingly, Menlo Park, California-based a16z, a forward-thinking firm itself, has close ties to Coinbase and the crypto industry, so Lempres’ sudden exit isn’t nonsensical. Taking his place will be Brian Brooks, formerly of mortgage giant Fannie Mae, who initially hopped onto the cryptocurrency gravy train in September. So make no mistake, Coinbase’s legal team is being left in good hands.

This post credited to News BTC Image source: News BTC 

The world’s leading cryptocurrency exchange by volume has just launched a new exchange in Africa: Binance Uganda. The crypto trading platform signed up 40,000 new users in its first week.

The massive response and interest in Uganda highlights a key strength of cryptocurrency that lies outside of the US and its preoccupation with Bitcoin ETFs, institutional traders, hedge fund heavyweights and Wall Street money. Crypto’s “killer app” will lie in its ability to attract people in developing countries where they do not have easy access to banks, credit and financial services.

According to a Stanford report entitled “Banking the Unbanked? Evidence from Three Countries” roughly 77% of Uganda’s population of 42.86 million is unbanked – an estimated 33 million people.

Writes UX/UI designer Pierre Rognion in Hackernoon,

In 2010, around 2.5 billion of the world’s adults was not using formal banks or semiformal microfinance institutions to save or borrow money. Nearly 2.2 billion of these unserved adults live in Africa, Asia, Latin America, and the Middle East. In most cases, they are unbanked because banks cannot serve them for various reasons (example: remote areas). But a lot of these people have mobile phones and make transactions with it. Why wouldn’t they transact with bitcoin and other cryptoassets?”

Binance Uganda, which launched in October, is operating outside of the established financial services industry and without a traditional bank.

Says Binance CEO Changpang “CZ” Zhao,

“We have no office, we have no bank account, and we have users from 180 different countries.”

Forbes Asia

@ForbesAsia

In our second panel, Zhao Changpeng, CEO of @binance explains how blockchain companies are changing the nature of business. “We have no office, we have no bank account, and we have users from 180 different countries,” he says.

Binance Uganda will offer 24/7 customer service support for fiat-to-crypto trading of Ugandan shilling (UGX) for Bitcoin (BTC) and Ether (ETH).

Join us on Telegram

CEO CZ is also hoping that Ugandas will use TrustWallet, which partnered with Binance in July. TrustWallet is a standalone application for iOS and Android devices that allows users to manage cryptocurrency and interact with decentralized applications (DApps), including decentralized exchanges. The technology empowers people to be their own bank without any middlemen. It supports Tron as well as thousands of tokens built on Ethereum.

CZ Binance

@cz_binance

Let’s give them a @binance account or a @TrustWalletApp app.

Tommy Mustache@tommyp408

Jarau from Uganda here just told me more than 70% of the people from Uganda don’t have a bank account. Binance is making a huge impact to help these millions of Uganda people by giving them an alternative they never had. “Freedom of Money” 👏@cz_binance @rambo1stbld @binance https://twitter.com/JarauMoses/status/1058364833299656709 

This post credited to Daily HODL Image source: Daily HODL

The world’s largest cryptocurrency exchange Binance has frozen accounts that received more than 93,000 ether from two wallets indirectly linked to the troubled Russian exchange WEX.

The accounts were frozen on October 25, Leah Li, a spokeswoman for Binance, told CoinDesk. The action was taken in response to pleas from WEX users who have been watching the ethereum blockchain, the known location of a public wallet belonging to the WEX exchange, uneasily in recent months while they have been unable to withdraw their funds off the exchange.

These users traced the flow of funds through the ethereum blockchain and concluded that the two wallets that sent the ether to Binance – in 25 transactions from August through October – were controlled by entities related to WEX. The traders have expressed concern that they won’t get their money back now that the funds have been moved to Binance.

They are worried because WEX, a successor to the defunct BTC-e exchange that inherited its infrastructure, has not allowed withdrawals for major cryptocurrencies like bitcoin and ether since July. Given a lack of answers or clarity about the state of affairs at WEX, frustrated users began filing police reports with Russian authorities earlier this month.

Hundreds of users appear to be affected by WEX’s ongoing withdrawal issues, judging from the size of the Telegram chat groups devoted to discussing the situation; one has more than 1,000 members, another focused on filing police reports has more than 400.

And at least $18 million is now believed to be at risk, based on the market value of the ether that flowed into Binance. The total figure could be higher, since only ether has been spotted leaving WEX-linked wallets so far, and users have been unable to withdraw most other coins for months.

The situation underscores the risks crypto users have long faced when trusting exchanges with their money. WEX opened for business shortly after the U.S. government shut down BTC-e in July 2017, slapping it with a multi-million dollar fine. At launch, WEX founder Dmitrii Vasilev framed the new exchange as a re-launch of BTC-e and said he was working with the old platform’s administrator and would restore its customers’ balances.

For almost a year, WEX functioned normally and had the full trust of former BTC-e users, some of them told CoinDesk. But the situation has gone quickly south, perhaps best exemplified by the highly inflatedprices for many of the exchange’s trading pairs.

“Help us to return our money!” a trader named Maxim M. wrote in an Oct. 20 email to Binance and shared with CoinDesk. “If you don’t want to follow the path of BTC-e, which was closed down by the authorities following its use in the laundering of cryptocurrency stolen from Mt. Gox, you should suspend all the WEX’s wallets and accounts.”

Vasilev did not respond to requests for comment for this story.

Binance’s Li said the Malta-based exchange was “not familiar with the specific situation at WEX,” but “we always investigate user claims thoroughly and we will suspend account access if any unusual activity is detected.” She added:

“We are encouraging users who may be impacted to file reports with local law enforcement and ask them to send us case numbers or official notices/letters of investigation. So far, we haven’t been provided with any notices yet.”

