| Uncategorized

The Weekly Hash – December 30 – January 4

Check out the latest happenings in the world of crypto, brought to you by the experts at Kraken.

This digest is prepared for informative purposes only and does not represent an investment recommendation or investment advice. Please see our full disclaimer at the bottom for more information.

See below all the important happenings this week in the world of crypto, presented by the experts at Kraken: 

  1. CoinDesk: China May Soon Have Its First Blockchain Exchange-Traded Fund
  2. Pulse: Korean Crypto Exchange Bithumb Hit With $69.3M in Taxes
  3. News Logical: TRON Foundation to Unlock 33 Billion TRX on 1st of January 2020
  4. CoinTelegraph: Google Suspends MetaMask From Its Play App Store, Citing “Deceptive Services”
  5. Reuters: Ripple Targets Partnerships With Banks in Brazil in 2020 for Blockchain Remittances
  6. The Block: IOTA Says it Has Resolved Mainnet Issues; Network Transactions Are Going Through
  7. CoinDesk: Ethereum Developer Virgil Griffith to Be Released on Bail to Parents
  8. BitTorrent: DLive Joins BitTorrent Ecosystem and Begins Migration to TRON Blockchain
  9. Takasbank: Turkish Bank’s Blockchain Platform for Digital Gold Transfers Goes Live
  10. China Money Network: China Implements Password Law To Pave Way For Digital Currency
  11. CoinTelegraph: Ethereum Network Overcame Intentional Attack Affecting Parity Nodes
  12. MetaMask: Google Has Restored MetaMask’s Android App
  13. The Block: Algorithmic Trading Platform CoinRoutes Reports $1B in Order Flow For 2019
  14. CoinTelegraph: Chrome Browser Extension Ethereum Wallet Injects Malicious JavaScript To Steal Data Fintech Futures: Former Starling Bank CTO Plans 2020 Launch of Crypto Digital Bank
  15. Fintech Futures: Former Starling Bank CTO Plans 2020 Launch of Crypto Digital Bank
  16. The Block: Crypto Miner Argo Blockchain Installing New Bitmain Machines to Increase its Capacity by 75%
  17. TASS: Venezuela to Use Petro Cryptocurrency for Oil Sales, Maduro Says
  18. Finance Magnates: Telegram Refuses to Share ICO Financials with the SEC
  19. The Block: Adjusted Value Settled on Bitcoin Fell Slightly in 2019; Contrast Shows Strength of Late 2017
  20. The Block: ECB Official Urges European Banks to Counter Facebook’s Libra with a Cheaper Payment Solution
  21. Decrypt: Bitmain to Cut Workforce in Half Ahead of Bitcoin Halvening
    • China’s Securities Regulatory Commission (CSRC), the country’s financial watchdog, received an application for an ETF that would track and reflect the performance of blockchain-related public stocks listed in Shenzhen
    • Dubbed Penghua Shenzhen Stocks Blockchain ETF, the application was filed by Shenzhen-based asset management firm Penghua Fund and was accepted by the CSRC on Dec. 24; if approved, it will be the country’s first blockchain ETF open to the public
    • The application was received at the same time as the Shenzhen Stock Exchange rolled out a Blockchain 50 Index that is comprise of 50 blockchain-related stocks listed on the exchange
    • South Korea’s tax authority, the National Tax Service (NTS), levied withholding tax on Bithumb Korea’s foreign customers’ income and hit the exchange with a large tax bill of 80.3B won ($69.3M), marking the gov’ts first taxation on crypto trading
    • The NTS categorized crypto trading of foreigners as misc. income and recognized capital gains from crypto trading as “assets”
    • According to Business Korea, Bithumb says it isn’t proper for the NTS to levy the withholding tax as the exchange pays corporate and local income taxes every year; the final payment may be subject to change as Bithumb Korea is planning to take legal actions
    • Coverage by The Block
    • The TRON Foundation will unlock 33B TRX ($445M) on Jan. 1, 2020, and is polling the community on how the funds should be handled, including investing in partnerships, re-locking the funds or instituting a coin burn
    • TRON News Twitter account claims that responses can provide the foundation with info on “how the community feels” about the massive coin unlock
    • Some speculate that the funds could go towards boosting Poloniex, which was recently invested in by TRON founder Justin Sun, while others fear the foundation may dump at least some of the funds and potentially dampen prices
