Huobi, the third-largest crypto exchange by trading volumes, is seeking to fill a void in Russia’s cryptocurrency community.

This month, the exchange opened an office in Moscow, the first major crypto trading platform to have a physical presence in the country, notably with a Russian-language call center. But Singapore-based Huobi’s ambitions go further, into lending and renting space for Russian miners, shaping the country’s regulations and training local blockchain talent.

The call center alone may be a significant differentiator, however. Even though leading crypto exchanges like Binance, OKEx and Bitfinex now have Russian-language interfaces, getting real-time support in case of tech problems have been a headache for many users in Russia who don’t speak English, Chinese or Korean.

“None of the big exchanges would answer your request in Russian,” a Russian trader named Anton, who didn’t want to disclose his full name, told CoinDesk.

For several years, the void was filled by the now-defunct exchange BTC-e, which had not only a Russian support staff but a network of local over-the-counter (OTC) dealers who had been facilitating the purchases of cryptocurrencies in absence of regulated fiat on-ramps in the country.

But BTC-e was shut down by the U.S. FBI in July 2017. Subsequently, a new platform named WEX picked up its job until July, when fiat and crypto withdrawals were frozen.

Since then, there has been no mainstream platform offering comprehensive support for users in Russia. So now Huobi is stepping in aggressively.

Concierge service

Huobi’s 30-person Moscow office opened November 12. In addition to the call center, this site provides back office support for OTC trading and listing, and personal managers for big clients, Andrew Grachev, the head of the Russian office, told CoinDesk.

“If someone wants to start trading with $1,000, he can come to the office and register with the help of a personal manager,” Grachev said.

To attract as many new users as possible, Huobi Russia is offering commissions lower than 0.1 percent for users who trade more than 50 bitcoin in two weeks during November, the company’s website says. Also, users will get a monthly “cash back” reward, Grachev said: 20 percent of trading fees users pay on the exchange will come back to their account in the form of Huobi tokens, which then can be used on the platform to pay for services, or cashed out.

Initially, Huobi’s plans were even more ambitious: the exchange wanted to enable deposits in Russian roubles, but the local experts said it’s a bad idea.

“They consulted with us a lot, and in the end, I think, we made them feel disappointed,” Vladimir Demin, head of the Center of Digital Transformations at the Russian government-owned development bank Vnesheconombank (VEB), told CoinDesk. “They were interested in providing fiat operations, but we told them it’s impossible.”

However, Russian users will be able to buy cryptocurrency for roubles using the exchange’s Huobi OTC service, and seamlessly transfer it to their trading accounts, Grachev told CoinDesk. The OTC platform is online, but it has too few users from Russia so far, so Huobi plans to lure local OTC traders with commission rates lower than on other OTC platforms, Grachev said.

Regulatory consulting

With three bills related to blockchain, cryptocurrencies and initial coin offerings (ICOs) currently stuck in the Russian parliament, the State Duma, the local regulatory environment is unclear and arguably unconducive to the industry’s growth.

However, government-backed institutions are watching the field closely and launching various local  blockchain pilots for government services, like distribution of government-sponsored prescription drugs or land registry.

“We started from projects on blockchain without using tokens or cryptocurrencies,” Demin said. “But we understand that using this technology only in a non-token way is like jumping half-way over the abyss.”

In August, Huobi signed up with the VEB’s Center of Digital Transformations and has been providing expertise that will be adapted for Russia by local experts and used in the development of future regulation in the country, Demin said.

“We were looking at this field and Huobi came out as the most suitable partner as they are already working with the governments of Australia, Singapore, China,” he said, adding:

“We are consulting the Bank of Russia and State Duma to add some practical elements to those bills.”

Further expansion

In addition to opening the Moscow office, Huobi will train blockchain entrepreneurs attending a special program for blockchain startups at Plekhanov University of Economics, one of the top Russian universities.

The university is in the process of finalizing a contract with Huobi, Nadezhda Surova, head of the University’s Department of Entrepreneurship and Logistics, told CoinDesk.

Initially, Huobi came to the university in search of tech professionals, she said, and later an expert committee within the Russian government’s Ministry of Digital Development approved the partnership.

Huobi’s further plans in Russia include offering loans for miners to buy specialized mining chips, or ASICs, and space for them to rent, Grachev said. According to him, these services might become available as soon as the first quarter of 2019.

