Crypto News - January 20-26, 2019

Bitcoin Cryptocurrency

LocalBitcoins Hack:

 


There is no question that one of the biggest questions that still surround the cryptocurrency markets is the idea of cybersecurity. It’s only a logical conclusion that institutional money flow will not be willing to flow into markets where funds can be stolen or hacked, or personal information can be easily breached. Unfortunately, last year, over $1 billion was stolen thanks to cryptocurrency exchange hacks, and it appears as though 2019 is already off to a bumpy start with regards to hacking.


About LocalBitcoins


Specifically, LocalBitcoins is a Helsinki-based Bitcoin peer-to-peer exchange that has solidified itself throughout the years, since its inception in 2012, before many were even thinking about the space. The founder, Jeremias Kangas, developed an escrow system to encourage a marketplace. The platform also facilitates in-person transactions, as well, which many in the cryptocurrency community have criticized, because of the potential dangers involved with regards to high-profile transactions.


About The Hack


LocalBitcoins was hacked on January 26, 2019. It should be noted that the hack was not one of a large scale, as the attacker was only able to obtain 8 Bitcoin (BTC). As of press time, this amounts to the hacker being able to obtain $28,336 from the attack. The hacker was able to use phishing attacks to take advantage of five separate users. The forum was disabled as a result.


Unfortunately, this is not the first time that LocalBitcoins has been hacked. In fact, 30 Bitcoin was stolen from the exchange years ago, in 2014. In addition, there have been other unfortunate events regarding the exchange, including a trader named Theresa Lynn Tetley - otherwise known as the “Bitcoin Maven” - was sentenced to federal prison last year because she was money laundering through the exchange. This happened after she began doing business with a certain individual who claimed to be a drug dealer, who was later revealed to be a DEA Agent. The operation laundered millions over the course of several years. In addition, two individuals from Louisiana also funneled money through an Bitcoin scheme that involved LocalBitcoins, as well.


The company ultimately was able to stop the attack, although it was notably vague regarding the attack. It described the attack as coming from an “unauthorized source”, and only described the victims as “a number of affected accounts”. The number is believed to be at least six so far, although there could be more.


Users can now log back into the exchange, and while the company disabled outgoing transactions for a certain period of time - they are now, once again, enabled.


Conclusion


The well-known peer-to-peer exchange LocalBitcoins has a history of security issues, and was recently hacked again, although the issue appears to have been resolved.



Crypto Valley Growth


One might consider the fact that the cryptocurrency markets have lost hundreds of billions of dollars as reason for startups to either struggle or ultimately fold. This is only natural in the business world, where sometimes, the investment climate is bound to cool off, thanks to the market reacting a certain way. However, one area that does appear quite resilient with regards to cryptocurrency and blockchain investment is none other than Zug, which has been dubbed the “Silicon Valley” of cryptocurrency, and is a city in Switzerland. While many cryptocurrency companies have described the cold investment climate as “Crypto Winter”, Zug has actually managed to prosper.


Of course, this doesn’t mean that the startups aren’t losing money. In fact, it is estimated that these Switzerland companies actually lost billions. The top 50 companies in the space actually saw their valuations decrease dramatically - from a total of $44 billion to around $20 billion.


New Study


This means that the valuations of these companies dropped by more than 50%. This study was conducted by a partnership of various companies, including Crypto Valley Venture Capital (CVVC), Swiss IT firm Inacta, and internationally-known professional services firm Price Waterhouse Cooper. For those interested in an average valuation - out of all of the 750 companies, the average company’s valuation hovered around $27 million.


Interestingly enough, however, the markets haven’t deterred entrepreneurs from believing in blockchain and cryptocurrency long-term. In fact, in the fourth quarter of 2018 alone, 120 new “crypto entities” have emerged. This means that in one quarter, the space saw a 20% increase, bumping up the amount of crypto companies from 629 to 750, which is certainly news that cryptocurrency enthusiasts can be excited about.


