Bitcoin price rallied towards the $3,750 level and later started a downside correction against the US Dollar.There is a key bearish trend line formed with resistance at $3,640 on the hourly chart of the BTC/USD pair (data feed from Kraken).The price is likely to correct lower towards the $3,550 or $3,500 support levels before a fresh rally.Bitcoin price climbed higher and settled above the $3,500 resistance against the US Dollar. BTC is currently correcting lower, but dips remain supported above the 100 hourly SMA.Bitcoin Price AnalysisIn the weekly analysis, we saw a solid upward move above $3,500 in bitcoin price against the US Dollar. The BTC/USD pair even broke the $3,600 and $3,650 resistance levels. A fresh yearly high was formed at $3,745 and the price settled above the 100 hourly simple moving average. Later, the price started a downside correction and traded below the $3,700 and $3,650 levels. There was a break below the 23.6% Fib retracement level of the last wave from the $3,341 low to $3,745 high.At the moment, the $3,580 level is acting as a strong support. If there is a downside break, the price could test the $3,550 support level. It also coincides with the 50% Fib retracement level of the last wave from the $3,341 low to $3,745 high. More importantly, the 100 hourly simple moving average is positioned at $3,525 to act as a strong support. On the upside, an initial resistance is near the $3,625 level. There is also a key bearish trend line formed with resistance at $3,640 on the hourly chart of the BTC/USD pair. The pair must break the trend line and $3,650 for a fresh upward move.Looking at the chart, bitcoin price is showing signs of a downside correction below $3,600. However, as long as the price is above the $3,550 and $3,500 support levels, buyers remain in action.Technical indicatorsHourly MACD – The MACD moved back in the bearish zone, with a negative angle.Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 50 level, with a bearish bias.Major Support Level – $3,550Major Resistance Level – $3,650
Archives for February 10, 2019
Ripple price failed to retain gains and traded below the $0.3080 support against the US dollar.There is a key connecting bearish trend line in place with resistance at $0.3065 on the hourly chart of the XRP/USD pair (data source from Kraken).The pair must stay above the $0.3000 support and the 100 hourly simple moving average to bounce back.Ripple price is currently correcting gains against the US Dollar and Bitcoin. XRP/USD is at a risk of a sharp decline if it breaks the 100 hourly SMA and $0.3000.Ripple Price AnalysisThe recent uptrend in bitcoin and Ethereum helped ripple price is climbing above $0.3000 against the US Dollar. The XRP/USD pair broke the $0.3100 resistance level and traded towards the $0.3200 level. A high was formed at $0.3199 and later the price corrected lower. It moved below the $0.3150 support and 50% Fib retracement level of the last wave from the $0.2864 low to $0.3199 high. The price even broke the $0.3000 support once and tested the 100 hourly simple moving average.At the moment, it seems like the 100 hourly simple moving average is acting as a strong support above $0.3000. The 61.8% Fib retracement level of the last wave from the $0.2864 low to $0.3199 high also acted as a support. However, there are many resistances on the upside near the $0.3050 and $0.3060 levels. Besides, there is a key connecting bearish trend line in place with resistance at $0.3065 on the hourly chart of the XRP/USD pair. The pair needs to break the $0.3060 resistance and the bearish trend line to gain bullish momentum. If not, there is a risk of a downside break below the $0.3000 support.Looking at the chart, ripple price is finding a strong support near the 100 hourly SMA, below which it could tumble towards $0.2900. The next key supports are at $0.2920 and $0.2910, followed by $0.2850.Technical IndicatorsHourly MACD – The MACD for XRP/USD is about to move back in the bearish zone.Hourly RSI (Relative Strength Index) – The RSI for XRP/USD is currently just near the 50 level, with bearish signs.Major Support Level – $0.2920Major Resistance Level – $0.3060
Sina Nader is the founder of CryptoLux Capital, a private asset management firm. Daniel Cawrey is CEO of Pactum Capital, a crypto hedge fund, market maker and liquidity provider.
If it walks like a VC, talks like a VC and acts like a VC, it’s probably not a hedge fund. And yet numerous crypto fund managers who’ve launched in the last few years have opted for the hedge fund model. Many of them probably should have gone with a venture capital structure.
Traditionally, hedge funds are measured on their performance over short, discrete periods of time. Months, quarters and years. This makes sense for established markets such as stocks. Price discovery is immediate – one can look up the price of Apple or Netflix pretty quickly.
