The oft-touted claim by traditionalists to ridicule cryptocurrency proponents is that Bitcoin [BTC] and all virtual currencies are merely a bubble. The December 2017 surge, its subsequent fall, and the long crypto-winter are often used to substantiate these claims. True or not, one cryptocurrency proponent is in the news after stating that these “bubbles” will decline in the future, as development ramps up.
Vinny Lingham, Co-founder and CEO of Civic, mulled the future of the cryptocurrency industry against the looming prospect of security token introduction, through a series of tweets on April 14.
He began by affirming entrepreneurial freedom in the cryptospace, relative to its traditional financial counterpart, citing the latter’s low “success rates.” The rewards of this crypto-success will be “far greater” than the post-dotcom bubble success of the FAANG companies, he added. FAANG refers to Facebook, Apple, Amazon, Netflix, and Google, the top 5 best-performing technology stocks.
Lingham highlighted the individual nature of the dotcom bubble, while referencing the multiplicity of cryptocurrency bubbles that have caused various ripples in the coin market. As security tokens enter the mainstream, crypto-bubbles will disappear, he said.
His tweet read,“Crypto has had many bubbles already, but as the industry moves towards things like security tokens that have yield curves, bubbles are unlikely to form in those sub-asset classes.”
Tokens, primarily a product of initial coin offerings [ICOs] or other forms of tokenization, draws parallels with cryptocurrencies, but represent an external asset which can be traded on a particular platform. Investors are given these tokens after an ICO, allowing them to vote, stake, or access certain facilities within a network.
Cryptocurrencies have been tirelessly vying to remove the security tag, as it increases regulatory oversight and decreases adoption. However, with the re-introduction of the Token Taxonomy Act, virtual currencies may not be classified under the definition of a “security” within the United States.
However, Lingham still pegs security tokens to “hit the mainstream as alternative ways to finance network effect opportunities.” He added that this will not only benefit the industry and prevent the bubble from forming, but also enhance utility token models as well.
The Civic CEO also added that the April 1 Bitcoin price rally, which saw the coin climb over $5,000, was not a sign of the end of the bearish cycle. According to him, BTC will need to push above the $5,700 to $6,200 range for 1-2 days, for the “crypto-winter” to subside.
A price double the touted bottom needs to be reached to confirm the departure of bearish sentiments and to shift the momentum upwards, he concluded.
Conspiracy theory? ‘Former developer’ claims Cryptopia’s January hack was a cover-up for fraudulent activities
Nothing draws attention to the cryptocurrency space as controversy does. 2019 has been very newsworthy in this regard, with the case of New Zealand-based Cryptopia starting the year off. The cryptocurrency exchange reported a massive hack in January, where over $16 million worth of tokens were stolen.
Now, there is a new twist to the tale after a “former Cryptopia developer” alleged that the hack might have been a product of a lot of fraudulent activities accumulating months before the hack in January 2019.
Twitter user @notsofast, who claims to be a former Cryptopia developer, released an article link that presented the “hostile takeover” of the exchange by Intranel.
Vcdragon, the author of the steemit post, stated that he and “Adam” started work on the exchange way back in January 2014. Adam was working full-time at Intranel as a developer at that time and Vcdragon was working solely on their Cryptopia exchange project.
Adam eventually resigned and Vcdragon said,
“Adam resigned from Intranel, but they said they didn’t want to lose him and wanted to keep an eye on us so they offered a room in their office for rent, which we would pay for by Adam doing sprint code work for Intranel, and when they didn’t have work for them they charged us cash.”
He added that back in 2017, when the exchange started to “exponentially” grow, Intranel’s interest started to increase and both of them [Adam and the developer] contemplated taking Intranel’s help for the business part of the exchange.
“Intranel made us an offer that for 20% of the company they would handle all of the business management and development things like helping with hiring and managing staff, paying tax, lobbying for regulator guidance and all the ‘boring’ business stuff.”
Things started to take a bad turn after that, according to Vcdragon, who alleged that Intranel was hiring staff for themselves and assigning new employees to the Cryptopia Founders at a higher price. When the exchange started to become dependent on new staff members, they were again charged an extra 5% equity.
One thing led to another and Adam resigned, followed by Vcdragon being “replaced in the office” after he had taken an “unpaid” month holiday.
In their absence, the developer alleged that Intranel completed depleting Cryptopia’s resources and carefully made it a part of their own company under ownership.