    • At the time of writing, 54.5% of the 696 respondents voted to Burn the new funds, 32.5% voted to invest in the TRON protocol, and 13.1% voted to re-lock the funds
    • The foundation locked the funds a few months after it left the Ethereum blockchain for its Mainnet
    • Coverage by CryptoGlobe
    • Google banned ETH wallet and dApp browser Metamask’s android client from its Play app store, claiming MetaMask was violating its financial services policies for allegedly allowing crypto mining on mobile devices
    • MetaMask said they don’t allow such services and attempted to appeal the ban, but the appeal was promptly rejected
    • MetaMask Co-Lead Developer Dan Findlay said, “I very much hope that this was an honest mistake on the part of Google’s reviewers, but in combination with all the crypto YouTube bans, it definitely puts me at disease about how Google is engaging with decentralizing technologies. If people accept this behavior from a mobile monopoly like Google, we may not deserve something better”
    • Ripple’s DLT platform plans to expand partnerships with Brazilian banks in the int’l remittance market by 2020
    • Ripple’s CEO in Brazil, Luiz Antonio Sacco, said the firm is expected to announce partnerships in the coming months with more institutions, including digital banks, “With successive advances in Brazilian banking regulation to facilitate financial transactions, including international, opportunities here will grow greatly in the coming years”
    • Sacco says its transfer services through Ripple can cost up to 10% of the amounts charged by banks
    • According to central bank data, Brazil remittances from January to November totaled $4.6B, a +10% increase YoY
    • Sacco added that the current focus is to discuss with banks and regulators possibilities of crypto coexistence with traditional operations to make txs in the global financial system more efficient, “Our vision is to use digital currencies as a medium of exchange, not as a speculative investment”
    • IOTA’s mainnet was reportedly unable to process txs for 15+ hours yesterday due to IOTA’s Reference Implementation (IRI) allegedly failing to account for a tx that was shared between two distinct bundles
    • IOTA said, “Once it marked it as ‘counted’ in one bundle, it was ignored for the next bundle,” adding that the issue has now been resolved
    • The foundation urged users who are running an IRI node to update it to version 1.8.3 (available on its GitHub page)
    • Former Ethereum Developer Virgil Griffith, who was arrested for allegedly assisting North Korea in bypassing U.S. sanctions, successfully appealed his denial of bond yesterday and will now be released on bail under a $1M bond
    • Griffith was denied bail last week due to text messages he sent to his parents about renouncing his U.S. citizenship and setting up a money laundering business in North Korea; Griffith’s lawyer Brian Klein argued that Griffith didn’t actually renounce his citizenship and that he was charged with not money laundering but sanction violations
    • Due to Griffith’s likelihood of flight risk and assets he might control outside the country, U.S. District Court Judge Vernon Broderick ruled he could be released to his parent’s home in Tuscaloosa, Alabama, as “moral suasion”
    • Griffith’s attorney Brian Klein said, ”We are very pleased the district judge sided with us and ordered Virgil to be released pending trial”
    • Coverage by Inner City Press founder Matthew Russell Lee
    • Blockchain-based content sharing platform DLive will join the BitTorrent ecosystem and migrate to the TRON blockchain from the current Lino blockchain
    • BitTorrent’s live streaming platform BLive will also be merged into DLive
    • TRON Founder & CEO Justin Sun said, “DLive is a great solution for live media producers. Think of how valuable live streaming content is already to centralized social media platforms who take ownership and advantage of their users’ hard work. We look forward to DLive bringing value to the entire world with the addition of TRON and BitTorrent’s global community of passionate creators.”
