When I was younger, my main goal was to catch them all Pikachu, Squirtle, Bulbasaur, they were my everyday companions
Now, as I’ve matured, I’ve turned to a more serious hobby — catching every cryptocurrency out there instead I’m Molly Jane, and this is our Hodler’s Digest: Pokemon Edition, and let’s try catch them all! Let's take a look at the latest market updates Crypto exchange Binance experienced a major security breach this week, which resulted in the theft of 7,000 BTC The amount, corresponding roughly to $41 million, was stolen from a number of hot wallets which contain approximately 2% of Binance’s total Bitcoin holding They used both external and internal method to trap a lot of phish and a lot of user accounts
And it's probably the most advanced, and the hackers are very patient So they don't move as soon as they have one account, they wait for when they have a very large amount of accounts, and they wait until they get a very high networth accounts Following the incident, Binance suspended all the withdrawal and deposit operations and encouraged all users to reset their credentials The hack impacted the price of Binance Coin, which dropped almost 10% in the days following the hack TRON CEO Justin Sun offered to personally deposit the Tether equivalent of 7,000 BTC in order to compensate Binance’s loss, an offer which CZ politely turned down
Binance claims to be able to fully refund customers using its SAFU, an emergency insurance fund CZ claimed he was considering the possibility to roll back the hacked transaction on the Bitcoin blockchain, as a way to return the stolen funds This option, called reorganization, would imply incentivising Bitcoin miners to form a 51% consensus and generate enough hash power to reorganize the blockchain’s transactions CZ discarded this option shortly after, but still the fact that he considered it in the first place sparked a wave of disbelief and criticism in the community as such a move would completely discredit Bitcoin as a decentralized immutable network Among the critics of the idea were Vitalik Buterin and Mike Novogratz who argued that Bitcoin’s network is too mature to be altered
We talked to Bitcoin educator and developer Jimmy Song about the hack Jimmy, how surprised were you when one of the most reputable exchanges in the space got hacked? It's the same story over and over again I've been seeing this since like 2012, 2011 or something like that I mean, ever since I got into this space it's always been: hey, be really careful putting your coins on an exchange, because most people don't realize how vulnerable a lot of these services are More recently a lot of these exchanges are flushed with money, so they're able to sort of cover out of their own funds, but it's only a matter of time until one of them goes bankrupt as a result
Many praised CZ for the way he handled the crisis What do you think about CZ’s reaction to the hack? He did the right thing in disclosing it, and that's a very good thing I think too many exchanges just sort of like sweep it under the rug and hope that they can make it up later, but by making it public he's sort of taking the hit now, but long term it's good in the sense that people will trust them a little more to come clean whenever bad things happen CZ mentioned the possibility of reorganizing the Bitcoin blockchain Is a reorganization possible and if yes it is the right thing to do in your opinion? It's definitely possible and reorgs have been done before and for different reasons, it could be as simple as two miners found the block at the same time, right
It's not always the case that rewards are terrible if there's like a bargain and there's social consensus around that It might actually make sense to do it There are all sorts of game theoretical reasons why you wouldn't want to do that Especially in this case, where you have the thief with 7,000 bitcoins, even if CZ is willing to spend 7,000 bitcoins, the hacker will be able to get away with some amount of bitcoins by incentivizing miners themselves What the thief can do is, they can basically give the miners some of their trapped coins in the form of fees and say: "Okay, well if you keep mining on the other chain you're gonna get more fees
" Why would they go and try to take your money back if they're giving up their own reward So you have to compensate them It doesn't really matter what the block reward is, but you're always going to have to spend more than the thief in order to basically roll back these transactions That's how it's designed It's designed to be very-very expensive in order to roll back
And how do you think this incident will reflect on Binance’s business in the medium or even the long term? We've seen a bunch of these hacks in the past few years The pattern that I've seen is that customers don't really care that much The things that are important, it seems to the customers seeing it, are liquidity, ability to trade and things like that, and maybe leverage I personally think security should be much higher But that's not what the market seems to be saying
There's a lot of people still on Bitfinex and some of these other exchanges that have been hacked in the past I hate to say it, but it doesn't seem to have affected things any, and I imagine Binance will keep chugging along After a year of rumours and more rumours, Mark Zuckerberg's New Year’s resolution to study blockchain and crypto might be bearing some fruit Facebook is now hiring PayPal staff ahead of its mysterious crypto launch, near the end of this year MIT professor Christian Catalini is also reportedly working on the development of Facebook’s coin
About 20% of the team’s 50 members come from Paypal, no sign as of yet of their most famous son’s involvement, Elon Musk, although knowing him, he is more likely to be working on MuskCoin, the native currency of a galaxy far far away Back down to dystopian Earth, Facebook’s crypto will probably be a stablecoin called FB Coin that will allow you to buy friends or something According to reports, the social media giant is seeking investments of $1 billion and is also in talks with Visa and Mastercard They also acquired the “Libra” trademark for the token, which will be pegged to the US
dollar and have a range of applications Sources from Facebook itself have done that thing where you lock your mouth with an invisible key, declining to comment Is Facebook Coin a good idea, won’t it just make the world’s most powerful nerd villain even more powerful? Just this week, one of Facebook's founders, Chris Hughes, called for the platform to be broken up, saying that while he still believes Zuckerburg to be a good person, he has amassed too much power for one man Barclays, Goldman Sachs and JP Morgan Chase have all planned crypto trading desks, but only one Wall Street Titan has got this close In the coming weeks Fidelity Investments might be introducing its very own crypto trading desk