Coming to Russia is a part of larger expansion plans by Huobi: in August, the exchange announced plans to open offices in the Philippines, Russia, Taiwan, Indonesia, and Canada, South China Morning Post reported.

According to CoinMarketCap, Huobi’s total 24-hour volume (excluding no-fee trades and transaction mining) is $595 million, making it No. 3 among exchanges after Binance and OKEx.

This post credited to coindesk Image via Shutterstock

BitMEX’s head of research, Jonathan Bier, gave a statement to Bloomberg this week that will soon be proven true or false. In regards to how the upcoming Bitcoin Cash fork would play out, Bier said that he believes that the important divide between the economic majority and the mining majority will sort itself out in rapid fashion.

“The chain will split in two, but the economy will support ABC and reject SV (Satoshi’s Vision). SV will have a low price and miners will leave it in a few weeks. That is my prediction.”

As head of research, Bier would have played an important role in the roll-out of the new fork monitoring tool that Bitmex has sponsored.

A Theory with Legs

Bier’s prediction is based on the reality of the situation rather than personal feelings regarding the technicalities of the upcoming hard fork. It is an informed and wizened view. The economic majority in a cryptocurrency is, in real terms, as important as the mining majority. There are a lot of reasons for this, not the least of which is the cost of the hardware involved in mining cryptocurrencies.

Miners take financial risks on hardware with the reasonable expectation that they will be able to earn a return. If one or the other chain is better equipped to service that result, then that will become the preferred chain of miners, and if they are within a few dozen dollars of each other in unit price, this preference can fluctuate algorithmically in ways that can have a dramatically negative effect on everyday users as difficulties rise and fall and make block times irregular.

Demonstration of this principle is not hard to find. There are many orders of magnitude more miners, pools, mining pools, and so forth contributing to the difficulty of the Bitcoin network than Bitcoin Cash’s current network as a whole. Yet, Bitcoin Cash itself (owing in large part to its architecture being almost identical to that of Bitcoin’s, with some important differences) likely has as much of a lead on the majority of other altcoins.

Some exchanges have decided in advance that they will not list Bitcoin SV at all, but they are just a few of hundreds of places that people transact in BCH. Multiple major exchanges have already made pairs including both versions of Bitcoin Cash, enabling traders to engage in pre-fork futures trading.

Other Possibilities

bitcoin cash fork
Bitcoin SV currently has majority support from miners, but will that persist following the fork? | Source: Coin Dance

While Bier’s informed opinion on the matter represents one likely outcome – that Bitcoin SV loses both economic and mining support in that order and in a short span of time – there are others.

As noted in the Bloomberg article, Calvin Ayre and other wealthy individuals – some of whom, like Ayre, own a lot of cryptos as well as mining hardware – have skin in this game. They could conceivably, by themselves and at a loss (although not in their rational self-interest), prop the SV price up for a time.

The likelihood that Ayre’s planned appeals to Bitcoin exchanges — to only list his version of Bitcoin Cash — are successful feels, well, very small. Purely to stimulate trading of the SV coin (or any trading at all) on their exchange(s) and encourage deposits, some exchanges might well list SV exclusively. It would alienate some users, but the 80/20 rule applies: 20 percent of customers make up 80 percent of many business models. In this case, some small exchanges might want that 20 percent to become SV diehards or just people looking to dump their SV coins, or some combination of both. But anything approaching a volume or economic majority? Forget about it.

A scenario that feels likely to this reporter is that both chains live on indefinitely. Whether or not either token enjoys a bullish token price across exchanges, it’s hard to imagine Craig Wright or Calvin Ayre coming back into the fold at this point, nor Roger Ver and Jihan Wu welcoming them back if they decided to do so. CoinGeek by itself has the capability to prop up the SV blockchain, and its media efforts have the capability to continually attract new users and widen the base. (Bitcoin ABC has the same capabilities utilizing a wider array of resources – Jihan Wu, Roger Ver, the coterie of major exchanges which have come out in definitive support of ABC.)

Ayre, Wright, and their sizable number of supporters seem to share a very specific vision for cryptocurrency, and it seems that only complete capitulation of their peers would be enough for them to call it quits this far in. A whole generation of Bitcoin mining hardware is soon to be obsolete with next-generation miners coming online, and this soon-to-be-resold hardware has a convenient retirement plan: mine on one or all of the latter-day Bitcoin blockchains. Effectively, a dedication or rededication of any significant amount of hash power from unexpected sources to either chain would change outcomes significantly, and this possibility relies very much, of course, on the market performance of either.

