Crypto-Related Fraud & Theft Resulted in $4.4B Loss in 2019, Bitcoin’s Carbon Footprint Lower Than Thought, Kraken Joins Silvergate Exchange Network

This week (25-30 November) in Blockchain & Crypto was super interesting and really productive - 89% of China’s Blockchain firms have allegedly tried to create their own cryptocurrency, crypto booking firm Travala partnered with travel giant Booking.com, Bitcoin ATMs firm Bitstop has partnered with the largest shopping mall operator in the United States, Simon Malls, and much much more!

About this and more, in the newest issue of Weekly Blockchain & Crypto Digest. Enjoy!

89% of Chinese Blockchain Firms Have Tried to Issue Crypto

89% of China’s blockchain firms have allegedly tried to create their own cryptocurrency, according to a senior executive at a local blockchain association. 

According to the state-run CCTV on November 21, Yedong Zhu, the president of the Beijing Blockchain Technology Application Association (BBAA), revealed that the vast majority of blockchain industry in China is focused on tokens, not blockchain. 

In addition to Zhu’s remarks, the report by CCTV covered a new study led by the People’s Bank of China (PBoC). Co-authored by five local financial and technology authorities, the “Bluebook on Blockchain” report reveals that there are 28,000 blockchain enterprises in China. 

The authors of the “bluebook” included the Chinese Academy of Social Sciences, the Payment and Clearing Association of China, the Beijing Blockchain Technology Application Association and Social Sciences Academic Press.

According to the BBAA president, only 4,000 Chinese blockchain companies are focused on pure blockchain technology, while as many as 25,000 have purportedly tried to issue their own cryptocurrency or token.

The news comes amidst the recently sparked Chinese push into blockchain technology development, which was triggered by President Xi Jinping’s call to embrace blockchain in October. 

The push was accompanied by a renewed wave of pressure on local crypto-related businesses. On November 21, the PBoC's Shanghai unit announced it was acting against entities allegedly involved in trading cryptocurrencies such as Bitcoin. On November 22, authorities in Shenzhen province claimed that 39 exchanges fell afoul of China’s cryptocurrency trading ban.

State-led publications have emphasized that the country’s blockchain push should be limited purely to blockchain technology, and not include cryptocurrency-related initiatives.

Crypto Booking Firm Travala Partners with Travel Giant Booking.com

Travala, a service that allows its users to pay for hotel stays with cryptocurrency, will now let its customers reserve any hotel that is bookable through Booking.com.

Travala announced in a press release on November 25 that it has already integrated Booking’s accommodations to its platform. The new feature will purportedly allow users to book 90,000 different destinations using cryptocurrencies. 

Travala’s customers can pay with its proprietary AVA token and 20 major crypto assets including Bitcoin, Ether, Dash, Bitcoin Cash, Litecoin, EOS, Stellar, Cardano, Binance Chaina, Monero, Tron, XRP and Dai. The firm’s CEO Matt Luczynski commented:

This partnership allows our users to access Booking.com’s accommodation listings, as well as the listings from several other leading travel suppliers, which is a fantastic use case for our own AVA token and another huge step towards mass cryptocurrency adoption.

Also, on November 25, Travala announced that its proprietary token was listed on the decentralized exchange Binance DEX and is currently trading against Binance Coin on the platform.

BitBay Crypto Exchange to Delist Monero Due to Money Laundering Concerns

Cryptocurrency exchange BitBay will delist privacy-centric cryptocurrency Monero due to money laundering concerns.

The exchange announced the decision on November 25, noting that the delisting will take place on February 19, 2020. The exchange explained its decision:

Monero (XMR) can selectively utilize anonymity features among projects. This feature of XMR is a subject to end of transaction support. The decision was made to block the possibility of money laundering and inflow from external networks.

On November 29, the exchange will already stop accepting XMR deposits. Due to the upcoming Monero blockchain fork, XMR withdrawals will not be possible from November 29 to December 5. BitBay will end trading support on February 19, after which it will cancel all buy and sell orders. The exchange asked that all Monero holders withdraw their XMR by May 20, 2020.

Poland-based BitBay is the 90th largest cryptocurrency exchange by 24-hour trade volume, according to data from Coin360. At press time the exchange has a daily trade volume of just over $20.7 million. 

BitBay explained that, as a regulated exchange, it must follow market standards and regulations regarding consumer protection and reporting practices. As such, it noted that Monero and other privacy coins had already been delisted from several cryptocurrency exchanges. 

In September, major cryptocurrency exchange OKEx delisted a slew of privacy-oriented coins including Monero, Dash, Zcash, Horizen (ZEN) and Super Bitcoin (SBTC). The exchange said that the coins fell afoul of new guidelines set out by the Financial Action Task Force.

BNY Mellon Officially Joins Blockchain-Based Marco Polo Network

The Bank of New York Mellon (BNY Mellon) has joined blockchain software firm R3’s trade finance network, the Marco Polo Network.

The American banking and financial services firm — which has over $1.9 trillion in assets under management — will conduct an evaluation program using the technology, Marco Polo announced November 25.

