CFTC Wants to Learn More About Ether (ETH) and Its Use on the Ethereum Network

On Tuesday (11 December 2018), the U.S. Commodity Futures Trading Commission (CFTC) issued a "Request for Input" (RFI) on "Crypto-asset Mechanics and Markets". More specifically, the CFTC is "seeking public comment and feedback in order to better inform the Commission’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network."

According to its press release, the CFTC is expecting that these comments, all of which must be received by 60 days from the date of publication of the RFI in the Federal Register, "will benefit LabCFTC, the CFTC’s FinTech initiative, and help to inform the Commission’s understanding of these emerging technologies." The Commission says that it wants this public feedback for advancement of oversight of the commodity futures markets and for regulatory policy development. It also says that the feedback will "advance the CFTC’s mission of ensuring the integrity of the derivatives markets as well as monitoring and reducing systemic risk by enhancing legal certainty in the markets." Comments may be submitted via the CFTC website, regular mail, or hand/courier delivery.

In addition to general feedback, the CFTC is hoping for answers to 25 questions across the following categories:

  • "Purpose and Functionality"
  • "Technology"
  • "Governance"
  • "Markets, Oversight and Regulation"
  • "Cyber Security and Custody"

Here are a few of the more interesting questions:

"Are there any existing or developing commercial enterprises that are using Ether to power economic transactions? If so, how is Ether recorded for accounting purposes in a comprehensive set of financial statements?"

"Does the Ethereum Network face scalability challenges? If so, please describe such challenges and any potential solutions. What analyses or data sources could be used to assess concerns regarding the scalability of the underlying Ethereum Network, and in particular, concerns about the network’s ability to support the growth and adoption of additional smart contracts?"

"Relative to a proof of work consensus mechanism does proof of stake have particular vulnerabilities, challenges, or features that make it prone to manipulation? In responding consider, for example, that under a proof of stake consensus mechanism, the chance of validating a block may be proportional to staked wealth."

"How would the introduction of derivative contracts on Ether potentially change or modify the incentive structures that underlie a proof of stake consensus model?"

The following question is especially interesting (see if you can spot anything wrong with the question):

"In light of Ether’s origins as an outgrowth from the Ethereum Classic blockchain, are there potential issues that could make Ether’s underlying blockchain vulnerable to future hard forks or splintering?"


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200,000 Bitcoin Lost in Mt. Gox Hack Can be Recovered, Russian Law Firm Claims

  • Russian law firm ZP Legal outlined how 200,000 BTC ($2 billion) stolen from Mt. Gox can be recovered.
  • Firm claims to have identified Russian nationals who received stolen BTC following the hack.

Russian law firm Zheleznikov and Partners (ZP) claims that 200,000 BTC, worth more than $2 billion, lost in the infamous Mt. Gox hack of 2014 is recoverable. 

Mt. Gox Funds Recoverable

According to a Q&A outline with former BBC journalist Andy Pag published Sept. 12, the Moscow-based law firm explained how 200,000 of the 850,000 lost BTC could be recovered.

ZP claims to have identified Russians nationals who received stolen bitcoin from the hack, and said that law enforcement could cut a deal with such individuals to return the funds to creditors. The law firm also contacted Mt. Gox creditors earlier in the year, outlining how they could take legal action against the Russian nationals to obtain the stolen bitcoin.

In particular, the group has highlighted Alexander Vinnik, the alleged operator of defunct crypto exchange BTC-e, as a potential recipient of some of the stolen funds.

Alexander Zheleznikov, the managing partner of ZP Legal, said that Russian authorities are investigating Vinnik and encouraged Mt. Gox creditors to come forth as victims in the pending case. 

Zheleznikov said,

Our plan is to represent the Mt.Gox creditors and help them report to Russian law enforcement so that the investigators could establish the connection between the stolen funds from Mt Gox, the operations of BTC-e and WEX, using Vinnik’s case.

He continued, 

If our assumptions of those connections are correct, the [thieves] will ultimately come forward and plead guilty, and to reduce the punishment, they will offer to recover a part of the funds. If they don’t, they will be deemed guilty by law enforcement, and then there will be a chance to sue them for damages based on the criminal case.

While ZP Legal may be providing a way for Mt. Gox creditors to obtain more than $2 billion in lost funds, the firm is planning to charge up to 75% of the recovered sum if their legal action proves successful.

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