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India Thrust into the Spotlight for $3.2 Billion in Bitcoin-Fueled Losses

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India Prime Minister Narendra Modi has established a reputation of being tech-savvy, but the administration has taken a hard line on the cryptocurrency industry. Now a report has surfaced in Bloomberg that Gujarat, Prime Minister Modi’s home state, could be responsible for more than $3 billion in bitcoin-fueled investment losses. There are many moving parts to the scandal, at the center of which is alleged Ponzi scheme BitConnect, which has been under investigation by Indian authorities and which was banned from operating via cease-and-desist requests in Texas and North Carolina.

Anti-Fraud Efforts Backfire

Prime Minister Modi’s decision a couple of years ago to remove certain banknotes that were being used in fraud reportedly led these India-based investors to flock to BitConnect as an alternative to keep their assets under the radar. Mr. Modi’s platform is an anti-corruption theme, and he faces re-election next year. Meanwhile, an accountant source told Bloomberg that on the heels of banning the banknotes, some $650 million made its way into Surat, Gujarat’s port city, in clandestine dealings targeting cryptocurrencies.

Ultimately, Gujarat-based investors reportedly directed billions of dollars into the controversial BitConnect, $3.2 billion to be exact, in response to the bull-market run in the bitcoin price, which peaked at year-end 2017. BitConnect, which also had offices in the U.S., Hong Kong, Singapore and other jurisdictions, was promoted in the state by BitConnect Co-Founder Satish Kumbhani.

BitConnect’s business model was to accept bitcoin deposits in exchange for which investors received the company’s native coin, which clients were then able to lend with a 40%-plus interest rate attached, according to the Bloomberg report. There were incentives to earn an even higher rate that involved luring other investors to the platform.

The Beginning of the End

A series of events unfolded including the cease-and-desist letters to BitConnect in the U.S. in January 2018 which coincided with the beginning of the downturn in the bitcoin price, all of which was exacerbated by India’s decision to crack down on cryptocurrency exchanges, after which time Gujarat and New Delhi became inundated with reports of crypto-fueled frauds, according to Bloomberg.

The saga only intensifies from here, as evidenced by reports of kidnapping by authorities and former lawmakers no less of BitConnect officials with demands for payment in hundreds and even thousands of bitcoin. With no resolution in sight, Gujarat investors were seemingly the ones left holding the bag for $3.2 billion. One of those investors, property developer Shailesh Bhatt, who is at the center of the controversy, is among the individuals being charged for wrongdoing and appears to be on the run.

Meanwhile, as India’s central bank has banned banks from cooperating with cryptocurrency exchanges, questionable methods of transacting in cryptocurrencies are on the rise, most notably Dabba, which is an illegal way of trading digital currencies off the books, as Hacked.com previously reported.

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4.6 stars on average, based on 34 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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Turkish Lira’s Volatility Rivals that of the Bitcoin Price: Report

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If you think the bitcoin price has taken you on a wild ride of late, it could be worse. The Turkish lira remains in freefall, rocking not only the local economy but spilling over into vulnerable emerging markets as well. In fact, the short-term volatility in the lira versus the U.S. dollar has surpassed that of leading cryptocurrency bitcoin, a report in Bloomberg pointed out.

Source: Bloomberg

Indeed, based on 10-day performance in the lira versus the U.S. dollar, volatility has exceeded that of bitcoin, Bloomberg reported. A Turkish constitutional referendum last year inspired similarly wild swings. Meanwhile, the lira and bitcoin are neck-and-neck for year-to-date declines at 45% and 55%, respectively.

Beating out bitcoin on volatility is not a coveted title, especially when you consider bitcoin’s ride since it’s December 2017 peak, since which time it’s shed more than half of its value. This summer alone, the bitcoin price has gone from approximately $5,800 in June to more than $8,000 in July only to fall back below the $7,000 shortly thereafter to almost $6,700 today. It has fallen through support levels like a hot knife through butter, but the plight of the Turkish lira is arguably worse. Turkey is facing a crisis of confidence in its currency, which is making other forms of payment, most notably bitcoin, more attractive.

Cryptocurrency a Refuge

So what’s a Turkish investor to do? Increasingly they are seeking refuge in cryptocurrencies, where the environment remains relatively friendly compared to other jurisdictions for crypto trading, say India. Bitcoin trading volumes that are up by double-digit percentages across local exchanges Koinim, BTCTurk and Paribu, as reported by Forbes. BTC trading volume on Turkey’s largest crypto exchange Koinim is up more than 60%. Over on BTCTurk, volumes are up by more than one-third and on Paribu it’s reportedly up 100%.

Meanwhile, the trade tensions between the Trump administration and Turkey surrounding steel and aluminum sanctions and tariffs only seems to be escalating, which could push investors and consumers alike further into crypto.

Taken the South American country of Venezuela, for instance. Dash Core has been thrust into the spotlight there as the poverty-fueled Venezuelan economy has been reeling from hyperinflation, as evidenced by hundreds of merchants now accepting the No. 14 cryptocurrency by market cap as a payment method. The same could happen in Turkey, though it’s unclear which cryptocurrency would be the top choice. Dash put boots on the ground in Venezuela to make integration and adoption more seamless and their efforts appear to be working.

