By Tom Allen October 9, 2017
Malicious code can go undetected, pushing up cloud prices
The processing power required for digital currency mining is being offloaded to unknowing website visitors
Multiple legitimate websites have been hacked to leech processing power from visitors’ computers, using them to mine cryptocurrencies.
Hackers have installed malicious code on sites belonging to schools, charities, file-sharing services and even CBS, according to scans.
Mining, in this sense, refers to the process of creating units of a digital currency like Bitcoin. The mining computers collect pending transactions (a block) and collate them into a coded puzzle. The first miner to find the solution announces it, and those transactions are validated and added to the blockchain. The miner then receives some currency as a reward.
Because only the first to solve the puzzle gets the prize, miners tend to use very powerful computers – or, in this case, a widely-distributed network.
“There’s a huge attraction of being able to use other people’s devices in a massively distributed fashion, because you then effectively take advantage of a huge amount of computing resources,” Rik Ferguson, VP of security research at Trend Micro, told the BBC.
More at: Cloud at risk from cryptocurrency miners – Computing
A group of blockchain companies have decided that the uptick in scams on Slack is no longer tolerable.
Last week we reported on a surge in phishing scams related to token sales, and the blockchain industry was quick to take action. A group of companies led by Aragon have decided to withdraw from the popular messaging platform Slack – including Indorse, Cofound.it, OmiseGO, Streamr, Santiment, FOAM, Auctus, Golem, and Decentraland.
“We started the proposal for the migration to an open source messaging platform after realizing that the current situation was unsustainable. Slack was designed for the internal use of projects; Slack lacks the tools necessary to run public facing communities, including the fundamental features required for projects in the blockchain space. Migration to an open source platform will help us manage and govern our communities more efficiently and securely,” said Luis Cuende, co-founder of Aragon and Project Lead. “The situation has worsened considerably with recent Slack updates that remove unique usernames, allowing scammers to easily pose as project members and leaving users with no way of distinguishing fake accounts.”
More at: Slack Abandoned by Blockchain Companies Over Phishing Scams – Finance Magnates
The US government is going after a New York man for allegedly operating a bitcoin Ponzi scheme.
The US Commodity Futures Trading Commission said Nicholas Gelfman, a Brooklyn resident and head trader at Gelfman Blueprint, a New York-based firm, “fraudulently solicited” $600,000 from 80 clients in a bitcoin Ponzi scheme.
Investors, according to a release from the CFTC Thursday, gave money to Gelfman “for placement in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy, executed by Defendants’ computer trading program called “Jigsaw.”
“In fact, as charged in the CFTC Complaint, the strategy was fake, the purported performance reports were false, and — as in all Ponzi schemes — payouts of supposed profits to GBI Customers in actuality consisted of other customers’ misappropriated funds,” the CFTC said.
Gelfman covered up the scheme by “staging” a hack.
More at: A trader is being accused of running a bitcoin Ponzi scheme – Business Insider
Switzerland’s financial watchdog has cracked down on operations of “E-Coin”, an alleged ‘fake’ cryptocurrency scam.
The Swiss Financial Market Supervisory Authority (FINMA), the country’s financial markets regulator and watchdog has revealed the closure of three separate companies involved in issuing “E-Coin”, alleged by the authority as a fake cryptocurrency.
In an announcement, the watchdog revealed that ‘Quid Pro Quo Association’ had developed and begun issuing E-Coins since 2016. The company, working with Digital Trading AG and Marcelo Group AG, also launched an online trading platform for the E-Coins to be traded and transferred. Since 2016, the three companies raked in some 4 million Swiss francs (approx. $4.1 million) from hundreds of Swiss investors.
The authority wrote:
Via this platform, these three legal entities accepted funds amounting to at least four million Swiss francs from several hundred users and operated virtual accounts for them in both legal tender and E-Coins.
More at: Switzerland Shuts Down ‘Fake’ Cryptocurrency Scheme”E-Coin” – Cryptocoins News
JP Morgan Jamie Dimon has labelled Bitcoin a fraud that will eventually ‘blow up’ at a banking conference in New York.
In an astonishing tirade against the flagship digital currency, Dimon said that it was only fit for use by drug dealers, murderers and people living in locations like North Korea. He also said that he would immediately fire any employee at the investment bank that he found to be trading in Bitcoin.
The Guardian quotes Dimon as saying:
“The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.
“It is worse than tulip bulbs. Don’t ask me to short it. It could be at £20,000 before it happens, but it will eventually blow up. Honestly, I am just shocked that anyone can’t see it for what it is.”
More at: JP Morgan labels Bitcoin a ‘fraud’ – The Block
Website claims that fake news stories are being circulated by the banks to stop the rise of digital currencies
The future of Bitcoin could be under threat because of fake news stories being peddled by the banking sector, a leading website has claimed.
News site Coingeek.com, which has recently been acquired by billionaire Calvin Ayre, claims the banks are trying to sully the industry in order to restore the “normal status quo of economics”.
More at: Banks spread fake news stories about Bitcoin and other cryptocurrencies to ‘restore the status quo’ – Mirror Online
Reasons to sit out the first wave cryptocurrency craze.
Burger King recently launched its own crypto-currency WhopperCoin in Russia. It’s a glorified loyalty punch card, where every rouble spent on a burger translates into one coin. Amass 1,700 whoppercoins, and get a free Whopper.
This is just one more piece of evidence that cryptocurrency such as bitcoin and ethereum is in its Napster stage. Napster, for those who don’t remember, was an early music-sharing application created in the late 1990s that granted users access to a gargantuan library of music. Then came the LimeWires and Kazaas. It was free! It was cool and sometimes, downloaded files would come with a wicked computer virus.
To be sure, the promise of bitcoin is hard to ignore, especially when it keeps shooting the lights out. Bitcoin Investment Trust (GBTC) is trading at a greater than 100% premium to its net asset value and charges a whopping 2% fee, but investors keep piling in. Last year to the day, GBTC had $94.5 million in assets. Today it has $772 million in assets.
It’s important for investors to keep in mind that it is still early days for cryptocurrency, which means there are a lot of duds and scammers in the mix. Despite the SEC’s protests, initial coin offerings just keep coming. The Atlantic reported that scammers are profiting from the digital coin rush, drawing the uninformed into Ponzi schemes. And the threat of getting hacked is forcing crypto issuers to turn to bank vaults. So maybe, its best to sit out the first wave craze.
More at: WhopperCoins, Scammers, and State-Backed Crypto – Barron’s