Vcdragon went on to claim,
“They bled money everywhere they could, we paid for tax on their staff’s flu shots? We paid taxes on Christmas fits to their staff and our company bought the gifts. Everything they were unable to take for themselves they pissed into the wind on needless expenses and luxuries to the company could not afford….that ultimately buried us.”
Vcdragon explained that back in November 2018, the possibility of Cryptopia going bankrupt was extremely high, if Intranel was not removed from the company.
While Vcdragon himself claimed to have no knowledge of the hack in January, he speculated that the hack might have been orchestrated by Intranel to hide everything that was done during their time with the exchange.
“I believe the Hack was orchestrated to bury everything they have done, and was planned to happen before we removed them so that it could tidily explain the state they had gotten the company into. And then rushed after their plan was interrupted when they were forcibly removed from the company.”
It should be noted that the veracity of these claims is yet to be suitably verified.
CFTC’s investigation may be contributing to BitMEX’s outflows dwarfing exchange’s inflows
The cryptocurrency community went haywire after Bloomberg, citing an anonymous source, reported that Arthur Hayes’ BitMEX exchange is under investigation by the CFTC for breaking trading regulations BitMEX was allegedly accused of offering Bitcoin derivatives and future products, without having necessary permission for the same, as well as allowing trading for US-Based clientele.
The report alleged that BitMEX leveraged 100x for Bitcoin trading, exposing traders to high risks, while probably having broken a few anti-money laundering regulations as well. The news spread like wildfire and led to prevailing a sense of fear among traders on the platform. The fear among traders was quite visible from the great imbalance between the inflow and outflow of capital from the exchange.
At press time, the inflow of funds on the exchange was down by 50.65% on the 24 hr chart, with the total amount going into the exchange being $11.48 million. In comparison, the outflow was 6 times greater, surging by 357.34%. The total amount of funds taken out from the platform in the last 24 hrs stood at $84.79 million, at press time.
BitMEX is not registered with CFTC
The sudden spike in outflow was triggered by the Bloomberg report. However, it is important to note that BitMEX is not registered with the CFTC. Instead, its headquarters is located in the Republic of Seychelles.
Previously, the CFTC had asked BitMEX to discontinue its services for US-residing traders, which they had to agree with. But, the report conveyed that the investigation began with the suspicion that BitMEX, despite the requested blocking of services, continued offering its trading services to US traders. While the report itself did not impact the crypto-market, it seriously hampered BitMEX’s reputation and created a sense of fear among traders.
The allegations against the exchange are quite serious and if there is not much clarity on the status of the investigation, the large outflow of funds might continue.
HitBTC under fire after users lash out at exchange’s withdrawal services, exorbitant transaction fees
The cryptocurrency industry has seen multiple incidents where holders and users of digital assets have been negatively impacted due to technical or man-made glitches. Such an incident came to the fore again when multiple customers reported problems while dealing with HitBTC, a popular cryptocurrency exchange.
The problem was highlighted after the exchange was hit by a whirlwind of customer complaints, many of them related to withdrawal and transaction fees. One such customer, Tai Zen, CEO of Cryptocurrency.Market, tweeted,
“I highly recommend staying away from @hitbtc at this time because you never know if you can withdraw your coins from their exchange or not. I do not see any reason why you CAN NOT withdraw popular coins such as @steemit @cosmos @tezos @helloiconworld.”
As a response to Zen’s tweet, HitBTC tweeted,
“We are sorry that you feel this way. Our platform provides hundreds of markets by integrating foreign software for each asset. This software requires regular technical maintenance and sometimes takes longer than expected.”
The exchange’s response was met with tepid reactions from the rest of the community, with many of them calling the exchange ‘diplomatic’ or ‘politician-like’. Another Twitter user, CryptoshiSk, complained,
“The worst thing is that they even do not allow to move coins from main to trading account although this is just internal transfer and has nothing to do with wallet maintenance. Real scam. be careful .”
HitBTC was quick to respond and said,
“Transfers between the main and trading accounts are sometimes affected by the maintenance as well. Can you let us know whether there’s an asset you’re interested in particular? Thanks in advance.”
The list of complaints did not end there as the rest of the customers’ grievances focused mainly on the ‘exorbitant’ transaction fees charged by HitBTC. Presently, HitBTC charges a withdrawal fee of $13.73 for every transaction while Bitstamp, another popular cryptocurrency exchange, offers the service free of cost.
To put things into perspective again, the fee imposed on a single XRP withdrawal on HitBTC costs $2.78 or 6.378 XRP, while at the same time, Bitso, a direct competitor, charges no money for the withdrawals.