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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 34 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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Crypto Mining Giant Bitmain Is About to Become One of the Biggest IPOs Ever

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Bitmain Technologies, Ltd., the world’s largest blockchain conglomerate, is going public this year in a deal that could go down as one of the biggest in history.

Bitmain Files for IPO

The China-based crypto mining company is planning to file an initial public offering (IPO) in September worth as much as $18 billion at a market capitalization of up to $50 billion, sources reveal. Once approved, Bitmain’s stock will be listed on the Hong Kong Stock Exchange.

The IPO is higher than the number floated around by Bitmain last month when it revealed plans to raise up to $15 billion via public sale. The higher valuation came after Bitmain closed a $1 billion funding round led by Tencent Music and SoftBank Group – a pair of Chinese companies that are also planning to go public this year.

At $18 billion, Bitmain would be the ninth largest IPO in history, just ahead of Facebook Inc. ($16.01 billion) and Enel ($16.59 billion), an Italian energy distributor.

Competition Intensifies

As Hacked reported last month, Bitmain isn’t the only Chinese blockchain powerhouse looking go public. Ebang Communication and Canaan Creative – Bitmain’s largest competitors – have also announced plans to launch IPOs this year. Each company is looking to raise at least $1 billion.

Bitmain remains ahead of the curve thanks to a series of successful funding rounds and a diversified business strategy focused on mining equipment manufacturing, equipment rentals and mining pools. This strategy has allowed Bitmain to profit despite the sharp downturn in cryptocurrency prices.

The company is on track for its most profitable year ever, with 2018 set to nearly double the last two annual hauls. Revenues have also experienced a four-fold increase over the past 12 months, outpacing Silicon Valley powerhouse Nvidia.

Bitmain is already expanding its global footprint with plans to build a $500 million data center in Texas. The investment would bring up to 400 jobs to a region that has been hit hard by de-industrialization.

However, Bitmain’s expansion has not come without controversy. The company has been accused of operating “secret mining pools” using its own ASIC hardware. Although CEO Jihan Wu has outright denied those allegations, a blockchain developer by the name of Hakkane has provided evidence to the contrary.

Controversy notwithstanding, Bitmain’s push to become one of the biggest IPOs ever is a significant milestone for the blockchain industry, which has struggled to gain mainstream acceptance. The massive economy that is borne out of the bitcoin revolution is showing signs of expansion despite underlying volatility in crypto assets themselves.

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.

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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 538 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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Speculative Investing Overtakes Fraud for Bitcoin Use: Report

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A kind of “flippening” has occurred in the cryptocurrency space but it has nothing to do with the jockeying for position among the top coins. Instead, this flip has been in the type of activity that has been driving bitcoin usage between speculation and drug dealing.

Speculative investing has overtaken bitcoin-fueled crime as the primary application, Bloomberg reports. The reversal is eye-popping, with criminal use narrowing from 90% at its height half-a-decade ago to 10% currently as speculative investing has taken control of cryptocurrency transactions, according to an official the U.S. Drug Enforcement Administration, whose parent agency is the U.S. Department of Justice.

It’s not that drug dealers have abandoned bitcoin altogether. In fact, it’s the opposite, as transaction volumes and the dollar value of bitcoin-driven crime has been on the rise. But so too has the number of speculative investors in the leading cryptocurrency, and as a total piece of the bitcoin-transaction pie, speculators now represent the biggest slice.

Criminal groups including drug cartels prefer cryptocurrencies for their features such as speed, less-pricey cross-border transfers and privacy, the latter of which is less of an incentive these days. DEA agent Lilita Infante told Bloomberg that public blockchains like Bitcoin are helping government officials to monitor illegal transactions and wallet addresses that are no longer obfuscated.

Bitcoin Dominance

Meanwhile, as the bitcoin use-case ratio has shifted, so too has the bitcoin dominance dynamic. Thomas Lee, market strategist and co-founder of Fundstrat, suggested to CNBC that the market is, in fact, responding to the positive developments surrounding bitcoin.

Lee pointed out “for many years, [bitcoin] was the only game in town.” In 2017 however, in light of the rise of ICOs and hundreds of new coins flooding the market, bitcoin’s dominance was more than halved from 80% of the broader cryptocurrency market to less than 40%.

In 2018, investors once again are showing a preference for bitcoin, as evidenced by BTC’s dominance having reached its best levels of the year in recent weeks to nearly 50%. Lee points to positive developments surrounding the No. 1 cryptocurrency by market cap, including the SEC’s decision not to classify bitcoin as a security, the ICE-backed regulated cryptocurrency exchange and enthusiasm surrounding a possible bitcoin ETF. Lee told CNBC: “[It’s] causing investors to decide that bitcoin is the best house in a tough neighborhood.”

 

Source: CNBC

 

Fundstrat’s misery index, which is a reflection of the mood of bitcoin investors, is hovering at a score of 39 out of 100, which Lee characterized as “recovering.” He suggested investors are afraid the bitcoin price will slip below $6,000 and remain in a persistent bear market. But Lee is quick to point out that it remains early innings for cryptocurrencies, as evidenced by the number of wallets, which hovers around 50 million and will be “matching internet’s trajectory” of 4.5 billion users.

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 34 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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