This could also work for crypto funds, but only if they invest in assets that can be priced immediately (e.g., BTC, ETH, etc.). Otherwise, they may have been better off with a venture capital fund structure.
A Bad Setup
There is evidence that many crypto funds launched with a less-than-ideal structure: prominent crypto hedge funds are now launching venture funds. Some are doing this while blocking investors from pulling capital from the original hedge funds.
In addition, several funds are now using something called side pockets. A mechanism to make long-term, illiquid investments, side pockets cannot be properly valued by a market because there generally isn’t one. Many funds invest in project tokens or take equity stakes in crypto companies. However, these are investments in assets that cannot be valued precisely.
This is because most of these early crypto projects don’t trade freely on an open market. And so, a crypto hedge fund starts to look and feel more like a venture capital fund.
In early 2018 Polychain Capital set up a venture fund. Source: SEC
The issue with many crypto hedge funds is a natural preference that skews toward venture-style rather than hedge fund-style investment. They are more comfortable making long-term investments. And this is a fundamental flaw when you try to wrap it in a hedge fund structure that is short-term focused.
It creates a situation where the hedge fund manager may actually be right, but get penalized for it. They may invest in some crypto asset that becomes widely used for distributed file storage, for example. However, the investment gets destroyed on a yearly performance basis. This is because before the investment thesis was confirmed, the crypto asset fell off a cliff several times on its way to the top.
The Curious Case of ‘Crypto Hedge Fund’ Performance
Let’s take the case of ABC Crypto Fund (not its real name).
ABC is run by a team of highly accomplished technologists hailing from Ivy League schools. ABC finished 2018 down over 70 percent. The managers of ABC do not have any professional money management experience. It appears they have not entertained the possibility that their love for the tech they selected may not be aligned with current market sentiment. Otherwise, perhaps their current outcome would be different.
Or consider XYZ Crypto Fund (again, not its real name). XYZ is run by vocal technologists who publish their views with a tone and conviction so fervent that it would embarrass a religious extremist. Reading their thought pieces, one might think they had achieved union with the sacred energy permeating the universe. It feels like they are granting mere mortals a peek behind the curtain to see the inner workings of the cosmos, expressed in crypto terminology.
So what happened with XYZ? Lost about half of their investors’ money in 2018. The irony is that they even tout their fund’s similarity to VC funds— but alas, they elected to organize themselves as a hedge fund.
We wish managers like ABC and XYZ well and hope that they ultimately succeed. We are long-term believers in crypto and digital assets. But we also have to call a spade a spade.
In fairness, it may have been difficult to predict what the optimal structure should have been for crypto funds. Hindsight is 20/20. If we look at things dispassionately, we see many fund managers who espouse a venture-style view, attempting to hold investments in a hedge fund vehicle.
Said another way, they have a 5- or 10-year horizon (like a VC), but they’ve packaged their funds in a short-term delivery vehicle (like a hedge fund manager). Perhaps this is why, when asked about their 2018 performance, they often say that they’re “investing for the long term.” Also that the technological promise is so great, that being “distracted by returns in the short term” is a mistake.
In 2018, the typical crypto hedge fund was down 69.95 percent. Source: Eurekahedge.
In certain situations, a hedge fund model does make sense for crypto. Some of the best performing crypto funds of 2018 were structured as hedge funds. Rightly so—they employed specific strategies that make sense for a hedge fund structure. Suffice it to say the hedge model can work well. Some funds finished 2018 with double-digit positive returns even as some of the most prominent funds were slaughtered.
Market forces will eventually sort things out after a requisite period of fairly intense pain. In the meantime, the time is right to bring a more realistic view to the crypto investment space.
Hope and enthusiasm for technology are great. But certain principles of finance have persisted throughout the centuries for good reason. Technology may well change the world for the better. However, economics and market forces cannot be out-coded and should certainly not be over-engineered.
The problem is one cannot have both. No one investing in tokens can reasonably say it is for the long term. If they truly had a long-term focus, these investors might as well invest in regular seed/series A rounds.
So, if you want to get into the game of picking the winning technologies in crypto, do yourself and your investors a favor. Call yourself by your proper name: A venture capitalist.
Special thanks to Ms. Birgitte Rasine for helping to edit this article.
Disclaimer: This article represents the views and opinions of the authors. It is not an offer to buy or sell securities. The information in this article is intended for informational purposes only and is not intended to constitute investment, financial, legal, tax or accounting advice. Past performance is not a guarantee of future results. Please consult an appropriate advisor and do your own research before making investment decisions.