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

This post credited to ccn Image from nChain/YouTube

 

The lack of suitable institutional-grade platforms is undoubtedly one of the greatest obstacles to institutional money flowing into the burgeoning field of cryptocurrencies.

However, the fact that this type of platform has not emerged so far is somewhat understandable. Not only are cryptocurrency markets a lot less mature than traditional finance markets, the specific characteristics of cryptocurrencies mean that simply overlaying existing solutions won’t suffice. One example of cryptocurrency uniqueness is having your digital assets stored on a blockchain and controlled through a set of public and private keys. This is a new paradigm for potential investors to get used to, as is the fact that keys rather than currency are stored in what is referred to as your wallet.

Even once a given user has acquainted themselves with the intricacies of how digital cash functions (no easy task), they need to navigate the confusing and fragmented landscape of exchanges – each of which provides different offerings when it comes to the cryptocurrencies and tokens made available.

These new rules and terms of engagement are a world away from the one that sophisticated investors are comfortable with, having become used to dealing with a single interface when trading in traditional financial markets. Not having a single solution that allows them to trade quickly, easily, and efficiently can be a major barrier for these investors to follow through on any initial interest they may have in the world of cryptocurrencies.

Which is why something needs to change if we want to see serious investments take off. As mentioned, there are various unique problems that need to be solved. However, one of the most significant is that of being able to place large orders and know that you are getting the best price available from the various exchange options. It seems about time, given the growing interest in the space, to build a platform capable of aggregating information from various exchanges into a single intuitive interface, with sophisticated APIs being deployed to interact with the myriad of exchanges in a streamlined fashion.

Caspian crypto echange
Gerrit Van Wingerden is the CTO and co-founder of Caspian

To these ends, I think Smart Order Routing (or SOR) could be an incredibly valuable mechanism to incorporate, so as to reduce the inconvenience of the aforementioned fragmentation issue.

Smart Order Routing is not a new solution, as it is already used across financial markets when individual assets trade across various exchanges. In fact, it has been a part of Tora’s offer to the asset management industry for many years now. However, SOR is not common in cryptocurrency trading, even though everyone is aware of the fragmented exchange landscape that is so characteristic of the market right now.

Notably, it can help ensure that the end user has a single pool of liquidity made up of all the exchanges available to them. For instance, if an investor wanted to place a large order for an obscure and rarely listed coin, they would only need to input the order into the platform and allow the SOR algorithm to take care of the rest. In doing so, it would take into consideration factors such as fees, liquidity, and commission accrued by given exchanges so as to effectively fill orders and to reduce any slippage.

There is currently $130 trillion of traditional assets under management, a number that trumps the $215 billion market cap of cryptocurrency. If even a fraction of the former were to be allocated into the latter, it would have a massive impact on the emerging industry as a whole. However, it’s not enough to simply look at this figure, note the potentially transformative effect on the market, and simply assume that such a change will happen. Instead, we need to collectively put forward solutions to the user problems that are holding back adoption and engagement.

More generally, the idea of investment into cryptocurrency needs to be decoupled from the complexity that’s associated with trading. High barriers to entry are limiting the number of investors getting involved. As the industry continues to evolve, it’s imperative that we turn our focus on adoption through enhanced user experience, with easy-to-use yet powerful trading tools that exist in the legacy financial system.

This post credited to ccn  Image source: Shutterstock

Major Hong Kong-based cryptocurrency exchange OKEx will delist over 50 trading pairs with weak performance, according to an announcement published Oct. 25.

As per the announcement, at 6:00 am Oct. 31, 2018 CET, the exchange will halt the trading of a swathe of pairs that they cite as having weak liquidity and trading volume. The exchange warned users that they should cancel their orders of the affected pairs from the platform.

OKEx also made a point of noting that it will delist only the indicated trading pairs, but not the tokens themselves.

Andy Cheung, Head of Operations at OKEx, called the move “housekeeping” in a tweet today, Oct. 27, saying about OKEx and other top exchanges: “As leaders, we are responsible for promoting a robust ecosystem […] We need to take action on those underperforming tokens now.”

In a tweet announcing the delisting yesterday, Cheung also noted:

“Getting listed is not final. Maintaining a good performance is the key to success.”

Earlier this month, OKEx announced the listings of four stablecoins at once – TrueUSD (TUSD), USD Coin (USDC), Gemini Dollar (GUSD), and Paxos Standard Token (PAX).