By joining Marco Polo, BNY Mellon intends to expand its technical expertise and explore how blockchain technology could be applied to its trade finance activities. The move is purportedly in line with BNY Mellon’s efforts to eliminate paper-based processes and digitize its business. 

Marco Polo is a consortium of major global financial and banking institutions aiming to bolster international trade. Launched in 2017, the Marco Polo Network is a collaboration of R3 and Irish tech firm TradeIX, and features major financial firms including banks French BNP Paribas, Dutch ING Japanese MUFG, Bank of America and French Credit Agricole.

Oliver Belin, chief marketing officer at TradeIX, said in an email to Cointelegraph that the Marco Polo Network now has 31 members to date, with 28 of them represented by banks, while the three remaining firms are TradeIX, R3 and Mastercard. Belin also noted that BNY Mellon’s logo will be added on the Marco Polo website later today.

Bitcoin ATM Firm Partners With Largest Shopping Mall Operator in US

Miami-based Bitcoin automatic teller machines (ATM) firm Bitstop has partnered with the largest shopping mall operator in the United States, Simon Malls, to install Bitcoin ATMs at several locations. 

BitStop announced on November 26 that the firm has already installed Bitcoin ATMs at five Simon Malls locations in California, Florida and Georgia. Bitstop co-founder and CEO Andrew Barnard said that the machines were installed ahead of the holiday season:

With the strategic timing of this new installation of Bitcoin ATMs at Simon Mall locations, customers can conveniently buy Bitcoin while doing their Black Friday and Christmas holiday shopping.

Bitsop, which claims to be licensed and regulated, plans to grow its teller machine network by over 500 locations by the end of 2020, according to Barnard.

The new partnership builds on the firm’s previous installation of a Bitcoin ATM at the Miami International Airport, which it announced in mid-October. 

The number of Bitcoin ATMs installed worldwide surpassed a new milestone. Data at the time showed that there were over 6,000 such machines worldwide, over 65% of which are in the United States.

Still, authorities are increasingly wary of such services. The United States Internal Revenue Service’s Criminal Investigation Chief John Fort, for instance, recently said that the regulator is looking into potential tax issues caused by Bitcoin ATMs and kiosks.

In addition to possible tax issues, Fort claimed that the operators of crypto kiosks should be obliged to follow the same Know Your Customer and Anti-Money Laundering rules as other cryptocurrency-related businesses.

New Research: Bitcoin’s Carbon Footprint Lower Than Previously Thought

Fresh research has challenged the perception that Bitcoin mining is irreconcilable with tackling climate change. Major science and technology magazine The New Scientist published a report on the new findings on November 20.

In their study, Susanne K?hler and Massimo Pizzol at Aalborg University in Denmark have criticized the assumptions underlying earlier claims that Bitcoin’s energy consumption may be as high as 63 megatonnes of CO2 annually, the New Scientist notes.

Such estimates rest on the assumption that carbon emissions from electricity generation are uniform across China — a country that continues to command a major share of global Bitcoin mining.

Yet breaking down the mining landscape in China to account for regional differences presents a different picture, resulting in a significantly lower estimated global footprint for Bitcoin of 17.29 megatonnes of CO2 in 2018.

These disparities are reflected in the fact that coal-reliant Inner Mongolia accounts for 12.3% of Bitcoin mining, which translates into an out-sized 25% share of total emissions. This is counterbalanced by the reverse pattern of the hydropower-heavy region of Sichuan.

K?hler is cited as noting that climate activists should continue to watch the Bitcoin industry — warning that electricity consumption per new Bitcoin mined is on the rise — but that they should be mindful to place it in perspective:

On the one hand, we have these alarmist voices saying we won’t hit the Paris agreement because of bitcoin only. But on the other hand, there are a lot of voices from the Bitcoin community saying that most of the mining is done with green energy and that it’s not high impact.

The researchers also noted that electricity consumption overwhelmingly accounts for the lion’s share of the coin’s carbon emissions — rather than the production and disposal of mining hardware, which accounts for just 1% of emissions.

As previously reported, other energy specialists have hit similarly back at the perception that high energy consumption is Bitcoin’s “Achilles Heel,” arguing in favor of shifting the debate away from energy consumption and towards where that energy is produced and how it is generated. 

This June, a fresh study found that 74.1% of Bitcoin mining is powered by renewables.

Ghana Exploring Digitized National Currency

The Republic of Ghana is exploring the benefits of issuing a central bank digital currency (CBDC), the governor of the country’s central bank says.

Ernest Addison, a Ghanaian economist currently serving as the governor of the Bank of Ghana (BoG), revealed that the bank is working with key stakeholders to explore a pilot CBDC project.

In a keynote address within the 23rd National Banking Conference on November 26, Addison stated that the CBDC project would be carried out in a sandbox “with the possibility of issuing an e-cedi in the near future.” The cedi is Ghana’s national fiat currency.

The governor did not mention whether the digital currency would be based on blockchain technology.

In the keynote, the BoG governor claimed that the CBDC pilot falls in line with the national effort to digitize the financial and banking sector. “Digital financial technologies will continue to define the future of our banking experience,” Addison said, claiming that mobile money transaction volumes increased from 982 million in 2017 to 1.4 billion in 2018.