Duck image via Shutterstock
ETH price extended gains and traded above the $118 and $120 resistance levels against the US Dollar.There was a break above a major bearish trend line with resistance near $117 on the hourly chart of ETH/USD (data feed via Kraken).The pair traded towards the $125 resistance and later corrected lower towards $120.Ethereum price is placed nicely in an uptrend against the US Dollar and bitcoin. ETH/USD could correct a few points, but dips remain attractive in the near term near $116.Ethereum Price AnalysisIn the weekly analysis, we discussed the chances of more gains above $120 in ETH price against the US Dollar. The ETH/USD pair corrected a few points, found support near the $115 level, and finally bounced back. It gained pace above the $116 and $118 resistance levels. Buyers were successful in clearing the key $120 resistance to set the pace for a new monthly high. More importantly, the price stayed well above the $114 support and the 100 hourly simple moving average.During the rise, there was a break above a major bearish trend line with resistance near $117 on the hourly chart of ETH/USD. The pair broke the $122 swing high and traded to a new monthly high at $125. Later, there was a sharp downside correction below the $122 level. The price traded below the 50% Fib retracement level of the last wave from the $114 low to $125 high. However, the previous resistance near the $120 level acted as a support. Besides, the 61.8% Fib retracement level of the last wave from the $114 low to $125 high prevented losses. At the outset, the price is slightly bearish and it could correct further towards the $116 level.Looking at the chart, ETH price is still placed nicely above the $116 and $114 support levels. If there are dips, buyers are likely to protect nasty losses below the $114 level or the 100 hourly SMA.ETH Technical IndicatorsHourly MACD – The MACD for ETH/USD is placed nicely in the bullish zone.Hourly RSI – The RSI for ETH/USD is currently just below the 60 level, with a flat structure.Major Support Level – $116Major Resistance Level – $125
Everipedia, the crypto community’s answer to Wikipedia (which has all the articles Wikipedia had at the time of the fork in 2017), will be using geospatial blockchain technology provided by XYO to verify the validity of point-of-interest information on the decentralized encyclopedia.
The decentralized Wikipedia alternative has an incentive structure using the IQ cryptocurrency, an EOS token. The Wikipedia alternative has the backing of Wikipedia co-founder Dr. Larry Sanger, who joined the project less than 6 months after launch. XYO is a geospatial blockchain company that provides accurate data location. What do the two have in common? Well, they’re working on a project that will enable Everipedia users to prove the value of their knowledge.
Wikipedia Alternative is its Crypto Cousin
The new technology will work primarily with points of interest, at least at first, although Everipedia foresees other uses of XYO’s services. Co-founder Markus Levin, also XYO’s Head of Operations, told CCN:
“We enable users to prove their knowledge. Let’s say you’re writing about the Statue of Liberty and you’re in India. You’ve never been to the Statue of Liberty. Your knowledge is second-source. It has a different qualifier than if you’re a professor of history and you’ve been to the Statue of Liberty many times. You’re a primary source.”
Validity of Information Bolstered by Location Data
CCN had an exclusive opportunity to talk to representatives from both companies about the partnership. We got some background on the Everipedia project from co-founder Theodor Forselius, who told us:
“Everipedia looked at the rest of the Internet. We realized that all other aspects of the internet like search engines, e-commerce, social networks, have evolved over the past two decades. There’s been a bunch of competition driving innovation forward. But with online encyclopedias, it’s just been Wikipedia and nothing else. We basically just saw a huge vacuum of opportunity.”
The project now has a couple million monthly users and over 1 million original articles. The content standards are entirely determined by the community of IQ token users. Submitting a new article incurs a cost in crypto tokens. If an edit or new article is approved by other users, the submitter gets their stake back plus a bit more from the network. If not, the funds are held for a period of time and eventually returned to the user. The incentive structure aligns to seriously discourage spam and low-quality posting. The Wikipedia approach to this has been a massive staff of volunteer editors who have arguably created an environment actually unfriendly to the free exchange of information.
Mass Adoption Requires Broad Interest
Forselius believes that non-financial applications of decentralized technologies are what will most likely cross over into mass adoption.
Wikipedia is the 5th most visited website in the world. As a non-profit, it cannot pay its own costs. Instead, it does an annual fundraiser as a non-profit, relying every year on users to pay the bills. Wikipedia also obeys censorship restrictions around the world.