Founded in 2014, OKEx is at press time the world’s largest cryptocurrency exchange in terms of adjusted trading volume, seeing around $402.5 million in trades over the past 24 hours.

This post credited to Cointelegraph  Image source: Cointelegraph 

Nov. 2: Cryptocurrency markets have continued trading slightly in the green today, remaining relatively quiet with moderate gains throughout the top 20 coins. Most of the top 100 digital currencies have experienced humble gains over the past 24 hours.

COIN360

Market visualization from Coin360

The leading cryptocurrency Bitcoin (BTC) is up only 0.06 percent on the day, and is trading at around $6,395 as of press time. BTC has seen slight volatility during the day, with the deepest and highest points of $6,327 and $6,396 respectively.

BTC

Bitcoin 24-hour chart. Source: CoinMarketCap

Ethereum (ETH) is up by slightly almost 1 percent over the last 24 hours, trading around $200, and the altcoin’s weekly chart showing its price decreasing by a relatively modest 0.41 percent. After dipping to its weekly low of $193.29 on Oct. 31, ETH has been steadily gaining in price.

ETH

Ethereum 24-hour chart. Source: CoinMarketCap

The third largest cryptocurrency by market cap Ripple (XRP) is up by 0.57 percent over the last 24 hours, and trading around $0.459 at press time. Over the past seven days, XRP is down by 0.06 percent.

XRP

XRP 24-hour chart. Source: CoinMarketCap

Bitcoin Cash (BCH) has stood out among other top 10 coins, making gains of 9 percent on the day. The altcoin is trading at around $462, while its daily trading volume is around $522 million, according to CoinMarketCap. On its weekly chart, BCH rose to as high as $469 following a dive to $411.

BCH

Bitcoin Cash 24-hour chart. Source: CoinMarketCap

During the last week, total market cap has seen some notable fluctuations, with a sudden dive to $202 billion and surge to $209 billion on Oct. 29 and Nov. 1 respectively. After jumping to as much as $209 billion yesterday, total market capitalization dropped to $205 billion, after which it saw moderate gains today.

TOTAL

Total market capitalization weekly chart. Source: CoinMarketCap

The industry has been awaiting the decision of the U.S. Securities and Exchange Commission (SEC) regarding the review of proposed rule changes related to a series of applications to list and trade various BTC Exchange-Traded Fund (ETFs) set for Nov. 5.

Yesterday, the so-called “godfather of ETFs” Reggie Browne said that Bitcoin ETFs will be certified “no time soon.” He specified that Bitcoin ETFs will be approved only after the development of a strong regulatory framework for the industry.

This post credited to cointelegraph Image source: Cointelegraph

Reggie Browne, who is a senior managing director of the ETF group at Cantor Fitzgerald, isn’t holding his breath for a bitcoin ETF. Despite the determination of crypto asset managers jumping through hoops to satisfy US regulators, Browne, who earned the nickname as “the Godfather of ETFs” from Forbes for his influence over the $4.7 trillion market, has his doubts, saying it will happen “no time soon.”

Browne addressed what he finds to be slim odds of a bitcoin ETF amid an inability by regulators thus far to craft a regulatory framework by which cryptocurrencies could operate. In the interim, “it’s very difficult for the commission to wrap their heads around a positive approval because there’s no data yet…the markets just aren’t here,” said Browne, who was speaking at the Georgetown University’s Financial Markets Quality Conference held in Washington, D.C. this week, an event at which SEC Chairman Jay Clayton was also present. Browne’s remarks were cited in Business Insider.

Crypto Catch-22

There’s a bit of a catch-22 in the crypto markets, as the arrival of a bitcoin ETF is widely deemed to be a sign of maturity in the nascent market, which just celebrated its 10th anniversary. Meanwhile, the approval of such a product is dependent on regulation that is waiting for a more mature market. The SEC has already declined nine bitcoin ETF applications, and the crypto community has their hopes pinned to a product designed by asset manager VanEck and blockchain startup SolidX.

wall street bitcoin

VanEck Director of Digital Asset Strategies Gabor Gurbacs on Nov. 1 told Fox Business: “I don’t know exactly how close we are but we are the closest we can be,” adding: “It’s very clear to me America wants a bitcoin ETF and we are here to build it.” In the meantime, VanEck is waiting on pins and needles for SEC feedback on its application.

