Cryptocurrency derivatives exchange BitMEX, and its executives, are facing a lawsuit for alleged racketeering, money laundering, wire fraud and unlicensed money transmission.

Deliberately designed for illegal activities?

In a lawsuit filed by BMA LLC in the United States District Court for the Northern District of California on 16 May, BitMEX was accused of being “deliberately designed, from the ground up” to aid or abet in a “myriad of illegal activities.” 

The top of executives of HDR Global Trading, BitMEX’s parent company, including Arthur Hayes, Ben Delo, and Samule Reed, are also individually accused of engaging in, or abetting, the crimes in the lawsuit, with the plaintiff saying the magnitude of the illegality committed at BitMEX is “truly staggering.”

Biggest unlicensed money transmission crime in US history?

Though HDR trading is listed in the Seychelles, the lawsuit was brought in California because BMA LLC claim that BitMEX’s executives have close connections to the state, and the Northern District. Backing this up, the plaintiff has cited sources claiming that almost 15% of BitMEX’s trading volume, which was around $138 billion, involved US-based traders – something BitMEX vigorously denies. 

If the accusations are true, it could mean that BitMEX handled around $3 billion of money transfers each day, despite not being licensed as a money transmission business in the United States – which would mean BitMEX was guilty of the biggest crime of its kind in US history. 

The plaintiff also accused HDR Trading of registering in the Seychelles solely to avoid scrutiny, quoting Hayes himself as having said the company had been registered there because it was cheaper to bribe officials than in the United States. 

To give some perspective on this point, despite popular misconceptions, according to Transparency International, the level of corruption in the Seychelles is not high – with the country ranking at 27th out of 180 (with 1 being least corrupt, and 180 being most corrupt). This places it far above countries like Malta, the EU-member state and iGaming/blockchain hub, which ranked 50th. 

Allegation after allegation…

But it doesn’t end there. BMA LLC has also accused BitMEX and its executives of racketeering, cryptocurrency market manipulation, wire fraud and many other illegal activities. 

Specifically, the lawsuit claims the way BitMEX operates allows manipulators and money launderers to operate with ease, enabling them to run an unlimited number of anonymous and unverified accounts, subject to no limits. 

It is also claimed that BitMEX deliberately uses fake technical problems, like system overloads and crashes to ensure it can control which specific trading orders are completed during volatile market conditions, and to manipulate price fluctuations and trigger liquidations. 

The exchange is also accused of operating its own for-profit trading desk, that trades against BitMEX’s own customers, making use of inside information. The fact that BitMEX admitted insider trading in April 2018 won’t help their defence on this point. 

In all, there are more than 100 pages of specific allegations in the lawsuit. 

AYO.NEWS says:

BitMEX and its executives, especially Arthur Hayes, are no stranger to controversy, but clearly the sheer scale and seriousness of the accusations in this lawsuit have the potential to sink the exchange entirely, and change the lives of its executives. 

With BitMEX also being sued by early investors to the tune of $540 million, the pressure really is mounting on the company. As with all these cases in the United States, it’s sure to be a long-drawn out process, but there will be millions of people watching it closely… 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

All original content featured on this site is © Pentagon Digital Limited, 2020

Social blogging platform Reddit’s ETH-based Community Points rewards are proving a hit with Fortnite players. 

Since being rolled out on the Rinkeby testnet over two subreddit communities covering Fortnite (r/fortniteBR) and and cryptocurrency (r/cryptocurrency), between 13 and 15 May, more than 80% of the wallets created have been from the Fortnite community. 

Points earned by each subreddit will have their own unique name. The cryptocurrency subreddit points are called ‘Moons’, while those for the Fornite subreddit are called ‘Bricks.’ Reddit has said it plans to distribute 50 million Moons initially, with a total cap of 250 million. 

Apparently, within three days of launch, over 10K users had signed up, with the vast majority to hold r/fortniteBR’s Bricks, and just over 2K to hold r/cryptocurrency’s Moons. Transaction activity from both groups was identical so far. 

Reddit is planning to migrate its ERC-20 based Community Points scheme from the Rinkeby testnet to the Ethereum mainnet later this year, though no schedule has been provided for its rollout to the entire 450 million user base. 

In general the Ethereum community seems to be welcoming Reddit’s Community Points, seeing it as a potential significant adoption driver, though some have raised concerns it may cause Gas prices to surge. 

AYO.NEWS says:

We’d hazard a guess the much larger uptake from Reddit’s Forntite community compared to its crypto community is probably due to “toke fatigue” and cynicism among those who are more familiar with the crypto world. Still, considering the sheer size of Reddit’s user base, its Community Points scheme has the clear potential to drive adoption significantly. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

All original content featured on this site is © Pentagon Digital Limited, 2020

Open interest on Chicago Mercantile Exchange Bitcoin options has exploded over the last week or so, surging over 1,000%. 

Data from Skew, the cryptocurrency markets data analytics and trade execution services company, shows open interest climbing to $142 million in the first half of May. Open interest is the sum of all the contracts at the time that have not expired, been exercised or physically delivered. 

Though there were notable spikes on 5 and 6 May, trading normalised immediately before the Bitcoin (BTC) halving on 11 May, only to rocket to $17 million on the day itself, and then surge to between $30m and $40m in the days since. 

Institution investment in Bitcoin (BTC) had been growing steadily during the runup to the halving, with major players like Grayscale and Fidelity Digital increasing their positions, but the scale of this spike may surprise many. 