By contrast, Everipedia is censorship-resistant. It runs on IPFS, the “permanent web.”
The Everipedia co-founder said of mass adoption:
“The main issue with the blockchain space and the state of dApps right now is it’s too much about blockchain and crypto. The terminology and the marketing, front-facing stuff for the users. So I think what’s really going to take a project like Everipedia to the masses is focusing on being a better product. We want to attract users because we are superior to Wikipedia.”
Enterprise Doesn’t Care About Your Crypto Creed, They Care About Performance
Markus Levin agrees that superiority of the technology is its primary selling point, not the buzz around blockchain and cryptocurrency. He said:
“We work with enterprises and it’s always solutions-based, right? They don’t call it a blockchain company. It’s all about the solutions we provide. It happens to be powered by blockchain. We have a number of companies coming in and out of our office every day, and it’s always, okay, you provide ledgers that are immutable, or you can certify the data, and so on. It’s always about the solution and the opportunity versus the blockchain. We differ from a lot of blockchain companies in this respect.”
The new system that will enable writers and photographers to verify their first-hand knowledge of subjects will be available to Everipedia users sometime in the second quarter. As a side note, Everipedia’s Theodor Forselius told us that Everipedia presents a new opportunity for people in places like India, where Wikipedia has a growing user base, to potentially earn a living or a secondary income by contributing to articles on the country.
Featured Image from Shutterstock
After Friday’s straight out of left field rally, analysts have begun to express optimism for the first time in a blue moon. In fact, one industry insider claims that technical analysts centered on Bitcoin (BTC) are switching gears from bearish to bullish. But will their forecasts hold up?Related Reading: Analyst Claims That Bitcoin (BTC) Could Surge to $5,000 in Coming WeeksTom Lee Downs The Bitcoin Red Pill AgainIt appears that Tom Lee has downed the Bitcoin red pill yet again. After making an appearance on Fox Business, in which he touted his decidedly optimistic sentiment, the Fundstrat Global Advisors co-founder and research head took to Twitter to double-down on a bullish narrative.Citing, a piece of analysis from the ill-named “Magic Poop Cannon,” a well-followed, yet oddly titled crypto trader, Lee remarked that technical analysts that were bearish in early-2019 are becoming “incrementally bullish” on BTC. But why is that?CRYPTO: Some TA’s who were bearish in 2019 are becoming incrementally bullish on #BTC $BTC
The one below refers to the 200-week mavg acting as support, something @rsluymer @fundstrat TA also noted as key support for Bitcoin.https://t.co/QOBqcQ83FV— Thomas Lee (@fundstrat) February 10, 2019According to the analysis that Lee, a former managing partner at JP Morgan & Chase, cited, the odds are increasing that the “Bitcoin Bear” is dead. Magic, who made a comment that BTC is most likely to bottom at $2,000 earlier this week, remarked that Friday’s jaw-dropping rally presents a positive technical case for the flagship cryptocurrency.The trader remarked that Friday’s 8% move, which set BTC above $3,700, rallied back into a triangle formation that was important before the late-January sell-off. Magic claims that if BTC can close its daily candle above ~$3,600, “this [will be] very bullish.”Magic then drew parallels between the 2014/2015 bear season bottom and the price action seen as of late. He concluded that while there are differences, BTC is currently “trending in a similar manner to the way it moved at the exact bottom of the last bear market.”Yet, it was also explained that the 200-week moving average remains a key line of support for Bitcoin, meaning that a foray under that level, currently situated at $3,300, could reverse this trend.Fundstrat Is Optimistic On 2019’s Prospects For CryptoAs hinted at earlier, Lee’s recent “hopium” high comes after he made an appearance on American television to talk Bitcoin. He explained on-air that $25,000 is a “fair value” for the leading cryptocurrency, citing the thirst for an uncorrelated digital asset that isn’t only used for speculative purposes, but as a newfangled form of money and store of value too.This recent comment also comes after Lee’s New York-based investment advisory outfit released its 2019 Crypto Outlook report. As reported by NewsBTC previously, Fundstrat laid out a number normal of macro, technical, fiat-to-crypto inflows, blockchain technology, and equity trends to explain why the outlook for Bitcoin and other cryptocurrencies could improve over 2019.Featured Image from Shutterstock
The Bitcoin community will be rolling its eyes right about now. Bitcoin Cash developer Amaury Sechet, the self-described “benevolent dictator” of the Bitcoin ABC (primary) implementation of BCH, has claimed he is Satoshi Nakamoto.