Waiting Game

It isn’t the first time a Wall Street executive has weighed in on the fate of a bitcoin ETF. In recent days Larry Fink, who is at the helm of BlackRock, the world’s largest asset manager boasting $6.3 trillion in assets under management, quashed any expectation that the firm would issue its own bitcoin ETF in the near future. BlackRock, which is one of a trio of asset managers that together control 82% of ETF market share, is on the sidelines until there are signs the crypto market is “legitimate,” which to him requires government backing.

Meanwhile, if the SEC’s motivation for suppressing a bitcoin ETF is, in fact, a lack of data and markets, as the Godfather of ETFs suggests, they are going to have fewer reasons to decline the product once institutional capital makes its way into the crypto space, which is largely expected to coincide with the opening of regulated crypto exchange Bakkt this year.

This post credited to ccn Images from Shutterstock

According to several local sources, Coincheck, a major Japanese crypto exchange, is unsure of reopening its exchange after suffering a $500 million hack in January.

MineCC, a cryptocurrency miner and analyst based in Japan, reported that Coincheck president Oki Matsumoto said:

“I do not know the prospectus of reopening.”

Factors Behind the Delay

Nine months ago, Coincheck suffered the largest security breach in the history of the cryptocurrency market, losing more than $500 million in XEM, the native currency of the NEM blockchain, to an unknown group of hackers.

Unable to compensate all of the investors affected by the hack, Coincheck reached a deal with Monex, a publicly listed company in Tokyo, to obtain sufficient funds to refund its investors.

The investigation into Coincheck involved law enforcement, local intelligence agencies, and the Japanese government in an attempt to salvage any portion of the stolen funds to compensate investors on the platform.

Subsequent to the incident, Coincheck lost its license to operate as a cryptocurrency exchange in Japan and was requested by the government to reapply, as a new executive took over the platform.

Until the Japanese Financial Services Agency (FSA), the country’s main financial watchdog, grants a license to Coincheck to operate as a fully regulated and compliant exchange, the platform will not be able to accomodate new users and open its exchange to the public.

This week, Monex disclosed that throughout July and August, the platform has allowed existing investors to sell their holdings in cryptocurrency on the exchange. While the exchange recorded a 66 percent drop in its revenue, the company has been able to record some revenues from existing investors on the platform.

“Since service suspension in January 2018, Coincheck only allowed existing customers to sell their cryptocurrency. This limited revenue stream resulted in segment loss of ¥ 0.6 B [around $5.3 million]. Coincheck has improved in governance, internal control and internal audit, aiming for full service resumption.”

The probability of Coincheck obtaining the approval from the FSA in the short-term remains significantly low, given the magnitude of the security breach and the number of investors that were affected by the hack.

Moreover, the FSA emphasized that it intends to implement stricter regulatory frameworks in regards to the security and internal management systems employed by trading platforms, and the Coincheck hack was the catalyst behind the decision of the FSA to stricten existing regulations surrounding the crypto market.

New Management, New Team

Coincheck will still be able to reopen if it can demonstrate to the FSA that the exchange has conducted a complete overhaul of its previous internal management system and security measures.

More importantly, given that the exchange was hacked due to a lack of security specialists working to secure the exchange, the firm will have to provide sufficient evidence to ensure that a similar issue will not resurface in the years to come.

This post credited to ccn Image from Shutterstock.

Goldman Sachs is allowing few of its clients to sign up for its future crypto products, according to reports.

The New York investment bank plans to roll out its bitcoin non-deliverable future contracts (NDF), a derivative product pegged to futures. Ideally, the service should allow an investor/borrower to take a short-term position in Bitcoin even though the government may not allow exchanges. The investor/borrower uses the foreign currency, but any foreign exchange gain or loss should be paid in Bitcoin. The service could lead corporates seeking to hedge exposure to foreign currencies whose use is limited or restricted in the domestic markets – this time using Bitcoin, not the dollar.

Details Not Finalized

According to The Block, the source notably contradicted with an earlier report which said that Goldman Sachs was looking for a similar NDF contract on Ether, Ethereum’s platform token. There was an announcement from the Chicago Boards Options Exchange (CBOE) that it would introduce an Ether-backed futures contract earlier this year. However, that product is still not out yet.

Goldman Sachs is reportedly studying whether the market needs a crypto NDF contract as a whole. The bank is reaching out to its clients, including senior bankers and institutional traders, to seek their opinion on how a Bitcoin NDF can break into the market. The source said that the bank’s clients weren’t necessarily looking for a Bitcoin NDF but that doesn’t mean they will not be interested in exploring the market.

