By Matt Levine December 20, 2017
Tales from the bubble. Bloomberg/Contributor
Here is the story of Longfin Corp., a fin-tech-ish company that was listed on Nasdaq on Wednesday and then announced on Friday that it was acquiring Ziddu.com, “a blockchain-empowered global micro-lending solutions provider,” causing its stock to go up by more than 1,200 percent and giving it a market capitalization of some $6.2 billion as of yesterday’s close. LongFin’s offering circular is a fun read — it describes its founder and chief executive officer, who also happens to be the controlling shareholder of Ziddu.com, as “a financial wizard” and “a true believer in disruptive technologies” who “believes that every piece of information is worth millions” — but even better is the press release describing the Ziddu acquisition:
Ziddu Coin is a smart contract that enables SME’s, processors, manufacturers, importers and exporters using cryptocurrencies across continents. Ziddu Coins are loosely pegged to Ethereum and Bitcoin. The importers/exporters convert offered Ziddu coins into Ethereum or Bitcoin and use the proceeds for their working capital needs. At the end of the contract, importers/exporters will realize their proceeds and pay back their funds through cryptocurrencies only. Depending upon the risk profile of the counterparty, the interest will vary from 12% to 48%.
More at: Maybe Crypto Will Make Securities Fraud Obsolete – Bloomberg
By Jonathan Fuller November 21, 2017
A startup on the blockchain-based software platform Ethereum vanished on Sunday after raising $374,000 from investors.
Confido sold digital tokens to investors in an initial coin offering (ICO) on Ethereum from November 6 to 8. After reaching a peak market cap of $10.7 million on November 14, the company’s website and Twitter accounts suddenly disappeared on Sunday. An announcement by Confido founder and former eBay employee Joost van Doorn on the company’s subreddit stated that the company had run into a “tight spot” due to legal trouble with a contract. The announcement has since been removed from Reddit. Confido’s currency price plummeted to a fraction of a dollar by late Monday.
Confido’s price history. The cryptocurrency plummeted on Monday after all traces of the company unceremoniously vanished on Sunday. Source: CoinMarketCap
More at: Blockchain-based Startup Vanishes After Raising $375K – Electronics360
By Laura Shin November 5, 2017
After Forbes uncovered misrepresentations in an investor deck by Canadian crypto venture capital firm NextBlock Global, the company has decided not to go forward with its public listing on the Toronto Stock Exchange and return money to existing investors.
The announcement was made publicly as well as in an email to “friends and investors” from CEO Alex Tapscott. The company was attempting a $100 million CAD ($78 million USD) raise after having already received $20 million CAD in a private offering.
“Today we announced that NextBlock Global will not be proceeding with a go-public transaction,” he wrote. “After careful consideration, we have concluded that the best course of action is to return to existing investors their capital in full and also to have them participate in any profits. As a young company, we have stumbled in our efforts to take our company public and we will work hard to rebuild the trust of those we have disappointed.”
More at: Alex Tapscott’s Crypto VC Firm Aborts Public Listing, Will Return Money After Falsehoods Revealed – Forbes DigitalMoney #MarketMoves
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