I am Satoshi Nakamoto. There it is said and I can prove it:
— Deadal Nix (@deadalnix) February 8, 2019
In the event the tweet is later deleted, here’s a screenshot:
The Benevolent Dictator
Sechet and Bitcoin ABC were cited by former Bitcoin Cash developer (now on Bitcoin SV) _unwriter as a primary problem for the BCH ecosystem. _unwriter believes that virtually anything that Bitcoin ABC wants, ABC gets, which he sees as toxic for decentralization. The power of Bitcoin ABC was a motivating factor in the BSV fork’s foundation. _unwriter recently launched a number of projects on Bitcoin SV.
In a follow-up tweet, Sechet provides some clues:
The hash of the message is 69ea465fc5f924b61dd51514617a8f2118bc1363c7a91a249d1ac404662139b3
It’s content will be revealed soon.
If you don’t believe me, stiff!
— Deadal Nix (@deadalnix) February 8, 2019
A Stack Exchange post by Bitcoin Core developer Gregory Maxwell explains that faking Satoshi’s identity is easier than one might expect.
“So, for example, a couple years ago Craig Wright claimed to ‘prove he was Satoshi’ by simply copying some pre-existing signatures out of the blockchain and posting somewhat obfuscated instructions on verifying them. It was figured out pretty quickly, but still managed to fool a lot of people– they were too caught up in the mumbojumbo to think of the obvious.”
Most people have so far taken the post in a light-hearted manner, like this:
I knew that all along. Your beard gave it away. One look at that beard of yours and I knew you were Satoshi Nakamoto.
— SpinBCH.com (@spinbch) February 8, 2019
Indeed, there’s a greater-than-zero possibility that Sechet is joking — perhaps even taking a not-so-subtle jab at Craig Wright. Let’s hope so anyway, goodness knows one Faketoshi is enough.
Jury Is Out on Amaury Sechet Being Bitcoin Creator Satoshi Nakamoto
However, we are journalists. We have to report on the fact that a prominent BCH developer is now appearing to claim the name Satoshi Nakamoto. Certain questions arise as to the nature of Sechet’s wealth. For one thing, if he’s Satoshi Nakamoto and he doesn’t believe in Bitcoin Core anymore, why not just cash in his billions and pump the Bitcoin Cash price?
For his part, the last person to publicly claim he was Satoshi Nakamoto was bitter about the idea:
A shame you fail to understand even the basics concerning bitcoin
Please continue down that path.
Do not allow me to stop you.
How about you swear an oath formally… pic.twitter.com/yjB6Z2bpgi
— Dr Craig S Wright (@ProfFaustus) February 9, 2019
While we’re on the subject of Craig S. Wright, there is growing (unverified by CCN) speculation that he may be an academic plagiarist:
The Craig Wright fraud scandal gets worse and worse the more we dig. He copied Sections 3 (minus 3.1), 4, 5, 6 from Liu & Wang:https://t.co/kLR8TyodIE
— Peter R. Rizun (@PeterRizun) April 10, 2018
The story is still developing, as Sechet has yet to post any more information. The last tweet he made related to the claim was a re-tweet of someone else claiming he was telling the truth:
— Steve Davis λ (@komone) February 8, 2019
Here’s a relatively recent interview with the developer:
Rest assured, CCN will be hot on this story. We’ve reached out to Amaury Sechet for an interview, any interesting results of which we will post forthwith.