Li later clarified that the freeze is only temporary, saying, “we’re only able to freeze accounts for a short time; some sort of letter from law enforcement is required for a longer-term freeze.”

Following the money

A CoinDesk review of public ethereum data found that the trail from the two wallets that sent ETH to Binance ultimately leads back to an address that was controlled by BTC-e.

Further, the analysis shows that the BTC-e-tied address is linked, by way of a divergent path of transactions, to the one wallet clearly belonging to WEX.

The BTC-e address is identified as such on Etherscan, a popular ethereum block explorer. Often, exchanges ask Etherscan to attach their brand name to their wallets, and if they can prove they are the real owners, the name gets assigned. Binance’s address is similarly labeled, but none of the more than 10 others are in the web of transactions between it and BTC-e.

The series of transactions began on July 29, 2017, when 485,705 ETH was transferred from the BTC-e address in one batch to another address that users believe to be WEX’s first wallet.

Subsequently, that address sent 480,000 ETH in 32 large, round-number transactions from September 2017 through January 2018 to a single address.

CoinDesk has confirmed that this wallet, pictured in the image below, belonged to WEX, since six users provided screenshots of their WEX withdrawal transactions – all of which involved the address, 0xb3AAAae47070264f3595c5032eE94b620A583a39.

But this WEX wallet was not the only recipient of ether from BTC-e. Another 184,772 ETH was transferred to the address 0x95cDdecd01856aA896426bd1ee021D87F3A5c199, and from there, smaller portions later traveled through several different addresses.

Eventually, two addresses – each connected to the BTC-e wallet through a different chain of six addresses – sent significant amounts of ETH to the address identified on Etherscan as belonging to Binance.

The first of these wallets sent 78,581 ETH to Binance in about two dozen transactions between August and October. The other wallet sent 14,794 ETH to the exchange in three transactions on October 15, October 18 and October 22.

Pleas for help

Maxim, the trader, said Binance’s initial response to his alert was discouraging.

“They responded that they can’t do anything so far but would watch those wallets carefully,” he said.

The text of Binance’s response, which Maxim sent to CoinDesk, reads: “Really thanks for your information, we are willing to cooperate with you. But at present it is hard for us to check all the account from WEX and take action. Anyway, we will keep an eye on this issue, if any update please feel free to contact us.”

While Binance spokesperson Li said the accounts were frozen on the 25th, this information was apparently not shared with frustrated WEX users until after CEO Zhao Changpeng (CZ) was asked about the issue on Twitter.

On Monday night, a Twitter user going by the name John James tweeted: “WEX cold wallets are moving funds through @binance. Meaning Binance is potentially help launder millions of dollars worth of stolens funds from Wex users. We have proof too. @cz_binance.”

CZ responded quickly: “The identified accounts are frozen, please report to law enforcement and have a case number. We will work with LE. This is part of centralization we hate too, dealing with other exchange’s mess (we don’t even know the details). But we will do what we can.”

This post credited to coindesk  Image source: Google 

According to Al Kelly, the CEO of Visa, the company could support crypto in the future if the global market moves in the direction of embracing consensus currencies like Bitcoin and Ethereum.

In the short to mid-term, Kelly told Jim Cramer, the host of Mad Money, that cryptocurrencies as an asset class is not a threat to reserve currencies that serve as the basis of Visa’s products. But, he stated that as the adoption of cryptocurrencies improve in the years to come, Visa will facilitate the demand for the asset class.

“I think there has to be some market that it becomes somewhat like a fiat currency in order for us to be comfortable. If it goes in that direction, we will move in that direction. We want to be in the middle, Jim, of every payment flow in the world regardless of how it happens or what the currency is behind it. So if we have to go there, we will go there. But right now, it’s more of a commodity than a payment vehicle.”

In the Middle

Visa is the most influential credit card service company in the finance sector and is amongst the most profitable businesses in the market alongside Mastercard.

In the long-term, Kelly emphasized that Visa will eventually serve as a middleman to attract crypto users to send and receive digital assets with Visa on its platforms, by providing fees to the company.

However, by the time Visa would feel comfortable in integrating cryptocurrencies, which as the CEO described it as when the asset class is established utilized by the mainstream, cryptocurrencies would not require middlemen to process payments.

With non-custodial wallets and open-source platforms, users of cryptocurrencies can efficiently and securely transfer digital assets without paying additional fees on top of the trasnaction fee provided to the miners of the ecosystem.

Currently, due to the lack of merchant adoption, it is difficult for crypto users to compensate merchants to purchase simple products like coffee and food. A financial institution at the size of Visa could single-handedly increase the adoption of crypto amongst merchants in a large capacity.

But, the intent of Visa to target the cryptocurrency sector is to provide middleman services several years from now when cryptocurrencies are already accepted by merchants and being utilized as an alternative currency to reserve currencies like the US dollar.

Fidelity’s Big Bet

The time to support and experiment with cryptocurrencies is now, when it is experiencing exponential growth and is still at an early phase.

Years down the line, the cryptocurrency sector could heavily rely on decentralized systems and services, which even platforms within the market including Binance expect, as seen in the development of the Binance decentralized exchange.

Already, Fidelity, Goldman Sachs, and Citigroup have started to serve investors in the cryptocurrency market by seeing sufficient demand for the new asset class, while Visa, Morgan Stanley, and several other financial institutions remain cautious in entering the cryptocurrency market.

This post credited to ccn Image from Youtube/Boston College Carroll School of Management.