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Cryptocurrency Market on High Alert as CFTC Subpoenas Bitfinex, Tether

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The crypto market was under renewed pressure Tuesday after U.S. regulators subpoenaed one of the world’s biggest digital currency exchanges and a startup known for converting cryptocurrencies into fiat money.

CFTC Issues Subpoenas

Bloomberg and CCN reported Tuesday that the U.S. Commodity Futures Trading Commission (CFTC) issued subpoenas to Bitfinex and Tether last month. Although the nature of the hearings has not yet been confirmed, speculators say it could be related to both companies sharing many of the same executives. Tether has been accused of running a fractional reserve to inflate bitcoin prices and thus cover up the financial issues facing Bitfinex.

Although it is not entirely clear from the official websites of Bitfinex and Tether who runs the firms, an email obtained from Bloomberg indicated that Jan Ludovicus van der Velde is the CEO of both. Van der Velde’s LinkedIn page says he is currently a resident of Taiwan.

Tether Under the Spotlight

Tether has been the center of a media firestorm this week after the company unexpectedly split with its auditor Friedman LLP, fueling critics who have long been suspicious of its backing. The company, which created the USDT cryptocurrency that is allegedly pegged to the U.S. dollar, has not been able to verify conclusively that its accounts are indeed backed by the greenback.

A document that appears on Tether’s website shows it had $443 million in deposits as of Sept. 15, although the names of the banks and account holders were blacked out.

Regarding its dissolved relationship with Friedman, Tether issued the following statement on Saturday:

“Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame.”

Tether is still recovering from a $31 million cyber heist last November, which exposed underlying financial issues facing the company. According to critics, one of the telltale signs of Tether’s solvency issues has been its persistence in minting USDT tokens. More tokens in circulation gives the company more opportunity to buy bitcoin and drive prices even higher.

The global cryptocurrency market shed tens of billions of dollars on Tuesday, with bitcoin briefly falling below $10,000. The combined value of all coins in circulation bottomed out near $492 billion, according to CoinMarketCap. That represents a decline of more than 12%.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 601 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Ethereum

Ethereum Hard Fork to Launch on Testnet in Early October

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Ethereum core developers have been feverishly working on Constantinople, which is the next upgrade of the network. According to a recent Ethereum Core Devs Meeting, devs will be ready for the hard fork release soon, and the hard fork of testnet Ropsten has been scheduled to launch on around Oct. 9. It could serve as a boon for the ETH price, which despite its recent rally could use another catalyst.

The Constantinople upgrade is phase-two of Metropolis, the first phase of which was the Byzantium fork. It’s expected to bolster efficiency and slash costs on the Ethereum blockchain. The widely watched as Casper technology, which is tied to increasing the scalability of the network, is planned during Constantinople.

The goal of the devs was to launch Constantinople ahead of Devcon 4, which is scheduled to unfold in Prague Oct. 30-Nov. 2. But they weren’t willing to do so if it “makes things unsafe” or “pushes people too hard,” according to the call. Dimitry, who was on the call, suggested it would be “a couple of months at least” before Ethereum forks onto proof-of-work chain Ropsten, pointing to the upcoming dev conference as the reason for the delay in progress.

Other devs chimed in, saying the timeline was “overly cautious” considering that Ropsten is a testnet. The devs tossed around the idea of creating a new testnet to replace Ropsten, but that was rebuffed. Ethereum Co-Founder Vitalik Buterin said on the call: “I’d argue that consensus issues on Ropsten happening from time to time is good because it trains an ecosystem of participants on how to react to them.”

The majority ruled, and the developers agreed to test the hard fork on Ropsten in the coming weeks, ultimately landing on the date of early October because there is a break in developer conference activity that week. They’re targeting Oct. 9 and will set the actual block number in a couple of weeks when it’s closer to being released to clients.

Block Mining Times

As for the release of Constantinople, the call host pointed to test cases at year-end 2018, either November or December, after which time the conversation turned to avoid launching the mainnet amid “crazy” block times. Average block mining times are currently hovering at a stable 15 seconds and Buterin doesn’t expect them to “get crazy within two months.”

He referred to last year’s Byzantium upgrade, saying the “general pattern is a doubling at the beginning every 17 days.” As a result, there would likely be a “more than three months of safety,” Buterin said. A wildcard, however, is Byzantium had the “backdrop of a rapidly increasing ETH price and hashrate” whereas now we don’t. As a result, it could take less time.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 60 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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SBI’s Ripple-Backed ‘MoneyTap’ Set to Launch Soon

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One of Japan’s largest financial institutions will soon launch a new consumer payments application backed by Ripple’s technology, signaling an important milestone in the quest to bring blockchain adoption mainstream.