Featured Image from CoinGeek/YouTube
After an incredibly positive week for Litecoin (LTC), it has been able to continue its upwards price surge today and is one of the few major cryptocurrencies that has surged during an overall quiet trading session in the crypto markets.Today’s upwards move has brought LTC to the top of its resistance region, and a break above this level could lead to a significantly further price surge.Litecoin Price Surges During Quiet Trading SessionAt the time of writing, Litecoin (LTC) is trading up over 7% at its current price of $46.8. LTC is up significantly from its weekly lows of $32, which were set earlier last week before the cryptocurrency began climbing.Instinct, a popular cryptocurrency trader on Twitter, spoke about LTC’s recent price surge, noting that it is now pushing up against another resistance level.“$LTC showing no signs of slowing down. Pumping on a Sunday morning straight to the top of this 3D resistance level… Very happy with my long from avg ~.093 on Mex. Want to add but not until I see some type of retest after a S/R flip. Looking quite impulsive now,” he explained.$LTC showing no signs of slowing down. Pumping on a Sunday morning straight to the top of this 3D resistance level.Very happy with my long from avg ~.093 on Mex. Want to add but not until I see some type of retest after a S/R flip. Looking quite impulsive now! pic.twitter.com/htqFMBPomH— Instinct (@instinctxbt) February 10, 2019Litecoin (LTC) Nears Weekly Resistance LevelAlthough today’s upwards surge is certainly positive for LTC, it still has a ways to go before it pushes against its major weekly resistance level.SalsaTekila, another popular cryptocurrency analyst on Twitter, noted that Litecoin’s strong weekly resistance level currently lies around 0.0165 BTC, up slightly from LTC’s current price of 0.0128 BTC.“$LTC analysis, tapping a fresh daily supply zone. Bottom grey is weekly support, top grey is weekly resistance. Looks to me like a local top.”/5 $LTC analysis, tapping a fresh daily supply zone. Bottom grey is weekly support, top grey is weekly resistance. Looks to me like a local top. pic.twitter.com/tZZZYzZC5c— SalsaTekila (JUL) (@SalsaTekila) February 9, 2019Other Cryptocurrencies Experience Mixed Trading Session Although LTC is surging today, most cryptocurrencies are trading mixed today.At the time of writing, Ethereum is trading down marginally at its current price of $118.65. ETH is up significantly from its weekly lows of $103 and has established the low-$100 region as a strong level of support.XRP has dropped over 1% today and is currently trading at just above $0.30. XRP has historically treated $0.28 as a region of support, which is slightly above its 2018 low of $0.25.Bitcoin Cash is one of today’s worst performing cryptocurrencies, as it is trading down 2.3% at its current price of $123.86. However, BCH is still up from its weekly lows of $112.Featured image from Shutterstock.
Ever since the security breach of Coincheck in January 2018, formerly the largest crypto exchange in Japan, local authorities have imposed a stricter process in granting licenses to trading platforms that support Bitcoin and other cryptocurrencies.
Recently CCN reported that Brock Pierce, the co-founder of Blockchain Capital, disclosed his plans to revive Mt. Gox, an exchange which lost billions of dollars in user funds stored in Bitcoin in 2014.
By distributing $1.2 billion currently held by Mt. Gox and reinstating the company’s operations, Pierce wants to reimburse every creditor of Mt. Gox through a process called Rising Civil Rehabilitation.
But, to operate as a cryptocurrency exchange in Japan, Mt. Gox will have to obtain a license from the FSA. Will the now-defunct cryptocurrency trading platform successfully obtain the approval of the FSA?
It All Depends Whether Mt. Gox Could Distribute $1.2 Billion in Crypto Holdings
The FSA has become significantly more rigorous in approving cryptocurrency exchanges.
Last month, the FSA granted its first license to a cryptocurrency exchange in well over a year to Coincheck, the company that suffered a high-profile hacking attack which ultimately led to the loss of over $600 million in user funds.
Main takeaways from Coincheck press conf:
– only NEM impacted
– plans to continue operating, restart trading
– not clear on plan to repay customers
– no multisig💀
– wouldn’t admit security was weak
– not sure how hacked, if domestic or foreign hackers
– CEO barely spoke
— Yuji Nakamura (@ynakamura56) January 26, 2018
It took Coincheck more than 12 months to relaunch and restore its operations after finding an investor that was capable of paying back users that were affected by the security breach.
Monex Group, the parent company of Coincheck, said:
“Coincheck Inc announced today that it has registered with the Kanto Financial Bureau as a cryptocurrency exchange agency in accordance with the Payment Service Act, effective January 11, 2019.”
However, the Mt. Gox case is arguably worse than Coincheck because of the complexities involved.
Currently, Mt. Gox – led by Brock Pierce – is focused on distributing $1.2 billion in Bitcoin to creditors so that the firm can restructure and ready for a relaunch.
The core problem with the Mt. Gox case is that there is a pending $16 billion lawsuit filed against the company by CoinLab which reportedly alleged the Japanese exchange for breaching a contract.
The case is not filed against Mt. Gox but rather against the creditors of Mt. Gox, as Mark Karpeles, the former CEO of the exchange, explained.
In an event in which the court sides with CoinLab and the lawsuit is settled, the amount of compensation Mt. Gox could be ordered to pay will have to be paid for by the creditors.