    • The partners will work together to bring blockchain-based P2P content sharing, including live streaming, to everyone
    • DLive claims to have +5M monthly active users, while BitTorrent claims to have +100M
    • Takasbank, the central clearing and settlement house in Turkey, launched its blockchain-based, physical gold-backed transfer system, dubbed BiGA Digital Gold, to provide banks with a blockchain-based system for the issuance, repayment and transfer of digitized gold
    • Each asset in the BiGA system represents a gram of gold that is physically stored in vaults of the Borsa Istanbul (BIST) Turkish stock exchange 
    • The BiGA project aims to “establish an infrastructure that will allow for the execution of the transfer of dematerialized gold at certain standards with their physical equivalents kept in safe custody using blockchain technology”
    • Coverage by CoinTelegraph
    • China implemented a law governing cryptographic password management to foster blockchain tech and provide a legal basis for the issue of digital yuan (RMB)
    • The law divides passwords into three categories – core passwords, common passwords and commercial passwords; the Chinese gov’t will strictly regulate core passwords and plain passwords, and will nurture the area of commercial passwords, “In order to prevent data from being tampered with, it is necessary to protect each data with a password. The development of blockchain technology can not be separated from the progress of cryptography technology”
    • The Ethereum Network was the target of a coordinated attack on Dec. 31 that affected Parity nodes
    • Core blockchain infrastructure company Parity Technology subsequently released network upgrades to protect against the attack
    • Crypto security consultant Sergio Demian Lerner said the attack was implemented in a way wherein “you send to a Parity node a block with invalid transactions, but valid header (borrowed from another block). The node will mark the block header as invalid and ban this block header forever but the header is still valid.”
    • Software dev Liam Aharon said the attack was close to taking down the entire network and that Ethereum could become more vulnerable to similar attacks in the upcoming year
    • Aharon added that the attack didn’t bring down the network because it has a client dubbed Geth, which is immune to the attack; however, because Parity intends to transition Parity Ethereum to a DAO ownership and maintainer model, Geth could become the only well-maintained client in 2020, “If this scenario came true, attacks similar to today’s would devastate the network, instead of just being inconvenient.”
    • After suspending MetaMask’s Android app last week, Google has now restored the app in the Play Store after mistaking MetaMask’s app for a crypto mining app 
    • MetaMask has ~264,000 monthly active users
    • Trading software provider CoinRoutes saw +$1B worth of digital assets in order flow on its platform in 2019
    • The firm processed +21,000 unique orders across +120 crypto pairs on behalf of its clients and routed +500,000 orders to 18 different crypto markets since the start of the year
    • Cybersecurity and anti-phishing expert Harry Denley said ETH wallet “Shitcoin Wallet” is injecting malicious JavaScript code from open browser windows to steal data from its users
    • The malicious code is targeting Binance, MyEtherWallet and other well-known websites containing users’ passwords and private keys
    • The wallet’s Chrome extension works by downloading multiple JS files from a remote server and then searches for open browser windows containing webpages of exchanges and Ethereum network tools; the code attempts to scrape data input into those windows, and once it does, the info is sent to a remote server that belongs to Tokelau, a group of South Pacific Islands that are part of New Zealand’s territory
    • Ziglu, a new crypto-friendly bank by former Starling Bank co-founder and CTO Mark Hipperson, could publicly launch later this month; the bank aims to bring the best of challenger banks and crypto exchanges to create “one truly complete current account”
    • Users will be able to buy, sell and hold fiat and crypto, as well as use a Mastercard debit card to spend funds
    • Ziglu is in the process of getting an e-money license from the U.K.’s FCA
    • Hipperson aims for Ziglu to process $1B in txs in 2020 and is looking to expand the bank into the U.S. as early as 4Q2020, according to Financial News London
    • Coverage by Cointelegraph & The Block
    • London Stock Exchange (LSE)-listed crypto mining firm Argo Blockchain is installing new 3,616 Bitmain Antminer T17 machines (159 petahash each) to increase its mining capacity by 75% by Jan. 10
    • The firm plans to install 6,384 more machines to increase its total mining capacity by 204% by the end of 1Q2020
    • Argo recently promoted its VP of Operations, Peter Wall, to CEO
    • Venezuelan President Nicolas Maduro said the country will sell oil and part of the gold it produces for petro, “We will sell Venezuelan oil in exchange for petros. We already sell Venezuela’s iron ore and steel for petros. We have already signed contracts for the sale of oil, steel, iron and aluminum, and we will sell part of the gold for petros.”