CME #bitcoin options open interest is up 10x this month pic.twitter.com/D7tIpx5t8B

— skew (@skewdotcom) May 15, 2020

AYO.NEWS says:

The massive increase in open interest on Chicago Mercantile Exchange Bitcoin options could well reflect the growing expectation of a massive COVID-19 lockdown-induced economic crash in traditional markets, much more than a reaction to the halving. 

As we’ve previously speculated, with analysts around the world warning of an economic downturn unprecedented in modern times, we could be approaching the ‘moment of truth’ for Bitcoin (BTC). 

Staying with Bitcoin and the halving, as we reported a few days ago, when the 629,000 block was mined, an ominous message was inserted by f2pool. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

All original content featured on this site is © Pentagon Digital Limited, 2020

Leetify, the Swedish AI coaching platform developer, has raised €900,000 in seed funding, in a round led by Finnish tech fund Inventure. 

Other investors in the round, which exceeded the company’s €864,000 target, included Swedish venture capital firm J12 Ventures, and Danish early-stage venture firm Futuristic.vc. 

Founded by Anders Ekman (CEO) and Vitalii Zurian (CTO), Leetify uses artificial intelligence to automatically analyse Counter-Strike: Global Offensive matches for players, covering things like aim, positioning, utility usage, recoil control, counter strafing, and crosshair placement, and provides tailored in-game practice. 

Despite only launching in September 2019, the company says it now has 10,000 active monthly users on the platform. The company says it intends to use the newly raised capital to accelerate its growth by improving products and expanding its team. 

AYO.NEWS says:

With esports turning into big business, and no shortage amatuer players around the world setting their sights on turning pro and building their careers as athletes, we can imagine there’s plenty of scope for growth and expansion for Leetify. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

All original content featured on this site is © Pentagon Digital Limited, 2020

Yesterday it emerged that international payment giant Visa has filed a patent for a blockchain-based “Digital Fiat Currency.”  

It seems Visa filed the patent with the US Patent and Trademark Office back in November 2019, though it was only published yesterday, on 14 May 2020. 

Apparently, Simon J Hurry, and Alexandre Pierre, filed the application on behalf of San Francisco-based Visa International Service Association, which seeks a patent for a digital currency recorded on a blockchain, and controlled by a “central entity computer.” 

The application mentions Ethereum as a possible blockchain, and says two records would be involved; one indicating “the digital currency for an amount associated with the denomination has been created for a public key associated with a digital wallet;” and one recording the “removal of the physical currency from circulation in a fiat currency system.”

The proposed system references the US dollar, but also covers other central bank digital currencies, like the pound, euro and yen, enabling the digitisation of physical currency from anywhere in the world. 

Visa has been involved with blockchain for some time, and was one of the original members of the Libra Association, the body overseeing Facebook’s proposed cryptocurrency. However, Visa withdrew from Libra late last year, along with other companies, amid widespread regulatory and political concerns about the project. 

In June 2019, Visa also confirmed it would be harnessing distributed ledger technology in the $125 trillion international cross-border, business-to-business transaction market with SWIFT – the Belgium-based Society for Worldwide Interbank Financial Telecommunication. 

In February this year, Visa also authorised Coinbase to issue debit cards, making the exchange the first pure-play crypto Visa Principal member. While at the end of March, Malta-based crypto exchange Binane also launched a Visa debit card.  

AYO.NEWS says:

It really shouldn’t come as a surprise to learn that Visa has been working on something like this behind the scenes. Despite being cautious with public statements about digital currencies, all major global financial and payment companies know full well that legacy systems are as good as dead, and that the future is blockchain-based. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

All original content featured on this site is © Pentagon Digital Limited, 2020

BitGo has announced it will be providing cryptocurrency custody services to Indian exchange CoinDCX. 

The agreement will see US-based BitGo provide secure storage and partial insurance for the digital assets traded on India-based CoinDX. The exchange is thought to have already begun transferring its assets to BitGo’s omnibus and segregated hot and cold wallets. 

According to BitGo, the company now processes more than 20% of all Bitcoin (BTC) transactions. Through a syndicate of insurers in the Lloyd’s of London and European Marketplace, the company also provides insurance policies worth up to $100m. 

Some of CoinDCX’s funds, including user assets held on its lending service, DCXLend, and cold assets and funds, will be protected by BitGo’s insurance. 

India’s crypto industry bounces back after months of paralysis

CoinDCX’s chief revenue officer, Pete Njarian, explained the company had enlisted BitGo’s services due to the “recent uptick in trading volumes on Indian exchanges” driving a need for “professionalisation in the form of fund security in the crypto market.”

Since India’s Supreme Court overturned the Bank of India’s controversial crypto services ban earlier this year, Indian exchanges have seen trading rocket, with CoinDCX reporting trading volumes up 47% in the first quarter, along with a 10x growth in new signups and 150% increase in daily active users. 

Foreign crypto firms, including South Korea’s Bithumb, have also been lining up to invest in the potentially huge market, with CoinDCX itself attracting investments from Bain Capital Ventures, HDR Global Trading (operator of BitMEX), and Polychain Capital. 

Obviously sensing the tide was about to turn, just prior to the Supreme Court ruling, Malta-based crypto giant Binance acquired Indian exchange WazirX. 

AYO.NEWS says:

It’s great to see the Indian crypto scene is getting back into the stride of things after all the drama with the crypto services ban, though there are apparently still some issues, with a number of  banks still refusing to provide services to businesses in the crypto sector. 

Despite the ongoing problems, with the world entering an unprecedented economic downturn due to the COVID-19 lockdowns, crypto businesses around the world are seeing an uptick in trade as investors look to protect their wealth –  and the Indian market is potentially HUGE, so it’s easy to see the appeal. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

All original content featured on this site is © Pentagon Digital Limited, 2020