Bitcoin Derivatives in the US

While Goldman Sachs researches its way into launching a Bitcoin NDF, the regulated US trading platforms, including CBOE and CME, offer crypto-based cash-settled future and future derivative products. Both the exchanges have expressed their interests in crypto futures, allowing speculators to believe that they would expand their offerings in the long run. CBOE, in particular, has admitted that it wants to be the leader of the cryptocurrency derivative marketplace. Meanwhile its counterpart, CME, is there but looks relatively less enthusiastic regardless of launching an Ether price reference rate.

There are developments taking place outside the CBOE and CME markets as well. Bakkt, a crypto startup headed by the owner of the New York Stock Exchange (NYSE), has announced that it would launch its first Bitcoin derivative product on December 12 this year. The firm has ensured that their future product would allow traders to settle contracts physically, meaning the contract expiry dates would see an actual Bitcoin exchange between the involved parties.

LedgerX, another crypto derivative platform, is also seeking to launch an Ether-backed future contract, pending approval from the Commodity Futures Trading Commission (CFTC).

This post credited to News BTC  Image source: News BTC

Choi Jong-Ku, the commissioner of the Financial Services Commission (FSC) of South Korea, has reaffirmed that there exists no issues related to compliance and security in the process of banks providing virtual bank accounts to local cryptocurrency exchanges.

At the state affairs audit conducted by the government of South Korea to evaluate the progress of all government agencies and commissioners in the nation, commissioner Choi emphasized that as long as cryptocurrency trading platforms are well equipped with Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, digital asset platforms will be able to obtain banking services from the country’s commercial financial institutions.

“There exists no issue in banks providing virtual bank accounts to cryptocurrency exchanges. If digital asset trading platforms have KYC and AML systems in place, there is no problem in issuing virtual bank accounts to exchanges,” commissioner Choi said.

In South Korea, crypto exchanges employ a unique system called virtual bank accounts that enable users to deposit and withdraw the South Korean won instantly so that users can hold KRW on exchanges securely.

Crypto Investors Optimistic

In early 2018, the government of South Korea encouraged banks to prevent working with cryptocurrency exchanges to eliminate the possibility of laundering money using digital assets.

While Nonghyup, a major commercial bank in South Korea that has worked with crypto exchanges for over a year, continued to provide services to local exchanges, in mid-2018, even Nonghyup was pressured to end its services to Bithumb and other major cryptocurrency exchanges.

The public statement released by commissioner Choi clarified the stance of the government and local financial authorities towards cryptocurrency exchanges and in the years to come, local digital asset trading platforms will no longer suffer from the lack of banking services from major financial institutions in South Korea.

South Korea Blockchain Association, which represents both small to medium-size and major cryptocurrency exchanges in the local market, expressed its optimism towards the newly established stance of the FSC and added that the initial problem related to KYC and AML introduced by the FSC 10 months ago have been resolved.

Considering the concerns of the FSC and local financial authorities towards security breaches, the South Korea Blockchain Association and the country’s largest cryptocurrency exchanges have initiated the process of obtaining insurance to protect investor funds.

Bithumb, Upbit, Gopax, Korbit, Coinone, and other large cryptocurrencies have also recently been approved by the government of South Korea for having sufficient security measures and internal management systems in place.

In August, security analysts at KISA and the Ministry of Science and IT told local publications that UPbit, Bithumb, Korbit, Coinnest, Coinlink, Coinone, Coinplug and Huobi a have solid ecurity and internal management systems integrated into their exchanges.

South Korea’s Crypto Exchange Market Infrastructure Strengthening Rapidly

This week, Bithumb, the second largest cryptocurrency exchange in the country, eliminated all banking options on its platform apart from Nonghyup, its partner bank.

Investors, confused by the abrupt decision of Bithumb, experimented with emerging crypto exchanges like Gopax, which is financed by the nation’s second largest commercial bank Shinhan.

Gopax, possibly due to the assistance of Shinhan, supports deposits and withdrawals for all local banks in South Korea, along with Kakao and Dunamu’s Upbit.

The competition in South Korea’s crypto exchange market is increasing with key players like Upbit, Gopax, Coinone, and Korbit gaining more market share, offering investors with several alternative options.

This post credited to ccn Image from FSC.

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