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CoinCheck Compensation

On Jan. 26, Tokyo-based cryptocurrency exchange Coincheck suspended some of its functions after an event that occurred around 02:57 on that date. The company detected an anomaly around 12:07 and issued a notice regarding the temporary suspension of NEM payments.

At around 12:38, NEM trading was temporarily suspended. At around 16:33, withdrawals of all handling currency including JPY were suspended, followed by the temporary suspension of trading other than BTC, including credit card and convenience store activity. Eventually, exchange executives confirmed that the company had been hacked for ~$520 million near the end of the day.

Last week, Coincheck announced in a blog post, a plan to compensate approximately 260,000 NEM holders for the $523 million XEM that was illegally removed from Coincheck. The cause of the hack is currently under investigation, according to a blog post on the company’s website. The blog post reads:

“We realize that this illicit transfer of funds from our platform and the resulting suspension in services has caused immense distress to our customers, other exchanges, and people throughout the cryptocurrency industry, and we would like to offer our deepest and humblest apologies to all of those involved. All affected users will be repaid in JPY via Coincheck Wallet”


SEC and CFTC Issue Warning

Last week, the chairmen of two US regulatory agencies have written a joint statement expressing their concerns over the present state of the cryptocurrency markets. Writing in an op-ed published in The Wall Street Journal, Securities and Exchange Commission (SEC) chief, Jay Clayton, and Commodity Futures Trading Commission (CFTC) head, J. Christopher Giancarlo, expressed their disapproval over the manner in which many market participants in the distributed ledger technology (DLT) space flout regulations and attempt to circumvent rules governing investor protection. The statement reads:

“Today we are seeing substantial DLT-related market activity that shows little or no regard to our proven regulatory approach. Some proponents of cryptocurrencies note that the jurisdiction of the CFTC and SEC over cryptocurrency transactions is limited and cite the absence of U.S. and other government market regulation as an investment attribute.”


BTCC Acquired By Hong Kong Fund

Last week, Bitcoin startup BTCC has been acquired by a Hong Kong-based blockchain investment fund. While details remain scarce on the deal, BTCC said in a press release that the move will help its efforts to expand internationally following its recent closure in mainland China. Bobby Lee, BTCC’s co-founder, said:

“Today's acquisition is an incredible milestone for BTCC. I'm very excited about the resources this gives BTCC to move faster and aggressively grow our businesses in 2018 and beyond.”

Bobby Lee

Philippines SEC

Last week, the Philippines’ Securities and Exchange Commission said it is crafting a set of rules to regulate cryptocurrency transactions, to mainly protect investors and reduce the risk of fraud. The regulation, which will cover issuance and registration of cryptocurrencies, is expected to be finalized this year, said Emilio Aquino, SEC commissioner in charge of enforcement and investor protection, according to Reuters. Aquino stated:

“We want to come up with our own set of regulations. You have to be extra careful how investors in this new space are protected.”

Emilio Aquino

South Korea Ends Anonymous Trading

Last week, South Korea began converting the existing virtual cryptocurrency accounts to real-name accounts as mandated by the government. The implementation of this new account system effectively ends “the use of anonymous bank accounts in transactions to prevent virtual coins from being used for money laundering and other illegal activities,” Yonhap reported.

Six major banks in the country are participating in this new system so far: Shinhan Bank, Nonghyup Bank, Industrial Bank of Korea, Kookmin Bank, Hana Bank, and Gwangju Bank. Yonhap elaborated:

“Opening cryptocurrency accounts has been banned for weeks while the banks have installed the system, which ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges for deposits and withdrawals.”


GmbH Halts Brokerage Business

Last week, German Financial Supervisory Authority (BaFin) has ordered Crypto.exchange GmbH, a Berlin-based exchange, to immediately stop acting as a financial broker. The order was issued after the exchange advertised on its website, btc-now.de, that it would sell customer’s Bitcoins for euros and sell them on a stock exchange, says BaFin in a statement.

The firm claimed the purchase price would be transferred to the investors within 30 minutes. According to BaFin, the financial commission business operated by Crypto.exchange GmbH is not authorized by the regulator. The financial watchdog took the decision after users claimed that they did not receive any money for cryptocurrency that was transferred to the firm, Bloomberg states. The statement reads:

“The BaFin order is immediately enforceable by law, but not yet final.”


Samsung Enters The Mining Business

Last week, Samsung Electronics, the flagship company of the Korea-based multinational conglomerate Samsung Group, has entered the Bitcoin mining business, according to reports from the country. Samsung Electronics completed the process for the development of semiconductor ASIC (Application Specific Integrated Circuit) for Bitcoin mining last year.

Venezuela Announces Pre-Sale of Petro

Venezuela’s president Nicolás Maduro has announced the pre-sale of his country’s national oil-backed cryptocurrency, on January the 30th. In addition, he has presented and signed the official petro’s whitepaper and unveiled the Petro Container for mining the new currency. He further asserted:

“We have reached the future. Venezuela advances as an economic power. Venezuela is at the forefront of the world, and we are going to accelerate permanently the start-up of the cryptocurrency, the petro.”

Nicolas Maduro

BitConnect Assets Frozen

A temporary restraining order (TRO) freezing BitConnect’s assets has been granted in the U.S. after a second lawsuit was filed against the cryptocurrency exchange and lending platform last week. The order – granted by Chief District Judge Joseph McKinley, Jr. at the U.S. District Court, Western District of Kentucky – requires the parties to disclose cryptocurrency wallet and trading account addresses, as well as the identities of anyone to whom BitConnect has sent digital currencies within the last 90 days.

The defendants have 10 days to comply with the order. In addition to the disclosures, BitConnect International PLC, BitConnect LTD, BitConnect Trading LTD and Ryan Maasen are prohibited from transferring any assets they may possess until they are granted permission by the court, according to the TRO. The lawsuit reads:

“This temporary restraining order is being entered without notice to Defendants to preserve the status quo and prevent irreparable harm until such time as the Court may hold a hearing.”

Bitconnect Lawsuit

Coinbase Issues Tax Forms

Last week, San Francisco-based cryptocurrency exchange Coinbase has issued 1099-K tax forms for a certain segment of its clients in the US. The company explains that it files 1099-K for customers who have received cash above the required reporting threshold, which is more than 200 receipt transactions or greater than $20,000 during the year. This also includes “business use” accounts, as well as GDAX accounts in which sales of cryptocurrency for cash have occurred that exceed the thresholds. The company states:

“We used the best data available to us to determine whether your account activity qualifies as Business Use, including but not limited to factors such as completion of a merchant profile or enabling merchant tools.”