Introducing MoneyTap

SBI Ripple Asia, a joint venture of SBI Holdings and the San Francisco-based Ripple, Inc. is preparing to launch the ‘MoneyTap’ mobile application on Android and iOS.

MoneyTap is the first major consumer-oriented application launched on the Ripple protocol in Japan. The app enables consumers with domestic bank accounts to send money instantly 24 hours a day, seven days a week using a QR code, phone number or bank account.

The new platform is powered by Ripple’s xCurrent, a solution that allows banks to instantly settle cross-border payments. Sources have yet to confirm whether XRP, the cryptocurrency launched by Ripple, can be used on MoneyTap.

As Hacked reported back in March, initial roll-out of the app will be accepted by several financial institutions, including SBI Net Sumishin Bank, Suruga Bank and Resona Bank. These firms are part of a larger consortium of financiers that represent more than 80% of Japan’s banking assets.

Ripple to Expand Commercial Application

In addition to MoneyTap, Ripple is planning to launch a commercial application of its cryptocurrency-focused product as early as next month, according to Sagar Sarbhai, who heads the firm’s Asia-Pacific and Middle East regulatory department. According to Sarbhai, the new product will be focused on xRapid, which offers low-cost liquidity for payment providers and other financial institutions.

“I am very confident that in the next one month or so you will see some good news coming in where we launch the product live in production,” Sarbhai said of xRapid in an interview with CNBC.

The xRapid technology relies on XRP to bridge currencies, which allows payment providers to process faster cross-border transactions.

Despite facing multiple lawsuits alleging XRP is a security, Ripple is riding a tidal wave of momentum from several high-profile partnerships with leading payment providers. Chief among them are American Express, Western Union, Money Gram and Santander. Ripple also has partnerships with more than 120 banks and financial institutions, especially in the Asia-Pacific region. Although not tied to XRP directly, these developments add value to Ripple’s blockchain technology, which could spearhead wider adoption at the currency level.

XRP, which was little changed Monday morning, is trading at a fraction of its all-time high. One unit of XRP is currently valued at just over $0.28, according to CoinMarketCap. The coin reached $3.29 on Jan. 3, according to CryptoCompare.com.

XRP has a total capitalization of $11.2 billion, placing it fourth among active cryptocurrencies in terms of value.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 601 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Fundstrat, Circle and Genesis Trading Execs Offer Market Insight

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Long-suffering crypto investors are finally getting some relief today, with the broader market gains surprisingly being led by Ethereum. The combined market cap is steadily approaching $200 billion while bitcoin’s dominance is back below 56%. Whether or not the market rally has legs and it’s the start of the bull run that strategists have been forecasting remains to be seen, but for now, the double-digit gains in many altcoins, not the least of which includes ETH, which is boasting an 18% increase, is a welcome sign.

Trading Dynamic

Ethereum Classic is hosting its 2018 summit in South Korea featuring one of the bitcoin bulls, Tom Lee, in addition to other industry leaders including Matt Beck of Grayscale Investments, Circle’s Jack Liu and Genesis Global Trading chief Michael Moro, all of whom offered their observations on the trading dynamic.

Source: ETC Summit/YouTube

If you need more proof that the crypto market remains in the nascent stages, consider that today 90-95% of the market is controlled by individual investors, not institutions, which is unusual for other asset classes such as commodities, as Genesis’ Moro pointed out. But that doesn’t mean that institutions aren’t placing bets.

Circle’s Liu pointed to a landscape in which early crypto investors who have amassed a portfolio may be looking to cash out at some point in time, while new investors who may have taken longer to be convinced to enter are there for the long haul. “You’re seeing quite traditional VCs/institutional investors take long-term bets on longer tail coins,” said Liu.

Bitcoin miners are also in the spotlight, given that the bitcoin price has managed to hold the $6,000 level despite the latest bout of selling, which is deemed the breakeven point for creating new coins. It’s a repeat of the dynamic of 2015 when the bitcoin price was similarly able to hold at 1x mining costs. Fundstrat’s Lee pointed out that contrary to popular belief, miners are not the ones unloading during the market downdraft.

“I think in a way miners are actually acting as a stabilizer. They’re not actually worsening what’s happening in crypto,” Lee said.

Based on anecdotal conversations with miners, Fundstrat gleaned that BTC miners are very aware of ROI tied to creating more coins. As a result, they’re more inclined to hold during the down times and sell when prices are higher.

Meanwhile, as the crypto market heads into the final stretch of 2018, institutional capital is the right custody solution away from entering the space. In the interim, crypto investing just requires more patience. “I think the next FANG is crypto. You need to just buy the quality projects and $1,000 will turn into … it’s probably going to be more than 1000x from here,” said Lee.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 60 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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