Earlier this year, the asset management firm launched a crypto custody service, but now they will, apparently, buy and sell crypto for their institutional clients The clients will be able to trade Bitcoin at first, but other digital assets are likely to follow Both Robinhood and E*Trade actually got into the crypto game before them, but they go after retail: Fidelity is the largest manager of retirement funds and is likely to attract an institutional client base Although it is just institutional for now, this is a sign that institutional players are no longer shy about getting into the crypto space This is something that was anticipated for 2018, but was never actually materialized, largely because of volatility and regulatory uncertainty
However, now that unsophisticated speculators are gone, more serious investors are interested in the space According to a recent study, Fidelity found that, out of 441 institutional investors, 47% think digital assets are worth investing in The bullish attitude gleaned from the survey comes at a time when the industry is still plagued by FUDy stories like Quadriga, Bitfinex and the Binance hack, but this kind of stuff apparently doesn’t deter institutional investors Take Mike Novogratz, who, despite losing $272 million in 2018, is still a believer; this week, he predicted that Bitcoin would shoot past $20K by 2021 Billionaire investor and increasingly out of touch grouch, Charlie Munger, made a discovery this week, he found out what Bitcoin investors do during their happy hour events
They gather around to celebrate the life of Judas Iscariot That’s right, the famous biblical traitor Charlie made sure to use his full name just in case you got it mixed up with all the other famous Judas’ out there Previously, he referred to crypto traders as turd traders, which at least made sense, but this latest comment makes no sense Do the investors have a shrine or a capital at the events, is the event mobile? If Judas represents Bitcoin, then is Christ the dollar and the romans are the federal reserve? And Charlie, you are only 95, get some more contemporary traitors like Benedict Arnold or something
And now Pikachu Molly, I choose you! It is now official: Bitfinex will conduct an IEO in the attempt to raise $1 billion The exchange will use the raised funds in a bid to compensate a $850 million gap in its funds The funds raised will also be used “for working capital and general business purposes” According to a recently released whitepaper, the sale will be private and it will be accessible only from outside the US
Investors can participate in the sale after going through the exchange’s KYC procedures Holders of the new token, called LEO, will be given discounts and rebates while trading on Bitfinex The LEO will be pegged to the USDT, the controversial stablecoin issued by Tether, Bitfinex’s affiliated company According to Dong Zhao, prominent Chinese trader and Bitfinex’s shareholder, the exchange already secured $1 billion in hard and soft commitments from investors for the IEO The announcement of the IEO came amidst a lawsuit which the State of New York opened against Bitfinex and Tether
According to authorities, Tether secretly gave Bitfinex a loan to cover up a $850 million loss, thus compromising the fiat reserves which should supposedly back the Tether stablecoin Bitfinex claims the funds are not lost, rather they were rather seized by various authorities, adding that it was working for retrieving the money According to an injunction filed by the Attorney General, a $900 million credit line from Tether to Bitfinex should be frozen as long as the investigation is ongoing On the other hand, Bitfinex’s lawyers claim the injunction is unjustified and likely to harm the startup’s customers and the market as a whole We reached out to Aaron Krowne, attorney at fintech-focused firm Krowne Law, and asked him to comment on the legal aspects of the Bitfinex case
So Aaron, despite the accusations, Bitfinex claimed to have acted in a transparent way towards its customers What do you think, did Bitfinex commit fraud in this case? I think they're having an issue with the legitimacy of the loan, the line of credit from Tether to Bitfinex So essentially this looks like a bailout of Bitfinex from Tether And the legitimate question here is: should a stablecoin trust fund be bailing out an exchange? That's not something that anyone would approach a stablecoin and think: "Oh, this is great I want to own a share in the stablecoin and I'm going to participate in this if it runs around bailing out exchanges
" So that would have to be judicially hashed out in a situation like this and basically be down to the court to determine whether this was fraudulent and besides that whether it's a legitimate use of Tether's funds Bitfinex’s lawyers questioned the legitimacy of the Attorney General’s injunction, as there is no evidence Tether qualifies as a security or a commodity under the Martin Act What do you think about that, is that a solid argument? They don't want to be under the jurisdiction of the securities That just gives more compliance points They would have to follow more disclosures, more restrictions, plus more enforcement rights including multiple damages, different sorts of damages that would be opened up if they were considered to be a security
So that's something, you know by default, if you're doing something like stablecoin or any sort of asset on deposit you don't want to be a security, you want to be under a different narrower set of laws So that's something that anyone would argue in that situation And do you think that this upcoming IEO is going to have any consequences on the legal dispute? I don't know if it has much of a direct tie into the legal dispute I suppose it could be piled on, as sort of a claim of the nature "Why are you guys trying to raise funds, when you're misrepresenting something else?" If it's deemed that they are misrepresenting something else
So it's certainly a situation where probably my advice would be don't do that, don't try to raise capital while you're fighting out a capital deficit in court So it's not a great thing to be doing I think, but it doesn't necessarily have a direct bearing So what was your favourite Pokemon as a kid? Comment below! And if you would have a choice today to have one Bitcoin right now or your own Pikachu, what would you choose? Because I know what I would choose