Simply put, if CoinLab wins the lawsuit, the $1.2 billion holdings of Mt. Gox, which was planned to be distributed to creditors, will have to be used to settle the case.
“This lawsuit today is not CoinLab vs. MtGox, but CoinLab vs. the MtGox customers, now creditors, who have done nothing to deserve being involved in this,” Karpeles said in May 2017.
It Could Take a Long Time For Mt. Gox to Relaunch
Coincheck needed a full year to relaunch and restore its operations even after the company found an investor which promised to reimburse users of the exchange.
The Coincheck case also did not have pending lawsuits or complaints in the magnitude of Mt. Gox that slowed down the process of the restoration of the company.
As of February, there are too many variables involved in Mt. Gox that could prolong the process of relaunching the infamous Bitcoin exchange.
The community has responded positively to the plans of Brock Pierce to lead an initiative that could potentially restore the reputation of the global cryptocurrency sector and reimburse all of the creditors of the exchange.
Hey @brockpierce My losses from MtGox inspired me to create the glass books transparency protocol in 2014 and then launch https://t.co/ZFal4LaVyS to be the most transparent exchange in the world. If you want help in the resurrection let’s talk.https://t.co/NSL3XGEeuM
— Vaultoro J.Scigala (@Vaultoro) February 9, 2019
But, considering the FSA’s tightening of policies surrounding cryptocurrency exchanges and the variables in the Mt. Gox case, it could take a significantly longer time than Coincheck to revive Mt. Gox.
Bitcoin Image from REUTERS / Kim Kyung-Hoon
In a matter of weeks, the demise of QuadrigaCX, once Canada’s largest Bitcoin exchange, has reached the front pages of mainstream media outlets worldwide. Bloomberg, Reuters, and Fox Business are among the mass of notable outlets that have covered this debacle.While their coverage of this situation has brought things to light that should be known, relatively little attention has been given to those affected, a purported 115,000. Some lost close-to-zero in funds, while others lost their life savings. Bloomberg recently sat down with one Canadian client of the platform, who lives in the same city that the exchange purportedly has headquarters in. His story wasn’t pretty. Please heed his story.Related Reading: QuadrigaCX Reportedly Didn’t Lose Access to Bitcoin Funds – is it More Than a Mistake?Vancouver QuadrigaCX User Loses $422,000 After Sale Of BitcoinUnfortunately, the QuadrigaCX case hasn’t been without its victims. In the aforementioned interview, victim Tong Zou explained his story. Zou, a thirty-something Canadian software engineer who held a variety of developing stints (BitTorrent, Spiget, Walmart, etc.) in Silicon Valley, moved to Vancouver just months ago in search of something new. As expected, Zou sought to move his savings, then situated in accounts of American financial institutions, which were valued at over $400,000.While such a move is mandated, especially for so-called “repats” looking to start anew in their own home nation, Zou chose a peculiar route. This was, of course, to purchase Bitcoin on American exchanges, before moving said cryptocurrency holdings over to Canadian exchanges for subsequent liquidation.Like many newcomers to the Canadian crypto economy, Zou was drawn in by QuadrigaCX, determining that the Vancouver-based exchange was the right platform for him to use. Maybe, he thought that he could visit the exchange’s ‘offices’ if things went south. Anyhow, he deposited his Bitcoin, effectively a majority of his liquid assets, and liquidated the cryptocurrency for $560,000 Canadian dollars.As Zou needed the money for a deposit on a Vancouver property, he issued a withdrawal request. Yet, Quadriga failed to pay its dues, and left Zou hanging for months on end. He remarked:“I wasn’t using it for trading — I just wanted to move my money over to my Canadian bank account… What I didn’t know was that my withdrawal would be pending or incomplete and it never got deposited in my bank account. I’ve been waiting four months so far.”While online hearsay indicates that users receive their withdrawals… eventually, Quadriga’s sudden closure likely put a nail in the coffin for Zou, so to speak.Zou, who believes that it isn’t curtains closed for the $422,000 that he is owed, is currently coordinating class-action efforts with his fellow victims, who have purportedly turned to Bennet Jones LLP and McInnes Cooper.This recent harrowing story comes as Elementus, a blockchain research unit, divulged that there’s a chance that QuadrigaCX never held 430,000 Ethereum (ETH) in its supposed “cold storage” wallets. Rumor has it that the company never held $100 million worth of Bitcoin either.Featured Image from Shutterstock