About Zug


Zug is a small town outside of Zurich that has quickly become the blockchain capital of the country of Switzerland, which has led many to believe that the entire country is making a play to become the most important country in the cryptocurrency space. Of course, it has plenty of competition from countries such as Malta, which is nicknamed “The Blockchain Capital” for how much the government there embraces cryptocurrency and hopes to become a hotbed of blockchain innovation.


The city is actually quite small, with a population of about 30,000, but has recently embraced offices of several important companies in the pharmaceutical sector, including Astra-Zeneca and Johnson & Johnson. One of the reasons it might have been able to attract more business over the years is the fact that it offers a low corporate tax.


One of the reasons that the town was so quick to embrace blockchain before many others is because of a developer by the name of Nikolas Nikolajsen, who set up a crypto service company by the name of Bitcoin Suisse back in 2013. Nikolajsen is considered one of the most influential bankers in the country.

Conclusion

No matter what is happening with the markets, one thing is clear: Crypto Valley is clearly still a launching pad for cryptocurrency-related companies, and cryptocurrency prices don’t seem to be slowing anything down.


Taiwan Arrests In Crypto Scam


Asia is a region that is quite tough on cryptocurrency, which many in the cryptocurrency world do not appreciate, especially considering the immense amount of people that live there. In fact, the world’s most populous country, China, is arguably one of the harshest countries with regards to cryptocurrency and initial coin offering (ICO) legislation. The world’s second most populous country, India, has been harsh as well. India has also appeared to be wavering on this decision, as there were rumors that the subcontinent would be launching its own state-backed cryptocurrency, which were refuted later. In fact, India has been widely criticized for its own indecision regarding regulation in the sector.


Scamsters Arrested


Of course, Asia is not simply limited to the superpowers of China and India, and there are many other countries that have been forced to decide where they stand in terms of regulation. Of course, despite whatever regulatory framework these countries come up with - there’s no country where fraud is acceptable, which is why 15 individuals were recently arrested in Taiwan.


They were arrested in the year’s largest cryptocurrency scam in Asia (so far), with these individuals swindling investors out of around $8 million. The scam involved a token called IBCoin. Over 30 investors were involved, and the group promised investors massive returns. The group was arrested by Taiwan’s Criminal investigation Bureau. The ringleader is a man only identified as “Lin”, and it took two separate raids for the entire crime ring to be arrested.


Luring Them In


The famous saying goes that it “takes money to make money”, and the crime ring certainly seemed to understand this. They would post on social media with status symbols such as luxury cars and other lavish items. Cars were seized in the ultimate arrest, as was $70,000, although it is yet to be determined where the rest of the money is at this time.


IBCoin was actually meant to be a cryptocurrency related to the adult entertainment industry, and was an ERC20 token, meaning that it ran on the Ethereum platform. Apparently, Lin had purchased tokens in 2017, and sold them for much higher. Specifically, Lin purchased Ibcoins for somewhere around 5 cents USD, and was able to sell them well over a dollar, meaning that he made well over twenty times his investment during the scheme.


CIB pointed out that no real company actually had ties to Ibcoins, and that they were essentially worthless.


Regulation


Taiwan, like many other countries, has expressed concern about the ability for criminals to launder money through cryptocurrency exchanges, and have enacted legislation to track down the identities of cryptocurrency investors and traders.


However, unlike China, the country actually does seem open to developing a framework for regulating ICOs, which could mean that it ends up being an Asian hub for blockchain startups, although time will tell whether this actually happens.


Wellington Koo, the head of Taiwan’s Financial Supervisory Commission (FSC), has expressed some optimism about the country embracing the sector. Specifically, he stated several months ago: “The commission has no intention of curbing the creativity and productivity associated with cryptocurrencies if they are not used as securities.”


Conclusion


The world’s largest Asia crypto scam has occurred so far, although it is only January, and it involved over a dozen individuals in Taiwan scamming millions from victims who were promised returns.




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