    • Maduro noted that the gov’t is successfully introducing its crypto, the petro, into Venezuelans’ daily lives, adding that +6M families in Venezuela used petro as a payment method to purchase goods and services during the New Year holidays
    • The price of one petro equals the price of one barrel of oil in Venezuela (WTI crude price is ~$63)
    • Coverage by The Block
    • The SEC said Telegram refused to share financial details related to its $1.7B token sale, “The requested bank records are highly relevant to the issues in dispute in this case, including how much money Telegram has spent, and in what manner, in developing the TON Blockchain, the Telegram Messenger application to be integrated with the TON Blockchain, and related applications.”
    • The filing reads, “Plaintiff respectfully moves to compel Defendants to answer questions and provide documents regarding the amounts, sources, and use of funds raised from investors in connection with the unregistered sale of securities at issue in this case. Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”
    • The adjusted value settled on Bitcoin dropped -11% YoY from $753.5B in 2018 to $673.1B in 2019, but is nearly identical to 2017’s figure of $671.3B
    • Since 2017, each year has reached volumes that eclipse combined totals from 2009-2016 nearly 4x over
    • Note: Coin Metrics adjusts for multiple outputs, including multiple successive transfers of an amount done over a short time period, to account for users moving their holdings as opposed to completing P2P txs
    • Jens Weidmann, President of Germany’s central bank and ECB policy maker, called on banks to develop a cheaper and faster payment solution to counter Facebook’s proposed Libra
    • Weidmann stated, “I don’t believe in always calling for the state right away” to come up with solutions, adding, “In a market economy, it is first up to companies to develop a corresponding offer for customer requests.”
    • Weidmann isn’t in favor of a central bank digital currency (CBDC) yet and believes that it is necessary to first define the pros and cons, “Then it can be decided whether it is needed and the risks can be controlled.”
    • According to Wushuo Blockchain, Bitmain is cutting 50% of its workforce to “correct former co-founder Micree Zhand’s haphazard approach to business strategy and poor allocation of funds”
    • Bitmain Co-founder Jihan Wu asked heads of departments to provide a list of who to cut from its ranks, which will be completed before Bitmain’s annual meeting on Jan. 17


The information in this report is provided by, and is the sole opinion of, Kraken’s research desk. The information is provided as general market commentary and should not be the basis for making investment decisions or be construed as investment advice with respect to any digital asset or the issuers thereof. Trading digital assets involves significant risk. Any person considering trading digital assets should seek independent advice on the suitability of any particular digital asset. Kraken does not guarantee the accuracy or completeness of the information provided in this report, does not control, endorse or adopt any third party content, and accepts no liability of any kind arising from the use of any information contained in the report, including without limitation, any loss of profit. Kraken expressly disclaims all warranties of accuracy, completeness, merchantability or fitness for a particular purpose with respect to the information in this report. Kraken shall not be responsible for any risks associated with accessing third party websites, including the use of hyperlinks. All market prices, data and other information are based upon selected public market data, reflect prevailing conditions, and research’s views as of this date, all of which are subject to change without notice. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Kraken and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction where such distribution or use would be contrary to applicable law or that would subject Kraken and/or its affiliates to any registration or licensing requirement. The digital assets described herein may or may not be eligible for sale in all jurisdictions.