“This consistent growth pattern underscores the sustainable nature of opportunity for the banking sector,” the governor concluded.

As such, the governor also announced that the BoG authorized Ghana Commercial Bank (GCB Bank) — the largest bank in Ghana in terms of total operating assets — to issue e-money similar to what is known as mobile money.

According to Addison, GCB Bank would create electronic value backed by an equivalent cash amount, which will allow customers to have access to electronic wallets issued by GCB.

Ghana is not the first country in Africa to consider the benefits of issuing its own digital currency. In August 2019, the National Bank of Rwanda announced it was researching how to offer an official digital currency in order to increase transaction efficiency and foster economic growth.

Crypto-Related Fraud and Theft Resulted in $4.4B Loss in 2019

In 2019, the total volume of cryptocurrency-related fraud and theft resulted in losses worth $4.4 billion, according to CipherTrace’s report for the third quarter of 2019.

In its “Cryptocurrency Anti-Money Laundering Report, 2019 Q3,” security research firm CipherTrace delved into the 120 most popular cryptocurrency exchanges’ compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements and analyzed patterns in crypto-related crimes.

Per the report, Q3 2019 saw a notable reduction in total cryptocurrency crimes as compared with previous quarters, and thus the lowest quarterly thefts and scams in two years:

This quarter, cybercriminals stole $6.5 million from cryptocurrency exchanges, while insiders bilked cryptocurrency users out of $9 million in exit scams and Ponzi schemes. This total of $15.5 million represents the smallest number of cryptocurrency crimes of any quarter in the past several years.

However, total losses from crypto theft on the year have sky-rocketed since 2018, as crypto thieves go after larger sums. Crypto thefts accounted for $4.4 billion in losses, up from $1.7 billion the year previously.

Two particular scams, the PlusToken scheme ($2.9 billion) and the QuadrigaCX crypto exchange fiasco ($195 million) accounted for the vast majority of losses.

Out of the 120 analyzed crypto exchanges, 35% have strong KYC standards, 41% have “porous” standards and 24% have weak KYC standards. 32% of the top-120 exchanges trade privacy coins.

Cyber criminals are developing new and more sophisticated methods to obfuscate the flow of funds. On November 26, Slovakian software security firm Eset discovered that cybercriminals behind the Stantinko botnet have been distributing a Monero (XMR) cryptocurrency mining module via Youtube. This crypto-stealing malware has reportedly infected around 500,000 devices.

Earlier today, major South Korean cryptocurrency exchange Upbit — which is run by a subsidiary of Korean tech giant Kakao — notified users of the theft of 342,000 Ether (ETH) (over $50 million at press time) from its hot wallet. The exchange pledged to protect user assets, stating that the lost funds will be covered by corporate assets.

Earlier this month, Gregg Bennett, a SIM-swap hack victim and angel investor, sued cryptocurrency exchange Bittrex over allegedly allowing the theft of nearly $1 million in Bitcoin (BTC).

Binance to Launch Crypto Travel Rewards Card with Startup TravelByBit

Major cryptocurrency exchange Binance announced in a blog post on November 28 that it partnered with crypto travel startup TravelByBit to launch a rewards card that facilitates crypto payments on major travel websites.

Per the announcement, the card will function like a traditional prepaid card with access to additional discounts and rewards that users will be able to load with Bitcoin, Binance USD, Binance Coin and Ontology.

The card will be released early next year and will initially target travelers in the Association of Southeast Asian Nations, Australia and Europe, with plans to gradually expand.

The service will reportedly allow its customers to book flights and hotels through major booking sites including Booking.com, Expedia, Agoda, and Ctrip, as well as TravelByBit’s own platform. 

Kraken Joins Silvergate Exchange Network

Kraken, one of the largest and oldest Bitcoin exchanges in the world, has joined the Silvergate Exchange Network (SEN). By joining SEN, the United States-based cryptocurrency exchange enables its clients to deposit and withdraw U.S. dollars from Silvergate accounts with no fees, the firm announced November 27.

According to the announcement, the depositing process will be different based on whether Kraken users have a Silvergate account. If they have an account at Silvergate, Kraken users will simply have to enable SEN funding on their Kraken account before using the option. Those who do not have a Silvergate account will have to apply separately at bank.

Silvergate Capital is a California-based commercial bank focused on digital currency businesses. The Silvergate’s SEN is a network of crypto exchanges and investors that enables transactions of U.S. dollars between SEN members.

As reported, Silvergate’s customers include crypto exchanges, miners and custodians, among others. The crypto-friendly bank saw its number of digital currency customers grow from 655 as of June 30, 2019 to 756 as of Sept. 30, 2019, as Silvergate stated in a filing with the U.S. Securities and Exchange Commission.

In August 2019, the SEN added another important crypto partner, the Winklevoss brothers-founded exchange Gemini, enabling faster transfers in U.S. dollars.

Earlier this month, Silvergate Bank launched its shares for trading on the New York Stock Exchange under the ticker NYSE:SI.

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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